neoconservative. he sees, it rests on a belief in alism thatxception most nonamericans simply find not credible. that most non-americans find non-credible. the idea that the united states behaves disinterestedly in the world state is not widely believed because it is, for the most part, not true and indeed if theyt be true fulfill their responsibility. it was hard to sustain the belief over time.

americans not scrutinizing it too closely. happened inwhat 2005 in 2006. the financial crisis in 2008 has really caused a lot of people to the fundamental propositions of the u.s. foreign-policy. and the onese approach is to continue to count on this disconnect. it is not a new phenomenon and frankly it hasn't really it plays out that way

and a minute. i think that is a reasonable approach. there is a couple different ways this manifests itself. during the cold war, this of course, it was a bipartisan problem. is. is how vital it and to not resort to the sort of that characterizes

u.s. foreign-policy. dean acheson's book. the senator advise dean to scare the hell out of the american i will paint said a picture clearer than the truth. in long history of american in agn-policy, speaking way that it doesn't expect them to respond well enough or urgently enough unless things are painted to them clearer than the truth. out three aspects that will bring the american people into the discussion. what is the relationship with our allies? what are they purporting to do? what do they actually do? somecan exceptionalism, at

level, depends on them being synonymous. can we make the case for hegemonic grand strategy? terrorism is not an existential threat. iran's military spending is 1/77th of the united states. iran is romania, not germany if this was the 1940's. hegemony andtary economic leadership around the world. there has been a long-standing belief that there are clear economic benefits down to the united states and the american people for playing the role that think there is really good research that calls that in the question.

i will leave those three on the table and i'm sure we will have a lot of time to discuss. >> in addition to the christmas article out there about hillary, isis, he has written a terrific book called the power problem, how american military dominance makes us less safe, prosperous, and free. heritage, you of think of kim. i went back and checked 30 years on and off. he and i were on a panel together in the early days of the bush administration. how come you're not in government? the secretary of state for international organizations, what do you think in terms of your personal -- heream delighted to be

with regards to distinguished panelists. i think of was thinking back on the days in the reagan years and the first bush administration. there was a lot more interaction between people that call themselves liberals and conservatives back in those days. we spent a lot of times each in our own bubbles. i have a feeling there is a yearning that we want to move beyond that. disagree, we do will try to and on something that's a bit more positive. i wrote an op-ed called the new liberal neo-ism.

the alliance forming in the wake of the controversies of the iraq war that did not have much to do with one another. i said at the time what was driving president obama was commonly understood as a doctrine. thats more in a reaction the iraq war was a disaster. it is time to try the opposite. up being very much along the lines of whether you intervene or don't intervene with military forces and that became the driving controversy.

i still think that there are some faultlines in that alliance. i think it has something to do with the fact that many of the and policies that ,resident obama tried to do they have been tried and they are not working very well. the president tried to reset relations with russia which he thought was based on the fact that george w. bush had been too harsh against the russians. forgetting the fact that the reason we had 2008 relations with russia is because of georgia. before that, president bush and looked in putin's eye. after georgia, he was disappointed and there was a

pulling back. obama oversident interpreted that, being too much and apply that to the policies of russia and it didn't work. in some ways, we did farm out the policies. we try to get closer to the european union. it actually sparked russia over the ukraine. we did see our national interest involved in that particular intervention.

they also had commercial and economic reasons. not just what happened in benghazi but the intervention ande was not followed up on it turned out to be a disaster in my opinion. on this whole question of the indispensable nation, those of us that work in foreign-policy. in some ways, we over interpret them. sometimes, the indispensable nation is used interchangeably or usedemony interchangeably with american leadership.

for example, i'm pretty pragmatic. other nation could perform the task that we perform in the world. just as a matter of fact, we are indispensable. there is an overaggressive foreign-policy where we would be hegemonic and all these other things. the example of the iraq war with respect to germany and france not following is used as a case example of this. i was at the state department. at the time, i look at the u.n. issue and i do remember that yes, germany and france had

their own particular reasons not to want to support the iraq war. i remember talking to the , theyn foreign ministry have their own reasons at that particular time to do it. have a or not we coalition or an alliance system, we have 37 allied countries in iraq with 150,000 ground troops. which is not something anywhere close in the coalition against isis. i don't think it should be dismissed out of hand. the last point i will make is it's not just the issue on russia. i think the president pulled out of iraq faster than his military advisers wanted to. as a result, he's been forced back under dramatic circumstances.

and yet, as i show in my articles by every objective greater it's actually and worse than it was six years ago. allies are complaining because they don't have the certainty of knowing what u.s. policy is. it is also a component of leadership. playing the traditional role of consulting with them and doing what the united states can do to get things done. ofon't believe it's a case simply bossing our allies around. i think it is much more subtle than that. where weo figure out have a common interest and

realizing that the allies will change. not just france and germany with respect to iraq but other countries that do very much want the connection with the united because we fear russia. indispensable as we used to be. but it doesn't mean we are not i don'tsable at all mean to suggest that you are suggesting this, i think your analysis is much more subtle. aware of anyo be kind of-ism. and to become something by which we can discuss among ourselves the obama doctrine and the like.

at the end of the day, there will be so many outline principles of the doctrine that you will not get a lot of guidance. it is true of your are a conservative realist or a liberal one. his article,n to he has written nature of figure book called getting america back to great. speaker has been a bulwark over the last decade. knows more about the middle east than anyone i've ever met. he's worked there, he's lived there, he speaks arabic. >> i want to thank jim and cam for coming, i hope this discussion brings you into this and we are in a time of

transformation when we think about national security strategy. and i think we've seen the politics quite clear. lastnot just what happened week with the budget and the domestic scene, but if you look , the one like syria they had on the non-strike event and the lineup on support for the opposition split within both parties. we talked to the hill quite a lot. we are in this transformative moment. withe a lot that i agree in jim's article. i struggle to bit with realism and a realistic term because somebody that has studied international relations. liberalried to blend

internationalism and realism. obama himself as a pragmatist. ofl even think it's balance power theory or liberal internationalism. andriy kissinger's new book, he talks about this where there is a delicate balance between the two. the main thing that has driven much of president obama's foreign-policy which i think has been transformative is what is the limiting factor? how do we limit our own engagements? of the iraq war coming to an end or the afghanistan war coming to an end later this year, how much more can we do in terms of expending that?

it is a realistic assessment. i don't think obama looks at state actors as a fundamental actor. this second thing i think you definitely get right and our analysts need to get in sync with where the country is at. and there is a rise of the rest. when he was running for that was an appeal to say ok. i have no problem with the phraseology leading from behind.

others to have an and recognize that, we will be in trouble. germany has a closer interest. sometimes you overstate the case . i think they understand that they had an interest. back from jordan in the middle east, i think there is a recognition that they have an interest in the anti-isil coalition. hit inding the right terms of u.s. leadership in countries like israel, getting the u.s. to call some plays but not in the way we are going to shock and all the region with our military might and force

which i think we tried in the previous decade. i mentioned this already but the thed point i would say, bush administration experienced this as well. and where do we actually use the force directly. first two years, the obama administration was more realist. the smart power negotiation effort. say it did not produce the results that they hoped. idealism a strand of that goes back. it's hard for us to check these high ideals.

there is the instinct there and , for many, i think americans to leave that at the door. the one thing that has changed which may be wasn't so much in the article but we will talk about is how the world is changed fundamentally. i think obama has adapted to it somewhat. and the criticism of the indispensable power framework is spot on. i think it's nothing new over the last few decades. see it every day and i think it complicates things. in how we talk about diplomacy and foreign-policy. whether it is the arab uprising or the arab spring. what we're seeing on the streets almost every place these days. to theo think what leads

comments, these changes are fundamentally different. the way technology is bringing assistance directly to oz with one another. it gets into our policy. .t makes it very hard they are all coming to get us. i think those values are essentially different than ours. that is what my article was trying to do. i think it's at the right balance on most issues. issues ways, the values and the reticence to talk about this -- this is where we may disagree. while the torture report was released, you see that people actually still look up to america in some ways.

you see it's a form of power that has been damaged by some of our past mistakes. you see that people look at our politics in many ways. they look at it as ideal. we often make these unforced errors that hurt ourselves. i will close maybe with a little bit of optimism. it is less pessimistic coming back here when you look at how people look to our country and an economic engine. i don't think we will be back there. how we actually adapt to the trends.

they have more of a say in their own politics. force formuch more the administration to react more quickly than it is capable of doing right now. we have 15 minutes before we turn it over to you folks who have been very patient. jim, do you want to respond to ?he comments made old-stylean the realism. and when obama took office, he cited him as a model. i do think that is realism.

that is interesting because it goes back to a debate about the time of the iraq war. felt, throughes the gulf war, that a display of opened the way for some negotiations. it was their belief. arafat was scared. that would work with the iraq war. and the other side, they had been arguing that you can't get anywhere in the middle east without an agreement between israel and the palestinians.

takes side on the scope side of-- scocroft that. my heart was with him and it did not work out well. that democracy would sweep the middle east. i'm not quite sure that the eu is the economic agency. i'm not sure when you say obama would have delegated to the europeans, it is the eu that would have expanded to the ukraine. a nato expansion issue is what i was saying. >> i'm not sure you're saying when the germans and others would not have -- >> an example when we do sit

back and let them take the lead it always doesn't work out -- it doesn't always work out well. >> you talked about the tension between republicans that want to save the world and at home they don't want the government to do anything. >> less than liberals. betweenthere is tension the skepticism of the efficacy of government that conservatives and libertarians share and a strange enthusiasm and the confidence that government can do lots of great things overseas. pithy way to say this is that folks like me have some doubts about the u.s. postal deliver theility to mail and we believe the united states can deliver democracy in

a foreign country where we don't know the culture and aren't really welcome. , not all theime time. but reading the series of articles, this notion about state failure and the need to rebuild failed states. what is it? avert theiring to decline or make them stronger, that is nationbuilding. i think many conservatives and libertarians have some skip the schism -- skepticism. therek there is a tension between the confidence in the u.s. government doing great things abroad even as they retain their skepticism about them doing great things here at home. how do we balance between our values and our interests get co

should we have state -- interests? should we have stayed with mubarak? thatose at the beginning wanted to move toward democracy. >> there is a simple answer or doctrine or philosophy that can guide us because you have to look on a case-by-case basis. it will have our own particular interests we're going to have to weigh. to that extent, i see a need for realistic values and interests. the point i make is that you have to have both. not only because the american people will not support a purely germany. imperial they do believe america has ideals that they want to live up to.

they are going to want to make sure that they feel like they are doing the right thing. how does that translate into what you support? policy hasiddle east never been based mainly on values. now with the rise of isis, we still have to have strategic interests. because it served in the bush they came out, with the so-called freedom agenda. they saw it as the ideological motivation for the iraq war when it had nothing to do with that.

it came later as a way of trying to rationalize what happened after the fact with an idealistic purpose. >> and do you remember what your liberal friends also said? >> if you talk about a neoconservative, it is like selling democracy at the point of the spear and that sort of thing. the fact is, we will never be able to sell a leadership role, it.ver you may defined i our allies are based on values as well. liberal democracies between europe and asia. we are partners and allies because of who we are and that is not insignificant.

because there is a diffusion of power and the like. question i have is that i kind of agree with the analysis we were making but what do you do about it? does that mean you cut your onense budget and go back military capabilities because you don't think you have a need to use it? what does that mean about trade policy in asia? because we no longer have the kind of interests we have before? that means that they are going to be asserting their own interests in cases. we feel obligated to support because he really didn't want to do the intervention either. >> let me ask you a question that comes up a lot about the whole responsibility to protect.

should that be a good guiding principle? should not? president clinton said his biggest regret was not doing anything about rwanda. >> it should be part of the debate but people often forget is what can you do realistically and practically? what can be done? there is a profile of samantha power in there and there is an when asked line about libya and syria. there seems to be a pathway where our actions would be leading to more lives lost -- if you are lives lost as opposed to more.

the obama administration itself is stuck. it's paralyzed. there was a strand inside of its own administration that we can't overlook the stacks of tens of thousands of bodies of what he's done and work with them. realisme is a strand of that says we've got to work with him. that idea is always out there and it's been applied where we could. that consideration is a big thing. egypt, it the case of is in some ways the wrong question. the egyptian people decided that he should go.

we were somewhat of a bystander in that. our statements mattered quite a lot. but if you look at the counterrevolution, with great popular support into a large extent, the u.s. had been on the sidelines and let things play out. moving forward in a place like egypt and some of these other don't have that struggling of how to blend realistic interests and working ofh security and the values how ordinary egyptians are being thrown in jail. i don't think it will work in this day and age. it may actually lead to a wider explosion. are tough test cases moving beyond the level of liberal values.

for the most part, the obama administration has taken a step back. >> what about iran, for example? morethink i would do highlighting the human rights abuses. ofre are bits and pieces this. i would not scuttle attempted diplomacy. and sometimes some of the orservatives and some camp's opposition to diplomacy, i would continue to have this on the agenda. president obama has done it episodically. i don't think we should invade

countries and impose democracy. tohink it would be great have them talking about this because it connects with the next generation. >> i would like to get to the audience. if you would stand up, wait for the microphone, tell us who you are and if you are with an organization. >> i am retired and i served in the clinton administration, later as the secretary for the -- environment development. my interest is more on the environmental side of war and i guess i will reflect on being to five for just a second.

i find a debate between the realist and idealist is very helpful. since think i have seen the kennedy administration is the failure of two kinds of interventionism. liberal interventionism, conservative interventionism which was the disaster in chile. all of which have led to further disaster for us, by the way. it seems to me that i would hear -- i would like to hear more reflection on the panel. i'm a yellow dog democrat from texas. >> welcome. >> please get to the point. >> what is the real problem? what is the real challenge? the evolution of democracy in places like china? a resurgent china that

economically threatens our position in asia? what is the landscape we are trying to play into when we are saying we need to be more realistic or less realist or more idealistic? >> anyone want to comment first? >> i guess this is stating the obvious. the landscape to me is divided between a world in which there are contentious powers. , specifically.a and a broad series of transnational threats. is in a way, russia and china are similar problems that we can all come up with lots of differences.

we have to cope with both. those are vastly different military problems and we can't give up what we need to do militarily with major powers and transnational threats. >> i like the way you framed that. the failure of two types of interventionism. to me there is an interventionist bias in washington, not just on foreign-policy issues. the burden of proof, generally speaking, should be on those calling for intervention because they have lots of unintended consequences. and in the foreign-policy realm because i believe the united's dates is safe and secure.

our contemporaries and ancestors within the. bar for an even higher me for intervention abroad and that doesn't mean never, but it means rare. this gets to the question about indispensable nation. must we be the intervener? do we presume that an intervention is required, must we be involved? but as a practical question, there have been a number of interventions that have not involve the united states at all. the problem is, because we have sheltered our allies for so many years, they have allowed the military power to atrophy. surprisedshouldn't be that they don't have the military power to carry out a very small mission which is

truly in their backyard. we just have to be honest with one another in this company and with the american people. the purpose of u.s. foreign-policy has been to discourage other countries from developing their own capabilities. we believe that most people believe it's a good idea. i tend to believe it's a good idea, too. but i don't believe it's a good idea for ever. i would like our allies to do something that did not require our intervention. >> that last point i couldn't agree with more. the fact is, we do want our allies to do more. it doesn't mean we have to do less. that bargain often doesn't work with them. if we want to do less, we want you to do more and carry more of the burden, they don't come back and say ok.

most is the me the diffusion of power. the resulting uncertainty in the world with all these kinds of threats. there is a terrorism threat. we all know what they are but it's a very confusing landscape. the thing that concerns me the most is because of our internal political and ideological debates, mainly because of the is thatss that occurred we are going to be making some serious mistakes and adjusting to this new world. we have a tendency to learn the wrong lessons when we make a mistake. backe 1970's, we pulled and we have the chaos not only in iran but the soviet invasion

in of the cast and -- in afghanistan. and then the gulf war. it was a cakewalk. it was very easy. we got the conclusion that we can use military power in a way that we have never seen before. to bee iraq war turns out the way we don't want it to be. back, andge, we pull of equalhe mistake eating internationally with military interventionism. they are not the same thing. the utility of it that's not demonstrated.

that we should be cutting our military capabilities. that we should be showing up at meetings and reassuring our allies. this is just old-fashioned diplomacy. it is not interventionism, per se. one thing that we should learn is that we have to be dam careful about using military forces. let's not over learned and drop the opposite conclusion. >> should we have gotten involved in syria earlier? >> not with military force. where i couldtion not see the use of force turning out very well. was you talkroblem about the responsibility to protect and it was a model for libya that could not be applied to syria because there was no

interest in doing it. libya was not just about humanity. i put more of a stress on the transnational threat. and in terms of climate change, this is a great example of where i think the obama administration follow all of it. he tried on the grand international scheme and they are trying to build a pragmatic coalition for building blocks. being smart about it. that's the thing about progressives that define us against conservatives that we accept change. we realizelent -- there is a thing called climate change. try to harness it as opposed

to going back a decade or two. defining the context is a really hard thing for anyone to do and it's why the obama administration is delayed because we've had this fracturing and fragmentation and diffusion of power in the world. >> i thank you very much. i am a reporting fellow and i am wondering if you could touch on the future of development. i heard that somebody like hillary clinton might be inclined to elevate usaid to a cabinet level department and i heard somebody like hillary clinton might make usaid part of the state department. i wonder what your thoughts are on the future of development? >> the problem with a id from is that it was in the

1960's with a certain philosophy of what economic development is supposed to be about. it was very much motivated by humanitarian interests and nationbuilding. that's a pretty much outdated economic philosophy these days. they have the struggle for an identity. they mix a lot of their concerns about humanitarian policies. withimes it gets combined values like democracy. it hardly ever gets straightened out. aid should be a part. certainly not a cabinet position. you have a policy that is more

a more and you have serious discussion about what that is. because of the way it is actually constructed. that people in the embassies that have their own independence , they have been this way for many years. it insident to put the state department. maybe anr try to have elimination where you have some kind of a strategic thinking of the policies being recommended with what the rest of the government is doing. >> will come back to the side. >> i am aaron. >> we know who you are.

i am writing my thesis on millennial foreign-policy. retire,warriors stepping into these policymaking -- i consider myself a millennial. never saw cold war born in 1990. how does it work with our style of who we are and how we see the world? andwhat will motivate us drive our foreign-policy outlook? >> i don't know but i would urge you to not assume that you will have the same point of view in the same way that generation xers don't have the same point of view. jim referenced this exchange for the starting point of my book.

you have two people quite close in age. madeleine albright and colin powell could not have been more different in terms of their attitudes on military intervention. what's the point of this wonderful military if we're not going to use it? there will be reactions to u.s. interventions in iraq and afghanistan that will cause a somennial's -- millennial's to be wary of military intervention. some will look at the experience and say this teaches us that we need to do it right. we need to have a larger nationbuilding corps and maybe a cabinet level agency. that it's interesting to ponder this. i would be surprised if there is a millennial point of view.

i was starting with the new obama administration to look for the generational outlook. i would mention two things. one i thought turned out to be far less significant than the obama people thought it would be , and the other more. the first is, in this new administration coming in, there were certain millennial buzzwords. the world is interconnected. over and over again except i cannot quite find out in general how that changed the consideration of foreign-policy. did one good thing. there is emphasis on new forms of communication whether it was in iran or china or anywhere else. the idea of promoting openness on the internet which was one of the tangible things hillary clinton did.

world isl, the interconnected but we have a lot of the same foreign-policy problems. one that turned out to be more important, as you say, in the millennial outlook, the old problems are seen as something in the past and the new problems of rising powers. our saying beforehand that ben rhodes told me in the first year of the administration, i keep reading about rising powers. i was at the copenhagen summit where obama meant -- happened to run into serious problems with the chinese and the indians. they said they did not look like rising powers to me, they look like real powers. that part is different. even though there are lots of french or british german diplomats worried about this.

europe.ss of a focus on it's a relative statement. >> i'm with the postgraduate school and i can't thank you enough for listening to this. i think there is a problem with linguistic terms. the termem with realism and others think realistic and it doesn't seem to be realistic. most people don't understand what you are talking about. >> that's why we have this. >> i wish somebody would make a definition that we could all start using. we somehow don't think about governments.

we assumed when we got rid of the army, let's figure out how to run themselves. governance is really hard and nobody talks about it. i heard him in september. i fell out of my chair when he said our real issues are understanding and relationships. >> the use and issues of realism , you are basically telling the truth and trying to look at the objective facts. the term is actually prudence in what the guidance for u.s. foreign policy should be.

and not get carried away about some kind of ideological state. i think you should look at the facts as they are and try to come up with a policy to match that reality. back to the question of millennial's, it will probably not be any different than any other generation. you will have the interest that you have. it will be shaped by events. president obama is having to respond to what is happening right now. and as it is, you have an inbox and you have to react to it.

either attacks or change of events. why's one of the reasons chris and i disagree on this capability. instrumentas an being misused. whereas i see it as a matter of deterrence. if you don't have it, people will perceive you as weak. you may have to respond with a weaker capability than you would have if you had strong one. that's the way i look at it. >> he capabilities you need for a strong military to defend attacks against yourself, it's quite different than the

military you need to defend attacks to get others that have not developed model terry capabilities to defend themselves because they are sheltered under your security umbrella. structure we have the we do and a ploy our forces as we do is not primarily to defend and it's her attacks against the united states. deteroo determined -- to attacks against others. realism means something, that in the basic context, that there is anarchy in the world system and grounded inor is security concerns. if you believe in that ism, and it informs your policymaking, it will guide how you respond. if you believe that peace or war comes from different political intems, you believe

democratic peace, that informs your foreign-policy. believe peace comes from economic interdependence, that informs your foreign-policy. know what i have ever met is purely a realist. john, that means do you not trade with the chinese? if you actually believed in that, you would not be trading with the chinese. they are becoming wealthier. in understanding what these terms mean, it can help us to ,ort out how different people presidents, will approach foreign-policy problems and in terms of their hierarchy, do they place priority on different things? >> for your generation, we have seen it.

multiple avenues. you see things like the gates foundation. in the civilian agencies become very frustrated. there is enormous frustration. .hat is big challenge those agencies need to reform but also you will see more people going into other avenues of u.s. engagement in the world. on governments, spot on. i was against the war but i believe it was important for us to try to take a sad song and make it better. governance is a nice label but the main point is it touches of .own power politics

this is where we disagree. there is this notion that if we stuck around and held it together, the real fault in the was theministration inattention to the sectarianism that has contributed to this spike in sunni radical jihadism. management, we, do not manage it. other actors have efficacy. infallible rights and we can shape on the margins and that is where obama gets it right. he is often portrayed as to standoffish but in a sense he understands that people need to write their own history. i happen to think it would be great if we talked a little bit more about the things we would like to see which he is doing now with an inclusive government but we are not pretending we will re-invade and preoccupy and

remake the society which is a good thing. >> do not try irony on vladimir putin. >> we could go on and on. the last question. >> i spent most of my life and research and the way i see it is the restas influenced of the world, it has had a large impact in the question i have is they spent $2 trillion in afghanistan and iraq. had we spent more money in higher education and research, with the world in the -- america be better off or not? >> let me take that comment and then give each of you a comment to wrap it up. if i could summarize what i have heard how about the phrase do not -- do not do stupid stuff.

>> you answered your own question. it was a leading one. but you cannot turn back the clock. the real question is how do we move forward and that is where having this discussion, we may disagree under from points but how do you synthesize the points to come up with something that is compelling to the american people because i think they are done. they are done with the adventurism and mistakes that were made and you need to show tangible results. are in a much stronger position than where we were in 2008, 2009 but we are still not great. thinkng about how we about power in the world and the multiple avenues of influence and us just hard power in the ways we think about things and military but also we can do it outside of government to continue the engagement of the rest of the world.

that is essential. wei had the impression that may be on the point, on the cusp may be that the bitterness that had been created by the iraq war is starting to fade. there is a new set of historical toeriences that we have process and understand. and then as the millennial , they will be dealing with new problems. i hope that this will be an opportunity for us as i sit in my opening remarks to focus on what we agreed on than what we disagree on. i think the uncertainty that exists in the world right now is tying her hands and we do not have the kind of clarity in foreign policy that we need. a lot of it has to do with a squabbling among ourselves over what it means. also a lot of score-setting and

also part of this debate over the iraq war, we were calling each other a lot of names and not moving forward area >> i will second something that ryan just said. when people ask about u.s. foreign policy, there is a presumption is what the government does create less successful foreign policy that we have is the interaction of individuals and private citizens who haveesses and ngo's interacted with people who are not american. you have to have a holistic approach to this because when people talk about exceptionalism and understandably i get upset about it, i believe the u.s. is an exceptional nation. we are a shining example and his

family. that is why we like to see the focus as the full press a presumption that u.s. policy is defined by his forest and military prowess which we have seen has some shortcomings. >> i would sum up and say this is -- discussion where there is disagreement but they are respectful in the gobi on the slogans. it shows me the point i was trying to make which was if you likeixated on slogans indispensable nation, it gets in the way of the scotian. i will say the other slogan and from theis more republicans, i covered the reagan administration, i heard him say i believed in the city on the hill regularly. he never used the word american exceptionalism. that was used by scholars out it such and such university to describe reagan's views. how that caught on as a slogan

for republican presidential candidates is beyond me but that is an example of what we need to get beyond. >> and want to thank you all very much. i want to think the audience for coming and also we finished right on time so thank you very much. [applause] click start on trump is at the economic club of washington. trumpl discuss the brand's entrance into the d.c. community and his possible local aspirations live at 7 p.m. here on c-span. tonight, mary gray and the

ethics raised by internet companies harvesting users' personal data in the economic research on that data. >> the creepy question, it is a great question. as summary who uses a computer every day, we have certain expectations when we fire up our computers about who sees what we are doing, who is sharing -- who we are sharing information with -- the expectations i have as the expectations are shifted because there might be another ,arty who sees what i am doing while iessage pops up am making a purchase, there are certain lines we do not know we have crossed them until it is too late. that is true for researchers and companies. there is not a clear sense of what is creepy because that is so culturally specific area and one person talking loudly on their cell phone and a park has

no problem listening in and if you have someone who's trying to have it public -- private conversation then they will go to great lengths to go someplace where they are secluded area not just doing with the cultural context, we are dealing with different preferences and experiences around privacy. >> tonight on c-span two. s> a house veterans affair committee looks at the expansion burialsystem to allow and improvements in grave accountability practices. you can see the hearing at 8 p.m. eastern. stephen -- stevenson looks derivatives.

brad in dallas woodhouse discuss their documentary. ier talks about the best place in government to work. live tuesday at 7 a.m. eastern on c-span. next, congressional budget office director douglas elm the brookingsat institution. that is 45 minutes. >> thehat we intend to do in future is use the opportunity to get views rather countries to see what we could learn from what they do and to be sure so we can continue to tell them how they ought to run their place much more like the run hours.

we seem to have lost some moral authority on that lately. the other thing is we have tried to bridge the academic and the practical here. the national bureau of research. we also think that it is policymakers hear the best ideas of academics but academics learn something about what is -- it is like to practice policy here. evente final part of our today, we have invited to people more qualified than almost anybody else to talk about the question of uncertainty and how policymakers react. robert chote,with previously with the institute

for fiscal studies and the international monetary fund. he spent a decade as a journalist londone ft and independent before finding more productive ways to use his time. elwill be joined by douglas mendorf, director of the congressional budget office. he served as the senior fellow here. robert will speak for about 10 minutes and then douglas for about 10 minutes and then they will join me on the stage and we will invite previous panelists and the audience to ask questions or make contributions. robert? >> thank you. what i will do is give you a background as to how the isatively newly created obr

trying to address these issues and how that is reflected into policy. let me start with a bit of introduction. are accountable simultaneously to parliament in the u.k.. we have been given four main tasks to kill. we use those forecast progress toward the fiscal rules that the government has set itself. there's another role for the trajectory of debt to the -- debt to gdp.

the third thing we do is to scrutinize the storing of tax and welfare and social security spending measures. we assess the long-term outlook for the public finance as much as cbo does looking over a 50 year horizon and what we can learn from the measures of the public-sector's allen sheet. in context and if you think about the differences , ombthe structure to cbo structure, one point to note is our analysis covers the telik sector, not just the equivalent of the federal government level. we are by parliament confined only to producing projections on the base of current policy. we are not forbidden at looking at policy options. the executive administration does not publish its own fiscal projections. we are the provider of the

official projections and it is for the government to comment on what we say, not for us to come in on the figures they produced. thinking about how uncertainty comes into our work, i think as a background it is important to bear in mind in the budget setting the executive is very powerful relative to parliament compared to the relationship to the administration and congress here and the treasury department in the u.k. is powerful relative to cabinet departments. the rationale for creating us was to remove political the motivated wishful thinking from forecasts rather than to help parliament consider particular options. when we set out on this task the objectives were to increase transparency and emphasize certainty. transparency means a lot of

detail and a lot of [inaudible] the policy should reflect uncertainty rather than ignoring it. it is important because of the detail we have produced. allows about uncertainty [inaudible] we can allow richer progress asard the target and finally the first person to run this i did not want to tie the sense of the institution to the accuracy of central forecast area we addressed uncertainty in the way that we do our work and our output in narrative and quantitatively. in the narrative that means being as explicit as we can in the forecast presentations and publications we do.

the idea that monetary policy wouldn't -- it evolves in line with market expectations, things like equity prices, there seems to be consistent with market expectations. we see is being specific economic risks that may affect the forecast in a particular presentation. euro what happens if instability reasserts itself. what happens if they knew tapered tantrums in terms of the global outlook for the on listening of monetary policy and the big uncertainty of what is the path to productivity and wage growth. beenf the key puzzles has why activity growth has been so weak and whether that will reverse itself and how. we tried to identify specific fiscal risks, conditional on the

economic forecast. a key one is to look at what is driving effective tax rates. the tax rate or the amount of ,evenue your racing per pound one of the reasons for our forecasting errors is not that we have overestimated the aggregate wages and salaries. the tax rate has been less than expected partly because of the distribution of pretax wages. , willthings we look at central and local governments stick within the budgets, public services spending. and perhaps finally to the cbo work, what uncertainty we see around the scoring of particular policies. we provide -- we do not provide what chuck would like. a confidence interval from around the estimates of scoring.

we provide uncertainty ranking. the quality of the data that underpins it, the nature of the modeling you have to do to get to an estimate and the nature and uncertainty surrounding the behavioral merely lifting the sources of uncertainty underlies how difficult it would need to interval around a particular estimate. we tried to illustrate uncertainty quantitatively. one thing a combination of having an independent forecast an explicit fiscal rules set up by the government is we smokeout policymakers preference of how much margin for error they want in achieving their

targets against the central forecast which would be one way of saying how much do you want to overachieve to address uncertainty. toused three main techniques illustrate uncertainty. sensitivity to key economic determinants and scenarios. the key thing is not to say these rejections are uncertain but how wrong does the forecast have to be and in the what sort of waste is a have to be run for the targets to be in parol. probabilitiesows around a certain forecast. we do mechanical sensitivity analysis so you take your central forecast for the targeted fiscal variables and say what difference it would make if there were more capacity back in the economy and then --t if government borrowing

[indiscernible] if you are looking for one major source of uncertainty around our projections it is the uncertainty to what is the potential of gdp to which you central bank hit its inflation target. there is a loty, of uncertainty around how far below precisely. the scenario analysis to or critiquesate that may be put forward to illustrate some areas of political sensibility. what difference would it make if

productivity growth was higher or lower or what happens of monetary policy times more rapidly. or whetherences -- it is being driven by risk premium or something like that. measures. additional the u.k. has the whole of government accounts prepared on a commercial accounting basis. those are liabilities that are assumed not in the central forecast to crystallize whether chance --gligible [indiscernible] there is a list of unquantifiable contingent liabilities which we know that there is a must when you can do with them than that. my favorite amongst these is the government has a requirement to return the land for the channel

tunnel to a suitable condition if it ceases to operate. it is in there anyway. in terms of the long-term projections, most of this has been on the medium-term. thestory here is similar to projections that cbo produces that allows you to take on board demographic change. analysisensitivity based on different population paths. different relationship between interest rates in growth and we can look at specific issues on the tax revenue side. where there are long-term trends on the average tax rate. is me know -- what we see the ability to learn. forecast forcific

we look at the error since he much of this is because policy changed after the forecast. how much of it was because of the economic determinants were different and how much was because of fiscal forecasting. it is not reassuring in the sense that you still end up having been wrong. it is interesting to see that this year we were wrong three years ago for the reason we thought we were wrong last year. i am happy to take questions. thank you. [applause]

>> thank you. director for only six. we are aware of the uncertainty of the budgetary and economic estimates we provide to congress. we view our estimates as representing the middle of the distribution of possible outcomes. we explain the estimates that way to members of congress and staff. we often discuss risks to our estimates. concern, the members are aware of the uncertainty of our estimates. it is not too uncommon for them to think that we got the sign of .he estimate wrong i think the issue at hand is not whether we should communicate the existence of uncertainty but whether our attempts to discuss and to quantify that uncertainty

provides particular additional help to congress and the choices that it makes. we have worked hard in the past two years to quantify the uncertainty of more of our analysis. there are important limitations on our ability to do that fortification and help legislators make use of such quantification. i will talk about the limitations we see. uncertainty of estimates and i will give for examples. when we estimate the macroeconomic effect we regularly provide a central --imate and a range of allowing for uncertainty about the response of labor supply. the effects of changes in budget deficits and other factors. these ranges are intended to cover two thirds of the distribution of possible outcomes. one example is the estimate of

the short turn and long-term alternatives of for federal debt. include of the projections for alternative scenarios. we should would happen if four key underlying factors, the growth of print -- productivity, interest rates, and a growth of health care costs differed. additional information on our long-term projections that includes a range of possible outcomes or the social security trust funds based on the historical year-to-year variation in key democratic -- demographic and economic factors. this analysis suffers from some of the weekends -- weaknesses that were identified. here, there are

estimates only effective unemployment, raising wage and we provided similar ranges for themates of the effects on federal budget of a document more competitive system for medicare. a fourth if i which we quantified uncertainty is to analyze actual -- out outcomes different from estimates. evaluationskering of testing is and revenue forecasts are be out shortly. there are rules of thumb is very. -- that vary. three principal reasons for ranges. the process requires point estimate of the budgetary effects of proposed legislation.

bill hogan put this in a more pithy way that i will. budget resolutions are -- [indiscernible] the house and senate budget committees track estimated budgetary effects of approved its his leash and using point values. in -- all arelaw enforced using point values. encompasses some values. [indiscernible] to provide point estimates. developing comprehensive procedures and rules that use a range of figures rather than point values seems quite daunting. a second reason that cbo does not provide ranges as we often lack a strong analytical basis for constructing such ranges.

one obstacle is most of the models and techniques are used in not readily yield estimates of uncertainty. they are not formal probability models create another obstacle is the underlying research. generally divides limited information about uncertainty. drew on dozens of studies so we could form an educated sense of uncertainty related to the time, the place, the modeling approach used as well as the sampling uncertainty. in other areas, the effects of prescription drug use and medical spending was based on a handful of studies. forming a sense of uncertainty would have been difficult. a further related challenges the lack of time. we're often rushing to finish analyses and specially the cost estimates that check focuses on before congressional action on an issue is expected to occur. scattering additional information can take

considerable time. that would delay the release of estimates and delay our other estimates on other proposals. the third reason is we -- we are developing ways to help legislators make effective use of our quantification of uncertainty. part of the challenge is that providing ranges for estimates sometimes muddies rather than enhances general understanding of our analysis. when we report ranges, people who like numbers to be big ten to pick the top end of the range and people who like the number to be small pick from the bottom . that can make the public discussion of our analysis confusing. we have a limited ability to that confusion. it is often an clear how legislators might respond to the quantification of uncertainty and we and the analytic community have developed only

limited guidance in this area. it is useful for legislators to be aware of the uncertainty in budgetary and economic estimates that we think they are. the harder question is what else might they do with a particular quantification of uncertainty that we could provide? want to adoptght all the policies that are very likely to increase or decrease a variable of interest or hit a particular target. robert gave, if you are trying to find a target you might want to pick policies that have a certain nobility of hitting that target. we have done analysis on whether a certain change in health care beenits that had implemented was resulting in savings for the department of defense and we concluded that it probably had. a similar analysis conducted when the policy was being considered could be helpful but in those cases where congress

was trying to hit pitcher particular- a target. understanding the extent of uncertainty about future federal spending that arises from uncertainty about lifespan might affect whether policymakers would want to index eligibility ages. another situation is legislators might want to adopt policies with a larger variance of future budgetary outcomes as a means of experimenting and identifying the best policy. but will help us set -- sort out but it is a complicated problem. legislators might want to respond to greater uncertainty about long-term budget projections by taking the larger deficit reducing actions to tale ofhe unfavorable distribution. legislators might want to

respond to greater uncertainty by focusing less on protected long-term out club -- outcomes. the more research like pounds paper and other papers being presented here and written elsewhere can help to guide policy makers that issue as well. the press -- profession is still in the early days of this sort of analysis. as a result, policymakers direct use of our estimates of uncertainty is limited at this point and that in turn, leads us to devote a limited ocean of our time to producing such estimates. i would like to emphasize that we are working hard to quantify the uncertainty in -- in more of our work, but there are notations on our current ability to do that and help legislators make effective use of that information. thank you. [applause] you for the clear and interesting presentations. i will have a few presentations

and maybe we can encourage the people who work on earlier panels to join in. robert, tell me of a got this right. do you have to express an opinion about whether the government has the greater than probability of meeting its fiscal target? >> yes, we do. we have to produce a point estimate forecast to say with a fall on the right side of that. we do. that theeresting formal fiscal targets are not the only thing that the politicians are interested in naming. fiscal two formal achievements and one is not achievable and the other is not winding. the government is focused on other things like a date on which it expects to balance the overall budget, with the path of the deficit is on a year-by-year basis. that is the formal role. it is not necessarily that -- the thing that policymakers are worried about most of the time. he talked more than you did

they what this is like -- are actually interested in this uncertainty or does this make you more popular with the [inaudible] this combination of the fact that you have a clearly target and independent forecasting because you are requiring policymakers even if by preference to say by her much they want to overachieve the target on a central estimate which is essentially asking them to say how much a county want to take of uncertainty in the future. in terms of the impact on policy changes, we have adopted an index of the state pension age. the government has a general principle of people expecting to spend one third of adult life in retirement but there will be a committee every five years to translate into a precise set of

ages which allows you to take into account the fact that that want tot be what you aim at. there is a general willingness to embrace the sort of thing. the bank of england has been doing this for quite some time in the charts it has presented. it is important that the emphasis on uncertainty does not give you an excuse to dots the responsibility to come up with your best judgment. raven king used to be reduce -- resistant to producing estimates. members of our profession rushed him to the office and photocopied the inflation report and blew it up and try to back out of the point estimate from the middle of the probability distribution. there is an acceptance in real politics that has not been suspended in the face of it >> it seems to me that a couple of , one recent to

talk about uncertainty is when are bound to which be a lot to me you can say to the members of congress i told you so, even if you were not listening and you can cite the day in which he testified before the budget committee. i think the deeper question and one that came up in the first panel this morning and when that henry aaron raises is that by giving long run forecasts, are you conveying something to policymakers that we do not really know that might in a different state of the world for we have now laid them to do something that is harmful? >> we have wrestled with how much weight to give to forecasts of our different horizons. over our long term projections go out 75 years, other reports were issued talk about 25 years and 50 years down that we have reduced the emphasis on recognizing that we have less knowledge about what will happen at that horizon.

is important for us to continue to do work that looks as hard as we can the projection over the next way five years. because the challenges that the country faces are not just short-term and the policy responses that are being weighed are not just short-term responses. they are gradual responses in general. we will -- want to move beyond the 10 year window. look out overt to a longer time than the standard tenure budget window. we are transparent in the greater uncertainty as we go out. in this last long-term budget outlook this year, this range that we show that has a picture of has a debt to gdp ratio in 25 years i've factor of two to one. it conveys clearly a lot of uncertainty but all of that

range that we show has yet -- which is is larger unusually level by the standards of the history of the country. there is information in that. >> do you ever find yourself thinking i wish members of congress would not pay so much inention to the score deciding whether something is a good policy or not? >> it is a standard view among my colleagues that too much weight is given in some cases to hitting a particular number that we recognize as uncertain and that legislators recognize as uncertain. that is a byproduct of ongoing legitimate concern about trajectory for the federal debt read we often think that our estimates are given too much weight relative to other

consideration. --let me ask about the i want to follow up on doug's question. there probably are policies that you think are good policies but part of the problem may be that when the congressional budget office says no savings, it is not reflected as we are not certain enough about it to do savings but that it would produce no savings. howuestion is more on health care reform, where my guess is they may be areas where you could say here are a number

of things that probably move in the right direction. might do good. we do not have the certainty. one question is is there a way of expressing without a score, an opinion or certainty that these things could have a positive effect because you may have things that are just -- the have become almost delegitimized. even though that would not necessarily be the intention. >> i am not sure what we can do about it. independentyze the payment advisory board as part of legislation this is a group that would have certain avenues and look for things it can do. it was not quite as successful as they might be. this is a probabilistic estimate. other proposals for

specific changes. we analyzed a few years ago the effects of raising the cigarette tax on the federal budget. also it would make the population healthier. people expect that would improve budget outcomes. it might not improve budget outcomes. thatme to very clearly some things that seem so good might turn out to be good or not. that comes through what we are doing. i do not know what else we can do. particularly in cases where it is harder to understand what the right point estimate would be. to quantify the uncertainty would be much harder. what robert talked about is there are -- it is a qualitative characterization of the of certain proposals.

that is not something that we do and we have not thought about it. i am not sure what our capability of doing that would be. republished 500 written cost estimates. things -- i do not want to sound that i am just focused on running the trains. we need to find mechanisms that for shortle timetables for wide range of legislation. >> that was the one that showed the error. you have marked in yellow. is that something that you are asked to do or is that your invention in order to avoid the problem? we have developed it beyond that. what we have previously done, we have a system in the u.k. that the government, we publish the

forecast, the government published its own scoring. what we will say about the uncertainty -- previously all we have done is to say that here is the list of measures announced in this package. i think we felt that it would be more useful to have a systematic and transparent way of doing it. this is paid for by a large number of highly uncertain takeaways and anti-tax measures. >> any scoring role is open to some kind of gaming.

and with presentation of all the details, the gaming is very evident. people who dig in know about it. and yet the scoring role plays a role. and so a lot of concerns has , as it were, over too much. we have included someone today who did the reverse. what was life like a for the cbo? what was it like without scoring when people was making up their own numbers. i certainly room -- remember the issue over social security. the issue was her much would we brace benefits this year and what are the political pressures and what the mets can we set so scoring set the limit but it was all made up scoring because the system had no automatics. the scoring was made up, here is a number. congress could hide behind the

number when beneficiaries wanted bigger things. i think scoring really matters. as important as it is. >> i love the british way of the whole of government accounting and on a commercial basis which i take to mean a cruel accounting. a sturdy was caused i state and local government that laid off countless employees as the government was trying to do the right thing. few colleagues have any idea what the fiscal gap is plus how large it is. there was -- will have to have a longer discussion of what happened prior to the automatics.

there was serious consideration. it looked as though from your had a lowering of your estimation of potential gdp of approximately 15%. with no apparent trajectory to be closing that gap back. it looks like you have taken a 15% bite of put tensile gdp at least through the year 2020. is that your presumption going forward and does not sound like an awful lot of uncertainty? >> the question is do you think you're 2008 was that bad? that now you have a need for that much correction? make overst point to the projection was before we existed so that was the

published projection when the forecast was still in political hands. [laughter] think certainly this has been true since the crisis hit in the u.k. and it is more so here it was to start with. the notion of how big is the whole that your fiscal consolidation program has to fill in is wrapped up in this judgment of how much gdp has moved down from the expected path. you multiply that loss by 0.7 and that tells you what the increase in the structural budget deficit is as a share of gdp. there is a lot of uncertainty amongst other people who are looking at this as to how big this decline is. and it is difficult to explain why that should have been that large. in response to the fact that we have had a weak economic

recovery. week article 70. all that suggests there has been a big supply. that view is challenged by the fact that we do not have any wage growth to speak of. be that narrow? it is something that is important for us to be upfront about. we are in the middle of the tenure consolidation program. >> about potential here? >> we revised down our estimate for 2017 by 8 percent or so relative to our projections in 2007. we think some of that is due to the recession and weak recovery. some is due to developments that want -- [inaudible]

it is harder to disentangle what part of the revision is due to .evelopments in the cycle the government is substantial. i think that this provide appropriate caution about taking a particular point estimate at face value. >> i am a journalist. i cannot help it is healthy. elenis for mr. eleanor -- dorf. been whether to factors.r project i was wondering what your thoughts were on whether --

accounting these factors would -- increase or reduce uncertainty? our scope for incorporating macroeconomic effects is limited by the estimates of changes in [indiscernible] not the cbo. estimate incorporate a lot of kinds of haverhill responses that are not static. they do not generally incorporate macroeconomic effects. another thing to emphasizes when legislation is being discussed or proposals are being weighed, that would possibly have large macroeconomic effects than and if time allows then we do estimates over those effects. we do this every year and -- in

our analysis of the president is it. we did for our analysis of chairman ryan's budget plans and we do it now and every year and in our long-term budget outlook. jct did it year, last year. work is not new to us. we spent a lot of time on proving our models on the effects of the scope policy and the economy and writing reports that spell out how we do that sort of modeling. analysesse kinds of for legislation that would possibly have noticeable macroeconomic effects and when there is time in the congressional process for us to do it, that is fine. we are doing that now. question to members of congress is how they want to use that information. that is up to them to decide what role they want to give

these estimate -- estimated they consider legislation. it is up to the members of congress to decide. >> another question? aaron. >> this is a question with respect to the alternative this goals and area projection which in many quarters is regarded as perhaps more realistic than the extended baseline. one of my questions refers to both projections. wheng the first session, commenting on the projections of social security and medicare hospital insurance, peter diamond observed that the probability that scheduled benefits would be paid in both

grams and current revenues would be collected in both programs was the probability of those joint events was about zero. yet, both the extended baseline and the alternative fiscal scenario assume that zero probability event will occur and that has fit into the projections. particulart to that assumption, my question is, what and arehink about that you bound by instructions are statue to estimate in that way, or was this a decision of cbo? the other question relates to the alternate fiscal scenario which is the ascension that revenues will continue beyond the 10 year budget window at 18% of gdp. which is based on historical analysisbut historical

of a time radically different in character from the one you are projecting, one in which in the future were we to remain at 18% of gdp, congress would have to continually cut tax rates in the face of projected widening deficits which, even given conger's cooper's evaluation of his colleagues strikes me as verging on calumny. something they would not do. i would appreciate if you would comment on both of those elements of the projections. >> it is common as you say for people to refer to alternatives as the more realistic scenario but i cannot refer it that way. we do not refer to it that way. on many of the occasions we have done this, alternative scenario debt skyrocketing ultimately.

that is not a realistic projection. for our purposes, the baseline and then the extended baseline scenario are meant to correspond roughly to current law. ,e think about the alternative that is corresponding closely to current policies, one might say, and then the difference was stark when the 2000 1-2003 tax cuts were scheduled to expire because members of our baseline followed current law and -- in incorporating those expirations but many members of congress were in their own minds starting from a benchmark in which the existing tax rates were continued and wanted to understand the effects of policy to that sort of benchmarking we put that continuation of the then-current tax rate into the alternative scenario. i do not think it is meant to be realistic. peter's concerns about this do not worry me. i think the alternative scenario it is meant to say what would happen if we continue with

current social security benefits and other sorts of benefits as they are being paid out and we continued with current tax policy. we are required by law to follow and constructing our tenure baseline projections. much of this was written into law in 1985 in the legislation with some modification since then. there are rules that we follow, and when there are ambiguities, we consult with the budget committee on how to handle those. that applies to the tenure projection, official baseline. the extended baseline projections, we try to follow that as you go further out. it is not literally current law, providing technical reasons. the country -- the government has a debt ceiling. we do not assume it is not raised. even the baseline rules about current law make certain sorts

of accommodations and for social security. where -- benefits are legally paid only if there is money in the trust fund. the rules say we will projected isefit as if it is -- there enough money to pay them. we follow that prince of the for the extended baseline. the alternative is up to our judgment about what alternative representation of current policies we think will be most useful to the congress in its deliberations area the goal is that realism. the goal is to capture what many members of congress think of as the current sorts of things that are going on in the budget. there is obviously ambiguity in that and we use our best judgment to be specific and then we lay out assumptions that we have made very explicitly. >> in the baseline, you are required to assume that social security benefits are paid even if there is that money in the

trust fund? and why 18% of gdp? >> what we're trying to capture is what people might think of as current tax policies in a broad sense. what is happening is that the federal government has collected revenue equal to about 18% of gdp on average with >> we think we're trying to show congress what would happen if they continued with the benefit policies that are in place and the sorts of tax policies we've had in the past and have now what will happen in the future and the fact that those lines, spending revenues diverge, that is the fiscal challenge. that is exactly the point, that with the sorts of tax policies we've had before, the federal government will not collect enough money to support the orts of benefits we have now given the aging population and the costs of healthcare. it is our effort to demonstrate to