Transcripts For CSPAN Key Capitol Hill Hearings 20131221

Important Political Parties have proved their reform. It has over 20 state legislatures. I think that shows leadership. Now with the polls, it really depends, as in many important issues in public policy, what type of questions you ask. If you describe the benefits of reform of this type, the majority of the feel that are in favor of paying lower costs in electricity or gas. If you want to privatize pemex, you have a high response of no. But this reform is not pemex. Its natural gas in mexico and that will decrease the costs of electricity through the process that we have discussed before. So i believe that this reform as it evolves it will show the benefits to the mexican people. We have also been very careful following the instruction of the president not to establish a timeline that its not going to be achievable. We believe that as david describes accurately that its going to take time. And the constitutional reform establishes already a timeline. We are going to follow it. We can migrate from those contracts from those to new contracts. Pending of secondary legislation that shall be put into discussion in the next period. Once Congress Approves legislation, were looking for a oneyear period of time for pemex to get its transition to contracts. We will see up to two years for the first bidding round. As you said around 2016, we might be around that time in 2015, 2016. As many of the specialists that are here with us today know, implementation of such reforms in brazil and colombia took time. Were fully aware of that now. We also believe that there are some fields that will benefit from this type of new contract sooner than others. Shell gas and shell oil in the northern part of the country or Shallow Water or brown fields in pemex will show an increasing production earlier than deep water in the gulf of mexico. So we will see some benefits coming in. We are estimating that our Oil Production will increase from the 2. 5 Million Barrels a day that we have now to around 3 Million Barrels a day to 2018 into 3. 5 by 2025. We believe thats a fair estimate. We also believe that an increasing production of natural gas from the 5,700 cubic feet that we produce today to around 8,000 by the end of this administration in 2018 and 10,400 around 2025, which will allow us to reduce our imports substantially from u. S. And decrease the costs of gas and electricity. We believe that those numbers are there. If you go to numbers of investment, we have seen many of the companies that have made those estimates show that around 10 billion by the end of 2018 of Foreign Direct Investment we believe that thats fair. Thats an increase by 50 of what the Foreign Investment in mexico is today. So that is a huge jump if we achieve that number by 2018. But those are estimates from private sector think tanks. Now on jobs, we believe that we will increase by half a million new jobs by 2018 over 2. 5 million jobs by 2025. So those are the estimates that we have put forward to the mexican people. We believe this is obviously something that we will achieve in the middle range and long range. We dont think we are going to have something immediate. We think in order to get it right, we need to do it one step at a time. Were committed to do it that way. Let me ask you. Outline where we are and where we are going to be. Fill in for us for the civilian like me how do i measure progress along that road . What are the milestones that we should all be looking for that this is going in the right direction, that this is on time, that were and as you do that, who has done this really well and what example should we compare mexico to as a best case scenario. I have four bell weathers that i guess i would watch in the the next six months. The first is legislation. The Mexican Government has already prepared drafts of legislation for implementation. Well see what do these frameworks look like, how predictable will it be. So legislation is the first benchmark. The second is going to be budget. Because if they get a significant Budget Allocation to buy seismic, if we see the agencies are funded to stand up to safety rules or the environmental rules or even the licensing requirements, then were going to see that we can predict, i guess, if the regulators are going to move swiftly. The third is outsourcing. Youre going to need a lot more information about the nature of distribution about whether theres metering at the houses. What do we know about the quality of transmission. That information has to be organized and presented for investors. I would be watching. Is there budget. And fourth would be leadership. Are we going to see shadow leaders of these efforts . President obama brought in mike and this is the guy who is going to fix this. So we should start to see shadow leaders for the environmental effort. Probably if theres maybe a leadership. So i think those are the four bell weathers for me. Brazil did it it right the first time. Then their second reform has taken it back. So i would say the opening to the upstream, norway, brazil have followed that model. I think the u. S. And norway have done it, but algeria did it. Iraq did it. The system of open criteria, you open the envelope and see who wins. The independents of the laters, it it remains to be seen whether they are going to be safety case or performance standards or what kind of regulators they are going to be. Norway is another great example. Colombia has a terrific regulator. Those are other countries that have done this well. And on the fund, i think its pretty much only norway that has done this with the kind of political independence, fiscal independence that mexico has done. I think its worth spending a moments talk about the regulator. Thats the key element right now i think in this. The question a the lot of us have is we have a very small, underfunded commission at this point in time. And in a relatively short period of time, were expectings them to either find the Human Capital or resources in mexico or bring them in from outside. And thats the real danger, i think, here. And david said it very well. Is commission going to be allowed to recruit internationally . Will it have the resources to do it . Is it going to be an attractive enough proposition . If its not a strong regulator, then this will be a real problem for both companies wanting to invest in mexico and for the benefits that will be distributed to the mexican people. What role jorge, can institutions like yours play in cooperating with some of the Technical Assistance . Its not only that, but theres a lot of universities in the United States that have a long relationship with pemex. Were working now with a group in mexico on shale gas development. We were talking about Water Resources along the border and what impact Shale Development could have to Water Resources. So certainly our universities in partnerships which we have with toly technical and the National Science foundation, the resources are there for us on our side of the business, the academic and Research Side of the business to add value to this whole process. And remember, theres a heavy involvement in research and partnerships in the american universities with the private sector. So, yes, theres no question that a u. S. Institution and in corporation with mexican institutions can play a key role in this whole process. May i just comment . This is a very important issue that independents in the world of the regulators. And the constitutional reform has taken notice of this. One of the strong elements of the reform is that in article 28 of the constitution, both regulators have achieved some sort of constitutional status. And they have granted technical atonmy. And they have granted something called object so what does this mean . This means that for the services that they provide, they collect a fee. Up to now, that fee would go to the ministry of finance and into the budget. So they wouldnt be allowed to keep that fee. Now they will be allowed to have it in a trust account. In a trust account up to three years of the yearly budget. So that means that they will have a trust account for almost three years of what their budget is like. So they will have enough resources that will be provided by their own services to be able to do all these type of things. Were evolving from a system that is mostly outregulated by pemex into a system that will be regulated by others. So we are migrating into that. We are fully aware that we have to be very careful into that implementation. In addition to that, there are going to be two new members for each of these regulators that right now five member regulator board. Now there are going to be a sevenmember board. This is due to increasing the workload. They are going to have the personnel, the budget and the aton my to be a fundamental part of new model that we have achieved. All of you have mentioned the word transparency in your remarks, in your comments. And clearly the reform aims to turn a page. How does the Mexican Government now guarantee that transparency . Particularly in light of pemex eventually becoming more independent, but how does pemex improve its independence from the very beginning . What are the steps of transparency, concrete steps that people ought to be looking for . Let me begin with duncan. Its a question for all of you. The first step is to really learn what best practices are out there in the world. The second thing is to take full advantage of the technologies that we have available to us. Enrique gave a nice rundown of how it will work its way through in the payments, et cetera. That information needs to be publicly Available Online and easily accessible. It it shouldnt be hidden behind various different hurdles that you have to get over. And the third thing i would say is that Industry Needs to play a role in making sure that things remain open and lets face it, the industry historically has not been the most transparent industry. Its begun to realize that transparency works in their favor. And fourthly, Civil Society needs to play a very big very bg role in mexico and the government should work with civil soes sirkts working with think tanks, et cetera, to make sure this data is available to the public. I think the role of the industry has changed considerably in the last 20 to 50 years. I think we do welcome transparency and we do welcome, also, Good Governance we have many countries in the world in which we have huge challenges. Theres lots of things we would like to implement thats part of the corporate core, not only the corporation but our shareholders and in some countries is extremely difficult to implement. I think transparency not only from the industry is welcome, but i think transparency in the whole process is welcome. Theres a lot of data, both seismic data. A lot of different data we have to share now. We have consortiums talking about universities, consortiums in which five or six Different Private Companies participate in that consortium and they share knowledge and they share new licenses and new procedures. So transparency is extremely important, but Good Governance within within the country in which we operate is extremely important. I think thats going to be the case in mexico, by the way. I dont have any question having lived there and traveled there for the last five or six years regularly that theres a culture change, that there is a new reengineering not only of people mechanics but a new reengineering of mexican society. By the way, i did not mean that the reform process was easy. I did say that but i didnt mean that. People have to understand the first thing, when i was sent to mexico, believe it or not, my corporation sent me for a threeweek course, even though i have a degree in latin american studies of mexican history. You have to go back to Mexican American war of 1917. People were in veracruz in 1914. Theres history behind the whole culture that comes and ties to march of 1938 that we have to understa understand, the political, historical courage it took for the president to move this reform forward. Even though from a historical, political context the process was difficult and not easy, what i meant to say is from a business point of view, this is the easy part, now comes the implementation so we can get to the targets of 2020. Its remarkable at the constitutional level people have to appreciate these transitory articles have constitutional status, revenue transparency, constitutional transparency, cost reporting transparency and reporting to the National Fund are demanded at the constitutional level. I dont think theres another country in the world that has a constitutional level directive for transparency. Thats pretty impressive. I think smaller attempts that will be important will be looking at what the auction system looks like. Presumably that will be transparent and joining Something Like the disstrackive Industries Transparency initiative will give a platform for Civil Society to participate. Thats been a Popular International movement thats shown good results. Enrique, let me give you the last word before i open up to questions. Theres a full committee of transparency in the company know nat toes administration. What you have said is true. We went to Different Countries to see how Different Oil models work. We learned from those who have transparency elements that work well we have put them in the constitutional so we can have a mandate, a clear mandate to make them enforcementable in the law and the regulatory next steps. Were fully committed. I think most importantly, the mexican people does not satisfy the way transparency has been dealt with, extractive sector in the past and we need to do it better. Thats strong and we hope Civil Society will be highly involved with that the idea of the itis is very important. Were analyzing to do it. I would like to bring our other guests here. Sir, why dont i begin with you because youre closest. Stephen donohue from mcclarity and associates. Thank you very much. Perhaps its on purpose, but theres some ambiguity about the issue of booking reserves. David in the paper says its clear its the attention to allow companies to benefit from the future value of what theyre doing. I havent quite heard you say that. Would you tell us how the government of mexico and sened use this Going Forward . That really is the fundamental issue. For us its what congress has achieved in the constitution we believe is Standard Practice of course. It has to be established that the property of oil and gas is of the mexican nation, but those contracts will also be available to be able to report future benefits, future economic benefits of those contractors for feeling all the legal requests that the companies have in different markets. So we are, according to Standard International practices, thats how we see that transitory article. I would just add, stephen, that the sec ultimately will want to look at the contracts and see if theres an element of risk and is there a security of entitlement. If they see those two in the forms of the contract, then they will make a determination that those reserves are able to be booked by companies. I would say in terms of the political culture from talking to our colleagues here and talking to the oppositional parties and appreciating the threshold for legislation is lower than the threshold for constitutional reform, the entire initiative makes no sense absent the ability of companies to book reserves. I think theres deep knowledge and recognition on the part of the government that if companies cannot book reserves, they will not invest and they wouldnt have gone to all this effort to try to enforce this constitutional change knowing it would take constitutional change without it. Youve got to see the contracts. I think in the legislation, thats the two big bellwethers are going to be how much the definition of the schemes is defined in the legislation and how much visibility there is on the terms. All these companies have their models and they crunch it in. How much is the return on investment. Thats why theyll pick mexico and not kurdistan or some other place. The earlier we see the stability, the more security there will be. My question is around National Content. Thats been a big issue in the hemisphere and the extent to which mexico deals with the National Content issue. Well put it more competitive verses other options or less competitive. In secondary law, we will establish percentages and the areas and the time frame for National Content. What we have learned in other countries is that it is important to one of the outcome ts of our reform of this type is to have a Strong National industry that produces services and participates actively in that transformation of the oil and gas sector and were aiming to that. It will be in the secondary legislation that we will establish that. Were also aware that some of the examples in other countries, if you put such strict rules into National Content, that has slowed down implementation of the reform or that has made them more e pen sive in the process of implementation. Another strong element is that were very interested in establishing Foreign Direct Investment, we were looking for companies that are right now based in the u. S. That will be able to be based in mexico and have important offices and produce products there in mexico in order to bring them, instead of buying the products from the u. S. , to be able to buy the products from mexico. And brazil has been very successful in achieving that and norway has been very successful in achieving it. Its own private sector has become a worldwide provider of services in the oil industry. Were aware of that. Were also aware we have commitments in different free trade agreements that we have to have equal treatment of investment. In order to craft a secondary legislation, we have these three elements to put into place in a correct way. I just wanted to mention that, as were sitting here today, there are a number of Mexican Companies today in houston already talking to u. S. Companies, particular service contract, Petroleum Services companies. Its not only Foreign Investment o from the point of view of american dollars coming, mechanics xan companies will come over here, do joint ventures with u. S. Corporations, have the knowledge transfer, the skill transfer that youll see in the next five years, a very considerable number of very quality Mexican Companies that will be the focus of this industry. From a local content point of view, i think the mexico case is going to be different certainly than the brazilian case. In fact, somebody asked the question about nafta. I think this is an area in which now the nafta infrastructure is going to help this new relationship between mexican, Small Companies, medium size companies, Small Companies that provide services and equipment and products to the oil and gas industry in mexico doing joint ventures with the u. S. That to me is a huge area of growth, by the way. I think its important to remember that we sit here in washington or houston and look and say we dont want the National Content requirements to be too high because that will be a barrier to investment, but we also dont want them to be too low. Part of this goal, its not just about oil and gas or electricity. Its about developing the mexican economy, increasing competitiveness and adding jobs ultimate limit if we want this reform to be politically sustainable in the long term, the mexican people need to feel a benefit from it. Thats why its incumbent upon business and government to work out what would be a fair level for national and local content and then for the government and people mechanics in particular to work with providers throughout the couple to develop natural indigenous capacity to do this. Thats where the longterm benefits of this reform will really be felt. Absolutely. The back of the room . The gentleman who is standing. Diana negroponte from the bookings institution. First to the undersecretary, 2450u for coming to washington and thank you for your Powerpoint Presentation which i hope the Atlantic Council will place on their website. My question concerns the valuation of the blocks. Prior to an auction on International Market prices, who will determine the valuation of existing fields and what are the criteria which will be used to determine their value. Thank you very much, ms. Negroponte. Well leave that presentation to the Atlantic Council. Thank you for having me. The ministry of energy will make that balance. The ministry of finance will make the fiscal calibration of the contract. Then the bidding process will be taken by the National Hydrocarbons commission who will sign the contract on behalf of the mexican state the secondary relation will establish the framework through which well do those economic analyses, and the industry would require case by Case Analysis because the fields from shell water to shell gas, the Economic Conditions are very different. We will allow secondary relations to establish a framework, but it will be up to the ministry of energy on its responsibilities and the ministry of finance on its responsibilities to tune in each contract, depending on the quality of the field. Thank you. I would just say, this is an area of risk, i think, to take an area, say shale fields or deep water and say this framework or frameworks that were going to apply, these are roughly the terms, creates a way to scale a lot of acreage at one time for auction where the market will determine the price. But if its field by field, that creates i think a significant drag on the bureaucratic process and the ability to really slow down why is one field verses another one under aern terms, then you run into problems of, is that being done because its a way of getting pemex to be able to get some preferential rights. I know thats not the design. I think thats something to watch in that process, is whats the most efficient way to get those blocks sized and get them up for auction and how much flexibility will there be for companies which may see higher risk in shale gas than in other areas because the cost to mean towards a concession versus profit sharing. Best practice example, who has done the acreage valuation correctly . Actually, weve done it pretty well. I would say at least in the deep water gulf of mexico. Jorge would agree. We run the seismic, do a geologic assessment. We make that Data Available and it goes up for auction. The market determines the price. At times when we have seen high risk like in shale gas but the deep water in 1998 when prices were 10, we provided tax incentives to encourage people to go into the shale business and into deep water. Both of those incentives expired once we did that. We saw an area of high risk and we wanted to maximize the reward. But we did it by area, by type of geology rather than by field. I think the norwegians do something similar. Even the uk has one scheme for marginal fields and another one for deep water. Its for marginal fields generally. Its not fieldbyfield assessment. It makes it easier bureaucrat cli on the licensing agency. And allows for variation which is important . Yes, among different types of technology. Deep water verses shale. Were following that path. First variation allowed by the secondary legislation. The gentleman in the back i know has been waiting. Thank you. Thank you sub secretary ochoa for being here. Mr. Duncan wood mentioned about the prices of electricity in mexico being a little too high especially on the northern part. Im a witness of this. Even though production will open up and production costs will lower down because of the openness, distribution in electricity and gasoline will still electricity is still controlled by a national company. What opportunities will be there . Is this even considered about opening up the national company, and what opportunities could be there for business . Thank you. Thats a very good question. The other part of Energy Reform is strong transformation in the electricity sector. This is not by field. But let me just give you some of the important lines of this reform. Transportation and distribution are natural monopolies. The ways this reform allows private participation is through contracts with cfe, the National Power company. And this is in the way the brazilians did their own transformation that allowed the Public Company to establish contracts that would allow to it build new transmission industry lights. Have in mind that 80 of the price of electricity comes from the cost of the fuel that you use to produce electricity. Theres a big opportunity there for natural gas to have an impact in the whole area. Now, the other important part in mexico is an inefficient Distribution System where were losing around 20 of the electricity that we conduct. This is due to technical failures in some areas is more like social problems that have been introduced in people not paying or people stealing the electricity. So through these contracts well find the mechanism to make these lines more efficient. If you see the percentage of the impact, having a market of electricity, having substantial natural gas and renewables that can put a mix of the production of electricity in a way that will tend the costs to go down significantly. If thats 80 of the cost of electricity, then we can translate to the consumer better prices to make it more competitive in a region. Its a huge transformation as well. I would suggest undersecretary for electricity in january. The reform is very, very important in the press because it was an issue with reform, it got to a secondary position. But hydrocarbons have taken much more of the attention. But electricity reform is very important. Please transmit to the undersecretary the floor is open. David, i know theres a section of the report on electricity. Do you want to summarize that . Undersecretary mel gar is well known here in washington. Wed be delighted to have here here. This is an area where theres great opportunity, but the framework makes all the difference. It may be that in mexico that distributed generation is going to be the first area of commercial opportunity rather than grid extension, places where people can have relatively small sources of generation access their own gas and provide electricity to something other than the major load centers. And so there needs to be visibility and flexibility in the legislation to allow those relatively smaller generators to be able to sell directly to customers. Relying on cfe for collections when collections are not good and relying on cfe for transmission security when transmission is already weak will be a source of insecurity for investors. Some flexibility there will be helpful. Subsidy is the other question there, because as long as residential consumers are subsidized, the target will be the industrial consumers, the ones producing their own electricity and to create a system where you can extend transmission and where you can bring in all this capital. At some point theyre going to have to give up the residential base. Nobody is going to be able to provide electricity cheaper than an existing subsidizing situation stem. I think in the initial drafts of the reform, there has been a transitory amendment by called for moving from general subsidies to targeted subsidies which would be classic economic theory. Right now everybody in mexico city gets their first 250 kilowatts of electricity free whether youre carlos slim or need subsidy from the government. Thats a very expensive system. Maybe in the legislation there will be an opportunity to take a look at that. We say the Value Proposition is a question. Those kinds of questions, both the data and the framework still have to be worked out. I saw duncan nod when the word subsidy was mentioned. As many of you in the room know, its a bizarre Pricing System in mexico. It really, really s. Some people e end up paying very little. When you jump over the barrier in terms of your residential consumption, all of a sudden, the cost of every unit of electricity that youve consumed goes up enormously. So working out how to remove subsidies but at the same time lowering energy costs i think is part of the conundrum were looking at right now and it vears, very important in political terms. This is where the average mexican i think will feel the benefits of the Energy Reform. Yes, we can talk about jobs and competitiveness and all the other great things, but the average mexican on the street wants to see that the promise of Lower Energy Costs and lower fuel costs as well really come through within a reasonable period of time. Im a believer, an optimist on this, that once you have a greater participation by private generators in the system and once you bring in these lower costs of natural gas for combined cycle generation which doesnt necessarily need to happen because the reform, it can happen by just building the pipelines across the border to get the gas into the market, then i think well begin to feel those benefits anyway. Thank you. Were willing to take questions from the web as well. Sir . Hi, jeff eping. Ive had the good fortune. I worked for pemex for a couple of years. Ive looked at hundreds of wells and seismic. Geological potential is very good. My question is turning the issue of security for operations, how do you think that will play out for drilling wells especially onshore. Thank you very much. One of the elements of constitutional reform is that an institution is going to be created to overlook industrial safety and Environmental Issues which is going to be dependent of the ministry of environment. That was created thinking about important issues that they were saying, up to today, pemex is a self Regulatory Institution regarding those topics. If an xaps, they have to make a report to the ministry of energy. That includes a new institution and it will will have the participation of the ministry of energy. But that institution will take care of that. Ill add the u. S. Mexico transboundary agreement finally cleared the u. S. Congress as part of the budget deal. When we were launching that, we thought it would be a first baby step to cooperate with mexico in the gulf of mexico. It turns out weve leapfrogged that completely. This would be an area for u. S. Mexico cooperation. Weve learned a lot about safety, at least in the deep water oil spill prevention, oil spill mechanisms, commercially available systems. So i think thats one of the areas over the next months where we could have some bilateral and hemisphere cooperations. Thats something we talked about. I just want to underscore that that process is already in place and this process already has been in place before this Energy Reform. In other words, there is great cooperation between the u. S. And mexican coast guard. Theres cooperation and work between sened and the u. S. State department, u. S. And private industry. In november there was a meeting in tampa in which mexican officials and u. S. Coast guard officials were there. The process is in place. All i wanted to underscore and highlight again through maybe saying everything in this world is easily as far as the agreements and paperwork is concerned, implementation is a very, very difficult challenge. And the deepwater horizon taught us that. I think in this new concept by the industry being able to work hand in hand with pemex, thats going to bring and transfer a lot of knowledge on how we manage the business. I think thats an area that were going to see quite a bit of improvement. By the way, not only in offshore drilling, but also pipeline transportation. We have seen a number of accidents and incidents in mexico and also in onshore field work. I dont know if this was implicit in your question. But Public Security onshore in particular, because i dont think were going to see the zetas going out into the deep waters of the gulf of mexico. Its a question i get asked a lot. My standard response is look where the International Oil industry operates globally . They dont always operate in the safest places. They know how to deal with security threats. The one potential exception i would say is the smaller operators that might benefit from a boom in the shale business in northern mexico. Thats where we really have to keep focused on the questions of rule of law in mexico, where we have to keep focused on trying to lower levels of violence in the across the country. And in particular, you know, lowering the cost of doing business because, although it hasnt been a significant disincentive for investment in mexico in recent years, it does raise the cost of doing business when you have to face threats of kidnapping, extortion, et cetera. For the bigger companies, thats not a big deal. For the smaller companies, i think thats something they need to factor in. Good morning. Ram i dont know genz from wbi. Let me come back to the electricity sector. Do you see a role for the world bank or the Public Branch of the world bank or the idb in opening up the sector to private participation . Not that i am aware of. The transformation in the reporm is that it will allow something that happened, since mexico amended its secondary legislation in 1995 sorry 199192 which was to allow participation of private sectors in generation for consumption of its own and to sell it to nearby big businesses. That model has been put into question because it was not a constitutional amendment. There has been several intents to amend the constitution in order to put this model into place. But until now it has been successful. So what we are doing now is establishing something that is already there. A third of mexicos Power Production is done by the private sector, but now what were achieving with this reform is not only that they have a constitutional base to do so, but were also promoting a market so that we can have the lowest cost producers to be distributed first, and that will be one of the substantial reasons where we can decrease prices in the future because we have a strong supply of natural gas in the country. That will decrease the costs of production of electricity in mexico, and if we have an independent body that will submit the electricity to the distribution lines according to lower costs, that wed be able to transfer these benefits to the overall population. Of course, there is a task ahead to get the subsidy system right in order to decrease externalities that you have, that duncan has described. This is part of a whole plan of implementation that will allow the lower costs of production of electricity to reach the bill of the mexicans. Theres one area how about product branding in retail . In other words, all the service stations in mexico are not owned by pemex. Theyre privately owned by dealers and jobbers and operators but only carry and buy product from pemex. In the legislation or in secondary legislation, are we looking at the availability of private branding . Thats number one. Is the operator of that private brand going to be able to import its own gasoline so the deficit in refining can be met by a new operator . Is that model for downstream marketing of retail fuels is somewhere in the revision of the reform . Yes, yes, of course. We already import 50 of our gasoline. But there is no benefit of competition for the consumer. So what we are looking at is precisely secondary legislation to open up branding and to open up the service. If that means that the private sector will do this Business Needs to import gasoline, thats what were currently doing. Were currently importing 50 of the gasoline. That will be obviously in the process that we can increase the Production Capacity inside the country. You were mentioning that you could see pemex having joint ventures in refineries in the u. S. The irony is we have them already. Pemex has a refinery in texas. Its a joint venture with shell. This is from the early 90s. If pemex would want to bring its partner, shell, to mexico and do what its doing in texas, until reform, they were forbidden to do so. Thats ironic. You can ask your oil company to do a joint venture in the u. S. , but you forbid your oil company to do it in your country. So with the Energy Reform that president pena forwarded to congress, pemex will be allowed to do those joint ventures in mexico. We are looking for an important change in downstream. Lit take time as youve described. We have now the legal structure that will allow those things to happen. David, you want to add something . Just the previous questioner, theres always an opportunity for the International Financial institutions to provide private financing, ifc. I think it would be welcome in the power sector. People mechanics is xms largest provider. For the ifc and others, having that participation would give comfort to private investors. Its probably something for the share hold earls and the bank to encourage. I have a question from those watches us on the web. Im going to direct it to duncan. The question is what does this mean for broader u. S. Mexico relations . Im going to add immigration, commerce, judicial cooperation, security cooperation. Its a question i get quite a lot, i have to say. What i think has been fascinating and incredibly well handled by the u. S. Government over the last 10, 15, even 20 years is how the u. S. Government has respected mexicos sovereign right to determine its own energy future, and the role that has been played by the u. S. Government, i was actually given a class yesterday at the Foreign Service institute. And the officer said was there really as a result of great pressure from the United States. He came up with a conspiracy theory. I said hang on, this sounds like from one of my classes in mexico. This didnt happen. The United States government has always been incredibly respectful in terms of allowing mexico to determine its own future. This is a result of a National Debate in mexico and a long process. But the implications of it for the bilateral relationship i think are very, very positive, partly because of increased business integration, but mostly the point i mentioned earlier on which is increased integration of Energy Markets which means youre seeing an increased integration of the Production System in north america. What were looking at for the future is that all of the three countries in north america depend upon each other to really enhance their competitiveness. Thats what this really opens up a possibility for, is lowering energy costs in mexico, guaranteeing stability of supply, making sure u. S. Producers in mexico can stay there because energy costs are lower. And in other areas you mentioned immigration security for example. These are areas where i see there will be a very positive net benefit for the mexican people and the mexican economy. Already were seeing zero net migration from mexico to the United States. Probably thats as a result of demographics, probably as a result of a tougher climate here in the United States, but probably as a result of greater Economic Opportunities in mexico and this can only help. Some of the estimates prove to be about 100,000 new jobs in the energy sector. Thats something we should celebrate. That means more 15yearold mexicans see their future is in country as opposed to leaving. On the point of security, if you are a young man who lives in a marge liesed area and you have no Economic Opportunities, theres very little choices for you. Are you going to my great or go into potentially organized crime . This offers you another way out. It needs to be added to all the changes happening in education, of course and other changes in the economy. I see this as being a very positive thing. It will relieve the pressures in the long run as well. Particularly in the border states. Yes. Did you want to add something . I agree completely. David, let me ask you another question from those watching us on the web. First, the bilateral relationship. But now cast this reform within the tpp thats being negotiated and some of the free trade discussions. Well, i think for the more mexico grows as an exporter probably in oil gas may have a more de domestic market, the more value there is in tpp. United states is in a slightly different position. For us the ability to export gas, given the enormous amount of gas we have, the potential to export lng and the relatively low prices, that gives us basically a bargaining chip to use for both of those trade negotiations which we didnt have before. So its indispensable for us. I think mexico would be a collateral beneficiary of that. Im not so certain that mexico is going to become an lng exporter in the next 10 to 15 years given the incredible amount of domestic demand and relatively low price of gas right now. Im not so sure its as big a deal for mexico in those trade agreements as it is for us. Do you want to add a mexican view of the bilateral relation . I agree that the first objective with a reform of this sort is to have enough oil, natural gas, petrochemicals produced in mexico for our own market. I think that youre right. Mexico will not be an exporter of lng in the near future. The first task is to reduce the 30 of imports that we have on natural gas, and that will boost a new industrialization of our country and to lower the prices of electricity. U but in the long run, and these reforms are made for 50 years. These reforms obviously have impact in the short term and the midterm, but mostly in the long term. I think well see a different scenario ten years ahead of us regarding that. In order for those benefits to come into place, you have to start now. One of the very important things weve done, the first big step, and we will follow the time line that constitutional reform has established, but we have our eyes looking into the future in those fields. The main thing is we have to look at whats going on in mexico also from the perspective of north america and the United States. This is a strategic regional revolution thats going to take place. If you look at the Keystone Pipeline when it gets approved, between the Keystone Pipeline, the seaway pipeline and all the west, east and down to the east coast, pipelines that are going to be opened up here in the next few years, the u. S. Gulf coast refining system is going to have the flexibility and xapsity of at least another 3 Million Barrels a day of capacity, mainly canadian crude coming down. As that canadian crude comes down, what is it going to displace . What foreign crude coming into the gulf coast is going to be displaced . If im a refiner in the gulf coast, i can tell a importer of crude the price differential verses wti is going to be different because now i have canadian crude in the pipeline that all i have to do is open the valve. The same thing with lng. I think what were talking about is that this mexican Energy Reform is really going to open a whole new strategic view of a Regional Energy matrix that we havent seen before, that we as a region can certainly take advantage. I go back to 1 2 tachlt were talking mexico, canada and the United States. Collectively if you guys can get your heads together, certainly from the energy point of view, we can be a powertobe. There was a headline from one of the News Services about the Energy Revolution and how were going to drown in oil because of all the oil thats going to be available. I think regional integration in north america, mexico, the United States and canada is very important for all three xhooe companies and also for this reform to move forward. If you play this out into the future after mexico meets its domestic demand, what can be interesting first is the product trade. Most of u. S. Products are now going to the hemisphere. But Central America needs gas. If you, depending on how widespread the shale formations are in mexico, when you meet your demand you can see 15, 20 years out that mexico can be a supplier to Central America and a lot of the problems weve had so far on fuel Oil Dependency in the caribbean and high carbon consumption in Central America can be resolved by mexico and Central America or mexico and the caribbean. There hasnt been a source close enough to that territory to be able to get bass. I think 15 years out were probably talking about not only north america, but talking about hemispheric energy immigration at an unprecedented scale. Or Electrical Conductivity were also talking about in which mexico can certainly play a very important role. We im sure can go on for a number of more hours. Im going to have to draw it to a close. I appreciate everybodys participation. An an nounment for those members of the press who would like to interview the undersecretary, if we can meet in the back of the room, that would be great. An expression of thanks to all of you for participating. Its been an amazing, amazing thing to watch in mexico, not only from the point of view of the technical ability to have passed this reform, but the prowess with which you did it e, not only this reform, in this past 12 months in mexico there has been an education reform, a telecommunications reform, reform of the financial and tax system, a political reform and now culminating a year and a couple of days into the first year of present pin netto with the Energy Reform. I think you could provide washington with a harvard case study about how to get some things done. Happy holidays to everybody. Thank you for joining us. Happy holidays to all of us. Thank you. [ applause ]. On the next washington journal Julian Sanchez discusses Surveillance Programs and recommendation from the task force on scaling back some of their practices. Elana schor talks about environmental groups and later on the program, a look back on what was accomplished in congress. David hawkings joins us. Well look for your comments by phone, email and twitter beginning live at 7 00 a. M. Eastern on cspan. As 2013 wraps up, were here on the west lawn to have u. S. Capital. A look at five important issues we have covered over the past year. Here is the lineup. Coming up on monday, a look at immigration laws. Tuesday, Senate Filibuster rule changes. N. S. A. Surveillance on wednesday. Thursday, it is gun laws and on friday, we wrap up the week with a look at the u. S. Budget and government shutdown. That all starts monday beginning at 8 00 p. M. Eastern on cspan. President obama ended the year with a News Conference friday in the White House Briefing room. He addressed the healthcare law, negotiations are iran and n. S. A. Surveillance. This is an hour. Good afternoon, everybody. I know you are all eager to skip town and spend sometime with your families. Not surprisingly, i am too. You know what they say . It is the most wonderful press conference of the year. I am eager to take your questions. But first i want to say a few words about our economy. In twirlt, our businesses created another 2 million jobs adding up to more than 8 million in just over the past 45 months. This morning, we learned that over the summer, our economy grew at its strongest pace in nearly two years. The Unemployment Rate has steadily fallen to its lowest point in five years. Our tax code is fair and our fiscal situation is firmer for deficits that are less than half of what they were when i took office. For the first time in two decades we produce more oil here at home than we buy from the rest of the world and our all of the above strategy means Lower Energy Costs. The Affordable Care act has helped keep healthcare costs growing at their lowest rate in 50 yers. That means bigger paychecks for families and bigger savings for businesses looking to invest here in america. For all of the challenges we have and for all of the challenges we have been working on diligently in dealing with the a. C. A. And the website this past couple of months, more than half million americans have enrolled in healthcare. Gov in december alone. In california, for example, a state operating its own marketplace, more than 15,000 americans are enrolling every single day and in the federal website, tens of thousands are enrolling every single day. Since october 1, more than 1 million americans have selected new Health Insurance plans. So all told, millions of americans, despite the problem the website, are now poised to be covered by quality affordable Health Insurance come new years day. This holiday season, there are mothers, fathers, entrepreneurs and workers who have something new to celebrate. The security of knowing when the you add that all up, and it means we head into next year with an economy that is stronger than it was when we started the year. More americans are finding work and experiencing a positive paycheck. We are positioned for new growth and new jobs. I firmly believe that 2014 can be a breakthrough year for america. As i outlined in detail earlier this month, we know there is a lot more we are going to have to do to restore opportunity and broadbased both for everyone in america. That is going to require some action. Earlier this week, the first time in years, both parties in both houses of congress came together to pass a budget that unwinds some of the damaging sequester cuts that have created headwinds for our economy. It clears the path for businesses and for investments that we need to strengthen our middle class, like education and scientific research. It means the American People will not be exposed to the threat of another reckless shutdown every few months. That is a good thing. It is probably too early to declare an outbreak of bipartisanship, but it is also fair to say we are not committed to endless gridlock. There are areas where we can work together. I believe work should begin with something republicans in congress should have done before leaving town this week, and that is restoring the temporary insurance that helps folks when they are looking for a job. Because congress did not act, more than one million of their constituents will lose a vital economic lifeline at christmas time, leaving a lot of job seekers without any source of income at all. I think we are a better come a better country than that. We do not abandon each other when times are tough. Keep in mind Unemployment Insurance only goes to folks who are actively looking for work a mom who needs help feeding her kids when she sends out her resumes, or a dad who needs help dainty rent while working parttime and learning the skills he needs for that new job. When Congress Comes back to work, their first order of business should be making this right. I know a Bipartisan Group is working on a threemonth extension of this insurance. They should pass it. I will sign it right away. Let me repeat. I think 2014 needs to be a year of action. We have work to do to help more americans are in the skills and education they need to do these jobs, and to make sure those jobs offer wages and benefits that let Families Build a little bit of financial ecurity. We still have the task of finishing the fix on our broken and the grayson system. We have got to build on the progress we have been staking the made over these last five years with respect to our economy, and offer the middleclass and those looking to join the middle class a etter opportunity. And that is going to be where i focus all of my efforts in the ear ahead. Let me conclude by saying just as we are strengthening our position here at home, we are also standing up for our nterests around the world. This year, we have demonstrated that with clear right, principled diplomacy, we can pursue new paths to a world that is more secure, a future where iran does not build a nuclear weapon, where serious chemical weapons stockpiles are destroyed. But the end of next year, the war in afghanistan will be over, just as we ended our war in iraq. We will continue to bring our troops home. As always, we will remain vigilant to protect our homeland and our personnel overseas from terrorist attacks. A lot of our men and women in uniform are still overseas. A lot are spending their christmas far away from their families and friends, still in harms way. For them and their families back home, we want to thank you. Your country stands united in supporting you and being grateful for your service and your sacrifice. We will keep you in our thoughts and in our prayers during this season of hope. Before i wish a Merry Christmas to all and to all a good night, i will take some questions. Jay prepared a list of who is naughty and nice, so we will see who made it. Julie must be nice. Thank you, mr. President. Despite all the data points you cited in your opening statement, when you look back this year, very little of the domestic agenda you outlined in your inaugural address has been achieved. Healthcare rollout obviously had problems, and your ratings with the public are near historic lows for you. Has this been the worst year of your presidency . I have to tell you, julie, that is not how i think about t. I have now been in office close to five years. I was running for president for two years before that. For those of you who covered me during that time, we have had ups and downs. I think this room has probably reported at least 15 near death experiences. And what i have been focused on each and every day is, are we moving the ball in helping the American People, families, have more opportunity, have more security to feel as if, if they work hard, they can get ahead . And if i look at this past year, there are areas where there have obviously been frustrations, where i Wish Congress had moved more aggressively. Not passing background checks in the aftermath of newtown was something i continue to believe s a mistake. But because of the debate that occurred, work has been done at state levels to ensure we do not see tragedies like that appen again. There is a lot of focus on legislative activity at the congressional level. Even when congress does not move on things they should move on, there are a whole bunch of things we are still doing. We do not always get attention. But the connect program we announced, initiating wireless in every classroom in america. It will make a huge difference for kids across this country, nd for teachers. A manufacturing hub that we set up in youngstown, something i talked about during the state of the union, is going to create innovation and connect universities, manufacturers, job training, to build on the renaissance we are seeing in manufacturing. When it comes to energy, this year is going to be the first year in a very long time we are producing more oil and natural gas here in this country then e are importing. That is a big deal. I understand the point you are getting at, which is that a lot of our legislative initiatives have not moved forward as uickly as we might like. I understand that. Which means i am going to keep at it. If you look at Immigration Reform, probably the biggest thing i wanted to get done this year, we saw progress. It passed the senate with a strong bipartisan vote. There are indications in the house that even though it did not get completed this year, that there is a commitment on the part of the speaker to try to move forward legislation early next year. The fact that it is not hit the timeline that i prefer is obviously frustrating, but it is not something i end up brooding a lot about. Its not just your legislative agenda. When you talk to americans, they seem to have lost confidence in you, trust in you, your credibility has taken a hit, the Health Care Law was big part of that. Do you understand that those the public has changed in some way their view of you . Julie, i guess what im saying is if youre measuring this by polls, my polls have gone up and down a lot through the course of my career. If i was interested in polling, i wont have run for president. I was polling at 70 when i was in the u. S. Senate. I took this job to deliver for the American People, and i knew and will continue to know that there are going to be ups and downs. Youre right, the Health Care Website problems were a source of great frustration in the last press conference that i adequately discussed my frustrations on those. On the other hand, since that time i now have a couple Million People, maybe more, who are going to have health care on january 1. And that is a big deal. Thats why i ran for this ffice. As long as ive got an opportunity every single day to make sure that in ways large and small im creating greater opportunity for people, more kids are able to go to school, get the education he they need, more families are able to stabilize their finances, the Housing Market is continuing to improve, people feel like their wages maybe are inching up a ittle bit. If those things are happening, ll take it. I said before, i have run my last political race. At this point my goal every single day is just to make sure that i can look back and say we re delivering something. Not everything, because this is a long haul. Thank you, mr. President. One of the most significant events of this year was the revelation of the surveillance of the National Security agency. As you review how to rein in the National Security agency, a federal judge said for example the government has failed to site a single instance where the n. S. A. Are you convinced the collection of that data is useful to the National Security to continue . A ill talk more broadly then talk specifically about the program youre referring o. As you know the independent panel that i put together came back with a series of recommendations, 46 in total, i had an extensive meeting with them down in the situation room to review all the recommendations that they have ade. I want to thank them publicly because i think they did an excellent job and took my charge very seriously. I told them i want you to look from top to bottom at what were doing and evaluate whether or not the current structures that we have and the current programs that we have are properly addressing both our continuing need to keep ourself secure and prevent terrorist attacks or proliferation of weapons of mass destruction or other threats to the homeland, and are we also making sure that we are taking seriously the rule of law and our concerns about privacy and Civil Liberties. What we are doing now is evaluating all the recommendations that have been made. Over the next several weeks im going to assess based on conversations not just with the Intelligence Community but others in government and outside of government how we might apply and incorporate their recommendations. And im going to make a pretty defenive statement about all of this in january where ill be able to say here are the recommendations that we think makes sense. Here are ones that we think are promising but still need to be refined further. Heres how it relates to the work we are doing not just internally but also in partnership with other countries. And im taking this very seriously because i think, as i have said before, this needed to be had. One specific program, the 215 program, is the bulk collection of phone numbers and exchanges that have taken place. That has probably gotten the most attention, at least with respect to domestic audiences. What i have said in the past continues to be the case, which is that the n. S. A. In executing this program believed based on experience from 9 11 that it was important for us to be able to track if there was a phone number of a known terrorist outside of the United States calling into the United States where that call might have one. And that having that data in one place and retained for a certain period of time allowed them to be confident in pursuing various investigations of terrorist threats. And i think its important to note that in all the he reviews of this program that have been done, in fact there have not been actual instances where its been alleged that the n. S. A. In some ways acted inappropriately in the use of this data, but what is also clear is from the public debate people are concerned about the prospect, the possibility of abuse. Thats what the judge in the District Court suggested. And although his opinion obviously differs from rulings on the fisa court, we are taking those into account. The question we are going to have to ask is, can we accomplish the same goals that this program is intended to accomplish in ways that give the public more confidence that, in fact, the n. S. A. Is doing what its supposed to be doing . I have confidence in the fact that the n. S. A. Is not engaging in domestic surveillance or snooping around, but i also recognize that as technologies change, people can start running algorithms and programs that map out all the information in our telephones and computers we may have to refine further to give people more confidence. Ill work very hard on doing that. We have to provide more confidence to the International Community. In some ways what has been more challenging is the fact that we do have a lot of laws and checks and balances and safeguards and audits when it comes to making sure that the n. S. A. And other intelligence agencies are not spying on americans. We have had less legal constraint in terms of what we are doing internationally, but i think part of whats been interesting about this whole exercise is recognizing that in a Virtual World some of these boundaries dont matter anymore. And just because we can do something doesnt mean we necessarily should, and the values that weve got as americans are one that is we have to be willing to apply beyond our borders i think perhaps more systematically than we have done in the ast. Ed henry. Thank you, mr. President. I want to followup on that because Merry Christmas, by the way. Merry christmas. When Edward Snowden first started leaking the information, you told the American People you already reformed them. My team evaluated them. We scrubbed them. We expanded some of the oversight. You also said we may have to he rebalance some. There may be changes. You concluded, you can complain about big brother and how this potential program run amuck, when you look at the actual details, i think we have struck the right balance. That was six months ago. The judge is saying no. Your own panel is saying no. Even your own panel. The changes have to be made. My question is, were you wrong then because you were not fully read in not just on these programs but on other programs, outside of the ones you just talked about, where we were potentially listening in on the german leaders, brazilian leaders, and others that suggest there were abuses, number one . And number two, if you werent fully read in on these programs, is it enough for example, what julie was getting at, was this question of credibility with the American People, just like health care, you like your plan you can keep it. On surveillance you looked the American People in the eye six months ago and said weve got the right balance. Six months later youre saying maybe not. Hold on a second. I think its important to note that when it comes to the right balance on surveillance, these are a series of judgment calls we are making every single day because we have a whole bunch of folks whose job it is to make sure that the American People are protected. And thats a hard job. Because if something slips then the question thats coming from you the next day at the press conference, mr. President , why didnt you catch that . Why the intelligence people allow that to slip . Isnt there a we could have found out strike the right balance. The point is not that my assessment of the 215 program has changed in terms of technically how it works, what is absolutely clear to me is that given the public debate thats taken place and disclosure thats taken place over the last several months, that this is only going to work if the American People have confidence and trust. Now, part of the challenge is is that because of the manner in which these disclosures took place in dribs and drabs, oftentimes shaded in a particular way, and because some of the constraints that we have had in terms of declassifying information and getting it out there, that that trust in how many safeguards exist and how these programs are run, has been diminished. So whats going to be important is to build that back up. And i take that into account in weighing how we structure these programs. Let me be very specific on the 215 program. It is possible, for example, that some of the same information that the Intelligence Community feels is required to keep people safe can be obtained by having the private phone Companies Keep these records longer and to create some mechanism where he they can be accessed in an effective fashion. Hat might cost more. There might need to be different checks on how those requests are made. There may be Technological Solutions that have to be found to do that. And the question that we are asking ourselves now is, does that make sense not only because of the fact that there are concerns about potential abuse down the road with the data being kept by government rather than private companies, but also does it make sense to do it because people right now are concerned that maybe their phone calls are being listened to, even if theyre not . We have to factor that in. My point is is that the environment has changed in ways hat i think require us to take that into account. But the analysis that i have been doing throughout has always been periodically looking at what we are doing and asking ourselves, are we doing this in the right way . Are we making sure that we are keeping the American People safe, number one. Are we also being true to our Civil Liberties and privacy and values . I understand. Its a tough job. God forbid there is another terror attack. Every one of us will be secondguessing you and its extremely difficult to be in the oval office. You put it on your back. My question is, do you have any personal regrets. Youre not addressing the fact the Public Statement you made, your director of national intelligence, got a question from a democrat, not a are republican, about whether some of this was going on. He he denied t doesnt that undermine the public trust . Youre conflating first of all me and mr. Clapper is he doing the job . What im saying is this is that yes, these are tough roblems. That i am glad to have the privilege of tackling. Your initial question was whether the statement that i made six months ago are ones that i dont stand by. What im saying is is that the statements i made then are entirely consistent with the statements that i make now, which is that we believed that we had scrubbed these programs and struck an appropriate balance. And there had not been evidence and there continues not to be evidence that the particular program had been abused in how it was used. It was a useful tool working with other tools of the Intelligence Community to ensure that if we have a thread on a potential terrorist threat that that can be followed effectively. What i have also said, though, is in light of the disclosures that have taken place, it is clear that whatever benefits the configuration of this particular program may have, may be outweighed by the concerns that people have on its potential abuse. If thats the case, there may be another way of skinning the cat. So we just keep on going at this stuff and saying can we do this better, can we do this more effectively . I think the panels recommendations are consistent with that. So if you had a chance to read the overall recommendations, what they were very clear about is, we need this intelligence. We cant unilaterally disarm. There are ways we can do it potentially that gives people greater assurance that there are checks and balances, there is sufficient oversight, sufficient transparency, programs like 215 could be redesigned in way that is give you the same information when you need it without creating these potentials for abuse, and thats exactly what he we should be doing is to evaluate all these things in a very clear, specific way. And moving forward on changes. Thats what i intend to do. You have no regrets. John croft. Thank you, mr. President. Its been a tough year. You may not want to call it the worst year of your presidency, but its clearly been a tough year. The polls have gone up and down but they are on a low point right now. What im asking you, you acknowledged the difficulties with the Health Care Rollout. When you look back and you look at the decisions that you have made and what you did, what you didnt do for you personally what do you think has been your biggest mistake . With respect to health care specifically or just general . The whole thing. Well, theres no doubt that when it came to the Health Care Rollout even though i was meeting every other week or every three weeks with folks nd emphasizing how important t was that consumers had a good experience, an easy experience in getting the information they need and knowing what the choices and options were for them, to be able to get high quality, Affordable Health care. The fact is it didnt happen in the first month. First six weeks in a way that was at all acceptable. Since im in charge obviously e screwed it up. Part of it as i have said before had to do with how i. T. Procurement generally is done and almost predates this year. Part of it obviously has to do with the fact that there were not clear enough lines of authority in terms of who was in charge of technology and cracking the whip on the whole bunch of contractors. So there were a whole bunch of things that we have been taking a look at and im going to be making appropriate adjustments once we get through this year and we have gotten through the initial surge of people who ave been signing up. But having said all that, the bottom line also is that weve got several Million People are going to have health care that works. Its not that i dont engage in a lot of selfreflection here, i promise i beat myself up even worse than you or ed henry does, on any given day, but ive also got to wake up in the morning and make sure that i do better the next day. And that we keep moving forward. And when i look at the landscape for next year, what i say to myself is, were poised to do really good things. The economy is stronger than it has been in a very long time. Our next challenge is to make sure everybody benefits from that, not just a few folks. And theres still too many people who havent seen a raise and are still feeling financially insecure. We can get Immigration Reform done. Weve got a concept that has bipartisan support. Lets see if we can break through the politics on this. I think that hopefully folks have learned their lesson in terms of brinksmanship coming out of the government shutdown. There have been times where i thought about were there other ways i could have prevented those three, four weeks that hampered the economy and hurt individual families who were not getting a paycheck during that time . Absolutely, but i also think that in some ways given the pattern that we have been going through with House Republicans for a while, we might have needed just a little bit of a bracing sort of recognition that this is not what the American People think is acceptable. They want us to try to solve problems. And be practical even if we cant get everything done. The end of the year is always a good time to reflect and see what you can do better next year. Thats how i intend to approach it. Im sure that i will have even better ideas after a couple of days of sleep and sun. Thank you, mr. President. On the debt ceiling your treasury secretary has estimated that the u. S. Government will lose its ability to pay its bills come late february or early march. House Budget Committee chairman, paul ryan, said the republicans are going to decide what it is they can accomplish on this debt limit fight. Willing to negotiate with House Republicans on the debt ceiling. You know the answer to this question. We are not going to negotiate for congress to pay bills that its accrued. I want to emphasize the positive as we enter into this holiday season. I think congressman ryan and senator murray did a good job in trying to narrow the differences and actually pass a budget that i can sign. Its not everything that i would like, obviously. It buys back part of these acrosstheboard cuts, the socalled sequester, but not all of them, we are still underfunding research, we are still underfunding education, we are still underfunding transportation and other initiatives that would create jobs right now, but it was an honest conversation. They operated in good faith. And given how far apart the parties have been on fiscal issues, they should take pride in what they did. I actually called them after they struck the deal and i said congratulations and i hope that creates a good pattern for next year. Where we work on at least the things we agree to even if we agree to disagree on some of the other bigticket items. I think immigration potentially falls in that category where lets heres an area where weve got bipartisan agreement. There are a few differences here and there, but the truth of the matter is that the senate bill has the main components of comprehensive Immigration Reform that would boost our economy, give us an opportunity to attract more investment and highskilled workers who are doing great things in places like Silicon Valley and around the country. So lets go and get that done. Now, i cant imagine that having seen this possible daylight breaking when it comes to cooperation in congress that folks are thinking actually about plunging us back into the kinds of brinksmanship and governance by crisis that has done us so much harm over the ast few years. To repeat, the debt ceiling is raised simply to pay bills that we have already accrued. It is not something that is a negotiating tool. Its not leveraged the responsibility of congress. Its part of doing their job. I expect them to do their job, although im happy to talk to them about any of the issues they actually want to get done. If congressman ryans interested in tax reform, lets go. Ive got some proposals on it. If hes interested in any issue out there, im willing to have a constructive conversation of the sort that he we just had in resolving the budget issues, but ive got to assume folks arent crazy enough to start that thing all over again. Quickly on a more personal note, what is your new years resolution . My new years resolution is to be nicer to the White House Press corps. Absolutely. Thank you. Greg leggett, the head of the n. S. A. Task force on Edward Snowden, he told 60 minutes quote we are having a conversation about granting Edward Snowden leniency. To what degree were you pleased he floated this trial balloon. What do you say to americans, sir, after possibly being alerted to john leons decision earlier this week reading the panel recommendations, believe Edward Snowden set in motion something that is proper and just in this country about the scope of surveillance and should not be considered by this government a criminal . Ive got to be careful here, major, because mr. Snowden is under indictment. Hes been charged with crimes, and thats the province of the attorney general and ultimately judge and jury. I cant weigh in specifically on this case at this point. Ill make ill try to see if i can get at the spirit of the uestion even if i cant talk about the specifics. I said before and i believe that this is an important conversation that we needed to have. I have also said before that the way in which these disclosures happened have been damaging to the United States and damaging to our intelligence capabilities. And i think that there was a way for us to have this conversation without that damage. Ill give you just one specific example. The fact of the matter is that the United States for all our warts is a country that abides by rule of law, that cares deeply about prifecy, that cares about Civil Liberties, that cares about our constitution, and we have country who actually do the things that mr. Snowden said hes worried about very explicitly, engaging in surveillance of their own citizens, targeting political dissidents, targeting and suppressing the press. Who somehow are able to sit on the sidelines and act as if its the United States that has problems when it comes to surveillance and intelligence perations. And thats a pretty distorted view of whats going on out there. So i think that as important and as necessary as this debate has been, it is also important to keep in mind that this has done unnecessary damage to u. S. Intelligence capabilities and. S. Diplomacy. But i will leave it up to the courts and the attorney general to weigh in publicly on the specifics of mr. Snowedens case. If i could follow up, mr. Leggitt is setting in motion if there was ever to be a conversation on amnesty or pleabargain. I think thats true, major. I guess what im saying is you would never consider it . What im saying is there is a difference between mr. Leggitt saying something and the president of the United States saying something. Thank you, mr. President. Merry christmas and happy new year. You talk about the issues of health care and the website rollout, but there have been other issues, misinformation about people keeping their policies, extended deadlines, postponements, we have a new waiver that h. H. S. Announced last night. How do you expect americans to have confidence and certainty in this law if you keep changing it . This one here, this new waiver last night, you could argue you might as well have delayed the mandate. Thats not true because what we are talking about is a very specific population that received cancellation notices from insurance companies. The majority of them are either keeping their old plan because the grandfather clause has been extended further, or they are finding a better deal in the marketplace with better insurance for cheaper costs, but there may still be a subset, a significantly smaller subset than some of the numbers that have been advertised, that are still looking for options or still concerned about what they are going to be doing next year. And we just wanted to make sure that the hardship provision that was already existing in the law would also potentially apply to somebody who had problems during this transition period. So thats the specifics of this latest change. You are making a broader point that i think is fair. And that is that in a big project like this, what we are constantly doing is looking is this working the way it is supposed to . And if there are adjustments that could be made to smooth out the transition, we should make them. But they do not go to the core of the law. The core of the law is that for 85 of the population, all they have been getting is free preventive care, better consumer protections, the ability to keep their kids on their Insurance Plan until they are 26, a 1000 or 500 discount on Prescription Drugs for seniors on medicare. 85 of the population, whether they know it or not, over the last three years have benefited from a whole set of the provisions of the law. Either way, if it were to be repealed, you would be taking away all those benefits from folks who already are enjoying them. You have this sub portion of the population, 15 , who either do not have Health Insurance or are buying it on the individual market. That is still millions of people. What we are doing is creating a marketplace where they can buy insurance and we can provide them tax credits to help them afford it. The basic structure of that law is working, despite all the problems, despite the website problems, the messaging problems despite all that, it is working. Again, you do not have to take my word for it. We have got a couple Million People who are going to have Health Insurance just in the first three months, despite the fact that the first month and a half was lost because of problems with the website, and about as bad a bunch of publicity as you could imagine. And yet, you still got 2 Million People who signed up. Or more. So what that means is that the demand is there. And as i said before, the product is good. In putting Something Like this together, there are going to be all kinds of problems that crop up, some of which may have been unanticipated. What we are trying to do is respond to them in a commonsense way. And we are going to continue to try to do that. But that does not negate the fact that, you know, a year from now or two years from now, when we look at, we are going to be able to say that even more people have Health Insurance, and that is not a bad thing. That is a good thing. That is part of the reason i pushed so hard to get this law done in the first place. And, you know, i have said before this is a messy process. I think sometimes when i say that, people say, it is real messy. And b, isnt the fact it has been so messy some indication there are more fundamental problems with the law . I guess what i would say to that, chuck, is, when you try to do something this big, affecting this many people, it is going to be hard. And every instance, whether it is social security, medicare, the Prescription Drug plan under president bush there has not been an instance where you tried to really have an impact on the American Peoples lives and wellbeing, particularly in the health care arena, where you do not end up having some of these challenges. The question is going to be, ultimately, do we make good decisions trying to help as many people as possible in as efficient a way as ossible . And i think that is what we are doing. 72 hours ago, you made this change, where people are buying a junktype policy you are trying to get people away from. Keep in mind, first of all, that the majority of folks are going to have different options. This is essentially a additional net in case folks may have slipped through the cracks. We expect it is going to be a relatively small number. These are folks who want insurance, and the vast majority of them have good options. In a state like north carolina, the overwhelming majority have kept their own plans. The ones they had reviously. But we thought, and continue to think, it makes sense that as we are transitioning to a system in which Insurance Standards are higher, people do not have unpleasant surprises because they thought they had insurance until they hit a limit, and next thing you know, they owe 300,000 for a hospital visit, that as we transition to higher standards, better insurance, that we also address folks who get caught in that transition and the unintended consequences. I will be honest that was the original intent of the grandfather clause in the law. Obviously, the problem was it did not catch enough people. And we learned from that, and we are trying not to repeat hose mistakes. And the enforcement, Going Forward. Bill mattingly . What was the message you were trying to send with not only your decision not to attend the sochi games, but with the people you named to he delegation . First of all, i have not attended olympics in the ast. I suspect that me attending the olympics, particularly at a time when we have all the other stuff people have been talking about is going to be tough, although i would love to do it. I will be going to a lot of Olympic Games postpresidency. The delegation speaks for itself, outstanding americans, outstanding athletes, people who will represent us xtraordinarily well. And the fact that we have got folks like Billie Jean King or brian boitano, World Class Athletes everyone acknowledges for their excellence and their character, who also happen to be members of the Lgbt Community you should take that for what it is worth. When it comes to the olympics and athletic performers, we do not make distinctions on the basis of sexual orientation. We judge people on how they perform, both on the court and off the court, on the field and off the field. And that is a value that i think is at the heart of not just america, but american ports. I am going to just roll down these last few real quickly. Ari shapiro, last day at the white house. E deserves a question. Senator max baucus was widely seen as the best hope for a largescale deal to overhaul the tax code. What does your decision to nominate him as ambassador for china say to your hopes for a major tax overhaul . It says max baucus will be an outstanding ambassador to china, and i would like a swift onfirmation. The expectation and hope is that if both senate democrats, or if democrats and republicans in the house and the senate, are serious about tax reform, it is not going to depend on one guy. It is going to depend on all of us working together. And my office is ready, willing, and eager to engage both parties in a conversation about how we can simplify the tax code, make it fairer, make it work to create more jobs and do right by middleclass americans. Jackie combs . Thank you, mr. President. How do you say it in hawaii . Mele kalikimaka. I would like to ask you what your reaction was to the nonpartisan truth telling group politifact when it said the lie of the year was your statement that if you like your Health Care Plan you can keep it . Related to the Health Care Problems we have seen over the past year, the fallout from that seems to be making democrats particularly in the senate a little rambunctious and independent of you, evidenced most clearly in the debate over iran sanctions. It looks Like Senate Majority leader harry reid has expedited consideration of iran sanctions bill for january, even as your administration and you have been trying to get them to lay off sanctions . You are stringing a bunch of things along. Let us see if we can have a question . That is a lot less than henry had. I thought we were trying to get along. How about i separate out the iran question from the Health Care Question . On the Health Care Question, i think i have answered several times this is a new iteration of it. Bottom line is that we are going to continue to work every single day to make sure that implementation of the Health Care Law and the website and all elements of it, including the grandfather clause, work etter, every single day. As i have said in Previous Press conferences, we are going to make mistakes. And we are going to have problems. But my intentions have been clear throughout. I just want to help as many people as possible feel secure, and make sure they do not go broke when they get sick. We are going to keep on doing hat. On iran, there is the possibility of a resolution to a problem that has been a challenge for american National Security for over a decade. And that is getting iran to, in a verifiable fashion, not pursue a nuclear weapon. Already, even with the interim deal that we struck in geneva, we have the first halt, and in some cases some rollback of Irans Nuclear capabilities. The first time we have seen that in almost a decade. And we now have a structure in which we can have a very serious conversation to see, is it possible for iran to get right with the International Community in a verifiable fashion, to give us all confidence that any Peaceful Nuclear program that they have is not going to be weapon eyes in a way that threatens us or allies in the region, including srael . As i have said before and i will repeat, it is very important for us to test whether that is possible, not because it is guaranteed, but because the alternative is possibly us having to engage in some sort of conflict to resolve the problem, with all kinds of unintended onsequences. I have been clear from the start i mean what i say. It is my goal to prevent iran from obtaining a nuclear weapon. I sure would rather do it diplomatically. I am keeping all options on the table. I would think that would be the preference of everybody on capitol hill, because that sure is the preference of the American People. And we lose nothing during this negotiation, precisely because there are verification provisions in place. We will have more insight into Irans Nuclear program over the next six months than we have previously. We will know if they are violating the terms of the agreement. They are not allowed to accelerate their stockpile of enriched uranium. In fact, they have to reduce their stockpile of highly nriched uranium. Ironically, if we did not have this six months in which we are testing whether we can get a comprehensive solution to this problem, they would be advancing even further on their nuclear program. It might of all that, what i have said to democrats and republicans is, there is no need for sanctions legislation. Not yet. If iran comes back and says we cannot give you a assurances we are not going to weaponize, if they are not willing to address some of their capabilities that we know could end up resulting in them having breakout capacity, it is not going to be hard for us to turn the dials back, strengthened sanctions ven further. I will work with members of congress to put even more pressure on iraq. That there is no reason to do it right now. I am not surprised that there has been some talk from some members of congress about new sanctions. I think the politics of trying to look tough on iran are often good when you are running for office. Or if you are in office. But as president of the United States right now, who has been responsible over the last four years, with the help of congress, in putting together a comprehensive sanctions regime specifically designed to put pressure on them and bring them to the table to negotiate, what i am saying to them, what i have said to the International Community, what i have said to the American People, is, lets test it. It is the time to try to see if we can get this thing done. I have heard some logic that says, well, mr. President , we are supportive of the negotiations, but we think it is useful to have this club hanging over irans head. We still have existing sanctions in place that are resulting in iran losing billions of dollars every month in lost oil sales. We already have banking and financial sanctions that are still being applied, even as the negotiations are taking place. It is not as if we are letting up on that. I have heard arguments that this way we can be assured, and the iranians will know, that if negotiations fail, even new and harsher sanctions will be put into place. I do not think the iranians have any doubt that congress would be more than happy to pass more sanctions legislation. We can do that in a day. On a dime. But if we are serious about negotiations, we have to create an atmosphere in which iran is willing to move in ways that are uncomfortable for them, and contrary to their ideology and rhetoric, and their instincts and their suspicions of us. And we do not help get them to a position where we can actually resolve this by engaging in this kind of ction. All right . Ok, everybody. I think i am going to take one more question. Colleen mccain nelson, and that is it. Thank you, mr. President. A lot of longtime advisers are leaving the white house. New advisors are coming in, or taking on new roles. As you reshape your team, how does that impact what you think you can accomplish, Going Forward . I just had lunch with pete, who is leaving the. That is tough. Not right now, at least. I love that guy. That will be a significant loss, although he will still be in town, and hopefully i will be able to consult with him on an ongoing basis. I think jonathan, coming in, will be terrific. He may deny it, but i have been trying to get in him in here for some time. He ran my transition office. At that time, i think he was still feeling he wanted to develop other organizations. John is a great strategist. He is as good as anybody on domestic policy. And i think he will be a huge boost to us and give us more bandwidth to deal with more issues. I suspect we may have additional announcements in the new year. There is a natural turnover that takes place. People get tired. People get worn out. Sometimes you need fresh legs. But what i can tell you is that the team i have now is tireless, and shares my values, and believes the thing i think i have repeated four or five times in this press conference, which is, we get this incredible privilege for a short time, to do as much as we can for as many people as we can, to help them live better lives. And that is what drives them. That is the sacrifice they make, being away from families, soccer games, and birthdays. Some of them will end up working over christmas on issues like iran. The fact that they make those kinds of sacrifices i am always grateful for them. If they say to me after making those sacrifices for 3, 4, ive ears, i need a break, then i completely understand. All right . Have a great holiday, everybody. Ppreciate you. Merry christmas. Appy new year. Today on cspan, washington journal live with todays headlines and your phone calls. Followed by a hearing on data brokers and how they collect and market personal information. And a hearing on the role of as 2013 wraps up, were here on the west front of the capitol to tell you about our year in review series. Here is the lineup. That all starts on cspan. Coming up next on washington journal, Julian Sanchez of the Cato Institute discusses the nsa Surveillance Program at new recommendations from a White House Task force that would scale back some of the agencys practices. Later in the program, a look back at what was accomplished this year in congress. Roll call Senior Editor David Hawkings joins us. Isgood morning it washington journal. Press conference which may have seen, the president of questions about the nsa, the Affordable Care act and iran. He told reporters that 2014 could be a breakthrough year for america. Especially when it comes to the economy. Do you agree with him about the possibility of 2014 being a good year . Heres how you can reach out to us and let us know