some folks said that is a freedom of speech thing. this is a really great area. we should not regulate it. we should study it. they wound up putting its been a requirement for a report on his political intelligence. the right now and will not be regulated. >> >> signing the stock act today, president obama was joined by a 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 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. -- finally 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]

>> it's not as easy as it looks. [laughter] >> there you go. [applause]

>> the deadline for filing federal income taxes is less than two weeks away. tomorrow afternoon, the irs commissioner of taxes at the national press club. you can see his remarks live here on c-span at 1:00 eastern.

at 2:00 eastern, also live on c- span, obama signed legislation designed to make it easier for small companies to sell stocks initial public offerings. this year's studentcam contest asked students across the country what part of the constitution was important to them and why. today's winner selected the first amendment. >> and god said, let there be light, and there was light. >> but it is no rebuttal to my position that atheism poisons everything that religion poisons. there are plenty of poisons in the world. >> anyone who says they have god on their side, also helps themselves and has the right to commit any crime reported -- any crime. >> a little harsh, right? the debate over religion has been going on since civilization began the jews were oppressed by the pagans. they, muslims and oppressed by

the catholic. in america, we are guaranteed our free right to practice whatever religion we associate with. the congress will make no law is out with -- affecting the establishment of religion or the practice there appeared -- there of. this is my house in grand junction, colorado. i have lived here most of my life and have hardly ever been to church. it is not because my family is traditionally nonreligious, because they are both catholic. i consider myself agnostic. religious leaders can truly separate a society. i decided to immerse myself in the middle to better understand religion and its role in government. this is a free lunch put on everwood by baptist church at my high school. people of all faiths are welcome. all they ask in return is to listen to a sermon.

>> allowing things in my life to interfere with the greatest decision, the greatest reality that mankind can never know, and that is, daily walking with christ. >> at the other end of the spectrum, the western colorado atheist and freethinkers meet once a month at the local mall to talk about service projects and infringement on their first amendment rights. >> [unintelligible] >> i spoke to the pastor at the church lunch and the leader of the '80s and freethinkers about many topics, including the existence of god. >> one way i know there is a god as i cannot look at this beautiful world around us and say that this happened by accident.

i believe that is an insult to my intelligence. >> but to say that there is some guy in the heavens looking down on me and, oh, i lost my cellphone and god found it for me because i've prayed, it is a very odd thing. if god can find somebody's cellphone, how come he cannot make peace in the middle east? >> because there is no certainty. we all need to take a bit of faith in our beliefs. faith, to me, and jesus christ, for instance, when i set this chair down in front of you, i did not test it out to see if it would hold me. i did not look at the manufacturer. i believe with all of my heart that it would hold me up, and so i sat in it. >> as a scientist, i cannot say that there is no god, because you cannot prove that. there is no scientific way to test that. however, for myself, i can say to me, there is no god. i have not seen any evidence, or any kind of analysis that

would convince me. >> both have been using the government as a moral system. i spoke with my teachers about the history of religion in america. >> reading the declaration of independence, you can see we are given these inalienable rights by our creator. just having god mentioned in the declaration of independence and those individual rights given by him were a huge driving force in the american revolution. >> the father is definitely saw the need for religious, but not the establishment of religious institutions that would be imposed on people. they wanted people to believe in whatever form of religion they so choose. >> i think the thing that offends me the most, especially when politicians nowadays say, we were founded on christian

principles, christians do not have a monopoly on morality. morality comes from your upbringing and the and are meant that you live in. >> we have got a little too far in trying to keep got out of government. >> 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 -- of belief in god. once we get to the point where we are that sensitive, then we are missing the point of what our freedoms are. >> the constitution protect our rights, whether christian, jewish, muslim, it is, whenever we choose. i do not see any reason why we should eradicate god from a government that was founded by christians. congress shall make no law with respect to the establishment of religion or the provision of the exercise thereof.

we need a mutual understanding that we are a country founded by christians. nobody is wrong and nobody is right under the law. we can practice what we wish. even though there is a nativity scene at the congress building, that does not permit you from going to a synagogue or exempting your freedom of speech or write to vote. i respect others rights if they respect my. we need to have the right to express our own beliefs. >> we, like other countries, need to be vigilant in protecting the rights of minorities and building a society in which people of all faiths, and people of no faith can live together openly and peacefully. >> go to studentcam.org to watch all of the winning videos, and continue the conversation on our facebook and twitter pages. >> still ahead, the head of the

pension benefit guaranty corp. on preparing for retirement. then a discussion on the global economic outlook. after that, congressional democrats looking into the causes of rising gas prices. later, former senator and middle east peace on boy george mitchell. >> on "washington journal tomorrow morning, we will talk about unregistered voters with the chairman of go-pac. tom shoop will talk about his new book, and we will look at an inspector general's report that criticizes the general service administration for excessive spending at a 2010 convention in las vegas. our guest is editor-in-chief of government executive magazine. "washington journal" is live on c-span every day at 7:00 a.m.

eastern. this weekend marks the anniversary of the bloodiest battle to be fought during the civil war. up to that point, the battle of shiloh, with almost 24,000 casualties, and we will tour the battlefield with chief park ranger state alum, saturday at 6:00 p.m. eastern. sunday night at 7:00, clara barton. join us as we rediscover the third corps office as it is prepared for renovation. this weekend on american history tv on c-span3. 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, 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 is not news that americans are 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. and's job is to encourage 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 theirs.

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 a 401k plan, each of us has to figure out how much to set aside, and to 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 now clear that american can do both. it can restructure -- it can still keep its pensions and pay pensions in the future. american is not alone. there are plenty of other examples. the grocery chain a&p just came out of bankruptcy and 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 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 and the vast majority of employers contribute to those plans. they set them up and they help fund them. in some cases, those are traditional plans. where the employer provides the funds, handles the administration, worries about the investments, guarantees the benefit. in more cases, they're 401-k type plans where the employer does handle administration, where both share in the costs, and where employees -- but where ploy yose take the risk that there's enough there. -- but where employees take the risk that there's enough there. one of the things i think is important is a lot of employers dissatisfied with either option are looking for better models. some are looking for 401-k type plans that provide a minimum benefit or a lifetime annuity benefit.

or they're looking for a high drid defined benefit plan where the investment risk is shared with the employee. all of these efforts are important. because businesses are better able than individuals to figure out retirement plans. i am -- 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 to have the time or expertise to set up a retirement plan. ploy employers do that. and -- employers do that. and that's why it matters that they do. every time a business says you're on your own, fewer people get a secure retirement. fortunately most businesses do offer retirement plans. two thirds of american workers today, two thirds, have access to some sort of employer-provided plan. and not to hit a point too

hard, 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 -- well, americans. americans and their families. now, how about government? what does government do? government doesn't require private retirement plans. but it does encourage them. it sets minimum standards. if a business promises a 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. government steps in to make sure those things happen. government encourages both existing plans and new approaches. we provide tax incentives.

for employers to offer plans and set them up. and i think this is important to 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. and similarly government can and is making changes to ensure that employers have options. that they have options within the traditional d.b. model and options within the 401-k, the so-called defined contribution model. and of course since i am from the pbgc i should mention government does if plans fail provide a safety net. i started today talking about baby boom ehlers. partly because i am one and retirement security is not only

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

baby boomer for commercial rewrote the words. he didn't say hope i die before i get old. he said, i don't want to die. i want to get old. so i don't think there's a generational divide on this. i think we all care about having a decent life when we can no longer work. and we can have it. if we as individuals save more. if business continues to provide both plans and funding, and we in the government continue to provide support, standards, and a safety net for those in need. thank you. >> thank you, josh. we'll now open it up to questions. let's start with questions in the room. yes, sir. and also, ask you to identify

yourself. your name and your news organization if you would, please. >> yes, i'm robert england with h.r. executive magazine. what exactly is pbgc doing to promote fention plans of any -- pension plans of any -- is there one kind of program or systematic effort to do that? >> josh, you might -- i'm not sure if everybody could hear that question well. if you could basically summarize the question, too. >> the question is what is pbgc doing to encourage pension plans. well, one is -- and i guess one thing i should be clear is the agency's mandate from the day it was created is to encourage voluntary private pension plans. and so we take that, our job,

as trying to do several things. one is preserve the plans that are already there. that's 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 doesn't accidentally make it harder for employers to offer pension plans. and this requires thinking through how do you regulate, how do you set your standards? we do that, too. third, talks like this one. which is to clear the air that there is general goodwill and desire on the part of everyone to have good retirement plans.

and 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? and the answer is no. and i think that is really very important. the vast majority of companies in america are offering pension plans to their employees. the vast majority of companies in america are contributing to those plans. and we think it's important to recognize that and to encourage that. any other questions in the room? yes. in the back, please. >> i would like you to talk a little bit more about the impact of defined benefit plans on the capital markets and what

the government can do to support -- to support their involvement. >> 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 professionals about setting up benefits and figuring out how to pay people, pension plans are also professional investors. and that means that pension plans were among the first people when a new class of folks, call them venture capitalists, went looking around for funds. pension funds were the place where there were sophisticated enough investors to say, ok, we'll provide capital so that you can actually create a venture capital industry.

same is true with what became the private equity industry. it didn't start as a private equity industry. and so the way i look at it is that because pension funds create a group of professional, serious investors. they create a knowledgeable group that can in fact innovate in investments. now, some of those innovations don't work. that is what the capital markets are about. but what i think is important is that pension funds provide them. and i think equally important is that because pension funds are sophisticated, they can watch their investments. they can provide oversight. they can provide the kind of governance that i know you worry about. and so for my perspective, entirely separate benefit to us

as a society is that in traditional pension plans, we have a group of knowledgeable, concerned, smart folks who participate in the capital markets in a way that isn't random. and isn't fly-by-night. and i just want to also smine the reporters -- also remind the reporters that might be listening, feel free to file the -- follow the instructions and ask a question. any questions? yes, in the back there. >> to what extent is pbgc -- i'm with c.n.a. -- to what extent is pgc -- pbgc increasing rates and longevity risk? [inaudible] but is there -- are you

factoring in longevity risk when you look at your pension premium increases? >> the question here is when we think about what the right premiums ought to be for pbgc, should we take longevity -- the fact people are living longer into account? and 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 they've lagged what they need to be. and so from time to time, the congress of the united states has recognized this and acted and raised those premiums.

we've gone to the congress and said rather than waiting until you do pension legislation, and rather than doing it in a way that everybody pays the same, why don't we do it on a more business-like basis and let us figure out what i rates apply to which people. the way our system works right now is that there's a fundamental unfairness in it. think about -- let's put aside pension terms and let's talk about auto insurance. you're required to have auto insurance. and you get a rate based on what your record and your situation is. well, suppose you got a note from your insurance company, because your neighbor had three accidents last month, your rates are going up. you would be ticked.

that's the way sour preem -- the way our premiums are set. right now, the people who pay our premiums know that their rates are raised because of the actions of other companies, not themselves. and we're trying to change that. we've started that discussion with the congress. and i hope when there is pension legislation in the future, that they will take that into account. because we think the result will be a better, fairer system. i want to use the discretion of the chair here and ask a question myself. you alluded to american airlines. and you've been in the headlines a lot for a very aggressive stance that you've taken. is this typical of what you do with companies? or is american a special case? they certainly reacted like they were a special indication. when you put leans on their foreign -- liens on their

foreign properties and took other actions. can you explain how american fits into enforcement or action you take against companies? >> sure. happy to do it. the fact is that what pbgc did at american is what pbgc has 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 about the agency, and i admire about the agency, is that the people in it are -- the financial analysts, the lawyers, the absent wares are terrific and professional -- actuaries are terrific and professional and experienced. so what happened when american filed is that pbgc used the talented staff it has, it used the tools that the law gave it 37 years ago, to protect

pensions. and that's why we're there. we are there to make sure obviously that the company survives. and 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 can't afford their plans. if we were in different economic times perhaps, and certainly when there were different economic times, we came to a different conclusion. and in that case we took the plan. but my view of this is we are doing the process of protecting pensions, we hope providing peace of mind to 130,000 people. in a way that preserves the jobs of the 80,000. and that is something which pbgc has done, perhaps

unnoticed. but done for decades. yes. >> good morning. thank you so much for being so optimistic. i wish i could say the same. back in 1985, 125,000 pbgc plans and today there are fewer than 20,000 and companies have been freezing them, shutting them down. and in recent years, the very low interest rates are the culprit for the death of these pension plans. and now we've seen a tax on public pension plans. california, new york, in about 20 states, i think, there are legislation either actively or

under consideration to convert the plans into some kind of defined contribution plan. so what is the pbgc doing in its role to encourage pension plans to look beyond the insured corporate and private pension plans to create some kind of a public-private partnership that will encourage more retirement security for the vast majority of americans? >> i'm sorry. i didn't get your name. >> denise from the afl-cio. >> what we are doing is trying first to preserve the plans we have. and i'll 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've been at the pbgc for a year and a half. and i'm always reminded of mark twain's remark about the rumors of my death have been exaggerated. it is absolutely true that the number of plans offered of the traditional defined benefit kind has declined in the last 30 years. it's also true the number of people covered by those plans has increased, not decreased. there are more people covered by defined benefit plans today than there were 30 years ago. now, does that mean that a lot of folks aren't choosing other ways to provide retirement security? no, it doesn't. but from my perspective, it is important to preserve the plans

we have. we think that traditional pension plans serve people better. and we are doing that. but -- and 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 life styles change, we still have those kinds of plans. and i mentioned that before. but i'll say it again because i think it is really quite important. most people know that there is the traditional pension model and there is the -- what is now the traditional 401-k plan. and the traditional pension model is the employer does everything, takes care of everything, and pays for everything. the traditional 401-k model is the employer writes a check and

then you're on your own. not just government. not just employees. but employers recognize that that is not satisfactory. and so there have been efforts, efforts that government has tried to facilitate to do -- to modify and offer options on both models that serve people better. so, for example, my colleagues within the administration have worked very hard to make it possible within the -- 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 that contribution get something that offers lifetime income. that's happening now. i think it's very important.

i think it will by offering new possibilities, it will give people new possibilities for retirement. i'll also 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 the risk to the employees in the form of what are called hybrid plans. and there were lots of difficulties. there were questions about whether they were fair. there were questions about whether they were lawful. etc. but what has happened is we're now realizing, and congress passed a law, five years ago, six years ago, saying hybrids ought to be allowed and so what is happening now is within the government, we are, within the administration, we are working 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 do think it is important. we are not going to enhance retirement security by just sticking to the old models. what we need to do is provide options so that case by case, employer and employee, by employer and employee, they have choices. that's what we're doing. and i think that actually is an important part of the future. >> that might be a good note to end on. i'm sorry that our -- all the reporters we have on the phone were too shy to speak up. but before we go, i just want to give a plug for a couple of other events that the club has going on. our luncheon speaker later

today is depak chopra and commissioner douglas schulman. and this friday at 10:00 we'll have another news maker and it will be a panel discussion on nuclear security and preventing nuclear terrorism. but for today, i want to thank you for joining us. and thank all of you for coming. and for those who are watching, thank you as well. >> up next on c-span, a discussion from the council on foreign relations on the global economic outlook. after that, congressional democrats looking into the causes of rising gas prices. then former senator and middle east peace envoy george mitchell. and later, a top official with egypt's muslim brotherhood speaking at georgetown university. the deadline for filing federal

income taxes is less than two weeks away. and tomorrow afternoon, i.r.s. commissioner douglas schulman talks taxes at the national press club. you can see his remarks live here on c-span at 1:00 eastern. and then at 2:00 eastern, also live on c-span, president obama signing legislation designed to make it easier for small companies to sell stock in initial public offerings. the council on foreign relations a. discussion today on where the global economy is headed. they talked about the u.s. economic recovery, europe's debt problem, and china's expanding economy. from new york city, this is about an hour.

>> the center for economic studies. i think we've been doing this update, i've been chairing it for two years. every time i do it, somebody comes up to me afterward and said why does it depress me so much? this economic news is terrible. and i say i'm just the messenger. and hopefully a better messenger this time with a pretty nice quota but i see every night the market has sold off and just my luck. i'm hoping that the rest of this panel is going to be more optimistic than i just was. it's a very -- i think veterans, all of you, on this stage, the united states chief economist at nomur, next to me here, joyce chang, global head of emerging markets at j.p. morgan. and here, vincent reinhardt, chief u.s. economist and co-head of global research at morgan stanley. last time vince came to speak here, he managed to invoke rebel without a cause.

a recent morgan stanley video, he invoked the lincoln assassination. and you better not let us down. and we need culture. we need history. just a couple of housekeeping points. remember, to turn those things out that go bleep off. they mess up the phone system. i think we have c-span here. so we care a lot about the sound system today. and secondly, this is on the record. so keep that in mind. let's start, joyce, with the euro zone. still the most -- the part of the global economy, in december and february, they seem to stabilize things, we just had the announcement of a big new -- i say new -- whether bigger is a question -- firewall agreement. joyce, are we out of the acute phase of this crisis in europe? >> the acute phase of the crisis which i would define as

liquidity, i think we're out of right now. but the chronic phase of the crisis which is the economic adjustment and the pain of that economic adjustment, we're embarking on that for a very, very long road. we're forecasting a session of 1.5% contraction in the economy this quarter. if you look at the firewall, that's not what's going to move the market. it's lpro that moves the market. that really led to the risk rally. and if you look at where the european central bank balance sheet now, as a percentage of g.d.p., it's in line with bank of japan. 30% of g.d.p. expansion. so acute meaning that the stemic liquidity issues have been addressed -- systemic liquidity issues have been addressed through lpro, not necessarily through the firewall or other actions, that's over. but the chronic economic painful adjustment, take a look, 23% unemployment in spain, fiscal deficit of 8.5% of g.d.p. well above what their target was and a recession.

that chronic phase is going to extend for a long time. and i think that's not just the european story. if you look at developed countries at large, the debt burden, the public sector debt burden increased by almost 23% since the onset of the global financial crisis. >> so vincent, we've had three countries in europe so far that have had formal support programs, portugal, greece, ireland, how long before spain gets one, too? >> that importantly depends on the willingness of the leaders of the rich countries to continue to send resources to keep the enterprise ongoing. i worry as joyce has explained about the chronic aspect. we have a continent in which a large number of countries will be shrinking as part of fiscal consolidation. and the core rich countries expect to have export-led growth. not exactly obvious to me who

they will be selling to. and particularly if we get past the funding stage, the euro would appreciate and not selling to the rest of the world, either. so the cron he can aspect of it is going to be when do people see the benefits of keeping the exercise ongoing? back to the immediate question. spain is the first cost. the funding. which is essentially a programming exercise, the i.m.f. would do in the 1960's. what's the official resources, what do they have to roll over, how much can they contract? >> 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 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 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 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 fewer. -- 17 members of the eurozone or fewer.

>> i think there will be the same. >> 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] collects the deadline for filing federal income taxes is less than two weeks away. tomorrow, we talk taxes at the national press club. the you can see his remarks life here on c-span the 1:00 eastern. president obama signing legislation trying to make it easier for small companies to sell stocks.

house democrats held a hearing on rising gas prices. must focus on speculators. nancy pelosi shares the hearing -- chairs the hearing. >> good afternoon. i am pleased to call to order this important meeting. i have appreciation to our chair. she will preside over today's presentation. i am also pleased to be joined by the chair of our caucus, congressman john larsen of connecticut.

i am pleased to be joined by congressman of right island. -- of rhode island. the agony of our consumers at the price of the pomp and what it means to them, especially people having trouble making ends meet. this is an obstacle to them. it is not just a luxury. it is something they must do. the agony is for the. the ecstasy is for big oil.

they raked in $137 billion last year. that is $261,000 a minute. wall street speculators are driving up the prices at the pump. we will hear about this from our expert witnesses. and thank my colleagues for joining us. i want to welcome everyone here. it is a pleasure to be here. this affects every aspect of americans' lives, not just the cost of traveling.

there are many reasons for fluctuation in price of oil. in some of these, the administration is moving forward by working with the international community. saudi arabia announced there would lower well prices. it is affected by rampant speculation in the oil market. this is something that we can and should do more about. last year the estimated that they increased crude prices by around 20%. even the head of exxon mobil conceded the price of oil should have been in "$60 60 $70 range" we're holding this hearing to

examine how we can do a better job of better examination. last year they charged oil speculators with manipulating the crude prices by up to thousand eight.

the agreement must establish palestine as a homeland for the palestinian people, just as israel is the homeland for the jewish people.

these the negotiations must insure that israel has recognized indefensible borders. they must ensure the state of palestine is meticulous, sovereign and independent. it is vital that each side understands that satisfying the others fundamental objective is key to a successful agreement. security for israel and viability for the palestinian state or in the mutual interests of both parties." taking office just a few days after that speech, president obama publicly reaffirmed that policy. but it seemed then that the culture of peace, so carefully nurtured during the process, had largely dissipated, replaced by a sense of futility, of despair, of the inevitability of

conflict. the conflict in gaza had just ended four days before president obama took office. the palestinians were deeply divided, and israel was in the middle of the general election. few then believed that there was any chance for restarting peace negotiations, let alone achieving an agreement to end its conflict. unfortunately, three years later, that remains largely the case, despite an intense effort. the solution cannot be imposed externally. the parties themselves must negotiate directly with the active and sustained support of the united states. this will require of them compromise and flexibility. most of all, it will require leadership. by all concerned, leaders,

especially, who are willing to take risks for peace. i still believe that this conflict can be ended. in part, because i think the very real pain that they will endure from negotiating an end to the conflict will in fact be much less than the pain they will endure if they do not. there is a lull now that has created a false sense of comfort, but if history is any guide, that will not last. if the conflict continues, both israelis and palestinians face a dangerous and uncertain future. that includes, of course, the possibility of renewed violence, which we hope and pray will not occur, but if it does, could spread in unpredictable ways. there are other dangers for both.

let me mention just a few. for the israelis, first, demography. there are now just about or a little over 5.75 million jews living in the area between the jordan river and the mediterranean sea. in the same space, there are just over 5.25 million arabs, including israeli arabs, palestinians on the west bank, and in gaza. the arab birthrate overall is much higher. within just a few years, they will be in the majority. israel will then have to choose between being a jewish state or a democratic state. once the two state solution is lost, it cannot be both. this has been widely discussed in israel, most recently and most forcefully by ehud barak, the former prime minister, now the defense minister, who has said that this is a painful choice that israel should not have to make. the second challenge arises from technology.

to keep out suicide bombers, israel built an enormous wall. but the real threat now comes not from suicide bombers, but from rockets. hamas has thousands of them along israel's southern border. they are crude, lacking in guidance or destructive power, but they do create fear and anxiety, and no one can doubt that over time, they will have more and better rockets. on israel's northern border, hezbollah already has tens of thousands of them. the public estimates range from

30,000 to 50,000. they are somewhat more effective, and though limited in range, hezbollah is engaged in efforts to upgrade their rocket systems. finally, and most ominously, iran now has rockets that can reach israel from iran itself. they don't yet have the precision weapons that are needed to strike very specific military targets, but they could cause enormous death and destruction in cities. the united states is fully committed to israel's security. that commitment is firm and unshakeable, and will not change. to honor it, we have provided enormous financial and military support to israel, most recently in the development of an effective antimissile system. but it is won known whether that or any system could intercept a large number of missiles that could be launched in the event of an all out war.

israel's very existence would then be threatened. the palestinians also face serious problems, especially the indefinite continuation of the occupation under which they do not have the dignity that comes from self governance. 1947, the united nations proposed a plan to petition -- partition the area and create two states. israel accepted it, the arabs rejected it, and the first of several wars began, all of them one by an increasingly strong israel. every sensible arab leader today would gladly accept that un partition plan which they rejected in 1948, if it were still available, but it is not, and it will not ever again be available, because circumstances have changed so dramatically. since then, the plans over to the palestinians have been less attractive, and they have rejected them all.

but as i told chairman arafat many times, and the current palestinian leader many times directly, there's no evidence to suggest that the offers are going to get any better in the future. so they have got to sit down, participate in, and stay in direct negotiations to get the best deal they can, even though this cannot 100% of what they want. that is the way they can bring the occupation to an end. and they really have to do it if they want to be successful in gaining their own state.

once they get their state, they can build on its. under the outstanding leadership of the palestinian prime minister kan that have demonstrated that they can do it, by laying the foundation and building the institutions needed for a viable and independent state. unfortunately, that state building effort cannot be sustained in the absence of progress on the political side. they are inextricably linked. there must be progress on both, or both will fail. it is a daunting challenge to rebuild trust, not only between the political leaders but also between two peoples, two societies with a long and bitter history of conflict, but they must find a way to renew hope and seek that peace can prevail, because it is very much in both of their self interest.

we must do all we can to help them. well, before i take your questions, i want to close with the personal story. as i mentioned earlier, and does ralph mentioned in the introduction, before i entered the senate, i had the privilege of serving as a federal judge. i enjoyed it very much, especially when i presided over what are called naturalization ceremonies. they are citizenship ceremonies. a group of people who come from all over the world, who have gone through the required procedures, gather before me in a federal courtroom in my home state of maine. there i administered to them the oath of allegiance to the united states, and by the power vested in me under our constitution and law, i made them americans. it was always very emotional for me, because my mother was an

immigrant, my father of the orphan son of immigrants. they had no education. my mother could not read or write, never went to school. for her entire adult life, she worked the night shift in a textile mill. my father was a janitor. but because of their efforts, and more importantly, because of the openness of american society, i, their son, got the education they never had, and became the majority leader of the united states senate. after every ceremony, i made it a point to speak personally with each of the new americans, individually or in family groups. i asked them how they came, why they came, i asked them to tell

me about their hopes and their fears. their answers were all inspiring. most of us are americans by an accident of birth. all of them are americans by an act of free will, taken at great risk and cost to themselves in many cases. although the answers were as different as their countries of origin, there were some common themes, and they were best summarized by a young asian man. when i asked him why he came, he replied in very slow and halting english, "i came, judge, he said, because in america, everybody has a chance. think about the fact that a young man who had been in america for less than 10 minutes, who could barely speak english, was able to sum up the meaning of our country in a single sentence.

america is freedom and opportunity, although we now face serious challenges here at home and abroad. i am confident that we will meet and overcome those challenges, and as we have in the past, emerge a better and stronger country. thank you for having me. i look forward now to taking your questions and comments. [applause] >> thank you for that, and i am going to ask the first question, because a lot of these people are having to deal with the craziness that goes on on both sides of pennsylvania this after -- these days, including not getting a budget on time and sometimes months end. how many potential shutdowns did we have last year, five? how do they do their jobs in that kind of environment?

>> that is a question i am asking literally everywhere in the world. americans don't understand what is going on, and people outside the united states really don't understand what is going on. let me try first to establish some context. most human beings look at past through rose colored glasses, and imagine it to be better than it was, and most look to the future with blinders, and imagine a worse than it will be. there was never a time in american history that was free of political conflict, partisanship, criticism, infective -- never.

go back to the time of thomas jefferson and read about the things said about him and the things that he said and did about john adams and his other political opponents. the back to the time of abraham lincoln and read what was said about him. franklin roosevelt. the first thing to do is to put it in context. it is bad now. it has never been a rose garden. that does not excuse what is going on now. it puts it in some context. soundly, i don't want to too much like i am defending politicians, which is an unpopular position in america today. this is a divided country. split about 50-50, down the

middle. you just look at the last several elections and see how they have gone back and forth. as a result, the elected representatives of people reflected divisions among the people. let me give you one example of the proposition that people, like political leaders, can and do hold and advocate contradictory views at the same time. in 1990, i was the majority leader of the united states senate, a democrat. president george h.w. bush, a republican, was president. we had a very tough time on the budget. not nearly as tough as now, but it seem so at the time.

it lasted for months, a lot of back and forth and a lot of public criticism. just like now, you can go back and look at the papers, and much of the current criticism was made then. i used to go back to maine every weekend to hold open town meetings, and after about three months of this budget battle back and forth, i went back to a town meeting on a saturday morning, a big crowd. they were disproportionately elderly, because they have more time to attend these things. the first guy got up and strongly denounced me, hardly criticize me for what he termed my excessive partisanship, the problems we are having in the budget, he said president bush has a home just a few miles from here. why don't you go down there like a gentleman and settle it with him?

when he finished his scathing denunciation of me, the crowd rose and a standing ovation to endorse his view. then he said, now have a question. back and forth all across, we don't even know what you guys are fighting about. can you explain the issues? well, life goes around. the big issue was medicare funding. the president had proposed a series of cuts that we felt would change the nature of the program. we have proposed some cuts that he did not like, and we were fighting over that period the guy got up and said senator, you represent us, and we are telling you, you go back and don't give an inch on medicare. and the crowd stood up and gave me a double standing ovation. so that is the second point. there are divided points of view. everybody says i hate negative political ads. why do you think negative

political ads run all the time? because they work. everybody says settle at, but -- settle it, but settled it on our terms. all of that explanation being said, it is really bad today, and it is i necessarily bad today, for a variety of reasons. does not have to be this way. -- it does not have to be this way. i was the democratic majority leader for six years. bob dole was the republican leader. not once, never to this moment, has a harsh word ever passed between us in public or in private. we disagreed every day before the senate in full public view, but we never once tried to embarrass or demonize or personally criticized the other. we had dinner a couple of times a week. we understood that carl -- while we have loyalty to our part is, we had a higher loyalty to our country into the institution of the senate.

i am sorry to say, that is what i think is happening for a whole variety of reasons. that is another long speech did it -- to tell you what to do about it. i think ultimately, it will be solved, if at all, by the american people. if the people decide they are sick of this, they will change it. there is no other way to change it, because the members of congress are elected by the people and they represent the people, and the way it is going to changes for the american people to say, we have had enough of that. we want something different. that means a willingness to compromise. i actually read about one member of congress who got up and said i am opposed to compromise in any form. compromise got us here. this is a country of 310 million people. this is the most diverse country in all of human history.

we have people virtually from every religion, every language spoken in this country. the notion that this country can be governed with no compromise of any kind, that any one person or any one group is going to get 100% of what they want is simply divorced from reality. the challenge of leadership is to do what senator dole and i did, too vigorously advocate our positions, but be prepared to make principal compromise when necessary for the common good. which means you don't get 100% of what you want, 100% of the time. you have to recognize that the other guy is just as sincere in his or her view, that disagreeing with you is not un- american are criminal, it just reflects a different point of view, and they have to be reconciled with the good of the people. but in the end, it will be the public that changes it, not the politicians.

[applause] >> we all love change as long as we don't have to do anything differently, right? >> israel has been identified as the probable source for a very effective computer virus that was sent out there to effect iran's nuclear processing. can you describe at all the u.s. response to that and how we feel about that? >> in cybersecurity overall, we are always talking about cyber war.

first i have to make clear, i do not represent the united states government. i am a private citizen. i did serve in that position, but i no longer serve now, so i do not purport to speak for the united states government, and my statements should not be regarded in any way is attempting to do so. secondly, even if i knew exactly what was going on, i would not answer your question. [laughter] know,e truth is, i don't because i have been out for several months now, and i think

there are some things that the edley are not and should not be discussed publicly. that having been said, it is a matter of public knowledge that both the united states and israel, and indeed many other countries, conduct covert operations to achieve their objectives, in a manner short of overt public conflict. and there has been a great deal written about -- much of that speculation, some of it grounded in fact, about the types of covert operations that have been conducted with respect to iran's nuclear program. so i believe i should leave it at that for now. >> but the term cyber war, there is a little debate going on about whether this is helpful to the overall debate, or whether this is up just blowing cyber out of proportion, and it does not really make much difference in the end. how important is this terminology? >> i believe that the technological and the communications revolution through which we are now

passing will ultimately, in historic terms, be seen as a turning point in human history of significance equal to or perhaps greater than the industrial revolution, which of course began in england and which has transformed human history in a way that anyone who lived prior to then could not possibly have imagined. and so i think the subject -- i am not going to talk about the term, because it is beyond my scope and i should not be commenting on things like that -- but the subject matter, methods of communication, methods of compiling and transmitting data, have become so significant, not just in individual human relations, but perhaps in a way that most people do not think about or comprehend, in terms of government policy and actions. so what you are talking about is of truly enormous significance for the future.

>> thank you for making me get my exercise. i am exhausted. >> good morning. you mentioned in your discussion about a better balance between technology and human activities. the whole idea of the information age you mentioned has the connotation of being short. everything done more efficiently, everything done more quickly. but a lot of the issues that you discussed about the arab spring and the problems we face in the developing world, you have to approach it with a long-term state of mind. sometimes when ever we invest, will try to do work in the developing world, it is kind of hard to go into it with a short- term view in mind. a lot of the time you have to bring resources to bear. you have to bring capital and do most of the investing, most of everything.

but whenever you go into it, you have to go with a long-term view in mind. do you think that going forward, even though we have to do things more quickly than we are able to because of the asian times in which we live, we have to have that long-term view in mind whenever we do anything that involves our country as well as doing work internationally. >> yes, we do have to, but it is extraordinarily difficult to do so when you are reset -- when you are to be set by so many current, contemporary problems arising -- when you are beset by so many contemporary problems arising.

our capacity to absorb and act upon the massive increase in the volume of information that we received thus not keep pace with the technology, and let me tell just a couple of short stories to illustrate that 0.3 before i went to northern ireland and the middle east, i spent a lot of time in the balkans during the conflict there. i visited a small town in northern bosnia which had been half serb and half croat before the war. they seized the town and burned down every building in the town owned by a croat. when i got there, almost every building in town had been destroyed. i said to the mayor, when do you think serbs and croats will be able to live side-by-side in

this town? he said we will repair our buildings long before we repair our souls. we have not been able to keep pace with the rapid change it is developing now, and we are beset by a constant an unending flow of information that is difficult for us to process. i have two young kids in school. my daughter does her homework while she is listening to music on her ipod and watching television at the same time. i said, how can you do three things?

she said daddy, it is different now. we can do that, you cannot. i do not think that is true, but sometimes a person thinks she can do three things and do them all well. we do need more long-range thinking. we do need more thinking beyond tomorrow. i was told about -- i raised this issue with people in the middle east, and i was told that one of the problems is that some of the leaders there, short-term is the morning paper, long-term

is the evening news. we have to get past thinking you can make decisions based solely on what appears in the morning paper in the evening news. it is one of those things, as i remarked in my comments, that it is easy to say, and easy to get agreement on, but then once you are in a position when you are beset with all kinds of different issues at once, it is hard to do. but it does require the kind of concentration focus because it is very much in our interest that we act in a long-term thought. >> people have been told they are overpaid and underworked and underqualified and every bad over and under thing you can possibly imagine. we are making you king for the day. what one thing we do like to see happen that would enable them to do their job better, that would make for better government? >> first off, i spent a good part of my life in government service and a good part out.

i don't know about the rest of you, but i have done much better out than in in terms of pay. >> don't tell them that. >> i did not enter government because there was an increase in pay. every time i entered government, there was a big decrease in pay. i did because i believe very strongly in government service. i feel i have been very lucky. i support the american dream because i think i have lived it. i cannot imagine not doing public service when the opportunity arose. so i think if you enter public service, i think it has to be with the proper frame of mind that you are serving. that is what the word means. service is serving others. you don't do it exclusively for financial or security reasons, although obviously everyone is interested in proper compensation and gaining security to the extent possible.

secondly, i think a lot of the criticism is simply unfounded. for example, one of the common charges you here today is that the government does not do anything right. well, it is so easily disproved. was the gi bill are wrong thing to do? when franklin roosevelt signed the gi bill, 4% of americans had four-year college degrees. today, 25% have college degrees. to a significant degree, because of the consequences that flowed from that enactment. was that a failure? the answer is, of course not. that was a very good thing to do, and everyone tends to agree with that. i think some of the criticism of government and government employees is vastly overstated

and erroneous and undermining. although it does not apply specifically to government service, i think one of the big problems in our society today is the undervaluation of teachers. people talk about all that is needed in the system of education, and i am not an expert in do not pretend to be, but i know my life was changed by few inspirational teachers. i will bet that is true of a lot of people in this room. i believe one of the great failings of our society has been the extent to which we did mean, undervalue, and insult our teachers, and we are now seeing that going on right at this very moment in the debate in public education in our society. and if we really want to have the kind of knowledge and skill and wisdom for future generations, we have to do better at recognizing the immense importance and value of good teachers in our society.

i think that applies as well in government service. >> former senator george mitchell, thank you, sir. >> thank you all. [applause] >> we will talk about on registered voters with the chairman. we will take your questions about the new book. a wealth and the quality is wrecking the world and what we can do about it. our guest is editor in chief of government magazine.

>> the top official with the muslim brotherhood spoke yesterday in washington. he said his political organization wants an open " ."ddle ground >> get started as soon as we can. i would like to welcome you on behalf of georgetown university and the center for muslim christian understanding. to our program today.

i had some opening comments, but because we have a limited amount of time, i will skip them, which is a first, but if i feel really frustrated, i will get up and give a talk after they are done for 10 or 15 minutes. but what we plan to do is to have two of the speakers -- each will speak about seven minutes, so instead of having four. then, we will go to the q&a, in which all four will then respond. that will give us a maximum amount of time. could i ask you ahead of time to ask questions? if you want to give a speech, i will stop it because we have a limited amount time, and we want to get as many questions in as we can. our first speaker today is the first speaker for this delegation that has come from the brotherhood and the freedom and justice party. she is a political activist and senior editor of the muslim brotherhood cozy official web site and its twitter account. she is a member of the freedom

and justice party's foreign relations committee, told a b.a. in english and an m.a. in mass communications. she also serves as a board member of an academic publishing house. [applause] >> thank you very much for having us. it is really our pleasure to join you today in the very first official visit of the freedom and justice party here. we are here to start building bridges of understanding with united states. we are doing this in several

places in the world, but we believe our visit to the united states is probably the most important because we acknowledge the very important role of the united states in the world, and we would like to -- our relations with the united states to be better than before, and we believe that the democratic egypt will have positive relations with the united states and will have positive relations with all the democratic world. as you know, we are coming from the freedom and justice party with an islamic background, so you will find us quoting the crown -- koran a lot. this principle is very important for us and probably

for our foreign policy and relations with the world. it says all people, we have created a wall of male and female and made you enter nations and tribes so that you may know one another or you may get to know one another. so we are here to get to know each other. it is not just from our side. we would like to get to know you, and we would like you to have a better understanding of us, and we are here to start good and positive relations with the united states. let me first start with a brief history of egypt or modern egypt and what has brought us here today. before the revolution, as you have been aware, we have been under tremendous oppression and immense violations of human

rights by mubarak's regime and lack of democracy and a very suffocating dictatorship that has impacted all egyptians, both muslims and christians, and egyptians from different segments of society. we have all been victims of such a dictatorial regime. egypt has been suffering extreme poverty. about 30% of the egyptians are under the poverty line due to the corrupt policies of the previous regime and preceding regimes over the past several decades.

we have high rates of illiteracy. we have seen lots of nepotism, and, of course, are deeply entrenched corruption -- our deeply entrenched corruption in almost all state and governmental institutions. before the revolution, the future was bleak. personally, i had no hope for a better future under the mubarak regime. we have reached a point where we were almost desperate. we have lost all hopes of a better future. for me, for example, -- i will tell you just a story of myself, which it applies to many egyptians, who suffered lots of oppression under mubarak's regime. before the revolution, i was working on a business luncheon for nurse, and i dropped a lot that was part of my job. my name was registered in the airport on the security check. for me, that was a tremendous

violation of my freedom of movement. whenever i wanted to travel, whenever i decided to travel, i have been stopped arbitrarily by the security police in the airports. they interrogated me. they searched my bags. they confiscated any papers that i had, only because i was affiliated to an opposition movement. i found this tremendously unjust, and i reached a point where i was really disappointed, and that was about a month before the revolution. i told the security police in the airport who used to interrogate me -- i told them, "well, i'm tired. are you going to do this whenever i travel? am i going to encounter that throughout my entire life?"

whenever i travel, i am intimidated. i am not sure whether i'm going to travel or not. i am not sure whether my belongings will be confiscated. he told me, "yes, you will be interrogated all your life as long as your name is registered on this list." so i told him, "i should have no hope or legal solution to the," and he told me there is no legal solution. the only solution is for the mubarak regime to go, and that is not going to happen soon, and that was just one month before the revolution. when he told me that, although i was really desperate, i had slight hope.

the tunisian revolution affected that hope, and our revolution -- of course, it changed history. it just brought our hold back. i became optimistic again that i can pursue my career. at least i have the freedom upon which i can decide on what i want to do. that was just a brief example. that happened to hundreds, probably thousands of egyptian families who have been treated unjustly by the mubarak regime because of their political opposition to the regime and then came the revolution, and the magical words -- the people want to topple the regime. we wanted it, and we got it.

mubarak stepped down. and that is just the beginning. the demands of our revolution have been mainly freedom, dignity, justice, and democracy. to shift to my party background, these are also the objectives of our party, the freedom and justice party. we are seeking to fulfill the demands of the young people who revolted, and these demands are our priorities, and we are committed to achieving that, although it is a huge challenge.

it is a very long-term goal, but we are going to do it. and we are going to be up to the operations of the egyptian people and the trust they gave us in three consecutive elections. you're so it's going to hand it over. [applause] >> let me just give you a little background on the next speaker. he is a member of the parliament from the freedom of justice party, serves on the foreign relations committee, holds a ph.d. in cultural studies from the university of pittsburgh and a b.a. in english. he is an adjunct professor of cultural studies at metro state university in minnesota and has authored several publications on bridging cultural and civilization gaps. i forgot to mention, i am john esposito, in case in the q&a you need to refer to my name. thank you. >> thank you, john, for inviting us here. thank you all for being with us here a little bit over a year now.

millions of people had to go to the streets of cairo and the rest of egypt to stand against corruption, dictatorship, and oppression. i remember those who sacrificed their lives for us to be able to meet together today. if i may kindly request that we stand up for a moment in commemoration of those who sacrificed their lives in the peaceful revolutions in egypt. thank you. the egyptian revolution, as egypt itself, was unique in the way it presented itself, in the way it acted against oppression, dictatorship, and corruption, and in the way that it is fulfilling its promises on the road map toward democracy, freedom, and the rule of law. the revolution was not against one individual.

it was against a system, the regime. the most common word that egyptians would feel very proud of financing it. i saw babies of three, for your, by repeating that i and many streets in egypt. it was very fitting that the young egyptians, boy or girl, would stand up and declare that they are free now, that they are willing to work together to build a new country based on the principles of justice, freedom for all.

the challenges are enormous. after the system collapses, and that is the unique moment in egyptian history. it is very difficult to find the oppressor and the oppressed together. i cannot forget that moment when ashad was getting out of prison at the same time. the minister was getting in the same cell. that is an amazing moment and difficult challenge in e jets. -- in egypt. you have killer and victim together. the challenge is how can we create alternatives that brings back the rise of the egyptians that is unique.

i always have this optimism about all citizens to come and visit and witness the great history of egypt. after we as individuals are becoming free, we would like to build and create free institutions. egyptians are determined not to go back to the old regime by any means. not by governments or an attitude. egyptians are serious. voices will no longer be fired. i ran as a member of parliament. you cannot imagine the difficult

dialogs we had to the people of in egypt. the new egypt was welcoming. this agreement, welcoming. they were willing to charting a course for the future. there is a need for a value system based on freedom, justice, and dignity. we have a culture that supports a strong family tie. faith for us defines this value system. we would like for egypt to be part of the global economy. the state need to empower the young egyptians. we would like to focus on economic partnership, on the

political front. free and interrupted trade and oil, energy supply, that nuclear disarmament and comprehensive peace are an important agreement of the political platform. we have a dream. the dream is that all egyptians have access to clean water, food, schools. we have a dream that the egyptians will not be fearful anymore of speaking truth to power. we've would like not to have the ear of any more torture for political -- have any more more torture for political beings. we want a civil society that is strong. the stronger the society is, the better for everyone. we need to create a balance between the strength of society

and strength of the government. the moment the government is stronger than society, it can lead to depression. we would like people of egypt to have the power in their hands. living for so many years under oppression, it created a culture of oppression. we have to replace it with a culture of democracy and freedom. we have a dream that visitors to eject can come safely -- to egypt can come safely. any time you visit egypt, make sure you stop and see the square. we but like you to be able to walk in the shadow of the pyramids and whisper a prayer in the virgin mary church which is across the street. this is the egypt we have a dream for. we have a dream that others

will be able to sail down and feel connected with 7000 years of human genius and creativity.

of that is the dream we have a. we had a dream that is not limited to egypt but is open for the whole world where we can honor human dignity and respect our cultural differences that we consider as indispensable conditions for world peace. thank you for having us. [applause] >> we will just do a brief introduction of two of the other people who will be joining in and responding. khaled al-qazzaz is an adviser to the muslim brotherhood on issues of national development

and organizational performance. he has a ph.d. in organizational behavior and business administration from ohio state. khaled al-qazzaz is for an relation. he serves as an educational consultant at a private and international chain in cairo. he is a ph.d. candidate at walden university. i would like to begin questioning with just one observation. in the aftermath of the uprising, as we have seen in egypt and, though islam did not initiate the uprising, we see this with the fjp plus the vote that went elsewhere. the question is whether that will demonstrate a willingness to pursue and build the democratic system and effectively depressed economic issues. what role will religion play in

egypt's government and institutions? what impact will that have on non-muslims and relations with the u.s.? those of you that are familiar with the platform of the fjp will see some of that address. how is that understood the? house that played out today? -- how is that playing out today? we will start here. >> hello. i have a couple of questions. >> one question. look at the line. we are catholic but you cannot do trinity or three questions in 1. >> i will start with

abdulmawgoud dardery. he said the united states and israel are the biggest losers. i wanted you to explain more about this. in november 2011, you said that if the united states did not like the results of the election, they can drink from them. >> ok. >> that was a run on sentence. >> that was a run on sentence.