Transcripts For CSPAN2 Key Capitol Hill Hearings 20150330 :

constitutionally. so i don't think it's merely that. and in suleiman the government actually created the words that were, that were being advertised. so isn't that substantially different? because the government's not creating these words. >> justice sotomayor the court indicated that -- >> that's the monument course. i'm talking about johanns. >> that's right. but in suleiman though, a private organize's fraternal order of eagles put its name on the monument it created the message, then donated it to the park. in johanns, yes, the message was espoused beef, it's what's for dinner, but even then the secretary of agriculture didn't write ad copy. sorry, the government had control, it just was not at every step of the way saying this is how the message must be. but at the end of the day, it had final approval. but to return to justice alito's hypothetical and what the test should be, the test can include other elements. and even if suleiman and johanns could be read as just a two-part test for all sorts of reasons texass has its name on every form license plate. the board takes a public vote for approving any specialty -- >> mr. keller? >> do you want us to hold that because it's government speech, the government can engage in viewpoint discrimination? is that what i'm supposed to write? >> that's right, justice kennedy. and the court has recognized that in suleiman and in -- >> and does that have any limits mr. keller? i mean, suppose somebody submitted a license plate to that said vote republican and texas said yes, that's fine, and then the next person submitted a license plate to texas, and it said vote democratic, and texas said no, we're not going to approve that one. what about that? >> yeah, justice kagan. i don't think our position would necessarily allow that, but i think that -- >> why wouldn't it allow it? >> because of the establishment clause, due process clause other -- >> this is not an establishment clause issue so i'm curious as to why -- what constitutional constraints you think there are and how they would play out as to the kind of hypothetical i just ghei you. >> absolutely justice kagan. i think partisan speech candidate speech, justice stevens concurrence and justice calea's -- and a scalia's -- >> so all you have to say is whatever prevents texas itself in all of its other activities never mind license plates from saying vote republican. right in. >> absolutely. >> you've put the same question, what stops texas from saying in all of its election literature that it passes out vote republican? i think something prevents that. and whatever prevents that would prevent it on the license plates too, no? >> that's correct justice scalia, which is why that issue is one of government speech in general. but the court has recognized unanimously that the government can speak, that the government speech doctrine -- sorry that the government can spook even if it is going to take -- >> what's the what case do you want me to read to show that the government can end engage in viewpoint discrimination when it's its own speech? the monument cases? >> yes, justice kennedy. suleiman would be the best example. >> are is this a case where the state, the government has aided in creating a new kind of public forum? people don't go to parks anymore. if the government brought 17 soap boxes to put around the park that's government property, but the government can't prohibit what kind of speech goes on there, why is this a new public forum in a new era in. >> i don't think it's a public forum for private speech for various reasons. the court has never recognized a public forum for private speech when the government places its name on the message when it completely controls the message and the forum when it is receiving notice and comment -- >> no but the whole question is whether you can control the message. >> that's -- >> you're assuming the answer to the question. >> well, justice kennedy, i think the court has looked at governmental intent to determine whether there's a public forum for private speech and for all of the reasons that we're pointing out that this is government speech, it is the same -- it is the flip side of why a public forum hasn't been created. so -- >> i'm to not quite sure why it's government speech since there's no clear identifiable policy. at least it's arguable there's none that the state is articulating. they're only doing this to get the money. >> mr. chief justice a single message, i don't think, can be part of any municipal test for government because government must speak in all sorts of ways. the 52 structures in new york's central park were all government speech and yet those are a wide array of messages such as alice in wonderland. >> well, but here you could have conflicting messages. what is the government policy between allowing university of texas plates and university of oklahoma plates? >> the state of texas can absolutely promote the educational diversity of its citizens. >> okay. what's its policy between permitting mighty fine burger plates and, you know pretty good burgers plates? [laughter] >> mr. chief justice as an austin texas establishment the state of texas if it wanted to could promote that message, but even if mighty fine burgers weren't a texas establishment texas is allowed to endorse speech and just because it would be generating revenue -- >> so it's endorsing speechsome. >> it is the government speech. the analogy would be an endorsement such as that of a professional athlete. the professional athlete, for instance places a lower go or otherwise on some apparel the athlete e is wearing that's still the speech of the athlete. >> right. but the athlete doesn't advertise nike on his jersey and adidas on his shoes. texas will put its name on anything, and the idea that this is their speech again, the only thing that unifies it is they get money from it. >> mr. chief justice -- >> he would if he could. [laughter] >> the state of texas does not put its name on everything. it follows a formal process with a public -- >> yeah, it does. you said its name is etched on the license plate. >> every message that is actually appearing on a license plate, yes. that is the state's message. >> how many of them are there? >> as of the beginning of this month there were 438 specialty plates 269 of which were available for general public use. >> how many have you disapproved other than in this one? >> we address that in our reply brief on pages 9-11. texas agencies have denied about a dozen plates. some of that information's in the record some of it is not. >> and what other ones have you disapproved in. >> the board's predecessor denied a pro-life plate. the board itself denied a troopers foundation plate x the board's predecessor also denied about a dozen other plates. >> all on the ground of offense? >> the information's not clear as to what the ground for those denials were. the legislature its has also repealed -- itself has also repealed multiple specialty plates it created. >> could i ask if you go down the texas and you just stare at license plates, are most of them just the standard license plate and then these 400 license plates you see very rarely or do most people actually have one of these specialty plates? >> well, there's a wide range. i believe most plates are still the standard plate. >> but there's a very, there's a substantial percentage that are not? it's not by any means unusual to see a specialty plate? >> it would not be unusual to see a specialty plate in the state of texas. but the state of texas, by etching its name on it, keeping control of what appears on license plates. it's still the state's message. >> what is the limit to this argument, that's what concerns me. and your answer to my billboard question was disturbing. but suppose people still did go to parks, and the state had an official state soapbox at the park. and every once in a while a state official would mount the soapbox and say give some official state announcement. but other times people who paid a fee would be allowed to go up there and say something that they wanted, provided that it was approved in advance by the state. would that be official state speech? >> justice alito i think there we're starting to cross over into a situation what is called, what this court in suleiman called a subterfuge. if you are abridging traditional free speech rights if you're limiting access to a traditional public forum, that would be an instance where government speech is crowding out peach and, therefore, raise -- >> when did this become -- i don't mean to interrupt justice alito, but i think we're on the same point. why hasn't this become traditional now that you've allowed it? >> i don't think it's become traditional because texas has always maintained control over its plates, and it has always exercised editorial control. so unlike a park which has been held since time immemorial -- >> you want us to say that public, the public fora cannot evolve over time -- people don't go to parks anymore. they drive. >> absolutely. the public, traditional public forum can evolve over time, but the indicia of a riggsal public forum -- traditional public forum still has to be one that is open. texas has not opened license plates. >> in a world in which you've approved 400 license plates and they're pretty common in the state of texas, and you've only disapproved a very select few you know, it does seem as though you've basically given, reeling wished your control over this -- relinquished your control over this and made it a people's license plate for whatever private speech people want to say. >> justice kagan i think it would be odd to say it's private speech when the board is taking a public vote and receiving notice and comment a very -- a governmental function of when the government wants to act. and then it's placing it name on the license plate. when the government is placing its name on the license plate it is accepting and signifying that this is the government's message. >> does it have notice and comment for every one of the 430-odd that it's approved every time there's a request? is there a notice and comment procedure? >> if it's a legislature-created plate, the legislature, of course would do it and then there wouldn't be an agency notice and comment proceeding. but under existing law notice and comment would be required for every specialty plate approved by agency which is all specialty plates that are not approved by the legislature. i think a good analog to in this would be the u.s. postal service's postage stamp program. the u.s. is placing its name directory on the medium. thousands of stamps have been issued in the past and yet there is also private input allowed. and just as respondents can speak in all sorts of ways on a bumper sticker right next to a license plate or in the end envelope on which a stamp would appear, that doesn't mean that someone is allowed responsive speech to whatever appears on a stamp or license plate. >> does texas also have specialty plates insofar as the letters or numbers of the plates are concerned? i mean, can you get a license plate that says hot stuff or something like that? [laughter] >> justice scalia, we do have personalized plates in texas. >> and are those censored? i mean, can you use a dirty word on those? >> the speech there is controlled completely by the state of texas. texas -- and this is not in the record concern. >> even though the individual selects hot stuff or whatever other message he wants to put so i guess if this is not allowed, we can't allow that either. >> yes justice scalia. >> dirty words people are entitled to use dir i words. >> justice scalia the court's holding in this case, i believe would direct lu affect personalized plates. >> i'm not sure your analogy to the postal service really works because none of us can imagine the postal service having commercial advertisements on its stamps. one of the license plates is for remax realty, you're not going to see that on a postal stash. >> justice, it may be true they have chosen not to own gauge this that type of expression but i don't think that -- for all the indicia recognized in suleiman's johanns and even justice souter's dissent, we have texas etched onto the license plate. also untenable consequences fall from an opinion recognizing that texas has to offer responsive speech. of texas should not have to to allow speech about al-qaeda or the nazi party simply because it offers a license plate propagating -- >> well, but there's an easy answer to that which is they don't have to get into the business of selling space on their license plates to begin with. if you don't want to have the al-qaeda license plate don't get into the business of allowing people to buy their, you know, the space to put on whatever they want to say. >> mr. chief justice, i believe, though, that would be in answer to all of the government's speech cases. and i'd assume, for instance, the court didn't say well, if you don't want to accept the suleiman monument don't allow monuments. and that's because government it allowed to select the messages that it wants to propagate, and it's allowed to speak in medium -- >> well, that might be because they've done that since the time of the pyramids or whatever. but they haven't had license plate messages since time immemorial. so maybe that's why they shouldn't be considered just like the monuments. >> mr. chief justice, i don't mean to suggest that they are just like the monuments, but they're still a fixed medium and a tangible message is being displayed to a captive audience as the court recognized. and in those situations the government is entitled to select the messages that it wishes to propagate and that are going to be closely identified -- >> personally, i'd rather have the license plates than the pyramids. i don't know that we want to drive texas to having pyramids. >> justice scalia, we also want to retain our license plates. [laughter] and that shows, i think, what this case is about. the respondents want texas to place its stamp of approval on the confederate battle flag through license plates, and texas doesn't have to make that judgment. finish. >> i don't want to beat a dead horse, but what's the best distinction you can give me between what you do with license plates and billboards a soapbox, an official state web site where people can put up a message that they want subject to state approval. if we were to write an opinion that tried to draw a distinction between the license plates on one side and those other things on other side, what would we say? >> sure, justice alito. i think the very first thing is texas has its name on it. >> of texas has its name on all the other things too. >> sure. in this situation we have exercised selectivity and control as my previous answer to justice kagan suggested, reply brief pages 9-11 addresses that. also we market this program to the public saying specifically that no one is entitled to whatever design they want rather, the board of the legislature has to approve it. that's the final item of the joint appendix. so this is not a situation where out in the world if you were to see a soapbox in a park then you would wonder is this the government speaking, is the government abridging traditional free speech rights, this is a case where texas wants to maintain and has maintained control of what it says on license plates. and respondents, everyone remains free to speak in all sorts of ways. speeches leafletting tv didments -- >> i really don't think that you've answered justice alito's question. in every park you need generally, a permit to do certain kinds of speech. so the government controls that permit process and tells you that it can say no. so is why is that different in the situations that -- it can't be really controlled, is what i'm saying, the ability to veto. because that would then give you the ability to veto, you could create a program in every public forum that basically controls in the same way. >> justice sotomayor i think there's a difference. we need to be clear about what approval means. if approval means access to a forum and it's not government controlling every single word of the message then i don't think you'd have government speech. it's simply you have a concern. >> have we held that you can deny access to a park or to a forum on the basis of the content of the speech? >> justice scalia content-based -- >> absolutely wrong. [inaudible conversations] denying access on the basis of content, right? it's a different situation entirely. >> justice -- that is correct. we are denying access. >> but mr. keller, one of the concerns that that raises, and this really goes pack to what justice kennedy said is that outside the traditional area of streets and parks this is a new world. there are all kinds of new, education pressive -- expressive forums being created every day. and as those come into play as long as state says hey look, we're going to regulate everything for offense we're going to keep anything offensive out of this expressive forum, it does create the possibility that in this new world with all these new kinds of expressive fora the state will have a much greater control over its citizens' speech than we've typically been comfortable with. >> that's right justice kagan. and i think for all of those reasons, a narrow ruling in this case would possibly be a beneficial way to go. >> do you know of any other expressive fora that are owned by the state, that are manufactured by the state, that have the state's name on it as license plates do? i mean, if there are a lot of fora like that, boy, i would really worry. but i don't know of any others. do you know of any others? >> no justice scalia, this is a unique -- >> what can you tell me then to help me, which might not help others, but i don't think these categories are absolute. i think they help but they're not absolute. so i would ask the question first, this isn't government speech in common english. it is speech of the person who wants to put the message on the plate. the plate's owned by the state. the state says we don't want certain messages to be displayed. and my question is why? why not? what is the interest that the state is furthering in keeping certain messages off the plate? >> justice breyer, the state's interest is selecting the messages it wants to put -- >> i'm sorry. if the -- and then you have the republican example, democrat. i mean not every interest is a justifiable interest. some are not. and some are. that's why i asked my question. they keep some off, and they let some on. what is their interest, what -- which are the ones? i'm asking a factual question. why have they kept off the ones that they kept off while letting on the ones they left on? >> justice breyer -- >> if they have no interest at all in making such a distinction, then i think since speeches hurt at least a little they ought to lose. but if they have a justifiable interest since you can put the bumper sticker next door, i think they win. and, therefore, i'd like to know what their interest is. >> and the state of texas interest here is propagating messages that show the diverse backgrounds, education -- educational backgrounds -- >> yes, texas likes each one of these interests that they allow to be put on the, their license plate. they like texas hamburger joints, and they probably would not approve a chicago hamburger joint being on the texas license plate. >> i -- >> they like some of these messages. others they don't particularly like. am i right? >> i'd like to get my answer. i was asking you what is the interest in texas and why does it keep off the messages it keeps off? >> in this particular example -- >> no, not just this example. there are a set of things they've kept off. why? >> justice breyer -- >> now try a general rule. i think the justice is asking you for a specific. why would you -- >> justice breyer i'll use the example of the troopers' foundation plate that was also denied. there texas didn't want it on its license plate because it was concerned if a motorist were pulled over, that then -- >> okay. look i can think of of many reasons i could make up. maybe they want to keep controversial political messages off. i'd say they have an interest in that, this suggesting to people texas doesn't sponsor in this -- i just want to know what they really are. what was the one you just said? >> the texas dps troopers foundation -- >> i'm interested in justice breyer's question. you're on the license plate approval board, what standard do you follow? when do you grant a request and when do you deny it? what is the rule? i think that's what justice breyer's asking. >> the board can deny a license plate for something members of the public would find offensive or for any reason established by rule -- >> then i think they lose. the reason i think they lose is because i don't see a state that comes in and says we'll keep off a private message and we'll tell you the reason later. we can do it for any reason we want. you're hurting speech, and i don't see texas' interest in saying we can keep it off for any reason we want. because that would be the republican/democrat too. >> well justice -- >> i'm saying question but i just think you have to have some kind of legitimate reason for keeping off -- and it doesn't have to be much. it could be just a little. >> are texas can have legitimate reasons for not allowing -- >> well then why don't you tell us what they are? >> well i think that would require a formal process. >> i just want to know what they are. >> justice breyer texas does not have to associate itself with messages it doesn't want to and finds offensive and pause texas has given that explanation here, we know that. many times government officials speak and don't disclose their motives -- >> and texas did and now we get full circle back to my first question. justice didn't just say, no, it said this message would be offensive to many people. is so that's -- if a message would be offensive to many people that's a standard that they're applying. and i asked isn't that too broad? >> no, justice ginsburg. the fact that we have that much discretion confirms this is government speech. mr. chief justice i'd like to reserve the remainder of my time. >> thank you, counsel. mr. george? >> mr. chief justice and may it please the court, we're here representing the sons of the confederate veterans because they wanted to have a license plate to raise money, in fact for the state of texas to keep up monuments which was the purpose of their whole process in this case. and the state of texas has gone about issuing an open invitation to everybody to submit to them public designs for license plates and and to create -- and thus, has created a limited public forum for these license plates. >> in texas can texas itself formally let's say by a joint resolution of the legislature endorse the grand army of the republic and not the sons of the confederacy? can texas do that? >> the legislature can endorse anything it wants. >> so the state can, right? so can the legislature endorse austin hamburgers in. >> well the legislature has created confederate heroes day in this particular case and the people on my side this side -- >> what about yankee heroes? >> they have created a 40 holiday for people, for -- [inaudible] >> what i don't understand is why this sticks in your craw when it's on a license plate. you acknowledge that texas can do all of these things so long as it's texas speech. the only question here is whether this is texas' speech or not. if it is texas' speech, all of these things can be said, can't they? can't all of the things that are on the license plate -- >> if it's texas speech by itself and is not joint speech because -- >> right. this doesn't seem to me like a very significant issue. >> well, if -- >> that's what we're concerned about. as long as texas say it's okay but, boy, if you put it on a license plate what -- i don't understand what the theory is. >> well, the state has created a very successful money-raising program in which it solicits people to come in and submit their design for their license plate so they can, they have to submit the design, they have to put up the money to make the plate, and then the plate doesn't ever get published to anybody until the person somebody orders it from the -- >> so suppose the message the applicant said we want this design and the design is the swastika. is that speech does whoever is in charge of the license plate, do they have to accept that designsome. >> i don't, i don't believe the state can discriminate against the people who want to have that design finish. >> does it have the swastika as well as somebody else says i want to have -- [inaudible] on my license -- >> jihad. >> jihad on the license plate? [laughter] can be -- there's, obviously, a court of appeal, district court of apile in which infidels was held to be -- >> what is your answer, what is your answer in this case as to justice ginsburg's hypothetical yes or no? must the state put those symbols or messages on the plates at the request of the citizen? yes or no? >> yes. .. >> if you prevail you're going to print a lot of texans from conveying the message. you have to agree with that. >> i would, if the state continues to use the same standard which is it might offend anybody the state can deny the plate. if that's the standard, and the exercise their discretion on the statutory standard that it might offend somebody -- >> but you have no alternate standard in order to have a proper or solution that seems wise for justice ginsburg's hypothetical. you have no standard. >> the answer to having a standard that controls people's speech is that the standard has to be pretty low-hanging fruit. in the christian law students association, college of hastings versus martinez justice alito in the dissent for the dissenters in the case of the offensive speech is something that speech we hate something that we should be proud of protecting. >> it's in that context. you say they can when they cannot understand which is were trying to keep offensive speech off the license plate yes or no? >> as long as a defensive is in the eyes of boulder, of course they can. >> they can or cannot? >> cannot. >> okay. now we see what you're saying. but if i were to go back to survey the basic underlying thought here, is a speech hurt? >> yes. >> the answer is yes it is. the private speech is somewhat hurt. a lot? put up a bumper bumper sticker. you can say a lot. how is it her? you don't get the official, okay. is there something to be said for texas? this. what they're trying to do is to prevent the official from being given to speech that offends people. people don't like it put up a bumper sticker. now we have to interest in opposite directions in many cases we try to weigh those things, the other things don't tell us the answer and i would guess, i don't really see the big problem that people are putting up that speech even that texas considers offensive reasons that justice scalia says put up a bumper sticker. what's the problem? >> well, the culture of creating specialty plates again in texas in 19 safety fund. we've been doing this, and we have gone bonkers with people buying these things in the state. there are 50,000 people with private plates -- >> there's a lot of money in this, isn't it? it's about $8000? >> i think it's a little more than that. more than that. i have a different question which is, i actually do think that this is hybrid speech. it's both government and the individual speaking at the same time. but that goes back to what justice scalia said. in will leave we said we can compel the individual -- in bully. we said we can't compel people have to put something that they disagree with us. we have the case. why isn't the reverse true for the government? if you could ask me to put my name because the law requires it, the state's name on a license plate why can you compel us to do something we don't want? why shouldn't it work both ways when it's -- >> the reason this has become and it's the numbers it's become a limited public forum for putting up messages. >> how do i know which is the governments, which is only the individuals? i wouldn't have known that not pro-anything was sponsored by some states and not others. or endorsed by some states but not others. so how do know that a particular license plate, the government doesn't endorse? >> you can't tell whether government wants your speech in advance in this program. you have to smit what you think you want, and then -- >> that implies a certain degree of approval. >> well of course there is approval. just like there's approval for someone to speak in a park. into columbus, ohio, case where -- >> but that's, i think was brought up earlier. you can have time place, and manner regulations for speaking in the park. you can't have content-based revolution. this is a content basis, content the state doesn't want. >> and they have, they the standard that is the lowest common denominator. if any person could be offended they tended not it. that is the standard which in fact, -- >> it wasn't quite that. it says they would be offensive to many people. >> no man. i think the statute says actually any person. >> if you had a standard like that in a case, in a normal case where we were regulating private speech, of course we would find that impermissible but the question is whether this is a very different kind of context. let's go back to thank justice scalia said it about the nature of license plates. there's a clear regulatory purpose. it's the government that actually makes a license plate. i think the license plate continue to be public property if that's right, like you have to return the license plate. it has the statesmen audit but it's clearly the official identification that the state kids with respect to a car. why doesn't all of that make this a very different case from the typical forum at cases that we usually address the? >> well, the reason is that we do have hybrid speech and they open up and they committed this billboard, as justice alito said, they created a billboard opportunity. since they can make everybody have a license plate they said we're going to create a billboard opportunity and put messages, let you put messages on it and pay us money for using our billboard. that's what they've done. and then they say to some people, but if i don't like your message because you're a republican or you're a democrat or you want to say mighty fine burgers instead of whopper burger, they can do that. that sort of arbitrary control speech based upon a standard that it might offend anybody is they either need to get rid of the program or the need to open up the program just to everybody else. if somebody publishes a speech they don't like justice o'connor indeed, the ohio case suggested you just make them put a number under it whom the ku klux klan puts across on the hill in columbus ohio,. >> i asked the question before, did you remember it really because i wanted an answer. it was in a statement. i wish i get i wish i could recall the concept shall basis here. forget the public forum, et cetera, forget all that. just go back to look to see his speech being hurt and the answer is of course yes but not much because they can put a bumper sticker. you look at the other side of it and you say, does the state have legitimate interests? interest? the state says yes, our interest is that the messages we like messages we don't care about and messages we don't like. we have a system for keeping the last off because it is the government speaking which represents the citizens, and the citizens it's their government and they don't want just as in the example justice scalia gave to have their government associate with messages that this commission doesn't want. maybe there are limits on that but that's the basic idea. now, way those two things. i think he would say little harm to speech. we see the other broad, et cetera. what is your response? >> the response is the forum has been created. >> it's the conceptual part and i can tell whether a forum, and license plate is a forum or not a forum or if it's a three-part test for, i can't get that their company go back to the basics of it. >> one of the ideas that you have articulated and others on this court is that what would've the reasonable observer believe this was. for example we did believe that the speech is the states speech of what they believe it's the person who bought the plate, because there's nothing it's communicated -- >> how about both? how about both answer to that? it is the states license plate. it has texas on it in big letters. and texas says yes, we have to approve it, yes, we approve a lot, but there so we don't approve because it's our speech. it may be that car owners the speech as well, but it is our speech. >> the state has dozens of potential designs for plates that don't care anybody else's message, and they have 480 designed for organizational messages and 50,000 personalized messages. the issue in this case is the person who puts the license plates on their car is the one that communicates the message. the other people are just get the approval. >> suppose the state had many fewer plates from which to choose. so let's say they have the standard plate, and then they have a plate for every college or university in the state. that's your choice. would that be government speech? >> it certainly is government speech in the sense that partly government speech the ability to choose somebody, and universities in the state. and if the standard by which they issue those is that we're going to put one for all the colleges and the state and that is the standard, of course that's okay. because it is a standard that they chose or the legislature chose, i suspect that says you can have, everybody who as a college can get into this pro. >> suppose they're broadly. it's not only the colleges and universities but it's all the places in texas of historic interest or natural features of the state. how about that? now you've got a lot more. >> to actually do those and those are not sponsored by anybody. those are state created and they charge more money -- >> but answer the hypothetical. justice alito says first colleges and the next scenic places. that's okay or not? >> they actually do. >> and suppose there's some little town that thinks it's really scenic and there's a way in which they can petition to get on this list. do you see where i'm going? at some point if you just a standard state plate of course that's government speech. if you've got 5000 different variations that people can create for themselves it becomes a lot harder to say that's government speech. so where would you draw the line? >> my view is that when the people get to create a message themselves, an organization in this case create a message for themselves, and then the people who look in the catalog pick out the license plate that they want and put on their car, then this speech is the speech of the person who communicated it is predominately -- >> my problem with this is, how do i know? there are three categories of plates, i understand. there's the official state plate, there are specialty plates created by the legislature, and there are specialty plates created by an individual. how do i tell the difference between the legislative plates which are government speech and the private plates? do i need to? what i do know is what i said at the beginning, it's both people speaking. and i think both people endorsing each other's message in some way. so why should the government be compelled to accept speech it rejects because it thinks it's wrong? >> in the first place -- >> and doesn't want to be associated with it directly. >> i understand. in the first place the way people take out plates, there's a big long catalog with 400 different organizational plates 480 now, it grows every day of organizational plates. people put them out at the catalog, out of the website and pick the one they want to pick and then they put on their license plate. the communication of information on the license plates actually is controlled entirely by the people who picked the plates. >> but what about justice alito's hypothetical -- we never did quite finished -- were the direction of this of his question was suppose this date, all by itself, has been messages, 20 messages, 200 messages, 2000 messages, you can choose, but the state makes of all the messages and give you all the choices. what results? >> well, the result is if the state has all the messages and pixar messages and then the people from whom, whom it pics, who excels the plates to -- >> i know that's the result of the hypothetical. i want to know the legal result. what's the first amendment answer? >> if they can design all kinds of license plates that it wants to choose -- >> is that scheme that i propose, and that follow from justice alito's questions consistent with the first amendment or not? >> it is not first -- when the individual submits when people, other people submit the design -- >> that's not hypothetical. the hypothetical is the state has 5000 designs and the state makes them all up and you can choose. is there a first amendment violation? >> i don't believe, is is the state is everything then it's the greed of the message and the speaker is the driver. >> what happens if private people could submit messages but they all had to go through the legislature? >> my view is that it is much more difficult case for us if you legislature passes a statute, because that is a legislative act and a clear act of the state. >> what's the difference then? if you think that would be all right, texas has said, well, the dmv does not the legislature, a different branch of government but its government just the same. >> i understand that, and the issue is whether or not in the cases, we have court of appeals cases that don't this thing which between legislative action and nonlegislative actions, and those that do. it is my judgment that the state has a greater claim making its speech when the legislature passes the bill and the governor signs it then the statute is clearly an explanation or expression of the state. >> well, if you -- >> what regard when anybody buys a license plate. >> in wooley, go back to that for such. i think if i object to the message on the new hampshire plate, live free or die, i the right to be disappointed with that. >> yes. >> okay. welcome if the state which represents many people in texas doesn't want to be associate with the particular message why does it have the right to say we don't want that event we don't want that association? >> it has -- >> the state represents x. million people. you want to be associate with this message through their official organ. what's the different? >> the difference is they invite people to make they charge people and have them pay for the manufacture of the license plates by giving them the chance to design a message. that's what they did. it costs the people who come up with these things, they paid all the front-end costs, put up $8000 collateral before any license plate is built, and it is a money making scheme that the use. the fact that they choose to apparently twice in history, and there may be more we can't document anymore, they've ever turn anybody down this is not a forum which people actually, they make any decision beside an economic decision. it's a factual matter. that's what happens. >> it's a somewhat technical question which just touched on it. do you have an objection to materials that your friend is cited from outside the record? >> to the extent he's a cited issues relating to the other design, i do not have an objection to that, because i think it's -- >> you think it's the extra record materials are accurate actually spent i think so. they are almost certain accurate in what we found since we filed our brief. but that the we've gone from 350 to 480 organizational designs since the case was tried, was not in the record either. but i don't doubt that he is sold a lot more organizational plates since then and they keep a better talent than we do. >> so the choice that texas had, am i right that in your view if they're going to have these vanity plates it has to be open to everybody, or they can shut thatthe program down and nobody gets vanity plates. but maybe if the legislature passes a law or laws saying this plate is okay, that might be okay. so what is the choice between everything or nothing with the exception of what the legislature does is okay? >> i believe that the best analysis is the legislature or the motor vehicle commission discriminates against people's speech on the basis of the content of the speech that is subject to serious first amendment concerns and is probably illegal, although there may be some exceptions to that. that's what i think the better rule is. but we have conflicts in circuits about that and we have not, this court has not addressed, that is not this case, but i believe it is -- >> mr. george, could i just take you back to the chief justices question for a moment and just make sure i understand. mr. keller has indicated that the are a number of other locations in which the state has disapproved plates, and in which the state has done on the grounds of offense. do you have any objections to those representations? >> to the extent that they were done on the grounds of offense i do, because he has one that we have verified and that one is that there was a concern about the danger to the drivers thinking that somebody's state trooper played made them a state trooper. >> what if the argument -- >> that's what he said at least. >> what if the argument were not simply offensive but a higher degree? you know incitement are likely to give rise -- i think someone driving in texas with a swastika is likely to trigger public violence. is the level of the states interest at all pertinent to your position? >> well, this court to rule law on incitement going back to brandenburg v. ohio and the ku klux klan rally that this court decided was not incitement is pretty thin at this point in our history, because i don't know what the rule of incitement would be today. >> no, but mr. george, just the worst of the worst whether it's a swastika or whether it's the most offenses -- the most offensive racial epitaph that you can imagine and if i were on a license plate where it really is provoking violence of some kind. somebody is going to ram into that car -- >> i don't think people can the government can destroy on content. they can put on the license plates that they disagree with this is not the state's speech in big orange letters and disclaim that speech. >> where is that going to fit on the license plate? [laughter] because of that you can put, we have taxation without representation of the district of columbia's license plate and that's a political message. they can put -- >> your position is that if you prevail, a license plate can have a racial slur. that's your position? >> yes. i don't think there's any consistent decision otherwise, although the stake and disclaim it undoubtedly on the same license plate. >> do you have to put taxation without representation on your d.c. plait? >> that's my understanding. >> or can you ask for a clean plate? >> well, i'm not living there but i believe it is required spent if some objects i guess it's like live free or die, write a? >> they can put it put it on david over. but you can put obviously the disclaimer idea justice o'connor came up with that in her concurrence in the columbus ohio, ku klux klan cross on the hill case and i thought there was a pretty good idea. that is, that we have a disclaimer when you don't like the speech, and you don't believe it's appropriate. the state can do that. and i think that's largely part of the answers. this is not certainly not purely governmental speech because the action of the state is only approval. and as to the pleasant grove city of utah case moments -- monuments are, in fact, unique circumstances. this court had decided van orton versus barry some years ago involving justice breyer put a map of the state capitol grounds with all the monuments in it. those monuments, when the case was decided had been the over 100 a monument in question had been there 45 years. monuments are different to any kind of speech in the park because of the nature of the creation. you would have less in common with monuments every seven feet which you can't do that. that case turns on those facts i believe it is correctly decided. i'm also convinced that joan is versus livestock marketing for isgrigg we decided because it started with a statute passed by congress telling the department of agriculture to do something marketing material, have estimated back to the secretary of agriculture, but in a private and don't market it and let the attacks on the two sport. that's all covered speech. >> you know how much money texas makes from this? >> i don't have that, it's not a line item in the budget but lots. spent that's all this is only about, isn't it? >> yes. [laughter] >> that's why texas is in the business. and so people get to play into business with them that they like what they are saying they don't get to do business with them when they don't like what they said. >> thank you, counsel. mr. keller, you have three minute training. >> you have very limited rebuttal time added to one question. you asked a question about the democrat republican distinction. you said there might be some other things equal to it. is there a first amendment standard that you can use to deny that plate? >> i believe it would be covered speech and, therefore, the would not be a first amendment problem. but i believe it would not be allowed to kiss of the constitutional bars would apply. >> no first amendment. >> just as if the monument were put up in a public park. it would be the government speaking however it would not be allowed under other constitutional provisions. it against just just a way to avoid the billboard problem. when the government has its name on the speech and when it is part of the regulatory process or a program of the government's and there's formal notice and comment and there's a public vote and there's no abridgment of traditional free speech rights, which is this case i think that's government speech. justice breyer to address some the other interest that texas has. texas wants to prevent offensiveness and vulgar speech and wants to prevent confusion and misrepresentation, promote safety, celebrate the diverse interest the state has. uri that even if this is hybrid speech and it does take two to tango in the situation you need both the motors and the state propagating the message that that is so government speech. all of this court's cases under the speech had been at posture. all of our sites in our reply brief and our opening brief to title fortitude of the texas admission of code those have been renumbered since the founding of our reply brief, but the substance is all the same. and that base this is not just about texas making money although texas does make money. this is about the state of texas not wanted to place its stamp of approval on certain messages. and a speaker is not entitled to the imprimatur of the state of texas on whatever message it wished to put on a license plate. thank you, mr. chief justice. >> thank you, counsel. the cases abetted. >> president obama delivers the keynote address today at the formal dedication ceremony of the edward m. kennedy institute for the u.s. senate. other speakers include vice president joe biden massachusetts senator elizabeth warren and massachusetts governor charlie baker. institute will chronicle senator kennedy's time in congress and includes a full scale replicate of the senate chamber. here's the senator delivering a speech at harvard about eight months before he died. >> fifty years ago i managed a successful reelection campaign for the junior senator from massachusetts and john f. kennedy, and although i certainly did not anticipate it at the time i myself have been deeply honored to hold the same seat he had for some 46 years. during my service in the united states senate i have often been called a liberal and it usually was not meant to be a complement. [laughter] but i remember what my brother said about liberalism. charlie before he was elected president, he said if i am a liberal they mean someone who looks ahead and not behind, someone who welcomes new ideas without rigid reactions someone who cares about the welfare of the people, their health, their housing, their schools their jobs, their civil rights their civil liberties. someone who believes we can break through the stalemate and suspicions that grip us. if that is what they mean by a liberal, i am proud to be a liberal. [applause] >> the formal dedication ceremony of the edward m. kennedy institute for the u.s. senate with president obama and vice president biden live today at 10 a.m. eastern on c-span. >> this morning, former federal reserve board chair ben bernanke is expected to talk about achieving full employment and labor markets and what it would mean for the u.s. economy. i think this one at the center for budget and policy priorities, his keynote address will be followed by an economist panel discussion about employment policy. live coverage on c-span2 should get underway in just a moment. [inaudible conversations] good morning everyone. >> good morning. >> i am this -- i want to welcome all of you to this exciting event sponsored by the centrist full employment project. i want to particularly thank the open philanthropy project for its very generous support of the full employment project at the center which has made today's event possible. many of you know the center on budget for its work on pressing issues to reduce poverty and inequality, and for our contributions to important budget and tax debates both washington and in state capitals. under the leadership of jared bernstein, the full employment project has broadened our work to include various economic policy issues that are critically important, but maybe longer-term in nature and extend beyond current policy battles. now i'm happy to say with the support of atlantic philanthropies, we are creating a new part of the center on budget which we call policy features that will apply the kind of longer-term perspective that the full employment project embodies to a broad range of key policy issues, and of which the full employment project will become a key part. policy features will focus on long-term federal and state fiscal challenges on new approaches to reduce poverty and strengthen opportunity on retirement security on health reform of which more still is needed, and on the intersection of climate change, poverty and fiscal policy as well as of course is on full employment. if you're interested you can find a one page brochure on policy futures in your packets this morning. today's event with a very distinguished speaker an excellent panel is a strong example of the kind of intellectual focus we plan to bring to these longer-term policy challenges as we're doing today, we will be engaging insightful and creative thinkers commissioning papers, placing a spotlight on innovative policy ideas. you'll be hearing more about policy futures in the months ahead, and with that let me turn things over the weekend commence today's event. but they turn things over to jared bernstein, the director of the full employment project. [applause] >> thanks, bob. really happy to see everyone out here today getting our week started on but i think is going to be an enlightening morning. bob noted that today's event is part of our full employment project. the goal of the project is to identify and advocate for policies that helped get get us to incubus at full employment. by which we mean a very tight matchup between the number of people who want and need to work, and the number of jobs. it's our firm belief that all of them is of the best ways to ensure that the benefits of the beast growth don't just a gimlet to the top of the income scale are broadly shared by families at all income levels. all the work of the project including a video today's event editors papers with commission can be found online at the center's website, center on budget.org. here's the plan for today. our keynote presentation will be followed by a short q&a your pathetic a few minutes to set up or panel which will include valerie wilson and 11, maurice emsellem i'm a self moderated by david wessel. following the panel will do another round of q&a. before we begin i would also like to thank alexander berger and the open flat of a project for the support of our work. i want to thank from the bottom of my heart ben spielberg and michelle for absolute integral in making this event happen along with many others of my cbp colleagues including susan and larry. i want to thank kelly hunter and, of course i want to especially thank ben bernanke and david wessel along with my awesome headless for the generous agreements to be here today. ben bernanke hardly needs an introduction. he was of course the chair of the federal reserve of 2006-2014 and a member of the fed board of governors before that. he has made more important contributions to our understanding of macroeconomics history and monetary policy than i have time to note. i've always thought we were extremely lucky to have been where he was during the great recession. the other thing many of us appreciate about him parks back to the old adage it really understand something, you can expect anyone. he has tried hard the many who sit in such influential positions to be extremely clear to avoid obfuscation and to tell a cases. i was one of many it was highly influenced by his important insights a decade ago regarding what he labeled a global savings glut and its impact on economies across the globe. you can imagine my excitement when ben graciously agreed to reflect on those dynamics today. so please welcome fellow blogger ben bernanke. [applause] >> good morning. thank you, jared. things to this and on budget and policy priorities for this important conference on employment, jobs. economics, standard economics at least focuses mostly on people like consumers and jobs is something i could do to get the community to consume. i think that's sociologist under the tide i think that's a little bit effective. people are also produces and that's an important part of how we view ourselves, and what makes us feel like we are creative and publishing things in our lives. so in trying to develop a healthy economy that will give everybody decent and meaningful work, we are addressing not just the issue of incomes but also the issue of personal satisfaction. now, my perspective, the panelists are mostly going to be i think not entirely but a lot will be on the microeconomics of foldable the my perspective is from macroeconomic perspective. and full employment is of course a central goal of macroeconomics policy. i'm not going i will not be talking today about prospective monetary policy actions out of respect for my successors and ex-colleagues, but i do want to say that when i was at the fed obviously we took a lot of we took very seriously the full employment part of our mandate and figured very much into our policy decisions, including in particular famous kiwi three quantitative easing open into program which expose only tide our policy to quote a substantial improvement in the outlook for the labor markets am glad we have seen not as much of it as we would like but certainly meaningful and from in the labor market over the last few years. now, important question of course going forward is whether or not macroeconomic policy by which i mean primarily monetary fiscal policy can reliably and sustained achieve full employment in our economy. i want to talk today about two frameworks which gave similar but not quite the same answers to the question that one of them is the secular stagnation perspective that larry summers has recently revived, and the other is as jared indicated come is to update a bit what i talked about 10 years ago as the so-called global savings glut, and i will explain what those are in a couple of minutes. but it will take the opportunity since jared arrested cannot i've kicked off a blog today. jared said i need to buy new pajamas like have appropriate costume for doing that. and i mentioned it today because tomorrow and wednesday my blogs will provide material related to these remarks this morning including background, data et cetera. if you did get everything i said today, just go to the brookings website and you will get more information. so let me talk a little bit about these two frameworks, and in particular i want to talk about what they mean for the longer-term future of our economy and for policy the policy implications. secular stagnation, the idea goes back to alpine hansen who spoke about it in his 1938 presidential address to the american economic association. hanson of course is speaking the latter part of the great depression. there's been a second recession in 1937-38 and unemployment was to probably about 17%, the best we could tell. and hansen expressed at the time he expressed pessimism about the ability of the economy to sustain full employment in the future he pointed out that demographics are moving in an adverse way at the time, slower population growth. he was concerned about productivity and technological change and he argued that going forward it would be likely that investments in a particular and also consumer spending might be chronically weak in a way that would prevent the economy from achieving full employment going forward. of course, hansen didn't quite take that one because after world war ii of course we had a period of substantial growth and high employment related both to a population boom the baby boom, and also to the application of many technological advances obviously in the '50s and '60s. but larry summers has revived the argument and modernize it, and i want to be very clear that i think there's a lot of interest here at a not interest here at an unconscious of any kind of you know opposition. i want to just try to look at how these two perspectives balance each other. but the key idea is in larry's revival of the stagnation argument come is little bit technical but the basic argument is that because going forward returns to capital and consumer spending are likely to be weaker than they've been in the past that the real interest rate that is needed to provide full implement could be very, very low. and there are a lot of reasons why real interest rates as we know if you look around the world of course you see very low real interest rates, and he talked about in his remarks to the national association of macroeconomics he listed a number of reasons why the demand for capital and the demand for consumer spending might be unusually low going forward and the result would be that essentially you would be very low interest rates to get the economy up to full employment. what were the reasons? obviously some of the same ones that alvin hansen talked about including the fact that our demographydemocracy is shifting towards an aging society, slower growth both for population and possibly also for slower technical change. also denotes, i think this is an interesting point, that if you look at new industries, like facebook on the one hand versus the industries that were dominant in the '50s and the '60s eyed steelmaking obviously facebook and similar companies have much smaller needs for capital. you don't need, they don't need big factors in heavy machinery to produce the output and so with less demand for physical capital, against the demand for investment will be smaller and that will again keep down the interest rates and the economy. related to that is that the relative price of capital has been declining over time, for both capital goods and for consumer durables. -- durable. the argument would be smaller. so the focus of this has been on the demand for capital goods from the perspective of how much capital people will want to buy and how that affects the total demand for output and in return the ability to to full and limited he also talks about potential stagnation in consumer spending which, of course, is a much bigger part of final demand. and he's talked about and i won't get much into this but he's talked about increasing inequality which has many implications of course and many causes, but he argues and i think there's an interesting debate about this, he argues that increased inequality because but for income in the hands of people who tend to save more, the rich, or the upper income people might push down the demand for consumer goods as well and, therefore, be another source of stagnation. what is the implication of this view that demand for capital goods and some consumer goods may be very weak going forward and, therefore, the interest rate needed to restore full employment could be chronically and systematically very low. well, one of the implications is something that larry has talked about is that if the real interest rate that you need to get full employment is extremely low, and in particular if it's lower than minus the inflation target of the fed, then the fed runs out of room because if the fed lowers interest rates to zito, and if that's not low enough, anonymously monetary policy find it very difficult to get to full employment. he points out, he argues that in fact in order for monetary policy to get to full implement by itself, that has allow financial bubbles like the housing bubble during the course the early 2000s. he points out that the economy did not overheat, even though there was all this demand coming from construction and consumer spending out of the housing bubble. he argues, therefore, that's evidence that monetary policy did not get us to full employment without bubbles and of course, will understand baubles are very dangerous and we don't want that to be part of our policy to give. so what's the solution? his main solution is that his fiscal policy, and he argues that by bringing in fiscal policy, in particular, for example, fiscal expenditure on new infrastructure, that would help solve the stagnation problem and address the concern that monetary policy by itself is insufficient. so let me just express a couple of points of agreement here. certainly a better balance of monetary fiscal policy is something that we have made for some time, and infrastructure in particular has the advantage that not only is it a source of demand which puts people to work when you build bridges and roads and schools and whatever but it provides productivity gains and other benefits in the longer-term for the economy as well. so i clearly would agree that you need a better makes monetary policy. not just the trendy but in other economies on the central bank is not desirable, and those who complain that low interest rates are bad for grace reasons because they create bubbles and so, we can debate whether that's true but the right response is not for the fed to tighten economy up with the economy in recession. the right responsible have a more balanced policy between monetary and fiscal that would give you the appropriate amount of stimulus at an interest rate that is not necessarily so low. so i agree with the. i also take aboard the point is made in the people of the fed had made, which is what he calls the inverse of -- the fallacious view that supply creates its own demand and, of course that there any problem with having enough demand in the economy. larry put the club as the reverse which is the lack of demand great lack of supply, but if you have any kind which is persistently below implement the people of long-term joblessness that's going to affect this goes can affect their motivations and their connection to fiber market, -- labor market, citing a weak underemployed economy you're also going to get eventually an economy which is not as productive as otherwise would be. so that's roughly my overview, and, of course, larry has no responsibly for my summary of his views of the secular stagnation hypothesis. let me now just give a few concerned that they have, a few potential responses that give it an alternative perspective. i would say first that just a few points. first, i think that the notion that the real interest rate that you need to get full employment has to be absolutely quite negative, because the fed can get real interest rates down to minus two advantage 2% inflation target. that's a little bit strong and most because would argue negative real interest rate is got to be things that are productive ultimate at least at a normal growing economy. when i was on a panel with larry first introduced the point about secular stagnation, and i reminded him of what his uncle todd was in graduate school which was that paul argued real interest rates couldn't be below zero because in that world it would pay take to knock down a rocky mountain just to save aghast that you from driving up the grade. literally it would if interest rates were really zero. of course, they're not we will not be knocking down the rocky mountains -- not be knocking down the rocky mount so don't take that little. it's questionable whether that's true and particularly when you think about the fact that investment is not just facebook that investment involves housing and office buildings and consumer durables and many other types of goods that pay a higher return than minus two. it's also questionable i think that you need to have a bubbles to get to full employment. there's a very nice paper by jim hamilton and ethan harris and others that was presented recently at the u.s. monetary policy forum and the question quantitatively whether, in fact, it really was true that the housing bubble of the early 2000s is the only reason the economy was able to get to full implement. and they point out i think correctly there was some offsetting factors, including the big trade deficit. with a big trade deficit at that time of 6% of gdp. that was a lot of demand that was going abroad rather than affecting demand in the united states. and on top of that we have a major increase in oil prices which is also sapping consumer demand. there were factors working the other direction and they sure those two things along with the housing bubble were more or less a wash. so that evidence and evidence recent evidence that we are at least approaching full employment is inconsistent with the of you that you need bubbles to get to full employment. their view which i think needs to be taken seriously is that the slow recovery that we see a low interest rates are at least in part due to headwinds, that is transitory drags on the economy that will ultimately dissipate, and often when i was chairman i would talk about the headwinds facing the economy including tight fiscal policy again, the aftereffects of a financial crisis which are still with us i think although obviously dying away, and also of course the fact the housing sector is still quite below normal in terms of its growth. there's some objections to the stagnation hypothesis although i think there's a lot of merit to it and i agree with some of the policy applications but i think the one concern that i would like -- implications. i would like to talk about the rest of my remarks is the fact that the secular stagnation, the way it is been expressed at least it's about u.s. economy in isolation. doesn't talk about the international aspects of our economy. but, in fact trade and exports are a source demand for our economy. and in a world where not just you know, if the whole world has stagnation that's one thing but if there's anywhere in the world that doesn't have secular stagnation and it is investment opportunities and growth opportunities, in the u.s. can benefit from that by foreign investment and exports to that area of the world. and i won't go into detail in the argument that basically again i would argue that in a world of reasonably mobile capital and reasonably mobile trade, that it's not enough to say that the u.s. is in secular stagnation that you have to argue the whole world is in secular stagnation. i don't find that very plausible even if the trend has reached a stable all of our new industries our faith -- facebook site industries, the rest of the world is not yet at that point. suborn order to think about secular stagnation and opportunity are full appointment i think it is important to bring in at least a little bit of global aspects and ask given that the united states is an open economy that we do for investment and we do have trade, can that help explain, give an alternative or at least a couple it to secular stagnation for the basic facts which are the real interest rates are quite low and that growth is less than we would like to see. so about 10 years ago i made an argument as jared mentioned called a global savings glut, the basic idea there was that for various reasons global savings was exceeding decide global investment and what are some of the reasons for that? well, first i pointed out what's happening in asia. your countries like china which have huge savings and even though they invest a lot as well, a lot of their savings was being shipped abroad in the form of acquiring international reserves, or in terms of supporting the export industry, which was a big source of growth for them. and this was a policy decision but this wasn't the fact that were no opportunities for investment in china. rather what they were doing there were some the -- suppressing domestic assumptions. they were keeping the exchange rate undervalued, and these policy decisions lead to big current account surpluses and a lot of savings that was flowing to the global economy. the rest of the nations following the financial crisis of the '90s, capital investment in those economies went down but they are high savers so that savings would alter the global financial markets. likewise, i pointed out 10 years ago, the oil producers commodity prices were very high of course just before and during the crisis and so you had countries like saudi arabia and others that were earning huge amounts of foreign exchange, could not spend all that effectively it also again that was money being recycled into the global financial markets. he had a high amount of savings in the global economy, and that was having to effects basically. the first was that with a loss of savings in the economy, that's going to drive down interest rates, the supply is greater than demand for investment. that will push interest rates down and that helped explain as i argued at the time help explain what alan greenspan called a conundrum, the fact that even as the fed was tightening rates between 2004- 2004-2007, the long-term rates were being quite low contributing to the boom in housing prices. the other effect of the global savings glut can be with financial capital flowing into the united states, that strengthens the dollar and contributed to our very large trade deficits as i mentioned before. so in the middle of the 2000s, in 2006 we have a trade deficit that was more than 6% of real gdp which meant that a lot of the demand for domestic consumers and firms was essentially being siphoned off into the global economy and this was the problem of global imbalances that was talked about a lot during that time. so that lost the demand to the trade deficit could contribute to slower growth in the united states an offset to something as i mentioned before a positive effects on demand from the housing bubble. all of those things i think are tied together. well, let me just come in the blog on wednesday i will provide a lot more data so let me characterize just very qualitatively how the world has changed in the last 10 years and with the global imbalance is in the global savings glut looks like to be. the basic facts are as follows. first, the trade deficit of the united states as you probably know is about half of which is very positive. the biggest reason for the decline in the u.s. trade deficit of course is the fact we have become a major oil producers again as we don't have to import as much oil. just a note if you're an exporter but you're not an oil producer in the united states, that's not entirely good news for you because the strength of our oil production and the reduction of demand for foreign oil means that the dollar is stronger than otherwise would be and it actually hurts not oil exports. that's a secondary issue. the main point is that the u.s. has seen improvement in its trade deficit, which is a positive thing. the second observation i think worth making is of course that the emerging market savings glut of a talked about changes ago looks to be come is still very large but it looks to be moderated somewhat. in particular as you probably know, china has been trying to restructure its economy so that it's not completely reliant on exports and on foreign investment, and more rely on domestic consumption and domestic demand and their current account surplus has come down meaningful and they continue to work in that direction so that is positive. .. there is one change worth noting which is 10 years ago when i talked about the global savings glut the european savings balance was about zero. that is the net trade balance of europe was essentially imbalanced. today since 2006 the net trade balance of europe in the eurozone has risen more than $300 billion. so there is a big movement towards surplus and imbalance in europe. where is that coming from? part of it comes germany which has largest by far the trade balance surplus in the world despite the fact the country is about the quarter of the size of united states and that is troubling. that looks to be structural and looks to be rising and will probably rise even more as the euro gets weaker over time. but, a lot of the change more recent change though has come instead from the fact that the deep recession in periphery in greece ireland and italy and spain and portugal has driven down demand for imports in those countries and moved the european periphery from being a being from deficit that is from importing more than they're exporting, to a major surplus. that has been the biggest source of the swing. so europe has replaced to some extent the emerging markets and probably that is one of the reasons why interest rates still remain very low in the world and that that is, a headwind towards u.s. growth as well because it props up the dollar and hurts our exports. now the good news there is that it is not really good in the sense that the reason for much of the trade imbalance surplus in peripheral europe is the fact they're in a depression basically. the economy is very, very weak and they're not importing very much and therefore they're exporting their extra savings to the rest of the world. that is obviously not food news for the periphery of europe but the good news for the world presumably at some point this is not long-term structural issue. presumably at some point europe will recover and that surplus will begin to moderate so looking around the world i think we see some tendency downward to the amount of, of the savings glut issue as we see less in the emerging markets and as we expect europe eventually to give back some of the surplus that they developed. so the implications are i think from that perspective that, the downward pressure on global interest rates will probably moderate somewhat over time and the pressures for the trade deficit of the united states will probably moderate somewhat over time and i think those are positive factors that need to be taken into account thinking about growth. well, again i don't think these are mutually exclusive stagnation and global savings glut. they're really very closely related idea except the global savings glut is the global perspective and stagnation is the national perspective. what are the bottom line in terms of policy. going back to secular stagnation, i think it is important for us to get a better mix of monetary and fiscal policy in supporting return to full employment. again relying entirely on fed relying entirely on central banks, makes it much more difficult and keeps interest rates very low where a better mix of monetary policy would have a better result. secondly if you believe in secular stagnation and you think the economy is not producing good returns, obviously there is a lot to make our economy more productive and make investment more desirable supporting technological change, more worker skills all those things that make investments more attractive in our economy. third, we have to continue to fight the headwinds which i think are part of what's happening, improving, for example, the housing market, and overcoming remaining problems left from the credit crisis. but finally i guess i would say that from the global savings glut perspective that we can't forget the international part. we needcontinue to what we've been doing for the last decade through the imf and other international bodies, trying to reduce global imbalances, try to reduce in particular, structural long-term imbalances that involve in particular large surpluses which essentially are counterproductive in a world where there is not enough demand to keep economies at full employment. i think these are interesting perspectives. i will stop there jared and i'm happy to take a few questions. [applause] >> okay. >> thank you very much. that was exactly what i hoped you would talk about. so we have about 15 minutes for questions and answers. i will call on you. please make it a question. no lectures, if you please. the more we can make our questions, crisp the more we'll have time for ben to answer them ross. >> you say that we need a better mix of monetary policy and fiscal policy, [inaudible] fiscal policy, what are you thinking of when you talk about a better mix? or are you talking about, you know $200 billion more of investment or, you know? >> no, i didn't go as far as this morning to get a numerical recommendation. but i would point to the last few years. i think 2013 was the worst from the macro perspective when fiscal policy, the sequester other cuts tax increase, all that together was actually a major drag on growth. cbo estimated in 2013, that fiscal policy was taking a point 1/2 off of growth. rather than supporting growth. and, i argued, as chairman during that time, that, the that short-term fiscal policy, ought to be more attentive to the needs of the recovery and that those who were concerned about fiscal sustainability which of course is legitimate issue, should be thinking more in longer term framework but in the near term, i think that, you know, that the fiscal policy was on the whole too restrictive during 2011, '12 '13. it put more burden on the fed to keep interest rates low to maintain progress towards full employment. >> we didn't rehearse this but i have a slide on that point later. >> you will get your answer then. >> no, no. i meant on the 2013 problem. i don't have a -- i could give you a fiscal recommendation. [laughter] it is not beyond my scope. josh barrow. >> thanks so much. can you talk a little more what exactly to do to try to reduce those global imbalances? if china is weakening or was weakening its currency, what leverage do we have to force them to change? there is talk about whether there should be provisions in trade agreements regarding currency to enforce a regime of currency levels across countries. is that something we should be doing? >> no, i don't support that for the following reason which is first of all i think there is no chance that would be accepted so it would kill the trade deal but the second thing although an economist can tell the difference between exchange rate management and the legitimate monetary policy i'm not sure that a technical legal document could do that in all circumstances. and i don't think that there is anything wrong with monetary policy being used to respond to weak conditions in a given economy even if exchange rate movements are a side-effect of that. pause, from the perspective of trade partners the exchange rate movement is offset by the stronger domestic economy in terms of not, you know, exporting the weakness of the economies. it is good for us, if other economies are doing aggressive, fiscal monetary expansion. so i don't i don't recommend putting that into the trade agreement. i think that, you know, weigh don't really have power tools but there has been, i can tell you, as a participant in many, many international meetings over the last decade, that it was a constant theme of discussion, the imf did some evaluations and reviews of different countries. obviously there is not a real legal stick to use but countries do respond i to diplomat lick and overtures and to pressure from their trading partners when what they're doing is perceived as counter product tiff to the global economy. we need to highlight those imbalances and continue in international meetings and other contexts to put pressure on countries to try to achieve a sustainable balance. >> let's see. right there. wait for the microphone please. >> hi, gina with bloomberg. i'm curious when you're talking about reaching full employment how do you feel what do you think the appropriate level is? how do you feel the fed's 5.2 range. >> i'm not hearing you. >> i'm really sorry. gina with bloomburg when we're talking about full employment what do you think the full employment level? where is full employment. >> in terms of the unemployment rate? >> yes, in terms of the unemployment rate. >> i don't know the number. econ metricians find uncertainty around it. that is why the fed is some sense groping. among other things they're obviously may paying attention to things like real wages to see if they're responding. that would be one indicator of approaching full employment but it is even more complicated it was before. andy levin's paper will show, that the unemployment rate used to be the only number you have to look at but of course now there are many dimensions of underemployment or unemployment as the labor market is changing structurally over time so it is much harder to make an assessment. as you know the fed modestly lowered recently their estimate of sustainable rate of unemployment. i would gather that is mostly in response to the fact that unemployment has fallen quickly. it has reached 5.5%. so far there is not much indication of wage pressures. as i said nobody really has the number, nobody has the number with any precision around the fed will continue to grope to find out what the right number is. >> just underscoring a point that ben made, andy levin's paper, andy will be on the next panel, andy goes into a lot of depth on the point that were just made. let's see is there anyone way in the back there? person waving your paper over there. >> chinese have made concerted effort in the last two or three years to establish the u.n. as a more prominent currency -- yuan. they have the sdr thing going on and a number of other moves they're making including the other investment bank. do you agree having that currency as an additional reserve currency would be good for the world economy or would that be bad for the world economy? how do you think that effort to establish it as a world currency will affect the euro? >> i think for the renminbi to be world currency there is a lot of work to be done. to make it floating exchange rate to make it fully convertible, et cetera. i think those would all be positive things for the world and for china. i hope they continue to undertake those reforms. if they undertake those reforms, then, you have a liquid market and a flexible exchange rate, then people, or countries will begin to use the renminbi more extensively as a reserve currency and i see no problem with that but i think the more important thing that not that the renminbi be a reserve currency but they take the steps necessary to get to that point. that is to reform their foreign exchange regime to improve the liquidity of their markets to allow capital flows convertibility et cetera. i'm all in favor of them continuing that reform process and i think one implication of that the renminbi plays a larger role particularly in regional trade. >> [inaudible] >> pboc has led on the people's bank of china has led on financial reform, that's correct. and, you know, i think they're right. >> okay. let's see, the gentleman right there. i appreciate the questioners being crisp as i asked so thank you. >> my question regards to one of the policy priorities you justed -- touched on climate change. what monetary tools do you believe there are to address the climate change problem and do you believe these tools require coordination on global scale or are they going to approach of each nation individual plan and we all come together? >> well, i'm no expert on climate change making any specific recommendations there but of course we've had success in the united states with market-based effluent charges in cleaning up the air. that has actually worked pretty well. and so there is various market-based solutions charges on carbon, markets there is a market in chicago that allows you to swap carbon claims. so if the country decides to go in that direction there are some good market-based approaches to that. obviously the more global it is the better. and, you know, that, if you can develop a global market, that would, equate the benefits across, across different economies. what the prospects are for that i really couldn't say at this point but it, just, again thinking about it from the point of view of global savings gluts and the like if countries decide to go in that direction another opportunity for capital investment right? which is part of the issue, are there enough good investments to be made? >> okay. maybe one or two more. right there. >> rob decker. ben, the employment problem has to do something with the capital stock, human capital stock. what we know about human capital stock in the united states now is that the percentage of young adults, 18 to 24-year-olds, 50, 60% or more are not really qualified for most jobs. in fact it is one of the surprising things, very large number of jobs that can't be filled three million or more in the united states. in your work on both, i suspect the secular stagnation must have also something to do with capital stock labor force quality, competitiveness. can you, have you thought about this or how would you suggest thinking about this aspect of full employment challenge? >> i thought about it a lot. i think that human capital formation, i mean this is pretty standard but i do believe human capital formation skills, acquisition, training, all those things are critical for addressing a number of our problems including inequality, including inability of people in the middle to make progress dealing with globalization et cetera. i think it is very important on a human level. so i strongly support it. i was an educator. my wife was an educator. we think this is a critical thing. it would certainly help on secular stagnation because if you have a skilled labor force obviously you will have a lot more attractive investment opportunities in between higher income consumers and more capital investment, you're going to get around this problem of insufficient demand that the secular stagnation is concerned. so it's a very positive thing. that being said, i'm a bit leery of the argument because we heard it sometimes during, you know, in 2008, 2009, when the unemployment rate was 10%, you know, i didn't think that these issues really had much to do why unemployment had risen from five to 10. there were people saying it is all supply side. i didn't believe that. so my remarks this morning suggest we have to make sure there is enough demand to put the economy at a full employment position. now over the medium term, you know, growth comes not from low interest rates or from even from fiscal policy as much as it comes from productivity and skills and those things and so those things are critically important but it is also important to make sure you've got a sufficient amount of demand to maintain full employment. >> if i might, i just want to amplify the last part of ben's comments in the following sense. back in 2000 we had similar human capital problems with the population you mentioned yet their employment rates were rising quickly unemployment rates were falling quickly. it is hard to really get too far into assessing the role very real problem you mentioned plays when demand is persistently weak. i think first you have to get to full employment to really understand the extent to which people are truly unemployable. one more question? does that work for you? let's see who back there the young person raising their happened back there, with the glasses. i learned no the to say the young man or woman. because i make mistakes. person. >> thank you. you mentioned china a little bit in your speech. some people predict that the chinese economy will encounter hard landing this year. what is your take on that. if you're managing the pboc what kind of policy would you implement to avoid the hard landing? my second question recommend the u.s. to join the other international financial institution, thank you? >> i will say a word about the first one. so china's going through some very difficult transitions now. as i said, it is very constructively desiring moving from being eggs port-led to having greater amount of domestic demand, with cop assumption. good for the chinese people that a greater share of their gdp devoted to consumer spending household welfare some that's positive development. it is tricky. involves truck ral and policy changes going on at the same time. that is one of the reasons growth slowed in china recently. as they go through difficult transition there are many other issues. there are issues to quality of loans in the banking sector shadow banking system, property values. not to mention issues like the environment and climate quality. so it is a very difficult complex situation but i guess my general sense is that the chinese government has a lot of resources. they have reasonable amount of control over the financial sector. so i'm not particularly pessimistic but of course obviously there is a lot we don't know about what is happening inside of china. we'll have to watch that carefully. >> let me invite the panel to come up please. >> i will move over here, what do you think? stay here? >> stay here. >> all right. >> while people are coming up why don't i do the introductions. i'm david wessel. i'm director of the hutchins center on fiscal and monetary policy at brookings. we have the center on budget and policy priorities has come up with a pretty ambitious agenda. first we get a lecture on secular stagnation and global savings glut by person bern. if that -- ben bernanke. if that hasn't filled you up we'll talk about three other aspects of full employment. let me introduce the speakers. each will speak about five minutes. then they will join me on the panel and we'll have a conversation and take your questions. the first speaker will be valerie wilson here who is director of economic policy institute's program on race, ethnicity and the economy. pre. valerie is an economist. i'm the least educated person on the panel by far. has her phd from the university of north carolina. she will be followed by maurice emsell em, for better or worse not a lawyer. director of employment law projects access and opportunity program. we'll hear from andy levin, currently advisor at research department of the imf but does not speak for the imf. he used to work for the fed. he does not speak for the fed. he will soon be a professor of economics at dartmouth college which he also does not speak for. jared bernstein definitely speaks for somebody. he is a senior fellow of course at the center on budget and policy priorities. you already met him. he will describe a little bit of the book he is working on. each of the speakers speak for five minutes on the panel. my friend larry haas will keep us for five minutes. reason they have journalists or former journalists because we're rude enough to tell them they hit their limit and i promise to do that. valerie. >> thank you david. good morning. before i get started on my remarks i would like to thank jared for inviting me to contribute to the full employment project and for allowing me to be part of such a distinguished group of speakers this morning. so i'm looking forward to the conversation myself. talking about the labor market each month has become a bit like going on a road trip with my two young kids who are six and three. every couple of miles someone is asking you, "are we there yet?" now, in the case of the labor market, there is usually referring to has the economy fully recovered? and just like i tell my kids every couple of miles, my answer is no, not yet. but one of the great things about the panel this morning is that we get to have a more meaningful discussion, what there should actually be. going back to my analogy on the road trip, clearly taking my kids down to the neighborhood park is a shorter ride. it is a much cheaper trip than taking them to say, busch gardens in williamsburg that they also enjoy but i think it is also quite clear the payoff on those two destinations is quite different as well. so similarly i would like to argue this morning that full employment is a better destination but the better payoff than full recovery. this is especially true when we look at african-americans in the labor market. now you may be asking, well, what is the difference? , what is difference between full recovery and full employment. the distinction i make is this. full recovery would simply return us to labor market conditions that we were in pregreat recession. now, whether or not that does it for you depends how good you had it in 2007. but full employment on the other hand raises the bar to the point where everyone was willing and able to work can get a job. now as we've already heard this morning, the question was raised about what is the unemployment rate of full employment? we can debate that but i think we know from past experience that it's possible to get that unemployment rate down to as low as 4% without setting off a national crisis. so i want to make three points this morning from the report that i wrote about why i think full employment is a better target than full recovery and share a few slides illustrating how this has disproportionate impact beneficial impact for african-americans. so the first reason i would argue that full employment is a better target than full recovery is i think pretty obvious. lower unemployment rate means more people with jobs. the african-american unemployment rate changes two percentage point for everyone percentage point change in the national unemployment rate. so with the labor improvement west saw over the past year, we saw the african-americans had largest increase in the share of employed adults. we saw that african-americans had largest increase in labor force participation. this translated into about 200,000 fewer unemployed african-americans over the past year as we saw unemployment fall. my second argument and i would draw your attention to the slide that is up now is that full employment create as tighter labor market that increases the chances that we have stronger and faster wage growth. so again to illustrate that point, the slide that is up now, shows average annual change in median hourly wages in last four economic recoveries. thing that immediately jumps out to you if you look toward the center of that graph clearly there was fastest wage growth during the 1990s. that was also the point where unemployment rate got the lowest 4% on annual basis in the year 2000. so i would especially focus on that 1995 to 2,000 bar and the fact that the wage growth for african-americans actually outpaced that of whites during that period. on either side of the '90s we see relatively stagnant wages. only other point of longer bar for african-americans during the current recovery period which a longer bar is not a good thing which is beneath the horizontal line which means wages are declining. now the next point that i want to make regarding wages and unemployment is demonstrated in this slide. so the last one shows you over a few different periods what happened with annual wage growth. this slide formalizes that relationship between the unemployment rate and wages and shows that since 1979, wages of black workers have been more responsive as i said at the beginning to aggregate labor market changes than those of white workers. so, for example, when the unemployment rate doubles from five to 10% the median black workers wages decline by eight to 10%. and that 8 to 10 depends on whether or not i'm including the period of the great recession and recovery. compared to 3% decline for white workers. my final point that i would like to make regarding why i think full employment is a better target is that more jobs means higher wages. and that translates into improved living standards. now in my graph i have in my report i have a graph that looks a lot like the first wage graph that i showed you, looking over last four recovery, except for median household income. now that relationship is pretty obvious since most people get income through working. but this slide i find particularly compelling because it shows that the share of african-american households and middle 60% of the income distribution which, could loosely call the middle class expanded between that period between 1995 and 2,000 as unemployment reached exceptionally low levels and black wages grew exceptionally fast. so we saw expansion of the black middle class that was actually unique to this late 1990s period. if you look at other recovery periods we see that there was actually a decline in the '80s decline in the current recovery, really not a lot of change in that 1:00 and -- 2001 and 2007 period. as i close up my remarks here and go back to my road trip analogy at the beginning and the question, "are we there yet?" are we whether we're talking full recovery or full employment i think the answer is the same at this point, no, we're not there yet but my hope we would endure the longer ride and get to the destination where the payoff is greater. and that payoff is full employment. thank you very much. >> thank you very much. [applause] >> two things i should have noted, we're asking for really brief summaries of papers which are much longer and detailed on the center for budget priorities and policy website. maurice, you want to go? secondly for people standing in the back, even if your pbb, your staff, there are seats up front. feel free, i vouch for you if they tell you can't take the seat. >> waiting for the slides to come up. [inaudible] >> do we have maurice's slides? thank you. >> thank you. go straight to the next one. thank you very much. yeah, i also want to thank jared for inviting us to participate in this forum and to taking into account this kind of extraneous issue for a lot of people which is the impact of the criminal justice system on full employment. i also want to thank my, the coauthor of our paper jason who is with the justice policy institute. together we did our best to document the impact of the criminal justice system on the labor market and make some very concrete recommendations for reform, to help clear the path to full employment for people with records. so in the few minutes i have i'm just going to flag a few of the key findings from the paper. first, i think most people know it has been widely reported in the press that, over the last several decades, 30 to 40 years, we've seen a huge rise in incarceration rates, over 400%, over the last 30 to 40 years. we we incarcerated about 2.4 million people right now either in prison or jail. another five million people are on supervision either on parole or probation. so a total of about over seven million people. every year, the costs to the taxpayer of the criminal justice system exceeds about $250 billion. given these massive numbers it is not surprising, exceptionally large numbers of people have a criminal record that is going to undermine their job prospects. according to the best information we have, roughly 70 million adults in the united states, nearly one in three have a serious misdemeanor or felony arrest or conviction that can show up on a routine criminal background check for employment. i will talk a little bit more about this later. but impact on people of color is especially severe. according to a recent "new york times" poll, 34% of working age men who are not employed, either full-time or part time report having been convicted of a crime. so if you put that together with the fact that nine in 10 major employers in the united states conduct criminal background checks for employment, often taking into account all or misdemeanor records, then you start to get a picture of what workers with a criminal record are up against when they try to break their way into the labor market. we also know from rigorous employment testing studies, let me get my slide up here. you can see that. that about 50% of employers are less likely to interview a candidate with a conviction record compared to someone who would otherwise identical credentials who does not have a conviction. so this slide from a professor testing study illustrates how these results play out by race. so it shows that african-americans have a far greater likelihood of being denied a call-back compared to whites but even more striking is the fact that, an african-american without a criminal record is less likely to be interviewed than a white candidate with a criminal record. finally i just want to mention a little bit more on the side of economics. the council of economic advisors recently concluded in a report focusing on limited labor force participation, that economic growth is also seriously compromised when large numbers of people with a criminal record can't make their way into the labor market. and, the center on economic and policy research found that, the failure to employ large numbers of people with felony records deprived the economy of as much as $65 billion in gdp in one year. so, that is kind of the big picture scheme. i want to talk just a little bit about a recommendation that some of the promising solutions. there are a bun. of them profiled in the -- bunch of them profiled in the paper if you have a chance to read it. i just want to mention there is a ton of momentum, bipartisan momentum what we call smart on crime criminal justice reform. we attend ad big forum last week that was cosponsored by koch industries center for american progress aclu, freedom forum tea party, you name it, they were all there talking about criminal justice reform. so we have this very special moment really to do something about this issue. so i will profile one particular reform. it gives you also a picture for how this issue plays out in reality for a lot of workers. so, just after the 9/11 attacks congress passed the terrorism security law requiring that over two million workers employed in the nation's ports had to undergo an fbi background check for employment. this is a program implemented by tsa. if the worker had a felony record going back less than seven years he or she is disqualified under the law from working in the ports. no matter how long you've been working there, if you have a felony record going back seven years, that's it, you can no longer be employed on one of the nation's ports. but in the legislation the unions fought hard to include two significant worker protections. one allowed workers to appeal what are routine inaccuracies in the background check, even with the fbi background checks. that is usually the fact that rap sheet reports arrest but it is not updated to include disposition like dismissed charges. very routine. the other protection allowed workers to petition tsa for what's called a waiver, to demonstrate their rehabilitation basically. individual information not just your criminal record. and in the end it turns out that both these workers protections were worth their weight in gold especially for workers of color. tsa granted 87% of the workers almost nine in 10 of the workers, were allowed to work despite the fact that they had a felony record going back seven years because they were able to produce evidence of rehabilitation. that was almost 15,000 workers who, whose coveted port worker jobs were saved in the end because of that one procedure. tsa also granted 95% of the appeals which saved 50% of the jobs, also a serious indicator how routinely inaccurate the records are. so as you can see from this next figure you can see that african-americans were far more likely to petition for a waiver or appeal given their disproportionate numbers who have a criminal record. that left bar you see, more than 50% of the folks who applied for the waiver were african-americans. unfortunately most occupational licensing laws, most employers don't follow these and other model worker protections. why so many workers with a criminal record are still unfairly shut out of the labor market. thank you. [applause] >> first of all, thank you to jared and the cbpp i think this is absolutely crucial topic. i wanted to see more events like this and more public discussion debate decisions policymakers make on fiscal policy and monetary policy and all other sorts of regulatory policies are crucial for millions of americans. so as david said, the red ink at the bottom of the slide if you can read it essentially to say these are just my own views and my coauthor. so i i have the privilege for working for ben bernanke. my instinct is to call him chairman bernanke because and i was an advisor for couple of years. the major strides that the fed took under chairman bernanke's leadership on transparency were really remarkable and on this slide you can see one excerpt from a statement that the monetary policy committee of the fed adopted in 2012. it is reaffirmed each year since then. as chairman bernanke, said a few minutes ago this statement and the related policy decisions that the fed made at that time and since then really underscored the role of the employment part of the federal reserve's mandate along with its mandate for price stability. those are both important. as ben bernanke emphasized in the past, those are generally complimentary goals. now what you see here in the statement is that a promise it's a commitment by the fomc to communicate as clearly as possible. it indicates their decisions must be inform by their assessments of the maximum level of employment. to just spend a moment here to explain this, the maximum level of employment is something economists think of as the balanced growth half of the economy that monetary policy can't really change that path. fiscal policy or regulatory policies can influence it. foreign policies but monetary policy basically takes that path as given and tries to help bring the economy back on to that path. and it is important distinction here with we're talking about full employment because there is actions that monetary policies do to promote bring the economy back to the balanced growth path. there are actions that other parts of the government can take, as well as the private sector to help raise the level of maximum employment, including the sorts of things that maurice said about legal reforms and protections as well as some things that valerie mentioned. those are all important. but focus of our paper that i have written is really focused on monetary policy. so, again as ben bernanke mentioned in the previous session, traditionally macro economists assumed for some good reasons that the unemployment rate is a pretty good indicator of the shortfall of the economy from the balanced growth path, from the full employment level that monetary policy can achieve that is associated with a stable low inflation rate. and what you see in this picture as unemployment rate went up dramatically from 5% to 10% when the great recession hit and it has come back almost all the way back towards its longer-run normal levels. the problem here is, again exactly what valerie said, "are we there yet?." and many policymakers and other commentators said, yes we're essentially back to normal now and it is the time for monetary policy to start normalizing the stance of monetary policy i will say to anyone that i strongly disagree with that. i will show you why. first of all, unemployment is very narrow concept in a way what is labor market slack because it only targets people completely out of work at all and they searched for a job in the past month. if you look at this picture it shows you people who are working but they're only working part time and they indicate they want a full-time job. they're available to work for full-time job and searching for a full-time job and they haven't been able to find one. it seems obvious to us, we can discuss it in the q&a, that is it is obvious to us that is part of labor market slack. if you look at the picture it, went up a lot in 2008 and 2009 when recession hit but only half the way back from the precrisis level. as valerie said and i think ben bernanke we have made substantial progress, measurable, important progress in the recovery of the labor market but we're not there yet. maybe only halfway this by the way, i lovallry's paper. i hope you will read it even if you don't read mine and danny's please read valerie's. it is a really important paper. it shows you see this on the right side of the issues, issues about under employment are very important for people of color. we show here the same exact theories but for specifically for african-americans. okay another issue people who have left the labor market, they're not currently searching for a job, they have given up but they're not unemployable. they could come back. without going through the details here in this picture the bottom line here is that, there has been some grade inflation going on as policymakers have been watching the data. they basically said, well, maybe those people are never coming back. maybe it is demographics. maybe it is structural factors. maybe these people just become unemployable because they have been out of work for so long? that phrase is very unappealing to me because my wife is a full-time mom. she hasn't been working a few years. is she unemployable because she is out of the labor force for a while? no absolutely not. the idea we should give up on people and are unemployable danny and i disagree with. that gap is big. this is something valerie emphasized in her paper, for what people in their prime age working years, 30s 40s, and early 50s those people are not retired. they're generally not disabled. they're not in school. okay? and many of them are not full-time parents. what you see here, those numbers fell off dramatically after the onset of the recession and they haven't recovered much. for prime age males 45-54 there has been some good news recently that their participation rates have been rising. so some of them have been coming back into the labor market as it has been strengthening. for primary age females we haven't seen recovery yet but we should and we shouldn't think we're back to normal yet until we see these people coming back into the workforce. okay, so finally the implications of this are crucial. we're talking here about somewhere between 3 to 6 million americans who shortfall in terms of full-time jobs, short what we would consider full employment. that means the true unemployment rate is not 5 1/2%. it is probably somewhere between 7 1/2% and maybe as high as 9%. that also means that we should be considering ourselves as quite aways yet from the time we can start to normalize monetary policy i know david wants to raise this in the q&a so i will stop here. >> before you do, explain what you have here. so the first cell on the left, i can't read it, 3.3? >> 3.3. let me go through this carefully because it is important. again there is a paper in your, many of you have goes into details. let me give you a brief overview. the first column is the millions of jobs, millions of full-time jobs of the short fall, how far away are we from full employment according to estimates danny and i done. benchmark estimate is 3.3 million full-time jobs. but reasonable alternative assessment of the labor force participation rate, the employment gap is actually 6 million full-time jobs. it's a large number, 6 million. >> the difference between the first row and second row the first row includes people who are working part time and second row adds to that people not in the labor force correct? >> no, not quite. both rows have, in fact both rows have the same amount of underemployment. >> i see. >> they both have the same amount of unemployment gap which is part of it. >> okay. >> i told you there was grade inflation. >> okay. >> cbo gave up on a lot of people saying they're now never coming back. that is been last two years cbo changed its views on this. >> i see. if you go back to 2013 take the views what they said back then you get six million people instead of three. that is a very big important difference. in terms of unemployment rate that is the middle column, we should think of true unemployment rate, people who want a full-time job, and working can't find a full-time job. people who dropped out, normal times would be working unemployment rate is somewhere between 7.4 and 9.1. >> the final column what the fed funds rate should be under policy rule and that suggests to you that it is premature to tighten? >> that's right. it's the benchmark estimate, this is just one rule so one could debate about this but this is just an example to say according to our benchmark estimate having federal funds rate close to zero is still appropriate today. if you take the risk that actually maybe these people are not unemployable. maybe they will come back, maybe the true unemployment rate is 9%, then it would be really premature to start tightening policy. >> thank you. valerie, let me start with you. so -- oh, i forgot jared. sorry. [laughter] andy used up all your time. andy and i. >> well, actually, might be better to just leave my part out. >> no, no. >> since i worked on it, let me give it to you. had to do with consumer producer distinction. the, i just want to underscore how important this, andy's paper is as well in this regard. maurice as well. there is nothing extraneous at all about the magnitudes he is talking about. so i recently, finished a book, beyond a few weeks the idea of the book was to get into this question what i call the fundamental problem of the u.s. economy although this disease has spread elsewhere. that is that economic growth can not longer be counted on to deliver broadly-shared prosperity. i think that is a very much embedded in our economy these days. ben bernanke alluded to that when he talked about inequality. the book purports to offer a policy agenda to meet that challenge. each chapter foes through a policy insteaded to reconnect overall growth and incomes of the poor and middle class. i will not go through 10 chapters in five minutes. i wanted to go through two in five but interest of time i will go through one and leave second for q&a when we get back to it. i will tell you about it so we might get back to it. the first point is one that underscores a point ben made in his talk which is getting the fiscal and monetary balance correct. would i argue that's been missing both in our economy and particularly in those of europe. i have three points to make. first, while those of us pulling for full employment often talk about monetary and fiscal policies if they're individually important, they are of course important compliments. and in fact especially when monetary policy is to some degree large degree neutralized. fed funds rate. interest rate they control is bound by zero, fiscal policy is more important. one thing to lower the cost of borrowing, but another to induce demand. in fact in the book i take you through a long example characteristic, with a restaurant that serves meatless meatballs. that is interesting if you want to talk about that. monetary policy sets the table and fiscal policy brings people into the restaurant. that is my first point. of the second point this zero lower bound problem may be an increasing problem going forward. if we want to avoid prolonged weakness in recoveries fiscal policy will need to step up. this again gets to some points ben made in his keynote presentation that interest rates are low probably stay there for a while gives the fed a less of a perch to zero bound a inherent probability raising the importance of getting this mix right. look at the box in my first slide here. it is just a little three by three grid with monetary policy on the x-axis and fiscal policy on the fiscal is on the y and monetary is on the x there just with growth, neutral and contraction. so you have nine different possibles there. in recessions and weak recoveries we want to be in -- oh sorry. we want to be in box one where both fiscal and monetary policy are pushing in the same direction. i would argue that's where we were in 2009 and much of 2010. in the book i document that these complimentaries were quite effective arresting output. one two punch of monetary and fiscal working together. but fiscal policy quickly moved us into box seven where the fed was in growth mode but fiscal policy due to austerity was in contraction mode. as i will show in a minute, this is the point i said when bern was talking about 2013, i have a slide on just how damaging that was. well now we've kind of moved to box four where the fed remains pretty much in a strong growth mode but fiscal policy is neutral. and in fact, this move from seven to four has been really helpful as i show you in a minute. having fiscal go from negative fiscal impulse to fiscal drag to fiscal neutrality has made a very positive difference in growth in jobs. now many of us are concerned about now and you heard this in andy's impassioned plea, that is about as passionate as you will hear a macroeconomist get as andy is, is that the fed could potentially move too quick to neutrality, to box five, although, i would say that chair janet yellen has been careful to say any glide path or liftoff of zero will be a shallow path and will remain data dependent. still i would like to stick to box four at least where the fed is on growth and fiscal is on neutral. i would say europe by the way is an interesting case here. i will stop after this point. in that when austerity first struck, where they bit off austerity even more tan we did they were kind of around box seven there. let me see. so yeah, when europe first began they were kind of around box seven there with a contraction mode of fiscal policy. actually when they began, fiscal policy was getting austere and fed was in neutral mode. >> ecb. >> ecb was very much in a neutral mode. this was this was problematic and really pulling back growth. the ecb moved to a growth mode and yet with fiscal still in contraction with much austerity occurring, europe remained very much in the mess that it's in. i think this shows the importance of getting this one-two punch right and perhaps ben will want to weigh in on that a little bit because i vividly remember him going up to congress during his tenure as chair of the fed during this period and arguing very much for complimentary fiscal policy. i won't go into my next chapter because of time constraints but i will say that what i did was to try to foresee a question i always get when i give this presentation. great, you all have wonderful ideas, great panel all good but we have dysfunctional politics that isn't going to do any of the stuff you want it to. that leaves the fed out of the picture because they're largely independent. but of course getting fiscal policy right depends on a very different set of political actions and actors that we now have in place. in chapter 10 of my book i talk about very carefully the politics it would take to get us where we need to go. >> great, thank you very much. [applause] so this is a bit of a challenge because the papers, are each of them so interesting and not quite on the same, in the same lane but, let me try, one question, to you valerie, then i want to change to talk about policy implications. you make the point, valerie that the unemployment rate of african-americans goes up more than of others during a recession and comes down more quickly during recovery. so two es request why, and is that getting greater over time or not? >> i think the why has a lot to do with the fact that there are persistent disparities in unemployment from the start. so typically the african-american unemployment rate is about double the white rate. close to trouble the national rate and so when we see things getting worse, because that rate is higher, you know we tend to see more of an increase there. by the same tone when the recovery really gets move you start to see it come down faster. but of course it has to come down from a a higher point that disparity has a lot to do with the unemployment rate move so much compared to the national rate. >> does that work over time or do we know. >> i don't see that necessarily getting greater over time. two to one has been pretty consistent over time and at same token, greater volatility has been pretty consistent which since 1979 which is the data i was using. >> maurice, seems to me that, you alluded to this, but i want to tease out i think you're talking about two different sets of policies here. one set of policy, reduce the number of people who have records so they don't have these blemishes on their on their employment forms. and second one is, let's lower the barrier to people who have these blemishes because so many people have them. i was startled by a fact in your paper, you said that for african-american working age men, i assume that is 25 to 54 something like that, who are not in prison so, african-american men, working age not in prison, 25% have a felony conviction, right? >> yes. >> so, can you talk about when you think about policies to address this, what is one policy that you think has promise that would reduce the number of people with records? and what's the policy that would reduce the barriers beyond your longshore -- >> yeah, that is exactly right you have to do both. you have to reduce, close the floodgates so there has been a lot of work done in that area to divert people from the criminal justice system at the arrest stage, the conviction stage the incarceration stage. i come from california. there is a proposition that passed with a ton of bipartisan support to basically reduce about six felonies down to misdemeanors mostly drug crimes. but and various various property crimes. and that has the effect of reducing the prison population 100,000 people. . .

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