potential, and certainly the intent to threaten our homeland, and ultimately, that is why we're here. host: general, what are your plans and the rest of the soldiers for the holidays? guest: thank you for asking and happy holidays to everyone as well. our hope is to have a day of reduced activities. there will be a couple of sporting events and we are looking for to a great meal from our dining facility. think most people are pretty much in the holiday spirit right now and we are looking forward to hopefully a good day to kind of reflect on what they are doing and why we are doing it in the direction we are going. host: happy holidays to you and everyone serving there, and thank you for spending time talking to our viewers this morning and explaining your responsibilities and the steps

you are taking in afghanistan. stay and everyone else in afghanistan. thank you very much. >> thank you very much, greta. for today'soes it "washington journal." we will be back in the morning. ♪ank you for watching today ♪ [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2016] ♪ >> here is what ahead -- what is ahead today. next, a discussion featuring dick cheney and leon panetta on the future of the pentagon and the trump administration.

then, ibm ceo on a future of artificial intelligence. later, how personal data is collected and used by marketers. taking a look at prime time programming, at 8:00 eastern, a look at the career of mike pence. .hen a profile of chuck schumer interviewsastern, with members of the 115th congress. here's a preview of the program on mike pence. mr. pence: my dad built -- in a small town of southern indiana. i started in politics as a democrat. when i heard the voice of the 40 is in a you is its, it all changed for me. i live the dream of becoming a congressman from a small town and i serve as governor of the great state of indiana. [applause]

pence: i served 12 years in congress. if i only had 12 years left to live, i would want to live as a member of congress. that was the longest 12 years of my life. [laughter] >> let me just say the challenge has really just begun. the american public has rejected the policies of george ocean they are waiting to see what we can do. we will show them we will never lose sight of them. in terms of making their lives that are. and creating a better america for the average person and all americans. of some of our prime time programming tonight. and event with mike pence at 8:00 eastern. a look u.s. capitol here where rations are underway for next

month plus's presidential inaugural. early january, the start of the 115th congress. we caught up with one of the incoming freshmen members. >> josh, tell us about your experience here in washington. you are not new to washington. gottheimer: it is great to be back. most excited about the chance to work with and sit down with democrats and republicans. during orientation, it is an opportunity to spend time together. common and a lot of issues. it has been great. >> democrat new jersey representative of the fifth district. rep. gottheimer: i was a speechwriter for president clinton and i most recently

-- worked with the chairman of the fcc. , worked at ford motor company corporate advertising, and most recently at microsoft where i did corporate strategy. >> what does all the background mean for the job you will do out here? how do you think that is impacted what you do? rep. gottheimer: it gives me a great perspective on bringing the public and private perspectives in. one thing that is so important, talking to folks here, how do we solve problems and dig in? iran on the idea we need to get our taxes down and cut unnecessary regulation and standby veterans and first responders. bringing the perspective of being willing to set the table, and less about partisanship, you cannot come to the table and scream at each other. you have to solve problems and move forward. that is hopefully one of the greatest assets i am bringing to

the table. i think most of us are incredibly frustrated with what is going on. you see what is going on here and it has been too little in terms of solving problems. people are focused on screaming and being nasty versus getting is fixed. to hit the eager road and start working hard from the beginning and really find a way for common ground. whether that is tax reform or infrastructure or doing right by families, i think there's so much opportunity to work together and that is what you're hearing. i will tell you, i must chart by democrats and republicans in terms of wanting to make progress and deliver for people. >> you are here because you to field representative scott garrett, republican. did a lot of work on financial issues. do you plan to do the same? is it important to the area you represent?

rep. gottheimer: financials are most critical to where i am from. regardless of what committee i am on, i know what i am focused on. we have a lot of big issues on the financial front to make sure our country continues to lead the world, especially from new york where i am -- especially in new york where i am from a new jersey, q2 local financial sector. small businesses need to thrive. getting our taxes down and cutting necessary relation is critical. -- cutting unnecessary is critical. help the economy forward, bring jobs in, make sure the companies who are there stay there. the world is our oyster in the future can be credibly positive, but it will take a lot of work. that is what people want. they want us to work together. >> where did you grow up and what was your childhood like? >> good question. -- rep. gottheimer: good question. i grew up in north jersey not

far from where i live now. i went to public school. my dad owned a small business, my mom was a schoolteacher. i learned like most people the value of hard work, but also the importance of giving back when you can. my dad always taught me, the private sector -- it is important to make sure we do everything to thrive but also standing by people who stand by us. which is why i spent a lot of time focusing on standing by first responders and make sure we do right by veterans, women's issues and families. i have a four year old and a seven-year-old who are the most important things in the world, and my wife, but i think we both agree the kids come first. as a parent, what guides me every day is doing right by them. i think that is what drives a lot here, their kids and grandkids. it is why we realize at the end of the day what is most important is building a good future for them.

>> what did your kids say when they find out you won? rep. gottheimer: we did not find out until about midnight. my daughter had fallen asleep, my seven year old we woke her up and it took her a few minutes. my son had a light of -- he had been a lot of cookies so he was running in circles. but they were both very excited about it. it is a thrilling time. it was a great chance throughout this process to teach them about democracy and how it works. no matter who wins, the country will move on and that is most important. you get to teach them about the different branches. i am excited for them to come down here and see what we do. this is about their futures. it is exciting to have them be part of it. they are not wearing me pins around anymore, but they were very into it. >> u.n. offer public school to to public school, to

go to the university of pennsylvania, oxford pennsylvania -- oxford university to harvard. how will that help you? rep. gottheimer: it gave him a good education, but i met a lot of people. i think education is critical. i was aborted so many opportunities. i am so grateful -- i was afforded so many opportunities. i am grateful for that. i am really hoping to bring these experiences to bear here. that is what you're supposed to be. it all affects your values. i really hope i bring what i learned from president clinton, the time we had surpluses a great economic growth, incredible fiscal responsibility with balanced budgets and stem a law enforcement. there are certain values i learned that will carry through now. it is important to find the middle. i believe there are extremes on either side. everything in moderation my dad always told me. i think that is a good place.

>> thank you for spending some time with c-span. appreciate it. rep. gottheimer: thanks so much. nice to meet you. us tuesday, january 3, for live coverage of opening day of congress. watch the official swearing-in of elected members of the house and senate and the elected speaker of the house. our all-day live coverage of the begin at 7:00 a.m. eastern on c-span and c-span.org. listen to it on the free c-span radio app. >> here are some of our featured programs. on saturday, take a look at tributes for members of congress and the white house. senator barbara of maryland. at 2:00, vice president joe biden. at 8:00 p.m., christmas at the

white house p rejoin michelle obama as she'd receives the christmas tree. tour the white house, make andstmas crafting projects finally, the tree lighting ceremony on the national mall. eight: 40 p.m., hear from former house speaker john in the on his time congress. at 9:40, attend the portrait unveiling of outgoing senate minority leader harry reid, democrat of nevada. speakers include hillary clinton, vice president joe biden, and charles schumer. we willt 12:30 eastern, hear from representative charles rangel of new york. then, from the shakespeare theater on capitol hill, we take you to the romeo and juliet wrongful death trial where supreme court associate justice sam alito serves as associate judge.

then a look at the career of vice president-elect mike pence in his new role as president. watch on c-span and c-span.org and listen on the free c-span radio app. >> now, former defense secretary's dick cheney and leon panetta talk about the future of the defense department under president-elect donald trump. from the recent ronald reagan defense forum in california, this is just over an hour and 10 minutes.

>> ladies and gentlemen, welcome to panel session eight. former secretaries of defense, asses the state of our national defense, where we are and where we need to go. please welcome barbara starr, cnn pentagon correspondent. [applause] >> i guess they are not going to introduce us. [laughter] >> the vice president of the united states. [applause] >> are we taking a picture? >> you all know the other two guys. [laughter] >> alright. here we go. >> we are taking a group picture, against my will. let me set the stage for this session.

i have standing room only and i guarantee that nobody is here to hear what i have to think. we'll have a very, interesting session. i suspect he had and i think -- i suspect. barbara: like most of the things

i do, this is special to me because i do is a long time, very long time had to go i know both of these men. secretary cheney has given me permission to call him secretary cheney. that is how i know him. the vice president was the first defense secretary i ever covered. secretary panetta was the first one i ever had to sit and take out when he moved to italian in his soundbite when he was upset about something. [laughter] barbara: i really cannot put that on tv. never really sure what he was saying. i do not really think we need to go through introductions, if you do not know who they are, you are probably in the wrong place. but i am going to start with a couple of anecdotes. because, i am taking the two former house members as well, i am taking the prerogative of the chair. we have everybody up there, too. hi. one of the things about defense secretaries, when you cover the pentagon, you keep an eye out because you never know when they will leave their office and go walking around. both of these gentlemen have a long history of doing that. secretary gates, secretary hagel also. secretary rumsfeld showed up in the cafeteria to eat lunch. secretary gates would walk around wherever he felt like it as a former cia director. and secretary hagel would walk around and either stop tourists or stop young troops, and start talking to them and ask them what they did. secretary cheney would be found walking outside on his own, getting fresh air because he

wanted it to. and he was also quite well known for turning up in hallways where you do not expect him. so one day, as a young reporter, i found him in a corridor, in an army corridor, and doubly for -- and i believe you were with the deputy defense secretary and they were walking around. i was like, i think they are lost. no way he is meant to be in this corridor. do you go to the defense secretary and say, are you lost? i asked if he was lost. he tells me the office he was looking for and turned him around and said, sir, you want to go that way. but, you know, get out and walk around. secretary panetta, same thing but i want to share a different anecdote. he would bring the late, dearly

departed bravo, a golden retriever, to the building. and so one day, the turn of in -- up in the press area to visit the press, bravo and a security detail. and we are all having a nice conversation. it became apparent bravo was ready to leave and go back. bravo had had enough. so bravo turned around and walked out of the press room, this is the dog. he knows exactly where the office is. he is not lost. bravo turns around, this golden retriever, going down the hallway and he knows exactly where he is going, followed by the secretary keeping up with

bravo, followed by the secretary of security detail. i go to that old adage in washington, get a dog. [laughter] barbara: i think the pentagon press will be interested to see where general mattis turns up in the building. and so that takes us to probably what everybody's interested in, the thoughts on the first and perhaps most immediate question. so we now have general james mattis as the president-elect's nomination to become secretary of defense. i do not think anybody questions his capabilities. but, you are both previous members of the house, let's start with you, secretary cheney, your views on a waiver for a general, member of the military to serve as secretary

of defense, what are your thoughts on this? and both of you, i want to ask you to address this because it is general mattis, are we all saying, great, let's go ahead. or are there issues to reflect upon and think about why this country has that law that there is civilian control and active duty military person should be out of the military for a number of years before they lead the armed services? what are your thoughts? sec. cheney: first of all, i think mattis is a great appointment. i would wholeheartedly endorse his selection. the question of passing a waiver, of course, is a serious matter when you believe very deeply in civilian control. and it was set up in such a way that we are not going to move people in the active-duty

military, move them into that slot. it will always be a civilian or if it is former military within seven years, you have to have a waiver and we have only done that once with george marshall. just a quick story with respect to george marshall. when i was sworn in as secretary, jim's picture was behind my desk in the office. and, the first secretary of defense, i took it down. i did not want to come to the exact same and as he did. [laughter] sec. cheney: i should not say that.

barbara: only a few tv cameras. sec. cheney: i put marshall up instead for the service he rendered. he was a special case, obviously. and i do not think we have abused the waiver. i think it's appropriate and i would support it. sec. panetta: i have, by the way, i kept marshall behind my desk, plus ike, both of them were behind my desk in great tribute to the leadership that was there at the defense department. look, i -- i think jim mattis is, having worked for me as a commander, he is a great soldier. somebody who really understands defense and is really thoughtful and i, too, and very pleased

with the appointment of jim mattis to that position. i do believe, obviously in the rule of civilian control. i think that is important. because you always want a secretary that understands military policy and also kind of understands the congress, the american people, relates to the issues that the president has to deal with and brings all of that into the context of defense policy. so, i do not view the military background as disqualifying or -- four secretary of defense. we have this ability now to provide a waiver. and i guess my view would be in the course of providing the waiver that congress will have hearings and i think that would

be an opportunity to make sure that jim, and i think jim does understand this, understands the role that he has to perform certainly of civilian side as well is on the military side. that is an opportunity to basically make sure jim understands that role as well. i am pretty confident that in the end the congress will provide the waiver and jim mattis will be our next secretary defense. barbara: is the inclination of congress to move towards this waiver, and there's all indications that they will, is it because it is mattis because he is by all accounts what of the most respected generals of this era? does it have a more to do with him in particular, then the issue of a waiver? sec. panetta: i do not think it is any question that people have tremendous respect for jim mattis and that obviously is an incentive. at the same time, who the hell are we kidding? seven years, where did it come from? [laughter] sec. panetta: somebody figured you have become a civilian after seven years. there is no magic here. the reality is they built it into the law and we're having to deal with it. i think there's a greater

willingness for the congress to provide their waiver with somebody like jim mattis. it might not be the case if it were somebody else. that is the nature of politics. barbara: let me -- please. sec. cheney: i think we are living in a special time and there are special problems and obligations of this administration going forward. i find it especially important to have somebody with jim mattis' background, a great marine. he has the experience to prove it. he has a perspective on what needs to be done with respect to the military and defense department. that somebody else without his background may not bring to it. and, i really think that because of the circumstances that we find ourselves in in terms of threats, capability, the task before the next secretary, especially appropriate to have somebody with his experience. he has been there and out on the point of the spear, and had to command troops in combat and that is not bad experience for somebody with going to serve. barbara: you said the new

administration will have special problems and obligations that they will have to deal with. let's have both of you, starting with you, sir, drill down on this a bit. what are the special problems and obligations you see topping the list for the trump administration? sec. cheney: i am sure it has been discussed before this session. during the course of the conference. but if i look at what is going on in the world, i look at the increasing threats, the russians and chinese, the problems with respect to isis and terrorism in the middle east. i think the challenges are very great. i think we have, unfortunately, over the course of the last many

years, done serious damage to our capabilities to meet those threats. what happened in respect to the budget, the sequester process, the fact that we no longer build defense budgets based on the threat but on the sequester, which is outrageous and was deemed to be outrageous when it was put in place on the supposition it was so bad it would never survive, but lo and behold, everyone has become comfortable with it. i do not mean to be partisan in my comments, but i believe in the last eight years, the military has suffered egregiously because of the circumstances we have had. i love colonel dunford and his comments at noon today, but i think there are responsibilities for what has happened. i am very worried about the circumstances we find ourselves in. and frankly, part of the burden falls on the political side of

of the house, not the military side of the house. we have not kept up our share of the bargain in terms of supplying the resources needed to do the job. sec. panetta: to follow up on what dick said, we are living with a lot of very dangerous flashpoints in the world. probably more instability and flashpoints then we have seen since the end of world war ii. and you know the full spectrum. you discussed it, whether it is isis or terrorism, whether collapsed states in the middle east, whether iran, north korea, russia, china, the whole area of cyber warfare that we have entered into, we are dealing with a whole series of potential threats. i am reminded of the period just before world war i, when there were a number of flashpoints in the world at that time related to some of the same challenges we are facing now. terrorism. failed states.

territorial disputes. fragile alliances. all of that. and failed leadership. the inability to deal with those challenges. any one of those things, the failure to deal with those created by the result of world war i. we are living in that period. that are a lot of flashpoints. and the new administration is going to have a look at that kind of world. and obviously, to find policy that we need in order to deal with that. but then, develop the defense policy to confront that kind of world. and the biggest problem right now is that, in line with what dick said, you cannot have a strong defense. you can talk about all of the things you want to do in terms of the defense budget. but the reality is you cannot do any of that. unless congress agrees to a budget and provides some certainty as to where the hell we're going. you cannot operate a defense establishment based on a cr. you cannot try to develop defense planning for the future when you are operating under the

threat of sequester and the possibility you will have to slash spending from the defense budget. it is dysfunctional right now. the ultimate challenge is going to have to be to be able to get a budget, to have congress move forward and do what it should have been done a long time ago. it was done in the time when dick was secretary, when we were both in congress. it was the ability of both republicans and democrats to sit down and do a budget. you have to put everything on the table. you cannot just pretend you can solve the budget problem by doing discretionary spending. it will not solve it. when two thirds of spending is

wrapped up in entitlements. so you have to put everything on the table. that is what i went through. we did it in the reagan administration, the bush administration. bill clinton did a budget that included all of those areas. that created a balanced budget. more importantly, we had a certain budget. where you knew what you were dealing with and could plan. somehow we have to get back to that. all of the things everyone is saying about the great things that will happen on defense, that will happen with weapons systems and with structure, none of that will happen if you do not get a budget put in place that you can plan on. barbara: secretary cheney, let's drill down, take this one step further. because all of this dysfunctionality comes as threats are getting bigger. i do not think anything is getting better. sec. cheney: i would share that view. [laughter]

barbara: when the new admission comes in, and on inauguration day, things can happen. hopefully not, but things can happen. bad things. so walk us around the world in your assessment and what your advice would be. and you as well, secretary panetta. let's start with the three biggies. north korea, iran, and russia. north korea -- all indications are they are moving ahead with their nuclear program. what is your advice to a new administration on what to do about that? sec. cheney: i think it is important to be honest and direct in terms of our current status. if you look at north korea -- we

have lived in a world where there have been nuclear weapons and russia had nuclear weapons, and china, but they are, for the most part -- we obviously do not agree on a lot of things, but they are governed by rational people. can't say that about north korea. the proposition we are faced with now is the real possibility that north korea will be armed with a nuclear weapon and that they will also have ballistic missile capability to deliver those to the continental united states. that is a very scary prospect. we have to spend all of the effort we can, persuading the chinese to join the effort to

shut them down. but i do not think we can bet the farm on that. i think we need to be very aggressive about building and deploying defenses against missiles systems. that includes the ability to take out on launch systems coming out of north korea. we need to deploy the thaad system in south korea. they have agreed to it. we need to be prepared to station ships offshore. and we are going to have to be aggressive about it. the chinese will not like it, but they have to live with it unless they are prepared to join in and actually make progress against the north korean threat. it is very, very real. i worry not only about their capabilities in terms of where the resources are. always remember the day when -- walked into my office and started throwing down colored photographs of the north korean built nuclear reactor.

the spring of 2007. the north koreans were providing nuclear capability to one of the worst terror sponsoring nations of the world, syria. thank goodness, the israelis took it out or it would have ended up in the caliphate. it was very serious business the north koreans were to be concerned about. those are two of the reasons. barbara: secretary panetta, north korea. you have certainly been aware of the intelligence all the way along. what is your assessment on how soon they could put all of the pieces together? a warhead? a missile? and perhaps, either an intercontinental or mobile launch system? sec. panetta: they have the capabilities to begin the process of putting it together within the near future. when and where depends, but the fact is, they are developing

intercontinental ballistic missiles. they are testing them. i think it is not too long before they have that capability, if they do not have it now. they have nuclear weapons. they are developing mobile nuclear systems. they are trying to develop the delivery capability for nuclear weapons. it is a very real threat. with a very unpredictable leader. i mean, we do not know what this guy is going to do. there is no certainty here. the only guy he seems to get along with is dennis rodman. [laughter] sec. panetta: so you do not know what is going to happen. with that kind of unpredictable

leader. and so, it is really important to continue to strengthen our relationship in that region. we have a strong defense relationship with the japanese. we have a strong relationship with south korea. we have 25,000 troops will in -- troops still in south korea. we have to build up their capabilities in order to confront north korea. we have to develop a relationship with other countries as well in the asia-pacific region in order to develop a really strong coalition. we have to put pressure on the chinese. dick is right. china has the ability to be able to influence north korea. they do not like what is going on in north korea. but they also want to keep them friendly. but china has to put additional pressure on them to be able to move it in a better direction. and the end result is that -- we

had 60 years since that war came to an end. the fact that we have built up our capabilities, built a strong defense system in south korea, the fact that we have made very clear we would take action to go against north korea if they tried anything, has, in many ways, prevented a war in that area. we need to send the same signals that if they decide to do something drastic, that we are prepared to take action against north korea. you have to draw that line. so they understand it. barbara: for both of you, that is very interesting. that has been the u.s. message, that the u.s. will respond. no question about that. but it has been a very carefully shaped, diplomatically transmitted message. a very controlled message from any u.s. administration.

candidly, are you concerned that the trump administration, at least in the opening weeks or months, could -- we will say inadvertently -- be too casual in its language? is this so serious now that they must be very careful in how they communicate u.s. policy in the pacific on this matter. sec. cheney: it is one of the reasons having a man like general mattis as secretary of defense to focus on those threats -- he fully understands these kinds of things. i always -- i agreed with him, for example, when he disagreed with the obama administration in using military force against the iranians. and their program. one thing that has worked against nuclear proliferation is military force, the threat of it. that is true going back to 1981, when the israelis took out the

nuclear reactor outside of baghdad. when we took out the program that existed in 1991 in respect to desert storm. when we took down saddam hussein, we shut down any possibility that he would move forward with the program. and five days after we captured saddam hussein, he announced he would surrender those nuclear arms. and another leader in that area surrendered his. it's not some pie-in-the-sky diplomacy, like the administration settled with the iranians. barbara: do think the threat of military force should be more public, more stepped up? sec. panetta: you asked about the trump administration's

approach to that. i do not think anybody knows what the hell the approach would be at this point. [laughter] sec. panetta: and, you know, there are a lot of questions. and frankly, which donald trump will enter the oval office. whether it is the tweeting donald trump, the reality tv donald trump, or whether it is the business person, businessman trump, who seems to be much more willing to engage in the realities we have to deal with. i am pleased he appointed someone like jim mattis, because i think that could be an important key to making one of the right decisions. i hope that he appoints somebody to secretary of state who understands the world and understands what plays out in our world. if you does that, obviously, he will have some experience there to guide him. because these issues are going

to break the day he walks into the oval office. every president i have seen in my time who has walked into the oval office -- i do not care how experienced they are -- when they saw the awesome responsibility the president of the united states has, it is overwhelming. it is overwhelming. and i think it will be true when he enters the oval office. he is facing an awful lot of responsibility. he is going to have to have some good people who will provide guidance. i think as a result, exercise some care. because the problem is president's words count. this is not something where you can say whatever the hell you think and expect you can change your mind the next day and say, well, i did not mean that. when you are dealing with foreign policy and countries

abroad, your words count. and so i guess my hope and my prayer is that he will have a willingness to work with people who understand these issues and be able to provide the kind of policy we will need in order to protect this country in a very dangerous world. sec. cheney: one of the most important things he can do is exactly the opposite of what his predecessor did, with respect to iran and nuclear weapons, and don't make the mistakes that the situation he is inheriting from the obama administration represented. with respect to our status in the world, the capabilities of our forces, the belief on the part of, i believe, many of our friends and allies that they can no longer trust the united states or count on our guarantees. i think we need to do major progress and reverse the obama policies and that's not a place -- not a bad place for him to start. barbara: but secretary cheney -- mr. vice president -- you are someone who has a long history no longer trust the united states or count on our of being very precise in your words, in your thinking, in your analysis. i am not aware of any time you have said anything very casually. [laughter] sec. cheney: now, barbara. [laughter] barbara: at least i cannot recall. where was that air force general you fired? well, that was another story. we will get to that later. so, come on, let's hear it.

you hear this casual language. and when i say that, don't go out tweeting "i'm anti-this" or "anti-that." the language of tweets is not necessarily as nuanced and contextual as u.s. foreign policy is. i think that is something that we can all agree on. so when you see this, seriously, what concerns does it cause you? if you were sitting with him and could give him some advice about all of this? about language, about meaning of words? what would your advice be? sec. cheney: well, first of all, i am not sitting with him. barbara: would you, if asked? sec. cheney: certainly. barbara: ok. sec. cheney: if the president of the united states asked for advice, i would be happy to advise barack obama. but he never asked me. [laughter] [applause] barbara: so again, language and words. [laughter] barbara: see, the man never says anything casual.

[laughter] sec. cheney: i think he needs to be careful. but he will learn as he goes along. i think he is putting some brains and good people with him. i am a big fan of mike pence. i know mike well from his 12 years in the house. i think he is a great choice as vice president and will play a major role. i think mr. trump is taking very, very seriously the job he has now, staffing up the administration. i think one of the reasons people get so concerned about the tweets is his way around the press. he does not have to rely upon -- [laughter] [applause] sec. cheney: rely upon the modern era, modern technology. he's at the point where we don't need you guys anymore. [laughter] sec. cheney: i apologize. [laughter]

[laughter] barbara: the question i asked, which none of you heard because you were all laughing -- do you see risk in that? it is all -- you are two of the men who know, more than anybody, who has stepped foot inside washington, it is all about risk. sec. cheney: and you do have to be careful. there was a time when i made a mistake. i had been secretary for about a week, or 10 days. back in 1989. i was asked by a reporter how i felt about mr. gorbachev. and i said nice things about him, but then i went on to say i thought ultimately he would fail and be replaced by a regime a lot more like the old soviet leadership than gorbachev had. one of the first calls i got was from my friend jim baker at the state department.

[laughter] sec. cheney: he said i was out of my mind. i learned my lesson. i was right, but i was a few years ahead of time. [laughter] barbara: so let's talk about the russians. sec. panetta: he would've tweeted about that today. sec. cheney: where is my twitter? [laughter] barbara: are you on twitter? sec. cheney: i do not know how to do it. [laughter] barbara: well, this is the perfect segue into the russians. so both of you, if you were sitting down with vladimir putin, would you trust him right now? or what level of trust on what issues would you have with him? secretary panetta, let's start with you. sec. panetta: look, you do not trust putin. you have to deal with putin. putin has his objectives.

there is not a lot of mystery here. i think putin is someone who really does want to restore the old soviet union and tried to, obviously, restore strength to russia. that is his goal. that is what he is after. i think it is really important, when you are dealing with putin, to deal with him from strength. you have to deal with someone like that from strength. if he senses weakness -- and he senses weakness -- he will take advantage of it. that is what he has done in the crimea, in the ukraine, in syria, what he is doing with all of this hacking business. he is taking advantage of it. i think it raises real concerns about someone like putin going into estonia or another country because he feels like he may

have a license to do that. so in order to deal with that, you need to make very clear what the lines are. and that the united states will not stand by and allow him to go into another country. that we will have a strong nato alliance. we will work together. and will respond in kind if that happens. make that very clear. make very clear that we will maintain a presence in that part of the world. make very clear that we have objectives and will achieve those objectives. that is what it is all about. those are the kinds of signals you have to send to a putin so he understands where the lines are. and then, can you deal with him? of course you can deal with him. you can talk to him and try to negotiate and deal with some of the challenges we face and try to make progress. but you cannot do that from a position of weakness. you have to do it from a

position of strength. barbara: so what would have been the answer, in your mind? crimea, eastern ukraine, do you go to war over russian moves into the crimea and eastern ukraine? how do you demonstrate that strength? sec. cheney: i think there is no question, mr. putin is a dangerous man. he does not even have a politburo he has to respond to. like many of his predecessors did. i think he has aspirations to restore as much as he can to the old soviet empire. i remember when the soviet union went out of business and europe was reunited that he described that as one of the disasters of the 20th century. i think he clearly has aspirations to take advantage of weakness. i think he has perceived weakness in the united states in recent years. i worry that it does not necessarily require military action. certainly, the threat is there, but i think you would like to undermine nato. to use his capacity to influence

politics internally with respect to the baltics. there are pro-russian parties in those very states and he could easily provide financial support to create opposition. he could threaten to cut off energy supplied to the baltics so they are 100% dependent on russia for natural gas. he could create a crisis, i think, in terms of simply threatening, if you will, for example, to perhaps be even more active and hostile unless the baltics withdraw from nato. the question is, how does nato respond to that? we have to be careful about it. i think if he sees weakness, he will act on it. i think he has perceived weakness in recent years. i think it was a mistake to cancel the antiballistic missiles program. that we had started to deploy in poland. and the czech republic, he believes given the fact that we have operated a pretty dramatic reduction in our nuclear

capability, we have not responded to what the russians are doing and the chinese, to upgrade their capabilities. we operate under the idea that if we deemphasize our capability, then north korea and others will not go forward. that is obviously, a flawed concept that president obama has adhered to. barbara: so what is your view, then, again, whether you have any concerns or what are your concerns that the president-elect has been publicly favorable towards vladimir putin? and may want to change his language on that? sec. cheney: i am not here today to advise mr. trump. in terms of how he changes his

language, i have expressed my views. i believe the signals he has -- i believe putin is a very dangerous finger. i believe the signals he has received from the u.s. indicate weakness. i believe our friends in europe are nervous to the degree the united states is committed to nato. i think we have to reinforce that degree of commitment. we have to be prepared to reverse course on the defense budget. rebuild the u.s. military. and reassert our responsibilities and leadership role in the world. that is important both to our allies, but also important to our adversaries, like russia. barbara: secretary panetta, what are your views? i think there is no question there has been publicly repeated favorable language for about an -- four and about putin from the

president-elect. do you think this could be sending the wrong signal or not the signal that there should be down the road to the world and to putin himself? sec. panetta: certainly i am concerned about that, because it creates an impression that somehow, we're not going to be strong with regards to nato, we're not going to be strong with regards to dealing with assad, with dealing with isis. that concerns me. because as i said, those are words during the campaign. we all understand they are words in the campaign. but people abroad do not understand that it is just a campaign. and may misread the messages that are being provided. having said that, i am a little more encouraged by this recent attitude in regards to dealing with nato and with some of the other issues that we have to confront in the world. and that he is beginning to understand that all of these

things have implications. so i guess, like dick, i have a feeling that once an individual enters the oval office and enters the responsibilities of the president, that you're going to be a hell of a lot more careful. about how you deal with the issues. i hope that is the case. it may not be. but i hope that is the case. because the reality is this is a dangerous world. a very dangerous world. we are dealing with a lot of these flashpoints. and, very frankly, the relationship with regards to russia is one of those that is extremely important in terms of the security of the world. and our continuing to exercise strong world leadership that makes very clear to the russians -- and this is something that goes back to the truman doctrine. it was harry truman who made the decision, when russia was trying to influence other countries, walking into greece and other countries, that the truman doctrine was not going to allow that to happen. it was what led to nato. it was what led to the marshall plan. because we were willing to draw lines on russia. and very frankly, drawing those

lines is what ultimately led to the failure of the soviet union. we have to continue to do that with regards to russia today. make clear where those lines are. yes, we will deal with them. yes, we will talk about issues that concern both of us and try to see if we can develop areas of agreements. but at the same time, we just have to make very clear that there are lines, that we will not allow them to cross. i think that is the way you deal with putin. barbara: go back for a minute to iran. you mentioned general mattis was someone discussing the notion of military action against nuclear proliferation. a lot of people analyze or say that if you -- if the new administration leaves the deal, pulls back from the nuclear agreement, this puts -- that they will restart the effort. at this point, are we so far down the road in the nuclear agreement that you cannot pull

yes, we will talk about issues that concern both of us and try to see if we can develop areas of agreements. but at the same time, we just have to make very clear that there are lines, that we will not allow them to cross. i think that is the way you deal with putin. barbara: go back for a minute to iran. you mentioned general mattis was someone discussing the notion of military action against nuclear proliferation. a lot of people analyze or say that if you -- if the new administration leaves the deal, pulls back from the nuclear agreement, this puts -- -- this puts a military option back on the table for iran. that they will restart the effort. at this point, are we so far down the road in the nuclear agreement that you cannot pull back without iran then going to resume its program and the u.s.

and israelis have to consider military options against it? is it too late to pull out of it? is the risk of an iranian restart too great at this point? sec. cheney: barbara, my point was, with respect to general mattis, i have not discussed it with him, but the press reports at the time that he left his job as commander, was that he disagreed with the obama administration policy on iraq. and i also disagree with the policy on iran. barbara: where we now? sec. cheney: i think when we look at the long-term consequences, the choice that president obama made, we have already paid a price. if you come back to my belief that the things that have worked

to retard or work against military action, that when president obama took military action on the table and he had a pattern, that when there was a crisis, the first thing he would announce is what he was not going to do and this was one of them, we ended up in a situation where military was no longer a possibility and from that point on, the iranians have had their way with respect to using the first negotiations or the agreement now, to get anything they want. billions of dollars, sanctions lifted, u.s. sanctions, even to the point, for example, when it was time for the president to act on the red line that he drew for syria, chemical weapons against their people, he threatened to take action, and when the chips were down, he

backed off. i personally believe, the reason he backed off was the iranians threatened the nuclear deal and negotiations. they are at the point now where they are able to influence policy throughout the middle east and their lover -- lever is the nuclear agreement. barbara: that is what i asked, is it too late to do something about it? sec. cheney: i do not think it is too late. you will need to reverse course and to send a signal, i would want to send a strong signal, that the military option is very much there and it is on the table and i would not begin by saying there is no military option. they are not in compliance, most people believe they are not.

i believe you need to be prepared to reverse course with respect to the policies of the obama administration pursued on iran. the change in terms of our relationship with friends in that part of the world, the egyptians, the saudi's, the israelis, turning our back on the historic relations with them in order to set up to the iranians and get an agreement, is a major blow i think to u.s. policy in that part of the world. barbara: those of us that were there, new that you looked at this question very carefully, of what it would take to do a military strike against iran's nuclear problem -- program. let's say it came to that, walk us through that scenario, the problems you face getting there, the israelis going unilaterally, tell us that challenges of going through that airspace, that

defense corridor, what we even know about the targets? sec. panetta: let's, without getting into -- i think it is safe to say that we developed a military plan, if necessary, take military action against iran. and that it was a well thought out plan and i developed a kind of approaches that would have been effective, if it was necessary. having said that, most important, with iran is, like north korea, we need to confront an iran that is trying to support terrorism in that part of the world. supports hezbollah, is involved

in syria now fighting with the russians, continues to be a destabilizing force in the region. we have to be willing to make very clear that iran cannot continue to do that. and at the same time, look, everybody has certain objections about the nuclear deal that was put on the table, but there were five other nations that joint -- that joined the u.s. in putting it together and i think at this stage in the game, while maybe you do not like the idea, i do not like the idea, but it allows within some time for iran to go back to building nuclear weapons, but it is a time where they are required not to develop a nuclear weapon and i do not think we should throw it out the window. i think we should continue to work with other countries to try to enforce it, but we should not

back away from allowing iran to continue these other things. i think frankly, the thing we have not done effectively is to build a strong working coalition of other countries in that region. the modern era of country, saudi -- the moderate arab countries like saudi arabia, georgia, uae, turkey, israel, we should have a working coalition club because they all have the same concerns about iran. they have the same concerns about isis, about terrorism, and frankly that kind of working coalition would be very effective to deal with the challenges in that part of the world. and b, we need to have a coalition that can provide a support system for some of these failed state. the problem is we go in and defeat terrorism and we leave and there is instability going

back in, we need to develop a support system that will provide some kind of stability for countries like libya, egypt, yemen, those are areas frankly where we do not have a strong approach as to what we are going to do once we have been able to establish a degree of peace and that part of the world. i think with a new president, that new president must establish a strong working coalition in the middle east to confront iran, but to also confront isis and other threats. barbara: when you say isis, this fascinates me, it takes me back, it seems like desert storm was the last time there was even anything that we saw at the time, victory over and objective. it has not happened since then.

when you cover the pentagon, you hear discussion about defeating isis in iraq, in syria, but we know that neither of those things, the pentagon knows it as well, defeating violent extremism -- what would, again, your analysis, where would you go from here on trying to contain if not defeat, the threat on a global basis of violent extremism? sec. cheney: i think our number one priority should be to rebuild america's military capabilities and adopt the consensus that we have had for 75 years on a bipartisan basis, between republican and democrat, that the united states must be the leader in the free world and

we must have first-rate military capability and the willingness to use it if necessary. i think that consensus, frankly, did not carry into the obama administration. i think president obama had a different worldview. and i think there is a lot of work that must be done to rebuild that kind of capability that we called on when it was time to do business. we had a magnificent performance by the military, we had significant investment over the years, and we ended up with a $60 billion war that only cost $5 billion because everybody else chipped in and it was a great success. we have gone away from that and we are in a situation now where we need to invest now and provide leadership to persuade the american people it is necessary that we can restore america's place in the world as

the preeminent power and that allies can trust us and adversaries needed to fear us. sec. panetta: i do not disagree with what dick said, they need to establish strength with regards to the net -- to the military. and send signals regards to the net -- to the tod that we will exercise world leadership. you want to know the greatest threat is the national security? it is the dysfunction in washington. and very frankly, there is a lot of blame to go around on both sides when it comes to dysfunction in washington. the leadership of the congress on both sides had been unable to come together when it comes the major issues facing the country. whether it is the budget, immigration reform, whether it is dealing with energy, whether it is dealing with authority, they have not been able to do it. they are dysfunctional.

and nothing is going to happen here unless the dysfunction is broken down and unless the leadership in congress, working with the new president, is willing to sit down and deal with these issues. we are not going to have a strong defense if they are not willing to negotiate what exactly are we going to do with regards to the budget, with the defense goals for the future. it has to be done pursuant to what we do best in a democracy, we govern. we have not governed for a hell of a long time. sec. cheney: everything is ok now. republicans are in charge. [laughter] [applause] sec. cheney: ok? [laughter] sec. panetta: you dreamer, you. [laughter] barbara: that was actually my question.

[laughter] barbara: yes, you have republican control across the board. both of you, as former members of the house, explain politics to me. does that mean they can do whatever they want, they do not need to regard the democrats? does it put a burden on the republicans that they have not had with a democratic white house, because they could always point the finger at the white house and essay that was the -- and say that was the problem. . sec. cheney: we talk about back in the day. when i was secretary of defense, my number one ally on capitol hill was a democrat, the chairman of the -- committee. -- the defense appropriations subcommittee and jack would come down and we would have breakfast in the pentagon and we would get out a piece of paper and on one

side with everything he had to have and on the other side was what i had to have and that was basically the structure of the bill. it was a bipartisan basis. we once took a multibillion-dollar defense bill and passed it, no amendments -- [laughter] sec. cheney: i do not know if we can go back to that point. jack murtha is dead and i am no longer in office. [laughter] sec. cheney: we are well-qualified to tell them how they should have done it. i mean, there is no question that there has been deadlock and plenty of blame to go around. i prefer to say, we have a fresh shark and we have a new -- a fresh start we have a new president and a unified congress. ultimately, obviously, the democrats can, they can filibuster and create problems

and we need to find ways to work together going forward. i think personally, what you need upfront is strong presidential leadership, and working with the congress to get them on board and i think many of them are already there. we need this as a number one priority. the u.s. military capability, national security policy, and our role in the world, we need to have agreement on the input for the resources to make it a reality and all the other debates, they are interesting but irrelevant until we solve the problem. sec. panetta: the new president will run into what all new presidents run into, smack into the wall of checks and balances. our forefathers created it that way. they did not want to put all the power in the president, they do not to centralize power in the parliament --

and they did not want to put the power in a start chamber court designed this system. but it can be frustrating as hell, and it can also be a formula for gridlock and that is what we have experienced over these last few years, is gridlock. at the time, i remember when i was chief of staff to bill clinton, and the house went republican and the senate went republican, and you know, the whole point was, can we work out some basis to negotiate here so we can try to resolve some issues? the first thing we ran into was the budget battle, and i can remember negotiating late into the night in the oval office, and you know, we came up with the last offer, and the decision was not to accept the offer, and the government gets shut down, and all hell breaks loose, and republicans suddenly realize this is not the right way to do it. and to the credit of speaker gingrich at the time, he said it

may be better if we negotiate with the new president, and we did. and we were able to get welfare reform and budgets done, and a whole series of things working together. and i think somehow we have to get back to that process. even though it is a republican president and house and senate, you know damn well in dealing with the membership on both the house and senate side that they can basically dig in on any issue, republicans and democrats. that is the nature of our system. you are dealing with 535 members. some are honest, some are dishonest, some are smart, some are stupid, and some are crooks. that is the nature of democracy. [laughter] welcome to democracy, and you cannot walk away from that. you know, presidents can be disgusted by it, but they have got to deal with it. that is how we govern in this country. you know, abraham lincoln had to basically bribe people to pass the 13th amendment.

you know, i can remember going through that process with bill clinton. we had a war room, and we basically had to negotiate with every damn member trying to get them to vote the right way and they did the same thing. that is the nature of governing. that is what you have to do, and if you think you can suddenly stand up, and, you know, in a pompous way say "this is what ought to happen," and then not roll up your sleeves and go to work, it ain't going to happen. it ain't going to happen. governing is a kickass process, it is the nature of it. it means you have to roll up your sleeves and engage. if donald trump is willing to do that and build coalitions around issues -- and i think you can. i think you can develop a coalition around funding infrastructure, for god sakes. it is something everybody agrees to. why not put that together? why not get it through congress on a bipartisan basis?

why not do some kind of immigration reform on a bipartisan basis? why not do something on the budget to try to establish and approach not only to reforming entitlements, but reforming taxes? those are opportunities, but it isn't just going to happen. we have gotten to a stage where, you know, look, in our day, governing was good politics. understand? governing was good politics, and if we govern, we went back to our districts. the fact we could govern and get things done was in our political benefit. i am not sure that people think governing is good politics now. that is the problem. stopping things was good politics on both sides. somehow we have got to change that mentality and get both republicans and democrats and a new president sitting down in the same room and negotiating and compromising and getting things done. that is what the american people want to know. if you take -- we all know the american people were angry and

frustrated as hell. and you know why? because of the dysfunction in washington. because both republicans and democrats were promising all kinds of things that they never delivered on, and if they can't break that gridlock, and we go through another four years, watch how angry the american people will be in another four years. barbara: we have just a few minutes left, and i could not let this panel, both of you gentlemen, go by without bringing the people equation, the soldier-marine equation, the human equation into this discussion. one of the things that journalism is so struck by, and i think many people they certainly know it, and if you don't, you need to read up on this, president george w. bush really has made such a commitment in retirement to america's wounded troops and america's wounded veterans. it is clearly something he has very personal, very deep, very

emotional feelings about, and it is pretty awesome to see that kind of commitment. it is not something he has to do. he feels it, and he does it, and i believe mrs. bush accompanies him in this effort. i don't even know what in particular -- what the question exactly is, but what strikes me is we are 15 years beyond 9/11. as someone who was in the building that day, you now have young troops joining who were what? maybe three or four years old on that day? you have a generation beyond that. just talk to us for a minute about, about the human side of this, that, you know we have this generation of wounded americans. we have new, young troops coming in. they don't join what -- i don't think they join because of politics. i don't think they join the military because they are democrats or republicans. what is the obligation of

presidents and defense secretaries to all of them in the years ahead? secretary cheney: well, i thought chairman -- general dunford did an effective job today of talking about how enormously valuable that resource is. i know when you have been through the process in your civilian leadership or the pentagon or working with the military, i always, as i look back on the various jobs i had and that was far and away the best because of the people i got to deal with, because of the caliber of men and women who were willing to serve. it is just an enormous resource we have is a nation, the fact that we have hundreds of thousands, millions if necessary who are willing to sign up and go in harm's way on behalf of the rest of us. and we have an obligation,

especially those of us who have served in government. i am no longer an office holder, but we have an obligation to provide the resources they need to do the job we asked them to do for us and not to let the gridlock, if you will, as leon talks about it, bog us down to the point where we are now sitting with a sequester and every year we go out there and take the knee back approach to axe approach to the budget, 17% of the defense budget. it is 50% of the cut. all of that, the troops that are not trained, the equipment that is not kept up-to-date, the maintainers that are needed to keep the marine corps f-18's flying, i mean, you go through the whole list, we are failing as a country if we don't provide them with the resources to do what they need to do and want to

do on behalf of all of us. falls on all of us, and i think especially those of us on the political side of business are obligated to find a way to get it done, because we are in a situation where, as i say, and i think nearly everybody i have talked to at this conference agrees, the threats are rising, and we will have to move heaven and earth to make certain we always stay ahead of that, and then we can, in fact, deliver, and is to those young men and women that sign up and go into harm's way for all of us that we have an obligation to. secretary panetta: i agree with dick. the proudest, proudest moments i had as secretary of defense was having a chance to look into the eyes of our men and women in uniform who are out there, you

know, whether it was iraq, afghanistan, other tough posts they had around the world, and you look into their eyes, having had three sons, you look into their eyes, and you see the fact that here are young men and women who are willing to put their lives on the line for our country. they are willing to fight and die for our country. and they do not ask a hell of a lot of questions. they are willing to do what is necessary to protect our country. and i have often asked myself, my god, if these are young men and women willing to put their lives on the line in order to protect this country, why the hell can't people who are elected to office use a little of that courage in order to govern the country and take the risks necessary to govern the country? because these men and women are prepared to do that. and they are, you know, we talk

about the strength of our military, and i know you've got great weapons systems, and you've got great technology, and you've got great capabilities -- it is not worth a damn without the men and women who are the warriors for this country and who are willing to go into battle to do what is necessary. i think we owe them the ability to support them, to make sure they have the finest equipment, make sure they have the finest support they can have in order to do battle, but more importantly, to also support them and to support their families to make sure that, you know, their families have decent housing, have a good education, that, you know, they have the ability to -- because they sacrifice a hell of a lot for those on active duty to support their families, and then also to support them when they leave the military and become veterans. too often once they leave, we kind of forget the sacrifice that is necessary.

if we are going to be true to our men and women in uniform, it has to be continual. we have got to support them not only when they are in the military but also support them when they are facing the tough challenges of being a veteran in this country. if we do that, then i think the united states can always be comforted in knowing that we have the strongest military on the face of the earth. barbara: let me -- i am noting that the clock says triple zero behind us. so that is a big sign, but let me wrap up five seconds by saying that both of these gentlemen when serving as secretary of defense embraced a very long tradition of talking to the secretary press corps without laughing -- [laughter] barbara: i am trying to say something nice here. [laughter] barbara: no, seriously, they both embraced a very real and set a tone of talking to the press corps and explaining policy, taking us into trips of

some very interesting places overseas with them, letting us see everything they could about what they were doing and letting us have the access to report on troops across the world. it was so important. journalism is not tweeting. and -- [laughter] barbara: it, you know, i think everyone in the press corps is looking forward to see what comes next. we hope the next secretary of defense, i think he will, will have the same. it just today, you know, gives me an opportunity to say thank you to both of you for that because on behalf of the whole press corps, it is so important. it probably never was your favorite things to do to come down to the briefing room, but it is appreciated, and we thank you really, all of us do. [applause]

[captions copyright national cable satellite corp. 2016] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] here's what's coming up, the ibm ceo talks about the future of artificial intelligence and then risks and rewards and how personal data is collected and used by marketers and then a

discussion on the opioid epidemic in the u.s. taking a look at the primetime programming, joining to set 8:00 a look at mike pence and incoming senate democratic leader chuck schumer eastern,20 p.m. members of the 115th congress starting at 8:00 p.m. eastern on c-span. >> this holiday weekend, here are some of our featured programs. on saturday, we will take a look at farewell speeches and tributes for outgoing members of congress and the white house. at 12:30 p.m. eastern with senator barbara mikulski of maryland and at 2 p.m., tributes and speeches for vice president joe biden. at 8:00 p.m., christmas at the white house. join first lady michelle obama as she receives the official white house christmas tree and tour the white house and see this years decorations. make christmas crafting projects with children of military families visiting the white

house and finally the tree lighting ceremony on the national mall. at 8:40 p.m., hear from former house speaker john boehner on the trump presidency and his time in the congress. the:40 p.m., attend portrait unveiling of outgoing senate minority leader harry reid. include hillary clinton, vice president joe biden, and charles schumer. on sunday at 12:30 p.m. eastern, we will hear from retiring member of congress representative charles rangel of fromork stop at 2:10 p.m. the shakespeare theatre on capitol hill, we take it to the romeo and juliet wrongful death where the supreme court associate justice samuel alito served as judge. the career of vice president-elect mike pence and his new role as vice president. watch on c-span, c-span.org and listen on the free c-span radio app. >> next week, "washington

journal" will devote programming to issues facing the donald trump administration and congress. we will take a look at national security and defense issues including challenges facing donald trump's national security team in the year ahead and the closer look at the career of secretary of defense nominee mathis. on tuesday, december 27, is trade and drop issues, examining how congress on the top administration could change current trade laws in an effort to create or save jobs. our topic is energy and environmental policy and will discuss how climate issues might be impacted by the new congress and the incoming administration. will talk about immigration and out president-elect trump in the new congress might change immigration policy. 30, look atecember the future of the affordable care act and how the republican congress and incoming administration will replace the

aca and the key players to watch. be sure to watch "washington journal" beginning monday, december 26 at 7:00 a.m. eastern. now the president and ceo of ibm talks about the future of artificial intelligence and what's called cognitive computing. virginia rometty was the speaker at the churchill club dinner in san francisco. this is a silicon valley business and technology forum. it begins with the ceo karen tucker. [background chatter] >> ladies and gentlemen, please join me in welcoming ceo of the churchill club, karen tucker. [applause] karen tucker: hello. thank you, thank you very, very much. my name is karen tucker, and i am ceo at the churchill club. welcome to the 2016 annual dinner as we proudly present

virginia rometty, chairman and president of ibm, and promod haque. there is a range of topics from cognitive computing to business transformation to other things that they see as a very important for future innovation and economic growth. cognitive computing to business after their discussion, we will have a few moments to take questions from the audience. we wish to thank ibm for their partnership making this possible. let's give them a hand. [applause] partnership making this karen tucker: if you are tweeting, please use the #churchillclub so that everyone can follow along, and there are other twitter codes in the bulletin. so she is a major force in the venture capital industry, having invested in over 70 companies,

over $40 billion over that time. early in his career after earning a phd and mba, he went to work for a large company called bmi medical, which -- emi medical which pioneered cat scanners, ct scan. that, he put in time at a startup, recruiting as a coo and ceo. that gave him a very special insight into what companies and start-- having locked into those issues himself. bove attended a different times they both went to northwestern , university in illinois. [cheers] [laughter] karen tucker: the two first met before virginia took the helm as ceo, and promod has followed her since that time.

please welcome virginia rometty and promod haque. [applause] virginia rometty: i very much appreciate that you pointed out we were at northwestern at different times. [laughter] virginia rometty: that was not the same time, different years. promod haque: listen, it is our pleasure to be here, and thank you, everyone, for attending. we look forward to, you know, an interesting evening here as we talk about, you know, some interesting things that are transpiring in the tech industry, and you know, new kind of innovations we have made.

it is my pleasure to, you know, be in conversation with virginia rometty here. ginny, as you know, has had a great career and accomplished a lot of fascinating things at ibm, and in fact, you know, i was looking at your bio a little bit. you started in 1981. [laughter] >> thanks for pointing that out we are getting off on a good , foot. promod haque: so close to 35 years. virginia rometty: it will be just early five last year. -- just 35 last year. promod haque: what a remarkable career that ginny has been able to accomplish, just fascinating. so you know, appointed ceo in january 2012, correct? so prior to that, ginny was responsible as, you know, the group executive for all the sales and marketing and strategies. i think i met you at that time. i think it was some event happening in new york, and you and i ran into each other and

began to talk about -- virginia rometty: it might have been our centennial. promod haque: i think it was. so i think a lot of fascinating things that jenny is involved with, and then especially since being ceo, you know, sort of a pioneer so to speak in the area of cognitive computing and utilizing the ibm workman program and technology to apply it to a lot of different vehicles and also, you know, sort of really do some fascinating things in the area of security as well as transformation of businesses, and a whole host of other things we will talk about. ginny, it is my pleasure to be in conversation with you here. virginia rometty: thank you, promod. promod just landed from india a few minutes ago? promod haque: a couple of hours ago. a few board meetings, and then a company involved in artificial

intelligence and analytics. virginia rometty: you could have your shopping cart out telling me about his companies. promod haque: so ginny, you have been doing a lot of stuff in the area of cognitive computing, and you know, as the street says, you bet the company or the future of the company going forward on watson and on cognitive computing in particular. it would be interesting to get perspectives on how you see that impacting society, the use of cognitive computing. virginia rometty: i will provide you some context. it is a big debt but it is not a -- it is a big bet but it is not bet this not a risky

. goes back, oh, we started almost two decades ago. it is something we can identify with. we got going down this path, and we don't think of it as a product. it was a time when we said, we look out and see a world where we would need all this data, whether it is -- maybe it was sensors or images, something that will grow and grow and grow. we had a lot of discussion over, the systems of today cannot deal with it, but -- and this is where the word cognitive came from. we do have cognitive overload. people will not be able to deal with this. this was important. i believe this is what will happen. the cognitive overload, you have got to develop something that would never program. you have to have them understand and learn and come up with their own answers. they would learn over time, which i would say, if this is one technology worth more in time that less in time, it would be the first. it would not be a product.

we see it as an era. that work went up until the time we did jeopardy, which some people might be familiar with, when we had watson do jeopardy. it only did. watson was our manifestation of the technology. but it was a believe this would be an era, you would have these systems, because you would have no choice to deal with all of this data, and more important, to resolve the tough problems, and you asked for context, you have to be able to solve things, you need this technology to solve it. it is why it is one of the first things you started with on health care, which is we undoubtedly picked one of the most difficult areas, but i absolutely believe the time is right. promod, i did not know you worked for a health care company back in time. now i know why you are always asking me about this. now this all makes sense.

so health care, but i must say, and i just noticed it on the program, i think in the front, i really believe that if it is digital today, it will be cognitive tomorrow. it will be pervasive. you can become a cognitive business, in the technology era. we can talk about hydraulic processes of ibm and where we apply this and where we change what we do. but to change society, we will, with these technologies, there is not a doubt in my mind that we will impact things like health care, the environment and jobs. we will talk more about that. he just go through a whole list. it will be an era of man and machine, and another reason why we call it cognitive, ai has got some sometimes negative baggage associated with it. we think of it as augmenting intelligence. i have given all of the experience in what we have seen, we actually did a bit of account now.

100 million consumers are being touched by watson, going to a billion next year. it is a two-way relationship. i am very optimistic about this, and for good reason. promod haque: you know, there is a lot of talk about ai and machine learning and, you know, a lot of companies are being seen from time to time, developing, you know, ai is the platform they are building and so on. you also see larger companies building it. how is watson's approach and ibm's approach and cognitive computing different from, you know, what microsoft might be doing or what alphabet might be doing? virginia rometty: there is no doubt if we go back in time even when jeopardy unleashed again, ai has been around for decades. i think at one time, i was in artificial intelligence -- i don't think i was a specialist.

in my early, early career years. i would go to parties, and my husband who does not work for ibm, i would say -- what should i say? i said, just say you are an ad specialist. -- an ai specialist. so you fast-forward to today, some people call it the ai winter coming out. you have got everybody talking about, because it is the same problem, all this data, how to make something out of it. everyone has approached it. as a company, fast-forward to today, every client, we get the privilege of seeing so many, but if you think about what will be the competitive differentiation, and i will come to us in a minute, but every one of you still saves data. it will be the basis of competitive advantage in some way. so we looked at that and said, where can we separate from some of the others out there? we separate in three ways.

one is this point about the goal being cognitive what man does. -- being augmenting what man does. this is about helping you do your best, or it is about taking care of things so you can do what you are meant to do, which we say is fascinating through doctors. we are pushing through a million patients. we are watching how doctors interact with this technology. originally, anyone who ever works with technology with doctors, have you ever -- does it always work? no, it is difficult. i have always patients, i have x number of patients. they are coming into a world where some of the medical data will double every 75 days. what will you do? that is impossible, but what i watched -- we have been for many runs on this in history, technology comes in, they are like, i can't change what i do,

i don't have time, but what watson said was almost like a collegial relationship between the man or woman and this. that is what it has shown us. i have watched this with lawyers, doctors, underwriters, engineers, it is the same -- even call-center people. the same kind of thing. this goal, that is what this era will do, man and machine. these are not just machines you dump data on them and say, oh, i am a doctor now. they have to learn. as a child, you would start, "are these related?" "no," then you keep going. man and machine is where we differ with others. the goal that we are augmenting what each of us does in our life. the second is the biggest business thing that differentiates us from others, and we have -- i have to tell

you, it took us time to get this right. if you really believe this is your basis of competitive advantage in your businesses, how can i be sure that the insight you have belongs to you and not someone else? we have architected the cloud system, but it is such that, by the way, your most voluble data, everyone has access to what is public. the next is what comes with marrying it. not with legacy data. this is like accumulative business, and you will see the resurgence of companies that take advantage of this. if i am a company, i bring in my data, analytics, we bring in watson and data, but the insight, we can guarantee the insight goes to you, they don't train this data for someone else to use. part of why that is, i don't have a search legacy background. some companies have a search,

and is like a big pool of data that is a knowledge database. this is not what this is. i think it is an important business model difference. i know how it ends, if that is not a good ending, i trained the data with mine for someone else to use it, i want the value of all that accumulated years of my data. the second big thing -- i do think this is, you will think what decisions you make and how you do it, knowing who owns the data and who owns the insight is a really big point and where you can do with this. the third one is, i also think we are in an era where so much of this is about an ecosystem, a big, open ecosystem. this morning we did a developer conference, i cannot remember where i was. innovation hangar -- does that remind anyone? did i make up that name? i was thinking i was an

innovation hangar. but we had 1500 developers there. the open ecosystem says you make something consumable, what the breaks it up into pieces so they can digest it, and i met people that i had not built things with. you do not have control in an open system like that. one man was 19 from stanford, and he built something called do not pay. ok, so i said, "what does it do?" he said, "using watson, it is a form of a robo lawyer. when i came to the united states from the u.k., i kept getting parking tickets. my parents called and said they would quit paying for these parking tickets. so i had to figure out what to do about this." i am thinking to myself, "don't park where you are getting parking tickets."

i am sure that's what the parents said. he put together cognitive intelligence on how to fight parking tickets, and it has gone viral. he has got, i think he said, 250,000 customers, and his rate is 50% of winning, fighting on these tickets. he asks you a few simple questions, and then you fill out your legal document. he started with parking tickets, he has now moved on to fire your landlord and he has got a whole set of these things. these are all legal, correct? he said "yeah, because you do not believe you parked illegally." it's great imagination. now he is working, he has got another big group around refugees and how to have them get legal documentation.

i think it is an excellent, great example. promod haque: that leads me to my question on that. talk about this entrepreneur using watson -- you know, as you look at life with watson, cognitive computing platform, how can startups utilize, you know, some of the capabilities of watson and then actually build apps and other applications and solutions? virginia rometty: i am going to answer it in a broader context, because this is not a commercial on watson for anything. subliminal, but did not mean it that way. i think everybody in your own business is here, you are thinking about, how do you form an ecosystem? this is true whether you are a bank, you could fight or embrace tech. many people are choosing to embrace and a good way. everybody has got this point of view of some platforms whether it is micro level or big.

if you are going to build a platform, it should do a couple of things. one, you need to give them access to something they cannot get access to anywhere else. in our case, we use the science of watson, the science of the cloud, we have invested the past 12 months, or even the past nine months, $12 billion. you cannot get it elsewhere. so give them access to science. the second thing you have to do for any kind of a platform here is, you have got to help people be better than not working with you. we are offering them all sorts of ways to certify as a cognitive developer. they have got to be top coder. you would know some of these things. you can get a nano degree in it. the new concept is all out in this. the third is help make them personally successful. -- commercially successful. and we have got the worlds largest service company, they bring hundreds of partners out

for solutions. channels are what people are looking for when they are looking for innovation. those rules fit on how to help a startup. bite-size junk, and of course free. that is the thing they all want is free for some period of time. [laughter] promod haque: any other thoughts? virginia rometty: on startups? promod haque: or the whole cognitive thing? virginia rometty: this point about being able to solve problems i do not think we could solve today. the stand between basic everyday, because i believe every decision you make in the next five years in personal are really big, you will be assisted by some kind of technology, i believe for all of us, that will be true. i look at some of the basic stuff where we are doing work on right now with sesame street and united states teachers association, the first wave is

rolling out of lessons plans for kids. on the everyday side. i don't know if you have ever looked at third grade math lessons -- anybody have a third grader? anybody remember third grade math? [laughter] i did it, that is atrocious. you would never know how to match a learning plan to how this kid learns or even if it was a good plan. so we set watson on a third grade math. started with third-grade math. it was to match your child learning style to the lesson, the right lesson plan, so throwing 500 years by all teachers next year, then we run into other subjects. so on the other side, i would say that point on health care, i really, we will probably do [indiscernible] do -- anyone in health care, one or two, three, four, five.

promod haque: 20% of gdp is spent on health care, $3 trillion a year. virginia rometty: it is the waste and inefficiency, but it is the outcomes. "60 minutes" did a segment on washington three weeks ago. -- on watson three weeks ago. unbeknownst to us, we doubt and interviewed different hospitals and the like, and it was for genomic sequencing. for us, it is an amazing sequence -- segment. doctors that work with professionals, any professional, technology. they said, we went through the genomic sequencing, and thousands of cases, patients, watson came up with exactly what my doctors did at the tumor board. so when you know about complex cancer cases, you do general

mixed sequencing, they do the tumor board and read your possible treatments, but in 30%, we found more. mixed sequencing, they do the that was the ability to match. we are now treating more patients outside of the u.s. than in on college advising. -- than in oncology advising. they do all of the breast cancer matching with watson, and we announced quest who has announced 50% of the doctors, cancer cases in the country if you want to genomic sequencing done, it will be done. this is really moving quick. [speaking simultaneously] virginia rometty: both for cost and for outcome. promod haque: in the venture community, we are seeing lots of startups with machine intelligence, learning space, cognitive computing -- virginia rometty: but you do need data. promod haque: this is right. when you think about it -- virginia rometty: not just publicly available. promod haque: when you look at what people call the digital economy, one of the things we

talk about in the digital economy is that data is the currency. when you think about it, data is the currency in the digital economy. how you put that data work is what is going to differentiate companies going forward, right? you have currently sitting there, you could invest it in a cd and maybe make 0.3%, or you can find an intelligent way to raise that money. same thing, you have got data, but if a company does not know how to utilize the data it has to his advantage, that is the cognitive computing concept. virginia rometty: when you and i first met, i point this phrase that data would be the next -- the world's next natural resource. promod haque: that is correct. virginia rometty: when you and i if you use it correctly. virginia rometty: if you just think about the natural resources, the value does not necessarily go to who owns them. this is true about oil or, you

go to africa, all the raw materials, but who refined it got value, and there are poor countries that have rich natural resources. so this will be true companies. promod haque: let's move on. let's talk about [indiscernible] block chain . i know you have done a lot of work in that space, and i know ibm is doing a lot of work in this whole area of blockchain. if you could take a few minutes -- virginia rometty: anybody know blockchain? the audience is experts. put your hands back up. how many believe it will have a big impact. oh, more went up even. that is even better. promod haque: how do you think it will impact business? what are the verticals? how exactly will those verticals make things better? virginia rometty: i have a bunch of agreers in here. they will add something to this conversation, but this to me is

one of those -- i can remember, i have a funny story about it. this goes back, i don't how many years ago. i'm in my home office, and this would have been, i guess it was beginning about all of the crypto current cities -- crypto currencies bitcoins, very early bitcoins, very early on in , bitcoin, all this chatter about it. i start looking around as i want to learn more about it. i do research online, i stumbled upon this youtube video. and it is -- it goes on for 20 minutes. but it is very interesting, clipboard after it describing how it is not bitcoin but how blockchaining, the underlying technology, works. it was lengthy, but i watched the whole thing, it is from ibm. excellent, so anyway -- [laughter] virginia rometty: i saw that, but it was right. so this was the beginning of my experience with blockchain.

i really believe for any supply chain, any supply chain, where there is inefficiency, which is every supply chain there is, any amount of tabor, uncertainty, -- any amount of paper or uncertainty you will apply , blockchain. it is this idea of a lecture that is in beautiful and when -- of a distributed ledger that is immutable and when one links to the next, that is permanent, cannot be changed, but it is distributed. you could have -- i and we have both said that blockchain will do for trusted transactions with the internet did for information. i did this op-ed in the wall street journal yesterday, and i said, if you do today what you knew about the internet in 1995, what would you do differently? i think you should ask that question on blockchain. we had several hundred poc's

going on with clients. but here was the thing that almost amazes me more. in my own company, i have dozens of blockchain projects going on, and i did not force any of them. that is a signal. they have embraced it. we have probably 40 billion of financing a year, and they took a simple process, dispute on invoices for financing. this was not singapore, this was another country, tax rate, whatever it is. so they put our ledger up of the whole financing business pretty fast up on blockchain, and the disputes go to -- the friction goes to nothing. so take that and pretend you are the world's largest shipper, shipping goods out of africa or wherever, you are talking huge amounts of efficiency. i would add one other thing you have got to have to be the

difference. we must -- i must put a plug in here for open source, you will have to have a sort of foundation that everybody uses that is trusted, the same one, or you will get islands and never get the benefits. the hyper ledger project is the fastest growing open source project out there, and we have contributed to it. it is established growing open source project, limited foundation. that is why i think it is important for the foundation. promod haque: private blockchains as well as public. virginia rometty: does not matter. governments will want permission, and it will need visibility. promod haque: which vertical do you think will be the early adopter of blockchain, based on what you see? virginia rometty: i think the supply chain of shipping, trade will take a big time, but we have many in the bank.

promod haque: i was going to ask you -- virginia rometty: like tokyo mitsubishi, msg, any kind of contract between two parties