i appreciate that this is at the lunch hour. >> coming up next on c-span, mitt romney visited the american society of news editors. then, president obama signing legislation that bans members of congress from buying and selling stocks based on inside information. that is followed by the head of the pension benefit guaranty corp. on repair -- on preparing for retirement. later, a discussion of the global economic outlook. >> this weekend marked the anniversary of the bloodiest battle to be fought during the civil war up to that point. the battle of shiloh with

almost all 34,000 casualties. we will tour the battlefield with the cheap park ranger saturday at 6:00 p.m. eastern. sunday night at 7:00, the founder of the red cross, clara barton, operated the missing soldiers office until 1868. join us as we rediscover the third floor office as it is right -- as it is prepared for renovations. this weekend on american history tv on c-span3. >> mitt romney spoke to the american society of newsmakers today. mr. romney says the president's remarks were full of distortions.

>> good afternoon, everybody. welcome to this very special naa luncheon today. before we get started, i would like to give special thanks to fti consulting, a global business with specialized services in the newspaper and publishing sectors. their practices focused on thought leadership and digital strategy, and audience yield, combined with expertise in organizational design, advertising performance, news and content, and fulfillment operations. ken harding from fti is here today if anyone would like to discuss their services further. for anyone who was opened a newspaper or turn on a television in recent months, our speaker does not need much in terms of an introduction. he is in good shape from a recognition standpoint and he is happy today given the events of last night with a clean sweep of the three primaries and a

further widening of his delegate votes. however, his recognition is build some the on a career of accomplishment. as a businessman, he founded bain capital, a hugely successful investment firm that launched names like staples and sports authority. he is widely credited with savaging the salt lake city winter olympics. he volunteered skills to take over an organizing committee mired in debt and controversy, leading to one of the most successful u.s. olympics ever, even with the massive security issues just months after 9/11. after -- as governor of massachusetts, he raced the budget deficit, and acted -- he embraced the budget deficit, and acted education reform, and health care reform that the state level.

after last night he holds a wider and stronger delegate lead in one of the toughest and many say contentious political campaigns in recent memory. here to sara -- share thoughts on the campaign and the country it is my -- here to share some thoughts on the campaign and the country, it is my pleasure to welcome governor mitt romney. ♪ >> good morning. thank you, good morning. thank you to the newspaper association and your board for the invitation to speak to you today. over the last 10 months, i have come to know a great deal about a number of your journalists part of your organizations. we have air our dirty laundry

together, sometimes literally as well as figure to wait, we have david hour upon hour on the fine aroma of a campaign bus and shared birthdays and holidays more with each other than with our families. one of the reporters covering my campaign enjoy her birthday, and for bad birthday i got her a cake and sank her eighth birthday song. -- sank her a birthday song. she reciprocated by telling me and my birthday that i was old enough to qualify for medicare. the changes in your industry have been striking. back then i would look online to see how stories were developing, and only hours after a speech it was dissected on the internet. now, we go to twitter. it is instantaneous. in 2008, the coverage was about

what i might have said in a speech here today, it is about what brand jeans i'm wearing, or what i have for lunch. most people in my business are convinced it you are biased against all of us, identified with the famous quip from lbj that if he were to walk on water your headline would read all call the president cannot swim -- "the president cannot swim." [laughter] >> frankly, in some of the new media, i find myself missing the presence of editors to exercise quality-control. and i missed the days of two or more sources for a story when it least one source was actually named. how your industry is going to change, i could not predict. i subscribe to the famous dictum for testing is very difficult, especially when it involves the future.

i do know this. you will continue find ways to provide the american people with reliable information that is vital to our lives and to the nation, and i am confident that the press will remain free, but further, i salute this organization in your various institutions that make it up in your effort to make it not only free, but also responsible, accurate, relevant and integral to the functioning democracy. thank you for that work. now, given the number and scale of our nation's challenges, this november's election will have particular consequence. it will be a defining event. president obama and i have very different visions for america, both of what it means to be an american today, and what it will mean in the future.

the voters will expect each of us to put our respective views on the table. we will each make our case, buttressed by our life experience. the voters will hear the debates, there will be buffeted by advertising, and informed by your coverage, and hopefully after all of that they will have an understanding of the different directions we would take and the different choices we would make. of course, for that to happen, the candidates have to be candid about their views and their plans. in that regard, president obama's comments to president of the death a deeply troubling. -- president of reaching that should give -- president dmitry medvedev are deeply troubling. by flexibility he means that what the american public does not know will not hurt him. his intent is on hiding. uni will have to do the seeking.

president obama exchange with the russian president raises all sorts of serious questions. what exactly does president obama intend to do differently once is no longer accountable to the voters? what is flexibility with foreign leaders require less accountability to the american people, and on what other issues will he state his true position only after the election is over? instead of answering those vital questions, the president came here yesterday and railed against arguments no one was making, and criticize policies no one is proposing -- criticized policies no one is proposing. it distracts from his record. wilander stand the president does not want to run on his record, he cannot run from his record either. i have said many times before the president did not cause the economic crisis, but he did make it worse.

he delayed the recovery, then he made it -- made it anemic. when he took office, many americans turned to him to turn around the economy and lead us to full employment. he failed these americans. the first three rules of any turnaround our focus, focus, and focus, but instead of focusing on the economy, he delegated the stimulus to nancy pelosi and harry reid. the $780 billion stimulus included a grab bag of projects that languished in congress for good reason for years. it was less a jobs plan and more the mother of all earmarks. the administration pledged stimulus would keep the unemployment rate below 8%, and it has been a mob every month since. the president's attention, -- of of every month since. the president's attention was

elsewhere like to government control -- takeover of health care, and apologizing for america abroad. he handed out billions of dollars to green energy companies including his friends at companies like solyndra, who are now bankrupt. the answer to the economic crisis was more spending, more debt, and larger government, and by the end of his term in office he will have added nearly as much public debt as all of the prior presidents combined. no president has ever run a trillion-dollar deficit. the new normal the president would have less embraced is trillion dollar deficits and 8% unemployment. through all of this, president obama has failed to pass a budget. in february, he put forward a proposal that included the largest tax increase in history and still left the national

debt spiraling out of control, and the house rejected it unanimously. of course, no fiscal challenge is greater than the one we faced with entitlements, as the president acknowledged three years ago, this is not a product which problem we can kick down the road for their -- problem we can kick down the road further. i would be happy to consider his plan, but he does not have one. 3.5 years later he is failed to even propose a serious plan to solve the entitlement process. instead, he is taking a series of steps that end medicare as we know it. is the only present to ever cut $500 million from medicare, and as a result more than half of doctors will say they will cut back on treating seniors. he is destroying medicare advantage, eliminating coverage millions of seniors depend on and reducing choice by two/thirds.

to control medicare costs he has created an unelected, unaccountable panel, what the power to prevent medicare from providing certain treatments, and the result will be fewer services available to patients. a couple months ago we saw a fascinating exchange on capitol hill that epitomized not only this administration's inaction on entitlements, but also its appalling lack of leadership. treasury secretary timothy geithner testified before congress, congressman paul ryan, who unlike the president has had the courage to offer serious solutions, he was pressing timothy geithner on the administration's failure to lead an entitlement reform, and timothy geithner responded, we are not coming before you today to say we have a definitive solution to that long-term problem. what we do know is we do not like yours.

take a moment. think about that. we do not a dissolution. all we know is you -- we do not like yours. it all makes us long for the day when the president simply read from behind. now, in the weakest recovery since the great depression, the president has repeatedly called for tax increases on businesses. as a candidate obama, he decides that a lower corporate tax rate would be better. as president, he has added regulations at a staggering rate. as a candidate, he wants to find ways to reduce them. as president, he delayed the development of oil, coal, and natural gas. as candidate, he says he favors an energy policy to adopt an all-of-the-above approach. nancy pelosi said we would have to pass obama-care to find out what was in it.

president obama has turned the buys into a campaign strategy. he wants to reelect him, so we can find out what he will do. with the challenges the nation faces, this is not the time for president obama as hide and seek campaign. he said he wants to transform america. i do not want to transform america. i want to restore the values of economic freedom, opportunity, and small government that made this nation the way it is. it is opportunity that has always driven america, and defined us as americans. my grandfather was in the construction business. he never really made it himself, but he convinced my dad that he could accomplish anything he wanted to. my dad did not have the chance to finish a college degree, and he was an apprentice as a carpenter, and based on that experience he turned around a

car company, and later became the governor of the state of michigan. my father made the most of the opportunities that came before him. by the time i came along, and i was the fourth of four brothers and sisters, i have the chance to get the education my father could not. i love cars, and i was tempted to stay in michigan and go into the car business, but i always wondered if success i might have was due to my dad, so when i got out of business school if i stayed in massachusetts and got a job with the best company that would hire me, and perhaps, more importantly, i was married and on the way to having five sons. over the next 25 years my business career had ups and downs, great successes, definite failures, but each step of the way i learned more and more about the power of the

free enterprise system. now, i am not naive enough to believe that free enterprise is the solution to all of our problems or to doubt that it is one of the greatest forces of good that the world has ever known. free enterprise has done more to lift people out of poverty, to help build a strong middle class, to help educate our kids, and to make our lives better than all of the government's programs put together. if we become one of those societies that attack success, the outcome is certain. there will be less success. that is not who we are. the promise of america has always been that if you worked hard, took some risks, there was the opportunity to build a better life for your family and for the next generation. i am offering a clear choice, and a clear path. unlike the president, i have a record that i am proud to run on. after my years in business, i

use my experience there to help save and olympics and turn around a state. when i became governor of massachusetts, the state budget was out of control, and the legislature was 85% democrat. we cut taxes 19 times and balance the budget every one of my four years. we in raced a shortfall and left office with a rainy day fund. i cast over 800 vetoes. if there was a program or an agency that needed cutting, we caught it. one television commentator said i did not go after the sacred cows, i went after the whole herd, and i cannot wait to get my hands on washington. unlike president obama, you do not have to wait until after the election to find out what i believe what my plans are. i have a pro-growth agenda that would get our economy back on track, and get americans back to work.

this administration thinks our economy is struggling because the stimulus was too small. the truth is we are struggling because our government has grown too big. as president, i will get the government out of the way and unleash the power of american enterprise and the innovation of the american people. seven months ago i presented a detailed plan for jobs and economic growth. it included 59 different proposals that would help strengthen the economy. i understand some people are a news that i have so many ideas, but i think the american people will prefer it to president obama's grand total of zero. i will cut marginal tax rates across the board for individuals and corporations, and limit deductions and exclusions. i will repeal burdensome regulations and prevent the bureaucracy from writing new ones. i will unleash domestic energy resources so we can get the energy we need at a price we

can afford and keep those dollars in this country. instead of picking winners and losers with taxpayer dollars, i will make sure every entrepreneur gets a fair shot and every business plays by the same rules. if i will create an environment where our businesses and workers will compete and win. i will welcome the best and brightest to our shores and ensure that we have labour and training policies that help american workers to be more competitive. instead of growing the federal government, i will shrink it. i will repeal obama-care, and cut programs we simply cannot afford, and i will send the state's programs they can implement at lower cost with better results. i have already proposed a plan that would strengthen medicare and social security for future generations, and on like president obama i have the courage to stand behind my plan and the leadership experience to ncacy -- enact them, without

tax increases. i will gradually raise the retirement age for social security and reduced the rate of benefit growth for higher- income seniors. i will introduce competition and choice to medicare while preserving medicare coverage as an option so future seniors can get higher quality at lower costs. this november we will face the defining decision. our choice will not be one of party or personality. this election will be about principle, freedom, and opportunity. i am offering a real choice in a new beginning. i am running for president because i had the experience and the vision to get us out of this mess.

we know what barack obama's vision of america is. we all lived these last three years. mine is very different. i see an america where we know the prospects for our children will be better than our own, where the pursuit of success unites us, where the values we pass on are greater than the debts we leave our children, where poverty is defeated by opportunity, not enabled by a government check. i see an american government that is humble, but never humbled, that leads, but is never let. we wage this campaign as republicans and democrats, but we share a destiny as americans. together, we must ensure that america's greatest days are yet ahead. thank you, and god bless this great land. [applause]

>> hello, ken. >> i'm ken paulsen. governor romney has graciously agreed to answer some questions. these are from all across the country. we had a special guest here yesterday who had some views. president obama said the republican party has gone so extreme that ronald reagan could not win a gop primary. i know they you took a look at the president's remarks. did you have a response? >> i think ronald reagan would win handily in a primary, and frankly, in all the primaries. i think our party is intent on preserving the vitality and

dynamism of the american spirit that i think is being deadened by a series of government programs that have been increasingly in evasive and have attacked economic freedom. i look at what the president said. there were so many things i found to be distortions and inaccuracies, and it is hard to give a full list, but let me try. he looked at the budget and said if we were to pass the paul ryan budget, look at the terrible things that what happened if we cut programs and a proportional basis, but of course you would not cut programs on a proportional basis. some programs would be eliminated all right, obama- care being first on the list, and this is about $100 billion a year. he went through a series of strong men, saying the republicans are interested in corporations being able to do whatever they want to do with pollution, employees, with impunity and without regard to

consequence. these things are strong men that have no relevance in reality. it is important for us to have discussions about the real issues that exist and how we would address them, and there are differences, but the idea of this rhetorical excess does not serve as terribly well in a process like this, and i hope in the future we can talk about the real issues, the real differences between us, the failures of the last three years -- the president the other day said that his has done a great -- has been a great presidency, in line with great presidents of the past, as he defined them. i do not think this has been a great presidency. as you like the pieces of legislation he has enacted, they did not get the economy to work again. the economy has gotten better, some will say, but the rate of recovery under this president has been the most tepid.

i saw an article in "the wall street journal" that said this is been the slowest economic recovery, including that of the great depression, following the great depression. so, this is has the records to be proud of. it is a record i think he will have a hard time defending, and it is a vision i have yet to hear laid out. how can you run for president and the president and not put forward a plan to make sure medicare and social as attorney are solvent? >> a gallup poll showed you leading president obama by one percentage point by -- among men, but trailing him by 18 points among women. why do you think you face this gender gap? >> i know our party has faced a gender gap traditional repair if the democratic party has done an effective job mischaracterizing our reviews. in the final analysis i will

win by having the support of men and women, in the battleground states and across the country. that will be by focusing on the issues that women and men care most about my wife has the occasion to campaign on her own and also with me, and she reports to meet regularly that the issue women care about most is the economy, and getting good jobs for their kids and for themselves. they are concerned about gasoline prices, the cost of getting to and from work, taking their kids to school, or to practice and so forth. that is what women care about in this country, and my vision is to get america working again. short-term and long-term. look, we are on a path to becoming more and more like europe, and europe does not work in europe. it sure is not going to work here. [applause]

>> we are going to have to maintain the unique features that make america the economic powerhouse that it has always bad, and a strong economy allows us to do a lot of good things. one, have good jobs, rising incomes, a growing middle class, and allows us to have revenue from taxpayers who now have jobs to pay for grade schools, a wonderful care for our seniors, a strong military to defend us, but at the heart of these things is a strong and vibrant economy. the president, almost without exception, if you look at the policy had at -- he has pursued and the acts that he has signed, they have made it harder for our economy to rebuild. do you know any businesses that said let's hire more people because obama-care is coming, or in the financial-services sector do you find smaller banks saying i am willing to give more loans because of dodd-frank, or when they heard about cap and trade the energy industry said let's grow in america, or when

they heard about the boeing decision they said it is a good time to hire people? in almost every measure the president has taken, it made it harder for small business to decide to grow, were big business to stay here. it has been an anti-business, anti-investment, anti-jobs agenda. that is not what the president and tended, but that is what it has done. it is time for golf -- for us to go back and say we want to make america strong again with the best environment for business in the world -- small business, big business, and job creators of all time. when the head of coca-cola says america's business environment is less friendly than that of china, we know we have a problem. i said the other night that my liberal friends say they love a strong economy, but they do not like business very much. the economy is simply the

addition of all the businesses in america, and what we will have to do is encourage enterprise, and, of course, encourage it with appropriate regulation, fair taxation, and without special breaks for friends of one party or another. that has to be done. making business thrived >> governor, today you once again referred to president obama traveling around the world apologizing for america. it is aligned -- if our troops engaged in something that is truly wrong, is there a time when a president should apologize?

>> when mistakes happen, you acknowledged the mistakes, but this is different than the apology to the middle east, not talking about a mistake that was made, he was instead talking about america. he says that america has dictated to other nations. he said that america has been divisive and arrested. look, america has not dictated. america has freed other nations from dictators. america's history is not only of having listed people out of tyranny through extraordinary -- listed people out of tyranny through extraordinary sacrifices of our sons and daughters, but also our principles of free enterprise, human rights, freedom and democracy, that have helped to lift millions out of poverty. america is the greatest nation in the history of the earth, so on the list, on the balance sheet, it is not appropriate for the president of the united states to apologize for america, america's history, and america's role in the world, but that is of course different than acknowledging mistakes. >> this might be a question of self-interest.

four years ago senator john mccain struck it spoke to us and he pledged to support a federal law -- spoke to us and pledged to support a federal law. >> i have not looked at that. i will give it consideration. i have an unusual background perhaps for politics, and i will describe a circumstance. we faced a decision about whether to extend a line of our subway system. it was an expensive decision, in my senior staff and a number of cabinet members, and have our legal department came in and said we of all met, gone to the pros and cons, and decided it was something we all endorse, and they expected me to say fine, go ahead. i said as anyone of you disagree with this, and they said no, and i said i cannot make a decision to go ahead with the

project unless someone in the room vehemently opposes. with regards to something of this nature, i would want to hear the pros and cons. i would like to hear the back- and-forth. >> i respect that, and i do wonder, then, early in your remarks you mentioned the good old days of multiple sources. she'll bonds are about giving reporters the rights. d.c. a role for confidential sources in america -- do you see a role for confidential sources in america? >> yes. can i ever imagine a time when a source would need to be revealed?

i can imagine that, too. i know that sounds like a conflict, which is why i have to give this more thought to understand which side of that i would come down on. i would want to hear from people in the industry. is there ever a time you would think a confidential source should be revealed? if the answer is no, i would like to understand why that is the case, and what the alternative is. >> we have time for just a couple more quick questions. you promised to use any means necessary to prevent iran from using a nuclear weapon. with you seek congressional authorization before a military attack? >> i will follow the constitution and determine what is the authorization to take any kind of military action. with regards to iran, and their nuclear program, this is not something which can be guaranteed to be solved through diplomacy. i certainly hope we can dissuade iran from their nuclear folly to crippling sanctions, which

should have been put in place all long time ago, threw him in guiding -- and died in -- indicting ahmadinejad, and to have support of dissidents are run the -- among the iranian people. the president was silent when they took to the streets following a stolen election, and i think we would have to decide we would take military action if necessary, and the degree of congressional involvement that would be in accordance with the law. >> one final question. you had a very good day yesterday. you have had your supporters, paul ryan, marco rubio among them, and they're called on republican opponents to get out of the race. have you asked them yourself? >> no, i have not. [laughter] >> now that you bring it up. [laughter]

>> people are free to make their own decision. they have each invested a major part of their lives into the campaign. i hope we are able to resolve or nomination process as soon as possible because i would like to focus time and attention on the key battleground states and raising the funds to be somewhat competitive with the president and his billion dollar request. we have a challenging road ahead of us, but i believe we will rise to the occasion. >> governor, thank you for sharing your time and your comments. >> thank you. [applause] ♪

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[crowd murmurs]

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>> still ahead, president obama signing legislation that bans members of congress from buying and selling stocks based on inside information. after that, the head of the

pension and benefit guaranty corp. on preparing for retirement. then, from the council on foreign relations, discussion on the global economic outlook. later, congressional democrats looking into the causes of rising gas prices. >> president obama today's signing the congressional insider-trading bill. what will this stop back to do when it is signed into law? >> that is a great question. the stark fact is basically a reduction very piece of legislation -- a reactionary piece of legislation that followed a pace last year that accused lawmakers of using their position to get rid of stock trade, basically using nonpublic information that every day americans do not have and trading of that information and making a profit. it was basically a p.r. problem, that if anything else.

members want to clarify, we are not doing this, given their approval rating right now. a cam up with this bill to clarify that we are covered under insider-trading bands. it basically is expanded to overhaul financial disclosure forms, not just lawmakers will be affected. it is also employees of the federal government. it basically rewrite some of the whole era of financial disclosure forms. >> it was changed to get a bite from pressure by a majority leader eric cantor. now in the law has broadened into the executive branch in the judicial branch. initially was the senate in favor of that person? >> the original senate version did not -- it included a few

thousand executive branch employees. really the top level people there were appointed by the president, folks running the agency. since then, senator shelby had introduced an amendment that barely passed. got 61 votes, and it needed 60 to expand that number from the several thousand to include more than 300 tickets thousand federal employees. >> the bill intended to clarify the obvious, that these restrictions against insider trading were already in effect. does it add any additional punishment for breaking the law? >> i think it puts more responsibilities on the lawmakers. the version that obama will sign it basically one of the specific things that is not in effect is saying that if lawmakers are

accused of this, not merely accused of found guilty, they will not get retirement benefits from the government if they are found guilty. >> there is a piece that is not in the bill, one of the original sponsors wanted an element in their dealings with the lobbying. can you explain that for us. >> the political intelligence these is basically a provision that was taken out of the bill. it said that folks that come in and be friend staffers and lawmakers and use that friendship to get information about the upcoming bills that might affect certain companies or investors, they use that information and sell it to these people who will pay big money for to keep business up with in coming legislation. basically it said if you are going to do that, you need to register like lobbyists do so we

can make sure we know what information is coming in and out. what happened is, people saw that, some folks said that is a freedom of speech thing. this is a really gray area. we should study this. they ended up taking it out of the bill as simply putting in our requirement for a report on this so-called political intelligence. right now it will not be regulated, it will just be looked into. >> you can follow rachel stories that cq.com. >> citing the stock back today, president obama was joined by of bipartisan group of congressmen.

>> ladies and gentlemen, the president and vice president of the united states. [applause] >> thank you. thank you very much. thank you, everybody. thank you. please, have a seat. good morning, and welcome to the white house. i want to thank mike outstanding vice-president, joe biden, for being here. [applause] we are joined by members of both

parties in congress to help get this bill to my desk. i am very grateful to them. i want to recognize congresswoman slaughter and risk kurt -- wish her a speedy recovery. she broke her leg yesterday, so she cannot be here in person. she first introduced the stock act in 2006. i know how proud she is to see this bill that she championed by leave become law. lately i have been talking a lot about the choices facing this country. we can settle for a country, an economy where a shrinking number of people do exceedingly well, or a growing number struggle to get by, or we can build an economy where everybody gets a fair shot and everybody plays by the same set of rules. that last part, the idea that everybody plays by the same

rules, is one of our most cherished american values. it goes hand in hand with our fundamental belief that hard work to pay off and responsibility should be rewarded. the notion that the powerful should not get to create one set of rules for themselves and another set of rules for everybody else. if we expect that to apply to our biggest corporations and our most successful citizens, it certainly should apply to our elected officials. especially at a time when there is a deficit of trust with the rest of the country. that is why in my state of the union i ask members of the house and senate to send me a bill that banned insider trading by members of congress, and i said i would find it right away. today i am at it say that legislators from both parties have come together to do just that. the stock act makes it clear that if members of congress use nonpublic information to gain an unfair advantage in the market,

they are breaking the law. it creates new disclosure requirements, new measures of accountability and transparency for thousands of federal employees. that is a good and necessary thing. we were sent here to serve the american people and look out for their interests, not our own interests. i am very proud to sign this bill into law. i should say that our work is not done. there is more began due to close the deficit of dress and limit their growth of influence of money in politics. we should make sure people who bundle campaign contributions for congress cannot lobby congress, and vice versa. these are ideas that should garner bipartisan support and they certainly have wide support outside of washington. it is my hope that we can build on today's bipartisan effort to get them done. in the months to come, we will

have plenty of debate over competing visions for this country that we all love. whether or not we invest in the things we need to keep our country safe, grow our economy so it is sustained and lasting, and whether or not we will ask some of our wealthiest americans to pay their fair share, how we make sure that america remains a land of opportunity in upward mobility for all people who are willing to work, those are all debates i am looking forward to having. today i want to thank all the members of congress who came together and worked to get this done. it shows that when an idea is right, we can still accomplish something on behalf of the american people and make our government and our country stronger. thank you very much for your outstanding work. with that, let me sign this bill. [applause]

>> there you go. [applause]

>> the deadline for filing federal income taxes is less than two weeks away. tomorrow afternoon, irs commissioner douglas shulman

talks taxes at the national press club. at 2:00 eastern, also live on c- span, president obama signed legislation designed to make it easier for small companies to sell stock in initial public offerings. in a few moments here on c-span, the head of the pension benefit guaranty corp. on preparing for retirement. then from the council on foreign relations, a discussion on the global economic outlook. after that, congressional democrats looking into the causes of rising gas prices. later, mitt romney speaking to the american society of news editors. the pension benefit guaranty corp. insures private pension plans. the head of the agency spoke today at the national press club in washington about how americans should plan for retirement. this is 40 minutes.

>> good morning. i served on the newsmaker committee here at the national press club. on behalf of the committee and the officers of the national press club, i want to thank all of you for coming out today. i also want to thank the reporters who are joining us on the phone as well as the audience joining us live this morning on c-span. our speaker this morning comic- g, josh gotbaum, will speak for tenor 15 minutes, and after that we will take questions. the press club invited him today because we live in airtime of retirement insecurity. for many, the golden years are

not so golden. 10,000 people will retire every day for nearly the next two decades, but what kind of then, will they have in their retirement years? many baby boomers are without traditional pension plans. an economic downturn and a drop in housing prices has wiped out assets. those lucky enough to have defined benefit pension plans find them under pressure. our speaker today will discuss how we can improve retirement savings for millions of americans, and also the aggressive actions he has been taking at pbgc to preserve pensions for millions of americans fortunate enough to have pension savings.

jos was appointed director by president obama in 2010. he has help manage and buys public, private, nonprofit institutions. for more than a decade of that time, it was an investment banker in new york and london, where he advised businesses, unions, and governments on a diverse range of mergers, acquisitions, and restructurings in steel, transportation, and other industries. during the clinton administration, he held positions at omb, treasurer, and defense. while he was appointed by the president and confirmed by the senate, pbgc is not funded by general tax revenues. it collects insurance premiums from employers that sponsored insurance premium plants and ours money from investments and receives funds from pension plans that taken over.

i am not going to talk anymore about what's pbgc does, i will let you do that. without any further ado, let me turn it over to josh. exxon wants to start by thanking jamie in the club for inviting me to talk this morning about what it takes and what we can do to have a secure retirement. this cannot news that americans are concerned -- it is not news that americans are returned about -- concerned about retirement. they fear they wouldn't have enough to live like they want to live. -- when they retire. but that can be changed, if we act. what does that mean we should do? individuals, people need to save more. businesses can help their

employees by providing plans and by contributing to them. at pbgc and within government, we can do what we always done, to work to strengthen retirement security and provide a safety net. is to encourage and preserve retirement plans barker american companies. when companies can afford their plans, we are a safety net. right now, we are responsible for benefits for almost 1.5 million people. we do it without a dime in tax dollars. we are funded by premiums from pension plans we ensure. but first, we try to reserve plans. people always feel more secure if their plans are intact. our mandate, however, is broader than that. under the law, we are charged

with encouraging voluntary private pension plans. that, frankly, is why i am here today. each and every day, some 10,000 baby boomers reach 65. that used to be thought of as the normal retirement age. but many of them are not retiring, because they cannot. the basis of this challenge is good news. we are living longer, healthier lives. when jfk was president, the average retiree did not live to see their 80th birthday. today, the average retiree will live well into their 80s, and a quarter will reach their 90's. so people are living longer, but that means the retirement will cost more, too. some folks say all it takes this for people to work longer,

for people not to retire so soon. well, people already are working longer. from the mid-1990s to about five years ago, the average retirement age went up by two years. and that was before the market crash. so the fact is, people are working longer, but even though they are working longer, they are living longer still. that means that in the future, retirement is going to cost more, not less. pensions that were enough in the past will not be in the future. half of the people working today don't have an employer provided pension at all. most of those who do have a 401k type plan. those plans have some very real benefits.

they move with you from job to job, and people feel comfortable knowing that have their own savings plan, that it is .here'irs as millions of learned in the last few years, those plans are not guaranteed. if the market drops when you are planning to retire, you are not going to retire when you want, or have a life in retirement that you hope for. there are other issues. with the borrowing k plan, each of us has to figure out how much to set aside, and to get -- guess how much we will need in retirement. it turns out that employees do not do that as well as employers do. people guessed wrong, they don't find out until well after they have retired. there is not a lot they can do about it. that is why we work to preserve traditional defined benefit pension plans. with traditional pension plans,

employees don't have to guess about how much to say. employers figure that out. because traditional pensions offer lifetime in come, steady payments for as long as you live, people don't have to worry about whether they will have an up or whether they will outlive their savings. furthermore, as a person who used to spend some time in finance, i should also point out that traditional pension funds also fund much of our nation's bencher and other entrepreneurial capital. we think traditional pensions are imported. it also turns out there are plenty of -- almost 40 million active workers, and in the corporate plans that we ensure, the vast majority of plans are

still operating. they are not frozen. more than three-quarters of the people in them are still earning benefits. that brings me to american airlines. american airlines is an example of what we do every day. what we are trying to do, working with american airlines, is to preserve both the jobs for 80,000 people who are working and pensions for 130,000 who depend on them. the first priority has to be for american, for the 80,000 people work there and for the millions who are passengers, to succeed. that is the first priority. but plenty of businesses, including other airlines, have managed to reorganize without also terminating their pension plans. american already has lower

pension costs and some of its competitors. pbgc has worked as an active creditor within the bankruptcy process to see whether those plans can be preserved. part of the reason pbgc can do so is that it is a very unusual government agency. speaking as a person who spent most of my life and business, one of the terrific things is that the staff back fully understands business. they can analyze financial statements. and understand business plans, and they work with businesses to see what is possible. sometimes it is clear that companies cannot afford their plans, and in that case, pbgc steps in and pays benefits. other times, we find that companies can restructure successfully and keep their pensions intact. that is what we found at american airlines.

it is never clear that american can do both. it can restructure -- is now clear that america can do both. it can still keep its pensions and pay pensions in the future. american is not alone. there are plenty of other examples. the grocery trained -- grocery chain a&p just came out of bankruptcy in kept its pension benefit. so did a former are parts business of four. last year ,pbgc worked with 19 companies that preserve benefits for more than 74,000 people. that is what we are doing. we think that is important. but the fact is that government does not require pensions. government cannot in short retirement security. everyone has to do their part. as individuals, each of us is

going to have to save more. if retirement lasts longer, if you have an active, healthy life, you have got to save more. most of us cannot just rely on social security and a traditional pension. we've got to say. a good target, if you don't have a traditional pension, is to set aside 10% of income each year. that is easier to say than to do. it is perfectly natural when retirement seems years away, or when times are tough, to put it off and say i will do it next year. it is perfectly natural, but it is mistake. the way to have a life you want tomorrow is to save today. but people don't do that alone.

businesses are critical, too. because businesses set up the plans that make it easier for employees to save, and the vast majority of employers contribute to those plans. that set them up and help fund them. in some cases, those are traditional plans. the employer provides the funds, handles the administration, worries about the investments, guarantees the benefits. in more cases, there are 401k type plans were they both share the cost, and where employees take the risk if there is enough there. one of the things i think is important is that a lot of employers, dissatisfied with either option, are looking for better models. some are looking for 401k type plans that provide a minimum

benefit or a lifetime annuity benefit, or they are looking for a hybrid type, traditional defined benefit plan where the investment risk is shared with the employee. all of these efforts are important. businesses are better able than individuals to figure out retirement plans. i have worked in finance for more than a decade. i have a variety of certifications from the national association of securities dealers, but i don't pretend that i have the time or the expertise to set up for retirement plan. employers do that, and that is why it matters that they do. every time a business says you are on your own, fewer people get a secure retirement. fortunately, most businesses to offer retirement plans. two-thirds of american workers today have access to some sort

of an employer provided plan. not to hit a point to hart, american airlines is an example here, too. american is a company that is working both to succeed and to provide retirement security for 130,000 americans and their families. what does government do? government does not require retirement plans, but it does encourage them. it sets minimum standards. if a business promises of pension, it should deliver on that commitment. if a business gets tax benefits for its pension, it should help all employees, not just senior management. governments that sent to make sure those things happen. government encourages both existing plants and new approaches.

it provides tax incentives for employers to offer plans that set them up, and i think this is important, government is making changes to take into account the fact that people are living longer. so that the standards that are applied to pension plans recognize the reality that people are living longer. similarly, government can and is making changes to ensure that employers have options, that they have options within the traditional model and options within at the 401k model. and of course, i should mention that government does plan rejigger by safety net it plans fail. i started talking about baby boomers today, partly because i

am one, but retirement security is not only a concern of baby boomers. last year, the gallup asked people age 30-50, people who are decades away from retirement, about whether they were concerned, whether they were worried about retirement. more than three-quarters of them are. i am a baby boomer and also a singer. in my youth, i saw the who perform, and one of the iconic songs is "my generation." there is a line that says "i hope i die before i get old." a few years ago, the rapper

will.i.am, who is not a baby boomer, rewrote the words for a commercial. die, i "i don't want to want to get old." i don't think there is a generational divide on this. i think we all care about having a decent life when we can no longer work. and can have it, if we as individuals save more. if business continues to provide both lands and funding, and we in the government continue to provide support, standards, and a safety net for those needs. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> will now open it up to questions. if i could ask you to identify yourself, your name and your news organization, please. >> what exactly is pbgc doing to promote pension plans or hybrid plans? is there some kind of program or a dramatic effort to do that? >> i am not sure everybody could hear that question. if you could basically summarize the question, too. >> the question is what is pbgc doing to encourage pension plans? one thing i should be clear on is, the agency's mandate from the day it was created is to encourage voluntary private pension plans.

we take our job as trying to do several things. one is to preserve the plans that are already there. that is why we work with companies like american and others to see if plans can be preserved. two is to try to make sure that we don't accidentally, or that government does not accidentally make it harder for employers to offer pension plans. this requires thinking through how do you regulate, how do you set your standards? we do that. third, to clear the air that there is general goodwill and a

desire on the part of everyone to have good retirement plan. so one of the things that happens when you are in an agency that focuses on plans when companies get in trouble is, you tend to think, well, is everyone trying to stop their pension plan? the answer is no. i think that is really important. the vast majority of companies in america are offering pension plans to their employees. the vast majority of companies are contributing to those plants. we think is so important to recognize that and to encourage that. any other questions in the room? >> i would like you to talk a little bit more about the

impact of defined benefit plans on the capital market and what the government can do to support that. >> as i mentioned, one of the roles of traditional pension plans that is not widely trumpeted, but is important, is that pension plans, in addition to being a professional about setting up benefits and figuring out how to pay people, pension plans are also professional investors. that means that pension plans were among the first people when a new class of folks, call them venture capitalist, went looking around for funds. pynchon funds were the place where there were sophisticated

enough investors to say we will provide capital so you can create a venture capital industry. the same is true with what became the private equity industry. it did not start as a private equity industry. so the way i look at it is, because pension-fund create a group of professional, serious investors, create and knowledgeable group that can, in fact, innovate investments. some of those innovations in not work. that is what the capital markets are about. but what i think is important is that pension funds provide, and equally important, is that because pension funds are sophisticated, they can watch their investments. that can provide oversight that

i know you worry about. from my perspective, an entirely separate benefit to us as a society is that in traditional pension plans, we have a group of knowledgeable concerned, smart folks to participate in the capital markets in a way that is not random and is not fly by night. >> i want to also remind reporters that might be listing on the phone, please feel free to follow the instructions and ask a question. >> [unintelligible] to what extent are you -- what does it have to do with longevity risk? interest rates will surely come

up at some point. are you factoring in longevity risk? >> the question is, when we think about what the right premiums ought to be among should we take longevity, the fact that people are living longer, into account? the answer is, of course we should. our view of the role of pbgc, which is how the law created it, is that it is intended to be an organization that provides a safety net without using taxpayer dollars. that means that the premiums we charge have to cover the benefits we pay. historically, those premiums are set by law, and frankly that have lagged what they need to be. from time to time, the congress

of the united states has recognized this and acted and raised those premiums. we have gone to the congress and said rather than waiting until you do pension legislation, and rather than doing it in away that everybody pays the same, why don't we do it on a more businesslike basis and figure out which rates apply to which people? the way our system works right now is that there is a fundamental unfairness in it. let's put aside pensions and talk about bottle insurance. you are required to have auto insurance, and you get a break -- talk about ro insurance. you get a rate based on what your record and your situation is. suppose you got a note from your insurance company, because your neighbor had three accidents

last month, your rates are going up. it would be ticked. that is the way our premiums are set. right now, the people who pay your premiums know that their rates were raised because of the actions of other companies, not themselves. we are trying to change that. we have started the discussion with congress. i hope that when there is pension legislation the future, they will take that into account. we think the result will be a better, more fair system. >> i want to use the discretion of the chair to ask a question myself. you alluded to american airlines, and you have been in the headlines a lot for a very aggressive stance that you have taken. is this typical of what you do with companies, or is american a special case? they certainly reacted like they were a special case, when you

put liens on their foreign properties and took other actions. can you explain how american fits into the picture, enforcement and actions you take against companies? >> sure, happy to do it. the fact is that what pbgc did at american is what we have done for decades. when a company is in bankruptcy, the job of the pbgc is to engage. it has done so for decades as a creditor. one of the things i like and admire about the agency is that the people in it, the financial analyst, the lawyers, the actuaries are terrific and professional, and they are experienced. what happened when american filed is that pbgc used the talented staff that has come late use the tools that the log

at 37 years ago to protect pensions. that is why we are there. we are there to make sure obviously that the company survives, but also that if at all possible, the pension can as well. as i mentioned, there are plenty of other cases where we do that, and we conclude that companies cannot afford their plans. if we were in different economic times, perhaps, and certainly when there were differing economic times, we came to a different conclusion. in that case, we took the plan. but my view of this is that we are doing the process, protecting the pensions, we hope providing peace of mind to 130,000 people, in a way that preserves the jobs.

that is something pbgc has done for decades, perhaps unnoticed. >> thank you so much for being so optimistic. i wish i could say the same. back in 1985, there were over 25,000 plants. today there are fewer than 10,000. they have been saying that in recent years, interest rates are the culprit for the death of these pension plans. now that we have seen attacks in california, new york, in about

20 states, there is legislation either actively or under consideration to convert the plants into some kind of defined contribution plan. what are you doing to encourage them to look beyond the insured corporate and private pension plan to create some kind of public-private partnership that will encourage more retirement security for the vast majority of americans? >> what we are doing is trying first to preserve the plans we have, and i will talk about that in a second, but also to try to

encourage options so that employers and employees can work out plans that work for them. let me first talk about preserving the plans we have, because i have been at the pbgc for a year-and-a-half, and i am always reminded of mark twain's remark about "the rumors of my death have been exaggerated." is absolutely true that the number of plans offered of the traditional defined benefit kind has declined in the last 30 years. it is also true that the number of people covered by those plans has increased, not decrease. there are more people covered by defined benefit plans today than there were 30 years ago. does that mean that a lot of folks are not using other ways to provide retirement security?

no, but from my perspective, it is important to preserve the plans we have. we think that traditional pension plans for people better, and we are doing that. this is where i think it is important to recognize the realities. it is also important to offer alternatives, so that as circumstances change, as companies change, as lifestyles change, we still have those kinds of plants. i have mentioned that before, but i will say it again because i think it is quite important. most people know that there is the traditional pension model and there is what has now become the traditional 401k plan. the traditional penchant model is the employer does everything, takes care of everything, and pays for everything. the traditional 401k model is

the employer writes a check and then you are on your own. not just government, not just employees, but employers recognize that is not satisfactory. so there have been efforts that government has tried to facilitate to modify and offer options on both models to serve people better. for example, i colleagues within the administration have worked very hard to make it possible within what i used to call the traditional defined contribution model to offer people a chance to have real lifetime income, so that the employer makes a contribution but the employee can, with a contribution, get something that

offers lifetime income. that is happening now. i think it is very important. i think it will, by offering new possibilities, it will give people new possibilities for retirement. i will mention one more. a lot of employers, when they first began to worry about the fact that they were taking responsibility for everything, tried to, within a traditional framework, pass a risk to the there were lots of difficulties. there were questions about whether they were fair and about whether they were lawful etc.. what has happened is we are now realizing, and congress passed a lot five years ago or six years ago, saying hybrids' ought to be allowed. what is happening now is that

within the government we are working did to set up a set of rules that are clear enough so that businesses can decide whether or not they want to use these options. this is a long winded answer but i think it is important. we are not going to enhance retirement security by sticking to the old models. what we need to do is provide options so that case by case employer and employee, they have choices. that is where we are doing. i think that is actually an important part of the future. >> that might be a good note to end down. i am sorry all the reporters who had on the phone were too shy to speak up. before we go i just want to give a note about a couple of

other events the club has going down. our speaker later today. this friday at 10:00 we will have another newsmaker. it will be a panel discussion on nuclear security. for today i want to thank you for joining us and thank you for coming. for those watching thank you as well. [applause] [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> coming up, discussions from the council on foreign relations about the global economic outlook. congressional democrats looking into the causes of poor rising gas prices. -- the causes of rising gas prices. president obama signing

legislation that bans members of congress from buying and selling stocks based on inside information. the deadline for filing federal income taxes is less than two weeks away. tomorrow afternoondouglas shulman talks taxes at the national press club. at 2:00, also live on c-span, president obama signing legislation designed to make it easier for small companies to sell stocks in initial public offerings. >> this saturday on c-span 2's book tv, join our call-in program with chris kyle as he talks about his life from professional rodeo rider to becoming the most lethal sniper

in u.s. military history. >> if you think about yourself as a family and a team and she says, when i get a race at work it is proud of me. our family got a raise. i felt she had a lot of respect for what her husband was doing. "the richer sex" author on how it impacts their lives. also this weekend, america the beautiful. ben carson compares empires the past with america and what should be done to avoid a similar fate. >> the council on foreign relations held a discussion today and where the global economy is heading. they talk about the u.s. economic recovery, you're opposed the debt problem, and

china's expanding economy. from new york city, this is about one hour. >> i think i have been sharing this for a little over two years. at somebody comes up and says, why do you depress me so much? i say i am just the messenger. i intend to be a better -- a better messenger this time. i am hoping the rest of this panel will be more optimistic than i just was. it is a very veteran view on this stage. next to me here is joyce chang

from jp morgan, and here is vincent reinhart. last time he came to speak here he managed to invoke "rebel without a cause." you better not let us down. we want the follow up. just a couple of housekeeping points. remember to turn things that go "bleep" off. i think we have c-span here so we care a lot about the sound system today. this is on the record. keep that in mind. let's start with the eurozone.

it is still the most turbulent part of the global economy. they seem to have stabilized things. we had the announcement of a new firewall agreement. are we out of the acute phase of this crisis in europe? >> the acute phase of the crisis that i would describe as liquidity, i think we are out. but the chronic phase which is the economic adjustment, we are embarking on that a very long road. we are forecasting a recession of 1.5% contraction in the economy this quarter. if you look at the fire wall, that is not what will move the market. ltro moved the market. if you look at where european central bank balance sheet is as a balance sheet -- with gdp,

it is in line with japan. the systemic liquidity issues have been addressed through ltro, not the fire wall or other actions. but the chronic painful adjustment -- take a look at spain. 23% unemployment. the chronic phase is going to extend for a long time. the debt-burdened -- the public sector debt burden increase by 23 percentage points. >> since we have three countries in europe so far that have had formal support programs, how long before he thinks in different. -- how long before spain gets one, too. >> that depends on the willingness of leaders of the rich countries to continue to send resources to keep the

enterprise on going. i worry about the chronic aspect. we have a continent in which a large number of countries will be shrinking as part of fiscal consolidation. the core rich countries expect to have export-led growth. it is not obvious to me who they will be selling to. if we get past the funding stage, we do believe the rule will appreciate and it will not be selling to the rest of the world either. -- the euro will appreciate. the chronic aspect of it is going to be, what do people see the benefit of keeping the exercise on going? back to the immediate question, it is an exercise program the imf used to do in the 1960's. what do they have to roll over, how much can the contract? the answer is it will -- it depends on the market aspect how wide it spreads.

>> there are crunching of the fiscal deficit every time they do that. they drive more people out of work. then they have a worse deficit. >> think about the death ratio, on the bottom is the real cost of borrowing and real growth. when you try to consolidate you do not do anything good to real growth. you often make the sustainability problem even worse. the only moving part there is the real cost of borrowing. what we are seeing is increasingly they will use their domestic financial institutions as the repository of the debt they cannot sell. in some sense, the answer to your question is, how much more room is there to impose on the european financial system before -- 7 forced ownership in

a debt-free country. -- semi forced ownership in countries. >> even that would not solve the risk problem. greece on the other hand is a great story. it is completely in compliance with their program. that is because the program has only been there for 10 minutes. >> i think you highlight the important question. i agree with the way they characterized as with the ltros, the fact that the ecb is willing to use their balance sheet that way. i ultimately it depends on greece and particular being an agreement with the europeans for continued funding. there is a fundamental issue of the greeks have to make a commitment that the rest of europe is willing to fund. they do not have a surplus up as. . -- surplus at this point.

as long as that is the case you run the risk that if the question breaks down, we are going to be back in a bore key phase. we have a great election coming up and that will be difficult. -- a greek election coming up and that will be difficult. there is the rest will go back to a world where you see the potential of a breakdown and greece ability to stay in the eurozone becomes an issue. i very much agree we are in a different world. one where growth issues are the predominant ones. detail risks are very much there. we still have, how will we deal with portugal? you look at the numbers on that and one can raise questions on that. then all of the broader financial questions are on the table. >> the portuguese spanish integration -- >> those are all complicating factors. those things can make the ecb's problem worse.

i think we are in a different phase and things are going better. detail risks are out there. >> would -- the tale at risks are out there. >> you have one camp that is doom and gloom, and an optimistic camp. their thesis is muddle through. if you only can put models through as optimistic scenario, if you muddle along a tight rope, you will wind up falling off. >> i think it is inherently a risky path. while one can imagining working in some sense, it does not take large deviations to put you over the edge. i think that is the problem that people in markets have to face. the europeans have successfully managed to walk that so far. each time we have come close to the edge, we came very close to

a destructive breakup. people kind of pulled back. i think there is a very strong incentive for the system to continue to manage in that way. it is difficult. it is dangerous for the system to be on edge. i think it is a drag on global growth in the sense that everybody looks at downside risk in europe as something you have to filter in. that affects your decisions. i think at the moment one of the reasons things are looking better in the united states is the downside risk we were facing last fall with the imminent crisis in europe has faded a bit. that is part of what has gone people more optimistic. i think it is an important aspect of how you look at a going forward. >> three years from now, will

there be 70 members of the eurozone, 16 or fewer? >> i think your. -- 17 members of the eurozone or fewer. >> i think there will be the same. >> keyword. >> we have -- fewer. >> let's talk about the united states. you have been arguing in the month or two before that the chances of qe3 were high. heavy changed your mind? >> certainly. you have to respond to what they say. they are an open and transparent fed and they're telling you something that matters. we were thinking there would be a 2% or 3% chance in the first

half. we have a forecast where the economy grows at trend. we have been above trend and we come back to trend, that is the second part. the third part is there is an election coming and they would not to want to stamp act during the campaign season. what the fed told us was that policy makers would be willing to act if there was evidence of a cooling in economic growth. they are not in the mode to buy insurance in advance of that. our forecast is one out of three chance the want to buy insurance, one out of three chance that given our forecast of growth they have enough reason to act. we're down to one of three now. >> are they making a mistake?

we still have an economy operating way below capacity. your perk -- your projection is inflation is leveling off. you have a low capacity. it is not just politics. >> they admit there is a lot of resource slack. they assert that the temporary increase and inflation -- the increase and inflation is only temporary. expectations are well anchored. they are short of both of their goals. the real risk is a two out of three chance they do not act. in that case it is possible it was just a growth spurt, we will see the economy come back to trend, and it will be through

july or august when the come to appreciate that and be hesitant to act immediately in the heat of the election season. i think it could prove to be a mistake. in 2010 they waited probably too long to nurture the green shoots. the only mark on qe2 in november. it started to accumulate as early as spring. >> i want to come to joyce for the international aspect of this monetary stunt in the u.s. part of this is the discrepancy between the employment data which has been fairly strong and gdp data has been less strong. how do you see that conundrum? >> that is an important aspect of how you look -- the chairman stresses and his statements, and that is part of what the fed is struggling with. when you look at it over the past four quarters you have gdp growing 1.5%. you have had the unemployment

rate coming down a full percentage point. the fed has been clear they do not expect that to continue. what has driven that is two things. it is the combination of relatively low productivity growth and labor participation. a combination of low productivity growth and an exit of the labor force. the fed has argued that those trends are not likely to continue. consequently, i think the pace of improvement in labor market is likely to slow. i think the other problem they have is financial conditions. you saw in the way the market reacted to the minutes yesterday essentially there conundrum, if you like, that if they make it clear that they are not going to do qe, there is a chance that rates will rise, according spreads will fall, and

credit spreads will widen, and there will in some sense engender a tightening of financial conditions that they do not want. one of the things all the policy leaders have been pretty clear on is that they believe at this moment we need to have continued very accommodative policies, and the market's own reaction to what they do can create a situation we do not want. the one aspect in addition to the way that vince characterize it is that you actually get into one of these on the backs were in anticipation of the not going, markets start to sell off, and you get an effect of tightening of financial conditions, which then undermines things. i think that is one of the trickiest challenges they face. be prepared because of that for confused communication. right now, they have embarked on

two sets of on conventional policy. what is the ongoing balance operation in the second is managing expectations by offering the assurance that rates would stay low through 2014. markets are contesting that view. they have priced in a tightening before like 2014. fed officials will have to protest that, and how do you protest that? you emphasize how much slack there is, how much room for the economy to expand, how well inflation is contained. when you hear that, do not assume they are signaling they will do qe. they are defending what they have already done. >> it is an interesting conundrum about the way banks function. if we communicate more clearly, more extensively, more openly, then the markets would get exactly what we want to do, so there would be none of these this communications. lo and behold, they do that, and we are still talking about potential miscommunication. i want to come to joyce and ask -- if there is a sustained

recovery that the fed appears to be wanting to believe in now, what that means for emerging markets, emerging-market currencies, and the global outlook. >> much of the story has been a dollar weakening story. you have seen in recent weeks a pullback in a lot of the currencies. the question is are we at the turning point right now? particularly when you look at the " prospects for europe. the message has been no further asset purchases by the fed, but we want the zero interest rate policy to continue through 2014. the central banks of large have signaled that. that still made emerging-market is pretty attractive place to be, just given how low yields are. peripheral europe at the beginning of the year was at 7%. it is now down at 5%. emerging markets are at 6%, a for your time is the growth. china alone is 50% of the contribution to global growth.

for capital flows into emerging markets, it is still a pretty robust picture, given where interest rates are likely to stay for the foreseeable future. the question for the currencies, though, is are you through with the currency appreciation trend, particularly in asia where rates are very low. are you looking at a scenario where rates have to go up? if you look at what central banks have done -- $6 trillion balance sheet -- you have to be looking at a time when we're looking at higher rates and higher volatility. emerging markets looks like an attractive place to be, but the differential is only widening. you're getting paid more for being in emerging markets. >> do you think that in terms of

the way the global system is perceived to operate, the wave of dissatisfaction we have had out of emerging markets will continue? just to recap, i would say that the first shock comes in 2008 when china holds vast amounts of dollar assets and suddenly realizes u.s. capital markets are not the safe, and the talk about dollar hegemony, and they want to change that. do you think that as things go forward, we will see more dissatisfaction about the way the system works? >> i think you are seeing that the satisfaction, but until you see countries like china make deeper progress on currency convertibility, interest rates,

where else can they go, right? it is one thing to talk about the opportunity in the emerging markets, but you have a lot of distortion as far as macro controls and the size and liquidity of these markets. i think there is growing dissatisfaction, but emerging markets are still in many ways going to proceed slowly on how they manage the capital inflows. we are still in an environment where there are not that many investable assets for just the size of the reserves we are talking about. emerging markets now that 80% of the global foreign-exchange reserves, and we continue to invest most of that, just given the size of the markets. >> you argued that the level of distortion around capital controls in emerging-market are converging in a way. >> it is a couple of things.

the first is expect more capital controls on average. in 2009, have the economy -- the economy's -- half the economies in were in financial crisis. in the emerging markets, it was the man shop. you snap back, you grow more slowly as a consequence. -- it was demand shock. that implies that emerging market economies are going to be dissatisfied with the very accommodative monetary policies in the advanced economies and therefore going to want to reclaim a measure of independence. the way you do that is put on capital controls.

but they are starting from a very uneven pace. that gives china the opportunity to liberalize at its own pace, but brazil and more globalized economy is, to tighten at their own pace, converge in the middle. on average, there will be more. that let's ask another question here about global governance. you have got, on the one hand, the u.s. posting a new president of the world bank, and some commentators observing that the nigerian candidate seems to be much better qualified. you have a fight going on about imf resources with europeans hoping the emerging markets will kick more money in to match what they have promised. how do you see that part of the governance of the global economic system devolving? >> in some ways, if you look back over the last several years, i would argue the g-20 has been a success. the evolution we have seen from the g-7 back in the 1990's up until where we are now, i think there is some real momentum. for example, the committee that

was made in seoul at the g-20 summit i think was a good thing, but if you look at what happened with europe and what is going on here, it has taken a bit of the steam out of the momentum, and i think that is something to be concerned about. i think about the situation in the u.s.. one of the things that is interesting is i have been looking at polling data on what kind of priorities voters have. one of the priorities is less money for foreign aid. if you translate that to what is on the agenda, that is a material issue. >> for the imf, you mean. >> yes. the g-20 essentially made a committed to try to complete the change in governance of the fund by september of this year. frankly, the chances of getting that through the u.s. political system this year at slim to none of your frankly, if you were to try, it would fail, and

you would have to take a step back. i think about the risk in some sense when i look at all those things, of the u.s. taking a step back, frankly, from being part, global governance being a real risk. sometimes the debate over the world bank, i think, raises some real issues. i have personally felt for a long time that we ought to open these things up, but i think there is a bit of a risk, just from the u.s. perspective, that if we kind of take less of a leading role in these things, that our overall commitment to the process goes away. the same time, you see what is going on in europe where they are, in some sense understandably, obsessed with

their own problems. that in of itself has also taken some of the emphasis away from the global governance side of things. at the same time, there's obviously a bit of a reticence on the part of the chinese to sort of step into the breach. it feels in contrast to what it felt like 92008 where i think there was, sort of, legitimate -- there was a real commitment to this. it added to the policy response. you get a bit of a sense of things kind of pulling apart in a way that i think is problematic. the realities of an election year in the united states are what they are. i think it would be a mistake to try to push this agenda now. you would get an answer you do not want. but it does raise risks about where we're going. >> reaching up to the audience and to the members in the second because there's a lot of talent in the room. we want to get questions. but let me pose one last thing to all of you, maybe starting

with joyce. is there a crisis over the horizon that we have not talked about, that we have not focused on? is it turkey or some other economy running some kind of deficit that will be in trouble? anything you worry about with oil prices spiking in iran -- what is your risks set? looking out six months or 12 months? >> looking out six months or 12 months, i do not think it is an emerging markets crisis. even though you have a country like turkey that is more vulnerable to higher commodity prices that has a current account deficit, but does not have a funding problem. it has a pretty good domestic industrial base. i think the situation is manageable.

the higher commodity prices on the whole are actually benefits to emerging markets a bit more. i think near term, the crisis still comes back to europe. have we graduated from the queue to chronic? is it really that greece was a kicking the can down the road restructuring? that an exit from the eurozone is something that gets more debate over the next six to 12 months, and then it comes back to europe? the big surprise last year was not europe. it was the u.s. ratings downgrade. that is what started the sell- off last year. we are getting into a u.s. cycle again. another debate about the u.s. debt ceiling. i think the markets will continue to focus on china just because there's not as much information available. and because there are more questions about how we are finally seeing a shift in growth in china from 11.5% to 8.5%, which in my opinion is not a hard landing. they talked about that for a long time. now it is actually happening, but everybody is worried about it. that does pose some uncertainty over the medium term. >> any date of the rising shock you want to predict? >> december 31. on december 31, an unstoppable force meets an immovable object. adverse the dynamics and a legislative sudden stop on the equivalent of 4.5% contraction in gdp and run the same time we're talking about the debt ceiling.

>> and the ability of the u.s. political class to reach sensible compromise is not as robust -- >> not proven, yes. [laughter] >> i very much agree that that is the frame of risk. i just want to put something on the other side, which is i think there is an upside to the u.s., as well, which is if you get an electoral outcome that allows you to do things, i think we are lining up to do some fairly major things that are positive. in addition to some long run fiscal deal, i would point out that just in the last couple of weeks, there have been a bunch of plans that have been put out on the fiscal side. the differences in his plans is

not really about stabilizing debt. they all do that. the difference is in the vision of government that you have. so i think if you get a clear outcome from the election on one side of the other, there's the potential for " doing a big fiscal deal, but that would include things like we are getting ready to do a major tax reform, which is i think potentially a very positive thing for the economy. i think we are lining up to the mortgage finance reform. i think if you get an outcome to the election that essentially puts gridlock to the site, there are very positive outcomes that could come of it. you look at the polls and ask yourself the question of how likely that political outcome is, and it is clearly not the most likely outcome. partly, as it think about how we think about the second half of the year, it will just be very complicated. there are very negative outcomes that are possible, and i would argue there are actual positive outcomes that are possible, and it will depend on the complicated interactions and what will get out of the election. >> in some sense, the good news is we are so efficient in delivery of fiscal policy that there is no single direction we have to go. that is it is about taxes,

appropriations process, entitlements, the wii budget, the lack of rules. you could actually contest the election on two different views of how big the government should be, opportunity compared to safety, marginal structure, tax rates. two different views, contest the election, and whoever wins but it in place. the problem is if we do not contest the election on those issues, then it is difficult to put it in place after the fact. >> i agree with that. >> sounds like you are on a parliamentary system, and that is very dangerous. >> one of the things we are shaping up for -- i think the choices will be much clearer this time than they are normally. republicans, to their credit, have put on the table a credible budget plan that is in full detail and is very severe. it is not the plan i would

choose, but it is a very clear vision for how you get fiscal consolidation. i think the democrats have a very different vision of how you approach the same problem. in some sense, i think you will have very clear choices presented to the electorate. it is an election. it is complicated. these are not issues that are easy for people to understand. one of the things that jumps out at the polling results on this is it is interesting that there is consensus in the electorate across the political spectrum in some areas that is encouraging. for example, you ask people, both republicans and democrats, if it would be willing to raise taxes -- do they think it is a good idea to raise taxes on people who think more than -- who make more than $250,000, and the answer is a majority yes. even among republicans. i think that is encouraging. looking at some categories of spending and asking if they are areas we should cut, you see some areas of consensus. on the spending side, it tends to be in relatively narrow areas. getting out of afghanistan, farm subsidies, foreign aid. unfortunately, that is not going to do it.

one of the places a little more troubling when you ask about medicare or social security, you tend to get majority on both sides not for less but for more. 21% of republican voters would support cutting medicare. 24% would support spending more, which puts the republican plan in an interesting context. look, when you look at those numbers and ask the question if the election were held today, would you get a sensible response from the electorate on the fiscal challenges we face, i think the answer is probably no. >> both of you seem to be saying the chances of a bipartisan solution look incredibly slim. the electorate may not force this issue. -- the electorate may force this issue.

there is not necessarily a drop dead date. if it can be postponed, will it be postponed? >> i think the odds of a bipartisan solution, unfortunately, given the political alignment, is low. to me, the good outcome for policy is a sweet, either way. all republicans, all democrats. that is the clearest way in my mind for where you will get progress on all these things. we get the most likely outcome, which seems today to be the president is reelected, republicans take control of the senate and retained control of the house -- that is problematic. that is the outcome where i am much less confident that we get, you know, progress. i personally think we will -- the problem at the beginning of the year will be handled in some way, but it is likely to be messy and noisy and have adverse effects to the market. an s&p downgrade seems possible, another one.

fitch downgrade. >> you'll be happy to note that this reminds me of my second favorite quotation from kafka, which is from "the country doctor, which is, "writing prescriptions is easy. dealing with people as hard." >> let's go to questions. i see one right in the aisle there. >> a little twist on the question you asked. there is some discussion among economic, democratic elites that is sort of a hopeful discussion on our economy. i am interested in the reaction of the panelists to it.

for one, the gdp growth is -- has been inconsistent with the employment numbers. typically, the gdp numbers are less reliable than the employment numbers. we have had a lot of revisions there. admittedly, on the downside, since 2008. the national income accounts, which should be about where gdp is, are a good bit higher than gdp. putting these facts together, the hopeful democrats say this is probably a pretty good indication that gdp growth has been stronger than we have seen reported and that we believe. i would like some reaction. >> are we richer than we thought? >> if you look at gross domestic income, it has increased faster

than gross domestic product over the last year. we have seen some revisions. problem is that the spread between the two does the very a lot over time and can reverse itself, so it is tough to know. it is true, for instance, we got more household employment in the last month than payroll gains. there is clearly a possibility of a break out on the high said. hiring needs to income, in from the sales, sales leads to sales expectations. all that is on non-financial firms. but our work backwards. and hope is a strategy. but when my optimism flutters upwards, i think that the world is a risky place.

we have an ongoing sovran crisis and banking crisis in europe. the possibility of elevated energy prices and a fiscal cliff coming. those are not the baseline outcomes, but those sales to potential outcomes are reasons investors should not have convictions, and if investors do not have convictions, you did not get the wealth creation the polls and economy of relative to trend. >> i think you are all too complacent about europe. seems to me that the european central bank has changed its spots totally from focusing on inflation to focusing on shoring up the banking system and keeping the economy afloat. that is likely to continue for three years or so, but three years from now, is there not a very strong possibility of a break up?

none of these countries are going to be able to make the fiscal changes necessary. growth is going to be slow or negative. you will not be able to implement the austerity with the work rules that exist there. consequently, three years from now, the ecb will run out of money, and europe's structural problems will still in door. am i too pessimistic? that even the next three years, i think, are pretty pessimistic. looking at spain and italy, they have a hundred billion dollars of gross sovran funding. the next three years are hard. it could be about a breakup of europe, or it could be you have weaker europe and stronger europe, which is the equivalent of a break up. it is very clear that the fiscal path cannot be held amongst all the countries.

i think that the focus will be less on the grease/portugal than on the italy and spain and what happens with those two -- less on the gree/ce to go -- greece/portugal. >> in some sense, he is asking if this superman bank in an act that is going to be revealed to be a cartoon. you have a million debates in europe. one fine day in december, the central bank says, "you know what? we would just print $500 billion in one day and do it again in february. >> i would distinguish -- i would follow that in the following way -- the central bank can provide liquidity, and liquidity is very important in the funding situation, and that is the contribution they have made.

that was obviously an issue in terms of the response to -- if you go back to where we were a year ago, there was this perception that sovereign risk in the eurozone was limited and concentrated. essentially what we went through was an adjustment to the world that they're serious sovereign adjustment, and that generated pressures that the ecb could respond to perak what they cannot respond to is the fundamental question is that there are fiscal imbalances that need to be funded. it fundamentally depends on the political relationship between the countries that need the funding and essentially the european institutions willingness to provide it. there is a political set of challenges. you think about it between greece and germany. greeks have to commit to doing certain things, right, in order to make it politically feasible for the germans to fund then. as long as they can find a

balance between the greek willingness to make commitments and, to some degree, actually deliver on them, in a way that is consistent with the political constraints on germany on providing the funding, this thing can go on. as somebody who has watched european integration from this side of the atlantic for decades, i am always struck by we tend to underestimate the commitment of the europeans to that process. i fully agree with you the there are risks in parts of this that are likely to continue. my response to sebastian's question was fewer than 15 down the road. is that too often? i do not know, but there are very big challenges. i think there are risks of accidents along the way. i do not think the ecb -- i mean, i think the ecb has done what it can do, but i do not think it ultimately faces a problem in the same way that they tend to think that is perfectly able to exit from its current situation and that will all be manageable in a reasonable way. i did not see that as the core problem. there is a different problem

that is very tough to manage. monetary policy can be a bridge, but it has to be a bridge to somewhere. >> if there is not the fiscal consolidation, there is nowhere to go to. before we give the ecb high marks on everything, their attitude towards private sector involvement has been on helpful because they have put themselves -- essentially, they have said that they do not participate in a hair cut in the greek arrangement, but what that means is when they buy sovereign debt, it actually places itself senior to everyone else, so it does not remove sovereign credit risks in its open market operations. that then raises the question -- in a sovereign crisis in the future, what exactly will the ecb do?

>> question right over here. question for joyce >> -- >> question for joyce. i was struck by your comment on what countries are willing to do. having traveled to asia, a guest we share a lot of they seem very willing to allow for the depreciation. i guess the question i have is what would you look at as a signal that they are allowing the euro-dollar to depreciate more substantially to allow both regions to grow their way out of their problems through exports, which is kind of what both need and can help them rebalance, but given their unwillingness, there has got to be something that you might be looking for as some sort of policy change or some sort of economic change that would signal greater willingness. >> i did not see the greater willingness. i think that there are emerging markets willing to look at more unorthodox policy mix is because they have their own domestic

agenda. >> you mean unorthodox mixes in order to prevent depreciation of the currency? >> yes. we have seen that across the board in the number of countries, particularly in some of the commodity-supporting countries, that they have had appreciation pressures, but i go back to the point about the g- 20. how will you get this kind of coordination with emerging markets countries and developed countries? emerging market countries, we still have such a big income differential. to try to convince emerging market countries where you have a standard of living, which they are still trying to bring up to provide resources for a bigger firewall for countries that have 35,000 or $40,000 per capita

income. i think emerging market countries -- now, it is about their own domestic self interests. they have a deeper domestic investor base. i am not sure that you get a catalyst that comes out of some local policy coordination that will result in an agreement that will work. it seems to me you had an agreement in 2008 or 2009 that is more effective than it has become now. convincing for countries to bailout richer countries is just something that is politically very difficult. going back to the politics in all of these countries when we talk about europe and the u.s. imaging markets has its own set of politics as well. >> sounds like the climate change debate the bit where rich countries say that they are growing emissions faster, and the emerging markets say that they still emit more. >> i wonder if you could comment on china. there's two schools of thought,

one that they are in trouble, show that is showing up in the currency and a strengthening. china recently raised its quota on bank lending and yesterday raised its quota on foreign investment in china. is it headed in the right direction or still headed for a harder landing? thanks. >> china is a very opaque economy. the line between the public and private-sector is extremely interesting -- indistinct, but that means there's a lot of policy to keep demand growing quickly, and our own forecast is they will succeed in that period that they can shift, essentially, credit bank capital and get some infrastructure building out of the private sector.

if anything, growth is going to be very well-maintained in china. >> ok. do you have a question here? >> if sarkozy is not reelected, will there be a spillover to the rest of europe? >> that is a great question because it relates to the german fiscal situation where there is also pressure from the

opposition on merkel to change her stance on austerity compared to growth. seems like in france and germany, two core economies', you could get political shifts. >> i will not pretend to be an expert on french politics. >> i did not ask you about the end of the election in spain, come on. [laughter] >> i think the german situation is a complicated one in the sense that i think there is actually more support in europe outside of the government then within the government, and there is this problem within the german government that it is a relatively narrow base taking the most hawkish position. merkel, unfortunately, is in the position of trying to lead a coalition that has that as a base, and it is a tough challenge for her to walk that line. i think having a partner in france who she could work with was very important. my guess is they will continue to find a way to do that, but it will make things harder, i think, for them to manage going forward. my impression is that the french, as the way they see these problems, is ultimately

consistent with solving the issues in europe regardless of which side wins on the election, so i'm not sure it is a long- term issue, but it will make what is already a difficult process harder, at least for a while. >> one thing to come out of these political shifts in europe could be a transactions tax, right? the german opposition is saying that is their condition for supporting what merkel wants. is that something you're clients worry about? >> most feel that is probably something they will avoid at the last moment or that for one country to do that unilaterally is probably unlikely to happen. all sides are actually worried about the amount of regulatory arbitrage that could occur, so there has been questions about the pace of which the u.s. is moving compared to europe, and that is where we have seen more delays and more postponement, even though these become political issues. i do not think that has come up as a burning issue more immediately, but i would say that all of the peripheral

governments have been overthrown, and belgium as well, so if you look at the trend in europe, a mean, look at all the periphery, and question on france, it is -- i think the risk still does come back to political happen is, given the kind of adjustment that needs to occur in europe. >> the question is is transfer free or core, and let's go to the question right here. >> what oil price or energy price over what time becomes a real game change your in your models? then again changer for u.s. growth? >> u.s. growth and world growth. >> i will speak for myself. in general, i think these things are not generally -- there's no question that higher oil prices are generally a drag. we did see in the first half of 2008 when gasoline prices hit $4 a gallon -- use of very discreet changes in consumer behavior. having been a $4 before, i do not think we will see that again.

if we're talking about normal supply and demand in the context of coming into a driving season and things will go up probably until june, i do not see that as a big issue. if we go to a supply disruption out of the middle east, there are obvious scenarios under which that can happen, that is a different kettle of fish. i did not think that is the most likely thing to happen, but it is certainly one of the things that would be on my list of risks. >> i will also look at whether it is a supply shock or demand shock causing the change. first half of last year, you had a 33% move in oil prices that was largely a surprise shock with libya. if you look at where we are at currently, maybe it takes 0.25% off of growth if it is sustained. not a huge move. whether it is a supplier rather than demand shop, i think it makes a big difference. i would also put the risk -- it seems like sanctions are growing.

i would put military conflict as an unlikely scenario at this stage in the game, but there's not necessarily a price. what we look at in emerging- market is -- what is the breakeven price for these countries? where they are budgeting the price of oil and saving the windfall for spending it, and i would say in emerging markets, most countries have been pretty conservative. they have budgeted oil conservatively. maybe $30 below where it is at right now. it is more of a problem for the developed market countries. right now, the current trend seems to me less worrisome than what we saw a year ago, given the move we had in the first half of the year.

>> i think from a u.s. perspective, it is all about gasoline prices, and the evidence suggests that households basically pay for higher prices at the pump by cutting back on other parts of consumption as long as gasoline prices are within prevailing norms. once they break out more significantly from prevailing norms, then they cut back in total. if we remain around where we are, then that means it is a problem with lodging or food or from the home or components of consumption, but not for overall consumption. it is a modest drag because we are a net oil importer. our chief risk is we have now essentially rolled back earlier declines, so we are at the high- end of prevailing norms. any increase from here on would more likely be associated with more restraint. >> one last question. i saw one in the aisle there. >> where do you all think the

dow will be in the first week of november? >> you will have to specify which day in november. [laughter] >> do you think any industries or countries such as iran will make any unusual attempt to influence the outcome of the election, say, by constricting oil supplies? >> a cake, two parts of that. >> i thankfully am an economist and not an equity strategist, so i feel acceptable in not giving you a straight answer to that question. having said that, one of the things we are thinking about is how the uncertainty around the election will affect markets. there's the economics of the

fiscal clip and what not, but also how the markets will react in anticipation. if you look at what happened last year on the debt ceiling and what not, the interesting picture you get is that the primary effect of the uncertainty that was created by that showed up by a weaker equity prices as opposed to higher interest rates. so there is a sort of interesting question, if you are facing fiscal chaos -- how do markets respond to that? i think, certainly, the experience last year would suggest that that will show up as uncertainty about the economic outlook, uncertainty about earnings that translates into weaker equity prices as opposed to people decide they want to sell treasuries. i would suspect that be the pattern. to the extent that you come into the election with one of these uncertain outcomes that we talked about earlier, my guess is you are not going to get the reaction of people looking up

and deciding they do not want to hold treasuries. it will be there is more uncertainty. the economic outlook is likely to be weaker, which will mean weaker equity prices. on the foreign meddling, it is hard to imagine anyone could do that successfully. it is a blunt instrument, and my guess is it would not do it. as someone who worked in washington for a good part of my career, i often hear conspiracy theories about this and that, and my general argument for why they are wrong as it assumes a level of competence that is not there. i apply that argument here as well. >> jpmorgan is forecasting for about a 14% return this year. we have had a lot of it already. i think what investors are trying to do is lock in what they made in the first quarter, which is in some cases with the forecasted for the full year, with all of this uncertainty ahead.

but what i have seen over the last couple of weeks is you have had a breakdown in these correlations where everything was correlated. there is more bullish sentiment right now about u.s. equities. on the whole issue of foreign meddling, i have to just say that if you act unilaterally, you will have retaliation. there's the question of who is the first mover in the iran situation? who will do that in a unilateral way, face retaliation? and when you get something that involves more global coordination, which has been very difficult, so i think the approach has been sanctioned, which has seen some effects, and that is what they are going to stay with, but i have seen recently, though, the some of those fears on iran seem like they have dissipated a bit over the last month compared to a bit earlier this year. >> do you think have to believe -- kafka believed in devious bureaucracy? >> no that about it. i agree with the point that it assumes a level of competence that probably -- and ability to predict the consequences of the campaign, the consequences of two campaigns.

with regard to equity prices, the world is a really risky place. with such risk, it is tough for investors to have a conviction and therefore tough to get durable wealth creation. we would say the equity market will be considerably lower relative to today. in particular, despite the fact that we have known since 1786 that it would be an election, equity investors have not really -- their window of observation has not embraced november or december 31 yet, but it is beginning to happen. as that happens, we are going to be spending the summer and into the fall looking at in- trade " on who will be president, who will win the house, who will win the senate, and we will supply the in to what we hear on sunday morning talk shows about what they do in power. that is not good for markets. >> we apologize for running

over by 203 seconds, but it has been a great meeting. thank you very much. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> after that comment mitt romney speaking to the society's

news editors. disbands member of congress from buying and selling stocks based on inside information. that is followed by the head of the pension benefit corporation. tamara afternoon, you can see his rewinds life here on c-span. at 2:00 eastern, president obama signing legislation to make it easier for small companies to sell stock. >> house democrats today held a hearing on rising gas prices. most drove the price of oil.

nancy pelosi chaired the hearing. >> good afternoon, everyone. pleased to call to order this important meeting of the steering and policy committee, with appreciation to our share, congresswoman rosa delauro of connecticut, who will preside over today's presentation. i am pleased to be joined by the chair of our caucus, congressman john larson of connecticut, and the ranking member on the natural resources committee, congressman ed markey, former chair of the energy security select committee. i am also pleased to be joined by congressman donna edwards of maryland, sandy levin of the ways and means committee, and from virginia, mr. moran.

when i think about today's proceedings, one name and give it is "the agony and ecstasy." the agony of the consumer is with the price of the pomp and what that means to them, especially those having trouble making ends meet, and how the high cost at the pump is an obstacle for them. it is not just a luxury, it is something they must do to make ends meet. the ecstasy is for oil. they raked in record profits last year and they are on track for another year of astronomical profits. we will hear more about that from our expert witnesses and from our colleagues. i thank my colleagues for joining us and i appreciate the presence of a professor greenberger and mr. guilford.

>> i want to welcome everyone here today. it is a privilege to do that. i want to welcome my colleagues on the panel this afternoon. i oil prices affect every aspect of americans' lives, not just the cost of traveling, but the heating of homes, food, and other purchases. there are many reasons for the fluctuations and the price of oil.

on some of these, tension in the middle east, the administration is moving forward with the international community. saudi arabia announced they would lower oil prices. that being said, the cost of gas is irrefutably affected by rabid speculation in the oil market, and that is something we can and should do more about. last year, at the peak of the last oil price bubble, goldman sachs speculated that speculators increase crude prices by 20%, and the price of gas by 56 cents per gallon. even the head of exxonmobil conceded that the price of oil should have been in the "$60 to $70 range," went instead it hovered at $100 a barrel. speculators make up 70% to 80% of the oil market. we are holding this hearing to see how we can do a better job of curbing excessive speculation in the oil market.

the dodd-frank oil legislation gave the eight cftc broad authority to investigate manipulation in the market, at last year, the commodities trade commission charged 5 oil speculators with manipulating the crude prices in 2008, netting them more than $50 million even as oil prices climbed towards record highs. in this house, the republican majority has tried to stop the cftc at every turn to the agricultural appropriations bill last year provided only $172 million in funding, about 44% below the president's request, meaning there are about 159 last cops on the beat. it is still not enough for the cftc to perform as it should. their request was for $308 million. we are here to represent american consumers, not oil speculators. we should be strengthening its ability to combat rampant speculation, not working to undermine it. i introduced legislation to provide the cftc with a reliable source of funding.

wall street accountability to the sustainable funding act will bring the cftc in line with other financial regulators. the fcc, the sec, the fdic. and it would authorize the collection of user fees to offset the costs of operations. in order to decrease prices immediately, i and several of my colleagues asked the president to release some oil from the strategic petroleum reserve. right now the petroleum reserve holds 696 million barrels and is filled to more than 95% of its capacity. even releasing a small amount of oil from the reserve can have a huge impact on the price of gas and discourage speculation. today i hope we can discuss the best ways to continue moving forward on excessive speculation.

last year president obama reconstituted the oil and gas price working group to investigate manipulation in the market. what should this working group be doing to make a difference? to the current market conditions warrant the use of the cftc emergency authority to set margins and position limits? the cftc has had its authority from the beginning of its existence but has refrained from getting involved since 1980. those questions and others -- i know our panel is going to address. thank you for coming, and we look forward to our discussion today.

with that, let me yield time to my colleague from massachusetts, mr. markey. >> thank you so much, chairwoman delauro. thank you for holding this. thank you, leader pelosi, for conducting this very important hearing at this time. thank you for convening this. i think we are at a very important moment in the united states relationship with the oil marketplace. right now the national average for the price of gasoline stands at $3.93 a gallon nationwide. within the next week, the average american driver could be staring through the wind chills at $4 a gallon -- through the windshield at $4 a gallon. of course, the republicans would like you to think this is all president obama's fall and deflected blame from the real culprits. they are wrong. the current spike in gas prices is not about obama. it is about opec, oil companies, and wall street speculators. we could take four steps right

now that could address this situation. one, deploy oil from the strategic petroleum reserve. when the french government said that talks with the united states and others deploy from the oil reserves, oil dipped just on the mere threat to use this weapon against speculators. the strategic petroleum reserve is to wall street speculator is what kryptonite is to superman. republicans oppose this. they believe the oil market is a free market. it is is not. two, we need to stop speculators from yearly gains that turn to the crude oil market into a casino. last year, republicans tried to slash the budget of the commodities futures trading commission, the agency that serves on the top of the

speculation at beat. the republican majority has moved legislation intended to delay reforms by the democratic congress that would diminish the power of wall street trading firms to manipulate the market. wall street's lobbyists have gone so far as to sue to block these reforms. we should be fully arming the wall street cops and ensure that they can crack down on the gasoline gamblers in the marketplace. the republicans are wrong. third, which it end out the need for exploitation of american energy resources. last year, america's number one export of any kind was our field. more than 1 billion barrels of gasoline, sent overseas to locations like china, morocco, and singapore. with rush holt and congressman

bill owens, i introduced legislation that would stop the export of america's oil and fuel produced from public lands. when american families are facing for dollar gasoline, we should not be allowing big oil to continue to export america's fuel that we drill for here. republicans oppose this amendment almost unanimously. four, we must end the tax breaks for oil cos. republicans want to raise taxes on the wind industry but have been protecting tax subsidies for the most profitable oil companies in the world. american taxpayers should not be asked to give oil company's 100- year-old subsidies so they can sell us oil at more than $100 a barrel and make more than $100 billion in annual profits. we should be pushing a long-term plan and moves us away from for a oil and insulate us from the price shocks of the oil market

that is controlled by opec. if we take these four steps, we will stop speculators from manipulating the oil market, we will rein in and feel exporters who are sending resources to china, and we will tell the opec dictators that we don't need their oil anymore than we need there is sand. thank you. >> i want to thank you, mr. markey. let me introduce our colleague mr. lawson to introduce one of our guests this morning. >> thank you, chairman delauro, for convening us here today. i want to commend our leader, nancy pelosi, for recognizing what americans have all across this country, the problems that they are tinkering at the pump -- are incurring at the pump, and in home heating oil and air- conditioning as we approach the summer. it is my great honor to be able to introduce gene guilford today. he is the president of the independent connecticut petroleum association and education foundation.

i've had the opportunity to work with gene over the years and a number of his dealers, who understand implicitly that the laws of supply and demand have been suspended when it comes to oil speculation. they have been at the forefront of helping us shape legislation for congresswoman delauro and myself. i am proud to be able to introduce him today. gene has an extensive background, and the members will find this most interesting, that gene was appointed by president reagan and served in the commerce department. he is very familiar with import and export commodities. and also served in the energy department as well. he has firsthand understanding of both of the regulation that is needed and also of our marketplace system.

most importantly, what he understands is the need of consumers, and that a recent press conference with chris murphy and myself laid out for the public what it is the best case in terms of the need for us to have ongoing regulation and promotion of the cftc and the dodd-frank bill. with that, i taught opportunity to introduce -- my proud opportunity to introduce gene guilford. >> it is my pleasure to introduce our other panelists, michael greenberger, who is professor at the university of maryland law school. he worked as a technical adviser to the un commission of

experts on reform of the international financial system. he also previously served as director of the trading and markets division at the commodities futures trading commission, and he served on the steering committee of the president's working group on financial markets. and as a member of the international organization of securities commissions hedge fund task force. thank you, michael, for being here -- as well, mr. guilford. we will start with your testimony. >> [inaudible] >> microphone. >> and chairwoman rosa delauro for convening of this hearing. i worked with almost everybody in this meeting, and you have been great friends of consumers, and you have landed an ear to those of us who don't have the clout of the big wall street lobbyists. many say there is no quick fix for this. i believe there is a quick fix for this, and i agree with many of the policy proposals that enunciated, but i would prioritize three of them.

first, let me say that yesterday i read the "financial times," which surveys all the world markets, and within an opinion column, the thesis was the united states is back leading the world's economy. europe is on its back, japan has been on its back, china is decelerating. our policies, which have been guided by the obama administration and you in congress, have created the embers that are sparking a recovery. the one that thing that will damage this recovery is the ever-accelerating gasoline prices. they are a burden in a micro sense in that people don't have the money to pay for $4 and maybe soon $5 gasoline. it is a hardship to virtually every american. but more important in a macro sense is this will break the back of the recovery. the president has said that, many of you have said that.

with everything going so well for us, why can't we fix this problem? many would like you to believe this is a supply and demand problem. i cited in my testimony and many experts who say that supply and demand is equilibrium to the saudi kingdom said they would increase production by 25% to make up for any boycott of the iranian oil product or interference with the straits of hormuz. the president has talked about releasing oil from the strategic petroleum reserve. but as was said in the testimony, the chairman of exxonmobil has said that market fundamentals mean that oil prices should be $60 to $70. they are approaching $105. they have been up to $110.

why is this happening if there is no supply and demand problem? do not believe those who tell you in the face of the experts and the face of the saudi king, in the face of the chairman of exxonmobil, that there is a supply-demand problem. what is the problem? it is gambling by wall street on the price of oil. it is similar to the gambling wall street did on whether or not people would pay for subprime mortgages in the mortgage meltdown. they could not pay off their debts, and all of us were forced as taxpayers dictate trillions of dollars to make up for wall street's bets that the subprime market would be successful. now they are betting in the upward direction of the price of oil. again, 60 experts in my testimony have said, from nouriel roubini, who famously predicted a meltdown, iranian oil experts, stanford, mit -- it is excessive speculation, which is a fancy word for saying that gamblers wearing wall street suits have taken these

markets over and are controlling the price and create investment vehicles that are designed to push the price of oil up. by gambling, by placing a bet, you do not increase oil production, you do not create market liquidity. it is like saying that las vegas creates a national economic well-being. we have a las vegas exponentially on the steroids making bets on the upward direction of oil. now, dodd-frank made it, with your leadership, a valiant attempt to deal with this, but we were to find in the way we dealt with that in dodd-frank, because we delegated all the

responsibility to the administrative process, which is overwhelmed with under-the- radar-screen wall street, 24 hours a day, seven days a week, millions of dollars of lying. i have recommendations for congress. under your leadership, there have been bills passed in this direction. leader pelosi, when you the speaker, congresswoman delauro, introduced a bill to stop speculation. it passed the house 401-19 that night. when oil goes over $4 nationwide, this will be a bipartisan issue. it is not a supply problem. the president said last week -- as he has said, as the saudis have said, as exxonmobil has set, supply is plentiful. we are a net exporter of oil. it is the gambling that must be

stopped. the investment vehicles that have a fancy names of the commodity index swaps, said that exchange-traded funds -- synthetic exchange-traded funds, much like the credit default swaps that led to the meltdown at wall street propagated as investments but were released bets on whether subprime mortgages would be paid off, half a trillion dollars sending signals to the market, false signals, that there is a supply problem. anybody who knows these markets and its objective says that those false signals are damaging the supply fundamentals in this market. that gambling must be stopped. it will not have anything to do with production, none of that money goes to production, none of it goes to liquidity.

it is all casino gambling and nothing productive. second, the president now has twice wisely said incorrectly said that it is not a supply -- a man prop wise -- wisely said and correctly said that i.t. is not the supply and demand problem, but there aren't manipulations by finding -- traders -- there are manipulations by financial traders. he has asked for a prosecutorial investigation. he did that first on april 21, 2011. oil is at $110. after he made that announcement, within six months it was $75.

but nothing happened and now it is back at $110 again. now the president has asked for this task force. i think all of us, and i know congressman van hollen is gathering -- all of us have to work with the department of justice to explain to them that manipulation of the oil markets is not only crippling the american consumer, but it threatens the recovery. if we go back to recession, there will not be a safety net. there will not be at tarp next time. the american people don't have a stomach for bailing out banks. if we don't have a safety net, that means not a recession but a depression. we all ought to explain to the attorney general that this has got to be his number one investigative process. where is the fbi? where are the interviews of market participants? where are the subpoenas? president obama has focused on this. let's get these guys going. i assure you, because the president's threat in april 2011 drove the price down almost $40, if there is a real investigation, just the

appearance of it will cause these cockroaches to scatter because the light will be turned on. they don't want to go to jail. they think they are not going to go to jail, they will keep damaging and the american economy. finally -- you said this may be the hardest thing to do, but the american public must understand that the commodity futures trading commission -- probably few of them know what that is -- is the, on the beat that can stop this problem. under the leadership -- is the cop on the beat that can stop this problem. under the leadership of chairman gansler they have done an amazing job, but they are underfunded. for a multibillion-dollar market, they have 700 employees. another $100 million to stop the economy spinning into a

depression. that is a very small amount of money. the cftc has to be fully funded. if they are fully funded, we don't need an interagency task force. they would have resources to bring these manipulation cases. they marketing manipulation cases, but they don't have the fbi, they don't have the necessary investigative power. we need to fund that agency. >> thank you very much, professor greenberger. mr. guilford. >> good afternoon. leader pelosi, congresswoman delauro, my friends from connecticut, thank you for inviting me before the committee. let me very briefly take you through what i believed to be an important part of the history of what we and going through,

because it was in 2004 that we first came and visited congressman larson and asked if he would be willing to join his colleagues in initiating a government accountability study of the findings of the cftc and find out what is going on in commodity markets. it was by then that we were becoming unsettled and concern about what was going on in the markets, the volatility and price increases. it was two years later that week at the report back that said that we think there's something going on and we think this is important but we cannot tell you because the law has effectively blinded the agency that is responsible for enforcing this laws. in 2008, leader pelosi, we came very close in being able to close the loophole and move this issue down the road. you remember 2008 very well because it was an experience we won't forget. it was at that time that the secretary of the treasury and at

the chairman of the federal reserve came to you and said that if you don't pass a piece of legislation in a couple of days, the american economy is going to go over the edge. it was on the basis of the reason why that was the case, wall street's reckless and irresponsible behavior that led to that point, that we ended up moving the policy a little further down the road with dodd-frank. now, where we are today with respect to connecting the dots between wall street and the gas pump is, for us, very clear. i would like to illustrate that you in the material i handed out to you. wall street gasoline contract is increased 86 gas a gallon in the last nine days. $25 million a week. the citizens of connecticut pay more for gasoline today than they did in the middle of december.

to put that into context, for the charts we have provided for you, now we're at 92 cents by virtue of the fact we had a six- cent increase just last night after i prepared this for delivery here today. at 11 billion gallons a month that americans consume in gasoline, americans today are paying $10 billion -- $10 billion more for gasoline than they were paying in the middle of december. when the context of the profs greenberger's statements with how much we should be finding an agency of the federal government for the purpose of overseeing these markets, it is costing the american consumer this amount of money just within the scope of 90 days -- 90 days -- it is extraordinary.

now, what could possibly have happened in the last 90 days to have caused this problem? did i hurricanes go through the gulf of mexico? was there a massive shutdown of refineries around the world? did israel attack iran? in the absence of anything that anyone can point to, a tax on the american public of $10 billion per month has been enacted as a result of what has gone on wall street since the middle of december. with due respect to anyone who chooses to blame this on india and china, we didn't just discover india and china the week before christmas. that is what has happened since the middle of december. speculators have overtaken the commodity markets. 10 years ago, actual producers and users of energy and agricultural commodities made up 70% to 80% of the markets, with only 20% to 30% of the markets

made up by speculators. now this has flipped and 70% to 80% of the commodity markets are controlled by financial industry speculators, only 20% to 30% of these markets are actual, legitimate hedgers of purchases of energy and agricultural commodities. six years ago, wall street brought up commodity index funds, resulting in a birds of a $400 billion of strictly speculative investments in commodity markets, and that is contributing to the price of food and energy prices. if i could, i would like to read you some of the promotional material for the commodity index funds. "when trading futures, you never actually buy or sell anything tangible. you are just contract and to do so at a future date. you're taking it buying or selling position as a speculator expecting to profit from rising or falling prices.

you have no intention of making or taking delivery of the commodity you are trading." let me repeat that -- this comes on the people who sell these things -- "you have no intention of making or taking delivery of the commodity you are trading. your only goal is to buy low and sell high, or vice versa. before the contract expires, you will need to leave your contractual obligation," which is where we get into the business of ruling contracts month to month, "by offsetting your initial position." the commodity markets are overseen by the cftc, who passed regulations to restrain strictly financial speculation in these markets. the financial industry has filed suit against the cftc in federal court, saying that these massive price increases -- they don't believe that these rules are necessary or appropriate.

to the americans who are paying $10 billion a month more for gasoline, and tell them these rules are not necessary. the financial services industry drove american nearly into another great depression in 2008, from which we are only now beginning to emerge. congress passed the dodd-frank law to regulate the reckless and irresponsible behavior on wall street, and that law and all of the agencies responsible for implementing law need to be strongly supported. the law needs to be allowed to work for the american people, especially before it is tinkered with any further. in the two charts i provided, which i would like to briefly cover, because there are some excuses going on that the increase in gasoline prices is all due to crude oil. if you look at a price of crude oil between mid-december and the middle of march, it might from $94 a barrel to $106 to $12 a barrel increase. 42 gallons a barrel, up 2 cents a gallon of increase in refined products. $12.24.

flip over to the next chart. you will see what happened between the middle of december and march 28. when from to -- went from 2.48 to 3.40 in 90 days. what caused the other 68 cents a gallon to be added to the cost of a gallon of gasoline on the new york mercantile exchange? it has gone up every single day, steadily every day since the middle of december. not before december, but since the middle of december. personally, with regard to the 28 commodities covered by the

commodity futures trading commission's rule, we think that the energy and agricultural commodities are so important to the people of this country that they should be 100% deliverable. that is to say we don't find any reason why this game of wall street placing bets on movements of these products -- you have no intention of making or taking delivery of a commodity york trading. if you have no intention of taking or making delivery of the commodity you are trading, you shouldn't be allowed to participate in the market. what we're talking about here is the food that americans buy and energy we rely on to run our economy.

as others have said today, we strongly support at funding for the commodity futures trading commission and reject proposals to cut their funding, which only guts the agency's ability to enforce this law. remember, 28 commodities covered by the position limits rule is energy and food. we also for the support revitalizing the department of justice task force on speculation started on july 2011, something the department of justice indicates it will begin immediately. i share professor greenberger's sentiments that if you shine light on the need for something, the behavior is likely to change. there is no reason not to begin that today.

>> thank you very much for the very compelling testimony and the real clarity of thought and candor. we will hold to a five minute rule here to be able to get everybody in to ask questions of panelists today. >> thank you. i think the fact that many of us are here is an indication that we may not be in session, but this congress should really be so. the republicans -- they support a free market even when it is rigged. we are here to try to probe this. you make such a compelling case as to how much the speculation is -- i think both of you have

said essentially a in terms of these derivatives they may be 80% speculation and 20% response to a real need. let me just ask you, assuming that is true, and there is much evidence there is, how -- if we ran the show, and i wish we did, how would we pass legislation that would get at the speculation but permit where there was an effort to hedge against an increase and take control of the product? that is the line you draw. how would we do this realistically? i think that if there may be some deaf ears here, we need to

shout loudly and persuasively. design a proposal that would get at this. >> [inaudible] -- new deal congress, which they passed to protect farmers from excessive speculation. essentially, the design is not to -- the critical word is "excessive" speculation, not speculation. in fact, speculation is needed for the farmer, the petroleum producer, to create liquid markets where contracts can be quickly traded. but as with a functioning market is 70% commercial, 30% of speculative. the markets are now 80% speculative, 20% commercial. commercials don't want to be in this market anymore because it is so volatile. they cannot control the price of march and because the contract should stop and their life savings may go in the

margin. this is all speculation. the two vehicles that many agree -- i provided all the studies on this -- that the speculators use that are the quickest, dirtiest way to get into this market are the commodity index swap funds and the synthetic exchange traded funds. don't worry about a fancy title. what does that mean? he walked into your bank -- you walk into your bank and say, "i don't want to buy this stuff. i don't even know what crude- oil looks like it you advise me that the prices going up so here's my money and i want dollar for dollar everything of the upward price." those wall street operations are like bookies.

they have to hedge their exposure just like a book the lays off bets when it gets a one-sided. they go into the real futures market, where the farmer and baker are trying to hedge prices, and they buy long oil contracts so on paper they have contracts that are 33 times the size of the real supply of oil. that sends a signal out that cannot be defeated that there is a supply problem and there isn't. you can't cut this snake off at its head by saying "no more betting on these markets." these are not commercials making these debts. unfortunately, i hate to tell

you this, they are pension funds, private equity companies, hedge funds, banks. all they are doing is like walking into a bookie shop saying, "i don't want to on this stuff, i just want to bet." you cannot bet that the price will go up, only that it will go down. >> the losers are the american people. >> they are continually told it is a supply and demand problems. the ceo of exxonmobil says $60, $70 a barrel -- it is $110 now. the saudi king says you are worried about blocking the streets of hormuz? we will make up a barrel for a

barrel everything that will be lost. by the way, in 1973, when opec cut off the west from all of its oil, worse than the blockage of the straits of hormuz, there was a fraction of the volatility we are seeing today, and i can give you charts that show that. in april 2011, it was the arab spring. libya's 2% production of oil is causing this spike, and the saudis again said we will make up the 2%. the president said this is not supply and demand, this is market manipulation, and he was right. what are you stopping here? are you stopping money from going into production? are you stopping money from people creating jobs? unless you think a casino, which comes to us with names like goldman sachs and morgan stanley are job creators -- no, you are stopping betting. if we are wrong about this, if everything we're telling you is a mistake, what will we have done if we stopped the bedding? we will close a couple of casinos. but we need, any time there has been a thread -- 2008, you guys passed a bill to hundred 88-133 to stop the backing -- 288-133 to stop the betting. is that a supply and demand responsibility?

then when people said that we got the price down to $30, it shot back up to 75 by the spring of 2009 but then you guys said that we would pass dodd- frank. when dodd-frank appears to be working because of wall street lobbying and lawsuits, the price of oil is back up again. stop gambling. i can tell you you will bring the price of oil down substantially, and all your constituents who are in heartbreaking situations, whether it is gasoline, heating oil, any derivative crude oil, will find comfort. and we will keep the recovery going and make the united states what it is for the first time in decades, a leader in world economic growth. >> thank you very much. >> thank you. let me ask my colleague from

rhode island for the next question. >> this is of great importance to my state. rhode island has the second- highest and limit rate in the country. when you hear your testimony today, and we have seen so much in the research that so much is driven by what sounds dangerously reminiscent of what we heard or rwanda in the mortgage group of market and the way it brought our -- heard or were warned about in the mortgage to give the market and the way it brought our families, the way is repeating itself is really infuriating. there is a piece of legislation that has been introduced on the senate side by senator bernie

sanders and senator klobuchar and senator franken that seems to me the required the cftc within 14 days to set about with identifying the magnitude of the speculation at also to set about addressing it immediately. i'm wondering whether that approach makes sense and whether the ratio you are speaking about the upside down can be corrected, and what are the obstacles to that happening is that legislation were enacted by the congress of the united states? >> let me say that that legislation is legislation that you people passed on june 26, 2008, when oil went to it will record price, which was forcing

the cftc to declare an emergency in the market and hoping that they would limit speculation both by flat limits on speculation and by increasing margins speculators have to pay. i think that is a good idea. but if you guys want to kill the beast, if you want to help constituents, don't delgate this out to an opaque administrative process where wall streeters are meeting -- by the way, the cftc will meet with anybody, but the consumers don't have the money to go down there 24 hours a day, seven days a week, and they don't have the money to fight these things in court where the wall streeters have hired the fanciest law firms, the biggest appellate firms, and i can tell you, and gene guilford can tell you, we cannot match that many dollar for dollar. the cftc is the very agency that you guys know don't have the funding for this. i would do it yourself. you can pass legislation banning

commodity index swaps and exchange traded funds, and you will remove $500 trillion from the market. they will come to you, the banks will come to you and say, "oh, you are going to limit production, you will limit liquidity." the market is overrun with liquidity. 80% of it is speculation. what you will be doing is stopping gambling, pure and simple. money only creating homes in the hamptons and yachts in the hamptons. your constituents should know that every time they break their part by buying $4 and maybe soon five other gasoline,

that money isn't going into production, it is going into home building in the hamptons and yacht-building in the hamptons. it is not a constructive economic thing. frankly, i will tell you something -- that bill gets introduced. what will it say to the speculators? hey, i will have to get out of this market, i will get out before there is a panic. i will undermine it now. that is what happened in 2008. senator reid got 51 votes in the senate where many democrats were out campaigning for president and a lot of republicans supported him. spectators said to themselves, "all, my god, these guys are serious." but then nothing happened. >> mr. guilford, let me ask you to comment, if you would. >> i think that the senator's bill is a great start. remember that the commodity futures trading commission's position limits rule was initially designed to do exactly what we're talking about today did unfortunately, at least initially, its limits were set so extraordinarily high as to be not terribly effective.

it is going to take time for them to be able to collect the data necessary to make sure they are setting limits in the right place, in the right way, and to make sure it is the most effective. that is the administrative process that professor greenberger talks about will take so long. and coupled with that, understand that the financial services industry has made it clear that it will litigate every single one of these rules that comes out of every single

one of these agencies for as long as it takes, because they no they are playing for time, eager for a time in the change of the presidency or a change in the makeup of the congress. their intentions are clear -- gut the agency's budget so that the laws cannot be enforced, litigate the rulemaking process is to draw them out as far as possible. banning things is a great way to start. you have a great opportunity with a letter of your colleagues have signed to the agriculture committee to hold hearings immediately. there isn't a reason that should not be the centerpiece of that conversation. >> ms. edwards? >> thank you very much, thank you to our witnesses today. i appreciate that you have put into context what consumers are feeling. most, barring a class or two in and a graduate school, have no idea about market economics, the commodities market, how that impacts things like the food we buy and the gas we put in our cars, so i appreciate that. it was helpful to hear just a reminder about supply and demand and the relationship between supply and demand and what should be the price. as you stated, prof.

greenberger, supplies are plentiful, demand is down, and prices really should reflect that, and they simply don't. i fill my tank a week and half ago, and it was $4.04 a gallon. i felt that my tank after church on sunday, this past sunday, it was $4.10 a gallon. this was just a week's time. i hear the $10 billion, and people don't understand those numbers. they are so incredible for us to have not been privileged to win the lottery. in the $4.10 i spent for a gallon of gas on sunday, how much should i pay? >> that's a great question. if you follow the logic of much of the conversation you have heard here today, and there will be widely differing opinions about the degree to

its speculation in and of itself contributing to this problem, you have a range of opinions from the chief executive officer of exxonmobil, who contended that between $65.70 $5 is the fair price and everything over that is speculative -- that between 60 $5.70 $5 is the fair price of everything over that is speculative. even if you to cut it down the middle and split the difference between the two, instead of spending $4, you should get in spending something closer to $3 for your gallon of gasoline. $10 billion is a big number. let me put it in the context that i think some may be more comfortable with. congressman larson is familiar with the people who work with me at my school.

i have a lady who is a single mother raising two children by herself. she has to come back and forth to work every day. in december, she was paying about $45 a week for gas. now she is paying $70. you all worked very hard after the first of the year in what looked like an extraordinarily difficult task to give every working american apparel tax- cut -- a payroll tax cut. the lady who works for me raising those two children, all the payroll tax cut she received goes into paying only to get her back and forth to work. whatever good intentions you may have had in helping the people

like the people i work with, it has gone all entirely to the higher price of gasoline. >> i really appreciate that, because that really does say exactly what we are talking about. the single mother paying for what was $45 for a tank of gas now paying $70 as effectively lost all of the tax increase that we provided for her at the beginning of the year. $4.10 a gallon -- i've got to get that correct that i paid on sunday -- should have been $3.10 a gallon. i really thank you very much for being able to help us understand the details, but to put it into a real context in terms of what i.t. is costing the american people. thank you, and i yield. >> thank you. mr. scott. >> thank you very much, ms. delauro, thank you leader pelosi and others for convening this meeting. gas prices are complicated and it is could you see good information. both of you have spoken about the legitimate futures market and speculation. that is one of the problems we had with the credit default swaps, where you had insuring against a loss in mortgages might be legitimate, but when

you allow many people to bet on the same package of mortgages, that's just raw speculation. we have centuries-old principles of insurance. basically, what you are buying insurance, and two final principles -- if you sell insurance, you have to have assets to back up your promise. the second is you can only buy insurance where you have insurable interest. i can't buy fire insurance on your house. what they were doing was letting dozens of people buy fire insurance on your house, so when you have a loss on your house, all of a sudden you all want all of these losses. how much of the speculation problem could be cured if we just went back to fundamental principles of insurance and required before you start selling insurance that you could only sell it to people

with an insurable interest? >> the gambling aspect of the subprime built on and what we're seeing today are similar, the investment vehicles that are being used are different. what you are talking about, congressman scott, is something that dodd-frank did a really good job on -- not a complete job, but a good job -- because you had people like john paulson who placed bets on tranches of subprime that he did not know it would fail. he bet people would be kicked out of their houses without having let any of the money to those people. by the way, the european union -- we did not in dodd-frank just say stop the gambling, we said to make it transparent so that everybody could see it, that would be therapeutic. but the european union, in the european sovereign debt crisis, angela merkel, mr. sarkozy got

the european commission to say that people were betting that southern european countries would fail without having lent them any money. they had a synthetic bet they would fail. the european commission said stop. >> but if they had lent the money, there would be legitimate -- >> they would not let the money -- >> in trouble interest would have hedged -- >> that is exactly right, and god knows how this happened. insurance commissioners were meeting in florida to say that credit default swaps are insurance and they are injuring somebody else's risk. since 18 06, when parliament said you cannot do that because people are insuring cargoes on british ships and calling the french navy to bomb the ships

and collect insurance, they put a stop to that. suddenly, within dodd-frank, god knows how it happened, state insurance law was preempted. >> should we go back to that, where we insist upon insurable interest? >> yes, we should, but what i would do is consider what the european union did on that front as well, and what i telling you is that the gambling on whether greece will fall, without lending money to greece, is not a productive investment. it is a destructive investment. european commission said no, we're not going to do that anymore. finally -- you said this may be the hardest thing to do, but the american public must understand that the commodity futures trading commission -- probably few of them know what that is -- is the, on the beat that can stop this problem. under the leadership -- is the cop on the beat that can stop

this problem. -- whether or not we ought to increase it, but more generally for price stability. >> to go back to your earlier question, those who have an interest or could take the delivery of those transacted up to be the. what they are promoting our people who will never take delivery of anything. nor will they deliver anything into this market. there are placing bets on the prices of the commodities.

instead of a local heating oil and retailer of the type that we represent who goes into the marketplace and buys contracts so that the retailer can turn it around to consumers and offer consumers a fixed price or a cat price for the winter, he is buying his contract of the market and is taking advantage of the market to stabilize his price. as they are being invited constantly, it is costing more and money for the small retailers to be able to engage in the transactions. it means it is costing insurers more money.

what professor greenberger is talking about is to be able to puncture this bubble and bring these prices down. with respect to the strategic petroleum reserve, i guess i can be counted among those, because it was a year ago but i was in the rep's office and we were working on the statement in anticipation of action in libya, about the president's announcement for the potential release of the strategic petroleum reserve at that time. and indeed, it is strategic for that purpose. you announce your intention. much vice -- much like professor greenberger was talking about when he said they could have a huge effect on the marketplace if the justice department announced it was going to undertake a massive and serious investigation of what is going on in these markets. the threat of that alone is huge. add to that the threat, and that is what we were talking about a year ago, a year ago was the threat that the united states was willing to do

whatever necessary in conjunction with our eyes to make sure that an adequate and -- with our allies to make sure that an adequate amount of oil was available in the market. including strategic movement. and understanding that we do not have a problem with a shortage of crude oil today. cushing, okla. is awash in crude oil. there is no problem with the physical supply of the product, none whatsoever. >> i thank the leadership for having this hearing. i wonder how long this can last and how high prices can go. normally, in the commodities

markets you have a boom and bust cycle. it has occurred with gold, with basically -- i mean, orange juice, everything. it seems that there must be some people, the john paul since of the world -- john paulsons of the world, if you would, ready to buy swaps, ready to gain the volatility of the market. or is there a uniqueness to this market? i would like to hear from both of you. >> this is a bubble and the bubble will burst. the last big bubble one from 147 to 30 in six months, but nobody saw that coming. goldman was predicting it at 200 when it was at 30. we do not know when the bubble will burst. in the meantime, as we said, people are spending money they probably do not even half, or not buying medicine they need, or not paying rent, to pay for

gas. that can trigger a recession. if we do not have tarp and the fed window, which i do not think politically we can have the next time, we are told by economists that could be a depression. when the bubble bursts, we may already be flat on our back. the fact that gasoline is down to $1.50, let's say, may mean nothing if we have unemployment up to 15% or 17%. >> i agree clearly that congress needs to take action. although, just between us and the cameras, that is not going to happen as long as the majority in the house of representatives are owned by the extractive industries. i want to ask you a question. we have a figure here that says that for every penny more we pay at the pump, the profits for the five largest oil companies go up by $200 million. is there any kind of collusion going on?

we got a figure from the head of exxonmobil, but they are profiting, are they not, from this speculation? it is all good for them. and when the price per barrel drops, the prices at the pumps are not going to drop proportionately. they will keep a larger and larger share. that is what has happened every time. their profits go up as prices go down. is that not true? >> two things, first, to professor greenberger's point that he was getting into it, to go, because i think 2008 was very instructive. in march of 2008 it was $70. by july it was $147. by november, $30. by next march it was at $70. that is an extraordinary role pressure to put an economy through. no one with a straight face could look at you and tell you that as india, that as china, we have some extraordinary

weather event. no, we did not. there was some interference in the marketplace that was posing such an extraordinary circumstance that it needed to go to $147. no, i did not happen either. it could only be -- >> it could only be market manipulation. >> what other consequence? the supply and demand fundamentals did not exist. it is almost as though someone were to say to you, everyone in china and india decided to drive their car in july and that drove it up. and they parked their cars by the fall, and that is why it went down. it is truly absurd. with respect your question about profits, first, every day that you hear a report on the news about what happens on the commodity markets, every single day, by that evening for publication the next morning,

the commodity market movements get translated into what happens on the physical market, a wholesale prices that are people pay -- the wholesale prices that our people pay. they follow almost in lockstep. there's no question that what goes on on wall street has a direct causal effect on ultimately, what is made, by virtue of what is charged to the general products -- general public and the price of a product that they pay. there is a direct causal relationship between the commodity markets and the prices charged in the physical market. we watch them every day. and the absurdity of some of this should not be lost on anyone. i will pick on heating oil again we just came through a heating oil season where we have virtually no winter.

it was extraordinary. the measurement of cold that -- of coal that we used was down by 25%. the volumes sold by hitting retailers were down by one- third. extraordinary weather event. then why, under those circumstances, would the commodity cost of heating oil to $83.22? you cannot give away heating oil -- would be $3.22? you cannot give awaking oil. ofre talking about the price crude and the price of a barrel of heating oil. the price of a barrel of crude is $104. at the price of a barrel of heating oil is $135. why would there be such a huge premium for a product no one is using because it is 70 degrees? it defies logic for anyone to

say is that -- it is supply and demand. and a representative markey, to your opening statements for the first time since truman was president, the united states has become a supplier of petroleum products. most people think we are a net importer of everything. our crude imports are under 50% and we make so much of the refined products that we use that we have enough to export to foreign markets. and heating oil commodity cost is $3.22 in a season with no winter. and the price of a gallon of gasoline on the nymex has gone up 92 cents between the middle of december and the end of march at a time when americans last year reduce their consumption of gasoline 2.5% and have

reduced it by an amount more than any time since world war ii over the last three years in the economic contraction. if there is anything that underscores what professor greenberger has said today about the actions you should take in these markets, is the fundamentals of supply and demand do not seem to count. americans have sacrificed. they have sacrificed. and they are not getting the benefit of it. >> compelling in sight. thank you. >> extraordinary. i now recognize the vice chair of our democratic caucus. >> thank you, madam leader. thank you to my colleagues for being here. by the way, in california, we are paying well more than $4 per gallon of gas. we are paying up to $4.50 and more for regular gasoline in los angeles. denman, we have seen this movie before. and it was not very good the first time. we sought with the so-called enron energy crisis -- we saw it with the so-called enron energy

crisis with the early to mid 2020. we sought with the housing bubble in the late 2000's. i think we hear you loud and clear. but there are still folks out there saying it is not speculation. it is not what you are saying. let me give you one other chance. is there another explanation for the steep increase in petroleum prices today? is there anyone out there in the world who has some credibility in saying that -- saying it is something other than speculators? >> it is in many people's financial interest to propagate, which is a logical thing, but people who do not know the markets, you would think with the prices going up like this, it must be supply and demand. that is what we all thought and economics 101. we did not know that these markets would become gambling

casinos. that is what has happened now. there may be some worry about the straits of hormuz. there may be some transportation problems that are causing this. but i will tell you, it did not go from $147 to $30 accidentally. the house ever presented as passed a bill to stop gambling. senator reid -- by the way, also you keep saying we should have hearings. in june of 2008 the leadership brought a bill to the floor that was introduced that day that passed that night. senator reid did not wait in 2008 to go through hearings. he introduced in his own name a bill that got 51 votes to stop gambling. he could not vote cloture. but if he kept fighting -- if the if prices had stayed up, he might have voted cloture. people were saying the republicans -- we will never get their support. i will tell you, when gasoline goes up, we have gotten their support before. >> and let us work on that

because i think is absolutely true that it is almost impossible these days in the house of representatives to get a hearing to have you officially testified, katulis -- to essentially convey what you have announced today, that it is due to speculation. but let me make sure. i do not want to walk away from this hearing and have someone say to me that there are credible folks out there saying it is in the supply and demand. is there anyone out there that you know that is saying we have a supply problem, that we do not have enough production? and i do not want to go into the dynamics of this and marketing 101. i just want a name. is there anyone i can turn to to find out where this person is coming from to say there is a supply problem? >> in all honesty, we have to say there is a guy who is a professor at one texas university. i note a professor from the

london school of economics. but if you wait, it is like the 60 to two or three. >> is there anyone saying that it is a demand problem, that we have increased our consumption? and you were saying we have seen the demand drop. >> absolutely, and to that point, there was a great story in the news that when i get home i will forward to you and other members of the committee. i forget what news service it was, but the department of energy produces these statistics. and the headline was, "americans reduce gasoline consumption. wall street does not believe it." [laughter] at some point you could have a debate with some about whether the statistics are right or wrong, but the fact of the matter is -- and i think this is borne out by whether it is a mastercard figures on credit- card purchases or whether it is even the american petroleum statistics on gasoline. very clearly over the last few years, americans have decreased their consumption of gasoline. is not a demand problem. there may be some areas of a country where there was this location of a product from time to time, and a question.

-- and dislocation of the product from time to time, no question. >> i was interested to see your background. if you are not coming from a left-wing think tank. if i understand it, you served under reagan for a time, did you not? >> yes, sir. and i appreciate you letting me in the room today. [laughter] >> we thank you for your testimony. who is pocketing this $10 billion a month that americans are having to pay for overpriced gasoline? where is it going? >> in the quarterly report you are going to learn that information. there is no question that the profitability of those who refined gasoline and to market it throughout the country are going to be benefiting from this.

there is no question about that. everyone knows that. also, those who are making these investments in these gasoline contracts are profiting handsomely. if you pay very close attention to what goes on between wall street and the physical markets, and i think this is an incredibly important thing for the commodity futures trading commission to be paying attention to, because it is not just about the commodities market, but also the relationship between commodities and the physical market and how one drives the other. you'll find people are paying a hefty bill for what is going on. >> thank you. >> i have to add that it is also wall street. this is how they make their money. there are two things getting at them indirectly. one is the so-called local role. which means they cannot -- volcker role. which means they cannot trade these contracts they have to have an intermediary. and the fed is telling these banks, get out of commodities. you are not buying oil. you are not selling oil finally, with regard to the physical markets -- you are not selling oil. finally, with regard to the physical markets, the 2000 biggest one was morgan stanley.

if you can drive prices up in the physical market, he will not want to sell those physical because it is an appreciating asset. why let the american consumer have a? but keep it until the bubble peaks. >> the largest supplier of heating oil is morgan stanley. it is not an oil company. even though you talk about big oil, it is actually big wall street that is controlling most of our heating oil. >> revelation after revelation. with that, let me ask for questioning from my colleague from massachusetts, mr. markey. >> thank you. climate change. new england's temperatures in the winter or four degrees warmer than they were in 1970. we now have philadelphia's

whether from 1970. people for opening day for the red sox are now planning which short sleeve shirt they're going to wear rather than which combination of sweaters and final shirts they are going to wear. that is a big change from years past. it reflects the downward pressure on home heating oil. but let's be honest, the price of home heating oil somehow or other was unaffected by the market. and people in new england and all across the country just got tipped upside down by morgan stanley. let's go to what happened in this market since 2002. if we had dennis kellaher from better markets testified two weeks ago. he told us that in 2002, 11% of this oil market was controlled by speculators, and 89% controlled by airlines. trucking firms. shippers. who had to basically placed bets

to protect themselves. now in 12 -- 2012, 63% are speculators and only 37% our truckers and shippers and airlines. putting them at the mercy of morgan stanley in terms of ensuring that this oil product is sold and that the law of supply and demand is, in fact, abided by. is this part of the issue here? but the people owning these oil products have no stake in ensuring -- that the people owning these oil products have no stake in ensuring that the prices go up? they just hold it. all it is for them is cash. is that what hold new england hostage to this winter, and people across the country? >> gazprom i agree with that. -- yes, i agree with that. just parenthetically, since i'm a red sox fan, where word about

who is going to be pitching, not the clothes we are wearing. [laughter] but back to morgan stanley. >> i did not mean to start a major league baseball war. i'm sorry. to the point of anyone's rational concept of supply and demand, when you have a one- third decrease in the demand for your product and supply is adequate for the market, based on the imputed demand, it defies imagination than anyone who ever took an economics 101 class would look at that circumstance and say the press should do anything other than go down. you do not have to be dick tracy to figure out why wall street is taking the cftc and all of the dodd-franc rose to court. >> right. >> they want to stop putting a

card on the beat. they want to make sure these regulations are not there so they can, the market and create artificial volatility in the market. that is the easy connection. morgan stanley control the market and they then go to court to make sure that the wall street regulations that dodd-frank put on the books are not implemented. and then they say to congress, do not put the $100 million worth of extra cops on the beat to scare the living daylights out of the scam artists. it is pretty simple. you can summarize this nefarious activity in this simple form. let me go to a couple pieces of information that came out today. one, according to the energy information agency, the united states crude oil inventories increased 16 million barrels over the last two weeks.

the inventory of oil in the u.s. one of 16 million barrels in the last two weeks. but the price of a gallon of gasoline went up 7 cents a gallon. >> that is right. >> there seems to be a disconnect in the market. and this morning, the department of energy announced that u.s. crude oil production last week rose to 228,000 barrels per day to 6 million barrels per day altogether. it is high as oil production since 1998. -- of the high as oil production since 1998. yeah higher production, more oil reserves, and the price went up 7 cents per gallon in the last two weeks. why would that happen unless morgan stanley and the other ticket scam artists are not out there trying to manipulate the market to keep prices high to reap short-term profits at the

expense of our economy and at the expense of ordinary consumers? do you agree with that summary? >> yes, i do. >> professor? >> absolutely, yes. >> professor, let me go through this litany that you want us to go through. one, you want the $100 million for the cftc. and you want to make sure that the republicans cannot cut $30 million from the cftc budget so that the cops are on the beat. is that right? >> that is right. i would add a footnote, because you are also proposing a transaction tax. the fed does not come to you every year and ask for money. they get money from the banks. the cftc should have, frankly cannot -- frankly, $100 million is the limit. there is a $100 million defense between what they're getting and what president obama wants to give them. >> they are getting $205 million and they want $308 million. >> in my opinion, they should get $408 million. they need more cops on the beat.

>> mr. guilford is talking about $10 billion because there are no cops on the beat. >> do you want the justice department to begin the investigation and announced that you think it will have -- and announced that you think will have an immediate impact on the market. on the question of banning some -- certain vehicles, name them. >> commodity index swaps, and synthetic exchange traded funds. >> how much money you think that will take out of the market? >> probably at least half a trillion dollars. >> that is the gambling money in the system. >> yes. >> you take that out and you will see a drop in home heating oil prices. >> any of those three things, you will see a drop. the three of them together, you will cut the head of the snake off for ever. >> and you agree with that? >> yes. >> it will have that impact almost immediately? >> yes. >> thank you. >> i want to thank our witnesses.

this has been extraordinarily informative. it is always good to hear you again, a professor. >> thank you. >> i have the benefit of the wisdom and knowledge of gene guilford, but i especially want to thank you. there is a tendency in and to see their prices of home heating oil for the consumer group. this is what is it -- is about.

we cannot thank you enough for the testimony. and also for backing up what we think is an important agenda to accomplish in united states congress. >> thank you. [no audio] with quick answers if i can because we are coming to the 3:30 p.m. mar. -- mark. every president since ronald reagan has proposed offsetting of the cost -- safety of the cftc operation for the collection of the fees. we have legislation of their at the moment to authorize that. the question for you and a quick answer. would a small user fee impose any real burden on market participants? >> the market -- the market has increased from $40 trillion

notion value market to $300 million -- $300 trillion notion of your market. it would not be noted at all but wahl -- wall street will not give an inch on that. even if it is a nickel, they do not want to give the american consumer and nickel. >> it would not be a burden. >> we're talking about a couple of pennies per transaction. it is almost infinite let's call -- it is so small. >> that would alleviate the funding and that would be beyond the a preparation we deal with. it would alleviate the funding problem for the cftc to do their jobs. do current market conditions warrant the use of cftc's current emergency authority to set margin and position limits to curb excessive speculation in the oil market? >> yes, but remember, the cftc,

which is not heroic in its efforts, is being starved to death. that is why the -- which is heroic in its efforts, is being cuff starved to death. forthat is why the president is so smart. get the fbi married with the brains of a starved agency. that would be my answer. >> and that is the authority that they have had for 30 years. >> but they are understaffed, as you know. i would like to get more direct and hit it harder. >> relief to consumers, once the definition of a swap is finalized, what concerns do you both have with regard to the lawsuits filed to prevent their role? >> i'm very word the lawsuit is going to kill whatever dodd- frank did. dodd-frank set the shipwright. the hearing, those who attended it -- i did not, but i hear from people who i respect that did -- did not go well. and it will go in front of a judge that probably will be objective.

the d.c. circuit has already banned the first dodd-frank objective put in front of it -- has already been to the first dodd-frank objective put in front of it i want to thank my colleagues efforts and -- has already bent the first dodd- frank objective put in front of it. >> i want to thank my colleagues for revealing information on technical issues. i wish we could take your all on the road and let the american people hear from you about what is going on. i think it would be critical to do that. i thank you for the clarity, the candor, and for your commitment to the american public and to the american consumer at an unbelievably disastrous time economically in their lives. there are relieving -- they are really on my support. many, many thanks for your

contribution today. >> thank you, madam chair. i want to thank you for bringing us together and bring forth these excellent witnesses to shed light on an issue of great significance to all of the american people. all of our members, as i said earlier, when we are out of session and so many members are present for a hearing, it speaks to the urgency of the matter and the expectation of excellence that we have from all of you, which was certainly realized. when i began my remarks, i talked about the agony and ecstasy, the agony been the consumer at the pump, and the ecstasy being the the oil companies. it is clearly recognizing they have made $137 billion in profits last year, $261,000 a minute.

it is clear that some of that ecstasy is shared by speculators, excessive speculators on wall street. this is a very big deal. i really -- it may be about the nicole, but i -- the nickel, but i think is more about the supervision that this will bring that they do not want. i will bring the issue before the full house of representatives in a bipartisan way. the answers to your supplying to us, the documentation of the challenge that we have will be before the full house. having said that, this is a matter of public record. thank you for bringing this issue to the congress. and the range of opinions

between dr. greenberger and his academic world and dr. guilford serving the administration in more than one capacity. the validity that you bring to this is wide ranging. we are most grateful. i thank my colleagues and the distinguished ranking member on the natural resources committee. he has spoken so highly of what your testimony would be. again, thank you. and thank you, congressman doyle for your leadership. thank you, and the hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> the congressional directory is a guide to the 112th congress. you will find each them -- member of the house and senate including contact intimation, district maps, and committee assignments. information on cabinet members, the supreme court justices, and members. you can pick up a copy at c- span.org/shop. student kim video competition asked students to create a video telling us which part of the constitution is most important to them and why. today, we will take you to grand junction, colorado where the third prize winner is a senior . hi, vinny.

>> hi. >> what did you choose to make a video about religious freedom? >> it runs a lot of how people act in everyday society. role in government whether or not we try to. i wanted to see all the different aspects of this. even though i am not religious, i find it fascinating subject. >> in your documentary, you spent time with various religious groups. how would you describe those experiences? >> i found them and lightning. i go to the church lunch every week from wednesday's. i still do. they are just nice people. they give up three hours of their time in the middle of the day on wednesday. i found it interesting to talk to them.

and the other side i interviewed a group in grand junction. there in the news every once and awhile. i did not know what to expect. there were also nice people. >> why did you think it was important to spend time with both groups? >> it is important that people look at both sides of an issue before taking a side. i really try to get both sides of an issue, political or economic or personal. if you look at one side of an issue, you are going to get half the message. you are only getting half the information you could be getting. i feel that ignorance can be a problem in society that i do not want to contribute to. >> what do you think about the involvement of religion in government? >> i find no problem with it. in america, there is a model of majority rule, minority [inaudible]

the country is mostly christian. it is not hurting anybody. it really does not have a negative connotation to it. the same thing with the pledge. it is not like i have to say it. i cannot say the pledge at all or a can not say -- i cannot say "under god." i do find it insulting when politicians use it like there calling card in trying to call other people who are not as religious immoral. i find that wrong. you do not need to be religious to have a moral background. i see it as a effective campaign strategy. there's not much i can do about that. >> what would you want of your to take away watching your video? >> there is no true 100% guarantee that any is right.

we should not be fighting about an issue where it is only a matter of personal faith. it is a more personal issue, it is a society issue. i feel people need to see that a lot more. >> thank you very much for your time and congratulations on your wan -- win. >> thank you. >> here is a brief portion of "in god we trust." >> the founders did have a religious background. we're going to far in keeping got out of government. >> you do not have a right, i do not think it was intended to be protected from exposure to religion, whether it be a christmas tree or some kind of display of summaries belief in god. sensitive, wet are missing the point. >> the constitution protect our rights, whether we are christian, jewish, muslim,

atheists, or wherever we choose to believe. congress shall make no law respecting the establishment of religion or forbidding the of freedom of exercise thereof. we need a mutual understanding that we are a country founded by christians. nobody is wrong and nobody is right under law. >> you can see this entire video as well as all the winning documentary's at -- documentaries at studentcam.org. >> next, mitt romney speaking to the american society of news editors. president obama's signing legislation that bans members of congress from buying and selling stocks based on inside information. followed by the head of the pension benefit guaranty corp. of preparing for retirement. later, from the council on

foreign relations, a discussion on the global economic outlook. journal," wegton will talk about unregistered voters. chuck collins will take his -- questions about his new book. we will look at an inspector general's report that criticizes the general services administration for excessive spending at a 2010 convention in las vegas. our guest is tom shoop. "washington journal" is live on c-span every day at 7:00 a.m. eastern. >> mitt romney spoke to the american society of news editors today. president obama addressed a group a day earlier -- the group a day earlier. mr. romney said the president's remarks were "full of

distortions." >> ladies and gentlemen, please welcome naa chairman mike reed. [applause] ♪ >> good afternoon, everybody. welcome to this very special naa luncheon today. before we get started, i would like to give special thanks to fti consulting, a global business with specialized services in the newspaper and publishing sectors. their practices focused on thought leadership and digital strategy, and audience yield, combined with expertise in organizational design, advertising performance, news and content, and fulfillment operations. ken harding from fti is here today if anyone would like to discuss their services further.

for anyone who was opened a newspaper or turn on a television in recent months, our speaker does not need much in terms of an introduction. he is in good shape from a recognition standpoint and he is happy today given the events of last night with a clean sweep of the three primaries and a further widening of his delegate votes. however, his recognition is build some the on a career of accomplishment. as a businessman, he founded bain capital, a hugely successful investment firm that launched names like staples and sports authority. he is widely credited with savaging the salt lake city winter olympics. he volunteered skills to take over an organizing committee mired in debt and controversy, leading to one of the most

successful u.s. olympics ever, even with the massive security issues just months after 9/11. after -- as governor of massachusetts, he raced the budget deficit, and acted -- he embraced the budget deficit, and acted education reform, and health care reform that the state level. after last night he holds a wider and stronger delegate lead in one of the toughest and many say contentious political campaigns in recent memory. here to sara -- share thoughts on the campaign and the country it is my -- here to share some thoughts on the campaign and the country, it is my pleasure to welcome governor mitt romney. ♪ [applause] >> good morning. thank you, good morning. thank you to the newspaper

association and your board for the invitation to speak to you today. over the last 10 months, i have come to know a great deal about a number of your journalists part of your organizations. we have air our dirty laundry together, sometimes literally as well as figure to wait, we have david hour upon hour on the fine aroma of a campaign bus and shared birthdays and holidays more with each other than with our families. one of the reporters covering my campaign enjoy her birthday, and for bad birthday i got her a cake and sank her eighth birthday song. -- sank her a birthday song. she reciprocated by telling me and my birthday that i was old enough to qualify for medicare. the changes in your industry have been striking.

back then i would look online to see how stories were developing, and only hours after a speech it was dissected on the internet. now, we go to twitter. it is instantaneous. in 2008, the coverage was about what i might have said in a speech here today, it is about what brand jeans i'm wearing, or what i have for lunch. most people in my business are convinced it you are biased against all of us, identified with the famous quip from lbj that if he were to walk on water your headline would read all call the president cannot swim -- "the president cannot swim." [laughter] >> frankly, in some of the new media, i find myself missing the presence of editors to exercise quality-control.

and i missed the days of two or more sources for a story when it least one source was actually named. how your industry is going to change, i could not predict. i subscribe to the famous dictum for testing is very difficult, especially when it involves the future. i do know this. you will continue find ways to provide the american people with reliable information that is vital to our lives and to the nation, and i am confident that the press will remain free, but further, i salute this organization in your various institutions that make it up in your effort to make it not only free, but also responsible, accurate, relevant and integral to the functioning democracy.

thank you for that work. now, given the number and scale of our nation's challenges, this november's election will have particular consequence. it will be a defining event. president obama and i have very different visions for america, both of what it means to be an american today, and what it will mean in the future. the voters will expect each of us to put our respective views on the table. we will each make our case, buttressed by our life experience. the voters will hear the debates, there will be buffeted by advertising, and informed by your coverage, and hopefully after all of that they will have an understanding of the different directions we would take and the different choices we would make. of course, for that to happen, the candidates have to be candid about their views and their plans. in that regard, president obama's comments to president of the death a deeply troubling. -- president of reaching that should give -- president dmitry medvedev are deeply troubling.

by flexibility he means that what the american public does not know will not hurt him. his intent is on hiding. uni will have to do the seeking. president obama exchange with the russian president raises all sorts of serious questions. what exactly does president obama intend to do differently once is no longer accountable to the voters? what is flexibility with foreign leaders require less accountability to the american people, and on what other issues will he state his true position only after the election is over? instead of answering those vital questions, the president came here yesterday and railed against arguments no one was

making, and criticize policies no one is proposing -- criticized policies no one is proposing. it distracts from his record. wilander stand the president does not want to run on his record, he cannot run from his record either. i have said many times before the president did not cause the economic crisis, but he did make it worse. he delayed the recovery, then he made it -- made it anemic. when he took office, many americans turned to him to turn around the economy and lead us to full employment. he failed these americans. the first three rules of any turnaround our focus, focus, and focus, but instead of focusing on the economy, he delegated the stimulus to nancy pelosi and harry reid. the $780 billion stimulus included a grab bag of projects that languished in congress for good reason for years. it was less a jobs plan and more

the mother of all earmarks. the administration pledged stimulus would keep the unemployment rate below 8%, and it has been a mob every month since. the president's attention, -- of of every month since. the president's attention was elsewhere like to government control -- takeover of health care, and apologizing for america abroad. he handed out billions of dollars to green energy companies including his friends at companies like solyndra, who are now bankrupt. the answer to the economic crisis was more spending, more debt, and larger government, and by the end of his term in office he will have added nearly as much public debt as all of the prior presidents combined. no president has ever run a trillion-dollar deficit. the new normal the president would have less embraced is

trillion dollar deficits and 8% unemployment. through all of this, president obama has failed to pass a budget. in february, he put forward a proposal that included the largest tax increase in history and still left the national debt spiraling out of control, and the house rejected it unanimously. of course, no fiscal challenge is greater than the one we faced with entitlements, as the president acknowledged three years ago, this is not a product which problem we can kick down the road for their -- problem we can kick down the road further. i would be happy to consider his plan, but he does not have one. 3.5 years later he is failed to even propose a serious plan to solve the entitlement process.

instead, he is taking a series of steps that end medicare as we know it. is the only present to ever cut $500 million from medicare, and as a result more than half of doctors will say they will cut back on treating seniors. he is destroying medicare advantage, eliminating coverage millions of seniors depend on and reducing choice by two/thirds. to control medicare costs he has created an unelected, unaccountable panel, what the power to prevent medicare from providing certain treatments, and the result will be fewer services available to patients. a couple months ago we saw a fascinating exchange on capitol hill that epitomized not only this administration's inaction on entitlements, but also its appalling lack of leadership. treasury secretary timothy geithner testified before congress, congressman paul ryan, who unlike the president has had the courage to offer serious solutions, he was pressing timothy geithner on

the administration's failure to lead an entitlement reform, and timothy geithner responded, we are not coming before you today to say we have a definitive solution to that long-term problem. what we do know is we do not like yours. take a moment. think about that. we do not a dissolution. all we know is you -- we do not like yours. it all makes us long for the day when the president simply read from behind. now, in the weakest recovery since the great depression, the president has repeatedly called for tax increases on businesses. as a candidate obama, he decides that a lower corporate tax rate would be better. as president, he has added regulations at a staggering rate.

as a candidate, he wants to find ways to reduce them. as president, he delayed the development of oil, coal, and natural gas. as candidate, he says he favors an energy policy to adopt an all-of-the-above approach. nancy pelosi said we would have to pass obama-care to find out what was in it. president obama has turned the buys into a campaign strategy. he wants to reelect him, so we can find out what he will do. with the challenges the nation faces, this is not the time for president obama as hide and seek campaign. he said he wants to transform america. i do not want to transform america. i want to restore the values of economic freedom, opportunity, and small government that made

this nation the way it is. it is opportunity that has always driven america, and defined us as americans. my grandfather was in the construction business. he never really made it himself, but he convinced my dad that he could accomplish anything he wanted to. my dad did not have the chance to finish a college degree, and he was an apprentice as a carpenter, and based on that experience he turned around a car company, and later became the governor of the state of michigan. my father made the most of the opportunities that came before him. by the time i came along, and i was the fourth of four brothers and sisters, i have the chance to get the education my father could not. i love cars, and i was tempted to stay in michigan and go into the car business, but i always wondered if success i might have was due to my dad, so when i got out of business school if i stayed in massachusetts and got a job with the best company that would hire me, and perhaps, more importantly, i was married and on the way to having five sons.

over the next 25 years my business career had ups and downs, great successes, definite failures, but each step of the way i learned more and more about the power of the free enterprise system. now, i am not naive enough to believe that free enterprise is the solution to all of our problems or to doubt that it is one of the greatest forces of good that the world has ever known. free enterprise has done more to lift people out of poverty, to help build a strong middle class, to help educate our kids, and to make our lives better than all of the government's programs put together. if we become one of those societies that attack success, the outcome is certain. there will be less success. that is not who we are.

the promise of america has always been that if you worked hard, took some risks, there was the opportunity to build a better life for your family and for the next generation. i am offering a clear choice, and a clear path. unlike the president, i have a record that i am proud to run on. after my years in business, i use my experience there to help save and olympics and turn around a state. when i became governor of massachusetts, the state budget was out of control, and the legislature was 85% democrat. we cut taxes 19 times and balance the budget every one of my four years. we in raced a shortfall and left office with a rainy day fund. i cast over 800 vetoes. if there was a program or an agency that needed cutting, we caught it. one television commentator said i did not go after the sacred cows, i went after the whole herd, and i cannot wait to get

my hands on washington. unlike president obama, you do not have to wait until after the election to find out what i believe what my plans are. i have a pro-growth agenda that would get our economy back on track, and get americans back to work. this administration thinks our economy is struggling because the stimulus was too small. the truth is we are struggling because our government has grown too big. as president, i will get the government out of the way and unleash the power of american enterprise and the innovation of the american people. seven months ago i presented a detailed plan for jobs and economic growth. it included 59 different proposals that would help strengthen the economy.

i understand some people are a news that i have so many ideas, but i think the american people will prefer it to president obama's grand total of zero. i will cut marginal tax rates across the board for individuals and corporations, and limit deductions and exclusions. i will repeal burdensome regulations and prevent the bureaucracy from writing new ones. i will unleash domestic energy resources so we can get the energy we need at a price we can afford and keep those dollars in this country. instead of picking winners and losers with taxpayer dollars, i will make sure every entrepreneur gets a fair shot and every business plays by the same rules. if i will create an environment where our businesses and workers will compete and win. i will welcome the best and brightest to our shores and ensure that we have labour and training policies that help american workers to be more competitive. instead of growing the federal government, i will shrink it. i will repeal obama-care, and cut programs we simply cannot afford, and i will send the state's programs they can implement at lower cost with

better results. i have already proposed a plan that would strengthen medicare and social security for future generations, and on like president obama i have the courage to stand behind my plan and the leadership experience to ncacy -- enact them, without tax increases. i will gradually raise the retirement age for social security and reduced the rate of benefit growth for higher-income seniors. i will introduce competition and choice to medicare while preserving medicare coverage as an option so future seniors can get higher quality at lower costs. this november we will face the defining decision. our choice will not be one of party or personality. this election will be about principle, freedom, and opportunity.

i am offering a real choice in a new beginning. i am running for president because i had the experience and the vision to get us out of this mess. we know what barack obama's vision of america is. we all lived these last three years. mine is very different. i see an america where we know the prospects for our children will be better than our own, where the pursuit of success unites us, where the values we pass on are greater than the debts we leave our children, where poverty is defeated by opportunity, not enabled by a government check. i see an american government that is humble, but never humbled, that leads, but is never let.

we wage this campaign as republicans and democrats, but we share a destiny as americans. together, we must ensure that america's greatest days are yet ahead. thank you, and god bless this great land. [applause] >> hello, ken. >> i'm ken paulsen. governor romney has graciously agreed to answer some questions. these are from all across the country. we had a special guest here yesterday who had some views. president obama said the republican party has gone so extreme that ronald reagan could not win a gop primary.

i know they you took a look at the president's remarks. did you have a response? >> i think ronald reagan would win handily in a primary, and frankly, in all the primaries. i think our party is intent on preserving the vitality and dynamism of the american spirit that i think is being deadened by a series of government programs that have been increasingly in evasive and have attacked economic freedom. i look at what the president said. there were so many things i found to be distortions and inaccuracies, and it is hard to give a full list, but let me try. he looked at the budget and said if we were to pass the paul ryan budget, look at the terrible things that what happened if we cut programs and a proportional basis, but of course you would not cut programs on a proportional basis. some programs would be eliminated all right, obama-care being first on the list, and this is about $100 billion a year.

he went through a series of strong men, saying the republicans are interested in corporations being able to do whatever they want to do with pollution, employees, with impunity and without regard to consequence. these things are strong men that have no relevance in reality. it is important for us to have discussions about the real issues that exist and how we would address them, and there are differences, but the idea of this rhetorical excess does not serve as terribly well in a process like this, and i hope in the future we can talk about the real issues, the real differences between us, the failures of the last three years -- the president the other day said that his has done a great -- has been a great presidency, in line with great presidents of the past, as he defined them. i do not think this has been a great presidency. as you like the pieces of legislation he has enacted, they

did not get the economy to work again. the economy has gotten better, some will say, but the rate of recovery under this president has been the most tepid. i saw an article in "the wall street journal" that said this is been the slowest economic recovery, including that of the great depression, following the great depression. so, this is has the records to be proud of. it is a record i think he will have a hard time defending, and it is a vision i have yet to hear laid out. how can you run for president and the president and not put forward a plan to make sure medicare and social as attorney are solvent? >> a gallup poll showed you leading president obama by one percentage point by -- among men, but trailing him by 18 points among women. why do you think you face this

gender gap? >> i know our party has faced a gender gap traditional repair if the democratic party has done an effective job mischaracterizing our reviews. in the final analysis i will win by having the support of men and women, in the battleground states and across the country. that will be by focusing on the issues that women and men care most about my wife has the occasion to campaign on her own and also with me, and she reports to meet regularly that the issue women care about most is the economy, and getting good jobs for their kids and for themselves. they are concerned about gasoline prices, the cost of getting to and from work, taking their kids to school, or to practice and so forth. that is what women care about in this country, and my vision is to get america working again. short-term and long-term. look, we are on a path to becoming more and more like

europe, and europe does not work in europe. it sure is not going to work here. [applause] >> we are going to have to maintain the unique features that make america the economic powerhouse that it has always bad, and a strong economy allows us to do a lot of good things. one, have good jobs, rising incomes, a growing middle class, and allows us to have revenue from taxpayers who now have jobs to pay for grade schools, a wonderful care for our seniors, a strong military to defend us, but at the heart of these things is a strong and vibrant

economy. the president, almost without exception, if you look at the policy had at -- he has pursued and the acts that he has signed, they have made it harder for our economy to rebuild. do you know any businesses that said let's hire more people because obama-care is coming, or in the financial-services sector do you find smaller banks saying i am willing to give more loans because of dodd-frank, or when they heard about cap and trade the energy industry said let's grow in america, or when they heard about the boeing decision they said it is a good time to hire people? in almost every measure the president has taken, it made it harder for small business to decide to grow, were big business to stay here. it has been an anti-business, anti-investment, anti-jobs agenda. that is not what the president and tended, but that is what it has done. it is time for golf -- for us to go back and say we want to make america strong again with the best environment for business in the world -- small business, big business, and job creators of all time.

when the head of coca-cola says america's business environment is less friendly than that of china, we know we have a problem. i said the other night that my liberal friends say they love a strong economy, but they do not like business very much. the economy is simply the addition of all the businesses in america, and what we will have to do is encourage enterprise, and, of course, encourage it with appropriate regulation, fair taxation, and without special breaks for friends of one party or another. that has to be done. making business thrived in america is one good way of getting people jobs and growing middle class. >> today you once again referred to president obama apologizing for america around the world. if our country's -- country truly errors, if our troops engage in something that is truly wrong, is there a time when a president should apologize?

>> when mistakes happen, you acknowledged the mistakes, but this is different than the apology to the middle east, not talking about a mistake that was made, he was instead talking about america. he says that america has dictated to other nations. he said that america has been divisive and arrested. look, america has not dictated. america has freed other nations from dictators. america's history is not only of having listed people out of tyranny through extraordinary -- listed people out of tyranny through extraordinary sacrifices of our sons and daughters, but also our principles of free enterprise, human rights, freedom and democracy, that have helped to lift millions out of poverty. america is the greatest nation in the history of the earth, so on the list, on the balance sheet, it is not appropriate for the president of the united states to apologize for america,

america's history, and america's role in the world, but that is of course different than acknowledging mistakes. >> this might be a question of self-interest. four years ago senator john mccain struck it spoke to us and he pledged to support a federal law -- spoke to us and pledged to support a federal law. >> i have not looked at that. i will give it consideration. i have an unusual background perhaps for politics, and i will describe a circumstance. we faced a decision about whether to extend a line of our subway system. it was an expensive decision,

in my senior staff and a number of cabinet members, and have our legal department came in and said we of all met, gone to the pros and cons, and decided it was something we all endorse, and they expected me to say fine, go ahead. i said as anyone of you disagree with this, and they said no, and i said i cannot make a decision to go ahead with the project unless someone in the room vehemently opposes. with regards to something of this nature, i would want to hear the pros and cons. i would like to hear the back- and-forth. >> i respect that, and i do wonder, then, early in your remarks you mentioned the good old days of multiple sources. she'll bonds are about giving reporters the rights. d.c. a role for confidential sources in america -- do you see a role for confidential sources in america?

>> yes. can i ever imagine a time when a source would need to be revealed? i can imagine that, too. i know that sounds like a conflict, which is why i have to give this more thought to understand which side of that i would come down on. i would want to hear from people in the industry. is there ever a time you would think a confidential source should be revealed? if the answer is no, i would like to understand why that is the case, and what the alternative is. >> we have time for just a couple more quick questions. you promised to use any means necessary to prevent iran from using a nuclear weapon. with you seek congressional authorization before a military attack? >> i will follow the constitution and determine what is the authorization to take any kind of military action.

with regards to iran, and their nuclear program, this is not something which can be guaranteed to be solved through diplomacy. i certainly hope we can dissuade iran from their nuclear folly to crippling sanctions, which should have been put in place all long time ago, threw him in guiding -- and died in -- indicting ahmadinejad, and to have support of dissidents are run the -- among the iranian people. the president was silent when they took to the streets following a stolen election, and i think we would have to decide we would take military action if necessary, and the degree of congressional involvement that would be in accordance with the law.

>> one final question. you had a very good day yesterday. you have had your supporters, paul ryan, marco rubio among them, and they're called on republican opponents to get out of the race. have you asked them yourself? >> no, i have not. [laughter] >> now that you bring it up. [laughter] >> people are free to make their own decision. they have each invested a major part of their lives into the campaign. i hope we are able to resolve or nomination process as soon as possible because i would like to focus time and attention on the key battleground states and raising the funds to be somewhat competitive with the president and his billion dollar request. we have a challenging road ahead of us, but i believe we will rise to the occasion. >> governor, thank you for sharing your time and your comments. >> thank you. [applause] ♪ ♪

>> president obama signing legislation that bans members of congress from selling stocks based on inside information. that is followed by the head of the pension benefit guaranty corp. on preparing for retirement bai. the deadline for filing federal income tax is less than two weeks away. you can see his remarks live here and c-span at 1:00 eastern. then at 2:00 eastern, president

obama signing wa legislation to make it easier to sign stocks and public offerings. >> president obama signing the congressional insider trading bill. what will this do when it is signed into law? >> that is a great question. it is a reactionary piece of legislation that followed a 16 minute piece last november. it accused lawmakers of using their position on stop trade. it is basically a pr problem if anything else. members wanted to clarify that we are not doing this given their approval rating. they came up with this bill to clarify that we are covered und.

the whole post watergate era. it is a big overhaul. >> you wrote it was changed a bit by erick kanter. now the ball is broadened into the executive branch. the judicial branch was in favor of that. >> dit included a few thousand executive branch employees. those are the top people appointed by the president, folks such are running a agency.

that was understandable. senator shelby had introduced an amendment that bear the past. it got 61 votes. in needed 60 to expand that number. it was to include more than 350,000 federal employees. >> the bill intended to clarify the obvious. insider training was already in effect. does this add any additional punishment for breaking the log? >> it puts more responsibility is on the lawmakers. the version that obama assigns basically one of the specific things is saying that if lawmakers are accused of this, then they are not one to get retirement benefits.

>> there is a piece that is not in the bill. one of the original sponsors wanted a deal with this. can you explain that? >> absolutely. >> it is basically a provision that was taken out of the bill. it said folks that come in and be friends staffers and lawmakers and news that friendship to get information about upcoming bills that might affect certain companies or investors, they use that information and sell it to people who will pay big money for its to keep business up with in coming legislation. this piece said if you're going to do that, you need to register so we can make sure what information is coming out. what information is coming out.