have outlive their ever -- all of a sudden that 90 they are still active and do not have income. this should have been greater concentration on lifetime income rather tha allowing them to take out the money due to economic recession, they wanted to buy a home, or grandchild needed money for school, there were other ways to deal with that. >> it look like you were agreeing with me. -- we have taxto incentives in place place to encourage retirement. in a taxus weak deduction, not tax deferral. making that more robust might make sense. i think the saver credit is a good idea.

i also think more incentives to encourage annuitization makes sense. there is an area where economists are more divided than a new it is -- then annuities. efficient way of allocating your retirement income. almost no individual will willingly annuitize. option of am the lump sum, they will take it and walk away. it is a human nature kind of thing. annuity turns you from a millionaire to somebody getting income per year. i think tax incentives are something along those lines to an courage -- to encourage annuitization. it is a high hurdle to get over. back to listen to the chairman's closing comments. >> yes, you did.

few in the senate know that secure the issues have -- thank you all for testifying. some members may have written questions for you if you would get answers in the next week to us via -- to us. i think the hearing was a success in many ways because the debate should be about the issue of achieving retirement security. not budget issues the way that they are issues of how to debate on how we actually do this, especially for low income workers. all kinds of things can happen. all -- thank you so much. you to my staff, i am very appreciative. this is -- the subcommittee is adjourned.

>> and efforts to fix a crippled cooling line on the international space station is currently underway. pumpnauts removed an old from the station ahead of schedule in an attempt to solve the problem that led to nonessential equipment being shut off and the station's orbiting lab. thatmericans are part of

crew. the associated press reporting this is only the second time ever. this has occurred. the entire process expected to be completed as the early -- as early as the middle of next week. >> stand by, we are changing the predators. >> this is what i call the free floaters. he is moving by himself. inside the international space station, working at the laboratory. he is going to be flying that arm. the founders of corkum of the 32nd version is the guys that were against the constitution were dealing -- were the latest conservatives of the day. think would patrick henry at the time. they wanted to have religious test for office holding. the founders were the cosmopolitans and most of them were bible believing christians. but why did they take the approach they did?

because they believed that no faith, including their own, was beyond faction. madison's-- sex --ption was courted was quarted sects. wechsler issues to work through that -- >> there were issues to work through in the early clinton years. they changed over time. some people think it was a good thing, some say it is a bad thing. there are important issues that people fight about with some legitimate disagreement. day,s -- >> christmas separation of church and state

ought -- at 12:30 eastern. on american history tv, from 1967, follow bob hope as he travels across the pacific for his annual uso to were of the southeast -- uso tour of southeast asia. a discussion on the nsa's surveillance programs and new recommendations for my white house tax -- white house task force. this is a little less than an hour. >> this week the president addressed the nsa at a press conference, a report coming out from the nsa, a ruling on the nsa. give us your assessment of the president's management of the agency so far. weekat has come out this

shows us the gap between what happens when management is totally internal and secret versus what happens when you get outside scrutiny. it shows the difference external scrutiny makes. always court judges have overseen these programs. when a judge from the outside takes a look, he says no, i am not convinced this is consistent with the fourth amendment. own the president's handpicked group of security intelligence experts takes a look at the programs in a --prehensive way, they find and make sure everything is well calibrated. there are a lot of big changes that need to be made to ensure that these are well calibrated to protect security without leading to potential abuses of civil liberties. host: the president does indicate he wants to make changes.

what does he face in making this change is? guest: probably an enormous amount of pushback from the intelligence community itself. their 40 some odd recommendations in this report from his surveillance review. one of the agents said they do not intend to follow these. the responsibility for cybersecurity should be split off from the responsibility for spying, which makes sense. we have seen that there is a tension there. on one hand they're trying to making occasions more secure, but that is in conflict with the mission of being able to spy on everything. last night there was a report about how the nsa was trying to undermine the security of one very widely used encryption toolkit. with a lot of his other reform recommendations, in a lot of

ways this is consistent with the more drastic reforms that have been proposed. the proposals they are making do not look like the sort of stuff intelligence committees have said would be sufficient, basically small tweaks. essentially, they're saying this program, for example the most controversial program, the telephone phone records program, one needs to be ended in its current form. that is something all along the president has said no we are willing to look at reforms but we basically support the program as it exists. for his own review group to say actually, no you charges looking at this and we say no, that puts him in a difficult position. host: we would talk about a lot of these things, but the nsa is a current topic. if you want to ask him

questions, the numbers are on the screen. here's a little bit of tape from yesterday at the press conference in which the president talked a lot about the nsa, talked about his management of it or here's a bit of it. >> we believed that we had scrubbed these programs then struck an appropriate balance. there had not been evidence in the continues not to be evidence that the particular program had been abused in how it was used. it was a useful tool working with other tools of the intelligence community has to ensure that if we have a thread on a potential terrorist threat that that can be followed effectively. what i have also said is that in light of the disclosures that have taken place, it is clear

that whatever benefits the configuration of this program may have may be outweighed by the concerns that people have on this potential abuse. if that is the case, there may be another way of skinning the cap. host: do you have any takeaways from that? guest: the most confession we have heard from the president that the program in its current form may need to be changed more than cosmetically. again, i think that is because this is a review group he picked. i think in a way most people saw this as -- you might have expected that pre-existing entity which has a lot of civil liberties friendly focus on it, it wasn't tax with the primary review responsibility very a lot of people saw that as maybe once a little less stringent or strident reports from folks that are closer to the intelligence community.

so in that group comes out with something saying yes, you need to make radical changes come in some ways more radical changes than even a lot of the critics have been proposing, that means you can't keep saying everything is fine. host: he says there is no evidence of it not being abused. is there truth to that? guest: it is the case that there have been a lot of evidence of misuse is. the problem is, what are they going to count as abuse. if you look at opinions that are been disclosed to the government from the secret fisa court, you find that the first three years of this program the court was not currently informed about how it was working. the safeguards the court had imposed on this program to make sure it wasn't abused were ignored. you have got a lot of improper queries. it is true that you can look at that and say ok we found a case

for we know someone was deliberately violating the rules to do some things as ethically and completely illegal like just look for whether a senator was having an affair or something like that, that is true, but the reason you have these rules are because a program on the scale, the is like that is always going to be very difficult to prove. is going to be hard to detect it at all and that hard to prove that it was deliberate or intentional. always going on in someone's mind within a certain query. we know for the cap the historical abuses, they're typically not uncovered until years later. the rationale here is you don't wait until the abuses are exposed in a secret and complicated program because you are not going to detect them in real time, probably. host: some of those recommendations you have been alluding to and talking about, including ending the nsa's collection of phone data and letting the private companies

keep the data, would he think of that step? guest: it depends on what it means. if means a status quo going back to the old model of when have suspicion about a particular phone number you go with in order to get those records, that is how it always works are traditionally works. so that makes perfect sense. it is not clear whether they are talking additionally about and it -- a retention mandate. if you have his records yet to turn them over in response to a court order, but you have to keep these records for certain amount of time, whether it is 18 months or two years or five years. that would be new. there are also two problems i can come with that because once you're forced to retain his records they can't really compete on privacy by saying we are not good to keep your records for longer than we need them. you open up the possibility of having those same records accessed by private lawyers in divorce hearings and other kinds of private lawsuits.

but, i will say it is a very different story. it is a different thing to say these records will be held for longer by the companies as opposed to all these records will be pooled in a giant government database and the government will do it it wants with those -- with that huge pool and you hope that they follow all the rules that are in place. host: you get the sense of the companies themselves are reassessing how they work with the government on this type of data? the headlines from papers this week such as verizon making statements. guest: and at&t, two. there's a drastic difference between technologies and traditional telephone carriers and their response to the story. target is because companies like google and microsoft, internet companies, are facing more competition. it is easy to opt out of using an internet service usually than

your local phone company. there are only so many of these carriers. is so, they've been pushing back very hard, the googleles and yahoos and aol's, saying we want to be able to tell our customers about how much information we're handing over, we want to limit maybe how much we're giving you so they can trust if you use g mail, you're not just letting the government into your inbox. the phone carrier so far, to stay out of it. but both verizon and at&t now coming out for the first time with the kind of transparency reports that in the internet space have now become increasingly standard. they too are starting to feel a bit of the heat. >> our guest to talk about the n.s.a., here's wayne, democrats line. go ahead, please. wayne, are you there?

one more time for wayne and then we'll move on. let's go to jodie, corning, iowa. caller: good morning, gentlemen, how are you? host: go ahead, please. caller: at&t and verizon and google and yahoo have been paid millions and millions of dollars, so, to collect the information. aren't us taxpayers paying the companies twice for taking, we're paying our bills and then our tax dollars are being paid for this overspying? guest: there have been actually significant payments. it's not that the companies are really making money on this, they have pretty large, legal compliance teams, in some cases dozens, i think in one case more than a hundred lawyers, and be able to process all the information and hand it over. so the payment is actually to pay for the cost of complying with this, but it's true, right?

the more, the more companies are burdened by having to find a way to process and turn over all this information to the n.s.a., the more expensive this becomes for the taxpayer. as the kind of massive $70 million intelligent budget goes. it's not a chunk we're spending, but maybe one of the reasons the companies have not had a huge incentive to push back. it's not imposing a burden on them that isn't being paid for. >> earlier this week, the president holding a photo op, with facebook, yahoo, google and the like. what's it mean to have the social media sites gather around the table with him? guest: i think one of the things you're reminded is that if you think back, for example, the debate over the soapa debate, this is what everybody thought

would battle through quickly and the technology companies being opposed to it meant not only were they able to throw a lot of lobbying money around, but they were actually able to leverage and flooded these offices with calls. so i think one of the things that reminds us, these are companies that beyond their enormous bank account, almost even punch above their substantial weight. so i think one of the things recognized there is antagonizing these companies comes with political cost. certainly you saw that n.s.a. was not just getting information directly from google from arrangements they had worked out, but in addition to that where google said we're going to do this, not going to do that, work out a balanced arrangement we think is reasonable to give you information out giving you all our users stuff, it turned out n.s.a. had been sort of

going behind their back and vacuuming stuff up on the pikes between the companies data centers. they were really furious about that. they thought they had worked out a balanced deal to protect user privacy and it turned out that basically they were being hacked. not literally hacked but that n.s.a. was going behind their backs on that. and so, yeah, they're in a lot of ways angry. host: what's the concern to me as far as their relationships with the n.s.a.? guest: not that you have necessarily more concern than any other service you might use. certainly if you're in the united states, at least in theory, the programs they're talking about are not supposed to be targeting you. that doesn't mean necessarily though that your information won't be vacuumed up as part of

a collection that is targeting someone overseas but is sort of more broad in the initial stage, so vacuums up a lot of stuff about your address book and other metta data. and later in theory, only looks at content first, but it's not a perfect process. host: this is suzie, independent line. caller: hi. host: go ahead, please. caller: oh, good morning. i have a question, i'm originally from utah, and i would like to know why it's been hidden from the american public about the huge complexes being built in bluffdale at the point of the mountain. seven huge buildings to store all of this information that the n.s.a. is collecting on americans, and foreigners also? but you don't hear anything, you don't see anything. already american taxpayers have paid $52.6 billion. where did that money come from? and why haven't we heard about

it? and i feel like if we really think, if americans really think that they're not being spied on, or that it's going to stop, then america better wake up, because you don't know the complex like is sitting in utah right now, with the thought of stopping this. so i would like your opinion on it. i would like to know why the news hasn't -- we've seen several photographs of it, very seldom, but why isn't somebody following up on that huge complex that's being built in bluffdale, utah. guest: it hasn't been totally ignored. the best story you can find is a cover story that appeared on wire magazine. the complex was on the cover of the magazine. it was by a journalist and historian of the national security agency. if you go to wire.com you can find somewhere on the site the

story he did about that complex. should be interesting to see, follow up reporting on it. my old friend cashmere hill from forbes has done some reporting about it. so, there is some stuff out there, but i think it's absolutely true that the enormous size of that complex speaks at least indirectly to the incredible quantity of data that n.s.a. is vacuuming up, that they need to build, complexes of this magnitude just to keep up with everything they're taking in. host: and also, caller, if you want to check our video library, i think james was on this program with that story to talk about this complex. go to our video library at cspan.org and type in his name or search words and you'll get that. sara, independent line. caller: yes. hello? host: you're on. caller: hello. good morning.

and i'm so happy to speak to you. as far as the n.s.a. goes, i am so frightened about it because they did nothing, they dropped the ball with what happened in boston. no one talks about that. and it's very frightening, and i don't care how many things they've said they stopped, i can't believe -- i voted for president obama twice! and i wish i had voted for the more mormon. i don't know what's going on in this country. guest: i'll say this much in their defense. in the boston case, one, it's not clear there were any international communications there that would have tipped off what was going on. these guys were kind of radicalized internally and not sure they were in touch with someone overseas. so that would actually be outside of the n.s.a. and more generally, it may just be the case that sometimes there

isn't enough evidence in advance that's going to tell you when any, what every single terrorist attack or event like that is going to happen. there was, i think, some kind of tip from the russians that maybe these were people worth looking at, but we don't know how many people the russians say are worth looking at every year. so if they looked a little bit and said we can't find any evidence at the time we looked these guys are involved in any criminal wrong doing, then there's not a whole lot we can do. and so in some sense, i think, you know, if, i think one of the problems is every time something bad happens, we think why didn't they stop it. the answer is sort of, well, they must need more power, they must need more authority to wiretap, more authority to get

information. it may just be there's not always a way in advance to know who those people are, unless you just sort of have a complete police state. so, in a way, i think we have to accept that sometimes stuff will happen that we cannot reasonably spot in advance. you hope, you know, when it's the really kind of major attacks on a 9/11 scale that there's got to be evidence in advance that you can pick up on. but, will smaller things sometimes happen that we can't stop? i think that's probably something we just have to accept. certainly if we keep increasing our power after something like that happens, there's no real sense of when that will stop. host: recommendations of the task force that were released this week, another couple of points that i want you to comment on. this was created, or at least one of them will create a public interest advocate for fisa courts. does that mean there's not as they're currently set up? guest: right. a body created in 1979, and the idea is that these 11 judges essentially hear secretly

applications for wiretap orders. originally, the idea was just they would be hearing individual applications, you know. julianne sanchez, we think is suspicious, here's the evidence why, we want to wiretap him, search his house or look through his records and the court would say do you have evidence to justify that he's linked to foreign power, foreign spy agency, ok. the problem is, that overtime, it stopped just being a court that makes those yes or no determinations. it started being a court that has to answer questions like, well can we have a huge program that collects everyone's phone records, and then analyzes them in various ways. and then what are the rules under which we can analyze. they're not just saying do you have enough evidence anymore. they're saying does the law allow this whole program, what

kind of safeguards are appropriate? they're answering these complicated and technological questions. normally a search warrant, whether it's intelligence or criminal investigations, the application is made many secret. you can't have a public process where you say come in, we'll have a proceeding whether we decide if we're going to wiretap you, it sort of defeats the purpose. but the idea is if they're going to be making these broad decisions, not just individual decisions, you need to have someone else in there arguing the other side. someone who can come in and say ok, if you're answering a big question like that, who's going

to say, i don't think the fourth amendment allows that, or maybe the statue doesn't allow that. maybe technology works in a way you haven't considered, that might create a problem. so it's not just you're hearing only the government's side. i think one thing's become very clear, as these opinions justifying some of these programs have come out, you see a lot of legal scholars, even people who are pretty sympathetic to broad government surveillance going wow, this looks like they zoomed through this, didn't consider a lot of counter vailing arguments and looked like they were stretching to give the government what they wanted. so this is a way to make sure that's not what happens. because then judges know, when you only hear one side all the time, however fair you're trying to be, that creates an effect. you tend to give that side what you're looking for. >> you talked earlier about tensions leading to complications and making changes. would having -- do you think the president because of that would probably hold off from making that kind of position doable? guest: this actually seems like the one thing most people don't have a problem with. we've seen, in hearings about this, a little bit of push back. i've heard some sort of separations of power's concerned

about whether this particular role makes sense there. there's a question and standings. if the court makes the decision the advocate thinks is wrong, can they appeal to the supreme court. questions about standing because the advocate isn't really representing an actual client whose interesting are adversely affected. so there's so many questions about that, but basically, this seems to be something that everyone, including the leadership of the n.s.a., thinks they can sort of live with. that in a case that's not some sort of emergency, a person needs a wiretap, we have a broad program we want to do or want to know, get a rule on what the law means or allows, then the case like that, they're willing to take the extra time and have another side present it. >> couple of other points, with an issue of national security letters only under judicial supervision, and stop n.s.a. weakening of encontribution standards by tech companies, can you address that last part? guest: right. we learned a few months ago

about a program called bull run where the n.s.a. has been working, the n.s.a., which is charged in part with enhancing and protecting american cybersecurity had been working in various ways, to undermine the encontribution of the security of the internet depends on, either by doing deals with particularly companies to insert back doors or to degrade the effectiveness of certain encontribution tools, or to promote less secure with flaws in them. a report just the other day, there was apparently a $10 million deal struck with a major security software company basically encouraging them to use, as their default sort of random number, something they knew had a flaw in it. when you're doing encontribution, a lot of the ability of the software to secure a communication depends on generating random numbers to create keys to lock and unlock communication.

if it turns out there's patterns in how the keys are generated, then if you're very sophisticated like the n.s.a., you can exploit those patterns to break it open. so it seems like they encouraged this company to adopt, and these widely used tools, a number generator the n.s.a. knew had these flaws, even though the company maybe did not. that's a huge problem. that makes everyone less secure. maybe only n.s.a. knows about the vulnerabilities. stuff that seems to have been inserted or adopted in n.s.a.'s request, a couple of years later, researchers go hey, we found a sort of complicated, not easy to spot, but we did spot it

eventually, was a problem in these. and so, i think it's absolutely right. you can't have an agency that people are supposed to be trusting to work with them to help enhance security because they've got the most sophisticated math ma tigses, and at the same time, their mission is to make sure they can spot everything. host: john, go ahead. caller: good morning. and good morning, julian, fascinating to listen to you. i was only calling with a comment, because i always hate to say, i'm getting old, and i'll be gone. and you know, i still get those standard today wave my finger and say it can't happen here. everyone thinking that it's been eradicated like the small pox. but i guess it will be your kids, julian, or your kids, kids that will wring their hands and

say and how did it happen here. how did it ever happen here. guest: i think it's always so important to remember, but i think a lot of americans don't know about or remember this. it has happened here. in the mid 1970's, the church committee, the senate committee that invest gated abuses that had happened over the past several decades under j. edgar hoover and the f.b.i., and they found a really disturbing, very long term pattern of illegal surveillance of political civil rights leaders, members of congress, judges, and misuse of that information for basically overtly political purposes. the most famous case is of course martin luther king who they wiretapped and bugged and attempted to discredit by leaking derrogatory information to friendly reporters, then

basically trying to blackmail him into retiring with tapes of his extra marital affairs. the real concern is even if you don't see what evidence that this newark texture has been -- new architecture that has been built, if you look at the real combination of symptoms, not just the database of all the phone records but the fact that they've got these powerful semantic right on the internet, able to filter, and able to seize it with other records that are being vacuumed up, there is an architecture of surround vail yans that is gathering so much -- surveillance that is gathering so much information that at the point in the future where it were to be misused, it would be capable of revealing intimate facts on a scale so far beyond of what was possible in the 60's and 70's,

you really have to wonder whether there would be, in a sense, anywhere to hide, when that happened, if that happened. host: maryland, from new hampshire, republican line, good morning. caller: good morning. and good morning mr. sanchez. guest: good morning. caller: i believe i was tapped, my computer, a few weeks before we first started hearing things about n.s.a. on the news. i'm sitting and working at my computer. now, i'm a writer, i'm writing about ancient egypt, so i've always got multiple egyptian websites open. i'm sitting and writing and all of a sudden i see popping up on my screen a little logo that says p.r.i.s.m., and then my system went down. and it turned out it was probably hacked.

and the fact that i haven't seen anything like that or heard of anything like that from anyone else leads me to suspect that either it was a malfunctioning computer or it was an n.s.a. trainee. i don't know any of this for sure, but it was kind of scary to think i may have been hacked. and do they know the difference between ancient and modern egypt. guest: i will tell you i think that is not very likely for a couple of reasons. one, obviously if you're having logos pop up on your screen you know something is wrong, which sort of defeats the purpose of surveillance. n.s.a., they're pretty confident, so, i mean, it would be sort of a blundering thing to have it pop up on your screen. it doesn't mean you weren't hacked. it may be you downloaded some other thing compromised your system. n.s.a. has access to, you know,

the pipes themselves. so, in special cases looking at particular targets, they might, we know they do in fact go ahead and hack the person's machine. but, usually that's not sort of how it works. when they get to the point where they have an active reason to think there's someone's machine they're going after. and so it seems, well, it's not impossible, depending on if the website you were visiting, it's conceiveable, but strikes me as pretty unlikely. but i do think that one of the reasons to be concerned about this kind of mass surveillance is indeed that when you know stuff on this scale is happening, it does create this chilling effect, so you have writers using the internet and

thinking well, if i go visit this website, if i look at some youtube of a radical, will it trigger something that puts me on a list somehow or gets my communications scrutinized more closely. whether or not that's the case here, a reason for greater limits is that you don't want people always sort of looking over their shoulder and thinking, you know, is this next link i click on going to somehow set off a red flag somewhere. is typing this word in this email going to send off a red flag somewhere. am i thinking every time i do anything online about whether this is going to trigger surveillance. host: our guest julian sanchez, cato institute, we're talking about the national security agency. julian sanchez, there's a story in "the new york post" saying the f.b.i. develops surveillance techniques that allow you to

turn on web cams. guest: yep. this is something i used to argue with my techy friends. i always thought that your web camera, or at least the web camera in your laptop is hardwired to the light to the power. we always believe if there's power going into the web cam the light kind of has to go on. someone can't just remotely hack your machine and turn on your web cam without you knowing about it and take naked pictures of you and look at what you're doing. as we've learned it turns out for some models of labtop there's a way you can compromise the system to alter the behavior of the particular chip that controls that so it doesn't turn the light on. you can activate the web cam without any alerts to the person using the computer. in a way even more troubling than that is the microphone in your laptop, on your phone, there's no light next to that.

only an alert if someone has turned on your mike. and so that's also, no doubt, something that can be exploited. although again, that's something a little less concerning because it doesn't scale, right? you can sweep in lots and lots of phone records and internet records and internet communications in bulk, have them in a big database and you better hope that no one in five to 10 years finds someone to use that huge database. remotely activating a camera or a microphone is, i mean, a kind of chilling technology, but you can't do it enmass. you can't do it to everyone. you sort of have to target. so in those cases you would hope that's something happening only after a judge has issued a specific search warrant. host: bruce jackson, florida, independent line.

caller: yes, good morning gentlemen. i guess the best thing to do is start off, do you trust the government? and number two, would we know about n.s.a. if it wasn't for edward snowden, trusting the government. you know we go back to fast and furious, benghazi, the i.r.s. which leaked information to the obama administration. i just, you know, and if you're worried about you're information, just go on google and google your name and find out how much information you can find about yourself on google. guest: i think that's right. in the report of the presidents review group the president released this week, they say, you know, it's important to remember that we cannot just totally trust the government. at some level, if you're going to allow surveillance authorities at all, there have

to be some trust that it will not be widely abused, but you should always sort of have in mind the possibility of abuse. if you look at the hearings on this subject, you sort of, again and again, people saying we know your heart is in the right place and do not intend to spy on order americans. maybe that's true about the guys running the show right now. but that should never be the structural policy answer that, you know, you trust the particular individuals whose hands are at the levers of a machine. you need structural controls. the founding fathers set up all these checks and balances and ways to ensure that power could not be abused, set up the bill of rights, the separation of powers. not that they thought they were

bad or untrustworthy people. they understood that power is untrustworthy in a sense. that power tends to be abused. so you always need to assume that at some point it will be unless you have structured designed to prevent it. >> what about people like edward snowden. what role does he play in this? guest: you know, some of the stuff that's come out was stuff we had an inkling about before. we didn't know quite as many details about the phone, we didn't know the exact legal rationale. but the "u.s.a. today" in 2006 had reported that there was some kind of large scale collection of phone records happening. that was sort of overshadowed by the big warrantless wiretapping that was happening at the time. i think again, maybe people may have assumed that that had gone by the way side as some of the illegal and immediate post-9/11 stuff was moved under by the authorities. but no, absolutely. a lot of this is stuff we wouldn't know about otherwise.

we saw president obama's press conference you referred to saying well, it was important that we have this debate, and indeed, you see now, big changes need to be made. a court says actually some of the stuff maybe wasn't legal after all. could have had the debate some other way. you want to believe him. you want to believe that we can talk about these things and regulate our national security apparatus without classified leaks being part of it, but, you know, how else were we going to have this debate? is there any evidence that this is a debate we would be having at any point but for those leaks? and so, you know, may have to say well, you wish this kind of thing weren't necessary. that, a debate could happen and secrets could be kept. that need to be kept. but i think, history shows sometimes that's what it takes.

host: what do you think will be the ultimate fate of edward snowden? guest: i was surprised to see that even within the government there are folks now talking about amnesty, i guess, conditional on his returning some of the data. i'm not sure if that's possible. i mean, my understanding is that he's basically at this point turned over what he had, or most of what he had to various groups of journalists, so it's not like he's in any position to return it, and certainly not clear the journalists who have it would be interested in returning it. so, i don't know whether to expect that. but i think politically now, in light of this report, and in light of the that court ruling, the line all along has been he's not a whistle blower because everything he revealed was legal, and fine and he's not revealing abuses or criminal conduct. well, the point where you have a judge apointed by president bush saying actually, i think this is unconstitutional, you know, it becomes a lot harder to say no,

he's not a whistle blower. so it may be politically more difficult to really try to throw the book at him, although i have no doubt there will be, for the rest of his life, someone whose job that is. host: stephanie, democrats line, you're up next. good morning. caller: good morning. host: you're on, go ahead. caller: so i would like to know what he thinks about the employees that actually work at n.s.a., and for the government. how many of them would have to be corrupt to actually exploit data? guest: well, one. there's no sort of proof of that. ed snowden is someone who basically took thousands upon thousands of highly classified documents that was not supposed to be possible to extract from the system. some of these reports, by the way, did actually contain, you seem them redacted, information about the names of particular people under investigation. so that hasn't been published. but some of the studies information out to persons.

so, as it turns out it takes one person to get this stuff out. and in this case, for months afterwards, still unclear exactly what he took. it's not clear that his extraction would have been detected at all except that, obviously, he went to the press and started publishing some of these documents. you have to assume that someone who extracted information to abuse it, either by you know misusing information for political purposes, or using information to make stock trade, because they found out about mergers. any of the number of ways you could use information or sell information illicitly, you're not going to take out a front page ad in the "new york times." you're not going to leak that to the guardian. i think this is clear proof it wouldn't take much. i will say everyone i've ever met or spoken to from n.s.a. seems like a thoughtful and decent person, so it's not that i, in my personal experience with these folks, they seem

like, you know corrupt people who are looking for ways to misuse their power. but, it does show that, it might only take one or two. and it might not be, if not now, five years in the future, someone who thinks what they're doing is in the interest of american security. certainly, i think j. edgar hoover when he abuses power, thought he was protecting american from communism. so one person at the bottom even it seems can do potentially a lot of damage. and, you know, much, much more recently certainly someone higher up could, i think, do even more damage. especially given again that we saw for years at a time the bodies that were supposed to be overseeing the program were supposed to work in one way and turned out they worked in a different way. so the structures in place to prevent that from happening don't seem to be effective. guest: someone asked to ask you

if the n.s.a. overall undermining of internet security could lead to more cyber breaches? he highlights the target breach. guest: in theory, certainly, right. but if you're introducing vulnerability into the system, even if you think you're the only one who knows about them, then yeah, you increase the risk that someone else is going to discover those and use them for their own purposes. not to do security surveillance but to extract people's credit cards. i think that's certainly the case. whether it's plausible to these particularly kind of vulnerabilities are likely to be looked in by order criminals, as compared to basically other foreign actors, that's a fairly

sophisticated and exom ply kated vulnerabilities. but when you reduce securities so you can spy, you reduce securities so someone else can spy too. host: how much technical know how does it take to pull often a target breach? guest: i don't actually remember the details of how that particular one was carried out. in part, if you look at what applications and sites are constantly updating themselves and changing the way they work, you know, every kind of major change introduces potential new vulnerabilities. you know. you see, even just order software, security updates on a pretty constant basis. that's just because it's impossible to really know in advance how all the complex pieces are going to work together and predict every vulnerability every global community of hackers might detect through constant efforts to hammer through something.

so in a way it's almost less an individual level. it's that no person tasked with securing a system is going to be as smart as everyone who's trying to compromise it. sooner or later, one of them is going to find a vulnerability you didn't think about. host: mary, the independent line. caller: hi. this may be less about n.s.a. surveillance and more about identity theft and privacy concerns, based on what i've seen on c-span this week. i'm curious about responsibility of employers of their employees data and things about have data on people, including social security numbers. my particular concern recently is that i have had -- i learned that my w 2's were sent to lawyers on behalf of a lawsuit

that my employer has going. and i learned that i could have the items redacted so that the social security numbers could be wiped off. and i'd be ok with them being submitted as long as the social security numbers wouldn't be there. but i was really concerned if this were to go to a jury, the stuff would be out there, exhibits, blah, blah, blah. and i think that's really personal data to have out there. i took it to my employer for his concern, he claims to have an open door policy. he was not interested in listening to my concern and just kept repeating that the lawsuit is none of my business. and so, i couldn't get very far with that. i was really going to ask for his help but he was not interested. so apparently his lawsuit is private, which it's not really because you know, it's out there and yet somehow my personal data is out there for people to see with my social security number, just hanging out there. i just wonder if you could address the thought around what

responsibilities, again, courts have, or employers have on protecting data for certain situations. guest: that's a huge question, and i'm sorry, i don't want to get too complicated. but there is a tension here that they've been grappling with the presumption that court records are supposed to be public, you're not supposed to have, in general, it happens, sometimes records are sealed. but the proceedings of a court, the documents presented in a court, are supposed to be part of the public record. and on the other hand, discovery and disclosure and lawsuits often irrelevance or personal material as part of the process that you don't necessarily want to put on the web for all to see.

so there is a tension between those two values. in your particular case, whose responsiblity it is would probably be determined by state law than any kind of national policy on this. i can't give you too much specific guidance, i might suggest that a foundation might be able to help out with that. host: we'll squeeze in one more call. this is larry, big spring, texas. republican line. good morning. caller: yes, i just wanted to bring up a couple of points that you kind of touched on earlier at the beginning of the show when julian first came on. one, is the fact that he said there was no evidence of any wrong doing that n.s.a. had done, you know, so far as gathering evidence and all. what about steve rosen that worked with fox and the other networks, they went after fox network, you know, went into their phone records. and then i forget the other network, there was another one. guest: that wasn't n.s.a., want to recognize.

that was the f.b.i. and the justice department, although certainly it all comes together. and in those cases, i think probably because the n.s.a. program is classified, and this is information they got phone records of both the associated press and the reporter as part of leak investigations, they wanted to be able to use that information in court. so they didn't want to talk about the n.s.a. database is supposed to be used for terrorism in theory. we know the rules were violated quite a lot. but in theory it's only supposed to be used within these rules. and they certainly don't want to have to publicly reveal the existence of that program. so these cases really involve, i think, warrants in the case of reading the emails of rosen, and grand jury subpoenas in the case of the associated press, and that's given rise to revamping of the rules, but which they're

supposed to look at media records. supposed to be an enhanced scrutiny before they sweep in a reporter's record because there's additional first amendment concerns where there's extra temptation for government abuse. are you going to learn who's talking to the government, not just a leaker you're worried about, but anyone who might be blowing the whistle or talking to the press. what kind of stories are they working on, giving you advanced warning about what's coming out. additional layers of protection there. but it is certainly concerning to see that in those cases, one, in rosen's case, essentially because they had to argue because of those restrictions, that he was in fact involved in some kind of crime, basically treated him as the equivilent of a foreign spy because he was engaged in order newsgathering. and the a.p. case, that in order to try to figure out who was talking to the a.p. about one

particular classified story, they swept in records for a whole bunch of a.p. phone lines. so would have learned about a whole lot of people who are communicating with the associated press. and gotten a pretty comprehensive picture of everything they were working on. certainly those are cause for concern. host: as we finish up, the legal decision that was handed down this week, ultimately, what does it mean? guest: so, a republican apointee essentially found the n.s.a. phone record program was likely to be found to violate the 4th amendment, this was the preliminary injunction, pending an appeal. meaning it doesn't have effect right away. but someone was challenging the phone record company saying don't want my information taken away did in fact probably violate the 4th amendment. there's a long ago supreme court

decision that sort of says once you turn over information like a phone number you dial or the internet site you visit to any kind of third party business, like your internet provider, google, your phone company, and they keep that in the business record, the idea there is you've given it away, you have given up your 4th amendment right so the government can get that without following all the restrictions that the 4th amendment imposed. you have to specifically say what you're going to search. you have to have probable cause, get a warrant from a judge. as the ruling says, that doesn't apply. the 4th amendment doesn't apply to these third party records and what this ruling basically says is, well, when it's on this scale sweeping information that covers years and it's everyone's information so you can analyze it in bulk to look for patterns, that raises additional issues. there's a greater intrusion

there. that does actually violate people's reasonable expectation of privacy. that's actually really important, because that idea holds up. it's not just this one program would be unconstitutional. it's that a whole lot of the powers that the government now has been using to collect enmass, lots of information about people without particular lots of information about people without particular warrants would have to be looked at as well and probably not survive scrutiny either. so, this goes on appeal to actually a d.c. court that has already basically endorsed that theory of the fourth amendment. the theory that even if it's not a constitutional search to get a little bit of information, getting a huge amount of the same kind of information can be a search by kind of going beyond what an order person would

expect to be kind of subject to disclosure, and so then the question would be does that make it the supreme court. there are other ways they can do this. the judge in this case decided not to look at the statutory argument. that is, forget the constitution, this is more than the statute allows. he thought, for various reasons, they weren't able to take up that question, to challenge that part of it. if an appellate court said no, we're going to look at that question instead, we can leave the big constitutional question aside and say we're going to decide it on the narrower, does the statute permit it. host: julian sanchez, thank you. >> on the next "washington journal," we will discuss the situation inside north korea byh scott snyder, followed

look at president obama's withnal security strategy david sanger. in fundraising and spending for the honey 14 and -- then fundraising and spending for the 2014 and 2015 elections. ," live everyournal morning at 7:00 eastern here on c-span. >> us 2013 wraps up, we are here to tell you about our c-span year in review series, a look at five important issues we have covered in the past year. here's the lineup. on monday, a look at immigration laws. tuesday, senate filibuster rules . thursday, gun laws. on friday, we wrap up the week with a look at the u.s. budget and government shutdown. >that all starts monday at a

clock p.m. eastern on c-span -- 8:00 p.m. eastern on c-span. >> the thing that i care about most is to make more of a museum, with more pieces of beautiful furniture that belong to our president. there's very little antique furniture here now, and most of what is dates from [indiscernible] >> i would've thought they would've been collecting this since the beginning of this republic. thomas jefferson did the most wonderful thing to putting in beautiful furniture. the war of 1812, when everything they had to and start piecemeal since then. every president who came could sell what he did not like, and they used to have auctions. a president could change the decor if he wanted, which president groom had the blue violet.

stopped at theas time of theodore roosevelt. >> "first ladies, influence and image." weeknights at 9:00 p.m. on c- span. next, the u.s. energy information administration releases its annual energy outlook for 2014. the report focuses on factors that shape the u.s. energy system over the long term, assuming that current laws and regulations remain unchanged. it also provides a basis for examining energy production and market trends. this took place of the john hopkins schools of advanced international studies. it is a little over an hour. >> good morning, ladies and gentlemen. i am senior adviser in our energy resources environment program.

it is a great pleasure to welcome an old friend, minskyinsky, -- adamson administrator of eia, to our session which has been done now for the last two or three years. we are very pleased to cooperate on that. adam has been in his current job for about a year and a half. before that, he had a distinguished career for about 14 years both as chief energy economist and before that, energy strategist. prior to that he worked for about 10 years in a similar role. adam is former president of the u.s. association of energy economics and former president of the national association of petroleum investment analysts. he has been on a number of committees, spent some time at csis and also at least two

advisory committees in the past year. he has been an occasional lecturer several times here at sais, so we are very pleased to have him back. he will talk to us about the reference case of the 2014 energy outlook. we will proceed with some discussion q&a after that. >> ok, will, thanks very much for the introduction. it's great to see you back here in this role at johns hopkins, and i appreciate very much your words.

i did hear you say that we are old friends, and i am saying we are friends of long-standing acquaintance. [laughter] i wanted to go through our annual energy outlook. let's see if we can make that work. there we go. the first thing i wanted to do is thank john and paul. here comes paul. when we get to q&a, the hard questions will be answered by john and paul. i wanted to remind you that these conclusions are all based on a complete set of analysis and model that includes some alternative cases, and more that will be coming out early next year as we move out toward full publication.

there is a lot of uncertainties, and sometimes i use a slide that says why it will be wrong, long- term forecast by their very nature are difficult. that doesn't mean that you should not do them, even if you think you're going to be wrong. you still want to do long-term forecast, because the reference case provides a really good way of moving towards side cases that can illuminate what it is you are doing. what is going to change, regulations and laws and consumer preferences and economic growth could be bigger or smaller than forecast. what we have really seen recently is changes in technology, especially in things

like horizontal drilling and multistage hydraulic fracturing and so on that have dramatically improved the efficiency of both drilling and well production. so keep that all in mind when you go through these conclusions. one of our main conclusions is that natural gas and oil will continue to grow. natural gas throughout the entire time frame, oil until sometime in either later this decade or maybe early into the next decade. one of the interesting things from this forecast is we now see u.s. oil production reaching 9.6 million barrels a day. that was the prior high back in 1970. keep in mind that's in our reference case. light duty vehicle energy use is

declining as vehicle miles traveled begins to slow and vehicle fuel efficiency continues to improve. i already mentioned growth in shale gas production, but that growth in production is going to allow for considerable increases in consumption in the industrial sector and in the electric utility sector, sometime in the decade of the 2030s, even in our reference case it will surpass coal in terms of electricity generation. we see that growth in natural gas production is not just sufficient to enable industrial and electorate utility use, but enough output to allow natural gas exports to be even larger than what we have forecast in

the 2013 annual energy outlook. with growth in both oil and natural gas production, we see the u.s. moving closer towards self-sufficiency, and there are some very interesting economic and geopolitical implications of all of that. finally, even with all of this activity, carbon intensity of fuels in the u.s. continues to decline, and carbon emissions related to energy consumption are unlikely to ever see the 2005 peak of 6 billion metric

tons, and in fact, may continue to either plateau or drift down, depending on further regulations. so let's look at some of the details on this. this shows total energy consumption and total energy production in the u.s.. we see that fairly big gap back in the year 2005 has already narrowed towards a 16% gap between consumption and production. that should narrow further as we go out, that 3% number in 2034, by 2040 it is essentially in the same ballpark. that means improvements in the u.s. trade deficit, and in fact, were going to be doing some today, and energy article

looking at energy and u.s. trade over the course of the next few weeks, so keep your eye out for that. i mentioned that oil production is projected to reach the prior peak back in 1970, u.s. crude oil production reached nine .6 million barrels a day. we are going to touch that level or come very close to it by the end of this decade. i think it will plateau. the current forecast shows it coming down. it has a lot to do with the geology of shale oil resources and production. this is a significant increase actually from the 2013 aeo forecast, which had numbers well below this level.

let me explain something that i'm actually very excited about. when we published the 2013 aeo, that was december a year ago. we had oil production data coming from our survey that at best in december -- i actually have to back up and say the models really got locked down around september. that meant we were working with numbers from june. in some cases, those numbers are really not complete and so you are working with data -- we were starting with data that was already relatively old and incomplete as a starting point. what we do to fix that problem was to create the drilling productivity report they are sending out monthly now.

the drilling productivity report actually gives us a forecast from this month and next month's production, so when we were locking in the aeo 2014 numbers, we had a pretty good idea back in september and october what current production was going to be and what it was going to look like toward the end of this year. so we are starting with numbers that are six months to one year better for our long-term forecast and what we were able to do in 2013. i think that is going to go a long way towards improving the near-term accuracy of the aeo 2014, and i'm very happy about that.

the numbers are shown in quadrillion british thermal units, 25 million btu's is roughly 12.5 billion barrels a day. you can think of transportation being roughly two thirds of u.s. oil consumption and break it down in those percentages. we can see jet fuel picking up a little bit, and growth in the lopez and things like liquefied natural gas being used in transportation. a little bit of an increase in ethanol as a part of the motor gasoline consumption numbers.

that seek back near 2005 was about 14 million billionaires -- barrels a day paid we are starting with their team .4 million barrels a day of transportation fuels. we see that low point roughly around 2030, and that is about 12.3 million barrels a day. again, this is the reference case. the current auto fuel efficiency rules begin to taper off around 2025 and policymakers decide to extend the fuel efficiency rules, we would see even lower numbers in there. we will run a side case on that this year, and that shows more of a decline than this plateau you're saying here.

i mentioned that shale gas, we're not seeing any peaking at all. by 2040, we will be over 100 billion cubic feet per day of these productions of natural gas. shale gas, these will roughly be half of the u.s. natural gas reduction. this is a remarkable development. marcello, haynesville, eagle ford, barnett about fayetteville, the big news is the marsalis orations in pennsylvania. pennsylvania.in it is now producing, estimated and are drilling productivity

reports, this month and hit 13 billion cubic feet per day. in 2010 it was barely two bcf a day. so what is going on in terms of shale gas and shale oil production is a very remarkable development. i mentioned that we saw natural gas actually exceeding cold in terms of electricity generation i fueled. that happens in that period past 2030, so that is a long ways away. that is based on current regulation, and it is very possible that we might see less coal and more natural gas replacing that coal as we move out over time. one of the other interesting things is allowing for, in our models, considerable growth in natural gas in manufacturing.

so if you just look at that middle column, 2025 to buy less concentrate on that as a mirror term project in -- nearer-term projection about these are stacked up in terms of the coming growth. we're seeing a huge increase actually in natural gas use in refining, and both chemicals and ddb food processing -- even food processing. even and other primary metals. this is an industrial production in our model that is growing at

2.6% per year. the other industries are clearly taking advantage of this relatively inexpensive, certainly relative to oil, fuel. there is growth of three percent or better per year in industries like primary metals. so, higher-level of manufacturing shipments leads to greater manufacturing natural gas demand. and all of that is resulting in positive impact on u.s. industrial production and gross domestic product, or gdp. on natural gas, this chart shows our projections for natural gas exports. so if you start at the top of the chart, and start to work your way down, you can see the numbers that are now a part of the aeo 2014.

the biggest u.s. export of natural gas are exports to mexico by pipeline. we also export gas to canada. if you look below the line at the negative numbers which is imports, you also see canada listed there. we are currently at a net importer of natural gas from canada, but those numbers have been coming down, so we import more gas from canada than we export, but i think it is kind of an interesting fact of north america and the north american free-trade agreement, and our long-standing very positive relationships with canada as far as trade are concerned, that there's a lot of two-way movement in gas across the u.s. canadian border.

we see more room for lng exports from the lower 48 states than we did last year. we still have a projection for alaska natural gas exports in these numbers. keep in mind, our forecast basically, out of our national energy modeling system. they are not particularly based on permits above for example there is no current permit for gas to be exported from alaska. we just think that the economics of that, as shown in our model, makes some sense, and so we portray that. since we were talking about lng exports, and i'm sure somebody will ask a question about this, so i would have a slight on it.

that is, what about product exports? the u.s. is knowing that exporter of petroleum products. the numbers right now roughly 3 million barrels a day of raw that exports -- product exports, and a smaller number of product imports. the black line shows the crossover point of being a net importer to be a net exporter. as we move out, in the next two -- few years we're seeing product exports moving up to be up toward one million barrels a day. moving up more as u.s. production continues to grow, and u.s. demand plateaus off. motor gasoline, one of the

interesting things about the ability of refiners to export things like distillates, which are getting a very good price in the international market right now, is it is resulting in high refining utilization rate. they're running now on the upper 90's, and what that means is products are being produced in surplus, in fact gasoline, there's enough gasoline around in the u.s. now that prices have actually been relatively moderate, below last year's levels at this time. i wanted to end this brief run through of our major conclusions with a thought on energy related co2 emissions.

we think that they will remain below that 2005 -- that 2005 peak that you see when we then plateaued briefly at roughly 6 billion metric tons. this can, combination of several different things. per capita gdp, we know that there was an economic downturn in the u.s., and that had an impact on energy consumption, and output. but more importantly, in digging about this going forward, we are assuming that economic growth in the u.s. will run at about 2.4% per year growth, but even with that growth but we are not seeing anything near that in terms of growth in co2.

the reason for this is a combination of less carbon intensive fuels, so natural gas, continuing to substitute for coal in the utility sector, and growing efficiency in the consumption side, like how many miles per gallon a car can get them and how that is late to the consumption of petroleum feels. a combination looking forward of improvements in fuel efficiency and continuing substitution of lower carbon fuels for higher carbon fuels, including renewables, makes a big difference to u.s. carbon dioxide emissions. with that, i'm going to, well, let's see -- let me just go through a couple

of these things briefly, and then we will end. we will have plenty of time for q and a. this shows u.s. dependence on imported liquids and the difference in domestic supply. this is not just crude oil production which is above 9 million barrels a day. you have to add 2.5 million barrels a day or more of gas. a little over one million barrels of day of refinery gave that is a volumetric increase that you get in refineries when you put crude oil through and get white products like gasoline and at about a million barrels a day of biofuels. natural gas liquids, refinery

gain and biofuels, we're going to push up total liquid production in the us to not quite a bit close to 60 million barrels a day of fuel supply. and demand will be running somewhere below 20 million barrels a day, that is going to shrink the imported portion of our liquid fuel supply to a number that is closer to 25 are -- 25%, around 2016, 2017, from numbers that as recently as 2005 were close to 60%. this shows that break down of the total oil production numbers, and you see the big impact of the yellow line by the tight oil output. other crude oil production holding relatively steady, and the net import number, including

biofuels import, that dark black space at the top, shrinking over time. other thoughts in the transportation area is the growing possibility that we are going to see natural gas in use as a transportation fuel. natural gas in the transportation sector is expected to grow quite a bit of output, finding its way into freight trucks as lng, as well as rail and marine uses. continuing use of compressed natural gas in light-duty vehicles and buses. on the left-hand side is trillion btus, on the right-hand side we have put in some numbers on billion cubic feet a day. so reaching something like 2.5

billion feet a day of use from numbers that are currently literally an order of magnitude less than that, fairly impressive growth expected there. thinking about natural gas, let's look at some of the numbers there. we're seeing an increase in our projection of natural gas prices from levels that are near four dollars a day reaching five dollars roughly, a little bit under, by 2018, and moving up over time. we see brent crude oil prices moving up faster, and the net result of that is the oil to gas price ratio done in btus continues to favor natural gas. you end up with a number that is over three in the forecast and what that says is that natural

gas per million btu is only a third of the value of oil on a btu basis. that is what's leaving to the -- leading to the whole idea of substitution of natural gas into the markets that would have typically been liquid fuels. let's look at the supply demand, and net export numbers. we still forecast that the u.s. is going to be a net exporter of natural gas. i think last year we thought that it would be roughly 2020 when that would take place, now given the higher natural gas production numbers, mainly, even

with consumption growing, allowing for the ability of exports. by the time we get to out to 2040 we are looking at fairly significant levels of lng exports. let's take a look at where this gas is going across the u.s. economy. again, growth in natural gas being used in electric power, in the industrial sector, and particularly manufacturing, although it looked in our models that there was a fairly healthy

spread of natural gas consumption in the industrial sector across the entire group in consumption. growth in transportation and the growth in the commercial sector. one of the reasons for that is that electric heat pumps are becoming more efficient and taking market share. let's talk a little bit about electricity. the main point to be made here is that the growth in electricity demand that we see looking out towards 2040 is still relatively low, and little bit less than one percent. you can see the left-hand side of the table from 2013 to 2040 it is .9% are year. one of the things we have done here is shown in electricity

use, that is the blue line, and the dark blue trend line along with gdp or u.s. gross to met the roddick, and the trend in that. -- domestic product, and the trend in that. we see three distinct periods in this charge. the time from 1950 into roughly the mid-1980's when electricity demand was typically outpacing growth in gdp. the time from the mid-1980's to 2005 where they were going close to each other, and then does time since 2005 where we see gdp growing faster than electricity demand. there are a number of interesting points to be made in this.

despite new nuclear capacity, the share of nuclear power in this declined slightly, and we will see that on the next slide. but that one percent growth in consumption does not allow for a huge increase in renewables or other fuels, unless you push something else on the system, like nuclear, or coal, or natural gas. so let's look at that length, and here is the split, apple -- natural gas growing from about 30% of electricity generation to about 35%. renewables continuing to grow across the entire time. coal coming down in percentage

terms, over the timeout to 2040, and nuclear essentially doing the same thing. what about non-hydro renewables? we continue to see very strong growth in wind and in solar. we are going through over the next month or so take a look at the solar numbers to try to better understand improvements in solar costs that have been going on, to see if we might be not overestimating but possibly underestimating growth in solar power. one of the things that keep these numbers looking relatively low in comparison to some of the other growth here is that tax

credits keep going in and out. the renewable tax credit for both wind and solar, and the changes they can make their, and the treatment of solar at the regional and local level will be another important factor. i am now going to stop, and if you will come to join me, we will see what kind of questions you all have. how we might be of further help to all of you here.

>> we will have some mike's coming around, i believe. we ask that you would identify yourself before asking your question. down here in the front? >> brookings. >> hold on one second. >> charlie from brookings. with the industrial renaissance we see in some of your chart, why do you think it is that gdp may not be able to grow faster than the 2.4% you used on average over your timeline? >> well, i think the answer to that depends on what assumptions

you make about the spillover the benefits associated with the increased oil production into the rest of the economy. there are sort of two different camps in this area. one says that oil and gas is a percentage of the u.s. economy that is still relatively small, and therefore increases in oil and gas production don't completely change the nature of the u.s. economy. the economy is continuing to move structurally away from things like manufacturing, and so that lower percentage is part of the reason. i'm very reluctant to say that

it is small, and therefore doesn't matter, because that phrase, a journey of a thousand miles starts with the first up, -- step, anything we do in terms of improving output ultimately has to show up in gdp numbers. i think that the modeling of this is just beginning to get underway. >> i can't hear you. let's wait until the screen goes up. t can't herar anything bu the

the screen going up. if that's working, herman, go ahead. >> congratulations on another excellent and very interesting forecast. i have two questions, one on the oil side, one on the gas side. some analysts believe that we can see in the intervening time, a drop of 10% to 20%, if that happens how would a production scenario be? oil prices and gas prices are much remaining in the range of three, is the amount side a little too pessimistic based on

that assumption? >> let's start with the sensitivity of oil production to prices. clearly there is a sensitivity. we are already seeing -- the forecast i had was for brent, and now more recently, crude prices are selling below brent. we're still getting the growth in output. a number of companies and analysts have tried to look at this on an individual company basis, and there are analysts that believe shale oil production in general is probably -- continues to be profitable below $90 a barrel, down toward $80 or $85 a barrel.

it is going to vary from field to field, and company to company. those calculations are based on cost assumptions that continue to change as the technology improves. as drilling rig efficiency get better, and as well productivity gets better, the overall cost structure for shale looks like it could continue to come down. that could make a difference. there are also geopolitical issues that might set a lower limit on oil prices. life could get very difficult from a revenue standpoint among some of the big oil producers around the world about as oil prices drop. -- as oil prices drop. for some countries it is the total social cost of producing

crude oil that is important, and those numbers are probably higher than what the cost of shale production is in the u.s. the other question that you had was doesn't that gap, that three ratio in the etu cost of oils -- btu cost of oils, ursus natural gas production in the u.s., doesn't that lead to incentive for further penetration of natural gas into markets at his -- that have historically been held by your oil? the answer to that is yes. keep in mind that since it is mostly in the transportation sector, certainly in the u.s., we're seeing the substitution taking place over time.

getting the infrastructure in place to be able to use lng and compressed gas in the u.s. takes time. so the growth rates are likely to be slow, could accelerate as infrastructure begins to get built out. this is the first year that we have incorporated a forecast for marine and rail use of natural gas, likely to be in the form of lng. we know there are a number of shipbuilders and rail companies who are looking at this right now.

>> good morning. thank you for coming this morning. i had a question on your ethanol data there. the question is, if there was a demand or consumption increase, given the reduction of vmt and the current regulation with ethanol blending, i just wonder if you could clarify that for me. >> sure. we will have more to say about that once the epa comes out with their 2014 figures. we are assuming that ethanol will grow a little bit in the motor fuels pool, mostly gasoline, and we are basing it on a view that says that in the near term, getting past the

blend wall is not easy, so growth will have to come in cars that are capable of using e-15 or e-85. the answer to that is similar to the discussion we just had with the previous question, getting the infrastructure in place to allow consumption of fuels higher than 10% ethanol gasoline is going to take some time and there are economic issues associated with that as well. so we will have more to say about that in side cases that will be running in 2014 when that gets published next year. >> thank you, paul connors. last year the net liquids imports, 37% -- i think the

numbers were seven-something and imports were five-something with a new projection of 42%. -- 32%. >> i'll tell you what, rather than me trying to do the math up here in my head, i will let paul look through the tables and figure out what those numbers are. we could get back to you. it is clearly coming down. over the next three or four -- crude oiluction production in the u.s. in december has just gone over 8 million barrels a day. so we could look at what the total level of consumption is, it's running at currently 18.5.

>> the low level is down to 4.9 million barrels a day. >> just under 5 million barrels a day. 7.5 today. >> thank you for the eia's annual christmas present of a glowingly optimistic forecast for the future. i'm going to play the grinch who stole christmas by noting that the trend you have noted how natural gas is replacing other fuel sources in many fields, but the trend this year has been for coal to increase its share in electricity generation, which is

obviously related to the relative price of natural gas versus coal. we have some anecdotal evidence that the current price of natural gas is not sustainable or profitable for the producers. the ceo of exxon mobil noted, and you yourself predicted the price of natural gas will go up, though only slightly. why is this not the trend of the future, at least in regard to electricity generation, where we return to increased use of coal? >> i will take the first stab at that. is alan here? maybe we will have alan comment on that, so maybe we can pass the microphone over that way.

you correctly stated that the relative price has changed between 2012 and 2013. we had very low natural gas prices in 2011 and 2012, and that led to a big pickup in natural gas consumption by electric utilities that sounded to be in their interest to burn natural gas rather than coal. as natural gas prices came up, coal burning electric utilities recovered as well, and it's kind of interesting to think about it this way. the market itself seems to be making a lot of the decisions about what fuels get burned at electric utilities. the longer-term, even with our increases in natural gas prices over the long term, we don't see a great deal of increase in coal, and alan can tell you more about that. there just aren't a lot more

coal plants likely to be built, and some of the coal plants we already have could retire on an economic basis as the utilities decide what kind of capital investments they do or don't want to make an existing coal plants. -- at existing coal plants. so we see that crossover taking place, where natural gas begins to exceed coal as far as electric generation is concerned. alan, is there a little more color that you want to put on this? >> absolutely right, and 2013, coal generation relative to last year so far is up about six percent, gas is down around 12% or 13%. you have to remember that 2012 was a very odd year. 2012 was a relatively warm year so residential and commercial use of natural gas was down. it was a low electricity growth year.

the net result of that was production of natural gas was soaring, the price of natural gas collapsed to under three dollars so a lot of coal was replaced by natural gas. we see that rebounding back. if you look at our projections, you will see that we see coal coming back in the near term, but we don't see the price of natural gas getting high enough to make new coal plants attractive. once you have utilized ones you have, most of the new capacity additions will be natural gas and some renewables spurred on by other programs. so gas just keeps growing where coal hits a plateau and doesn't grow any more. >> one last thing i would add to allen's comments, an answer to a point that you made, i think the jury is still out on exactly how strong natural gas production

can be at current prices. i know there has been a lot of talk suggesting that higher natural gas prices will be required to maintain output of shale gas and our model suggests that, too. but we do know from things like the drilling productivity report and other comments from industry that well efficiency and drilling efficiency continue to improve, which means that natural gas at current prices might be more profitable then you would have thought a year or

two ago, and in fact, the longer-term natural gas price forecast in 2013 was higher than the 2014 aeo which we are publishing today, so our natural gas price track is somewhat lower this year than it was last year. i think certainly from what we are seeing happening on the productivity side, that trend might continue for a little while. >> thank you again for the very comprehensive and excellent presentation. i wanted to ask you about the electric power sector and your view on nuclear power that is contained within the forecast. it looks like you have the share of nuclear power more or less holding steady through 2040. when we look at this, it looks

like the large number of the nuclear fleet are going to be retiring sometime between 2030 and 2040, if you assume, depending on what you assume about license extensions on the existing fleet. a lot are due for additional renewals in that 2040 timeframe. we have already seen a tremendous amount of pressure on nuclear plants, have announced retirements, everything from california to crystal river in florida to the upper midwest to the northeast. i'm just wondering what your views are on nuclear power going forward, because that -- when you are talking about 45 gigawatts, it has a big impact on overall share of generation in the power sector and on emissions going forward as well. >> right, i think you're absolutely correct that we will find the key assumption that you have to look at in projecting

nuclear power, especially for the last 15 or so years of that forecast, from 2025-2040, is what happens with planned retirement. -- plant retirements. we are assuming that a number of companies will file for extensions, life extensions, and that allows those numbers to stay relatively flat as you go out towards 2040. if the aeo went out to 2050, i think you would see more of a decline. a lot is going to depend on what happens with that. the other thing that is important to have to know, but of course you can't, is what the situation will be in terms of operation and maintenance expenses at these nuclear facilities. there has been a relatively steep increase in costs over the

past few years, whether that continues could make a big difference to the forecast, we are assuming somewhat of a slowdown in costs as we moved out into 2025-2030 time frame. so the combination of knowing what operation maintenance will be and knowing what the life expansion answers going to be ultimately gives you the answer. in our side cases, where we look at low nuclear, what we find is that the bulk of the difference would show up in greater consumption of natural gas. alan, is there anything you want to add to that?

>> i think you are exactly right. low natural gas prices and slow demand are challenging everything right now. that is true for gas, coal, nuclear. in our reference case, we project natural gas price to gradually rise to the point where it makes it attractive to maintain and keep most of these plants around, but that is a very uncertain future. many of the things adam pointed out about demand growth and all those things could affect that and we will be running, and we have for the last several years because the uncertainty makes us look at alternative cases. it is a big issue, and if it is replaced, it will be replaced by very efficient natural gas. it is not as large as one might