up a mechanism for reviewing a major piece of the budget say every three years and five years to see if the money could be spent better and priorities were what congress really wanted them to be. question? so is what alice describes on the domestic side, is the military really any different? isn't there a certain amount of the air force, the navy, the marines, everybody has to get their share of the cuts? >> broadly, the budget shares haven't changed a lot. that's a fair statement. within those shares they've changed a lot. let me try to respond. first off i think it's way too harsh that suggest that ovq)all only 1% of government spending has any effect. i will offer just a couple examples. one obvious one, we haven't been attacked since 9/11, folks. some other countries have, quite recently, unfortunately. that's a tribute i think to both our intelligence and to our military capability. we got in and more or less almost out of two wars you may not like the results of them accordance with the will of the

administration, the president and the congress. so we do a number of things and i think it's unfortunate that we suggest otherwise. in terms of accountabilrty, we absolutely know where we're spending the money, down to a great deal of detail. you may not like the results that you see. that's a fair point. and there are priorities set. i mean, i will give you a current example. we have backed much on ground forces over the last few years than we have any others. that was a painful decision, i can assure you, within the department of defense, but it was one consciously made based on a strategy that we felt in the aftermath of iraq and afghanistan we could afford smaller ground forces and still cutting but not as much the naval and air force. so i think alice is right, we can do better, but it is not as if we are just taking this money and sort of randomly spending it wherever we want and it's not

the case that there's no effect. >> it's easy if you mischaracterize someone. that's not what i'm saying. let me give you some examples. if we resort to specifics, i hate to do that, but if we did budget that i think even alice would agree are ridiculous like farm subsidies. >> just to be fai) to peter orszag, peter orszag wasn't saying only 1% of the federal government bought anything. what he said was talking about domestic programs, we don't -- it's only 1% we know actually works, right? >> that's correct. >> but you have to think about that. a little bit. for example, one thing we do is air traffic control. i don't think we are investing

enough in modernizing that system, but very few airplanes fall out of the sky. and another thing we do is interstate highways. we probably aren't maintaining those as well as we should, but you can drive from here to new york. we know what we're getting for that. so it's not -- i think it's sort of silly to say we don't know what we're getting for government programs. >> there's a diffq)ence between knowing what you're getting and you usq" the example of air traffic controllers we have several air traffic controllers that are using cathode ray tu1n probably the only ones remaining in the whole world in airports -- >> that's why i said it needs to be modernized. >> you need to spend more money on things like that and less on things like agriculture subsidies. >> michael, you want to defend agricultural subsidies? bob gave us three scenarios for what could happen to defense i'm sort of interested in what odds you assign on those what's going to happen this year?

>> yep$, i think bob's right. i guess just to s(ell out one or two of the options before congress, ron and i have done a little writing on this, too. it seems to me this overseas contingency operations fund that bob talkedy about and where there is some play in what you use it for, but 4i? complete liberty to use and abuse that term. you could have congress actually modify the law to allow a little even broader definition so for example, with putin doing what he's doing in ukraine, should we be able to say that any activity in europe by the u.s. military even routine training, is essentially something we can fund through the account because until we have a new president in two years i doubt we are going to have a fundamental repeal of the budget control act so there's a very good chance we have to live with the caps and therefore, our overseas your main safety valve. it's already helping. you can find a way to let it help more. you can define anything that's going on in terms of operations in europe, essentially, as a deterrence related cost. and you could even do some of

that with the asia pacific given there has been a fair amount of turbulence. bob i'm sure can think of all the complications in doing this more easily than i, and is probably thinking about how i have been in a think tank too long and not in the real world and i realize -- but there are ways to stretch the definition. for example, it goes from the united states to the persian gulf today or the arabian sea, and it flies a few or even just 10% of its whole six month deployment near afghanistan, as i understand it, the entire deployment could be counted and funded out of the oko. i think that's reasonable because to get to the arabian sea, you had to actually do that long deployment and so it's not a complete abuse. it's not -- it's not deceitful but it is a broad and somewhat lenient definition of what a war cost is. you could find ways to expand that. that may be the most realistic thing. i think everyone's learned that sequestration per se is painful and so ineffective that what bob said is hopefully true, that the idea of congress appropriating above the caps and thereby necessitying this formal process of sequester which is as youx board set of cuts, and then service chiefs in the world have to implement this, it's crazy.

it's just nuts. i would hope that for all of our disagreements, we recognize there are legitimate disagreements. over defense there is no legitimate role for a sequester as the mechanism to go to a lower funding. >> bob, can you just talk a little bit about what's it like to be in the pentagon and have to deal with these across the board spending cuts? how much of a waste of time is it? technically interesting, i have to say, to a comptroller but the price was way too high. several things wente1 wrong in 2013 sequester and as alice said, all government leaders including myself, thought we wouldn't do it and so we didn't slow spending in the early part of fiscal year '13. we didn't want to sequester ourselves. well, they did it. suddenly we found ourselves with

six months to go in the case of the department of defense, a $38 billion cut exacerbated for d.o.d. because that was the year we underestimated some wartime requirements and incidentally, the oko is outside of the caps. it does get cut by the sequester. i never understood the logic of that but the lawyers insisted so we saw! a cut in oko, we had underestimated the amount. it all came together and had particularly devastating fnects on the operating accounts. we saw services do things we never thought they would] the air force stopped flying at 12 squadrons. the army stopped sending units through its national training center. the navy is saying we are not going to send a second strike group to the persian gulf even though the combat commander wanted it. there were significant effects. overall it was exceedingly discouraging and of course followed hard on by the shutdown.

it was a lousy year. >> even though there's no formal oco escape hatch, there is always some way, emergencies or whatever, but let's say that the )epublicans hold the line, that they want to stick with the caps. that? what are the practical consequences? >> i think the things that i mentioned like we won'tb have -- our air force will continuq to be among the worst in the world. i think we are rated something like 13th in terms of efficiency. our infrastructure will continue to deteriorate. there's a recent report that shows we are something like 17th in the world in the quality of our infrastructure. so those are very concrete impacts. a lot of people are very concerned about nih. nih, look at the budget of nih. it's shocking. it goes up -- it's astounding how much it went up. somebody told me the president has a certain level, then the house gets it and adds to that and the senate gets it and adds to that and they vote and come out with the congress

report and it's still higher. now for the last five years, at least according to the baseline, it's actually been reduced. it looks like a mountain and now it's coming back down. not as much as the mountain you talked about before on defense but it's coming back down. there will be many, many practical consequences. i don't think republicans will i talked to two pq staffers who are involved in the budget process and they both said the same thing, that there will be ways they will be able to get, you know, a buck here and a buck there and they won't $ave to -- they will be able to say they lived by the caps but they really didn't live by the level have the cap >> " well, i'm less prone to think they will find ways around it but i think ron's got some of the right things. what do you do when you have immediate needs that have to come out of your budget, whether you're a family or an institution?

you generally let the maintenance go. you don't put on the new roof if it's not actually leaking. we have been doing that for a long time in the federal government. and i'm not just talking about roads and bridges. i'm talking about national parks and as we said, air traffic control and a lot of prisons and a lot of things that we think need to be there and should be maintained in a modern way but we haven't quite be able to do it. now, if you look at the projections for the next ten years it will get worse and worse. we will put off morek of the routine maintenance. we will just not do those things and at some point it will catch up with us. >> what about how this affects federal employees? i know there's a caricature of federal employees that they don't work very hard and are overpaid and they have too high pensions and stuff, but is that really true in the past given the caps and the shutdowns and

computers do a lot of things clerks used to do. it's partly because they do work very hard. >> so any defense guys have a domestic question? >> if you look over a long time, the federal workforce is declining as a percent of anything. as a percent of total labor force. and that's in part because we have gotten more efficient. computers do a lot of things that clerks used to do. and it's partly because they do work very hard. >> i will turn the tables. >> well, i would like to add on to what alice said regarding federal employees.

first i distinguish between the military and civilians. we give a great deal of credit as we should to the military public opinion polls show it's the highest rated organization in terms of trust in the united states. the civilians on the other side tend to be linked to government as a whole and the public has a lot of distrust for government. so i think they do get a bad rap. i think if you step back, i supervised many of them, watched many others during my tenure in the pentagon. they do a lot of things right. some of the overall things we haven't been attacked, are certainly partially of their doing. but more specifically, 80% of the work force in the financial management community, department of defense is civilians. they manage through some of the toughest budget times in the sequester period and before and after, i might add, and it's still chaotic budgetarily. a large percentage of the logistics folks are civilians in the department of defense. they conducted an exit from afghanistan. again, you may not like the

results of the war but they got us out of there in a landlocked country where we had extreme problems logistically. i could go on with other examples. i think federal employees do a lot right and as managers, as a former manager, one of my goals is to try to say that to them because they are -- we do see a degradation of morale and i think it is of concern in terms of recruiting new employees into the federal government. >> i think that the public perception among people who don't work for the government is that there are a lot of people who work hard and the incompetent people never get fired. that is true? >> that is a problem. i certainly won't sit here and say there's no improvements that should be made in the civil service. two things need to happen. one, we need to be able to hire people more quickly. they worked that issue hard and made some progress, it's still not where it needs to be. and for a small number of poor performers, we do need to be able to fire them more quickly. it is just having managed a group of civil servants, there comes a point and you know there

are always a few underperformers, it is such -- it is so difficult to actually make changes or to actually fire them. it's just not worth the effort and the time it takes in management. so absolutely, we need to improve the civil service but we also need to tell the majority who do work hard and are getting things done that they are doing things right so they will stay with us and new people will come in. >> michael, do you have any domestic questions you want to pose? >> yeah. let me just mention two categories of spending. i would be curious if you folks have ways of thinking about whether the spending is high enough, too high, too low. ron, you mentioned mental and nih health issues, nih, but i'm curious about science writ large, energy research, other kinds of physical sciences research, whether we spend enough and how do we even set up a methodology to figure it out and secondly, environmental protection.

that of course partly overlaps with energy issues with global warming kinds of considerations and trying to find alternative energy sources. but more generally speaking, how do you feel about the resources we have for environmental protection? >> i think they could be spent better but the effort to make sure that we don't have polluted air and polluted water and too many greenhouse gases going into the atmosphere seems to be really important. now, people complain about the environmental protection agency. i don't think they are complaining much about the spending. they are complaining about regulations that could be simplified or about doing something in a more market-friendly way. personally i think we ought to have a carbon tax. it would be a lot more efficient and effective to control carbon emissions through raising the

price by a tax than by putting the regulations on all of the coal-fired plants. but we aren't doing that and if we're not doing it, then we have to regulate. >> i think the only thing to add to that that i think is important, you can count on there will be constant criticism and attempts to rein in the epa. i wouldn't be surprised if republicans might even try to cut their budget. but there will be a constant stream of criticism of the epa and overemphasis on environment and so forth. the republicans have been very bold about this in recent years and i don't see any sign of it stopping. >> alice, isn't one of the perverse effects of the caps that there's this ever-present temptation to do tax credits and then they are accused of having a complicated tax code because

doing the same thing through the tax code doesn't count against the spending caps? >> absolutely. if you think something is a federal responsibility and we ought to be doing more of it now it's very hard to say well, there ought to be a spending program that does that. but sometimes you can accomplish the same thing by regulation and sometimes you can accomplish the same thing by adding one more provision to the tax code and we have been doing that for decades, and the result is that we have a tax code riddled with special provisions which are essentially spending programs. we decided we wanted to favor home ownership so we made more generous deductions for your mortgage interest which benefit you more if you have a larger mortgage and a higher income. so we have a spending program which goes differentially to richer people with bigger houses. what sense does that make? i don't think very much but it is part of the fallout of not

having a spending program. >> to give an idea of the magnitude of this, estimates run as high as a trillion dollars in losses in the tax code for exactly these kind of provisions alice is talking about. if we really have tax reform ryan says we will have tax reform, i think they will take a run on it. if they do, they will pass it in the house, i think. senate's another matter. but one of the big things is they will get rid of some of the loopholes and it will be fun to watch. it was in '86. it will be very lively. >> what odds you giving on tax reform in the next two years? >> 1%, 2% at least. >> ask the defense guys a question. there must be something you wonder about the defense budget. >> wonder in the sense -- >> i want ron to ask you a question. >> yes. i have a question. explain to me how i have seen numerous articles in fairly reliable places like national journal and so forth, i have never been in the department of defense, about the cost overruns

on program after program after program after program. i think it's pretty much accepted that you see the original estimate of what it costs for a new weapons system for example, and before you know it it costs twice as much or even more than that. how does that constantly happen? >> well, i'm afraid it's human nature. first off, you are roughly right. i used to say take the price early on in a weapons system and double it in real terms and ask yourself whether you still want the weapons system because there's at least a reasonable chance that will happen. there tends to be underestimates early in the process in order to get the program going. after all, budgets are always constrained. you want to get your program going and then unfortunately what we tend to do with these programs when we finally get

them nearer into production is reduce the rates to accommodate budget changes and that inevitably induces inefficiency. so overruns are a problem. they are a little lower than they have been and i think they've gotten a fair amount of attention in this administration, but i wouldn't want to sit here and say this problem is solved. i think part of it is human nature. i think you see it in most infrastructure projects outside the department of defense as well. i have seen articles although i can't quote them but i remember some that mentioned infrastructure problems of similar complexity and unfortunately, many had overruns as well. >> go ahead, alice. >> isn't part of it this representative government that -- >> democracy, the root of all evil? >> how did i miss a chance to pick up -- >> the importance of military spending, both procurement and military bases as -- for jobs in so many congressional districts. and i have heard very conservative members of congress say government doesn't create

jobs, it destroys them, and all that sort of thing. but it doesn't apply to the military base in my district. if we lost that, we would lose jobs. is there any way around this? >> i don't know how other than a fundamental change. i remember seeing many years ago a map, i think it was the b-2 bomber subcontractors. there was a pin in virtually every congressional district. >> i remember that one. >> companies are smart enough to be sure that this happens because they know the reality of it. i think to some extent representative democracy is inherently inefficient. that doesn't mean there aren't things you carve out and ask government to do because they can only do it, but you probably do want to minimize them because it's not going to be as efficient as if you've got a truly competitive industry. >> yet we ought to at least

acknowledge that base closure commission turned out to be a very effective mechanism and we closed hundreds of bases. >> we did five rounds -- >> we've got a few more. >> got a few more to go. >> but this is not a problem thaw can't deal with. we have dealt with it under the terms of democracy, it's been very impressive. >> we have done five rounds of base closure and the annual savings from those five rounds which are now all complete is $12 billion a year. so if we hadn't done them, starting in the '80s, we would be spending $12 billion more in perpetuity. absolutely and we need another round. >> is there a way to apply that to the procurement problem? >> you know, i don't see how easily to do that. congress is part of the problem but i think a lot of this is in the executive branch, department of defense in the case of defense procurement.

several things happen. we don't tend to corral appetites as well as we should. there's a realization by the creators of these systems that are going to be around for 20 or 30 years, they want them to function well so they push the requirements to a level that is very expensive, and then the problems i just cited of human nature, keep the cost down low get the programs started, tend to lead to overruns. go back to what i said earlier it's a little crass and i certainly have never said it as a government official but i think you should look at a price of a weapon early in its life and say do i still want this if it is somewhat more expensive. and if the answer is no, you better worry. >> what i would add, i certainly agree with the difficulty here. but i think, alice, there is essentially a way in which there's a check on the system which is if the question is do i need to buy 22 b-2 bombers and they are each costing me $1 billion, congress might just say no. with the f-22 fighter which was originally going to be a lot less expensive and i'm not blaming lockheed martin. they made a beautiful jet, it's the best jet in the world and i'm glad we have 189 of them. we were supposed to have 750. two things happened. the cold war ended so we didn't need as many but also the price

kept going up and so the congress and the pentagon decided we better curtail this program. so what we do instead is we keep the f-15s flying longer so there usually is an implicit backup plan which is use the existing system longer, refurbish it, remanufacture it, and frankly, i think there's room within today's pentagon budget to do a little more of that but i would say this is the one point we haven't really touched on, just to sort of wrap up as we move towards wrapping up this initial part of the event, even if you look for a lot of sort of reasonable reforms in how the pentagon does business, you do that additional round of base closures, you get the health care premium changes that bob and others were promoting, you make a few other efficiencies which they are trying to accomplish. even if you do all of this, you are probably going to essentially pay for the needed increase in your budget because you are too optimistic about how much various things would cost. in other words, you need to do

all this just to tread water. you need to do the base closures and the military compensation reforms just to sort of tread water and make the administration's plan self-consistent. now if we sequester in addition, or we cut further beyond where the administration's going, even if you do the base closures which there's no sign congress will do, and it takes five years to get the savings anyway, even if you do the compensation reforms, you are not going to begin to be able to pay for sequester with those kinds of efficiencies. so you are going to have to cut the army down even further. you are going to have to cut the navy at a time when china's navy is growing. so these are the kinds of specific issues that we probably should get into with our friends here.

>> i understand the terms here you're not really talking about the process of across the board spending cuts. you're talking about living with the level of spending that would exist if they either avoid the sequester by appropriating that much money, or being stuck -- >> i think the caps are too low regardless of how you get there. >> i think the same thing is really true in the domestic side. there are things that appear on people's lists of things that could be done better. for example, we have an awful lot of job training programs and they don't work especially well. i would be heartily in favor of serious look at those programs and consolidation of them, and improvement of them. so that they are actually better at training people for real jobs. that said, it's not going to save much money, you ought to be doing all those kinds of things but even if you do, the same thing is true. this amount for the whole set of discretionary domestic programs is quite small and getting smaller in relation to the needs of a growing economy. >> we are going to turn to the audience here unless somebody wants to make another point. all right. raise your hand. wait for a mic. tell us who you are and try and keep your question short. behind the -- the gentleman behind you.

>> thank you, dan morgan russell at the university of southern california. dr. o'hanlon, you touched on this a little in your first answer but now that we have put these caps on defense spending and can't necessarily guarantee world stability, has this encouraged any of our nato members to begin picking up the slack and if it has not, what level of defense spending, reduced defense spending, will encourage them to spend a little bit more on world defense and stability? >> big question. let me give short answers in the spirit of david's admonition. short answer to your first question is no. allies are spending less as a rule except in the middle east. at least in east asia they are sort of holding the line but most of them don't really spend enough, in my judgment, and certainly nato continues to go through the floor. nato's spending among our allies in europe is very mediocre even against the standards the alliance collectively established.

so they are down to about 1.5% of gdp on average. we are still over 3%. we are headed towards 2.6%, 2.8% for us. cold war average for them was 3% to 4% but they are way below even their own current standards. secondly, your second question very good question, but i don't see evidence that there is a correlation partly based on my first answer. so if we cut more, i don't think the answer is necessarily that at some point the allies get serious about providing for their own defense. i think the answer could be they become vulnerable to attack or they wind up overcompensating and engaging in a regional arms race. one of the nice things about a strong american linchpin is that it tends to keep sort of a lid on some of the regional tensions, for example, japan korea, china, which three countries that don't necessarily

get along all that well if you leave them to their own devices. so i actually prefer a system in which there's a fairly strong american linchpin and i'm not sure i see evidence to think if we simply cut, it will get a happier outcome from the allies doing more. >> you think putin will lead to higher defense spending in europe? >> their economies are in much worse shape than ours. >> the gentleman in the front. >> thank you. i wanted to ask, actually provoke you to think about disruptive events that might change the calculus for good or evil. call them wild cards, ticking time bombs. for example, nobody i think predicted oil at $50 a barrel. i don't think anybody thought the swiss were going to take caps off the franc. in the case of the defense department, there may be hundreds of thousands of soldiers who come back with traumatic brain injuries which have not been detected but will be, which will put huge pressure on the budget. you've got a replacement program for the ohio class for the bomber and sometimes for the whole nuclear industry. what sort of disruptive events

do you think could really change the calculus that you worry about or could worry about both domestically and internationally? >> in defense? >> go, please. >> ok. interest rates. interest rates are amazingly low and yet they are going to increase 262% in the next ten if the interest rates went up, it would be -- that would really be a difficult event to contend with and i don't see another way except cutting spending and we would have to raise revenue, i'm sure. >> i will take a couple. this is probably more mike's line. we've got an unstable ruler in north korea. i don't think anybody can know what he is going to do. we have several tens of thousands of u.s. troops not very far away. i think that could definitely be a disruptive act. iran, i mean, has certainly got to continue to be worrisome. events in afghanistan could be disruptive if things go poorly there.

so i can think of a number of foreign policy issues that would involve the department of defense heavily and probably change the willingness to spend on the department of defense on the part of both the president and the congress. >> i will just add one which is, i know you thought about this yourself, all out competition with china. something that i know alice fears. we had a panel here several years ago where she and bob kagen and i were talking about this, what an arms race with china might look like. but right now, it's not an arms race, it's an arms competition. we are spending 3% of gdp, $600 billion a year, they are spending 2% of their gdp, $150 billion a year. you know these numbers. but they are on a strong fast upward trajectory and it's not really clear how we are going to react as the curves start to converge. are we going to try very hard to keep our defense budget level

well above theirs and by how much and how is this going to play into presidential politics. right now i don't think d any likelihood of a big disruption just based on political debate5 and strategic debate in brookings events and presidential campaigns but if you actually had an exchange of gunfire, perhaps provoked by or not provoked by but catalyzed by some of our allies with iraq and china in an unfortunate way and we see an american ship sunk maybe the chinese weren't even shooting at us, they were shooting at the taiwan navy and missed, who knows, but something like that, even if it doesn't produce all-out war, could produce an all-out arms race. that would be a disruptive event. >> seems to me another possibility, so we have a very big debt to gdp ratio. we borrowed a lot of money during the recession because we had a huge recession. it's not clear to me we could do that again and i'm not so confident that we won't have that threat again, whether from outside the united states or inside our own financial -- >> nothing positive from the

panel? >> well, you mentioned something, oil prices -- >> [ inaudible ]. >> you really caught us. look, economic side, we could have seen the worst of the last -- of the problems. we could be on the cusp of an increase in productivity and faster growth that would spin off more revenues and allow us to grow -- reduce the debt to gdp ratio much faster than we anticipate if we got lucky and had a good stream of growth. i don't put a high probability on that but i wouldn't count it out. >> keeping the caps on will help that at a tremendous cost. >> help the numerator, not the denominator. he was looking for good news. >> well, i'm not sure what good news he's looking for. >> faster gdp growth. >> i think it would be good, i think it would be good news if we had more domestic spending of the right kind and what would trigger that. possibly some kind of disaster that we don't want like another bridge falling down or an air

traffic disaster, or something competitive. we did react to sputnik for those of you old enough to remember sputnik. the russians put the satellite up there and then we decided we better spend more for science. >> question over here? gentleman in the front row? >> hi. scott mosione from inside the pentagon. the defense department has been working on the long range research and development plan, industry's kind of indicated they have been a little reluctant because the aperture is so large on it and the funding isn't that large. i was wondering what you saw for the future of that program, the funding of the program and maybe its success. >> what is it anyways? bomber? >> no. you're talking about defense innovation initiative? >> yes. >> so it was a program announced several months ago by secretary hagel looking for initiatives that could be game changers from

an r & d standpoint. a new stealth, for example, was certainly a game changer precision guided munitions are things that have changed warfare. you know, i think it is still in gestation and at least that's my sense. i'm not deeply and i'm certainly not deeply involved in it, but the process of going through thinking about where we should invest r & d for the futures is a healthy one even if nothing dramatic comes out of it. i'm not sure you can legislate innovation or mandate innovation but i think it is healthy to require the department to think ok, am i spending in the right places, are there areas where i should be more innovative. and innovation to some extent is a state of mind so maybe the department of defense needs to look for ways to be more agile maybe assigning some of its people to startups, for example, to interact with them in ways

that may produce new ideas. i think it's a healthy process. i don't know where it's headed but i'm glad we're going down that road. >> the gentleman here in the middle, and then -- right where you are, then the guy right in front of you. >> john goring from city university. gao did two reports studying the effect of sequestration and given alice's concern about the slow eating away of the maintenance or seed corn of domestic agencies, what is the chance that brookings would adopt the methodology that gao used and create a sequestration monitoring project so that in addition to the many things you do, you provide every two or three years, regular reports on the state of the impacts of sequestration so rather than have ad hoc events like this one, there would be a permanent monitoring? >> i think that's a good idea, but i would amend it.

i have been bugging dave because he runs this new -- >> you put him up to this, didn't you? >> to undertake some kind of a discretionary spending initiative. i would want it not just to monitor the effects of the caps, but also to undertake the bigger question of where should we be spending more and where should we be spending less and can we assemble some evidence about how programs are working or not working that would be guidance for the congress on just that question. >> the gentleman in the blue. >> bob hines from here at brookings. you all agreed that sequestration is bad. the budget caps probably aren't good, either. a republican congress probably isn't going to be raising taxes any time soon. dave, you kind of threw out there a minute ago faster gdp growth. where is the discussion, though, regarding say effect on the

fiscal policy, worky on the fiscal policy from the congress, you know, to perhaps free up the corporations to do more under capital spending, that rising tide, all boats float kind of a thing, and wouldn't that really get rid of a lot of this entire discussion? >> corporations are sitting on a lot of money right now and they could borrow more at very low interest rates. they are not investing enough. it's not entirely clear what the government could do about that. maybe you're suggesting corporate tax reform. i would be for that but i don't think there's much evidence that it would unleash a tidal wave of corporate investment. >> phil? over here? >> hi, phil law from brookings. i'm wondering at what point these caps become painful enough and the decisions difficult

enough that mandatory spending that's not the subject of this event becomes more on the table, more a focus of debate, more maybe even a regular subject of budgeting for congress. >> i think that it's going to happen regardless of the caps because with ryan being on ways and means committee and talking about tax reform, also he's been a consistent supporter of premium support which could really be a game changer and he's not going to give up on that. i wouldn't be surprised to see the house pass it again. what would happen if the senate passes it. there are some possibilities irrespective of the caps that republicans will actually do the right thing and go after entitlement spending.

as long as we have president obama i doubt that anything very big will pass, but it will be interesting to see. >> but it's very hard politically, even if you are a republican, to cut -- to either get tax reform t raises revenues or significant entitlement reform, and it's much easier to cut this discretionary spending. i was, as dave mentioned at the beginning, a veteran of both the simpson-bowles commission and the deminici-rivlin commission and we proposed tax reform entitlement reform and caps on discretionary spending. what have they done? they tightened the caps way below what either commission recommended and they didn't do anything about either tax reform or entitlements. >> i think the one thing that might have changed enough that there could be some action on entitlements is that the republican house has worked very hard to educate its members about how important medicare is as a part of this problem and how premium support is a

reasonable solution, and they have supported premium support for three or four years and haven't suffered consequences in the electorate yet so i'm more optimistic than you are. >> but i think both entitlement reform and tax reform have to have bipartisan buy-in. they have to have a lot of people around the country saying we understand this and it's ok and that's hard to achieve. >> i agree that it's hard, but the other factor that makes me a little hopeful is now the looming 2016 presidential race. when i think about the individual players, first of all, everyone's going to have to say how their plan will at least do as well for the deficit as the budget control act which is as we know, not very good over the median to longer term. so even though our deficits have been cut back to a manageable number at the moment, it's not going to stay that way based on baby boomers retiring and medical costs growing and all the things people in this room know well about. alice can correct me but it

looks like the projections are for trillion dollar deficits again not too long into the next decade. >> 2024, according to cbo. >> so that becomes the would-be second term of the next president and therefore, a president who presumably is going to be asked on the campaign trail to explain his or her vision for the country and presumably is going to want to explain the vision also in terms of american power, military safety and long term national growth is going to have a hard time avoiding this question. and just to give two names, if hillary clinton runs as expected, she is a strong advocate of a strong national defense. she is also not going to want to leave any gray area about her bona fides on that subject trying to become a woman president from the democratic party and obama's former secretary of state. it will be incumbent on her to explain how the u.s. military will do well under her watch and also, how the country will grow in terms of its education, infrastructure, science and so forth. these are things that amount to a presidential vision.

and they require some degree of budget discipline. now, anybody campaigning is going to have a temptation not to want to talk about cutting entitlements, i agree, but having said that, there are ways to limit the growth, you know, the cost of living formulas, you can phase it in gradually, anybody who is near retirement doesn't really have to meaningfully lose anything that they would have gotten otherwise. and for a republican running republicans may have the tea party within their broader gop umbrella, but it's still the party of ronald reagan when it comes to presidential races. and i'm going to believe that until i'm proven wrong. and any -- even rand paul, rand paul is now becoming the guy who wants to build up american strength and just not intervene which is actually reagan's legacy as well. reagan didn't use the military a lot. but rand paul i think has

recognized that you don't become the republican nominee by being the tea party guy. paul senses he can win, this is my interpretation, obviously and you are probably a better expert on this than i, but any gop front-runner or likely nominee is going to have to explain how american power will improve on their watch because that's the legacy of the party of ronald reagan. so i see presidential politics as a hopeful indicator not for what's going to happen this year but for what could begin to happen certainly by 2017. >> gentleman in the aisle there. >> zach biggs, a reporter with james. i was hoping we could parse the differences between the 2016 caps and the rest of the years under the budget control act because with 2016, the last year we have this flat spending for defense in particular before we start to see some of that increase that might be able to keep up with inflation. we heard the horror stories of what was going to happen as a result of the downturn. we are pretty much through the major part of that downturn. now you could say that it's going to be flat with inflation but what's different this year versus the subsequent years when there is an actual increase in the cap? >> well, i find it hard to get too excited about those out

years because so much is likely to change, but you're right. i mean, even in 2016 under the caps for defense, there's about a 1% increase, probably not enough to keep pace with inflation, but there is an increase and then it gets up in the two range so it will be roughly flat. i'm not sure whether -- if the gist of your question is sort of nothing has gone wrong so if we're flat, we're ok, i would take issue with that. i think military readiness has been significantly damaged especially in 2013 with the sharp sequestration cuts and the other problems i described earlier, and there's a gradual attempt to recover, but it's not there yet. we have underfunded in the out years of the defense budget support activities. military construction's an obvious one. it was quite well funded around the 2010 period. it's now clearly underfunded.

we're not spending enough to maintain. you can do that for a number of years, but you will pay the price eventually. so there are problems that exist right now and when you add to those the threats at least i see as being pretty severe to u.s. national security, they lead me to believe that we do need to -- order to fully meet our national security objectives. >> i will give one example. just look at the u.s. navy. so then u.s. navy right now, which is probably the centerpiece service for dealing with china's rise, has about 285 major ships as they define them. and that's in contrast to twice that many in the 1980s, and about 350 even in the 1990s. so in other words, it's substantially less. meanwhile, china has substantially increased its fleet. i'm not saying we should be ready for an all-out fight with china navally but i am

suggesting that our ability to sustain presence and commitment and keep the region stable and help persuade china to rise in a generally reasonable and peaceful way, does depend on our being able to sustain capability the navy has tried and president obama i think with a very smart rebalanced policy has tried to say we are going to base a little higher fraction of the navy in the western pacific region so the historic average of 50% is now being increased to 60% by the end of this decade. that's the trajectory that we're on. and that makes good sense. that's just a way hillary clinton was part of that, i think it was a very strong legacy of the first obama term and i think president obama's tried to sustain it now into0 his second term. this trip to beijing i think went well. he's trying to keep this concept going. the problem is, 60% of a smaller navy could still be less than 50% of the old navy, if you're not careful.

and right now, the navy's ship building budget depends on increases in that budget top line, even if the ships come in on cost which they won't. which means if you want to even grow the navy modestly, you are going to have to see us get out of this, you know, downturn that we're in, certainly avoid the sequestration mechanism and i think see modest reals,0z!yjvjsnuewth in the navy budget in the years to come. and i would say that's a reasonable standard by which to judge military efficacy. you can debate, you know, the number of ships is not the be-all and end-all. it obviously depends which ships and what capability. i'm not suggesting that numbers by themselves answer this question. but the logic of saying that we should at least be headed upward towards a somewhat larger navy at a time of such rapid chinese growth, i think is a fairly compelling logic but it's at risk under the caps that are now, you know, potentially going to arrive. >> right behind you. to your left. next, behind you, to your left.

>> jason tom from here at brookings. there is a large department that gets grouped into domestic spending and that is dhs and they seem to take care of similar to d.o.d. and they get funded appropriations when others sometimes do not. and going back to this system shock incident, we have what is playing out in france and the ongoing discussion of what to do with dhs in february and might this be instructive as to how congress approaches the issue of domestic spending and security or is this a one-off immigration issue. and i don't want to get into a debate about immigration. thank you. >> i think it is a one off immigration issue because of the president's order. i doubt there could have been 234i problem about moving ahead with the dhs budget but for that. >> don't you think it could be symptom of one of the few things congress can do is holding up the spending bills to have leverage with the president. if they can't override his veto

in the senate, the temptation is enhanced. >> it special is a temptation. and here is an example. and they did pass them all. so they don't get a chance to do that with an appropriation bill for a while. >> back there. >> hi, my name is stiekki from japanese newspaper. i have a question about structure investment. i think u.s. government, local and federal were spending about 2%, 3% gdp and now it is less than 1% and so my question is why the u.s. government hasn't reduced investment or infrastructure, does that reflect republican's asking for

a smaller government or does that reveal public spending in general? >> i think there are several examples. it has been going on longer than this congress. and if you look at spending on the highway fruft fund which people known is a problem for a long time and congress has done virtually nothing about it. pain they will this -- maybe they will this year, but it is nonbipartisan -- well it could be republicans fault in the sense that in order to do something serious about spending on infrastructure, i think they'll have to be additional revenues of some kind and that republicans are clearly completely against. so you need to think of creative ways like investment bank of some kind, maybe a devoted change in a tax code that would produce revenues and a fund that could be used for investments

and infrastructure, something like that. so we are way lower, lower than the rest of the world. we've been deck laning for well over a -- declining for well over a decade and we have problems, inefficiencies and how long people lose in tax and time and the airports and what not. we'll have to do something. but there will be a requirement on some kind of financing. republicans are reluctant to increase the tax gas. car is more efficient and oil is cheaper and so forth. so i think that is the most important holdup, some creative way to finance more investment in our infrastructure. >> well i think you're right that the financing question has been the whole-up. we decided to finance through a gas tax and that was a great idea for a long time but now

americans are driving less and more fuel-efficient cars. there are plenty of other ways to finance highways, including different kinds of taxes. vehicle miles driven tax would make a lot more sense than a gas tax. but it's been hard to get people together and i think it would have to be bipartisan around a new look at how we finance highways and bridges an other infrastructure. >> so it sounds like your answer is two-fold. one is, it is a symptom of how disappointing or dysfunctioning our political system is is that something as popular as infrastructure can't get done and secondly how to finance it has become part of that. >> i would say it is more than congress has not focused enough on ways to refinance it. i think that is the problem.

they need to think of things, i agree it probably has to be bipartisan, but can be made to appear like it is not a tax increase increase. i think there are problems and there has to be something done sooner or later. >> well i agree with you. and there has to be -- call it an investment bank or something that will have to bring in a whole lot of money to finance roads and bridges is somewhat of a fantasy. >> do you think it was a mistake that the simulus bill didn't include this. >> i think there was a mistake and there was some infrastructure on some investment, and yes, there should have been more, but it was a hard case to make. >> ryan, don't you think there is a general skex six about government that have made it impossible for projects to get to run.

i never thought high-speed rail would be more important other than just brown. >> that is true. but at some point reality will intrude and kog will have -- congress will have to do something and it will. >> ron says at some point something will interfere, and mike says something good could come of the 2016 election and so to me that comes in wild-eyed optimism. so thank our panel. thank you for coming. if there is a paper cup under your seat or a piece of paper, pick it up and put it in the trash can. we'd appreciate it. [captioning performed by the national captioning institute,

which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2015] >> on newsmakers this weekend republican senator john hoeven of north dakota. is the sponsor of a bill that would authorize construction of the keystone xl oil pipeline. he talks about the legislation that president obama has threatened to veto and other energy issues. you can watch it at 10:00 a.m. and 6:00 p.m. eastern on c-span. >> dr. anthony felty is on the frontline line battling against infectious diseases. >> we have drugs right now that when given to people who are hiv and acted, -- infected, i can

show you the dichotomy from the early 80's where if someone came in with aids, the median survival would be six months to eight months. which means half of them would be dead in eight months. tomorrow, when i go back to rounds on friday and they come into a clinic to his 20 plus years old, relatively and recently infected. i put them on a cocktail of three drugs, highly active it -- retroviral therapy. i can tell them that we can do mathematical modeling that if you take your medicine regularly , you can live an additional 550, five-zero years. if you take your medicine's, you can live essentially a normal life's and. -- lifespan. it is a huge advance.

>> director of the institute of infectious diseases. saturday night on c-span's q&a. >> today's joint news conference at the white house with president obama and british prime minister david cameron. then secretary of state john kerry talking about the recent terror attacks in france and the u.s. french relations. and former congressman martin frost and tom davis discuss reasons there is gridlock in washington dc. at a joint news conference today, president obama and prime minister david cameron spoke on efforts to counter national and global security threats after recent terror attacks and rants. they also talked about -- in france. they also talked about the additional sanctions possibly

imposed by congress. this is an hour. >> ladies and gentlemen, the president of the united states and the prime minister of great britain and northern ireland. >> please have a seat. good afternoon, everybody. this month marks a notable anniversary. 200 years since the battle of new orleans. here in america we called the great victory over the mighty united kingdom our british friends call it a technicality. the treaty ending the war was signed weeks before. either way, we've long since made up. on this 200th anniversary of a great american victory, we count the united kingdom is one of our greatest friends and strongest allies. today is a great leisure to

welcome prime minister david cameron back to the white house. david recently noted how comfortable the two of us are working together. some explored the linguistic definitions of broke. some seem confused and ask what does obama mean? let me with the speculation to rest. david is a great friend. one of my closest and most trusted partners in the world on many pressing challenges we face. we see the world the same way. we recognize that. the united states and the united kingdom stand together. our people are more prosperous. the world is safer and more just.

great britain is our indispensable partner. david has been an outstanding partner. i thank you for our friendship. with both economies growing and unemployment falling we discussed how to create more jobs for our people. we believe this needs to be the year when the united states and the european union make real progress toward the transatlantic trade and investment partnership, and we share the view that boosting demand in europe can keep our economies going. as innovative economies in his information age, we're expanding our collaboration on digital technologies to improve our governments. given the urgent and growing danger of cyber threats, we decided to expand our cooperation on cyber security. as leaders in the global fight

against climate change, we believe a strong commitment to reducing greenhouse gases will be an essential element of any ambitious climate agreement that we seek this year, and that will help spur the creation of more clean energy jobs on both sides of the atlantic. with regard to security, americans, british unity is enabling us to meet challenges in europe and beyond. we agree on the need to maintain strong sanctions against russia until it ends its aggression in ukraine, and on the need to support ukraine as it implements important economic and democratic reforms. we agree that the international community needs to remain united as we seek a comprehensive diplomatic solution to prevent iran from obtaining a nuclear weapon. additional sanctions on iran at

this time would undermine that international unity and set act our chances for a diplomatic solution. as a two leading contributors to the global response to ebola in west africa, we urge the world to continue stepping up with resources required so we don't simply stop this disease, we do more to prevent future epidemics. much of our discussion focused on the continuing threat of terrorism. in the wake of the vicious attacks in paris as well as the new surfacing out of belgium today we continue to stand unequivocally not only with our french friends and allies, but was also all of our partners who are dealing with this scourge. i know david joins me when i say we will continue to do everything we can in our power to help france seek the justice that is needed, and all our countries are working together seamlessly to prevent attacks

and defeat these terrorist networks heard with our combat mission in afghanistan over, we are focused with our nato allies on assisting and equipping afghan forces to secure their own country and deny al qaeda any safe haven there. and we will continue to count on great britain as one of our strongest counterterrorism partners. we are systematically taking out isil fighters, we are putting them on the defensive and helping local forces in iraq push these terrorists back. david and i agree that we need to keep stepping up the training of iraqi forces. we will not relent until this terrorist organization is destroyed. the terrorist group underscored

how terrorist groups are trying to support people in our own countries to engage in terrorism. i lead a special session of the un security council last fall to rally the world to meet the threat of foreign terrorist fighters, including coming from syria. david and the united kingdom continue to be strong partners in this work. at the same time we both recognize that intelligence and military force alone will not solve this problem. we will keep working together on strategies to counter violent extremism that radicalizes recruits and mobilizes young people to engage in terrorism. local communities, families, neighbors, faith leaders have a vital role to play in that effort.

we also look forward to welcoming our british friends to the summit next month on countering violent terrorism. whether in europe or america, a critical weapon against terrorism is our adherence to our freedoms and values at home, including the pluralism and respect and tolerance that defines us as diverse and democratic societies. finally, i want to take this opportunity to publicly congratulate david on last month's stormont house agreement. it is a tribute to the courage and determination of everyone involved, especially the leaders of northern ireland, and the governments of ireland and the united kingdom. the u.s. was pleased to play a small role in achieving this agreement. we will keep doing what we need to do to support the peace process and the better future for the people of northern ireland. let me turn it over to my good friend, david cameron. >> thank you very much, barack and thank you again for welcoming me to the white house. you are a great friend to britain and to me personally. as leaders, we share the same values. as you said, on so many issues we see the world in the same way. most of the time we speak the

same language. [laughter] in the last six years since he became president and in the nearly five since i have been prime minister, we faced big issues on our watch. those challenges have boiled down to one word, security. economic security, the jobs and living standards of our citizens, and national security, the ability of our peoples to live safely and in peace. at the heart of both issues are the values that are countries cherish. freedom of expression, rule of law, and our democratic institutions. those are the things that make both our countries strong and which give us confidence that even in the midst of the most violent storms, with strong leadership we will come through to safer, calmer, and brighter days. during your presidency you have had to deal with the aftermath of a massive banking crisis and the recession. when i became prime minister britain had the highest budget deficit in its peacetime history. our economy was in grave peril. five years ago we had 110,000

troops serving together in afghanistan. thanks to their efforts, today it is afghan forces taking responsibility for security in their country. but we continue to face difficult times for the world. we have to deal with the warning lights flashing in the global economy. weak growth in the eurozone, slowdown in emerging markets that is why it is vital for our shared prosperity that we both stick to the long-term economic plans that we set out. we agreed that 2015 should be a pivotal year for an ambitious and comprehensive eu-u.s. trade deal that could benefit the average household and britain by 400 pounds a year. the uk is now the top destination for american and foreign investment, with 500 projects last year providing 32,000 jobs. america is the u.k.'s biggest trade partner. our message on the economy today is simple. we are going to stick to the

course. seeing through our economic plans is the only sustainable way to create jobs, raise living standards, and secure a better future for hard-working people. britain and america both face threats to our national security from people who hate what our countries stand for and who are determined to do us harm. in recent weeks we have seen appalling attacks in paris, in nigeria. the world is sickened by this terrorism. we will not be standing alone in this fight. we know what we're up against. we know how we will win. we face a poisonous and fanatical ideology that wants to pervert one of the world's major religions, islam, and create conflict, terror, and death. with our allies we are confronted whenever it appears. the uk is the second-largest contributor to the anti-isil coalition.

antiaircraft have conducted over 100 strikes and will continue to play a leading role. we will deploy additional intelligence and surveillance assets to help iraqi forces on the ground. most important of all, we must also fight this poisonous ideology starting at home. in the uk we are passing a law so that every public audit must combat extremism. in europe, russia has chosen to tear up the international rulebook and trample over the affairs of a sovereign state. this threatens our stability and prosperity. it is important that every country understands that, and that no one in europe forgets

our history. we cannot walk on by. we will continue to put pressure on russia to resolve this crisis diplomatically. at the same time we will continue our efforts to support ukraine on the path of reform, including with financial assistance. the reaffirm our obligations as nato partners to stand by our allies. we will be to beating an additional thousand troops for exercises in eastern europe. we are committed to ensuring that iran cannot develop a nuclear weapon. the best way to achieve that now is to create a space for negotiations to succeed. we should not impose further sanctions now. that would be counterproductive, and it could put at risk the valuable international unity that has been so crucial to our approach. we also have to keep pace with new threats such as cyberattacks. we have today agreed to deepen our cyber security cooperation to better protect ourselves.

finally, we face -- the entire world -- faces a growing threat from diseases. today our fight is against ebola. in the future it could be against a global flu pandemic. through our action in sierra leone, the u.s. action in liberia, france, and ginny, we are beginning to turn the corner. but we must get better at are spawning to these global health -- responding to these global health emergencies and make sure we can master them before they master us. a new international platform to stimulate the design and development of new drugs -- all of these things are needed. let 2015, the year we must crack ebola, also be the year we tackle extreme poverty and climate change. we must set goals to eradicate

extreme poverty. on climate change, we want an outcome in paris that keeps our goal of limiting global warming by 2050 by 2 degrees in reach. those two things have the potential to give security to future generations to come. for almost two centuries, after those difficulties we were discussing earlier, america and britain have stood as candidates. -- kindred spirits. today as we survey a world in flux, our alliance stands strong, rooted in its long history, and reinvigorated by the challenges we face today. if our forebears could join us in the white house today, they might find the challenges we are facing, from isil to ebola cyber terrorism to banking crisis -- they might find those hard to comprehend, but they would surely recognize the ties that i does across the atlantic and the values that are peoples hold so dear.

-- the ties that bind us across the atlantic and the values that our peoples hold so dear. we have stood together so often, not just because we faced, and threats, but because we fundamentally believe in the same things. that is as true today as it has always been. it usually benefits are countries and the people we are -- our people we are here to serve -- hugely benefits our countries and the people we are here to serve. >> we will take a few countries -- questions. jonathan of abc. >> you mentioned your opposition to the sanctions bill on iran. this is a bipartisan bill supported by some very senior top members of your own party and congress. why do you oppose a bill that would only impose sanctions if you fail to reach an agreement and if the iranians failed to agree to take steps to curtail

their nuclear program. would you go so far as to detail a bill supported by top democrats in congress on this issue? to mr. prime minister, i understand you have been making phone calls to senators on this issue of the iran sanctions bill. is that correct? are you lobbying the u.s. congress on this? mr. president, i would like to hear your reaction to the news that mitt romney is running for president again. [laughter] >> on your last question -- [laughter] i have no comment. [laughter] on your first question, when i came into office i made a commitment that iran would not obtain a nuclear weapon, that we could do everything we could to prevent that.

that is important for our security and important for the world's security. if iran obtains a nuclear weapon, it would trigger an arms race in the middle east, make our job in terms of preventing proliferation of nuclear materials much more difficult. given their missile capabilities, it would threaten directly our closest allies, including israel, and ultimately could threaten us. what we did was systematically with the help of congress, construct the most forceful, most effective sanctions regime in modern history. what was remarkable was that when i came into office, the world was divided around this issue. iran was united. through some very strong diplomatic work, we united the world and isolated iran. it is because of that work that we brought them to the negotiating table not for posturing, not for meetings that lead nowhere, but to a very

hard-nosed nuts and bolts discussion of their nuclear program. their interim deal we entered into also froze progress on their nuclear program, rolled back in some cases the stockpiles of material they had already accumulated, and provided us insight into their program that was unprecedented. we have people on the ground who are able to verify and inspect and tell us what exactly is going on. that's not just our assessment. that is the assessment of intelligence services around the world, including the israelis. the agreement is held and negotiations have been serious. we have not lost ground. iran has not accelerated its program during the time these negotiations have taken place. iran's program has not only been in abeyance, but we have actually made gains in rolling back some of the stockpiles they

had. we have on the table currently a series of negotiations over the next several months to determine whether or not iran can get the yes. iran's program has not only been in abeyance, but we have actually made gains in rolling back some of the stockpiles they had. we have on the table currently a series of negotiations over the next several months to determine whether or not iran can get the yes. what has been remarkable is the unity we have maintained with the world in isolating iran and forcing them to negotiate in a serious way. the p5+1 not only includes china, but russia. they have continued to cooperate with us and setting forth positions that would give us assurances that iran was not developing a nuclear weapon.

i have always said that the chances that we can actually get a diplomatic deal of probably less than 50/50. iran is a regime that is deeply suspicious of the west, deeply suspicious of us. in the past they have surreptitiously as secretly advanced aspects of this program. we have huge differences with them on a whole range of issues. but, if in fact we still have an opportunity to get a diplomatic deal that provides us verifiable assurances that they are not developing a nuclear weapon, that is the best possible outcome that we can arrive at right now. the question i have for members of congress, including those folks in my own party, is why is it that we would have to take actions that might jeopardize the possibility of getting a deal over the next 60 to 90 days?

what is it precisely that is going to be accomplished? i can tell you what the risks are. i think david shares my assessment here. under the interim deal that brought iran to the table, we were not supposed to initiate new sanctions. you will hear our arguments. these technically aren't new sanctions, they are simply laws putting in place the possibility of additional sanctions. i assure you that is not how iran or our partners would interpret it. the likelihood of the entire negotiations collapse is very high. if that happens, there is no constraints on iran going back and doing what they came to do

before they came to the table, developing a heavy water reactor that once built is extraordinarily difficult to dismantle, and very difficult to hit militarily. going back at underground facilities that are very hard to reach militarily, accelerating advanced centrifuges that shorten the time span in which they can achieve breakout capacity. and they would be able to maintain the reason they ended negotiations was because the united states was operating in bad faith and blew up the deal. there would be some sympathy to that view around the world which means the sanctions we have in place now would potentially fray, because imposing those sanctions are a hardship on a number of

countries around the world. they would love to be able to buy iranian oil. the reason they have hung in there is because we have shown that we are credibly trying to solve this problem and avert a military showdown. on that context, there is no good argument for us to try to undercut, undermine the negotiations until they have played themselves out. he if -- if iran and sub not being able to say yes, if they cannot provide us the kind of assurances -- ends up not being able to say yes, if they cannot provide us the kind of assurances to conclude they are not obtaining a nuclear weapon we will have to explore other options. i will be the first one to come to congress and say we need to tighten the screws. that's not the only options that will be available. i have consistently said we leave all options on the table.

congress should be aware that if this diplomatic solution fails the risks and likelihood that this ends up being a military confrontation is heightened. congress will have to own that as well. that will have to be debated by the american people. we may not be able to rebuild the kind of coalition we need in that context if the world believes we were not serious about negotiations. i take this very seriously. i don't question the good faith of some folks who think this might be helpful. it is my team that is at the table. we are deep in this stuff day in and day out. we all make judgments blindly. -- we don't make these judgements blindly. we have been working on this for 5, 6, 7 years. we consult closely with allies like the united kingdom and making those assessments. i'm asking congress to hold off

because our negotiators, our partners, those who are are most intimately involved in this, suggest it will jeopardize the possibility of resolving -- providing a diplomatic solution to one of the most difficult and long lasting national security problems that we have faced in a very long time. congress needs to show patience. with respect to the veto, i said to my democratic caucus colleagues yesterday that i will veto a bill that comes to my desk. i will make this argument to the american people. i respectfully request them to hold off for a few months to see if we have the possibility of solving a big problem without resorting potentially to war. i think that is worth doing.

we will see how persuasive i am. if i'm not persuaded in congress, i will be taking my case to the american people on this. >> the big picture is very clear. the sanctions that america and the european union put in place have had an effect. that has led to pressure. that pressure has led to talks. i would argue with the president, how much better is that than the other potential outcomes. that is what we should be focusing on. i have contacted a couple of senators this morning. i may speak to one or two more this afternoon. simply to make the point as a country that stands alongside america in these vital negotiations, that is the opinion of the united kingdom that further sanctions or

further threat of sanctions at this point won't actually help to bring the talks to a successful conclusion, and they could fracture the international unity there has been, which has been so valuable in presenting a united front to iran. i say this as someone who played quite a strong role in getting europe to sign up to the very tough sanctions. i would make the point that those sanctions have had an effect. to those who said if you do an interim deal, if you even start discussing any of these things the sanctions will fall apart. the pressure will dissipate. no one will be able to stick at it. that has been shown not to be true. the pressure is still there. as the president says, if the iranians say no and there is no deal, let's sit down and work out whatever sanctions to put in place. we are absolutely united in a simple thought which is a deal

that takes iran away from a nuclear weapon is better than either iran having a nuclear weapon or action to prevent it. it comes down to that simple choice. i do what i can to help. sure, i will. >> [indiscernible] >> i think the way the president put it, i would not disagree with. it's very hard to know what the iranian thinking is about this. i'm the first british minister in 35 years to meet with and iranian president. there is a very clear offer their, which is to take iran away from a nuclear weapon and to conclude an agreement with them which would be mutually beneficial. a question from nick robinson of the bbc. >> a prime minister with extra

security being put in place today for the jewish community and also police officers. would people be right to conclude that the threats of an attack on the streets of britain is almost imminent? mr. president, you have spoken of the threat posed by fighters coming back from syria. do you ever worry that this is a legacy of the decision of the united kingdom to stand on the sidelines during syria's civil war? if i may briefly on the economy, you say he -- you agree -- is it time to stick to the plan? >> we do face a very serious islamist extremist threat in europe, america, across the world. it have to be incredibly vigilant in terms of that threat. we've got to strengthen police and security. we've got to do everything we can to keep our country safe. that involves long-term, patient, disciplined approach.

there is no single simple thing that needs to be done. it means closing down the ungoverned spaces that terrorists operate in. it means working against isil in iraq and syria, countering this death cult of a narrative that is perverting the religion of islam. it means working together with our oldest and best earners so that we share intelligence and security and try to prevent terrorist atrocities from taking place. it is going to be a long patient, and hard struggle. i'm convinced we will overcome it. in the end, the values we hold to our freedom of democracy, of having open and tolerant societies. these are the strongest values there can be. in the end we will come through.

like some of the challenges our countries have faced together in the past, it will take great discipline and patience and hard work. you ask a question about imminence. >> on the jewish community, i think it's good the police will stepping up on patrols. in fighting terrorism you can't rely simply on policing and security. this is a job for everyone this. say role we all have to play in making sure we keep our

communities safe. >> respect to syria and the connection to foreign fighters, there is no doubt in the chaos and the vacuum that's been created in big chunks of syria, that's given an opportunity for foreign fighters to both come in and come back out. and i chaired a u.n. security coun sill meeting and we are now busy working with our partners to implement a series of actions to identify who may be traveling to syria in order to get trained to fight or to hatch plots that would be activated upon return to their home countries. so it's a very serious problem. the notion that this is

occurring because the united states or grain or other countries stood on the sidelines i think is first of all mischaracterizes our position. we haven't been standing on the side lines. it's true we did not invade syria. if the snergs is had we invaded syria, we would beless prone to terrorist attacks, i'll leave it to you to play out that scenario and whether that sounds accurate. we've been very active in trying to resolve a tragic situation in syria diplomatically through humanitarian efforts, through the removal of chemical went frns syria that had been soand now, as isil has moved forward, we have been very deadly. active in degrading their capabilities inside of syria even as we are working with partners to make sure the foreign fighters situation is

resolved. i think david's point is the key one. this phenomenon of violent extremism -- the ideology, the networks, the capacity to recruit young people -- this has metastasized, and it is widespread, and it has penetrated communities around the world. i do not consider an existential threat. we are stronger, we are representing values that the vast majority of muslims believe in -- in tolerance and working

together to build rather than to destroy. so this is a problem that causes great heartache and tragedy and destruction. but it is one that ultimately we are going to defeat. we can't just defeat it through weapons. one of the things we spoke about is how do we lift up those voices that represent the vast majority of the muslim world so that that counter narrative against this nihilism is put out there as aggressively and as nimbly as the messages coming out from these fanatics. how do we make sure we are working with local communities and faith leaders and families whether in a neighborhood in

london or a neighborhood in detroit, michigan, so that we are inoculating ourselves against this kind of ideology? that is going to be slow plodding, systematic work. but it's work that i'm confident we are going to be able to accomplish, particularly when we have strong partners like the united kingdom doing it. on the economy, i would note

that great britain and the united states are two economies that are standing out at a time when a lot of other countries are having problems. so we must be doing something right. major garrett. >> good afternoon. questions for both of you. i want to make sure we heard what you were trying to say, clearly directing a message to congress. are you also sending a message to iran that if sanctions talks fail, that a war footing is the next most likely alternative and do you believe europe is at a turning point now in its recognition of what it's threats are at its own mobilization in terms of new laws, security

footing, larger budgets? we talk about cyber security. there is a crucial issue for both countries, back doors and encryption to protect people, and also privacy. i would like your comments on that. thank you. >> i am not suggesting that we are immediate war footing should negotiations with iran fail. if in fact our view is we have to prevent iran from getting a nuclear weapon, then we have to recognize the possibility that should diplomacy fail we have to look at other options to achieve that goal. and if you listen sometimes to the rhetoric surrounding this issue, i think there is sometimes the view that this regime cannot be trusted, that

effectively, negotiations with iran are pointless, and since these claims are being made by individuals who see iran as a mortal threat and want as badly as we do to prevent them from getting nuclear weapons, the question becomes, what other alternatives exactly are available? that is part of what we have to consider as to why it is so important for us to pursue every possible avenue to see if we can get a deal. it has got to be a good deal not a bad deal. i have already shown myself willing to walk away from a bad deal. the p5 plus 1 walked away with us. nobody is interested in some document that undermines our sanctions and gives iran the possibility of, whether covertly

or gradually, building up its nuclear weapons capacity. we are not going to allow that and anything that we do, any deal that we arrive at if we arrive at one would be subject to scrutiny across the board. not just by members of congress, but more importantly, by people who actually know how the technical aspects of nuclear programs can advance. and how we can effectively verify in the most rigorous way possible that the terms of the deal are being met. so the bottom line is this -- we may not get there, but we

have a chance to resolve the nuclear issue peacefully. and i should point out that even if we get a nuclear deal and we are assured that iran doesn't possess nuclear weapons, we still have a whole bunch of problems with iran on state-sponsored terrorisms their rhetoric towards israel, their financing of hezbollah, we have differences with respect to syria. it's not as if suddenly we have a great relationship with iran. it solves one particular problem that is urgent, and it solves it better than the other alternatives that might present themselves. so my main message to congress at this point is just hold your

fire. nobody around the world doubts my ability to get additional sanctions passed should these negotiations fail. that's not a hard vote for me to get through congress. so the notion that we need to have additional sanctions or even the possibility of sanctions hanging over their head to force them to a better deal -- i think the iranians know that that is certainly in

our back pocket if the negotiations fail. with respect to violent extremism, my impression is that europe has consistently taken this seriously during the course of my presidency. we have worked collaboratively and with great urgency, and the recognition that not only do you have foreigners who may be trying to hatch plots in europe, but that given large immigrant populations, it's important to reach out to and work with local communities and to have a very effective intelligence and counterterrorism cooperation between countries and between the u.s. and europe. there's no doubt that the most recent events has amplified those concerns. one of the things i have learned over the last six years is that there's always more that we can do. we can always do it better. we learn from mistakes. each incident that occurs teaches our professionals how we might be able to prevent these the next time. and i'm confident that the very strong cooperation that already exists with europe will get that much better in the months and years to come. >>

>> here is where i actually think that europe has some particular challenges. and i said this to david. the united states has one big advantage in this whole process. and it is not that our law enforcement or our intelligence services, etc., are so much better, although ours are very very good, and i think europeans would recognize we have capabilities others don't have. our biggest advantage, major, is that our muslim populations feel themselves to be americans and there is this incredible process of immigration and assimilation that is part of our tradition that is probably our greatest strength. it doesn't mean we aren't

subject to the kinds of tragedies that we saw at the boston marathon. but that has been helpful. there are parts of europe in which that is not the case. and that is probably the greatest danger that europe faces, which is why as they respond, as they work with us to respond to these circumstances it's important for europe not to simply respond with a hammer and law enforcement and military approaches to these problems but there also has to be a recognition that the stronger the ties of a frenchman of north african descent to french values, the french republic, that is going to be as important, if not more

important, over time in solving this problem. there's a recognition of that across europe. it's important we don't lose sight of that. with respect to the issue of intelligence gathering, signal intelligence encryptions, this is a challenge that we have been working on since i have been president. obviously, it was amplified when mr. snowden did what he did. it has gone off the front pages of the news, but we haven't stopped working on it. and we have been in dialogue with companies and have

systematically worked through ways in which we can meet legitimate privacy concerns, but also meet the very real concerns that david identified and my fbi director identified. social media and the internet is the primary way in which these terrorist organizations are communicating. now, that is no different than anybody else, but they are good at it, and when we have the ability to track that in a way that is legal, conforms with due process, rule of law, and presents oversight, then that is a capability that we have to preserve. and the biggest damage that was done as a consequence of the snowden disclosures was in some cases a complete undermining of trust. some would say that was justified.

i would argue that although there are some legitimate concerns there, overall the united states government and from what i have seen the british government have operated in a scrupulous and lawful way to try to balance the security and privacy concerns. and we can do better. and that is what we are doing. but we are still going to have to find ways to make sure that if an al qaeda affiliate is operating in great britain or the united states that we can try to prevent real tragedy. i think the companies want to see that as well. they are patriots. they have families they want to see protected. we just have to work through in what are technical issues. there is not so much difference in intent. how to square the circle on

these issues is difficult. and we are working with partners like great britain and the united kingdom, but we are also going to be in dialogue with companies to try to make that work. >> on the iranian issue, i think -- i make this point that i don't think you can characterize it if there is a deal, new pressure has to be applied to iran. even if there is a deal, a key to that deal will be transparency and making sure this country isn't developing a nuclear weapon, and that would mean repeated pressure. i would absolutely back up what barack says about recognizing that in so many other ways, we have some major disagreements with what the iranians have been

doing. britain has suffered particularly from the appalling way that our embassy and staff were treated in that country. we approach this with a huge amount of skepticism and concern, but the goal of iran without a nuclear weapon makes these talks worthwhile. you question, is this a turning point for europe in terms of terrorism? i would argue that we turned some time ago. maybe britain in particular, because of the appalling attacks that took place in 2005, but there have been attacks elsewhere in europe. since i have been prime minister, there has probably

been at least one major plot every year of quite a significant nature that we have managed to intercept, stop, and prevent. so the awareness of the scale of the challenge we face is absolutely there across government, across parliament, and across the different political parties, in the police and intelligence services. there is an opportunity for countries in europe who perhaps up to now have been less affected, to work with them and make sure that we share knowledge and skills

because when you say the turning point is making sure your legislation is up to date, making sure your police and security services have the capabilities they need, making sure you've got programs that can channel extremists away and making sure you are better integrating your communities -- it means doing all of those things. i agree with what barack says about the importance of building strong and integrated societies. i made a speech about this in munich, saying there had been a mistake in the past in some countries had treated different groups and different religious groups as separate blocs rather than try to build a strong, common home together. that is what we should be doing. and that is what our policy is directed to. and of course, you need to have a multiracial, multiethnic society of huge opportunity wherein one generation or two generations you can come to our country and you can be in the cabinets, you can serve the highest level in the armed forces, you can sit on the bench as a judge. i've got in my cabinet someone just like that, who in two generations his family has gone from arriving in britain to sitting at the -- that is vitally important, as is combating unemployment and poverty. here is i think the really determining point. you can have people who have had all the advantages of integration, who had all the economic opportunities our countries can offer, who still get seduced by this poisonous, radical death cult of a narrative we have seen in recent weeks. people have gone to fight in syria who had every opportunity and every advantage in life in terms of integration. let's never lose sight of the real enemy here, which is the poisonous narrative perverting islam. that is what we have to focus on, recognizing that we help

ourselves in the struggle if we create societies a genuine opportunity, if we create genuine integration between our communities. let's never lose sight of the heart of the matter. as for the issue on the techniques necessary for intelligence services to help keep us safe, all i would say -- and the president and i had a good discussion about this earlier -- i don't think either of us are trying to enunciate some new doctrine. the doctrine i approached this would -- i take a simple approach to this. ever since we have been sending letters or contacting each other on the internet, it has been possible in both our countries by signed warrant, by the home secretary to potentially listen to a call between two terrorists to stuff them in activity. in your country, a judicial process, we believe in very clear front doors through legal processes that should help to keep our countries safe. as technology develops as the world moves on, we should try to avoid the safe havens that could be created for terrorists to talk to each other. that is the goal that is so important because i am in no doubt, having been prime minister for 4 1/2 years

having seen how are our intelligence services work, and there is a connection between that and the capabilities that our intelligence services within the law use to defend our people. i think the final question is from robert moore from itv news. >> there is a security alert all round the jewish community in britain. is that based on specific intelligence, should people be concerned about doing their daily activities this weekend and do you regard a terrorist attack on british soil as almost inevitable? and, mr. president, you say there's a dialogue underway with big american tech companies, but

do you share the prime minister's view that the current threat environment is so severe there does need to be a swing of the pendulum maybe from privacy to counterterrorism and in this era of private, encrypted communications is a dangerous one? >> the issue is a threat that we face. the level has been set at severe. it has been sent by an independent expert organization so people can have full confidence that these things are never done for any other motive than to look at the evidence about terrorist threat and to set the level accordingly. when the level set at severe the authorities leave an attack is -- believe an attack is highly likely.

if we believe it was imminent, we would move to the next level which is critical. we clearly do face a very real threat in our country in recent months, as i was discussing with the president. we have had a number of potential attacks averted by british police officers. that is the picture. it is regularly up dated and reviewed but it should not be moved unless there is real evidence to do so. this is based on what has happened in france on the whole picture that we see, and it is sensible, precautionary measures to make sure we do what we can to reassure those communities, communities who are aware of the threat they face, and this is a

bigger challenge. one of the most moving sights in paris was to see so many people holding up signs saying "i am a cop," "i am a jew." it was moving that people wanted to stand together with one community that had been singled out, not because of anything other than the fact that they were jewish, and it is important that we speak up and stand up for those communities and give them the protection they deserve. >> obviously in the wake of paris, our attention is heightened. but i have to tell you over the last six years, threat streams are fairly constant. david deals with them every day. i deal with them every day. our conterterrorism professionals deal with them every day. i do not think there is a situation in which because things are so much more dangerous, the pendulum needs to swing. we need to find a consistent framework whereby our publics have confidence that their government can both protect them, but not abuse our capacity to operate in cyberspace.

and because this is a whole new world, as david said, the laws that might have been designed for the traditional wiretap have to be updated. how we do that needs to be debated both here and in the united states and in the u.k. we are getting better at it. i think we're striking the balance better. i think companies here in the united states at least recognize that they have a responsibility to the public, but also want to make sure that they are meeting

their responsibilities to their customers that are using their products. and so the dialogue that we are engaged in is designed to make sure that all of us feel confident that if there is an actual threat out there, our law enforcement and our intelligence officers can identify that threat and track that threat at the same time that our governments are not going around fishing into whatever text you might be sending on your smart phone. and i think that is something that can be achieved. there are going to be situations where there are hard cases, but for the most part, those who are worried about big brother,

sometimes obscure or deliberately ignore all the legal safeguards that have been put in place to assure people's privacy and to make sure that government is not abusing these powers, and on the other hand there are times when law enforcement and those of us whose job it is to protect the public are not thinking about those problems because we are trying to track and prevent the -- a particular terrorist event from happening. it is useful to have civil libertarians and others tapping us on the shoulder in the midst of this process undermining us that there are values at stake as well and we welcome that kind of debate. the technologies are evolving in ways that potentially make this trickier. if we get into a situation which

the technologies do not allow us at all to track somebody that we are confident is a terrorist, if we find evidence of a terrorist plot somewhere in the middle east that traces directly back to london or new york, we have specific information, we are confident that this individual or this network is about to activate a plot, and despite knowing that information despite having a phone number, or despite having a social media address or an e-mail address that we cannot penetrate that, that is a problem. and so that is the kind of dialogue that we're having to have with these companies. part of it is a legal issue, part of it is a technical question, but overall, i am confident that we can balance these imperatives and we should