e put it simply. without broad access to quality education, there is no future for the middle class. with this legislation, the majority are saying to america's low-income kids, you are on your own. mr. speaker, that is not who we are. i urge my colleagues to vote against this bill. the chair: the gentlelady's time has expired or yields. the gentleman from virginia reserves. the chair recognizes the gentleman from minnesota. mr. kline: thank you, mr. chairman. now i'm very pleased to yield to a new member of the committee the gentleman from michigan, two minutes. the chair: the gentleman from michigan is recognized for two minutes. >> thank you, mr. speaker. and i thank the gentleman for yielding. mr. speaker, i rise today in support of h.r. 5, the student success act. because our system -- education system is failing. where i come from we call trying to do things over and over again and expectinging a

different outcome in-- expecting a different outcome insanity. i believe our system is broken to the extent that it's a moral imperative for congress at this point to step up and act. our students, our parents, our teachers should not have to settle for a failing system. before congress i worked in the private sector and also had an opportunity to speak -- excuse me, to work in state government, including the opportunity to serve as the majority leader of the michigan senate. at that time i saw firsthand how much more effective we can be at the state level to use state resources and control where they're going than to have the federal government come in, step in and use and expect the state to spend it in a certain way. mr. bishop: this system of top-down, it does not help the stateses, it puts us -- states, it puts us in a bad position. had i had the opportunity, i would have come here in support of the cause as well because i

believe it's the right thing to do. i believe it's high time we defend the 10th amendment and rein back the federal government's role, especially in our children's education. local teachers and parents know that our children are -- know our childrenen better than the department of education -- children better than the department of education in washington, d.c. ever could. and the result is that our system is broken and that becomes clearer and clearer every day. i just want to mention a couple of statistics that i find alarming. but instructive. first of all, 35% of our fourth graders are reading at a proficient level. only 26% of our high school seniors are proficient in math. just a couple examples that i mentioned, those examples are unacceptable. mr. kline: i yield an additional minute. the chair: the gentleman is recognized for an additional one minute. mr. bishop: thank you. the student success act gives back authority to our states and expands opportunities to our children -- so our children can get the best education opportunity possible.

that's what they deserve and that's why i was sent to washington, d.c., to support. this bill is also critical in ensuring the federal government cannot force a failed program like common corps, on the states. -- common core, on the states. it's also important to make sure we protect the rights of our home schoolers and our private schools, that's exactly what this bill does. mr. speaker, we must reduce the federal government's footprint in our children's classrooms because it's making a mess of the education system. we are long overdue for change and i believe the student success act will move our nation in the right direction. thank you and i yield back the balance of my time. the chair: the gentleman from michigan yields. the gentleman from minnesota reserves. the chair recognizes the gentleman from virginia. mr. scott: thank you, mr. chairman. i yield myself such time as i may consume. the chair: the gentleman is recognized. mr. scott: mr. chairman, because this bill limits the amount of funding available, it moves money from low-income areas to wealthy areas eliminates targeted funds for english learners and those with disabilities it fails to set

meaningful standards a lot of organizations oppose the legislation, including business organizations, child advocacy groups, civil rights groups organizations supporting those with disabilities and health groups, including the congressional track caucus, the advocacy institute, the after-school alliance, the american association of people with disabilities, the american association of university women, the american fedcation of -- federation of teachers, the american foundation for the blind the association of university centers on disabilities autism national committee autistic self-advocacy network, the center for american progress the center for law and social policy the children's defense fund, the committee for education funding, the consortium of citizens with disabilities, the council on great city schools, the council

of parent attorneys and advocates incorporated, democrats for education reform disabilities rights education defense fund, easter seals, education post, education law center, first focus campaign for children, gay, lesbian and straight education network, human rights campaign, the center for mental health law, lawyers committee for civil rights under law, leading educators, the league for united latin american citizens, the mexican american legal defense on education fund, the naacp, the naacp legal defense on education fund, the national association of school psychologists national center for learning disabilities, the national council on independent living, national council on teacher quality, the national center on time and learning, national congress of american indians national council of loraza, the national coalition

for public education, the national disability rights network, national down syndrome congress, the national education association, the national urban league, the national women's law center, parents for each and every child, poverty and race research action council, public advocates incorporated, stand for children southeast asia resource action center, teacher plus, new teacher project, education trust, united negro college fund, the leadership conference on civil and human rights and the u.s. chamber of commerce all in opposition to this legislation. . i reserve the plans of my time. the chair: the gentleman reserves. the chair recognizes the gentleman from minnesota. mr. kline: thank you mr. chairman, we are expecting another speaker, en route so i'd like to -- do you have other speakers? yes, you do i'll reserve. the chair: the gentleman from minnesota reserves, the chair

recognizes the gentleman from virginia. mr. scott: thank you. mr. chairman, i yield one minute to the gentlewoman from alabama ms. sewell. the chair: the gentlelady is recognized for one minute. ms. sewell: thank you, mr. speaker. i often don't come to the floor to speak, but i felt compelled on this particular bill, h.r. 5 to talk about it. why? because i represent a district that has 90% of the public schoolchildren live and receive reduced or free lunch. and it's important for me to just state for the record that i think that a bill that takes away funding from public schools and targeted funding for low-income and poverty students would be an abomination. this bill is here because the work of lyndon johnson 50 years ago. it was a civil rights bill, frankly. why? it was an acknowledgment that

socially disadvantaged children needed additional help. somewhere along the line, mr. speaker we've lost, as a nation, the notion of our children. it's always my child. not our children. until the person who lives in high income sees -- mr. scott: i yield the gentlelady 30 seconds. the chair: the gentlelady is recognized for 30 seconds. ms. sewell: until the parents of more affluent children see that their lives are intricately linked to children that are poor we as a nation will never be the beloved community that so many civil rights leaders fought and died for. so i want to thank the gentleman from virginia for the opportunity to speak on this underlying bill and i want to urge my colleagues to vote against h.r. 5. the chair: the gentlelady yields. the gentleman from virginia reserves.

the chair recognizes the gentleman from minnesota. mr. kline: thank you mr. chairman. i'm pleased to yield two minutes to a member of the committee the gentleman from georgia, mr. carter. the chair: the gentleman from georgia is recognized for two minutes. mr. carter: thank you, mr. speaker. i also want to thank the gentleman from minnesota for his work on this bill. very important bill. certainly very applicable to what is going on in our country right now. federal intervention in our nation's classrooms is at an all-time high and the obama administration continues to believe that they think they know what is best for our children. however, despite continued intrusion into our children's classrooms, student achievement remains stagnant. out of 34 countries students in the u.s. ranked 30th and 27th in science and math respectively. it's clear our education system is not adequately serving our children and it's not going to be fixed by washington bureaucrats.

our education system can only be fixed by parents, teachers, aunts, uncles coaches, community leaders. the people who actually know what is best for our nation's children. that's why i'm supporting h.r. 5. i'm supporting this bill to put some refraints on -- restraints on the administration, rein in the department of education and put key os our children's education and future back in local control where it belongs. it repeals out of touch teacher qualification programs and allows state and local officials to determine who is qualified to coach their children. it also eliminates 65 programs and creates a brand program with greater flexibility for school districts. we all know that children learn differently and at their own pace and without this bill, the secretary of education could prohibit funds from being sent to states unless they adopt certain one size fits all standards like common core. i will be the first one to say

that additional reforms are -- to our education system are feeded. no this is not the silver bullet. but it is a great start. and it is a great bill. mr. speaker, i support this bill and urge all my colleagues to do the same. i yield back. the chair: the gentleman yields back. the gentleman from minnesota reserves. the chair recognizes the gentleman from virginia. mr. scott: i yield myself such time as i may consume. the chair: the gentleman is recognized. mr. scott: i want to state for the record, mr. chairman that graduation rates are up in the last, since no child left behind was passed, black and latino children are doing better. the -- and so it has been working but we need to continue to improve. mr. chairman, i'd like to read the statement of administration policy that speaks to the administration position on h.r. 5. the statement of policy goes as

follows. administration strongly opposes h.r. 5 the student success act as approved by the house committee on education and the work forest. -- work force. congress must act in a bipartisan way to reform elementary and secondary act of 1965. it helps by giving them flexibility from no child left behind mandates. however it represents a step backwards in helping the state's families prepare for children's future. it -- part of the legislation is to ensure that all -- it fails to maintain the core expectation that states and school districts will take serious sustained and targeted actions when necessary to remedy achievement gaps and reform persistently

low-performing schools. h.r. 5 fails to identify opportunity dwaps and remedy inequities and access to resources and support students' needs to succeed such as challenging academic courses, excellent teachers and principals, after school enrichment or expanded learning time and other academic and nonacademic supports, rather than investing in more schools, h.r. 5 would allow states to divert education funding away from schools and students who need it the most through the so-called portability provision. the bill's caps on federal education spending would lock in recent budget cuts for the rest of the decade when it allow funds to be used for education to be used for other purposes such as spending on sports stadiums or tax cut for the wealthy. h.r. 5 fails to make critical investments for the nation's students including high quality preschool for america's students

and investment and innovative solutions for the public education system. if the administration agrees on the need for high quality statewide annual testing as required in h.r. 5 so parents and teachers know how children and schools are doing from year to year and allow for consistent measurement of school and student performance across the state. however this bill would -- this bill should do more to reduce redundant and unnecessary testing such as asking states to limit the amount of time spent on standardized testing and require notification when it's consuming too much classroom learning time. the administration opposes h.r. 5 in its current form for all these reasons but particularly because it would deny federal funds to the classrooms that need it the most and fails to assure parents that policymakers and educators will take action when students are not learning. the president were presented with h.r. 5, his senior advisors would recommend that he veto the

bill. i yield back. mr. kline: i understand the gentleman yields back? mr. scott: no, i reserve. mr. kline: ok mr. chairman, i'm happy to yield to the chairman of the subcommittee on work forest protection -- work force protections, the gentleman from michigan, mr. walberg. mr. walberg: thank you, mr. chairman. thank you, mr. speaker. since no child left behind was put in place the federal government has dictated how states and school districts spend money, gauge student learning and school performance and hire classroom teachers and frank -- and frankly mr. speaker, it isn't working. washington bureaucrats new york matter how well meaning they are, will never have the same personal understanding of the diverse and special and unique needs of students and teachers,

administrators parents, who spend time with them. mr. speaker, i stand here today because i have to speak for aaron and moses. aaron is -- for erin and moses. erin is my daughter-in-law and the mother of my four grandchildren. moses was a student that tested her teaching ability and her passion for teaching. erin came to teach in a classroom, fourth and fifth grade classroom, special needs students in cicero illinois. freshly minted out of her educational training, masters program, she came in with a passion for teaching. she came in because she was sent in that classroom as a full-time continuing substitute because the teacher of that classroom had gotten up one day walked out of the classroom and never came back.

erin was given the opportunity of a lifetime, to teach these students and she began to invest her life into those students, especially one young student, fourth grader, by the name of moses. moses came from a difficult situation. moses at that time new york fourth grade, wasn't even fully potty trained. but erin invested her time and talent and frankly her treasure into the life of that student as well as the others. had wonderful outcomes in working with the parent in the home as well as with moses in the classroom. the next year, erin was given the opportunity to be a full-time teacher. not a sub anymore. and i'll never forget the day when she came to me and said dad -- she had tears in her eyes he, said i'm not sure i'm cut out for teaching. i said why? you had an amazing impact for the six months of time you spent in that same classroom last year.

she said now all i'm doing is filling out paperwork, for illinois for chicago and for the federal government. she ultimately had our twin grandsons and went from the classroom to the home. but there will be a day that comes when those four kids are at the stage and she can go back to the classroom. i want erin to go back and have the ability to teach, to love on those kids, to direct them and work with the parents, not spend time filling out bureaucratic forms. that's why i support the student success act. it replaces federal control with state and local control. the bill allows states to establish -- the chair: the chair recognizes the gentleman for one minute. mr. walberg: to establish and implement their own standards and assessments, allows states to development their own accountability plans by eliminating federally prescribed school improvement and turnaround interventions.

it provides state and local school districts flexibility. mr. speaker, that's what we're speaking for. that's for the erins and moses of the world and educational opportunities that should lead us to the future in great ways for this country, to lead the world, this is what we're talking about, mr. speaker. the students success act places control back in the hands of education's rightful stewards, the teachers. the administration. the -- the administrators. the states, the parents and ultimately the students. let's pass this bill and i yield back. the chair: the chair recognizes the gentleman from virginia. . mr. scott: i'm prepared to close. the chair: the gentleman from virginia is recognized. mr. scott: i just wanted to end

-- i yield myself such time as i may consume. the consortium of citizens with disabilities says the students with success act creates incentives to take students with disabilities unchecked, off track from having access and achieving a regular high school dip plomea. less than 1% of all students have a significant disability which corresponds to 10% of students with disabilities. without this limitation, we fear schools may inappropriately assign schools to alternative assessments. that assignment to these alternative assessments may lead to reduced access to general curriculum and limit a student's access to earn a regular diploma. that's why the disability groups

oppose the legislation. i just want to end with a reminder, this limits the funding and transfers money from low-income areas to high-income areas and that's not just urban areas. there are 2,400 low-income rural districts that will will lose over 150 -- $150 million, 15% of their allocation under the current law, they will lose in rural areas. the legislation eliminates targeting for english learners and those with disabilities and it fails to set meaningful standards and for those standards we should join the administration in opposing h.r. 5. and i yield back. the speaker pro tempore: h the chair: the chair recognizes the the gentleman from minnesota. mr. kline: i yield myself the balance of our time. as is always the case, we hear a

lot of things, some of them are actually factual some of them are not. there is some things that come along with this. we did hear some things from both sides of the aisle that are worth underscoring. one of the other speakers talked about how schools and states need continuity, i think was his word, predictability. and that's what we do not have now. right now, this country is operating under the law of the land, which is no child left behind. and under a big convoluted scheme of contemporary conditional waivers which provide no continuity, no predictability. and that's why we are hearing on both sides of the aisle from coast-to-coast and off the coast, as a matter of fact, that we need to replace no child left behind. and we believe i believe as we

replace no child left behind, that we need to put responsibility in the hands of parents and teachers and school boards and states and not in the hands of washington, d.c. i think that it's not fair to say that there's not a problem. we heard from the ranking member that graduation rates had gone up. on the other hand, they hadn't gone up much. and we're still in the position where 26% of high school students are -- 26% high school seniors are not pro efficient and only 38 -- only 26% are pro efficient in math 74% -- maybe i need to have a little math -- only 38% of those high school

seniors can read at grade level. we have a problem and we need to address that problem. we heard that a lot of talk about how -- where title 1 funds go and portability of public schools, and it's a question i understand and we believe it's fair if you are eligible for title 1 funds you ought to get those funds. there's a disagreement. i think that the children, if they're eligible, if they're in poverty, that they ought to get their share of title 1 funds. one of the things we didn't talk much about today as we talk about the problems out there, we know that in some areas of the country, you have children trapped in absolutely failing schools, where less than half of the kids that graduate. and those who graduate are nowhere near ready to go to college or go to work.

we have seen across the state and across the country and in most states, charter schools public charter schools popping up. and giving parents hope, giving them a chance to get those kids out of failing schools. i said the other day in the rules committee, because it was so moving to me, i went to a charter school in north minneapolis, 430 kids in that school, their parents are delighted with the education they're getting now and thrilled to have gotten their kids out of failing schools and when i asked the principal and founder of the school if she could take more kids she said no, this is the right size for this school. they would like to replicate this school and that's what this bill allows and how successful is it? there are 1,000 kids 1,000 kids on the witnessing list to get into that charter schools because parents want to get out of failing schools. this bill allows this to happen. it comes down to, who do you

trust? parents or local governments? we want to put the control in >> a debate on the education bill begins on the floor tomorrow. the bill would eliminate no child left behind requirements and give that up already to states. a final vote is extracted by the end -- expected by the end of the week. another bill dealing with education savings past today. it expands funds to include computers and software. before the week is over, we could see work on legislation to fund the homeland security department. negotiations continue off the floor. current funding expires on friday. coming up today on c-span3, the

federal communications commission considers the net neutrality plan. plus response from opponents of net neutrality. live coverage gets underway at 10:30 a.m. eastern. at 5:00 p.m., this yours conservative political action conference with remarks from possible 2016 presidential candidates, governor scott walker of wisconsin, and bobby jindal of louisiana, as well as former alaska governor sarah palin. it will be hosted by the american conservative union. >> the political landscape has changed with the 114th congress. there are 43 new republicans and 15 new democrats in the house and 12 new republicans and one new democrat in the senate. there are also 108 women in congress, including the first african-american republican in the house. keep track of the members of

congress using congressional chronicle on c-span.org. the page has lots of useful information, including voting results and statistics. new congress, best access on c-span c-span2, c-span radio and c-span.org. cracks after testifying earlier in the day in front of the house armed services committee, general philip breedlove briefed reporters at the pentagon. he spoke about u.s. and naval support of ukraine and the ongoing situation with russia. he also discusses the flow of foreign fighters into and out of syria in support of the islamic state. this is 45 minutes.

cracks good afternoon, everybody. it is good to be back in this room and with you today. as many of you know and may have watched, i've just completed my testimony with the house armed services committee. i would like to thank undersecretary warner for her time and partnership. are those of you who did not listen to my testimony, i'd like to review a couple of key points before we proceed to your questions. i told them, compared to one year ago, europe faces a different and much more challenging security environment. we have confirmed that a resurgent russia is exercising power and influence, not only in neighboring countries, but also in the region more broadly. and around the world. the challenges global, not regional, and enduring, not temporary. the most visible manifestation of russian inauguration --

aggression started one year ago, with russia's illegal occupation of crimea, followed by its continued on conflict in eastern ukraine. the best way to bring it to a -- to an end. the whole conflict gives us calls for much concern. since the beginning of the conflict in ukraine, we have seen evidence of russian involvement. to logistics, control, air defense. there are unidentified russian specialist troops. they now direct and to train the

pro-russian troops. russia fired artillery over its order. -- over its border. tanks, armored personnel carriers and other military vehicles. these have been used on the front line against ukraine forces. these actions do not aid to reestablish normal relations. actions matter much more than words. what we see on the ground is a russian who does not play by rules. they are destabilizing to the region as a whole. they have global impact. at the same time, europe also faces a surge of extremism.

i sold shows what a deadly threat they pose. --is isil shows what a deadly threat they pose. attacks like those in france belgium, and denmark are only going to become more frequent. insecurity all along the southern border of europe. everything from migrants to criminal -- the spread of instability has a direct bearing on the national security of the united states. to protect the homeland, they are working bilaterally. addressing these challenges means the efforts in europe

remain essential. more important than any time in history. /year at the beginning of the crisis in ukraine, we rushed land to reassure them. the nato alliance -- the reason we can respond quickly is because we were there. we were there, posture correctly. it is the bedrock of our ability to assure our allies. to deter real adversaries. to respond in a timely way if deterrence should fail. supports all facets of eucom submissions. -- eucom's missions.

permanent presence is in building relationships while signaling our commitment. genuine and fully funded can play a role in meeting the role. if it is properly resourced. it is easier and a cheap year -- cheaper then to retake a piece of land. based on the budget control it has already forced eucom. our timelines are longer, and our ability to deter is less sure than it could be. the security challenges around europe are only growing sharper and more complicated.

had a great conversation with the committee and now i look forward to our conversation. with that, i will open it up to your questions. >> is sanctions -- if sanctions cannot stop the conflict in east ukraine what really can the nato and the u.s. do to and the conflict? or is the answer to do nothing? >> what i would say is all the tools that are available are the recipe that brings us to a position where we can force mr. putin -- in the decision-making. we currently have sanctions on board.

we have nonlethal aid going into ukraine from several nations. we still have diplomatic and informational tools to employ. as you know, the disinformation campaign that russia has out is quite pervasive. we need to get onto the field and further onto the field and the diplomatic field. what i advocate for is russia is using incredible pressure. we should answer in all four tools of national power as well to change the cac list of what he should take on. -- changed the calculus of what he should take on. >> it does not seem that there does not seem to be --

>> what i said is that it could embolden him. we do not know what putin's reaction is. if we were to apply 2 -- too harshly in one area -- we have to understand the risk calculation of what we are doing, and find the way to change his calculus. >> can you talk about the russians posture in the black sea? >> we have not seen any great change in the naval surface

combatants as far as the posturing in the black sea. what we have seen is a that crimea has been transformed in a significant way as far as weapon systems. you have seen this talked about. these weapons come from and are defense systems that reach half of the black sea to surface attack systems that reach almost all of the black sea area have made the platform of crimea a great one for power projection into this area. to change and posture numbers we have not seen a big change. the black sea -- many of those nations are black sea nations. their navies operating in the black sea. sometimes u.s., sometimes other nato nations. i do not see a change in that.

nato will go into the black sea and exercise with its partners. we will work with turkey, a great ally, or in the context of the montreux convention. >> what is your reaction -- what is your interaction with the russians like? are they courteous? >> we have seen several different manner of interactions in the black sea. most of them i would call a professional at first, as we were having some of our nato vessels go closer to the crimean peninsula -- maybe, i would call them a bit more confrontational. by and large professional and

the way that seagoing vessels carry on. >> would you favor a -- an army ukrainian forces? >> good question. what i would say is we have had a lot of interaction with the ukrainians, as have other nations. what the ukrainians have said is what they need has been pretty consistent across the conflict. u.s., european command has had a deep relationship with ukraine for some time, but even more close for about the past year. our joint commission has set up a structure where we have engaged him at all levels of their defense ministry, and in their fielded forces. our introspection -- our inspection and interaction gives us the same picture of requirements they need. we have a good feeling of broad

categories of intelligence, communications and jamming devices. counter mobility capabilities. based on all of those interactions, i have prepared my advice and passed it up through my chain of command. that is now in the process of being considered. >> talk about the pros and cons. generate mccain -- general mccain says you have to send a strong message to put in. opponents say if you are with the ukraine forces, it is only going to escalate and will up the ante. >> let us examine what putin has

done already. well over 1000 combat vehicles. russian combat forces. some of their most sophisticated air defense. battalions of artillery. i would say that mr. putin has already set the bar and anti-very high. of course, it could get worse. we have to be very straightforward to say that none of us knows what mr. putin will decide. if we take action, many believe he will accelerate. if we take action, others believe that it may raise the cost, and he may make another decision. we judge what we think will happen and find a way forward. what is clear is that right now it is not getting better, it is getting worse every day. >> to follow up is it likely he

will escalate in the actions of a lethal a decision? if the u.s. continues on with the same type of material they are giving the ukrainians without giving them the small arms -- would we expect that russians would continue? >> you really asked two questions. again, we cannot know what mr. putin will decide. i like to talk about looking at the capabilities that he puts in the fields. what options do that give him -- doesn't that give him?

you will never probably be able to predict. your first question is could this escalate in the absence of any change? that is what is happening now. we have seen a steady escalation. remember, as they first went in, they were incredibly careful not to show russian presence. tried to create ambiguity confused as to whether or not they were actually in their. that message is falling apart. we see outright russian involvement air defense systems that have never been used anywhere outside of russia. the facade of trying to behind -- trying to hide behind this

equipment that was stolen from ukraine. we see that mr. putin is all in. they will proceed to -- until of their objectives are accomplished. >> and the committee this morning on the possibility of permanent forces in eastern europe. obviously the nato, russia agreement says nato -- is it time do you think to look at that again? >> let us go back to the question i was hoping you would ask. which is about four structure in your. i am an advocate for structure in europe.

if we look at what happened when russia first went into crimea. we saw that -- the one 73rd out of germany was able to respond. within 96 hours. they were able to get troops in there to bring reassurance to our allies. our craft out of east respondent lest then a day -- responded lest than ass than a day. to bring assurance to poland. so these permanent forces are the key to being able to react. that speed to these provide --

add speed to these provocative issues. i answered the question i want to answer, now i will answer your question. as these are forces, we do not have -- which is going very well. the feedback from our baltic nations is very good. i think you may have seen lithuanians'man of the year. a u.s. soldier on the front of their magazine. these countries and this rotational capability, which is a part of this larger assurance construct that nato is the right way.

>> i wanted to ask you about the nuclear side. because secretary carter talked about the notion that russians are still in violation of the imf treaty. what options should the military and pentagon consider? he talked about the dod options could be counterforce capabilities. what are you seeing right now from the russians and continuing violations? their violations of imf. their testing of cruise missiles. operationally are you seeing them the point platforms potentially even to crimea that could be nuclear capable -- that could provide destabilization and an uncertainty?

and what do you do about it? >> first of all, i agree with those in our administration who have adjudged that russia is in violation of the imf. i agree that they have tested systems that are outside of the boundaries. this is of course important and tough to address. the logic that our secretary defense follows, we have to change mr. putin's decision calculus as to whether he uses these or deploys these. we have to change that and that series of thoughts. you asked a very important question about have we seen the appointment of those forces?

we have not. but it is not that clean. in crimea, there are those dual use weapon systems that could very easy -- very easily be nuclear or non-nuclear. it is very worrisome. ground-based west -- ground-based weapon systems. dual use aircraft in crimea that could be nuclear or conventional. it is really hard for us to tell if they are being for station in one or the other. it brings in ambiguity so it is really hard for us to pick up and our intelligence and communications. >> can i follow up?

what do you actually think is put in his calculation on both imf violations on nuclear capable platforms? what is his calculation? is a putting it out there for destabilization? rather than options in the atmosphere, are there things you have to do now? do you have to an act some of those countering options to stop what he is doing to show that you're not going to let it go on? >> so again i cannot tell you what is in vistaprint's head. what i can tell you -- i cannot

tell you what is in mr. putin's head. what i can tell you is what we have seen. we know that he has put the types of weapons to some platforms in various places. crimea and others. that could be dual use. remember that we have dual use airplanes as well. the next question you asked me is why? what is he trying to do? some have said they think he is messaging. trying to influence our decisions. clearly, he is not happy with our epa a moving forward. maybe he is trying to adjust our decisions. these are tough issues for our nations to address.

as you heard me say this morning, i think one of mr. parsons main objectives -- mr. putin's main objectives is try to divide the west. try to divide nato and its approach to military solidarity on issues just like this one. i do not think that i would add anything to what the secretary of defense has said. we need to first have a dialogue with them to try to convince them to come back to the table or be in compliance with the imf. if that does not work, we begin to look at the next series of options. >> i wanted to ask you again about the baltic states. which they are members of nato. how confident are you in the ability of nato to defend, and

attack -- and position of having to retake later -- one that secretary kerry was testifying they thought nato was risking like a paper tiger because he was going to essentially have his way in the ukraine. >> first, i think that the baltic nations are nato nations. i do believe that mr. clinton understands -- mr. putin understands what a nato nation is. i think that across the last 6 to 7 months, the whale summit summit,

what i saw was the most clear emphatic nato commitment to article five defense that i have ever seen. i've been in the nato business since 1982. my first trip over there to germany. i believe he understands that commitment. that commitment is real. our nations are ready. in fact what you see and their readiness action plan are those annotations to the old nato and the old nrs. it makes them more responsive to react. the response and the ministerial's we have just completed to standing up all elements were demonstrative and positive. we got six nations is a very

high readiness task force. we have multiple nations standing up to participate in all of the and if i use. the 6 --nfi use. the six units that will be used. a three nation core that now we will take on. that article five issue in the northeast. nations are putting their forces behind their signature that says we are committed to article five. i would never even repeat the description that you said. the bottom line is nato has stood up to the plan for making our alliance better ready to meet these challenges. >> i have a question on isis.

could you give us an update about the fighters from europe? how nato and eucom are countering that issue? how do you see turkey's role in countering? >> the flow of foreign fighters to syria and from syria is a problem. we all accept that. it could not be made more plane starting in belgium first, and then paris, and then copenhagen. laying out in the press over the last three days, three teenage girls choosing to go joint isis. the problem of foreign fighters in both directions is concerning.

the nations -- first of all nato has decided to take this on and make this a part of our mission to address this. multiple nations have already joined in several groups to address this. now that will continue to grow. the beginnings of this is the sharing of information. many different kinds of information that allows us to understand track, and adjust. that is growing now from a military approach to and all of government approach. we have multiple legal entities. and to paul and others. that -- interpol and others that we are teamed with. this group of military and

ministry of interior's capabilities to address this. we believe this is going to get worse before it gets better. especially the return of a rock in syria. it will get worse before it gets better. turkey is evermore tied into this network and evermore cooperative. turkey is a great ally. they realize the issues and are cooperating. >> is there a red line that if russia crosses it, help and ukraine? >> no. the nations have discussed this. nato is after all a political

alliance and then a military alliance. and there are nations of nato who have bilaterally and in some cases multilaterally made decisions to be a part of this and they have already decided. we have seen several announcements in the last couple of days three of our nato nations now involved in going forward to train and do other missions in ukraine. but as an alliance, the answer is no. >> i'm curious when you have these conversations with russia they've violated several agreements from the mincic agreement tot nuclear agreement. when you're having these dialogues what are the direct next steps where dialogue is not going forward? or are there any direct

consequences that you are consequences that you are discussing with russia? are so it's a tough question to ask me because i'm not involved in any of these direct conversations. and as far as those things that fall outside of my bailiwick, i can't comment there. i think that what -- how i would answer your question is along the following lines. much like we say in the tom bass this will not end militarily. we have got to come to either a diplomatic or a political solution. we don't want a war of grand proportion in eastern ukraine. this will not end militarily. we have got to come to either a diplomatic or a political solution. we don't want a war of grand proportion in eastern ukraine. we need to find a diplomatic and political solution. >> how would the united states bring someone to the table who is ignoring all the agreements that it's signing? >> this is a hard thing and it's got to be more than the u.s. this is something that the nations of the west need to be involved in bringing this

pressure. we've had great leadership from and angela merkel and president horn to find solutions. political this is bigger than any one nation trying to find the path forward. but as we talked about before i think the important thing to remember is that a nation has four views of military model. i'm sorry if you use something different. i use dime. diplomatic informational militarily and economic. we have a whole set of tools. we should be using all of those tools to change the decision calculus in mr. putin's head and tie -- try to find that approach that convinces him that is better than he and russia to find a solution to this conflict. and that is what we will continue to do. >> i would like to follow up on tom's question.

last month all indications were that you were a bigger proponent of using defensive weapons that you have been recently. i was wondering try to find that approach if you could walk us through your evolution and thinking about defensive weapons. there were reports months ago that you were on the hill talking about the use of defensive weapons. i was just wondering if you could walk us through your evolution of thinging of it. is your feeling that it would divide nato and the united states? why is it not as appealing as it appeared to be the united states just a few weeks ago? >> i must tell you that it's interesting for me to watch the reporting and people saying what they think i'm thinking. i have not changed us through your from essentially the framework that i just laid out a little while ago. and that is that we have four types of tools. we should not necessarily write

any of them off. so i think that all the tools should be considered. again, we have to find the mix that brings the solution. it's not any one of the four that brings a solution. so we have been talking with the ukrainians. we have sent a deep series of teams of military people to interact from the u.s. european command headquarters to interact with the military headquarters in and essentially assess series of teams of military people to interact from the u.s. european command headquarters to interact with the military headquarters in and essentially assess capabilities needs et cetera with the ukrainians. we have identified things that could change their ability to defend their own country. we have put ford options for our senior most decisionmakers to make decisions and now we'll see what our nation decides. >> in your discussions with the ukrainians, how not necessarily write any of them off. so i think that high of a priority does defensive weapons come up in terms of things that

they think would help them? >> clearly they are in open press and in discussions at the highest levels of government asking that nations give them the ability to defend themselves. >> general, you said it's getting worse every day and ukraine, putin's all in unless the rest of the world does something to change his calculus he will proceed until he accomplishes his objectives. so what the highest levels of government asking that nations give them the ability to defend themselves. is your assessment of exactly what his objectives are? >> so the unsatisfying start is the same as i've said several times. we can't know what is going on in mr. putin's head. but what is pretty clear from what we have seen in georgia, in assessment of exactly what his objectives are? >> so the unsatisfying start is

the same as i've said several times. we can't know what is going on in mr. putin's head. but what is pretty clear from what we have seen in georgia, in moldova, and now in ukraine, that to coin a phrase about ukraine, we believe that his objective is that it is to keep ukraine out of the west and to keep the west out of ukraine. and allow ukraine to stay in the orbit of russian influence. and so again we don't know what's in his head. but what we have seen is a series of these what you have heard called frozen conflicts which amount to a veto of a nation moving assessment of in a western orbit because of a fear of this frozen conflict inside of their wrear. so i cannot claim any special knowledge but what i see is that mr. putin is exerting his influence in the eastern part of ukraine in order to change

the decision space in kiev about whether they should be associated with the west or not. >> does he have to accomplish something specific on the ground in order to accomplish that larger objective? >> i think that's -- i don't think there's a good answer to that question. the decision about whether that nation will go e east or west or remain essentially in a neutral status is in the minds of those who lead and its capital. so i think mr. putin is trying to affect those decisions. >> senator majority leader mitch mcconnell has agreed to submit a d.h.s. spending bill. we'll get some congressional reaction. at 7:45 a.m. eastern oklahoma senator james lanchingeford will join us to talk about the topic and half hour later it's

a democratic perspective. those conversations plus your calls tweets and e-mails. our show live at 7:00 a.m. eastern, 4:00 specific on c-span -- pacific on c-span. in a western orbit because of a

>> now, a discussion with john chambers chairman and ceo of sisco who spoke about the trans formation of information. he then takes questions of an audience and ceos at this forum. it runs about an hour.

indeed for being with us this morning. i'm the editor-in-chief of "the wall street journal." it's a pleasure to welcome you all to the latest viewpoints breakfast in our series where we quiz some of the latest ceos in the

u.s. and the world on their plans for the future. hank you particularly for coming out this morning, a very busy morning in new york. the president is here. if you fight your way through traffic lines, police blockades and detours. this is united nations week in new york when we play host to some of the most powerful people of the world, many of whom have been in their positions of office for a very long time. they come and give us their advice and views on what's happening in the world. it's appropriate this morning we have with us john chambers, chairman and ceo of cisco, celebrating his 20th anniversary of chairman and ceo. congratulations. we are looking very much -- looking forward very much to hearing from john chambers. he is joined by dennis berman. in addition to his many talents he recently became a father for the second time. john, if you notice in nodding off during any point during the proceedings, don't take it personally. it's more

to do with the quality of the sleep is probably getting up the moment. thank you all for being here. you can follow this event afterwards. you can see the video streaming on wsj.com/viewpoints. issue get a chance come you can watch it all again. if it's that exciting, you can watch it again and again on a permanent loop. this is very much a participatory event and we very much appreciate your participation. we will have lunch of time for questions and answers afterwards. please be ready for that. once again thank you all for being here and without further ado, i will hand it over to dennis. >> it's an incomparable morning. you recently predicted that perhaps over the next 10 years, some of the biggest technology

companies will not be around. tell us about who they are when they will go down, and who should we short? go right to it . --go right to it. >> if you look at high-tech industry, if i were to take a step back, my competitors â >> such as? >> synoptics, cabletron, they have pulled out. 10-15 years ago, it was much bigger than that. alcatel, lucent, ericsson, etc. we are the size

how do you see it? >> all of high-tech industry has for decades, i.t. should enable your business. in some ways, we did and in some ways do not achieve many of the business objectives. in the last 18 months, you have seen

the image and how technology will get a different interface and allow to move. but it is not just in this country. you are seeing countries around the world change at tremendous speed. angela merkel talks about her country being a digital country. as with the key leaders in germany this past week and in france and that -- the prime minister of france and looking at how to digitize the country to make a competitive for the future. israel is probably the top high-tech country in the world with a digital first, gdp growth, job creation, inclusion of minorities, health-care education, movement of other cities. what it says is tied this together and these number of devices connected to the internet to 500 billion, you will be in a good spot. >> how does a business person make decisions on when aims are how do you see it? moving at that pace and in that way?

>> traditionally, you turn to the cio and say educate me on this and make the decisions. that is not an option anymore. if i talk to cio's around the world, most believe they have to understand that technology is self. a key advisers a business leader to understand the technology opposed to the cio. if we and he or her does not make the transition, -- this is one where the cio has to change in the business

leaders but the cio. >> if the ceo doesn't change, he or she will take the company down with him. >> the people hiring in this room today, should they be left hiring for technological proficiency?

>> first, our education group does not do a good job of repairing the skills we need. >> go on. >> you have to think about how the newly young people in? if you cannot communicate with the social capabilities and do not understand collaboration, you will not get the talent you need. what do i tried to do? i try to get people who understand the business we are after in understand the implications for it. >> let's talk about the sales culture. traditionally cisco seems to be changing quite a bit. can you give me an example or two of how you reach your customers? >> one of the hardest transitions, we have to transform our organization, service and sales. we are a tough sales team. we can sell routers well. i get excited. most of you go we have 18 product families where we are number one. producing solutions and outcomes. easy to say, hard to do. how to sit across the table from a leader of a large company and say your gdp can grow 1%-3%? >> do they say they do not believe it? >> i will bet you money on it. >> in no productivity from -- you can say productivity grew quite rapidly because i see and the missing productivity quotient. all of the spending from 1996-2014, we have not seen the productivity close to 1%-3%, why should we believe it now? that it will really change? >> you have to catch the market transition is true. during the 1990's, you moved in connectivity and the internet came, directly and indirectly and went from 1000 devices connected to 6 billion. we did very good on collaboration at the top. we changed the supply chain. what you are back to see, you'll connect the devices and think about right hundred billion devices squared where this will go. the challenge is how do you get the right

information at the right point in time to the right device to the right person to make the right decision?

the industry leaders and wanting as a ceo and government leader, you have to have the instincts of was something fundamentally changes. probably unfair because she is an engineer and talk in mexico and how does he achieve socially quality and the role's next-generation of the internet of everything, how does it transform the business? you do the same thing in germany and france and the u.k. and they get it, these are smart people. can we fill a void where we can get people excited? >> there's been a lot of money spent and people in this room have spent billions of dollars and maybe that will be the case they can get those sorts of results. a good way to sell stuff, people are looking at specific examples of why that should be the case. >> let's go to a city transformation, barcelona. it is the top innovation city in europe. basically, the mayor and vice mayor, interfacing the city. they outlined the goal of transforming their city. they are the only balanced budget in southern europe. they operate with a surplus and have $3 billion in savings over 10 years and networking. that would change how public transfer patient -- transportation works and while smart buildings and will do paid parking. >> how long does it take? >> another three years. and in terms of implementation.

let's go from there to hamburg. >> $25 billion a year. >> not bad. >> everything will get connected. you only pick up in their transportation company and you think, that's a railroad company. you talk to the ceo and he says he is an internet of everything company. they are going to move into bicycles and cars and transportation and different customer experience. you see a country like germany and the industrial revolution where the government leaders say i will transform myself. you see in a france, the president of france is in a tough situation. he is thinking about what he can change. if he watches what he is doing and he has an unbelievably good prime minister with him and it was a pleasant surprise. he understands have to transform his company. and willing to say how do we do these with companies and how do we partner with the chamber of commerce? 700,000 members and how do they put technology in each of the companies and how to the companies and how to the company's guaranty a million jobs and growth? at cisco this concept â >> back to sales. you are ahead of state level at this point. tell us what this is. mrs. merkel, you have a few things on your plate and i will like to sell you a connected port. and then what happens? where do i cut the check? what is that sell like? >> let's use israel because we made the sale. you identify the country you want. second thing they want is jobs. they have to include 2 million arabs in israel and the working force which they do not do at the present time. you have to include coming back into the workforce. and economic and defense and connectivity and education and health care. you line up with all three critical partners. >> there -- you are bringing political unity to israel, is that what you are saying? >> no, the key leaders understand how to work on a common goal. if you speak to

prime minister netanyahu, he will say cisco is my partner. you talk to -- cisco is my partner. you talk to a third political party, head of finance and they say cisco is our partner. you make it known. you are talk to republicans and that support democrats sometimes. it does not matter which party it is. people grasp what can occur. once you get the references, it gets exciting. you are able to say this was general motors does or what was done in israel. and then you have trust. we have a lot of weaknesses. >> let's talk about the weaknesses. everything sounds exciting. the world is changing probably for the better. and the s&p at the large trades at 17. the market has spoken. it is given a referendum on the vision for cisco's sake of what you want to do with the company. why is there so little multiple happiness for the

on your plate and i will like to sell you a connected port.

the markets are were read about, we are good on transition. the question is, can we get revenue growth in this area? a small company of 20 people can come right at us. on the other hand, every time, we get a 40% market share and combine these products together and take expenses out and moved. if we do it right, we will have good software. >> everybody has seen the ad and the hype about the cloud. tell us three things that are b.s. about the cloud and three things that are real. >> i will get in trouble. >> go for it. >> the i.t. is sweating. b.s. on the cloud is it is secure. it is not there yet and it has

to be with certain applications on it. how easy it is to get some work load balances. if you're just offloading, it works very well. the positives -- it will be the future. we would use it for 25% of consumption of i.t. or 50%. it will be somewhere within that. if you talk to pass customers, we are the number one player in terms of private cloud. do you see it coming and can you use this market transition to become the number one player? we entered the market in cloud and combine technology with storage with the network and everybody said cisco is not a good server. we are the number one in the u.s. we want to the state market share. in our industry, do you get the market transitions right? market transitions and then are you able to economically get to the bottom line? some have huge pressures on your earnings. and if you have the courage to go after it. we do acquisitions uniquely. out of 18 months, all of to have been in the cloud. >> people have got a lot going on and may not remember much from the conversation but to give one thing they need to know about the cloud. maybe take off your cisco hacked and as a technology advisor to people in the room, one thing about the cloud. >> i think it allows for to be with certain applications on it. how easy it is to get destruction of business. many people have private clouds and other use public clouds and combine with our partners for a cisco cloud image. understanding were cloud comes together with mobility and social insecurity is going to be a large part of where this industry goes. as a business leader, you should not care about clouds you need to know how technology enables your goals and how it can enable your goals for connectivity and get it back like we did in the 1990's over the next decade. you want to know how it enables a new set of competitors to come at you. they would not be the same and they will be dramatically different in 5-10 years and regardless of industry. it is not an end goal in its self. have people on your team who understand, the implications on it. >> let's move from clouds to bubbles. we had a piece of public weight the wall street journal that said these silicon valley is in a bubble territory. his line was there are more companies losing more money than ever before. valley in the bubble? which segments? >> just watch -- >> they do not have â >> that's my point. what you

have to watch and john, a wonderful man on my board, he would be the first to say and this is not about overconfidence, 75 percent-80% of the major transitions in the technology world today, expertise is within 25 miles of silicon valley. it is hard to describe how unique it is. people were willing to take the risk, unlimited venture capital. companies are getting funded way too early and the ceo's know it. they say if i can raise 200 million now a gift 10%, i will have it for a long time. there is a real worry. dr. wang trained me well and the smartest man i know. he said if you think you will go to countries like china and sell one coke, that's not the case. cisco is more profitable since day one on one of the most profitable around. so, i personally think a mistake not focusing more on profits. your numbers are right and you can argue the company is going public today has no earnings. in 2001, we remember -- 83%. if you get caught in an economic downturn or in a social media segment of that, you will see some type of breakage to occur. however, if these trends continue, growth covers up the mistakes, the companies will figure out how to make profits out of them. if there is not a major industry disruption were economic downturn, you will probably have a gradual landing for part of those companies. will the majority of my competitors be in existence 10 years from now? no. the majority of the social networking companies be in existence 10 years from now? probably not. if there is not a major disruption, if there is a major disruption â >> do you see race having any impact on silicon valley? do you see that? >> absolutely do. if you watch what most of my customers view and concerned about, it is the emerging markets. a data point, the emerging markets are in the mid-teens. mexico went for 15% growth to flat and one quarter, year over year and the next year -12%. it was a good forerunner. if rates are raised dramatically, you would choke growth in emerging markets. there's only one engine going well and that is the u.s. 3% growth, not bad. if rates and get raised, it. the world. our central breaks have to be concerned. yes, it really could.

>> i think the first thing you

say is, if you're not part of this technology transition, you're going to be left behind. the second thing is, we can bring that to you better than anyone else. third, watch our track record. there is no facts behind what people have said. there are facts with other companies around the world, and people know it, in terms of direction. so you've got to earn their trust and confidence and say, how do you achieve your goals in this country and how do you perhaps partner with them, with an sap, to bring that to life? let me use an example of the same conversation in france, because i don't think that president would have a problem with it. when i met with him on friday, and it was a tough week. that would be an understatement. yet he was remarkably effective. spent an hour 15 minutes. we talked. we went through the issues, et cetera. then i did exactly what i did here. two of the heads of state, they visited the day before or the day of. we knew very well. and in palestine, we worked to take the economy from one half of one percent to 6.4% in four years. people would give cisco say is, if you're not part of this technology transition, you're going to be left behind. the second thing is, we can bring that to you better than

do you see that? >> absolutely do. if you watch what most of my customers view and concerned about, it is the emerging markets. a data point the emerging markets are in the mid-teens. mexico went for 15% growth to flat and one quarter, year over year and the next year -12%. it was a good forerunner. if rates are raised dramatically, you would choke growth in emerging markets. there's only one engine going well and that is the u.s. 3% growth, not bad. if rates and get raised, it. the world. our central breaks have to be concerned. yes, it really could. >> china, speaking of emergening. not so emerging anymore. describe how you feel about the complicated relationship between the national government of china and the united states, the privilege of cisco, a representative of the tech industry. where does that stand and how do you feel and where is it going? >> both of my parents were doctors and they taught me to deal with the world the way this and not the way you wish it were. the complexities is the most complex it has ever been and mexicans out of the state department and a great undersecretary of traded their. we are not effectively communicating between our countries. when you do not communicate well whether it is us and russia were us and china, then you have a lot of fallout occur in the process. my view is china ought to be a great economic partner with us and we ought to the able to artistic -- articulate the

win-win to get there. that is what the chinese would like. >> what is wrong? >> we are not communicating effectively. i am not just talking five years experience in china, i have been there 30 years. i've seen it on charts. what the future leaders, the majority before they got appointed. i wish i could tell you i control my own destiny there but i do not. the chinese are pretty smart and usually pretty predictable. if our countries were able to work out issues, there has to the rules of the road that we are going to do versus germany or versus china. we have to agree upon it does. it is an industry issue. china could go either way as the wildcard on it. i like india. if you are bidding on emerging markets, modi has the imagination of his country and business leaders. he has the equivalent of both the house and senate in his terms with his political party. if i were betting, i would bet big-time on india. china? a little tougher. >> you view them as -- how would you rank them on the scale of free and open trade with cisco right now? >> it is 30%. having said that we achieved one of their top social awards given out in beijing for what we did during the earthquake. 85,000 people died. we change health care and education. the chinese know we have brought transformation and innovation. >> foreign markets often view you as espionage and cisco as related. whether fairly or not. that incredible picture of nsa personnel having basically stolen cisco gear, put their software on it, and put it in the sales. rather incredible photo. >> first of all, none of us know the facts for sure. if businesses and governments, 30% come out of china, if we do not work with trust in our governments do not come

together, we have a big problem. secondly, you have no idea what a government does. all espionage is done in different ways. the easiest way to get into a network is a systems administrator. they are the ones who have the key. they use the same password on a system that they do on facebook. the vast majority of espionage issues will be done by employees, rogue nationstates, and candidly organized crime. we are going to try to transition to a security company. today, the people in this room have 70 security companies in their environment. that means you have none. the bad guys while to get around. you take a problem and say how do you solve it? espionage issues will be done

>> absolutely do. if you watch what most of my customers view >> absolutely do. if you watch what most of my customers view and concerned about, it is the emerging markets. a data point, the emerging markets are in the mid-teens. mexico went for 15% growth to flat and one quarter, year over year and the next year -12%. it was a good forerunner. if rates are raised dramatically, you would choke growth in emerging markets. there's only one engine going well and that is the u.s. 3% growth, not bad. if rates and get raised, it. the world. our central breaks have to be concerned. yes, it really could. >> china, speaking of emergening. not so emerging anymore. describe how you feel about the complicated relationship between the national government of china and the united states, the privilege of cisco, a representative of the tech industry. where does that stand and how do you feel and where is it going? >> both of my parents were doctors and they taught me to deal with the world the way this and not the way you wish it were. the complexities is the most complex it has ever been and mexicans out of the state department and a great undersecretary of traded their. we are not effectively communicating between our countries. when you do not communicate well whether it is us and russia were us and china, then you have a lot of fallout occur in the process. my view is china ought to be a great economic partner with us and we ought to the able to artistic -- articulate the win-win to get there. that is what the chinese would like. >> what is wrong? >> we are not communicating effectively. i am not just talking five years experience in china, i have been there 30 years. i've seen it on charts. what the future leaders, the majority before they got appointed. i wish i could tell

you i control my own destiny there but i do not. the chinese are pretty smart and usually pretty predictable. if our countries were able to work out issues, there has to the rules of the road that we are going to do versus germany or versus china. we have to agree upon it does. it is an industry issue. china could go either way as the wildcard on it. i like india. if you are bidding on emerging markets, modi has the imagination of his country and business leaders. he has the equivalent of both the house and senate in his terms with his political party. if i were betting, i would bet big-time on india. china? a little tougher. >> you view them as -- how would you rank them on the scale of free and open trade with cisco right now? >> it is 30%. having said that, we achieved one of their top social awards given out in beijing for what we did during the earthquake. 85,000 people died. we change health care and education. the chinese know we have brought transformation and innovation. >> foreign markets often view you as espionage and cisco as related. whether fairly or not. that incredible picture of nsa personnel having basically stolen cisco gear, put their software on it, and put it in the sales. rather incredible photo. >> first of all, none of us know the facts for sure. if businesses and governments, 30%

come out of china, if we do not work with trust in our governments do not come together, we have a big problem. secondly, you have no idea what a government does. all espionage is done in different ways. the easiest way to get into a network is a systems administrator. they are the ones who have the key. they use the same password on a system that they do on facebook. the vast majority of espionage issues will be done by employees, rogue nationstates, and candidly organized crime. we are going to try to transition to a

security company. today, the to get around. you take a problem and say how do you solve it? there are no backdoors that we are aware of. we find any security company. today, the people in this room have 70 security companies in their environment. that means you have none. the bad guys while government in any customer's network, we give them up immediately. it doesn't matter if it's china, u.s., or europe. >> germany has been vocal about u.s. interests innovating german >> germany has been particularly vocal about u.s.

interests invading german space

let me use an example of the same conversation in france, because i don't think that president would have a problem with it. when i met with him on friday, and it was a tough week. that would be an understatement. yet he was remarkably effective. spent an hour 15 minutes. we talked. we went through the issues, et cetera. then i did exactly what i did here. two of the heads of state, they visited the day before or the day of. we knew very well. and in palestine, we worked to take the economy from one half of one percent to 6.4% in four years. people would give cisco the credit, with our palestinian partners, to do it. in jordan, we worked on their education system. we've done that 10 years ago. currently we're working on the refugee capability, health care and education. we know how to transform. so the business or government leader, if somebody can bring you huge benefits that you want, as a track record of being trusted -- this is an issue for merkel to solve with a bomb. they've got to have rules of the road in conduct. they've got to resolve it there. you can't put your businesses in between. >> it's a fitting note here on u.n. week. just a few last things. speaking of heads of state, hillary clinton, she came to address your sales meeting at tell us what happened. what was it like?

does she have it? is she going to get it? >> well, it was interesting. i've had the honor to interview probably 20 heads of states. i've interviewed her husband probably four times. she didn't want to know the questions ahead of time she gave a good opening comment for about 10 minutes. then we got right into it. and several of my strong republican friends came up afterwards and said, we've got a problem. she's really good. and it kills me to say that. she would make a great world leader. she really would. >> and you're very good. so as someone who appreciates other people at the top of their game, what is the one or two things that she has that you think make her special in your eyes? >> she's got experience. she's able to articulate her view remarkably well. she listens well. she understands if you're going to lead a country, you lead it with businesses as a partner to create jobs, not

business, the bad guys. when she says she's going to do something, she does it. and she comes with an experience that is very strong. having watched from the side, watched her as a first lady, then senator, head of state, secretary of state and then i followed her around to the government leaders. the government leaders would be remarkably candid about our leaders, after our leaders leave. i don't share that either. but she has progressed. she's got a very good base. as a republican, i hope we get a candidate that can really give her a run for the money if she decides to run. >> do you have any names? >> well, i think we have a long way to go to have somebody in a position that will have that type of firepower. >> so you're willing to accept secretary treasurer for either party? >> no. i'm not into politics. but i like business. i love what i'm doing. obviously it probably comes across. i've been on the road for two weeks running like crazy. it's sick, but it's fun. we're going to

try to change the world. >> two questions. speaking of spraingses, larry -- transitions, larry ellison, 70 years old. one awesome cup victory and one awesome company to his credit. you're 65. do you have thoughts? >> just turned 65. so first of all, i thought larry did a very good job on transition. if you republican friends came up watch, they will make it run very smoothly. secondly, the next time i talk about transition will be when we announce it at cisco. so the next time you hear it will be when we make that transition itself. so suffice it to say i've got a great number of probably five to ten people in the company that could be c.e.o. of almost any company around the world. >> speaking of pondering, you spend a lot of time jogging. is that where you have your best

thoughts? >> yeah. i think we shared it earlier. i think each of us finds different ways of thinking. i run the woods -- run in the woods. i'm not a fast runner, but i love doing it. and i run uphill first. so for the first half of the run, thoughts? that's when i organize my thoughts, solve the problems, think through the issues. and the second half of the run, thank goodness, i just enjoy it. my type of approach. >> let's go to q&a. please. >> thank you. thank you for the interview. my name is pamela teagarden. in my for-profit company, we look at employee engagement statistics. so i'm going to take the conversation just a little around the bend, because you spoke a lot about productivity. over the past couple of decades, we've known that a lot of the productivity is tied up in employee engagement. and we haven't come out of that yet. so as this productivity increases at unprecedented levels, that will increase operational well blg well-being but we need personal well-being as well in the

office place. my question for you is not how will h.r. adapt, but what is the innovative crazy new idea that's going to take people practices to another level? >> sure. >> i think it will be around social media and collaboration finally coming to life. just being very open, microsoft and cisco are probably the two leaders in collaboration. we do very well with top of the organization. we do not do well with collaboration getting to productivity, as you rightly said, down through the organization. i think the future is going to be all around collaborative capabilities with video at the heart of it, ease of use, not technology, better have a c.e.o. behind you to be able to do it. and you've got to change productivity as you rightly i'm pretty bullish on the productivity. you can have what is a very advanced video capability that used to cost the processes that go with it. that's one of the other reasons $20,000 in your home for

$2,000. top box or on your top. so i think the ability to bring collaboration to its forefront is very important. being challenged, i think the two leaders in this industry think to find ways we interoperate because to put our customers in the middle, that's not good. i think also the ability to really be there when you're employees need you, is a key element of it. i know every onus of every employee is life threatening for them, their spouse, their children. we move heaven and earth to help them during the tough times and we save a lot of lives. but that's part of our culture as well. it's back to employee connectivity, where the employees -- we hold our teams even during the tough times, pretty well. to answer your question very directly, it's going to be around collaboration. it's going to be around, how do we understand this new generation, what they expect with the smartphones?

and it's going to be around -- it has to be easy to use. that's what also is contributing. >> speaking about your employees, are they too distracted by their phones? >> not at all. that loads the networks, which i love. but to answer your question, they are going to use -- the most important technology device to every college graduate is their smartphone. and if you don't understand that's the way you're going to interface to them, if you don't understand that's the way you're going to sell to them, if you don't understand, when they're in your store buying something, they're going to be contacting through social media the people they trust most, their peers to say, what do you think? i actually go to other way. this is one that you've got to find the device enable productivity and we've got to find a way to interface to every device to do it right. pro >> please. >> could you talk about cisco's cap net plans 2016 versus 2014 and what you see the telecommunications industry is likely to spend?

and secondly, i come from the school -- i'm on the financial side. i come from the school of thought that companies are supposed to buy back stock when it's undervalued. i think since 2004, we spent 76.6 billion buying back stock that obviously wasn't undervalued. what motivates the buyback that the company pursues to such a large point that prices that didn't seem to be particularly attractive? >> so a series of questions going in reverse order. this last year -- we have a com commitment to our shareholders. we're a very profitable pre-cash flow. we'll return that in the form of share buybacks and dividends. we actually bought back and gave 120% back to our shareholders this last year. you all

deserved it. we're going to continue to give back a minimum of 50% of our cash flow, regardless of the tax laws, to our shareholders, as we move forward. and to your point, the buyback has been both good for the people who bought the shares from, but also as a shareholder, it has helped you, because the stock is up. to the first question, in terms of cap x around the world, it varies dramatically. the commercial and enterprise market is going well. in the u.s., when you look at i, the last quarter this year -- we won't be able continue to give back a minimum to maintain that rate -- and everything i say today should not have any impact on the current quarter. i want to remind everyone, i'm not making any updates on the quarter, nor should you interpret that. that's three years in law school. my parents will know they spent some money successfully. but if you watch what is occurring, the u.s. enterprising -- they are realizing the technology again will get a huge change in terms

of things that are important to productivity, interfacing their customers differently, taking on new competitors. it grew in the mid teens last quarter in the u.s. when you look at u.s. g.d.p., usually good news and bad news on the business side are a pretty good indicator. europe, germany and the u.k. both grew in double digits. again, you look where the g.d.p. growth is happening in europe, you can almost follow that. we did see emerging markets continue to be very challenging. service providers spending is tough. a lot of pressure on price points, a lot of pressure on spending around the world. the real issue, service providers, they don't know how to make monies. they're competing against-a-an amazon or google model, they're competing with a very high overhead structure where what they did before was provide transport. i said about 12 years ago -- i wish i had used

a different word. i said 90% of the revenues will be free. same thing with data or video transport. they must transform themselves to a different level of content to their customers. and many of them are struggling with this. there are some that are rethinking out of the box on how to get there. but spending, we're modeling to be tough over this next year. >> should verizon buy time warner or something like that? >> i think a lot of people are looking at how you add value that's sustainable to your environment. if you watch what comcast is doing in getting content, they've been very successful. if you watch what netflix is doing -- it's where you're going to get your revenue streams. it's also where do you have sustainable differentiation? it does you no good to get into something that you don't have sustainable disney disney dif â >> i think every c.e.o. has to make the right decision for

their company, period. if you get cautious in this job, you can't lead. >> but the activists are winning. the activists are in control of wall street at this point. >> i respectfully disagree. i think what you are seeing is focus on the shareholders, which is right. it's the right thing to do to give 50% to my shareholders, guaranteed. we should do it. if the right thing to do is to bet on some key acquisitions, i'm going to continue to do it. and if i get beat up for an acquisition that doesn't work and the major criticism is a company called flip, which we paid $600 million for, and i have 20

companies that i paid well more than that that have been successful, that will take that pressure. as c.e.o., you want to be your own activist. so i think you always have to listen to constructive criticism. i think you've always go t to have to courage to do what's right for your company, period. if you make decisions purely for the short term because somebody puts pressure on your, your company is not going to have a future. that's like treating the symptom as a doctor as opposed to the underlying opportunity. >> huge commitments to shareholders -- that's a digression. other questions? if you could, just -- state your name and where you're from. >> russ from sun garden. appreciate it. wanted to go back to the security topic. and, you know, you see what's happened with home depot and target and all that. what do you say to the leaders of those companies, a? and b, from more of a standpoint beyond the

governments need to trust each other, what are the things that you think the u.s. could do from a policy perspective that would engender more trust in even our allies at this point? >> okay. >> so if you watch what is occurring in environment -- and i know i'll make some people uncomfortable here -- there is no safe data center in the world. as the c.e.o., you've got to know what happened to these companies could happen to you. every company in the u.s. has probably been broken into. people don't announce it, for a whole bunch of different reasons. and the majority of time, it has nothing to do with our government or our friendly government counterparts. this is why we are going to try to become the number one player in security, because it will inhibit how fast the internet grows, it will inhibit cloud, mobility. it will really hurt us as well. so i think what we

have to do is be realistic that the majority of security issues are because companies did not follow policy. i won't talk about either one of the companies you mentioned. but most of the time when there's been a security breach, it's because somebody didn't follow the policy that they should have. they took code home or left a back door open or they were the systems administrator where you've got the password. it's like leaving the keys to your house on it. this is just going to get worse. organized crime, the sophistication of the attacks are unbelievably good. and the financially world, unfortunately, is unbelievably good. the tax that you saw out of asia were way more than what you probably read about. unbelievably tough sophisticated type of attacks. so what i tell c.e.o. or the leader is first, you are exposed. secondly, here's how you can minimize the way to do it. third, i will at the right time do a good sales pitch. but i'll be realistic. you've got to get your attention on it, to really pay attention to policy

and direction. that's actually what our companies have done together. but it's something that i think our country has to address. this is where, i believe, the country leaders have to come together with rules of conduct. it's the wild west out there today. there are no rules. and this is what government should do. they should say here's what we're going to do and not do. then as long as people know that, you don't surprise your citizens. you don't surprise your companies in terms of the directions. >> question about one or two recommend along those lines? >> first thing i would do is really educate your people that most of the problems come from somebody not following process and procedures. for all the complexity, usually the most important issues is somebody just left their password open. somebody took code home. there's good reasons for doing that. second, you need an overall security strategy. and you need to put not somebody good on it -- because it's the kiss of death to say to your