secretary geithner spoke tuesday at the annual "wall street journal" ceo council meeting. this is a half-hour. >> ladies and gentlemen, the treasury secretary of the united states, tim geithner. [applause] i was running out of line. i am glad you're here. the people in this room, we polled them before you got there, by two to one we do not expect a deal before we hit the fiscal cliff. there is a bit of a highlighting of the dominican republic, which we have not figured out. [laughter] i think there is a lot of anxiety in this room about the

fiscal cliff. do you think we will go over it, or are you confident they will deal with the other side before we get there? >> there is a lot to sea, but i think there is every reason to believe this is a solvable problem. it is true we have a lot of challenges with the country. but there is a lot of support for trying to do things that will help make the economy stronger in the short term. universal support for extending the middle-class tax cuts -- that remove much of the greatest risk of the fiscal cliff. there's a lot of support for finding bipartisan consensus on other things that would make the economy stronger, like a set of amendments -- commitments to finance higher levels of infrastructure and education. there is bipartisan support for that. there is bipartisan support for doing the obvious things -- you have to pass an extension of the business expenditures,

things that are important to do. there is a lot of support for trying to make some real progress on long-term fiscal challenges. a lot of benefit in doing that for the economy. i think this is a solvable problem and we want to do as much as we can to take advantage of this opportunity to make some progress on each of those fronts. >> one thing about which there does not appear to be agreement -- that is, should the bush tax cuts on over $250,000 be extended, or should they be raised? i heard jay carney say there is no way the president will agree to anything that extends the tax cuts on the upper two brackets. that sounds like a line in the sand. is it? >> it is important to start by acknowledging that we find this encouraging that you have seen republican leaders in the last couple days explicitly embrace the recognition and support for

as part of the balance of fiscal reforms a package that raises revenues. that is very important. that is very encouraging. reckoning the basic reality of how you govern a country like this in the face of the challenges we face. that is good. you know the president's position -- very simple. let's expand middle-class tax cuts, removing the potential greatest source of uncertainty and damage from the fiscal cliff. let's put in place a balanced set of a fist or forms that recognize the reality republicans now embrace that the most fortunate to% of americans are going to a pay a modest but larger share of income taxes. but he is not prepared to extend the upper income tax cuts. if you look at these questions carefully and thoughtfully, we have, as many people have done, look at the amount of deficit reduction you have to put in place. if you recognize what is a

realistic share revenues will have to contribute to that and believe that we should not be asking middle-class americans to pay more in taxes, i do not see how you do this without higher rates. i do not think there is any realistic way to do it. it is not possible to raise money from upper-income people by closing loopholes, getting rid of deductions, stuff like that? >> what we propose is as part of the balanced reform package, a package that would raise roughly another $1.5 trillion in revenues. 1% of gdp. to do that with a mix of modest rate increases, back to the clinton rates, which was a very good economy for the american business sector and private investment. to combine this with reforms

that limit the value of deductions for upper-income americans. other ways to do that, but there is a lot of magical thinking about how much money you can raise some tax expenditures. a lot of people who have looked at that question and concluded that, incorrectly, there is a huge amount of resources there you can realistically race. that is not true. when people look at this and look at it carefully, they will come to the just reached. to do enough to restore fiscal sustainability, be careful what you do to long-term growth prospects of the country, and make sure we are not adding to the burden on middle-class americans. a mix of rates and deductions -- i think that is what that critical consensus ultimately well be on this. -- political consensus ultimately will be to solve this. >> are you saying that if republicans do not agree to raise the top rates to what they were when bill clinton left

office, we are going over the fiscal cliff? >> i do not see a realistic way to solve this without a recognition -- let's see the positive side. it is encouraging to see the leadership recognize that we are going to have to generate a modest amount of additional revenues from high income -- that is a good recognition. we are just at the beginning. we will get people -- we will see how it goes. i agree, this is going to be tough. i know the lack of clarity and resolution is going to be a burden and a source of uncertainty. this is something we will have to go through. we will govern this country better, find a better way to support things that improve the long-term growth prospects, we have to find a way to resolve the divide on this question about the long-term. -- long-term fiscal trajectory of the country. that is worth trying to do.

>> as you said and the president said, we have to both raise taxes and restrain spending. the proposal so far on medicare has been largely limited to the provider side. is the president going to leave here with a proposal to do something different on medicare in order to get the republicans to back off their position on the top rates? >> the president is putting in his budget -- not enough attention has been given to this -- hundreds of billions of dollars of carefully designed reforms to the health care system that are designed to reduce costs. we recognize better ways to do that, but there are hundreds of billions of bars in detail, specified reforms in that context -- hundreds of billions of dollars in detailed, specified reforms. he has proposed hundreds of billions of dollars in other savings in what is called the other parts of the government, and other mandatory, things

like that. people can design things differently. he is prepared to look at those things. we will start with where we have been, with pretty well designed reforms. >> if all the president says is i have put out my budget, i have won the election, take-it-or- leave-it -- >> that is not the way he said. he was careful in the language he said on friday. we will look at what we have proposed. -- take another look at what we propose. they are very substantial. one point of comparison, they are larger in the 10-year window than the health care savings proposed by simpson- bowles. take a careful look at those. we will take a careful look, to. >> what happens if we go over the if? -- the cliff? if republicans cannot bring themselves to raise the top rates and accept what you are offering? >> i do not see why they would make that choice. why would you want to put the

economy through that? the recognition that revenues will have to go up, after conceding their recognition revenues will have to go up on the most fortunate americans, why would you decide to take the economy over the if and put the economy through -- through the cliff and did the damage that would cost? because you are unwilling to agree to a modest set of rates for 2% of americans. it seems deeply implausible as a strategy and should be avoidable. >> why aren't you willing to say in order to avoid the economy going over the cliff we are willing to entertain a different way to get money out of the top 2%? that might involve some rather radical restructuring of deductions? >> when you take a hard look at the amount of resources you can raise from that top 2% of americans through limiting deductions, you will find

yourself disappointed. we're looking for 1% of gdp. you are going to find it is hard to do that through deductions unless you want to raise taxes quite meaningful on middle-class americans. there are people who might argue that is a good policy. that is not the president's view. even if you think it is good policy, do you think it is more realistic? is it more politically realistic to get a deal that will involve tough things on all aspects of government, where instead of a modest tax increase limited to 2% of americans, a much broader tax increase. is that more politically feasible? in any framework that restores the score responsibility you will be asking pretty significant sacrifices of a broad swath of americans.

everything that happens on the spending side effects people much more broadly in this context. what is proposed is an agreement of a ratio of roughly $2.50 of spending cuts for every $1 in revenue. those spending cuts will cut significantly into basic functions of government. government transfers that affect millions of americans. that is why -- that recognition why we think the shape of balance is going to have to involve that mix of rates and reforms. >> i feel i'm watching the same play with the same actors at watched last year. john boehner still in the house. you are still at the treasury. the president is back in the office. harry reid is in the senate with more seats -- why should i believe this will end any more positively than the summer of 2011? >> i will not try to talk to about optimism, but let's look

at what has changed. you have republican leadership acknowledging relief for the first time in this debate in public that they would agree to increase revenues as part of an agreement to help restore fiscal balance. that is a very important change. you could debate what has motivated that change, and of course it is true that that approach has very popular substantial support among the american people. you have a much greater recognition that the economy would benefit from a carefully designed balanced agreement on fiscal reform. putting that off indefinitely is not good for the country. that is important, too. i think, again, if you listen carefully to what people are saying and what many politicians are saying, there is a lot of

consensus on the things that would be good for the economy now. that is98% of americans with tax certainty. agreed to fund a carefully designed program of larger public investment and infrastructure. that is very good for growth. make sure we're doing sensible things in education, educating future americans. with a better capacity to compete in this world. things with broad bipartisan support. they will provide the basic anchor for a agreement. >> if we go over the cliff, at some point when the congress to raise the debt ceiling. the president's leverage is until the end of the year -- if they fail to get a deal and that the taxes go up and the president will go on tv and say i tried, the republicans were obstinate, but the leverage shifts to them because you need the debt ceiling and the president has said that not raising it is impossible? >> i do not think so.

anybody who looks at the experience of the costs to the country of those republicans employed last year will find that is not something it wants to repeat. you do not put the credit of the united states at risk, however. -- ever. you cannot threatened to default on the credit, destroy the credit of the country as part of some game to get marginal advantage on policy questions. that has never been a responsible way to govern, judged by any predecessors, republican or democrat. my view is the people were part of that and are still there. they will do what congress only can do, pass the debt ceiling with less drama. it was not just drama -- it was enormously costly and damaging. >> what is your role in this next act? will you stick around until we get a deal? >> i will play a valuable, important role until around the inauguration.

>> let me ask you a couple questions. about the rest of the world, andthen you'll get to questions from the audience. how would you evaluate the state of play in europe now? >> i think what the europeans have done over the last several months is very important. they are in a much better position to more carefully manage the incredible difficulty of the reforms they still have -- still ahead for their countries. it changes the way europe is governed and run on financial policies. even with the most compelling amount of political will and -- this will be very difficult. reforms will take some time. what they have done over the last several months is give them a framework that makes that possible. they still have a lot of tough decisions had. what i'm referring to is the combination of firewalls the

government has agreed to and what the central bank is pushing. >> over the next few months, there is a question about whether spain will need a bailout and whether germany will approve. if they do not, all the ecb offers are useless. you told us you thought catastrophe diminish to the part where they were manageable. they seem to be rising again. >> this will be true for years. you will see a lot of uncertainty about the concourse of each of these additional steps. in greece over time and any other country that gets itself in a position where it is difficult to borrow sustainable rates. by credibly committing leaders of europe to take out the risk of catastrophic failure from the equation from the markets, they bought themselves some space to do that without there being much damage on the rest of the world. they have to demonstrate they are willing to do those things.

they are attending a much better position to do. even with the events of the last few weeks. i cannot think it is surprising that greece is still hard. the greek government has done enormously difficult things over these last few weeks and i think those reforms will be rewarded by more support from the europeans. you will see a little uncertainty about other aspects. >> what does europe need to do in the next two or three months? >> they have to demonstrate they are moving to put reforms in place. something the with the financial system in europe is governed. and a better mix of constraints. those are the key things they have to make progress on. that will take it difficult amount of political

negotiations over the next several years. >> china. with the new leadership -- what will you be watching for? >> the big question is what will be the shape of this next- generation of economic reforms in china. they have had a remarkable record over the last 30 years of broadening the scope for property rights and private enterprise, managing a remarkable increase in incomes brought this but growth across an economy. but they have a difficult set of challenges ahead as the population -- as the population ages. they have run out of room to use those tax forms of stimulus to get the economy moving in the short term.

you will look carefully to what they do to expand the scope for private investment, private initiative, better property rates not just for us but chinese innovators to expand opportunities. to reduce the role of state-run enterprises. people are going to look to the chinese government to see what is the new direction going for it. all indications we have are that the people that will be at the center of the government going forward are committed to that path. not debating that basic trajectory. but there will have to make some decisions about the shape of those reforms. even as recently as last spring, despite the fact they were in the midst of a political transition, they were setting new frontiers of financial reforms. that i think were very encouraging. you have seen the exchange rate increase significantly the past few years. they have some more work to do on that side but that is part of the commitment towards a more market oriented economy. >> what about their attitude

toward their relationship with us? it is clear what kind of relationship they want with us? >> i think they recognize how important it is for them to have a stable expanding global economy and how important it is to them to still enjoy access to the major markets. it is because of the recognition that they have been willing to move on a range of things that are very hard for us an important to our commercial interests. i think that is the balance will hold going forward. >> a couple of questions -- one is, the democrats keep citing clinton era rates. where the only relevant for income-tax rates but not for spending levels or as a rate of gdp? i will sign up for clinton era income-tax rates it obama commits to clinton era spending levels. >> you cannot repeal of the aging of the population.

the big event -- the demographic changes -- million americans become eligible for medicare and social security in the coming years. it is not something you can ignore. part of governing is recognizing those basic realities. the level of spending projected in the president's budget is one example. the modest spending outside of its adamant rhetoric -- relative to the share of gdp. in the president's budget, the level of spending for non- defense discretionary spending, those levels are very low. the share of the economy relative to clinton. we think we have laid out a

sensible balance in this context which shows significant restraint where you need to show it. but still recognizes that we cannot ignore the fact that we have millions of americans retiring. >> why should we believe an administration that has ballooned the deficit attacked it with any vigor? that is not the track record. >> the people who say that miss some basic realities of what drives our deficit. it is to the deficits have gone up. it has gone up for reasons you all know. let's just review them -- they go up significantly because of the cost of the bush tax cuts and expansions we inherited. go up significantly because of the cost of the crisis and recession. the policies be put in place which have helped bring economic growth back are only 10% added to the increase in deficit over this amount of time. people are mistaken in their

basic app tradition. -- in their basic attribution. >> i hear about a continued concern that this administration is simply somewhere between does not get business and is tossed out to it. people complain about regulation -- and is hostile to it. people complain about regulation. the president's rhetoric. you have heard the laundry list. what do you see to american ceos when they complain to you about that? >> i say tell me what policy you are concerned about and let's talk about the merits of them. if there is a proposal in the financial system you think is too costly are missed designed, some of what that is. what would you replace it with and how would you do it? if you look on balance at what

is set up policies be pursued and what the fed pursued over the last three and a half years have been, they have been dramatically effective in not just putting out the financial buyers got laying out the foundation for economic growth. the rate of growth in the assessment and productivity over this time has been a very good set of policies for the american private sector relative to -- if you look at in the country's experience in financial crises, i think we at basic test. if you are concerned about the shape of reform on the regulatory side, it is true financial reforms are tougher. you want to leave this economy vulnerable to a crisis like we had in 2008?

the things we haven't done have been good to the long-term health of the american financial system. >> anyone else have a question they want to pose? yes? >> how much more debt are you willing for the american people to bear to continue to stimulate the economy? >> our deficits are not about the above 5% of gdp. -- now about -- of gdp. they are down dramatically from where the heat -- are now down about 7.5% of gdp. there are down dramatically from where it started. you need to get the deficit down to the point where the debt stops rising as a share of the economy. to do that, you have to be slightly below 3% of gdp.

that basic objective and there's everything we propose on the budget and at the same basic objective that anchors the proposals before us today. it is a basic recognition. how much is enough? that means you have to go down to below 3%. to go from 7.5% to 3% -- spending stuff is automatic in a recession starts to recede but you still have to find consensus on a set of reforms. that is what this debate about the fiscal framework is going to be about. how to come to consensus on roughly 2% of gdp in additional savings. roughly 1% on the revenue side and the balance on the spending side. you do not want to do that quickly. if you try to do that too quickly, you will really hurt and economy that is still not

growing as rapidly as he would like. given the pressures around the world in europe and elsewhere, you want to keep your focus on doing things to help make it stronger in the short term. that means you have to have a gradual path. for restoring fiscal balance. >> this will be the last question. so, make it a good one. >> it seems one of the themes which inhabited the first four years was the balance between economic priorities and other priorities. how much political capital energy was spent on health care and other things. the question is, how do you strike that balance and you see that balance changing at the go forward into the next four years?

>> let me complicate your question by saying about the balance between short-term and the immediate and long-term things that matter for the strength of the economy. it is important to recognize that as we get to this next stage of this fiscal reform debate, you have to think about this not just about how you bring this deficit down gradually to the point where there sustainable. you have to think about this and the terms of what can you do to improve the long-term growth perspective of the american economy. there are a set of things we have to do in and for structure and education just to name two. that are very important to the growth potential of this country and not very expensive. if we sacrifice those objectives in the interest of getting more fiscal restraint more quickly, we will do a lot of damage. i would encourage people to look at -- we want to look at things that are good for growth

now and growth over the long run. that is why you do things that mattered to the near-term strength of the economy as a whole. that is another place where you want to get the balance right. principal objective of the economic side will have to be what is good for the growth prospect of the american economy and how to design a balanced set of reforms to restore fiscal stability. i know there are people out there who say it's november 13. the end of the year approaches. why don't you just put off all the stuff to buy yourself some time? why not extend everything got to mark i would discourage you from doing that as an -- as an attractive alternative to review leave all the uncertainty -- alternative.

you leave all the uncertainty. if you do that, what incentive have you given anybody to negotiate? if you say again we are going to extend and i -- and delay, what gives people the confidence? that people will come to the table and negotiate. they always believe if they hold out, they can just extend again. i know that cliff is unattractive. it would cost a lot of damage to the american economy. that damage is avoidable. not that complicated to solve. but be careful about those who argue for and urge for last -- let's just extent. it will leave a different source of uncertainty which is what will give the people the incentive to come back and do >> the miami book fair international this live on book tv. two days of nonfiction book,

author panels, interviews, email and tweet. -- featured authors include bill o'reilly, john walsh, jake tapper and christopher fiction's's must book with a panel that includes his widow -- book.topher hitchens' and join us on line for exclusive offers chaps -- author chats on facebook. >> outgoing budget senate committee chairman kent conrad said a budget plan would likely total five the with trillion. this said raising the medicare eligibility age and changing the payment formula for social to draw benefits could be part of the final deal. senator conrad's remarks on "the wall street journal" ceo council meeting are about 25 minutes.

>> mimi -- maybe the only constructive conversation has been a group of senators called the gang of six. we invited all of them but due to very -- various conflicts, we got one, so we what ask him to carry the whole burden of the six today -- senator kent conrad and who will be interviewed. senator conrad has been budget committee chairman and is retiring at the end of the year. great to have you here. >> good to be here. >> why don't we go back to the questions that will pick up on the first question david asked -- just the context and give a

sense of the mood of the business community. do you believe there will be some sort of constructive deficit deal in congress before the end of the year? only one-third think yes, ted -- two-thirds believe we might go over the cliff unless there is an extension. if there is a deal, how are your investment plans likely to be affected? one, increase in investment, two, increase, stay the same. if we could get a quick vote on this. everybody have a chance to vote? 1, 2, 3.

while we are waiting, senator conrad was not only member of the gang of six but the gang of eight, touch trying to contend with -- we should look in your tats. efforts to put a framework of the deficit deal, senator conrad has been involved with. because he is retiring we are expecting him to tell us the secrets of what is happening inside -- inside the senate right now. we of results? 77% said it will increase investment, a 23% stay the same, 0 say it would decrease. tremendous pent-up demand for some resolution. let's go to the third question. are you optimistic or not over your business prospects in the next year? just in general.

we were talking on the phone. you are optimistic there will be a resolution to this. i am wondering if you could give a sense of what would it look like. what constituent parts, what sort of revenue increases and what form, what ox gets gored on the spending front? >> let me say i am speaking for myself. not as part of any of the groups i have been a part of, whether it is it -- whether it is bowles-simpson or group of six or group of eight. i think it ended the day we will be in the range of a $5 trillion package. i hope we are. i think we are going to have -- we are going to look back on what has already been done and factored that in. because what has been done so far has been all on the

discretionary spending side of the equation which you know is less than 20% of the overall budget. so, it is critically important now we move to entitlements, reforming entitlements, and the revenue side of the equation. there will be additional domestic discretionary savings. there will be additional entitlement other than the main entitlements -- that the social security and medicare. social security i think will be handled separately. it will not be part of the deficit reduction bill. any savings will be part of extending the solvency of social security itself. >> that is done how? raising the age limit by having a means test? >> it will be done in several different ways. one of the ways it is extend the cap in terms of what income is exposed for funding social security. the age will be extended over an extended period of time.

and you also change the so- called points -- the technical way of determining what social security payouts are. and you will also -- there will also be an inflation adjustment -- currently it is done and away most economists say is not fully accurate. >> an adjustment to the annual adjustment. >> should the people in this room qualify for social security? >> sure. >> there should not be a means test. >> there should be a mean that the test -- it goes to a question of what revenue is used to support the system. but i think people who pay in the should certainly be eligible to get something out. my former father-in-law is a very wealthy man, one of the more successful businessmen in north dakota and he tells me

many times, i don't need social security. if you do not want to take it, you do not have to take it. but it will be very hard to of a program where people paid in and then when not eligible to receive what it is they paid for. >> there are a lot of taxes paid for, -- not take the village of, meant for other segments of the population. why shouldn't social security to be viewed differently? >> it is designed as a social insurance program. if you pay premiums for social insurance you ought to qualify for the benefit. i think much easier to justify means testing is medicare. and i voted as a member of the finance committee a number of years ago, a group of us revolted in the middle of the night and actually passed and the finance committee means testing of medicare. i really don't understand the

justification there for working- class families to pay a part of the medicare benefit for very well-to-do individuals. that is a very different model than the model of social security. >> at the end of the day, once the kabuki over the language of rates over revenue, once it is all done on the medicare fraud, what is a resolution likely to look like? >> i think a more likely resolution is something that is done to slow the growth to the growth that occurs in the underlying economy. if we can accomplish that, by a series of measures, i think we would have done ourselves and the country a world of good. in other words, slow the growth of spending to the growth of the economy. >> how do you do that? >> there are a series of steps that can be taken.

more co-pays. going back to providers and asking them to take less of an increase. raising the age of eligibility which is more attractive now that we will have exchanges in place. meaning people who are not in medicare will have an alternative place to get coverage. >> are these elements likely to be part of a final deal? what happens to the defense budget >> i think it will be asked to take additional savings. it would not be asked to take the amount in the sequester. defenses are taken savings approaching $500 billion over 10 years. that is in the budget control act.

the sequester would ask defense to take another roughly $535 billion of savings. it is done in a way that makes almost no sense. there is the prioritizing. i do not think any serious person has looked the approach and said that makes any sense at all. my own anticipation is that number will be reduced but there will still be a request for additional defense savings probably in the range of $200 billion. $300 billion perhaps at the high end. >> and that gets achieved? cuts at that level? >> well, if there is going to be an overhaul deal here, a deal that has anti the reform, revenue, additional discretionary savings, it is all going to have to move as

package. that is my best judgment at the moment. >> talk to us about process. the fiscal cliff is a few weeks away. are there extensions? how does the process work now? what do we get come december 31 and when do we begin to approach a resolution of the sort you just described? >> here is what i have been trying to sell. again, i just speak for myself although i think there is growing support for this basic structure. number one, a down payment. in the range of $400 billion. on the revenue side and on the spending side. those are things that would be done now that one could be a short are actually going to happen. because they would be passed

now. a framework that sets out how much money they are to save and raise and what the balance is between the two. those committees of jurisdiction began -- then be given six months to work out the details, to provide specifics. third, if they fail for whatever reason, there be a fail-safe. that fail-safe actually goes into effect if congress if we does not produce the savings and revenue agreed to in the framework. >> sounds like a sequester. >> different than the sequestered. the sequester was designed to say this is not something anybody would want to do. this approach would stand back on its head. instead of having something that

was widely seen as making no sense in being unacceptable, they have it fail-safe that you could live with. my well live with if committees in jurisdiction to not reach that which is called for. it would have to be part of the package. -- who sets the fail-safe for each of the committee's? >> well, they have to be part of the package. said the that is offered, -- something that is offered, hopefully by leadership, by the white house. and what have all these elements. >> we are counting on the market to beat everybody into line. if this is not done in a responsible, rational way, markets will step in. secretary geithner just talked about putting the dollar at risk. put in the credit rating of the u.s. at risk. is there really a compelling argument within congress? the dollar, after all -- when

there is a crisis abroad, it is the first place people move into. the reserve currency around the world. is that hovering over these negotiations or that anxious about the markets? has that been dispensed with? >> i think it is hovering over this. there is a more immediate prod, the reality that will confront every member of congress. these tax cuts from the bush era are all going to expire. the sequester, $1.20 trillion across-the-board cuts. that is in law. the doctors who treat medicare -- the alternative minimum tax will grow from affecting 4 million-5 million people to affecting 30 million people. the doctors who treat medicare patients are going to face a 28% cut. these are not somebody's

imaginings. these things are all in law. they are going to happen. there is a debt limit the session -- that will have to be -- debt limit extension that will have to be addressed. >> that could extend these things. >> they can. i think the market's reaction there is very important. the notion that markets would not react well to kicking the can down the road. i think it is more the market. the american public would not react well to just kicking the can down the road. >> bob zellick and austen goolsbee bought up the notion that this feels like groundhog's day. what is different post-election than pre-election? same players, slightly different complexion of players come inauguration day but not really.

what has changed that gives the optimism that some deal will be struck now i could not have been struck before the election? >> first of all, the president was reelected. whether you agreed with his reelection and not -- had he not been reelected, at the other side had taken power, he would have to wait for the new president. because you have the sitting president reelected, he did not have to wait. number two, we are days closer to all these things actually happening. the end of the tax cuts, the alternative minimum tax, the sequester, the automatic spending cuts. all those things are very close to being upon us. that does not deal with unemployment insurance and the payroll tax holiday. because those things are also set to end. so there is a growing momentum

that i think will compel colleagues to act. could i be wrong? absolutely, i could. because there is rigidity in the system. especially on the far right and the far left. let's be candid. there is rigidities there. it is conceivable that you get into a negotiation and people just cannot adjust to this new reality quickly enough to make it time the decision. so you do go over the cliff. i hope that does not occur. i hope rationality prevails. but it is possible that you have to get into going over the cliff before people opposite to act. -- are persuaded to act.

>> a senator last night described the president as introverted. not particularly outgoing in bringing people into the tent. is there a deficit of schmooze velocity coming out of the oval office right now? >> i would say he is sufficiently extroverted to have just won a national elections. i think we have for presidents who have been reelected for a second term by these kinds of margins. four president's been reelected for a second term by these margins. reagan being one to read obama being one. so this notion he is introverted and not affected -- really?

-- not effective -- really? i would say he has been pretty effective. looking back, i do not know of people read ezra klein's column today about all the things that have happened. the money for the financial institutions being passed. the recovery act been passed. really dramatic health care changes being made. these are real things that have happened. you may not agree with them but those are real accomplishments. one war ended, a nother one being put to a close. if you think about what he inherited, it was a remarkable set of circumstances. -- staggering set of circumstances. i'm not sure he had much time to choose members of -- as previous presidents have your years to it -- he was dealing with one

crisis after another. i can just say for me, i have been at the white house more under this president and all the other presidents i have served with combined. he is a serious guy. i expect that you will see now that a lot of these other things are not in crisis mode that there will be more engagement with individuals on capitol hill. i think that would be a good thing. >> the you need at the moment like this an lbj type a personality? should we be able to rely on the vaster institutions we have here? president? they did not get to know each

other. -- trent lott was saying they fly back home after two or three days of legislating. they are not out having dinner, smoking cigars. finding commonality so they will not be nasty on the floor of the senate or the house. that is tougher now. shouldn't those institutions be able to solve those managerial problems? an lbj - type figure. >> i just read the book about lbj -- the president calling the government printing office to make sure it does not close so congress could get a bill printed because he knew they needed to act because if he waited until the next day, some

of the votes he had made drift away. can you imagine a president, any of the president's i served with, calling the government printing office to keep them open? i do think a dash of that would be very helpful and what we are involved with. as the group of 8, on these complex issue, trust is important. and if you spend hours and hours and hours together, at a certain report develops and i think it is important to getting an agreement. >> thank you, senator. we will get questions from the audience. >> none here. >> yes, please. >> the you think it is necessary for the senate to pass a budget and if so, when do you think they will do that?

>> there are different ways of passing a budget, as you know. there is a budget resolution. you know, we heard a lot of criticism of a budget resolution was not passed. instead of a budget resolution, a budget law was passed called the budget control act. a budget resolution, as you know, never goes to the president for his signature. i think a lot of people in this country does not realize a budget resolution is cure -- purely a congressional document. i think in this circumstance a budget resolution is not what we need. i think we need a budget law. the budget control act with a good beginning in the sense that it set spending limits for two years. actually went beyond that and set spending caps for 10 years. goes way beyond what any budget resolution would normally do. 10 years of caps and it gave special powers to a special committee to deal with entitlements and deal with revenue and said to them, if you reach agreement, you will not

face a filibuster. you will be able to offer that on the floor and get an up or down vote. that is a huge deal. now, they failed, so that your answer was the sequester across the board $1.20 trillion cut. in this circumstance i think we would be infinitely better to have a law rather than a budget resolution. >> another question? >> senator, if there are none from the audience -- one last question. you are from north dakota. the oilfield is now changing the landscape of u.s. energy. that is going to change presumably manufacturing costs in the u.s. how long before it begins to pass through into the national budget as a revenue producer in a variety of different ways -- lower-cost manufacturing, more in the u.s., etcetera. >> permit me to go beyond that

-- it is incredibly exciting and it helped dramatically reduce our dependence on foreign oil. we have gone from about 60% dependence down to 42%. a new report out yesterday which said by 2013 the united states will be energy independent. a huge deal over time -- 20by 2030, the u.s. will be energy independent. instead of spending about a billion dollars a day we would be able to get the money at home. that will strengthen the economy and create more jobs and improve our competitive position. it will have a budget impact. but most budgets are looking at a five-year window. very there we go beyond five years. the vast majority of the time is a five-year window. you do not get adopts much help the first five. it has enormous implications when you go to the second 10 years and the third 10 years.

a bit ofnow, we've got very good news that will give a lift to the american economy and really improve our competitive position in the world. that of a terrific thing. we are lucky to have it. >> i think on optimism -- the third question, the audience was pretty much split down the middle, optimistic and not over the next 12 months. if you could just wait for a second i will ask editor in chief robert thompson for closing the mont -- remarks. >> thank you for closing on an optimistic note. one of the few optimistic notes in the past hour and a half. i would like to thank our spend it sponsors without whom we would have been over a fiscal cliff with this conference. delta, lenova, nasdaq, omx and oracle. i would like to thank dorothy and the team for organizing the conference. and i would like to thank alan

murray. i did not know of all of you know, but he loves washington and conferences so much that he has decided to stay in washington and run an organization that is one continuous conference, which is pew research. a week's time he leaves "the wall street journal" and leaves his job as executive editor and takes over pew. what he has done for us and for all of you, mr. allen murray. [applause] and now, outside, beer and other beverages and dancer and next monday in "the wall street journal" there will be a special section that captures what we discussed over the last -- >> several live events to tell you about. the house energy and commerce committee will be hearing on the recent fumble meningitis

outbreak and whether it could have been prevented members will hear from the fda commissioner. c-span 3 at 10:00 a.m. eastern. also at 10:00 a.m. eastern on c- span2, house democratic leader nancy pelosi told a news conference to talk about her future role in the democratic party. and president obama is also having a news conference today. live coverage on c-span2 at 9:30 p.m. eastern -- 1:30 p.m. eastern. next on "washington journal" we will focus on the so-called fiscal cliff, the expiring tax breaks and automatic spending cuts which will go into effect unless congress asks. the best will include nanticoke from national journal, and also ways and means committee members -- republican kevin brady from texas, representative sander levin, and you can also call in with your questions for