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tv   Key Capitol Hill Hearings  CSPAN  November 20, 2013 12:00am-2:01am EST

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run. the impact of the shut down and the default not only dealt significant damage to the economy at a time when we didn't rex the seeming incapacity to work together to advance an .genda i think people are legitimately we have a because major problem with health care in this country, 41 million people without health insurance, a lot of people underinsured. and once again, how we fix a health care system that's been broken for too many people for
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too long, i think, ends up speaking to how much confidence we have in government and whether we still have the capacity collectively to bring about changes that are going to be good for our economy, good for our businesses, good for the american people. i do want to say, though, that, beyond the headlines, we have made real progress in the economy. and sometimes that hasn't gotten enough attention. some of the tough decisions that we made early on have paid off, decisions that helped us not only recover from a crisis but begin to lay a stronger foundation for future growth. we refocused on manufacturing and exports, and today our businesses sell more goods and services made in america than ever before around the world. after a decade of shedding jobs, our manufacturing sector's now added about half a million new jobs, and it's led by an
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american auto industry that has come roaring back after decades of decline. we decided to reverse our dependence on foreign oil, and today we generate more renewable energy than ever before and more natural gas than anybody in the world. and for the first time in nearly 20 years, america now produces more of our own oil than we buy from other countries. when i took office, we invested a fraction of what other countries did in wireless infrastructure, and today it's up nearly 50 percent, helping companies unleash jobs, innovation and a booming economy that's created more than 500,000 jobs. when i took office, only 5 percent of the world's smartphones ran on american operating systems; today more than 80 percent do. and it's not just in the high- tech economy that we're seeing progress. for example, american farmers are on pace to have one of their best years in decades, and they have consistently been able to export more, make more profits and help restore rural economies than when we came into office.
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and yes, we decided to take on a broken health care system. and even though the rollout of the new health care system. and even though the rollout of the new health care marketplace has been rough, to say the least, about half a million americans are now poised to gain health care coverage beginning january 1st. that's after only a month of signup. we also have seen health care costs growing at the slowest rate in 50 years. employer-based health costs are growing at about one- third of the rate of a decade ago, and that has an impact on your bottom line. and after years of trillion- dollar deficits, we reined in spending, wound down two wars and began to change a tax code that i believe was too skewed towards the wealthiest among us at the expense of the middle class. and since office -- since i took office, we have now cut our deficits by more than half. add it all up, and businesses like yours have created 7.8 million new jobs over the past 44 months. we've gone farther and recovered faster than most other advanced nations.
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and so in a lot of ways, america is poised for a breakout. we are in a good position to compete around the world in the 21st century. the question is are we going to realize that potential? and that means that we've still got some more work to do. our stock markets and corporate profits are soaring, but we've got to make sure that this remains a country where everyone who works hard can get ahead. and that means we've still got to address long- term unemployment. we still have to address stagnant wages and stagnant incomes. and frankly, we've got to stop governing by crisis here in this town, because if it weren't for washington's dysfunction, i think all of us agree, we'd be a lot further along.
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the shutdown and the threat of default harmed our jobs market; they cost our economy about $5 billion dollars and economists predict it will slow our gdp growth this quarter. and it didn't need to happen. it was self-inflicted. we should not be injuring ourselves every few months; we should be investing in ourselves. and in a sensible world, that starts with a budget that cuts what we don't need, closes wasteful loopholes and helps us afford to invest in the things that we know will help businesses like yours and the economy as a whole: education, infrastructure, basic research and development. we would have a grand bargain for middle-class jobs that combines tax reform with a financing mechanism that lets us create jobs, rebuilding infrastructure that your businesses depend on, but we haven't gotten as much take-up from the other side as we'd like to see so far. we have the opportunity for bipartisan authority to negotiate the best trade deals possible, so businesses and workers can take advantage of new markets that are opening up around the world.
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we haven't seen the kind of take-up from the other side that we'd like to see so far. we've got the opportunity to fix a broken immigration system that strengthens our economy and our national security. the good news here is the senate has already passed a bipartisan bill that economists say would grow our economy by $1.4 trillion and shrink our deficits by nearly a trillion dollars over the next two decades. you wouldn't turn down a deal that good and congress shouldn't either, so i'm hoping that speaker boehner and the house representatives can still work with us to get that done. and we need to be going all out to prepare our kids and our workers for the demands of a 21st-century economy. i've proposed giving every child an early start at success by making high-quality preschool available to every four-year-old in america. we know that you get more bang for the buck when it comes to early childhood education than just about anything else, and you've got great examples around the country, oftentimes in red states that are doing just that, and we need to make that same investment. we're working to bring down the costs of a college degree so
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more young people can get a higher education, and one thing that i'm very excited about -- and this has been a good example of a public-private partnership is the idea of redesigning our high schools to make sure that more young people get hands-on training and develop the skills that they need, particularly in math, science and engineering that businesses are looking for. and, in fact, today, we're announcing a competitive grant program that will encourage more high schools to partner with colleges and local businesses to better prepare our kids for college or a career. and in december, i'll be bringing together college presidents and other leaders to figure out ways to help more low-income students attend and succeed in college. so just to sum up, my basic message is this: we know what the challenges are. we know what the solutions are. some of them are tough, but what's holding us back is not a lack of good policy ideas or even what used to be considered good bipartisan policy ideas. we just have to break through the stubborn cycle of crisis
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politics and start working together. more obstruction, more brinksmanship won't help anybody. it doesn't help folks politically. my understanding is, nobody in this town is doing particularly well at the moment when it comes to the opinions of the american people. but it certainly doesn't help anybody economically. on many of the issues, i think you and i would agree, and i want you to know that i'm rooting for your success, and i look forward to making sure that we are able, in the remaining three years that i'm president, to work together to not only improve the business climate, but also improve the prospects for americans all across the country who have been treading
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water, feel like they're losing ground, are anxious about the future and their children's futures, but i think are still hopeful and still possess that fundamental american optimism. if they see leadership working across the board on their behalf, then i'm confident that we can make enormous progress. so with that, why don't we get jerry up here, and i'll start answering his questions. i hope he has some input. [laughter] if he starts asking me about what happened to the kansas city chiefs -- the -- i'm not sure i'll have a good answer for that one. [applause] >> well, thank you, mr. president. let me start by thanking you officially for joining us today. i think you probably see a lot of familiar faces out there, most friendly, most of them. and i would also note that you're getting here a little late. congressman paul ryan is coming later. he's going to get here a little early. so if you guys overlap a little bit, maybe we can just get some problems solved right here.
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what do you -- [laughter] - >> let's do it. let's do it. >> it's your chance. we have talked amongst ourselves. i've tried to sort of take the sense of the room, and so i'm going to try to reflect some of the conversations that have been going on here in the questions that i'm going to ask you. you'll not be stunned that i'm going to ask you about health care first. you indicated there and you've indicated publicly quite clearly that the rollout has been difficult. what do you think you've learned from this experience about the government's ability to do this sort of thing, about the law itself or about your own administration? >> well, there are a couple of things. number one is that this has been a big problem for a very long time, and so it was always going to be challenging not just to pass a law but also to implement it. there's a reason why, despite a century of talking about it, nobody had been able to successfully try to deal with some of the underlying problems in the health care system.
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the good news is that many of the elements of the affordable care act are already in place and are working exactly the way they're supposed to. so making sure that consumers who have, you know, employer- based health insurance are getting a better deal and better protected from some of the fine print that left them in the lurch when they actually got sick; that's in place. making sure that young people under the age of 26 can stay on their parents' plan; that's helped 3 million children already. that's making a difference. helping seniors to get better prescription drug prices; that's already helped millions of seniors and billions of dollars in savings. rebates for people who see insurance companies who are not spending enough on actual care, more on administrative costs or profits, they're getting rebates. they may not know it's the affordable care act that's giving them rebates, but it's happening. so there were a number of things that were already in place over
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the last three years that got implemented effectively. the other thing that hasn't been talked about a lot is cost. there was a lot of skepticism when we passed the affordable care act that we were going to be giving a lot of people care but we weren't doing anything about the underlying costs. and in fact, over the last three years we have seen health care costs grow at the slowest pace in 50 years. and that affects the bottom lines of everybody here. and there are a lot of smart delivery system reforms that slowly across the system are being implemented, and they're making a big difference. and that's saving us money. that's why, by the way, some of the projections that -- in terms of what the affordable care act would do to deficits have actually proved even better than we had originally expected. what i have learned though with respect to setting up these marketplaces -- which are essentially mechanisms where
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people who are currently in the individual market or don't have health insurance at all can join together, shop and insurance companies will compete for their business -- setting those things up is very challenging just mechanically. the good news is that choice and competition has actually worked and insurers came in with bids that were even lower than people expected -- about 16 percent lower than had originally been projected. the challenge has been just making sure that consumers are actually able to get on a website, see those choices and shop. and i think that we probably underestimated the complexities of building out a website that needed to work the way it should. there is a larger problem that i probably -- i speak personally but also as the administration could have identified earlier. and that is the way the federal government does procurement and does it is just generally not
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very efficient. in fact, there's probably no bigger gap between the private sector and the public sector than it. and we've see that in, for example, the va and the department of defense trying to deal with electronic medical records for our service men as they move into civilian life. most of that stuff's still done on paper. we've spent billions of dollars i'm not saying we as in my administration. i mean we've now had about a decade of experimentation, spent billions of dollars and it's still not working the way it should. so what we probably needed to do on the front end was to blow up how we procure for it, especially on a system this complicated. we did not do that successfully. now, we are getting it fixed, but it would have been better to do it on the front end, rather than the back end.
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and the last point i'll make is that -- you know, in terms of expectation-setting, there's no doubt that in an environment in which we had to fight tooth and nail to get this passed, it ended up being passed on a -- on a partisan basis -- not for lack of trying, because i met with an awful lot of republicans trying to get them to go along, but because there was just ideological resistance to the idea of dealing with the uninsured and people with pre- existing systems -- yeah, there was -- there was a price to that. and it was that what was already going to be hard was operating within a very difficult political environment and we should have anticipated that that would create a rockier rollout than if democrats and republicans were both invested in success. one of the problems we've had is one side of capitol hill is invested in failure and -- and that makes, i think, the -- the kind of iterative process of
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fixing glitches as they come up and fine-tuning the law more challenging. but i'm optimistic that we can get it fixed. >> well, that's the question i was going to ask next. is it possible you've lost enough time here and enough potential customers in the exchanges that you're not going to reach the critical mass of sign-ups that you need to make the marketplace work? is that a danger that you have to worry about right now? >> well, it's -- it's something that we have to pay attention to. but keep in mind that this model of marketplaces was based on what was done in massachusetts. and the experience of massachusetts was that in the first month, 153 people signed up out of an ultimate 36,000. i mean, it was -- it was less than 1 percent signed up in that first month, partly because buying insurance is a complicated process for a lot of people.
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when they have more choices, it means that they're going to take more time. there's no doubt that we've lost some time, but the website's getting better each week. by the end of this month it will be functioning for the majority of people who are using it. they'll be able to shop, see what their choices are. the prices are good. the prices are not changing during the open enrollment period that goes out until march. and so i think that we're going to have time to catch up. what's also been expressed as a concern is the mix of people that sign up. so we might end up, you know, having millions of people sign up, they're happy with their new coverage, but we've got more people who are older, more likely to get sick than younger and healthier. we've got to monitor that carefully. we always anticipated, though, that younger folks would be the last folks in just because, you know, it's been a while since you and i were young - >> [laughter] >> - but as i recall, you don't think that you're going to get
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sick, you know, at -- at -- at that time. so, look, i am confident that the model that we built, which works off of the existing private insurance system, is one that will succeed. we are going to have to, a, fix the website so everybody feels confident about that. we're going to have to, obviously, re- market and rebrand, and that will be challenging in this political environment. but keep in mind in -- in the first month we also had had 12 million people visit the site. the demand is there. there are 41 million people who have -- don't have health insurance. the folks in the individual market -- many of them are going to get a much better deal in the marketplaces. and so we've just got to keep on improving the customer experience and make sure that we're fending off efforts not to fix the problem, because if somebody wants to help us fix
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it, i'm all game, but fending off efforts to completely undermine it. >> let me turn to the economy, the broader economy, probably the predominant concern of people in this room. we seem to be stuck in an economic growth pattern of ok but not great growth. your friend larry summers was here earlier today and said essentially the problem, or one of the problems, is that the system can't do two things at once. it can't cut deficits and spur growth; it needs to do one or the other; right now it needs to spur growth, should not worry so much about deficits. do you agree? and if you do agree, how do you make that happen? >> you know, actually, larry and i and most of my economic team, in fact, all my economic team, have consistently maintained that there is a way to reconcile the concerns about debt and deficits with the concerns about growth. what we know is, is that our -- our fiscal problems are not short-term deficits. our discretionary budget, that portion of the federal budget that isn't defense or social security or medicare or
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medicaid, the entitlement programs, is at its smallest level in my lifetime, probably since dwight eisenhower. we are not lavishly spending on a whole bunch of social programs out there. and in many ways, a lot of these programs have become more efficient and pretty effective. defense -- we spent a lot from 2001 to 2011, but generally, we are stabilizing, and the pentagon, working with me, have come up with plans that allow us to meet our security needs while still bringing down some of the costs of defense, particularly after having ended the war in iraq and on the brink of ending
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the war in afghanistan. so when we talk about our deficit and debt problems, it is almost entirely health care costs. you eliminate the delta -- the difference between what we spend on health care and what every other country -- advanced, industrialized nation spends on health care, and that's our long-term debt. and if we're able to bend the cost curve, we help solve the problem. now, one way to do that is just to make health care cheaper overall. that's, i think, the best way to do it, and that's what we've been doing through some of the measures in the affordable care act. there are some other provisions that we could take that would maintain our commitment to seniors, medicare, social security, the disabled, medicaid whilst still reducing very modestly the costs of those
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programs. if we do those things, that solves our real fiscal problem, and we could take some of that money -- a very modest portion on the front end -- and invest in infrastructure that puts people back to work, improve our research and development. so the idea would be, do some things in the short term that focus on growth, do some things in the long term that deal with the long-term debt; that's what my budget reflects, that's what a multiple series of negotiations with john boehner, you know, talked about -- the so-called grand bargain. we couldn't quite get there in the end, mainly because republicans had a great deal of difficulty with the idea of putting in more revenue to balance out some of the changes that were made on entitlements. >> i would guess a lot of people in this room would say that another way to make some of those things happen would be to fix the corporate tax code, that everybody agrees is a mess.
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you got some companies that pay way too much compared to their international competitors, some companies don't pay at all. it's not a good system, it's not an efficient system, everybody agrees, but it doesn't ever seem to change. can you make it change? and can you do something about repatriation of u.s. assets overseas? >> well, here's the good news, is that both my administration and republicans have talked about corporate tax reform. and paul ryan, who's going to be coming after me, has said he's interested in corporate tax reform. and we've reached out to him and we've said, let's get to work. we put forward a very specific set of proposals that would lower the corporate tax rate, broaden the base, close some loopholes. and in terms of international companies and competitiveness, what we've said is, rather than a whole bunch of tangled laws that incentivize folks to keep money overseas, let's have a modest but clear global minimum tax, get rid of some of the huge fluctuations that people
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experience, it will save companies money, make them more competitive, and in terms of transitioning to that system, actually allow some people to bring back money and, in a one- time way, help us finance infrastructure and some other projects that need to get done. i don't expect republicans to adopt exactly the proposal that we've put forward, but there's not that much separation between what democrats are talking about i know chairman max baucus put out something today, chairman of the finance committee -- what dave camp over in the house has talked about. this should be bridgeable. the one thing i would caution is and i've said this to the business roundtable and other
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corporate leaders whom i've talked to -- people like the idea of corporate tax reform in theory; in practice, if you want to make the corporate tax reform deficit-neutral, then you actually have to close some loopholes. and people like the idea of a simpler tax system until it's their particular loophole that's about to get closed. and what we can't afford to do is to keep all the loopholes that are currently in place and lower the corporate tax rate. we would then blow another hole in the deficit that would have to be filled. and what i'm not willing to do is to have higher rates on the middle class in order to pay for that. >> some of the ceos here had a working group earlier today, the mission of which was to address the question of how do you stay competitive. interestingly, at least to me,
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their first priority -- first priority was this: immigration reform. the u.s. needs immigration reform to retain talented workers educated in the u.s. and attract talent to the u.s. immigration reform could provide an instant jolt to the u.s. economy, which we need. i know you agree with that statement, but it's hard to see that happening right now. you've got the senate off on one track. it's passed a comprehensive bill the house won't even agree to take up. democrats want to do comprehensive reform; republicans want to do step-by- step reform. it's a poisonous political atmosphere. can you make it happen? >> i am actually optimistic that we're going to get this done. i'm a -- but i am a congenital optimist. i would have to be; i'm named barack obama; i ran for president. so the -- [laughter] - >> and won. >> and won twice. [laughter] so look, keep in mind, first of all, that what the ceos here said is absolutely right. this is a boost to our economy. everywhere i go, i meet with entrepreneurs and ceos who say, i've got, you know, these terrific folks; they've just graduated from caltech or mit or stanford; they're ready to do
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business here; some of them have these amazing new ideas that we think we can commercialize, but they're being dragged back to their home countries, not because they want to go but because the immigration system doesn't work. the good news is that the senate bill was a bipartisan bill. and we know what the component parts of this are. we've got to have strong border security. we've got to have better enforcement of existing laws. we've got to make sure that we have a legal immigration system that doesn't cause people to sit in the queue for five years, 10 years, 15 years, in some cases 20 years. we should want to immediately say to young people who we've helped to educate in this country, you want to stay? we want you here. and we do have to deal with
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about 11 million folks who are in this country, most of them just seeking opportunity. they did break the law by coming here or overstaying their visa. and they've got to earn their way out of the shadows, pay a fine, learn english, get to the back of the line, pay their back taxes, but giving them a mechanisms whereby they can get right by our society. and that's reflected in the senate bill. now, i actually think that there are a number of house republicans, including paul ryan, i think, if you ask him about it, who agree with that. they're suspicious of comprehensive bills, but you know what? if they want to chop that thing up into five pieces, as long as all five pieces get done, i don't care what it looks like, as long as it's actually delivering on those core values that we talk about.
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>> democrats have been pretty suspicious that all five pieces, once it's done - >> well, and -- and -- and -- and that's the problem. i mean, the key is -- you know, what we don't want to do is simply carve out one piece of it let's say, agricultural jobs, which are important, but is easier, frankly, or the high- skilled jobs that many in your audience here would immediately want to do -- but leave behind some of the tougher stuff that still needs to get done. we -- we're not going to have a situation in which 11 million people are still living in the shadows and potentially getting deported on an ongoing basis. so we're going to have to do it all. in my conversations with republicans, i actually think the divide is not that wide. so what we just have to do is find a pathway where republicans in the house in particular feel comfortable enough about process that they can go ahead and meet us.
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this, by the way, gerry, i think is a good example of something that's been striking me about our politics for a while. when you go to other countries, the political divisions are so much more stark and wider; here in america, the difference between democrats and republicans -- we're fighting inside the 40-yard line, maybe - >> you fooled most people on that in the last few months, i'd say. >> no, but -- but -- [laughter] well, no, no, the -- i -- i would -- i would distinguish between the -- the rhetoric and the tactics, versus the ideological differences. i mean, in most countries, you've got -- you know, people call me a socialist sometimes, but, no, you've got to me real socialists. you'll have a sense of what a -- what a socialist is. [laughter] you know, the -- i mean, i'm talking about lowering the corporate tax rate. my health care reform is based
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on the private marketplace. stock market's looking pretty good last time i checked, and, you know, it is true that i'm concerned about growing inequality in our system, but nobody questions the efficacy of market economies in terms of producing wealth and innovation and keeping us competitive. on the flip side, you know, most republicans -- even the tea party -- one of my favorite signs during the campaign was folks hoisting a sign -- governments, keep your hands off my medicare. think about that. [laughter] i mean, the -- you know, ideologically, they did not like the idea of the federal government, and yet they felt
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very protective about the basic social safety net that had been structured. so my simple point is this. if we can get beyond the tactical advantages that parties perceive in painting folks as extreme and trying to keep an eye always on the next election, and for awhile at least, just focus on governing, then there is probably 70 percent overlap on a whole range of issues. a lot of republicans want to get infrastructure done just like i do. a lot of them believe in basic research, just like i do. a lot of them want to reform entitlements to make sure that they're affordable for the next generation; so do i. a lot of them say they want to reform our tax system; so do i. there are going to be differences on the details. and those details matter and i'll fight very hard for them, but we shouldn't think that
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somehow the reason we've got these problems is because our policy differences are so great. >> well, the details are obviously important enough to shut down the government just a couple weeks ago. and everybody knows we're headed back toward showdowns again: january, budget; february, debt ceiling. jack lew was here earlier, your treasury secretary, and said he thought maybe the system crossed the threshold in october and has realized it doesn't want to go back and do that again. are you confident it's not going to go back and do that again? and by the way, the oecd, the organization of economic cooperation and development, suggested today that the u.s. just get rid of the debt ceiling entirely. would you be in favor of that? >> i think that the way our system is set up is like a loaded gun. and once people thought we can get leverage on policy disputes by threatening default, that was
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an extraordinarily dangerous precedent. and that's a principle that i had to adhere to, not just for me but for the next president, that you're not going to be able to threaten the entire u.s. or world economy simply because you disagree with me about a health care bill. i'd like to believe that the republicans recognize that was not a good strategy, and we're probably better off with a system in which that threat is not there on a perpetual basis. i do not foresee what we saw in october being repeated in january. but, you know, the broader point is one that i think all of us have to take to heart. we have to be able to disagree on policy issues without resorting to the kinds of extreme tactics that end up hurting all of us. and that's been my main disagreement with a lot of my republican friends. and frankly, the american people agree with that.
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they don't expect us to march in lockstep. there's a reason why we've got two parties in this country. they do expect that we are constantly thinking about how are we making sure they can find a job that pays well, that their kids can go to college and afford it, that we are growing and competitive, that, you know, we are dealing with our fiscal position in a sensible way. and -- and if we keep them in mind consistently, then i think we're going to be successful. you know, one thing that -- you've got some international ceos here, and i think they'll confirm this. when i travel, what's striking to me is people around the world think we've got a really good hand. you just take the example of energy. they say america is poised to change our geopolitics entirely because of the advances we've made in oil production, natural
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gas production. it means manufacturing here is much more attractive than it used to be. that's a huge competitive advantage. we've got the most productive workers, just about, in the world. and we -- our workers have become more and more productive, and a lot of companies look at that and say, we wish we had workers who were able to operate the way these folks do. our university systems, our research, you know, infrastructure -- all those things are the envy of the world. and one of the great things about america is -- sometimes, we get worried that we're losing traction and the sky is falling. and back in the '80s, japan was about to take over and then
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china and obviously, before that, the soviet union, and we usually come out ok because we change and we adapt. i just want everybody to remember that we're in a very strong position to compete, as long as our political system functions. it doesn't have to be outstanding -- this is sort of like winston churchill, two cheers for democracy -- and you know, it -- it -- it's always going to be messy, but it's got to function better than it has. >> i'm in the red zone here on the clock here, but let me -- i do want to ask about -- a question about international affairs. you've mentioned the world and the u.s. position in it. there's the possibility this week of an agreement with iran, a preliminary linear agreement, in which they would free some of their nuclear activities in return for some relief on sanctions. your israeli friends have been arguing, along with some of your some of your friends, as well as your foes, in congress, that if you give the iranian regime any relief on sanctions, the sanctions regime will fall apart, countries that don't want to be there in the first place
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will head for the exits; it will all come apart. and that's the danger of what you're negotiating right now. i know you talked to some senators about this very topic today. is there going to be a deal? and why can you ease sanctions without having them fall apart? >> well, just by way of background, when i came into office, we had a trade embargo, the u.s. had done some things unilaterally, we did not have a strong, enforceable international mechanism to really put the squeeze on iran around its nuclear program, despite the fact that it violated a range of u.n. and nonproliferation treaty requirements. so we built, we constructed with the help of congress, the strongest sanctions regime ever. and it has put a bite on the iranian economy. they have seen a 5 percent contraction last year in their economy; it's projected to be another contraction this year, and in part, because the sanctions have been so effective, we were able to get iran to seriously come to the table and look at, how are they going to give assurance to the international community that
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they are, in fact, not pursuing a nuclear weapons program. i don't know if we'll be able to close a deal this week or next week. we had been very firm with the iranians even on the interim deal about what we expect. and, you know, some of the reporting out there has been somewhat inaccurate, understandably, because the p-5 plus one -- the members of the permanent members of the security council in addition to and germany as well -- have kept the negotiations fairly tight. but the essence of the deal would be that they would halt advances on their nuclear program. they would roll back some elements that get them closer to what we call breakout capacity, where they can run for a weapon before the international community has a chance to react, that they would subject themselves to more vigorous inspections even than the ones that are currently there -- in some cases, daily inspections.
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in return, what we would do would be to open up the spigot a little bit for a very modest amount of relief that is entirely subject to reinstatement if, in fact, they violated any part of this early agreement. and it would purchase a period of time -- let's say six months, during which we could see if they could get to the end state of a position where we, the israelis, the international community could say with confidence, iran's not pursuing a nuclear weapon. now, part of the reason i have confidence that the sanctions don't fall apart is because we're not doing anything around the most powerful sanctions.
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the oil sanctions, the banking sanctions, the financial services sanctions, those are the ones that have really taken a big chunk out of the iranian economy. so oil production and oil sales out of iran have dropped by more than half since these sanctions were put in place. they've got over a hundred billion dollars of oil revenue that is sitting outside of their country. the rial, their currency, has dropped precipitously. and all those sanctions and the architecture for them don't go anywhere. essentially what we do is we allow them to access a small portion of these assets that are frozen. keep in mind, though, that because the oil and banking sanctions stay in place, they will actually still be losing money even during this six-month period relative to the amount of oil sales they had back in 2011. so what we are -- what we are suggesting, both to the israelis, to members of congress here, to the international community, but also to the iranians, is let's look, let's test the proposition that over
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the next six months we can resolve this in a diplomatic fashion while maintaining the essential sanctions architecture, and as president of the united states, me maintaining all options to prevent them from getting nuclear weapons. i think that is a -- a test that is worth conducting. and my hope and expectation is not that we're going to solve all of this just this week in this interim phase, but rather that we're purchasing ourselves some time to see how serious the iranian regime might be in re-
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entering membership in -- in the world community and taking the the yoke of these sanctions off off the backs of their economy. >> thank you for joining us. >> thank you, everybody. [applause] following the president, representative all ryan talked talks,he 2014 budget immigration reform, and took questions about a possible 2016 presidential run. this is half an hour.
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>> ladies and gentlemen, the chairman of the house committee of the budget, paul ryan. >> welcome. thank you for being here. we know you have been a friend of the ceo council. it is great to have the year. i want to bounce off of you the start of a couple of things the president said. you spoke in strong terms of the arms we have had with government by crisis. yet he expressed optimism about this budget round, avoiding repetition of what happened with the that unpleasantness. can you tell us now that there would not be a another shutdown or another debt limit?
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>> how we avoid the shutdown, whether we can have an agreement, or we have a continuing resolution, either one of those scenarios will prevail. we will not have a government shutdown. the debt limit is later on. we do not know the timing of that. jack lew was able to delete called more extraordinary measures rated that could be into the summer. i do not believe -- doing -- these are disjointed event. i do not believe he will have the theatrics surrounding that. >> why do you think that it will be different this time, within your conference?
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the speaker didn't want the crisis that happened the last time. correct me if i am wrong. i do not think that you did. >> that is correct. >> but you cannot control your members. how can you prevent that from happening again? >> obamacare is here now. so, the reason this happened from our perspective was now people understand why we fight obamacare. yet understand the minds of the house republicans going into this. we were doing hearings getting this testimony, saying that this program was not ready for prime time commenting the damage that was going to come to the people we represent. we wanted to do everything we could to stop it. many didn't think it was the way to stop it. it is clear that the shutdown does not stop obamacare. the government did shut down. he did not stop obamacare.
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that is in the past. it is clear that that will not stop obamacare. the thing that we feared what happened, are now happening. we fear the worst is yet to come with respect obamacare. that one again the web of government shutdown. we will keep the government funding at current levels that need be. >> that will not fire up your members even more to say now we have an even greater -- knowing >> no. it disconnects. obamacare is an entitlement. they are not related. >> their position is, all you need to do to get a deal, to get them to move on entitlements, is eliminate tax expenditures that tax subsidies they call raised carried interest of to the normal income tax rate. if that is what you need to do to get entitlement reform, why not put together that deal?
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>> that is not what they are saying. they're not saying they're willing to do them, reform of any significance, even with that. they're not suggesting that. that is point number one. they are cementing -- they are not interested in the reform of any form. >> you give us the tax expenditure, we will give you something on entitlements. >> i don't see that. let me back up to what i was going to say. if this becomes about raising taxes, we are not going to get anywhere. the president already got a big tax cut in january. $600 billion. that is point number one grade point number two, we are very serious about tax reform. ways and means is moving tax reform. max baucus is working on tax reform legislation. that is were taxes should be dealt with. we do not want to short change
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tax reform. if we take tax loopholes and put them in this budget process, we are shortchanging tax reform. our goal is to get our rates down. our goal is to get to a 25% rate in international competitive system. we do not want to short change that. the loopholes are needed to bring those down to grow the economy and get people back to work. on the spending side, we are willing to trade spending cuts that are across the board. that is a trade we are willing to look at. that is a discussing now. >> you're willing to ease the sequester limits. >> if we can get entitlement reform. >> we are having conversations. we do not have an agreement. we have differences of opinions. you mentioned one of them. we're going to try to work out differences. the bottom line, what we ought
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to do is something that is good for the deficit. are we reducing the deficit or not. that is point number one. i more than happy to cut spending in a smarter way to replace of these across-the- board cuts. do any a way that produces more deficit reduction. that would be a step in the right direction. it wish of the government can work in function even divided. it can do that, and they'll be a good sign of confidence. it is nice to show that the parties can function on a basic level. we are not what raise taxes to do that. we think it is bad for the economy. it takes pressure off the kind of fiscal discipline we finally have, getting spending under control breed it is only under control in discretionary. we would like to bring reforms over there if we want ease discretionary problems. >> if you cannot get that deal you described, would you be able to accept an extension of the sequester? >> that is a we will do. >> you would consider that? >> will take the fiscal
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discipline we have. there is a smarter way of doing it. we cannot do it that way, we will stick with a we have. >> would ask about something larry summers said, the government doesn't do two things every well. spur growth, reduce deficits. right now, given our figures, his art images governments do nor to spur growth and put the deficit offer another day. >> growth does reduce the deficit. we have tried a playbook for five years now. look at the anemic growth we have had. this demand-side spending stimulus has not worked, is not working. it is ringing us higher deficits, which means more tax increases. it is all done at the expense of progrowth policies like lowering taxes and regular tort reform. all of this temporary stimulus answered the uncertainty facing businesses, robs about tax rates, raise their deficits,
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which adds to more uncertainty and the higher taxes. real progrowth policies, lower our tax rates. that would be growth. look at this incredible energy boom we could have in this country if we get behind it. energy production is going up on private land. what we could respond with the same thing on federal lands? and regulatory certainty, which stops this boom from happening. these things are growth. those things produced faster growth, and a lower deficit. >> you're not prepared then to declare victory in the short term on the deficit. that has to be a priority? >> yes.
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we do not see these as trade- offs. asterisk and on a growth, more jobs, through progrowth policies, not borrowing and spending. let businesses breathe. lowering tax rates on the margin. that reduces more growth. that is reduce deficits. i do not buy the premise of the question, which is it is either deficit reduction or economic growth. >> another agenda item, immigration reform. we get conflicting reports from republicans. we hear the speaker say no votes this year. somebody else says there might be a vote this year. we want to get this done before the election. maybe not until after the
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primary. where you stand on immigration reform? is it something that we can see getting done this year? >> i am for immigration reform. i am for the house form of immigration reform. we do not think -- i think this is all progrowth. i can going to whole thing about birth rates and labor markets. the point is, we are denying our country from having a lot of intellectual capital to help us create jobs. i think if we do immigration reform right, that is progrowth policy. i'm advocating moving forward on immigration reform in a step-by- step way. we will do in a process that guarantees the will not melt the result of the senate bill. that is what the speaker was talking about. the way the house is going to work and proceed is a step-by- step approach, getting the border secured. we just not trust the word on this.
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it has to be actual and verifiable on border enforcement before other things can be triggered. we want to move from a chain migration. to an economic-based immigration system. and, we want to make sure that we have a system that does not grant amnesty, or create a moral hazard. that helps respect the rule of law while dealing with people who are not documented. we think there is a way to do this. it transmits our system from a family basis into an economics basis. that is seven or eight pieces of legislation. not think you can -- i wanted to do this this year. being involved in budget negotiations which will take up early december, there is not enough time to do it. >> you do not think there will be any votes question mark >> we do not have the time. >> when does it start? the longer you wait, the harder it is to get it done. the closer you get to november, all bets are off.
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>> i agree with that. i want to get it done this year. it is not because we do not want to do it. we are literally losing our time to go budget negotiations. we have a farm bill. the literally do not have the space in our calendar to do it. we are serious that the house will proceed with immigration reform. we will do in the way i just described, that guarantees that we do not, with a senate proposal. >> is a majority in the house public and congress for a pathway to citizenship for the 11 million people who are undocumented? >> i would say no. the way you describe that is if we are giving somebody a jump in the line. if we are giving an automated person at pathway in front of somebody who is here legally. here is what i would describe. what we have been envisioning is
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a person goes on probation. like probation, there is assimilation. pay taxes. pay a fine. english civics. you can't be on welfare for a decade. after have a job. after the border is verified, after that time in five years, then you can get out of probation, which have a work permit. if you want to get in line to get a green card like any other immigrant, you can get in that line. you are at the back of the line. we want a preference the person who came here legally and did things right from the get-go. we do not want to person came near by overstaying their visas
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crossing the border illegally a jump online. that is not a path to citizenship. that is not prevent a person who is right with the law the ability to get a green card. >> want to get a green card that is a path to citizenship. half of your congress would call what you described amnesty. >> i do not believe that. it is such a laborious process, it respects the rule of law. the reason they want to map in opposite ways we do not want to create moral hazard where we tell people just wait, and we will wipe the slate clean in a decade. we want to make sure we are not in the same place 10 years from now. we never have the enforcement i came with the legal immigration system. we want to have the guarantee that it is actionable along with the change in legal system from chain to economics, a system for undocumented tear at the law, in a way that does not reward them from having broken the law. we believe that is the way to do it. and it is a way majority of
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republicans will vote for. the alternative is amnesty. line about a 15 year time before you can become an american citizen under what i just described. i would hardly call it amnesty. >> ken cuccinelli lost election but he won by so many points. can republicans continue -- can they regain the presidency without doing better among minority voters? and how does the republican party do that?
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>> forget about the electoral college. forget about demographics and what republicans should do. what is the right thing for public policy? that is to fight for every sin a person's vote. that is an idea that works for everybody. so where i believe we have a lot of room for improvement as a party is to show that we have enter answers for fighting poverty. 46 million people in poverty, highest rates in a generation -- you know, we have known each other a long time. we have better ideas for fighting poverty and for revitalizing our inner cities. we have to be constructive on immigration reform. immigration is a good thing for this country. it is what this country has been built upon. i think we need to speak to all of these issues here notecause it is good for some lyrical cac election, but because it's the right thing to do and it is how we revitalizing american idea. it is how we get back to a program of, equal opportunity
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upward mobile society which america has always been. it hasn't been in these stagnant times, but we have to show that we have solutions to speak to that and to every single person, no matter who they are or where they come from or the color of their skin or their gender. that is the right thing to do. if we do that, then hopefully those medical benefits will accrue. >> you were a national candidate last time. there is a lot of discussion among republicans. you hear it all the time. the next republican nominee for president in 2016 has to be a governor, somebody like a chris christie or john walker or john kasich. do you agree with that? >> no. [laughter] >> why not?
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you have this mess in washington. the republican electorate looks at that and says i don't want to redo that, change deck chairs with somebody else in the other party. let's get somebody else who has a reputation for governing and put them in the chair. >> the resume isn't as important to me as a person, their quality of ideas and their record a reform. i want to make sure that we get a person who will be a standardbearer who can go the distance. i am familiar with what going the distance means. it means a lot. it is not easy to do. but also somebody who will be a good standardbearer, who will be strong on principles come inclusive on ideas, and gives what i call full-spectrum
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conservatism that speaks to each and everybody. because i believe this country has just a handful of years before we go down the european path, before we become the social welfare state. and we have to turn this growth engine back on. the good news is that it doesn't take a lot to turn things around and get this country growing again. i don't think we will have that with this administration. we just won't. i don't think the president has the philosophy or the disposition or the temperament to do that. i'm hoping that we can do a few things to make this divided government work. but to fundamentally fix what is needing fixing is doable. it will take somebody who knows that a do it. they could be a governor or somebody from the federal side. who are there were they doing and where their gifts? that is what is important to me on the resume. >> you were in iowa recently. no doubt investigating the ethanol program.
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and you did say that you would look closely at making a run your self very what is your mental checklist? what are you looking at when you make that decision? >> i was keeping a commitment to a friend in iowa who had an event that he asked me to do almost a year ago. it's next-door, wisconsin, nearby. no. the way i look at this is this. if i am going to do a job in the majority, as the leader of my party, trying to fix these current problems, i cannot let my mind be clouded with personal ambition. because, if i do come i cannot make the decisions to govern in the majority. right now, i have a job to do on behalf of the people who elected me and the responsibilities given by my caucus.
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i will focus on that. after that is done, i will take a look at those things, do the kind of soul-searching it takes and make the decision. presidential side, policy ambitions, the question is that i have to see if i have political issues. >> to win the white house and get the nomination, you have to really want it. >> yes, sir. >> and people say we don't know if you wanted. >> i have a young family. i have been a policy guiding congress. i have focused on my family and the policy in congress. where i have been in my career, you can do that and be a good family man. that has been very important to me. jan and i had a long talk about going on the ticket and whether we could balance that. we believe we could and we did. >> it was a sure campaign. >> it was an 88-day race.
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the commitment i made in the beginning was that i have important work to do. i need to focus on that work and i don't want to cloud my thinking based upon what does this do to juxtapose me with this person or that person in new hampshire or iowa. i don't want to think like that. it will clog my judgment right now. >> do you have a timeline? >> no. >> let's get a few questions from the audience. there must be a few for congressman ryan. none at all? he has you totally convinced? yes, please. right here. get the microphone. >> governor christie spoke directly last night about the need to reach across the aisle.
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if he could get 70% of his agenda passed in some compromise, that would be moving his case forward by 70%. the sinning to your comments on immigration, it wasn't clear that there was a mindset that, on a bill or an issue that most people in this room see as quite critical for the future that would get 77% of the democratic agenda that would give both sides something that they could live with. >> we talk to democrats. there's a certain bottom line that is important for us. just to pass a bill. most importantly, maintainer principles. so, yes, do we need to address skills? do we need to get the enforcement, interior enforcement, border enforcement? do we believe that we have to have a viable answer for the undocumented and do it in such a
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way that could text the rule of law and does not reward a person for cutting in line? yeah, and i think there are democrats who agree with us on that. those basic and suppose, i believe, the president and his party would be crazy to walk away from. i think there is a way to do this. but, again, it goes both ways. we are just going to get jammed with a senate bill. we have made it very clear that we will not take that bill and we won't take a process where it leads to that bill. we will do a process likely described, which by the way i think the country prefers that we do these things step-by-step so they and we know what we are voting on. i mean, look at obamacare. you bring these multi-thousand page bills to the floor and no one knows what's in them and then look what happens. we don't want to do that with any issue, let alone immigration reform. >> and why not try to do what you can do?
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why not do a dream act bill, for example? when i do a stem graduation? but try to get them done, even if you can get the grand enforcement provisions and everything else, just do those. if you did some of those coming would be tremendous for the economy and the country. >> the democrats will not just go with us if we do that. in working with democrats, they won't support our stem bill if we don't bring other bills along with it. so we want a step-by-step approach which brings these bills that are coming out of judiciary committee -- they are still working on bills there -- and do it in a time when we can deliver this. if we are trying to cram an rush because it is a calendar year, we don't think that is responsible. we really don't have time to do that. the other part of it is that there are big problems that need fixing across the immigration system. we want to show had these pieces integrate and work together so that we are doing it in a way that is smart. and we want to do it in a way to make sure we won't get jammed with a senate bill.
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so the process matters as well. >> next question. yes, please, in the back. you can get a microphone. >> hello. when the debate -- when we shut down the government and the debate around the debt ceiling happened, it sent the shivers down the spine of every business around the world and many consumers. now we have resulted, but only shifted. come january and the next deadline, what do we have to expect? >> that is why i was not a big fan of the way it was done because it was a can kicking exercise. this is what sends shivers down my spine. is that we go into next year when the federal reserve begins to normalize our policy and perhaps interest rates begin
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rising and we will not have taken advantage of this low- interest rate moment to get a down payment on our debt. we know from the cbo that our debt is about to take off in a few years and never come back down if we don't do anything about it. we have 100% increase on the population and only 17% increase in the worker population paying for their programs. in the cost of the programs that the user growing 60% a year. that is a whole lot faster than the economy, wages or inflation. so this is our concern. what we get from the resident is just give me more debt without doing any thing to deal with why the debt is rising so fast. we want to get a down payment on our debt problems because, if we do it now, we can do it on our own terms as a nation. if we wait until we have a crisis, then we are in panic mode, cutting the safety net, reneging on promises to seniors after they have already retired, at higher interest rates and in
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crisis. we want to get ahead of our problems and we think that is good for growth. if we get some debt reduction under control now, that will bring more security to the markets and interest rates, when they normalize they will do it at normal rates than otherwise. the only kind of leverage we ever get with this kind of a divided government that does not want to reduce the debt, that does not want to reform the drivers of our debt, the government programs, that is why we want to have serious conversations about what it will take to get a down payment on this problem. i did a an op-ed a month ago saying that there are all of these entitlement reforms at the present put in his budget. we will take those as a down payment. means testing. that makes sense. we are for that.
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the problem is we do not have a receptive audience from the other side of the aisle to even these -- to do even the small and minimal things. so we have to look at where leverage is to get the down payment on the debt. the thing that is in our nation's interest. if we lose three years not getting our debt under control, that is three years where we are digging a hole even deeper in the solution will be even uglier when we get around to fixing the problem. that's why. >> one more right here. >> could you envision your party, the republican party, coming forward with an alternative to affordable care act that incorporates many of the provisions, the popular provisions or the provisions that people think work that could be a viable solution to some of the problems that seem
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to be in the law this year? >> well -- [laughter] he tax of that on at the end there. many of us are working on alternatives, but it is literally if option of running numbers and getting them whipped into shape. i don't think this year -- that is just a logistical point. the republican study committee has a bill for a complete obamacare replacement that has been released that has 100 cosponsors already. in 2009-2010 had complete patient reforms when obamacare was being deliberated. so before, during and after obamacare, we put out very comprehensive patient-centered market-based plans and i do envision is doing so again.
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to your other question, i believe that we can come up with a system that has guaranteed access for affordable health insurance for all americans regardless of whether a person has pre-existing conditions are not without this costly government takeover, without this big brother database, without government running health care, without government mandating what you can and cannot do. the problem that the president has is that he jammed this through a one-party rule. republicans, my self included, work working with bipartisan solutions and they had none of that. so can we have a system where people with pre-existing conditions have protections? >> yes. >> can we have a system where you have equalized tax benefits, people who can get affordable? health insurance yes. can you do it without this government take insurance -- takeover without having to be forced to buy health insurance that the government makes you have? yes.
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we can access affordable care without inflation. we will offer some more in the near future. >> thank you very much for joining us. >> thanks, paul. [applause] >> the ceo conference, including marks by jack lew on budget negotiations. summers on the struggle between the deficit and economic growth. up, the congressman from new york talks about the latest problems with healthcare.gov.
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budget negotiations ahead of the commerce committee. dine -- conference committee deadline. washington journal is live every morning at 7:00 eastern. >> wednesday, a look at national security issues. series.e first in the live at 2:00 eastern on c- span three. was -- president kenny kennedy was shot 1963, within one minute, several dallas police officers ran up the grassy knoll. many people were pointing to it. had his gunficer
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drawn because you -- he expected to find an armed gunman. who producedn secret service credentials. two other officers reported the same thing. the secret service and the warren commission and everybody else have identified the secretn of every single service officer. all of the secret service officers were taught to go with their protect these. withwent to the hospital the president and vice president. who were these people? i do not have an answer, but i stuck to the facts. so tonight at 9:00.
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live for this year's national book award in new york city. red carpet interviews with the nonfiction finalists. watch live coverage of the award ceremony. >> more from the wall street journal ceo conference. we'll hear from the president of the world bank, the former bank of israel governor for half an hour. [applause] [applause] >> so good morning. i was asked whether the ceos
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would actually show up for a panel at 8:15 and we all agreed yes. so thank you for letting me look like i know what i am talking about. and glenn hubbard, the dean of the columbia business school and was an advisor to george w. bush. i want to talk about the world economy and i want to start with the emerging markets. a couple of years ago, i think one would have said that the developed world was faltering and thank god for the emerging markets, china, india and the best of them, who were providing
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global demand. in countries like the u.s. and europe better get used to this because we will be less and less relevant in the future with emerging markets. and i would say that coming the last x months, maybe there has been some rethinking about that. so my question to you is is the golden age of emerging markets behind us? we think growth in the emerging markets will be over five
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percent and we think that will continue. we will not see the 10% growth rate that we saw prior to 2000 and eight. a lot of the fundamentals are in much better shape than we even knew. thoughtand eight, we that america was going to go off the deep into with the financial crisis, they have kept a five percent growth rate all the way through. i was very impressed with their understanding of the importance of their own macroeconomics. every single one of them, what they tell me every time i talk to them, we have to figure out a way to trap more capital. something has happened over the last 10 or 15 years and i think
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emerging markets understand they have got to be competitive. think creatively. we are focusing a lot of our effort on trying to make deals. there is so much infrastructure needs in these countries and they will have to attract private capital. the opportunities may be much greater than you think. bric is china.
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the chinese have produced a plan that's nobody understood in the beginning. but now that time has gone by, it looks better and better, including radical changes, including the one child family gradually. china just outstripped korea, which to that point had been the fausto's for the longest. the rule of 70 says that that period increased 30% which is unprecedented in history. and it looks like they got most of what they should do, including structural changes, in place.
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that is good news. whether they will be able to do it and whether in the end they will be driven back to bank financing under orders of the government, we don't know. that probably could happen. for the others, they have to improve their policies. this is a sad story of life that, if you have all of the prerequisites in place but you pursue policies that get worse and worse, you get into trouble. there is a phrase called the fragile five, which consists of india, south africa, turkey, and russia and brazil. >> i thought you're going to put the united states on that. thanks you. >> the fact is that every one of them was either a bric or, shortly after inventing the brics, jim o'neal invented
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something called the mists which were 10 countries for whom the leaders were mexico doing well, indonesia doing reasonably, south korea doing well, and turkey not clear. and you can't stay on top if you don't keep adjusting your policies and they haven't. they have begun to pay the price. will they learn the lesson? at some point they will. the sooner the better. we don't know about that. in africa, they say it is largely based on its waiting resources, but it is more than that. south america is divided into countries doing the right things, to countries not doing the right things. the ones not doing the right things don't look especially good right now. that is venezuela in particular.
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so even there we see the same fact they you better get your policies strain out and we hope they do it. >> cautiously optimistic. stan fisher? >> cautious as well. easy credit has been largely responsible for the market boom as is china's own development. i think stan is absolutely right. there is so much attention now paid to tapering and fed policy spilling over to the emerging market. it's like blaming it on the bossa nova. it is saying that the fed is not responsible for structural
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problems in emerging economies. if you take china for example, some of the recent economic to balance having good that it is still he financial sector whose policies don't work. structural reforms are needed likewise in india. around the world, rather than looking at big monetary or macro factors, these are individual policy factors. africa remains really an exciting bright spot particularly for the climate in entrepreneurship. in my own school, we have been on the ground for a decade training people who train entrepreneurs. really exciting. >> let's talk about a couple of developed countries. let's talk about europe.
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>> they are trying to create something that took the united states 100 years to create, which is a more or less unified center based on european money. the banking union is moving much faster than anybody thought they could. but take note. the united states fixes banks by 2009 basically. the european bank, they will not be fixed until 2014 at the earliest. and it can be done, but they have to get the work done.
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that means they are behind. this waiting 17 countries that they want to be in a banking union and have the supervision by another group rather than their own regulators is not easy. then they will move on at some point to the fiscal side. everybody thinks you have to move the media lead to the american centralized government which is larger and more important in the national government. they don't have to do that. there's a step to have a reasonable amount of money at the disposition of the central authority so it can move funds around. that is a different proposition. they will be able to do that if the political will remain some that will be very tough.
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i would just say think about two years ago. everyone was sure that the euro wouldn't survive the year. now no one is even talking about its disappearance. they have a habit of overcoming difficulties despite everything. so i am moderately optimistic it will happen. >> what about japan? they are rolling the dice on policy. do you think this has a good chance of success? >> if you look at the various arrows come i think you will see a range of chances. the change of monetary policy has been welcome. japan has deflation they can be arrested. central banks are powerless here. the government, i am a little more skeptical. certainly, the talk from the incoming administration was very promising in the beginning and continues to be.
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but the real issue inside japan marsh structural reforms that have bedeviled the japanese economy for decades. >> dr. kim, what do you hear from people around the world about the united states in 2013? i we seen as a place to envy and admire because we have all of this entrepreneurial fervor or are we seen as the laughingstock because we can't even figure out how to keep our government open? >> if you just look back at what happened in august 2011, the last time we had a near miss, we followed the numbers very carefully. stock markets in developing markets to pay 15% hit. whatever happens here has a direct impact on what happens in the developing world.
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but i think there is still tremendous admiration for the ability of the u.s. to innovate. every single country in the world is thinking about what they need to do to build an innovative new generation coming up. my experience in running the university is that it has, they are saying what do we need to do to become more competitive? what do we need to do at the primary, secondary and especially at the tertiary level? that at the heart, the united states remains very strong. china has done so well to process improvement. but the real innovation is still a bit out of reach and those countries want that. and we know we have that here in the united states.
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>> i wondered if you could -- there is beginning to be some criticism that the central bank have done too much, that they have taken too much of the responsibility for getting growth going, particularly in the u.s., maybe in japan. under the circumstances, do you think that the central banks, he said in particular, doing too much or is this what the doctor ordered? >> without the fed, we would've had a deeper recession. the economy would be in much worse shape today and we need to remember that. precisely had to get out of it and at what speed is a much harder thing to measure and to
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calculate. it has this problem of not quite understanding what happened to the participation rate of the employment force. so there are dangers. as a central bank governor, we had to reduce our rates in israel because the united states rates were so low that, if we kept them where they should have been, 4%, say, we would have had an inflow of funds that would have created a lot of damage. housing prices have taken off. you have seen them take off in the united states. but these are things which you can watch closely. everybody knows now about exit prices. presumably, we will take that into account and moderate policy accordingly. so yes, it is dangerous. >> but it was necessary. >> but it was necessary. there is another line which is you shouldn't help the governments not face the dilemma they should be facing. leave the job to them. as a central bank governor, i
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thought that was very nice but it was not our job to figure out how to teach the government to behave better. we had certain tools at our disposal. this was what was good to happen and we use them. that is the only way you can behave. the moment you begin thinking you are disciplining government, i think you are in deep waters. >> there is no western that we are asking too much of the federal reserve and that the federal reserve is in dangerous territory. it didn't start out with extraordinarily positive responses. without the federal reserve's response, we could well have had a depression. but it is worth knowing that the early actions and things like the mortgage-backed security markets aimed at structural issues in the financial system unless persuaded that some of the other measures, long
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duration treasuries, variety of quantitative easing measures that had much of an effect on the real economy and run the risk of miss allocating capital in the economy. if you look back, what we needed was posted to negative interest rates that we could not engineer. the textbook answer for that would have been a big fiscal policy changes, massive investment incentives and things like that that would mimic exactly the kind of interest rate movement. the government sat on its hands. so the problem has not been the federal reserve. the problem has been a government. i agree that it is not were the chairman to give lectures to the government officials. >> i want to ask you about climate change.
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to what extent do you think the global governments are doing enough to prepare for the risk that we will really have a problem? >> first, let's start with the science. this is something that i dug into deeply when i came on board. first of all, the evidence is very clear that there is the phenomenon of man-made, change. the other thing is what do we do? there are governments and corporations that we can do better and that is something that we all agree on. 70% of greenhouse gases come from cities. so is it possible to create more efficient cities. we are actually working on that
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with china. china has completely changed its approach on global warming and climate change because they have had to close down their cities because of pollution and they are losing people every year. >> in general, are they doing enough? >> not yet. but there is smart things we can do. form of agriculture that can produce better yields and put carbon into the ground. we have to try to reach a political solution globally. but in the meantime, there are some he things we can do that is good for people, good for business and good for the environment.
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>> if you have a question, raise your hand and somebody will bring you a microphone. otherwise, i will keep talking because you know i can do that. there's one in the back. just speak loudly. tell us what you're. >> [indiscernible] we have experienced two decades of overinvestment booms all over the world, housing in the united states, technology in emerging markets. i would like each of you to put odds on the probability that china is experiencing an overinvestment boom that is going badly. >> 100%. china has been massively over investing. it has invested in large numbers of net present value.
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not because they're leaders don't understand economics. it is a bet on generating employment. i think it is a bad bet. it is the one that leaves financial problems down the road. but absolutely there's massive overinvestment. >> if you go back 10, 15, 20 years, china was investing 28% of gdp. now it is 45% of gdp. we have never seen that kind of level of investment in the world before. the chinese know they have to unwind. they say they are very serious about moving from investment to growth model, one more focused on consumption. i have met with them. i have talked with all of the leaders there. they understand what they're doing. and this group of leaders is much more savvy around economics than previous groups of leaders.
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but it will be tough because the unwinding has to happen gradually but they know they have to do it. >> which will be the stars and which are the duds? >> so of the 15 emerging markets, which will be the stars in which will be the duds? >> my guess is that china will turn out more positive than expected. it will be about 8% growth. remember that, when china grows
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and 8% after 10 years of growth that 10%, it is adding far more to global gdp at 8% growth this year than he added at 10% 10 years ago because the economy is to have times larger than it was previously. duds? there are a lot of candidates. i'm not sure that i want to sort them out, but there is a chance that were politics -- and india's a great disappointment. i don't know if you want to call it a dud. india had it right and now government is doing a lot of things that do not make sense economically and they have an election coming up. when an election is coming up, it is worth considering what they will do up to the election and how long it will take them to undo it. one last saying -- we used to have a saying in the imf. it takes 10 years to build up countries, its framework. and it takes on election to destroy it. it happens time and time again and it is a very sad phenomenon. >> a ringing endorsement of democracy. brazil?
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more likely to be a star or a dud? >> somewhere in the middle. it goes back to the policy mix discussion in the panel. argentina continues its century- long obsession with terrible public policy. >> you want to nominate a star and a dud? >> let me tell you a couple of places where i am hopeful. again, let's go back to africa. almost half of our business now is private sector. so our job is to help to find ways of de-risking investments, if you will. they have great leadership during the private sector has been growing. the leadership is totally omitted to building a better business environment and they pay $.75 per kilowatt hour of electricity which is seven times what we pay here in washington,
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d.c. if we can find long-term ways of finding capital for them to invest in energy at a much lower rate, those countries will grow. they are educating their people much more. it is a totally different scene now. i would just say once again that, if anyone is interested, please talk to us because our role is to find ways of making the inmate attractiveness of investing in africa apparent to people like yourself. i think you will be surprised at how much we know about individual economies, their governments, and the policy environment. you may think differently about the possibilities. another place i hope grows quickly where we are doing
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everything we can is myanmar. it has a huge potential upside. they have made some very courageous decisions. and we come as a global community, has to show that there is a democracy dividend. so we are moving like crazy to build the energy and for structure. and if we do, they could be very strong. >> what about russia? >> anybody else? oh, come on. all right, let me ask you this. do you think that we have a chance, dr. kim, in eradicating global poverty, extreme poverty, those who live on a dollar and a
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quarter or less in our lifetime? >> china lifted more than 600 million people out of poverty in the last 20 years. we have a chance to do it. our research shows that about two thirds of the poverty alleviation comes from growth and about a third comes from various policies that support directly. the thing that is encouraging to me is that there's not a single country that i have visited that doesn't understand the importance of private sector growth as a part of their overall economic strategy. india has a $1 trillion infrastructure deficit over the next five years. the government has said to all of us that more than half of that has to come from the private sector. so we want to learn how to help the private sector do better. they have a long way to go. but i have to tell you that they are committed to it.
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they at least clearly understand that private sector is critical. >> i guess 5% growth or 8% growth is interesting in brics. i do a lot of business in brazil and in india. the current currency exchange ate it all up. any comments on how you see foreign exchange develop? most of us we report in euro dollars. that is how it has to be measured. >> they most honest thing that any economist can say is that currencies fluctuate. i don't think that we have deep insight. the question you raise is two things. one, at a micro level, whatever
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hedging is responsible for your business. the other thing is that there are predictable movements based on policy differences that you can look at. but hedging comes to mind. >> in your mind, is there any reason why europe would stop growing in the next two or three years? >> start growing, yes. the rationale is that everybody says that there is no judgment in the periphery countries. but there is policy happening. the countries that are in programs have significantly reduce their costs relative to others. so they can start coming out of it. we also have the ecb coming back to life, which will give a
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partial push to growth for some time. and there is a dynamic that will take place in the global economy. there is a chance it will work out. you have to realize how quickly views change. britain was the sick man of europe up until three months ago. all of a sudden, it is the star. it has grown for three quarters. that sort of thing changes moods and investment rates a lot. whether it be growing at 3%, i doubt it. will it have grown consistently for several quarters? quite possible. >> i am told that it is time to move to the next panel. please join me in thanking our guests. [applause]
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>> jack lew also spoke at the conference. his remarks are 25 minutes. [applause] >> good morning, secretary, thank you for joining us. you just got back from an interesting trip to asia. i want to come to the domestic story in a minute. you were actually in china. can you give us a sense of what you think how serious the reforms that were announced and whether this will represent a radical change in china's economic structure? >> whatever issue we were discussing, they knew what they needed to do. moving to market allocation of resources, moving to a market- determine exchange rate, opening
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markets. what i did not get a sense of the sequence. i suspect they are looking at several years of change. obviously, it makes a big difference what order they take things in. i think they know that they have to get more market signals in their economy in order to get the growth rates they need. obviously, the global economy needs them to do that as well. i definitely got the sense that they are serious about economic reforms. >> ceos from a lot of companies in the world, what is your sense of what it will mean for global business for american business in particular. is this the kind of opening that they are involved in? will that really open up their markets? >> take the shanghai free-trade zone. it is one of the initiatives they announced a few months ago after the economic and strategic dialogue here in washington.
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they have not yet determined all the details of what that will entail. if it opens up their financial services markets, that is a big deal. if it opens up a number of their markets to international competition. they made the decision to reverse from presuming their markets are close, presuming they are open. they still have a lot of work to do. they had a big announcement on the shanghai free-trade zone. that is an early indicator of where they are heading. they have domestic needs.
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they know that inventory buildup in the state-owned enterprises is a signal that the market is not working, that resource allocation is not working. they know that to maintain a growth rate that is in the sevens will require reform. i suspect that they will be making good the sequence of change in the timing of change to get their economy moving and do it in a way to a smooth transition because there will be a disruption when state decisions are making more of the determinations. they also seem to understand that they need to stimulate demand. in order to have a good sustainable growth rate going forward, they need to have a more consumer demand. one of the things that they are talking about is taking some of the profits from the state-owned enterprises and pumping it back into the economy, both by putting money into the
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government to spend and dividends to shareholders. i don't want to suggest that they must from now they will turn around and it will be transformed. but they have certainly chartered a direction that is consistent with the things that we have very much encouraged them to think about. i suspect that we will still be pressing them to move faster and probably, when we see the sequence, we may make different choices and we will just have to continue to work with them. one thing that really impressed me was how important the u.s. relationship is to them. i met with the president just a few days after he took over in march and i was there just a couple of days after the thing.
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it was very important to them to have these kinds of conversations. >> you have been pressing china to open its markets. in the last few months, the last couple of years, we have seen a reversal to some extent in that relationship. china has said some pretty critical things of how the u.s. has been running things, in particular the fiscal issues in the last few months. did you get much from them on that? >> not really. i think that they understand that we went to a noisy clinical process. but in the end, we did work that we told them we would do and that is to stand by the full faith and credit of the united states. i was reassuring. if you look at the political debate here, leaders on both
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sides had said that we need to extend the debt limit. we can't know through the kind of process that created so much anxiety in september and october. i would say, if congress could do it sooner rather than later, it would be better for the u.s. senate global economy. >> what will we do on the day that congress has successfully kicked the can down the road for several months. are you saying we won't have another experience like we had in october? >> if you look at what the republican leaders have said since october, it is clear that this was not a good experience either for the country or for them politically. i know the right answer. i know the right answer. the answer is that they should just extend the debt limit way in advance and not have any sense of crisis at all. i hope that will happen. they said february 7 is the day that the debt limit expires. we do have extraordinary measures a month after that. so they have some time. i hope, when they resolve the
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budget, when they start moving forward that they just do the business in a moving way. >> everybody is looking for some kind of longer-term sustainable budget arrangement. we will hear from paul ryan later this afternoon. what in your view would be the right way to go? maybe trading off the sequester for significant changes to entitlements, entitlement reforms. what is your position? what is the best outcome in what should we expect in the next couple months? >> if you ask me my view of the best option, it may not be the same as what will the -- what will be the likely outcome. the president lays out a very clear path with tax reform and entitlement reform and replacing the sequester. the blueprint, if we were to follow it, it would give the economy the kind of certainty and tailwind it needs to grow. i don't want to get ahead of the
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budget conference -- budget conferees who have the resolution of the debt limit in october. they have been meeting. there is any number of possibilities that they could come out with. any number of sizes. it could be small, medium or large. anything they can do that they can work together and chip away would instill some confidence both in the process and in the substance. i don't want to jump ahead of where they are. the challenge in doing something really big is that oath sides have to do something really hard. we have made clear that -- that both sides have to do something really hard. we have made clear that the entitlement reforms in the president's budget would mean tax reform
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it would require raising some additional revenue. if that is not a possibility for the republicans, something large is not likely. there is other ways for these countries to work things out. i would leave it to them. >> would you say it has not worked out all that well for the republicans but there was a sense that the administration was not getting involved. it looked like the administration was sitting back and letting republicans dig their own whole. you're going to leave it to the budget conferees on the hill. are you going to be more actively involved this time? >> just to be clear, we said in october the congressman needed to extend the debt limit. we kept him closely informed literally every week. and there was not a negotiation over the debt limit.

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