how is that determined? >> there is staff at the whitehouse that has been there for many years. they know if i say i would like to use the regan china and they will say me might not have enough. or if the decor is hot pink you probably don't want to use red. not that we use hot pink. but they will help you figure out the china, and what linens look the best. >> there is a storm expected to hit washington, d.c. on thursday. what do you do if the weather doesn't cooperate? >> that is the most stressful thing. i can imagine departments were doing a weather call on the phone. luckily it was a beautiful day but it was cold.

the decision was to go forward. we have had decisions where it rains and we have the guy standing behind with the umbrella. but the weather is a call that is made the day-of the event >> in the two state dinners you were responsible for; were the inside the whitehouse or did you have the tent? >> for mexico we were inside for dinner and then outside for a tent where beyonce performed. for china, we had three tables in three different rooms and everything was inside the whitehouse >> your work is done by the time the dinner is underway. so what is your job like on this night? >> you are running around making sure everybody is comfortable. and also enjoys the night.

>> how do the obama's repair -- prepare -- for this? >> i think the first lady spends time on what she is going to wear. she is involved with the menu planning. >> this is what the table is looking like. >> it is beautiful. >> the first lady is very involved. so is the president. they will look at the books and they go up every night a month out they are getting memos about the state dinners. where the invitations are going out, tasting test, and a week before you start the process of a sea and say these are the people we want to sit here

>> what will they dine on this evening? >> it is all food inspired by america. there is going to be stuff from the first lady's garden. but chris comeford is the chef and she is amazing. when we had guest chefs, for my first state dinner, we had rick bales who is an american chef but cooks mexican food. it is hard to fix a dinner for 300 people or even 200 and making sure it all comes out at the same time and it is hot. if you run a restaurant that is great. you can have perfect food with balance. but chris is great and billy is the pastry chef and he is great,

too. they have a delightful menu planned >> i would imagine the best is the tasting >> that is very true. and during the holidays there are cookies left over and they will show up and you have to be careful not to eat them. >> annie chicago is on the line. are you with us? go ahead, please >> hi, let us know your most favorite part of the whole experience was for you. >> well, that is a great question, annie. thank you. i loved the first state dinner. it was big and scary. i was working with a wonderful team both mine and in the social

office. it was wonderful to be into that state dinner and saying we did it and people had a great time and no body had a terrible time or got sick. >> you mention the seating plans, what kind of protocol is in involved in that? >> my other social secretary friend would say you would never seat spouses together. but the obama's feel different about that. they think spouses and friends don't spent enough time together so we seat them together. we typically split up men and women and make it boy/girl. but it varies. >> from houston, texas.

kin kingsley is on the phone. >> just a couple questions for you: first of all, what influence or input does mrs.obama have for setting the dinner of the state menu. and given the fact there could be a female president, is the whitehouse set up for a male first gentlemen. who might be coordinating the state dinners >> ms. obama is very involved with the decor and definitely the menu. she is part of the tasting as

well and decides what to serve ultimately. social office in the whitehouse is incrediblely small. i had two deputies -- incredi y incredibly -- small. and that format would probably stay the same, i would think, if there were a female president. i would presume that if the first gentlemen would want to be involved with this, they would happily take their advice. i think it would just be individual >> this is a photograph from french newspaper that haws the french president with president obama this morning. and i want to talk about changes because he didn't bring his long-term girlfriend.

what does that change mean? >> you try to account for every detail, but you cannot be so ridged, you can't be flexible. we were talking about changing the invitation, but the folks that got it received it as it was. we have cligfers down the house from the social office and they work long hours and can make any changes needed for theman -- for the menus -- >> we welcome the listeners on the radio. we are talking about state

dinners. we have our next caller from indiana. >> i wanted to know i also see politici politicians and business people and important people are only invited to the state dinner. do they occasionally let hard working, average americans come? >> that is a great question. it might look like that in the book-sellers as they are announcing the bradley coopers of the world. there are several hard-working americans that are invited to the dinner. when i was social secretary for the mexican state dinner, we had wonderful folks that were local to washington, d.c. who run non-profits here in towni.

the first lady is very adement about having hard-working people. >> you have the president of france, and i want to ask you, france is known for many things, especially their food. does that add to the challenge for the chef? >> yes, i believe so. i am glad i am not the chef >> how does the whitehouse prepare for the food and wine for somebody who is coming to the united states for a country known for its food and wine. >> any time you have the french president coming there is a little extra pressure as the french are known for their food. there is going to be a little extra emphasis in being sure the t's are cross and i's are

dotted. but the food is always taken serio seriously and there are no loose ends typically. >> how was it determined based on your experience of serving past visitors? >> it has a very french take in it. and in other respects a very american take. it is good blending of the two different styles. the first class of caviar, and quail eggs, and finger link potatoes is a french style. i am sure the executive chef at the whitehouse put her own particular american spin on it. but if i read that without the word american in it i would think this is a french course. this isn't atypical for the state dinners. we tried to do the first dish by

honoring an ingredient or plate from their county. the second course is winter garden salad. it is curious because in my recollection there is cheese on the entre so they have moved the salad to the first place and this is probably a product coming from the whitehouse garden. it looks to be, while it is called a salad, it is probably a room temperature style venl vegetable dish. and very nutritional in keeping with the mandate of a healthy

and nutritional lifestyle. the dry aged beef is the next course and that is american through and through. to have the blue cheese on it is a tip of the hat to the french style but a very american blue cheese. even the spelling is the blue american spelling here. there is a blending of these great american ingredients with a french take on it. the desert is going to be great because you cannot go wrong a chocolate chocolate and vanilla ice cream. it sounds like a light, refreshing healthy menu.

the dry-aged rib-eye steak is great. they have a french sensibility with american ingredients and take on it. >> there is a tasting before it is finalized, but what else goes into account? >> the first thing that happens is the state's department officer of protocol will forward a paper going through the dinner. from the food stamp point we talk about cultural, personal taste and health of the guest. and typically the chef meets with the social secretary or with the first lady to talk about their thoughts on what the menu should be. several menus will be generated

addressing all of the different concerns. and from that the first lady picks out a menu or number of courses she likes. there may or may not be a tasting. ms. bush liked them. ms. clinton didn't do that many. if there is a tasting, there is a follow-up and corrections or amendments to the menu. and then we would go through making and remaking and rehearsing if you will to get them the way you want them. a state dinner is like a broadway opening. once it hits the bright lights, you have to hit your mark and you cannot be experimenting at the last second. the dinner isn't the only thing happening that night so you have to find the niche within the entire options

>> what about the vegetarian options? >> there are a number of options. when the invitations are ontario out there is a line that says let us know if you have dietary concerns. rather they are vegan, vegetarian or non-gluten it will be addressed. the whitehouse is a private home so the first lady wants to be gracious and having people coming into their home and be comfortable. so in many cases we go out of the way to make sure all of the alternative menus were offered. american wines from california and washington state -- the reasoning behind that? the whitehouse is all about highlighting american food, wine and entertaining.

so even though france has a story history of wine, we are pretty good at it. i was looking at the wines. it would appear we have a couple really, really good ones. again, i think they are in the french style but by american producers. i am looking at the sparkling wine. it would appear that it is montechello in virginia which is an interesting tie between jefferson and the french. i think they are going to be excellent wines. they are not well known but they are exceptional. >> and the logistics that go into this. this isn't a large whitehouse

kitchen and 350 guest. >> it is smaller than many people's home kitchens. it is sort of a little portion that is small, high powered and all of the staff that works there are talentalented and at top of their game. you are talking about a great team of professionals and an equipped kitchen. this is like a broadway opening. people are rehearsing and rehearsing. there is no margin of error. it is like a hotel or restaurant, where if it doesn't go well you get 10% off the bill. you have to hit this. that is the real difficulty of it. the dinner is well rehearsed but the pressure is there that there could be no slip ups. >> what advice would you give

the staff tonight? what have you given them in the past? >> the chef there now is exceedingly talents culinary and great eye and palate for design. she will have no problemxcuti problemxcuting -- problem executing -- i don't have words of wisdom because she is doing a super, super job. the only important thing is that everyone pulls together and realizes while it is a state dinner, the true stars there are not the chef or the service or the floral. it is the president and the first lady. >> walter was the former executive chef and the author of the book "whitehouse chef". now living in new mexico. thanks for being with us.

>> my pleasure >> you can join in on the conversation at facebook and share your thoughts about the state dinner for the french president. we will get more of your calls in just minute. we are told now that the guest of honor, the first lady and president on the south lawn, with tent setup with a monet-style them. we will see what it looks like inside the tent and the toast by the president and french president. but in the area known as the cross hall, the president, first lady and the french president in a receding line before they met with the 150 guest in

attendance. [music playing]

>> as they move from the private quarters to the state florida and went to the blue room, that is a standard protocol for the dinners? >> yes, they were coming from the private residence. what the social secretary does is stay to the gentlemen, well they are standing up there ready as they are all of the time, and they say are you ready to accept the colors. and they come down and do a dignified move and come down the stairs followed by the head of state and the first lady. >> they go to the blue line and they have a receiving line with 350 guest and that is a lot to shake hands with. >> it is.

but the social aids that you see in the photographs around the whitehouse are just wonderful. and they are so polite and nice at moving the guest through if someone wants to spend a little bit more time with the president chatting >> i know you have one story about being prepared for the unexpected and we will get to that. but first we will go to sarah from south carolina. good evening. go ahead, sarah. >> i wanted to ask how you talked about the staff earlier and how well they are trained and ready for anything. i would like to ask her as far as the number is concerned, how many aids does it take to make everything run smoothly from the start to the very end and be able to have everything cleared away? how many is there? >> gosh, i am from north carolina so i love your accent.

it varies on the set up the dinner. the flow is beautiful to see. you bring in wait staff that is trained very well and knows how to place the plates down all at the same time. i don't know how many. i think we have had as many as 50-60 waiters that move. it is like a butterfly show the way they move in and out. it is cleaned up by the time the next course is coming out. they are very well trained. but the numbers vary based on the table and how easy it is to move. you have 200 so you have to think about moving the extra staff around. >> tim is on the phone from

alexander, virginia. >> thanks for taking my call. i think you did a great job as social secretary. put i would like to know how did you make sure you got all of the etiquette and protocol issues just right? >> that is a good question. the preview social secretary are a great group. and now we have the first male social secretary. and we have been supportive of him. but they are a wonderful group that will help with anything. you can call and say what do you do in this situation. i worked with marsha who is the chief of protocol when i took over. so i could pick up the phone and is ask her anything.

she was so nice and lovely working with it: it isn't partisan. we were there to help each other. >> the formality of the event as you look at the wait staff and everyone in their finest. can this be stressful for guest? >> it can be. you wear clothes that are not comfortable. and they are walking on marble. but you sit down and have a nice dinner and the foods and wines are wonderful and you get to be entertained with wonderful ene ener -- entertainment --

>> we have our next caller >> how did you become social secretary? >> i was on the president's first campaign and wanted to serve in the administration so i was chief of staff for our trade representatives ron kirk. when the previous secretary, rogers went back to chicago, the president asked if i would do the job. it was a big ask but i am glad i did it was it was fulfilling. >> during the first state dinner, guest got in that were not supposed and things changed to make sure that didn't happen again. can you explain? >> i think after that happened people stepped back and said this shouldn't have happened and let's make sure every i is dotted and everything t is

crossed. we were more diligent and i went to bed with the guest list under my pillow and made sure every guest came through. >> the invitation is something you cannot miss in the mail because it is thick on heavy bonded paper and there is a lot to it. >> you can feel the print on it, too. it is wonderful. it is as a nice thing. it is the way things should be. >> there is a menu at the table? >> a menu people can take home as a keepsake. it has the menu and wine. >> i think we have the videos and we will show you as we hear from michael in west virginia. >> yes, thank you have taking my call. -- for -- >> i just wondering if michele

obama's mother take part in the planning and does she attend the dinners? >> she is a lovely women and took part in the dinners i did and took part in the tasting. she has great experience with that and can say what needs to be added and what would go better with this dish or side. she is a great asset to the tasting. >> can you put a price tag on what this cost the whitehouse? >> i think it varies. you know, there are -- it takes a lot to put them on. it can be a little pricier than your average dinner party >> the president is going to be travelling to france for the 70th anniversary for the d-day invasion. let's go to georgia. good evening.

>> good evening, caller. >> i am impressed by the protocol of you. i was a lucky person -- i am a united states citizen from pakist pakistan region. and i welcomed president in 1979. if there is a muslim guest, how do you serve them? >> if the head of state has dietary restrictions we know that way ahead of time. we work with their staff and find out if they have dairy sensitiveties or don't like b s

brusle sprouts or something. >> is there an exchange of gifts and how is that determined? >> there is an exchange of gifts. the protocol office at the state department does of the work. they are amazing and spend months on doing their homework. what does steve like? what are his hobbies? what are his favorite foods? they dig around and find out stories that would make a good gift >> what is the proper etiquette for, in this case, the president of france to send a thank you to the first lady and president? do they send a note? >> i don't think if i have seen a note if a note has come. it is hard to get mail into the whitehouse.

but i would imagine a note would be good. ... when we did china, we moved people from the state dining room into the east room. so they were able to have some coffee and move on to the east room. it varies. you know. dinner by dinner. >> final question, because i mentioned it earlier, you have to be prepared for everything, including a wardrobe malfunction. >> a wardrobe malfunction, yes.

it was not the first lady, they was president. saw, the private quarters, that usually takes three minutes. and while they are lined up waiting, the president is binding his jacket, the button pops off. >> host: the president of china. >> host: to 5 feet you know, president obama. and that took about ten minutes. so the guests were wondering ball was going on. we have of wardrobe malfunction and everything went smoothly after that. >> host: julianna smoot, thank you for being with us speech to take you so much. >> host: we want to share with you more from the winehouse. arriving shortly after 7:00 eastern time to be greeted by

the president and first lady. this is what it lovelock. -- what it looked like.

[inaudible conversations] ♪

♪ >> that was about two hours ago as the president and first lady welcome to the french president. now at this hour the french president and the american president toasting each other taking place in a tent that has been described by writers as a monet masterpiece. coming up shortly you will have a chance to see what it looks like inside. we cannot bring it to you live because of -- because of the logistics'. he will be a will to appeal it out and show it to you momentarily.

while the president of france was arriving, on the lower level guests were arriving. 350 guests invited for tonight state dinner and we will watch the scene as it unfolded late tonight. [inaudible conversations] >> ambassador charles rifkin. the our role cleveland, mrs. linda d. [inaudible conversations]

[inaudible conversations] mrs. rachael robinson. mr. norman siegel. ms. laura hold gate. >> mr. and mrs. ryan mr. charles adams jr.

[inaudible conversations] [inaudible conversations] mr. and mrs. kenneth ehrlich. [inaudible conversations] >> ms. constance's millstream.

[inaudible conversations] mr. and mrs. peter s. eliot. [inaudible conversations] >> mr. and mrs. richard plethora .

[inaudible conversations] mr. kevin smith. [inaudible conversations] correcting, mr. keith smith. mr. burton smith. ms. julie e. milliken. ms. roberta catherine and mist late -- missed rachael lagard.

[inaudible conversations] ms. liz simon. [inaudible conversations] mr. and mrs. john goldman.

>> the honor roll and mrs. harold rogers. [inaudible conversations] mr. and mrs. jack smith.

patrick. [inaudible conversations] [inaudible conversations] >> the hon. and mrs. mike donovan. [inaudible conversations] mr. and mrs. joe been some. [inaudible conversations] the governor of kentucky and mrs. bashir. >> misters steve it plans -- it

steve clemens. it. [laughter] [inaudible conversations] [inaudible conversations] >> mr. anderson this is steve holland. it jeff zucker and steve holland

, longtime white house correspondent for writers. again, you're looking at the arrival of the guests that began around 6:30 p.m. this evening in an area known as the bookseller. they then moved upstairs for a reception and then took a trolly a short distance on the south side of the white house for the actual debtor itself. the state dining room and east room not able to handle the 350 guests to honor the french president. so this is what the scene looks like inside the south lawn to and to to replicate a money money-inspired setting in much have that transportation of a spring-like the man and a test by the president of the united states in honor of the president of france. [applause]

[applause] >> a good evening, everybody. please have a seat. [laughter] michele and i are so honored to welcome you to the white house as we host the president and his delegation for this historic state visit between our nation, the first in nearly 20 years. and our press conference today i quoted the son of france in 1831

set out across our young country and a chronicle of our american democracy as those are always amazed this nation of ours and captured its. as well as anyone ever has. tonight i would like to share some of his lesser-known observations about american dining, the absence of wind in our meals which first struck him as very disagreeable and still cannot understand a multitude of things that americans succeed in introducing into their stomachs. some things did not change. when francois came here years ago to study i suspect he said the same time. about the white house, but the traveling companion wrote the president of the united states occupies a palace that in paris

would be called a fine private residence. and he wrote -- and i very much can relate to this, the power of the king of france would be know if there were modeled after the power of the president. [laughter] and he did not have to do with the filibuster. one young american lawyer went to paris and was deeply moved to see white and black students studying together. and that was charles summer who became one of our greatest abolitionists and helped to end slavery in is one of the reasons that all of us can be here this evening as full citizens free in the cool. it is true that we americans have grown to love all things french, film, food, wine,

especially the wind. but most of all we love our french friends because we stood together for freedom for more than 200 years. tonight i want to pay tribute for the principle of and principal careers that he has shown on the world stage. i thank you, francois. we started this busy yesterday at monticello, and i would like to and where we began. thomas jefferson wrote trope -- so as the troweled inhabitants of any nation on what country on earth would you rather live. certainly in my home when my friends to our relations in the earliest and sweetest affections and recollections of my life. but jefferson added, which would be your second choice. france, of course. and so i propose a toast.

to our friend and partner who all of our friends from france or here today. god bless america and long live the alliance between our great nations. >> here here. >> cheers. [silence] >> i think it is right here. [inaudible question] [applause] [applause] >> mr. president, members of the congress and french parliament, ladies and gentlemen, i hope a

translation exists. [laughter] i would like to thank you, mr. president to muffle the warm welcome they you have extended to me and my delegation. france and the united states of america are tied by history, french citizens such as lafayette who fought alongside the heroes of independence to when your freedom, freedom to preserve. the glorious history of the americans who came to fight during the first world war and then in june, 1944, to lead the european continent from oppression. this have to and it was a great moment in the great honor to

applaud your unknown soldier with the french vision of honor and a word veterans of the civil war. i promise, we shall never forget that. [applause] more, after september 11th 2001 terrorist attack on that for a full day bureau all americans. this is the very reason why we have come together. now, i will speak french.

[speaking in native tongue] [speaking in native tongue] [laughter] [speaking in native tongue] [speaking in native tongue] [speaking in native tongue] [speaking in native tongue]

[speaking in native tongue] [speaking in native tongue] [speaking in native tongue] [speaking in native tongue] [speaking in native tongue]

[speaking in native tongue] [speaking in native tongue] [speaking in native tongue]

[speaking in native tongue] [speaking in french] [speaking in french] [speaking in french] >> i raise my glass in honor of america, the president, barack obama, the united states. [speaking in french] [applause]

[speaking in french] >> we have feelings for one another. we love the americans, and you love the french. [laughter] we share the same universal values, freedom, democracy. we have been defending these values together. the french armed forces are able to rely on the support provided by the u.s. soldiers and equipment in the central african republic. your support as accompanied our operations aiming at restoring security in this country torn by a violence between religion. see whether we have removed the unacceptable threat of an iranian nuclear weapon.

we have succeeded in reaching an internal agreement in syria. we together removed the threat of force, the threat of a worsening situation and managers to force the regime of assad with the stockpiles of chemical weapons and together we are looking resolutely for a political outcome so desperately needed. to get a french and americans also want to work for growth and introduce a new rules that will prevented financial crisis and enable us to fight more efficiently against. [inaudible] the strength and robustness of the american economy is a source

of hope for all countries provided that we'll -- open our markets. we will succeed. together we will also rise to the challenge of climate change. hosting their conference in 2015. it is up to us to convince our major partners to take the necessary steps before it is too late, and i know i can count on your commitment. mr. president, the relations between our two countries have reached an exceptional level of closeness. there is one simple reason for that. we share the same vision of the world and share a mutual respect the united states of america and france are two great nations. what is expected of them is to keep the promise, the promise of freedom and the promise of progress and also to keep the

dream alive, that same dream that made by jefferson, washington, lafayette commanded french revolutionaries, the dream to change the world by uniting our forces, united -- uniting our talents, we will be able to keep the flame of hope alive. i raise my glass to the president of the united states of america and to michele obama. long live the united states. along with france. [applause] [applause] [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute] > president obama will welcome

benjamin netanyahu to discuss the ongoing middle east peace talks, iran's nuclear programs. the white house released a statement saying in part the prime minister's visit is a demonstration of the bonds between united states and israel and range of security issues. u.s. house with a shortened week . republicans held theirs at the same location. while democrats arrived today, the conference kicks off tomorrow with discussions on immigration and minimum wage as well as speeches from president obama and vice president biden. he will be there tomorrow. maryland governor o'malley will speak and president of the world bank. we'll hear more from the democratic leader nancy pelosi. set for 6:00 p.m. eastern and we plan to bring you live coverage here on c-span. because of the impending storm, the house got out yesterday and

finished up their work. senate passed the extension, the suspension of the debt ceiling which passed the house yesterday and passed the senate today 55-43 and passed a bill that would repeal the one percentage point reduction in the annual cost of living increases for military retirees. both that bill and the debt ceiling bill expected to go to the president shortly for his signature. >> the context is that lee enjoys someone who counseled acceptance and submission and resignation to the situation. and that is always struck me -- it's a series that doesn't add up in a sense and we know lee was the most prestigious man in the south we no that they didn't

submit to the political will that southerners began to contest the northern understanding. and contest them through political means and violent means and what i found is that in the eyes of confederates, he was a symbol of an bun bowed pride and kind of measured defiance. >> rethinking grant and lee, saturday night at 10:00 eastern and sunday morning at 11:00, part of a three-day presidents weekend. >> the new c-span.org access gives you access to political events with more added each day through c-span's nonstop coverage of national politics, history and nonfiction books.

find our daily coverage of official washington or access more than 200,000 hours of archived c-span video. everything c-span has covered since 1987. and our video is searchable and viewable on your desk top, tab let. the new c-span.org makes it easy to watch the what is happening in washington and find people and events from the past 25 years. most comprehensive video library in politics. >> the president of the heritage foundation said there needs to be immigration reform but now is not the right time to do it. former senator jim demint spoke at the summit.

agenda with democrat control in both the house and senate system of we looked at all this and said, if we're serious about the heritage foundation about building an america where freedom, opportunity, and civil society flourish, we need to do something more to make sure our policies get across the finish line. that's why we started heritage action of after four years of being in business there are three things that are necessary for conservatives to do to ultimately get our america built. the first, and everybody learn this is in fourth grade civics, some people in the d.c. establishment use it as a trump card to tell any conservative who does something different.

it's undoubtedly true we won't build the america we envision unless we win elections. however that's a necessary but not a sufficient condition for getting our ideas across the finish line. it's very popular here in washington, d.c. to say washington is broken. washington, d.c. is not broke . washington, d.c. is a finely tuned machine that aimed at expanding government's power, picking winners and losers in the economy and making sure those have access -- those who have access to the corridors of power, those who have access to the lobbyists who run this town, get the kashouts in the tax code, get spending in their favor, get the regulatory regime written in a way that allows them a competitive advantage over those who might want to break in and disrupt incumbent businesses. washington, d.c. is a town where good ideas go to die and until we break the status quo bias,

conservatives will never have victories. that's the second condition for conservative victories. the third is bold ideas. americans are desperate for bold ideas. they're desperate for bold ideas that are not about left or right but about uniting americans and making life better for all. that's what we're here to talk about. we have a fantastic roster of people talking about issues from school choice to access to energy, what we can do about cronyism in financial markets and all the way through the agenda. fighting the status quo is what gets you headlines. heritage action is proud of the headlines we've gotten for fighting the status quo. but we're also looking to introduce ideas to make life better for everyone in this country. that what we're working hard to do. i can't think of a better person to lead off the discussion today then our first speaker. he's someone who needs no introduction.

around the country this august, i introduced him simply as the real "mr. smith comes to washington," i'm pleased to introduce senator jim . mint [applause] >> thank you, mike. good morning, everyone. ladies and gentlemen, and members of the press, thank you so much for being here to join us today. i'm pleased to welcome all of you to this very important policy summit. i thank heritage action for hosting us today. i'm also very grateful to the many members of congress who will soon be speaking. i appreciate them taking time out of their busy schedule to join us and share their ideas. in addition, a big thank you to all the policy specialists from here at heritage and elsewhere who have lent their expertise to shaping these ideas and will be part of presenting them here

today. sometimes it's too easy to caricature conservatives as people who are more interested in stopping bad legislation than romoting good legislation. i know this is not true but i suppose at times it's tempting just to sit back and be snide about the many failures of modern liberalism and big government. with examples like detroit and obamacare, sometimes it's just oo easy. but even with such easy fodder, we can't give in to the temptation. we're conservatives first and foremost because we know that conservative ideals will do the most to make life better for all americans. we have ve concrete solutions to build upon the successes of the past and realize the potential of the future. crucially, much of this requires the cleaning out of the cobwebs

and rust which have gathered in too many federal laws and antiquated federal tax code and regulatory regime that cannot address america's current challenges. in short, it's time for real progress. as the great c.s. lewis said, we all want progress. but progress means getting nearer to the place where you want to be. and if you've taken a wrong turn, then going forward does not get you any nearer. if you are on the wrong road, progress means doing an about-turn and walking back to the right road. and in that case, the man who turns back the soonest is the most progress i man. unfortunately, there is -- is the most progressive man. unfortunately, there's nothing progressive about the progressive establishment here in washington. it cannot turn around. it is blocked by a berlin wall of the mind, trapped behind

policies that promote subsistence, not independence. control, not freedom. and then endless gray concrete of centralized power. the men and women who will shortly take this stage have looked over that middle -- mental barrier and seen a new landscape, one where problems are solved, not subsidized. one where citizens are entrusted with the care of their own families and communities. one co-alreadied by opportunities as diverse as the millions of lives in this great nation. today we'll be looking at the path act which which representative jeb hensarling has introduced to diso the bumbling fannie mae and freddie mac and encourage private investment and innovation. we'll look at the power act into deuced by senator tom graves and mike lee. it lowers the gas tax, cuts red tape and returns funds and

decision making back to the same localities that know best how to use them. senator lee is also going to rebro deuce the welfare reform act along with representative jim jordan, which not only saves taxpayers hundreds of billions of dollars but puts social assistance back on track, getting people into jobs and out of poverty. we'll be hearing about the hero act which takes school accreditation out of the hands of federal bureaucrats and puts it at the state level while lowering the cost of higher education for students across the nation. representative raul labrador will walk us through the marriage and religious freedom act which enjoys broad bipartisan support and prevents government discrimination of any person, church, business, or other institution based on their traditional view of marriage.

these policy do not arise from lobbying of special interests. they are for the benefit of all americans. they were not designed to serve those who work the halls of power but those who sweep them late at night. if conservatives in congress wish to return to their seats this november with a mandate from the people, the ideas presented today will help secure that mandate. it's not sufficient for conservatives to run against agendas, they must advance ideas and legislation that will build a stronger america. a mandate to lead without a plan, without a proposal, without original legislation is no mandate at all. it is simply a continuation of a broken, deadlocked status quo. already, there are rumblings of huge, contentious pieces of legislation we might see in the coming year. these bills, as always, treat

the law like a club. when some 50-something members of congress bludgeoned the other 40-something with ideas they don't like. like the disastrous obamacare initiative, they attempt to address an issue all together in one grandiose action. legislation stretching into the thousands of pages, unready the very people who vote for it. they invariably increase spending and our national debt and create more problems than they solve. they're divisive to legislators themselves. when enormous bills are rammed through congress, it destroys any hope, any reason, to reach across the aisle and cooperate on improving our system of government in ways that are agreeable to everyone. perhaps worst of all, they divide our fellow citizens. it's not just a matter of political disafwreem.

we'll always have that. i think we can always fine a way to benefit from political disagreement. the unity americans have with each other does not arise from quashing those communities with different believes or -- beliefs or opinion bus allowing them to govern themselves according to their own beliefs and values. with so many different viewpoints and lifestyles and cultures are forced into one mold, resentment replaces love for one's neighbor. public affection turns into public enemyity. patriotism into ambivalence. i ask the leadership of the house and senate, regardless of party, to leave this ham fisted approach behind. instead of wasting time forcing the country into one size fits all policies, take the opportunity to genuinely consider the ideas we discuss ere today. and allow for open debate on these and other proposals that could improve the lives of many

americans so easily and so quickly. i am confident that these ideas if allowed to inform our laws and way of governing will make the first great stride toward the three things we all wish to achieve. a strong economy, a strong society, and a strong america. let these both be our goal and our starting point. no matter our parties or philosophy, we can unite if we recognize we're running in the same direction. the agenda, this agenda you'll hear today to unite america has the promise to give aid to those disadvantaged by circumstance, opportunity to those trapped by bureaucracy, and protection to local values and endangered -- by local valued endangered by national meddling. these ideas can bring people together once more in appreciation for each other,

their country, and i dare say it, even our government. thank you and i look forward to being with you here today. [applause] >> jim has some time to take questions if we have them from the audience. anybody want to jump on first? jim, zsh >> jim can you start off and talk about your experience in the house and senate in terms of bold ideas when you were capable of moving them forward, what some of the hurdles were to getting those going? >> i better stand over here where there's a microphone. it's never easy to move things through the house and senate but i will say when i first came to the house, mike -- i was elected in 1998, there was certainly much more bipartisan working together. all the bills that i introduced, we had a bipartisan or democratic co-sponsor, and --

but what i have found, not so much in washington, that america is hungry for bold ideas and clear leadership. certainly the polls are clear that they're pretty disgusted with congress in both parties. but what we found in the last year, we talked to people all over the country, students, minorities, people from all walks of life, is there is broad agreement on the things that we're talking about today. even, i think folks who have -- who have had a liberal mindset for a long time are starting to see that the federal government, despite good intentions, cannot do the things they're promising to do. they have not been successful running our schools. health care appears to be a disaster. but we see states opening up so many new opportunities. it wasn't too long ago when the

president said we were out of energy as a nation. but now that states have moved around all federal lands around federal regulations with new technology, we found we have enough gas, natural gas, oil to ast 100 years. lowering the cost of energy and creating vibrant economy. so the bold ideas, mike, we see moving at the state level more than the national level. we can see choice in school creating opportunities for at-risk and poorer children who had no opportunities before. we see families with jobs because states are developing energy. we see a lot of states solving the health care issue in ifferent ways. so these are not just pie in the sky ideas we're talking about. a lot of what you hear today is just taking the -- a need a legislative idea, and moving the power and money back to the states and doing the things in washington that we need to do, doing them better and more effectively and more efficiently and hopefully at a her -- lower

ost. so i'm confident that these ideas, these are not huge things like tax reform or entitlement reform that we know we can't get done this year. but the things in education we're talking about, the things in transportation, i know that there's a number of democrats who support them because some of the ideas have been introduced efore. so i'm optimistic that if we take these ideas to the american people, that's the whole idea of heritage action is not just to take them to the hill but take them to the american people, inspire the american people with these ideas and then in that, hopefully we'll create a consensus with their legislators to get something done. >> [inaudible] the discussion of amnesty and immigration, i'd

like you to talk about the olitics of that issue. >> well, i think the broader issue just these comprehensive thousand-page bills, we see the damage that they can do. and the pattern in washington now is to introduce them and pass them within two days before america has a chance to find out what's in it. that's what happened with obamacare, dodd-frank, and they would love to do the same thing with the huge immigration bill. that type of bill, it will divide our country right now. and we need immigration reform. but as we've talked about at heritage, we don't need this big conglomeration of comprehensive bills, especially at a time when americans have lost the trust in this president to faithfully carry out the laws. there are immigration laws on the books that the president is ignoring.

so how can we in good faith say, yes, we'll give an amnesty now and then the president is going to fix our borders and handle workplace enforcement and do the guest worker visas that we need. frankly, this is not a good time to do it. i believe that we need immigration reform, heritage has a step by step proposal that i think will earn the trust of the american people, unite the country around an idea and i think restore the -- this whole idea of our heritage of immigration which we certainly support here. ut with this president, what he's done with obama kaye and arbitraryly enforcing our laws, how he's misused the i.r.s. against his political enemies to give the president the authority that would come with this giant amnesty bill does not make sense. >> daniel patrick moynihan said

you have the right to your own opinion, you don't have the right to your own facts. i had the opportunity to have a lovely exchange with david brooks on "meet the press" about the immigration bill and there's a misperception that there's an immigration bill in washington, d.c. that would give america the modern immigration system that it the serves. there's not. there's a corporate cronyism bill in the senate that's masquerading as an immigration bill that was written behind closed doors by this afl-cio and chamber of commerce and it would do a disservice to this to allow a corporate cronyism bill to pass, to make us all feel better about doing immigration reform and miss a chance to modernize the system. we are eager to work on a step-by-step possess to work on immigration reform. unfortunately there's nothing to work with here in washington right now. >> today we're going to hear, i'm certain, a number of

conservative ideas, heritage foundation, heritage action has done a great job in advancing them but to get them to become law, what plan do you have to get the senate democrats even to consider them and get them passed -- get them past harry reid or do you plan to take the ideas to the states where there are republican governors and republican legislatures that would have a propensity to be more support snive >> the american people have the right to be presented with a choice. i think that one of the things that we regret about the last three or four years is that they have not been able to have that level of choice because house republicans frankly haven't pursued a bold agenda. think back to the fiscal cliff debate of a year and a half ago. if you'd gone into a debate and said to the president of the united states, we just passed a tax reform bill that would have been pro growth, wouldn't have been worried about picking winners and losers but instead making life better for all americans, that's what we want, to use this opportunity, to use

the unfortunate opportunity of the fiscal cliff to do that. if you're not willing to do that, we'll maintain the status quo of keeping the bush tax cuts because now is not the right time to raise taxes. that allows the americans to see that there's a conservative agenda, that works for all americans, not americans who have access to lobbyists who can get a 0% corporate tax rate. we're here today to talk about those bold ideas. we hope that the people in the senate, the president, anybody in washington will look at those bold ideas and say, this is what what's right for america. frankly, we're skeptical. there's a status quo bias in this town that needs to be broke. we're committed to break it. bold ideas, we think, will work at the ballot box and we think anybody that works on bold ideas will result in electoral success. but right now there's -- there's not a conducive environment in washington, d.c. to advance a

gold agenda that's good for all americans because this town is where bold ideas go to die. so it's not to be done in the next six month bus the process of starting that process is what we're here too do right now. >> are you advancing some of these ideas -- >> let me jump in here. that's a big part of what we do. our folks at heritage are traveling all over the country, working with states, particularly in the area of school choice, right to work concepts, so we can stand here in washington and point to states that are working and working with these ideas and by promoting them i think we're encouraging other states to do them but as mike said, showing the world that conservatives have an alternative to what's going on here in washington today. that's been the real weakness, i think, in the last few elections is the idea that the economy is so bad, gas prices so high, it was going to take the democrats and obama down. that doesn't work that way. americans need to know what we

stand for. you'll hear part of that today. certainly this is not our whole solution for 2014, but you should take a look at that if you're interested and ideas that can build a better america. what we want the country to know is that the ideas that we're talking about really unite people. we have seen that all over the country. they agree with our ideas. sometimes they don't like the packaging of republican or democrat but the country is not nearly as quided -- divided as washington makes it out to be. if we can present ideas and we've seen it with school choice, for instance, juan williams helps us with school choice. minorities all over america are seeing that this is a way to get kids out of failing schools and into schools that are working and safer and get more opportunity. by doing this, i think we'll help pull the country together and hopefully show both parties that the right ideas are also good politics.

>> i thought maybe you'd make some progress there since it's een going on for 75 years. >> i'll let mike comment on that but we did make progress in the sense that we helped americans see. i think for the first time the farm bill wasn't a farm bill. 0% food stamps and the spending -- 80% food stamps and the spending on food stamps increased dramatically. they cut it back a little bit. if we hadn't forced a debate on it, there wouldn't have been any debate on food stamps or farming. i think we made it harder for them to drive through a farm bill without real reforms. we'll be working on that every day between now and then. mike, you were on the front lines of all of that. >> that's a great question, it el straits the problems in washington we're here to address today. you can't find a single policy expert from right to left who

thinks america has agriculture policy that makes sense. the peterson policy did something a few years ago, coming up with plans going forward and all of them said there needs to be changes to the agriculture policy. yet when the deal is struck three weeks ago, the media and nerve washington, d.c. said, bipartisanship has broken out in washington, d.c., washington is working, something got done. well, something got done in the sense that it passed but america did nothing to move our agriculture policy forward toward a modern, 21st century agriculture policy would look leek. instead we kept the same soviet-style ag policy this country has had for decades. i'm hospitalistic, we have gone through two years of frankly unpleasantness that none of us want to be caught up in over a farm bill. i'm optimistic that the house agriculture committee, the senate agriculture committee,

committees in the past that have had very little interest in meeting with policy experts to talk about what a 1st century -- 21st semplingry pardon me bill, will use the next few years before we have to go through one of these again to think outside the box. we've had members of congress express interest in sitting down with us and figuring out, when we have to do this again in five years, what's good policy, not just what's the status quo pushing forward but that's what's happening in washington. the farm bill is a perfect example but you see it in every other bill that goes forward and i think today is the start of turning that around. >> more from the summit in a moment. half an hour, we'll go live to a briefing with house democratic leader nancy pelosi fpblets they are previewing the maryland

retreat. that briefing scheduled for 6:00 p.m. eastern and you can watch t live here on c-span. >> all americans know we must ensure roofs over the heads of our citizens. since the 1930's. federal government has distorted housing markets through the operation of fannie may, freddie mack and the federal housing administration. taxpayers are responsible for $4 trillion in the mortgages and mortgage-backed securities. yet despite the heavy involvement of the federal government, home ownership rates have barely risen in the last decade. 1968 home ownership was at 63.9%.

the recent data has it at 65%. congress should wind them down by repealing the firms' federal charters. both entities distort the market by shoing mortgage-backed securities. over the last 10 years, nobody has been a better friend to the american people in congress than congressman jeb hensarling. many americans are unheard in d.c. 33,000 lobbyists conspire to make d.c. the city where bold ideas go to die. those who afford lobbyists get taken care of on capitol hill with tax loopholes, regulatory relief and special spending projects. jeb hensarling, chairman of the house financial services committee has worked tirelessly to promote bold policies. i look forward to hearing his remarks on protecting the

taxpayer and homeowners act. ladies and gentlemen, please join me in welcoming congressman jeb hensarling. [applause] >> mike, thank for the kind introduction, but i must admit i'm sitting here following senator ted cruz to something called a conservative policy forum. who have i upset at heritage action? [laughter] >> i was hoping the senator wasn't having a flashback thinking this was a senate floor and going to speak for a full 21 hours and i'm glad there are three of you still left in the room to hear me. i want to thank the heritage foundation for preserving what we all know president reagan

called the last best hope of man on earth. and it's not just enough to celebrate our heritage of freedom and opportunity, we have to act on that heritage and thus was born heritage action. and i want to thank them for their good work in helping be at the tip of the spear to keep our valuable american exceptionalism alive. now, personally, i have been speaking about housing finance for quite some time in my congressional career and it's recently been a hot topic in washington. what i did not know is that all of a sudden, it has gone global. now, just in case you missed this little news item just the other day, i read that based upon our success in the united

states, nigeria is now setting up its own version of fannie mae. 'm not making this up. doesn't nigeria have enough problems already? i want you to know i'm not an investment adviser, but personally if i get one of these strange emails from one in nigeria wanting me to bring me in on a great real estate deal, i'm going to pass it up. maybe it's just me. you can do what you want. i'm going to take a pass. i have been concerned about housing finance reform, not simply because i'm a policy person about housing, but i care about freedom and opportunity, as do most of you in this room. and the simple truth is america cannot have a healthy economy unless we have both a healthy

and sustainable housing finance system. regrettably that is not where we find ourselves today in america. we do not have a healthy and sustainable housing finance system because we lack both freedom and opportunity. so where are we today in america? today, hard-working taxpayers have been forced to engage in the mother of all taxpayer bailouts. nearly $200 billion to bail out fannie mae and freddie mac. today, taxpayers remain on the hook to $5 trillion. mortgage guarantees one-third the size of our entire economy weighing in at roughly $42,000 per american household. ladies and gentlemen, that is unfathomable. and because of the dodd-frank act, think of the obamacare for credit markets. washington elites decide who can qualify for a mortgage and who

cannot. that is unfair. changing this unsustainable, unconscionable and unfair system is why the house financial services committee, that i have the privilege of chairing, has recently approved the protecting american taxpayers and homeowners act known as the path act. instead of a system dominated by government control of the housing market, the path act offers an alternative vision, where housing finance systems relies on private capital and market discipline. the path act includes four fundamental goals essential to the development of any free competitive market. first, it clearly defines and limits the role of the states. second, it removes artificial barriers to private capital in order to track investment and encourage innovation. and provides market participants with clear, transparent and enforceable rules. and fourth, it empowers

consumers with more options with more informed choices, so they, not washington bureaucrats, can decide which mortgage products best meet their needs. it begins by ending once and for all the failed re inch n of them, the government-sponsored entities that were at the center of the financial crisis. additionally, it will repeal their misguided affordable housing goals. we all know that affordable housing is not spelled g.s.e. but spelled j.o.b. and regretly jobs are in short supply under this administration. now much has been said by the critics about the so-called need to have fannie or freddie or their equivalent in our housing finance system. we should begin by knowing that

the u.s. is practically alone in the entire modern industrialized world by having government-sponsored enterprises guarantee mortgage securities. the u.s. is practically alone in the level of government direct subsidy and intervention into our housing market. and guess what? we were also practically alone in the level of turmoil in our housing markets as measured by foreclosures and delinquencyies. i possible it to you, it is a direct causal link. by almost any measure, they have not propelled the united states to housing finance nervana. we are compared to other industrialized nations, whether we look at rates of home ownership or look at spreads between mortgage interest rates and sovereign debt, the u.s. can be found somewhere around the middle of bock of the pack.

there is one unfortunate category where the united states has clearly led, and you guessed it, that is foreclosure rates. only in america can you find a government that subsidizes more so we, the people, get less. but we do not have to look overseas to see a well functioning housing market without government-sponsored enterprises and don't have to look any further than our own market that has successfully operated without them. the jumbo market was approximately 20% of the total housing market. and in that market, we found capital. liquidy arket we found and fix mortgages and consumers choice and innovation all right here in america. all of that was delivered for 25 bases points or one quarter of 1%, interest differential than what was provided by the government-sponsored enterprises.

i would say a modest amount in order to avoid taxpayer bailouts, government control and economic catastrophe. and by the way, whatever moderate interest rate buydown the g.s.e.'s delivered to home buyers, it was offset by some extent by artificially driving up the cost of housing, helping inflate our housing bubble. so in other words, it is not self-evident that the g.s.e. ever made the home buyer better off. i have heard there are arguments for preserving the g.s.e.'s and the arguments are they are standard bearers. there are aggregateors for small lenders by purchasing loans through the cash window and provide a conduit for small originators to access mortgage eninvestigators through the issuance of mortgage-backed securities and these are functions that are indeed helpful to our marketplace.

thus the path act ushers in a new system of private housing finance providing clear and transparent disclosure of mortgage data, giving certainty to contracts and their enforceability and creating an open-end access utility for mortgage-backed security issuers . the path act reforms the federal housing administration, because you will not have true housing reform without it. otherwise, ladies and gentlemen, you are simply push a onend of the failed balloon only to have it bulge out on the other. with the path act, the f.h.a. will have a clear and defined and limited mission, one that people traditional associate with the federal housing administration and that is helping first time and low to moderate-income families while preserving a countercyclical

role. the path act take the f.h.s. l -- f.h.a. out of hud. with the tools and flexibility it needs to fulfill its mission in a financially sound, less politicized manner. now more than ever these reforms are critical. just last september, the f.h.a. became the latest recipient of a tax-funded bailout, the first in the f.h.a.'s 79-year history and i believe without the path act, unfortunately, i doubt it will be f.h.a.'s last. it is a bailout the that has $1.7 billion added to our national debt which i agree with our former chairman of the joint chiefs of staff admiral mike mullen is the single threat facing our nation today. if any of you ever attended or watched proceedings of the house

financial services committee, of which i chair, you will see us run in real-time a continuous display of the national debt clock. it serves as a constant and sobering reminder of the threat. it is something that must loom large over issue we debate in the committee room and indeed on capitol hill. our national debt under president obama is unsustainable, unconscionable and i believe immoral and it must come to an end. not only will a bankrupt f.h.a. help no one. a bankrupt america will help no one either. the path act will put the f.h.a. on the right footing so it can fulfill its mission safely and soundly. some critics have called putting private capital in housing finance as quote, unquote, jide logical. i believe what is ideological is

being vetted to a status quo, which condemns the american people to a never-ending cycle of boom, bust and bailout. some have asked how the path act will impact the 30-year fixed rate mortgage that has been the traditional mortgage relied upon by so many. it will continue to exist. the path act will not change that. the path absent is the only housing bill before congress that specifically protects the 30-year fixed rate mortgage, and other bills do not mention it. the path act is designed to keep mortgage rates low on non-government 30-year fixed rate mortgages. to help level the flage field between big and small institutions and protects consumers by giving them more choices. i should note although the path act will preserve the 30-year fixed mortgage, importantly, it

will not steer people into the 30-year fix d mortgage. it may be the right product for some, but not the right product for all. the real threat to homeowners and financial institutions again is the dodd frank act. moody's chief economist, mark zandy has testified that dodd frank could increase mortgage interest rates one to four percentage points. and reports half that the mortgage loans made last year would not comply with the dodd-frank rules that went into effect just last month. in short, dodd-frank could cut the number of mortgages in half and double the cost of those that remain. and that's why the path act will reverse many of the most harmful regulatory burdens of the dodd-frank act that had been imposed upon consumers and

businesses alike. let me conclude with these thoughts. as our nation charts a path forward on housing reform, many will maintain that we are having a debate between house and no house. i disagree with that framing. i think the real choice is whether or not our generation is going to perpetrate a system that demands for house for us so that our children in turn receive less house tomorrow. if so, what an unjust inheritance we leave the next generation. and that's why this debate matters so much, because when it comes down to it, this really isn't a debate between whether or not we afford the granite tops or the tile countertops or a debate about basis points or fixed term loans. in many respects, it even transcends the issue of housing finance itself. ladies and gentlemen, it is

about freedom. it is about opportunity. it is about sustainability. it is about keeping faith with our founding fathers and our forefathers so that we leave our children an america where they are bound only by the size of their dreams. and we protect that portion of the american dream for those who work hard and play by the rules and want to have a home that they can actually afford to keep. i thank you. and i thank heritage action for the opportunity to talk about the path act today. thank you. [applause] >> our two panel members, research fellow at financial services and director of

financial regulations studies. and if i could start with you, a year ago, the heritage foundation spent significant time came out with four studies looking at the impacts of shutting down these g.s.e.'s, can you talk about that and what it would do to our economy? >> we relaunched one of those papers. but basically, what you see is that the interest rate subsidy which has been going mostly to the g.s.e.'s and not to individuals who buy homes or mortgages, is rather small. and if we get rid of it, we predicted a relatively small impact on the economy in general and naturally, we are actually predicting a lower cost of home ownership. we have less debt, which is in many cases a good thing. a slightly lower monthlydown

payment. slightly lower home prices in response to the interest rate. and incidentally, that is why the realtors are against these reforms because they don't want housing prices to drop. that's the quick version. of course, there's more in the paper. >> we do have it outside. >> going forward, it is suggested that lenders look to government entities for guidance on underwriting criteria, does this approach to the problem that contributed to the financial crisis? >> it supported it. let me emphasize a bigger point. when we talk about f.h.a., we are not talking about subsidies for home ownership but subsidies to home debt. i find it amazing before 1960, the majority of homeowners owned their homes free and clear. it was your house, not the bank's orphaney or freddie, it

was yours. but that said, one of the problems before the crisis was, the government really put its thumb on the scales in a very big way that drove mortgages to the government and you are seeing this reinforced by d.o.d. --- dodd-frank and it really and also has to do with the qualified residential retention rules but all of these rules come together and push the incentive for servicers to sell their mortgages to the government rather than retain it themselves. at the end of the day, part of the problem is we have set up a system that it is difficult to deny loans or to foreclosure loans or charge to cover that risk. the only way someone is going to take that is if the taxpayer is on the hook. i think we need to start with fannie and freddie and f.h.a.

but our entire system of finance , all of these come together and address our mortgage system. >> mr. chairman, help us to understand coming out of today, it wasn't a problem with senator going t what can we do forward? >> fannie and freddie have been around for quite sometime, fannie dating back to the new deal. freddie coming about in 1970. , ople who have built a system careers based upon government guarantees or loans to give them up. so the lobbying has been quite strong. and if you believe that ultimately to have a sustainable system of home ownership to end

the system of boom, bust and bailout, that we need to transition to a competitive marketplace. you have to have your voice be heard. i have been a member of the house financial services committee for 11 years and i would say those who have attempted to protect fannie and freddie and the status quo have presented the strongest lobbying that i have seen in the jurisdiction of that committee and they aren't letting up. a vacuum. abhors politics abhors a vacuum. exercise your constitutional right to have your grievances redressed and let your voices be heard, but need to be heard

soon. i'm fearful, the wind, the opportunity to address this at least in this congress may begin to fade. i need not tell you, it is challenging to get anything done in divided government. and i think history will show us that the closer we get to election day, it gets even more challenging. there is not too many things i agree with the obama administration on. but we all know the old addage about a stop clock at least being stopped twice a day. they are actually right in willing to end fannie and freddie. there is an opportunity here, i think. but if it doesn't get done my guess is in the next several months, the window will probably pass. and unfortunately more debt -- every day that freddie and fannie remain is a day that gets

stronger. >> let's go to the audience for questions. to hat's' obama's incentive end fannie and freddie? >> you are asking me to psycho-analyze the president? i may be a little uncertain here on what -- listen, this is a very valid question. you always want to know what is motivating one to do this. and i have some trepidation in that what i do not want to see s a ruse or a guise to where fannie and freddie are essentially put into the federal witness protection program, given a new name and cosmetic

surgery and unleashed on an unsuspecting public. i assure you whatever president obama will sign into law is not going to be identical to the path act. but right now i'm having a tough time envisioning a system that is worse than the one we have, although i'm sure this administration is quite capable of it. [laughter] >> you guys do this professionally and what you do for a living. you have a chairman who is leading in a big, bold way. how big is this what chairman hensarling is proposing to do? >> let me start out with the bigger picture, to me, fannie and freddie were part of the financial crisis. they weren't the only cause, there were a lot of other causes. and if we had not had in this financial crisis, i don't think we would have had obamacare or

this expansion of government. the new deal came out after the great depression. the point i want to emphasize is, when we have big financial .ries cease, it provides covers but also going to provide the environment for the next big expansion of government. if we want to attain these financial cycles, fannie and freddie is the place to start, not the place to end but place to start. >> and a big task. we have to remember there was a 1934 act that gave us fannie mae but didn't authorize the creation of a federal agency. after world war ii, continuously after world war ii, different presidential administrations have tried to privatize fannie mae and both g.s.e. and we haven't been able to eradicate

this problem since it started. >> it's very easy to think, here are two companies, what's the big deal. if you add all of the debt together that fannie and freddie have issued, it is greater of all 3,000 companies on the nasdaq. these just aren't two random companies but two companies that dominate, debt is about $16 trillion now. their debt is about $6 trillion. it's quite capable to the size of the national debt so you can't care about the deficit and not care about fannie and freddie. they are also a big foundation in a bad way in our financial system. banks are full of fannie and freddie debt. the repo markets are full of fannie and freddie debt. if you want to end too big to

fail, you have to start with fannie and freddie. there is no one who is bigger than these two institutions. >> in 2008, one of my colleagues thought, you have two insolvent companies, we have to get rid of them. how hard can -- how hard can that be? and here we are five years later and still hasn't happened. >> what do you think that tells us about the administration's real position on house regular form and what should we expect oming out of it? >> i'm supposed to be meeting with my former colleague soon, looking to my trusty staff, i think he's reached out.