was on gay marriage and how much that changed the hollywood positions, how much that changed public opinion on the matter? that e should take over situation? >> i have looked over pro marriage policies, and my conclusion is none of them worked. my parenting skills and coaching does work. activehat requires government policies. they involve partnerships that government could fund and other things. with -- with people on this panel support those kinds of policies? policies likeded partnerships or early childhood education? >> when looking at the parenting

skills -- what you see is that everyone is delaying marriage in th isty, but one swa delaying having kids until after marriage. how do you spread those norms? i think this is interesting. i call myself a conservative i am comfortable in -- this goes back to the issue of conclusion more broadly. when you are looking at how parenting has evolved, we look at upper and middle educated people, their parenting not in the way that people parented in the 1950's and 1960's. they are inventing in -- parenting in a new way. this happens to be unusually well-suited to a society in which you have very rapid cultural and economic change. is the high investment parenting

is the only thing that this note row group of people can do? or is this something that a larger part of the population can do? if you need a public policy, as i suspect you do, i think that is something we need to think hard about. i think that is going to introduce an interesting new tension. we have been in a rhetorical moment of a movement among conservatives for lots of good reason. there is an exhaustion of faith in failed institutions. you're saying a whole series of issues, including marijuana regulation, where you're dealing with the conflict of chaos and order. you are seeing the need for a new public paternalism. the fact they have some --carious where they say wage subsidies might be the way to make it more inclusive, i think conservatives need to feel

more comfortable acknowledging that they are not libertarian. the parenting skills is one part of that. >> i want to talk about that word "internal is on -- pater nalism." partnerships are paternalistic. >> part of what has happened in the somewhat libertarian term is a change in our own understanding of what our fairly recent history has been. welfare reform is what everyone talks about first. andas very paternalistic very decentralized. conservatives seem to be comfortable with some degree of government paternalism when it is relatively local and they except the fact that things were really in different places and should be allowed to be defined differently in some centralized funding behind it.

the implementation will be different based on people's understanding of how different communities function. there is room for that to help. they are always going to work in the margin. there is some evidence that helping people works. it helps a little. it works better than marriage motion. -- promotion. the problem is really great. capitalism requires a kind of citizen that does not produce. the question of what does produce has been a question for conservatives to care about capitalism in a serious way. we are seeing now but it looks like when we fail in some portion of society to produce s citizen. you cannot blame the people in the situations. this is the greatest public policy probably have. an optimist about america.

on the question of how to help people in those situations, i do not think anyone has any idea. it requires a kind of citizen that doesn't produce. well put. >> i would say that libertarians are comfortable with paternalism with their children. say when you talk to people who study marriage, a lot of them talk about the wage situation as it is now that men cannot get steady work for 50 weeks out of the year. therefore, they are not in use around the house. that sort of thing -- there are broader of the policies or you can say instead of this, try to do things [indiscernible] things like early childhood education, not convinced you

could scale it. i'm very convinced that schools do a good job. with things like childhood if it does a even little, that is better than nothing for kids who have very little. >> i think it is right that you want to try these things partly because things that involve complex service delivery are better off so people can choose to avoid certain interventions, but being able to do this, but he decentralized model requires a fiscal policy layered on top of it. it is one thing to do parenting classes and try to improve outcomes for kids and families and it is another to say we can cut the food stamp program. in order to develop trust among voters that this is something that will be done in a way that

doesn't commiserate them, but also because there are separate approaches that could be done together rather than a substitute. i think that is important to pair those two things. one over here. the microphone is coming. >> thank you. i would like to bring the discussion to ground level. you have mentioned it is important to create citizens for the appropriate scale for the new age. that eitheryou party that could address the problem of having the right worker, the right employee, would get everyone's vote. let me give you an example. the president of the national association of manufacturing said that at any one time there

jobs million manufacturing opening that are going unfilled excess of the skills gap. why is that? certainly throwing more money at education system is not going to close that. we need a set of allah sees that closes that skills gap and cements the workers state in the system -- we need a set of policies that closes that skills gap and cements the workers state in the system by giving him and her those skills that the marketable -- right now manufacturing is 12% of the company. if it can be raised to 15% of the economy, we would have the same level of employment in the manufacturing sector as we had in 1980. now, will we go back to 1946, hell no, that will never happen. but there are -- so the question is, who can help create the kind of policies that will create a closure of the skills gap, to create the employee that is

sought after by the new capitalist economy? >> there are a couple of questions in that. and all of them are framed from the point of view of an employer in a way that's interesting. that's useful but i think is also probably too often the way conservatives think about questions like this. i would say it's certainly true that our education system -- the education system of any public that takes it seriously is always going to face the challenge of balancing its self-understanding. is your role to create a citizen that is capable of self-government or the worker your economy needs? the answer is both but the way to balance those, the way to distinguish between what is

universal education and what is specialized education for what's needed here and now is a challenge for our education system. we at this point are probably not doing either of those things very well and our education system is not great. for many people it's fine. for some people it's absolutely dreadful. from the point of view of employers, it seems to have all the wrong priorities. i think that requires some changes in the way we think about the distinction between higher ed and secondary education. the distinction between worker training and education. those things have got to be -- have got to answer needs that bubble up from the bottom. as you're suggesting. so they've got to be a little more flexible, they've got to be capable of offering people more options, i think there's a lot of room for improvements in the way that our public education system works and the education in general works. i think it's a low-ranging fruit for public policy.

there are a lot of low hanging fruits for public policy. there are a lot of places where the inefficiency of the systems that we have is so great and their inability to deal with problems that are perfectly obvious is so great that you can really improve things quite a bit in a lot of areas. education certainly is one of them. i think thinking about it in terms of worker training is one obvious way to do it. we do have to be careful it's not the only way to do it, because it's not the only problem with our education system. >> i want to jump on this just briefly. my personal view is that the real problem is that you have corporations that have very high profits right now, you have corporations sitting on enormous reserves of cash and why is that? that's because they're not afraid. i think when you look at economic sectors in which firms are afraid that their advantage is going to evaporate, that some new startup is going to come and destroy them, those are the firms that are hiring. facebook started out as a relatively small company. they're hiring quite a lot. they're never going to become as big as g.m. but they're hiring a lot. they're paying higher and higher wages to the people who have skills and that in itself is creating a dynamic in which

people are seeking to build those skills. when you look at the corporate tax code, the way it rewards large incumbents, if you look at all kinds of aspects that we treat business enterprises, we are not creating an environment in which these firms are afraid. it's perfect to have a safety net for citizens. it's not appropriate to have a safety net for corporations. i think an environment in which more corporations are afraid of business model innovation, i think that would actually be very good and would be particularly good for workers. >> i almost never disagree with reihan but i have to here. corporations are sitting on cash because of political and economic uncertainty. they're concerned about higher taxes, regulations can drive up the cost of their business, cost of capital. >> let's get some more questions here. >> mike with the manhattan institute. we talked about cities, we talked about conservatives needing a national movement. in order to be a national movement we need to compete in cities.

that's how we move senate races and certainly eventually presidential races. and we have the examples. we have right here in new york, indianapolis, reforms on public labor and certainly most recently public safety. but we lose cities. so my question is why? is it messaging? do we need a new agenda? many of you would say that we are kind of solving the problems of a decade or two decades ago. but i think in cities we're solving today's problems but we're not getting better. what do we need to do? >> in 2008 when obama was elected, i actually looked at this problem and thought, ok, is this true in other advanced economies? where the cities always vote left and the rural areas always vote right? and it turns out in europe there isn't a clear pattern. in some european countries the cities are actually more politically conservative than the rural areas and there are maybe a lot of different reasons for that. but that gives me hope that there isn't anything inherent about urban life that necessarily means people must vote more left than rural people.

but i do think it's a huge problem and something we need to address and we have to be willing to compete in areas where there isn't a short-term payoff. that's the hardest thing about the political cycle. is the short-term payoff leads us to cultivate the voters that we can win in the near term and that leads people away from cities. >> thank you for being here today. this has been a very interesting panel discussion. i wanted to ask about education but you touched on that. i want to ask about foreign policy. it doesn't translate into a lot of votes but it's something that's obviously very important. the bush years could be described briefly as perhaps overreach. and now you can say that a conservative critique of obama might be that we withdraw too much and it allows a vacuum for strong men like putin. what would be the conservative response, what would be your response, your policy prescriptions for what's going on in the world right now, particularly in ukraine and syria and how you guys would think about handling that?

>> i doubt we can touch on all of those things. but this is an area where the panel is pretty divided. i personally believe that joe has this -- he said in the 1990's i think it was, securities like oxygen, you only notice when it's vanished. i personally think that u.s. global leadership, i think it's extremely important in undergirding much of the rice of global prosperity we've seen. -- rise in global prosperity we've seen. i do think it's fair to say there was overreach during the bush years but it's very important that we invest and i think the problem is that the investing in our capabilities, the benefits of that are not always clearly visible. i also think it's true that the problem is that there are big swaps at the national security state that are ok. it's hard to tell. it's hard to have a coherent cost-benefit analysis.

there are real structural problems and we might want to shift resources. but do i think there's a dangerous tendency on the right to give short drift to the importance of american power undergirding global stability but this is not a popular view. least of all among younger conservatives. >> foreign policy is important but it's not going to be important in the political debates of the next decade or decade and a half. i think -- we've had very little recent time where we've sort of had a normal political environment on foreign policy because we had the cold war and then september 11. but i think the best we got for where foreign policy is going to sit in american politics was the period from 1990 to 2001 where it was not salient. you can see that in the way conservatives talk now about the obama foreign policies. they try to find points to sort of harp on where the president is seen as weak.

i think that's behind the obsession with the benghazi attack. i think there was also a very telling statement from marco rubio about syria, when the president was waffling about whether we were going to intervene this and rubio took up a position where he wasn't sure if he was for or against an attack in syria but he was against whatever the president was for. [laughter] and so i think i don't know what kind of foreign policy a republican president will enact if elected. george w. bush ran things that he was going to have a humbler foreign policy and then september 11 happened and directions changed. i don't think that's going to be a key driver of elections. >> hi. first, thank you, everyone and moderator, for hosting a really interesting discussion. i have a question about health care. i'm directing it toward josh. toward the end of the discussion you suggested the

decentralization of service delivery as superior. there is a segment of the health care complex called home health agencies and they take patients in a recuperative and rehabilitative phase and bring them home and it suggests much higher outcome, much cheaper delivery. the affordable care act has almost destroyed the industry. it's led to major reimbursement cuts over a multiple last two, three, four years. do you see this vis-a-vis the left-right divide, given there's a superior outcome with it, as something conservatives can reintroduce, repackage, rebrand and sell in the health care complex for superior outcomes? >> i think the interesting thing that we've seen or an interesting thing we've seen with the implementation of obamacare is i think to an extent it's been a driver of innovation among providers because they're faced with these

reimbursement rate cuts. there's been a real drive in the industry to find ways to contain costs. we've seen i think a slowing in health care expenditure over the last couple of years. and so actually the government turning off those taps to an extent -- and remember, it's not like we had a private health care system before obamacare. we already had the government incurring about half the expenses. so by paying less i think that can be a driver of a kind of decentralized innovation. where the government basically is saying, we're going to pay less. you figure out how to do it with less money. that's not to say it's going to work everywhere. if you cut reimbursement rates too much you're just going end to up with scarcity of care. although i would note that among the somewhat disappointing findings from the oregon health study, we found people were consuming substantially more health care if they had medicaid which suggests that barriers to access due to low reimbursement

rates were not as large of a problem as people on the right sometimes say. you don't want the federal government going in and telling health care providers exactly how to do their jobs. but i do think that centralized fiscal policies can be a driver of decentralized outcomes about service delivery. >> it's very simple. give consumers control of their own health dollars. then all of these things, whether it's home health care, retainer-based primary care, a lot of this stuff will automatically happen. why? because if the consumer is controlling the dollars, then the industry works for who pays them. today it's the government and third parties that pay the deliverers of health care services so the person who is important in that system is the payer, not the patient. if the patient is controlling the dollars then the system magically works to serve the patient. and that's actually -- i resist this call for conservative

fraternalism because i think the opposite is what we need. we need to actually restrict the amount the government's doing but actually give people the money. so if we're concerned people don't have the means to afford certain services or support themselves in a certain way, that doesn't mean have some complex government program that tells them what to do. give them the economic resources to pursue the people who would deliver those services directly. >> the point that josh finished with, which i very much agree with, in a certain way the home health care question is one that shows the problem of both sites. the system we had before obamacare and the system we have now. in the bush years there was huge pressure to increase investment in all forms of home-based health care. which was also a sort of centralized decision about how the system should work. it didn't work very well. it was probably an enormous waste of money. and now we're doing the reverse

and saying, well, let's have a centralized decision that says, no, we don't do that. neither of these is the right approach. the medicare system we have, and really the larger health care system we've had before, was not a consumer-centered, market-oriented system. that's the direction that conservatives need to move in. >> some of this sounds very familiar to me. the pessimism i'm hearing was very similar to the pessimism of the late carter years and i was with the reagan administration. it was amazing how quickly things turned around. and i think some of the 1980's solutions are still there. i think problems of regulation, obamacare has messed up the medical markets but it's also messed up the labor markets tremendously. financial regulation, just today there was a report on a large number of new species being declared endangered. i think all these -- everywhere we look the economy --

\[inaudible] and i think that's a lot of the unemployment we're seeing goes back to your mill worker. why does he have trouble finding a job in maybe because employers won't commit to hiring because they don't know what kind of health care expenses he's going to generate in the future. so i think to the extent, if we could deregulate some of these things, we might be able to move away from many of these problems. >> i agree, but it's also true that the policy challenges of today are very different than the policy challenges of 1970. just look at the tax rates in 1978 versus the tax rates of today. regulation is a much, much bigger problem than it was then. so we have to have an agenda that is tailored to the challenges of today. >> you guys talked about how there's no republican plan to deal with decentralization in civil society. but i'd argue that the ryan plan was conceptually about that. it was about privatization and voucherization which would decentralize from the federal government and a large amount of

spending consults which would allow civil society to flourish. that program seemed very popular with republicans and very, very unpopular with the public. so i'm curious if you think these sound like good concept bus if in practice they're going to be too to volatile and unpopular? >> almost no voters care about decentralization as such. so you can't build the message around that. nobody goes into the voting booth and says, do i want a government and society that is more central or less central? they care about more fundamental pocketbook issues. but the ryan plan thing goes to a distinction that i mentioned earlier. you want to decentralize certain kinds of deliveries because of the value of local knowledge, you have different preferences in different areas. bureaucrats who work for local governments are more likely to be in touch with local people or who work with nonprofits than people who work for the central

government. but that doesn't mean you have to decentralize the actual fiscal flows where the federal government has a significant advantage in its ability to tax and borrow. if you commit to having those decentralized, it gives you more flexibility to centralize other things. this is not just a backdoor way to slash the welfare state and reduce real incomes for people. >> there is a problem that republicans are going to have to deal with. you may have noticed obamacare wasn't popular, still isn't. most things that are actually fiscally feasible are wildly unpopular. people like free stuff that is paid for by some other person they've never met. it has never been more true than it is today because we have an aging population that is very conservative about keeping what it has gotten and because there's less money.

with lower growth you face much harder fiscal tradeoffs. you can't take it out of surplus. you have to take it out of something that people already have. i think this is going to be a big challenge for republicans as they frame an agenda which is that if you're going to be honest about what it's going to cost and how you're going to do this and who the losers are going to be, because there is no such thing as a policy in which someone is not worse off, then you're going to have to go out and say that. and be credible. that is going to make those people very upset. >> democrats can do that. >> i think the problem is that it takes us 40 minutes and a future of conservative -- conservatism talk to mention anything about social issues. we lose people flat-out because we have this bloodletting of state by state gay marriage, yes or no. so is there some kind of way that we can avoid a possible

schism of northeast republicans who frankly this issue is settle, right? all of us have gay friends, we're fine with it. but for southern republicans, how do we keep them from going off and causing a schism and running away with todd akin and pat robinson? >> i think even in the south, young republicans have your views on the social issues. so i think this is a generational transition that's going on on both the right and the left that perhaps won't be as substantial of a schismatic issue in the future. but i think that's sort of the political element of it. i actually wish and hope that conservatives would have a coherent political philosophy around what they think culture and society should look like that would accept the post-1960's reality, the world we live in.

>> a couple questions from social media. but i'm going to jump in. the republican party is a pro-life party. it never will not be a pro-life party it. would die without being a pro-life party. i just have to say that. [laughter] i'm not a pro-life person. i'm just pointing out the reality. >> there's no generational shift on abortion. >> i carve out abortion from the other social issues. >> this is a question from one of our twitter followers who is watching. he'd like to know, why not define debt ceiling to be the ratio of debt to g.d.p.? >> the fundamental problem -- this is just a general thing. people believe if they could only come up with some great rule, they could stop people from doing stuff they don't like. we just have to -- first of all,

you can never get the rule because the other side understands what you're doing. they're like, no, you can't have the rule. the second problem with this specific thing is that there's always going to be an outstanding emergency. we declare war on iceland once a year and then we give them a plan and we've gone right back. there's always ways to gimmick these budget rules. our job is to tell politicians no, don't borrow any more money, cut spending and by the way, i really -- this is something i think the republican party really needs to do is say, when you spend money, that is borrowing it, ok? the decision to spend is the decision ultimately to borrow and then the decision to tax. and george bush totally alighted the fact that when he spent money he was going to have to pay for that through taxation and obama has not even been interested in that discussion. on both sides, we need to understand that they're all the same thing and that trying to focus on the debt ceiling is a way to control that is not focusing on the fundamental problem which is the stuff we bought.

>> this is not the biggest problem with that. the biggest problem with that is that the economic crisis in this country is massive unemployment and the fact that wage growth is anemic because the labor market is slack. and conservatives have become a movement of people who think that that is a less important issue than government debt even though interest rates are extremely low and capital is flowing into u.s. treasuries because of the market is strongly accepting of the fact that the u.s. government will pay those debts. if we continue to prioritize this debt issue over issues that are actually of economic importance to 85% of americans, we won't be able to appeal with them. >> i disagree with this on two levels. interest rates are low. but just politically, people hate the debt. this is polled incredibly well. everyone hates borrowing money. do they act on that, no. are they totally hypocritical and irrational about it, yes. but is this political problem for republicans? no, i think this is something

that actually when they go out and talk about it, polled extremely well and does them good at the ballot box. >> it's a profound economic problem. the most profound economic problem. >> a conservative is somebody who thinks every market is efficient except the treasury bond market. \[laughter] >> we want to have a debate about monetary policy and what they are, that's fine. but let me tell you. in 2040 when we're paying more in interest payments than we collect in tax revenue and china has twice the g.d.p. than we do, you'll be very concerned about the price of u.s. treasuries. >> we've got one minute left. and i'm just going to ask you one quick informational question. since you're all young hipsters. \[laughter]

what's the most conservative macklemore song? no. i want you each to name either a politician or a writer who if you had to pick someone to have a profound impact on the future of conservatism/the republican party, pick a person presumably not yourself. [laughter] >> i'm willing to say i will probably be the least influential writer on the republican party like ever. all of my ideas are basically electoral death. but -- david brooks. very much. [laughter] >> credibility shot. >> one person who gives me hope at this point is mike lee. who is first of all a senator who doesn't think he's running for president which is just a wonderful thing in american life and very rare. but he's also a person who is shaping a conservative vision that makes a lot of sense to me and i think it would make a lot of sense to a lot of people. >> i think the most important policy innovation coming from conservative politicians right now is on criminal justice. and revisiting the idea that it is a good idea to massively incarcerate people, especially for nonviolent crime. i think there are a number of

southern governors who have been doing good things on that, including mississippi and louisiana and north carolina. >> i would say that the most influential writer or politician that we will have in this generation will be the one who makes conservatism accepting of modern society and modern social issues, again leaving abortion aside. maybe that's a politician, maybe it's a writer, we'll have to see. but that person has not yet emerged. >> jim, a gentleman of the manhattan institute, is a guy who is always going to be a niche product. he's not always going to capture the hearts of the massive but he's a guy who really gets the idea that markets are fundamentally about decentralized trial and error. they're actually really important. and that the right really ought

to be the party of experimentation. and i encourage everyone in this room and everyone watching to read him. >> he's had some major pieces. >> he's got a lead piece in the next "national affairs." >> thank you for that. >> thank you very much, guys. [applause] [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute] >> remarks from president obama in oh so, washington, the site of last month's deadly mudslide the di site ofton,

the deadly mudslide. and governor chris christie isn't senate -- attending a dinner. -- is attending a dinner. the dinner is taking place in washington. you could see his remarks live at 7 p.m. eastern on c-span. pentagon,day at the john kirby briefed reporters on why 600 u.s. troops will be sent to eastern europe for military exercises. it is more about that now. aggression in ukraine has resolved -- trenton are resolved. it is based in italy.

they will write tomorrow to begin exercises with polish troops. this new exercise is a first in a series of expanded u.s. land force training activity in poland and the baltic activity that is set to take place in the next few months and beyond. additional companies will move in the coming days to lithuania for similar exercises. with that, i'll take your questions. >> what is beyond? what is the timeline? indefinite? 150hen i say -- it is about , but it could very based on the exercises itself. it is about 150 soldiers. what we are after is a persistent presence, a

persistent rotational presence in these exercises. with the troops in place in all four countries probably by the end of this weekend, maybe monday. the exercises will last about a month or so. then we will rotate fresh troops and for more exercises. how far this will go, i cannot give you a specific deadline or timeline on it. for looking at trying to keep this rotational presence persistent throat the rest of the year. beyond that -- persistence throughout the rest of the year. beyond that, we will see. >> i talked about 600 personnel in total? -- are you talking about 600 personnel in total? you talked about a persistent, rotating presidents.

right now it will start with those four countries. the plan accelerated because of the korean situation? aggression ina's ukraine, we have been looking at ways to reassure allies and partners. these exercises are -- they aren't bilateral -- are bilateral. it is not a nato exercise. two, it is in response to that need. they are looking for ways we can constantly reassure allies and partners of our commitment to article five, but also to them and their security. >> [indiscernible] that we are countries

routinely operate with. d ise are units that the 173r worked with before in all four countries. they know each other. there is a relationship. yes, these exercises were conceived and added on to the exercise regimen as a result of what is going on in ukraine. >> that was a portion of a briefing held earlier today at the pentagon. you can watch the entire briefing anytime online at c-span.org. three whistleblowers discuss the challenges they faced when they sought to expose wrongdoings and violations of law. we heard remark from one who broke the pentagon story, as well as a former senior executive at the national security agency who is prosecuted as a spy. see that event tonight at 8 p.m.

eastern on c-span. congress is, while in recess, we are showing you book tv programs in prime time. tonight, stories from the white house. "dear abigail" the intimate lives in revolutionary ideas of abigail adams and her two remarkable sisters. oys."d "lincoln's b finally, "the hidden white house." harry truman and the reconstruction of america's most famous residents. all of those programs tonight on c-span 2. as he mentioned a few moments ago starting at 7:15 p.m. eastern, live coverage of new jersey governor chris christie at a congressional dinner held by the new jersey chamber of commerce. until then, discussion on the current trends of shrinking deficits and what it means for and revenues.ing

it is from today's "washington journal." host: maya macguineas back at our table. she is on a committee for face the debt campaign. federal spending highlights the failure of u.s. capitalism to create adequate jobs and even to sustain itself. that is encouraging because a lot of it shows that the economy hasn't fully versed -- recovered. the fiscal situation was so bad. it blew up the deficit. , we do not actually need to focus on getting the deficit down in the short run. theow that what i've --

real problem isn't a deficit this year or last or next year. the economy is so weak. it helps to compensate for that. the real problem is the deficit looking out into the future is growrge and predicted to at unsustainable levels. it might come down too quickly we hadshort run, but them basically nothing that has really fixed the long-term debt problem's. we still looking at a mountain of debt. politicians do not want to deal with that mountain of debt. that is a challenge. host: cbo put these numbers together. 2.8% of gdpined this year. down 32% from 2013. shrinking $469 billion in 2015. why is no one chairing the falling deficit? >> i think the president is

chairing the falling deficit. he has made one of his talking points the fact that we have cut the deficit in half over the last four years. and a lot of his economic advisers have said that the deficit is coming down too quickly. you may do not want to tear those immediate, short-term improvements. we talk about the deficit coming down in half, it sounds really good. a broaderot to put in context. the deficit was cut in half over the past four years, but it grew 750% in the two years before that. high as thetwice as historical average. after a work am expected that to be larger, but you have a plan to grow the economy and bring that debt down. right now, we don't have a plan. we have an aging population, health care costs that are

growing too fast, faster than the economy, and a lot of programs at expanding faster than the taxes. it is not the best thing for the economy to make the deficit the focus now. the number the reasons it was a bit was a result economic crisis. we had a huge recession. yet automatic stabilizers or changes in the budget were less revenue comes in because people aren't doing as well and more money is being spent on programs that are helping people in need. a lot of money goes out there. we also spent a lot of money and stimulus programs.

three, lot of policy changes. are we going to shut down the government? yes. are we going to default? no. we made some policy changes. we put in another round, it was called the sequester. across the board, automatic cuts. those policy changes have brought the deficit down from trillions of dollars to half $1 trillion. host: would that be a good thing? guest: the policy changes are

really dumb. we have made fiscal improvements by looking at the wrong parts of the budget. we get across-the-board spending cuts for the most part. there are a lot of savings you could find in these areas of the budget, but you want to thoughtfully inc. about what are the programs that are outdated and we do not need anymore. what is performing really well and what could we spend more money on? we have an underfunded infrastructure and for arts in time. we want the spending caps to push policymakers to be more thoughtful about what is working and what our national priorities are. i do not want to be held responsible for making these tough choices until people in cutting part of the budget. we will do across-the-board cuts. revenuesway we raise -- when you raise tax rates, innings people will work less because the incentive to work is less. there's a huge opportunity for a

plan to reform the tax code. we could bring down rates, but you could have people pay more revenue if you want to close the deficit, which i think we need to do. it all needs to be shored up. we are doing this country an incredible disservice by pretending we can sweep those

problems under the rug. at some point on the road, when it is too late to do in a smart way, someone will get around to fixing these programs. we need to shore them up and strengthen them and fix them. nothing is being done. that is my biggest concern. what other thing -- the fastest one part of the budget is interest. this is the biggest, wasteful item of the budget. people would say they're wasting money here and there appeared a there are lots of places we waste money, but they tend to be the smaller items. the interest payments. even mine, the interest rates are very low. if interest rates were to go up, that problem will become even

worse. when you see these trillion dollar deficits, it is because we haven't fixed the entitlement and interest payments are growing so quickly and falling on top of themselves and growing and growing. we do not raise enough revenues to pay for what we spend. basically, that is saying we do not want to pay for this. we're handing the bill to our kids. it couldn't be more irresponsible. >> we are talking with maya macguineas about spending and the budget. go ahead. caller: i would like to know why the u.s. is indebted we are the most powerful nation? guest: will we be able to stay the most powerful nation given that we are still in debt? was said recently that the greatest threat facing the u.s.

is not a security threat, but the threat of our national debt. it is frightening to many of us. we are the strongest economy. we are the premium nation in so many ways, but it seems that we are squandering that leadership because of basic, but irresponsible holocene making religious -- policy making. her a lot of things they want to spend money on. of investment, security for the country, programs to help people in need. programs to ensure we have secure and -- secure retirements. as we prioritize the budget, we say, no one likes taxes. but if you want the government to do something, we need them to spend the money and then cover those costs. i would say a lot of this has to do with the partisanship in washington. you have people who want to do

more spending. people who will want to cut taxes. those are the easy part. instead of making those -- we will cut some spending area we will raise the revenue to pay for what we are doing, which a be a compromise. it would be responsible but hard for politicians to tell voters that so we will do. they take the easy way out and charge the national credit card. have been doing it year after year. in the past, we primarily ran deficits when in war then when the economy is stronger, we would get rid of the deficit. we no longer do that. we run deficits in good times and bad. every year you do, that amount of money goes to the national debt. the huge amount of debt is released -- draining the strength of this country. you see it in all of the international countries, wagging

a finger in united dates, losing your position of authority to tell us what to do because you are being so irresponsible. host: happening in real-time on that website, we will go to rob, republican caller. caller: i am concerned about this. if our interest rate goes from one percent now to normal, like five or seven percent, would we be paying five times the amount of interest on that debt? that is one question and maybe give me exact numbers. if our interest rate goes from one percent now to normal, like five or seven percent, would we be paying five times the amount of interest on that debt? that is one question and maybe give me exact numbers. number two, when we bailed out the banks and they pay back the money for the bailout, where did the money go? three, they had a segment earlier on middle income people feeling like they were taxed too

much. i am assuming they were considering the contribution to the social security system as what causes them to have a higher tax rate. it looks to me like it is a contribution to their retirement that we will ultimately get. could you speech to those? guest: three great questions. i feel like we have a teaser rate. the u.s. has had low rates and you have people -- rates are so low and we should borrow more. interest rates go up one percentage point, that would add about $1.2 trillion that we would owe in interest payments over the next 10 years. 120 billion dollars a year in interest payments.

if they go up just one percentage point. they can go up significantly more than that but everybody remembers the supercommittee, a group of members of congress who tried to get together to come up with some savings so we would not have the sequester across-the-board cuts take place. they were trying to save between 1 trillion and 1 trillion and a half. they cannot come up with any agreements they agree on. the point is, you would need a supercommittee that would actually succeed for everyone percentage increase in interest rates. that just shows you we are very vulnerable if we borrow less. depending less on borrowing, we would not be so worried on the fact that rates are likely to go up. host: countries continue to buy our debt. guest: yes. we are the safe haven. it is so strange, we could mess up the world economy and when we

threaten to default, it could send ripples through the world economy. we could mess up the global economy and people will block our debt. people believe we will do the right thing in time. those assumptions are being called into question. people look at our government and say, that is not as stable a government as it used to be. the lack of ability to compromise, the real problems and come together and solve them, in the past, republicans and democrats would fight but they would come up with a solution. right now, you have every issue. i think the question is being called to whether we really are able to govern as we have in the past. if and when other countries become more stable, think

countries in asia -- in asia and europe, people start to diversify. that is where the pressure will be. host: bailing out the banks. one of the things we have seen in the situation with the banks and fannie mae is money coming back into the treasury over time. excellent question about social security. social security taxes or contributions are foremost families the largest component of the tax bill. i could see it either way. on one hand, you're putting money into the system so the benefits will be there later. it is a pay-as-you-go system.

what i put in my payroll taxes each year, it goes to pay for my father's benefits right now. it accounts for me or even a place where it is safe. in the past, we were taking in more money than we were spending this year. what that did come it was used to buy government bonds to help finance our deficit. that money went to pay for defense education, infrastructure, all the different things we spend money on in the budget every year. now we owe it back to social security but it was used to finance the government. now social security does not run surpluses anymore. every dollar we pay in payroll taxes is now going to pay for benefits directly. we switched from running surpluses as the baby booms started to retire.

frankly, that is one of the big problems. so we can keep this program making good on his promises. we will need to scale back on benefits, look at the retirement age, which we actually overstate in our economy, or raise revenue or we will have to raise some combination of all these aims to fix the system. policymakers know that is what we have to do. we have been waiting for years. baby boomers are starting to retire. it is not about fixing the budget. this is about fixing social security. in many ways, they have and used to cover up other parts of the budget. they have been used to mingle for other revenues and used as tax dollars. host: here are a couple of tweets for you.

guest: i guess he doesn't like seeing it because it is depressing? host: about that. people do not want to know or talk about the idea of this debt. guest: what we have gone through in the past couple of years is remarkable. we had suddenly trillion dollar deficits, the country woke up and started saying, we have to deal with it. someone who's really worried about this issue and how it will harm our economy -- frankly, it means already our economy is going slower, wages lower, job security is lower. having these deficits, i know we do not feel the affect everyday. but it affects our economy and livelihood already. people woke up and they were incredibly rate about it. -- worried about it. it became the most contentious issue. there are a lot of members are

working closely together on it. you saw this in the house as well. for the most part, soon as you're talking about the sticky, thorny issues of reforming entitlement, cutting spending, and raising revenue, politicians not play grown-up. we focus on the issue and they were unable to come up with deals. i think basically all the politicians came up with a one agreement they could, which is, let's not talk about it anymore and pretend things are ok. we have been talking about and it is really hard. it won recklessly grow the economy. we need to. part of growing the economy is making responsible choices dealing with your deficit.

i think we are in a position of deficit denial. you have got all of the leaders trying to pretend is not a real problem even though it is. i would add to the mix of midterm elections. a lot of people are thinking about running for office. you do not see a lot of acts of political courage during the election. the person who treated us does not want to talk more about the debt but we have to deal with the debt. we cannot sleep and onto the carpet. voters need to ask their members of congress what they would do to confront it. host: here is a tweet. guest: there is a lot of division about whether a flat tax is the right answer. i do not think so. always had ahas

progressive tasco. u are doing, the higher your tax rates are. every year, the government loses over one trillion dollars. the home mortgage interest reduction, the fact we do not pay taxes on health care. if we're willing to trade some of those come even the tax rate -- tax breaks for yachts and second homes, and get rid of some of those, we can bring out tax breaks -- tax rates down. so we have the same distribution of who is paying taxes as we do now. income equality is growing in the country. going to a flat tax where the people on the upper and are paying lower tax burdens does not make sense. you could greatly simplified attacks and bring the rate down for everybody.

let's go back to call spirit michael in brooklyn, democrats. caller: hello. good morning. i worked more than a 20-year-old. i have no home and car. i cannot buy anything for my children and my wife mary who is responsible for that? [indiscernible] problems --or these [indiscernible] sorry for hear you about your situation. talking about growing the economy and growing your way out of it. can the united states grow their way out of the deficit? guest: that call reps on your heartstrings. so many people are suffering in the country right now. it is terrible economic recovery

has not been strong as people would want to be. we do not know how to bring more jobs back. there are a number of things we have to do. on bringing the deficit down right now is not the right priority. about how weink will create better incentives for work and job creation. you could best things do is reforming the tax code. so it is easy to bring jobs and keep jobs in this country and hire people. another thing we could do is should makewhere we more public investments. some have longer-term growth prospects like education and research. some have more immediate growth prospects as well. infrastructure and direct

spending on things that would grow the economy over time. we have to get the debt under control. aboutked a little bit entitlements. howdy strengthen the program so many people rely on so they will be there today. protects they that people who depend on them. ways if we get ahead of pretending we do not have to deal with the challenges but star strengthening them now. you can make changes so every single person who depend on them is protected, does not have we couldprotected increase benefits at a low and back are willing to pull benefits for people who do not need them. it seems incredibly sensible to me. should make more public investments. some have longer-term growth the caller makes you feel the pain of how terrible the fact that we are not working as good stewards of our economy now. we are not thinking about ways to be responsible or ways to protect people falling through

the cracks there we are not feeling with longer-term challenges of dealing with a sustainable economy. class we're talking with maya macguineas. budgettter handle is at talks, if you want to follow them. she is on a committee for face the debt campaign. federal spending highlights the failure of u.s. capitalism to toate adequate jobs and even sustain itself. you are next, david. you are on the air. caller: two quick points. i would think if you raise your taxes, you have a less disposable income, you would probably work more than -- rather than last. my second point, more important last time i looked, the

u.s. workforce is 22 million. every seventh employee was the government employee. six people who pay for that. in the government and the private sector. the comparison between the two, it is day and night. the government job is a breeze. all expenses paid, no sweat. seriously. harder -- effort and you are carrying the weight of all the government employees, i do not want to take up more of your time, but that in a nutshell. will have her respond. >> you have the personal experience. we tend to treat government workers as one big group. it is a diverse group. government employment has been

recently and wages have not gone up for employees. in some ways, that is changing and the government is becoming a less desirable place to work. remove away from the government private sector. the government shutdown was incredibly insecure for a lot of workers at the time. be you observation would have the most talented people working for significantly less wages and other areas, there are huge bureaucracies where people are not working, incentives are not to work. it has become a place where people are not fired. it is true of the entire government. figure out where in the government -- policy experts are

phenomenal. how're happy to figure out to figure out these policies. i prefer the ones not as partisan. at the same time, what we need to do is look at the government much more specifically in the program. the laborould include force. much of our budget is focused on how much we will spend and how much we will tax, but it does not do much to evaluate the performance. if we changed priorities, and we do not do that most of the time, but if we spent a lot more time budgeting to actually evaluate how the bureaucracies are working, we could find a lot of savings in that area and it would make the government much bring in some and

of the private sector competitiveness efficiency better help old. >> the new game for extremely rich tax avoidance. i want your take on the affordable care act. >> will that add for deficits? that is the $100 million question. it has been interesting because the fight over the affordable care act is weak. it has been distracting from a lot of other important issues entitlementof full reforms. a lot of ways to make changes to it and improve it. what we're seeing right now, we have seen a significant dry out -- that is a real problem. not growing as fast as they had before but still fast. some of the most recent studies we are looking at are showing it

is not really the result of the aca. the slower economy or things that are not as likely to stick. law,ems in the health-care there will not be that much that would control costs. for when theyid put it in place. past, we put in a prescription drug plan and mexico -- massive taxes. they paid for the health-care law and that is a start. the question is, was it going to include things that help control thecost of health care? answer, i am pretty sure, is a little bit but not nearly enough. expanded coverage so massively, and was a huge opportunity to control costs spear once again, with the government said, the easy part, let's expand coverage. partll see that hard controlling costs later. it will be harder to do because we waited and it will not be connected to cut -- expanding coverage. >> lifted you make of the data released last week on medicare

and how much doctors are getting on medicare payments? that that we need more transparency. there are huge things we're learning about discrepancies in how much different doctors are collecting for medicare. it is terrific we are showing the data. tore are people jumping conclusions and some doctors making a lot more for good reason. for the large part, i think anyplace we can make the data more transparent, when a half the with government programs like this, will be very good for helping to control costs. health care is really hard. we need more information. we need more transparency. those of us trying to navigate the health care system, it is overwhelming. i cannot go on the internet and look at millions of different cost of different doctors and figure out exactly what i need to be doing or my health care. to get the transparency

data out there and have people starting to use it to figure out where we are making -- it is a step.aul and an important host: some of the analysts said it is largely due -- to prescription drugs. money step.of that is for the drugs seniors need. guest:

of gdp to debt? >> a lot of great questions. i think i understood this one. the first one was about the deficit. each year we run a deficit. that much is evident to the debt . if we ran a surplus, we would

bring the debt down. it will be there for decades is my production -- prediction. the second question is about the fed. there are a lot of questions out there which nobody knows. nobody knows how the unwinding of the assets the fed has purchased and the balance sheets will affect the overall economy. that is the important question. will we be able to do it? the bigger question is how it will affect the overall economy. will it be very disruptive to interest rates or will we be able to gradually unwind, not purchase the treasuries anymore, and start to put them in open markets slowly over time. host: the question was about debt ratio to gdp. guest: i'm not sure about the 21%. you might be talking about the size of the government compared to the economy at 21%.

the debt is about 73% of the overall economy. two debt numbers. that is the debt we have borrowed from the public. there is the debt we owe ourselves to the social security trust fund. we owe closer to 100% and how much we promised ourselves. it is projected to go up slightly over the next 10 years. p slightly over the next 10 years. we studied this. there is no magic number on what the debt would be. there is no international standard that would be reasonable or doable. a reasonable plan that came out on how we will get the debt controlled in a gradual way. you look at the plan that is like that, that dealt with all parts of the budget and grow the

economy and protect the most honorable, you would probably want to shoot for getting your disruptivedebt to about 60% ofa decade or so. there is no magic number. the trick is that you want your debt to not grow faster than the economy and it has been peer that is the problem and that is when things are unsustainable. if you look at something like the president posses budget, just scored last year, while it would manage the debt for a couple of years and it did not grow faster than the -- van the economy, it didn't -- van the economy -- these are dry and boring numbers. have ason why is if you debt level like in 2008, you have fiscal flaccid at flexibility. if you have a national emergency, something with a huge opportunity and your debt levels

have moneyyou then on your credit card you can borrow. right now, our debt levels are so high that if we have another down and below, because there is no way we will have the economy growing steadily, you have it grow up and down like it did before. up and down, we are constrained. our hands are tied behind our back there and we do not have the same borrowing power and it before. other countries keep lending to us right now. because our debt is as the risk stop at somecould point. we need to make sure we get our debt into a reasonable zone. 62% would be reasonable. below 40% would be historical averages. so that we will be able to borrow when the need comes up, which it certainly will. independent caller.

peace, the politician speaking out there. i believe the problem is people who talk about in your budget projections are pretty laughable. about his left was the politicians who kept talking about the social security trust fund a few years ago. politician doublespeak. host: you're breaking a little bit. what he thinks talking about a tenure budget is foolish yet felt -- foolish? policies or change iran the world and interest rate goes disaster and we have to get basic controls of the budget under control. i will let you go that point because it is difficult to hear you. guest: i get the point.

i talk about things in 10 years when we do budget? then the politicians going change and all over again, sometimes for good reason because the world has changed and sometimes because there are different politicians in place. it changes regularly. the reason i think it is important is because what we course understand is the we're on where we're headed. in particular, if you look at things where we have government programs that make promises to people, they need to understand what they can and cannot count on. to know noteget from the social security administration saying this is the kind of in a fit you are so far unlikely to get. what the note does not say if the administration does not have the money to set aside to pay for that. long-term projections are critical. do not look beyond this

year in the budget, we would not know social security -- the trust funds will run out of funds in a decade. we would not know disability would run out into years and medicare were no longer cover its costs the way it was originally planned. you have to look at do not looks year in the budget, we would not the choices you make today. another way to say it is we could not -- budget measures have a profound effect on the coming years. faster than the economy or more each year. something that is not permanent. you have to see the long-term projections. the important thing is to look .t those projections it is not that that is the budget or the plan. trackuld help us stay on to make decisions to help policymakers. just like you want companies to spend more time thinking about

the sustainability, our country needs a longer-term plan. it has to be a long-term plan. we're falling short where we have to think about the media policies. -- the media policies. host: don. caller: good morning. you are riding a dead horse. the real issue in this country is economic equality. it is economic inequality not only here at around the world. [indiscernible] point, capitalism in the 21st century, that what -- 95% of ourwith money went from the top one .ercent

that is af taxes, real problem. if, like suggested, that we start taxing the upper one come youf the bracket do not like to hear that because your corporate sponsors who sponsored your $4 million for ray or little get-togethers in washington, are part of the corporate community. of your am not sure last point, which is sort of it is a, but i agree tremendous challenge, one of the biggest facing the country right now. a picture is actually -- absolutely integrated with the inequality issue. as you go to the book, one of the points was some people are only making their money from capital and labor. how do you spread the benefits of capital?

there needs to be more shared capital if and when that is when the capital will be. a sweet -- guest: i do not think it makes any sense there is a tax break there. i do not agree we will have an 80 or 90% tax rate. that would really harm the economy. i agree we should have a progressive tax system, but i do not think it is the only solution. this book is luckily starting a tremendously important dialogue in this country. not, -- notill have come up with solutions. it comes from the fact wages are shifting and jobs are shifting because it is a more open global economy them before. short-term solutions in terms of

minimum wage a sweet -- are not nearly enough. they are scratching the surface of the benefits of economic growth, which has been muc. >> how is the group funded? guest: by foundations. the fix the debt campaign is funded by corporations and individuals. the campai >> we leave the last few moments of washington journal to take you to the remarks of chris christie. live coverage. >[applause] >> thank you all very much. thank you.

you all very much. thank you for the introduction. welcome to new jersey. i hope we won't be having nearly as much interaction as i had with your predecessor. it will be better for me if we don't have to do that at all. thank you for the introduction. thank you for arranging the renewal of this trip despite the wonderful winter. members ofelcome the congress who are here as well. of course, i want to add my congratulations to governor byrne. for every governor who will someday be an x governor -- governoronr, to see a who serve some difficult times still be yet he -- still be here

at 90 does great things for me. . you are an incredible example, governor. [applause] governor loves to come here every year. the reason he does is the reason why all of us,. it is to renew relationships. it is to hear from the business leaders of our state. what is going on in their particular business. the overall business climate that they see in our state. to make sure we stay in touch with each other. dependent's future is in large measure on the people in the room. those you represent and employ. i am proud to continue a long perdition of governors who come the businessss community on the challenges and opportunities we see before us over the next year. i understand these remarks are

being broadcast live by c-span tonight. but that will tell you is this lyricalthe quietest might in america and months. [laughter] we are going to do the past we the 15best we can for people out there watching c-span to bring them as much entertainment as we can over the next number of minutes. i said there are challenges and opportunities. there always are. i sees particular time, the challenges and opportunities melding together. when we think back on what has gone on in our state over the last five years, the recovery we have made has been exceptional. but it hasomplete, been exceptional. i want to remind you of a few of

the things we confronted a little more than four years ago when we all gathered here in 2010. we were confronting a budget crisis in the middle of a fiscal year that only had less than four months remaining. we had to reduce spending by between theion beginning of february and the middle of march or the state of new jersey would not have met payroll for the second pay. payarch -- for the second period in march. we had declining state tax revenue. unemployment rate. the business community that was stymied by the troubled national economy and burdened by the wet blanket of years and years of

tax increases in the state of new jersey on those businesses and their employees. we confronted a situation where we had to decide very clearly which path we were taking. there were two paths. the path we took for the last decade, which was to once again increase taxes, not do anything about spending, and continue to burden even further the business community and the citizens of our state. those who proposed this despite the fact that they had already seen in independent study done by boston college that said in the four years prior to 2009, $70 billion in wealth had left our state. not diminished wealth. departed wealth. it went to states like florida, north carolina, delaware. even pennsylvania.

despite that, there were voices that still called and still call today for increasing the tax burden on the people of our state and its businesses that employ the people of our state. we chose to take a different path. to make the pledge we would reduce the size and scope of government. to make a promise to the people and businesses that we would not increase taxes given the volume that they had endured over the course of the last decade. how have we done? if you look at the budget we februaryjust this past you takel year 15, if up the entitlement programs that we have, pension payments, payments for health benefits, and debt service, take those items out, spending on every tther item in the state budge

,s $2.2 billion lower, fy15 and we spent in fiscal year 2008. we have 6000 fewer employees on the state government payroll today than when we stood here four years ago in 2010. we made the pledge to make government smaller and less to expensive because we knew it was the only way to avoid what had been the in bev ability -- inevitability of ever-increasing on their businesses, income, and items they purchased. they knewesses, there were ever-increasing taxes as well. we increased -- we decreased

billion.taxes by $2.3 billsonomic incentive which are leading to more businesses staying in new jersey and more businesses coming to new jersey and creating jobs. 130 thousand new private sector jobs since we took office in 2010. all these things are things that were hard-earned victories. ultimately, bipartisan victories. during my entire time, we have had a democratic legislature. none of this would have gotten and the -- would have gotten done without our colleagues in the legislature and their support. people ask me what it is like to be a conservative republican governor in a blue state working with a democratic legislature. i have said, these are the people of new jersey. they have an enormous since of

humor. [applause] [laughter] they have decided to elect me twice. and give me a liberal democratic legislature. they're like 13-year-old middle school students in a science class. they take that experiment into the basement. they mix things together. they say, let's see how this will work. what will happen if i mix these two things together? be therection would was nothing but combustibility. combusting me, a soft-spoken thoughtful guy, with the shy thoughtfulft-spoken senate president, would lead to nothing but an academic

atmosphere that would lead to the secondouse, oldest one in operating, to be blown up and sent to rubble. that. not led to that natural skepticism and cynicism that many new jerseyans have has been undercut. factrge measure by the that we have decided to work together to solve problems. we decided to compromise with each other. mean i was get what i want. i wake up every morning security knowledge i will not get nearly everything i want. the good news is, so the steve. that partnership, the most consistent i have had over the last four years, with leaders in the democratic legislature, has led to the economic growth we are seeing in new jersey and an atmosphere that has convinced people there are times when

government can work for them. for years andese this progress and made difficult decisions. now, as we look forward to the next four years, are we going to go forward or backward? this beingples of not hypothetical questions, but actual questions. in issues we are confronting as we speak. first, people have complained in new jersey for as long as i have lived about property taxes. in the 10 years before i became governor, property taxes increased 70% in 10 years. eventrend is so obvious, patrick murray's polls can get this right. just wanted you to know i knew you were here, patrick. we haveast three years,

seen three years in a row of property tax growth of less than two percent. [applause] why is that? it is because for the first time in a long time, we are actually honest with people and each other. we passed the two percent cap that did not have 15 exceptions. cap,-- after we passed the we did the next that you needed to do to make the cap real. so taxes would not increase. services would not be increased -- decreased. that is to cap the celery to public sector workers at two percent. we sunsetted it for april 1 of this year. when i was back negotiating that, while he april -- why we picked

fools' day. i think i am beginning to understand. averaged axes have 1.7% increase over three years. public-sector employee wages average 1.86%. the climate where inflation is 1.1%. the system is working. this year, we propose the renewal of that cap. the legislator sent -- legislature sent me a bill that was riddled with many of the sins of the past. i use that subtle device that governor byrne used many times, the conditional veto, to send it back what i thought was appropriate to keep the progress going. senate jersey state agreed with that conditional veto by a vote of 33-1. we stand here tonight without an

interest arbitration cap because the assembly has failed to act. this is one of the moments where that question is being asked. are we going to go forward or backwards? if we do not pass the cap, let me tell you what will happen. one of two choices will have to be made by mayors, county executives, all across the state. to go to be -- valid to ask permission to raise taxes of up to present. currents know in the climate that is not an election you would want to be on the wrong side of. the alternative, if the voters refuse to increase taxes beyond andpercent, it is broad massive cuts and layoffs. who tells you

differently is not telling you the truth. there are only two choices. increase revenue, decrease spending. that is it. in this context, we have the assembly failing to act. it it is one of the key questions for new jersey's economic growth and vitality. as many of you already know, and i hope you will continue to say out loud, property tax growth that goes back to the seven willnt per year range squash economic growth in the state. from coming tole her state to live and work. that is a fact. the fact that we have to live with and deal with directly. we will continue to work with our partners. partners on both sides of the aisle, a 33-1 vote in the senate, 120 mayors and other county leaders who came with me

and the lieutenant governor to urge the assembly to act. we need to move forward on that piece of legislation and get it done. the next a vital issue we need pensionsith, again, is and public-sector health benefits. let me give you a statistic that should startle you. for fiscal year 16. for the first time in new jersey 's history, we will spend more money on retiree health benefits than on health benefits for active employees. think about that. we will spend more money for the health benefits of people who were doing nothing than for people who are doing something. for our state. if that does not convince you, over $50 billion

underfunding of our pension system, that this is a course that is bound to careen us into economic distress and disaster, i would commend for your review the case study of the city of detroit. the city of detroit which in the 1960's was the wealthiest city in america. bankruptcy.clared they have declared bankruptcy. why? $11 billion in debt. $2 billion in cash during -- i was no math major, but i know that is a problem. of the $11 billion in debt, $9.5 billion was retiree health benefits and pensions.

but for those crushing burdens, detroit would not have declared angrily. in the same way we saw general motors and others have to declare bankruptcy based on the same type of crushing burdens. now i have heard folks in the legislature say, the governor is overdramatizing this. it is not a problem. we will grow out of it. i have to tell you, i have been a long -- around for a while. i used to hear democrats kill republicans for saying we would grow out of federal budget deficits. now in new jersey, we have democrats telling republicans we will grow out of this problem. is there anybody who really believes we will grow out of the $50 billion-

underfunding of our pension system? let me tell you what it is doing. god for bid, to actually cut taxes. here is what it is doing. budget, of year's every new dollar in spending, is to payery dollar for pension, health benefits, and death services. six cents for college education, k-12 education, health care institutions. drug rehabilitation. -- a leadsthing nothing to cut taxes and make our state more affordable for

the people who live and work there. this is not a problem we will grow out of, everybody. let me be clear to you. this is not about politics for me. running it in the state again. i am done. the nextdle through couple of budgets and make do. and leave this mess for the next person. that has been none too many times in the state. new governors who, and with hopes and aspirations and plans. peopley have sold to the of new jersey in good faith, only to find the bag they are left is significantly heavier than anybody told them. remember, in the 2009 election year, the people of new jersey were told that the fiscal year 2011 budget headache $6.5

billion deficit. budget had a $6.5 billion deficit. deficit turned out to be $11 billion. not $6.5 billion. ont gift was left on my desk 2010. this is not about me. this is about the next person, wherever he or she is. what we are going to leave them to deal with. so we can ignore it, if you like. but it is not going away. it will impact each and every one of you and your businesses and employees. i probably will be be least affected person of the bunch. you will see me leaving, waving,

smiling, relieved. [laughter] in one who was walking should be the one who is going to be nervous. let's not do that. we know how to fix these problems. they are fixable. but it means looking people in the eye and telling them they are getting less. they are getting less for a good reason. a happy reason. one should -- that should bring them joy. they are living longer than any actuary anticipated when they set up the systems. that is good news, not bad news. ray governor? -- a governor? governor? [applause] this is not a static game we play. changeses like yours

and adjust to different social and economic conditions. if you do not adjust, you will become a dinosaur and to become extinct. every day, the challenge for the leaders in this room is to read the markets. situation in our society. to adjust your business model to new conditions. you can't say, i set up this business model and adopted it. i don't care about the change conditions. you promised me i could do this. that is not the way it works. why should we believe that government has the entitlement to work that way with other people's money? a $2.25 billion payment to the pension. the largest payment ever made by any governor in the history of

new jersey. that payment, the single payment 15, is moreear - than any governor did. it is not that we are walking away from the obligation. we are stepping up to the obligation. we are not ignoring what needs to be done. despite that, $.94 of every dollar next year will be spent on those three items. that is not a business that is growing. that is a business that is burying itself under obligations it can no longer step up to. are we going to go forward or backward? standard & poor's has told us we are going backwards because we are not dealing with the issue. they commend us for the changes we made in 2011, but they have told us what folks in the

legislature are telling you is wrong. you don't have to take it from me. take it from them. they say what we have done is good but not nearly enough. we are not going to grow out of this. we are going to have to be adults. we are going to have to actually fix it. we are going to to look people in the eye and tell them, cannot do this anymore. thing the federal government refuses to do, we need to set an example to do in new jersey. people inct the washington dc to finally step up to the plate and meet their obligations, tell us the truth on both sides of the aisle, then we better do it ourselves in our own state. or we are nothing but hypocrites. are things better in new jersey than they were four years ago? of course. they are significantly better.

revenue in the state budget is higher. businesses are looking to grow and expand. new businesses are coming into new jersey. they are better. did this can be turned around in the blink of an i -- this can be turned around in the blink of an eye. i would much rather be a flyingr who had revenue in over the transom and my biggest problem was trying to figure out how much to cut taxes, how much to increase programmatic spending on things we care about, investing in our childrens' future, and not be the guy standing here telling you we have to make hard choices and decisions. we need to do that now. we need to do them together. i'd much rather be the other guy.

but this is what i have been given. accept a position of leadership, it doesn't come with a guarantee of sunshine and rainbows. it comes with the guarantee to do something great everyday if you have the guts to do it. i believe i have partners in the legislature who know and understand this and will do this. regardless of party. but we have set up a political system that doesn't reward the people all the time. what is happening in the legislature, they are slathered -- scared. they are scared to have to say this out loud. it is unpleasant. it is difficult. but it is necessary. confront and 2-3

years if we do not do this is a state with declining economic circumstances. more people departing the state. businesses that are wondering if the investments they made were the smartest and for them to do. we don't want to do that. we don't have to do that. our citizens deserve better than that. much better than that. and so i will continue to talk about this. not as i love to, but because i have to. not because it will bring people out of their seats, applauding wildly, but because i hope it will keep you in your seat thinking about whether or not we be tto be degeneration --

he generation who leaves this place better for our children and grandchildren then it was for us. our country over the last 238 years has been built on freedom, and each ofsperity, us feeling that solemn obligation. for us togood enough use up the great resources of our state and this country for our own creature comforts and benefits. are smart.e kids they will figure it out. no one did that to us. they gave us a leg up. they gave us an opportunity.

to inherit a greater country and state than the one we were given to read -- we were given. we are now at that crossroads. those problems get bigger, not smaller. we have to decide, all of us, about whether or not we will meet that solemn obligation. i can tell you this. i don't want to be part of the generation that is ultimately judged to have failed the first next to generation of americans. i don't want to be part of the generation that will be judged that way. believe me, we will be judged. we will be judged by how we conduct ourselves in these decisions. when we bury our heads in the withand assuage our guilt the creature comforts we have gotten because of our efforts, but more partly because of the efforts of our ancestors.

it is ansy choice. -- easy choice to me. it is time to make a few people unhappy so the greater good can be achieved. [applause] i don't know who started the applause, but i was hoping to go through the entire thing without any applause at all. you disappoint me a little. this speech is not about me coming here and patting you on the back and telling you how great you are. i am not here for you to tell me that, either. that is not what friends. friends oweot what friends. i came down here tonight to let you all know that despite the fact that the easy route for me would be to cruise for a set --

cruise through a second term and not confront the problems and leave be bad for the next person, i will not do that. at least not willingly. [applause] the good news of tonight. these problems are fixable. because of the greatness of the people in this room, they are not only fixable, but they can be conquered. i wassk me all the time, at a school in long beach island. i got two great question. me, does youro job come with perks, and is one of them a cell phone? i don't know where kids come up with these questions. the second question was, what is

the best part of being governor? tonight telling you the way i answer that. the vest thing about being ivernor is every morning when get up, i know i have a chance to do something great. i don't do something great everyday. i am human. but i wake up every morning knowing the people of new jersey have blessed me twice with a job that gives me the chance to do something great everyday. if that doesn't get you out of bed, i don't know what well. -- will. despite these challenges, the challenges have molded with the opportunities. this is an enormous challenge we confront. the opportunity is to make new jersey both actually and of civiclly an example

mindedness, self-sacrifice, and american greatness that can lead an example for our entire country. we have done it before. we can do it again. if we do, i suspect that many of the people in this room will be at the forefront of that fight. if you choose to be, i thank you in advance for it. i ask you undecided, to consider the alternative. weaker rnative is a america. that is unthinkable. butjust for our children, for the citizens of the world who need america to be a strong, successful, constant back and -- for what their

lives can be. let us resolve together to confront these problems with honesty and integrity. the spirit of togetherness. if we do that, i believe in my heart that the citizens of our state will reward us with economic growth, opportunity, freedom, and austerity like we have never seen before. -- prosperity like we have never seen before. we will be able to say we have done our jobs. when our time on the earth is over, we will be able to pass the torch on to the next generation, >> we did our job. now it is your turn. if you care that much about our state, said why. let's resolve to fix our problem's honestly and fairly and make this a that are place for our children and grandchildren.