Transcripts For CSPAN3 Politics Public Policy Today 20150206

Africa. So, i think we are seeing a perhaps unplanned, but none the less, an expansion of the chinese ability to deploy ships far beyond regional wars. But not necessarily to the indian ocean or persian gulf. No, they are doing some of that. Since december 2008 of course, theyve had to Counter Piracy formations in the gulf of aden. They are slowly beginning to deploy more and more ships into the indian ocean. The fact that earlier i guess last year, they sent a conventionally powered submarine, certainly has gotten the indian navys attention. The indian navy tends to take an exaggerated view but none the less we are seeing increased distance deployment by the chinese navy. On mikes question, if i remember my World History correctly, there actually arent too many cases of a continental power becoming maritime power. Soviet yoon ontried, failed. Were the only one. So, what china is setting for itself is not a small goal. On allens question, i agree that once you have the capabilities, theres the temptation to use them. And i think that temptation b sbt isnt just in the minds of the pla. A friend of mine was vacationing in hainin island where the naval base is and he actually was taking him to his hotel and they were going by the naval base and the taxi driver was complaining about how the fact about the fact that china had spent all the money on the ships but wasnt using them. Why dont we use them for something. More seriously i think its impossible to make a sort of general prediction about this. We are going to have to be on the lookout for cases as we go forward of exactly how china decides to use military power to deal with a specific problem and here, we get into something buds mentioned and ive mentioned, the quality of chinese Decision Making and its confidence or lack of confidence in the ability to control managed risks. Another round. Further back. Here in the front row. These two over here, then well work back. Please. Thank you. My name is jeannie win. Thank you for the opportunity and for all the presentations. Ive heard all panelists mention the South China Sea would be the most risky and dangerous point even of the factors you brought up and ive also heard about the geography and the message that that i would like to ask about the role of vietnam and as a yan in the big pictures. Both economically and politically and militariwise. So, we are expecting a code of conduct. So when you see for the code of conduct to be effective, we have to have a mechanism to enforce it. Where would u. S. Be in that enforcement . And right now, we talking about chinas building islands and if we let that proceed, that would undermine not only the u. S. , but the whole International Community and asean as well and most of all, it undermine the international law, which we had tried to reenforce in the code of conduct. So, where do you see that u. S. Can rally the United Nations Security Council to have something so say in it . Thank you. Back to the panel. Im a recent graduate from Syracuse University and i love this topic. My questions for david. We talk about how chinas economy has been slowing, but last year, 7. 4 , i believe and i just recently read from the wall street journal that there was some type of restructureing within the peoples bank of china and they were able to free up about 100 billion u. S. Dollars for lendinging. What do you think the limb takes would be for their military and for us as well. The u. S. David would you like to start . Yes. Chinas economys slowing. Mostly for natural reasons. There have been overinvestment, particularly in real estate, but also heavy manufacturing and i would argue in local government, the structure, so its natural for the economy to be slowing down and basically its a healthy thing thats been managed well but the authorities dont want the economy to grow too much, so the most recent move they got some disappointing data the first coming in at the beginning of 2015 was disappointing in terms of easing rule to reduce the requirement and free up as you say, something around 100 billion equivalent of additional lending, so thats the shortterm macro move. I think the, for this discussion, i think really the important issue is more the kind of medium term and longterm growth of the economy. Closed sectors would benefit from structural measures were more and more important in terms of taken sustaining the economy overall. Its very interesting because it seems to me that if theres some sort of clash between vietnam and china where the land features and drilling rights on monday, on wednesday, they had a Vietnamese Communist Party and the head of the communist were having a love fest. So, hanoi is obviously tryinging to keep a balanced view which goes back to the point of geography. China is right there. You know the chinese army the walk to vietnam and the u. S. Is a long away way, but i think this idea of balance also explains why hanoi is striking up such a much closer relationship with india. Indian navy guys are training the First Submarine crews in vietnam, for instance, and theres an agreement that Indian Navy Ships have been repaired in vietnamese shipyards but vietnam is going to be very wise about this i think, as a balance goes forward. As far as the code of conduct is concerned, the 2002 decision to design a code of conduct has made sporadic progress at best and i dont know that the u. S. Is ever going to have any role in enforcing that. Im not sure who would be available to enforce it. I think beijing is going to maintain this position that even within a general code of conduct that the bilateral relationships are going to have to decide whos right and wrong. I think malaysia was the first to do this on swallow reef and the philippines and taiwan have also dredged dirt and expanded island facilities. Certainly, china is doing it on a much greater scale than anybody else has. The interesting point will come when under the conventional law of the sea, should china try to claim unclosed rights for these structures while theyre clear manmade structures dont qualify as islands thats something in the future that will have to be decided. I reread the unclosed this morning before coming down here. Was once again struck how a treaty, an International Treat thety can be so indefinite with so many gray areas. Just to supplement im not holding my breath about the inclusion of a binding code of conduct. I think china at least may not want to restrict its flexibility by accepting rules. I think that if we ever get to it the enforcement will have top among the countrys concern. But i do think the United States believes it is, it will be very useful in the countrys concern can have a binding code of conduct. On vietnam, i think, i agree with what bob has said. Another thing to be said about vietnam is that it, it does have a capable military. And that can be a force for stability and you can contrast the capability of the vietnamese military with the military of another Southeast Asian nation that i wont name. Can i say one word on vietnam . I just have to add that i think vietnam has this great opportunity because its one of the initial negotiators of the Trans Pacific nart they are ship so if it can be implemented and vietnam can meet the standards, vietnam will be the biggest winner relative to its gdp, so this will be a very important measure for vietnam to tie it more closely to the United States and japan economically. Now, it would be good if china joins a successful tpp. That will be great for the whole region, but its a great opportunity for vietnam. By the way, they look to the next round, speaking of other countries, we havent talk eded a lot about australia today. They have a very good fis tall position and yet, theyre only spending about 1. 6 of their gdp on the military, so it gives you some gauge of their relative concern about china. Its real, but not through the roof. Likewise, theres a lot of talk about Prime Minister abe, remilitarizing japan. There are a lot of interesting things going on in japan, some of which i support, some of which im concerned about, but i would note that japans military budget is still plus or minus 1. 0 of gdp and its virtually not moved from that very low post world war ii ceiling despite all the talk of japan doing more. Its interesting as people talk sometimes about arms races in asia et cetera if there are, theyre within certain constraints. Pat malloy, then the gentleman in the blue vest. Im a trade lawyer, but im also a former member of the u. S. China commission. And my question is to mr. Dollar. Means you build your economic strength and upon that, you will build your military and your political strength. The title of the program is about chinas rise and why we need to increase our Defense Budget or deal with that. My understanding is since china joined the wto, the United States has run about three trillion worth of trade deficits with china. Last year, it was 30 340 billion. Some would say this is contributing very much to chinas growth at the expense of our own growth and jobs in this country and economic strength in the country. Would it make sense to begin to rebalance this economic relationship rather than feeding chinas growth at our own expense. My names martin apple from california. My discussion point is very straightforward. That is the cyber connection. Threats and super agents and all these things developed on both sides of the ocean. Just as much as all the others because it really underlines their success. Toupt start then well get to the cyber question . Yes, i share the sentiment behind your question and certainly f we go back a number of years to the period before the Global Financial crisis, the imbalance between the United States and china and just more generally, imbalances in the world have really reaches extreme levels. Chinas surplus got above 10 of gdp. U. S. Overall trade deficit was around 7 in gdp and lots of people were warning that was un unable and that proved to be true. I would argue weve mad a lot of progress with rebalancing since the crisis. It really makes sense to look at the overall imbalances. If the u. S. Has a deficit with china, if that were balanced with others, it wouldnt be such a concern. Our deficit has come down to about 3 of gdp. Chinas overall surplus has come dounl below 3 of gdp. Those are sustainable numbers and there are reasons why that may not be disadvantageous for the United States. My worry now is that those imbalances are going to start rising again. U. S. Economy is finally starting to perform in a healthy way and our trade deficit is widening. Probably say the December Numbers were somewhat disturbing, so its definitely an issue we need to focus on. One aspect is the Exchange Rate where we have an intense dialogue with china and theres been a certain amount of progress in terms of china letting its currency appreciate. At this point i feel the bigger issue is market access. China remains closed in many important sectors, both in terms of trade and foreign investment. I think its in chinas interest to open up those sectors. It would have a significant effect on the United States economy and the United States would benefit from being able to export more and investment in china. So, i think thats where the dialogue is now and thats why things like Trans Pacific partnership and potential by lateral treaty these are very important because they would signal china is serious about opening up and Meeting International standards. That are appropriate for its level of development. So, i think things are are kind of hanging in the balance now as to whether we make that progress in terms of market access. If we dont, then i think theres a danger those big imbalances are going to come back and the u. S. Will then have to think about other potential strategies. Richard on cyber. Thank you for the question. I think you make a good point. If only the most difficult security domains to manage are the new ones where you dont have an experience and i think cyber is doubly tricky because the attribution problem is so severe. If there were problems with the Pla Air Force or missiles we would probably be able to figure out pretty quickly that china was involved. Sigh Cyber Attacks are a different story. This deserves all the attention its getting. And should probably get more. Second is for our institutions to build up their defenses. In a serious way. Whether its u. S. Government, u. S. Critical infrastructure. U. S. Corporations. It probably doesnt hurt if we also build up fairly robust capabilities. To remind china that were not just going to play defense. Ultimately the management of this new domain is going to require diplomacy and creation of rules where rules dont exist. Now, that may be a tall order. But its certainly something to try and achieve. Okay, another round of questions here. One more time in the back. And then well go to the gentleman standing against the wall. Thank you. Im mark wall. Recently former university of wyoming u. S. Pacific command. First, how would you say chinas reading the situation in the ukraine and what lessons may be drawing or not from the west response there for it approach in the three cs. And secondly, taiwan may not be the focus of chinas military build up these days, but taiwans facing new elections. What should we. My question is for david, but appreciate once or if china catches up with the u. S. , what will it contribute to the world order and how would that look like . Just specifically in terms of institutions and power structure . As i see it, china is pretty well embedded in the set of global institutions. Its a Security Council veto country. An important member of the imf, world bank, world trade organization. Now, within those groups, the economic groupings, which is im more qualified to talk about, theres broad agreement that the power, the voting shares, et cetera they should be shifting away from developed economies towards the developing. I emphasize the point that the u. S. Can aspire to keep roughly its share of gdp, which i think is a realistic aspiration, but thats not realistic for europe or japan because of their demographics and other factors, europe and japan are likely to be a slightly declining share of the World Economy and likely to be a gradually increasing share of the World Economy and that has a lot of positives. Because you remember, most of the developing people in the world live in the country. So, in terms of those institution, it makes sense from the voting shares for the power to be shifting and thats for the accepted. In the imf, there was an agreement about reallocating shares. Now now, unfortunately, the u. S. Congress has not ratified this agreement and i dont know see prospects in the good to ratify this, so from the point of view of the chinese its fair to say there seems to be some reluctance on the part of the United States and the existing powers to let china kind of take its natural place in these institutions. So i see china now hedging to some extent. Its still starting a new investment bank, a silk road fund. I see that as chinese hedging behavior that makes a lot of sense. I think its the galvanize existing powers except that the power should be shifting. I would relate this also to the Trans Pacific partnership. The chinese perceive that as an effort on the part of the u. S. To exclude them. I see it on a part of the u. S. To set new high standards for trade in the 21st century. I hope that it succeeds and i hope china joins so i think this is an interesting moment in history where over the next decade or so it will not be clear if chinas really throwing its weight into strengthening the existing institutions and having a kind of a well agreed set of economic rules. Or if china will gradually be shifting more toward the developing an alternative set of institutions, which is not likely to be a good thing. I think there are a lot of things we can do to encourage china and bolstering those. A lot of economics is win win, so on the economics side, it would be good if we could agree with china and economic rules that lead to more trade and more investment. Sometime ago at the American Institute of taiwan its really nice to see you. I havent studied chinas view of ukraine closely, but i would suspect they would have a mixed view. First of all there would be deep concern about what they perceive, unz line perceive, as the u. S. Stimulating this quote unquote, revolution, from at least some chinese views. The situation we have today was started by the United States and theres not they dont focus as much on the internal reasons why the intraukraine dispute occurred. We see this they may see a couple of opportunities. One is if the United States gets deeply involved in the dispute between ukraine and russia, that may distract us and diverse ut from paying so much attention to east asia and so much attention to them. Similarly, there may be sort of a view that if we can strengthen our relationship with russia, its a useful card to play against the United States. I hope they would think twice about moving too close to russia, which after all, its a country that violated an International Treaty. In i think they should worry about the precedent russia has set by stimulating accept ra advertise m in a small empty particularly through a referendum. At least some people in china with maybe a sense of humor would see the an analogy there. Thanks. I certainly think richard hit that nail on the head and i just add with respect that taiwan does not lead to taiwans importance have been reduced. From a military estimate by the pla, i dont think they believe that the taiwan military is a significant opponent. I think that the p pla military in a taiwan scenario is much more concerned about u. S. Military intervention. Having said that, im not sure that the pla calculations of that sort are very accurate. I think for the last decade and a half, ive become convinced that the pla has grossly underestimated the capability of the Japanese Selfdefense forces, for instance, but certainly in terms of strategic importance, i think taiwan remains at the head of the list. Im sorry. I really think its way too early to make a sound judgment. We do not yet know who the candidates will be. Although people think they know. We do not know what the mainland policies of those two candidates will be. We dont know who will win. And so there are a lot of variables at play. I do fear that there may be an overreaction on beijings part if the doctor were to become taiwans next president. But i hope they would not overreact, remain restrained and see how the situation develops before taking any kind of preemptive or assertive action. One last point on ukraine then our final two questions. I think another dimension to this is what extent has american policy in ukraine seen us being resolute. Ill use this as an opportunity to do an advertisement. Susan rice is going to be up here, that one, too will be covered live. Shell be talking about the president S National Security strategy. These are on peoples minds. Im not a complete defender of the policy on ukraine or anywhere else, but i would observe that i think theres been a salutary effect a beneficial effect in that, whether what were doing towards putin with sanctions is adequate to stop putin, the its a pretty good deterrent against a truly rational doing something similar because i think the chinese frankly, are a little more capable of rational Decision Making than putin right now and the economic consequence consequences, sanctions, may not be enough to get putin to desist, but there are pretty powerful signal that is the World Community is capable of applying sanctions in a more capable way than before. Thats an optimistic interpretation. Something to it as well. So, time for two more questions. Woman here in the fourth row and then right behind her. I have just been in west pack for the last four and a half years and im now here this d. C. So you talked about defining the ends to then determine what our means would be on this subject of chinas expansion and our policy towards it. If you could define those ends, my question would be what would your answer be and if you could put any percentage of our gdp towards defense spending, what do you think it would take in order for us to maintain position and a role of foreign president s. Following on that if sequestration does go through how would that affect our policy in terms of relying on our allies to support our role there since we did discuss china kind of pushing us out towards the Second Island chain and what would it take for us to maintain our position . Last question. Richard when you brought up what china should think about what russias doing, i think you underestimated what china is doing about that and one thing is strengthening military ties with russia so what can russia sell china . What is the possibilities, this is the main theme here of a strengthened Chinese Military through new connections with the Russian Military and how should the u. S. Respond to that . I think what well do is just work down the row and answer your questions and any concluding thoughts. Folks may have. Ill begin with one thought on u. S. Military spending. I dont want to peg things to a certain percentage looking out indefinitely to the future. Even if sequestration occurs im hopeful that the president ial race will change the calculus of the United States, so it wouldnt last more than two years i would hope. I think there is a case for modest, real increases in the u. S. Defense budget and heres a very, i hope stark way to put it. That i hope is compelling. A big part of the le balance strat yi, the pivot of the military event is largely us navy and the central that makes much sense if the navy is stable or growing because you have 60 of a smaller force that may be less than 50 of the old force and if you do the math, sequestration is roughly at the cross overpoint. In other words, it would force a reduced fleet size if it was to stay over longterm, which would be in the range of lets say 240, 250 ships maybe less and 60 of that is no improvement. Relative to 50 of where we are today. Its more or less a watch. Thats a clear way and a reason im against sequestration. I dont think we need a build up but a nice, steady, real increase would be, to me, a good thing. Over to you. Thank you. If i had a real good answer for the question id probably call the secretary of defense this afternoon and let him know, but its a very important question. It has to do with the entire military Investor Confidence in this country. By the time the latest Aircraft Carrier is deployed, its probably going to be a 20 million machine. I dont know that even the United States is going to be able to afford that in the long range. Thats hairsy as you know. The four president s point that mike has just addressed is really critical. It goes to much more important longterm, the rest of century or mid century strategic question for the United States. Are we going to be able to afford or should we maintain the president s, do we need in the case for instance, trying to look ahead to see the status of japan, korea, whether unified or not, china and so forth, is it going to be necessary or worthwhile for the u. S. To maintain a military presence in northeast asia . Just one example. I think one could argue its not. It would not be necessary. Your final point though i think goes back to something several maybe almost 20 years worth, trying to engage more active participation to maintain a forward presence that we believe to be necessary today. I think he was one of the navy, for instance theed idea being we rely on our allies. Thats more than relying on the Japanese Maritime Defense Force on or the republic of south korea. Which are focused to the north. Once should the condition be unified, i dont see the rational for believing that seoul would want to extend military participation much beyond the peninsula. As far as Southeast Asia is concerned, i think once again geography counts very much and at the first sign, should it become apparent that the u. S. President s is going to become a declining presence i think were going to see a shift in foreign policy. Just want to say our economy is starting to grow. In the short run to grow about 3 in real terms. As the economy expands, it makes sense theres nor infrastructure needs, education and potentially, more National Security needs. Im not the person qualified to talk about that, but as the economist in the group theres certainly the potential to spend more resources and in many of these areas i know, like infrastructure and edge kaxucationeducation, if you dont spend money, the economys going to slow down and youve basically shot yourself in the foot. So i hope we dont get stuck in a moment where we feel we have to hold or reduce in real terms when in fact our deficit is at a sustainable level and our economys growing well, so we have the potential to meet needs that will continue to make our economy grow well. So, let me take the prerogative of the chair to thank you all for being here. To ask you as ive been told, if youre going to stay at brookings, enjoy our cafeteria across the hallway. Youre asked to leave this room quickly to get ready for susan rice, to wish my mom an 80th birthday, to thank the panel. Jobs numbers were released this morning. Show an increase of 257,000. Wages went up by the most in six years. In the meantime, the Unemployment Rate ticked up to 5. 7 from 5. 6 in december. Todays statistics show hiring and job growth is stronger in december than previously thought. Our live coverage of Congress Continues next week. The house now will then tuesday noon eastern for morning hours. Get underway at 2 00. Work next week on the Senate Passed bill to approve the construction of the keystone xl pipeline. Yesterday, Kevin Mccarthy and steny hoyer previewed next weeks schedule on the house floor. Heres a look. Speaker on monday, no votes are are expected in the house. On tuesday, the house will meet at noon for morning hour and 2 00 p. M. For business. Both will be postponed until 6 30. On wednesday and thursday, the house will meet at 10 00 a. M. For morning hour and noon for legislative business. On friday the house will meet at 9 00 a. M. For business last vote for the week are expected around noon. Mr. Speaker, the house will consider a number of suspensions for next week, a complete which will be announced by close of business tomorrow. In addition, the house will consider s1, the senate ketone bill. After six years of waiting this bipartisan bill, which will create more than 40,000 jobs will finally be placed on the president s desk. I do sincerely hope he considers his long standing veto threat and signdes with the american people. Mr. Speaker, the house will also consider two critical tax packages next week that will provide much needed certainty for americans and Small Businesses. Hr 644. The fighting hunger and senty vak by tom reed will make Charitable Giving provisions permanent. This will include provisions offered by eric paulson, erin shock and mike kelly. Together, this package will make a real difference in the lives of americans by encouraging lives of property and enhancing deductions for food contributions and to those in need. Finally, mr. Speaker, the house will consider hr 636, americas Small Business tax relief act sponsored by pat tea berry with additional provisions offered by dave reichert. This is essential to creating stability for our nations best job creators by making increased expensing permanent and i thank the gentleman and i yield back. From. Our live coverage of the u. S. House will start at 12 00 eastern on tuesday on our companion network, cspan. The Senate Returns live monday at 3 00. Theyll debit the nomination of the National Director of drug control policy. Later in the week in the senate, senators could continue work on a Homeland Security spending bill, which includes provisions to block the executive order from the president on immigration. A fourth attempt to proceed to the bill is possible. Current funding for the department expires at the end of the month. Here are some of our featured programs for this weekend on the cspan networks. On book tv saturday nigh at 10 00 on afterworks, washington brur owe chief for london. To stop the taliban advance in afghanistan. And sunday at 10 00, Senior Editor at Melville House books on the u. S. Senates torture report and why his company decided to publish it and on American History tv all this month, interviews with former korean war p. O. W. S. This sunday, charles ross, an Army Sergeant who was captured by the chinese held from 1950 to 1953 and just after 9 00 a look back at salma with Eleanor Holmes norton and bill plant. You can find our complete schedule at c cls dln. Org and let us know what you think about the programs youre watching. Join the cspan conversation. Like us on Facebook Follow us on twitter. Coming up shortly on cspan 3, live coverage of a discussion on libertarian view of the president s state of the union. Cato Institute Scholars will also talk b about issues libertarians should focus on this year and what to expect from the new congress. You can see that live at 12 00 eastern on cspan 3. Until then a portion of from mornings washington journal. We spoke with Donna Edwards on the House Democrats agenda and president obamas 2016 budget request. Now joining us is Donna Edwards, a democrat from maryland, a member of the democratic steering and policy committee. Also a member of the Armed Services committee. Did i get that right . Transportation and infrastructure. Thats all right. Sorry. I can talk about that, too. Wel let you. Recently, the president introduced his budget and youve been on capitol hill long enough to have heard this. Every year, the president interviews his budget its always dead on arrival. So, whats the purpose of having a president introduce a budget . I think for me, the purpose is to see the president s vision for the nation, where we want to go and then its Congress Responsibility to take a look at that, come up with some of our own ideas, frankly b, and put those on the table, but i found it helpful. I think the president laid out a lot of those priorities in the state of the union and that sent him and gave a little bit more meat to the bone with his actual budget and now, its our turn. And is there going to be a return to regular order . Well, you know, im a democrat and so, we dont control things. Thats up to Speaker Boehner. To decide that. I hope so. I mean i know we just all of us just finished our committee organize organizing, hearings have started on capitol hill. And so, i hope that that is true because i think its an opportunity to try to find some compromise, some agreement in places which you just cant do when you put a bill on the floor at the last minute. And so i hope that we arent going to have more of the same of that. Although frankly, from the beginning of this congress it looks like thats what weve got. What are the issues yall are dealing with is the issue of Homeland Security funding. What is going on there and whats the democratic position . Yeah i mean, i think the its the american position, which is that the department of Homeland Security can continue to operate, look out for the security of our hoemd, protect our northern and southern borders and our waterways. And they cant do that if they dont have money and the department of Homeland Security is slated to basically shutter its operations at the end of this month. And you know republicans need to put a bill on the floor to fund the department of Homeland Security and stop Holding Things off because theyre having a fight for the president over his executive action on immigration and frankly, if youre really concerned about our borders, youd make sure the department of Homeland Security is fully funded and operational. For us in metropolitian washington, weve got a lot of Homeland Security employees, 280,000 of them throughout the department. Who will even though they may have to work because theyre essential, theyre not going to be receiving paychecks. Republicans promised us the last time they shut down the government, they wouldnt do that again and yet, here we are where the republicans saying were willing to shut down effectively, the operations of the Homeland Security, jeopardizing the security of the nation. Look at whats happened in france and australia. We live in a dangerous world and we need our department of Homeland Security fully operational. Its irresponsible not to fund it. And so i hope that there is some kind of reality before but havent the republicans in the house passed, Congress Passed a bill saying heres the funding for dhs, but it doesnt include the immigration provisions that the president issued in this executive order . Heres the thing, one, that is essentially dead on arrival in the senate. Its never going to make its way to the president. The president wants a fully funded bill and the fact is that if the republicans in Congress Really want to deal with immigration, there was a bill that passed the senate in the last congress. It has enough support in house to pass the house and go on to the president. We could both deal with immigration and fund our department of Homeland Security, so i think the ball is in their court right now. The president s executive action, i fully support the executive actions on immigration and i think its a responsible thing to do and the president has acted a complete inertia by the congress. John lewis and butterfield of the cdc, march 3rd speech. Im going to tell you i think that the leadership in congress and Speaker Boehner effectively going behind the white house back against the, against standard protocall, inviting a head of state just prior to an election in their county country, its unheard of and i dont think we should you know, provide any kind of support or cover for that. I havent made a Firm Decision myself and i have to tell you, i am leaning against not attending the that address. In fact, i did go to the last address. The Prime Minister netanyahu was actually before the congress twice already. He wants to come a third time. Which is unprecedented. Only Winston Churchill has addressed the congress three times. And i went to the last one, but the last one was down according to protocall. It was an agreement between the democratic leader and the speaker and in consultation with the white house. That is not what happened here and it looks like its just plain politics and if you remember, Prime Minister netanyahu actually tried to interfere in our last election for the last president ial election and so i just dont know why anyone would endorse or support this. I will say i will be going to the joint session of congress that was done according to protocall, inviteing pope francis to the congress. I cant wait for that. Zpl thats in september. Another issue though, heres from the wall street journal. Obama to Seek Congress approval to fight militants. To seek authorizations for operations against Islamic State militants, kicking off a political fight that could see the administration clash with members of both parties over how much authority to give to president s. First of all whats the issue and whats the president has been operating under a use of force agreement, early 2000s and that there needs to be a current authorization, i dont know that i would necessarily support that, but i think its important to have a current authorization that is limited in scope to the work that has to be done and i think there are some of my republicans colleagues who would for this operation, give Carte Blanche to the president to operate and there are others of us, and democrats and some republicans, some republicans, that are saying no we need to limit it in scope. We dont want Ground Troops in syria and on the ground there. But and give the president the kind of authority that he needs. That said im not really clear im supporting that authority but i think it is important for the president to have the agreement of kog congress and the white house. Donna edwards you are a member of the Democratic Caucus and the Steering Committee for the democrat house, what is your ability. I like to be a reading and someone who studies issues. I never go to the floor of the house to vote on major legislation without studying it and hearing from a lot of people. When i came to congress i came from working with outside and advocacy organizations and funding with them. I know a lot of organizations around this town and around the country that provide analysis and information and i like to take all of that in. I dont think that one member of congress can just make a decision herself on her own, as i like to take that in. I hear from my con stiduents that are knowledgeable because they are here in the region and you cant fool them or get anything by them and then i make decisions. I like to study issues. I think that is the reason that nancy pelosi elected me to costeer the committee. It is a committee that defines and helps to illustrate policy priorities for democrats in the house and im looking forward to a full agenda over this next year to look at things like income inequality, providing childcare assistance as the president has illustrated what it means to fund our Community College and provide for education, how we have to create jobs by growing the middle class economic based on rebuilding our nations infrastructure and investing in research and technology and so i plan as part of our Steering Policy Committee along with my colleague rachel storing, from connecticut, and well pull together a framework to illustrate priorities that democrats have for growing the middle class and growing paychecks in this country and im looking forward to doing that. And well begin taking calls after this last issue. Edwin christian says please ask mrs. Edwards about tpp and how we are going to be informed. Ive expressed that directly to the president and to the white house. Lets separate things. First of all, the president wants fast track authority, the ability to move trade agreement through the Congress Without any amendment or process. I dont think that that is acceptable. I think if member of congress are going to be asked to vote on something as substantial as a Transpacific Partnership agreement with 11 or 12 nations as a part of that then as a member of congress it would be irresponsible for me not to have some say and influence over that. I would also say from the perspective of the white house which is reaching out to members of congress now, there has to be more transparency in terms of what is in the agreement and negotiated. One of the things i have raised for the past couple of years is the issue of buyamerica provisions and it has been on the books for decades and it brings american firms contracts and american opportunities from american taxpayer dollars and i dont want to open up those opportunities to nations whose own nations dwarf ours. So we have about 550 billion worth of opportunities that are available for u. S. Businesses and that would be stacked up against about 5660 billion from those other nations. That is an unfair advantage. Why i would tell a contractor in prince georges or Maryland County that instead of just competing with folks in california that you have to compete with some in berni. It is unfair to make a decision that a specific vote on tpp because we havent seen it. But the fact is what weve heard is not good. Weve had the experience and American Workers have had the experience of living through the trade agreements. Look at the agreement we struck with north korea a couple of years ago. Our trade agreement has grown exponentially. You mean south korea. I mean with south korea. We dont have a trade agreement with north korea lets be clear about that. But it has grown with south korea. After we struck the nafta agreement i come from a mill family from south carolina. And those jobs wont come back. And there is no way we should enter into another trade agreement that will further jeopardize the American Work force and i think there are many members of congress, republicans and democrats, that have serious concerns with the negotiations that have gone on so far and we havent been active participants in those negotiations. Im a member of congress and that is my responsibility. Under grad degree wake forest law degree of law. And Donna Edwards, her fifth term in congress. Tim from gainesville, youre up. Hi, representative edwards, it is great to speak with you again. Why hello. I spoke with you before and you said it was thoughtful and i spoke with you about the racial issues and i spoke with you also about a cancer that i had and im pleased to report to you that im in remission now due to alternative medicine. Congratulations. What is your question this morning. Well i had acupuncture and other methods. And im a prolife democrat. And if anyone questions that they should listen to your section speech. And they should ask you about questions about sonogram issues. We dont all get the same education and see the same doctors and i would like to know, because i worked in a prolife organization that did hand out services and did try to educate and we were unusual in that regard and i would like to know while i very much agree there is a war on women no question about it and i dont want to see the ugly things that make me a little embarrassed tim can you bring this to a conclusion. To put it simply what can we do to get out more information and why do you think that sonograms are not a good thing. Prolife and your sequestration speech. Are you familiar with what he is talking about . I do. And ill say this to tim and other viewers. I believe a woman should have the right to make their own decisions, just as tim had his decision for his decisionscancer and i think women should make our own decisions about our Health Care Just as we are seeking treatment for different conditions or whether we are seeking treatment for our Reproductive Health care. Im glad that the Affordable Care act enables women to do that on our own and it is unfortunate that republicans in congress have just this last week cast our 56th vote to repeal or change the Affordable Care act and largely many of the votes have been cast on the basis of supporting or not womens Reproductive Health care. Im clear im a prochoice democrat. Roy, paulo illinois independent line. Good morning. Good morning. Mrs. Edwards i want to ask a question about the executive orders that the president has taken. Im wondering if it is not opening up a pandoras box, what if we get a republican in office if he doesnt need to follow and go around and sign whatever he needs to sign and make it law. I dont know what will happen in the future with our country. Thank you. Well thanks, roy. I think it is an interesting question, but the fact is that the president s executive actions on immigration have been taken within his executive authority and every single president that we can name in the last several decades has taken similar executive action with respect to immigration. What the president didnt do is what he describe he couldnt do and only congress could, and that is to make give legal status to the millions of people who are here in this country that are undocumented. He acted within his limited authority with respect to the children and the parents of those children who are essentially, although maybe not americanborn, are american made. Because they went to school and grew up in this country and want to contribute to this great nation. I think the president acted within the scope of his authority and the realle chaenks for the congress the real challenges for the congress and the United States to make sure we have an immigration system that is comprehensive and makes sense and gives people the ability to contribution to this country and contribute their taxes as well because they are working aboveboard and im looking forward to the day that the republicans and in the congress and the senate act on a reform bill because i think if it were put on the floor today and in the house of representatives, it would pass. We know such a measure passed in the senate. Jody is in creston, iowa, on the republican line. Good morning. And thank you for cspan. How are you this morning . Good. Maam when was the last time you read the constitution . I mean actually read it verbatim . Because this was not legal for him to do this. And all of the president s were going off and cleaning up tiny little mine usha parts with the executive action. This will hurt our country so bad, i just dont understand why the democrats cant even bring it up on the floor and debate it. Show why are you guys afraid of it. Debate it. Let the people see what the democrats are actually protecting. Jody why is immigration such an important issue for you . Because i was born in south korea in Southern California and live in arizona. Southern california is now bankrupt. Go ahead, maam. One, i do believe the president has totally acted within his authority i would suggest to jody and others to call Speaker Boehner at the capital and ask him to bring a bill on to the floor as only republicans can since they hold a majority on to the floor. And as democrats we would be happy to debate and vote on the bill. I would urge the speaker and others out in the country who believe that to urge the speaker to bring a comprehensive Immigration Reform bill to the floor of congress and we will debate it and it will pass overwhelmingly. I have young people in my district who werent born in this country and brought here when they are young and gone to school and graduating from school and they want to work and contribute. Washington journal live every morning at 7 00 eastern time. We leave this to Washington Hill and a discussion at the Cato Institute with scholars and the president s 2015 state of the union. Well weve heard plenty of that over the last few years and so where does that leave us . What does that mean for liberty and how will that affect economic growth. What can policymakers do to discuss the current state of the union with respect to financial regulation, tax policy, international trait and intelligence surveillance, i have four cato policy experts. To my left is mark col ab rhea, director of financial studies at cato. Before joining cato in 2009 he was six years at the professional staff of the u. S. Senate staff on banking staff and he worked on Housing Mortgage finance for Ranking Member Richard Shelby of alabama. He has built a career on regulatory proposals on financial and real estate markets so on how it affects low and moderate households and holds a doctorate from george mason. Edward is from downsizing government. Org. Before joining cato he was a senior economist on the joint Economic Committee and with joint waterhouse and cooper and has testified to the senate many times and his articles have appeared on the Washington Post and the wall street journal and others. He is the author of global tax revolution. Edwards was a member of the fiscal Communication Division of the national kaed of sciences. Julian sanchez at the technology of private and Civil Liberties with focus on National Security intelligence. Sanchez served as the washington editor for the news site rs technica where he served telecom. And hes worked for the democracy in america blog and he is a contributing editor. He was written for the National Review to the nation and from the policy blog just secure. He studied Political Science at new york university. And Peter Isakson conducted research on International Trade and investment policy. Hes authored dozens of papers on the subject focusing his research on u. S. China trade relations, trade agreements and institutions, globalization and u. S. Manufacturing and the trade universities such as the antidumping regime and authoring antidumping exposed and unfair trade law and testified before a variety of congressional meetings and a guest on numerous Television News programs and published in the washington journal wall street, and nation review. He holds an mba from George Washington university. Theyll speak for five to ten minutes and then well open it up for q a. Lets open up with mike calabria. It is an honor to be with the audience today. I know it must be tempting to be here other than what is playing outside in the 17 degrees after the windchill factor so it is nice to be in here. So the state of the union has to deal with where we are here today in the country but i want to start with where we are today in the economy. And the economy directly impacts all of us, whether it is weak or strong, it impacts our own job prospects, and impacts the prospects of our friends and neighbors. Dont need to remind you that we are entering the sixth year of recovery since the economy bottomed out in 2009. There are bright spots but i think it is fair to say the economy disappointed in a lot of ways. In the second half of the 2014 Consumer Confidence has picked up but to me an area of tremendous concern despite todays employment numbers is the labor market. We had the Unemployment Rate drop last year to below 6 and a considerable of this decline was workers leaving the labor force, so declining unemployment for the wrong reason. Labor participation rates have been falling since 2006. And while the up tick was only large enough to offset the decline we saw in december. So we are still relatively flat. So put that in perspective. Had the Labor Participation rates remained at 2006 levels, our economy would have less jobs. It was only in december of 2014 that we reached the number of jobs we had in 2007s peak so it took us 7 years to took us back to where we were and that doesnt account for population growth so i think the bottom line is the labor market has fallen far short of where we were and where previous recession terms have seen in terms of other countries. And this mornings job report was a positive in terms of headlines. One thing that concerns me is the 2. 7 increase in teen unemployment since december and given that a number of states increased the minimum wage starting in january and that is a factor well see in the market. Too early to tell but something we need to see watched. And then there is the weakness in housing construction. We did break a million starts last year and an important threshold. Ill say by way of comparison at the peak of the Housing Market we were twice as many at 2,000 starts. And that impacted employment and constructionrelated industries. To summarize before i move on to policy, i think were slowly headed in the right direction. There are a lot of weaknesses that remain. I dont think were near the time where anybody should be taking a victory lap on the economy. There is also an except to which i think it is easy to say that perhaps job market weakness is because of a lack of demand. There could be more demand as a definitional sense but to me more of the economic sense is a disconnect between the labor market between the spending and jobs. Gdp and Consumer Spending for years continued to increase even if slowly when the labor market was essentially flat. This has only changed in recent years. My own view and this topic is debated is that mortgage forbearance creating disenfranchise for jobs and that is one of the major forces behind the labor market starting to recover. Because of the this of this rebound in Housing Markets, mortgage numbers are starting to decline. They havent hit numbers since the 1990s rate and our homeowner rate isnt far from 1960s. And when i work in home finance and since weve gotten back to Home Ownership rates that we havent seen in decades would recall for a rethinking of our u. S. Financing rates. In recent weeks the president announced a lowering of premiums to bring in more bow orrers into the market and manny may and freddie mac has said it is time for take on more current condition and they are lack of any capital. The taxpayers on the hook for any risks they might take. To expand Home Ownerships and in tears i fear this effort will fail as well. And while the induction for the fda, i think the fha marginal borrowers are younger and lower credit will suggest that instead what well see is a reduction in credit quality among fha. That is quite a feat given that they are already subprime for credit qualifiers. So i think this will cost the taxpayer in reduced premium income and have them make the numbers work and it is their problem and not minor the president s problem and well have more losses and bringing in lower quality borrowers. And fhas a particular case of this, but it is not the only program on our budget where the costs are pushed out in further years and have estimated credit subsidies but the estimates for the last 20 years for the fha have underestimated the cost of the program but over 70. So these are costs not in the Premium Program and the programs dont pay for themselves and this is an amount that has to be made up by the taxpayer. Weve seen the cost less in the student loan programs so be weary of government loan programs that promise lots of profits because more often than not those profits are illusionary. So let me talk about what i would call shadow budget obligations. My colleague Chris Edwards our budget expert will talk more about what is on budget. I want to talk about what is not on budget but ultimately eventually comes on to the budget. And that is the sometimes explicit and implicit subsidies in the Financial System. In terms of direct loans and guarantees, the shadow liabilities are over 3 trillion. The largest amount is 2 trillion and again this is stuff directly part of the budget but the costs not reflected like fha, va and rural housing. Student loans are another trillion. Again, these programs end up costing significantly more than they are promised and while those are on budget they are not accurately reflected. Worse of concern is those implied guarantees that arent even on the budget. So for instance, the taxpayer is correctly perceived to be standing behind the 6 6 trillion debt of fannie and freddie. And it is also worse about 2 trillion in private Pension Funds at risk to the taxpayer they may be asked to pick up as well. So important to keep in mind, a lot of figures and contingent liabilities. And equal concern is of actions of the widespread bailouts and the dod frank act leaves the taxpayer standing behind trillons in tax liability. The taxpayer stands behind the 7 trillion in the bank deposits. The question is whether the 6 trillion in other Bank Liabilities is whether the taxpayer is on the hook as well. And that says nothing when you guarantee risk, it is eekon 101 the same is true about the risk in the Financial System, whether it is student loan guarantees or banking guarantees it is risktaking in the market place and that is something we need to be concerned about even if the financial crisis starts to fade into the memory. To give you a sense of the unfunded liabilities, first ill start with one of my former colleagues at cato has estimated that the unfunded liabilities in net present value are about 70 trillion of what promised weve made we cant keep. By way of comparison the bank of richmond has estimated that the shadow liabilities in our Financial System are as much as 25 trillion. So one quickly gets close to 100 trillion in liabilities that is seven or eight times gdp. We dont have the ability to pay that and we wont. So i certainly would say by difference, however, some of the financial liabilities do have collateral behind them. Certainly fannie, and freddy all had mortgages where there is physical property. So summarize the state of our financial fiscal union it is at best shaky. I think our Housing Market has been driven by an immense flood of finance liquidity and that has gotten stuck in the Banking System and not made it to the greater economy. It has been good for banks but not necessarily the economy. When they raise the rates i think Housing Prices will flatten or decline in the coming years. When i was on the helm and everybody chanting Housing Prices havent gone down, and they do decline and when they do nasty things happen. So keep that in mind. And those along the coast like san francisco, my end view is that a Housing Price decline is a good thing. Incomes there are far short of what one would need to be a house but it will be a painful adjustment. And things have be driven by free money from the fed. To the extent this assistance has back door increases, but well wait to see. But over the fundament flaws in our Financial System i very much worry another financial crisis may be well in the works. So the bottom line is to ensure the sustainability of our recovery and i think deep reform is needed, particularly but not exclusively in the area of mortgage finance. And while we are six years past the financial crisis my opinion is the fundamental drivers of the crisis remain to be addressed. So maybe with that very happy note ill turn it over to my colleague Chris Edwards who i know will be even more cheerful. [ applause ] thank you very much, mark. Im Chris Edwards. Director of tax policy at the Cato Institute and editor of downsizing government. Org our website that tells you how to cut the federal budget. President obama has introduced his 2016 budget and ill be talking about the taxing and spending in the budget. The language of the budget is rather triumphant as if the administration has solved all of our economic and debt problems. And his budget policies are rather aggressive and in mar his tax policies are a bit of poke in the eye to american businesses and to republicans who just happen to win a landslide election last fall. So this was not a compromised budget on taxing and spending policy. So to look at spending policy first, under president obama, spending and debt has soared forward debt as a share of gdp has doubled since 2008 and forward debt is the highest in the peace time history and the president s budget seems untroubled by that and will keep debt at high levels. The president proposed budget deficits of around half a trillion a year for the next decade and again the administration sort of seems untroubled by that. But that is 500 500 trillion every year passed on to new americans. The administration in its budget plans no ward off of fiscal doom of Social Security medicare and medicaid which will be growing as a share of economy. The trust fund for Social Security disability runs dry next year and the Administration Just papers over that problem. The Congressional Budget Office projects that federal spending will grow to around 30 of the economy to around 2035. So future americans will be increasingly less free as the government gobbles a greater share of everything produced in the nation. But that sort of scary foergs by the cbo and omb has similar longterm projections. They are optimistic for several reasons. First president obama in his budget shows Discretionary Spending meaning defense and nondefense spending drop marketedly over the next decade. Would you be in favor of that but the problem is the president has no plan to make that happen. No major cuts and terminations. So his showing falling Discretionary Spending is smoke and mirrors to cover up the size of the deficit problem. The second issue is that the United States may see unforeseen wars in the future. Iraq and afghanistan cost us 2 trillion, an enormous amount of money so hopefully we will award major wars but if we do get in major wars were starting with major debt. President bush started his wars with a low level of debt. So they could be catastrophic fiscally as we go higher and higher into debt. A third issue is in these longterm projections of cfo and omb, do not include recessions which will blow huge holes in our deficit or forward budget. So now that the economy is growing it would be prudent to start paying down debt but unfortunately president obamas budget does the opposite. So in sum the official projections are artificially rosie and i think the upshot is that we should scour for programs to cut and terminate, now that the economy is growing, now would be a great time to cut federal spedding and cutting the budget. Org is a great place to look for programs to cut. One areas they should cut is subsidyies to states like education and housing and foundation. These cost over 600 billion a year and they are ripe for cutting. A Good Opportunity i think comes in may when the federal Highway Trust Fund runs out of money. They have a large gap between spending and gas tax revenues. Congress should cut spending down to the level of gas tax revenues to solve the problems and allow the state governments to fill the gap however they want. The president s budget goes in the opposite direction and raises taxes to increase highway and transit spending. That is the wrong way to go. There is no advantage in increasing federal intervention in the nations highway system. State governments can raise their own money to spend on their own highways any time they wouldnt. They dont have to wait for the federal government. So switching over to president obamas tax proposals, there are two problems with them. They would increase Tax Complexity and they are very much antigrowth. It is a curious thing that obamas budget says repeatedly that his tax proposals would simplify the tax code. President obama repeatedly in speeches and in his state of the union says he wants to simplify the tax code. But if you look at the details of his plan he would tax Capital Gains at death, impose a new bank tax and new socalled war on buffet tax on high earners and proposes new complicated tax credits. There is a tax credit for twoearner tax credits and giveaway tax credits such as a new manufacturing tax credit. These would all complex the tax code which is the wrong way to go. They are also antigrowth. He would increase the federal Capital Gains tax rate from 2428 . Our Capital Gains tax rate would be 32 . It is remarkable. If you look around the world at the trade partners, the average Capital Gains tax rate is 18 . So we would be 32 and the average ocd country is 18 . Why do other countries have low Capital Gains tax rates because they know the low Capital Gains tax rates are good for entrepreneurship and startup companies. The increase unfortunately is very much antisilicon valley. He would impose Capital Gains at death. The problem is we already have a 40 estate tax that hits wealth at death. If you look around the world, countries generally either have a state or inhartance tax or they tax Capital Gains at death and generally dont do beth and the president wants to do both and the problem is that will hurt high earners and hurts the economy and hurts all of us. He would increase cooperate taxes. We have the most competitive Corporate Tax in the world. We have the highest rate with state taxes on top, the u. S. Tax rate is 40 and the average Global Tax Rate is just 24 . A second problem with our tax system is we tax corporations on a worldwide basis. The United States sort of claims the right to tax u. S. Companies on their operations throughout the entire planet when you think about it is a bizarre way to set up a tax code. Every other ocd country has what is called a territoryial tax company, means they dont tax about the country nationally. So the problem with the expansion of Multi National foreign operations is it would make the United States to headquarters a Multi National corporation. Weve seen this development of in versions in recent years. That is caused because the United States is a bad place to headquarters Multi National corporations. Obama wants to put a new 19 tax on the foreign subsidiaryies of Foreign Companies most other countries put a tax rate of zero on their foreign tax countries. Obama seems to view Foreign Companies as an enemy to be punished but foreign subsidiary subsidiaries are complementaries to u. S. Companies. The better the Foreign Companies do the better it is for u. S. Production and workers. So when General Electric is successful in foreign subsidiaries it is good for ge workers here in the United States. So the president s budget goes in the opposite of real tax reform. Tax reform to this Administration Means to penalize high aeshers earners and businesses and so well have to wait until the next president for a tax code that is simplifies the code and is good for the economy. Thank you. [ applause ] thank you all for being here. The other state of the union speech, i was heartened to hear president obama saying that while others had moved beyond the debate about our Intelligence Agency surveillance program, he had not. My enthusiasm weans when he said he would issue a report about what they had done internally to issue safeguards on those program and the report that was issued this week underscores how far short theyve fallen in Reform Efforts not just from what several independent panels but from what the president himself committed to just over a year ago. I think what we see in that report is by far not enough both from a Civil Liberties perspective, because we have constructed a truly unprecedented and sprawling architecture of Data Collection on the premise Data Collection requires extraordinarily broad and indiscriminate collection of data about the guilty and the innocent alike and an architecture that because of its breath could, in a time of crisis, or at the behest of people with poor motives be that with a flip of a switch turn from legitimate to illegitimate purposes in the way we have seen in our history repeatedly over decades under Intelligence Services with inadequate oversight. Although they lacked the capabilities of the modern nas and fbi. But we see distrust in Global Markets of American Technology companies and projects that the american Cloud Computing sector alone stands to lose something on the order of 180 billion over a period of three or four years because of that declining trust. Especially in the enterprise sector. Weve seen precipitous declines in global orders for ciscos reuters following reports of in stalling malware on those not but for particular individuals but at the corporate level but both to restore confidence in our Civil Liberties but Global Marketedness, we need to do quite a bit more. So of course at the end of the last session we saw the main surveillance reform vehicle, the usa freedom act stall in the senate. The most prominent component of that was reform to the patriot act and related authorities to get telecommunications metadata, which is the basis for the bulk of the telephone data by Edward Snowden and the president voted to stop that and the metadata was recently renewed again and certainly bodies the Civil Liberties over sight board and the president s handpicked Surveillance Review Group have both said this is a program of extremely limited effectiveness that could safely be ended and should be ended. The private Civil Liberties board went into some detail examining claims about the efficacy of the program and terror plots that have been foiled and went through one at a time in demonstrating 11 out of 12 they had provided no intelligence use to fbi or nsa and in the 12 cases providing monetary support to al shabab has been the first way they found some useful information but it was not necessary. The targeting methods would have sufficed. We have had the agreement of the Intelligence Community with the approach outlined in that legislation that can duplicate the functionality of that program, although it is of limited effectiveness weve seen the general counsel lob lit at a conference at cato and then again at the Brookings Institute saying the Intelligence Committee was comfortable with this reform and they wished it had passed and yet we hear frankly somewhat confusing invocations like the attacks on Charlie Hebdo and the rise of isis invoked as reasons that again, despite what the Intelligence Community says we need to preserve a domestic call programs. There is such a thing as being more kam than the pope being more catholic than the pope. We need to not hamper the Intelligence Mission that there should not be there should not be the resistance we see. Similarly, weve not seen any significant reforms to collection under section 702 of the fieza Amendment Act an authority allowing general warrants that permit nsa analysts to select foreignbased targets and also allowing our communications with americans and we know that at least in the last count there were over 9,000 such targets under one order one quasiwarrant task. And of course again many, Many American communications are swept up in the process. This is concerning given we know the fbi is authorized to search these data bases for the identifiers of americans. So people could not be legal to collect on directly because they are in the United States without a particularized judicial warrant can be pulled out of this enormous pool of Global Communications from a enormous number of targets that hayden just stressed are not necessarily bad guys because nsa doesnt just look at bad guys but people that are saying things that are interesting. And the fbi can search this data base for American Communications even when they are conducting mere assessments, meaning not a full precedent the investigation based on some evidence of wrongdoing but just to satisfy themselves that there is not wrongdoing being committed. It is also concerning because of a practice we learned about called socalled about collection, that is to say a target is selected and accounts or phone numbers are selected which is typically most concerning for email address or online account, is tasked for collection but the collection does not just encompass communications to or from that address, rather all International Internet communications are scanned and the contents scanned and the Communications Neither to nor from the target and perhaps to or from americans are collected if they contain a reference to a target identifier. Again, this recent report has proposed a number of additional internal approvals for the use of some of these techniques but as Justice Scalia said in a respent Supreme Court opinion, our founders did not fight and die for strict erin ternal protocol s protocols. By the Foreign Intelligence Surveillance Court own standard, in fact, these techniques would appear to be unconstitutional. The Foreign Intelligence Court has articulated an exception from the traditional warrant for electronic searches suggest that when a search is conducted both for a foreign intelligence purpose and when it targets someone believed that the probable cause level of center of agent to a foreign power there is a special needs exception from the warrant to get a particularized judicial warrant and that is not a requirement of this type of collection. It requires that collection target foreign persons but does not have that additional requirement so you have communications of u. S. Persons who are protected by the Fourth Amendment collected under conditions that dont satisfy the own criteria for a foreign intelligence exception. That should be a problem i think. Weve also heard calls increasingly, even as we are hearing dire warnings about the state of american Cyber Security to restrict encryption policies, including platforms used by people that provide device encryption on things like smartphones. These are extraordinarily problematic because very little evidence has been presented that in fact this is proving a obstacle to any concrete investigation into the enormous universe of data that we have cant be obtained in alternative ways but it is principle because the government can require you to store your own information in a format designed to facilitate their access though you have been committed of no crime it is as though you had to write your diary in english to make it easier in case the government wanted to read it. It is problematic from security as it is just wickedly difficult to create any kind of Communications Technology or system that is secure against unauthorized salt and working against its own user against only those entities which you wish to provide access to and in the Global Market place trying to sell devices and technologies to have a deliberate architecture for Security Breach built into them is a difficult proposition and slightly more subtly it is problematic because it entails nonobvious design constraints that when a Communications Provider retains communications you bake into that mandate design constraints that again may not be obvious to the nontechnical. But for instance, you push people from distributing Pure Communications architecture, which are hard to intercept, even if there are good technical reasons not to want to implement that architecture. Finally the unifying problem that brings all of these things together is the extraordinary lack of transparency. A lot of the programs i talked about were implemented subject to secret rulings of court and secret interpretations of statutes by government lawyers wildly differing from what any ordinary member of the public would have understand the law to be authorizing and what many prominent legislators understood themselves to have authorized any reform to be credible, i think with the public, in think of these areas is going to need to be bundled with reform requiring some minimal level of transparences and major decisions from the fisa court and in a democracy we believe there is no such thing as secret law, let alone a body of secret common law. We may not know about the state of the union as the fbi and the nsa do but we should at the very least know what the state of the law is. Thank you. [ applause ] hi everybody. Thanks for sticking around. Im going to speak about something that is a little less scary than what julian just described but important nonetheless. The state of u. S. Trade policy is probably closer to the libertarian model or ideal than any other policy, not because the government is not encroaching in trade policy or that because it is particularly libertarian, is that government encroaches more in these other spheres of our public lives. So were still a long way from the libertarian ideal in trade policy and that ideal would be free trade. The free flow of goods and services across borders without tafrs tariffs or discriminatory restrictions the free flow of investment across borders in and out of the country, into any industry and any and all industries, the free flow of labor in and out of the country. So the moral case for free straight is compelling and people are entitled to the fruits of their labor and to dispose of their property how they wish and the government interfering in those decisions and trying to tilt that balance so their products are cheaper or taxing foreign producers so their products are cheaper and that is where the unfairness is and it messes up incentives. It causes people to make political decisions instead of economic ones instead of in vesting in r d and making a mouse trap. Companies are more inclined to invest in politics and k street and companies that dont want to invest in washington have to spend on washington because their competitors are here asking for things an demanding things and so it creates this problem and it distorts markets because the producers dont know what to to produce to satisfy consumer demands. So ill get off that high horse. Ill talk more about the mission of the trade center at cato. Our goal is to is to educate the public and policymakers about the benefits of free trade and free protection. That that was our goal i would have lost my job a long tile ago. So where do we stand about illuminating people about free trade. Well is the public more aware about the benefits of free trait than last year or five years ago. If you ask the poll, you see people begrudgingly the acceptance that the United States needs to be engaged in the Global Economy but you also see reticence, reluctance, skepticism about the reluctance of trade on jobs in particular. Lets look at the political dialogue. Well that is still fairly partisan. Republicans accept freer trade representing business interested. Not necessarily free trade but protrade, proexpert. Democrats tend to be guided by their labor and environmental and anticorporate interests are opposed to trade. But interestingly i would say more so than any of the time in my 14 years at cato prospect are greater at any time in that span and that is ironic considering the president who is presiding over this state after fairs is a president who never really made a case for trade liberalization. And he didnt even make a state even at the state of the union, he said we have to ebb gablg in engage into these because if not well be left behind and china will make the rules so it is something that we have to do rather than beneficial that we should do and to me that is not the way we should pitch trade. And let me digress and give you 150 years of trade policy in one minute. Democrats werent all the party of protectionism it was the other wail. From the civil war until 1934, republicans were the party of the protection. Tariff is the party of trust. Big business didnt want big business because they wanted the trade and until nafta trade was a good thing. After nafta, democrats started really peeling off and opposing trade. And when g. W. Bush was president , it was at the beginning at least, it seemed unlikely the trade agenda would go anywhere, there was internal combustion going on here in the United States, but after 9 11 there was a new impetuous for globalization so show solidarity and was a majority the republicans controlled congress and the senate and the house and in seeking trade Promotion Authority president bush didnt want to incorporate the republicans in congress didnt want to incorporate the demands which were for liberal trade agreements. So trade passed on a liberal basis and all of the trade agreements were fairly bipartisan. When obama when democrats took control of congress in 2007 there were three pending by lateral agreements negotiated with clom columbia and panama and taken off track by nancy pelosi and so that climate prevailed. So when Obama Took Office he capitulated and didnt push these trade agreements at all and so for several years these agreements laid fallow and when the republicans took back the house, in 2011, the president said ill help get these agreements through and he did work with congress to get these agreements done and announced were ramping up efforts in the Transpacific Partnership and sent his ftr to set up the deal but never made the case of why we should do this and then the 2012 election was rhetoric on trade and antitrade. And last was introduced on a bipartisan basis but harry reid said dont think about bringing this to the floor and we wont vote on it and they didnt. So right now we are at the stage where we are trying to negotiate and get trade Promotion Authority for the president. There is language being written now in Senate Finance and house ways and means and likely by the end of the month something will come out. I think trade Promotion Authority is a great idea. Under the constitution, the congress can make the policy and the president can enter into treaties and it is a skpeedy ant and congress is saying you must do x, y and z and cant do a, b and c and we will vote yay or nay with no filibusters. It is described by opponents as sort of an executive power grab. Congress is just capitulating and giving away its responsibility to the president and that is not the case. I think it would be good for the president to have good trade promotion a agreement, foreign negotiators are not going to put their best offers on table unless they know the deal they negotiate is going to be able to withstand congressional scrutiny. In other words, wont be picked apart by congress. So there is a lot of opposition to the trade agenda itself, meaning the Transpacific Partnership negotiation. And then there is also the transatlantic negotiation that is going on the ttip. Im not sure that im going to support the tpp or the ttip. I think im inclined to do that because i think it makes us more economically free. But these trade agreements have a lot of protectionism baked into them. Trade agreements are not free trade. They have industries entirely carved out from liberalization. Some tariffs are phased out over long periods. For example, the Auto Industry wants there say 2. 5 import tariff on automobiles. The Auto Industry wants to phase that out over 25 years. So like, one tenth of a percent every year. There are also provisions for rigid intellectual property provisions. Intellectual property is a monopoly. Do we need some . Maybe. Do we need more than we have under u. S. Law, probably not. But some of the agreements are pushing for that, or pushing for investors, investor rights, for Foreign Investors to be able to go outside of the u. S. Judicial system if there has been expropriation or treated unfairly and asset values have declined. U. S. Companies would have access to the third Party Tribunal system as well. I dont think it is necessary. I will evaluate the agreements by whether or not theyre liberalizing. And i think those who want to nip trade in the bud by denying fast track or trade Promotional Authority have it wrong. Get trade Promotional Authority and congress can still vote no if they dont like it. The other issue that i want to bring to your attention is the Export Import Bank. That was supposed to lapse last year in september it was reauthorized temporarily through june 30th, the Export Import Bank is an export Credit Agency which allegedly finances export sales that private sector banks would be unwilling to touch. If that is the case, if thats what it does theyre putting taxpayer resources at risk. Defenders of the banks say that theyre making money for the treasury. There is no really no risk. Thats like driving home drunk and then rationalizing the next day, i made it home safely last night, i can do it again tomorrow. There are taxpayer dollars at risk. But also this is not been a big part of the debate, im trying to get it into the debate there are costs. Americans love exports right . Exports are good, imports are bad, trade accounts the scoreboard, were losing the trade, we have a deficit and everybody is cheating, we love exports, right . Thats the wrong way, of course, to think about trade. But because people think exporters are so good, xm bank thinks that oh, we underwrite exports, were good, reauthorize our charter. But there are costs. There are costs to other companies in the same industry that dont get xm subsidies. Theyre put at a disadvantage. The best example is delta, delta has been raising the roof about subsidies to boeing. Xms primary customer is boeing. But when boeing boeings customer like air india air ethiopia, get subsidies from u. S. Taxpayers, u. S. Taxpayers are subsidizing the competition of u. S. Carriers. And delta has made a big deal about it. But think about it there is 50 billion of subsidies that went out over the past seven years in manufacturing. Each of these manufacturing beneficiaries has a downstream customer. And these customers are put at a disadvantage the same way delta is. So im hoping that this the bank is not reauthorized. Its life is through june 30th. And thats something that were standing for. We wrote about it in one of the papers out there the cato suggestions for the 114th congress. Ill stop there. Thank you. [ applause ] well, we do have time for some q a. Really only one rule and that is to express your question in the form of a question. But otherwise were ready to go. Yes, maam. Yes my name is sharon, voice of the moderate. I have a question to follow up on the import export bank. Ive talked to progressives and they believe that they want the bank reauthorized because of green technology. Then ive talked to the hawks and they want it reauthorized because they think the republicans are going to change it so weapons can be included as one of their things they will ensure, and if that happens well be selling a lot more weapons and people at the dod tell me they dont want that because we have vets going over to afghanistan with one limb because they need people and we dont have enough money for the va to take care of the people that we need to take care of. So my question is your statement about the export import just made me happy because finally Somebody Just says that other companies are hurting by doing this, so the issue that i have is how does it get explained to the general public so its clear because i dont think Congress Really gets it. Thank you. Excellent question. I wrote a paper about those downstream costs a few months ago, and distributed up here ive been told people having a hard time understanding. So im going to try to revise it a little bit and make it more accessible. What i find to be the most interesting twist in this whole xm debate is the support that xms reauthorization is getting from progressives. They have spilled tons of ink and shouted from the rooftops about corporate welfare and theyre supporting it. And the only reason that i can imagine theyre supporting it is because the proponents of getting rid of the bank come from the right the tea party. And the tea party stands for we must be against it. I think that motivates a lot of opposition or lots of support for xms reauthorization among progressives. Thank you. In the back. Yeah. My name is adam. I have a question about we are now out of recession. Do you think that another crisis is possible . Can you identify any indicator that will show that maybe we are not totally out of recession . Sure. Im reminded of an economic forecaster friend of mine who likes to say give a number give a date but never give both. So i try to in that mind frame i say i am absolutely 99. 9 show we will have another financial crisis some day. Boy, i wish i knew when that was going to be because maybe i could make some money. I dont know when it is going to be. So certainly there are several sectors of the economy im worried about. It is a general rule of thumb when you have long stretches of time when the real post inflation rate of interest is negative, that is youre essentially paying people to take money. Im certain if you pay vast parts of the public to take money, somebody is going to do something dumb with it. So we had six years where the fat has run and negative real Interest Rate policy. That, to me, is distorted property markets, distorted equity market it is distorted the bond market, so when we see that unravel again, it is a question of when. I thought the Housing Market was going to in 2004, i was off by a year and a half. Again, cant say when i think it is going to be, but i think within the next five years, were going to start to see property markets equity markets level off, go down in some areas. There are still there are some positives. I do think the banks are under capitalized, but better capitalized than they were. I think the amount of risk in the Mortgage Market is big but not as bad as it was. There are other areas. I dont think this sovereign debt crisis in europe is anywhere near being solved, so thats a very big overhang. But, again i dont think we have done dealt with the fundamentals and ill end that just by simply saying you rarely get a financial crisis without some sort of expansion and asset prices and expansion of credit. And we have seen both of that in this case. And, again, whether the companies have made better decisions this time around remains to be seen. I would add to that, you know recessions happen. Economists havent figured them out whether theyre called Business Cycles or whatever you want to call them, theyre complicated, and economists cannot foresee when theyre going to happen. If you go back to january 2008, when the cbo introduced its budget projections, it did not see the recession coming that had already started in december of 2007. In january 2008, cbo saw a rosy future of rising growth 2 , 3 . Economists have no idea how to project future economic growth, forecast market is terrible because we dont totally understand how the economy works. So we will have another recession. I dont know where it is going how it is going to what it is going to be caused by caused by a central bank screwup or changes in Energy Markets or whatever but to me the upshot is we ought to be prudent with the federal budget we ought to get deficits and debt down now, while we have a chance. The economy is growing now. Now is a good time to start making some of these reforms we need to make because, again, what if we get into a deep recession, what if we have another major costly war, and it is going to put the country in a terrible situation because were going to be starting off from a very high level of debt. So we ought to be prudent, pulsemakers ought to be prudent. I dont see much of that on either side of the aisle in washington. Yes, you, sir. This is directed at mark calabria, but anybody else who has anything to