what is interesting about this is if you look at this by college and noncollege household what aree asked people the basic financial tools that you have your disposal? we see a very sharp divide

between whether or not a college degrees in the household. we then asked americans how important do each of you think the following financial activities are? for you to meet your own personal financial goals. then in asking the question about whether or not you think you are ahead, on track or

behind. some of these areas of financial performance. 75% say they are either ahead or on track of paying off and avoiding your debt. the state planning of 40 and investing in the stock market at the lowest 31. again, you see in terms of this large number of our population the feel that they are either behind or just fighting to keep

days with meeting what they recognize as the demands of the or staying afloat on a daily basis in terms of meeting your obligations. said, we asked if he had an important financial decision to make today, how confident are you that you have the ability to understand information, gain the right information to make the right decisions? a.m. percent. aboutey're very confident making those decisions. buying a home, planning for your estate planning,

setting up longer-term suffered children 64% say they're very confident they have the ability -- excuse me, 34% for confident total. some may question whether this confidence as well place, but this has been a consistent theme of americans saying i am best able and i trust myself, my family, my neighbors to guide me on these financial decisions. graph, the dark blue-collar are those who say they have a solid plan for their finances. the lighter shade of blue are those who say they have a plan to have some questions. they're looking for little more support. those us who don't have a plan and really need some guidance.

people, we are thinking about your money and how you handle your personal finances, do you have a solid plan? do have a plan but need help? would you really need some guidance? -- looking at this again by those demographic breaks that we talked about, the most confident group are those who with full-time worker, household over 50,000 a year but do not have a college degree at 66%. retirees at 71%. they are into executing the plan. overwhelming majority of the retiree households, 71% say they are confident they have a solid plan and they are

executing on it. on the margins we have those who are in lower income households, those who have not full participation in the labor their concern for long-term planning is quite pronounced. then, are split, over whether or not we ask a question .bout financial regulation to get increased information, what is the best way to go about this? i draw your eye to the ideological break on this. you will see the 43% of

democrats support the regulatory fix. that is the most popular with them. you do see with republicans that 37% most supportive of the market fix. competition should bring about better performance five businesses. finally, turning a little bit to how americans believed that his current dysfunction we're seeing in washington dc and the stalemate around but budget and fiscal issues -- finally, what do believe is the

most likely impact on you every large federal budget deficit and debt in terms of your own personal financial situation. toin, i would draw your eye the two top scorers here, far and away. they're worrying about the andal year and higher taxes fewer opportunities for jobs or wage increases. the issue of disposable income and households daily challenged by the current circumstances. i had to leave you on something that is not very optimistic, but in looking toward the future, the near future, in terms of

where we are, how confident are you that the congress and presidents ability to avoid a shutdown for the deadline, 70% of americans are not confident and that cuts across all political party identification and all demographic groups. they have very little confidence that they will make progress going forward on this. that has an impact not only on political attitudes but also consumer behavior. with that, we're going to show you a couple of vignettes to bring to life some of these numbers. thank you. [applause] ♪

>> i would consider myself to be middle class. we have a mortgage and we have a car payment, but we are able to pay everything off. i from poor to excellent would rate our family situation as good. >> dimeric, i just had a baby. there is a lot of cost to being a parent. we can go out and say i want to buy the shirt. i know people who can't even do that. that. after budget everything they make. remember but sometimes

having to decide between paying for lunch or buying gas. contribute to it 401k. it is necessary for my retirement. >> i would be very concerned about planning for my retirement. should theppi bush judy chu retirement plans if they have the opportunity. >> i would not have enough savings to last me six months if i would just work. i have enough to last me one and a half or two months. >> i would be enough for just a couple of months. >> i definitely do not have enough savings to exist last year. my husband worked seven days a week and if we were to lose her job, it would be devastating. important to start tomorrow. if something is not paid i get really stressed out about that. i do hope to get ahead and that we will eventually pay down any

kind of debt we have we owe over $100,000 in student loans. >> isolate countries headed in the wrong direction. don't approve of the job that barack obama is doing. >> he's battling with the congress that is so completely difficult. congress is doing and inexcusably bad job. >> think we are still in a recession. there is no growth. unemployment is off the charts. i think if we didn't have recession people with the degree would be able to find work. i think regardless right now you are out of work. >> i think over the next year the us economy will be better. >> i hear that it is supposed to be improving but i can't tell you how many people around me

are unemployed and struggling. >> the federal deficit affects just because way everything is related to everything and it trickles down. >> it is more difficult to get salary and benefits. of ae most likely impact federal deficit is fewer job opportunities. >> hopefully in my lifetime it see for mytter but i children if it continues to go the way is in this world they're going to have it rough. >> the shutdown definitely affected many people in this country. >> if we lose trust or a sense of security -- >> i think the ederal shutdown means that find optimism for

america based on the fact that we persevere and keep going. we don't give up and we stick together. i think that will get us through. >> there's a lot of negative news about the country going downhill, but the american spirit is so positive and you can always find the silver lining. it is who we are as people. we can't really focus on anything negative. you know what? that is what gets us through. thank you. those are some of the respondents. lose my job to turn over to nancy cook from "the national journal. >> to forget to his outstanding panel, we want to get some on his participation to get a sense of how people are feeling about some of the poll numbers.

we would like to give the audience opportunity to weigh in on the poll by asking a couple of questions. you can text your answer to at poll.tweaked to >> here's a question. what you believe the primary way average americans can improve their arsenal financial situations? is to theirsponse own personal effort and if that is the answer you believe in, the second response improveericans can their own personal financial .ituation through government

there is also going to be tabulated in real-time on the screen by friday. >> let's see. this is pretty cool. it looks like the majority of people here think that -- oh, oh. know, ok. wins.like the top ones whe this is interesting and seems to go along with what we heard about the poll. i want to introduce a panelist. they're all wonderful and i can't wait to welcome them. first we have a consumer advocate of the certified financial planners board. -- we have aident senior director of consumer financial services and the

president of the identity -- assistant program at the financial services roundtable. thanks everyone for joining us. [applause] >> there is so much to dig into. i want to start with you. one thing that came out through the polling was that americans feel very frustrated about their financial futures, even though the recession technically ended a few years ago. you are an economist, can you give us a sense of why this is happening? >> i wasn't surprised at all to see that people still think we are in a recession. we are not. we are officially out of the recession. ofofficially ended in june 2009. how long ago was that? it was four years ago. with seen very little improvement on the

ground. we are deteriorating since then but since that. 2000 eight into the nine, the company has been on a cliff. just enough to hang on. just enough to keep on with growth in a normal population. and we off the cliff have been bumping along at the bottom of that the poll for that entire time. we are definitely in a recovery, but it is so slow that it is not surprising that people are feeling like it is not improving because it is so slow. >> is a significant amount of job uncertainty and people are worried about losing their jobs in this major proportion of >> when the data parts i found fascinating is how confident people were in their

ability to guide their own financial futures. they thought they could get advice from family and friends. and as a financial planner do think that is a good idea? are -- were you surprised? >> we are very aware of this fact that people do go to the family and friends for advice. we are also aware that people went to their friends to hire bernie made off. [laughter] public a better educated about what the options are and that certainly is a major rarity of the cfp board to increase the standard of professionalism in the financial planning industry. the family do go to and friends but they also go to themselves. we saw that. that was interesting in the polls.

to me it is the same issue if i were to ask this room how many of you are above average drivers. [laughter] you'd find that more than 50% of you would raise your hands, but if you are a statistician, you know that the answer is that you are not. so i think people are more confident in their abilities, maybe they are -- maybe they should be. people do need advice and it is our job at the board to make sure that is top-flight advice. >> if i could pick up on that, i was surprised by the conference withpeople said they had their ability to make financial decisions. i see an opportunity which some of our companies are using to leverage social media to get the information out in the community

of people that you trust. we have seen a number of new financial advisory tools that are based on seating good -- seeding out there good information. it is based on sound information so it is not just what you pick up at the barbershop. really good solid information from financial planners. >> absolutely. a between financial literacy and decision-making. there's no question that people need more financial information. they need to understand the basic vocabulary and concepts of personal finance. but what is also needed is the judgment. you have that baseline of information. it is so -- you need the

capability to put that information together and to apply it to a specific individual and make a prudent judgment. necessarilyare not capable of doing that. we can't do our own brain surgery and in many cases we need somebody to help us. taxes and investment and retirement planning. >> so much whining is being left to individuals. the poll shows a very few people had employees sponsored 401(k)s. people were picking a health care. do you feel like businesses and employees are going to have to thatin and help people do more? >> absolutely. i think that is a trend we are seeing. both employers on the financial services companies that help manage those funds are providing

and in a moreon accessible format. obviously, you can't sit somebody down and give them a two-hour lecture on what the portfolio allocation is going to be. it is very much going to be how you deliver this information in usable pieces at the opportunity for people to absorb it and apply it. there has to be an ongoing process. employment environment, the is theonal environment, ideal place to be doing that. another thing i was struck by was the retirement statistics. about how americans are getting ready for retirement. i know your research firm has done a lot of polling around social security, but harvesting that change over the years as you have been doing that research? >> one of the things my company

retirement confidence survey. since 1991 we have served the public annually on issues pertain to retirement. -- people's confidence in being able to live comfortably. in 1995, 8% of the public said they are not at all confident that they can afford to live comfortably throughout their retirement. at all confident in 2007 and this year it is 20%. three times as much. we us is the plan to work longer. in 1999 we found 11% of workers planned to work 266 or longer and now it is just 36% -- to work until age 66 or longer and now it is just 36%.

response to the lack of confidence, but that is a risky response and not everyone can realize it. one final point, a lack of confidence is not a bad thing. it is a wake up call to reality. if you are overly confident you won't act and take action. a lack of confidence as this first up to trying to do more. in some ways, i hope this will be translated into greater efforts. one of the things to me is your poll numbers underscore that the great recession hit different age groups differently. when you think of young workers, they weren't in the position to hit,assets that took a big so the wait is hitting them is more in week job opportunities. older workers, just by where they are in the lifecycle, they're the ones who took the ones who took a major hit. most people who arrive at retirement if they retire with

any wealth at all, it is the body of their homes areas people saw a massive hit in their retirement security because of the bursting of the housing bubble. but you hear a narrative about older workers staying in their jobs. they're not retiring or making room for younger workers to come in. you see this generational warfare sometimes. it is not happening. when you do the data on the number of missing workers, we know the unemployment rate has written that -- has to climbed a ton. a huge portion of that improvement has not been for good reasons. it has been because people are dropping out and not entering because job opportunities are so weak. you can actually dig in and say who are those missing workers. they are missing workers who are aged 55 plus.

as a group, people aged 55 plus, fewer of them are in the labor force now than there would be if the recession had not happened. it is smaller as a share than if smaller workers. just not seeing job opportunities so strong for that group that they're able to really stay in and show up their retirement in the aftermath of the great recession, either. >> if he can pull back for second, so much of the poll was about building your financial future and people's inability to plan long-term across retirement. people were really responding to short-term financial needs of the families. how are people going to build well if we are just stagnant. how will we do that in the future? >> there is a mechanism in the workplace that has found to be effective.

defaulting people into savings levels, it hasn't been used --imally a lot of companies natalie know this works, we can start encouraging people to sign up at five and six percent and then escalate them up to 10%. this is effective. i am not denigrating education which is important, but we have to use all the tools available. we have a tool that we recently found work and it can be used more effectively. >> australia does that and they have had a lot of success with that. eleanor? >> i agree. get them enrolled. even young people today are not investing in the stock market in their 401(k) plan. understand their long-term. what happening is that this poll

that a lane and clear americans are still paying for yesterday. they're not paying had for tomorrow. .he other can't or they won't .gain, it is very short also, consumers need to understand it used to be that the goal of life was to retire. even i as a financial planner that wasot of time -- a major financial planning goal. now financial planners help people build that nest day, figure out how they're going to retire. now we have student loans. that is in not as big as that retirement not that you have to fund. think about health care costs

particularly of the elderly and caretaking. that is another huge not. suddenly we have consumers between rocks and hard places everywhere you look. there's so much work it takes a comprehensive approach to turn to a young person or to an older person and help them make the tradeoff. and oftentimes we have to work at the margin, you know? a change here, a change there. retirement and financial planning certainly is no longer just about what's the best investment. so often people confuse us with, you know, being kind of stock junkies, where, in fact, we are much more comprehensive, looking at the 360-degree picture, and it's so important that we get consumers thinking about all these conflicting priorities. >> i would just add to what matthew said, where i totally agree that we have found a mechanism that works and that

works quite well. i think it's clear to us at least in the financial services industry that that is something that should be expanded, that should be supported, and the obstacles that should keep employers, whether it's large employers or small employers, from offering these plans ought to be, you know, smoothed away. i mean, we hear a lot of concern from small employers, you know, that it's expensive, that they're worried about liability. there have been initiatives ere in washington to we define the concept of fighting irish air, which the employment employment community is concerned about, because they're worried they're going to have, if they're trying to help workers save, they're going to be held to a higher standard. you know, if anything is sort of wrong with policy, anything that stands in the way of the

employment community fostering, you know, financial planning, retirement planning, savings and so forth, we really ought to take a long, hard look at. >> yeah, go ahead. >> i would add one more thing. agree with everything the panelists said, that the signup, the financial education, and the other thing that i think is a key back drop here is, if you're living paycheck to paycheck, it doesn't matter how much you're getting signed up, how much financial planning -- if you don't have the wages that would even allow the possibility of saving, you're not going to be able to save. the other set h sort of leg of this stool is, make sure i need good jobs. we need to deal with the jobs problem, not just in the aftermath of the great recession, but in the 30 years leading up to the great recession, where we saw the economy getting richer and richer and richer, product activity growing, but the share of jobs that are good jobs, that you could really raise a family and save for retirement, that just remains flat, that you're not seeing most people

sort of reap the benefit of that economic growth. i think that's the other piece here that is the thing that will make all this possible for a much larger swath of people who hope to retire someday. >> i agree with the importance of jobs, but even now, our survey indicates that most people who are not saving can't afford to save by their own admission, and people who can save can afford to save more. if you save more for retirement, what would you have to give up? the answer we heard more than anything else is eating out. that leads me to think the main thing we would lose is cholesterol. coffee out. the meal, the lunch eating out, sort of pack from home. we've lost a culture of thrift in a way, and it's very hard to get it back, but it is, in fact, a key problem. we can save more easily. not everybody, not people without jobs, but most people, even people with modest jobs. it's important to have jobs,

but i think we have to address this basic issue. >> you've done interesting research looking at, you know, apart from just retoorment, some of the other financial issues that baby boomers are going to face as they get older. can you tell us a little bit about that? >> sure. we're going to have to teach everybody to cook simple meals, right? we need a cooking course. yeah, at the roundtable, one of the things we really work very hard with our members on is older americans, and issues like fraud and financial exploitation, and these issues ke cognitive impairment, and we've done some work, and the federal reserve recently did a paper on the financial risks -- what is making older people -- and they define older americans as 40 and over. what is making people anxious? one of the things is this exploitation, and in the family

context, the very real challenge of cognitive impairment as people age. we know that their ability to actually make -- the ability to make financial decisions is the irst skill to decline. sooner than the communications, the social skills, the ability to, you know, to talk rationally, but the ability to manage your money is the first skill to go, and i know you're nodding, because this is -- >> absolutely. the last thing to go is the admission that you can no longer drive. this is a huge issue, and with the aging of america, and then it spills over into a younger generation, because the people are e 1940's to 1950's taking care of these elderly, and what is the cost to them? lost wages and benefits, it's

not just the hard cost of medical. this is huge, but it brings up again this fiduciary responsibility. want to speak to the fiduciary aspect, how critical you to be working with, know, to have professionals who are abiding by a standard that puts a client's interest ahead of their own because that is a very vulnerable population, not above 40, but maybe above whatever number we finally settled on. it's so key. we're also aware of that. we published a guide to -- it's a self-defense guide for seniors against financial abuse. it's one thing not to have the money, it's another to have that money taken away and how important that is. i totally concur in that

regard. >> back to the polling for a second, another thing that struck me as interesting was just how focused people were in paying off their debt. as opposed to -- you know, carrying a little bit of credit card debt or student loan debt was a lot worse than, let's say, saving for retirement or building a nest egg, a six-month nest egg, and i just thought that was so fascinating. do you all see that as a change, and is that because of the political climate, the emphasis on debt? has that also been there? >> what's new is student debt. people are entering adulthood with what might be considered a crushing burden, which affects them psychologically. the amount of debt people start off with has risen considerably. it's a marriage problem. also i think you go back a long way, it was harder to accumulate debt. now it's easy. that's part of the culture of thrift. i think the levels of student debt is the real problem.

>> yeah. eleanor, have you seen a change there too with this emphasis on paying off debt immediately? >> well, yes. you know, certainly people in the very affluent, you know, segment of society, they want to pay off debt because it's the best use of their money right now rather than, you know, investing it at, you know, 10 basis points in a savings and loan or whatever. so you do see that. but i think paying off debt has become more important because of the job situation. why? because with a bad, you know, debt record, employers are now looking at your fico scores, and worry urging this to young people. you know, you've got to take care of that debt issue. if you're not, if you're not paying regularly and a little bit more than actual what will you're told you owe, because it's going to impact your

ability to get a job. until you get a job, all of this other ability to save for, you know, the education and the medical and, you know, everything else is moved, as we saw in the polls. >> let's go to heidi. real fast, we're going to go to audience q&a in a minute. if you have questions, start thinking about them. heidi? >> i think the other thing about why people are more concerned about rising debt is not just student debt being much higher than it used to be, so is other kinds of debt. i think that's probably underlying this credit card debt. what are they called, home equity loans? in the bubble years, when everyone was told the value of their house is going to go up and up and up forever, it actually was very rational to take out a home equity loan to pay for your kids to go to college. we saw that happening left and right, people sort of eating their homes. now, after the bubble crashed, here in real trouble. one of the reasons i think we saw, it sort of loops back around to the jobs thing, one of the reasons i think we saw debt increasing so much leading

up to the great recession is because the job quality wasn't there. the people, the way people continue to see rising living standards is they were able to eat their homes instead. i think that's one of the back drops here to this thing. people are holding a lot more debt than they used to. >> that's great. questions? think we have one right here. >> one thing that goes off of this, it seems like people are , ng to not be saving enough seems like --

>> i have so many. you're absolutely right. but here's the thing. savings are so very low right now. they're sort of cyclical. saving should be go up in a recession, because are like, i am not buying that washing machine right now because i don't know about my job. so savings rate goes up in a down turn. we saw that here. but then it comes back down during a recovery. savings rates now are back -- they're not back down to 2006 levels, and we do not want them ever to go back down to those levels, but they're down to 2004 levels. so people are now spending the money -- the money that's coming in, people are spending it. but assumption is low. now i sound like a broken

record. the thing that squares that circle is they don't have jobs. they're spending what money they have, but many people are unemployed, and then the people who have jobs, the high unemployment is hurting their wage growth. high unemployment puts huge downward pressure on wage growth, and then tuition is totally straight forward. your employer does not have to pay you big wage increases to keep when you they know you have no outside options. and so this high unemployment is hurting the wage growth that people with jobs and a lot of people don't have jobs so family incomes are low, so they're spending the money that they have now. savings race are low. people just don't have as much money as they did before the recession began. >> that's great. uestion in the back? >> i'm a physician. my question to the investment people is, the financial planners, is about timing. we're always told that timing doesn't matter.

but someone here referred to this act that 40% of people over 50 have to retire. it's not when they lose to retire. what happens about what he said, that the market can remain irrational longer than you can remain solvent? a lot of people had to -- had to dip into their 401-k's during the recession because they lost their jobs, and that as their only source of money. how do you cope with that? i mean, if you happen to be aid off at the wrong time. >> well, again, hopefully we get to people before this happens. that's what planning is all about. they have the emergency funds. they have the ability to get through a situation like this without going to the 401-k, probably last place you want to go to. you know, timing is important, t the more we get people

planning, the less sensitive we're going to be to that, you know, timing issue. but you spoke about retirement. there's no doubt about it that when we're living longer and we have a retirement nest egg that's no longer being managed by our corporation, we're a government pension, we're managing it ourselves, and we're also responsible for taking the money out, this is a huge problem for a lot of people, where advice really is needed. how do you take it out in a fashion that's tax-efficient and makes it last? there's no doubt about it. if you take more, just when that big, you know, 2008 event hits, that can wipe you out. so we have to be working with people to get them, you know, more flexible, able to deal with it. one thing we have to do is get their debt levels down. because there's no doubt about it, if you have to be paying that debt each and every month,

you have to be taking it out of your retirement nest egg just when you don't want to. so it's a matter of rationalizing their cash flow and expenses. there's lots of tweaks we have to make at various pressure points. it's not just all about getting that right. timing does matter, but our goal is to help our clients and help the american public be less exposed to those timing disasters. >> unfortunately, we're all out of time, but thank you so much for the panel. this was a great discussion. i appreciate it. thank you. before we start our next panel, we're just going to go another one of these the audience participates in the poll. it's the same deal as last time, text your answer. the question this time is, how confident are you in your ability to make important

financial decisions like planning your retirement and buying a home? this is apropos after the last question. so if you are very confident, 22333, text 664808 to or tweet @poll. if you are somewhat confident, 22333, text 664809 to or tweet @poll. et's see what happens. so people are not confident. that's -- oh, oh, oh. ok t. looks like we have a tie. people are not -- oh. till moving. that would be interesting. is this -- are we at the end

point? still moving? well, i think it seems like it's very close -- it seems like it's not very confident. oh, that's rising. i think it's a bad poll result. i think people are not super confident in their own ability, which is interesting, because it seems to contrast with what the poll says so. i just want to introduce our second case study. we have the executive directory of doorway toss dream fund, and michael hirsh from "the journal" back to the stage. thank you so much. >> good morning. i just want to acknowledge you are all here till the bitter end, and i appreciate that. i will promise you two things. my take on a lot of the discussion today has been that at least it has been kind of depressing. i promised you some optimism as we kind of go into the final round here. i promise you i'll talk really fast, ok? all right, great. let me make sure i'm using the

clicker right. just a word about what is doorways to dream fund. we're a nonprofit organization. our mission is to strengthen the financial security and opportunity of low and moderate-income consumers through innovating, incubating, and stimulating new financial projects and public policies. shorter version, we're a laboratory for new product ideas and public policy ideas to benefit really working poor folks.dle-income primary focus has been on savings, which is relevant to the conversation today. and you can see some of the folks that we have the privilege of either working with or getting support from. by way of getting started, i will just say first, savings is fundamental to a lot of the themes and conversation today, whether you're talking about paying down debt or whether you're talking about long-term financial planning and preparation, or the emergency fund, part of the conversation. a lot tv really comes back to that personal decision and ability to set aside some money, right?

that's what we tend to focus on. and a lens to think about that problem is sort of two halves. one is the landscape that we all operate in. do we have a good set of product choices and public policies and other tools to help us build financial security? then the second half, all the great tools in the world, if we don't have some ability to navigate those tools, to make smart choices, they're not going to be successful. we try to think about those two halves, and let me run you through some specific examples. ok, i will say, too, that part of the prior conversation was, is this a government problem, is it a private sector problem? i think what we'll see in our comments is that it's both, and there can be a little bit of each. let's talk about one that's more public sector-focused. how can we make saving ease any does anybody know what the single largest transfer from the federal government to individual household every year is? that's probably true.

second is social security, in the context of low and moderate-income households particularly. it is tax season, where the i.r.s. sends out $300 billion every single year for households that are what we might call working poor, this is almost, without exception, the single largest financial event of the year. you can get 20% of your annual income in a refund that comes typically in february, that time of year. huge financial event f. we care about financial security and care about helping people safe, we need to think about tax season. so what this schematic illustrates is since 2006, the i.r.s. has offered all of us the ability at the time we file our returns to say take this part of my refund and send it to a savings destination, whether that's an i.r.a., savings account, or whatever it might be. that's huge, right? because you can make that decision once at the moment you find out how large that refund is. so if you're a single working

parent, maybe making $25,000 a year through a couple of hard-time jobs, you go to your tax preparer, you're going to get $2,200, how much would you like to send to savings? that's the question that can be asked. what we found in our work is a lot of those folks don't necessarily have a savings product to send their money to. we ran a 009, after series of pilot tests, the i.r.s. offers a inflation-protected u.s. savings bond. that was an announcement the president made back in 2009 that the i.r.s. would begin this service. this has led to life today, so for the three or four years the policy has been in effect, about 170,000 people have savingd collectively, $65 million. importantly, 80% of those come from households with incomes less than $75,000 a year. so while these are small amounts, on an individual household level, they are, we think, the beginning of a saving pattern for a lot of

people who had a very difficult time beginning that pattern of saving. we are now starting something new, which is to offer a national promotion to bring awareness to the saving opportunity, called save your refund. ien courage to you check that out. if you save part of your refinanced through the splitting mechanism, you can win up to $25,000 for your choice to do that. there is also legislation called the savings act, which is designed to modernize the set of policies. all right, how many people enjoy saving money? all right. there's a chuckle, ok. let's see, which one? i promise to try to keep this lively, but it illustrates an important point, which is that in the tradeoff or tension between saving and spending, the spending forces have a lot of advantages in their column, right? spending is fun. it's immediately rewarding. it's also backed by tens of

millions of dollars of marketing effort, and really, we haven't done the same thing when we think about marketing, financial security and saving. so this has led to us an idea which we call prize link savings. the basic insight is, rather than offer you a certainty of a very, very modest return on your savings, i'm sure those of you who have a savings account know how modest that is in the current interest rate virnlte. what if we offered you a chance to win way life-altering return on that savings? it turns out many of us are quite interested in making that trade, that that possibility of a large return is much more appealing and much more motivating to us than that certainty of a very modest return. bhavel economists will tell us this is using the insight to benefit ourselves. and by the way, we spend in this country $60 billion a year on gaming, on lottery sales and similar products. 80% has been estimated comes from households leaving on less

than $50,000 a year. this has led to a product called save to win. we ran that as a pilot in michigan with eight credit unions in 200 , saw a very strong consumer response. over 11,000 people showed up and opened these accounts, save to win has now spread. year to date, or i should say life to date, we've had 42,000 people across the country, where the product is offered, open these accounts, and they've saved $70 million. this has led to policy change in eight states, trying to replicate the conditions that allowed this product in michigan, and a broader interest in this use of probable returns to motivate people to save and make it, frankly, a little less painful and a little more exciting. we're now seeing the possibility of state lotteries being engaged in offering savings products, which a quick factoid, there are twice as many retail location toss buy a

lottery ticket in this country as bank branches. there's a real appeal there. we've seen private sector startups that are using this core insight, including one that's working with the federal government called pay perks, and there is a piece of pending legislation to remove some of the legal barriers that make this product complicated. all right, so as i said at the outset, the landscape matters. we've seen one from the public sector, one more from the private sector. we also need to make smart choices. what can we do about that? we've had conversation about financial education, financial advice, all of these things are relevant. back to sort of these, which would you prefer? what do you think? are you more likely to be drawn to the pile of advice books or to the game? our insight has been that the game is probably going to win for many of us. i don't know if we have a representative group in this audience that most of us enjoy

something that is fun, and it's led us to create what we call financial entertainment to be contrasted with financial education. there's a video game to offer financial learning in an atactive, fun, and behavior-changing oriented way. we have a library of six financial entertainment game titles. you can find them online at financialentertainment.org. these are casual video games that are easy to pick up and play without a lot of time invested in learning what the game is about. one of them is available on a mobile device, so you can be waiting for the bus and have a few minutes and open it up and play a little bit of celebrity calamity. what we've done is take the broccoli and dip it in chocolate. if you want to reach millions of people with important financial lessons that lead to new action, new behavior change, we've got to think

bout this problem differently. work books and well-intended volunteers and highly specialized financial planners are not going to be the solution to getting an entire country to think differently about their finances. with our nonprofit level budget, we've been able, as i said, to build six titles. we've put them online. we've now had over 400,000 people show up and play these games. we don't believe that the best metric is just hours of financial education. that's kind of a lame metric, but we were delighted to realize when we ran the numbers that with average play times between 20 and 40 minutes per game, this is voluntary, people show up, they get excited, they just spent 25 minutes on a game, which is an eternity on the internet, we've delivered 90,000 hours of financial education through this mechanism. we have evidence that it leads changes in people's pre and post test knowledge, more important, their attitudes, how confident they feel about being

able to make decisions, and that it can pull through to different actions, different choices that they make. of course, the holy grail is new patterns of behavior over time. you know, looking forward, the agenda here is to go more mobile. i mentioned one of our games is available on the apple i platform. we'll have another one coming out this year. increasingly, we're breaking apart the components of games so they can be applied in smaller measures to different things, a term that's sometimes called gamification. and i believe i'm ready to wrap up. thank you. [applause] >> well, i have to ask a question that i'm sure is on everyone's mind, how does celebrity calamity work? >> in celebrity calamity, you play the part of a runaway, spend-thrift celebrity, and your job -- you don't play that part. you are their manager, and your job is to help those celebrities achieve their financial goals without going

insolvent. in some ways, celebrities can be a useful negative role model, others ways not so much. >> absolutely. our target audience for these games were young women between the ages of 19 and 32, and so one of the choices you have to make is what sort of motif, and that was the motif we thought would have resonance with that target audience. >> we have almost 10 minutes left for questions, so let's open it up to the audience. oh, this lady in the back, please. >> all these are very clever gimmicks. this may not be the right question for you, but the government subsidizes rich people who save money for retirement in e.r.a.'s and things like that, because they get a big tax expenditure. does the government do anything like that for people who don't pay taxes, which is half the

country, don't pay federal income taxes? they don't get any tax benefit. >> i think you're right that there are a lot of people who would want to weigh in on that question. what i can contribute is there is something called the savers credit. the savers credit is targeted to households, i believe the cutoff is $50,000. it's original policy design, as i understand it, and it's designed to be a refundable credit. so for people who do not have a tax liability, they could still receive some sort of incentive to save money. somewhere through the political process, the refundability fell out. i mention it, because i think it provides a template for what might be what you're suggesting, which is a set of policies that provide a clear incentive for working households to accumulate money. doing it in the context of the tax code has a lot of benefits and back to my schematic here of a national tax time savings infrastructure, if you sprinkle

in an incentive on top of that set of pipes and plumbing, you really have a recipe for turbo charging the second thing i would say quickly, but there are a number of public policy incentives that make it actually hard for folks to save. if you happen to be seefing public assistance, food stamps i think there's been a lot of coverage. a lot of people are receiving food stamps. if you exceed a certain threshhold of savings you lose your public benefits. while we understand where that may come from, the public creates the at wrong message instead of incentives for people to start building their own financial security. >> all the way in the back there. >> i'm a consultant now. i was a bankruptcy attorney in a past life and i just wanted to go back to the point that you made about the tax refunds.

is a better policy -- i was appalled when i had clients who had large refunds at the beginning of the year during their bankruptcy filings. is the a better policy to really adjust and have more per paycheck perhaps instead of have the savings schemes that you had suggested? >> that's a great question. i would answer this way and say whether we think it's good policy or bad policy, the evidence is pretty clear that it's a very strong consumer preference to in effect overwithhold and receive very large refunds. one piece of data on that, there was something called the earned income tax credit? this is a wage subsidy. for many years you could take an advance which is a policy designed to speak to that idea. wouldn't it be better if you could get more all year long. and the answer was people didn't want to do that. they liked this idea they don't

know how big but there will be some reward. so i think it's a fair question to ask what we might want to do to adjust policy but in the meantime our focus has been trying to make the most of that reality that people want to see those large refunds and then decide what to do with them. >> one more perhaps? >> i wonder if the government could take a lesson in this like in u.s. savings bonds. the rates for savings is very low currently and it's projected to stay that way but in time it might change. however, years ago it paid a fairly decent rate. times have changed. when i was a young man people went out got savings bonds but after that they shifted to the ira if they could afford to put money away. everything became the need to save money without paying tax. however, many of these older programs are still available and maybe the lottery angle might help. you could have an annual prize

tied to savings bonds, try to help the government balance its budget in a way. >> we're big believers in the savings bond program. it's sort of fallen out of fashion but i-bond these inflation protected bonds are paying well over 100 basis points compared to i think my -- i won't say the name of my bank but i think my bank is paying 5 basis points. so there are very good savings products with no fees. it doesn't matter if you have a bad history with the banking system there are tens of millions of americans who cannot open a bank account but they can buy savings bonds. so i think it's fallen out of fashion. unfortunately there's no marketing budget left for the savings bond programs but we think there's a good opportunity. the message that the government is sending i like the observation that we've lost this idea of being a country of thrift. when john wane and bob hope and

the federal government were telling us we should buy savings bonds there was a message that savings was a prudent thing to do. i think that's the extra layer that we can get by reinvigorating that savings program. >> i think that brings us the end. our event. and i'll turn the stage once again to my colleague. thank you very much for a very interesting topic. [applause] >> i just want to say thank you to our participants. i thought it was a great day. and also to our audience both in the room and watching via live stream on national journal.com and for tv a special thank you to all state and to san jay for supporting this important conversation. have a great weekend. and a great holiday. hanks.

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captioned by the national captioning institute --www.ncicap.org-- > hello! > how are you doing?

>> hello! >> how are you doing? >> i'm good. hello, everybody. >> one of your staffers said you are in a great mood this afternoon, so -- >> i am. >> we're doubly blessed here. so that's terrific. i'd like to thank you very much for being here today, mr. president. the forum, and i personally, are honored to have you join us in this conversation. and i am personally honored that you insisted that i have this conversation with you, even though i never set foot for any conversation for 10 years. so thank you. i'm very honored. shall we start with iran? >> we should. >> okay, good. mr. president, polls indicate that 77% of israelis don't believe this first nuclear deal will preclude iran from having nuclear weapons, and they perceive this fact as an existential matter for them.

what can you say to the israeli people to address their concern? >> well, first, before i answer the question, let me say to you, haim, thank you so much for the great work that you've done. i think the saban forum and the saban center has done outstanding work, and it provides us a mechanism where we don't just scratch the surface of these issues. obviously the challenges in the middle east are enormous, and the work that's being done here is terrific. so i want to also thank strobe for hosting us here today, and all of you who are here, including some outstanding members of the israeli government and some friends that i haven't seen in a while. so thanks for having me. let me start with the basic premise that i've said epeatedly. it is in america's national security interests, not just israel's national interests or the region's national security interests, to prevent iran from

getting a nuclear weapon. and let's remember where we were when i first came into office. iran had gone from having less than 200 centrifuges to having thousands of centrifuges, in some cases more advanced centrifuges. there was a program that had advanced to the point where their breakout capacity had accelerated in ways that we had been concerned about for quite some time and, as a consequence, what i said to my team and what i said to our international partners was that we are going to have to be much more serious about how we change the cost-benefit analysis for iran. we put in place an unprecedented regime of sanctions that has crippled irans economy, cut their oil revenues by more than half,

ave put enormous pressure on their currency -- their economy contracted by more than 5% last year. it is precisely because of the international sanctions and the coalition we were able to build that the iranian people responded by saying we need a new direction. and that's what brought president rouhani to power. he was not necessarily the first choice of the hardliners inside of iran. now, that doesn't mean that we should trust him or anybody else inside of iran. this is a regime that came to power swearing opposition to the united states, to israel, and to many of the values that

we hold dear. but what i've consistently said is even as i don't take any options off the table, what we do have to test is the possibility that we can resolve this issue diplomatically. and that is the deal that, at the first stages, we have been able to get done in geneva, thanks to some extraordinary work by john kerry and his counterparts in the p5-plus-1. so let's look at exactly what we've done. for the first time in over a decade, we have halted advances in the iranian nuclear program. we have not only made sure that in fordow and natanz that they have to stop adding additional centrifuges, we've also said that they've got to roll back their 20% advanced enrichment. so we're -- >> to how much? >> down to zero.

so you remember when prime minister netanyahu made his presentation before the united nations last year -- >> the cartoon with the red line? >> the picture of a bomb -- he was referring to 20% enrichment, which the concern was if you get too much of that, you now have sufficient capacity to go ahead and create a nuclear weapon. we're taking that down to zero. we are stopping the advancement of the arak facility, which would provide an additional pathway, a plutonium pathway for the development of nuclear weapons. we are going to have daily inspectors in fordow and natanz. we're going to have additional inspections in arak. and as a consequence, during this six-month period, iran cannot and will not advance its program or add additional stockpiles of advanced uranium

enriched uranium. now, what we've done in exchange is kept all these sanctions in place -- the architecture remains with respect to oil, with respect to finance, with respect to banking. what we've done is we've turned the spigot slightly and we've said, here's maximum $7 billion out of the over $100 billion of revenue of theirs that is frozen as a consequence of our sanctions, to give us the time and the space to test whether they can move in a direction, a comprehensive, permanent agreement that would give us all assurances that they're not producing nuclear weapons. >> i understand. a quick question as it relates to the $7 billion, if i may. how do we prevent those who work with us in geneva, who have already descended on tehran looking for deals, to

cause the seven to become 70? because we can control what we do, but what is the extent that we can control the others? >> well, haim, this is precisely why the timing of this was right. one of the things we were always concerned about was that if we did not show good faith in trying to resolve this issue diplomatically, then the sanctions regime would begin to fray. keep in mind that this was two years of extraordinary diplomatic work on behalf of our team to actually get the sanctions in place. they're not just the unilateral sanctions that are created by the united states. these are sanctions that are also participated in by russia, by china, and some allies of ours like south korea and japan that find these sanctions very costly. but that's precisely why they've become so effective. and so what we've said is that we do not loosen any of the core sanctions -- we provide a

small window through which they can access some revenue, but we can control it and it is reversible. and during the course of these six months, if and when iran shows itself not to be abiding by this agreement, not to be negotiating in good faith, we can reverse them and tighten them even further. but here is the bottom line. ultimately, my goal as president of the united states -- something that i've said publicly and privately and shared everywhere i've gone -- is to prevent iran from getting a nuclear weapon. but what i've also said is the best way for us to prevent iran from getting a nuclear weapons is for a comprehensive, verifiable, diplomatic resolution, without taking any other options off the table if we fail to achieve that. it is important for us to test that proposition during the next six months, understanding that while we're talking,

they're not secretly improving their position or changing circumstances on the ground inside of iran. and if at the end of six months it turns out that we can't make a deal, we're no worse off, and in fact we have greater leverage with the international community to continue to apply sanctions and even strengthen them. if, on the other hand, we're able to get this deal done, then what we can achieve through a diplomatic resolution of this situation is, frankly, greater than what we could achieve with the other options that are available to us. >> let's all hope we get there. >> absolutely. >> you have hosted passover dinners at the white house. >> i have. >> and you know this famous saying, "why is this night different than any other night?" in that context, i would like to ask you a question. with the best intentions and all efforts, president reagan vowed that pakistan would not

go nuclear. didn't happen. with the best intentions and all efforts, president clinton vowed that north korea won't go nuclear. why is this nuclear deal different than any other nuclear deal? >> well, we don't know yet. no, we don't know yet. i think it's important for everybody to understand this is hard. because the technology of the nuclear cycle -- you can get off the internet -- the knowledge of creating a nuclear weapons is already out there. and iran is a large country and it is a relatively wealthy country, and so we have to take seriously the possibility that they are going to try to get a nuclear weapon. that's what this whole exercise is about. having said that, if you look at the history, by the time we got an agreement with north korea, they essentially already had a nuclear weapon.

with respect to pakistan, there was never the kinds of inspection regimes and international sanctions and u.n. resolutions that were in place. we have been able to craft an international effort and verification mechanism around the iran nuclear program that is unprecedented and unique. that doesn't mean it's easy. and that's why we have to take it seriously. but i think one of the things that i've repeatedly said when people ask, why should we try to negotiate with them, we can't trust them, we're being naïve, what i try to describe to them is not the choice between this deal and the ideal, but the choice between this deal and other

alternatives. if i had an option, if we could create an option in which iran eliminated every single nut and bolt of their nuclear program, and foreswore the possibility of ever having a nuclear program, and, for that matter, got rid of all its military capabilities, i would take it. but -- >> next question -- >> sorry, haim, i want to make sure everybody understands it -- that particular option is not available. and so as a consequence, what we have to do is to make a decision as to, given the options available, what is the best way for us to assure that iran does not get a nuclear weapon. and the best way for us to assure it is to test this diplomatic path, understanding that it's not based on trust -- it's based on what we can verify. and it also, by the way, does not negate the fact that iran is engaging in a whole bunch of other behavior in the middle

east and around the world that is detrimental to the united states and detrimental to israel. and we will continue to contest their efforts where they're engaging in terrorism, where they're being disruptive to our friends and our allies. we will not abide by any threats to our friends and allies in the region, and we've made that perfectly clear. and our commitment to israel's security is sacrosanct, and they understand that. they don't have any doubt about that. but if we can negotiate on the nuclear program in the same way that ronald reagan was able to negotiate with the soviet union even as we were still contesting them around the world, that removes one more threat -- and a critical, existential threat -- takes it out of their arsenal. and it allows us then to ultimately i think win them -- defeat some of their agenda

throughout the region without worrying that somehow it's going to escalate or trigger a nuclear arms race in the most olatile part of the world. >> unfortunately, you're right it would. tom friedman had an interesting perspective in one of his columns. he said, "never negotiate with iran without some leverage and some crazy on your side. we have to out-crazy the crazies." do you think he has a point? >> well, tom is a very smart observer. and i know that my friend, bibi, is going to be speaking later, and if tom wants to characterize bibi the way you just described, that's his -- >> i didn't say that. >> that's his prerogative, that's not my view. prime minister netanyahu and i have had constant consultations on these issues throughout the last five years.

and something that i think bears repeating -- the united states military cooperation with israel has never been stronger. our intelligence cooperation with israel has never been stronger. our support of israel's security has never been stronger. whether you're talking about iron dome, whether you're talking about trying to manage the situation in gaza a little over a year ago, across the board, our coordination on the concrete issues facing israel's security has never been stronger. and that's not just my opinion. i think that's something that can be verified. there are times where i, as president of the united states, am going to have different tactical perspectives than the prime minister of israel -- and that is understandable, because israel cannot contract out its security.

in light of the history that the people of israel understand all too well, they have to make sure that they are making their own assessments about what they need to do to protect themselves. and we respect that. and i have said that consistently to the prime minister. but ultimately, it is my view, from a tactical perspective, that we have to test out this proposition. it will make us stronger internationally, and it may possibly lead to a deal that we'll have to show to the world, in fact, assures us that iran is not getting a nuclear weapon. it's not as if there's going to be a lot of capacity to hide the ball here. we're going to be able to make an assessment, because this will be subject to the p5-plus-1 and the international community looking at the details of every aspect of a

potential final deal, and we're consulting with all our friends, including israel, in terms of what would that end state look like. and if we can't get there, then no deal is better than a bad deal. but presuming that it's going to be a bad deal and, as a consequence, not even trying for a deal i think would be a dire mistake. >> well, personally, i find a lot of comfort in the fact that even though the united states and israel may have red lines in different places, we are on the same place as far as the bottom line goes -- >> absolutely. >> and iran will not have nuclear weapons. fair to say? >> absolutely. that is more than fair. >> good. thank you. should we move to these israeli-palestinians -- we should. >> okay. >> very obedient president i have here today. this is the saban forum, so you're in charge. >> i wish.

or cheryl is in charge. >> >> you're more on now, mr. president. it is cheryl who is in charge. that's exactly right. >> >> anyway. first of all, before i ask the first question, i would be remiss if i didn't, from the bottom of my heart, thank you for your continuous effort to achieve peace in the middle east. thank you so very much. > i appreciate it. thank you. >> so people talk about an imposed american solution. we've heard these rumors rumbling around for a while. the u.s. has always said it doesn't want to impose. what would you propose? >> well, first of all, this is a challenge that we've been wrestling with for 60 years. and what i've consistently said is that the only way this is going to be resolved is if the people of israel and the

palestinian people make a determination that their futures and the futures of their children and grandchildren will be better off with peace than with onflict. the united states can be an effective facilitator of that negotiation and dialogue; we can help to bridge differences and bridge gaps. but both sides have to want to get there. and i have to commend prime minister netanyahu and president abbas for the courageous efforts that have led to very serious conversations over the last several months. they are not easy. but they come down to what we all know are going to be the core issues. territory, secretary -- security, refugees, and jerusalem. and there are not a lot of secrets or surprises at this point. we know what the outlines of a

potential agreement might look like. and the question then becomes are both sides willing to take the very tough political risks involved if their bottom lines are met. for the palestinians, the bottom line is that they have a state of their own that is real and meaningful. for the israelis, the bottom line is, to a large extent, is the state of israel as a jewish state secure. and those issues have been spoken about over the last several months in these negotiations in a very serious way. and i know tzipi livni is here and been participating in that, and we're very grateful for her efforts there. and i think it is possible over the next several months to arrive at a framework that does not address every single detail but gets us to a point where

everybody recognizes better to move forward than move backwards. sometimes when you're climbing up a mountain, even when it's scary, it's actually easier to go up than it is to go down. and i think that we're now at a place where we can achieve a two-state solution in which israelis and palestinians are living side-by-side in peace and security. but it's going to require some very tough decisions. one thing i have to say, though, is we have spent a lot of time working with prime minister netanyahu and his entire team to understand from an israeli perspective what is required for the security of israel in such a scenario. and we -- going back to what i

said earlier -- we understand that we can't dictate to israel what it needs for its security. but what we have done is to try to understand it and then see through a consultative process, are there ways that, through technology, through additional ideas, we can potentially provide for that. and i assigned one of our top former generals, john allen, who most recently headed up the entire coalition effort in afghanistan -- he's retired now, but he was willing to take on this mission -- and he's been working to examine the entire set of challenges around security -- >> has he concluded anything? >> well, he's come up to -- he has arrived at the conclusion that it is possible to create a two-state solution that preserves israel's core security needs.

now, that's his conclusion, but ultimately he's not the decision-maker here. prime minister netanyahu and the israeli military and intelligence folks have to make that determination. and ultimately, the palestinians have to also recognize that there is going to be a transition period where the israeli people cannot expect a replica of gaza in the west bank. that is unacceptable. and i think we believe that we can arrive at that point where israel was confident about that, but we're going to have to see whether the israelis agree and whether president abbas, then, is willing to understand that this transition period requires some restraint on the part of the palestinians as well. they don't get everything that they want on day one. and that creates some political problems for president abbas, as

well. >> yes. well, i'd say my next question of what was the reaction of the prime minister to general allen for john kerry. >> yes, ask john kerry, or ask the prime minister. >> okay. >> i don't want to speak for him. [laughter] >> they won't tell me, but, okay. [laughter] >> that's probably true. >> my last question -- the palestinians are two people -- one in the west bank, led by president abbas that is negotiating the deal, and one in gaza, led by hamas that wants to eradicate israel from the face of the earth. president abbas, as far as i know, says he won't make a deal that doesn't include gaza, which he doesn't control. how do we get out from this labyrinth? >> well, i think this is going to have to happen in stages. but here's what i know from my

visits to israel, my visits to the west bank -- there are people of goodwill on both sides that recognize the status quo is not sustainable over the long term, and as a consequence, it is in the interests of both the israelis and palestinians to resolve this issue. there are young people, teenagers that i met both in israel and in the palestinian territories that want to get out from under this history and seek a future that is fundamentally different for them. and so if, in fact, we can create a pathway to peace, even if initially it's restricted to the west bank, if there is a model where young palestinians in gaza are looking and seeing that in the west bank

palestinians are able to live in dignity, with self- determination, and suddenly their economy is booming and trade is taking place because they have created an environment in which israel is confident about its security and a lot of the old barriers to commerce and educational exchange and all that has begun to break down, that's something that the young people of gaza are going to want. and the pressure that will be placed for the residents of gaza to experience that same future is something that is going to be i think overwhelmingly appealing. but that is probably going to take place during the course of some sort of transition period. and the security requirements that israel requires will have to be met. and i think that is able -- that

we can accomplish that, but ultimately it's going to be something that requires everybody to stretch out of their comfort zones. and the one thing i will say to the people of israel is that you can be assured whoever is in the office i currently occupy, democrat or republican, that your security will be uppermost on our minds. that will not change. and that should not mean you let up on your vigilance in terms of wanting to look out for your own country. it does -- it should give you some comfort, though, that you have the most powerful nation on earth as your closest friend and ally. and that commitment is going to be undiminished. >> that was my last question.

>> i promised -- we worked something backstage where as long as haim's questions weren't too long, i'd take a couple of questions from the audience. and he was very disciplined -- [laughter] so let me take one or two. this gentleman right here. why don't you get a microphone so everybody can hear you? >> mr. president, i used to be a general in the israeli air force, in intelligence, and now running a think tank in tel aviv. looking into the future agreement with iran -- i put behind me the initial agreement, and what is really important is the final agreement. two questions. what is the parameters that you

see as a red line to ensure that iran will be moving forward -- moving backward, rolling back from the bomb as much as possible? and what is your plan b if an agreement cannot be reached? >> well, with respect to the end state, i want to be very clear there's nothing in this agreement or document that grants iran a right to enrich. we've been very clear that given its past behavior, and given existing u.n. resolutions and previous violations by iran of its international obligations, that we don't recognize such a right, and if, by the way, negotiations break down, there will be no additional international recognition that's been obtained.

so this deal goes away and we're back to where we were before the geneva agreement, subject -- and iran will continue to be subject to all the sanctions that we put in place in the past and we may seek additional ones. but i think what we have said is we can envision a comprehensive agreement that involves extraordinary constraints and verification mechanisms and intrusive inspections, but that permits iran to have a peaceful nuclear program. now, in terms of specifics, we know that they don't need to have an underground, fortified facility like fordor in order to fordow in order to have

a peaceful nuclear program. they certainly don't need a heavy-water reactor at arak in order to have a peaceful nuclear program. they don't need some of the advanced centrifuges that they currently possess in order to have a limited, peaceful nuclear program. and so the question ultimately is going to be, are they prepared to roll back some of the advancements that they've made that would not justify -- or could not be justified by simply wanting some modest, peaceful nuclear power, but, frankly, hint at a desire to have breakout capacity and go right to the edge of breakout capacity. and if we can move that significantly back, then that is, i think, a net win. now, you'll hear arguments, including potentially from the prime minister, that say we can't accept any enrichment on iranian soil. period. full stop. end of conversation.

and this takes me back to the point i made earlier. one can envision an ideal world in which iran said, we'll destroy every element and facility and you name it, it's all gone. i can envision a world in which congress passed every one of my bills that i put forward. [laughter] i mean, there are a lot of things that i can envision that would be wonderful. but precisely because we don't trust the nature of the iranian regime, i think that we have to be more realistic and ask ourselves, what puts us in a strong position to assure ourselves that iran is not having a nuclear weapon and that we are protected? what is required to accomplish that, and how does that compare to other options that we might take?

and it is my strong belief that we can envision a end state that gives us an assurance that even if they have some modest enrichment capability, it is so constrained and the inspections are so intrusive that they, as a practical matter, do not have breakout capacity. theoretically, they might still have some. but, frankly, theoretically, they will always have some, because, as i said, the technology here is available to any good physics student at pretty much any university around the world. and they have already gone through the cycle to the point where the knowledge, we're not going to be able to eliminate. but what we can do is eliminate the incentive for them to want to do this. and with respect to what happens if this breaks down, i won't go into details.

i will say that if we cannot get the kind of comprehensive end state that satisfies us and the world community and the p5-plus- 1, then the pressure that we've been applying on them and the options that i've made clear i can avail myself of, including a military option, is one that we would consider and prepare for. and we've always said that. so that does not change. but the last point i'll make on this. when i hear people who criticize the geneva deal say it's got to be all or nothing, i would just remind them if it's nothing, if we did not even try for this next six months to do this, all the breakout capacity we're concerned about would accelerate during that six months. arak would be further along.

the advanced centrifuges would have been put in place. they'd be that much closer to breakout capacity six months from now. and that's why i think it's important for us to try to test this proposition. i'll take a couple more. yes, sir. right over here. >> mr. president, israeli journalist from "israel hayom" daily newspaper. mr. president, i covered the negotiations with iran, nuclear negotiations -- geneva 2009, istanbul 2010. and i came back now from geneva again, where you could see the big change was not only on iran's side, but also on the p5- plus-1 side, meaning they were very eager to reach an agreement. coming back from geneva, we learned, and some of us had known before, the secret talks america had with iran. and we know the concern you have on the israeli security -- we're very grateful. but how does it coincide with your secret negotiations washington had with tehran? thank you.

>> the truth is, is that, without going into the details, there weren't a lot of secret negotiations. essentially what happened -- and we were very clear and transparent about this -- is that from the time i took office, i said we would reach out to iran and we would let them know we're prepared to open up a diplomatic channel. after rouhani was elected, there was some acceleration leading up to the u.n. general assembly. you'll recall that rouhani was engaging in what was termed a charm offensive, right, and he was going around talking to folks. and at that point, it made sense for us to see, all right, how serious are you potentially about having these conversations. they did not get highly substantive in the first several meetings but were much more exploring how much room, in fact, did they have to get something done. and then as soon as they began to get more technical, at that

point, they converged with the p5-plus-1 discussions. i will say this -- the fact of rouhani's election -- it's been said that there's no difference between him and ahmadinejad except that he's more charming. i think that understates the shift in politics that took place in this election. obviously, rouhani is part of the iranian establishment and i think we have to assume that his ideology is one that is hostile to the united states and to israel. but what he also represents is the desire on the part of the iranian people for a change of direction. and we should not underestimate or entirely dismiss a shift in

how the iranian people want to interact with the world. there's a lot of change that's going to be taking place in the middle east over the next decade. and wherever we see the impulses of a people to move away from conflict, violence, and towards diplomatic resolution of conflicts, we should be ready and prepared to engage them -- understanding, though, that, ultimately it's not what you say, it's what you do. and we have to be vigilant about maintaining our security postures, not be naïve about the dangers that an iranian regime pose, fight them wherever

they're engaging in terrorism or actions that are hostile to us or our allies. but we have to not constantly assume that it's not possible for iran, like any country, to change over time. it may not be likely. if you asked me what is the likelihood that we're able to arrive at the end state that i was just describing earlier, i wouldn't say that it's more than 50/50. but we have to try. last question. and i think it's -- the young lady right there. >> mr. president, i'm a reporter for israeli channel two. i have been listening to your analysis of the iranian deal,

and i can only imagine a different -- a slightly different analysis given by our prime minister netanyahu. >> i think that's probably a good bet. that's more than 50/50. [laughter] >> israelis are known for their understatement. [laughter] and i try to imagine a conversation between you two. and he would ask you, mr. president, i see this deal as a historic mistake -- which he has already stated -- and i think it's the worst deal the west could have gotten. and you would have told him, bibi, that's where you go wrong. what would you have told him? that's one thing. and then, perhaps to understand the essence of your conversation, he would ask you, mr. president, is there one set of circumstances under which you will order your b-52's to strike in iran? what would you tell him? [laughter] is there any set of circumstances in which you will order your fighter pilots to strike in iran?

what would you tell the prime minister? >> let me make a couple of points. number one, obviously, the conversations between me and the prime minister are for me and the prime minister, not for an audience like this. and i will say that bibi and i have very candid conversations, and there are occasionally significant tactical disagreements, but there is a constancy in trying to reach the same goal. and in this case, that goal is to make sure that iran does not have a nuclear weapon. as president of the united states, i don't go around advertising the circumstances in which i order pilots to launch attacks. that i think would be bad practice. [laughter]

i also would say, though, that when the president of the united states says that he doesn't take any options off the table, that should be taken seriously. and i think i have a track record over the last five years that indicates that that should be taken seriously. it's interesting -- in the region, there was this interesting interpretation of what happened with respect to syria. i said it's a problem for syria to have chemical weapons that it uses on its own citizens. and when we had definitive proof that it had, i indicated my willingness potentially to take military action. the fact that we ultimately did not take military action in some quarters was interpreted as, ah, you see, the president is not willing to take military action despite the fact that i think mr. qaddafi would have a different view of that, or mr. bin laden. be that as it may, that was yesterday, what have you done

for me lately? [laughter] but the point is that my preference was always to resolve the issue diplomatically. and it turns out, lo and behold, that syria now is actually removing its chemical weapons that a few months ago it denied it even possessed, and has provided a comprehensive list, and they have already begun taking these weapons out of syria. and although that does not solve the tragic situation inside of syria, it turns out that removing those chemical weapons will make us safer and it will make israel safer, and it will make the syrian people safer, and it will make the region safer. and so i do not see military action as an end unto itself. military action is one tool that we have in a tool kit that includes diplomacy in achieving our goals, which is ultimately our security.

and i think if you want to summarize the difference, in some ways, between myself and the prime minister on the geneva issue, i think what this comes down to is the perception, potentially, that if we just kept on turning up the pressure new sanctions, more sanctions, more military threats, et cetera that eventually iran would cave. and what i've tried to explain is two points -- one is that the reason the sanctions have been so effective -- because we set them up in a painstaking fashion the reason they've been effective is because other countries had confidence that we were not imposing sanctions just

for the sake of sanctions, but we were imposing sanctions for the sake of trying to actually get iran to the table and resolve the issue. and if the perception internationally was that we were not in good faith trying to resolve the issue diplomatically, that, more than anything, would actually begin to fray the edges of the sanctions regime. point number one. and point number two -- i've already said this before -- you have to compare the approach that we're taking now with the alternatives. the idea that iran, given everything we know about their history, would just continue to get more and more nervous about more sanctions and military threats, and ultimately just

say, okay, we give in -- i think does not reflect an honest understanding of the iranian people or the iranian regime. and i say that -- by the way, i'm not just talking about the hardliners inside of iran. i think even the so-called moderates or reformers inside of iran would not be able to simply say, we will cave and do exactly what the u.s. and the israelis say. they are going to have to have a path in which they feel that there is a dignified resolution to this issue. that's a political requirement of theirs, and that, i suspect, runs across the political spectrum. and so for us to present a door that serves our goals and our purposes but also gives them the opportunity to, in a dignified fashion, reenter the international community and change the approach that they've

taken -- at least on this narrow issue, but one that is of extraordinary importance to all of us -- is an opportunity that we should grant them. all right? well, thank you very much. i enjoyed this. [applause] >> thank you so much. thank you, mr. president. you've been very generous. [applause] [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute]

>> live, your call-in comment on "washington journal." after that, "newsmakers." then, a discussion about the deal concerning iran's nuclear program with republican congressman mike rogers of this again and democratic congressman chris van hollen of maryland. >> after war, things escalate so quickly. just a moment that seems so loving can turn and flip and be so out of control. this is one of those days, and it ended with adam packing to leave and sasha going through his things and seeing a hidden handgun and saying what is the

goingand him saying i'm to take this to sell it. on top of the other pressures, they had no money. gun and het held the went in a room and came out with a shotgun and really tried to her to goher and get so much that she would pull the trigger and kill him. as i described in the book, and this is what she told me after, she wanted to. >> the preterm -- the return home is only half the story. span'st at 8:00 on c- "q&a." >> this morning on "washington editor," "usa today" paul singer looks at efforts to reintroduce the health care law, the outlook for a budget deal, and the 2014 midterm elections and the 2016 presidential elections. then "wall street journal" reporter eric morath talks about the jobs numbers.

lampton on vice president trip -- on the vice president's trip to china. "washington journal" is next. ♪ good morning, it is a back to work week for the u.s. senate and the only week old houses in congress will be in session. negotiations sums on a possible agreement, the farm bill, and others are just some of the topics that will lead the debate in what is expected to be a busy five days for lawmakers. the flag of the u.s. capitol remains at half staff in honor of nelson mandela. the white house announced that the president and mr. obama -- and mrs. obama will be joined by presidents carter, clinton, and george w.