growth rate. that is gigantic. coming back to my earlier slide on what drives innovation, isaac education and economic freedom. we talk a little about education. let's talk about economic freedom. what does that mean? it means small government, party rights, sound money, -- property right, sound money, freedom to fail. freedom to fail means being able to start a business that other people think are crazy and knowing that you are not going to be bailed out at the end if it does fail. if people are offered to billion out, they will tell you how to run your business. -- if people offer to bail you out, they will tell you how to run your business.

if you do not have the freedom to fail, you do not have the freedom to succeed. it everybody fails gets paid out -- gets bailed out, the people who succeed pay you out. you need the freedom to do something other people think is crazy and to fail if necessary. let me say a few words about that. low-margin tax rates. all -- we all understand that some taxes are necessary to run a policy. we also all understand that all taxes have disincentive effects and that is bad. we also understand that some taxes have worst affected than others. a tax on wages discourages work. that is bad. a tax on capital income also discourages work. because part of the reason

people work is to accumulate savings so they can invest. but that tax on capital income in addition to discouraging work also discourages savings. that is a double whammy. to some extent capital gains state taxes, this discourages both work and savings which is doubly bad. that insight pervades the public finance literature of the last 25 years. one thing not by the general public is remarkably unaware of these days -- one thing i find the general public is remarkably unaware of these days

is that capital tax rates in the long run ought to be zero. capital taxes do so much more harm than wage taxes that you always improve the world even for the poorest will need to replace the capital tax or wage tax. if you have a choice between evils, the capital taxes are almost always the worst. there is a great deal of disagreement among economists about what the transition to a book like. how quickly should be go to that 0% capital tax rate. there is another big issue -- the reason you want to set the capital tax rate to zero is that people will invest more. they will not invest more unless they believe he will keep it at 0.

there are a substantial number of economists who say you will never get people to believe that he will keep it at zero city might as well not try. there are a substantial number who say no matter what you commit yourself to, people will know that 10 years down the line, you might change your mind and because of that, it will have that disincentive affect any way. those people have an argument. other economists are not commenced by that argument and say that we would get ry far -- are not convinced by that argument and say that we would get very far. but where the consensus lies is that if we could get to that 0% rate and commit ourselves to it that would be a good thing. the world would be better. the rich will be richer and the poor would be richer. in another -- not just the long term but the median term. those are the aspects of economic freedom that i claimed

drive innovation and growth. how do i know that? for starters, here is a graph of economic freedom. the fraser institute in canada rates countries on economic freedom. what do they mean by economic freedom? this was not a random list. this was a list of criteria the institute uses. this was not a random list. this was a list of criteria the institute uses. this is the measure of economic freedom. this is per-capita income in various countries. there is a general upward trend. as economic freedom goes up, so does per-capita income. that chart proves causation and correlation are two different things. that is still only the beginning of an end -- of an investigation.

you have to look at the data more carefully, controlling for variables to review and discovering economic freedom is really important. the ideal way to determine something like that is with a controlled experiment. that is always the gold standard in science. we have exactly to controlled experiments on this. one is called korea, what is called germany. split the country in half, one goes one way, the other goes the other way. in both cases, the results were definitive. the problem is that n=2. an experiment with two observations is never as convincing as one with more. an economist at mit and harvard had a very clever idea for how to find other controlled

experiments. he said let's look at the countries that were colonies of england. the english set up a very different political and economic regimes in different countries. let's see whether the ones that have more economic freedom prospered more. that is not really a controlled experiment because somebody could always argue maybe the british chose the prosperous places to give the freedom to. but his idea was that is not actually what happened. if you look historically what they did was they looked around at where are the places that have a lot of bad diseases? like malaria and yellow fever. these diseases did not affect the natives because they were immune the but the affected the colonists.

the british said, the places that have malaria and yellow fever, we will not settle there. so we do not care how bad things are there. let's give them a tyrannical regime and the non-free regime. the places that are free of malaria and yellow fever those are places we might want to settle some day. so let's make things there as free and democratic as the place where we might want to live. that is kind of a controlled experiment. it is kind of random which places are subject to malaria and which are subject to yellow fever. that is not the british going in and saying who is prosperous and who is not. if you look at that and ask about specific countries, i do not have country by country data at hand. i should have put it up here but if you look overall, you find considerable evidence that

freedom actually causes prosperity. freedom causes prosperity, economic freedom cause prosperity. what about other kinds of freedom? other kinds of freedom did not seem to matter very much. if you look at political freedom, these are all things i think most of us would agree are good, free and fair elections the right to organize, no dominant military or religion, open transparent government, rights to minorities -- none of that correlates with prosperity. civil liberties, freedom of expression, religion, absence of terror, gender equality. none of that plot -- correlates with prosperity. freedom house makes -- is an organization.

in this case, it is not like the other craft. 1 is the freest -- the freest countries. it does not continue as the go down. if you look deeper into that data, there is no serious correlation there. what matters for prosperity is economic freedom, not the religious freedom, not the political freedom, not the civil liberties. so i will summarize again. i will point out of his intellect. education -- people who are educated save more, and a bit more. the data shows that if you improve education at the higher levels, you get more innovation.

if you improve education at the lower levels, innovations tend to get adopted more quickly. education at the higher and lower levels both improve innovation. freedom leads to more innovation. people have the rights to their discoveries. it leads to more savings because people will say more when they believe their savings will not be confiscated. i will stop there. i went longer than i planned to. and i will take questions. [applause] >> the back to the first part of your presentation. from your perspective you have

a very optimistic long-term view for the world. i am wondering -- i know this is a big subjects. if you take the european debt crisis situation. put that into perspective. are you still optimistic about europe japan? >> just about all of them have positive growth. if you look at the balance sheet and draw a conclusion to this format about the end -- the economic health of the country -- it affects each one of us on average something like $50,000 worth. that is in federal debt

obligations. and that is certainly affecting our individual well-being. it is also true we are all richer than we were 15 years ago. could things take a much worse turn? we have an example from the west and most of the western world. then we have seen the world come crashing down. we have even spiralled into negative growth. yes, there is no limit to the damage governments can do. but also, there is the amount of good that free people can do.

we are not broke. but the government has spent a lot of money. we are poor for that. we are about as poor for that if we had paid for it all along. they could have taken a promise in the past. they are going to take it promised in the future. yes, they have done a lot of damage. i wish they would do less damage. but i do not see dundee's government's crashing down. >> i wonder about the claim of education causing growth or

maybe it is the other way around. did you look at how gdp rose and how college education rose? both are exponential curves. it seems like gdp rose first and people did not start going to college until the early 1900's when gdp growth took off in the late 1800's. >> and yes another -- 200 years ago, you saw people with increases in the not of education. individual choice is to become educated definitely started.

more recently, much of the evidence on education and growth is international evidence. i do not have the data. i wish i did. there's a lot better in from -- international evidence. the point i would point to the next time you're in front of a group there is a lot of statistical work on this. yes? >> well, do you agree with your conclusion that economic freedom is conducive to growth, but i would question whether -- you point out the various english colonies. this is really random. if someone were in a country with malaria or yellow fever.

that could be indicative of other problems that would hamper growth. >> the reasons are the negatives are largely immune to that malaria and yellow fever. -- the natives are largely immune to that malaria and yellow fever. >> given that if congress takes no action the increase in our tax on capital gains is going to be 6% january 1 2013, and the increase on the tax on dividends is going to triple -- to you have any forecast for us on what

the impact will be on america if there are no changes to congress? >> i think it will be disastrous. if you are asking for numerical predictions, i am absolutely not going to do that. as i said, all capital income should be taxed. originally in 1980's there was a switch for current. that showed only it would improve posterity -- prosperity for the average american. that prosperity would pervade every income class. it does not work if people do

not believe, and that is exactly what we need. people are not responding to the current rates. look, if you polled the economists, there is a lot of stuff we disagree on but we pretty much all agreed, for example, that free trade is almost always a good thing. we all agree that if you can commit yourself to a low capital gains, you ought to do it that. >> i was not trying to ask you for an exact percentage. pardon me for giving you that impression. the thing we will still have

growth in 2013. >> the answer depends so much not on what the tax rate was but i cannot begin to touch that question. i have no idea. >> you implied the answer to this. any time you have redistribution whether it is from americans or two americans, the effect on killing the goose that lays the golden egg and for any capital that might have been exported to other countries what do you have to say about the fact that even if welfare were to help the poor how much would it help them if we just let people keep their money? >> if you make the worst

possible case scenario assumptions, you still end up with a great deal. if you take your issues seriously and to make the absolute most worst-case scenario, you should still have, according to that metaphor, a small welfare cap, much smaller than we currently have. if you make more monolithic assumptions about the fairfax you would probably end up arguing for a somewhat bigger social safety net. again, what i want to do is not make the case for any particular number but to make the case that anyone who is arguing has the obligation to tell you what their calculations were and how

they arrived at that number. >> i just have one question for clarification. if there is no correlation between civil liberties and economic growth -- are you saying there is no correlation with freedom on the one hand and on the other economic freedom? >> good question. let me try and remember. i think what you will find -- there are very high levels of

political freedom and civil liberties. we have the moderately free and the not free at all. the interaction between those political terms and economic terms is exactly the question to be asking. i wish i could remember the answer for sure. i will look good up and i will tell you tomorrow. >> i wanted to ask you to clarify a little bit about the freedom and prosperity. visit also reduce poverty -- does it also reduce poverty. -- does it also reduced poverty?

let me say it this way -- is this some fact that i can rely on to tell 90% of my friends that their poverty is being reduced by freedom? >> you are right. empirically those things go hand in hand. if you look at the united states again that improvement in the quality of life for the port has moved right along with growth -- for the poor has move right along with growth in the united states, along with china. 1 billion people have been lifted out of poverty. i don't know offhand of any substantial example we're a society has had sustainability

that has not brought the lower end along with the. you can see that those things go hand in hand. >> and wondered if you had any comments about the low hanging fruit metaphors and the possibilities for growth in the future? >> i knew you would comment on that. [laughter] >> if i can figure out how to use the -- >> here is my comment. [laughter] >> you have some very positive

statistics but one could possibly argue that is not just the effect of economic growth. it is a testament to the success of the redistribution of the welfare state. have you thought about a way to filter out more with an example of how the rising tide lifts all boats? i think the best way i can think of to address that -- >> i think the best way i can think of to address that of hand, the correlation we see everywhere between capital growth and work on the other. industrial activities -- approximately two-thirds of revenue is paid out to workers.

that is a good empirical rule of thumb. workers get about two-thirds of the output. that is as much of the output as workers are going to get. what really affects quality for the poor, i think is wages, and wages are tied to the amount of capital. you see that not just over time. >> the only comment that i heard about population we saw on the graphs, and of course they were done on a per-capita basis. i wonder if there are any comments you can do on population with regard to the population with your own studies.

>> i do not want to give away my punchline. [laughter] >> thank you very much. >> i wonder if you think micro lending -- [unintelligible] >> i love the idea on this. it makes me feel good. other than that, can it work? i have no idea. i hope it does. >> i wanted to ask about two things. it seems to have a different effect. that is the impact of corruption and the property rights of the rule of law. >> that effect is seen most dramatically in africa. again, the country started on that growth path.

they have all kind of rewritten that have. you see in africa, they are able to take this away completely. turn it around. it is huge. is a huge break on economic growth. there's all kinds of arguments about what this is, but they think there is a good case to be made that the absence of legal force and a greater respect for property rights was a prerequisite for the industrial revolution. i am not prepared to really get into that. i had a colleague in england. so -- >> you answered my question.

i wondered if you have thoughts on why the industrial revolution happened when it did and only in the west? >> everyone has thought about why the industrial revolution happened when it did, and no one has an answer. it is a good idea to think about how to do things better. but then you think about why was this the case at that particular time? these things happen randomly. there certainly were big political changes in 1988. speaking as a non-historian, we created a much bigger climate, a much safer climate. so i am not telling you we should not care about our politics.

we should be particularly concerned. >> [unintelligible] >> uh- >> senate democrats on the benefits for women in the affordable health care law. >> on the newsmakers john cornyn outlines the key republican campaign strategy to win a senate majority in the election. newsmakers sunday at 10:00 and 6:00 eastern on c-span.

>> the political parties are holding their platform hearing in advance of the summer conventions with democrats voting on their final recommendations and detroit followed by mid august. coverage of the party conventions begins august 10 with a reform party in philadelphia. the democratic national convention live from charlotte north carolina monday september 3. >> a discussion on the role of a 18-29 year-old voters from today's washington journal. this is under 30 minutes.

>> you are charged with getting people up to vote. how is it different then the dnc and rnc who want to see them at the polls. it >> i guess the dissension i would make is to have groups that are partisan and political and reach out to the political base of each party and do a pretty good job of it. we are focused on key principles. opportunity. the advancement of that freedom and smaller government. we sweep up a lot of people. independents and republicans. people the have not made up

their mind yet. host: what is a millennial voter and where did they stand in 2012? guest: that are considered to be 18 have entered the 9 year olds but they are basically adults emerging into the voting electorate and people who have been there a little while. that includes college-educated and professionals. for 2012 these are the people who were very active in the 2008 for president obama. host: in terms of the millennial unemployment, we have the numbers from the department of labour. the national unemployment rate was 8.3% for the millennial spirited what kind of an effect will this have an november? host: guest: the real thing

going on is to have the tour. seven figure. in addition to that you have 1.7 americans no longer counted by the bureau of labor and statistics. if the to the number and folded it, you have an actual unemployment rate for 16.7 million. when you ask one person on the ground in iowa or ohio or florida what does this mean they either knows somebody directly they experience it themselves or their families experience it. when you have a national issue that will be a predominant issue in the election. host: we are talking about the millennial vote. we would like for you to get involved in the conversation. the numbers are on the screen.

we have a special line for millennial between 18 and 29 years old. continuing on regarding the discussion on the mellon deals and the unemployment situation and what you are dealing with with your research, do you find these people who are coming out and that large numbers for president obama when he was the candidate in 2008, did they feel disappointed by the fact so many of their rank and file are unemployed in 2012? guest: there is a tremendous amount of frustration. in 2008, the turnout was 66%. part of that is a tribute to their campaign. they've reached out in and they built a great deal of

expectation about hope and change. the reality is many of them are frustrated and only 31% believe president obama has done a good job on youth unemployment. 77% of them have actually made a major life decision or delayed one because of the economy. this includes getting married, having kids. or the fundamental things that young workers often do, which is which cities to get new skills or new opportunities. they're not doing that because there is no confidence. host: you bring up the major life changes that have been delayed. we have some numbers from the polling company. you mentioned buying a home. 44% of the folks that were polled say they have delayed buying a home. 28% say they are delaying saving for retirement.

27 percent says paying of student loan or other debt. changing jobs, 26%. starting a family, 23 percent and you're getting married, 18%. this unemployment is having a significant effect on these folks. guest: absolutely. when you look at this, to understand the impact, it is based on individual spirit it is an impact at a local level. it impacts a huge number of industries. housing. consumer goods. the basics of life that young people often go through are being impacted. this is one of the things that when we look at that number, we try to think of it in terms of individuals and make certain that we are connecting.

about their personal situations. host: paul conaway certification four u.s. presidents, three governors, and is a veteran of more than 100 political campaigns. our first call comes from houston, texas. mark is 29. you are on. caller: hello. thank you for having me. host: what is your situation? caller: i was speaking on the numbers, the unemployment numbers. -- is this something that we will -- host:we lost mark. it sounded like he was -- i cannot really say. is this something that will be a long-term concern for the millennials? guest: i think so. in order to get out of this slump, you need job creation levels at 350,000 per month. when you look at that number of 12.7%, that issue will be generational. no doubt about it. in terms of entry level job skills and being able to

accumulate wealth, this will be a major issue for many years. host: next up is gail calling from albuquerque, new mexico. you are on. caller: good morning. i wanted to talk about during 2009, we voted president obama into the white house. it seems like the young people kind of gave up and did not help him out by keeping congress democrat. we would have been out of this recession right now and growing at a faster rate if we had not have sat down. the president is trying to do this all by himself. we are trying to blame him for something. it host: before you hang up, you said we young people. how old are you? caller: i am 25. guest: regardless of what your

political party is, we strongly believe that people must stay involved in the process. if you were active for president obama and you feel strongly you have a duty and loyalty to stay involved. however, if you feel that he has not represented your concerns you also have an obligation to articulate those. our friend is a democrat. he self identified dead. in terms of blaming yourself, you have to stay involved in the process. we are seeing a lot of folks who originally said the, we will support you and we are active for president obama. they changed their minds. there are changes occurring. host: our line for independent. go ahead. caller: i had heard that the unemployment rate for recent college graduates was somewhere around 50% and that is why it

was affecting their decisions on what they were doing and a high percentage of recent graduates were having to go back home and not be able to branch out on their own? have you had any research on that? guest: we do. there is a study that came out from rutgers that spoke to this issue. what it indicated was that for college graduates in america the unemployment rate and underemployment rate is 50%. for the country, the question is -- if you have folks who actually have taken on debt and student loans and have saw to better themselves through college and only 50% are actively engaged in the workforce and the rest are underemployed or unemployed, what do you have to say? we do not think that is a good thing. not for the individuals or states that are depending on

bride-to stay in them. it is not good for the country long term. many folks are going home without jobs. they're staying with their parents and trying to pay their loans. that is why we firmly lieve things need to change. host: we have a tweet -- guest: that person is correct. you are able to see some candidates have emerged very strongly. ron paul has a strong following. you have to be careful how you define libertarian because a lot of times, we are talking about a great deal of frustration at bel federal government. people are frustrated with political parties. people feel like they are contributing to the debt. people are absolutely correct about that, to some extent. libertarian as some is -- libertarianism is very strong.

in addition to ron paul getting enthusiasm, you have very strong candidates like rick santorum who were able to get the majority of the useful int -- youth vote in states like ohio. when you have candidates who are not afraid about articulation, you'll get a strong following. guest: there is a tremendous amount of frustration. in 2008, the turnout was 66%. host: guest: one of the things not talk about is she is a harvard mba. she was concerned about what the future of the country would be in terms of competitiveness.

she made it a priority and her office. caller: i live in the 10th ward which is the board for the neighborhood surrounding it. what we found is the early vote is very good to help turn out the students vote. if you put a vote out for the neighborhood, not only does the student told on the campus and

in the neighborhood there and pocket sell it around the city, it enables students while on campus to vote early. it was quite a boom for student voting. i think it is a very good thing to do. something i would encourage all campus swords to do is have an early vote location. guest: that is something when i was young my career i was the state chairman for college republicans and maine. labor able to turn out so vote that it actually defeated an incumbent state sen entered that was one of our professors. we became a best friend. that is true whether you are in local communities or a campus level. the fact the students vote has impact is something that is the subject of a lot of impact.

i think the more you can reach out to people and in towards them to vote and remind them of their responsibility to vote is a good thing. >> we have a map supplied to us from you all regarding targeted out to reach a targeted visits to colleges and high schools. this is based on the obama administration's travel numbers. the state's am blue is where the president has visited three or more times between march 2011 and july 2012. the states with the red dots are states where there has been a single visit. this is not lost they need to get out there and target young people if they want to be reelected. >> they look at the same polling numbers that we did. where we found an interesting is we are active at the grass-roots level. we have a very aggressive grass-

roots team. . there were talking at the taxpayer expense a president of? and his officials. we took a look at the last six months. it is clear when you look at unemployment -- young adults employment levels. this has impacted their enthusiasm. based on analysis, they have done 400 targeted visits to college campuses and at locations around the country and swing states where young adults hang out and where they have a population center. host: we are talking with paul conway. if you want to find out more you can go to their web site. we will leave that up for a couple of seconds while we take the next call from a greenhill north carolina. james is a millennial.

caller: i really want to tell you there is a huge disconnect from what you see on tv and what people say about unemployment. i work in the home health industry. you see how people have the regular americans -- my company boats medicaid and medicare. i have two youngsters who are 23 and 24 years old. i see my young people tell me all the time -- most of them do not know what is going on in politics at all. they have no clue. the most frustrating thing for me is that people, politicians will say unemployment and this and that. it has gotten to the point where he and they tell me, we do not know what is going on. they do not know anything about politics because they do not watch it or understand it.

then you see people who are frustrated. every day i see this every single day. people are getting afdc say, it is easier for me to get food stamps and to find a job. they cannot get jobs because they are under qualified or over qualified for they give up looking. that is the real meat and potatoes going on in this country. we have gotten to the point where everybody has given up. host: paul conway, before you answer that, i want to throw this up. it is a tweet. it says, why is paul conway leading an effort to bring in 18-year old voters? guest: the caller brought up the issue of disconnectedness among young people. we designed the organization to reach out on social media

because that is where young people are getting their information. we have had 750 million views on our pages. we source everything we put up on facebook because we have actually become an information hub for millions of americans across the country. the caller is absolutely right. people are disconnected from the events going on in the news and you will get a great deal of frustration. people are frustrated with the lack of opportunity and they earned dropping out of the process. we are trying to change that -- and they are dropping out of the process. we are trying to change that. to the second caller, it is a great question.

i had been opportunity to pull together a group of folks who are all land deals. i worked closely with them -- who are all millenials. we have a blend of talent. folks who are my age and the majority of my staff are millenials. we have over 900 campaigns under our belts, political campaigns. when it comes to leading an organization, sometimes talent and experience is helpful. they thought so. i have had the pleasure and the opportunity to serve them. our organization is tied into the community. they are masters of the universe in terms of technology. i am fairly good at identifying and building teams. we wanted to make sure we had a

team that was world class. we have a vice president that is an expert in running organizations and tying policy and tactics. our vice-president of communication is another talent. he is a young man who started a business in his house on social media and did quite well. we are lucky to have him. what our national field organizers -- these folks are overwhelmingly in the demographic and they do a great job at what they do. host: would you say that for campaigns around the country regardless of what the level is that they can use generation opportunity as a resource for how to better communicate with that millenial voting blocked? guest: we do not -- coordinate with campaigns at all.

we have a number of tools available about how to be effective on talk radio and television. we also see a lot of folks that are mimicking what we do on facebook, copying things. it is the sincerest form of flattery in some ways. we have also seen an uptick of organizations trying to address millenials. this demographic is wide open. if anyone feels they have a lock on this demographic, they do not. this is a discerning generation. you need to go out and tell them what the solutions are. they will hold you accountable and they are looking for results. they are living with the problem every day. they want results. host: let's go back to the phones and our conversation with paul conway, the president

of opportunity -- operation opportunity. caller: i wanted to expand a little bit on a couple of calls ago saying they supported obama and after that everybody went home. the point is, we have to realize the that that one person, even the president, does not to say this is what i want to happen. there are 535 other people who are important. what we have seen happen with this gridlock situation that we have is we have a party that is actually decided that since they did not win the white house, the way of eventually winning the white house is to make sure the person in there was not successful at anything they attempted to do. i am saying, that is our biggest problem right now. we have to realize that falling victim to that kind of trick is not going to work. even if the other side wins this time, it will be a close election. now the democrats get to do everything they can do to stop whenever ms. romney tries to do to actually fix our situation -- mitt romney tries to do to actually six our situation.

so that the next election, the economy will still be bad and everybody will blame that one person. host: we will leave it there. guest: the caller is from new orleans. new orleans is a place that is near and dear to my heart. i participate in rebuilding after hurricane katrina. -- participate in rebuilding after hurricane katrina. some folks would like to say

there is block and tackle going on. i think it is more complex. when you have a congress that is elected by the people and some of those representative take a look at things based on principle. some of the disagreements with present -- with president obama are bipartisan concerns. it is interesting that the caller is calling from new orleans. take a look at the city of new orleans and around the gulf coast. there was a moratorium on oil and gas exploration in the gulf of mexico. the mouth of flowback on that was led by mary landrieu -- blowback was led by mary landrieu. we are talking about jobs on the gulf coast. these are good, hard-working folks who are trying to get their boat mortgages paid off get to rebuild.

when you have a shutdown of a major element of america's hinchey independence and the acceptance of that was based on principle -- america's energy independence had and the exceptions -- acceptance of that was based on principle. when we take a look at that issue alone, we see that a lot of the frustration and the push back on administration issues is bipartisan. same thing with coal. i representative -- a governor, joe manchin, has taken at a stand and said that we put out a coal mine, you are putting a community out of work. sometimes when you take a look at what is: on on the hill it is a matter of principle not just politics.

host: we have an e-mail that says paul if a bright fellow. >> dr. atul grover talks about the doctor shortage and the impact the affordable care act will have on that. and dr. kresbsbach looks a manufacturing and factory workers. next house delegate speaks on a measure to limit abortions in washington d.c.. then kathleen sebelius on the benefits for women on the health

care law. after that the weekly addresses by president obama and eric cantor. >> sunday, in depth with julianne malveaux will take your phone calls and tweak its for three hours. >> i tried to look at this at the larger perspective and try to see how we got to where we were today. is there any trend or a theme that runs through our relationship? what the ultimate goal as an objective account of what transpired on both sides. >>david crist on 30 years of austerity between the u.s. and iran it. >> on tuesday the house fail to pass a bill that would ban abortions in washington, d.c..

mr. speaker sometimes schoolyard boys pick on the wrong kid. antitrust forces thought they found a cheap way to make a large point against the right of women in our country to reproductive health and choice. so they picked on the district of columbia. picked a fight with the district of columbia. after all the district of columbia doesn't have a vote.

even if the billle is about only the district of columbia. -- bill is only about the district of columbia, but in the process they picked a fight with the women of the united states because this is still a pro-choice nation. they didn't want to get women worked up in an election year, but they wanted a federal label. so they thought they could get the house to pass a bill that's coming to the floor today on suspension that women in the district of columbia are not entitled to an abortion previability at 20 weeks. mind you everywhere else in the united states that right still would exist. and while they are at it, they say let's penalize women by allowing an injunction against abortion by these women by anyby, any caretaker who has

had anything to do with them anywhere in their life. i guess the elementary school nurse could come in and seek and injunction and penalize doctors. two years in jail. and a fine. no health exceptions for the woman no matter her healtor fetal abnormality. no rape, incest exception. one of my constituents professor zinc, had an abortion at 21 weeks. the earliest time her physicians discovered that she was carrying a fetus with half a brain. had it been born alive at all, it would have had constant seizures. she would have had to carry that fetus to term. sometimes boys pick the wrong fight. the forces have threatened leadership here and particularly republicans saying they are going to score the

vote. all that did was bring out the really big boys. planned parenthood and pro-choice, naral, who are going to score it as well. it will take 2/3 toass this bill. i'm hoping that you won't get that kind of supermajority. this is not the typical anti-home rule bill that holds everne else harmless except d.c. residents the d.c. government. this bill is a key element in a state by state campaign that seeks fit undermine and eliminate reproductive choice and relt for -- alth for women across the united states. the miscalculated, they have reinvigorated the pro-choice movement. they have -- just as they did when they infill freighted the susan -- infiltrated the susan b. komen race for the cure and

forced could he men to do -- komen to do reverse take and continue to give to parenthood just as they did when they failed to defund planned parenthood. just as they did with the attack on contraceptives in health care policies. now people see this fight against reproductive choice for what it is because it ended with the constitutional right to abortion. they have abandoned all their principles because if they feel so deeply you how could they put a bill in that would affect only women and fetuses in the district of columbia. the supreme court decided 39 years ago that a woman is entitled to an abortion. it's not a constitutional right everywhere except the nation's capital. the it's a constitutional right everywhere. they are great but they are differences we must respect and the supreme court has settled

those differences with roe vs. wade which says previability, this is between a woman and her doctor. active viability, of course there are some things that can be done, but the health of the mother always has to be a large factor. this bill stretches beyond any penalty, any doctors in our country will ever receive. any penalty on women. and it is the kind of bill that sends a message to women. this is not a house that is protecting her reproductive health f this bill passes, it will cause -- health.

>> we gather our team. good morning everybody. i first of all want to start by thanking the center for organizing this announcement today and for inviting me to join these wonderful senate leaders and a consumer from ohio to talk about women's health. the leaders i am with today has been such strong advocates for women and their health for decades. i am really pleased to join them. today we are here to market a new day for women pose a health and america.

starting tomorrow thanks to the new health-care law, all insurance policies will be required to cover new michael care women need to stay healthy. they will have to cover it without charging women out of pocket. we are likely to be the health care decisionmakers in our families keeping our children up to date on checkups, urging our spouses to take care of themselves, helping an elderly parent stay on education are find extra money to pay for health insurance. too often we put our own health last. that is especially true when it comes to preventive care. the regular screenings so important to staying healthy that can be too easy to put off. what makes it worse is that before the health care a lot. many did not cover basic care. other health-care plans charged such high payments that they

discouraged women from getting services. as a result survey results showed more than half of the women and delay or avoid a preventive care because of its cost. that is simply not right. that is not good for our country. t why it to the health-care law that is about to change. new private plans and that medicare have been uncovering life changing tests and care for men and women such as cholesterol screenings and flu shots with no copaiba. all new insurance plans will be required to cover additional services without out of pocket cost including domestic violence screenings, contraception, breast feeding counseling and supplies, and a well woman visitor where she can sit down with their health care provider.

according to a report released by our department, 47 women in america will be eligible to receive the vital care with no health paid. no woman should choose between seeing a doctor and putting food on the table for her family. many women will not have to make the choice any longer. it is important to know many women will see it been more protections thanks to the new law. starting in 2014, it will be illegal for companies to deny coverage because they are a breast cancer survivor or pregnant or a victim of domestic violence. it will be illegal finally in america to charge women more than a man just because they are women. being a woman will no longer be a pre-existing condition in this country. for too long insurance companies have stacked the deck against

women forcing us to pay more for coverage that did not meet our needs. a new day for women's health has arrived. i would like to turn over the podium to the center for has not only been an incredible championed for women's health but is the dean of women in congress. >> thank you very much. >> well done. >> good morning, everybody. what a happy day. tomorrow august 1 will be an opportunity for a woman who in need of preventive health care services will be able to take a giant step forward to have access to the care they need without cost or discrimination. tomorrow august 4, put this down on your calendar. whitman will be able to have

access to the essential preventive services that will provide early detection and screening for those situations where they are most at risk and also provide opportunities to care and service they need as wives and mothers. this is called the women's preventive health care amendment. during the health-care debate, we wanted to do two things. we wanted to save lives and save money. we knew preventive health care was a cornerstone to that. early detection means -- early detection and screening provides the protection where we know the problem before it spreads to a lethal nature. one of the most important tools we women have is mammograms. they wanted to take the mammogram's away from us.

well hey not while i am here. what did we do? we organized with senator harkin and senator dodd leading their committee, working with a good women and men that supported us. i was able to bring to the floor the preventive a women's health care amendment. we suited up. we put on our good -- we were able to pass legislation. what does it mean? it means that we will be able to have access to those early detection and screenings for breast cancer, colon cancer, lung cancer, all of the dreaded see words we are terrified of where we know if a woman gets a disease, it not only eve fax her

but the entire family. we did not want to write the benefit. we wanted to turn to a learned society to say, what were the essentials services. that is why they came up with the annual checkup. the breast-feeding support. the domestic violence screening as well as access to contraception. what we will be able to do is what the top killers of women will no longer go undetected. the kind of support services that we need to be healthy to be good mothers and to be able to have our family life. we eliminate the valleys of care, the most important was cost. often women did not seek that because of the co pays and deductibles. the second was the attitude of insurance companies to charge women more. we got less. we have eliminated the barriers.

we eliminated the benefits. on august 1 women all over america will be able to have access to care that they have had to fight for for so long. i am so grateful we were able to pass the affordable care act that we had the support of the leadership. this was not only a woman's issue, this was a family's issue. we had the support of fantastic man. one of the great champions here has been senator harkin. he was one of the prime movers in the affordable health care act. he is one of the prime movers in the whole concept of protection and wellness. he has been a great champion for women proving the fact that man of quality never are shy about supporting women who seek equality.

let me bring up our good friend senator tom harkin. >> first of all, thank you. thank you for your dynamic leadership at the department of health and human services. again, i can not thank you enough center. we team up together. senator kennedy asked each of us to had certain parts of the reform bill. we worked together closely to put this all together. while we worked hard to put together a strong preventive package that includes everyone because we wanted to change the sick care system to a health care system, one where people could get early checkups and prevent an analyst from progressing. a lot of that went into effect a

couple of years ago under the preventative services task force recommendation. a covered everybody. what we are talking about a dozen to effect tomorrow of the recommendations of the institute of medicine. that pertained particularly to women. that was what barbara championed so far and brought to the senate, this focus. this focus that because women -- do i need to state the obvious -- they are different than men. certain health requirements are different than men. and so we asked the institute of medicine to come up with a list of preventive services that ought to be included in the package. that is what starts tomorrow. tomorrow 47 million american women will not be able to get preventive services that cannot the before and know cost -- no copays or deductibles.

they will be able to go in and get a visit annually as a checkup. i know we focus a lot of breast cancer and other screenings. i will return to that in a second. there are a lot of other things, too. whether as much or diabetes or a host of other things women in need to have a visit every year. that will start tomorrow. 47 million american women 519,000 in my state of iowa. they will have preventative services available to them. we fought very hard to include these. the center has given me -- would not be a will to do it without her leadership. she focus like a laser on the issue. making sure women had all of these preventative services available. i guess if i had what my regret

is that it took us two years to get here. better late than never. tomorrow is a new day. on a more personal note, i lost both of my sisters to breast cancer. at a fairly young age. when my older sister mary ann and died and we went to her funeral, her younger sister sylvia -- soviet was there. she had no idea that she also had breast cancer. within two years she was dead also. they left young families. they lived in rural areas and small towns. they did not have any money. they did not have a health care coverage. for them to go and get a checkup would have cost money. money they could not afford at the time. they had a number of kids.

as i said, they did not have a lot of money or health care benefits. it could have been different if they have this available to them. early checkups. early screenings. for both of them it was way to live by the time they discovered it. this has a very personal, poignant meaning to me. i just hope women in this country will take advantage of this. they will not go and get the annual screenings. it will get the checkups. early detection we know works. millions of lives can be saved. families will not have to lose a parent or a sister because of breast cancer or cervical cancer. all of the others. so when i hear republicans say

-- is still said they went to repel this, they want to take this away from women, i stay with the center. as long as we are here. >> thank you, senator harkin for your leadership and your willingness to share a personal and moving story. to underscore the importance of today. i think the center for her tireless leadership and the continuing to fight hard for this amendment that was adopted. leading the nation as a transformational moment for all of us. the goal of the affordable health care act is to help the nation to become healthy. in being more healthy, we can be a more prosperous, economically vital nation. it is a blessing when the citizens are healthy. it is truly a blessing when the

women of a nation are healthy. the mothers of a nation are healthy. as senator mikulski pointed out and secretary sibelius, women are the primary caregivers of a nation. the healthier the caregivers are, the better a nation will be. it makes so much sense it is a shame this was illegal until today. with this legislation, with this government requirement which is important, a partnership with insurance companies, women will be able to get the care they need to stay healthy. to raise their sisters -- to raise their assist -- their children themselves. to have mothers healthy to raise their children as opposed to transferring the burden to the ticket -- society or community are enormous. for louisiana over 600,000

women with private insurance -- not woman on medicare and not women on medicaid that will benefit as well -- but 600,000 women with private insurance will be able to access services to keep themselves healthy and well. women working minimum-wage jobs or woman that show up at the highest levels of the companies said the corporate level. this is truly an amazing day. it would not have happened without senator mikulski is leadership. let's keep our women and mothers help the. -- healthy. >> i am pleased to be here. colleagues that have the guts to stand up and fight the battle that women deserve. that is reasonably good health

care led by mikulski who always surprises us with her leadership and dynamism, tenacity, and all of the things that resulted in where we stand in the health-care bill right now. can you and imagine what would have happened in february when one of our colleagues in the senate decided to bring up an amendment that would strike the women pose a health care -- women's health care section out of the reform bill? what would have happened is that at the same time, a woman came in there and said, you know what, i think we ought to stop prostate screening for men. what would have happened? we might get a response to that. the fact of the matter is there is a man oligarchy that wants to

decide what woman ought to be doing for their families. now there is a chief honcho whose name is romney who has resolved to repeal health care the first day he has office. we are saying, to bed. you do not know barbara mikulski and her following. all of us salute when succumbs in the room because she deserves our respect and affection and thanks. i have five daughters and six granddaughters. i want them to know -- i want them to keep their mitts off of our kids and grandchildren. we will continue to fight the fight led by barbara mikulski and secretary sibelius. tell the guys on the other side. tomorrow is a new dawn coming.

we will keep shining a light on that. >> first, let me tell you on behalf of the people in maryland i have the honor of representing 1 million women who benefit from the announcement in my state. we are proud we have sent to the senate one of the great leaders on gen -- gender equality issues. she has been a leader throughout her career on gender equity issues whether it is fairness with the ledbetter act or the preventive health care i in the affordable health care act. we thank you on behalf of a grateful nation the progress we have made to close the gap on fairness and equality in the health-care system.

and have been discriminated against. the provisions of the affordable health care act help to close the gap in fairness and america on health care. secretary sibelius' already mentioned some of the facts. we have no limits on caps that effect women more than men. by 2014 the annual cap will be gone on insurance policies. we talk about pre-existing conditions. women who have been discriminated against are really the poster children for why we needed to eliminate pre-existing conditions. that will end in 2014. higher premiums just because they are women, that will end. on august 1 tomorrow, there are

many provisions -- when they have to give value for the premium dollar that takes effect on august 1. women are going to benefit from that provision. i am proud of the preventive health services you have read about. senator mikulski was responsible for the amendment we put into law. it will give women the preventive health care services they need without copayment. this is an important day as we continue to make progress in america to provide quality affordable health care to all people in the nation. i am proud to be on senator mikulski's team.

>> thank you. tomorrow august 1 is a great day for women and families in the country. tomorrow the provisions of the affordable care act that are so important to women go into effect. i want to thank senator mikulski, senator harkin and all of my colleagues for the works they have put an end to making the affordable care act and these provisions a lot. the data is very clear. these provisions as senator harkin has so eloquently will save lives. opponents may not want to pay for those. the reality is that because the provisions will go into effect tomorrow women will be better off, their families will be better off, and as we look into the underlying cost of health care in the system, we will be

more cost-effective with the provisions. it is a great day for women and families. >> i am really proud to follow senator should team and to stand with some of the giants' in the senate. i agree with everything that has been said accept where he said it he was surprised by senator mikulski's tenacity and carelessness. somebody i have come to admire, i am not surprised. there are two dead giants or not with us today that stood strong and tall. senator kennedy and senator don. i am flattered to have followed senator dodd, the senator from connecticut whose citizens will benefit tomorrow. they will see a new day and a new dawn carried it will be a

great day for america because it combines the quality and it saves lives. it also saves dollars for anybody who may be impervious to the life saving effect of this measure. let's talk about dollars. prevention and detection saves resources and expenses. they will drive down cost as we must do in our health care delivery system. we are talking about diabetes screening, cancer screening basic health screening that means detecting and stopping disease before it is spiraled out of control. that is a great day for all americans. that is a great day for families. when a mom or sister gets sick, the entire family suffers. that is a great day for the

health care delivery system. it is a historic day for america because we are saying here today we will not retreat, we will not repeal. we will not reject a step in the right direction showing washington can get things done. we can break the gridlock and move forward. i want to thank my colleagues for their great leadership and introduce something who has been a champion of health care. >> there have been any number of heroes in this country. some will not and some not so well known fighting for a gender equity. nobody has done a longer and better than she has. i was in columbus with ledbetter, somebody who stepped up and because of her fight women a round of this country people are making more money

than they would have otherwise. i will be introducing another hero in the fight for equity and the fight for health care for women in the. about one year and a half ago i was in toledo. we announced as people across the country announced the beginning of -- the efforts and medicare are preventive care starting in early 2011. some 600,000 women and ohio senior woman in ohio began to have preventive services. mammograms, various kinds of physicals and paying no coke pay or deductible. that was the beginning of this. one for a million women starting tomorrow will have access to the

services. notable among them -- did not a typical story of somebody with the courage -- a store that is all too common. she is the mother of four. she says for kids and a grandmother of 12. she has a story to tell. she is really the reason that we all make these flights. i remember sitting in a house committee with tom harkin as we wrote some of the preventive elegance and this bill and how important they were. it really is because of people like anne. she is willing with all of her own losses over the past to step up and fight and an ongoing way. she is an activist in toledo and

an activist here. >> thank you. yes surprised to be here. it is a pleasure to be here. it is an honor. listening to every body's speech. three minutes is a tough thing the to stay with when pleading for human life. that is what i am doing. i am a three-time survivor of cancer. you live with cancer every day of your life. that does not go away. i have been fortunate and blessed. my first bout with cancer was 30 years ago. i did have insurance thankfully. i also checked myself for 18 years because when i was 18 years old they found a lump. i am lucky to have a doctor who said do self examinations and pay attention to your body. i found it when i was 36 years old.

i was lucky. i had double -- it other surgeries for repair work that was done. it all worked out great. that was 1982. and it doesn't to i was diagnosed with colon cancer. i had no signs until i found a little bit of blood monday. because i pay attention to my body i realize this should not be. i call the doctor right away. they found a large tumor. i have seven different doctor opinions. it all felt it was a 10-year growth of the tumor. i was 55-years old at the time and it was 11 years ago. cancer might have been avoided altogether. have i had had it that 45 been not have got to anything. thankfully i had a good insurance at that time. i ended up at washington, d.c.

at a hospital for a special procedure that a doctor taught and did all over the world. i was fortunate enough to get in there to have a tumor removed. when it came back, we had much more extensive surgery and i went back to ohio and have them because nobody wanted to work on me in toledo. the expertise was not there at that point in time. we come forward into the year 2000. i was diagnosed with breast cancer. i call my insurance company right away because the insurance i finally got, i was the night after my employer had asked me. he had asked me if i would please go off the insurance because i was costing every body to much in the company. the figure he gave me -- it was costing the company and not the individuals. there were several and the company that were carrying other jobs and i did not want them to

carry the cost for me. i had no idea what i was walking into. i was refused by insurance companies. i finally ended up at open enrollment. my cheapest until it ended up with what i did was $1,650 a month. i was on total life exclusion for cancer and respiratory. that came up because to the anesthetic to get a little bit of -- do not take any medicines for it but i am the night. in 2010 and this happened ebonite that we diagnosed i call the insurance company right away and said what you cover me and this is probably not. if it comes back-you do not meet your deductible. i am not a sick person. i take good care of myself but i get cancer. i do not know why. if they came back positive because of the pre-existing

condition they would not cover me. i canceled insurance because i was paying money and not getting anything back. luckily i was approved for a program through ohio. i was very fortunate because my bills for my one-day surgery was almost $40,000. i am single and that would have put me back. i was very fortunate to have that. i am glad they took over. i still had about $8,000 to $10,000 on my own. that was a difference from $40,000. >> or being dead. >> and to get to that, i am just a voice here representing not just millions of people women and men, but being a woman i cannot even tell you how much we appreciate what you are doing and how much the impact will be on women. most of the people that i know it around me are women fighting cancer. i have a friend fighting bone

cancer for six years which is a recurrence from breast cancer years ago. she cannot move. enough hard to get in and out of her car. she cannot go in the backyard and sit in the sun. getting out of her bed is a project until the morning. she could be around for another six-20 years. until bone cancer hits your organs, you can live with it for a long time. as painful. to live in a world of pain and agony and fear -- when you hear the words you have cancer, it is a paralyzing moment. once you get past the moment you have to decide what to do. that decision is gigantic. until you get the decision, you are in a black hole. he have to move it forward and make up your mind you will get better. the screening and the testing and learning about your body and being educated is so very important because most cancers can be avoided. i know that i would not have had

colon cancer if i would have had a colonoscopy before the time i did. my breast cancer could have been a lot worse if i had not noticed it and an early stage. i have been fortunate. there are thousands and millions out there not as fortunate. i will throw one thing out. if you look at cancer patience a loan and take a 911 every other day of the year and you have the same amount of people who are dying from cancer in our country, 911 was horrific. it was every expletive you can think of. these are people dying day by day and are living with pain and fear and devastation, financial devastation. some losing their families. i do have that for kids and i have 12 kids. i look at them and i do not want to go to the something that i went there rise to many of my friends go through.

i lost my brother's three months ago in my sister was diagnosed three months ago with melanoma. this is tough. this is a very tough. i thank you very much, senator and all of you that have supported this and are putting this into effect. i do not understand how the cannot put this as a priority. since there are not, thank you. please take the voices and strong. >> i would like to thank marcia green bird. she is a founder and co- president. [applause]

and action network, the national women's law center. we could not have done it without each other. we were all in it together. i want to thank the advocates. it is their voice that will have brought this to the floor. many nice things were said about me today. you have to talk about the people in the trenches every day. the people who were affected. the people who give a voice to the statistics. i wanted to publicly thank them. we could have never have done this without their incredible work. the narrative shows why we will never try to repeal this bill. we will fight it. now, marcia. >> thank you very much.

all of the champions for women's health who are here and in this is very exciting day. your story is such an amazing reminder that we're not talking about statistics, we are talking about people. we are talking about the most heart wrenching health circumstances that can be avoided with access to the health-care system, with a decent health insurance for every american in this country. that is what the affordable care act promises. coming into effect tomorrow for each new plan as it comes on line, the promise for women and their families is just incalculable.

but i want to add a few things to what has already been said so movingly by others whose spoken earlier first of all, it is actually the 40th anniversary of the national women's. step by step by step efforts by efforts it has taken this long and longer to reach a day when women's health is not an afterthought. when it is not an ad on. when we are not trying the one service at a time to get included when the model of health can include and health care can include women as well as men. that is really what is so fundamentally thrilling about

what we are on the brink of experiencing. because of the affordable care act and the preventive health care amendment that the senator led towards passage women are not only not a pre-existing condition, but we have had experts identifying from the get go -- what is it that makes women healthy? what are the services women need? they need to be included. they need to be a part of what is available in this country. not through charity. not through happenstance. but because the law incorporates women's health as one of its fundamental purposes. the national law center a number of years ago did a report of the

individual market. she told pretty movingly how difficult it was to be on your own and have to buy health insurance. what we found was that women who had to buy insurance were not only charged routinely more than men -- as much as 85% more than men, that was excluding maternity coverage. excluding contraception. now, we will face and it meet today when women are not charged more than men and their healthcare needs are covered. whether it is counselling services for domestic violence survivors. whether it is the kind of testing to try to detect

diabetes. whether it is the availability of all forms of fda approves contraceptions so women no longer have to avoid because of the cost the most effective means of contraception for them. whether it is a means a visit so that in the maternity coverage and follow up is available for women. these kinds of services are lifesaving. they are recognition of the fact -- women that do have to take care of them are health and often are because of the cost the first ones to put their health care last as they take care of others. as each new plan turns over, as

women across the country and their families can really let out a sigh of relief that they will get access to this coverage once and for all we have a lot to be thankful for. we know that it did not come without effort, without the fight, without leadership, without determination, and we have to continue all of the efforts to keep the progress and place. one of the things on the banner is a hash tag for health. i know there will be a lot of sweet thing and of following through today and tomorrow -- tweeting and what it promises overtime. it is important to say -- stay involved and stay engaged in state in the fight so that we

continue progress and make sure that it turns into a reality for every man, woman child in this country. thank you. >> i forgot to introduce a deer colleague and friend from the national partnership for women and family. >> thank you. thank you senator mikulski and secretary said alice and all of the wonderful champion's on behalf of the affordable care act. -- secretary sibelius. this law is the greatest events to women's health than a generation. tomorrow august 1, one of its promises becomes a reality as you have heard from women's -- millions of women who will be healthy as a result. beginning august 1, the

affordable care act will ensure a new insurance plans will cover preventive health care without cost sharing and with no copays. net for too long have put the critical services out of reach for so many women. this is one of the most tangible benefits from reform. thanks to the affordable care act, no longer will women go without birth control because they cannot afford the copiague. no longer will women go without -- they cannot afford the coat pay. no longer will cost prevent pregnant women from being tested for gestational diabetes. no longer will cost prevent new mothers from getting the supplies they need to breast feed their infants and give them a healthier start in life.

no longer will teens and adults go without potentially lifesaving screening and counseling. it is about time. the affordable care act covers annual breast exams mammograms and tests at no cost. tomorrow costs cease to be a deterrent from preventive care that millions of women need. soon reform will out lot gender discrimination in pricing. at long last. as more benefits roll out, we should all focus on implementing the law and injuring all women and all americans can access the critical services. to those who try to argue repealing reform is right for this country and for our families, i say this. you cannot talk fast enough

you can not so enough confusion or in any way d.c. of the women of america. the man who care about them. no longer. better care for a pregnant mothers, hiv is, sexually transmitted infections and domestic violence. no cost access to birth control and other preventive services will make women and our families and our country healthier. starting tomorrow, we have the affordable care act and its champion's to thank for that. we thank you. >> senator mikulski had to go to the floor. she had some time reserved to speak about this. she is our leader. see ask me to try to field any questions if you have any. >> the other women's health

issue in the capital today is a bill to ban all abortions in the district of columbia. what are your reactions on that? given the gulf between the two part is on health issues, is that something that will have to be resolved after the election? >> a while ago i chaired the district of columbia. s said then and i believed ever since, the congress of the united states should not interfere in the government of the district of columbia. regardless of banning abortions a after 20 weeks, this is no business for the u.s. congress. . >> the bishop has declared it as being illegal and an unjust mandate. they have issued an injunction.

is being enforced as a texan a small-business owner. >> preliminary injunction. >> right. >> do you believe the federal government has a right to force small business owners to act this way? >> what i do believe is that the obama administration has carved out a very sensible middle ground exception to this. churches religious organizations, they are certainly exempted from this. for-profit businesses that cover a broad variety of people -- they do not have to pay and if they do not want to for the individual spirit have to pay in for the health care. it is up to the insurance companies whether they want to pay for this as a provision.

i think the exhibition the obama administration came up with is sensible. i think we also have to keep in mind, a lot of times we talk about birth control or contraception. many times for many young woman -- women of child-bearing age, it is not just to prevent a birth or prevent pregnancy. there are many women who take birth control pills because they have terrible minstrel crams once a month. some of them almost incapacitated and cannot work. i know of young women who are able to work and be productive. it is prescribed from their doctor. are we being told a woman has to take the prescription from a doctor and take it and show it to her employer? or show it to her insurance company about what the diagnosis is? you would not ask anybody to do

that. i would ask any woman to do that either. i think that we have to move ahead on this. i do not know what the outcome of this case will be. no it is a preliminary injunction while the cases decided. i do not know all the facts in the case. i just do not. but i do believe that we have carved out a viable exception for a religious organizations and churches. does anybody have anything to add to that? >> i will just say briefly it is very much until the beginning preliminary injunction states. i think if you look at any of the legal precedents that this particular provision is well within the legal bounds as well as being sensible as senator

harkin said. of course, in this particular case, a company that is, i believe, it is what the company is ironically enough, of course for those who happen to work for this company, who never thought they would be working for religious company as they are and is not a religious organization at all, they are paying into whatever their share of insurance is. and so women need to be able to get access to needed health care just like men can. of course, one of the things we have to make sure of is that this does respect woman pose a health needs and women's own religious principles and beliefs, too.

in the balancing the legal and constitutional precedents take all of this into account. the that is why we are quite confident as this case and others move forward that the provisions will be upheld. >> over the course of the last couple of years, a number of studies has come out over the health-care debate that recorded in the breast cancer screening and mammograms -- these kinds of things have become excessive. they have created the emotional concerns for people because they were a initially positive and negative. it seems as if this is a response to some of the discussion. these prescreening tests are necessary. the problem is also that a lot of studies are coming out of increasing insurance rates. there has to be some amount of regulation on insurance. i believe that the debate on single payer and the public

option has to be retaken under this consideration and explicitly because what you see with the regulated financial industries like you saw with the wall street situation the -- we need fundamental regulation like we need glass-steagall. >> that is a statement that i question. >> the statement on glass- steagall is important. what are we going to do about the insurance companies? " remanded them to keep the prices low? if he will say we need real health care for people, how do you provide affordable health insurance? >> on the exchange as you well you will have a different system starting in 2014. more transparency, people being able to see what is offered on the exchanges. what different companies are offering. " freckly what will happen in 2014 as the american people will

get what we have here in congress. every year we have an open season. i think we have 15 or 20 different plans rican chick -- weekend pick and choose from. i have changed my plan from where i was here with just my wife and i. we had kids we changed it. when our kids who left we changed it again. most people have not had that option. now, they will in 2014. we hope that will keep prices down. i believe a strong as anything what we are talking about in terms of moving to preventive health care, early detection is going to do more rigid i hate to use this phrase -- bended the cost curve and anything we have them. this is part of the women preventive health care. that is a part of it.

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with lessons learned following the crisis, morgan stanley has worked over the past several years to add significant risk management enhancements to our secured funding program. as mentioned above, we have added significant term to the ma tutors in our secured funding liabilities, and since a large portion of those liabilities come from investors who utilize the triparty repo platform, our credit from our clearing banks has been meaningfully reduced. we've extend the maturity of our secured funding book from less than 30 days to now in excess of 120 days. this is now at a disclosure metric in our public filings. extending the maturity and limiting rollover risk are the most powerful, tactical steps that can be taken by bank dealers immediately to reduce the intraday extension of credit. since the critics tension takes place at the maturity of the

trade, creating a longer and staggered maturity profile can yield significant risk reduction. the triparty reform committee has worked to identify the issues and put forward recommendations for the remediation of the gaps that became apparent in 2008. many of those recommendations are now in practice or in scope and on a clear timeline. many enhancements to the process have created increased stability and added clarity. it is clear, however, that the main and most important goal of reducing intraday critics tension has not yet been achieved. it is also clear the responsibility of this cannot be solely assigned to the two clearing banks. we in the bank dealer community have to take the immediate and incremental steps available through our liability management practices to become a much bigger part of the solution. there is no single operational solution or systems development that can solve this issue completely. what is required is collaboration between the bank dealers and the two clearing banks to provide a set of strategic steps to begin a tactical but meaningful reduction of intraday critics

tension in parallel to building the operational systems enhaments. we believe the status quo is unacceptable, and by beginning this reduction through prudent liability management, we can reduce risk during the proposed buildup by the clearing banks. at morgan stanley, we've seen results achieved by working directly with clearing banks to take these steps. morgan stanley is committed to taking the steps necessary to build investor confidence in this important funding channel. the market's liquidity is provided by investors who seek transparency, a clear understanding, and the information they need in real time to make appropriate risk decisions and to effectively manage their collateral and counterparty exposures. we have worked with the triparty committee and other industry groups to move this reform forward. morgan stanley is committed to achieving the entirety of the goals laid out in the committee's report and has invested and executed on changes to our processes well in advance of the scheduled timelines with the goal of meeting the needs of our investors. this is a top priority of our

firm, and we will continue to work at both an industry and a firm level along with our regulators to add stability and durability to this platform. again, we are appreciative of the opportunity to discuss these important issues and look forward to providing this committee with any level of detail and information that will be helpful as you deliberate on the past forward. >> thank you very much for your excellent testimony, and we'll do seven-minute rounds and i'll yield at the end of my time to the senator. i suspect we have the luxury of going back and forth a bit after that too. again, thank you. let me recognize there has been progress made by the clearing banks, by the broker dealers, in terms of prudent steps to prove the process. but this echoed something, the continued intraday-trading activities is still a severe problem. and second, they talked about

the need for increased government involvement. this task force was the principal private with detect ability systems in the federal reserve bank of new york. that leads me to a question, and this is sort of echoing from our discussion about the libor, which a question of who was really in charge. so, with respect to this issue does the new york fed bank have the responsibility, authority to step in and be the involved party, or is it the board of governors, the s.e.c., or lots of people? i'm leading to the conclusion, everybody has a role, but no one's in charge. >> thank you senator reed. let me begin by emphasizing i'm here today speaking for the

federal reserve board, but obviously the federal reserve bank of new york and the federaleserve board worked closely and collaborately on this triparty issue. i think in the wake of the most acute phase of the crisis, i think there was a broad agreement that some steps needed to be taken and that the risks that had become evident during the crisis needed to be addressed. i think we also at that time were not entirely clear as to what exactly the right way would be to address those. one thing that was clear was that the triparty market is unusually large and unusually complex. it does not just have any broker dealers, clash lenders, clearing banks, but all of the above involved fundamentally in a daily settle process that is fairly complicated and has to be accomplished in a reasonably tight time frame.

we started out hoping we could find an industry solution. as you suggested, that involves bringing people together in 2009. as all of us in various ways, i think, have reflected in our testimony, substantial progress was made through that process. people have mentioned some of the specifics, but everybody also has fundamentally recognized what i would like to emphasize today, which is that we did not get to the end of that road. this task force process did not get to the end of the road, despite the fact, for example, that the daily unwind now occurs later in the day than it did several years ago. essentially all of the $1.8 trillion triparty market is still unwound every day. what we want to emphasize, i think, is we began with an industry process. we thought that the industry

was best positioned to think about what the right solution would be but that we were absolutely committed to progress being achieved here, and to that point when it became clear in the middle part of 2011, that the triparty task force was not going to meet its public commitment from 20 10, despite significant progress having been made to practically eliminate intraday credit by the end of 2011, the federal reserve increased our involvement, and in particular, brought supervisory tools to bear in a very direct way. the details of that are, you know, described, for example, in our july 18 press release. >> let me just -- i think this is an important point. who is in charge? if the fsoc is going for

greater involvement to try to shepherd this initiative to a timely conclusion, which several panelists have said must be done, who's in charge? who's the person that's got the mission to do this, to get this done? is it mr. dudley or chairman shapiro, or is it who knows? do you have an answer? >> yeah, i mean, i think there's two answers. one is sort of all of the above, right? there are reports that each of those individuals have that bring to bear on specific -- on participants in the market. that having been said, the 2010 dodd-frank act did also create a financial stability oversight council, which does have, i think, a clear statutory responsibility to deal with situations where things threaten as you suggest, might be the case here. >> i appreciate your comments, but i think this is something that, as a result of this

hearing, we need a specific answer, because we don't want to be in a situation again where everybody's involved, but no one's responsibility. if, in fact, the fsoc, has you point out, has called for greater government involvement. i appreciate your response, but what has been the stumbling block to prevent dealing with the intraday-trading issue? mr. wolf has been quite specific that's still a huge problem. second it was pointed out that it's been moved back to 3:30, every day you're rolling the dice in some respects. >> i would absolutely reiterate what mr. eichner said we all need to work in concert, and i believe the fed has provided great leadership for this.

our part of it that has provided a stumbling block is we really are responsible to get a technology platform to enable simultaneously -- a simultaneous settlement between new and expiring trades, and we are working on that right now. so we can provide a platform so that this all happens much more efficiently. >> would it be helpful if you were -- well, helpful at least to justify the funding, if you were sort of required at a certain time, certain to do it. is that an issue? >> we have actually reduced the time already. we were originally projecting to finish this at the end of 2016. we've reduced that time through a lot of extra technology to 2014. >> the tenoregon some of the comments from the panel, but also from fsoc, is even the 2014 deadline still exposes the

system to risk that should be mitigated. just the final point because my time has expired and i'll recognize -- one of the aspects of the progress made is the automatic substitution of collateral. previously i understood that individual broker dealers could come in and sort of rearrange the collateral at the end of the day or during the day, causing delays and confusion, etc. is that still possible? is that still prevalent? >> no, actually, the addition of automated deal matching, plus the cash substitution for automatic substitution has actually improved that significantly. >> thank you. again, that is -- that's a testimony and a tribute to what you all have done. i appreciate it. >> thank you very much, mr. chairman. i'd like to understand the objective we're trying to achieve here a little better. as i understand it, the entire triparty repo market is unwound every day still, if i understand you correctly, mr.

eichner. and ms. peetz indicated simultaneous settlement is the ultimate objective. explain to me, ms. peetz and others, i welcome putting your input in here too, how would it ideally work? how would the market ideally work if we can achieve the objectives that the task force is seeking to achieve? >> there would be several changes. this technology would enable just the trades that are actually matured to be rolled, if you will, and so you wouldn't have the intraday required for the whole book. it would be just for that activity that's changing. so that would reduce the amount of intraday significantly. you also have higher quality klatt val another aspect we're working on and asking dealers to tremendous fund that

collateral. so what we call trimming the book will be another concrete move toward getting the risk out of the equation. >> thank you. anybody else? >> yeah, i would just say, taking the more 10,000-foot approach here, the critical problem i think in the market that became evident during the crisis was that the focus of certain risks was not fully understood in a consistent way by all market participants. so, when you sort of say, what is the key goal here? the key goal here is to make sure that it's very clear who bears risk at every single moment and that those risks then can be priced into people's decisions. >> i would say we certainly support elimination of the process of unwinding trades every day, particularly term trades. it certainly helps us to have more of a static pool of

assets. as i said, we actively manage and stress test those assets daily, so the fact that they don't change over and are reklatt rised after the market is certainly a benefit for investors. >> thank you. >> we would agree with that, and we think where some of these interests are very much aligned is bank dealers funding their less liquid assets for longer term makes sense combined with the fact that reducing this optimization that occurs every day on trades that are much longer to maturity al hours our investors to have a more stable pool of collateral that they can risk manage on a much more real-time basis. so, by changing that more frequently, that presents a lot more revaluation and the like. so, the extent that the intraday credit is drawn at the point either at maturity or at these substitution points, reducing that, stabilizing the pool is actually beneficial to both investors and the reduction of intraday credit risk. >> explain that better to me. one of the points you made in your testimony was that the

issue or the risk related to collateral management or the turnover of collateral is one of the big problems that we're trying to deal with here. i don't understand how the collateral turnover issue plays out. could you explain that? >> it plays out in two forms. first, at mat tutor of the trade, there's a critics tension. it's a trade that has been put on, now come due. at that point, the collateral is coming back through the clearing banks or the bank dealer who now has to take intraday credit. to the extent that those books have been moved out considerably and if those ma tutors are staggered the amount of actual credit that's going to be extended can be reduced. so, simply stated, if the entire book rolls over every day and if the liabilities are one day in nature, the amount of credit is considerably higher than if the book has been put out for six months or a year. additionally with the less liquid assets, which present more risk, and we've seen, in working with our clearing banks, the meaningful outcome

of pushing those ma tutors out has really benefited significantly in the reduction of intraday credit. then there is a optimization where the substitution of collateral, as dealers need collateral back and want to reoptimize the book, the frequency of that also creates some critics positive sure as well. when we think about investor confidence, having a more stable pool of collateral with our investors, giving up some of that ability to optimize plays out both from an investor confidence perspective and from a credit perspective. >> thank you. the basil three frame work includes two new minimum standards for funding lick quidity. one, the liquidity coverage ratio, which is intended to promote short-term resilience, and the other, the net stable funding ratio, or nsfr, which is intended to address liquidity and provide

incentives for banks to use stable sources to fund their activities to what extent will the new basil liquidity standards affect the triparty repo market? i guess that question is for mr. eichner. >> happy to start. that i think gets to really a very important part. we've talked here about three basic vulnerabilities. senator reed began by reiterating those. one involves the funding profile of dealers. we've talked about that extensively as well. the ba si l three l.c.r., and netted stable funding ratio requirements are surely going to provide additional impetus to dealers to more effectively manage that risk. so, it certainly directly addresses that one vulnerability. the second vulnerability is the one that we spent most of the time talking about, namely the settlement process and its reliance on intraday credit, which remains, as we've

emphasized, still quite a concern. the third is a dealer that faces distress or default. i think they're really focused on that first question, dealer liquidity risk management, providing additional incentives for that to be improved and strengthened. >> thank you very much. senator? >> thank you very much, mr. chair, and thank you all for testifying in this. the piece of this that i'm trying to get my hands around is the domino effect. that is, when one firm is in trouble and has to sell a lot of assets quickly, it creates a fire sale price that drives down the securities that have been used in other repo sections or deals, immediately causing trouble in other institutions. do we feel like we're in a better position than we were

say in 2008? >> i mean, i think as emphasized in the fsoc report, as we've emphasized in various other forms as well, you know, this remains a very real concern. we certainly recognize the tremendous progress that has been made and will continue to be made on the intraday settlement issue. the issue, senator merkley, which you referred to, that remains a task ahead of everybody sitting on this panel. i think we are hopeful at the federal reserve that like the intraday credit issue, this will be something for which, over time, the industry develops a consensus, and then that consensus can be a route to a solution, possibly with regulators urging along the way.

in reality, this is something that remains yet to be done. >> i was just going to add, we're getting increased transparency also among the players, so we will be able to monitor. in fact, the fed is interested in monitoring not only dealer-specific activity and investors, but then collectively the market. we're getting better and better information for that. >> as we get better information, i assume that the mean repo plays such a large role is it's the cheapest way to borrow, and you want to borrow at the cheapest cost. at some point, how much of kind of the source of credit can that be before it becomes a huge systemic risk to institutions? >> i would say that that's another aspect that all of us are looking at which is, should dealers have limits on the amount that they can

actually extend during the day? that's another thing we're working in concert with the industry as well as with the fed, to develop plans for that. >> in terms of the limits on the dealers or actually the limits on the amount of funds that a particular institution can raise through repo transactions? >> it's a bit of both, because you would naleds the name and what they could withstand, and, of course, that changes as the market changes. so we're building tools to do that. >> other insights on that? >> yes we would see this again, getting back to this liability, this topic of liability management, to the extend that less liquid assets are funded for short periods that they present risk, to the extent those are funded for longer periods of time, we see several works. first, investor due diligence has gone up considerably. the overklattization -- the overcollateralization risks are higher.

the books are maturing less quickly. so as dealers are funding for longer periods of time, because the reduction of intraday credit is taking place, it does require the books are term and had staggered with the focus on less liquid assets. that provides time that these adjustments can take place, not in a short period of time, but over periods of time that move to three six, nine 12 months as opposed to seven days. i think that's a very big change, and i think in discussions about the liquidity coverage ratio, the reduction of intraday critics tension will force those issues. and again, the benefit that we see to investors is at that point the collateral becomes more stable, the ability to value and to make choices and to do due diligence that mr. meier has laid out becomes a much easier task over time. >> let me ask you a little bit of a different track question, and that's because your bank has been involved in the arrangements made on the spot markets, supply crude to certain refineries and buy

refined products. and that struck me as some sort of systemic risk given the volatility that can occur in natural resource markets. does that play at all in terms of the financing through repo? >> it's not an active asset in the repo world. >> ok. thank you. >> thank you very much. one of the points that mr. eichner made in his prepared testimony, it is still discretionary with the bank to extend credit on intraday arrangements is that correct? >> yes and i think at this point we've gone through several work streams with our clearing bank to begin to reduce the critics tent, particularly with a focus on less liquid assets. i think there's a major work stream underway at b.n.y. mellon. we can only speak from our perspective on this, but there are pretty clear deadlines in terms of what that extension

will be, which will certainly move to a very direct asset-based model very shortly. >> but the clearing bank for reasons, any reason, hopefully a prudent reason, could essentially say we're not extending credit to the broker dealer, which would force you, force a broker dealer like morgan to somehow -- how would you deal with that? >> reducing the amount of intraday critics tension certainly -- again, as we mentioned, there's no operational solution that will eliminate that. ultimately there's a few ways to pay for that. if the books are funded too short, you have to post up liquidity, so the extent the bank won't extend, it the dealer would replace that, or to reduce the activity that matures. again, getting back to this terming and staggering and reducing the amount that comes due on any given day, particularly with a focus on less liquid assets. so terming out the book, there's a cost to that, of course because you're paying for a longer duration in

liability, and/or posting cash liquidity during the period of that unwind between then, and i think that's how it would be replaced and we think that by taking the actions that we've laid out, that can be reduced very dramatically as well. >> we're still in a position for the cascade effect that the senator referred to, if the banks were their own prudent reasons to decide not to extend the credit the dealer is now forced to take some -- basically come up with a cash, if they don't have the cash, they're in a very awkward position and that leads to a downward spiral with respect to the whole system. >> yeah. >> potential, but less so today. >> we think it's been somewhat mitigated, but it's a point that that actually occurs. the bank, as we see it with a lot of the confirmation and the transparency around the collateral and the term will have a much clearer view of that, and we'll have lots more early-morning signals well in advance of an event. >> ms. peetz with respect to

this issue, morgan has taken these steps. do you have the contractual authority to require every one of your broker dealers to sort of step up to what you think is the appropriate standard in terms of the way they operate, the way -- the tenor of their arrangements all these different aspects? >> yes how we facilitate that is through different agreements. the near-term activity that we're pushing on at the moment is prefunding of collateral, and so there is a separate agreement that each of the broker dealers will now sign with us to acknowledge that they understand how that's changed. and so, as this kind of continues to change, we will amend those agreements giving us that power. >> you represent the investor side basically the people

putting the cash up, and there has been a report that there's a higher amount of structured financed being placed on these repo transactions, which is not -- let me assume -- not as liquid as some of the other forms of paper that you have. particularly in the days of mutual funds with the new rules, the rule about what they can hold and can't hold, is there a potential problem here where they get the collateral back, but it's collateral that they cannot hold or they have to dispose of immediatelyso it basically, we have to give it away almost is that a dilemma that you faced? >> i think it's a real risk, senator. i also read the report yesterday, and i was disturbed and i mentioned it as well, that there still is a lack of, i'd say, proper diligence on the part of investors really to really look at the types of collateral, the suitability. so, for example narcotics money market fund, our position is

that the traditional collateral treasuries, agencies mortgage backed securities are appropriate and suitable forms of collateral. we do not go down in credit quality, don't take credit spreads, bonds, etc., into the money funds. and i do think -- i was actually encouraged. we had a meeting last week with someone from the federal reserve bank of new york and the s.e.c. asking all the right questions about, you know, our activities as an investor, do we have the full plans in place, and what our thoughts are around suitability of collateral, particularly from money market funds. those questions were asked by the s.e.c. i think the right questions are being asked. what i would like to see is the federal reserve start to audit the full plans and actually make sure that people have the thoughtful process in terms behalf they're acceptable as collateral and are they actually looking at it. we can rely on banks to do that. we don't feel it's appropriate, and we are very thoughtful in terms of the process we go through, and we determine what are acceptable forms of

collateral even down to specific levels with various counterparties. >> but there still exists the possibility that either wittingly or unwittingly a mutual fund could have the collateral in that transaction that the dealer put up as something that would be very difficult for them to liquidate if that became their only mechanism to pay back. >> that is a real risk, senator, yes. >> and let me ask the final question. there's an alternate, at least one other alternate mode to this market, and that is to designate, rather than having clearing banks, to have what would be known as a financial market utility. briefly, could you all comment upon whether that's looked at, the efficacy of that, etc.? very briefly. >> sure. i guess i would start right where mr. meier left off in

saying that we remain very concerned about this collateral liquidation problem that you're discussing. obviously it is the largest concern with respect to less liquid collateral, but it is a concern with even morecollateral. so i think we feel that even once the credit issue has been addressed by reaching the target as others have described there is more work to be done around collateral liquidation. there are a number of models that might work. we think you can be done in the context of a bank system although there are challenges because collateral liquidation systems rely on a membership structurend the ability to mutualize risked and the ability to assess cast -- capital contributions. we think that would work. we also think that utility is

another possibility and will be something that will have to be looked at seriously. as we move to this next phase. >> you have to have a chance to answer this question. >> i would agree with everything that was said. we have been discussing the topic that there are obstacles regarding the sharing of risk. we think that as we move toward our 2014 state we will not necessarily need a utility which is what you are getting at. >> from my perspective i do not support a utility and i believe in terms of collateral, that is the job of the investment manager. you run the risk of rewarding those who are less diligent. from our interest, but we have

long and short collateral and that gives us a competitive advantage to provide funding against the curved and we land to morgan stanley and we take in from morgan stanley. if there is a problem, we go through a liquidation process. we optimize those liquidations in the marketplace. we think that is one of the net against we have as an organization -- mitigants we have as an organization. >> our goal is investor confidence. we have heard that the services provided are an important part of risk-management. what we want is a safe platform that accomplishes that but what do our investors need to see in terms of collateral management? whoever can provide that, we

need to be agnostic. we have to work on the work with our clearing banks. the overall goal is heightened confidence. >> i do not have further questions. i want to thank the panel for not only their oral presentations but they're written testimony. i found it helpful and i am encouraged by what i hear and think we might be able to make some good progress. >> you and i might need to talk about, who is in charge for the fed responds. >> i think that is a critical question, given the last several months of our experience. if they make for a moment, we are looking at the potential

triggering event for market behavior which is dysfunctional. we have huge issues in europe with respect to the disability of their banks and it raises the question is 2014 to long? we have given ourselves, i know you have pulled it back, but if there was a financial crisis even greater than the present one in europe, would it result in undue pressure is so that she would have to not extend credit, forcing dealers? all of this goes to the point do we have until 2014?

>> as chairman bernanke and others have pointed out, this remains a big concern. i think we also recognize the importance of moving in a deliberate fashion recognizing this is a complicated market that has implications across the economy. we want to see the industry move in a way that gets to the target state but does not do so in a destructive way. we would be on comfortable with 2014 if this were just 24 team. i think one of the things that the federal reserve has done in 2011, and by bringing some supervisory tools to bear, we

have asked market participants and others, over which the fed reserve has authority for detailed pilot -- milestones. we do not want to be told we will get this done. trust us. we want to see a clear path to getting all of this done by 2014 with many intermediate steps and risk reduction along the way. that is the way we get comfortable with 2014 in light of the environment we are operating in. >> anyone else? >> we would say from our perspective, to the extent that this flows through where investors have a clarity on what they have and we have clarity on what our bank will do during a normal and distressed market to environments and against what

assets the accountability falls back to the bank dealer. as it works through the due diligence, clarity between the clearing bank and the bank dealers in terms of what everyone can expect during times of stress and prudent liability management, we think is the best outcome. that is how we think we can get to 2014. >> i want to thank you all. i think we need to get a much more definitive, clarifying the notion of who is in charge from the federal perspective. one of the lessons we have learned, when everyone is in charge, no one is in charge. thank you for your testimony. if there are no further questions, we will keep the

record open because there could be some of our colleagues who have additional questions. we would ask you, my colleagues to submit to those questions no later than next thursday and we would ask you to respond as quickly as possible. thank you very much. the hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> next, a hearing on business opportunities in latin america. and at 7:00 a.m., your calls and comments on "washington journal." >> later today on boat tv, in depth with an economist, at a columnist will take your calls and e-mails for three hours beginning at noon eastern. >> what i tried to do is take a look at this and go back to see,

how did we get to where we are today? is there any trends through our relationship? with the ultimate goal of trying to write an account of what transpired on both sides. >> analyst david crist on 30 years of hostility between the u.s. and iran. part of the book tv this week announced the span -- this weekend on the c-span2. >> those comments came tuesday at a senate foreign relations hearing on business opportunities in latin america. this is an hour 20 minutes.

doing business in latin america. our goal is to examine ways for the government to help promote the myth -- american businesses in their -- -- region while considering the challenges of a growing chinese foot killed barriers to market access, and the impact of weak institutions in some countries on american investments. it is my view that we have been distracted by the events in the middle east and around the world and have not had enough compasses on latin america. it is also my view that we ignore our own neighborhood at our own peril. while most countries in latin america have escaped the worst

of the downturn, there are troubling signs. our government has to engage in the region, working with the private sector to increase trade, promote american companies, and create jobs, jobs in new jersey, florida, and throughout the hemisphere. the changing economic policies, and in the discovery, and other factors in latin america have given rise to promising economies with robust exports and an expanding middle class. not only has trade between the united states and latin america expanded 40%, there are other positive trends. relative political stability that american companies should take advantage of. elected governments to encourage foreign investment and foster

economic growth. brazil colombia, and aru enjoyed democracies favoring foreign capital and investment. with 56 million latin-american households joining a rapidly growing middle class consumers in these countries enjoy greater buying power than ever before and that is an opportunity for american industry. as positive as these developments are, their region is not immune to the effects of the recession. the international monetary fund lowered its economic forecast growth for latin america to 3.7%, down from 4.5% in 2011. a renewed concern it as the weakening of democracies by leaders to use their office to grow their power by weakening democratic institutions, the

rule of law, and independent media. investors are reluctant to place their trust and resources in countries like venezuela bolivia, and ecuador. the ongoing crisis is an example of market response to political instability. last week, a fitch downgraded its outlook from the country from stable to negative. the government to limit market access that, failure to pay debts, and nationalization without compensation has shocked investors. it will take many years for the country to recoup the loss of market confidence resulting from these policies. looking at the broader picture china has taken note of the positive trends in the region and has fined a foothold in the region while all attention has been in other places around the

world. china has made significant inroads in latin america. trade has increased from 12 billion in 2000 to over 140 billion today with china's supplanting the united states as the largest trade partner. deals offered by china are often too good to pass up. in addition to offering loan terms and investment, china's policies -- policies make them inany cases a more attractive partner than western investors. that brings us to the purpose of this hearing. we are examining opportunities for american companies in latin america. we are here to consider opportunities for the government to promote business and trade and we are here with some of the experts on the business and

trade to help put the positive trends and the challenges we face in clear perspective so that we can move toward policies that maximize the positive trends and mitigate the challenges. i want to thank our panelists for being here. let me turn to my colleague senator rubio. >> thank you for holding this hearing. a couple of items. i would ask consent this letter by senator lugar be entered into the record regarding the ecuador mischaracterization of the reports on the drug eradication act. i will need to leave around 2:30. there is a meeting. it should not take on. thank you for being here. i appreciate your service to our nation. latin america is a place of

importance that is crucial to our safety and our prosperity. it is important to note this will continue to grow. as i have said, the last three decades have seen an impressive expansion of economic freedoms in this hemisphere. with the exception of cuba, a leaders recognize the legitimacy of policies and operation to curb transnational crime. we have seen this in brazil colombia, and mexico, to name a few. they have expanded the democratic space and their institutions have been strengthened. they have embraced competition and see the rewards of free enterprise. i urge the administration to take bolder steps to consolidate

our relations with similar nations. in the absence of a free-trade zone, the partnership offers new opportunities to integrate the region into the economy. i hope the administration will consider a mechanism to include as many countries as possible. they could develop a fast-track process to allow countries to join the community once these negotiations are finalized. we can work on expanding opportunities in the region -- region and should address the challenges plaguing the region. a working democracy depends on a system of checks and balances where institutions can work their will within a constitutional framework. argentina, ecuador, and venezuela is sing a reemergence of elements in the legislative

and executive branches of government eager to serve their short-term political interests. according to a 2012 index, only four latin american countries cuba ecuador rank as economically repressed. these countries also share the distinction of being led by totalitarian or authoritarian leaders. this trend will diminish any efforts to help american businesses grow and invest. the u.s. response should be clear and swift. a trade agreement is the seal of approval of certain best practices and to only stay in place based on meeting certain good governance. i look forward to your testimony and hope to learn more about policies to address the opportunities to american

businesses hoping to invest in this region. thank you so much. >> thank you, senator. let me turn to our panel. we will hear from francisco sanchez who will be joined by matthew rooney for the u.s. department of state. we look forward to your informed thought as representatives of two of the most prominent agencies in the u.s. government. and what, if any, tangible steps are being taken to grow our historical strong ties within the region. i do not know if you have this in your oral testimony your full in testimonies will be included in the record. we ask you to summarize for about five minutes.

whether we pursue it in your testimony, i am concerned about some of the challenges and want to explore those with you. if you do it in your testimony fine. let me recognize secretary sanchez. >> thank you, ranking member rubio, members of the subcommittee, i appreciate the opportunity to testify about our work to help american businesses thrive in latin america. two years ago, president obama launched the national export initiative and he set a goal of doubling exports by the end of 2014. the reason was simple. whenever more american products reach more markets, it strengthens american businesses. it means more american jobs. last year, exports reached a record 2.1 trillion in total

value supporting 9.7 million american jobs. latin america was a key to this success. it was the destination of $370 billion in u.s. goods, an increase of 54% since 2009. there is potential to do more. latin america has a growing middle class. more customers for u.s. products. consider roh growth is projected across the region. brazil will spend billions on infrastructure development as it prepares to host the 2014 world cup and the 2016 olympics. u.s. companies can and should play a part in this growth. as president obama had made clear, the future of the united states is linked to the future of our neighbors in latin america. we are bound by it a shared

history, cultural ties, and our proximity. as we look to the future, it is critical we strengthen these ties in a way that benefits all partners. allow me to mention a few of the administration's efforts to strengthen integration. administration officials including myself, and private sector partners participated in a summit to create new pathways to prosperity. in june, president obama announced that the u.s. and its partners extended an invitation to mexico to join the partnership trade negotiations. at the u.s. department of commerce, we lead the forum and we lead the u.s. brazil commercial dialogue. we do this to strengthen the $74 billion trade relationship. in our work with mexico, we are

focused on intellectual property rights and on making north american supply chain more efficient to enhance borders and infrastructure. of course, we work to provide a level playing field so the u.s. businesses can compete. our latin american trade agreements covering 84% of our regional trade, do more than it eliminates tariffs. they promote predictability and recourse where necessary. that is why the trade agreement which took effect in may, is so important. u.s. businesses have access to sell their goods in this important market. the service is ready to meet u.s. businesses with opportunities across the region. entrepreneurs can visit our web site and we will help them succeed in latin america and the global marketplace.

a couple of examples of our services, in new jersey, our center helped them secure a $15.5 million contract with the government to provide bridges. our miami office provided counseling to trader brothers, a distributor of oil and gas equipment, helping them secure several cells. the potential is there for even more. as part of this work, the administration will continue to collaborate on critical issues. let me take a moment to thank the senate finance committee for reporting on a bill that would take care of some technical corrections to the u.s. pre- trade agreement. it will maintain a create jobs across the united states and

latin america. i hope congress will pass this bill very soon. the goal of the united states, and our latin american partners, is a shared prosperity through shared ideals and values. i want to thank both of you for your leadership in this part of the world and the opportunity to testify today. i look forward to working with you as we move forward our commercial relationship with latin america. >> thank you. secretary rooney. if you would put your microphone on. >> ranking member rubio, thank you for the opportunity to be here to discuss efforts to promote the competitiveness of u.s. business in latin america. the western hemisphere is a region of opportunity for u.s. business.

since 2002, the gdp of the region has approximately tripled. these developments and numerous others have lifted millions of households into the middle class. rising exports demonstrate u.s. companies are already taking advantage of these opportunities. some countries such as argentina and venezuela have chosen policies that result in higher rates of inflation. this has caused commodity prices to come off their highs highlighting the risk of overreliance on as a single sector. sustaining economic expansion will require the region to transition away from commodity- led growth driven by demand from china to a more balanced model based on productivity. many countries are coming to see the benefit of trading relationships with countries like the united states.

u.s. businesses also face challenges in taking advantage of the opportunities in the region. a lack of transparency can discourage investment. nevertheless our private sector is well positioned to overcome these and other barriers and the administration is working to help them. to help compete we are working with the department of commerce to provide better and more available information on business opportunities. in particular through an initiative to focus on probe but in promoting business opportunities in 9 countries worldwide, including brazil and latin america. secretary clinton opened the latin american idea partnership to encourage u.s. small businesses to build a partnership with small

businesses in latin america. it is a piece of a larger initiative that president obama launched as he was traveling in april to help small businesses navigate the complexities of international trade. we have linked are now works with similar centers throughout the hemisphere to create a network of the americas with over 2000 serving 2 million businesses, leading them closely together to provide small business owners with an on ramp to the economy. it builds on several years of work under an initiative in building and development throughout latin america. we are focused on the fact that women of her special obstacles. this is why the president launched the women's initiative to promote access to training, finance, and access.

our businesses have moved beyond selling products to latin america. they are working hand in hand to build complete businesses from supply chains to retail partnerships. secretary clinton's initiative challenges all of us to focus on shaping the policy environment so these can thrive. with this in mind, we're collaborating more closely than ever with canada and mexico on economic issues such as regulatory cooperation and more efficient borders. we have set up a line to talk with our ambassadors and their teams throughout the hemisphere to get advice on navigating the political and economic landscape. as you noted the americas holds important for the united states in terms of energy. in the coming years, the region will provide more and more of