rose: welcome to the program. we begin with the president's budget, al hunt on the story with shean donovan, the director. office of management and budget. >> nobody puts it better than the president. as he said at the state of the union, this is really about middle class economics. and it lays out, i think, we are hearing from lots of different folks that they see this as the most comprehensive vision for middle class economics that they have seen. rose: we continue with anthony foxx his new report is called "beyond traffic" u.s. department of transportation's 30-year framework for the future. >> charlie i hope this report is a wake-up call to the country that the house is on fire. use any euphemism you want. we are not investing in the

infra infrastructure infrastructure, not taking care of what we have and we are not being as smart as we could be about how we use the assets that are out there today to advance mobility and get people moving again. rose: we conclude this earning with jorge castenada and shannon o'neill looking at mexico today and tomorrow. >> the real issue today for me charlie, is whether he has been so weakened two years into his six-year term that what he did already is really all he is going to do and that from here on a very sort of lame-duck for four years is going to have to administer a stagnant economy. the numbers will be out in a couple of weeks for 2014. the economy grew 2%, significantly less than the united states when normally we tend to grow a bit more than the united states when the united states does well. that's really for me the central issue. can he get the economy to grow? has he been so severely weakened

that he won't be able to? and is he able to have a new beginning? there is nothing to indicate that he is being able to do this charlie. rose: al hunt on the story with shaun donovan, director of the office of management and budget, anthony foxx and a look at mexico. funding for "charlie rotes" is provided by the following: >> rose: funding for "charlie rose" has been provided by: >> rose: additional funding provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide. captioning sponsored by rose communications from our studios in new york city, this is charlie rose.

>> charlie, the obama administration unveiled it's $4 trillion fiscal 2016 budget with projections for revenues and spending out for 10 years. here to talk about it is the man who assembled it shaun donovan, the director of the office of management and budget. thank you for being with us? >> great to see you. >> a budget is a pathway, an architectural plan. what is the theme or message of this budget? >> well, you know, nobody puts it better than the president. as he said at the state of the union this is really about middle class economics and it lays out, i think -- we are hearing from lots of different folks, that they see this as the most comprehensive vision for middle class economics that they have seen. and really, if you think about it, we made enormous fiscal progress and economic progress

in our country, but we are still not seeing the wage growth that we need to. and because of that inequality is too high. so what it tries to do is really lay out: what are the three big things we need to help families raise their wages? one is we should try to make their paychecks today go a little farther and the budget does a range of those things. second, what can we do to actually spur the growth of jobs going forward that are going to be good paying jobs, whether it's in emerging technologies or manufacturing, whether it's in new infrastructure and what are the things we can do to make sure that our people are ready for those jobs? starting at, you know early childhood education but all the way through community colleges. >> community colleges. you know, the one cliches of this town, really tired cliches is budget did are dead on arrival. we always say that. we know 90 or 95% of this will be en acted because it is every year but it's the margins that make a difference the 5 or 10%.

in a $17 trillion economy can that really generate change? >> well, look. let's thingk about what has happened the last few years. we were going through gridlock and sequestration, and if you ask real people out in the world whether the fact that the government couldn't pay its bills, that we were choking off funding for our roads and bridges for educating our kids for research and development, you know, our economy is the most innovative in the world. that's our brand. choking off the basic r & d that leads to that, we felt that in the economy. and whether it's, you know the close to a million jobs we lost because of all of the economic uncertainty that discovered manufactured -- that sort of manufactured crises we reached a deal that set new funding levels, got rid of some sequester, what did we see? confidence start to rise, job

growth accelerate. there is no there is no question in my mind that if we get this right that it makes a difference. i am not going to say it changes the world immediately. but it does make a big difference. it sets the long-term path of the country. >> to get it right, you have to get it through a congress controlled by republicans. the reaction from republicans has been rather hostile. has anything surprised you? have you seen anything that says, well, gosh. it's better than i thought? >> well, first of all, the model that we are building on is a model that worked a couple of years ago. it was called mur called murray-ryan. it said we are not putting enough into the short-term to grow, build our middle class. and at the same time we have got longer term fiscal challenges with medicaid and medicare, with our deficits and debt. let's take some savings from those longer term things, move it in to spending on the

discretionary side. >> but what you just mentioned is paul ryan who of this budget said it is economic envy, it's class warfare. again, i come back. the reaction is pretty hostile. >> you know, those are good sound bytes, to use your words. i just came from three and a half hours up on capitol hill, and two striking things to me: one is that everybody up there was talking about how to help the middle class. as i said to members up on both sides of the aisle, i am glad you agree this is our challenge. we have got a specific plan we have laid out. but second, i have seen a lot of agreement on both sides of the aisle saying look. maybe this is the right model to move forward. end sequester, dollar-for-dollar, we need more money into international defense and to the other things that are going to move our economy forward and i am actually -- i will tell you, al i am surprised. i am pleasantly surprised i have seen as much agreement as i

have. >> you think they are playing on your turf? >> i think it's fair to say the president laid out a pretty clear program. >> let's talk about specifics. corporate tax reform. there were some promising comments in your point of view on that. tell us what you think of the odds of it actually occurring this year, and what are the biggest hurdles? >> well, first of all, i do think this is one of a number of places where there is a chance to come together and get something done. >> better than 50/50? >> i would say at least 50/50, i would say. but where i think the most promising turf is if you will -- and you've got the budget right there. for the first time, we've actually put a real thing on the cover and that's a bridge. making a point that we need to invest in infrastructure. we have a proposal that's gotten some bi-partisan support to reform our corporate tax system and take the one-time profits of

companies bringing money back from overseas that's parked over there right now forever, untaxed. bring it back and put it to work for infrastructure. it's a proposal that dave camp and his recommendation with a similar structure. we have seen a lot of legislation that's following this. so we think there is a real chance. >> let moo go back again. what's the biggest hurdle? >> so look, the biggest hurdle is everybody agrees in theory that what we need to do is get rid of loopholes, so-called broaden the bates and lower the rate. the president laid out we should lower the rates from 35 down to 28. the problem is once you start to talk about specifics in those loopholes it gets hard. and so what we are hoping we can do is that everybody is serious enough that we can really close a bunch of these loopholes. you know, the system, everybody agrees the system is riddled with loopholes and unfairness. the problem is we have to get

specific. >> you mentioned the infrastructure proposal and you would fund it. it basically is a one-time taxing the fund and assets. that's not a permanent solution? it's just a one-time? >> well, recognizing that we have been kicking the can down the road a few months at any time now for a year. >> better than that? >> sixty years is a pretty good solution. what it would allow you to do is first of all, increase the amount we are investing in infrastructure by 40%. so it's a big boost to what we are currently doing in infrastructure. but second, six years is some real space to look at what those longer term sources of funding might be. and so we actually think it's gaining momentum in terms of support. >> let me ask you this: gasoline prices are at the lowest they have been in at least five years. why isn't this the perfect time to increase the gas tax and fund infrastructure with that in that's a much more permanent

solution. and given the economics it also would be good for the environment. why did you shrink from that? >> there are a number of folks up on capitol hill who are violently agreeing with you. there is a group up on capitol hill who are violently disagreeing with you as well. i heard that in my testimony this week. look, with the president -- what the president is saying is he has put a constructive proposal on the table. there is growing work for a framework like this. we are happy and eager to talk about longer-term sources as well. and we are not going to be dogmatic about what that has to be. >> you have brought at a time administration, in your administration, the deficit has gone down dramatically. it's only a little more than a third, i guess, of what it was five years ago. >> that's right. >> the president said what counts is not the short-term but the chronic long-term deficit. even though you brought it down over 10 years i think your deficit would be about 587

billion. is that dealing with the long-term chronic deficit? >> look, these aren't our numbers. most of the folks who look at these issues say if you can get deficits under 3% of gdp, then you have met the key fiscal task. we do that every year through the 10 years. and on the longer term, you know here is the irony: we get credit for the short-term. we generally tend not to get credit for the already substantial reductions we have seen in our long data. the president came in office and said we have two big challenges: healthcare costs are growing too fast and we've got this demographic bubble that we are facing where because of the baby boomer retiring, we are going to have more and more retirees per worker. it's as simple as that. the math is inevitable. we have actually made some real progress on healthcare costs. in fact we brought down the cost of medicare and medicaid by

almost $200,000,000,000 in the year 2020. one year, $200,000,000,000 less spending. >> why isn't this designed to go all out on entitlements? >> two big picture things, al: social security is not the key driver of our long run deficit. the medical costs are much more of an immediate challenge. second, the president's put forward principles for social security reform. if there is a serious bi-partisan conversation about this, we are ready to engage. we should also recognize: what's one of the most important things we can do for social security? >> comprehensive i havegration realtime -- immigration reform. the more workers we can bring to this country who are going to pay taxes and help support social security trust fund just this week the social security actuaries said that just the relatively small steps the president took last year for -- on immigration, executive has helped social security.

if you think about what comprehensive immigration reform would do, it's one of the most important steps we could take. >> well, but you are right about social security, i am sure. but the social security disability fund runs out of money at the end of next year. sot when that happens what do you do? do you real indicate some of the other social security funds, or is this an open to look at the whole social security reform issue? >> look. i would say let's take a page out of the book of congress's democrat and republican for many, many years and that's just a simple reallocation. take a little bit of the payroll tax. move it from the retirement trust fund to the disability trust fund. comebined combined, when you do that both trust funds have reserves all the way through 2033, and we can, if we are going to be serious about reform, we've got plenty of time to do that but what we shouldn't do ask cut the benefits of workers who have paid into this system, who have become disabled by almost 20% next year.

this is urgent that we get this done. it's a simple fix system done many times before? >> one of your other proposals that has a great deal of appeal is free tuition for all community college students. i don't think anyone would disagree that community colleges are an engine of growth particularly for new arrivals in this country. they matter a great deal. some critics say the problem is dropout rates. and why didn't you propose reforms like maybe only give that money to those schools that graduate 50% or more or picking up on some of the stuff that is in your home town the city of the university of new york has a program for support ebooks and counseling. >> those are such good ideas? >> they are in your proposal. the 50 percent requirement? >> what we do is we say you have to demonstrate high enough quality in terms of not just graduation rates but, also, that what you are teaching within that program is helping folks?

>> they've got a number? >> i don't think we proposed a specific number like that. but the way its framed would allow us to do that. second, we say, you can only get these as a student. you can only get these this help if you are actually keeping your grades up and graduating in a reasonable time period. >> you think that's going to be an active community college proposal? >> i think it has a real shot. remember, this is structured as a partnership with states. what we are saying is this is not a mandatory federal program. we are going to make matching dollars available to states that want to come in and do this. >> we have talked a lot about this year and two years out the long-term. but you face a short-term potential crisis the next couple of weeks: funding for homeland security. the white house has made it clear that they will not accept any riders that undo what the president did by executive action on immigration. is there any face-saving you can

give those republicans who created a problem a mess of their own more funding on the southern border or anything like that or are you adamant it only can be a clean bill? >> al, this is not rocket science. right? we set funding levels. everybody agrees on those. homeland security has been traditionally a very bi-partisan agency. and, so like it's clear what the solution is here. pass a clean bill. >> you think you can get that solution? because most republicans the vast majority, have already voted against a clean bill by adding those riders. >> republicans in congress have made it clear that they want to govern. i was encouraged that in december, we got a full-year funding bill for every other agency and many people thought we wouldn't. i thought that was a good sign. so, i remain hopeful that they do the right thing. ? >> this is a test of whether they want to governor you are

saying -- to govern, you are saying? >> maybe because i am the budget director but isn't the most basic job of congress to fund the government and to do so on time? we presented an on-time budget this year. we are hoping that we can get back to regular order in the budget process, but we are not going to get to a productive solution on 17 until -- on 16 until we get the 2015 done of all of the things we should play games with. homeland security funding at a time when we have cyber issues and a whole range of other things? they ought to be easy. let's just get it done and move on to the important work of getting the '16 budget past. >> you have been there for the six months. finally you were at hud for over five years. now you oversee the whole government. what's the prospective? >> i think if there was one thing i would say looking out across all of government is yeah, we make our mistakes.

but a lot of what we are doing today in the country is working, and the kind of optimism that you have seen from the president a real since that america has turned a corner. we have recovered from or largely recovered from this terrible crisis we have been through. part of that is because we are getting things done in the administration. that's exciting to see. >> mr. director, we thank you so much for being with us today. >> my pleasure. >> we will be back in just a moment. >> anthony foxx has been u.s. secretary of transportation since 2013. he is also the former may or of charlotte. this week, he unveiled a report called with quad /-* "beyond traffic." the challenges the country will face over the next 30 years, crumbling infrastructure, demographic shifts and the rides of ought on mouse cars are among the ideas explored.

on monday, president obama presented a $4 trillion budget, of which 478 billion would go towards infrastructure programs. i am pleased to have anthony foxx a fellow north carolinan. >> good to be with you rose: tell me about this report because we all know how important infrastructure is. >> includes roads and bridges and lots of other things. and we know that it's in a terrible way. we know that and we know that there is repeated calls that we need to do something and we need to consider i hope from a structure as an investment in the future: a, it provides jobs. b, it gives us a better infrastructure as there is increasing urbanization in the country. >> charlie i hope this report is a wake-up call to the country that the house is on fire, use any euphemism you want but we are not investing in the

infrastructure we need in the future and not being as smart as we could be about how we use the assets that are out there today to advance mobility and get people moving again. we are stuck in traffic. >> cuts across travel in cars in planes on trains, just about everywhere. >> it was during the administration we built this great enter stain highway in the 1950s. >> yeah. >> using the fuel tax and that was able to help us build the infrastructure to have the highway system we have today, but today, we have two problems. one is we have a legacy system that has to be maintained. and we also have fast-growing areas of the country that need new capacity. so we have both problems that we didn't have back in 1956. rose: why have we neglected the infrastructure? >> i think it's easy to take for granted. this is a termite in the batesment. it eats away slowly at the foundation but it doesn't

necessarily topple you over. but i think americans are starting to see longer travel times, more congestion on our freight rail system getting goods to market. there are all kinds of challenges that people are starting to see. we are fraying at the seams. now is the time we have to deal with it. rose: and if we don't? >> if we don't, travel times will get longer. congestion will become greater, and folks the quality of life and the commerce in this country will go slower. and that will be -- >> rose: we will risk death and injury. >> yes. there are absolutely safety con jejsz to not addressing these issues. rose: you said an effort to look beyond the immediacy. you are trying to take a long view and get beyond politics and budget arguments? >> yes. we have been, you know, sometimes i run, and when you are running and you are looking at your feet, you don't run as far or fast as if you are looking at the horizon. in this country, we stopped looking at the horizon when it comes to transportation. it means that we have to look at the federal level at what we are

investing and where that money is going but also at the state capitol and in city hal,000s we have to work in more coordination to make sure our investments are going as far as thing. rose: there are some alarming notes here. for example, you say if we don't do anything about it, 2045, traffic congestion in omaha, nebraska could be as bad as it is in los angeles today. >> congestion is coming. we are going to grow by 70 million more people in this country by 2045. >> means more people trying to get places. you will see congestion pop up in unlikely places reportsrose the merge society of civil engineers said american needs to invest $1.8 trillion. >> yeah. we are in the hole. >> the budget is 4 trillion this year? correct? >> yes. we are in a hole. notes question about it. what i would also add is that

the federal portion is just one part. there is state dollars that go in to transportation. there is local money that goes into transportation. there are private dollars that could go for active portation and cost savings we could achieve if we are more efficient with how money is spent. all of those strategies are part of the future. reportsrose -- rose: this is not an action plan and not intended to be. it's a survey of where we are and where current trends may take us if left unaddressed. why is it not an action plan? >> the decision making system in transportation is fractured. federal, state local governments have pieces of transportation. your transit systems are largely local. your rail systems are largely private or semi private. your aviation system is backed by the air traffic control system at the federal level but there are commercial carriers involved. so there are all kind of governance complications in transportation. no one entity can develop an action plan. our hope is that the plan sparks

a conversation that leads all of the players to get to the table, coordinate better and help us shape the future reportsrose you call it a blue paper, not a blueprint. >> yeah. rose: we had a terrible accident last night in new york nt sp is looking, investigating trying to get the facts of what happened how to prevent it from happening. can you tell us anything that you know about that tragedy? >> we are still gathering facts. >> obviously, when nt s b looks, we will look for whether there are things that need to happen at metro north to assure this doesn't happen again. terrible tragedy. >> governor cuomo said to me this morning, it was horrifying to be there. he said it was just graphic and...? >> it is horrifying. it points outt we haves we have

to concern ourselves with safety. >> that's what the rail does and the dot does rose: tell me what you are urging us to do as we look toward 2045. >> three things. first, we've got to take better care of the system we have. the idea that we have bridges that are in disrepair and roads that are crumbling, that's not the america that's going to be a prosperous america in the 21st century. them, on top of that, there are places that are growing. where you and i are from in the south that's one of the two places that are going to see the most ex plowsive population growth in the next 30 years. those areas are very auto-dependent, and they are going to be overwhelmed. >> like california? >> exactly unless we get more capacity. then, i think there are some smarter ways we can utilize our infrastructure. for example, technology and automated vehicles and other

innovations over the next 30 years that we need to rapidly put on the market. rose reports what you want-- rose: you want to start a dialogue? >> yes. rose: have a conversation about transportation, you know, and you think that it's necessary to change the dialogue? >> we are not having the right conversation. down in washington right now, for instance, success in this area is viewed towards getting the highway trust fund replenished. it's running short because people are driving and using less fuel. they are not generating enough revenues, so the trust fund is person pettily falling -- perpetually falling short. we are not looking at outcomes where the country is going how people are changing the way they use transportation. climate change is obviously an issue we need to deal with in infrastructure as we build more. all of these things are factors that the country has to confront. if we don't, we are going to be spending money but not getting the right outcomes

rose: you said it breaks my heart, mississippi, alabama, you have good people trying to work hard and do the right thing. in some cases, they just can't get from a to b. >> yeah. i did a bus tour back in part of my time until mississippi and louisiana. there are entire counties where school buses were having to reroute around bridges that were in such a state of disrepair so kids, school kids were having to spend 20, 30, 40 more minutes on the bus just to get to school because of this. this is not the country that we want to have in the future. this is a set of problems that we can deal with. they are entirely of our own making and we have a choice in the future to fix them. rose: there is a lot of talk on the part of tesla and google and lots of other people about driverless cars but also autonomous cars. we clearly are approaching a time where driving will take on

a different form. lay out that future. >> the technology is evolving to enable cars to talk to each other. so an accident that might have happened today in 2015 may be avoided because a car coming in one direction can see the car coming in the other direction in ways that i human being can't. rose: an alarm? >> exactly or stop. we may find safety improves. we have had 80% improvement in safety because of technological innovations. we have 30,000 highway accidents and fatalities that happen around the country. we think technology will soften that. the autonomous vehicle is slightly different in that we are seeing variations that aren't focused on cars talking to each other other but a car recognizing the environment around it and being able to move within that environment. and we think both technologies hold a lot of promise.

part of this report is the more rapidly we can get those products tested and in the marketplace we think there are gob to go safety and mobility benefits rose: you are the proud son of teachers? >> yes. reportsrose how did you get in politics. >> it's a long story e rose: davidson? >> my grandparents were both teachers, and, of course, teachers are some of the most wily politicians because they are watching the school board meeting. around the dinner table, i grew up in their house around the dinner table, i would hear about what was going on all the time. my grandfather, when he retired, got involved in grassroots politics. and i would sit around at the kitchen table and ask for his support. reportsrose he was influential. >> so i learned from him a little bit about the grassroots of politics. i never thought i would be doing what i am doing now. rose: two terms as a city council member? >> two terms as city council

member and two as mayor. rose: how did the washington appointment come about? you got your city to be the host of the democratic national convention too. >> yeah. i had done some things with transportation in charlotte, focused on building a transit system in a fast auto-dependent city. we had innovative projects with our airport putting rail connectivity into our airport so we could move freight more quickly. and i suppose it caught the notice of the president. i was happy to accept his request that i come do this job. rose: what will you do when this administration ends? >> who knows? you know, there is so much going on and so much to do right now over the next two years. i want to have this conversation with the country. i want to help influence congress's work on both the highway bill and the aviation bill. rose: they can't do anything unless they get the budgeting process under control.

>> yes. yes. rose: not lunching not lurching from disaster to disaster. >> in transportation, there have been 32 short-term measures which has crippled ability of local and state governments to do long-term projects. we think there's a way to invest substantially in infrastructure. the president put a proposal on the table to do that, as you mentioned, paid for without increasing the deficit or tax rates but using tax reform to not only plug the hole in the highway trust fund but move this country way, way down the road. rose: affidavit savedson college where you were president, in charlotte very good school, you went to nyu law school. >> yeah. reportsrose after law school rather than go to practice law or clerk, you went to new orleans. >> yeah. rose: to play a jazz piano? >> i wouldn't to learn how to play the trumpet. the other place in this country i could imagine learning to play

was -- rose: why? >> it is the most majestic instrument in music. rose: why? >> gabe regabriel played the trumpet trumpet. he is a good friend rose: did you take lessons from him? >> yeah. he takes political lessons from me. i take music lessons from him. rose: who is your favorite jazz player other than that? >> other than that? rose: it's been, all of the names, i am amazed. >> i love louis armstrong. i go back to early new orleans, and there are so many greats duke ellington and his orchestrations, and i could go on and on. rose: thank you for coming. >> thank you, charlie. rose: anthony foxx the secretary of transportation for this government. back in a moment. stay with us. ♪ rose: we begin with mexico and

what marks the first foreign visit to the white house this year. president obama hosted president jorge castaneda. sweeping structural reforms have earned him the support of the international community, outrage over the disappearance of 43 students has threaten toddy rail his economic platform. joining me, some mexican observers, francisco goldman from the new yorker magazine, shan shannon o 'neil and from abu dabu dhabi. how would you characterize the meeting between the two presidents and the state of the relationship today between mexico and the united states? before we turn to some of the problems within mexico. >> sure. the meeting went very well. it was very scripted, very

organized. so there were no surprises. and many things were continuing works in progress. little changes little announcements of progress on transportation on air rights and things like that little progress on education and some of the exchanges that are happening. so it was basically a continuation of a long-standing relationship between the two. they met twice here they have met twice in mexico. it's building on an already pretty solid base. reportsrose francisco, how would you characterize the presidency of the mexican president as he comes to washington with respect to his relationship to the mexican people today? >> it's a relationship that is in kind of an unprecedented crisis at least in modern times. it's not just that he has received the lowest poll numbers the lowest approval ratings in 20 years since the

disastrous economic crisis brought on by the peso devaluation back in '94/'95. his relationship with the mexican people is really broken, maybe irrepairably so. it's a complete really lack of credibility anymore. he is a president that is perceived to be really indifferent, i think, to a lot of the suffering that mexicans have been enduring. i think that was really showcased highlighted in the arena, the public arena of how he reacted to the 43 students. the crisis recently of the apparent corruption in the administration with the mansion that was supposed owned by his wife but the title, the deed was held by a construction group

that has received government contracts from the peneyeta and his finance minister had an apparent sweetheart deal like that, also. there is a perception that this is a government that is, you know, indifferent to appearances of conflict of interest, indifferent to the security problems in the country that it wagerred everything on a kind of public relations campaign to convince the rest of the world that it had this plan to modernize and reform mexico. some of that might be well on paper, some not, but you can't really modernize a country plunged into this kind of impunity, corruption a state in which people perceive that it's absolutely impossible to achieve justice at the level of official

responsibility for any kind of crimes. so this has distanced his government and really, all of mexico's institutions and political parties certainly from the people right now. and that's reflected in the polls and in a lot of other things right now. rose: what do they have to do? >> something big. if we did this in the united states, you would see in cabinet ministers resign or be fired. nothing of the like has happened. you would see the president go to the town where these students disappeared and meet with the people. he has yet to do that. rose: here that seems obvious. >> you would announce independent investigations and you would bring in civil society groups. those that are protesting against you. you would bring them in and give them a real say. none of that has happened yet. rose: francisco when it comes to the united states, what's is his ask? what is he asking of the americans? >> i am not sure but i think what et cetera primarily asking for is somehow for -- is

primarily asking for is his luster to be returned to him. there have been all kinds of stories in the mexican press recently where he is literally described as a laughing stock. they say our president has gone in one year from being on the cover of "time magazine" to savior of mexico to now an international laughing stock. he wants to get the perception out there that well, maybe that's not, you know, maybe president obama, by treating him, by trying to affirm some kind of partnership can give him some of his legitimacy back. but i think, as you said, some of the things he should have done seem so obvious. that's exactly what has really i think, hurt him staggeringly with the mexican people has been his complete real ineptitude in responding to

these crisises in the most distant, cold, indifferent, often really kind of insulting way, you know. and it's been one mistake compounded by another. so, you know, we will see what the trip to washington can do for him. but he's going to come back to mexico and it's going to face a revived student movement. things have quieted down a little bit because the students were out on vacation. while he has been away i think this is very important to mention, gathering steam has been the growing suspicion, the headline in the most important digital news site yesterday: did the army burn the 43 students in their incinerators? scientists, witnesses and lawyers suspect that might be so. if that story begins to gather steam, i think, you know, he and his government are far from

putting -- hard to put the 43 students behind him. rose: could he be forced to resign? >> some col turn against -- could turn against him. what we don't see as normal citizens pushing from behind. if the story gathers steam that this was not either the story that the mun it's pal-- municipal police with the local drug trafficking game that it turns out that the army forces were directly involved and that there has been some kind of cover-up, that's going to be very very hard to recover from. rose: it's incredible. >> we were talking about what kind of measures could he take? the measure i hear a lot of people talking about is something people would be demanding in the united states would be an independent prosecutor an independent investigation and even in the corruption cases but that doesn't seem likely to happen.

it would be unprecedented for the mexican state to take the initiative of launching an investigation against itself but that would be the most direct way to restore credibility. >> one thing he has not done, and his closest advisors is expand from beyond his original state. if he came from new york and all of his advise errors new yorkers. he hasn't gone broadly. that's something you might see, if you want to see a big system step him to bring some of those in. rose: how does mexico stand in terms of the rest of latin america in terms of the economy. >> the last decade the global story has been china and its rise and grab for comemodityies and resources. >> and the chiles and perus have benefited from that rise. mexico has always been a competitor, not a compliment to china. it had a rough decade because it was selling many of the products that china sold to the world.

it wasn't exporting anything to china. nower, we are starting to see that change. china is fading from what it was. it is no longer going to be the engine of growth the way it was before. mexico is a more open, competitive economy particularly the part that's tied to the united states. it's going to rides and fall with the united states. if you look at the next two to five years compared to the eu, compared to china the united states is pretty strong. that's where that correlation. rose: the strongest economy we see now along with great britain. having said that, what impact does that have on mexico? they are connected, independent? >> exactly. huge because as i mentioned, it's the export destination but more than mexico sending things to the u.s. mark we now have because of nafta 20 years of nafta, we make cars and t.v.s and blenders and airplanes and everything else together things are produced on both sides of the border. so, a the u.s. economy strengthens so too, does the mexican economy. >> said, the things that have

held it back, which francisco is talking about, many of those could be may be addressed by these reforms, the reforms that pinetto put into place. here is where his weakness, his political weakness does he have the political capitol to make them become reality. reportsrose becomes important? >> incredibly important. that's how the next co might have its moment. what's happened to his politically could challenge that possibility. rose: jorge, glad you could join us. give us a sense of how you see it. how do you see mexico where it is at this moment and what it must do to fully realize the reforms and implementation of reforms and the economic possibilities? >> i think what i heard of both of our colleagues, i tend to agree with much of it, not with all of it, in the sense that this is a severely weakened president who two years ago started off very well but with a series of weaknesses from the

very beginning that only now appeared but they were there for the from the beginning when saying it's as if he had all of his advisors from new york. i think it's more as if they were all from new jersey not quite the same thing. not only closeq-group a closed group of mediocre people. i know you do, charlie. you would love to live there. i am sure you would. in any case, i think that that's a real issue there. the second point is that he did not, from the beginning, take on the issue of corruption. not only the reality of it, but the perception that many mexicans have that the pri is corrupt. it's not necessarily true but an overwhelming majority of mexicans think so. when, in addition a series of a lot of evidence seems to suggest that it is true, he was very severely wounded by that. and then, he reacted very -- in

a very haphazard way to a real issue, which was the military carrying out extra judicial discussions of up to 22 people. i am not sure that the government's story is false. i think i tend to think more or less what the government has said is true and no one has been able to prove anything to the contrary, that the army killed them that they are still alive that they took them away and threw them into the ocean or any of these stories. i think basically the version is true. the real issue today for me charlie is whether he has been so severely weakened, barely two years into his six-year term that what he did already is really all he is going to do and that from here on, a very sort of lame-duck for four years is going to have to administer a stagnant economy. the numbers will be out in a couple of weeks for 2014. the economy grew 2%,

significantly less than the united states when normally we tend to grow a bit more than the united states when the united states does well. that's really for me the central issue: can he get the economy to grow? has he been so severely weakened that he won't be able to? and is he able to have a new beginning? there is nothing to indicate that he is being able to do this charlie. rose: what does he have to do? are there bold steps he can take, or are you suggesting maybe so wounded that he can do nothing but simply be a lame duck for four years? >> i think what a lot of people in mexico have suggested what he should do, the first thing he should do is have a major cabinet shake-up, get rid of a large part of the cabinet he has and appoint people from different regions of the country from different professional origins, different generations, et cetera. with this team being exhausted and is likely unable to go much further. he has to address the rule of

law which he did not address during the first two years and people like myself -- i wouldn't say shannon but certainly like myself and others in meth co are partly responsible for that because when we try to suggest a program which looks a lot like what he has done three or four years ago, we didn't place that much emphasis on the question of the rule of law and we should have. and he didn't, and he should have. difference, of course, he is president. we are not. so not a minor difference. that's the second thing he really has to do. he has to do away with the corruption somehow, at least at the top level. he should force his new cabinet ministers if there are to be any, to make public their tax statements, their tax returns and their asset statements. none of them are really made public in detail in mexico today. and he should probably, as francisco said appoint a special prosecutor, independent processing cuter to investigate and now a new series of extra judicial executions which

apparently took place yesterday in the city where 11 people who were killed by the army, separate five or six were extra judicial executions in the public square according to several eyewitnesses who are giving their stories today in the mexican press. >> should be done. i think that's a third step that has to be done. then he should probably take some very dramatic steps regarding the issue of drug cartels, organized crime, et cetera. unfortunately president obama said yesterday to him at least publi, that the united states continued to support mexico in its war on drugs or in its fight against organized crime and drugs. it's the stupidest fight you can have. what he should do is what people in oregon n washington, washington state and washington, d.c., colorado, et cetera, are doing legalize marijuana to start with. announce it and do it, and then launch a major international

campaign for an end to the prohibitionists like the united states put in plates 50 years ago and is going to be renewed bye-bye the un special session of the general assembly. rose: i want to hear from each of you your reaction to what the president intends to do with we want to cuba and what impact that might have on cuba and lattip america? >> we have seal t real change in the executive position toward cuba and opening up. we have had a policy that's been in place for several decades. it hasn't changed things in cuba. so it's time for a rethink. this is at least a start. the executive branch can't, you know get rid of the embargo, do some of the things. depressed needs to step in. i think this is quite important and at least puts the ball back in castro's court to reciprocate. we will see if they want to reciprocate. i stepped to think they won't want to because part of their

strengths comes from opposing the united states. the united states isn't the big enemy anymore. it makes it more difficult to deal with the deprivations and those things happening there. what may change more quickly is u.s. relations witness rest of latin america. we are sometimes a punching bag. sometimes justifiably. sometimes not. u.s./cube alan policy has been an easy target. that is taken away, at least with the president. particularly when the president goes to the summit of the americas, a meeting of all of the presidents in the hemisphere come this spring cuba will be there for the first time. obama has said that he will go and be there as well. it takes away this hold dichotomy and then the hypocriticalness of it that other countries point out to. i think it will open up the ability for the to work with other countries. less for cuba and more for how we deal with other countries in the region. >> francisco, cuba. >> i agree with most of everything that shannon said. i think what's going to be interesting to see in cuba as it

changes is how cuba, itself changes. i don't think anybody want to see cuba suddenly become, you know, just this, you know, a new version of miami. i think it's going to be really interesting to see if that crazy hybrid of a now discredited, you know, obviously very discredited communist totalitarian regime that did, certainly, have some remarkable achievements in education and so forth, how that very educated populace is going to adapt to a new game to new economics, to a new system is going to be really interesting and it may be an interesting laboratory for the rest of lattip america. rose: i can't wait. jorge what about cuba? >> i think obviously, president obama's decision was a major step forward for the sfwluns. it should have been -- for the united states. should have been done a long time ago.

it remains unclear whether there is a ticit or ulterior point. : there will be a political opening in cuba or not. if not, the embargo will not be lifted. if it is not lifted then the economy impact of president obama's decision will be very minor for cuba. the symbolic importance is there. the importance may be for latin america is there but nothing much will change for the cuban people. whether raul castro is ready and willing to carry out that political opening or not will mean a lot for the cuban people for president obama, and, also for latin america and the other that china mentions which i agree with which is perhaps now countries like mentionxico, like brazil even colombia can actually also begin to try and push and edge and nudge cuba

towards democracy elections, respecting human rights and stop accepting the principle of the cuban exception that cubans are allowed to do what people fought against for years and years and years but when somebody else does it, it's because the americans are against them, then they are allowed to do it. now, the americans aren't bothering them anymore. so maybe now, the mexicans and the brazilians will tepll the cubans, it's time to have an election. you shouldn't be afraid of it. nothing happens. it's time to let people out of jail. it's time to have newspapers, radio stations television stations unions, political parties respect human rights, freedoms? >> >>ets. this is still people fought for, for 30 years now. why not the cubans? reportsrose well said. thank you for joining united states. francisco goldman from the new yorker magazine. his new book is called "the

interior circuit, a mexico city chronicle. and also, shannon o 'neil: twos nations indid i have visible, mexico, the united states and the road ahead. thank you. for more about this program and early episodes, visit united states online at pbs.org and charlierose.com. ♪ captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org

>> rose: funding for "charlie rose" has been provided by: >> rose: additional funding provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide.

report" with tyler mathisen and sue herera. day of reversals just when it looked like greece was making progress on its debt the european central bank said not so fast and that sent u.s. stocks south. a one two punch. blames the dollar but there's something else on share with the dow component. why ford dealers have a hard time keeping one specific truck in their showrooms. all that and more tonight on "nightly business report" for wednesday, february 4th. good evening, everyone. what a difference just a few hours makes. earlier in the day, the dow jones industrial average rose to its highest level in almost two weeks, but just before the closing bell most of those