like it, and hold from orbit as it passes the sun. like a stream that needs a boulder halfway through the wood. who can say if i'd been changed for the better. but because i knew you, i have been changed for good. it will may be that we may never meet again. in this lifetime so let me say before we part so much of me is because i have learned it from you and you will be with me like

a hand written on my heart. and now no matter how our stories end. i know you have re-written mine by being my friend. like a ship blown from its mooring like a seed dropped by a skybird i don't know if i have been changed for the better, i do believe i have been changed for the better and because i knew you because i knew you because i knew you

i have been changed for good. [applause]

>> as it says in the book of james, the testing of our faith produces perseverance. perseverance. we have learned that in boston this past year. all of us. we have built it, we have seen it, we have shared it. for the families who lost loved ones, for those recovering from injury of every kind, it is what life is all about now. it is about dancing again after losing a leg, it is about starting a marriage forged in tragedy, is about learning to care about family and friends. the testing of our faith produces perseverance. is there a tougher test of faith for parents than the loss of a child? or seeing your child badly hurt while you fight pain and injury yourself? neighbors, friends, on this day of remembrance i started at the heart of the dorchester, the

community where i was a kid, where martin richard was a kid. the other day i came across some pictures from a neighborhood party a few years back. one picture stopped me cold. there he was with some friends, my arm around a little boy, holding him close. he was wearing a dorchester t-shirt and a mile that could light up and we are. the little boy was martin richard. a day has not passed when we do not cry over him, but we also feel like this is the right way to remember a little boy with a gusto for life and a caring heart. martin played in his little league with enthusiasm and shared joy. as a coach in that leauge, understanding the importance of never giving up.

his older brother gets that. he is an exceptional student, good athlete, a great kid, always eager to help. he is the kind did you want your kids to be friends with. so as his sister. they are teaching us a thing or two about never giving up. by the way, you did not hear it from me, but james is playing basketball again. [applause] martin would love that, the way he saw the world, anything was possible. all across our city, we are learning that too. we are learning not just perseverance, but resilience. resilience rooted in hope. weeping may endure for a night, but joy comes in the morning.

we endure the night, violence came to our city, boylston street and the square, and felt like everyone was hurt, everyone was suffering. down the red line in dorchester, up 93 through somerville and medford, and on memorial drive to m.i.t. our grief drew us a painful map. in the darkest hour of that night, we looked to our first responders who are always our begin on hope, of courage, of heart. we saw police officers, firefighters and emts running toward danger as they always do, and they always will. we saw medical staff and volunteers tending to the injured. we saw businesses on boylston street children traumatized.

our public employees from the city of boston were rushing to find resources. we saw people who came to cheer on the runners instead of running away themselves, running to save the lives of perfect strangers. as the day went on in wheeler to handley of loss, we saw that their lives told us a story of our city. lingzi lu was drawn here from halfway around the world to study, learn, and explore. krystle campbell was always the last to leave work, but she was always there when her grandmother needed her. sean a. collier was doing what he always wanted to do, building a career as a police officer devoted to community. and martin richard was a little neighborhood kid with a big smile and even bigger heart. together they showed us the qualities of our city that will carry us through. to the survivors, we bore

witness to your experience, we gain strength from your courage, and hope for our future. we came together as a city within 24 hours. business leaders, government, philanthropy created the one fund. help came from across the world. people reached out to us in solidarity, offering messages of healing and hope. next week thousands of runners and millions of our friends from around the world will come to boston. the 118th boston marathon will be a living breathing celebration of our cities resilience. we still hurt. we hurt from trauma, we hurt from grief, we hurt from loss. we hurt whenever violent hits our streets anywhere in our city and our kids become victims. we hurt now as we mourn the loss

of two of our firefighters in a fire. a young boston police officer injured at the scene in watertown a year ago was honored for his bravery and is suddenly gone. we hurt when brave first responders give it their all. weeping may adore for a night, but joy comes in the morning. after a dark night and a bitter winter, spring is here, the snow is gone and the red sox are back, and in a week marathoners will be too, running for martin, for family, for friends, for boston, for america. we are never going to be the same, we are stronger than ever. we've been tested and tested again.

we face these hurts with a new understanding of our strength. we have survived the dark night to survive and face the new day. we can believe that anything is possible. this is boston, the city of courage and champions, the city of hope, and the city of heart. god bless you, god bless the city of boston, and god bless the united states of america. [applause] [applause]

[applause] >> mr. vice president, ladies and gentlemen, brothers and sisters, none of us at this podium could possibly add to the testimony of the survivors who have spoken today. i'm just glad to be here with all of you. i'm glad to join in the remembrance of krystle campbell, and lingzi lu, and martin william richard, and sean a. collier. there are many years till heart from this tragedy, and yet and

inspire us with their determination. i am glad for the chance to honor and thank again the first responders and medical professionals and volunteers who cared for and comforted those hurt. the law-enforcement officials who meticulously and methodically worked to solve this crime and find the killers. the many political leaders who put their emphasis on leader and not political throughout that week. i'm glad to have this tragedy behind, and the next marathon is upon us. i'm glad especially to share in the timeless triumph of our community's response to this crisis. boston's strong is about the triumph of community itself. over and over again these last several years we have emphasized

the importance of building community. of seeing our stake in our neighbor lost dreams and struggles as well as their own. sustaining such sentiments as top in the face of the crushing cynicism so prevalent in modern culture. yet for me the thing we witnessed in the aftermath of that vicious attack last year, and that i submit we are here today to celebrate is precisely that sense of community. that in during an transcendent display you and so many others showed last year of kindness and grace. there are no strangers here. in the days and weeks after the marathon last year we were reminded how few degrees of separation there are in fact between us. i think of the young lawyer on my own staff who finished the route on boylston street equidistant between the first and second blast. the friends who left the finish line minutes before the first explosion because their small children needed a nap.

or the friends who did not. they are no strangers here. i see nurses and doctors and elevators at the cbs who met on the third shift hearing for the injured. our daughter was walking toward boylston when the first bomb went off. i carry in my pocket today the photograph of martin richard holding a campaign sign for me when he was three years old. he got around, mr. mayor. [laughter] there are no strangers here. the day after the bombing i met with karen rand, her boyfriend and his brother in the hospital while she waited to see if doctors could save her leg. i did what i could to encourage and support her, and she were reminded me that we had met on shelter island. last summer when a street in chicago, where i was born and

raised, was renamed for me, who should come rolling up in her wheelchair to support me but the same karen rand. there are no strangers here. we are not strangers. we are all connected to each other, to events beyond our control, to a common destiny. we share the same fears over the same hopes, the same community. we are all caught in an inescapable community. whatever affects one directly, affects all indirectly. we are not strangers. we are, in the end, one community. i hope we hold tight to that.

as we remember the dead, and encourage the injured, we remember the community. i hope that we remember the courage of the first responders, we remember community. i hope that as we thank the medical teams and the public officials, we remember community, because it all adds up to an enduring example of the power of common cause, and of working together and turning to each other when we could have easily turned on each other. indeed the power of love itself, that is when a community is. i am so proud to be a part of this one. god bless you all. thank you. [applause]

>> i have been part of some incredible tributes, but i have never witnessed a tribute like i have heard today. [applause] we are honored to be asked back. say to those quotes

survivors. you have survived and you have stored -- sword. soared. you are inspiring. i have never heard anything so beautiful as what all of you just said. [applause] you are really good. i am serious. it is remarkable. tommie, i can tell you one thing. there is not a single person whose heart you did not speak to. they understood every word you said.

you have been my friend for a long time. the reason they heard it is your heart is as big as the city. it is an honor to be with you. what -- first of all, thank you for having yield and me. what an incredible job you have done. this is an important day you bostonians do not understand. it is important day for the country. the victims.of this is a bittersweet moment for you -- knowsny of

rings --anniversary brings every memory back in such sharp relief. you would almost not have it happened. you, thank youo for your courage. i hope you take some solace, again, from the outpouring of love and affection of all the people in this great city and the country. but it is still difficult. i know that no memorial, no words, no acts can fulfill what you yearn to fulfill.

it takes incredible courage for you to be here. they see you. they hear you. they know of you. the fact that you are here, i promise you, gives them hope that maybe, maybe they can overcome what they are facing right now. the one thing you have vastly underestimated what you're doing for so many people in dealing with your own grief with such courage. you inspire them and we owe you for just being back. and to patrick and adrien, louise, david, all the survivors here and elsewhere, you are living proof that america can never, never, never be defeated. you are the proof of that

assertion. so much has been taken and you have never, never given up. and all the survivors were not here, even those tough days lying in a hospital bed -- i remember looking up at the ceiling wondering, god, i cannot do this anymore. i don't want to do this anymore. and wondering how much more can you take. but you mustered the courage and you got up and you kept going and you brought an awful lot of other people with you as you walked on on a prosthetic leg. and you are here. you are undeterred. and you are unyielding. that stubborn perseverance that the mayor spoke of in the face of unfathomable challenge, that is just your courage. that is just courage. my mom -- they kid me because i talk a lot about my mom -- but my mom was a great old irish lady.

she told us from the time we were kids to each of my siblings but to me, joey, you are defined by your courage and you are redeemed by your loyalty. the four of you are the purest example of my mother's standard i have ever met. you are defined by your courage. and you are redeemed by your loyalty. you'd didn't just take care of yourself. you reached back and help so many other people. in your loyalty, you inspired this great city. and even though i am not a boston fan, i love you guys, man. [laughter] what an incredible city. it really is. you are an incredible, incredible city. i know politicians are not supposed to say that, if you are not a red sox fan. you get the living hell kicked

out of you. that was a good reason not to say you are not a red sox fan. in the face of america's resolve, not a liquid happen on 9/11, you become the face of america's resolve for the whole world to see. i have traveled over 900,000 miles just being vice president, all around the world. people know all about you. they know who you are. they know your pride. they know your courage. they know your resolve. they know who you are. that is why the twisted, cowardly terrorists who acted here and in other places do what they do. they try to instill fear. they try to instill fear so that we will jettison what we value the most. and what the world most values about us, an open society, our

system of justice, our freedom of religion, our access to opportunity, the free flow of information, ideas, and people across the country, the willingness and capacity to gather anywhere and in any numbers and say what we believe. that is their objective. that is what they attempted to do directly in boston, is to make us afraid. not just boston afraid, but to make america afraid. so that may be, maybe we begin to change our ways. that is the objective. the very soul of who we are. they figure, if they instill enough fear, we will change. and it infuriates them that we refuse to bend, refused to change, refused to yield to

fear. you are boston strong. but america is strong. they are not unlike you. all around america. that is what makes us so proud of the city and the state, what makes me so how to be an american. we have never, ever, ever yielded to fear, never. just look at what you have done over the past year recovering from the attack. you form support groups, established foundations, colleges set up scholarships, local businesses supported charity drives, houses of worship have provided comfort and so much more. the organizations like the one fund have gone above and beyond to raise millions of dollars to help the families of the victims, the survivors and the

city recover and rebuild. and you have taken greater pride in your community that stood by you, protected you. pride in the world's greatest doctors, nurses, emt's, members of the national guard, veterans, teachers. of course, pride in the world's greatest police officers and firefighters was mentioned repeatedly today. [applause] last year, i had the great honor of asking to speak for officer collier at m.i.t.. thousands of men and women in uniform stood in line as far as the eye could see. it was incredible. they showed up because they

shared a fundamental obligation to serve and an unbreakable sense of duty. it is not just what they do. it's who they are. it is who sean collier was, patrolling to protect a campus and community that he loved. it is also what officer dennis simmons, who put his life on the line last year in a shootout to hunt down the killers, he suffered a severe head injury and ultimately he succumbed. and also, it is the firefighters, michael kennedy and ed walsh, had recently to deal with when they responded and their grieving families knew every single time they responded to an alarm, something like this could happen. yet we know there is not a single moment, not a single

moment of hardship that america has not been transformed by, made stronger by. we know this for certainty because it is the history of the journey of america. it is written in the not just in the brave men and women we honored today in uniform, but anchored in the end on thing courage and uncommon resolve of ordinary americans. that is the incredible thing about america. we teach our children this in schools, that these are qualities ingrained in our national character, stamped into our dna. they animate our national identity and they continue to define who we are. and last year's marathon, the whole world witnessed ordinary citizens doing extraordinary things. shopkeepers delivering blankets

and water, doctors running through the finish line, to the hospital to care for the people who had been wounded, residents and store owners opening their doors to folks for shelter. and what has become an iconic photograph, carlos in his cowboy hat pushing jeff ballmer. that photograph -- [applause] that picture is hanging on walls around the world. carlos did what you bostonians do and what americans do. carlos ran to him rather than from him. a normal human instinct is to run from, not to. he wasn't a firefighter.

he wasn't a trained medic. he wasn't a police officer. but yet he instinctively ran to. that is what bostonians do. that is what bostonians did. and when the 36,000 people line up to start the marathon, you will send a resounding message around the world, not just to the rest of the world, but to the terrorists that we will never yield. we will never cower. [applause] america will never, ever, ever, ever stand down. we are boston. we are america. we respond. we endure. we overcome. and we own the finish line. god bless you all and may god protect our troops.

[applause] >> c-span is pleased to present the winning entries in the student cam documentary competition. it encourages medical -- middle and high school students to think critically about issues. entries wereies -- based on the question, what is the most important congress

should consider? congress should make education their most important issue. >> i want to be a ballerina teacher. >> i want to be a soccer player. >> i want to own my own hair -- >> many of us are introduced to the american dream. the idea that we can become whoever we want to. our schools are improving, reform ideas have been anything but equal. rotter has to deal with economic and social questions, but we can't use the reality of avoidy as an excuse to responsibility for educating

children. helping them beat the odds. recapturing the dream begins with education. [bell rings] every weekday at 2:04 p.m., students at troy high, one of the best schools in the nation, finish their course work and go on to enjoy a variety of opportunities. >> the troy school district is successful because of the culture of our city, the culture of our school. it's a culture of high expectations and excellence. >> i think the strength really lies in our staffing. we have really made a concerted effort over the time i have been in the district of 31 years of hiring quality, quality staff. >> our success shows that education in america is fundamentally not flawed at all. in fact, our success shows that the system works when it's properly supported. >> the current state of education in america is really dependent on where you live.

in communities which are traditionally more underserved, the education system is really lacking in a lot of capacities. kids in classrooms here are in elementary rooms full of 40 to 45 kids, whereas their peers in more affluent communities 10 miles down the road are in classrooms of 20 to 25 students, typically with an aide, as well as other specialized programs. >> this anecdotal evidence reveals the stark disparity between american schools and is indicative of the persistent income achievement gap, a term which refers to the lapse in learning between wealthier and poorer students. research and data not only support the existence of such a gap, but show us the extent to which many of our schools are failing. >> your income level plays a larger role in your academic achievement than your race. so what the stanford center for education did is they looked at standardized tests, and they saw that the test scores between

affluent and low-income students has grown by 40% since the 1960's. >> the gap in test scores between poor kids and wealthy kids is now nearly twice what it is between white kids and black kids. >> fully 96% of kids from the highest income group complete high school -- it's just almost a given, 96% -- while less than 2/3, only 63% of those who come from the lowest economic quartile, do. >> according to the education department, many poor public schools do not pay teachers and educators as much as wealthier schools just a few miles away. >> that means the u.s. has these huge inequities between wealthier districts, typically in suburban areas, and high-poverty areas that no other advanced nation tolerates. >> think about what that does and how it hurts us as a country -- in jobs, in terms of our international competitiveness, and what it means for lives of children, families who are trying to escape poverty and trying to escape psycho-social failure. >> this is not the american dream. and so the american dream says that that child, that student,

that family should be able to elevate itself, lift itself up out of that really terrible situation through the public education system. you perform well in school, you can go on to do anything you want. education is anybody's ticket to success in this country. we need to make sure it's always that way, and we need to provide those tools for students and the youth in our country to always have those opportunities. that is the root of the american dream. it really is. >> and it's frustrating to know that i can be learning all of these things and i can be doing all of these things and i can't, and people think that people from -- that that children in schools are stupid and brutish because of what they see on television. and it's not true. we want to learn. we want to be able to do what the other children are doing.

we want to have the same opportunities, but they keep taking them away from us. >> we got so many gangs and so many drug dealers hanging out on corners that could have been or should be productive kids in school, students that have a desire to do something. these guys are not dummies, but when you got a failing system, you create dummies, you create kids that don't want to do anything because they don't have a future to look forward to. >> no matter how you look it, the issue of educational inequality is a dire truth. so what can we do about it? >> congress, you need to listen to your educators. you need to hire educators for your government positions, your advisory boards. >> you must somehow have highly qualified teachers everywhere, but how do we get them? you have to convince people to do the first and you have to convince them not to leave. a lot of people leave teaching because they find it very stressful and an unsatisfying role. >> i would really hope that they would continue with their title i support. >> the more we can address all of this at the elementary level,

we will have less intervention and less discipline problems and less failures in our middle and high schools. >> congress really needs to look at and evaluate how they're going to fund out-of-school-time programming. >> we're running after-school programs. we're running programs on the weekends, on sundays. >> this is our money. this is our school system. the state of michigan needs to have the ability to run its school system, receive its funding internally. >> as we have seen, there are countless potential solutions for the education crisis. but, congress, what really matters here is that you prioritize the issue, that you make it your greatest concern to provide a high-quality education for all children, because we, the youth of america, are the future. >> our children only have one chance, one chance to get a great education. they can't wait for poverty to magically disappear. in fact, for them and for their parents, education is the way out of poverty, and they don't want to waste a minute. they are chasing the american dream with everything they have,

and we have to help them get there. we all share in that responsibility. >> to watch all of the winning videos and to learn more about our competition, go to c-span.org and click on studentcam. and tell us what you think about the issue this student wants congress to consider. post your comment on studentcam's facebook page, or tweet us using the hash tag #studentcam. >> on wednesday, the women in the world summit. a conversation with hillary clinton. and stories of bombings and chemical attacks in syria. here is a little of that event. we were -- me and my cousin, preparing activities for the kids. working with them. we heard on the internet that a

anmical attack -- after hour, we heard of a similar attack that hit my town. you know, the- bombing -- we didn't recognize bomb thisi balmy's -- night were different than other bombingsngs. they were carrying gases. after half an hour, we started feeling dizzy. our noses and eyes were running. we recognized there was something different in the error. -- air. we rushed to the rooms and w oke up the family members. we try to help them. put scarves on their noses. >> were your throats and eyes

burning at this point? >> yes. our noses were running. we couldn't see well. we had difficulties breathing. bedidn't imagine it would worse. the hospital go to to help. nurses at that hospital. we rushed to the hospital and try to help. it takes us usually five minutes. but because the bombing and shelling, it took us 20 minutes. i remember when we arrived at the neighborhood, i saw thousands of corpses on the streets. women and men and children. i remember screaming and yelling out. saying, oh god.

i was so shocked. i didn't imagine to see that you. paulson onent, henry china's economy. then proposed changes to the tech system. two journalists talk about the new book they are working on. the boston memorial ceremony marking the bombing anniversary. the next washington journal, we will look at the financial disclosure statements and how much money they are raising in this year's selections. -- elections. the chairman of the federal usction commission will join to discuss how his agency has been affected by the recent supreme court decision. and keep johnson, senior

reporter -- keith johnson will focus on the role that natural gas plays in the relationship between russia and europe. when the conversation on facebook and twitter for washington journal. former charger he secretary henry paulson says china's economic gains over the last 30 extraordinaryn but not sustainable. speaking at the center for strategic and international studies, he said that the leaders understand climate change. this is one hour. >> it is a pleasure to be here. i asked him how many times he had been here. he said, more than 100 times.

i thought i would start by remembering that you presided at the home for a horrible financial crisis. we were a country with a sophisticated financial system with the people running it. it didn't turn out to be as good as we were led to believe. in some sense, the chinese are facing what is regarded as a potential for a financial crisis. but cap -- perhaps with less expertise. they do have a few resources that they need them. i wonder if you could talk about how big a risk you think there is in shadow banking or credit boom or housing. how well prepared they are to manage it if it hits. >> thank you david.

it is great to be here. that was a question i got a number of times in china. everyw is, of course economic system known to man, every economy from time to time, will have financial crises. the roots are almost always government policies and then they manifest themselves in the banking system. we have an economy like the chinese that relies on debt financing for real estate, plant investment. the problem is inevitable. havecertainly are going to

bad debts. in many ways, this is similar to in 2000.ened in 98 and part of the bad debts are related to the financial crisis because of their fiscal stimulus program and policies. the of it is related to shadow banking. are, you know,t in that market to the private sector. funding.it, municipal the way i look at it is that first of all, i don't think capacityubts that the or commitment they have to

prevent the failure of systematically important companies -- today, the problem municipalities. estate owned -- state owned enterprises. the public do not have the leverage. the central government has huge capacity. today, the things that i tell in the system with diffuse decision-making, they need clear lines of authority. some tougho make decisions about which institutions are systematically important and which are not. whether the losses should be shared with market participants. they need to make it clear where the government is on the hook

and where it is not. i'm not making light of the current situation. i think it is manageable. is the floridaus government policies that led to governmentthe flawed policies that led to this. is a triangle between the banks, the government, and state owned enterprises. dealing with that. the other, a very significant problem, is the system of municipal finance. which is overly reliant on real estate sales. municipal governments taking land from the farmers and selling it to developers. they need a new system. it is not sustainable. they need a new system of municipal finance. it it is easier said than done. right now, it doesn't work.

it won't work unless there is a new tax system. fiscal reform. what happens is mayors have huge obligations and do not have access to sources of revenue. enough sources of revenue. what they are doing is taking land and selling it and funding it in the shadow banking market. from banks, on a short-term basis. it will take a while to fix this. fiscal and to take tax reform. the leaders understand it. they need to manage their way through this period while they do something that is going to be -- >> it sounds like you could have a few big bumps on the way to a better system. like the state of illinois. that the chinese

economy, i wouldn't compare with the state of illinois. we have some very significant problems. china does -- has their own problems. i think they, like any economy, will have bumps on the road. to step back and look at it more there is a huge need in china to develop a new economic model. the administration is committed to doing that. they put their credibility on the line and laid out a very broad program to do that. it is easier said than done. to take the economy and developing new economic model and rebalance it.

you can to doink something like that without significant bumps along the way. >> to what extent - have the transformed into changes in incentives for local government? we talked about how, if you wanted to be promoted, you had to produce growth. top is forc at the balanced growth. have they changed the incentives for the local officials? it will take a while to do that. the incentives are important. the environment is an area where it looks like they have changed. have the institutions to deal with environmental issues the way we do. they don't have a strong, you

know, protection with regulations that can be enforced. the approach that the administration is using is making the environmental protection, clean air and clean water, an important part of the way the of valuing officials. -- they would go through their litany of what they had done with their gdp. job creations. now, in addition to that, they are all talking about the environment. if they believe that is going to impact their career, it is going to be a very important part of their performance. it will make a big difference. >> did they have measurable targets like reducing particulates? >> that is not clear. that is clearly something that needs to be done.

-- i am frankly encouraged. i don't believe it is rhetoric. to do this if it is going to keep its credibility. >> you have been working a lot on the environment. talk about something that convinces you this is more than just press releases. you, to me,st given the best example. further, if even five or 10 years ago, somebody had told me bees are the things china is going to do in terms of investing in clean technology and shutting down dirty plants, i would expect them to have made

more progress. is despiteppened some extraordinary steps, it has been blown away by the growth. there is a real understanding today that the quality of the growth is much more important then just ramping up gdp. the chinese people are demanding it. it is the big issue. remember, i was there at the end of february. when i was there, you could hardly see the sun. was, you know, the rating is -- thedanger zone leaders are right there in beijing breathing the same air.

need.is a huge they are doing important things on resource taxes. they are doing a lot of things. there is no doubt they are serious about it. >> one of the things you mentioned to me and came up this morning, in the leadership period, the role of the party seems to have changed some. talk a little bit how the role of the party is compared to the last couple. >> the party has always been predominant in china. i think some americans -- because when we talk about reform, we are thinking the chinese may be in the back of our minds. they are trying to create a system like we have. so when they look at market-based reforms, these are

reforms that are good for china and us. when you look at what they are doing in modernizing the government, it is good for china and us. it came from a very prominent and powerful family, a chinese communist party. he sees a strong party is critical to him being able to achieve successes in the reform areas he is pursuing. he sees the party is the only strong institution. he has done things and doing things increased the credibility of the party.

and whole lot of things including very, very strong anticorruption campaign. he is making the party -- as someone who has been going to beijing a long time, i hear in the conversation with officials, you hear the party mentioned much more frequently than in the past. >> is that a substitute for government? is he trying to break the gridlock of government? how do you build a strong government if the party is being so much -- >> that is the $64,000 question because what happens is -- if you look at the reforms, most people in the u.s. and most of the press are focused on the economic reforms which are very broad in scope and extraordinary which is all about giving the marketed decisive role.

it is good for china and us. it is also a huge agenda in terms of modernizing government. the institutions of government because china does not have the institutions, the governmental institutions that it takes to govern a country with an economy as big and diverse as china. there is work on restructuring. part of it is a structural issue. take the ministry of environmental protection. in certain areas, it is going to take more centralization which is counterintuitive to many americans who think there is already too much authority and

top-down authority. how do you regulate the environment if it is not done centrally when you have consistent rules at the local level that are enforced? part of it has to do with the legal system and where due process and the role of law and restructuring the disciplinary process who my counterpart has done. there is a catch-22 which is the party probably is the only organization in china that i strong enough to get these thing -- that is strong enough to get these things done because there are huge vested interests.

or is it less about hard power and more about time to clean up the system to keep the people happy? >> just for background, and for those who haven't been following it closely, it was led by him among the central disciplinary committee. there is a really highly publicized program to go after

not just the flys, the tigers. some very senior people have been targeted, including the former standing committee member. right up there is corruption, property rights, clean air, water, food security and corruption. there is no doubt this increases the credibility of the party for the people. no doubt about that.

number two, to the extent that some of the people being targeted are senior and some of the state owned pillars of the economy, i think will lessen resistance to some of the reforms. but, i also believe they are very serious about curbing corruption for domestic and international credibility. i think they understand that although arresting people for past transgressions will strike fear in a lot of people and they will curb the behavior going further. this is a systemic issue. it is one that has to be changed and has to be changed through sort of long-term policies emphasizing values and integrity, changing incentive systems, part of this will be -- part of which will be paying the officials to do the jobs they need to do.

part of it will having clear rules on anticorruption and a legal system that is more even as it enforces the law. i think a big part of it is doing what they want to do in terms of having the market play a bigger role in the economy and government playing a smaller role because i think the current system where the government play such a big role is, again, one that spawns corruption. >> it might make the system more cleaner and work better but on the other hand, if that the week and resistance to reforms, that is not such a bad thing either.

>> well, first of all, it strengthens the party. by by credibility and also there is no doubt that i think that some of the vested interests in state owned enterprises and other places is the fact some of those people have been targeted will help get reforms. >> i think the american view was always that you cannot always have successful market focus capitalism without also having political freedom. the chinese leadership clearly does not buy that argument. do you see attention there? are they going to feel pressured to have more political freedom? is the kind of restlessness among the chinese people or is it the alternative if they could

deliver the goods and clean air and can get away with having that. >> first of all, i would say that right now it is very popular in china. and, most of the people, all the people i talked to are really focused on delivering the goods on these other things. it is going to be very hard to deliver on when you talk about the sorts of things that is being taken on. my own view has been for some time and it continues to be that the system is evolving and that they have ultimately as you move

to have a market economy that is as integrated as china is for the rest of the world, the system needs to evolve to become more open. it really does. so, i believe that the government will not achieve the success they expected to achieve if they move in that direction. i think there will be pressure to move in that direction. this is a pragmatic leadership. one of the reasons why i have gone to china as much as i have over the years is when they are focused on their economic objectives and reforms, they are pragmatic. they are not locked into ideology.

they are looking for what will work and again i think the system will evolve and needs to evolve. >> when you worry about china, when you think about what could go wrong, what is on your worry list? >> to me, the big picture is this. it is that this is a country that has accomplished an extraordinary amount over the last 30 years and they have done it with an economic model that has run out of steam in my judgment. it just plain isn't sustainable. you can get a bunch of economists consider on the room. when you talk about what they need to do in terms of reforming the labor market, removing

immigration restrictions, all of the various social reforms, the government reforms, the economic reforms in order to unleash the potential of the private sector, to reform the financial system. a $9 trillion economy to change is a difficult thing to do. to me, the good news is the leaders understand it. it is not like talking to u.s. politicians sometimes. it is like a problem doesn't exist the people. when you talk with them, they are very pragmatic. they know the problem exists. the question is are they going to be able to get the things done?

because, i am going to make a very big, important point -- when you look at the scope of the issue and the scale that i have taken on and the personal credibility that they have put on the line, it is very unprecedented for a general party secretary to be the one that heads up to the central reform leading group. they've taken it on, but the question is it is so complex to do this. they've done a lot.

how are we going to know if they are going to be successful or not? it comes down to competition. just plain and simple is that. i will define competition because economic competition -- the things i'm going to look at our first of all, are they going to be the key sectors the private sector competition? i think they will, but are they going to do that? are they going to reign the state owned enterprises and continue to reform them which is not an easy thing to do at a time they are really underperforming? you take away their special subsidies, protections and put them on a level playing field to make them compete is going to lead to unemployment in those areas. thirdly, which i think is really

important, are they going to open up to foreign competition? i think that is critically important. there are two groups of reformers in china, many of whom are the domestic companies that are all for competition as long as you let them run their own companies. that is why i have been as focused as i have been on this bilateral investment treaty because just like he used wto admission to thrive economic reforms internally, i think this is what the current government would like to do. >> use the treaty to introduce more competition within china because that is what you have to do.

>> it benefits china tremendously in terms of increasing the efficiency. i don't think the reforms will be as successful as they need to be without it. it is the only way you were going to build healthy, strong companies in china. look what happened in every industry, every country when you protect. an industry. we protected our auto industry for years and look what we got. i think it is critically important. to me, what i worry about is this is such a big agenda. there will be strong vested interests in political resistance, it is going to take some doing to get it done.

it is complex. how you sequence these reforms. >> it is going to be difficult if growth is slowing and they're worrying about not creating jobs and then you tell him to take away the protections of the state owned enterprises so they have to lay off workers. >> there will be right now -- i have been looking at what they have been saying about growth. i was very encouraged by two things that the premier said recently. he is well aware that growth is slowing down. i don't see them slipping back into old patterns of a bunch of lending stimulus, infrastructure which isn't needed.

they recognized the growth and then they announced of this really -- i looked at it as a massive pilot project program between the hong kong stock exchange and the shanghai exchange which will lead to a lot of two-way investment below into each market. i think it is something that if it works could be replicated with other markets around the world. what i think we all have to worry about is how easy is it to get done. >> one of the things i noticed when i visited china, we talked a very wealthy people, successful entrepreneurs or companies that serve these people. i think a great deal of insecurity is that they are afraid they will be accused of corruption or they all seem to

be buying a house in vancouver and making sure their kid goes to harvard and gets a green card. am i wrong about this? are the insecure about their future in china? >> i wouldn't want everybody together. it is a vibrant private sector. when i talked to my friends or with jack of ali baba. look at what they are doing in internet banking and taking on the banks. there are a whole lot of private sector people who are encouraged because they really believe that this is a government that understands the future of the country is the private sector.

ping, wherever he was, every problem, there was a big emphasis on the private sector as opposed to state owned enterprises. there are other people who have accumulated a lot of wealth and people who really benefited from the vested interests. i think anybody who is -- who understands china, i have to believe most people that are there understand it better than we do, recognize that these reforms are not going to be easy. >> what role do the people's liberation party play in the economic reforms? are they an obstacle because they have vested interests or not? >> as you look at the state owned enterprises, the

government owned enterprises, you have a group of central government owned companies. when i talk about state owned enterprises that is what i have been focusing on that there is basically 100,000 plus entities in china owned by different pieces and some of them no doubt owned by poa in addition to municipal governments and so on. those entities need to be reformed. they are underperforming. i think that they will be and a lot of them will be broken up,

be sold, be taken public because you look at the pressure on municipal governments to pay down debt right now. i think that is going to be working in their favor. >> because they own some of these enterprises. >> i think one of the things -- when municipal governments have been under pressure to fulfill their mandate, they sell the real estate to developers or bring on a local company which may own or part of infrastructure that is not commercial.

i think there will be pressure. >> let me turn to the u.s. what is it you think the u.s. should do either business or government to maximize the chances of successful reform in china that benefits them but also benefits us and the rest of the world? >> i started off with the proposition that to achieve the important things we want to achieve globally in terms of the economic objectives we have that we want china to succeed with these reforms. now, many people don't agree with me and of there are some people that always thought what is good for china economically are beginning to question because the relationship is becoming more complex.

i really believe more now than ever that we need -- because of some of the tensions in the national security area, foreign policy area, it is really important to thicken that relationship. it is quite important that we have complementary policies. the two things i would say is bilateral investment trading. we have a lot of shared interests. we have some things where we have differences. we need to figure out how to manage those differences. we are going to be competing in certain areas and in other areas we can't let that cloud cooperation. having shared interests is not enough unless you turn it into complementary policies.

i look at it and say if china identifies those areas where there is not market access, that is going to add to the transparency and predictability of the investment process. if they narrow those areas rather than carving out big parts of the economy, that is going to be really good for them in terms of helping them have a more efficient economy to speed up the reform process and build stronger companies. i think the u.s. needs to negotiate hard to recognize that is a big step forward and take a reasonable approach to transition. i believe a bilateral investment treaty will also significantly increase u.s. investment in china because it is going to increase trust and understanding. i think putting cross investment

on an international treaty basis will take it to a larger extent away or help insulate it from the political cycle or the ups and downs, of the tensions between beijing and washington. i think we should welcome chinese investment to this country. it's very important. on the environmental area, i think this is one most people understand. part of the reason why the paulson institute work so hard, sustainable economic policies in china and the u.s. and sustainable urbanization is the next several hundred people. it is hard to get your mind around that.

going to cities around china will drive environmental outcomes. as we cannot -- it is very important -- i happen to believe climate is sort of the overriding social and economic issue of our day. that is what i believe. i don't think there was anything we could do in the u.s. by ourselves to solve this problem. having worked with a number of developing countries, i think the chinese leadership gets this to a greater extent than any other major developing country i could find. i think there is a huge opportunity as the two biggest emitters of carbon and users of energy for us to really work together and cooperate. there is a natural fit. no one innovates like we do. we can look at our universities, look at silicon valley, look at all the financial legal

infrastructure we have around that. no one can test new technologies quicker and is a fast-growing energy market than the chinese. what are we doing? we are exporting coal and expecting big quotas when they want to sell us solar panels cheap. there are a lot of policies that are hard to explain unless you look at the politics. there is a lot of room for cooperation. >> i think we could turn to questions. we have about maybe 10 minutes. there are a lot of people so tell us who you are and remember a question ends with a question mark. ma'am? the mic isn't working.

>> [indiscernible] we have difficulties narrowing the gap. do you think that ability will help benefit china for them to have potential future trade negotiations or does this agreement -- what kind of impact will this agreement have on china? >> you are referring to the transpacific partnership. the question is are the chinese threatened by this or -- >> i happen to believe it is very important dealing with china to be -- for us to be strong economically.

to be strong diplomatically and strong militarily. and it is particularly important to be strong economically, diplomatically, militarily in asia. number two, i see the tpp is very important, top priority because it is focused on economic integration. it is looking at behind the borders and some of the other restraints -- moving the other restraints the competition. i think if we get a high quality tpp, i would be surprise if the chinese don't want to become part of it. i think we should welcome the chinese. i think they would benefit and we would all benefit. that is my view and i think we are starting to hear them talk more openly about being part of it.

that is something else that would drive reform and be quite helpful. >> do you think the chinese attitude is that the u.s. has to choose between china and japan, particularly militarily or do the except we could be allies and partners with both? >> they look more broadly when it comes to that. very broadly, they absolutely accept we should -- our relationship should be based on mutual respect and there will be differences. and that those differences should be managed and preclude cooperation. this u.s.-japan, chinese-japan conflict and tension is quite disturbing because i think the two forces that are in conflict with each other, you see it in the pacific, one is need for

economic growth which china and japan needs and all of asia needs will all benefit from it. what is in conflict is that, putting that in jeopardy are the political tensions. to me, that is disturbing. it is just really, really important that we have great communication. the u.s. government keeps pushing. we have to have political level, senior level, right down to the boat captain so you don't have a conflict. i think that is very important.

there is a lot of history there. there is a lot of sentiment and nationalistic sentiment in both countries. i wouldn't underestimate the significance of it. when i talked to some of my most -- to some friends in china, people that have gone to u.s. schools, people that have had admired our system in our country and that raise that issue, they talk about the history and we were allies in world war ii. we don't get it. the fact is we have a defense treaty with japan. they are an important ally. we have individual disputes, but

we don't take sides. we try to be neutral. this tension is something i worry about. it is a concern. >> in the back. >> my name is doug. recently, the treasury issued advisory to china to not let its declining currency values get back into play when there is concern about unemployment. many independent economists say

it is pretty clear to me only when they have a market determined currency are they going to have really globally competitive capital markets, they are going to have an economy that is where the market is playing a decisive role. are they going to be able to move up the chain and do all the things they want to do to rebalance the economy? i am not the only one that thinks that. you can do two things. you can keep intervening in the currency market or you can speed up moving to a process of market determined currency. if you keep intervening, you're going to keep accumulating foreign exchange reserves. -you are going to be funding the structural deficits in the u.s. and japan. you are not going to be

rebalancing your economy. or you can move the had and do things for your economy. so, i clearly think that they need to take action. this is always a hot button issue in washington, d.c. one of the reasons why -- when i am outside of washington, i don't talk as much about that because it is easier to understand. i don't -- i am not downplay the importance of currency, but i think even more important are the structural issues that lead to imbalances. the structural issues cause them to over save and the issues that -- we cannot blame the chinese for the fact that we borrow too much as a government and as a people. we have policies.

>> david must be doing well. it's coming. >> thank you. you mentioned political reform. the evolution is needed. this comes at a time when china is cracking down on the flow of information, internet, media, people who even agitate in favor of government policy could find themselves in jail. is this undermining the need for diversity, transparency, working against the economic policy? >> i am an american and i love our political system. i think that i would like to see -- i think it is important that they move through something that is more open and more inclusive.

what you have seen is -- you have seen the administration, at the same time they have put out a whole set of reforms which are badly needed. they have also said we are going to deal with a number of hot button issues like the one child policy, labor reeducation camps, they have focused on the major issues of food, water, air, corruption. they have done that at the same time that they have cracked down on those things. so, they have -- i say they are dealing with issues that the people care most about today. again, i don't think that is a winning formula.

i think over time they won't be as successful as they are going to be a less they have a more open, inclusive government. >> that woman here and then the gentleman in the back near the camera. >> thank you. as china embarks on its economic reforms, i'm wondering if mr. paulson could talk about the secrecy of these reforms especially in the financial reform area. >> the secrecy is very important of a reform because, for instance, if you normalize the

labor market with, you know, and let everyone migrate to the big cities and take their benefits with them, you have them flooding beijing. they cannot accommodate more people. how do they do that? they are going to normalize the market for second and third tier cities first. the financial market reform, you know, they are going to need a budget responsibility. they have to be held accountable and have sources of revenue that they can call on, but right now mayors don't have budget responsibility and they don't

have financial statements that are transparent which are required to have a market. if you need a municipal finance market, they have a ways to go up because they cap fiscal reform, tax reform, give mayors the tools they need to manage a budget. these are going to be very -- that is why he has given himself seven years from the time the announced these policies which was some time ago to get them done because it is going to take a while. what i look at are what are the things that can be done soon and are they doing them? are they doing the things they need to do right away? i focus a lot on the financial

markets. the reason i do is these are things that have been studied, debated in china. they know what the issues are. they -- these reforms are very important. i start with the idea of letting foreign financial institutions come in and compete because you are going to need a world-class institutions and i have never seen a situation where i believe joint venture, institutional investors, or investment banks -- it is hard enough to run one where you have control so you're never going to get there with a joint venture. reforming the markets so that they -- capitalist allocate to households rather than state owned enterprises.

eliminating the caps on the interest rates that savers receive. there are a whole list of things. the other things i am going to look at is competition. are with a moving quickly to do the tough things with the state owned enterprises? it is not going to get easier as time goes on. i have been quite encouraged by not only what they have said about the markets playing a decisive role, but some of the steps they have taken the, the rollbacks, the red tape, and the regulatory barriers to keep their private sector from getting and competing into certain industries. they have done a lot in terms of weighing out a very ambitious program. they have moved very quickly like in areas like anticorruption.

we have to wait and see for the environment. >> you are talking to an american worker. yes, i understand that the air i breathe has something to do with the pollution that comes across the globe from china. if i am an american worker, my wages have not gone up, my company has a lot of investments in china and they tell me it is good for me but i am not so sure about that. what do you say to american workers whose wages are stagnant and see that men in cities can do business in china. what is in it for me? what you say to them? >> the american worker is struggling in manufacturing. we have eight or nine times the output we had in 1950 with the same number of workers that we had then.

when i go through plants in china, i see very similar things to what i see in the best companies in china and the u.s. which is i go through manufacturing plants, i see robotics and technology. this is inside. we need technological advances. it is driving productivity but in almost every industry i look at whether it is architecture, engineering, almost any business, technology and manufacturing is destroying jobs. we need to really focus on this and focus on having the proper training programs, etc.

what i say to people in the u.s., i think worst and most important, we need to fix our own economy. that is going to be the key to our relations with china and everything else. everything starts with our own economic strength. the things we need to do to be competitive. we can kick all these things off. there was a good number of them. the other thing i would say to a u.s. worker is we should be fighting to open up and continue to open up opportunities for u.s. products in china. right now, it is very interesting. you talk with farmers and ranchers, that is an easy sell. they look at what is happening and how fast the consumption engine is growing. it is no longer -- you mentioned wall street. it used to be wall street and a lot of the global companies.

i think right now the constituents -- clean technology companies and technology in the state and city level, there are a lot of people that are looking for chinese investment to come in. i went to a company in china last friday which wasn't that long ago. it is a leading manufacturer of auto glass. they just bought a huge plant in ohio. they are going to hire 1000 people. i think that is the case we need to make. i think it is a hard case and i sure don't want to be the one that is trying to say this directly to someone who has lost their job in a plant. i don't think there are a lot of jobs -- products we are

importing from china by and large are products we would be importing elsewhere. that is the fastest-growing area. that is why we have to fight so hard to open up these markets. >> with that, please join me in thanking hank paulson. [applause] >> thank you, mr. secretary. thank you all for coming, especially on a rainy day. we will be continuing this conversation for another year at least so i hope you will join in with us. thank you. bye, bye.

[applause] it is my honor and personal pleasure to present to you his i --lency harmonic cause karzai. [applause] >> thank you. thank you very much. thank you. lee's -- please. thank you for the great owner. speaker, mr. vice president,

members of congress, distinguished guests, the great people of the united states of honor to speakmy on behalf of the afghan people in this assembly. i thank you and the people of this great country for your generosity and commitment to our people. you have supported us with your resources, with your leadership in the world community, and with the precious lives of your soldiers. [applause] find more highlights from 35 years of house floor coverage on our facebook page.

>> in a few moments, a discussion on proposed changes to the tax system. journalists talk about the book they are working on. today's boston memorial ceremony marking the bombing anniversary. on wednesday, at 8:00, the women of the world summit. a conversation with hillary clinton. here is a portion. produce inclusive

prosperity. i am a product of the american middle class and i am great role for everything -- i am grateful for everything i was given as a child. see otherant to children denied that opportunity. it is an economic issue. it is a moral issue. it is a political issue. and i want to get back to evidence-based decision-making. there is too much that has gone on in our politics recently that is pure ideology, partisanship. the disguise of commercial interest behind a political we areand the result is marching backwards instead of forwards. ofteny perspective, we reach these points in american history where we try to decide

which way we go, whether we embrace the future, how we go about doing it. it is one of those times. if we are going to be true to ourselves, we have an election coming up this year and we ought to be paying attention to that because it will set the parameters for what can or should be done. the administration certainly supported imf reform. the congress got all wrapped up around misconceptions and political infighting, mostly against the white house. opened a very evidence-based mature conversation. it may lead to places i am not enthusiastic about that would not be my choice, but compromise is an essential part of running

a great democracy. we cannot afford to have people who deny the right and the need for compromise. out is what i want to see you. -- that is what i want to see. not just on the editorial pages, but we need it in people's kitchens and offices and on the field watching your kids play soccer. we need people to start talking and to not he afraid to talk to somebody who disagrees with you. this is one of the biggest problems. if we do not begin to talk across all of the lines that divide us, we will get further separate. a look at the american tax system and the proposal to change it. this is a little less than an hour. general continues.

host: our conversation on this tax day takes a look at the fairness of the tax system. andguests, rebecca wilkins william mcbride. to both of you, thank you for joining us. one of the reasons we wanted to come on was a question pull -- posed by gallup. the question is, he said, do you regard the income tax you have to pay this year as fair? yes, 41% say no. guest: fairness is in the eye of the beholder. it is not well defined. good true, you have got a survey there that indicates most people do not think it is very fair. i think they are right. depending on the various definitions of fairness.

general principle of fairness is that everyone is treated equally under the law. our tax code does not do that and has not done that in a long time. 100 years or more. does note tax itself treat people equally. it taxes income. it taxes people for generating income. it does depend on your income. guest: most people are not upset with the amount of taxes they pay, but they're upset when ge or mitt romney has a lower tax rate than they have. our tax system is not very fair in our view because we believe it ought to be more progressive than wealthier people should have to pay higher.

if you look at an income test come the wealthy pay the majority heard if you look at the tax system overall. the tax system is almost flat. everyone pays about the same amount of taxes as they take in their share of the country's income. the top one percent earns about calmf the countries in the and pay only 24% of the taxes. those who make more pay more taxes, what you think about that? that is the progressive tax. it has become more progressive than ever. wrote -- renowned organization based out of paris looks at tax codes in the developed world.

they found a few years ago the u.s. tax code is the most progressive in the developed world. there are a lot of stories in about people skipping out on taxes. rich people skipping out. on average, there is a burden on the income tax very skewed to the high-end. >> we're making progress as far as taxing people who make more. would you agree? the problem is the other taxes folks pay. on the other coast. on the bottom fifth pay 17% of income. the top one percent pay less than three percent of their income. state taxes tend to be very regressive. aggressiveing a very income tax can you make up for that. apply it to washington.

here are we? guest: we have gone through a time of a lot of gold up, with dave camp's proposal in february. it has not been well received by congress by other party. -- either party. passing more temporary something called the tax extenders list of provisions, this helps is nice, in particular, so i think it is

back to normal business. the proposal, one of the reasons our previous guest told us -- people make a certain type of income when it comes to taxes. that is right. there are so many provisions it is hard to summarize but yes, it does target the rich in many ways. and changes all across the income spectrum. guest: this plan would get rid of a lot of special interest tax breaks. feeling theeneral tax code is about to be overhauled. itn you get to the details, will be difficult. everybody has attacked -- a champion and everyone will fight for their own particular brick. >> two guest joining us to talk about taxation.

if you want to ask them questions about the current tax system we have, this is your chance to do so -- you can make your thoughts known on our twitter page. you can send us an e-mail. a little about your organizations. the center for tax justice. guest: we work to influence cap policy to make the tax system more fair and sustainable. totainable means it is are fairr what you want and and that it taxes people according to their ability to pay. founded in 1937, always

been nonpartisan, nonprofit organization. we have always advocated for according toicy principles laid out by economist 's going back to evan smith. it is on our website. we advocate for simplicity on the tesco, neutrality, transparency, stability of the tesco, and no retroactivity. that means, do not change the law retroactively and change taxes on people for income they earn 20 years ago. seven brackets as we speak. some of the efforts consolidate into two. some things are lost during the process. what about the idea? when it comes to your idea of simplicity, buying a bunch of

ax brackets are the benefits? guest: it is meaningless. what is compensated about the tesco are all the special rules and provisions and credits. we think there ought to be steeper productivity for the code. right now, someone making $350,000 pays the same tax rate as someone making $350 million. we think there are -- there is a lot of room for tax brackets. guest: it is a clear measure of the code we had