tv Key Capitol Hill Hearings CSPAN June 5, 2014 4:00am-6:01am EDT
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to remember that the things that hold a city together, the public safety officers, the mayor and his various departments and the library all work together and i like that we have physically done that with our architecture. >> learn about the rich history of salt lake city, utah saturday at 6:00 p.m. eastern on c-span 2's book tv and sunday at 5:00 p.m. on american history tmp v. >> yesterday president obama along with other world leaders visited war saw to commemorate the 25th anniversary of poland's first free elections. in his remarks the president discusses the efforts during the cold war and u.s. polish relations. the president's remarks are 20 minutes.
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>> mr. president, mr. prime minister, madam mayor, heads of states, and government, past and present, including the man wo jumped that ship beyond a reasonable doubt wall to lead a strike that became a movement the prisoner turned president who transformed this nation thank you for your outstanding eadership.
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distinguished guests, people of poland, thank you for your extraordinary welcome and for the privilege of joining you here today. i bring with me the greetings and friendship of the american people. and of my hometown of chicago, home to so many proud polish americans. in chicago we think of ourselves as a little piece of poland. in some neighborhoods you only hear polish. the faithful come together at hurches. we have a parade for polish constitution day. and every summer we celebrate the tastes and we're all a little bit polish for that day. so being here with you it feels
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like home. now, 25 years ago today we witnessed a scene that at once seemed impossible. an election where for the first time the people of this nation had a choice. the communist regime thought an election would validate their rule. r weaken the opposition. instead, polls turned out in the millions. and when the votes were counted, it was a landslide victory for freedom. one woman who voted that day said there is a sense that something is beginning to happen in poland. we feel the taste of poland again. and she was right.
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it was the beginning of the end of communism. not just in this country but across europe. and the images of that year are seared in our collective memory. citizens filling the streets in budapest and bucharest, hungarians, austrians cutting the barbed wire border. protestors joining hands across the battlics. ecks and slove yaks in their velvet revolution. east berl inners climbing atop that wall. and we have seen the extraordinary progress since that time. al united germany, nations in
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central and eastern europe standing tall as proud democracies, a europe that is more integrated, more prosperous and more secure, we must never forget that the spark for so much of this evolutionary change for this blossoming of hope was lit by you. he people of poland. history was made here. the victory of 1989 was not inevitable. it was the culmination of centuries of polish struggle, at times in this very square. the generations of poles who rose up and finally won
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independence. the soldiers who resisted invasion from the east and the west. the righteous among the nations. yankarski who risked everything to save the children of the holocaust. those from the ghetto who refused to go without a fight. the free poles, who even as this city was reduced to rubble waged an historic uprising. we remember how, when an iron curtain descended, you never accepted your fate. when a son of poland is sent to the chair of st. peter he returned home and here in war sau he inspired a nation with this words there can be no just
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europe without the independence of poland. and today we give thanks for the catholic church and the spirit of saints jean-paul ii. we also recall how you prevailed 25 years ago. in the face of beatings and bullets you never waivered from the moral force of nonviolence. through the darkness of marshall loyola poles lit candles in their windows, when the regime finally agreed to talk you embraced dialogue. when they held those elections even though not fully free you participated. as one solidarity leader said at the time, we decided to accept what was possible. and so poland reminds us that
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sometimes the smallest steps, however imperfect, can ultimately tear down walls, can ltimately transform the world. and of course your victory that june day was only the beginning. as your president just indicated, the democracy is more than just elections. true democracy, real prosperity, lasting securities. these are neither simply given nor imposed from the outside. they must be earned and built from within. and in that age-old contest of ideas between freedom and authoritarianism between liberty and oppression, between solidarity and intolerance, poland's progress shows the enduring strength of the ideals
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that we cherish as a free people. here, we see the strength of democracy. citizens raising their voices free from fears. here, we see political parties competing in open and honest elections. here, we see independent judiciaries working to uphold the rule of law. here, in poland we see a vibrant press and a growing civil society that holds leaders accountable because governments exist to lift up their people, not to hold them down. here, we see the strength of free markets and the results of hard reforms. gleaming sky scrapers soaring above this city and super highways across this country. high-tech hubs and living standards that previous generations of poles could only imagine. this is the new poland you have built.
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an economic miracle. here, we see the strength of free nations that stand united. and across those centuries of struggle poland's fate too often was dictated by others. this land was invaded and conquered and carved up and occupied. by those days are over. poland understands, as few other nations do, that every nation must be free to chart its own course to forge its own partnerships, to choose its own allies. this year marks the 15th anniversary of poland's membership in nato and we honor polish service in the balkans,
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iraq, afghanistan and as americans we are proud to call poland one of our strongest and losest allies. so this is the poland we celebrate today. the free and democratic poland that your forebearers and some who are here today dreamed of and fought for and in some cases died for. the growing and secure poland that you particularly the young people who are here today have enjoyed for your entire lives. it is a wonderful story but the story of this nation reminds us that freedom is not guaranteed. and history cautions us to never take progress for granted. on the same day that years ago
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that poles were voting here, tanks were crushing peaceful democracy protests in tiananman square on the other side of the world. the blessings of liberty must be earned and renewed by every generation including our own. and this is the work to which we rededicate ourselves today. our democracies must be defined not by what or who we're ainst but by politics of inclusion. our economies must deliver a broader prosperity that creates more opportunity across europe and across the world especially for young people. leaders must uphold the public trust and stand against corruption, not steal from the pobblingts of their own people. our societies must embrace a
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greater justice that recognizes the inherent dignity of every human being. and as we've been reminded by russia's aggression in ukraine, our free nation cls not be complacent in pursuit of the vision we share, a europe that is whole and free and at peace. we have to work for that. we have to stand with those who eek freedom. i know that throughout history the polish people were abandoned by friends when you needed them the most. so i've come here today on behalf of the united states, on behalf of the nato alliance, to reaffirm our unwavering commitment to poland's security. article 5 is clear. an attack on one is an attack on all.
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and as allies we have a solemn duty, a binding treaty obligation to defend your territorial integrity and we will. we stand together now and forever. for your freedom p is ours. poland will never stand alone. but not just poland. astonia will never stand alone. latvia will never stand alone. lithuania will never stand alone. romania will never stand alone. these are not just words. they're unbreakable commitments. backed by the strongest alliance in the world and the armed forces of the united states of america the most powerful military in history. and you see our commitment today in nato aircraft in the skies of the battle aks, in allied ships patrolling the black sea, in the stepped-up
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exercises where our forces train together. and in our increased and enduring american presence here on polish soil. we do these things not to threaten any nation. but to defend the security and territory of ourselves and our friends. and yesterday i announced a new initiative to bolster the security of our nato allies and increase america's military presence in europe. and with the support of congress this will mean more prepositioned equipment to respond quickly in a crisis and more exercises and training to keep our forces ready, additional u.s. forces in the air and sea and on land including here in poland and it will mean increased support to help friends like ukraine and mold ovea and georgia provide for their own defense.
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just as the united states is increasing our commitment, so must others. every nato member is protected by our alliance and every nato member must carry its share in our alliance. the responsibility we have to ach other. finally, as free peoples, we join together not simply to safeguard our own security but to advance the freedom of others. today we reaffirm the principles for which we stand. we stand together because we believe that people and nations the have right to determine their own destiny, and that includes the people of ukraine. robbed by a corrupt regime ukrainians demanded a got that served them, beat and bloodnd
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they refused to yield, threatened and harassed they elected to vote. because a leader's legitimacy can only come from the consent of the people. and ukrainians have now embarked on the hard road of reform. i met with your president elect this morning and i told him that just as free nations offer support and assistance to poland in your transition to democracy, we stand with ukrainians now. ukraine must be free to choose its own future for itself and by itself. and we reject the zero sum hinking of the past. a free and independent ukraine needs strong ties and growing trade with europe and russia and the united states and the rest of the world. because the people of ukraine
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are reaching out for the same freedom and opportunities and progress that we celebrate here today. nd they deserve them, too. we stand together because we believe that upholding peace and security is the esponsibility of every nation. the days of empires and spheres of influence are over. bigger nations must not be allowed to bully the small or impose their will at the barrel of a gun or with masked men taking over buildings. and the stroke of a pen can never legitimize success of the neighbor's land so we will not accept russia's occupation of crime ya. our free nationless stand united so that further russian provocations will only mean more isolation tor russia.
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because after investing so much blood and treasure to bring europe together, how can we allow the dark tactics of the 20th century to define the new century? we stand together because we know that the spirit of war sau and budapest and prague and rlin stretches to wherever the longing for freedom stirs in human hearts whether in minic or cralkcass or damascus, pyongyang wherever people are willing to do the hard work they lding democracy, will have a partner in our nations. for in the struggles of these citizens we recall our own struggles. in their face wes see our own.
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and few see this more clearly than the people of poland. the ukrainians of today are the heirs of solidarity. men and women like you who dared to challenge a bankrupt regime. and when your peaceful protests were met with an iron fist poles placed flowers in the ship yard gates. today ukrainians honor their fallen with flowers in independence square. we remember the polish voter who rejoiced to feel the taste of poland again. her voice echos in the protestor who savered what she called a taste of real freedom. i love my country she said and we are standing up for justice and freedom. and with gratitude for the strong support of the polish people she spoke for many ukrainians when she said thank
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you poland we hear you and we ove you. today we can say the same. thank you, poland. thank you for your courage, thank you for reminding the world that no matter how brutal the crackdown no matter how long the knife, the yerning for liberty and digget does not fade away. it will never go away. thank you poland for your iron will and for showing that yes ordinary citizens can grab the reins of history and freedom will prevail because in the end tanks and troops are no match for the force of our ideas. thank you, poland, for your triumph not of arms but of the human spirit. the truth that carries us forward. there is no change without risk and no progress without
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sacrifice adodom without solidarity. god bless poland. god bless america. god bless our unbreakable alliance. thank you very much. >> after the president's visit to poland he traveled to brusselses. at the conclusion of the meeting heing he scheduled to h joint press conference with british prime minister david cameron. we'll bring that to you live beginning around 10:00 a.m. eastern. at dawn on the morning of the
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6th of june, 1944, 225 rangers jumped off the british landing craft and ran to the bottom of these cliffs. their mission was one of the most difficult and daring of the invasion, to climb these sheer and desslat cliffs and take out the enemy guns. the allies had been told that some of the mightiest of these guns were here and they would be trained on the beaches to stopped the allied advance. the rangers looked up and saw the enemy soldiers at the edge of the cliffs shooting down on them with machine guns and throwing zpwrennadse and the american rangers began to climb.
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>> monday former national security advisers discuss their time in the obama and bush administrations and gave their assessments of iran, russia and china. this is an hour. >> thank you all so much. i am andrea mitchell from nbc news and from msnbc, and you know tom donelan and steve. we are so happy to have two former national security advisers who have had long experience in public policy and before and since their roles in government. i, of course, knew tom all the way back when i was first going
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to the state department and you were working with warren christopher, and steve from all the years in the white house, and of course, with national security adviser role when secretary rice was secretary of state. so, thank you all so much. we've had a great kickoff to this from jack lew. first, let's talk about, since he raised the questions of sanctions, and it is so top of mind right now with russia and with ukraine, steve, first to you. how effective have we been in mobilizing europe against russia? we've seen the effects, the economic effects with the ruble, but how is ha translated into effecting vladimir putin's behavior? >> well, you don't know. one of the great questions is what makes vladimir putin tick, and i think it's really hard to say. he on these kinds of issues runs that system, you know, out of
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his hip pocket. i mean, it's really what is in his mind really is what matters. i think the administration was able to put together international support for a sanctions regime. it has been limited. it is focused on individuals and institutions that have been associated with the regime and associated with this effort. asset freezes, visa bans, those kinds of things. threatened more institutional sanctions that would go after elements of the russian economy in the event russia would have intervened to upset the upcoming election, would have moved across the border with their own forces, rather than with money and personnel and weapons, which is what they're doing every day. so, i think it's been a useful element, but i think one of the problems is these sanctions are so visible and so public that they become sort of, in some sense the thing you reach for.
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and they are a useful tool, but they are only one of a series of tools, and that can be more useful in some context and in others. and i think in ukraine, one of the risks is if we focus only on the sanctions and don't look at other things we could be doing to over time reduce russia's leverage on europe and to move forward with our vision of a europe whole and free. i think those things over the long term are going to be more important in deterring activity by putin. so, one of the risks -- you know, sanctions in some sense are a prisoner of their own success. they've been so visible, they've been effective. people seem to turn what is a tactic into a strategy and not realize they work more effectively when they're part of a whole series of u.s. tools, including, quite frankly, backed up by the use of force. one of the things that got the sanctions together against iran was that both the bush administration and the obama administration said to
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countries, help us with sanctions on iran because the alternative to sanctions, bringing iran to the negotiating table, is the use of force, and nobody was enthusiastic for that. so, i think we have to not get seduced by sanctions and their visibility and their effectiveness and embed them in an overall strategy using all elements of power in order to achieve our objectives. >> well, and to that point, tom donil donilon, you're the national security adviser, or the secretary of state, and every the effective tool of sanctions, they've been tried and tested. but in this instance with ukraine, there is no military threat, because i don't think anyone would suggest the use of force. there have been various criticisms that perhaps we should have done more in terms of military backup for the nato allies. but nobody has suggested that we would go up against the russian
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military over ukraine. >> no, well, i think -- i agree with stephen. first of all, it's great to be here for the tenth anniversary of the terrorism and financial intelligence group at this treasury department. this, by the way, and we'll get back to this, i think this discussion underscores the fact that the name is currently inadequate, because you do a lot more than what is in your name, and i think this is an example of that. i agree with steve that the sanctions effort to impose a cost on putin and russia for their conduct here is one element of the strategy, and the other element to the strategy we do need to include, a number of things that we've been doing, which is the support to the ukraine government politically, to support the ukrainians in terms of getting their economic footing through the imf, through european support and our own support, absolutely critical going forward, reassuring our nato allies, especially those front-line states and nato,
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taking concrete steps to indicate our support through our nato alliance for those countri countri countries, and the president will be underscoring that in europe this week, but also imposing a cost here through sanctions. so, it's one element of a comprehensive strategy here to address russia's aggression and illegal activity in europe. in addition, i think there are a number of long-term things we need too do, including focusing with europe on diversifying their energy supply and having strategies for insuring they're not as dependent on russian gas as they are today, and i also think it's part of also moving forward, frankly, with our economic negotiations and getting the tea tip agreement done with europe. that said, with respect to the sanctions, i actually think they've had an effect. if you look at the facts, as secretary lew laid out, in fact, most of the assessments right now with respect to the growth prospects for russia for this year and next year have been dropped substantially, probably
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into a contraction. you've had capital flow. secretary lew indicated that the estimates would be maybe $100 billion of outflow this year. i think it may be higher than that. we had $60 billion of outflow just in the first quarter. and the former finance minister said maybe as much as $150 billion. you had lots of investments in russia, so i think it's had an effect. i think it's had an effect on some decision-making and it's been a deterrent from some of the worst kinds of conduct that putin might have engaged in. last in respect with putin. my judgment is the same as steve's. it would be inaccurate to describe this as a system decision because it really is an autocratic system with putin making the decisions. that's certainly my observation from spending part of my time with him and in that system. so, hard to know which pressures get which results, but my own judgment is that, in fact, russia's actually more -- and it's not a simple calculation because there are costs as
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well -- but i think russia's actually quite vulnerable to a target of sanctions. last thing i'll say on this is that putin can say that -- i think i said that three times, but that's okay. >> no, no, it's all good. >> you're doing fine. >> that you know, the foreign policy that president putin seems to be pursuing right now is a turn away from integration of russia into, with the west politically and the security, which is something, two administrations have been -- many administrations, the clinton administration had been pursuing. he's turned away from that, right, and has a foreign policy now defined -- i think, steve, you'd agree -- by negative opposition to the west and in counterdistinction to the west at this point with russia taking the unique stance, pull back, well, in terms of political cooperation. that said, you can't pull back economically. he can stand defiantly politically, but at the end of the day, the russian economy can't stand defiantly in the economic realm, and they really are vulnerable, i think, to
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this, and i think it's made a difference, frankly, in terms of his decision. i think the decision he's trying to make is balance his conduct versus causing the west to put the most aggressive secretatori sanctions on him. >> i want to follow up with the west, but steve, if his option is to make, pardon the phrase, a pivot to asia, can russia counterbalance his losses in europe by what we've seen recently in his negotiations in china? >> he can help, certainly on the energy side, to have additional sources of export for his oil and gas. my understanding, though, is that the expectation is that the oil and gas that will go to china is largely from the western part of russia. so, he will continue to be dependent on having supply -- sorry in the eastern part of russia, he will continue to need to have supply to europe and beyond, the western part.
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you know, putin's interesting, and i think one of the ways to think about putin, and we saw this when he went into georgia in 2005 -- he's very -- he has a long-term strategic view. he believes in russian greatness. he believes that he has a historical role to restore russian greatness, not the soviet empire, but a russian empire, if you will, through this eurasian union that is contradistinction to europe and to the west and to china and asia. and i think he will go as far as he can in pursuing that agenda, depending on how much he succeeds and how much resistance he gets. when he went into georgia, we were concerned that today georgia, tomorrow the crimea, and the day after the baltic states. well, putin's two-thirds of the way there. and if he were to try against the baltic states, particularly
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latvia, for example, what he's doing against ukraine, and call into question the article 5 guarantee of nato, that is really an effort to split nato. and it's very interesting that he has been currying favor with the extremist parties in europe of both the right and the left that did so well in the european parliamentary election. those parties are all unified by one thing and one thing only, they don't like the eu. so, in some sense, if you're putin, you're playing an interesting hand, you know. you can take advantage of these opportunities, disarray, as occurred in kiev. and how far he goes depends on how well he does and how much resistance he gets. but the stakes are very high. the stakes really are about the kind of europe we're going to have in the future, whether it's going to be a europe whole, free and at peace, based on our values, or is it going to be a russian-centric europe with a kind of regime that putin is
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imposing in russia? because it's interesting, and i'll stop, it's interesting that his activities in ukraine have been paralleled by even greater crackdown internally on political and civil rights. >> that hasn't gotten, by the way, i think, the kind of attention in the west that it deserves. the internal level of repression and activity against opponents inside russia is at a level we haven't seen. and through the propaganda efforts that we haven't seen -- >> and against the media. >> absolutely. we haven't seen really since the fall of -- since the crack of the soviet union, and this is all a piece, i think, with respect to china. putin was clearly trying to indicate that he has alternatives through trying to negotiate this long-term gas deal in china. you know, but in kind of an irrelevant time frame here, remember that, i think the total trade relationship, economic relationship between russia and china right now is about $80 billion, which is a small
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portion of trade relations with the united states, particularly with europe. so, it's -- and i think a lot of competition historically, a lot of competition in central asia. so, we'll have to see how this ultimately develops, but i do believe in medium term here, there's a lot of pressure that can be put on russia. >> you know, here treasury has these enormous tools with sanctions. and as have been described to me, the targeted sanctions you refer to are to try to not make any of our european allies bear the full brunt of the pressure. so, we know france's vulnerability on arms exports and the uk on finance and germany, obviously, on energy, but the attempt to try to spread the pain? the leaders have been remarkably supportive, given how hard it was to bring them around. but as we see in the european
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elections and as we hear anecdotally, i was just in italy and was speaking to the people in the media there, leading figures in italy, from france, speaking to people from germany. the populations are not really where we are regarding putin. people were questioning me, why are you americans so upset about vladimir putin? now we see hollande inviting him to normandy. what would you as national security adviser, either, both of you, what would you advise the president of the united states to do going to europe this week and having what will obviously be some side-bar conversations with putin. how do you try to hold the coalition together when they are under such pressure from their business interests and their populations? >> well, one of the problems europe has, and tom and i were talking just before, and he can
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pile on to this because he's just been back to europe, but europe is in a bit of a crisis. they've now had close to a third of the voters in the european parliament elections opt for people that are anti-eu. they are in some sense a crisis of leadership. it's still the question of who speaks for europe. and they will now have a head of the eu council, a new foreign policy spokesman. who are those people going to be and how much are european leaders willing to let them actually speak for europe and take decisions for europe, which the individual countries will back up and support? so, there is a problem. the eu project has always been an elite product. it never has really been sold to the european people. you've seen that in the referendums over europe in the last four, five, six years. and now there is a question of is europe going to move forward to have speaking more with a
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single voice in foreign policy or is it going to continue to be the voices of the many? so, one of the problems is that the president doesn't really have a solid partner, and it has a solid partner that is internally focused and in crisis. i think it's good that he's going. i think it's very good that he's going to poland, and i think his speech there will be very important, because he is going to have to show the vision of the future and to try to, in some sense over the heads of the leaders, rekindle some excitement in europe for the vision of a europe whole and free and at peace, something that we kind of stopped doing in 2008 when the expansion of nato stopped, the expansion of the eu stopped, and we kind of left countries like ukraine in the middle between the west on one side and russia on the other. that's a bad place to be. and i hope the message he will send is it's time for us to get back into our vision of what a europe should be and not by
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default leave space for putin to pursue his. >> i couldn't agree more. i think it's -- well, what's happened, of course, is in the recent parliamentary elections you had a strong indication that a segment of the european population thinks that they're not delivering for them, and there really is a lot of effort that's going to have to take place here in order to bring leadership more in line with the expectations of the people and actually deliver. i think the president's role will be to underscore the stakes, andrea, here, and to underscore the importance of solidarity and in the u.s./europe relationship, to underscore the obligations that we have to our partners here. and by the way, i know there's some debate about the wisdom of nato expansion, and there's been some commentary that, somehow, that the united states pursue the nato expansion through the clinton administration and into the bush administration was somehow responsible for the direction russia had gone in here. well, i don't think you can really make an argument that, in fact, the direction in which vladimir putin's taken russia internally has much to do with
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nato expansion. and number two, through those years, the united states repeatedly reached out to try to work on integration efforts with russia. and number three, i think as we sit here today and you look at the conduct of russia since 2008 and again now in 2014, we should be very happy we engaged in nato expansion. if you sit in a baltic state or you sit in poland today, you are very happy that you're a member of nato, and it makes a huge difference with respect to what putin can consider, what russia can consider that it might do and what is off the table. so, i do think this has been a very important strategic initiati initiative, and i think it needs to be underscored and embraced during the course of the president's trip. >> and it's been pursued by three administrations, because there has been an enlargement of nato under clinton, bush and the obama administrations. this has been a bipartisan policy, and it's served our country well, and it served europe well. >> and the argument that somehow this is forced russia to take
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the direction it has domestically or in terms of its foreign policy i don't think holds water. >> if you are at treasury and you are negotiating and working with the allies on sanctions, how much is your leverage undercut by the snowden leaks and the post-snowden era and its effect, if not personally on angela merkel -- she can get over it -- but on the political sentiment in europe against the united states? steve? >> well, it's difficult. and i want to make a plug here for my colleague, juan zerade, who has written a wonderful book that tells the story, and it's a great tale about how treasury got into this business and really developed these new tools. certainly -- and one of the things that's very important, and tom will talk about this, is the importance of treasury as a source of intelligence and information about what the bad guys are doing and how they're
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moving their money around in addition to a way of trying to disrupt them. but it has been -- the snowden leaks, the discussions of the involvement of u.s. social media in helping the government on areas of dealing with terrorism proliferation have given us sort of two crises. one is the crisis with government leaders. how come we didn't know, and concerns about spying on leaders and the like. and my guess is that piece we will repair over time through dialogue and conversations. there are some reforms going about how we do some of these things in terms of bulk storage of data and the like that i think will help with the leaders. the problem, i think, is in some sense the european publics, and there's a breach of trust there. and i think there has to be a broader conversation about this
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balance between what we need to do to defend our people against terrorism proliferation and how to do that in a way that safeguards civil liberties, and i don't think we really have that conversation. i think europe today does not feel under threat from terrorism, does not feel the way we do the risk of proliferation and the risk of nuclear weapons in the hands of terrorists. so, i think we need to have a more adult debate. it's a trade-off, and it's a balance. and i think if we could have that debate in europe, the way we are having it in this country now, we can come up with an understanding of what governments can do and what they need to do and what are the constraints on which governments operate. the key, i think, of this will be two things. let's have the debate, and let's have it in an adult way, not in a stick figure way. and secondly, in any event, there's got to be a lot more transparency, which, again, comes to the debate. people have to understand and know what is being done and not done in their name and be
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comfortable with it over time. so, we have a lot of work to do in terms of the debate and discussion with our publics here at home and with publics in europe. >> the snowden revelations have been exceedingly damaging, obviously, and it's been damaging on a number of dimensions, including in terms of state-to-state relations. i agree with steve. i think that over time, because the relationships are mutually beneficial and they are deep and they have been exceedingly productive over time, i think that those will be repaired and are on the road to being repaired, frankly. there's other aspects of this in terms of damage that we can discuss, not directly irrelevant here, which is to the commercial damage to american companies and the trust in our companies with respect to our internet and cloud and hardware products around the world, which is something that is going to be something we're going to have to work on i think very hard, and there's a real threat to the bulkization of the internet. so, that damage i think is for real and will need to be
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addressed, but i agree with steve. i think with respect to the intelligence relationships that we have, they are mutually beneficial and i think we can work those -- i think we'll work those through in a productive way. >> steve hadley, one of the arguments for negotiating with iran that was made privately to many of us was that the sanction regime was teetering. it was very, very effective, as secretary lew was suggesting, but that europe was not going to stick with it forever, that we had to negotiate with iran. i don't know where you come down on that in terms of secret negotiations. >> you know, there's always a problem when you use sanctions and diplomatic pressure and other things to put pressure on a regime. it's pressure for what purpose? and the purpose in this case was try to get the iranians either to unilaterally give up their program or come into a negotiation and negotiate
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constraints that would reassure that it's not a route to a bomb, so -- >> do you have any doubt, let me just ask -- should we stipulate that there was no way they were going to come to the table without the sanctions, that the sanctions worked to that -- >> i think the sanctions were one of a series of tools in terms of diplomatic isolation, in terms of things directed at their program which we can't talk about. i think it's been a very successful, coordinated policy of pressure. i think it did bring them to the table. i think having come to the table, we have an obligation to test and see if we can get a negotiated solution that gives assurance that this is not going to be a path to a nuclear weapon. the tricky part is going to be, you know, if the sanctions succeed, the challenge will be how do you gradually unwind them in such a way that we still have options in the event that the iranians cheat. if someone said to me who's been following this, if iran does not
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now have a covert nuclear facility going in iran someplace, it will be the first time in 20 years that it hasn't. so, there is a cheating issue. and one of the challenges of the agreement is not just what's the agreement, but what are the things that surround the agreement in terms of snapback sanctions and preauthorized actions that will give iran an incentive not to cheat. so, i think, you know, there are issues of sanctions if the agreement -- if they succeed in reaching agreement. there are harder issues of sanctions if there isn't an agreement. and the question there will depend, how did the negotiations break down. if the iranians walk out in a huff and say we don't trust the americans, we're now going to go get a nuclear weapon, then it will be pretty easy to get sanctions back on the table and maybe even some other things like military action. but if it is a muddier outcome
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and the iranians basically go public and say we've made a reasonable offer to the americans, the americans didn't accept it and we can't accept it because it does not meet our thresholds, that's going to be the question. can we then get the world at that point to agree that we need more sanctions to make iran more reasonable, or do you have a vladimir putin, decides to put himself once again center stage and announce that he thinks the iranians have given far enough and the problem for the breakdown in the talks is all in the americans' head? and at that point, the international consensus that has made sanctions so effective breaks down. that's a problem. >> yeah. >> is there a third option also? is there a third outcome where both sides say we've made a lot of progress, there is a lot of technical challenges remaining, we're going to extend beyond july, and then you're bibi netanyahu and you say this is a
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very dangerous window, because this is when iran might start -- >> well, the interim agreement provides for that expressly. the interim agreement based on which we're not negotiating provides for a six-month rollover if both the parties agree to do that, by mutual consent, number one. number two, the basis on which we're doing these negotiations, the interim agreement, is a sound based on which to do a negotiation. essentially, you have frozen the key aspects of the program. with respect to the medium uranium at 20%, you've actually rolled it back. >> but are you as confident -- how would you respond to steve's suggestion that iran has never not had a covert hidden facility that we couldn't detect. >> well, but this is part of the ultimate deal, right -- >> right. >> -- that we'd make with respect to the size of whatever program is there, the distance that they would be from being able to achieve a nuclear weapon if they decided to break out, and quite critically, the importance and the intrusiveness
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of the inspections regime, which you might have, and the ability to kind of, as steve was saying, to go back to sanctions in the event that you see cheating on that side. so, the details in this will matter. i disagree, by the way, with the premise of your question, that somehow, that the sanctions regime was breaking down, that's the reason that the united states and iran got to negotiations. >> okay. >> i don't think that's true. i think what happened is that, as steve indicated, if you do an assessment of each time that the iranian government has made a strategic reversal, a strategic decision to go in a different direction, it has only been under extreme pressure, and we can go through each of those instances since 1979. we determined after, the united states determined, after a bona fide effort to do outreach to the iranian government in 2009 and to offer a negotiation at the highest level with the iranian government, and we got nowhere. they were either unable or unwilling to respond with respect to that. our understanding with our allies and friends and partners around the world, including the russians and the chinese, was that, in fact, after this bona
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fide offer of negotiation, if the iranians were not able to do this or unwilling to do this, and that's what happened, that we would join in a pressure campaign. and as steve indicated it was a multidimensional, simultaneous, multi-element pressure campaign that was put on the iranians, ultimately that resulted in the election of rowhani, who then came to the table. essentially, he ran on the prospect, or on the proposition that he would undertake to relieve the economic pressure on iranian society. the only way to do that was to engage in a negotiation on the nuclear side with the west. i didn't see really any breakdown in the sanctions regime. i saw, on the other hand here, rowhani being elected on the promise of getting some economic relief for iran and knowing the only way to do that was to come to the table with the united states and the rest of the international community. that, by the way, leads me to another point here, which is that i think all of the leverage is with the west right here right now. because the sanctions, the bulk of the sanctions, remain in
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place. i don't think the iranians have gotten any sort of real kind of maximus boost here out of the interim agreement, and the united states and the west should come to those negotiations with that attitude, andrea, that, in fact, that sanctions remain, that rowhani will not be able to make good on his promise to the iranian people, and that we have quite a bit of leverage here in these negotiations. >> will that leverage persist, steve? we saw the french and the germans and other interests lined up in davos trying to meet with rowhani, then sending delegations to tehran. how long can we maintain the coalition? >> it's a problem. you know, we've seen this movie before, and there are differences, and we can talk about those. but you know, we've been to the table with the iranians before and we've had a nuclear agreement with them before. this was in the 2003-2004 time frame, where it was pretty clear that the iranians thought, as moammar gadhafi thought, that after afghanistan and iraq, the
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united states was willing to use military force against iran over its nuclear program, and this suspended the program, the covert aspects of the program. they engaged with negotiations with eu-3 and we reached the paris agreement, which suspended enrichment, pending negotiation of the ultimate resolution of the issue. and then, quite frankly, we got bogged down in iraq. they had an election. "a" mannie nijad is president. he campaigns on the platform that those who entered into the deal with eu-3 were traitors and ought to go to prison, and he rolls the whole thing back. so, there's getting a deal, and then there's keeping a deal. and i think the administration, i hope, has in some sense three task forces going. one is the task force that's trying to get the deal with iran, one is the task force thinking about what are the things outside the agreement that will actually keep the iranians compliant with it, and then third is a task force thinking about how to reassure
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the rest of the countries in the region, our friends and allies, that if there is an agreement with iran, we are not now sort of packing our trunk, thinking our job is done and leaving the region free to an iran which will have even more money to back the kinds of things it's doing to support terror, to support assad in syria, to disrupt iraq, to disrupt afghanistan. this is a real challenge. and you know, getting the agreement is only the first step of a very challenging road. >> i agree with that, but with respect to companies and others being anxious to do business with iran, the details matter he here. and the nature of the sanctions in place right now would continue to force companies to choose between doing business in iran and doing business in the united states. and we've seen the force of that. one of the really, i think, important aspects of the sanctions approach that's been put together by the u.s. treasury department has been to take advantage of the centrality of the united states financial
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system and to work with governments, obviously, but also with private entities who have to make these kinds of choices. and that's what the sanctions do. the sanctions both put together by the administration and implementing congressional legislation really do force a company to decide, a bank to decide between doing business with iran and doing business with the united states. it is exceedingly powerful, and i am not in the government today, but i think i would have a pretty good guess that the treasury department would tell you that while these are in place, they intend to enforce them. >> as we look at the arc of treasury's role in making foreign policy, taking the 30,000-foot view. steve, when you first became first deputy national security adviser, then national security adviser, was treasury always at the table as big a role? or how did it involve under juan and stew and now david into
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becoming, or what is it now in terms of the relative positioning? >> my view was that treasury should be at the table because what we did in foreign policy had implications on things treasury did and because it was a clear head of someone who is actually not engaged in the day-to-day. it was not the treasury there was because they had an arsenal to contribute to solving the problem, and that's really the terrific story that juan tells and others have told, that it was a real case of people in the government being free to innovate. and it starts 11 days after 9/11 with executive order 13224, which is an effort to target terrorist financing and those companies and banks that were laundering terrorists funds. it then expanded, having been fairly successful in using it as a tool on the war on terror.
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someone comes in and says why don't we use it for proliferation? and the first test is actually not iran, it's north korea in 2005 and where we actually got some hands around kim jong-il's personal funds. >> let me just tell you, i was in pyongyang in 2006, and when they told me -- it goes back to i had to pay something like $75,000 in cash for the satellite time we had used or they wouldn't let me leave the country. and i discovered there was no way to make a transaction because of exactly what you had done. >> right. >> we had to go to another diplomatic resource and -- >> we cut north korea out of the financial system. >> a bridge loan or whatever you would call it. >> and ultimately, it led them to come in 2007 to negotiate a follow-on agreement, which at the end of the day was never implemented. so, then the question was, it works on north korea, let's try it on iran. and one thing that i think needs to be said is there are several
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arrows in this financial sanctions quiver. one is the direct one, which is, you know, freezing people's assets and listing institutions that are laundering funds for terrorists, proliferators. but the other one that stewart levy and hank paulson used so effectively is the indirect reputational risk. you go around -- stewart went around, and hank, to maybe three dozen, four dozen banks and financial institutions in europe and said, you know, you don't really want to be dealing with these iranians banks and don't want to be dealing with the irgc, because they are actually funding terrorist activity, proliferation activity, it's going to become public, and your people and your depositors aren't going like it. so, they're a wonderful tool, because they both have direct, indirect and reputational effects. and this was a whole -- this was a new frontier, and it made treasury a real player. and as i said earlier, my risk,
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my concern now is, it's become so good and they become so effective, people think it's a silver bullet, rather than just one element of a comprehensive strategy. >> i agree with that. a couple things on the office. first of all, it really is a truly non-partisan set of tools that have been used, a bipartisan set of tools. i think that's been indicated. and one of the first personnel calls that i made during the transition in 2008 was to track down stewart levy at an event with his kids, right? >> and talk him in to stay -- >> get him to stay in the obama administration and he did. and i think to steve's point, it resulted in continuity in building on the tools and insights that had been developed in the bush administration that we built on and enhanced, i think, going forward, so, it really is a bipartisan effort. treasury is at the table and has been at the table addressing some of our most important security issues, national
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security issues, whether it be the terrorist threat or it be the north korea challenge or the non-proliferation challenge in iran. i think the point that steve pointed to, which is a really important point that goes to the point of the strength of being at the center of the world financial system here in terms of our ability to do these things. in many ways, even our unilateral steps become multilateral steps, because as steve was pointing out, if you sit down with a bank and you say, all right, do you have assets and transactions in the united states, they're subject to the treasury designations. but you also have to think, and we're designating this bank in iran, for example, because of bad conduct, and we can underscore to you and show you the bad conduct. private sector banks around the world, they're not going to take that risk of dealing with those entities after they've been designated, with cause, and you will have this ripple effect, and it really has been -- this has been one of the great
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insights, i think, that the two administrations have had with respect to the effect of sanctions. it is way beyond, as the treasury secretary says, way beyond trade limitations, trade embargoes, quite targeted and exceedingly effective. >> have we lost any leverage post 2008 as many in europe and elsewhere blamed us and our banking system being undercapitalized and our mortgage, the spreading of the mortgage crisis to europe? did we lose any leverage as china has risen relative to our strength? >> you know, i'm not a financial type, ruben jeffrey, there are others here that you can ask for that. my sense is, look, we took a hit, but we have recovered. it is true that i think one of the things that is the consequence of the financial and economic challenges of 2008 is that almost for the first time,
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it was developing nations rather than the developed nations that actually led us, in some sense, out of that financial and economic struggle. but a lot of reforms have been put in place in the financial system in the united states and globally, and i don't think anybody thinks that there is any substitute in the short run for the dollar as the reserve currency. china has a lot of things it needs to do to make its currency truly convertible. and you know, europe has its own challenges and questions. you know, not two years ago, we were thinking about whether there was a crisis of the euro and whether the euro was going to survive. so, at this point, the united states financial system is still the beacon of stability in the international community, and i think that's, my sense is it's going to be that way for a good while. >> i agree with that. number one, we obviously took a
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hit, reputationally in terms of authority, power and prestige in the world after the financial crisis, number one. number two, though, the policy response in the united states, both at the end of the bush administration, into the obama administration, i think has actually been quite a success. and indeed, if you look at our banking system as compared to banking systems, for example, in europe and elsewhere in the world, you see a much stronger system here, right? and that's reflected in the fact with respect to capital flows and where money has gone in the world, has come into the united states, obviously. with respect to the specific things we're talking about here, andrea, i haven't see any diminution in respect to the ability to work with the financial system in a cooperative way multilaterally to affect our regime. and indeed since the financial crisis, we've had most of our success with respect to working in the financial system. but the point steve made i want to get back to is very important. because treasury can do things, and they can do things quickly
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and they're identifiable and they're concrete, it's very important that they be part of overall strategies and that we remember that not every case is iran, for example. the iranian case where we had been exceedingly effective, as i argued to you earlier with respect to bringing the iranians to the table is the unique set of circumstances. it is horrible conduct. it is clear violations of international law. it's a policy goal in terms of preventing iran from acquiring nuclear weapons in which there is broad agreement around the world, including, by the way, by the russians and the chinese. >> absolutely. >> they were particularly vulnerable with respect to oil and the banking sector. so, it was a unique -- but even with all that, it also took tremendous resources, tremendous resources, both to work the governments multilaterally and also to work, as we were referring to here, work with private entities around the world. so, it's important that each of these challenges be taken on in their own context and you not assume that we can do an iran
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campaign in every case, because that's not going to be the case. additionally in the iranian case, we also had the important collateral circumstance that we were able to do this at a time when the saudis were willing to increase their oil production and where the united states had had its energy future go in a completely different direction, right, with respect to us now being on track to become the largest producer of oil in the world, and indeed, the increased production of oil in the united states during this critical period in conjunction with the increased production by the saudis is one of the reasons why the costs were actually bearable here in terms of our cutting off and reducing by more than half the export of oil, crude oil from iran. absent those productions, we would have had real cost issues with respect to the impact of the sanctions that we were putting on, in other words, negative impact on americans and on the west from our sanctions. and we were able to manage that because of our energy, the change in our energy futures and saudi actions. >> let me drill down on china
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for a moment, in terms of their increasing leverage and the cyber war and their -- they have no reluctance to use these tools, and we are, i would argue, more vulnerable in that the snowden leaks occurred only days before the summit in sunnylands, when we're told the president was planning to make that a big part of his first big meeting with president xi. so, how has china evolved in terms of its economic and cyber tools against what we can leverage, steve? >> well, and again, i'm dealing with what's in the newspapers. but we have to -- you know, this is a case where we have to make some distinctions here and we have to have a conversation. it is one thing to use cyber
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tools to get information to counter terrorism, to counter proliferation, to deal with threats against the country. it is another thing to use cyber tools to steal private corporate information for competitive economic advantage. we, clearly, do the first. we are not alone. there are a lot of other countries that are doing the same, some of whom are very outraged by the disclosures of snowden and probably know more about what we do than what their own home countries are doing, but that is something countries do. what china is doing in this what some people call the greatest theft of intellectual property in history is really something we don't do and most other countries, not all other countries, do not do. but china is doing. and one of the things we have to do is get the chinese to understand in their heart of hearts, though they will not admit it publicly, that there is
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a difference. but secondly, the chinese will not stop this activity, in my view, unless there is a penalty. now, this effort of indicting, you know, five pla people is an effort to try to impose a penalty. it has a lot of problems, because one of the problems is it -- one of the unfortunate things about u.s./china relations is when we hit a political hiccup, one of the first things either one country or the other does is cut off military-to-military ties. and in fact, having military-to-military interaction is a very important thing. and unfortunately, arresting the five pla threatens that. i think we need, and keith alexander is here, and you can ask him about this. i think we need to impose a penalty for cyber crime in cyberspace, and to be able to have a way -- and there are difficult legal and policy issues here -- to take away the
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capacity of cyber criminals to conduct cyber threats. and until the day that we can pose, in some sense, asymmetric penalties for this kind of thing, i think it's not going to stop. i think just, you know, diplomatic interactions are not going to get us there. there has to be some real costs. and i would hope that there's a task force looking at what those costs could be, because i think, you know, i understand why they arrested the pla folks. i think that's not going to turn out to be the best or the most useful tool. >> -- not arrested -- >> sorry. indicted them. >> yeah. >> i apologize. >> i get the first public speech with respect to this. in the spring of 2013, with respect to calling on china directly. and i have a spent a lot of time with the chinese leadership and i think they were a bit surprised this came from me. as steve said we have massive, and had massive state enabled
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cyber theft. from the united states. and indeed we have been engaged with the chinese on this. and i think -- i talk a little more broadly about it. i do think there has to be a khost. the chinese didn't perceive any cost to this up until the point that it was raised. they certainly used the snowden revelation, as you pointed out, as a pushback with respect to the dialogue that we've had with them. but very important to get back to the dialogue, and it's very important to reject the equivalent argument that the chinese might make between espionage, all right, and -- and criminal cyber activity and cyber enabled economic theft. they're very different things. and the conversation that takes place with the chain he's has to go broadly beyond cyber thieves to say this is going to affect the overall quality of the relationship between the united states and china. that this is going to be something that's going to be raised repeatedly and directly with the leadership of china by
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the highest levels in the united states. and it's going to affect the overall quality of the relationship. it can't have the circumstances. the conversation i think we have to have with the chinese directly, you can't have a circumstance where you have a $500 billion a year economic relationship between the united states and china and where you have this scale of outright theft. that die log needs to take place. there needs to be a cost associated with it. it needs to affect the overall quality of the relationship. and it needs to be kind of a very direct set of conversations about what is allowable, what's on and what's off in terms of cyber activities. so rejecting the equivalents argument is a very, very important -- >> what leverage do we have? >> we have a $500 billion relationship with the chinese, right? an economic relationship. and there are a lot of elements to the relationship that we have with the chinese. >> what i would be looking for and what tom would be looking for is, you know, a smart
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sanctions too or financial sanctions, too. what is something that will happen to the chinese system. we don't have to talk about it. it will just happen. they will know it, we will know it and the argument is if this continues more of this stuff is going to happen. the question is, what is that? i would rather have it -- i'd rather not have to put it in the standpoint of the overall public trade relations. i think just raising it high level meetings is fine. but i think we've got to look for some new tools that they will see that will hurt them in this cyber realm and they will know if they don't change their ways more bad will happen. i don't know what it is. i'm not in that world anymore. but that's what i hope we're looking for. >> i have to ask you because jack lew started this off by talking about 9/11 and the evolution of the treasury tool.
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in response. and there is a big debate today about whether releasing five very high-level taliban prisoners is the right response to get back a prisoner of war. steve? >> i don't do this stuff anymore. look it's very hard and the right questions are being raise. did we negotiate with terrorists? we don't, and for good reason. problem is, if you swap or pay to get your hostages back, you incentivize hostage taking. that's a problem. there were congressional statutes requiring consultation with congress. if we could consult on the operation against osama bin laden, why couldn't we consult on this? so there are a whole series of questions that need to be raised.
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you know, again, my guess is that the dilemma the administration had was the following. we've turned over a lot of prisoners in afghanistan to afghan authorities, and regrettably they are released a lot of them over the objection of our military people who are now been released in afghanistan who killed americans. and that's a very troubling thing to happen. but that is what happened. in afghanistan in disclose of those prisoners. our troop levels are coming down. and i think the administration probably was in a very difficult choice of, look, we have an opportunity to get this guy back. the president said i think, regrettably, that all of our combat troops will basically be out by the end of 2016. i think that's unfortunate. to have that kind of arbitrary
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cutoff. i'd much rather have it condition space. but in any event if that's the policy, the question is, if we're not going to get this guy back, when? and i think that was the dilemma. and they basically said look, we've lost control of all these prisoners in afghanistan. these are five guys, bad guys, but at least we have a chance by giving them to the qataris that we can keep them off the battlefield for a period of time. and this may be the only way we can get our guy back. i think that's probably the decision that came before the administration. you can have arguments about whether -- how it was handled, whether they should have notified congress and all the rest. but my guess is, that's the dilemma they faced. it's a hard one. >> we did not -- we didn't do a preconsultation with the congress on the osama bin laden raid. but with respect to this, one, there's a big difference between getting a p.o.w. back in a war zone and negotiating with terrorists. it's an entirely different context here. and that's what this is. this is essentially getting a
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prisoner of war back through a swap. it's a unique undertaking, because you know, the qataris were mediating this, and will take some steps to restrict the activities of these guys. they are difficult decisions, though. with respect to incentivizing the taliban and others who we are at war with in the -- in afghanistan, from taking prisoners, they don't need a lot of incentive, right? we've been in a -- we've been there for over a decade. and this -- they know the value, frankly, of being able to -- of being able to take an american, american soldier, a captive, and i don't think that this -- i don't think they need any incentive to do that. i don't find that argument persuasive. we have that risk every single day in afghanistan. and we deal with that risk. there are others on the panel, michele knows, who can talk
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about this. i don't know it's an incentive problem. it was an opportunity as steve said to get back home. the only prisoner of war in the conflict, and there were constraints put on the activities of the guys who were going there. and it's a different context. it's essentially getting back a p.o.w. in a war zone context. >> and i take tom's correction, it's interesting, because i read the press coming out of the sunday shows, which said that we had consulted on the obama -- the osama bin laden laraid, whi was not my understanding. i thought that's interesting. it is a point if we did consult on that, why not here. i think it's important that that record be connected publicly. because that argument is being -- >> i'm willing to make that correction. i know something about this. >> yes, indeed. >> i'm willing to make that -- i'm willing to take the opportunity to make that correction, make that correction public. >> are you making a distinction between consultation on the
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months leading up to and or and no consultation during the week or days leading up left, talk about places where you don't think sanctions work. we talked about iran, and you've talked about the unique set of circumstances with iran. and to a certain extent, with russia and ukraine that targeted sanctions, you think, have
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already affected russia's economy, and potentially this behavior. where doesn't it work? steve? syria? >> well, a couple things. and i'm -- others can correct me on the numbers, but one of the issues that came, surfaced in connections with sanctions against russia on ukraine is people, you know, the united states generally has to lead on these things, and encourage the europeans to come around. but i think germany is, i think, russia's number two trading partner, if you take the eu together it's far and away the number one trading partner for russia. we're way down that list. so one of the problems in sanctions is, you know, they need to be multilateral many times because the folks with the money, with the economic and financial relations, may not be the united states of america. this is why it was so important to bring the europeans along,
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which actually started in the clinton administration, to bring the europeans along to see around the way we did, because we were sanctioned out, in many respects, at least initially on iran. now the administration's -- two administrations moved that goalpost further. so one is the question, you got to look at who's got the leverage. and if you're really going to make these things work, then the folks with the leverage have to be at the table, and have to be willing to sanction. because otherwise, they're not going to be effective. secondly, you know, it is tools can are cumulative in their effect. and if you can have a military element in addition to your diplomatic and all the rest, if you can have the threat of a military element, it is going to make sanctions more effective. this is the argument that we made on iran. we cannot make -- bring the table with the sanctions we'll
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have to contemplate military force and nobody really likes that. it is true, nobody when russia went into georgia, when russia went into ukraine, no one suggested the u.s. would engage russia militarily. but the fact that we have reinforced our presence in nato countries, the fact that hopefully the nato countries will begin to pay more attention to defense, and to increase their own defense spending, this again is something that i think gives added leverage so a sanctions context. finally, they're at the question for how many things are you willing to threaten sanctions. we've now been on terrorism, we've been on organized crime, and drug trafficking, we've been on proliferation, there's now discussions sort of using it as a tool for human rights. you know one of the things you have to really decide is, because you can overuse these
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things, what are the national interests and national values which are so important to us as a country that we're willing to use this tool? and what are issues on which, you know, the advocates for this particular perspective will watch you use the tool but in some sense we ought to say you know, we've got to save this for the things where -- that matter most to us, and where they can be most effective. so i think that's -- it's got to be an issue of priority in terms of values and interests, and in considerations of effectiveness, because you know, these things will become a wasting asset at some point. >> i think that's all correct. one is that, with respect to where it hasn't worked, i think overuse is an important -- is very important concept to think hard about here. as i said earlier, not every case is going to be an iran case and you have to think very clearly about what your objectives are. and it can't just be a reflex to go through this because, again,
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it's something that the treasury can do in a week, and military action it seems to me the two or three context, andrea, where they're difficult, right, is where a country is unplugged from the world economy. like north korea. now as the bush administration successfully was able to find a seam there and a connection that was effective. but that's one of a few. so if a country is willing to live like north korea, and tragedy, and where their citizens are completely unplugged from the world, and suffer, you know, that's a more difficult circumstance in terms of -- you know, you can make it more difficult for north korea and we have, frankly, to engage in plow live ration efforts and we can make it more difficult for them to get the kinds of things that can advance their program. but you have a more limited effect when they're unplugged from the world economy. and the second is, i think, as
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steve said where you don't have multilateral support. you know, for example, there's not an economic relationship between the united states and iran, there hasn't been since, i don't know what the relationship was, but basically since 1979 or the early '80s there really hasn't been an economic relationship and it was absolutely essential that we have a multilateral setting there, and where you don't have an economic direct economic relationship of any consequence if you don't have multilateral support you're not going to have an effective sanctions. >> i think our time with you is -- has expired. but i wanted to thank both of you for your collective wisdom, and judgment, and experience, and for sharing with us today. it's been a great privilege for you. >> thank you for being here. >> thank you so much. [ applause ] >> take, a senate hearing on student loan debt. on "washington journal." ater, president obama holds
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joint news conference with david cameron. we are trying to focus on the speaker is because it is the speaker with the full majesty and weight of his position who yesterday made allegations that have not been answered to. i will yield to you. [indiscernible] >> you do not normally have that in the 26 hours you have presented this to the public. the interesting fact is that your remarks, going back to 1970 and 1972, taking them out of context. with one purpose alone, in my opinion, that was to imply that members of the side were un-american and their activities. will you respond? you knew there was nobody here. men --cam, but those two
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give us your perspective. >> speaker o'neill was a giant. he knew the politics of the house. he knew the politics and he kept much of it to himself in terms of other members. he received a great amount of intelligence from members, what was going on in different places. he always believed politics was the art of the possible. nobody got their way all the time. he was a broker within the democratic caucus and within the house. newt gingrich made a conscious decision that they would always be in the minority because they worked with a majority. so we started attacking bob and johnthe leader rhodes and everybody on that side.
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because -- the only avenue to the majority is through confrontation. this was an argument about the cash he would ask rhetorical questions and make charges. he knew the chamber was empty. the camera was tight on the at the time. and in the role came to show that it changes the whole dynamic. that now,he process many years later, has torn this institution apart and has really paralyzed institution. >> congressman george miller, sunday night at 8:00 on q&a. is weakened on book tv, live coverage of the chicago tribune printer row lit fest. andthomas, joseph ellis,
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harbor aaron reich. sunday's topics include the father and son relationship of bill and willie geist. and vietnam's dragon lady. live this weekend on c-span2. book tv, television for serious readers. the consumer financial protection the total u.s. to $1t loan debt as up trillion. the senate budget committee held a hearing on how that debt affects consumers and the overall economy. senator patty murray chairs this 1.5 hour on hearing. [inaudible conversations]
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see this hearing will come to order. i want to thank senator johnson who is filling in today for my ranking member senator sessions. welcome to you and all of our colleagues who are joining us today as well as a roomful. welcome to all of you on a really important topic today. we are going to be talking about a challenge that 40 million people around our country face today and for many americans who want to further their education and build their skills taking out student loans has become a college prerequisite. but that debt can have lasting consequences for borrowers and begin their chances of getting ahead. insuring more americans get a fair shot at something many of us here in the senate are very focused on and a bill that is coming to the floor very soon which will allow borrowers to refinance their school loans is an important part of that fair shot agenda. i will be discussing that
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legislation and that more later but first i want to thank our witnesses who are here with us today who will help shed some light on the challenges that now now -- mounting student that can pose for borrowers and their economy. today we are grit to be hearing from rohit chopra the student loan ombudsman for the consumer financial protection bureau and i'm pleased to welcome britney jones today. she is a recent graduate and former president of the student virginia education association. we are also going to be hearing from richard vedder a distinguished professor of economics at ohio university. a college degree is a worthwhile investment and for many it can be a ticket to the middle class. we know that on average college graduates earn more and they tend to have lower unemployment rates than their less educated peers. a highly educated work force is also good for our country. it strengthens our middle class, it strengthens the workforce will need to compete in the
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21st century global economy. more and more jobs of the future will require post-secondary credentials or degrees and in fact in the coming years as many as two-thirds of all jobs will require at least some college education according to the center on education and workforce. but to afford college many people have to turn to student loans to help finance their education. in just a few moments you will hear from britney jones. she's going to be talking about how taking out student loans made it possible for her to get a college degree and britney i'd look forward to hearing more about your experiences. you were to start a teaching career and the same time paying down the student loan the but later college. of course britney is not alone. dealing with overbearing student debt is becoming a reality for growing number of americans. statistics are staggering. today the average college graduate will have to pay back around $30,000 in student loans and a record number of young
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households owe student debt. back in 1989, 16% of young households have student debt. by 2010 that figure had more than doubled according to the pew research center. more young people than ever before are dealing with more student debt than ever before and that can have lasting consequences. americans who took out school loans lined it difficult to save and accumulate wealth. a recent study found college graduates without student that had accumulated seven times more wealth than those who are paying back school loans. crushing student student debt isn't just hurting borrowers. there is mounting evidence that student debt is holding back our economy. historically young americans have been the source of economic activity as they set up a households and start their own careers but today many are finding it difficult to save even for a down payment on a home and hide monthly bills to pay back student loans can disqualify many people from many
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many -- even getting mortgage. and first-time homebuyers aren't able to get a mortgage it can adversely affect the housing industry as a whole. that's why groups like the national association of realtors and homebuilders association have expressed concern about the overbearing financial weight of student loans. student debt can stifle entrepreneurship. young people who dream of starting up their own business aren't able to take the risks and the business they need when they launch a startup. they not student loan scam or that young people from saving for retirement while making the kinds of purchases that help further economic recovery. mr. chopra i know these economic consequences are what you and others in the consumer financial protection bureau have called the domino effect and i'm looking forward to hearing more details in your testimony about those negative economic impacts. to address these challenges as a starting point we need to ensure that student loan servicers, those are the companies that
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handle the billing to track borrowers payments are treating borrowers fairly and responsibly unfortunately there have been reports of student loan servicers mistreating borrowers. some people have discovered their loan servers or hasn't properly process payments and complains that student lenders have for borrowers into default if a cosigner dies despite the barro being current on their loan payments. i was very troubled to hear recent reports that sallie mae was overcharging military members on their student loans. sallie mae has agreed to pay nearly $100 million in fines after charging military members higher interest rates and i've asked secretary arne duncan to investigate to make sure other student loan servicing companies and hundreds and not doing the same but we can do more to help our wares. the bank on student emergency loan refinancing at is a bill from senator warned that i cosponsored along with several democratic colleagues. that bill will allow borrowers
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to refinance their federal student debt. the congressional research service estimates that this bill would let our wares save $4000 on average. passing the legislation would put more money in borrowers pocket so they can make ends meet, make down payment on homes or start new businesses and help grow our economy. right now people can refinance their home loans are their there business loans when interest rates drop. this bill will let our wares with federal student debt do the same and they should be a bipartisan issue. last year for example republicans and democrats came together to pass the bipartisan student loan certainty acts. that bill allows far worse to take advantage of lower interest rates established by the free market. this refinancing legislation would use the same free-market principles to help those with existing student loans. at a time when higher education is more important than ever to our nation's long-term competitiveness a college degree
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shouldn't drown far worse in debt. we need to make sure people who choose to further a their education and build skills are better able to afford college and manage their student debt. it is an economic imperative. to strengthen our middle class to strengthen our work orders and help spark economic growth congress needs to address these challenges. i'm very delighted to have this hearing today and before i turn it over to our panel of witnesses i would like to hear from senator johnson. >> thank you madam chair. appreciate you holding this hearing. this is an extremely important issue. it's a tragedy that we have our children incurring student loan debt. i had a finance professor in college before we talked about the cost of capital in the complex issues with corporate finance he spent a day talking about personal finance. he said the reason they call the debt instrument a bond is
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because you go into debt and you put yourself in the bondage and you want to avoid that. i took that to heart. i have course had the advantage of growing up and going to college in the 70s when college was a whole lot cheaper. i worked full-time and rather than leaving college with close to $30,000 in debt i left college with $7000 in the bank. i wish that were more possible. i would like to start with a chart that i prepared an i been using this in my powerpoint presentations as i travel around the state of wisconsin. i just lay out some facts in a food for thought here. what this chart shows is that in 1963 the total cost of a four-year undergraduate degree in public college was $929 per year. this that's room, board and tuition. by 1988 the actual cost had risen to $4678 which was 27% higher than growing with the rate of inflation. you can see as of 2012 the cost
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of college outstrip the rate of inflation by 22 and have time so rather than costing $7000 which is what would it then growing at the rate of inflation one year of college now in 2012 with $17,474. 2.5 times the rate of inflation and i guess the question i'm asking is why? what is so different about what colleges and universities spend their money on that their costs would outstrip the rate of inflation by 2.5% by the way to the proponents room and board. food and shelter in the rest of the economy not necessarily on college campuses but the rest of the economy are growing at a lower rate than inflation because we have become so much more reductive in those sectors of the economy. obviously productivity is not a word we use in education which is a shame. just kind of asking the question of why all of our good
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intentions and let's face it what we spend in college in terms of of students is $2 trillion in 1963 was well-intentioned but it had a very serious negative unintended consequence. in trying to make college marks of civil we make it less accessible because we have made it so much more unaffordable. oh by the way to add more detail to that chart over the $2 trillion we spent over that timeframe about $200 million was spent through 1963 in 1988, 1.8 china dollars was spent as college costs skyrocketed. cause and effect them i will leave that for the reader to judge. i think mr. vedder is going to talk about that as well. madam chair you are correct, it's a shame that in 2011 which is the latest numbers i have from the college board average student loan debt after four is a colleges $25,000.
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of those 57% of students that incurred debt and private institutions is 29,000900 incurred debt. another statistic is how long it's taking our students to graduate. about half graduate pretty much in the four year time period. in other words they graduate in about 4.3 years but the other half raises the average time of graduating to 6.3 years. again just asking the question why is that particularly when you have so many kids leaving high school with college classes in the bag. have we made college funds available so readily that people can dither in college? is just a question i'm asking. now part of the hearing is to talk about other types of pieces of legislation to supposedly solve the problem. when i thing i think it's important to talk about is how those might be scored. currently the cbo is constrained by having to score the cost of
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these college aid programs under the federal credit reform act and under that scoring for the tenure period 20 fort -- because it doesn't account really for varying economic conditions or loan defaults its showing that student loan program saves the american taxpayer and reduces the deficit by $135 billion over 10 years but at the use of fair value basis and account for economic times in the fall to cost the government 88 ilya dollars timeframe so it's important to look at each legislation and we take a look at the fair value cost and the effect it has on the deficit. i think finally the only thing i want to talk about is a potentially unintended consequence of some of these programs designed for loans. in 2007 congress passed into law the college cost reduction
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access active 27. established a forgiveness program the discharges any remaining debt after 10 years of full-time employment in the public service. the borrower must have made 120 payments in order to obtain this benefit. in other words they have to keep keep -- they can't be in default over the 10 year period while they're working for the public sector. for luke over the end said law law schools look to the new laws and saw an opportunity. income-based monthly statements are lowered than standard payment so the schools could cover graduates payments entirely for the first 10 years. the money for law school payment assistance programs usually comes out tuition mostly paid with federal student loans. you understand what i'm saying there are? the law school is gaming the system. they are saying so all we have to do is we will make the loan payments for our graduate students or 10 years and at that point the american taxpayer will
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pay for the law degrees. at berkeley for example it's part of the fee the professionals agree to be paid. georgetown 350 borrowers take advantage of this program in earthly there are 263. by the way the average student debt of a law graduate of georgetown is $150,000 it were we as $115,000. "the wall street journal" wrote about this also. the university of chicago is also doing that and until recently georgetown had on its web site basically talking about how the schools aid combined with the federal plan quote means public-interest borrowers might not pay a single penny on their loans ever! "back. again i understand this $3.5 trillion and student loan program in the aid packages are all well-intentioned programs
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but i think we have to honestly take a look at the situation and look at the very severe and serious negative unintended consequences of our good intentions. part of that is we have collectively enticed her children to incur 1.5 chilean dollars in student loan debt and now we are trying to figure out how to solve that problem. >> thank you. we are going turn to our witnesses. ms. johnson thank you for coming and sharing your personal experiences. we are going to start with you. >> good morning chairwoman mari senator johnson and members of the committee. my name is brittany jones and i thank you for inviting me today. my story starts as a second grade student at an elementary school and the decision was made i brittany jones self proclaimed mathematician drama queen would declare to the world that i would become the second grade teacher. with little deviation i pursue this plan throughout my studies and is a teacher in turn followed by receiving my bachelor's degree from virginia
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commonwealth university in early childhood education. during high school when my counselors began the conversations about attending college. they talk to me about the details color shifts in grants and financial awards. naturally i assumed everyone to attend college. it was not as i was accepted and learned the amount of financially they would be offered that i feared i could not attend. after conversations with my financial aid counselor and various chats with my parents regarding the necessity of a college degree i made the decision to enroll with the assistance of student loans and pursue my dream of becoming a teacher. unfortunately the cost of attendance constantly increased while the grant funds decreased. upon graduation in 2011 the joy of completing the first portion of my program was overshadowed by the chair that i have borrowed well over $70,000 in student loans from various sources federal subsidized unsubsidized perkins and personal loans and still a need to complete another year of school which was required to get my teaching certification.
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i like many of the students i have encountered was facing the decision of whether to continue my education and follow my dream of being a teacher or seek immediate employment. i recall one student who having borrow the maximum amount of student loans for one school year was unable to fill the gap in his cost of attendance. he withdrew from the university and never returned. another student who ironically serve as our treasure also left for financial reasons. a full-time student had a job in sales and was offered a position of store manager. faced with the decision of incurring more student loan debt she decided to -- for me personally when confronted with the decision to borrow another 20 grand, $20,000 to complete my program i decide it was best to postpone attendance. immediately after commencement
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services ceremonies i drove to an interview for preschool teaching job began teaching the following tuesday. i was excited to have a position despite the low wage of $10 an hour because unlike many of my colleagues and i was in my desired field. i was a the lead teacher in my own classroom. i was elated until the loan statement started to come. because i owed approximately $60,000 in federal loans at the time and i was working full time i had to start paying them back. this proved problematic or they figured i would be able to afford paying $600 a month. i was making $10 an hour and paying over $900 in rent and insurance and other expenses a month. my parents were able to help do some of the payments to keep the loan in good standing. this continued for a few more months until i lost my job. in 2012 i received notice that i had defaulted on the remainder of my federal loans totaling approximately $58,000.
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the gentleman from long company called and requested the date by which i could send the 58,000-dollar check or money order. after a laugh or two he then said he would be happy to help set up a payment plan. he put a dent calculaticalculati ons and determine i would be able to pay $653 a month. at this time is working it is a prekindergarten teacher making $13 an hour with payments for insurance and utility. i worked as many as three jobs at once just to make my monthly payments. now two years later i was finally to apply for financial aid and returned to school to pursue my masters. as you can imagine the ordeal i wonder if my student loans a this decision a weary one. the search for alternative programs. i didn't want to collect any more student debt. my goal is to become a classroom teacher at not a teacher with more loan debt than she can fix in the air. a search led me to find a
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teacher residency program. through this program which so began the summer will become a highly qualified educator with a master's degree. all fees associated with the cost of attendance will be repaid upon the completion of the program which includes four years teaching in denver public schools. this program is promising and an exciting time in my life yet almost $50,000 still awaits repayment. in student loan debt has been the driving force of my decisions for the last eight years of my life and according to my current repayment plan is projected to be for the next 25 years of my life. well into the years for which i should be planning retirement. it should not be this way. senators you have the power to make sure that it is in this way any longer. you can take actions to help make college more affordable so students have a fair shot at are suing their dreams. degrees and not debt should be our collective goal. i urge you to help increase student aid especially for those who need the most financial help
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you to urge you to help make student loans more affordable including by allowing refinancing of those loans as legislation from senator warren would do and i ask you to look for ways to make careers of public service by teaching more attainable by expanding the loan forgiveness programs. thank you chairman murray and the members of this committee for the opportunity to share my story today. >> thank you very much for coming and sharing that with us. mr. rohit chopra. >> chairman murray and senator johnson members of the committee thank you for the opportunity to testify today about the impacts of student debt. the financial crisis destroyed trillions in wealth for families preparing to send a child to college and contributed to large increases in student debt owed by americans who have already graduated. in addition to considering how to make college affordable for future students we cannot ignore the impact of the 1.2 chilean dollars already owed by more than 40 million americans.
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there has been growing consensus that $1.2 trillion could have repercussions that threaten the broader economy. the treasury secretary remarked that student debt is hampering our economy across multiple sectors of society and the federal reserve identified student debt is a risk to aggregate household spending. executiveexecutive s in the banking industry have also cautioned the condition of the student loan market quote is now having a significantly negative impact on students the economy and taxpayers. according to a survey by the national association of realtors 49% of americans say student loan debt is a huge obstacle to homeownership in the national association of homebuilders noted that student debt can impair the ability for graduates to qualify for a mortgage. higher debt or does my not only delay household -- but also other purchases.
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student debt can hamper entrepreneurship. preliminary research on student debt and small business formation finds a negative correlation between changes in student loan debt information of certain small businesses. young workers who say the early for retirement can generate significant assets over the course of their careers that student debt may be stopping workers from even contributing at all. the same can be said about the impact on labor market outcomes. the american medical association noted that high debt riddance can impact of career choices of physicians leading some to abandon primary care altogether. student debt can impact the availability of other professions critical to the livelihoods of farmers and ranchers in rural communities. for example veterinary students are graduating with debt
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averaging over $150,000 making it less likely they can make ends meet in livestock management practice in the list goes on and on. there are several areas that warrant attention. servicing loan restructuring and refinancing and data availability. first servicing. as a financial crisis unraveled many americans faced improper foreclosures due to mistakes from their mortgage servicer. i'm concerned inadequate service may be conjured into a growing student loan default problem now topping 7 million americans in over 100 and dollars imbalances. last month after referrals from the cfpb regulators ordered sallie mae to pay nearly $100 million for violating multiple laws including illegal treatment of servicemembers with student loans. second unlike other markets refinance opportunities for student loan borrowers are few
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and far between. when margaret's borrowers the broader and just rates plummet their own incomes rise in credit profiles and prove they try to refinance. responsible student loan borrowers rarely have these options. third transparency which we must address. as fed chair janet yellen has stated problems and mortgages would rebound through the financial system. currently financial regulators and the public lack fundamental information on student loan origination performance. unsurprisingly the drivers of pre-payment delinquency and default in the student loan market are not well understood and we must work to close the transparency gap. in conclusion we must ask ourselves how do we preserve the drive to succeed for so many who feel that the dream is just now out of reach. ignoring the warning signs may
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prove to hold back not only the future growth and dynamism of our conduit also our entrepreneurial spirit. addressing these concerns in the near term may pay dividends for many years to follow. thank you again for inviting me to participate today and i look forward to your questions. >> thank you very much. dr. vedder. >> thank you senator murray and senator johnson the other members of the budget committee. i wish to make three points. first the current student loan debt crisis would have never happened had college costs increased at the general rate of inflation. the primary cause of the student debt problem has increased university fees. we must deal with the root cause of this mainly runaway college costs of inflation. second there are many reasons for this university price inflation several of which i mentioned in my written
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statement that one that is relevant here is that rising tuition fees are partially caused the federal assistance finance programs themselves. the programs themselves are part of the problem. any significant successful solution to the problem of writing -- rising college costs will work only if you radically change the nature and magnitude of federal finance. third we are at or near a tipping point where fundamental change will come to higher education. these changes are starting to happen. i believe many policy proposals gaining prominence these days do not fundamentally address the broader problems and indeed would like to worsen rather than improve the situation. table 1 looks at the inflation adjusted increase in tuition fees from various years over the last 75 years.
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along the lines of senator johnson's earlier comments. we see that for the first half of that period tuition fees tended to rise 1% more than the overall inflation rate but since 1978 inflation-adjusted tuition growth has tripled to well over 3% a year. if college tuition inflation since 1978 were what they had been before that day, say 1% a year, tuition levels today would be almost 60% lower than they actually are. public four year university tuition levels would be in the three to 5000-dollar range instead of seven to $12,000. student loan volume with each romantically less. it's a bigger burden for example for a citizen of indiana to send their child to purdue university today than at the end of the great depression. even room and board charges far outdistance food and housing inflation rates.
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solve the tuition fee problem and it will dramatically reduce the student loan debt crisis. there are many explanations for rising tuition fees and three are discussed in my written testimony that the most relevant here is the explosive growth in federal student financial aid of this has contributed to rising tuition fees. there will be no permanent solution to the debt crisis without reining in federal programs. there are many ways to downsize these programs to make them more progressive which liberal democrat should like that also smaller and cheaper which republicans should like. existing programs have failed miserably and provided greater access for lower income americans. the proportion of recent college graduates coming from the lowest quartile of the tradition is smaller than it was in 1970 before pell grants
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