of a plan. i would rather take donald trump over hillary clinton. up inhow is it shaping these hypothetical matchup's that polling companies like to do -- does it look? bernie sanders is slightly outperforming hillary clinton and some of the recent matchups. not by a big margin, maybe not even statistically significant and some polls. i think you're seeing deceived -- you're just seeing a generic partisan vote. entry bys a possible the former new york mayor, michael bloomberg, is that a credible strategy?

could he win an independent bid? guest: it's hard to see how that could work. he set himself in 2013 that it is hard to win if you're not major party. he got elected in new york as a republican and ran as a major party candidate. he would have some degree of constituency, maybe more to the left. he would be competing with hillary clinton's base. it is hard to see how he gets out to compete for some electoral votes. host: does that help republicans? guest: it helps republicans. donald trump, if he ran, that would split a vote, but bloomberg would draw a more liberal vote at the expense of the democrats. this is a crazy politics

race we have going this year. i kind of like bernie sanders -- but thereat he are a lot of problems we could fix with just some common sense. we need troops on the border, not a war, but on the border. we could fix social security and pay 50% of the earned income from the day the baby comes out of the hospital. credit and that tax put it on social security, and that would more than probably pay for health care. raise the minimum wage, but wait until they are 18. there's a lot of common sense things they could do. thanks very much for c-span. host: what does it look like intong into the bo-- nevada? guest: it's a state where hillary clinton has been favored. it will be a relatively low turnout caucus and is hard to

pull. -- poll. sanders has been making some headway. you want to watch latino voters, who should be able to deliver pretty heavily for hillary clinton. where do the union voters, who are big for nevada, where do they go? leadership has generally favored clinton, but there is a lot of support for bernie sanders among youth in -- among union rank and file. host: that could be why afl-cio is holding off a presidential endorsement. this is a big win for bernie, is what they put on the headline. guest: it is spewed there is a desire-- it is a big win for bernie. desire to get onboard with the front runner early, even though bernie sanders is closer to the heart of the rank-and-file union members. the longer he can delay

organized labor getting into the clinton camp, but a more -- camp, the more he can create the impression this is a competitive race. if you have strong performances in new hampshire and iowa, that perception becomes a reality. hillary clinton is featured in the latest issue of "vogue" with the headline, "will hillary glenn make history?" her -- the access to reporter has had access to her in iowa and new hampshire on the campaign trail. quirky, republican. i'm very disappointed in the republican voters, if they are republican, supporting .rumpeted -- trump they are not voting with their brain, just what they think they can get.

trump cannot finish a complete sentence. what he will do, and in fact, he does not know anything about our trade, he thinks we are dealing these countries wrong. when he was asked who you would pick for a supreme court quit,ement for scalia, he daughter,pped, "my i'll ap-- my sister, i'll appoint her." she is the most pro-abortion person i know. host: what do you make of what she is arguing? guest: yes. death heightens thes scrutiny.

cap has made a lot of conflicting statements on social issues. he has no track record of legal and judicial issues. with ted cruz and marco rubio, this is a really huge issue to highlight. to show seeds of doubt, didn't want to -- doubt, do you want to considering the judges he will choose, that could turn off evangelical conservatives. "donald trump can talk the talk but has not mastered the walk, and it is foolish, having examined the record, to think of trump as a conservative rather than a man only looking out for himself. voters call him a moderate because they cannot fit him into either ideology. his persona worked in the primaries and caucuses because republican elites have earned a reputation as a party of the

talkers and timid actors. millions of americans are fed up with them. no one doubts the donald trump is a tough guy, but on a close examination, he reveals himself to be without an anchor. challenges this time are considerably greater than usual and every voter in south carolina and the primaries must keep that in mind. the rest of us are depending on them." why do they write that? guest: you're looking at, there is a large non-trump vote. polling done that breaks this down, marco rubio versus donald trump, it looks like they could beat him on a one-on-one race. we would have to see what dynamic lets that happen, but right now, rubio and cruise are dividing the vote, and to a lesser extent, john kasich.

the fact that they are attacking each other so ferociously and competing with each other in calling one another names, it plays into trump's hands, because it keeps the vote divided. host: it is giving him the most delegates. guest: and also, the greater extent the race looks like a circus outside of trump. he looks more like he is in keeping with the dynamic of the race. that we have the sophisticated donald party, he is the bluish guest--boorish guest who has interrupted. but people are asking, is the list that exclusive to begin with? donald trump doesn't look like he really is -- it plays into the message that he is sending that this is a circuit to begin

with before he even got there. i, richard. racer: we are looking at a that is really changing america this year, because you look back at what america was founded on as working-class. people came to america to get and i think the whole campaign, we look back at republican hardy freed the slaves-- republican party freed the slaves. i didn't ask people to give me stuff i worked hard for it. you keep a budget. john f. kennedy said, "ask not what this country can do, ask

what you can do for your country." theme that youa he or over and over again in the republican primaries. it is across the spectrum of all the candidates. marco rubio argues that president obama is changing the nature and character of the country. donald trump is trying to be the champion of the working class. this is is arguing that a theme of the american people. host: people on twitter are saying, "if jeb is jeb smith, he would not be in the race, because he would not have $150 million war chest." guest: there is no doubt that family ties or why he is so well-funded. primary voters say they kind of like jeb, but i don't think the country needs a new bush.

the domestic politics that were maybe a benefit to him as he got were more of a styling block. has been a stumbling block as we've headed into the primaries. host: south carolina. kathy, good morning to you. independent caller. caller: good morning. host: who are you going to vote for? caller: we are trump supporters. , myhole family sisters, their husbands. the thing i like about trump, he is for the american citizen. it seems like the establishment -- i'm a registered republican from years ago. i'm an evangelical christian. it seems like every time the vote came around, the establishment republicans give

-- they havelicals gay marriage, they are doing partial-birth abortions, they are cutting baby parts up. i'm angry. don't come ask for my vote now whenever what you have said you were going to do and you did nothing. you sat silently by. because he is for the american citizen. have the same resume as the president in the office today. host: kathy says she is angry. 47% of new hampshire republicans

said they felt betrayed by republican politicians. guest: that is a really big thing driving donald trump's appeal. people are saying he did not take that conservative position. you'll hear a lot of voters like the caller who say we have these people who took the right changed? whatwhat was different after we elected them? that is trump's main argument. i'm not beholden to anybody and i can produce these results that politicians have promised and never delivered. host: a fourth line for south carolina voters. continue to call in from south carolina. two days to go before you get to vote in the republican primary there. 202-748-8003.

elijah in florida. democrat. caller: good morning. host: go ahead. like people like bernie sanders and john kasich -- if john kasich one new hampshire -- he needs to team up with rubio or z and ben carson should be donald trump's vice president. host: jim antle? would be on asich lot of people's short list for vice president. he has done some things as governor that have alienated conservatives. the medicare expansion, the rhetoric used in arguing with

opponents of that expansion. solid conservative record in the governor of ohio, he must win state for republicans if they are going to win in november. it is hard to see john kasich's path forward after new hampshire. but i could see him on a lot of people's short list for vice president. host: south carolina and the newspaper down there. guest: a lot of editorial boards really like john kasich. host: a democrat. caller: i have got a comment. i want to say i'm kind of with theted republicans and their party. they do nots like care what happens to america. everything is obama's fault. i have a quick story.

i did not agree with anything george bush had to say, but when he got us through -- a shoe thrown at him, i was so angry they have the nerve to do that to my president, even though i do not agree with him. i feel like republicans do not care what happens to obama. everything is his fault. like someone said earlier, republican elections right now are looking like a circus. every time you have a thereversial president, are trips down memory lane suggesting everyone is happier with a previous -- previous president.

any queue will hear a lot more of that kind of argument being made as we debate the supreme court vacancy. i think the democrat line will say it is naked obstructionism or worse if senate republicans do not want to consider a successor to scalia nominated by obama. front story at the examiner is the senate gop likely to hold line on obama supreme court pick. sandra day o'connor has said to get on with it, that you should not have a vacancy for a year. behind thepening scenes with your story? what are you reporting? all the incentives would be to oppose president obama's's nominee, whomever that is. getlikelihood we will someone who is not a reliable member of the liberal bloc of the court is very small. we're talking about which lock will soak -- will control the

supreme court. that has effectively evolved into the primary policymaking body in a lot of dozen or so issues in the united states. the next supreme court justice will have more to say about the legal status of abortion, marriage, religious liberty, from of action, than any senators. hightakes are every bit as as for who controls the senate. you have as much of an interest to affect that outcome is any senate race. democrat,ip, democrats get to vote. how do you plan to vote? sanders -- bernie sanders wins

the nomination, i will vote for donald trump. the republican party, they value god and are evangelical christians. it a were really questions, they were not think about donald is nowhere near that. the republican party are bunch of hypocrites because i say one thing about christianity and god, and they talk about president obama like he is the devil. i think they are a bunch of hypocrites. robert, an to independent. caller: it is not much toferent, i love hillary help me figure it out on the republican side, i could even but my problem

you give credence to us far as who you vote for. i'm thinking about not even i do not want to vote for one of the others, especially on democrat side. andan vote republican here i am thinking about voting republican, but i want to know if hillary will come up on or if ted cruz can qualify with him being born in canada. donald trump's main line of attack with ted cruz was the birthright. he has backed off a little bit with that. obviously, the e-mail question with hillary clinton i think is more signet appeared --

significant. it is not clear what impact that has happened with democratic primaries of than her numbers who are voting based on who they think is honest and trustworthy, not good. extent the e-mails versus her overall reputation, it is not very clear. talkingmes antle earlier about the supreme court battle, republicans holding strong opposing the nominee in his closing month -- months of the presidency. republicans clash wednesday over how to battle president obama's is expected nomination as the white house

left over in the remote possibility the president might stop a -- guest: it is an option the president has. the supreme court actually ruled at one his use of recess point when it was not evident the senate was in recess. is a chip the president could use. it would not be a lifetime appointment at that point. the samenot have lasting effect on the supreme court majority and it would keep the issue alive into november, whether or not he made the appointment. you will hear some of -- some republicans debate amongst themselves the optics of what it would be like to stop a

nomination by obama and what it will do for their prospects for control for the senate. the moment the elegance were up for reelection, and to be holding firm. i would expect the senate leadership to do so. joshua, independent, you're next. you're quiet moments, do you ever wonder why newspapers are following like dominoes to bankruptcy and lack of interest? back to the campaign, we were to believehildren anybody could be president. your assertion that donald trump does not have macro experience or does not have overview of core jurisprudence, these are falling on deaf ears to people who believe the garbage men

could be president of the united if you surround yourself with the best and brightest people with expertise, you can use your judgment and discernment. most politicians and i am not a huge trump fan, but i like that he is holding politicians feet to the fire. maybe you could do good things for the country and maybe he won't, but i think the assertion like a gentleman -- by a gentleman like yourself, that he has a micro knowledge or he has to be able to shoot magic out of his fingertips is nonsensical. host: i heard your point. guest: i don't remember microfilm out of micronesia, but the question a lot of people have, none trump voters, thel the majority of

republican electorate, is does donald trump have the knowledge to do things he promises to do? say they will make some the great again. getting from point a to point b seems difficult. trump is all caps by saying he has managerial expertise. maybe so. host: james on our lines for democrats. caller: i'm a sociologist. i will tell you donald trump owes his support to barack obama and the reason is that birther movement. if you listen to the pavlovian response the average voter has been conditioned, you say

hillary clinton and harry reid and you get this response. the establishment has been telling the average american it -- the reason their lives are visible is it is the democrats faults, the black's, the immigrants faults, and all of that has been conditioned and their lives are still miserable. they are angry at the republican establishment because barack obama has not been impeached. host: let's take his there he. guest: there is a lot of anger toward the president. i think donald trump, while he got on the map politically through a lot of the birther stuff in his using the birther stuff on his opponents for the it isican nomination, hard to see how he could be doing as well as he is doing if there were not a crisis of confidence with republican leadership. if there were that the party

leaders would do with a promise to do, i do not see trump having quite the same appeal. a lot of it is channeling the anger of the party establishment for not a combatant anything. if there were greater confidence or happiness with the recent record, i do not know if trump would have a leg to stand on. host: in, a republican. we lost him. we will go on to ernie. littleton, colorado. good morning to you. caller: good morning. ben carson, trump, and bernie sanders are the only ones not supported by super pac. it seems like ben carson is probably the smartest of them all.

them on either side of the aisle has mentioned how they would pay the debt off, not just balance the budget, because we know they would go over the budget. just like what happened in greece, bernie sanders is the only candidate on either side that wants to re-implement the glass-steagall act, which would protect us from bailing out or going in to big banks and corporations. what about that sentiment out there? donald trump and bernie sanders, people are traffic to them because donald trump is paying for his own campaign and does not oh anybody anything. right, although he has done well with earned media and has not had to spend much on his campaign, but that is exact right. the view is donald trump would not be beholden to anybody.

the democratic side, it is a lot of bernie sanders appear -- appeal as well. he is not reliant on super pac contributions. he is getting a lot of his money from small, democratic donors. he average of $27, and yet is raising money and a way that is competitive with hillary clinton, who is getting a lot of money from big donors. it is appealing and a time where people are disaffected with the establishment in both parties. host: we will have to leave the >> -- here's more. >> some of you might be asking, why are we still talking about rooms?

's advice is the only issue on the national security agenda? i think you are right. but in my view, i will bring these two topics together, because i link our policy to counterterrorism that so came to focus on and use the drone as in part responsible for the rise of isis. isis came up from, according to the cia, nowhere, but of course they were around, the cia just didn't watch as it was focused on using drone killings. drones that terrorize the people who are affected, not just the targets, but those have to live on the constant threat of attack. they are open to the recruitment by groups like isis when they say the people who sent to the drones are our enemy and we will train you to fight them. the drone has become the single biggest recruiting tool for

islamic terrorist organizations since guantanamo was used for that purpose. >> that was just part of what she had to say at a recent event held by the chicago council on global affairs. you can see the entire event tonight at 8:00 eastern, here on c-span. road tois evening, our the white house coverage continues with hillary clinton at a campaign stop in nevada. she will be speaking with supporters of the labor international union in these las vegas -- in east las vegas. >> c-span coverage of the presidential candidates continues this week with campaign events in south carolina and nevada, leading up to the south carolina gop primary and the nevada democratic caucuses on saturday, february 20. our live coverage starts on saturday at 7:30 p.m. eastern, with the candidate speeches in your reactions on c-span, c-span radio, and c-span.org. ♪

>> c-span's "washington journal," live every day with news and policy issues that impact you. coming up tomorrow, international security program director will join us to talk about his new book, "united states of jihad." be sure to watch "washington journal" beginning live at 7:00 a.m. eastern tomorrow. >> tomorrow, after "washington journal," the body of supreme court justice antonin scalia of will lie in repose in the great hall of the supreme court. starting at 9:30 eastern, the court will hold a ceremony with current and former supreme court justices, families and friends, and former law clerks. following the ceremony, the hall will be open to the public until 8:00 p.m. eastern. the president and first lady, members of congress, and other dignitaries are expected to be among the first paying their respects tomorrow.

that all starts here on c-span at 9:15 eastern. watt calledy, mel out presidential candidates for not talking about housing finance reform and government-sponsored enterprises on the campaign trail stop he also gave an update on the federal home loan bank system. this is an hour. >> good morning, everybody. to welcome you all to the bipartisan policy center. i was just saying to henry that nothing gets my blood flowing in the morning like running from a broken redline and a vigorous discussion of housing finance. i'm delighted to be with you all. i think many of you know, strengthening the nation's mortgage system has been a major focus of us for the

last several years. three years ago, our housing commission put forward what we thought was a pretty copper has a financer plan. we contributed significantly to the corporate warner and johnson creek bills. i see a few leaders in that audience. notice you are all a little uncomfortable, having forgotten our three year anniversary, but i want you to know you have a few more days -- it is the 25th of february. i am told it's either glass or leather, depending on who you ask. but i digress. we are grateful to have mel watt with us today. fhfa is maintaining an ongoing stewardship of friday

freddie mac and others. of course, we always like to an informed sense of our nations future. to provide a more formal introduction, it is a real pleasure to turn over the microphone to henry cisneros. henry provides so much leadership to so many projects that we refer to him as a bipartisan recidivist. he just can't quite seem to get back on the straight and narrow. but most of you know henry. he is, i think, incredibly generous with his time, and in my experience, he is someone who brings unique depth of substance, a real friendship and grace to all the work he does. [applause]

>> thank you. jason persuaded a bipartisan group of immensely important bipartisan senators to create this institution. i tell him frequently that if it hadn't been thought of a decade or so ago, it would have to be invented now, because the need is so great for this kind of forum for bipartisan discussion, of things that can't be discussed in more partisan terms. it's important in terms of putting important reports and having success in areas oas diverse as energy, housing, aging immigration. a really important institution. it is a pleasure this morning to introduce our guest speaker, mel watt. i've had the good fortune of watching his work over the years. i served as secretary when he

had oversight responsibilities and the congress. i had to work with he and his office often. i also watched his work as a congressman from north carolina. as a former mayor, you look at competitor cities across the and charlotte grew to immense stature during the time that he was a congressman. its airport, which the congress had a lot to do with, its emergence of the banking sector, and and charlotte general, overf this great southeastern u.s. city, mel watt had a lot to do with that. he has the distinction today of holding the toughest and most important job in washington, and judging by the great turnout today, in person and online, it is also a job that is very closely watched. as leader of fhfa for more than two years now, you manages an agent responsible for overseeing the most vital components of our nation's mortgage system. together, fannie mae, freddie

mac, and the federal housing loan bank system provide more than $5.5 trillion in funding for the u.s. mortgage markets and financial institutions. fhfa is also the conservator of freddie and has performed that functions in september, 2008. if that is not enough, the fhfa works with gse to create access to mortgage, credit for creditworthy borrowers, improve their foreclosure and loss mitigation activities, and reduce their retained mortgage portfolios. the fhfa has also made credit risk transfer a major focus of his work, and is now working securee to develop a platform and a single gse security. he was well-prepared for these responsibilities. heor to joining the fhfa, served in the house of representatives for 21 years,

from 1992 to 2014, representing the 12th congressional district of north carolina, which includes charlotte. he was telling me earlier that he was born within a few blocks of what is now the charlotte airport. while in congress, he sat on the house financial services committee and was a key member of the capital markets and government-sponsored enterprises subcommittee. he'd been watching this field and these ge's for -- these g se's for a while, as well as consumer credit subcommittee. he also served on the house judiciary committee and was the chairman of the congressional black caucus. i particularly applaud his work in trying to balance the nation's economic prosperity and issues of economic justice and opportunity. he did a wonderful job. as a native of north carolina, and in hisappa,

honor i picked a tar heel blue tie, and i did that with a special notice of last night's game where duke managed to pull it through. he received his jd from yale. we are grateful for your many years of public service, appreciate your steady hand, and it wanted thank you for the important and sometimes unheralded work you are doing on behalf of the american people. on behalf of the bpce, i thank you for choosing this forum to share your ideas on this important subject. we look forward to a question-and-answer dialogue at the conclusion of your marks. please join me in welcoming to the bipartisan policy center, fhfa director, the honorable mel watt. [applause] >> good morning . i think i would be a lot more upbeat if that carolina blue tie

had prevailed last night. but i hope i can get up from after that defeat. my team lost, of course. and we lost in the super bowl, so -- [laughter] >> i'm on a losing streak. [laughter] >> let me start by thanking secretary cicneros for his kind introduction and his opening remarks. i also want to thank the bipartisan policy center for extending been the tatian to me to speak today -- extending the invitation to me to speak today. i think all of you will agree that the things i am going to talk about deserve bipartisan attention and collaboration likely have seldom seen in recent years. -- anpeech has two parts

easy part and the difficult part. philosophyreflect a that i hope all of you agree we have tried to encourage since i begin the director of fhfa, a philosophy of open honest,, and transparent discussion and decision making that helps demystify what fhfa, fannie mae, and freddie mac do, and how those things relate to housing finance stakeholders. the first part of my speech is easy because it looks retrospectively at some of the things we have accomplished, and how we have managed fannie mae and freddie mac, which i will call the enterprises in the conservatorship to accomplish these things. by saying that this part of the

speech is easy, however, i want to be careful not to suggest that all the decisions i will highlight were easy or noncontroversial when they were being considered. been my experience that when decisions produce positive response down the road, we tend to forget how controversial or complicated these decisions might have been at the time they were made. the second part of the speech is difficult, both because it looks forward, something i have shown much less inclination to do up to this point in my time as director of fhfa, and because looking forward is inherently more difficult and almost always tends to generate more controversy. after two years as director,

however, i think it is timely for me to talk not only about our accomplishments, but also about some of the challenges and face, some of which will surely become more difficult for us to control, the longer the conservatorships continue. while my primary responsibility as conservator may be to manage the enterprises in the present, as i have said on a number of occasions, i believe that i have obligation both as my role as conservator and regulator to be frank and transparent about our challenges and risks. by doing so, i hope these remarks will ignite some dialogue that could will be difficult, but i believe is also critically needed. necessary tond is

frame both parts of the speech. congress established fhfa in 2008 during the height of the financial crisis, and one of the agency's first acts was to place the enterprises into conservatorship. senior preferred stock purchase agreement, what i will he u.s.e pfpa, t department of treasury has provided essential financial commitments of taxpayer funding to support the enterprise's compromise financial status. during the first four years of conservatorship, the enterprises drew a total of $187.5 billion from treasury, but neither enterprise has made a further draw since 2012. fannie mae has approximately

$118 billion of its pfpa commitment remaining, and freddie mac has approximately $141 billion of its commitment remaining. since the beginning of conservatorship, through the end pay015, the enterprises approximately $241 billion in dividends to the treasury department. under the provisions of the pfpa dividenderprises's payment do not offset the amount drawn from the treasury department. virtually everyone would agree that today we have a much safer and more stable housing finance system than when fhfa placed the enterprises into conservatorship. i also think that most of what

attribut people would attributee improvements to the decision s made in conservatorship. fees have increased by 2.5 times since 2009, and our review last year concluded that, overall, guarantee levels are now appropriate. stronger credit standards have removed unsound risk we haveg, and in increasingly focused on how to support sustainable access to credit for homeowners. statutory enterprises obligations. delinquencies and foreclosures have gone down on the enterprises's legacy books, and the number of reo properties held by the enterprises has decreased significantly.

the number of hard refinances has surpassed 3.3 million, and the enterprises have taken more than 3.6 million other actions to prevent foreclosures. the enterprises retained portfolios have decreased by over half since march, 2009. their portfolios are now more focused on supporting their core business operations. the enterprises's multifamily programs have strong performances through the crises, and they continue to share risks with private investors. their multi family purchases provide needed liquidity for the general, multifamily market with an increasing focus on affordable rental housing. we have completed efforts to

revamp and improve the warranty framework, and we have strengthened counterparty standards for mortgage insurance and non-bank servicers. in significantly ramped up credit risk transfer programs at both freddie mac and ith bothae, w enterprises now regularly transferring substantial credit risks to private investors on over 90% of their typical, 30 year fixed-rate acquisitions. macave a target for freddie to start using the common securitization platform in 2016, and a target for the single securities to go into effect with both enterprises using the csp to support their major securitization activities in

2018. in all of these things, we have also placed greater attention on diversity and inclusion in the enterprises business operation, consistent with legal standards, and with projections that the future composition of homeowners, renters, and the country as a whole, will be more diverse. as this list highlights, fhfa's role as conservator of fannie mae and freddie mac has been unprecedented in its scope, complexity, and duration. especially when you consider fannie mae and freddie mac's role in supporting over $5 trillion in mortgage loans and guarantees. roleis an extraordinary

for a regulatory agency. also because we are obligated to for so both -- to fulfill both the role of supervisor or regulator and the role of conservato at the same time, and because we are now approaching eight full years of having these obligations. let me also describe briefly how fhfa has managed these dual roles and responsibilities. like otheandr federal financial regulators, fhfa conducts safety and soundness supervision with a deliberate distance from fhfa and the enterprises. members of our supervision staff, many of whom are located on site at fannie mae and freddie mac, conduct examinations that focus on areas of highest risk to the enterprises. they produce reports of

examination and make findings as to whether the enterprises need corrective actions in particular areas. in contrast, our role as conservator involves a different kind of relationship with the enterprises. under the housing and economic recovery act of 2008, the fhfa has the full authority of the enterprises's boards of directors, management, and shareholders while the enterprises are in conservatorship. this means that fhfa has ultimate authority and control to make business, policy, and risk decisions for the enterprise. the enterprises's boards know

their job is to meet our expectations. however, managing these enterprises in conservatorship requires much more of a joint what would occur under a normal regulatory relationship. examinerle, while an would review board or management minutes after the meetings have taken place, members of fhfa's division of conservatorship team attend management and board meetings as part of our conservatorship functions, and i, personally, attend and provide at executive sessions of enterprise board meetings. approaches that we use to manage the unique nature of these conservatorships. under these approaches, we have been able to for sale our statutory obligations to ensure

safety and soundness, to preserve and conserve enterprise assets, to ensure liquidity in the housing finance market, and to satisfy the enterprises's public purpose missions. set the overall strategic direction for the enterprises in fhfa conservatorships strategic plan, and in annual scorecards that outline policy expectations. we set quarterly and year-end milestones for our scorecard objectives, and we conduct regular evaluations of whether rhe enterprises are on track o behind in meeting our targets. our final scorecard assessments at the end of each year factor into the compensation calculations for fannie mae and freddie mac executives.

thend, we delegate day-to-day operations of the companies to their boards and senior management. with over 12,000 employees at the two enterprises and considering the nationwide scope and technical nature of their businesses, we can't pull every lever and make every day-to-day operating decision. quick toed, i'm acknowledge that their operations would grind to a halt. ther conservatorship, enterprises continue to operate as business corporations with boards of directors subject to corporate governance standards. the enterprise boards are responsible like boards of other companies for overseeing their business activities. they review budgets and set limits. business plans and

oversee senior management. first place these into conservatorship, fhfa selected new chief executive officers, reestablished their boards and approved new board members. fhfa has contingent to approve members and board throughout conservatorship, and they are responsible for meeting our expectations and effectively running the companies. i meet several times a month with the ceos of freddie mac and fannie mae. in addition to my attendance at board meetings, i have regular conversations and engagement with each enterprise's board share to help elevate issues that need to be resolved. have -- that require

advanced approval by fhfa. deciding which items we should delegate to the enterprises and which should require fhfa approval is a judgment call, and finding the right balance is an ongoing process. there are decisions that are obvious choices for fhfa to make, such as setting the core components of the guarantee fees charged by fannie mae and freddie mac. others are closer calls. while we retain the authority to step in and make the call on any issue, even ones that we have previously delegated, we have found that providing as much clarity as possible about roles and responsibilities serves everyone better. the fourth prong of our

conservatorship model is oversight and monitoring of thisprise activities, and is something that happens on an ongoing basis. it is probably not an overstatement to say that this takes place constantly. we would have to ask them about that. in addition to attending meetings of the management committee, the fhfa staff members engage in regular dialogue with the management and operational teams at the enterprises. we regularly review information submitted by the enterprises and take action where appropriate. inaging the enterprises conservatorship through this fourth step approach with regular adjustments to account for changing circumstances has worked well. fhfa's conservatorship decisions

ped navigate the enterprises for a financial crisis, and despite the substantial negative impact of the crisis, help prevent it from being far worse. eight-year conservatorship is unprecedented, and managing the ongoing, protracted conservatorships of fannie mae and freddie mac poses a number of unique challenges and risks. this leads me to the more difficult part of these remarks. i have consistently stated that our responsibility and role at fhfa, as conservator, is to manage in the present. however, as we work to appropriately manage challenges

and risk in the present, we also have a responsibility to assess when these challenges and risks may escalate to the point that they negatively impact the enterprises and border housing finance market in the future. i giving this speech today, am signaling my belief that some of the challenges and risks we are managing our ever escalating and will continue to do so the longer the enterprises remain in conservatorship. ansequently, i believe i have responsibility, both as regulator and as conservator, to identify and discuss this concern more openly. and the serious risk,

one that has the most potential for escalating in the future, is the enterprises like of capital. fhfa suspended statutory capital classifications when the enterprises were placed in conservatorship, and fannie mae and freddie mac are usually unable to build capital under the provisions of the pfpas. the pfpas require each enterprise to pay out comprehensive income generated from business operations as dividends to the treasury department, and the amount of the funds each enterprise is allowed to retain is often referred to as the enterprise's capital buffer. this capital buffer is available to absorb potential losses, which reduces the need for the enterprises to draw additional

funding from the treasury department. however, based on the terms of the pfpas, this capital buffer is reducing each year. and we are now over half way down a five-year path toward eliminating the buffer completely. 1, 2018, theary enterprises will have no capital buffer and no ability to weather second to nones, credit related loss incurred by freddie mac in the third quarter of last year. againstmaking a draw the remaining treasury commitments under the pfpas. a number of noncredit related factors that could lead to a loss and result in a draw on those commitments.

interest rate volatility, accounting treatment of derivatives, which are used to hedge risk but can also produce significant earnings volatility, reduced income from the enterprises retained portfolios, and the increasing volume of credit risk transfer transactions, which transfer both the risk of future credit losses as well as current revenues away from the enterprises to the private sector. a disruption in the housing market, or a period of economic distress, could also lead to credit related losses and trigger a draw. it is, of course, impossible to predict the exact ramifications of future draws of funds from the pfpas commitments, but let

me offer a few observations. importantly,t future draws that chip away at the backing available by the treasury department under the pfpas could undermine confidence in the housing finance market the remaining funds available under the pfpas provide the market with assurance that the enterprises can meet their guaranteed obligations to investors in mortgage backed securities, even while they are in conservatorship, and don't have the ability to build capital. in effect, the treasury department's financial commitment to each enterprise under the pfpas is a source of capital that supports mortgage market liquidity. however, under the terms of the pfpas, these funds can only go

down and cannot be replenished. would reduce the overall backing available to the enterprises and a significant reduction could cause investors to view this backing as insufficient. investorsar where would draw that line, but certainly before these fun were drawn down in fullds. criticalconfidence is if we are to have, as we do today, a well functioning and highly liquid housing finance market that makes it possible for families to lock in interest rates, obtain 30 year fixed-rate mortgages, and prepay mortgages if they want to refinance or to move. if investor confidence in

enterprise securities went down and liquidity declined as a result, this could have real ramifications on the availability and cost of credit for borrowers. draws could lead to a legislative response adopted in haste or without the kind of forethought that it should be given. i have been clear that conservatorship is not a desirable and state, and that congress needs to tackle the important work of housing finance reform. however, because of the intricacies of our housing finance system, and the extremely high stakes for the housing finance market and for the economy as a whole, if reform is not done right, i continue to hope that congress

can engage in the work of thoughtful housing finance reform before we reach a crisis of investor confidence or a crisis of any other kind. while it's not my place to metal discussions,ical i am also not hearing much discussion of housing finance reform in any of the presidential campaigns. discussed but related challenges posed by continuing conservatorship is fannie mae insulation mac's from normal market forces that would otherwise inform their operations and business practices. ther differing views about business models leading up to the financial crisis, but in conservatorship, the responsibility to create a

regime of market discipline and appropriate competition falls squarely on fhfa shoulders. the longer the enterprises remain in conservatorship, the greater and more comp catered this responsibility be -- and more complicated this response ability becomes. it will present itself in multiple decisions, including pricing. although the enterprises are not building capital while they are in conservatorship, fhfa expects fannie mae and freddie mac to determine their pricing as if they were holding capital and seeking an appropriate economic return on this capital. this is something that was very important to fhfa as we started to review and make adjustments to guarantee fees. we worked with the enterprises to review the cost of capital as

part of our assessment of the correct level of overall guarantee fees charged by the enterprises. without such an approach, it would be challenging to decide what guarantee fee levels to approve. through our 2016 scorecard priority to finalize a risk management framework, we are also working to further our ability to evaluate these kinds of enterprise business decisions. another challenge related to market discipline is the question of how the enterprises should or should not compete against each other. as i discussed earlier, we have consciously structured the conservatorships of freddie mac and fannie mae so they continue to run as growing concerns.

we want them to continue to innovate and we want them to compete on the kind of customer service they provide to lenders and on the quality of their business practices. we believe that competition in these areas is healthy for the enterprises, good for housing financing markets, and good for borrowers. however, we have also made a number of decisions that work wire the enterprises to adopt a line standards in certain areas. such ias an aligned counterparty requirement, to avoid excessive risk being placed on taxpayers. we carefullyrship, determine when to allow competition and when to require

alignment, requiring of course that all operations be executed in a safe and sound manner. that to beingnge in protracted conservatorships forces us to face is how to manage and plan for the future when there is tremendous uncertainty about what the future holds. demonstrates that it is difficult to manage the enterprises in the present without establishing some kind of plans for future. here i'm not talking about plans for housing finance reform, but plans for every day operations, including strategic planning that every well-run business does, and project planning that is necessary to continue key initiatives. without looking somewhat down

the road, fhfa and the enterprises would both lose their momentum and jeopardize day-to-day success. the key dilemma when you have an uncertain future, however, is how far down the road to look and how to retain the necessary talent to implement either short-term or long-term plans. this challenge drove my decision to authorize the increases in compensation for both enterprises, ceos that proved so controversial. i recognize that our delegated model relies heavily on strong management teams to uphold their side of conservatorship. second, we needed to have the enterprises engaged in operations august strategic planning over a thre

e-to-five-year horizon. to do those things, we needed to ensure continuity by retaining senior-level staff and having reliable succession plans that minimize disruptions. implementede have the legislation that congress passed to reinstate the prior ceo compensation limits, and it is not my intention here to debate the wisdom of the decision that congress made. having served in congress, i understand that it was an easy political decision, however, the issue of reliable succession planning is another example of the many challenges presented by a long-term conservatorship. the fact is that the enterprises run businesses that rely on a highly specialized and technically skilled workforce.

retaining that workforce is essential to the enterprises's success and to fhfa's success as conservator. with continuing uncertainty about conservatorship of indefinite duration and what role the enterprises will play in the future of housing finance, retaining skilled employees will be an increasing challenge. ongoingmade these conservatorships work thus far through the dedication of staff at fhfa and the staffs at both enterprises. we, of course, remain committed to to continuing this task. we know that the stakes are high for the housing finance market and for the broader economy, however, as i have indicated in my remarks today, there are

substantial challenges and risks associated with the unprecedented size, complexity, and duration of the conservatorships of fannie mae and freddie mac. years atre than two eyar fhfa, i can assure you that these challenges are certainly not going away, and some of them are almost certain to escalate the longer the enterprises remain in conservatorship. i thank you for the opportunity to address you today and look forward to the discussion that will follow. [applause] >> director, thank you very much for a very frank, thorough discussion. i think we have all been treated to a real statement of concern

by a person who has been in charge of this for our country. hear suchre treat to an analysis of the last two year period and the period that preceded it, and to lay out in clear terms language that the congress can understand, the american public can understand, the media can understand, and her for action. short, ironime is going to ask just one question to get the ball rolling. i'd ask you to prepare your thoughts on questions you might have. the director has consented to take some questions from the audience, and i will moderate the process. to start the process, director, after two years, what is the most impressive thing for you? what has made the greatest impression in terms of the overall environment of the housing markets, the economy, fhfa's role?

what has surprised you or impressed you in this initial two-year period? >> i wouldn't say i was surprised, but i have been totally impressed by the level and quality of the staff at fhfa and the level and quality of staff at fannie mae and freddie mac. really, really anmitted people to work in atmosphere where you don't know what your future is as an employee or even as an institute, and what role you will play going forward to have people and to be able to retain committed staff, leadership, has been a major, major benefit

to the american people. i think their staffs give a lot of second-guessing and abuse, but when the history of this period is written, people hell recognize that t commitment these people have made and the people at fhfa director made to stabilizing and solidifying the housing sector almostsing finance is unbelievable. the level of commitment that i have observed. it has been difficult. we operate under substantial constraints in that space, to be able to retain employees, some

of which i eluded to here. i think it will get more and more difficult as we go along, which is one reason i am sounding the call for somebody to take action of some kind, to clarify the situation. speech,listen to your what is the action? i'm not asking for specifics, but are we fundamentally talking about the congress needing to step up and act -- what is reform? >> some version of reform -- i wouldn't characterize it as one or the other, because there are multiple approaches that could be taken. t one of the things clearly is that

certainty gets priced in the market, which is one of the reasons we went out of our refineway to -- out of our way. it was generating so much uncertainty that they were pricing the uncertainty into the cost of borrowing funds. uncertainty has a price. something needs to be done to tell the markets and the american people what to expect in the future, and we don't control that, so i stay out of trying to speculate about what that is or whether this approach are that approach might be the best approach. in your previous position in the congress, you might have an opinion. >> i have some strong opinions. [laughter] me about mye to ask

personal -- i don't have any personal opinions anymore, i just have fhfa opinions now. [laughter] >> i'm not free to express my personal opinions anymore. >> in the category of things that impress you, could you say a word and then we will go to the question. could you talk about the housing market overall, leaving fhfa and a unique vantage point for how the country is doing in the context of the larger economy. are we in these and enough shape that we can be comparable about the role of housing? >> i think we are in much, much, much, much, much, much better position than we were at the onset of the crisis. once we put fannie mae and freddie mac into conservatorship, we made substantial progress.

we stabilized the housing finance market, housing values came back. -- uniformly everywhere there are still a number of people who are underwater, but that number is reducing every month. cases, the availability of credit swung to the point where it was not available as it should have been, and we tried to get lenders to adjust back -- that's not a result, i would say, of fannie mae and freddie mac's credit box, it is a result of lenders not being willing to lend throughout the credit box they want back. but i think we're in a good position. interest rates being low has

helped. they seem to be staying stable, despite what the fed is talking about in raising their base rate. i think we are in a good position. the question is, can we sustain of uncertaintyd enterprisese staying in conservatorship forever? theirs was never intended to be a permanent solution, and i think it should never be viewed as such. >> i think it should be noted that a true public servant talks himself out of a job. [laughter] >> i'd be happy to do that.

that would be a blessed day for me. if you did the right thing to way me out -- to wipe me out -- [laughter] crowley. in the absence of housing finance reform, we're left with gse's total and the government dominance of the residential mortgage market. you talked a little bit about business decisions by the gses and competition between the two, but you didn't say anything about competition in the private sector or between the private sector and government. which steps is fhfa taking in that regard? >> well, we have taken a number of steps to try and remove uncertainty where we can, but we don't have any control over -- i mean, i don't have lenders in conservatorship.

if we did, we might take some action. but i'm not suggesting that would be a good thing. i'm suggesting that where we are shouldconservatorship end at some point. the primary thing we've done is try to remove uncertainty by making clear should what the representations will be, encouraging lenders to loan throughout fannie mae and freddie mac credit box. you know, that's all we can do. fannie mae and freddie mac don't loan; we just take loans that other people make and take them off their books, back them or securitize them. >> i was speaking among the things about -- have done, in a

responsible way, and continue to on credite can d o risk transfers. our concern is will there be enough private investor money out there to sustain what we are doing now, and in a downturn, will that still be available? i don't mean to minimize the value of that, i think it is very important that we've done substantial credit risk transfer, and we will certainly continue to do that. >> question over here. go ahead. even handelman. you spoke very clearly and

eloquentl about the ongoing risks of a definite conservatorship for the a sick functioning. -- for the basic functioning. can you talk more specifically about the indefinite nature of conservatorship affecting their ability to help affordable housing, whether it is affordable homeownership or affordable rental housing? good product innovation, the support they provide in the secondary market, their chartered role in that area? controlling, to some extent, that innovation in conservatorship. more aggressive in our control than they might be able to be if they were not in conservatorship. serious about the statutory mandate to serve low income and middle income people,

and that is not something we made up. we're serious about it, so we try to balance all those things as well as we can. we will continue to do that as long as the conservatorships continue. whoever isg that writing the future would provide for that on an ongoing basis we setorward, but -- issued als, we just proposed due to the servant rule, which we are in the process of of electing comments on now, and will finalize. ourdy should understate

commitment to providing support for affordable housing, because it's a statutory commitment, like safety and soundness. >> on that question -- follow-up you have personal thoughts about the state of homeownership and its role? we have traditionally viewed it as a way to the middle class, a way in which persons who have not been homeowners can amass wealth and earnings an so forthd. the general state, of health of that issue -- >> homeownership as a percentage is down. people got really adversely affected by the crisis. tore's a general reluctance that, innto a market

some cases, burned people substantially. there are some changes taking place in addition to that that are headwinds against homeownership. >> demographic medical 87 he you know, if you -- i uess you're younger than me -- i should say when i was coming along, somebody would -- a house would stay in for 30 years, and so now people are moving. much more mobility. mobility.re is beingarts, creation delayed. you know, there are a number of

headwinds. we try to not to take sides homeownership and rentals. our responsibility is in both of those areas. but, it is true that a of wealth inortion this country and a of wealth onate part in minority communities has been stocks wnership versus or bonds or other kinds of things. over the years been a building wealth in the country at large and in specific communities. > you see that as a worthy continuing goal for the country. > i do, but that's not my decision to make. >> i get that. i was asking from the context of our whole career and the work that you did before in congress. >> ron has a question here and the center and long in ciations with the b.p.c.

multiple capacities and habitat nd a champion of rental these days. >> well, i'm glad you spoke to it. to talk a little bit more about the rental situation in this country. homeowner, t a you're a renter or you're staying with your parents, the rental housing situation in this country is worse than i've ever seen it and been in business for 45 years. we have more than a quarter of more than paying half their income for housing and more than half the renters 30% and renters only average.000 a year on but we're losing all the time. the only production of is low nce i'm aware of income housing tax credit and not near enough. wondering if fha had some responsibility to see this improving because it's deteriorating every day, i

think. and much eteriorating deteriorating because of the lack of supply rental generated that's because there's so much more it now, people having homeownership and supply is not yet caught up. year multifamily market exploded. we projected and the economists explode ected will again this year. we ding is taking place and fanny ajor emphasis on mae and freddie mac being involved in the affordable space in the g involved egular rental space only to assure liquidity in the market, but aggressively involved in the

affordable space, and that's why we put a differential -- freddy's anny and regular multifamily financing we can't cap the affordable side. develop -- they can or as much on their books secure ties or finance as much affordable side competing't want them in the private sector and it's been more than willing to step nto the private part of the market. we have a responsibility, i side on the affordable and we're trying to aggressively pursue that responsibility. the st one point on

exclosie expleas explosion. alf the country cannot afford that. there is no low income tax redit and not no affordable housing being created that the bottom half of the country can afford. >> that's probably somewhat of n overstatement but you're right that there's not enough, which is why we put our emphasis fanny mae and freddie mac on he affordable side because there's not enough of that being built. we're trying to make it easier housing reblntal constructed and for what's already there to be as ined as affordable opposed to reverted to fill the market, yes.the > director, thank you for honoring the bipartisan policy

points y bringing these and being available to answer the questions. there is a lot of interest in in the housers. yes, there are. >> i spoke too long. that's okay. it was full of content and substance. hank you for your public service. there is an irony that we need conservatorship but you have created through our management skills a workable system and there's trust in that, so it's actually in some ways. a call today have issued to action and it demonstrates kind of wisdom and courage you've shown throughout your public service and to bring this message here today is important and we all appreciate it. please join me in thanking an out standing public servant. sir.hank you, here a look at the

c-spanme schedule on the networks. tarting at 8:00 p.m. debate on u.s. drone strikes and counter terrorism strategy and book tv authors and ith books on u.s. history and it's american history tv. we'll begin with the 1992 bill speech after sion he lost the new hampshire primary. road to ght c-span's the white house coverage continues with the hillary clinton rally in nevada and will speak with voters and supporters in east las vegas. live at 11:30 eastern time on c-span. c-span's coverage of the presidential candidates ontinues this week with campaign events in south carolina and nevada leading up south carolina g.o.p. ca ry and the democratic

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public.open to the watch on c-span and c-span.org. joining us now we have todd harrison. e's the defense budget analyst director at the center for strategic and international talking nd we'll be about the department of defense budget. todd, thank you so much for joining us. >> thanks for having me. let's have a brief overview for our viewers. line f explain the top items and the difference between defense budget and the war fund. >> on february 9th, the annual t submitted his budget request to congress and that included the budget for the pentagon. included in the defense budget is $524 billion and what budget. as the base that's the core defense budget having a cost of department of defense regardless world.t's going on in the and then separate from that they

a $59 billion budget request in an account that is overseas contingency operations. distinction between the base budget and the war budget s how it's treated under the budget control act. the budget control act is a law put back into place in 2011 to help control and that put ng mandatory budget caps across the non-defense portions of the budget, and of course if it triggers ose this process called sequestration. people are probably familiar the past few years. the way it treat defense funding though is different. base budget that counts towards those budget caps, but the war funding is not capped. it doesn't count towards your budget cap. in there ou put doesn't count toward your budget cap. that's the way that the

department can exceed the budget triggering a sequester. that's important because it's recent years. the war funding account has been used for things that are not war related. congress and the administration have put more and more funding to be in the used base budget. basically in order to get around they could aps so increase defense spending ithout increasing the budget caps. the distinction between what budget and he base the war budget has been blurred so much if you look at the you can tell re the difference. there's so many things in the ar budget now that used to be in the base budget that as an analyst i consider them together at this point. any limit to how high the war budget can go? only limit is what congress is willing to appropriate. limit. no statutory like with the base budget there

is a statutory limit. that's the limit this year. that's all they can request for d.o.d. unless congress raises the budget caps. but the war funding is not is not a limit. they requested 59 billion because in the budget deal that last year it said that under the agreement that at department would get least the amount of war funding yearit got in the previous which was 59 billion so their requesting 59 billion again this year just to keep the spirit of deal. >> okay. we want to bring our callers conversation. can call in on the republican line at 202-748-8001. and rats 202-748-8,000 independence call at 202-748-8002. d.o.d. talk about the compares with its budget to some

that have r agencies been -- what part of the overall budget s the defense make up and how does it compare? >> if you breakdown the overall budget it's about $4 trillion a year. here's a big difference in the budget between what they call discretionary and mandatory. budget, arters of the $3 trillion goes to mandatory items. confusing. what it really means is it's auto pilot is on where congress has passed a law in the past that is considered a permanent appropriation and so the amount of money that gets accounts is se determined by a formula that is set in law. mandatory funding includes like social security, medicare, medicaid and many veterans benefits and services. are the big items. he discretionary part is about a trillion dollars a year. and defense is about half of

that. the hen non-defense is other half. so the non-defense part of the iscretionary budget includes everything from funding for nasa, education, transportation, of veterans t benefits and services is in the on-defense part of the discretionary budget. state department and affairs, those are all non-defense. of 's in the defense side the budget is the department of weapons nd the nuclear related activities that are not funded in d.o.d. but in the of energy and the national nuclear security administration. hose things together make up the defense part of the discretionary budget. of ast week the department defense chief financial officer ike mccord talked about how recent budget deals have impacted the department of budget. let's place that for our viewers

now. we got about 17 $2.5 billi $2.5 billion this year than last that's in terms of the budget deal and was exactly flat years.se two $2.5 billion about what i call kitchen table math. if you do the math the pay have consume about that amount of money. so, taking that aside we really flat amount of money once we got done with the with, sation part to work so that really speaks to the this being nt about more about the shape of the budget than the size because the size isn't growing. if you look back to the year before, one of the reasons that the secretary has said he was budget deal is hat it jumped us up a good

0-$25 billion down to the $495 billion level. and that he what this budget and a better his place and jumping off point for jump up get the next we need in the future. >> you can talk more about how ast year's budget agreement is shaping this year's budget. > what mike mccord was referring to, once the budget control act goes into effect it these budget caps. we've had three budget deals that have modified the budget cap. the first deal was in 2012. cap for sed the budget fiscal year '13 and brought it about 495 el of illion and then we had subsequent deal in 2013 that ncreased budget cap for fiscal year '14 and '15 that kept it at in the base budget. then the most recent one of 2015

the caps for fiscal year '16 and '17. in '16 and rently umped the d.o.d. budget up to 521 billion and then for fiscal 524 17 it's come in at billion. and so, it is fortunate. department is fortunate they've gotten some relief from the original level of the budget caps. add up all the increases from what the caps would have mo to how they've been ends ed over the years it up cumulative increase of 97 billion over the past five years. victory of sorts for the pentagon. ut still far less than the pentagon had been planning for. almost every single year of the administration, the highernt has requested a level of defense spending than what congress and budget cuts

allowed. there has been this give and take back and forth. > we want to bring our callers into this discussion. up first on our independent line don from orange, texas. don, you are on. caller: thank you. know that we haven't declared war on anyone since world war ii. so i'm wondering about the war.nition of and secondly -- for budget terms. econdly, i know that the amounts for i guess you'd say veterans ement of benefits, they're not in the budget amount. i wonder if and you could and explain amount why it's separated. >> sure. whata great question about we consider war related spending. it actually has nothing to do with whether or not we declare war. it's something that congress and the administration get to define for themselves. technically in budget terms the war related budget is called

funding. supplemental and that just refers to the process that it goes through in how it's or appropriated. it doesn't really have any onnection to whether or not it's war related. whatever is allowed to go in the ar funding account is whatever congress and the administration decide to put in there. to be not actually have connected to real world combat operations at all and if you ctually dig into the details about half of that funding that's in there right there, has no lf of it connection to operations in iraq, syria and afghanistan. t is part of the peace time presence and deterrent conduct on hat they a regular basis. there are a lot of things there are in the base budget that they are putting in war budget that around of maneuvering the budget caps and this is something that both the congress and administration have been

doing in concert. something you can blame on one party or another. a terms of veteran spending, lot of people don't realize what we spend on veterans benefits is budget.t of our defense it's actually considered non-defense. amount of funding for 1 rans right now is about $160 billion a year and that is rapidly. took eve when the obama office it was 100 billion and substantially. due to the is vietnam veterans. t's the baby boomer generation and those costs are projected continue growing by the end of decade they'll be about $200 billion a year. that's not part of the defense budget. carried separately in the federal budget.

democratic n our line we have elroy from west arizona. you're on with todd harrison. caller: yes. this is a retired military from arkansas. used to be an administrator myself of course under george w. bush administration. reallocated our our jobs much -- you know reallocate our dollars times along with the times with the jobs that we are producing money. can we not improve our revenue and stuff like that knowing that we invested in the future jobs and stuff that can actually economy and improve he budget of what you guys are dealing with? >> yeah.

good point. money and how r can it be used most effectively benefit the military overall.economy there is a lot of talk about that. one topic that's come up a lot recently in defense is how can we restructure military pay and enefits to be more competitive with the private sector because you're seeing that companies in usingivate sector they're many different forms of pay and enefits to attract and retain talent. the military is basically stuck with a compensation system that designed in the forties and fifties and so, that's been a big topic of conversation. there's an effort in the pentagon called force of the future where they're trying to they're trying to reshape the military pay and so that they'll be more competitive with the private sector. like t means things increasing maternity leave and

aternity leave as well and changing the retirement system, actually -- re congress this past year added a new part of the retirement it's a for the military 01 k like plan so people can divert some of their paycheck and get a matching contribution from the government so they have retirement savings that would supplement the retirement pension that the still offers. in the private sector fewer companies are offering pensions anymore. and so, they're offering more retirement plans. so the pentagon is doing what it can. of of course it needs a lot help from congress to restructure its pay and benefits competitive e more with private sector jobs. >> okay. e are talking with todd csis.son of the ou were a captain in the u.s.

air force reserves about the president's budget. the defense spending budget. was put forth by the president. calling this d as defense budget a punt by the president. that?id you mean by >> i did say that, didn't i? >> yes. in many ways they avoided making lot of really big difficult decisions this year. his is the last budget request of this administration. to be expectedat they'll continue on the course they'd be on for the past seven years. changes.'t see a lot of for example, we didn't see any major programs get cancelled. and so, i think that they are putting off a lot of the big decisions that are going to have to be made to the expect administrations and there are to be made.t have right now and the pentagon's a ns they got what we call modernization bow wave.

comes forate ship.a peak costs will be overlapping in time and they'll peak in the twenties. 20's.ng might not be available.ght not be there is a reckoning where to delay some of these programs or scale them ack or ask for a massive infusion of funds to cover the bill and we didn't see much year in on that this this budget request. that's why i'm saying they're

punt to the next administration up to the next president to try to deal with some of these issues in terms of the long term modernization plans for the military. >> is that a usual course? do we usually see presidents at the end of their administration punting on the budget on that way? a mixed record. -- at the endimes of the george w. bush administration we were peeking then surge in iraq and starting -- or the surge in was a ramp so that up period and the budget was rapidly. if you look back at the end of he clinton administration, we had just been at the bottom of a draw down and starting to build up again. to see in the last clinton budget an increase in military spending. so, it varies from time to time. it depends on the conditions, in this administration my assessment of the budget request

a punt to the next team. on ur next caller we have our democrat line of the we have alex. you're on. >> caller: thank you for having me. of the $4 trillion budget 3 trillion is mandatory and in stone and the 530 comes from the 1 trillion indiscretionary spending. is the entire 3 trillion of all domestic ding or are there -- i know you programs,the veterans but there are also programs that are also relating to maybe rnd else relating to pretty budget or is that much self contained win that discretionary. small part that's in mandatory. t's generally about 6 or

$7 billion a year, billion with a b. part of thery small $3 trillion of mandatory spending. majority of the mandatory spending is going toward social security, medicare and part of the veterans benefits and services i talked about earlier. those are the real drivers. now, that's not set in stone. that is set in law. can be changed. ongress is typically reluctant to make changes to this program. to make changes you're talking benefits for current beneficiaries. many of te retirees so you are talking about changing what they get in the social security check or what they get in terms of andcare benefits politically, it tends to be a nonstarter.