learning. not every subject is best taught in a classroom situation. i'm wondering if any of you have any comment on these other kinds of vocational education other kinds of investment in terms of human capital. are we under investing ther e? >> i think that is an excellent point and it is important this cannot just be about higher education. there is a lot that happens before that. if you look at a lot of other countries, they do have much more robust vocational tracks than we do. if you don't want to go to a school where you have to take a liberal arts course and maybe you can get your engineering degree and you want to do something considered vocational -- that term has negative connotations -- but you can do that. there is a danger with that. if you think about germany for

a long time you took a test and you are tracked into that. you don't want a system where your future is determined for you buy a test. we want one where you have an interest or ability to do something, that takes you away from a traditional college, you should be able to do that. we see that within school choice. there are scarred charter schools where he can learn everything right down to underwater welding, which i don't have any experience with, but i understand it is pretty lucrative. you can get lots of valuable skills. skills that cannot be easily outsourced. there is something else important which is that we have a lot of money going into higher education. by all indications, it is not translating into more learning. there is inflation the arms race and amenities and buildings. i think it is hard to make the argument we need more money. maybe we needed better targeted.

we need to allow people to choose what they think is best for them even before college. >> i agree with all of that. we should place more emphasis on non-four-year, but all kinds of degree programs. this brings up another interesting topic which is online work. there was a lot to be done online and a lot now being done. people that qualify for various certificates based on online has a real impact on their debt that they carry away. also, the programs where you work and get practical experience at the same time, these programs start in high school. there ideal programs worked kids get experience and work. we have about 5000 academies across the country that do the same thing and there is high-quality research that shows those kids -- the boys in those

programs, eight years later they make $2000 more than. these programs -- by the way on the point of the four-year schools -- the kids in the career academies have the same probability to go on to a four-year institution as kids who did not participate in the program. it is not necessarily shut them out. these programs, yes, they need to be looked into. >> my fear is -- i agree -- we don't want to follow the german track. there are a lot of people out there who really are for the classroom and would really prefer jobs that are -- what we call vocational education, but that bias should not be something we cater to.

>> i have a few questions here. you mentioned that race matters a lot in this country still. there is an overrepresentation of -- it might have been latino students or minority students at for-profit schools. could you clarify that? >> yeah, so for black students in california, if you look at the chart in front of you -- we analyzed the young adults in the population and we see they are overrepresented in for-profit colleges for that age group and underrepresented at the four-year universities and slightly underrepresented at community colleges. that is significant for black students in particular in our state attending for-profit colleges. we know that the regional issue

-- we have a growing population in the inland empire. there is only a couple public universities. if you drive down the 10 freeway heading east, you will see pro-profit colleges up and down. we know some of the for-profit colleges do intense marketing and outreach and handholding which are things students who are first generation going to college need. in some ways they are looking for a direct way to get trained into a particular job. they are giving a particular guide post for that. those are some of the practices that community colleges don't have the resources to necessarily do, but those are the things that work for students who don't have anybody else helping them to a four-year university. we see high numbers of latino students at for-profit colleges too. >> yesterday, it was brought up

that many of these for-profit schools end up with large amounts of students that end end up not completing and have substantial debt. in fact, some of these schools target those students for the purpose of paying some of that financial aid. some of them that might complete the work find their education is not what they thought it was or they cannot transfer it over because the credentials are not transferable. do you know anything about that? >> this is what is really disturbing. you have essentially for-profit colleges and universities, some of which are actually good performers. some of which really do target enrollment because they are completely publicly funded. so the idea that they are private institutions is really concerning when they rely on students that are low income,

will qualify for grants, qualify for these federal subsidized loans or private loans. so, if -- i think there should be a federal expectation if these institutions are receiving federal money that may have some skin in the game. if they are being funded entirely through federal and state dollars, they don't have any skin in the game in terms of producing better outcomes for some students. we find that disturbing. as a member of the california student aid commission, we instituted the legislation that limited pell grants to institutions that have a high cohort loan default rate for their student. that means a lot of their students graduated or not, but not able to pay their loans and had a very high, or very low

six-year graduation rate. there are mechanisms by which we can put minimum requirements. this was done in california in response to the recession and the fact there are limited dollars. you have to pick and choose how to disperse them. it is good practice. it is why corinthian in particular has been so affected, because many of those colleges in our state were kicked out of receiving health grants -- pell grants. if they are receiving public dollars and that is the only mechanism by which they survived we should be a little concerned. >> yes? >> i want to add to that. i would agree that all for-profits are not superb, but i think it would be unfair to single them out for single-digit graduation rates. as i indicated, we are looking at many nonprofits at single-digit graduation rates. the issue is one across the

board and i think it would be wrong to single out one sector for that problem. >> thank you. if you look at these different sectors, there seems to be a correlation between the outcomes and who they are serving. a lot of this appears to have a lot to do with the preparations of people who attend those schools before the even get to college. there are plenty of atrocious for-profit schools. if you look at community colleges, they have terrible outcomes and there seems to be a connection between the preparation of the students that go there. this is also a k-12 problem. where often through eight giving money to people going to college who are not necessarily prepared for it. people that are mediated are less likely to finish. that is something that needs to be focused on whenever we talk about higher ed. what is going on from birth to high school graduation.

>> there are no perfect players in this entire system. my recollection from yesterday was that in terms of students that have default on their loans, it is well represented students coming from for-profit universities. it was something like 47% of all of the default. s. clearly, there is something happening there as it relates to these funding issues that merits a little closer attention. not everyone should be painted with the same brush. >> just in response, i don't disagree that preparation in k-12 matters but colleges should be serving the students they have, not the ones they wish they had. i think it gets to the question of if you have students that are coming in less prepared, what are you doing as an institution to better provide service to them? me know there are institutions and community colleges that are addressing remediation in a way that is very effective.

so i would just push back a little bit that it cannot just be k-12. there is a responsea bility first editions. >> mr. haskins, i had a question about one of the charts you showed us. i think it was chart number three which shows latino colleges attendance exceeds the african-american college attendance. earlier today, we had testimony from professor florezs who indicated some of this might be peer demographics. the growing population of latinos which naturally there will be greater representation in colleges, not necessarily that we have come up with a magic program that has put more latinos into the path of college. do you have any opinion on that and how that might be represented? >> it could be true.

i'm not positive. my charts are percentages. it is not just the numbers. it is the percentages that have been coming up. that does indicate that hispanics are in fact more likely -- a rate of increase of college than blacks. >> the you know why that might be? -- do you know why that might be? >> i have opinions about it, there is some research about it. family background makes a big difference. the quality of high school makes a big difference. one thing that has happened in the hispanic community apparently -- people in chicago have talked about this -- there has been a change within the family. many hispanic families, at least in chicago and other places i have heard of, don't necessarily pressure their kids to go to school. they want them to earn money

contribute to the family. they were actually the force that kept kids from going to school and that appears to be changing a lot. parents come to realize how important colleges. they want what is best for the kids. the views of parents are changing. that could be another factor. >> i could attest to that. i'm from chicago. a lot of immigrant latino families in particular would encourage their children to step out of school and help the family. there is an overwhelming effort to educate our parents about that. it is a challenge, but most ore folks are talking about that. >> that is a good factor as to why hispanics are increasing more rapidly than blacks. >> you had some questions? >> we were talking -- thank you, mr. chair -- we were talking before about the default rates

and for-profit colleges and universities. my recollection is there are certain limits or guidelines placed on our public colleges and universities where if they reach a certain default range there are penalties attached to include loss of government money. are our for-profit colleges and universities subject to the same default rates? the same kind of penalties? i seem to recall there are not. >> in california, the rules do apply across the board. there is -- in california, they do. in terms of federal policy, i'm not quite sure. >> i was inquiring about federal policy. >> i'm pretty sure it is the

same for all schools. they are changing how they calculate the default rate but i think it is the same. as long as you are taking title iv money. where there is maybe a difference, i would have to look. there is a question on how you cooperate -- incorporate the money. i don't think it is connected to the default rate. if i am correct, there is no difference. >> thank you. >> i can say within the accreditation system of the for-profits, they have been held to certain baseline requirements that the nonprofits have not. in terms of certain basin requirements -- basic requirements higher expectations for for-profit. it is been up for grabs as the what was acceptable and what was

not for nonprofits. there is no baseline for graduation rates. although there are baselines for for-profits. >> thank you. >> commissioner? >> thank you. so, mr. haskins just testified their recommendations at brookings is to take programs to reform them and create a more general grant program to provide that kind of support. i was wondering whether you also -- what is your response to that recommendation? >> quite frankly, i have not analyzed a lot of those programs myself. my concern with that recommendation would be that in many instances it is those programs that have really high

graduation rates for underrepresented students. i think just more research would be needed before i could feel comfortable. i do think that we have to get to a place where resources reach more students. some of the challenges are those programs only reach a small number of students. we need to get to a place as we have a student body that the majority now is first-generation -- all of the students could benefit from those kinds of services that is provided. how do we scale that kind of intervention? we know there is limits, especially some of the programs are really high touched. you can only do with a small amount of people to be effective. i think one of the things that the provost at kyl state fullerton says is that they use the data to identify the programs that are barely affected by closing gaps and serving students and that can be

scalable. i think that is the direction we need to move in because there may be some of those programs that are effective but they are not scalable. we need scale. we need more of the students to access some of the benefits these programs provide. >> i have one more question. >> i want to clarify one thing. >> is it about what you wrote? >> it is my own recommendation based on research. >> thank you. the other question i have is -- i got the impression from the most recent testimony from this panel. at least some people believe we are spending enough on higher education support. you testified in your written testimony that we should consider spending more on pell grants and making them more available throughout the year to help people who go to school and

the nontraditional students. i'm wondering what your view is on whether we are actually spending enough on financial aid and where you would put it if we were to try to either reorganize what we are spending or try to spend more. >> that is a really tough question. i don't believe we are spending enough. the research is pretty clear that the pell grant while it has grown in size in terms of cost for the federal government, because of population growth has increased, has not kept pace with the cost of getting a college education. the research indicates it is harder today for low income students to go to school full-time. when they do go to school, many of them have to work. making summer pell available with better support those resources. in california, we are not

spending enough on higher education. there is a huge wage premium for folks today that is very different than what it was in the 1960's or 1970's. before you can get a high school degree and that was enough to put you into middle-class life and get a job that you could sustain over a career, could afford you a house. that simply is not the case today. we know that whether it is a vocational degree or a four-year degree, that is what makes the difference in students abilities today to get into the middle class. if we care about growing our middle class, i don't see how you could do it without investing more, especially in getting more low-income students to be able to afford to go to college full time. i don't know what the magic number is. i think making pell your route is a good first step. simplifying fafsa some more

eligible students apply and get the financial aid they are entitled to. those would be the more immediate recommendations. >> i had one more to add on to that. mr. haskins slide showed there is a decrease in work-study, if i read the slide correctly. is that a concern that we are spending less on work-study? the prior panel felt one of the most important things was to address the fact we don't have the traditional old-fashioned kids just out of high school going to college, but now we have older students with families who do need to work. so, one of the bigger challenges for successfully getting to would agree is if you could stay in college if you are working full-time, even if you're getting your tuition taking care

of. >> i think work-study is really critical. the research indicates the longer a student is in on a campus, the more likely they will feel like they along. the more likely they will succeed and get to graduation. work study helps you that. i think part of it is federal funding. the other part of it is northeastern university is a good example of private-public partnerships where they have students that go to school part-time and work part-time in their chosen field. it is not like having a job at the gap. it is having a job as an intern at an engineering company, where that company actually covers some of the cost. i would say that it may absolutely be increasing federal funding, but also how do we increase public and private partnerships that want good quality interns that they can

financially grow and address the fact that students the need to work? is it better to have them working on the field or on campus? yes. >> thank you to the panel. it has been very informative. a couple of questions. we have talked a lot about funding. as i mentioned in the previous panel, i was troubled by slides that shows we are spending trillions of dollars. as i mentioned before, i'm troubled by the 23 year period, the gap of black and white achievement has narrowed by only two points. i hope if you spend several hundred billions to close the gap, there would be more than two points. and that we wouldn't have to wait hundred years to close that gap.

i'm fine because it is not my money. at least, not directly. if we want to spend more money on something i'm hoping to do so smartly. i was struck by the fact that there is really no measurements -- no transparency, no calendar accountability standards. we are giving more money to failed programs. it is not seem to be closing any gaps. if you were to suggest a policy prescription for narrowing achievement gaps, increasing college access, persistent and a attain ability would it be to increase funding, increase transparency or accountability standards? which is the most effective of those three? >> do all three.

[laughter] >> money is something. we are talking about money -- we have all kinds of money, but the chinese government money frankly. we don't have any money. i would like to know how we get this stuff done the smartest way. i'm interested in outcomes more than inputs at this particular point. >> i want to certainly agree with you. as i indicated, we are spending two times per student average than any other industrialized country with worse results. for your graduation rates hover around 40%. looking at this as a problem that needs more federal dollars thrown at it -- we need to be looking at it as holding institutions accountable. we have heard more skin in the game. that is an important issue. we need to basically accredit those that are succeeding and

not accredit those that are not. students will not know the difference between a school that is doing well and having students gains as opposed to schools that are not. we need to approve the existing accreditation system that essentially rewards schools the matter how they are doing. if they were doing 90% versus 5%, does not matter. we need to move to a transparency system which would allow institutions to show their financially stable, would require them to show certain key metrics of performance and last but not least, would insist in order to get title for money, it would have to show student learning gains. and it is not a question of giving somebody a degree or a piece of paper, it is actually showing students have gained value with the money they have spent. study after study, whether we look at it academically or the national assessment of adult

literacy the vast percentage of college graduates are emerging after spending lots of money without the skills that are needed to be effective in the workplace. the system is skewed in favor of access and not in favor of student success once they are there. >> mr. haskins. >> i agree with everything she said. she did not exactly say this but accountability is key. we have not talked about it here but i do a lot of work on federal debt and deficit. we have are ready started cutting spending on children in the last few years which we had not done in the previous 30 years. there is a real issue on how much the federal government will spend. what we have to learn to do is do better with what we have now and accountability is definitely the answer.

accountability in the k-12 schools, in the community colleges, at the university. two of three recommendations i made were basically accountability recommendations. i think it is very important that we spend $1 billion now for example on these college prep programs that are supposed to be focused on low income kids. there are very good research studies that show they produce modest or no impacts with some exceptions. why wouldn't we make it more demanding, force them to evaluate -- a condition of them getting the money. they have to do good studies that show they are producing an impact and if they are not, give the money to somebody else. >> what should be the metrics in that evaluation, in the accountability? would it be just not a diploma but a five-year income rate? a longitudinal study of what the person does with that particular diploma? >> i think a high school graduation will be the least

desirable but a good measure. college entry is a good measure. college completion is a better measure. did they get a job when they graduated and what is the wage would be best of all. >> i want to say that funding is absolutely not the answer. more funding is not the answer. we spend more on education at all levels than almost any other country. at higher ed, we spent more than any other country. what we have seen this funding translate into this largely a lot of waste. if you look at -- i know it is cherry picking to say look at the water parks that are springing up in colleges and universities. there is a reason for that. what we have seen his research evidence that shows what most people do when they are choosing between colleges now they don't choose based on academics -- they choose based on amenities. this is because we are using third-party funding. it is partially grants.

it is a bigger problem of loans. you can get them very easily at any amount from the federal government. it is the same at the kid through as a result of it. i always wary about accountability because accountability sounds good but we need to look at something like we have seen with no child left behind which was supposed to be about accountability. what we found that was that people who will be held accountable are pretty good at finding ways out of being held accountable. no child left behind said we would have all kids efficient by 2014 and what did states do? in most cases, they had a definition of proficiency which was incredibly low. we have to be realistic about how much an accountability system -- >> you can fudge anything. if you look at five years out

from the time somebody graduates, if he has a job in making $50,000 a year, you know that is a metric you can look to as opposed to someone in another college where 30% of their students have a job of a year or more. >> i can already tell you one problem. then you have to adjust for the situation of those people when they went to those schools because there will be schools that deal with kids or students who are well -- less well-prepared. if you -- if your students are less well-prepared, you don't have to earn as much and then you start to see all sorts of loopholes working their way into regulation. that is what we have seen repeatedly when we talk about accountability. >> some transparency, would that assist in terms of if you provide students with all the information you possibly can, a number of metrics there is no perfect metric, right? if you have a number of metrics give them a lot of information on which institution they want

to go to and inject competitiveness into the process . college a competes against college be or the same student knows i have to be better than this guy. >> i think into it if we have seen lots of that as already available for colleges. mike's u.s. news and report evaluations but they do tell you stuff like graduation rates and things like that. federal government has had a college navigator now for several years. what we have seen is that people tend to not use a lot of information we make available. i think part of that problem is we want to do good with aid, but part of what aid does is make this decision, we will pay for this decision, and it is not necessarily your money or money you have right now that is part of that. i think part of the solution is counterintuitive but people selecting schools need to have more of their own money involved rather than third-party funding

because that incentivize is making more disciplined decisions and that actual accountability and especially when people using their own money and they hold a school accountable when that school is not giving them what they want. >> i have three other commissioners who want to ask questions. commissioner clad the followed by commissioner active written in the chair. commissioner: [indiscernible] it seems to me that all these different schools are talking that k-12 and they all have issues. are they all issues for, the shame a goal of getting more students -- issues for

accomplishing a goal of getting more students? do you believe that different schools face different problems and how will you evaluate them? excuse me. how -- it seems like a problem here. i was wondering if we could get some commentary more focused on -- [indiscernible] and how do you go about that? commissioner: one back to my suggestion that we allow title iv money to close schools better showing they will have successful students by showing student learning aid. why is this a good solution? because -- in other words, these

national test take the students where they are and determine whether or not they are at or above predicted learning gains. it is a wonderful way for a student to be able to establish -- for school to establish if it is doing a great job with certain demographics of the population, so i think we do need to go to a system that will reward and showcase institutions that are transparent in terms of their financial stability, what they are able to do, and if they are actually providing value to students. in the students are leaving with student learning gains, that present of glee is going to be a helpful predictor that they will succeed once they get out of the institution. commissioner: the schools are competing regionally to ensure these different games and go about it in different ways? commissioner: i am proposing we move away from the accreditation system which is ok -- opaque and

has money flowing regardless of performance. as i indicated we are seeing single-digit graduation rates at schools receiving title iv funding. what i would like to see is a system or title iv flows directly to institutions that show they are providing education to students and students are graduating at or above predicted learning gains. this way, we are able to highlight schools that are successful and whatever -- at whatever price and we are able to show those who are affected and the students who are looking to find a schools that are doing well with their particular work and they would have data to make an informed decision which they can under the current system. >> i would like to endorse the idea and defend the idea that we have to make -- measure what we want to do. we need to specify the outcomes we want and pay for those and it at least has to be part of an accountability system and we can

measure these things. we have all kinds of good statistical techniques to adjust for what the student started so it doesn't there the whole system off just because some schools specialize and kids graduated in the top of the class and other schools of specialized were kids are around the middle of below. we can adjust for that and compare institutions and out of those kind of break and are funding would be based on starting with low income kids. there are lots of things we can do. accountability has got to be part of the system and based on outcomes. >> i guess my job is to throw a wrench and ideas. you still have problems though. we talked about controlling for your student population is. and you get to college, you run into big problems. do you measure what every student knows when they leave that college?

do you measure it by the program they are in so you have some set example for engineering students? english majors? accounting majors? is it supposed to be a measure like we have seen in critical thinking? what does it mean to be critical thinking? i say these things to point out that using the term accountability is certainly an intuitively -- it is something we want to have. we want accountability but we have seen repeatedly that operationalizing accountability becomes a difficult thing because we are talking about very fine-grained decisions ultimately that i made by lots of individuals. >> it is a fine-grained thing and there are problems but we are getting better all the time and if we continue, we will get better and better. where are we without accountability? that is a counter question. >> how are the colleges and universities except in your form of accountability? >> if you can -- if you control

the purse strings, you can make them dance. the government has a right to say if you want our money, you have to meet these criteria. that is not very difficult and the government does it all the time. >> i agreed that we also might take some examples from what is happening in the states and i don't know the details to a great deal, but i believe in wyoming and massachusetts, they have a set up where students take a particular test and based on how they are assessed in terms of college readiness, it will give them access to community college, access to a four-year college. there is actually calibrations on a system so that if someone needs, for example or remediation, that student then gets state aid to go into community colleges which is a cheaper way to deliver remediation and also they can succeed there and moved into the four-year college. it is a graded system designed

to keep students where they are not for some ahead to a four-year school when they are not college ready, but to give them access to college post secondary education at a level where they can more likely succeed and continue to move up as they do so. >> i am going to move on to commissioner and then the vice chair. commissioner: i would like to take us back to start at if the achievement of the baccalaureate degree from an accredited university is the goal -- is one of the goals. i'm not saying certificates that lead to middle income jobs and the resurgence and advanced manufacturing that we also want to be promoting and there is a

lot of other good things going on and technical training of all kinds could make us more -- could make students -- some students who choose to pursue that a much more employable with skills that are translatable and career paths that are perceivable and all of that is absolutely true. this is not meant to suggest that everyone should go to college or only the four-year degree is the only thing we need to be focused on. in happens to be with this hearing is focused on and trying to figure out whether or not the federal investment that is being made could be made better by focusing on practices that work in institutions that have shown by virtue of enrollment

persistence, and current graduation rates that they have an inclination, some level of expertise, and a commitment to graduating students in general and specifically to addressing some of the gaps in attainment that we see in particular communities, which of course, that being the particular issue of concern to the united states commission of civil rights. so having said that, all of these other things are of concern and, you know, certainly are truly the case. with regard to that particular issue -- if they were to be reformulation, relocation of

existing dollars -- reallocation of existing dollars spent, so we are not talking about more money . let's talk about how we might spend the current assessment rather to achieve -- butter to a church baccalaureate degrees in general. we need that. we also need more achievement in underachieving communities. we need both those things, so that is my proposition. to the extent that we need both those things and we have the opportunity to reallocate existing dollars, mr. hoskins? what would you focus those dollars on? you said we had accountability and i don't disagree that we should not be paying for things we are not getting or conversely

we want to pay -- we would even be willing to pay more if we were getting the thing that we wanted, right? accountability is extremely important, focusing on outcomes. i agree with that as well, not so much inputs but who is achieving the goal here? what other things might that money be focused on to get better outcomes? >> i have very simple answers and one of my recommendations was state should base more of the money that they get to schools on performance. their performance should be graduation rates employment, and wages. those are the main outcomes we are looking for. and the system would be skewed so that if you could do that with kids from low-income families that you would get

some kind of extra credit, extra money of some sort. that is the way i would do it. >> thank you. >> i think the answer to your question is, yes. the federal investment in higher education in this country can help address these issues of either producing more graduates if that is a defined goal. the investment has multiple goals, right? i think probably the first step is, do we get commonality or do we have a common goal of increasing baccalaureate and payment is important -- baccalaureate attainment is important then closing the gap amongst diverse population and ensuring that everyone regardless of income status, has access to a higher education is important. if the answer to those three questions is yes, then the investment could be targeted in a way that we ask the next question which is how do we

scale? because we could invest and continue to invest a lot of resources and private institutions that have good results that are not necessarily scalable or we could focus more of our resources on comprehensive university that will have greater scale in terms of producing graduates that we need and going back to your question commissioner, around what is most important, i think all three of those things are important but certainly having transparency so you can have accountability around the outcomes that you want with your resources is clearly important. i would just add to what mr. hoskins has said is that you do have to be thoughtful about what that accountability looks like but i don't think it is too much to say that every institution that gets federal resources should be demanded to improve

their graduation rates and close their gaps at their institution and do a better job than they did before. but until we articulate that as a goal and hold the purse strings to achieve that, i am not sure that that will happen. >> you can have the last question. >> thank you. thank you very much, mr. chair. this is for mr. mccluskey and mr. haskins. i have been following the arguments that we have been hearing for guarding outcomes and accountability and at one point, mr. mccluskey, it seemed that you are saying that you would measure success by graduation jobs, wages, and then you went on to put a value around $50,000 in terms of income and i guess what i found myself thinking is that when we

are talking about educating in an educated citizenry, unless we put an income on wage value on it? understanding of course that there are many occupations and roles and services that are -- that our states and federal government needs that there isn't a really big value income placed on it. you were not saying that there is not success if you fail to make, after attending college and graduating, x-number of dollars. mr. mccluskey: i don't think i was saying that. i was saying i don't want measures because i don't want accountability. just kidding. i do want accountability but brings up an important point.

there doesn't seem to be agreement about what the outcomes should be. should it be graduation rate, when you learn as you get older? that one of the things that concerns me is that in the state of florida the year or two ago, the governor said, should we really be spending money to produce anthropologist? >> that same argument has been made by some of our leaders in the state of north carolina. for liberal arts education as worth anything? mr. mccluskey: and that concerns me because i don't think education is something you can certainly -- necessarily monetize but i am sympathetic the concern that we spend a gigantic and not of money on higher education and we don't seem to be getting anything of commensurate outcomes. this is why i think and it is counterintuitive, a lot of the problem is we have a lot of money that comes from somebody other than the student with they consume education, so they may decide to study anthropology for four years because it does not

seem to be costing anything and maybe i want to do four years of college, so there is a balance there. i don't want to go to a system where you essentially have a bureaucracy say, if you don't earn $50,000 within three years of graduating, then there was something wrong with their education. >> and i just had a quick point? i am all for institutions and the students having skin in the game, but want to make the opposite argument that high-income students have any skin in the game when their parents fund their college education. i don't think anybody would object to having parents fund their kids' college education so i think we need to be careful that we are not putting additional barriers for low income folks that really should not have to put anything in because of your family is barely surviving on $16,000 a year, why should you have to put anything into your college education?

>> that concludes this panel. thank you, everyone. we appreciate it. we will take a few minute break until 2:45 and we will come back on with the final panel today. thank you. >> sunday at midnight, the patriot act expires, including provisions authorizing the nsa's ball: data collection program. the senate is meeting sunday afternoon in an effort to pass an extension in parts of them all. president obama has called on senators to renew counterterrorism edgers in the long. -- in the law. [indiscernible] president obama: i would like to remind everyone that sunday at midnight a whole bunch of authorities that we use in order

to get terrorist attacks in this country expire. -- perfect terrorist attacks in this country expire. fortunately, the house of representatives will move forward with the usa freedom act that received overwhelming bipartisan support and what it does is not only continue authorities that currently exist and are not controversial. for example the fbi or other law enforcement agencies to use what is called a probing wiretap so we know if there is an individual where there is probable cause that that individual might be engaged in terrorist act but is switching cell phones, we can move from cell phone to cell phone. a lot of controversial provisions -- those authorities would be continued.

what the usa freedom act also does is it reforms the bulk data collection program that has been of significant concern and that i promised we could reform over 1.5 years ago. we now have democrats and republicans in both the house and senate that think this is the right way to go. we've got our law enforcement and national security teams and civil liberties proponents and advocates who say this is the right way to go. the only thing standing in the way is the handful of senators who are resisting these reforms. despite law enforcement and the ic saying let's go ahead and get this done. we only have got a few days. it expires sunday at midnight. i don't want us to be in a situation in which, for certain period of time, those

authorities go away and suddenly we are dark. and heaven forbid, we've got a problem where we could have prevented a terrorist attack or ended someone engaged in dangerous activity but we did not do so simply because of inaction of the senate. >> you can watch the senate sunday afternoon session where they will consider a renewal of the patriot act provisions live on c-span [applause] -- live on c-span2 with possible votes at 6:00 p.m. >> this week on "q&a," are guesses to time pulitzer prize winner david mccullough who shared stories about his new book "the wright brothers." >> we did not even graduate from school because they had something interesting project going on.

wilbur i think was a genius. although was very bright and very inventive, clever mechanically, but he did not have the reach of mind that wilbur had. they loved music. they loved books. nathaniel hawthorne was orville's favorite writer. sir walter scott was loved by catherine and for one of her brothers, they gave her a book. they were living in ohio with no running water, electricity plumbing, and they are getting a bust of a great english literary giant to their sister for her birthday present. there is a lot of hope in that. i think what i would like to get to know even more about is this sense of purpose that they had.

that sounds like a bad pun, but high purpose, not something ordinary of big idea and they would achieve this a good idea. in fact, >> nothing was going to stop them. sunday night at 8:00 eastern and pacific. three former treasury secretary's discussed the long-term economic outlook in the global economy. robert rubin, henry paulson, and tim geithner took part in this year's milk and execute -- institute in beverly hills and moderated by facebook operation sheryl sandberg who worked in the clinton administration treasury department. this is one hour.

>> sheryl sandberg, the author of the best seller with their will to lead and before her role in facebook, cheryl was the vice president of global sales and operations at google. we are delighted to have her, our panelists, and you are in for a very enjoyable hour, so here they are. cheryl, it is all yours. [applause] sheryl: i am delighted to be here and still i do have a chance to moderate this panel of three extraordinary man. there are so many wonderful things to say about all three of them professionally and personally, but there is one surprising thing about them

which is they are not on facebook. [laughter] and so i have taken the liberty of helping them to the and it is my way of introduction. , i hope. here we go. our first analyst today is bob rubin. he was the 70th secretary of the treasury who served under president clinton and the first nec director of the country. before that, he was cochairman of goldman sachs and now he served as cochairman of the council on foreign relations and one of the founders of hamilton project. please let me in joining bob. [laughter] you can see how great this would be for them, right? hank paulson, 74th secretary of the united states treasury and served under president bush. before that, ceo of goldman and

sachs. he now chairs the paulson institute at the university of chicago which is a think and do tank, i like that which and he has a new book called "dealing with china," which hit number three on the new york times bestseller list. [applause] our third, tim geithner, the 75th secretary of the u.s. treasury served under president obama. you heard it here folks, he never actually worked at goldman sachs. he never did. people think he did but this may be why. bob has some views on why and he may choose to share them later. he was ceo of the new york federal reserve bank and before that, he was a civil servant, a career civil servant at treasury, and he is now president of warburg pincus. these welcome in joining our panel.

so we are sitting here with three of the most experience economic minds and decision makers. that is a great honor for all of us. we might as well start with economic outlook. i think it is fair to say that so far, 2015 may not be as promising as we might have hoped for growth certainly outlook at the end of 2014. looks like it might be a little more optimistic. so, let's start, are we slowing down? or has the current president and u.s. fed says, do we not know? rubin: i think if you go back for five months ago, the consensus was something like 3% growth. the last couple of months, most businesses feel there has been some softening. but i do not agree with the way you framed this, with all due respect. sandberg: please. rubin: what we have is the continuation of a gradual slow and steady recovery.

i think the unemployment rate is probably substantially in excess of the official unemployment rate. we have stagnant wages. that is the issue. there is one other thing i will say. i think there is a substantial tail risk. i am on the council of foreign relations. people talk about geopolitical risks, but i think they feel deeply threatened. it is not the market. we all know there has been a tremendous amount of reaching for you, and that question is has it created excesses or not? i do not know whether it has that is a possibility, another tail risk. i think the most likely outcome is a continuation of a gradual slow recovery. sandberg: hank, are we getting better, getting worse? paulson: i agree. i think it has been more or less bumping around 2%, plus or minus. i happen to think that global slowdown, the slowdown in investment, strengthening dollar probably provide more of a headwind then we get from the decline in oil prices. but again, i would echo what bob

says. i think there are some significant risks. but the good news is, we have been more or less growing since the third quarter of 2009. we are in a bright spot in the global economy. housing prices are rising. we are not growing fast enough and too many people are getting left behind. sandberg: tim, economic outlook? geithner: it is worth noting that none of us really know anything about the future, and we certainly do not know anything about how economies perform in this quirk term over the long run. we live in a messy, dark, scary, uncertain world. but i think the economy is -- [laughter] sandberg: but that said -- was that a scary, uncertain world? geithner: that is the normal state of mankind. it is sad to admit, but it is true.

but i think in that context, the u.s. is gradually getting -- sandberg: slightly less dark and scary. geithner: we are a resilient country. and i think a much stronger country than any other major economy. and if you look at the challenges we face as a country, they are pretty stark challenges, and our politics are terrible. but i think you would rather have our challenges than the challenges that any developed economy, and i think any major emerging economy around the world. sandberg: when you think about where we are -- where was it messy, scary, dark? or a continuation of slow economic growth since 2009. how do you think of job creation? do you feel that our community continues to create jobs at the rate it can? is there something we should do to jumpstart it, make it less stark and scary, messy? geithner: we are creating jobs and getting closer to the point

-- i think bob is right. not the point where we are fully using the tremendous human capital of this country. but we are getting closer. i think we needed a longer period of growth above potential for that to happen. we are still growing fast enough, even at this moderate pace, to gradually bring all those talented people back to the labor force, where they can be used more productively. sandberg: you think we are on the right track? geithner: i do not want to say that. you never want to look too optimistic. sandberg: don't worry. [laughter] sandberg: raise your hand if you are worried tim is too optimistic. go ahead. anyone? you are safe. keep going. pessimism covered. [laughter] geithner: and of course, there is a lot of things we could be doing. of course there is. can we say we are outputting at the frontier of what is possible in terms of politics? -- in terms of policy? no one believes that. we are operating so far toward the frontier in terms of public

policy that marginal improvements in closing that gap would have really high returns. sandberg: job creation, are we doing enough? will this slow and steady recovery give us enough job creation, or something else? paulson: no, it won't. i feel very strongly we're not growing fast enough. the income disparity is a huge issue. and i think that the only solution to this -- there is no easy solution -- are fundamental changes. that the world is changing quicker than our policies are changing. and we need the kinds of policies that will let us have a competitive economy going forward. i agree with tim that we are a bright spot, and we have got list challenges than any other major country. but as i look at the secular changes i see, and look at what is happening as a result of the digital revolution in technology, globalization, i

think we need fundamentally different policies to grow quicker. we need a new tax system. we need entitlement reform. we need immigration reform. these are not easy things. but it is going to take our political system working better. so on the one hand, i am pleased with where we are now compared to where we were. but the kinds of changes i think we need to drive us forward are going to take fundamental reform. sandberg: job creation. rubin: i guess i would say three things. when ms. my first comment -- i , think the unemployment rate will be substantially in excess of the official rate. i agree with something hank said. if we had effective policy today, i think it could make a very substantial difference in the short run and is critical in the long run. this is, in my opinion, the fundamental challenge to the future of our country. that is, reestablishing

effective government. congress is totally unwilling to compromise across political and policy divides, and that is the only way this can work. not looking at the moment, but looking over time, i think the world you are part of, the world of new technologies, artificial intelligence, and the rest of this creates real questions about what pressures will be on wages. on one hand, there is tremendously constructive force in productivity and growth. on the other hand, it may turn out to be highly labor displacing with respect to conventional middle income jobs. we could have a whole section on how one response to that from a political point of view, but i think it is a's areas -- is a serious longer-term issue for the country. sandberg: the state of the country? paulson: income inequality is something we all thought about. i was working on that topic when i was still at goldman sachs. geithner: in which direction? rubin: you were working on increasing it.

[laughter] [applause] geithner: i think cheryl was approaching this. sandberg: i think tim made up for his previous pessimism with humor. we appreciate that. geithner: i was serious. [laughter] paulson: it was a huge issue. we talked with economists and with the current chairman of the economic advisers, kruger, when he was at princeton. my first conversation with the treasury secretary -- my first speech as treasury secretary was on that topic. i'm going to go back to it said. -- back to what bob said. of course, there is big debate in terms of what the driver is. and globalization is a force. but i think what is going on right now with technology and the digital revolution is huge. i think it is the biggest economic trend in the world today, by far.

and i think technology brings with it huge advantages for society overall, but the pace of change is so fast and so violent. and as i look at industry after industry, whether it is engineering, architecture, law business, we see the middle being carved out. anything that can be routinized is being routinized. so it is winner take all. so you have to ask yourself and say, you know, i have a believe this is progress. you cannot turn back the clock. most of the new technologies i see are really much more about productivity, and i do not see them creating more new jobs than they are illuminating. i am sure there will be some. i think the question is not is this happening?

the key question is what do you do about it? i do not have a license to talk about training and education and so on, but i do believe the kinds of economic reforms i was talking about earlier will make a difference and help deal with the problem. basically -- and this is not just a u.s. problem. it is hard to think of a country that does not have it. it is a global problem. and i do not think our democracies are going to work the way we need them to work if we do not deal with it. it is just too easy for politicians to be populist and to look for scapegoats as opposed to dealing with the real problem. sandberg: the issues come together, the dysfunction bob talked about inability to create policy tim mentioned. it is not possible to look at the situation and say we are not , well placed to handle serious economic challenges, technological changes. what is possible to do? if you could pass the right

policies, what would they be? and two, what can we do? this is an amazing group of people. a lot of influence in a lot of industries. what can people do to create the political environment which would get us to the right policies? tim, what are the right policies, and how would we get there? geithner: these are not challenges we are going to solve -- sandberg: in the next 46 minutes? geithner: there is no simple compelling easy set of things. , these are challenges for a generation or more, and they are going to take a long war, in economic policy. i think you need stronger economic growth relative to potential. it is hard to do much on these things without growth. it is very important to recognize in the beginning that fundamentally these outcomes for the low income worker or even the medium worker are hugely dependent on how fast we are able to grow. and part of this depends on our

ability to do a better job as a country at delivering the type of public goods only governments can deliver. education is going to be fundamental to that. and of course we know that that is a complicated, hard thing to do. i would say at the start, you have to recognize that designing policies to try to create more rapid growth -- infrastructure is a good example of things that have high returns in growth and are more employment intensive. and try to focus on basic things that improve our capacity to equip people with the skills and needs to compete in this world. that is a very hard thing to do, but we are not close to the frontier of what is possible. i would focus on those things. sandberg: bob? rubin: i would give you answers to two questions. i think the fundamental challenge for our country is to have an effective government. i am not going to get invited to the next panel if i say what i am about to say. that i think social media plays

an enormous role in public opinion. i think it has become, to some extent, a conductor of ideology and politics, and echo chamber. the converse would be if the social media could find -- if those who had responsibility in social media, whoever they may be -- [laughter] rubin: could find a way to engage the american people in recognizing the must have effective government, whatever your views on issues. and we should insist our elected leaders be committed to governance and to principled compromise to find common ground among divines. -- ground across divides. i have thought a fair bit about this. i do not know social media. i do not belong to facebook, as you correctly pointed out. i think properly used, it may be a constructive as opposed to undermining role, which it place now. in terms of policy itself, i think the best thing we could do is it will constructed fiscal policy would increase public investment in the short term and

simultaneously enact entitlement reform to put us on a sound financial footing. increased revenues and do immigration reform. education. increase the minimum wage. we need to give workers and even playing field in terms of the rights to decide on collective bargaining. there is a lot you could do that we cannot do without a political system that works. paulson: in terms of the political system, the political system reflect people. our people are very divided. the country is polarized. and i think part of it -- it is not just social media. we get our facts from different places. people self select with so many different cable channels and so many sources. i think that is a huge problem. but in addition to the policy moves we need to make, and i think we all pretty much agree on the kinds of things, i think there are other things that need

to be done. i think people need to understand the act of these -- the facts of these changes. i think even if we take all the policy steps that anyone could deem appropriate, the world is changing. and the sorts of jobs that were available, used to be available, are not going to be available in the future. i think that really means people changing some of their expectations, getting different types of training. i think one of the most disturbing things are the number of young people who are not working or are not happy with their jobs today. sandberg: particularly globally. youth unemployment numbers globally are shocking and striking. paulson: it really, really is. i think this is a global problem, and i do not think we are thinking big enough about it. in terms of how to do it. people have done more work. the reason i said i did not want to practice without a license -- i really have not done the work on what kind of universal

service would he in the united -- would be in the united states, or what we could do so that every young person has some kind of training and some kind of follow-up training afterwards. but this is a huge problem, and i think it goes beyond just policy. the world is changing so fast, i think people's expectations need to change, and politicians who are just looking for scapegoats or saying it is the republicans' fault, or democrats, or wall street -- this is an easy issue to demagogue and a hard one to solve. geithner: i want to emphasize one thing i think they both said. this is not really a challenge of a paucity of ideas. it is not as if we are short of good ideas for things that would help. this is all about the craft of governing and how to help the american political system we -- rediscover the capacity for principled, pragmatic compromise, and the ability to

actually do things. in our political system, it is worth remembering that all power to affect the path of the long-term growth of the american economy goes through the congress. we did not invest the chief executive of the united states with vast power to alter these incentives. if you are going to get better choices out of your government you are going to have to raise the expectations you created for them in terms of their ability to do things. and you know that is where we look so appalling and disappointing today. that is about rediscovering the ability to find some room for pragmatic, principled compromise, something we seem to have lost. sandberg: let's follow up on one of the issues you raised one of the policies which i think everyone thinks is obvious -- entitlement reform, and talk about how. it is impossible to look at the numbers and not decide this country needs to do entitlement reform. you can decide we will do it in advance. you can decide we will wait

until the inevitable entitlement crisis happens. so, how? we are here we are citizens. , how do we hold our congress , our elected members responsible for getting to the pragmatic compromise we know we need? geithner: our system is sort of famously good in extremis, but not so good for the slow burning -- the problem of rust we are accumulating. that is the ability to bring the long-term forward, doing that today. that is our big challenge. but there is no way around it except to try to confront those basic choices and recognize these things are unsustainable and unaffordable, and it will be easier to adjust to that new reality if you start now and do not defer it. sandberg: if you were sitting treasury secretary now or about to become the new one for

whoever gets elected how? , paulson: when i came to washington, that was why i decided to come, to work on entitlement reform. as you know, i got to work on some other things. [laughter] paulson: but it is -- my own view is, it is all about political reform. because if you look at the issues, social security is analytically simple. it is politically complex. even though health care reform is analytically and politically complex, it is not too complex to do something better than we have got now, where there is some fundamental reform. i always thought we would ultimately extend the coverage to the uncovered, the 30 million. it never occurred to me we would do it without getting fundamental reform. so this is -- i really believe that there is some people in

-- there is so many people in america today who do not even know what their health care cost as long as the government is paying it. that is a system, no matter how much you trust regulation, it is really hard to have us deal with those costs. it is all about generational equity and the future of our country. again i come back to what bob , said. it is about making the political system work. it takes leadership. it has to come from the president. it's got a come -- and our country does not deal as well with our political system with as tim said, they, complex -- big complex difficult , issues, if they are not in immediate crisis. but we will figure out -- we have got to figure out -- rubin: i don't really know how to answer your question. i sort of agree with everything that has been said. and i think it is even more complicated.

because there is not a will -- we'll right now for entitlement reform. in fact, there are many who say we should increase social security benefits. when asked, how would you pay for it, it does not become part of the discussion. i think that, as hank said, if you could reform the health care system in such a way to give us health care as a percentage of gdp comparable to other countries, that would be an enormous savings for the federal government. making the political system work -- i know i am repeating myself area as somebody who runs a -- am repeating myself. we visited somebody and asked him to put up his own money. it was his money, not ours, to see if there was some way to create social media and create an interactivity, so the middle of the country would engage. you have to get people to engage. try to engage people in the issues, in the hopes that if you did that you could get a political environment that would put pressure on politicians so

they would change their calculus and decide it was never in their political interest to engage in compromise and reform. i think that is the fundamental question. sandberg: the political environment we are operating in has huge challenges for policy execution and operation. domestically. i think it is also challenging the u.s. position in the global economic world. it is interesting to talk about that with the increase of the asian infrastructure investment bank. i think when many of us were growing up and in the position the u.s. had in the global economy -- it was kind of unsinkable if you look back a certain number of years, that this got created without the interest of the united states, -- against the wishes of the united states, without the u.s. joining. it was written in the "the u.s. government is so bitterly divided it is on the verge of defeating the economic state it built at the end of world war ii.

the director of india, talking about the u.s., said, it is a lmost handing over legitimacy to the rising powers, not by intent, but as a result of dysfunction, and lack of resources because of tight budgets and competing financial demands. the u.s. is less able to maintain economic power. and because of political infighting, it has been unable to formally share it either. the question is, what is really happening for the u.s., in terms of maintaining global economic leadership? is it changing, and does this matter? does the u.s. economic leadership position -- is it changing fundamentally, and will that matter? geithner: at this point, if you talk to people who run businesses or invest around the world, there is a point where there is confidence in the relative position of the american economy today. i believe that. on the other hand, that exists

with deep concern about what our political system has done for the capacity of the u.s. to support things like you referred to. and i think it is important to recognize that with this profound erosion of support in both parties, both the republican party and the democratic party, of the types of institutions globally and the types of international economic policies that were so central to the success of the world in the many decades after world war ii -- with a deep erosion of support for those things, it is hard to play that role. we have nothing like the freedom to maneuver in terms of resources, although we are a rich country, to deploy resources, because congress has to approve that stuff. and the profound erosion of support for trade has made it harder for us to negotiate and deliver these things. i think these things have very real costs. i think a lot of americans look at the world and say, maybe china is a deep threat to our economic interests, our security

interests, or there is some other power that is going to erode our position. it is important to understand we -- for americans to understand we are still a master of our fate in those angst. the biggest risks to our economic outcomes and relative position in the world are about washington, our politics in washington. unless you can relax those constraints and rebuild consensus, we will suffer a damaging and severe erosion in our capacity around the world to be a source of not just stability, but fairness, rules of the game, basic security for people. sheryl sandberg: so it is eroding and it matters? geithner: still in a relative sense, we are still the best source of interested, respected, relatively neutral views on how to make the world better in that

sense. ideas are not enough. you have to deliver a mess we delivered the u.s. behind those things, it will suffer and erosion. >> i would rather invest in the united states compared to any other country in the world. our flexible labor markets, our demographics compared to china and europe, the problem is we have all said multiple times, we have got to get our policy in order for the system to work. i think we can continue to play a major role in global and geopolitical matters for a long, long time to come and hopefully in partner with china and not opposition. it comes back to getting the house in order. without the united states, --

take geopolitical issues, for example, there is no one to play the role that the united states has played for many decades now. i think with respect for maintaining fair trading rules or opposing staggered death appropriations, for a whole host of these issues, there is nobody will play the role of the united states will play in the world needs the united states and we need america again. sheryl sandberg: role of america, changing? rubin: it is changing, but anybody who was riding a soft -- writing as off, as tim said, we are by far the strongest economy, the biggest economy in the world. i don't see anyone out there who is going to overtake us with super dominant force in the world if we fix our problems. and if we lead by example.

the political system makes it difficult for us to do this today, but i think this sort of thing we need to do to show leadership is first, as everyone said, correct -- have our own economy perform well. we have to be a good example ok? it starts with what we do at home. secondly, showing leadership -- economic leadership abroad. take china as an example -- china has got many more problems than we have today. as i said over and over again you can make the biggest mistake exaggerating and overemphasizing china's strength as a country, but they are engaged so they are building trade linkages all around the world.

investment linkages, we are in better position to do that than the chinese art and we are better. we can't be successful with 4% of the world's population looking to do business with the other 96%. i tend to be an optimist. we have got to get the tpp -- transpacific partnership -- that would be huge to get that done. it would also be huge if we don't say the -- having said we would get it done. it's important on being able to deliver on what we say and in terms of our economic strength. there is plenty that we can do. i will tell you, this will not be the world at any of us will want to live in. even if you're not living in the united states, if the united states does not become -- continue to be a leader economically again i just don't think there is a lot they

can be doing internationally without passing legislation. to me, this is just being able to look beyond domestic politics because politics never favors foreign investments. but these are very very beneficial and i think it is going to take strong leadership. anyway, i think we all agree, so we are all talking to ourselves. ms. sandberg: and michael from an, who was bob quast chief of staff -- mr. paulson: he is just a bright spot, and he is going in all the time and making progress and

fingers crossed he will get it done, we will get trade promotion authority, and when we get it done, it is amazing how people will start looking at things differently. ms. sandberg: let's go to china, and your book is obviously brand-new, and i have read it, it is fantastic. it is incredibly well-written, and congratulations. china is likely to surpass the united states is the world's largest economy. they are the biggest creditor, handling over $1 trillion in american debt, so how do you think america should be approaching the china-u.s. relationship, and what advice do you have for the right kind of relationship with china? mr. paulson: read my book. [laughter] mr. paulson: no seriously -- mr. geithner: or at least buy it. [laughter] ms. sandberg: or at least buy it. [laughter] ms. sandberg: that was tim's joke, so i don't want to take it.

mr. paulson: china has emerged as a formidable competitor in addition to a partner, as we all know, and the relationship is much more complicated, given that they are more assertive now in foreign policy and given their economic success. it is very much in our interest to find a common interest, and there are many areas where we have a shared interest and we are not going to make real headway globally unless we find ways to work with china. if we are looking at climate change and environmental issues, for example, i don't know how we solve them unless we are working with china.

if we working complementary ways, economic problems become easier to solve. if you are looking at stability or global stability and peace, denuclearization, this is all accomplished with working with china. as i see the world today, it is more important than ever that we get important, tangible things done. that way the public can see the value of the relationship and we don't let the competition devolves into a debilitating

repetition. -- competition. competition isn't bad, we can thrive with competition. china is using cop petition with their economic and national security ends, and we can do likewise. we need to be strategic with the way that we are dealing with china, so again, i am repeating what both bob and tim has said if we are where we would like to be 20 or 30 years from now, it is not because china will be a threat, it is going to be because we didn't fix our own problems. in terms of our borrowing from china, and that we are a creditor to china, i am asked that question all the time, are you concerned that chinese -- the chinese have so much debt? and my answer is, no, i am concerned that we have so much debt. the chinese are doing what is in their interest. the money they have invested in

our debt is a much bigger percentage of their foreign exchange reserves than it is of our debts. if you are a chinese investor, would you rather own a euro or a yen? give me a break. what we need to do -- what we need to do, is to expand linkages. this is so much for the bilateral investment treaties, because i believe in direct investment, chinese investment in the u.s. create jobs, and there is a very strong linkage between our two countries. i think the bilateral investment treaty will also help chinese reformers opened up big parts of their economy to competition from the private sector and from u.s. companies, which would be

good. the last thing i would say which i think people who have been reading the newspapers nknow, -- know, is that they all know the economic growth in china is slowing. so we know that. so what people have perhaps less focused on is of the fundamental issues is the model that has worked well for a long time is running out of gas. they have some flawed policies that need to be fixed, they are building up too much municipal debt using investment -- government investment in this municipal debt to drive growth so they need to fix those problems. i think that is going to be very important to them and to all of us, in terms of how they deal with those. ms. sandberg: china, anything to add? too much fear, not enough cooperation? other thoughts? mr. rubin: i think hank has said it reasonably well. [laughter] mr. rubin: probably. probably. mr. geithner: one thing in praise of hank, it is a very simple thing, but in these kind of questions, whether it is china or coming back to the

basic craft of governing is that the huge thing that matters is that you are putting yourself in the shoes of your counterpart, trying to look at the world through their eyes and tried to figure out what is important to them, what -- trying to figure out what is important to them, what is important, and i think hank, you demonstrated how high the return is on that kind of investment because you worked so hard to build trust with people who were unlikely to trust you as a capitalist from a goldman sachs. you worked very hard to build that basis of trust, and i think that is fundamental to much of what is necessary. mr. rubin: i would like to add one more thing if i could mention it, hank and i wrote an article that will come out at the end of may in the atlantic -- in "the atlantic" magazine. there is tremendous wariness in china about our country, when in fact, besides the fact that we will have a mutually important relationship, there are all kinds of transnational issues, climate change, terrorism, penn nationalism -- pan-nationalism but this is probably the best chance that the globe has of

dealing with these issues, because of the global sway that these two large economies would have would be greatly increasing the awareness of this country and the must be this -- and i must say the same would be true in china to getting past that fear. ms. sandberg: getting past the fear. mr. paulson: the challenge is we just have to acknowledge is that there are few examples in history of a major, preeminent power and a rising power that ultimately come to conflict. that is not inevitable. as a matter of fact, that is far from inevitable, and i am not predicting it, but it takes work.

the choices policymakers make on both sides is deciding on what cooperation is on how we resolve some of these issues and how we work on financial rules but also recognizing that they need to have a financial say in this system going forward. this is really, really important. ms. sandberg: so the return to women and the role in the u.s. economy. i will go to a warren buffett quote. we once had to explain to bob that jimmy is not warren's son. mr. paulson: i came back in -- mr. rubin: i came back in i saw president clinton and the president looks at me and he says, why doesn't that surprise me? [laughter] ms. sandberg: warren buffett has

famously and generously said that one of the reasons that he was so successful is that he was only competing with half the population. so we know the gender gaps are a drag on our capacity. the imf released a report saying that if women had as much participation in men, u.s. gdp would increase by 5%, japan by 9%, egypt by 11%. those are big numbers. when women cannot reach the highest leadership positions -- and i know how hard this conference has worked to get to 30% -- you know, women can't get there, and we are not being used at productive capacity, so what needs to be get -- what needs to be done? mr. paulson: could i start out? actually, no, i don't want to start out on this subject, somebody else. ms. sandberg: tim?

mr. rubin: if he had the answer, he would have written a book. mr. geithner: we have to hire more women, we have to promote more women, we have to pay them fairly, it can't be rocket science. ms. sandberg: yes, yes, that is great. [applause] ms. sandberg: it is very hard to do. we know we need entitlement reform, we know we need equal pay, so what is important for women? mr. paulson: if someone benefited throughout working with my career at the paulson institute, most of the senior people are women, and i thought about it a lot. it is a difficult issue to deal with. the one thing that i saw from my time at goldman sachs and working with a good number of

clients is that even if men are doing their level best and don't believe they are biased in any way, when you are choosing between a couple of leaders, you tend to go gravitate towards the one that has the kind of qualities that you express. so my own belief is that what it takes is it takes a lot of push from the top down, it takes it from a from the corporate boards, the ceo, the and i don't -- and i don't believe in quotas. the man has got to put his finger on the scale, and i am just totally convinced that is what it takes, and it is going to take also policies and programs that recognize that there are differences. there is a huge amount of advantages you will get from having a diversity. i have thought a lot about

leadership, and there is no great leader anywhere that doesn't have great people around him. everybody has strengths and weaknesses. hank is great, hank is discrete, and -- mr. geithner: are you speaking of yourself in the third person? [laughter] ms. sandberg: he is in the middle of such a good answer we are going to let him have it. mr. paulson: so you have people around you that compensate for your weaknesses, and so if i watched that in women, women have some really different characteristics, different leadership styles, different management styles. even if you think you are being totally egalitarian, i think i

don't like what i read in europe about quotas of four boards and legal quotas. but i've got to tell you, i think we are going to be headed in that direction. if it were easy it would have been done a long time ago. ms. sandberg: i think there is a portion that we have failed with when it comes to the biases. mr. rubin: i remember when i was at goldman sachs and i was developing at harvard and i think on an entry-level basis, over time, the pools, men, women, is a little bit different in the field to each field, and

if you give the kids -- and the result is, that they opt out of the kind of indents school time activity that leads to these positions that you are talking about, so i think it is a much more complicated question. do you change those norms? you get questions about that. ms. sandberg: lead policies. mr. rubin: but i will tell you something, and i know the politically correct things to say about this, and i could get everybody to come out and clap if i wanted them to. [laughter] mr. rubin: i think it is very

complicated, and if the client wants you on the phone at 11:00 at night, i think it is easy to say these things but very hard to do. in countries away from the united states you cultural issues. mr. paulson: bob, i would just like to say one thing, everything that bob said, i agree with. we have all lived with it. but when at least when i saw it at goldman sachs, when you have the women working, that i think it is very important early on to make sure that they have every advantage and they get the opportunities to keep going, there will be certain jobs and certain careers that are just harder than others. but i think you could move the

needle a little bit for some things earlier on. ms. sandberg: all right, let's talk china -- climate change bob, let's start with you. do you think this is faced appropriately enough as an economic issue? mr. rubin: hank, mike bloomberg, and tom stier started something called risky business, and we learned that environment al problems can cause catastrophic effects for life on earth as we know it. i think it is a desperate problem, and a lot of people in the room can agree but they have

not internalized the degree of the cataclysmic effects that can occur from not dealing with this, and i think what we need is what hank wrote in his op-ed, i think we need to have restrictions on carbon, and research and pilot projects and looking into non-carbon-based sources of energy. mr. paulson: bob said it very well. the only thing i would add to that is that we talked about how the governments worked better on problems when there was a crisis. unlike a financial crisis, this is very vicious because it is cumulative. the longer you wait, it takes away your ability to avoid the worst outcomes. the governments do better if it

is done on a national basis is that of a global, but we have time to act and time to avoid the worst outcomes. bob has emphasized something that he did not mention here and when i was talking to republican colleagues, this was something i talked about, and this is very important. part of this is already baked in the cake and we know it is coming, and of course, we are trying to avoid the worst outcomes. bob has pointed out that all of those that are posing a solution are ultimately setting themselves up for the government to have a bigger role and a huge fiscal problem. because what happens is, think about it for a minute, whenever there is a climate related disaster, a forest fire, a drought, a flood, you name it, it hits one geographical region, one industry particularly hard

and the government comes in, and then there is a big cost to that, and there is a big fiscal cost, and we all pay. bob comes out with a very good editorial in the "washington post," and he talks about how it is a big fiscal problem. this is based upon how people are not wanting the government to play a bigger role and not trusting the government. we have business people looking at this and democrats and if you just sit down with communities and talk about this, let's just look at a range of possibilities in terms of economic impact, you meet people in the middle. it proves that normally, groups that are opposed who say they have a big climate problem, and if you bring it up to the whole

community suddenly, they are all ears. mr. geithner: in economic policy, most of the things that are important are going to be deeply unpopular, and the capacity to bridge that is the hardest thing for the political system. ms. sandberg: so the lights are shining, we have five minutes left, so i will ask you for the long answer is, but

unfortunately, i have to ask you for the short version. what is the most important thing you learned as a treasury secretary? tim wrote a great book with a lot of things that he learned, also worth reading, so did bob seriously, these are great contributions to the public understanding. mr. geithner: i think i learned that you can't approach these jobs as if you are tasked or you are challenged to optimize within the constraints given. because you can't do much for the economy within the constraints you are given. you have to figure out a way to relax those constraints and you can't do that without a

combination of good ideas and without some capacity to figure out how to bring it together in support of those things, which is about negotiating with governance and governments. ms. sandberg: hank, what did you learn? what is the most important thing? mr. paulson: most people think the treasury secretary is the most powerful politician, but unless you have the support of the president and you are able to work with congress and foreign governments and regulators, they don't work for you, again, you have to engender their support. one of the things that i learned is that it takes saying the same skill set as a business but a

very different mindset. you have to be willing to listen, you have to be willing to compromise, and there is not a lot of room for ideologues. so it really comes down to people, it is much more people than analytical. ms. sandberg: bob? mr. rubin: i was just thinking of something i wanted to say and i was trying to consider if i should say it or not. larry summers would say the most important thing is to call and ask him -- [laughter] mr. rubin: now, having said that, two things strike me, one is know what you know and know what you don't know, and there is an enormous learning prospect and secondly, be true to yourself, what ever you think, it is your responsibility to say to the president of the united states, whether he or she agrees with you or not. and the temptation to not do that is enormous. you've got to be true to yourself.

ms. sandberg: now we are going to do lightning round. get ready. mr. geithner: good luck with that. [laughter] mr. rubin: you got the wrong group. mr. geithner: you start with hank and you'll never get to us. [laughter] ms. sandberg: hank, we are going to start with you. one word, one phrase, are you ready? if you could do one change unilaterally, what would it be? mr. paulson: fixing our retirement system to save our future. ms. sandberg: he did it. mr. rubin: to make our fiscal policy more effective. ms. sandberg: when did the fed raise rates? >> when they think it makes sense. ms. sandberg: do better.

>> if you ask an english major i will say early next year. >> i think what matters is they do it at the right times and i think it will be very dependent. >> one word. who was our biggest global economic competitor? >> ourselves. >> i agree. >> i concur. >> what will be the number one issue in the 2016 presidential campaign? >> i defer. >> income disparity. >> that is an interesting question. i would say a variant of what hank said but mine is a better version. [laughter] >> stagnant wages. >> last book you read. >> i am reading three books right now. the last living unich in china. it is actually a very interesting book. [laughter] >> lightning round. >> oh, ok. [laughter]

>> a book called a pound a paper. >> last book you read. >> innovators. >> what is your newest piece of technology? come on. dig deep. any piece of technology. [laughter] >> hank. anything? >> the ipad. >> what was the question? >> what is your newest piece of technology? >> a ballpoint pen. [laughter] >> most important issue people are not talking about. >> i think we vastly under talking about climate change. >> hank. stick with the lightning round.

>> i will go with climate change. >> we're talking about everything, not doing much. >> are you still walking around the office with your socks on? >> yes because it is comfortable. >> you claim to have started this trend with bob copying you. >> i suspect he was first but i admire that custom. >> any special behavior you want to share? >> only holes in socks. >> i hope you can answer this. iphone or android? >> what? [laughter] >> say it again. >> iphone or android. >> iphone. >> iphone. >> blackberry. [laughter] >> most economically literate president. >> i only knew a few presidents but i think president clinton was massively illiterate -- massively literate.

[laughter] >> most economically literate president. >> george w. bush. >> obama or clinton. >> absolutely. paper or kindle? >> paper. >> kindle. >> kindle. >> news online or on paper? >> mostly online. >> both. both. >> what do you do to relax? >> to relax? [laughter] >> you do the same thing i do. >> flyfishing. >> absolutely. >> but i really do well. [laughter] >> he may cast better but i catch more fish. i get it out quick. >> i do that too but i read. >> thank you all. [applause] ♪

[captioning performed by the national captioning institute, wiich is responsible for its caption content and accuracy. visit ncicap.org][captions copyright national cable satellite corp. 2015] >> on the next washington journal we will tie death penalty information center robert donovan about nebraska's decision to get rid of the death penalty. and this week's newly announced presidential candidates with democratic consultant liz chatterton and republican consultant ford o'connell. >> here are some of our future