make a better own stabilizing activity over the last generation has been our move to demerv the icbm force. we see that as one of the core steps in the direction of a more stabilized strategic relationship among countries. so, yes, as a general matter, we constantly focus on the necessity of avoiding multiple missiles, and they create multiple target your -- targets. our is a target on discourse on these matters internationally. and they will continue to be so. greatk we had some really track to and track one activities in pakistan.

i commend those of you around the room who have been involved in them. they have been very interesting and very productive from what i have seen or when people send me reports and so forth. . think this is an really solid. we do have discussions of these matters on an official level as well. we have a strategic dialogue with india. we also have so-called snap-talks with india. for, it what snap stands think security, national security, and strategic problem-solving. take this discussion out of regional ghettos. eurasianct a whole

community, they affect a whole international community. we need to talk about them any broader community of countries who are either deploying or attending to deploy these kinds of capabilities with any of the other systems that you might name, including a merv system. opportunity to discuss these in a regional setting is very important and i hope we can accomplish them. >> good morning. i am interested in your state , and would askt

you to elaborate on all setting. toisrael prepared and ready engaged in being transparent, and how is egypt in terms of its current government structure, and how much to a hindrance is this to all of us? >> that is an interesting -- you know, frankly, i think we have spent -- we have had a purgatory -- preparatory process going on. there has been a quite positive , and i thinkrocess that it dealt with some of the initial anxiety within the conferencesof mirv in 2010. es have brought the four axis together, the israelis, the s, the middle east, and

egypt, and they can all get together and agree on an agenda, nore is no reason to have doubt about another review process in april or may. i have reason to say that there was significant progress in 2010, we are right on the cusp of moving to getting a conference. we're hoping the parties can act everybody's interest to agree on an agenda. >>-or, thanks for your time this there, -- hid

thanks for your time this morning. what about the proposal from last year hitting its mark between now and 2018? thank you. >> again, i think a lot depends on, in this case, broader political issues. i did take note that president ,utin, when he made his speech which was very critical of the united states in many, many ways, but there was one key paragraph where he said that it is necessary to continue nuclear arms reduction negotiations. i hope this is indicative of russian possibility in this regard -- russian flexibility in this regard. it is a good thing to do to

ersue strategic arms reductions. historically, throughout the ups u.s.-soviet the relationships, throughout the cold war, continuing to pursue the strategic arms reduction was in the interests of the entire global community in the context of the nonproliferation treaty and our responsibility to pursue this under article six. i believe that there is both a historical rationale in avoiding a crisis bilaterally, and i believe that there is a strategic interest in requirements as well, or strategic interest rationale, i would say.

that these reductions would be not only in the u.s. washed interest but also russian's interests, its.'s also russian's interests as well. >> thank you. what do you have to say about nuclear talks on negotiations? >> yes, i believe you are talking about the cost of the modernization programs over time? uh-huh. [indiscernible] ok, i understand now. question is whether the

economic crisis in the russian federation may affect their further modernization methods, and what the impact might be. again, this is a little bit out --my job, but i was leading reading with interest about the financial commentary on what is happening with the russian economy right now. one of the comments that was made by putin several weeks ago was that the russian national federation budget for 2016, with the assumption that oil was at $96 per barrel. today, as we know, oil is up and down some, but the trend is pretty much down, heading below $50 a barrel. is that of the assumption that it is not going to be viable for economy, soussian

it is not up to me. treasuryin our own department or finance ministry, but i think there is bound be the impact on the goals russian federation has laid out. i cannot tell you what those impacts will be, but historically that has meant selecting priority. there has been a lot of talks about different kinds of weapons systems on the russian side in as toess, i can't comment whether any of those are officially endorsed or not. i think it is inevitable that there will be some honing of the program to modernize the russian strategic forces due to the economic difficulties. so that is really all i can say on that matter. high, doug birch, public integrity,"

as moscow has been pursuing cuts, at some point will the gettingration consider our stockpile to the size of the , with respectile in the judgment that the u.s. can get by with a small arsenal and will still be secure? >> i believe the question is a russian about unilateral reductions, and i will say as i thatsaid repeatedly production is not on the table? -- table. not on the table is all i can say. [indiscernible]

>> yes, good morning, tim , first of all matter of secretary, thank you for all of your hard work. mentor, we if a often like to look at things that might affect the treaties in 2016. a likelihood of sanctions being announced as early as friday, i do believe to restriction is willing sacrifice all of the hard work that your office has done for , or d yourms control that the two topics can be -- or do you think the two topics can remain separate, as well as your efforts in the future? >> thank you, and let me express my appreciation for the threat

reduction agency and the entire team of inspectors that go out. and on our site, the members of the army and the navy for accepting these individuals for coming out. they come out multiple times a year, it takes a lot of work, as you can imagine, to prepare for those inspections. force and on the air the navy side, as well as accompanying the russian teams. and we go 18 times per year to russia, we go to their bases in their long-range bases, and there nuclear sectors, you guys are really on the forefront here. thank you, and my appreciation for your continuing work. i will say as far as the crisis, , the ukrainemoment crisis was bursting on the scene, some of you may recall,

it was march 8, which was international women's day, so that is a big russian holiday, so i was astonished to see when i woke up in the morning a reference in the newspaper that russia was considering pulling the plug on implementation of a new start treaty. i got on the phone immediately with my counterparts in moscow. that report was linked to an unnamed source in the ministry of defense. i got on the phone immediately and said, what is going on? i was told, we will look into this, and we will get back to. -- to you. i waited five days, and i got a --l back, and and in and an official announcement from the russian federation that they would be following the treaty despite what was going on in the ukraine.

i hope that will be consistent with the history that i spoke out -- spoke about a moment ago. there were some very difficult patches during the cold war, but we nevertheless continued to our central treaties during the era. some of you may remember with long memories that in afghanistan in anti-79, we pull the plug on the so-called salt ii agreements. we did not move forward and ratify that agreement. so far, the republican administration and the kremlin agreed to salt ii limitations. that went forward with a parallel agreement in, even when the soviet union in bated afghanistan. -- invaded afghanistan.

again, despite serious differences and serious problems bilaterally, we have continued to the limitation of our central treaties and agreements, and affecting our nuclear forces within our mutual interest. i hope that will be the case here as well. >> good morning madam secretary, i am a lawyer who worked in nuclear export control and non-revision -- nonproliferation law. i was wondering about the partnership with respect to a verification. i wonder if that work at dissipates a multilateral organization to eventually implement verification as this disarmament moves into the multilateral instead of the bilateral, or whether the

anticipation is that these efforts will develop techniques that can then be used by the iaea in the course of verification of disarmament? >> thank you, that is a very interesting question. will say the i former perspective of the u.s. ificatione see this ver policy as a national function, but here is my second point, we do obviously cooperate with international organizations, i mentioned being at the ctbt on-site exercises in jordan. we put a lot of exercises and people into the implementation of that on-site inspection experimentation. the iaea, wewith work very closely with the iaea.

in the foreseeable future, there is a potentially national responsibility. however, this is something that i wanted to note. this is something that we have worked on historically as to what will happen when we get close to zero. is not a matter for national policy makers at the moment, but i would welcome continuing work on what the wo uld-be requirements would be when we get close to zero. historically there have been some good studies on this area, and the academic community and the scientific community are continuing to consider these missions, because i think it backs up, again, our of zero. how can we practically get to zero? in order to do that, we are going to have to do some very hard thinking, constitutionally,

procedurally, technologically. we could spend a whole morning session on that, but nevertheless, we are just talking about the nuts and bolts of this and i think there could be some good work on that topic again. >> good morning, matthew mckenzie from the national resources as statistics council. thank you so much for speaking today. times reportedow is thinking about rail mobile nuclear systems, and i wonder if you had any comment on that reporting? thank you. >> talk about back to the future, that is where we were in the 80's. again, consider what is going to be stabilizing and what is not

going to be stabilizing going forward. i did mention that i see the as first ben, judicious, for example, there are certain numbers for delivery vehicles, and they are well below the 700 central limit. when it is fully implemented in 2018, it will be 700 operational delivery vehicles. russia is well below those numbers. -- yousington surging up can see them surging up. the rail mobile system is a good example of one itse the questions about and is economic feasibility as well as is strategic feasibility rationale, with but we will see, i think urgeainly

consideration of strategic stability impacts of such a system, especially if it is delivering a mirv missile. >> there was a question of the whether the mobile interconri tinental missiles would not be covered by the treaty. >> it would have to be brought under the treaty, essentially. >> madam secretary, good morning. chief, inspection team and i would like to cobble a couple of questions here based on some of the questions that we have heard. you mention that 90% of the world's nuclear armament are in the hands of the united states and russia, and that unilateral disarmament is not on the table from the united detente

perspective, and the recent statement from putin is that he , buts future disarmament there has also been statement from russian officials that they are not really interested in any further bilateral disarmament, be on the new star treaty, and it needs to be in a multilateral form. >> thank you for reading that up, that is what they had laid out in one of his earlier phases. >> my question is, since 90% are handsh russian and u.s.'s , the question is the multilateral discussion does -- have you had any question with other nuclear states that could kind of indicate what their threshold is as far as what the united states and russia needs to gain -- obtain? has notrically, there

been official positions or, but there have been a lot of -- there have been a lot of experts when u.s. orwell russia gets around 1000 warheads, then maybe we will get more interested come up i am not saying that these are official statements by any means. i would just note that the number of 1000 has been out there as something that other countries have in their ngo communities have commented on. what thing about this multilateral point is that i have always stressed that i don't even see how you would structure such a negotiation, because there is such a dispel is between the united states and russia do have over 90% of the nuclear arms in the world, so how do you structure a negotiation between to parties

with very high numbers and three parties with very low numbers? it does not make practical sense on this, and i have yet to hear on the russians on how they was torture such negotiation. i don't know what they mean when they want to move to multilateral negotiations now. that is going to be an interesting topic of discussion. thanks. >> thank you, dan perlman for the school of complex solutions at george mason, and just in response to your comment about one we need to get to zero, of the things that we each do more of his look at the auses and the fear of nuclear weapons, and the irrational belief of what weapons provide, and i have gone

to the u.n. conference on climate change at one of the things -- change, and one of the things that we have been doing is talking about mechanisms for dealing with nuclear arms first. we have many ways to deal with conflicts, and we usually deal --h the symptoms of getting we can her to the symptoms first, but would you comment? i know ayou, diane, lot about your work, and we have had a chance to talk about it for. one thing i would say -- about it before. one thing i would say is that secretary kerry has been out on the road nonstop, and in recent weeks, very much hope is on the middle east in the hopes for

rejuvenating the middle east peace process. we have the regional security very much in mind, and we are constantly working as a matter of national i'll see -- national policy. but my opinion is that we must do both. the handst play into of those that are saying that we are not doing enough on government if we somehow back off or sit on our hands and do not try to continue to make practical progress on everything we can, whether it is the progress of generating conditions of more sophisticated monitoring warheads, that is the whole meaning of our verification initiative, and also as i mentioned, getting non-weapon holding countries involved. but you have to do both at once, i think. >> i'm going to give myself the

last question. can russians be serious in the of limitations of a new start? russiansmentioned that have not been cleared to go beyond that, i think he's a term blocking functions for further reductions. is very sense within the u.s. whyrnment wide russians -- russians are doing this? sense for is there a russia at this point in time to be reluctant? crisis, to the ukraine i think it was a complex mix of interagency factors on their side, and perhaps, and i'm speculating here, perhaps sums and that they have not right decided where they want to go with their own modernization program, so not wishing to

reductiona nuclear negotiation in the context. in terms of the ukraine crisis and when it emerge, i think there are additional layers of complexity here, in that i think there is a different attitude in moscow in the theory of further reduction to the point that i made a few months ago, and that is that despite the relationship, we believe that we should continue in a responsible way to pursue further arms reductions from russia. it is the best way we see in the end to reduce terrorists getting their hands on nuclear weapons. that is what president obama said on his speech, terrorist wielding nuclear weapons is not good, so the only way to reduce that is to get rid of nuclear material. i'm really proud of the fact that we have gotten the

equivalent of three metric tons out of the country. that the russians have been great partners in that has been great, we have had rate partnership with russia, despite the ups and downs in our relationship. i think it is a bit more because of their political stance in this bilateral crisis. despite this bad. , this ad patch -- bad period, this bad patch, we should continue to press forward. beforehand, it was more institutional and interagency, and since the crisis has emerged, it has taken off some

political aspects of it as well. >> rose, you have covered a lot of ground and we are grateful to have joined us in your busy schedule. [applause] and in about an hour, we will be taking you like to the center for strategic and international's daddies, and university former professor jon

huntsman will talk about the next steps in a u.s. engagement in china, moderated by bob schieffer. at 5:30 p.m. eastern time here on c-span. here are some of the programs he will find on c-span networks. actor seth rogen discussing politics and humor with daily show creator liz winston. sunday evening at 8:00 on c-span discusses the war on women rhetoric. william dereoewocz discusses how students should think creatively, and sunday morning

just before 11:00, the west lafayette indiana interview of city authors and to her of city sites. and historian damien shields talks about the life of patrickerican soldier leburne and the battle of franklin. and then a discussion of police brutality in the neighborhoods of oakland. let us know about the programs you are watching. comments@cspan.org, or send us a tweet at cspanco mments. follow us on facebook and

twitter. outlined theients decision to normalize relations with cuba through the white house, and whether the white house can move forward with a republican-controlled congress. this is just under one hour. >> ladies and gentlemen, please " chief "politico correspondent, ben white. [applause] >> good morning everybody, thank you for coming out. , "politico" chief correspondent. if many of you don't read it you

should, and if you don't, i can instruct you on how to sign up for it later. we are pleased to have the white house national economic council director, jeffrey zients, with us. anyone who want to comment can send us a #morningmoney at twitter. and we want to thank the peter g. peterson foundation for their generous sponsorship of this event. here to say a few words to the foundation is loretta ucelli, vice president of the peter g. peterson foundation. loretta? , as mentioned, i am loretta ucelli with the peter wepeterson foundation, and

want to raise awareness on the nation's long-term school challenges. we believe in a long-term fiscal foundation is an important ingredient in achieving and maintaining a prosperous and healthy economy. we are concerned that although lower,erm deficits are our long-term fiscal path remains unsustainable. part of our mission is to bring folks together like we are doing with ben this morning to have serious and substantive discussions about these issues and policies. so i am delighted to be hearing fromrose gottemoeller -- jeffrey zients, who is at the center of all of these issues. so thank you all for coming, and , for being suche

an engaging host and moderator. >> thank you, let's not waste any more time. >> good to be here. >> thank you so much for coming out on what is a very busy newsday on the nation's capital, busy few days. when the president goes to hawaii for vacation, we can have the news dialed down a little bit maybe, catch a break. thank you for joining us. we want to talk about the big news story of the day, and that is pulling the movie after the hackers which have been connected to the north korean from aent has threatened cyber terrorism. a couple of questions about

state cyber terrorism issues. the government respond, how can the government respond to that in a way that will he tolerated going forward? and how big of an economic impact are we looking at in corporate america by state-sponsored cyber terrorism? >> the president spoke to this last night, and clearly this is a serious to jewish and -- a serious situation. back, i was once part of the private sector, and as a ceo, there was a thought to the risk of business, and depending on what industry you are in or what business you are running, you think about cyber, and what you have done to safeguard your network. making sure that you have safeguarded that network is top of a ceo's list. you are constantly looking at your risks and what you can do to protect your network, it is a

top priority for any ceo in this environment. the president has lead this effort, we have a single point which did in dhs now, not exist before, and working very carefully with the private sector on nuclear power plants and at the same time increasing information sharing between the federal government and the private sector. that said, we do need legislation. the president proposed legislation in 2011. congress has not acted on cyber security legislation. we need legislation the acreages filesharing, but at the same time incurs is -- time acreages time encourages protection. >> something by this by the

north korean government could not be responded to subtly by not notrnment -- could be responded to by the government. this decision by sony to back down in cyber terrorism from the north koreans, in your experience as a ceo and in your role in government now, how big of a threat is this type of cyber terrorism, and are we likely to see more instances like this where state-sponsored cyber terrorists are able to achieve their goals through these type of -- >> i think the wrong focus is on theeconomic potential in future, i think now the future as we said earlier, is what can

we do to get ahead of this and to protect our networks? every company needs to be investing in cyber production. -- cyber protection. we need to do what we can across the federal government, and to work with the private sector, that in order to take this to the next level, we need legislation. >> was psychopathic cuba news a little bit. -- let's talk about the cuba news own little bit. news a little bit. i am not quite clear how he would be able to move toward with these two congress with -- to countries without congress moving forward with the embargo. importantly, in the opening

of more broad access to the cuba, which would be good for the citizens of cuba and potential aunt for newer's ntpreneurs. this is a strategy that needed a revisit, and as you pointed out, there are some targeted economic opportunities. read itplace where i most was in "the washington editorial page, and they said they cuba was on its last leg, and if these liberalization's will put more money into their pocket and not really advance the cause of the that's -- cuban people, and that given time,

they will advance on their own. >> the president believes that yesterday's actions will lead to a more open and free cuban society. as i talked about just a second ago, there are targeted economic opportunities for u.s. companies there. >> let's talk about the russian ruble collapsed and the impact as you see it on the united states economy. thegenerally cover destabilization of the russian economy and the impact it could have on the u.s.. a lot of economists say that we will have minimal exposure to that. are we looking at a potential for a financial crisis to come back? >> we monitor the situation carefully. there are direct impacts in terms of our relationship with , but that said, the

russian economy is under a lot of rusher. -- of pressure. russia and the u.s. are working closely with our european allies come up the stations were very certain to impact russian sectors, including defense and energy, and at the same time minimize the impact of our own economy and the economy of our european allies. those sanctions have had an effect, and more importantly, they are targeted at changes at the russian leadership and its policies, that is the goal here. not to impact the russian people. who drop in crude, which is unprecedented, which i will talk in a few minutes about the positives of that for the u.s. in the global economy, that has

had a negative impact on russia because of it dependent on oil and oil exports. watching that market closely and we are tracking any potential disruptions to global capital markets. so far we don't see any major disruptions, but we are watching the situation closely. the potentialw on for economic growth in 2015, before we leave though, what is the nitty-gritty that has been going on in washington over the last couple of weeks, which we all know is the government ending bill that the president just signed to on the government through september without homeland security. question among the democratic left is, why sign that bill when it included the rollback of the part of the derision is -- part of the derivatives push out of dodd frank?

a lot of outrage on the left about that, it is a bad deal, he did not get enough in return to that, why did the president signed a deal? >> think the bill is a compromise. it funds 11 out of 12 pieces of the government for one full year. it is really important to have certainty in washington. look ato backwards a consumer confidence or business confidence over the last several years, we have had eight gradually upwards sloping line. however, we have had three or four dips. each of those dips is directly related to have occurred at the same time as a fiscal crisis or a potential fiscal crisis in washington. shutdown or a a fiscal cliff, each dip -- and if you look back over the last year

or so, we have had none of those , and that is part of why we had we havenomic growth and had more job creation in the first 11 months of this year than we have had in any month since the 1990's. lowployed is down to numbers and we are starting to see wage growth. importantly, we avoided a self-inflicted wound here. the deal is not perfect and it is a compromise, but there is fightinghis deal, against ebola, fighting for early childhood education, fighting for manufacturing hubs across the country, fighting to advance our position in manufacturing which create good paying jobs. there are parts of the bill that we don't like, and you mentioned push out.frank dodd's

but looking at the whole, we thought the compromise was that are than the alternative. one alternative would have been what i just described, another goal,ifted wound on this which would have eventually led to economic issues. the other alternative could have been to kick the can for several months on the whole of government. as we benchmark how we did at this compromise versus how we projected the other compromise would have looked like, we thought it was the right. -- right path. theould you have said to negotiators, this is unacceptable, take this out, and that us that bill without that in theire? it seems that republicans'

endgame was to get the majority -- republican's endgame was to get the majority. >> it was lifting up and looking at the whole situation and edge marking it, as i said, versus shutdown, which we can all agree would have been an awful outcome, but also benchmarking what would have become the default position, which would for thehort-term cr whole of government, which meant that we would have had to had another -- have another negotiation. i mentioned there are several good things in the full year funding bill, and at the same time some things that we don't the overall evaluation here, is that this bill while a compromise, was better than the alternatives. >> let's talk about the

potential for some of these financial problems to reoccur next year. the dips ink at confidence that occurred over the last few crises, obviously you had republicans in control of both houses soon, but there were as a couple of things they came up around same time in spring or summer, you will have the homeland security meeting to be funded, there are a number of issues that could come to the head -- a head at the same time, how do we avoid this next year when republicans are going to demand some cuts in spending in return or an increase in the debt limit. should we expect that we are discrete have more fiscal crises next year? >> i hear from businesses across the country, small businesses, entrepreneurs, how important it has been the last year in terms of economic growth, and not to have these dark clouds. and i think, and i not on what is i say this, we have learned

that lesson. we are hopefully exiting a. of these self-inflicted wounds. period of these self-inflicted wounds. areave learned that there dips in confidence and we have learned that there is momentum in the economy, as i mentioned there is job growth, and we look at our position in the global economy and the leadership position that we have, and the list that we are experiencing are lower oil prices, we poised to have a good economic situation in 2000. . 15 -- 2015. let's talk a little bit about your view on the economy were

-- economy more broadly in 2015. are we at a point finally where someresident can take credit for improving our economy that is going to be stable, and particularly in wages where we did see a faster pace of wage growth, which has been the thing that has really kept able sour on the economy, there is a lack of eating income increases, are we going to see that people feel better about the obama legacy? what is 2015 going to look at from the white house? president'sof the performance on the economy, if versusk at our situation other advanced economies, we are risis peakve our pre-c

on gdp, whether you're is 10% is 10%- whether europe below. thanve a more this economy many european and asian countries combined. 320,000 -- ifthe you count the 325,000 jobs that were added in october, and we look at the jobs that were added in the business sector and the manufacturing sector, and you bimix which is very encouraging, but again, this is ofeveral decades old problem

statements middle-class growth problems. we need to make appropriate investment in training, taking advantage of new training models that can retrain people for high-paying jobs in a very short. of time. time.rt period of we need to invest in our infrastructure, and we also need to get set up for long-term competitiveness in this economy. as i mentioned, in manufacturing, we are bringing together hubs in cities across america. these hobs are public-private combinations that work with universities, and we want to be the leaders in those technologies, not only creating the technology, but also commercializing them and man u actually -- and manufacturing

them. they have great spillover effects in the community, and in two thirds of developer jobs are in manufacturing. what we have here in the u.s. is important for our global competitors. the president started these a couple of years ago, piloted them by executive action, and they have been very successful. we have now launched eight of these hobs. -- hubs. funding bill,ar they have been made into law. >> was soccer about economic prospectscks -- coming out of washington, ballistic a break and a lot of

people here know you, and some people don't. self, thatut your you are a washington area native, where you went to school, and how you got this job. >> i grew up. right outside the beltway, i left to go to school at duke and then went to a company that i don't talk about very much, which is in boston. hisses from the crowd! [laughter] consultingack into for a year or so, and then got a went andy break, and that alreadympany

had a business formula in place. it was a company called the advisory board. we turned into two companies, what is called the advisory board, what is called the corporate executive lord, and they essentially do the same thing on strategies and operations, both are -- executive board, and they essentially do the same thing on strategies and operations, both are located here in washington, d.c. i walked into the office of management and budget and had never had experience with that before, so i took my private sector experience into the public sector. i have had a very lucky and interesting and her chin it run interesting run.

>> you sell yourself short i not talking about the saving of healthcare.gov, which you spent a little time working on and fixing it. speaking of that, are you please with that? >> when the website was not working, particularly well due to a great team effort, many people from the private sector stepped up to the plate, so people dropped everything at google and came out and spent all day and all night on 60-90 to the plateg up to be the general contractor on the upper. -- on the effort. we came together and we accomplish a lot on a short. time.e -- period of

function been a step in terms of the website, it improves the website very well. lots of demand. two point 5 million people have already been through the site in the last 30 days or so, so that site is in very good shape and health care is in very good shape. >> there has been some discussion as to the pronunciation of your last name, i don't know if i pronounce it correctly? >> you did just great. >> does it right with "science?" ce."t rhymes with "scien >> great. >> awkward transition. [laughter] and when we look at the affordable care act, we have

found it the uninsured has dropped by 26%. at the same time, health care costs are going down. health care costs have been increasing for the last 50 years, so now you step back and you say simply, what was the president trying to accomplish with the affordable care act, it increase two things: coverage and lower costs. he has done both. >> was talk about congress and stuff that is on the president's agenda. specifically, tax reform and trade deals. you have republicans running the show on both sides of the aisle, do you think there is a real prospect for corporate tax reform that would lower the top rate while closing loopholes? do think there would be a package that would be acceptable

?o liberal democrats think that wec to will see them through, or will it devolved into parsimonious acrimony? for 2015 gearing up and legislation, and the president is clear that there are places that we don't agree, immigrants, president, and the republicans, there are places that they don't agree -- democrats, the president, and the republicans, there are places that they don't agree. where is the potential for the agreement and where will we be making progress to improve the economy, move the dial, for middle-class americans?

if you look at the intersection of what could potentially get done and what could move the dial in a meaningful way in terms of the economy and the middle class, i think there are three things that come to the top of the list, and you mentioned two of them? cracks second is business tax reform. third is tax reform linked to funding infrastructure. we talked about the advantages of infrastructure, it puts people back to work in well-paying jobs. it steps up our competitiveness. let me go deeper on tax reform. what makes me optimistic that we can make progress is, if you look at the president's framework, and the former chairman's framework for tax reform, there is overlap. it starts with 35%.

we have the highest statutory rape. it is too high. down by getting rid of tax expenditures. we can bring it to the 20's. both plans had that is the first piece. the second piece, right now we have a global tax system, which means that if you are operating in a different country, your tax rate is 35%. that is one system. another system is a territorial rate, where you pay what the tax rate is in the country where you are operating. the problem with that is, it creates a rate -- a race to the bottom as countries compete to have con -- companies located there. what the president has in his is a hybrid system, where you set a minimum rate, and if you are paying more than

that in a country, you oh nothing else. if you pay less than that, difference between the minimum rate and the rate you are paying in that country, you oh the u.s. the chairman camp and president had this tax proposal. is third lease is, there lots of money. estimates are up to $2 trillion, that is trapped overseas. if it comes back, it must pay at the 35% rate. that is not good for our economy to have that distortion. both proposals have a one time all fee at a lower rate to bring money back. both proposals fund infrastructure, the long-term reauthorization of interest -- infrastructure. that overlaps makes me optimistic. these are not easy deals. levels,e differences in the new statutory level, the level in the 20's, what level is

gettingid tax set at? rid of specific deductions or hasholes, each one of those a special interest group behind it. this is not an easy piece of business, but it is important. it could bring more companies back home, and create jobs. the u.s. is the number one place in the world, when you survey global ceos, to invest. we lost that to china for a while. ceos ofnterview manufacturing companies, 54% are looking to bring facilities here. we need to continue to create an environment that encourages that investment, that encourages that in sourcing and getting our up isate tax system

important. >> is there a scenario in which the president could make a deal, mainly with republicans, and not necessarily bypassed democrats but get republican support on tax reform that democrats are not -- >> anything that needs to get done here needs to be bipartisan. the standard the president has is, is this good for the middle class? is this good for workers? as part of business tax reform, funding tax structure is good for workers. we have an opportunity to extend the earned income tax credit in a way that is good for working americans. >> does the president expect to get trade promotion authority from the republican congress, and if he gets that, can he push through foreign trade deals in way that is economically beneficial to corporate america that is also raising wages? x those trade deals are done

with trade promotion authority. we assume that trade promotion authority will be an early area of focus for the new congress. at the same time, under mike roman's leadership as the trade representative, there has been significant progress in the transpacific partnership. it covers 40% of the worlds gdp. this is a -- for fast-growing countries. given our competitive advantages , and the fact that we have been rowing exports and getting a good trade agreement in place, that will create good jobs. it is also important for strategic reasons. there's an opportunity here to set the rules of engagement on labor, environment, intellectual property. the transpacific partnership gives us an opportunity to do that, and set those standards. if we do not do it, someone else will.

heis important geopolitical -- geopolitically to get tpp done. it is far along, the president had a meeting on this in china in november. usdr has done on the hill. the hill is fully engaged. at the end of the negotiation, you are down to the hard issues. what we need to get tpa done, line,p across the finish in these final sets of negotiations. >> let us talk about what seems to be, and will probably arise in the next congress, tensions between progressive democrats and centrist business friendly democrats. it is centered on a couple issues. one is the swaps push out under the government funding bill. the other is the treasury

secretary nomination. obviously, senator warren has come out against his nomination. a couple of other democrats have. there are a number of democrats that are incensed about the nomination. even some republicans are incensed. i want to know why you think it was a good idea to nominate an investment banker for this particular job at treasury. what he would bring to it. and, does it unnecessarily exacerbate the tensions within the party over whether it is to close to wall street, and should move away from those relationships? >> i have gotten to know antonio over the last year. he is an incredibly talented individual with great values. i think he has very relevant experience. when you are putting together a team for a company, you think through a broad set of experience and skills and talents. the same applies in government.

at the have our team national economic council, it is the same thing. the treasury, you need people from different backgrounds, people with academic grounds, people have served in government before, maybe some people who have not served in government before, to bring a new perspective. people with business and financial experience, lawyers. i think antonio is a great member of the treasury team. an overalloes have set of backgrounds. to bring 20 years plus of wall street and financial experience to the treasury is valuable. i hope he gets a fair hearing. >> is it true that some within the administration -- that treasury now, you don't have that broad experience in financial markets, particularly position when overseas, 18 trillion in u.s. debt, a good percentage of that is publicly held. there is a lack of understanding in financial markets at the

treasury right now, high -- a lack of high-level expertise and relationships of people who buy our debt and management of the debt. holespot where there is a in experience. >> i think it is a very talented team with a lot of experience. they have been through a lot. situationandle any that might arise. that said, having some buddy with antonio's experience and talent and commitment would be a great addition to any team. >> i want to take a twitter question. when the next bill, will that be a cost of doing business? where does that drop the line? there is a concern of people who are protective of dodd frank's

financial industry decisions. the derivatives shout is the first in what will be a series of changes in the law beneficial to wall street that is potentially damaging to the long-term safety and value of the system. in the armor. >> that will not be the case. the president will not allow for dodd frank to be watered down. we have made a lot of progress. there is now 500 billion dollars of additional capital. we are must less reliant on short-term funding. the derivatives market is much more transparent. there are much higher margin requirements. we will continue to push hard on dodd frank. the president will not allow that to be watered down. >> there are significant dodd frank changes that would water

it down? i want to talk about your relationship with business and wall street, there was a lot of criticism in the first term that the obama administration did not have rate relationships of corporate america, and no emissary that could speak to ceos and away that you do. do you view that as a rule -- your role when coming in? what is your schedule like in terms of talking to executives and having dialogues with the private sector? >> i came into my job at the office of management and budget when the charter was to improve government operations and productivity. when you think about the private year after year, productivity gains of one and a half percent or 2%, that compounds over a few decades to a major improvement. productivity is both cost,

unit, andst per improving service quality. those are correlated. there is not a great measure of productivity in the sector. the gains are probably about one third of the gains of the private sector. we have the private sector, with these productivity gains, and the federal sector, like this. that creates a productivity gap. our job is to close the gap. it is always incorrect to lead with technology as the answer. technology has been at the center of productivity gains, and therefore closing the productivity gap, technology is central to that. closing theal of gap and getting better technology in my first role, i put together a board of advisors coming from the private sector

who are leaders in technology and productivity. that has helped to bring corporate best practices into government to close the productivity gap. in my current role, we are all about, how do we create more well-paying american jobs? in business, and you have a problem, revenue is not doing what you hope will do, the first thing you do is kick your team out the door and say, go talk to customers and suppliers. visit new countries. in many ways, businesspeople on the front lines are customers. they are creating the jobs. it is really important for all of us in government to be very close in touch with business entrepreneurs, medium-sized and small business leaders, to understand, what are we doing that is working? so we can keep doing it. what are we doing that is

getting in the way, and how can we fix that? what are -- opportunities are we missing? i am disciplined in my own sure we are make interacting with the folks on the frontline, creating jobs and well-paying jobs for the american middle class. that is our goal. >> how much does that schedule take you to new york? walk us through a typical day or week and the life of jeff zients. >> it is a long day. and ends later than i would like. the best way to think about it is, meetings, either one-on-one or small groups, a couple weeks ago we were at a business roundtable. of my time is meeting with ceos and aunt burners -- entrepreneurs.

>> do you think those relationships have improved in the second term doing administration and private industry in a way that you can see? >> we will not always agree. i talked earlier about, there will be areas where we do not agree with republicans, but that does not mean we cannot work together. there will be areas and decisions the president will make on regulation or executive action that not everyone will agree with. i think we are in a good space as far as our communication and, getting esteem back explaining policies. communications and inputs are good. we have a good working relationship with businesses. >> a few other twitter questions. why hasn't the white house addressed congressional concerns about currency manipulation under tpp?

will that get worked on? >> the currency is the view of the treasury department. --ed tell me about >> are you a big duke fan? do you go to the games? i am a duke fan. i grew up a redskins fan. i find that more difficult these days. click's tummy about it. >> hopefully there will be better days ahead. >> we have a question here in the front. >> you spoke about tax reform is one of the issues that could

make the dial on the u.s. economy. republicans in congress have suggested that any improvement in the u.s. economy and tax reform should be reflected through dynamic scoring and tax changes. what is your view? is,ne place we agree business tax reform should be revenue-neutral. cost -- have any impact negatively on the federal toget, or we are looking raise revenue. we are not believers in dynamic scoring. i feel this is not the time to change the rules. business taxin reform in a revenue neutral way. let's not change how we score the budget. question, in the back. one of the surprises in this

congress was the inability to reauthorize the terrorism insurance act. do you have a thought about where there will be a lapse? changes, and will that spur congress to move quickly or will they drag it out? >> this is terrorism risk insurance. this was meant to be the last piece of business before the senate left town. we were disappointed it was not. desire, whenn and congress comes back, is that they make it one of their first pieces of business. so we do not have a significant gap. >> is there a possibility that, if there is a gap, and the gap is filled by the private sector, there could be a program that was not necessarily needed? or are you convinced it is essential? exacton't remember the

count, it was in the 90's in the senate. this is the right thing to do. congress should of been -- done it before they left town. >> one more question. i think that vote was 94-3. >> i am not sure if it was a field goal. >> can you speak to upcoming veto politics, where in the last two years, the leverage democrats have is that the numbers they are playing for in the senate are 67, not 60? changes -- that changes everything, even with quicken's taking control. some very wise former congressional relations staffers from the previous president have told me personally that it is to your advantage to do it early

and in a way, just like we do with cuba, make sure people take your threat seriously. few vetoes have been overturned. it is a weapon that most likely will benefit you. can you speak to that? >> is a question about vetoes. to number one priority is find common ground. where can we compromise as we did on the spending bill young co it's not perfect, but we talk ,bout areas that we don't like there are areas, potentially in business tax reform and trade and interest -- infrastructure where we can compromise. any efforts toe, water down dodd frank, there was hastax extender bill, which

permanenton of extension with very little in it for working-class people. the president made his views was notat that something he would support. he said, the fact he would veto it, in a matter of a day or so, that bill was restructured in a way that passed a one-year extension. it was not a $450 billion unpaid permanent pitch to the budget without working-class considerations. i think that is a case study. i work -- worked closely with senator warren on that. if something is out of balance, from the president's perspective, he will continue to express his views, including, if necessary, the threat or veto of legislation that is inconsistent with his values, which are the

values of improving life for the middle class and working americans. >> we will see a cavalcade of vetoes? we will hopefully see a productive congress. if there are pieces of legislation that come to his desk that are not consistent with his values, he will not be able to sign those. >> it will be interesting for us to cover that. i want to thank the director for a wonderful conversation, and the peter g. peterson foundation for supporting the events. a special thanks to the director burke,igh school, edmund and my mom. dick taught my first economics don't if i passed it but i got through. thank you for coming out. have a wonderful holiday. us on thefor joining

live stream. we will see you next year. [applause] >> yesterday, the white house announced the u.s. will resume diplomatic relations with cuba. some of the reaction, from today's washington journal. alan gomez, first and foremost, what is the reaction from the cuban population there? is a mixed bag. on the one hand, you have the older generation of cubans, that came here shortly after fidel castro took over in cuba,, and they felt enraged and betrayed. they feel this is a fight they have fought for over 50 years, and they think the government down there was on its last legs. by doing this, they think the president gave them a lifeline.

but, there is a younger generation of cubans, who are a little more excepting of things like this. the economic embargo on the , when obama first ran for office, he talked about the need to change these things. he killed down here. anger,as a lot of passion, and resentment. but a lot of other cubans were understanding. >> what is the fight they have been fighting? >> against the castro brothers. when you put yourself in their shoes and understand their history, these are full had their property taken from them, who themselves are the relatives of people who have spent time in political prisons down there. by maintaining the

embargo and maintaining the isolation the u.s. has made its foreign policy for cuba for all these years, that was what was going to squeeze him out. that is what they have been trying to continue to push and maintain, so they felt like yesterday was the ultimate loss for them. >> what did president obama first do when he first came into on u.s.-cuba relations? how did that they out? play out? what was the economic and political follow to that decision? >> when he came down as a candidate in 2008 and talked about making changes, if not to the embargo, what he could do as an executive to change things up with cuba, there were some folks who were angry and upset. he went ahead and did what he did. in 2009, he made it easier for relatives of cubans, who are in

the u.s., to travel more frequently and sent back more money. in 2011, he opened it up for other americans to get down there a bit easier. that is in the form of education visas, humanitarian trips, religious trips. a lot more americans started heading down there. the economic impact was felt mostly, at least in the u.s., by the travel is -- industry. there are a lot more flights to .uba from new york there are people who are sending money down there and trying to nascenny minor way, the t cuba small business enterprises. now, he hasas done expanded that. >> in what way? >> i was hearing a lot of

misunderstanding about this. the economic embargo, as we know it, remains. that was implemented by presidents. form of-- it is in the an act of congress. congress would have to weigh in if they wanted to change the embargo. what the president did, was use his economic -- executive authority to change relations with the united states to allow for more americans to go down there. there are more opportunities for americans to visit. their ability to send money to regular cubans will be increased. $500e now, you could send per quarter. it has been increased to $2000. you can send more product to ,mall business owners in cuba farmers and folks who are trying to open restaurants and small businesses. markets will be able to send more money to help them out.

cuba, theyho go to can use debit and credit cards in cuba, which was unheard of before. some people say you will be able oftake out about $100 worth cigars out of cuba. we will be able to send more money and send more americans down there in the next couple years. >> what does it mean for the ?conomy in miami what industries will benefit from this? and also, what about communication technologies, internet, etc.? will that be allowed in cuba? >> yes. as far as the economic impact down here, it will be a lot of -- airlines will benefit, iybody who is involved, imagine there will be a lot of, the line at the miami airport is

usually very heavy with relatives taking as much as they can back. those lines will get longer now. there will be a lot of people who will benefit from being able to send things down there, reaping the rewards of his missed successes in cuba. more from the investment and transportation send -- standpoint. that is a big change that is going on in terms of business. right now, you can't go down and start your own business. with technology and internet are goings. companies to be able to help cuba -- i was going to say rebuild, but they never really had one. to build up their infrastructure, in terms of the for regular citizens, internet usage is currently restricted.

5% of the population has access to the internet. the majority of that has to do with the government restriction. they want to open that up. u.s. businesses can go down there and help lay the fiber optic cables and increase access to the internet in different parts of the country. >> finally, the politics of this. how does this play out in 2016 florida being a key state for folks running? this play out in capturing the cuban-american vote? >> it is hard to underestimate the impact this will have, at least for the gop primary in florida. every candidate will have to answer how they will deal with this. most republicans that we have seen so far have come out opposed to the president on this , either because they think this

is another example of executive overreach, or because they think a is a bad idea to deal with terrorist or negotiate with someone like castro. a lot of them are upset, but when you look at jeb bush, he has already thrown his name in the hat. it will be important for him. very popular among the cuban community here. it will be interesting to see if his angryntain opposition to what the president did. senator marco rubio from florida, another possibility for 2016, is also affected by this. he himself is a cuban-american. ted cruz from texas, his father is cuban. the bigger question will be, how floridians welcomed this news and what they will think about candidates who try to roll this back. >> alan gomez, usa today.

we appreciate your time. thank you. x have a good day. >> good evening. >> right now, at a center for strategic and international withes for a discussion 2012 presidential candidate jon huntsman and others. >> -- for fear that we may be hacked by the north koreans. we have a great lineup for tonight. we are glad you have joined us. i would like to thank bob

the college of communication at tcu for their participation in bringing us these dialogues. none of this would be possible without the generosity and niarchosof the stavros foundation. we are appreciated of all the do. there are a number of remarkable public services -- servants in attendance. here, andm keating is ambassador tom schieffer. recognize twoo young men who are visiting center for strategic and international studies. they are heroes who have served in afghanistan and iraq. ande names are ivan keegan chris clary.

please rise so we can honor you with the same service that you have honored us with. [applause] do, is thereer anybody better than bob schieffer? lee's welcome mr. bob schieffer? -- please welcome mr. bob schieffer. >> thank you very much for coming. this will be a good one tonight. we have a great panel. advisor ofon, senior the freeman chair in china studies here at center for strategic and international studies. he spent more than two decades in the u.s. government intelligence and foreign affairs committees. he is the senior china analyst, or was, at the cia. he played a key role in supporting policymakers during ,he 1996 taiwan missile crisis the 1999 bombing of the chinese him -- embassy in belgrade, the

downing of the u.s. aircraft in the, in 2001 he was awarded u.s. department of state's said. honor award for outstanding forort to the secretary aiding the office when chinese leadership changed hands in 2012. is somebody who has become well known and recognized for his knowledge of china. he is a writer for new yorker and he covers politics and foreign affairs. he is the author of a book about ambition:ed "age of chasing fortune, truth, and faith in china." for eightn china years, and before he joined the new yorker, he was a member of the chicago tribune team the 20 --nts are for investigative

that one a pulitzer for reporting.ve jon huntsman, ambassador to china from 2001. before that, he was governor of utah. he began his career as a staff assistant to ronald reagan, and he served each of the four presidents since then. his roles include a bit -- ambassador to sing for -- and most recently, ambassador to china. as governor over utah, he focused on economic reform and brought unemployment to new lows. four years ago, governor, you were busy. running for president. >> we don't need to talk about that. [laughter]

>> are you going to run again? [laughter] no pressure. >> there was an editorial this morning which called me and ostentatious moderate. is, better that than a few solanum us panderer -- panderer. when you are a simple problem solver, as most governors are, you look for ways to get to the finish line. it becomes more complicated. >> so you are not going to run again? >> sorry, bob. >> we have the overriding issue for policymakers over the next

decade, and that is managing the china relationship. and i was getting ready trying to learn about everything before the last presidential debate, i talked to graham allison at harvard, and he pointed out that in the history of the world, going back to sparta, there have been 15 times when a rising power rose up to challenge whoever happened to be the loan superpower at the time. 15 cases, the result was war. the big question for china and the u.s. is, can the policymakers on both sides find a way to defy the odds? i want to start with the three of you. chris, let's start there. i want to ask, how would you define relations between the

united states and china right now? what you see as the main challenges? bob.ank you, relationshipe the is definitely on and afford trend following the summit meeting between president xi jinping and obama. we had a bumpy first half of 2014. thatsides wanted to use opportunity to get things back on the rails. we see that with some of the significant agreements that came out of that summit. the climate change agreement, military confidence building measures, and the real world of economic interaction between the two sides. something simple like the be set extension for chinese business people coming to the us-mexico difference in terms of how we are viewed.

the chinese have come up with an major country relations. so far, neither side has figured out how to define that. the u.s. has been somewhat reluctant. the challenge in the nearest term is, generally speaking, despite the positive summit, there is an assessment in beijing that obama is weak domestically after the midterms. him fordo they do with the remaining two years? how do they interact? my sense is, there are two schools of thought. i think this is a high-level debate. one side would argue that 2016 is uncertain territory. there is a general feeling that whatever comes out of it is likely to have a harder policy for china.

perhaps we should invest in obama and do what we can with nexto hand over to the republican or democratic administration. the other school argues that, because he is weakened, he is .nreliable or inconsistent that unnerves the chinese. keep the, they should relationship stable, but not necessarily invest, but rather turn their attention towards the region. we saw this coming out of president xi jinping's address during the work conference a couple we -- a couple weeks ago. the message was very much, we are here, get used to it. that is the chief driver that will complicate our relationship going forward, how do we adjust to that reality? thank you for having me here today. it is -- i want to give a plug

to chris. he said the central foreign work conference is not the most elegant phrase. that not easy to make saying, anti-just made it fascinating. i look at what could have come out of this recent meeting with xi jinping and barack obama. if you go back five years to the moment when the president made his first trip to china, the reporting that came out of it was not good. this was a president -- the perception of the time was, the president had been, and a sense, shown his way around. he did not been able to shape the contours of the visit, and he did not seem in control. if you look at it this time, the story was different. they came out of it with a climate change agreement that was a surprise to many people watched the relationship closely. they come out -- came out with

something that is significant, a couple deals about tilting confidence between the two militaries, the chinese and american military's. -- building confidence. rid of uncertainty about what happens when you have these two big countries playing in the same neighborhood, on the chinese coast. how do they talk to each other? what are the rules of the road? this is the beginning of a more candid conversation about how to avoid that clear pattern of history. one thing worth mentioning, that pattern of 11 15 times when a rising power his challenge at an power, what strikes me is, you see that written about in the chinese analysis. the fact that they are talking -- itthe few cities trap sounds much nicer's in chinese.

that is a good sign. some of the same fundamental understandings of the risks we encounter and what we need to do to avoid those risks. >> governor? >> what an honor it is to be here and i want to thank everybody year. i want to pay tribute to some any in this room more i have glanced at while being up, who i have known over many years and it worked with indifferent professional capacities. it is an honor to be with you once again. i know how hard you've worked in promoting the u.s.-china relationship. i would say the u.s.-china relationship is based on one fuel type only, and that is trust. sometimes, the trust is depleted from the gas tank, at which point you must fill it back up. we are at a point where we need to fill the tank back up with trust. produced goodit results on the people-to-people toa outcomes and commitments

get more of a heads-up on a are size is and the climate deal. i am not sure how that one works in terms of the verification. i would characterize the relationship today as being status quo. it is ok. i say that because it could be better. generally, the u.s. china relationship is maximized when we have things to do. that we feel that are part of the aspirations of our people. when we had established the relationship in 1972, we had a common geopolitical objective. establishment of the world trade organization. i was involved personally. that was another thing that kept us at the negotiating table. both sides wanted the

aspirational outcome, and it kept us honest. we did not feel -- fall victim to headlines, which can be a destructive thing. i would say we are doing ok today. we are managing the downside risk, which is no easy feat. we are missing the upside potential, which is vast. that is the only thing i would say, what should we be doing in that regard? i think we are missing the economic these. nothing came out of the last round of discussions that really spoke to the economics of the relationship, which is the glue that holds us together, particularly through the times that are difficult, the choppy waters that we inevitably have, and there is a whole lot more we could be doing there. whether it is integration of tpp, that could be a huge opportunity. investment treaty,

which could be a pathway in terms of representing early steps of getting there. we are doing fine, protecting the downside, which is important, but we are neglecting the upside. may have nothing to do with u.s.-china relations, but the realize -- reason i ask questions is because i do not know the answer. what would china take away from the president's announcement that we would establish ?elations with cuba their argument at the white house was that our relationship informeda and vietnam the decision to do this. that be interpreted in china, do you think, chris? they will have views, but they wilma dwell on it. i think they will look at it they will look at it

sn terms of president putin' bombers that showed up in the caribbean. i think it will look at it largely through that plan. they will look at it defining latin american diplomacy and the venezuelan issue. they have investments up and down latin america now. i think they will think about it in that regard. will they like it? not like it? >> it will change the economics of the cigar market. but they hope to see us off balance in our own neighborhood. one issue that has kept us off balance is, cuba, number one, and immigration, number two. the cuba relationship normalizes it somewhat. china would see that, in their eyes they would rather see the

waters choppy and our neighborhood. they see us as maximizing the relationships around them, strong diplomatic relationships throughout the asia-pacific region. i think their aspiration would be to do the same thing in our neighborhood. this run somewhat counter to that. that theay also see president has more gas in his tanks than they thought. the unpredictably of it may come as a surprise. the sky may not be on his heels as much as we thought. that would change how they approach him. you do see chinese presence in the caribbean. the fact that the united states has a new position there is probably not entirely welcoming to them. >> what struck me about it, and this is off the point, is the fact that this secret hill, this town does not keep secrets very well. ,veryone i talked to yesterday

when this came about, the people elected and did not like it, i have never seen an issue that was kept so under the radar as this one was. means, know what that but that was my take away. see our tilt to the pacific as an effort to contain china? i think most people in this room would agree that we have to be -- the united states has a lot of business in that part of the world, and we should be involved there. what i have wondered is, would it be a good idea to announce we are making that tilt? >> as to whether or not it is a good idea, yes, it was reassuring to our partners. the challenge was the rebound or private, the rhetoric has been different than policy.

yes, we have stations and marines. this split with the navy, 60% in the pacific and 40% elsewhere, this will not change significantly. complete absence of any kind of an economic peace, which is create -- critical to the rebalance being successful. in asia, economics is security. pursuing they security side, it makes it easy for china to say, we are about trade and growth. these guys are about creating difficulty. i do think they see the rebound -- rebalance as a challenge. when president xi jinping first came into office, there was some dialogue as to whether or not their.uld change of strategic opportunity, this notion that they have a benign and security environment.

they have had a couple years to observe how the rebound -- played out.s >> how did they react to the transpacific partnership? ani suspect it is seen as extension of fairly aggressive u.s. policies in their view of somewhat.nment, i suspect they will also see it as opportunistic overtime. they have a look-alike agreement, plus three plus six. you have countries in those groups, japan, malaysia. one agreement is based on lower standards, because they are not as high as we are on labor and other things. at some point they will have to go from, why is the u.s. always trying to do things in our neighborhood without including

us? we work do collaboratively and integrate these agreements? --t will have to be done china has benefited from our presence and a long time in the asia-pacific region. benefit from the tranquility that has existed in the postwar. postwar period. now they are looking at the u.s. as being more problematic. they would like to have their own sphere of influence. to project power and secure and protect their lines of transportation and supply of raw materials. that will bring us head to head in some areas. it means that this is inevitable. follow trade flows and

the flow of people. at some point, we will have to deal with reconciling our differences in the region. it will be over geopolitical issues. >> ambassador huntsman hit on the key issue that a lot of us think about -- we are talking about some and pieces on the board. the board of self is the fact that we do not yet having mutual understanding about how the united states and china will the westernds pacific and asia. our president has said the u.s. is a pacific nation and will be through the end of the century. xi jinping fundamentally believes china will reach -- return to a position of dominance in east asia. that is a fact. the question is, when and how? we are not having an overt conversation about it. we talk about the smaller details, but that part remains unsettled. the greatestis

source of concern, whether we see the future the same way. >> i don't think we necessarily do. the key point is the notion that they want to be able to operate with impunity. that is the plan. they want the rest of us to accept it. we see them through their actions preparing the ground for this. as we have been saying, that will cause us to bump up against one another every so often. what is interesting about recent rhetoric in speeches is, the notion of greater activism. for many years, chinese foreign-policy was guided by keeping a low profile. thatnping has announced time is over and they are moving to something different. what is important is, for us not

to take the term activism. i try to think and morning -- think of it more neutrally. we have to figure out how we will respond to that. we need to have a debate in this country about responding to that. >> japan is perhaps our strongest ally, in that part of the world. there are obviously problems between japan and china relating to these. how does the united states navigate its way on that problem between japan and china? , atou have some complexity least starting with china and japan, that goes deep based on history and geography and politics. also based on worldviews.

,n one capital, xi jinping whose father was a deputy prime minister under mao, and in abe, theou have shinzo grandson of a wartime minister who helped administer japan half-occupied manchuria. when you layer over that the sovereigntynd disputes, and the history which, of course, we will be celebrating. and remembering. managing that relationship, and i got the ice cold handshake we saw in the media, was a positive step. whoever thought that kind of a person -- if you are in the white house and you had a picture like that, you would be fired. it was a breakthrough.

you know what it means in each capital. the fact that they are standing together shaking hands, the next thing you know there will be a delegation going over and meeting at the lower level functionary, and things will normalize on the trade side. we go through distinct cycles between japan and china, exacerbated by transition politics. xi jinping had his transition abe had theinzo same thing. the u.s. must be loyal to its allies. up tot respect and live agreements. sometimes we do not do a good job when it comes to alliance , something we did better than anybody in the days of general scope croft. friction, butte

that should be the centerpiece in the asia-pacific region. building confidence. >> that is an interesting point. it makes me wonder, do you all think that japan and china, and have aicymakers there, good understanding of our relationship with both of those countries? are the japanese confident right ally, ande are there we will honor that treaty if it comes to a showdown with china? do the chinese understand that? honor that treaty? >> both sides have had doubts. time,of calm down over especially after the president's vision -- visit in april.

my sense is, the japanese are always concerned about the nature of our relationship and china and what is happening there. how you address that on the policy side you make sure you pre-breathe and pro-brief them. my sense is that there may have been some doubts, especially the serious issue -- there may have been some doubts. i think the president clarified that. in my sense, in beijing, that message got through. >> i think also, we talked the photograph -- if you look at that from the west, you think, white even have this picture.