Sunday, November 20, 2011

Terrorists Spies and Hackers - FBI Director Robert Mueller Speech (Full Transcript)

  • Robert S. Mueller, III
  • Director
  • Federal Bureau of Investigation
  • Commonwealth Club of California
  • San Francisco, CA
  • November 17, 2011
Remarks prepared for delivery.
Thank you, Mason, and good afternoon everyone. It is always good to be back in San Francisco, and to meet with the Commonwealth Club.

Two months ago, we marked the tenth anniversary of the September 11th attacks. The horrific events of that day were the prelude to a decade of political, economic, and cultural transformation—and globalization and technology have accelerated these changes.
Consider how different our world was in the summer of 2001.

The leaders of Egypt, Iraq, and Libya were entrenched in power. Barack Obama was an Illinois state senator, and Arnold Schwarzenegger was just a movie actor.

Ten years ago, most Americans had never heard of a credit-default swap or mortgage-backed securities. Lehman Brothers had just celebrated its 150th anniversary.

In 2001, Mark Zuckerberg was captain of his high school fencing team. Borders Bookstores had $3 billion in annual revenue; meanwhile, “Kindle” was something you did to a fire, and a “Nook” was merely a small corner of a room.

And back then, most Americans knew little about Usama Bin Laden or al Qaeda.
At the time, I was the U.S. Attorney here in San Francisco, and I myself paid little attention to those terrorist attacks occurring overseas.

Today, our world can change in the blink of an eye—and the effects of that change are felt more rapidly and more broadly than ever before. Consider the current economic climate. When companies fail to recognize and adapt to change, they can go out of business almost overnight.

Law enforcement and the intelligence community face a similar challenge. If we in the FBI fail to recognize how the world is changing, the consequences can be devastating. Lives can be lost…our national security can be threatened…and the balance of power can tip toward our adversaries.

Terrorism, espionage, and cyber attacks are the FBI’s top priorities. Terrorists, spies, and hackers are always thinking of new ways to harm us. Today I want to discuss how these threats are evolving. And I want to share what the FBI is doing to stay one step ahead, to keep our nation safe, prosperous, and free.

Let us begin with the terrorist threat.
During the past decade, we have weakened al Qaeda due to the coordinated efforts of our military, the intelligence community, law enforcement, and our international partners.
We have captured or killed many al Qaeda leaders and operatives, including Usama Bin Laden and Anwar al-Awlaki. We have shut down terrorist training camps, frozen their finances, and disrupted their communications. Most importantly, we have uncovered dozens of cells and prevented attacks.

Yet core al Qaeda, operating out of Pakistan, remains committed to high-profile attacks against the West. We confirmed this with the records seized from bin Laden’s compound upon his death. And we saw this with the plot by Najibullah Zazi to bomb the New York subway system in 2009.

Meanwhile, al Qaeda affiliates have emerged as significant threats. Al Qaeda in the Arabian Peninsula, operating in Yemen, has attempted several attacks on the United States, including the failed Christmas Day airline bombing in 2009, and the attempted bombing of U.S.-bound cargo planes in October of 2010.

Most recently, we have a growing concern about the threat from homegrown violent extremists. These individuals have no typical profile; their experiences and motives are often distinct. But they are increasingly savvy and willing to act alone, which makes them difficult to find and to stop.

The recent case of Hosam Smadi is one example. In 2009, Smadi was a 19-year-old Jordanian citizen living in Texas. Although he espoused loyalty to bin Laden and al Qaeda, Smadi was not affiliated with any group or other would-be terrorists. He had become radicalized on his own, through the Internet.
When Smadi expressed a clear interest in attacking a Dallas skyscraper, the FBI used undercover agents to set up a sting. Three agents who spoke Arabic began talking with Smadi, first online and later in person. He believed he had found an al Qaeda sleeper cell to assist him.
After months of planning, Smadi parked what he believed was a truck bomb underneath the skyscraper, and dialed a cell number he thought would detonate the bomb. But the bomb was a fake, supplied by our undercover agents—and the call signaled agents to make the arrest. Last year, Smadi was convicted and sentenced to 24 years in prison.

Intelligence led us to Smadi. And the combined efforts of our federal, state, and local partners helped us to stop him—before he could harm anyone.

We in the Bureau will continue to enhance our intelligence capabilities—to get the right information to the right people at the right time. We will continue to build strong partnerships—for these tools have been the foundation for our success against terrorism over the past 10 years.
We must keep adapting to these changing terrorist threats, to stay one step ahead of those who would do us harm. And we must do all of this while respecting the rule of law and the safeguards guaranteed by the Constitution.

Now let us turn from terrorists to spies. Many people assume the end of the Cold War made the world of cloak-and-dagger obsolete. Unfortunately, espionage is still very much with us.
Nations will always try to learn one another’s secrets to gain political, military, or economic advantage. Indeed, the foreign intelligence presence operating in the United States is roughly the same as it was during the Cold War.

We still confront traditional espionage, such as spies working under diplomatic cover, or even posing as ordinary citizens. Consider the arrest last year of 10 agents of the Russian Foreign Intelligence Service. Many of you may have seen TV news stories and videos covering the techniques we used in our investigation, code-named Ghost Stories. It featured the stuff of a John Le Carré novel—dead-drops in train tunnels, brush passes at night, and clandestine meetings in cafés.

Apart from the more traditional types of espionage, today’s spies are just as often students, researchers, businesspeople, or operators of “front companies.” And they seek not only state secrets, but trade secrets from corporations and universities—such as research and development, intellectual property, and insider information.

Consider the recent case of Noshir Gowadia, a naturalized U.S. citizen from India. For 18 years he was an engineer at Northrop Grumman, the defense contractor that built the B-2 stealth bomber—one of our nation’s most important strategic assets.

Gowadia decided to offer his knowledge of sensitive military secrets to anyone willing to pay for it. He sold highly classified information about the B-2’s stealth technology to several nations, including China. He also made six covert trips to China to assist them in the development of stealth technology for their cruise missiles.
Partnerships were essential in finding and stopping Gowadia before he could further damage our national security. Together with the Air Force, U.S. Customs, the IRS, and other agencies, we built a strong case against him—and this past January, he was sentenced to 32 years in prison.

Foreign spies know that military superiority is merely one factor that determines the world’s balance of power. Just as important is the kind of economic innovation we find here in the Bay Area.

So it is no surprise that spies also target the most valuable secrets of American companies and universities. They hope that stealing the fruits of American innovation will give their nations a shortcut to economic pre-eminence.

Let me give you one example of the cost of this type of espionage. Last month, Kexue Huang, a former scientist for two of America’s largest agricultural companies, pled guilty to charges that he sent trade secrets to his native China.

While working at Dow AgriSciences and later at Cargill, Huang became a research leader in biotechnology and the development of organic pesticides. Although he had signed non-disclosure agreements, he transferred stolen trade secrets from both companies to persons in Germany and China. His criminal conduct cost Dow and Cargill millions of dollars.

These two cases illustrate the growing scope of the “insider threat”—when employees use their legitimate access to steal secrets for the benefit of another company or country.
Add to this that so much sensitive data is now stored on computer networks, our adversaries often find it as effective, or even more effective, to steal secrets through cyber intrusions.
Foreign spies have increased their skill at exploiting weaknesses in our computer networks. Once inside, they can exfiltrate government and military secrets, as well as valuable intellectual property—information that can improve the competitive advantage of state-owned companies.

Earlier this month, the intelligence community issued a report to Congress stating that cyber-based economic espionage is increasingly pervasive. The report publicly confirms that other nations are using cyber capabilities to collect sensitive American technology and economic secrets.

While state-sponsored cyber espionage is a growing problem, it is but one aspect of the cyber threat. The number and the sophistication of computer intrusions have increased dramatically in recent years.

American companies are losing billions of dollars’ worth of intellectual property, research and development, and trade secrets. Outside attackers burrow into company networks and remain undiscovered for months or even years. It is much like having termites in your house—often, by the time you discover them, the damage is done. And “hacktivist” groups are pioneering their own forms of digital anarchy. Here in the Bay Area, you witnessed their work firsthand when individuals hacked the BART website and released personal data of BART customers.

We also must consider that hostile nations or terrorist groups could launch cyber attacks against our critical infrastructure.

The anonymity of the Internet makes it difficult to discern the identity, the motives, and the location of an intruder. And the proliferation of portable devices that connect to the Internet only increases the opportunity to steal vital information.

We in the FBI cannot merely react to computer intrusions. Hackers will seek to exploit every vulnerability, and we must be able to anticipate their moves.

Let me share one example. In April, the FBI brought down an international “botnet” known as Coreflood. Botnets are those networks of virus-infected computers controlled remotely by an attacker.

To shut down Coreflood, the FBI took control of five servers the hackers had used to infect some two million computers with malware. This malware allowed the hackers to steal personal and financial information by recording users’ keystrokes.

We not only shut down the servers—we took another unprecedented step. With court approval, the FBI responded to signals sent from infected computers in the United States. We sent those computers a command that stopped the malware, preventing harm to hundreds of thousands of users.

Staying Ahead of Threats
Surveying today’s threats is somewhat like peering into a kaleidoscope, where even the slightest rotation creates new patterns of color and light. Just when it seems you understand a threat, the world turns, and the threat has changed.

As Tom Friedman has described in his book, The World is Flat, advances in technology, travel, commerce, and communications have broken down barriers between nations and between individuals. Globalization has had a flattening effect, leveling the playing field for all of us. This hyper-connectivity is empowering and engaging people around the world—both friend and foe alike.

So how do we stay ahead of terrorists, spies, and hackers?

Intelligence will continue to drive our investigations. We must ask ourselves: What do we know about these threats? What are the gaps in our intelligence? And what human sources must we cultivate to fill these gaps?

Each of us—government leaders, business executives, and everyday citizens alike—must ask ourselves what vulnerabilities we may have overlooked.

We must also place even greater emphasis on partnerships and information sharing. No single agency, company, or nation can defeat these complex, global threats alone. And in these days of tight budgets, working together is essential.

Finally, we need the right tools and capabilities to address shifting threats—for example, the foreign language skills we used to stop Hosam Smadi, and the advanced cyber capabilities we used to shut down the Coreflood botnet.
Still another critical tool is the FBI’s ability to intercept electronic communications.
Many social networking conduits—in contrast to traditional communications carriers—are not able now to produce the electronic communications we seek in response to a court order. When investigators cannot collect communications pursuant to court order in near-real-time, they may be unable to act quickly to disrupt threats or to protect public safety.

Laws covering this area have not been updated since 1994—a lifetime ago in the Internet age. So we are working with Congress, the courts, our law enforcement partners, and the private sector to ensure that our ability to intercept communications is not eroded by advances in technology.
One last, but important, point: The FBI has always adapted to meet new threats. And we must continue to evolve, because terrorists, spies, and hackers certainly will.
But our values can never change. Regardless of emerging threats, the impact of globalization, or changing technology, the rule of law will remain the FBI’s guiding principle. In the end, we know that we will be judged not only by our ability to keep Americans safe, but also by whether we safeguard the liberties for which we are fighting, and maintain the trust of the American people.
Our adversaries are persistent and clever, and the pressures of globalization and technology are ever-present. Change is a constant in today’s world—and we must prepare for it.
Yet change is just one constant; the other is the American people’s resolve to defend our freedom and our way of life. This same resolve drives the FBI every day. And together, we can and we will keep our country safe from harm.
Thank you for inviting me here today; I would be happy to take some questions.

Tuesday, November 15, 2011

California School Bans American flag T-shirts

1st Amendment Center - California Court Allows US Flag Ban on Mexican Holiday

President's Wife Meets With Hawaiin Organic Farmers - Official Transcript

The White House

Office of the Press Secretary
For Immediate Release
November 13, 2011
Remarks by The First Lady in Roundtable with Members of Ma'o Organic Farms

Waianae, Hawaii

November 12, 2011
11:55 A.M. HAST

MR. ENOS: So, aloha, and welcome to Ma'o Organic Farms. I'll be your moderator.

MRS. OBAMA: Excellent. (Laughter.)

MR. ENOS: And on behalf of our organization and our community, we're really, really grateful. And we welcome you for what you do, not just because of your Office of the First Lady -- which is -- so fun.

MRS. OBAMA: It's all right. (Laughter.)

MR. ENOS: You've really done a lot of work to lift up the things we do and we're practicing here, so we're so honored to have a fellow comrade in arms, if you will, to visit us. And we'd like to start today's event with just an introduction.


MR. ENOS: We'll just go around, and our team is going to just give a little bit more about themselves, and share some things. And we'll pick up a conversation after that.

MRS. OBAMA: Great.

MS. ABBOTT: So, aloha again. My name is Maisha Abbott. I am 20 years old, started working at Ma'o about three years ago. And the reason why I came to this program was because I heard of its college opportunities and I always had a passion to further my education. So that's why I joined. And just by being here, I just realized that it's bigger than just going to school -- it's about changing our community. And afterwards, I plan on getting a bachelor's in fashion design and getting my master's in environmental studies -- and eco-friendly design.

MRS. OBAMA: Awesome. (Applause.) Yes.

MR. KENNEY: Aloha. Welcome to heaven on Earth.

MRS. OBAMA: It is, yes. (Laughter.)

MR. KENNEY: My name is Ed Kenney. I am 43. (Laughter.) I am the chef/owner of Town and Downtown Restaurants. And we've been co-producers with Ma'o for 10-plus years. A year ago, I was asked to sit on the board of directors, and without hesitation, wholeheartedly, said yes. As a chef and a director, I am given the task to, I think, tell the story of Ma'o to 600 hungry people a day. And when you tell the story with food, and with this food, it's incredibly easy. When you taste this food, it's -- you're not just tasting a carrot, you're tasting this youthful enthusiasm, you're tasting youth leadership and mentorship -- you're tasting food security and sustainability. And you will get a chance to taste the food tomorrow.

MRS. OBAMA: Yes. Awesome. (Laughter.)

MR. KENNEY: Thanks.

MS. SAMSON: Aloha, my name is Kuuleilani Samson. I was born and raised in Makaha-Waianae all my life. I attended Waianae High School. I graduated in 2008. And in my senior year, I went -- I first heard of Ma'o through one of our majors, Hawaiian studies. And as soon as I graduated, I came into the summer -- program. And there I came into the two-and-a-half-year internship, the youth leadership intern. And I just recently graduated from that program. I just got my AA from Leeward Community College in -- I'm currently at the University of Hawaii-Manoa, working on my bachelor's in Hawaiian studies. I hope to move on towards a master's in education, and I want to teach back at my high school.

MRS. OBAMA: Nice. (Applause.)

MS. SANA: Aloha, my name is Cheryse Sana. I've lived in this valley about my whole life. I'm 22 years old. I came to Ma'o after I graduated in 2007. I heard about Ma'o through my teachers at Waianae High, and also in the Hawaii -- I was just kind of, like, "Oh, what to do?" And I know that they had their college program here, and so I was like -- I always wanted to go to college, so I was like, "Ah, let me just take it." So I came here, and then three years later, I'm the farm co-manager. And I graduated from LCCU with my AA and certificate in community food security. I'm at UH-Manoa -- University of Hawaii, UH-Manoa. And I'm in -- major, and I should be graduating in about a year. So -- with my BA.

MRS. OBAMA: That's awesome.

MS. SANA: And I also want to be a professor when I grow older, or a farmer.

MRS. OBAMA: Awesome. (Applause.)

MR. MILES: I guess I'd better follow suit, then.

MRS. OBAMA: Should I introduce myself?

MR. ENOS: Yes. (Laughter.)

MRS. OBAMA: I am Michelle Obama. (Laughter and applause.) I am 48 years old. And I am honored to be here. I've heard about all that's been going on here for years and years. We have some very interesting connections to what has been going on here. So I jumped at the opportunity to come and not just see for myself, but to also allow the world to see what you all are doing. As you know, I planted a little garden in my backyard. (Laughter and applause.) And while it's a good food-producer -- we're producing about 1,100* pounds of food every year, we also have a beehive, we've got tons of honey that we're using. We use them as gifts, we give them to the community.

But one of the primary reasons we planted the garden was as a form of education. Childhood obesity is one of my signature issues. Our goal is to eliminate childhood obesity in a generation. And our view is that if we teach young people early about how to eat, and we give them a connection to the food that they eat, that they're more excited and interesting -- and interested in what's going on, and that in turn opens up a broader conversation about nutrition and health and movement -- but also deeper issues of access and affordability, which are some of the primary causes of obesity. Because many of our communities -- in underserved communities, kids aren't growing up with vegetables because there are no grocery stores. People don't have that connection.

And we're finding, through our contact with kids, that it is in fact working -- like you guys: You now eat vegetables. You actually know what arugula is. (Laughter.) And you eat it.

MR. MILES: -- favorite.

MRS. OBAMA: That's right -- my favorite, too. Arugula and steak, I like it a lot. (Laughter.) That's good stuff.

MR. PARKER: Say it, man -- it's great.

MRS. OBAMA: But we find the same thing is true with young kids, and if they get their palates adjusted to those very interesting flavors, they stay connected. So we feel like we're just a small part of what you all have been doing for a very long time. And it's important to know that it's working. It's sustaining a community, it's creating a conversation, and it's putting young people to work and giving them futures, which is the most powerful thing. And I am just proud of you all in so many ways.

So I look forward to more discussion. But that's who I am. (Laughter and applause.)

MR. MILES: Aloha, my name is Manny Miles. I'm 27 years old, grew up here in Waianae. Pretty much lived here my whole life. I've been working at Ma'o for 9 years, so, like, I'm the old fart of all the interns.

MRS. OBAMA: You're old, you're old. Old man. (Laughter.)

MR. MILES: I've been here forever. Started with Uncle William back then -- good times. The reason I joined was because I love working outdoors. Funny thing is, I told myself growing up that I'd never be a farmer, because my family, we had a little -- we had about a half-acre plot with corn; we raised chickens, sold the eggs to our neighbors. And I told myself, "You know what? I'm never going to do this -- it's too much work." Funny thing is I'm here doing it, and my dream is to one day have my own farm. I mean, I want to work here in Ma'o for a long time, but I want to be able to grow food for my community and sustain my family with my own farm -- even if it's only, like, half an acre, it's a little something to grow food.

Thank you. (Applause.)

MR. PARKER: Hi, my name is Derrick Parker. And I'm 21 years old, and I'm an organic farmer.


MR. PARKER: It feels good saying that. (Laughter.)

MRS. OBAMA: "I am a farmer!"

MR. PARKER: But I joined the program, I've been here for about almost four years. I graduated from the program -- like these guys -- and now I'm attending UH-Manoa -- University of Hawaii. And I'm hoping to major in music. I want to get a bachelor's, or even achieve my master's in music -- specifically voice, and then become a voice teacher. Also, I do want to, like, stay in touch to farming, because it's a -- it should be a way of -- it's a way of life. So it should be a way of life, and not just work. All of us that are here, we don't just work. This is, like, our life.

MRS. OBAMA: Yes. So you can sing, huh?

MR. PARKER: Yeah -- look at that. (Laughter.)

MRS. OBAMA: That one escaped me.

MR. PARKER: She gets into it. (Laughter.)

MRS. OBAMA: I mean, is there -- you got a little something?

MR. PARKER: Really? (Laughter and applause.)

MRS. OBAMA: I put you on the spot.

MR. PARKER: Oh, my gosh.

MRS. OBAMA: I didn't plan it. I was just -- (laughter.)

MR. PARKER: Okay. I only know, like, my gospel kind of music, so --


MR. PARKER: (Sings a song.)

MRS. OBAMA: Yeah! (Applause.) See, just in case you all thought this was about farming -- (laughter) -- you've got gospel music. Very talented crew. Thank you, thank you.

MR. KENNEY: Don't quit your day job. (Laughter.) I'm kidding.

MRS. OBAMA: Thank you.

MS. ARASATO: Aloha, my name is Miki, but my real name is Michelle. (Laughter.) I'm 21 years old, and I have been in Ma'o for three years. And I was one that was -- I didn't -- farming was, like, far, far away from my mind. Let alone was helping my community. It wasn't a thing on the list, you know? So I came here. So I came to Ma'o, then I realized, "Oh, this is important and I have to make a difference." Yeah. So after I graduate, I plan -- I want to repeat Ma'o within our community or anywhere on this island. And I plan to do that trying to get my goal, environmental studies, agriculture and Hawaiian studies.

MRS. OBAMA: Awesome. And you're going to be traveling to my home town.

MS. ARASATO: Yeah. I can't wait. (Laughter.)

MRS. OBAMA: So, yeah, Chicago in February -- she doesn't realize that it won't be that fun. (Laughter.) So what are you going to Chicago for?

MS. ARASATO: I'm going for the Kellogg Foundation, to go talk with youth and do some empowering over there -- get them hyped. Like how I do here with these guys.

MRS. OBAMA: Yeah. (Laughter.) So this is giving you an opportunity to travel the country as well. Good stuff. Just bring a sweater, long underwear.

MS. ARASATO: Okay. (Laughter.)

MRS. OBAMA: Hats and gloves. Someone who knows cold, help her before she goes. (Laughter.)

MR. ENOS: Thank you, Miki. Aloha, my name is Kamuela Enos. I am first and foremost honored to work for these guys. They keep me very busy. I am Ma'o's director of social enterprise. I'm also on the White House initiative on the Asian and Pacific islanders. Somehow they chose a farmer from Waianae to get involved.

MRS. OBAMA: Yeah, it's not a bad choice.

MR. ENOS: It's such a wonderful experience. But I'm born and raised in this community, and my father was heavily active for many years. So sometimes I felt like I had no choice. It was like those Darth Vader scenarios, like, "You're going to do this."

MRS. OBAMA: Right. (Laughter.) "I am your father." (Laughter.)

MR. ENOS: Through that, you learn about responsibility and mentorship. And I think that's what led me to where I'm at now. And I really -- like, I believe that we do this because our ancestors were organic farmers. And this gives us a way to walk in their footsteps, but still survive in the context in which we live -- a market economy, a standards-based education system. And the challenges which often face us in our community -- which is called "underserved" by the outside -- but we know the inherent value and assets: the land and the youth. So we are here to kind of show you things that we already know inside all of us. So I really appreciate you being here in Ma'o. (Applause.)

MR. DeMOTTO: Okay. Aloha, my name is Jordan DeMotto. I am 18 years old, and I've been here for about 4 months, so I'm new.

MRS. OBAMA: You're the baby. (Laughter.)

MR. DeMOTTO: Yeah. So in high school, my major was agriculture. So my passion was waking up to having -- getting dirty. So that's why I joined Ma'o. And also because of the support that you can get from your fellow interns, cool managers, and the staff -- with working, schooling, and also your personal issues. After, I want to go to the University of Hawaii at Manoa and get my master's in environmental studies.

MRS. OBAMA: Nice. (Applause.)

MR. ENOS: So I have the very daunting task to kind of take all these wonderful ideas and topics, and try to continue this conversation along. But I really wanted to start with maybe some reflections. I mean, we've -- part of their job was to study what your -- the initiatives you've put forth -- like "MyPlate", "Let's Move."


MR. ENOS: And we want to start -- maybe if you have any reflections on this, what you say today, and to share with them, as a leader, and to give them some advice, maybe, on their path.

MRS. OBAMA: Yeah. Well, I just think that the youth leadership piece is key to all of this. Because it's really about continuing to pass what you're learning on and on, because that's what happened: There was a break in that learning, in that connection. So one of the greatest tasks is to not let that break happen again, and that really falls to all of you, because you have the privilege and the opportunity, now, to learn and to carry this forward.

So taking it seriously, as you all are doing; continuing to prepare yourselves, because it's one thing to farm and to talk and to eat and to grow and to connect, but the next step to change requires your preparation. And going to school, and understanding the subject, and understanding how what you do connects to not just the rest of the nation but the rest of the world. These issues are affecting communities all over the globe, and it's important for you to have the substantive foundation to back up your passion.

So I think that that's one of the most key components of this effort, is the fact that you're educating and you're encouraging each other, and young people who will follow you, to go back to school, stay in school, get that foundation -- and then bring that knowledge back. And to continue to pass it on. Everyone here is lucky, as was I -- growing up on the South Side of Chicago, we had some similar issues. We didn't grow up in a beautiful valley, where we could look around and see the connection. But for the few of us who did have some of the opportunities to get an education and go out and learn, feeling that obligation to then reach back and bring other people along.

So the mentorship piece of this stuff is important. You now have to lift people up, whether it's your own brothers and sisters or the kids down the street, or the students that you're going to teach. It is a responsibility that you all have to embrace, to just keep reaching back. But I think you all are doing that. So just keep it up. Keep it up.

MR. ENOS: Thank you. Anybody want to respond to that, just to share some of your thoughts a little bit? Miki, please.

MS. ARASATO: Oh, with the mentoring?

MR. ENOS: Yeah. How does that work here?

MS. ARASATO: Okay. Well, for us working here, it is -- it can be hard sometimes. But, like how Jordan said, we have the support of each other. Like, it sometimes is hard being the bad guy, sometimes being like, "Oh, no, you have to work better. Oh, you got to do your homework." Like, being a good mommy sometimes is hard. But at the same time, those kids didn't have -- most of these guys don't even have that kind of role model to look to, because all around them they just see is negative -- negative things. So we just try to be that positive --

MRS. OBAMA: I mean, everybody here is so positive. You all support each other. It feels like it's easy, but I'm sure that this hasn't been easy. I would love to hear some of the challenges that you face in your own families, in your own communities. Farming is not necessarily the hot thing to do, right? (Laughter.) So what happens when you hang out with your boys and you tell them, "I'm going to farm! I like arugula." (Laughter.) How does that work out? (Laughter.)

MR. PARKER: Well, I guess that's true. It's not really the most popular job. Like, some of my friends, I told them, "I'm an organic farmer." And they’re like, "So when are you going to get out of that? When are you going just" -- because I guess, like, they haven't -- but I can't, like, blame them, or I can't, like, just say it's their fault that they're saying that, or they're trying to bring me down. But it's just that that's how we were raised up -- that's how we were brought up. Even me, like, I saw farming as like a -- it wasn't even a last resort for me. It was like, that's -- who does that? That's so old school -- not realizing the importance of it, and how we're connected to it. This is how we survive, how we -- we take for granted the foods we eat because we can -- there are so many fast-food restaurants; people just -- this easy access thing, and we don't really see the work that goes into it.

Being a farmer for me -- just being able to eat the food that you grow. I mean, you see it from every -- like a child, like your own babies. I have all little babies over here. (Laughter.) You see that seed -- you just see how that seed, and you're continually nurturing it, weeding it every few weeks, make sure it grows well. And then when you finally get the chance to eat it at an awesome restaurant -- Town Restaurant -- it's just that -- see it on the plate, that's like the final --

MRS. OBAMA: It's good, right?

MR. PARKER: The final spot.

MR. KENNEY: It makes my job easy. (Laughter.) You guys do all the work.

MRS. OBAMA: But what kind of pushback have you all gotten? And how do you deal with that? Because you're going it -- for many, you're the first, often, in your families to go to school, to pursue this. What happens when you hit that wall of, "What are you doing?" Have you all faced that?

MS. ARASATO: Oh, yeah. (Laughter.) Every single one.

MR. MILES: I think for me, like, with my family the biggest challenge was getting them to understand that eating healthy is important. I lost my father three years ago, and my family doesn't want to admit that it was due to his health.


MR. MILES: And I tried for years to try and get them to eat healthy. I mean, I grow vegetables for a living. It's not hard to take some home -- that's one of the benefits of working here, we get to take food home. And I tried so many times, like, to cook food for my family. My mom loves it. My dad, he's so stubborn, he's so used to eating, like, Spam, corned beef. But I mean, it just takes a lot to try and get it to work. And slowly it is -- I mean, last Thanksgiving I made, like, some of the beans that we were growing, just sautéed it, and they loved it. I mean, it's just taking those little baby steps. But it's definitely a challenge.

MR. ENOS: Maybe one of you guys want to share about the challenges facing the school side of it, and just the whole different culture that maybe different from what your peers think about what they do after high school.

MS. SAMSON: Yeah, definitely -- like, a lot of my -- okay, so like I said, Ma'o has been sending students to school for, like, 6 years. And I come from the third cohort -- poetry. So I've been here a few years, and our cohort initially started off a little larger than our previous cohort -- about 26 interns. And it slowly dwindled through the years, and that's because people find their own passion on other things, and farming is not for them, or schooling is not for them. Because here in Ma'o -- Ma'o is a special, unique -- it's a special blend of schooling and farming, to train you to be a good leader.

And just like Jordan said, we move off of our support that we get from our fellow workers. And sort of like having our interns and our friends drop out of the program, it's tough to want to stay there. But when we come to the realization of what the bigger mission and the bigger movement is, it is really important to really, like, be able to strive -- what you think is really important.

MR. ENOS: Maisha, you've been silent. Is there anything you want to share about some of this? We're not going to let you slide.

MS. ABBOTT: Definitely, I have faced hardships by being in this program. Just coming from a family background who suffered in obesity and diabetes, and high cholesterol and blood pressure, and stuff like that -- the symptoms that most Waianae people have. Just trying to make my mom to eat more healthy, because she's disabled, and making the decision to stay home and going to school -- yeah, so.

MRS. OBAMA: It's hard stuff, huh?

MS. ABBOTT: Yeah, it's -- but I definitely like the support -- exactly what Jordan said -- that we have here. It's because we each have our own individual stories, and we all go through struggles here, and we just lift each other up by being in this program. And just being in that organic movement -- further education, further pushing the farm to be more successful.

MRS. OBAMA: Well, you all are ahead of the curve. I just -- this -- you've been around for a bit, but this movement is growing all over the place. And the fact that you've got the training and the experience that you have -- I mean, what your families don't understand is that there are -- there will be growing opportunities in not just farming but in policy, in larger discussions in terms of technology, and a whole range of things. And there will be a lot of people catching up with where you are, because you've done this. It's not hard to -- it's not easy to convince them of that now, but trust me --

MS. ABBOTT: Yeah, later.

MRS. OBAMA: -- yeah, it's coming.

MR. ENOS: Yeah, I think that's the key that is captured in our name -- it's youth leadership training, where it's not farming or academics; the goal is that there are pathways to leadership. And maybe -- and I know that leadership and mentorship is a really big piece of the things you're promoting. And maybe some of you can talk about what leadership means to you, and especially what you've learned, and how this program has helped you to understand that. And if anybody wants to pick that up and --

MS. SANA: Leadership -- I can honestly say that when I was in high school -- well, when I was small, until I came here, speaking up was not my thing. I was scared. I was, like, nervous of what people would say because of my own opinion. But coming here, like, it's like they got me out of my shell, and I --


MS. SANA: -- I won't be stopped. (Laughter.) And, like, it's good because when you don't stop, sometimes more ideas come out -- not only from you but from other people. And this leadership, I guess, is -- what I've learned from this, being a leader in the shed and on the farm to my peers and the younger cohorts, is that it's not only me running it, it's all of us. Sometimes, like, they'll remind me, like, "Oh, aren't you supposed to do this first?" (Laughter.) I'll say --

MRS. OBAMA: It's like, "Aahhhh."

MS. SANA: Yes, you're right. Well, you're teaching me. And I tell them, "You know what? You're teaching me, too. You're backing me up" -- and, like, how I would probably say to other people. And, gosh, if you'd seen me 4 years ago, you would not even recognize me.

MRS. OBAMA: I hope not.

MS. SANA: It's like I'm a whole other person now. I actually remember -- I was the class valedictorian, and I had to give a speech, why I like the -- Hawaiian coast, which was probably like 1,000 people. And it was, like, really nerve-racking. I couldn't even speak; couldn't even understand me. And I'm here talking to you, and -- (laughter) -- enunciating, and --

MRS. OBAMA: It's good. That is good. (Laughter and applause.) Enunciating, making all kinds of sense.

MS. SANA: Yeah. (Laughter.) I make sense now. I don't even remember my speech, but I'll definitely remember this. (Laughter.) And just -- leadership to me -- to me, growing up, I always wanted to do my culture. It might not be growing taro consistently, or sweet potato, like how our ancestors did. But it's a part of what we do, and we're doing it a 21st-century way. We're respecting our land. We're trying to have that connection. And back then, like how Derrick was saying, it was a way of life -- it was a way of life. It wasn't work. It was --

MRS. OBAMA: Survival.

MS. SANA: -- survival. And I think we have -- nowadays, we have this mental block, like, "Oh, we got to grow food to survive." Back then, it was, like, to every ancestor -- all of our ancestors, it was like, "We got to grow food to just grow food." (Laughter.) It's common sense.

MR. KENNEY: What would you do?

MS. SANA: And my goal is to change that mentality to back then, because if we don't know where -- I mean, we heard it all before, so -- because if we don't know our past, it's going to happen again.

MRS. OBAMA: That's right.

MS. SANA: And we have it there -- it's all there. It's in books, it's in oral history. We have to use it. We have to use our resources and provide ourselves, to grow bigger, to expand, to farm the -- the Naval Base, hopefully someone gives it up and we can farm it and that -- (laughter and applause.) It not only provides us a farm, but it provides our community, people outside of our community. You know how much people want to be here, but just because, like, our restriction, it's just kind of building on our community first. And it's just -- we want to do so many things, but how can we do it? That's my question. (Laughter.)

MRS. OBAMA: This is the beginning.

MS. SANA: Yeah, it's the beginning.

MRS. OBAMA: It's this -- the same way that you talk about little by little changing habits and changing beliefs -- you're already doing this. I mean, just hearing about how Ma'o has grown; you started with what, how many --

MR. ENOS: Five acres.

MRS. OBAMA: You started with 5 acres. You have how many now?

MR. ENOS: We have 24, approximately.

MRS. OBAMA: I mean, that is change. And that's something -- I think that's another part of leadership, too, is understanding that -- and I say this, the President says this -- change -- meaningful change does take time. And the thing that I would urge you not to be is so impatient that you give up before you get -- right? Be patient! (Laughter.) Because oftentimes we expect things instantaneously. And this community didn't arrive here in a few years, it took generations. So it's going to take some time to wind this back down.

The key is to stay the course, and to not let the great be the enemy of the good. I mean, you may not achieve everything that you envision right away, but that doesn't mean you turn around, that doesn't mean you stop. That means you keep pushing it forward, step by step.

And that's how we're approaching this obesity initiative. That's why we set a generational goal. It would have been ridiculous for me to say, in 10 years we're going to -- or in 5 years we're going to change the way people have thought about eating and living. It doesn't happen that way. We start with kids. We start with introducing them. We start with their habits, and it's -- the impact is really going to be on their kids, and how they pass that on.

So patience is a big part of this. And the President has to deal with patience. As the leader of our country -- there are a lot of people who are like, "Why isn't everything fixed now?" It's like, he's been President for 3 years. (Laughter.) Some things take time.

And I always say, the only thing that happens in an instant is destruction, right? You can take decades to build something up -- tornado comes through, it's gone, right? So important things: Not just this movement, but your lives, right? When you become parents, raising your children, that is a forever proposition. And believe me, kids require patience. (Laughter.) They don't do anything right away. (Laughter.) So it's good to start practicing. Many of your parents will think that, too. (Laughter.)

MR. ENOS: That's a long way off.

MRS. OBAMA: Right -- it's a long way off. But let me tell you -- you'll be in training. So this -- you are doing it now. Change is happening. You just think of how you've changed in 3 years -- did you say 3 years? You have become a completely different person. Now, what if you had given up after the first year, when you hadn't changed right away, right? You were still shy, you were still a little hesitant, you were still a little nervous, a little insecure. But you stuck with this initiative, and now you can't shut up. (Laughter.) And that's a good thing.

MS. SANA: It's a good thing.

MRS. OBAMA: It's a very good thing. So just don't lose heart. There will be victories. The flow of change is up and down. But as long as it's -- as Barack says -- we're moving towards a more positive place. That's what you're looking towards -- you're looking towards the long term. So be patient.

MR. ENOS: And I think that arc that he refers to is, like, it's really important. And I think as farmers, we know that you can't plant something and expect to eat the next day.
MRS. OBAMA: That's right.

MR. ENOS: -- of creation, investing is key to what the program is based on. And this idea of generations, and one of the rocks of our program was Uncle William Aila, Sr. -- that they teach us this notion of what it means to work in a valley for decades, and to grow your family here, and to come back and give, and teach love, respect and willingness to work. So I think having this generational approach as well to the program is key. It's not this generation within the internship, the generation within the community that come and serve in the same space.

Maybe could one of you just quickly talk about what it was like to work under a mentor, like Uncle William, Sr.? Like, maybe Derrick.

MR. PARKER: Oh, okay. Well, I'm blessed to have the opportunity to have worked with Papa Aila -- I call him -- yeah, we call him "Papa Aila." But just because he -- it's just he's a good role model. I just thought the fact that he's lived a long time, he's lived a good life, he's -- if you've seen him working, he's unbelievable, because he's just -- like, he works faster than me. He's just -- the way he works. And you can see, he's not just, like -- he's not just working to work; he's working because there's something behind that pushing him. He has that passion -- the passion for farming, the passion for us as youth. And then that's exactly what we're learning now, is that we're not just -- I'm not just waking up at five in the morning or four in the morning to come here and work and then go home. There's more to it. There's just something that's behind us, pushing us. There's a passion that's pushing us to come to work, to do what we got to do -- to stay the extra 30 minutes, the extra 3 hours, or 2. But it's --

MRS. OBAMA: Whatever it takes to get it done.

MR. PARKER: Yeah, it's more than just us. It's not just our selfish goals or our own -- whatever we want. There's more to it. That's what -- we learned that from him.

MR. ENOS: I think at this point we're going to start wrapping down. But I want to create a space where all of us can go around and just say one last -- if there's one last thing you want to share with the First Lady, or if she wants to share with us.

MRS. OBAMA: Or if you have a question -- whatever you --

MR. ENOS: If you have a question. So we can --

MRS. OBAMA: But don't feel pressured.

MR. ENOS: Don't feel pressured. (Laughter.)

MS. ABBOTT: Starting with me? How about we start with Jordan?

MR. ENOS: Yeah, Jordan.

MRS. OBAMA: Oh, she put you back on the -- that was good. (Laughter.)

MR. DeMOTTO: I guess just, like -- because I just started, and being in Ma'o has really, like, inspired me to -- because me, too, I'm kind of shy. But then I'm here, speaking to you -- and in front of a lot of people. (Laughter.) It's really, like, helping me to be a better person.

MRS. OBAMA: That's good. That's good. And we expect big things. No pressure! (Laughter.)

MR. ENOS: Thank you. Thank you, thank you very much. It was an honor to have you here, and it's an honor to work for your husband.

MRS. OBAMA: Thank you. Keep it up. Michelle! (Laughter.)

MS. ARASATO: Just so you know, you're awesome. But they're reflecting on what all this -- all this knowledge you sent us. Thank you so much for doing that. And now I know, like, pushing these guys, I have all this -- all I can share with them, all this -- and you're such a beautiful -- thank you for coming. Thank you -- thank you so much.

MRS. OBAMA: My pleasure.

MR. PARKER: Well, I have a question, so --


MR. PARKER: Well, where -- like, the elementary I went to, it was -- elementary, and we had a farm there. That's kind of like -- I feel like I'm going back to my roots, where I was at. And some of the things that I'm learning here, I learned previously, and I remember them when I was younger. And I was just wondering, like, how could we incorporate farm -- like, I know -- I agree with gardens, and I have a garden in my own house. But I just like the concept of farming. Like, when you think of -- when I think of farming, you think of producing food to feed people, and like it's -- more than like -- yeah, just, when I think about that. So I wonder, like, how -- maybe how could we have more farms, and in our elementary schools? Like, across the world?

MRS. OBAMA: Yeah, yeah. Well, that's something that we're really encouraging through "Let's Move" and the Department of Agriculture, HHS -- there are a bunch of departments that are giving grants to schools and communities to promote gardening. And one of my hopes is -- this isn't -- but I want to work on developing more resources that we can use to give out to encourage and support. There are nonprofit organizations that do it, but I think one of the first steps is really just lifting it up. And we're seeing that change. There are more -- I get so many letters. We have so many wonderful stories from community groups and local schools that are planting their own gardens, they're changing the way they eat, they're incorporating nutrition education into every aspect of the curriculum. The Department of Agriculture has something called U.S. Healthier Schools, and we're trying to encourage schools to become sort of gold-standard rated, which means that they're making changes in their curriculum, they're changing the nutrition levels in their cafeterias, they're incorporating community gardens -- they're doing a whole range of things. And we've doubled the number of U.S. schools, which was our goal for one year. We've already surpassed that, and we're going to keep pushing.

So we're starting, and I think that you all are ambassadors in that respect. That may be another outreach effort that you all can do as part of your youth leadership, is identifying some schools, working with them, being the mentor -- because many schools don't do it because they don't have the knowledge base or the resources. And you all have all of that. So wouldn't it be wonderful to pick some of the key schools in the area that have the potential, raise some money, and share that knowledge. That's how it happens.

MR. KENNEY: Yeah, passing the torch.

MRS. OBAMA: Yeah, passing the torch. That would be great to do. And I would love to come visit some of those schools. I come here regularly. So --

MS. ABBOTT: Visit more often.

MRS. OBAMA: I would love to! (Laughter.) Let me tell my staff -- put Hawaii in the rotation; once a month. (Laughter.)

MR. PARKER: We'll have -- arugula for you. (Laughter.)

MRS. OBAMA: It's a great idea. But I'd love to see you all do more of that. You can lead it up -- you can head it up there. You got it. No pressure! (Laughter.)

MR. MILES: I guess for me, I have a kind of a similar question to Derrick. Because, like, for me -- I've been married for a couple of years, had a child --

MRS. OBAMA: You just sound like you're such an old man. (Laughter.)

MR. MILES: Around them I am.

MRS. OBAMA: Like, 26, married -- (laughter.)

MR. MILES: I know what you mean about the patience. (Laughter.) But my wife and I, we made a decision to buy a home instead of buying farmland, because farmland is so expensive here in Hawaii. I mean, a half-acre of land costs more than buying a three-bedroom house. And I guess my question is, how does someone like me -- and not even -- I know a lot of people. Like, people usually don't want to be farmers, but I have friends that do want to be farmers, and how do people like us go about doing that? How do we get the funds? And because my goal is eventually to have Waianae be the hub of all organic agriculture here in Hawaii. I mean, we're in the middle of the ocean, 2,000 miles away from California -- we need to somehow figure out how to grow our own food. And I'd like to be a part of that.

MRS. OBAMA: Well, developing some policy groups that are thinking about how to finance that; getting government officials to sit down with you all and think through financing. Thinking about co-oping, coming together, pooling resources together. I mean, the truth is land in Hawaii is incredibly expensive. But again, starting small and growing from there.

And Gary, who is the founder here, I'm sure he's got some knowledge to bear on -- how do you replicate this model is essentially what you're talking about. But that's a good topic to form some discussion groups, get some other young people, some business leaders -- pull folks together and start thinking it through.

MR. MILES: We'll form a working group, and we'll keep you apprised on your next visit, next year.

MRS. OBAMA: Sounds good. (Laughter.)

MR. ENOS: Actually, we got this sign, though, that we’re going to wrap things up.

MRS. OBAMA: What, we got a sign?

MR. ENOS: We got a sign.

MRS. OBAMA: Who’s giving signs? (Laughter.)

MS. SAMSON: Can I ask my question?

MRS. OBAMA: Yeah, yeah, we’ve got time. Go ahead. (Laughter.)

MR. ENOS: Okay, if we have time from the First Lady, go ahead.

MS. SAMSON: I really wanted to ask my question.

MRS. OBAMA: Uh-oh, I’m getting the stink-eye. (Laughter.) Ask it quick, before I get in trouble. I don’t seem them.

MS. SAMSON: I love what you’re doing with the “Let’s Move”. But then, I guess, my question is, what’s after “Let’s Move”? It’s in schools now, but what’s after we may leave the schools, when they go back into their community and they have to fight that? Where is the -- how do we build on opportunities to build -- to keep going up, and not to -- they have this hope and then -- it’s sad to say sometimes they just go straight back down. And that’s how it is --

MR. ENOS: Continuity? Like, how do you continue the --

MS. SAMSON: -- yeah, for us. And, like, that's what I brought up in previous conversations, and it’s kind of going off now, is the idea -- a lot of people like to use pipelines. I’m using the idea of an -- is like a stream that comes straight down. But then in the -- thinking on -- like, I was just thinking, like, what I guess my ancestors was like challenging me. And I was just thinking, like, real -- like, back in the day, like, you know, it wasn’t just -- it wasn’t -- first of all, it wasn’t a pipe; it was a stream the water went down into the ocean. The water went up into the air, and it somehow comes back and it revives the whole land of the air that we breathe and it’s part of who we are. And I just want to keep that going. How is it that we get people from two-year college to four-year college; four-year college to getting their M.A., and providing, in the same sense, food -- access to good food from their elementary health to the intermediate health to high school health.

And college, people have more options now and there’s a lot of good food at college.

MRS. OBAMA: But you still have to have the knowledge base to make the choices.

MR. ENOS: Yes, you still have to be educated to make those choices and to maybe even have that support. I know for us it’s a lot more easier because we all -- we are educated. But I guess it just falls back in replicating this model in other places to --

MRS. OBAMA: Well, with “Let’s Move,” we’ve really had to think about it in a multipronged approach, because while we focus a lot on schools, “Let’s Move” is really about galvanizing a community. I mean, the goals are much bigger than just schools -- because we know that kids can’t make choices if their parents don’t have information and if they don’t have a -- and parents can’t make good choices if they don’t have a community feeding into those choices, again. So you can’t tell a mother, "Add more fruits and vegetables to your kids’ plates," and then the nearest grocery store is 10 miles away and requires a cab ride, a bus ride. It’s just not practical. So that mother may want to make the change, but if she doesn’t have the resources and she doesn’t have a community supporting them, it’s all just talk.

So that’s why we have to look at accessibility and affordability. We’re working with mayors and local elected officials, in trying to get them to be a part of what we call “Let’s Move Cities and Towns," where mayors and local officials start making commitments, affordable commitments, because it’s tough in these economic times when all cities and towns are squeezed economically.

But how are we building our communities to make them healthier? What kind of playgrounds and walkways and bike paths are we utilizing? We’re calling on chefs. We have “Let’s Move Chefs to Schools." We’re calling on chefs all around the country to adopt a school and to work with them on changing their menus and getting kids involved.

So we -- this isn’t a one-shot deal, and it’s not -- again, it’s not an instant goal. It’s a generational goal. And I would urge you to think big. Because it is true, you can’t make change in a vacuum. You can’t ask a child to make a change and then plop him down in a community that’s not supporting that. It is true -- you’re just setting them up to fail. So the goals do have to be big. And that can be daunting, especially when the little stuff is already hard. But you don’t do this alone. You have to have a coalition of people that represent so many different factions of a community.

You have to -- just like Ma’o farms wouldn’t be successful if it plopped down here and it didn’t have connections, and you weren’t talking to people, and local residents didn’t feel some ownership -- it wouldn’t survive. And the same thing is true for this initiative: pull other people in. You’ve got -- buy in your local elected officials. Find the foundation leaders out there. Find the businesses that are -- that can help support this. It takes a community to make this happen.

So it’s a heavy lift, but one step at a time. One stays -- yeah. And you talk good. (Laughter.)

MR. MILES: Yeah, you're new.

MRS. OBAMA: You can convince anybody to do anything now. (Laughter.)

MR. ENOS: So we would like to honor you with -- to close, like, all of our -- we didn’t have an opening protocol, but we have a brief Oli Mahalo for you, and we would like to share it at this time. So thank you for your time.

12:43 P.M. HAST

Friday, November 11, 2011

Republican Debate Michigan - (Video and Full Transcript)

The Michigan Republican Presidential Debate

Oakland University
Rochester, Michigan
BARTIROMO: And good evening, everyone. I'm Maria Bartiromo.
HARWOOD: I'm John Hardwood.
And welcome to CNBC's Republican Presidential Debate.
CNBC's "Your Money, Your Vote: The Republican Presidential Debate" Live from Oakland University in Rochester, MI ...
BARTIROMO: Tonight, we are here in the great state of Michigan for a debate that will focus almost exclusively on the economy and how to fix the financial problems of our country.
On the stage tonight from left to right: Senator Rick Santorum.
BARTIROMO: Congresswoman Michele Bachmann.
BARTIROMO: Speaker Newt Gingrich.
BARTIROMO: Governor Mitt Romney.
BARTIROMO: Mr. Herman Cain.
BARTIROMO: Governor Rick Perry.
BARTIROMO: Congressman Ron Paul.
BARTIROMO: And Governor Jon Huntsman.
HARWOOD: The candidates will have 60 seconds to respond to questions, 30 seconds for follow-ups and rebuttals. Those will be at the discretion of the moderators.
We also want you, the candidates, to help us out a little bit, by answering the questions as directly and specifically as you can. I know you want to. You have proven that. But just in case you get off topic, maybe by accident, we may have to interrupt you.
BARTIROMO: Throughout the evening tonight we will be joined by an all-star lineup of the smartest people on CNBC.
First up tonight, Jim Cramer, the host of "Mad Money."
Jim, welcome.
CRAMER: Thank you, Maria.
HARWOOD: And we also want to hear your voice. Go to our Web site,, and tweet us at CNBCDebate.
All night we'll be showing your tweets on the bottom of the screen, so all of the candidates will have even more of a motive to impress.
BARTIROMO: In the interest of time, the candidates have agreed to forego opening and closing statements tonight. So let's get started.
And we begin with you, Mr. Cain. I want to begin with what we saw today, another rough day for our money, for our 401(k)s. Once again, we were all impacted by the news that the Dow Jones Industrial Average dropped 400 points today. The reason, Italy is on the brink of financial disaster.
It is the world's seventh largest economy. As president, what will you do to make sure that their problems do not take down the U.S. Financial system? It is the world's seventh largest economy.
As president, what will you do to make sure their problems do not take down the U.S. financial system?
CAIN: Let's start with two things. First, we must grow this economy. We have the biggest economy in the world. And as long as we are stagnant in terms of growth in GDP, we impact the rest of the world. We must do that.
But we're not going to be able to do that until we put some fuel in the engine that drives economic growth, which is the business sector. This administration has done nothing but put stuff in the caboose, and it's not moving this economy. We must grow this economy, number one.
Number two, we must assure that our currency is sound. Just like a dollar must be dollar when we wake up in the morning, just like 60 minutes is in an hour, a dollar must be a dollar. If we are growing this economy the way it has the ability to do and at the same time we are cutting spending seriously, we will have things moving in the right direction in order to be able to survive these kind of ripple effects.
BARTIROMO: So, to be clear, focus on the domestic economy, allow Italy to fail?
CAIN: Focus on the domestic economy or we will fail, so, yes, focus on the domestic economy first. There's not a lot that the United States can directly do for Italy right now, because they have -- they're really way beyond the point of return that we -- we as the United States can save them.
BARTIROMO: Governor Romney, should we allow Italy to fail? Should we have a stake in what's going on in the eurozone right now?
ROMNEY: Well, Europe is able to take care of their own problems. We don't want to step in and try and bail out their banks and bail out their governments. They have the capacity to deal with that themselves. They're a very large economy.
And there will be, I'm sure, cries if Italy does default, if Italy does get in trouble. And we don't know that'll happen, but if they get to a point where they're in crisis and banks throughout Europe that hold a lot of Italy debt will -- will then face crisis and there will have to be some kind of effort to try and uphold their financial system.
There will be some who say here that banks in the U.S. that have Italian debt, that we ought to help those, as well. My view is no, no, no. We do not need to step in to bail out banks either in Europe or banks here in the U.S. that may have Italian debt. The right answer is for us...
BARTIROMO: But -- but the U.S. does contribute to the International Monetary Fund, and the IMF has given $150 billion to the eurozone. Are you saying the U.S. should stop contributing to the IMF?
ROMNEY: I'm happy to continue to participate in world efforts like the World Bank and the IMF, but I'm not happy to have the United States government put in place a TARP-like program to try and save U.S. banks that have Italian debt, foreign banks doing business in the U.S. that have Italian debt, or European debt. We're just -- banks there.
There's going to be an effort to try and draw us in and talk about how we need to help -- help Italy and help Europe. Europe is able to help Europe. We have to focus on getting our own economy in order and making sure we never reach the kind of problem Italy is having.
If we stay on the course we're on, with the level of borrowing this administration is carrying out, if we don't get serious about cutting and capping our spending and balancing our -- our budget, you're going to find America in the same position Italy is in four or five years from now, and that is unacceptable. We've got to fix our -- our deficit here.
CRAMER: Congressman Paul...
(inaudible) to say, and I really get that. But I'm on the frontlines of the stock market. We were down 400 points today. We're not going to be done going down if this keeps going on, if Italy keeps -- the rates keep going up. Surely you must recognize that this is a moment-to-moment situation for people who have 401(k)s and IRAs on the line and you wouldn't just let it fail, just go away and take our banking system with it?
PAUL: No, you have to let it -- you have to let it liquidate. We've had -- we took 40 years to build up this worldwide debt. We're in a debt crisis never seen before in our history. The sovereign debt of this world is equal to the GDP, as ours is in this country. If you prop it up, you'll do exactly what we did in the depression, prolong the agony. If you do -- if you prop it up, you do what Japan has done for 20 years.
So, yes, you want to liquidate the debt. The debt is unsustainable. And this bubble was predictable, because 40 years ago we had no restraints whatsoever on the monetary authorities, and we piled debt on debt, we pyramided debt, we had no restraints on the spending. And if you keep bailing people out and prop it up, you just prolong the agony, as we're doing in the housing bubble.
PAUL: Right now, Fannie Mae and Freddie Mac are demanding more money because we don't allow the market to determine what these mortgages are worth. If you don't liquidate this and clear the market, believe me, you're going to perpetuate this for a decade or two more, and that is very, very dangerous.
CRAMER: Governor...
(inaudible) Italy's too big to fail. It's great. I'd love it if we were independent. It would be terrific to say, "It's your fault. It's your fault. It's your problem." But if this goes, the world banking system could shut down. Doesn't that involve our banks, too?
HUNTSMAN: So we wake up this morning, and we find that the yield curve with respect to Italy is up, and prices are down. So if you want a window into what this country is going to look like in the future if we don't get on top of our debt, you are seeing it playing out in Europe right now.
You are seeing the metastasy (ph) effect of the banking sector. And what does it mean here? What am I most concerned about, Jim? I'm concerned that it impacts us in way that moves into our banking sector where we have got a huge problem called "too big to fail" in this country.
We have six banks in this country that combined have assets worth 66 percent of our nation's GDP, $9.4 trillion. These institutions get hit. They have an implied bailout by the taxpayers in this country, and that means that we are setting ourselves up for disaster again.
Jim, as long as we have banks that are "too big to fail" in this country, we are going to catch the contagion and it's going to hurt us. We have got to get back to a day and age where we have properly sized banks and financial institutions.
HARWOOD: Thank you, Governor.
Governor Romney, I want to switch...
HARWOOD: ... to the bailout drama that we lived through in this country, and no state understands it better than the state of Michigan. I'm going to talk a little bit about your record on that. Four years ago when you were running for the Republican nomination and the auto industry was suffering, you said, where is Washington? After the election, when the Bush administration was considering financial assistance for the automakers, you said, no, let the Detroit go bankrupt.
Now that the companies are profitable again, after a bailout supported by your Republican governor here in Michigan, you said, well, actually, President Obama implemented my plan all along -- or he gravitated to my plan.
With a record like that of seeming to be on all sides of the issue, why should Republicans be confident in the steadiness of your economic leadership?
ROMNEY: John, I care about this state and about auto industry like -- I guess like no one else on this stage having been born and raised here and watched my parents make their life here. I was here in the 1950s and 1960s when Detroit and Michigan was the pride of the nation.
I have seen this industry and I've seen this state go through tough times. And my view some years ago was that the federal government, by putting in place CAFÉ requirements that helped foreign automobiles gain market share in the U.S., was hurting Detroit. And so I said, where is Washington? They are not doing the job they ought to be doing.
My view with regards to the bailout was that whether it was by President Bush or by President Obama, it was the wrong way to go. I said from the very beginning they should go through a managed bankruptcy process, a private bankruptcy process.
We have capital markets and bankruptcy, it works in the U.S. The idea of billions of dollars being wasted initially then finally they adopted the managed bankruptcy, I was among others that said we ought to do that.
And then after that, they gave the company to the UAW. They gave General Motors to the UAW and they gave Chrysler to Fiat. My plan, we would have had a private sector bailout with the private sector restructuring and bankruptcy with the private sector guiding the direction as opposed to what we had with government playing its heavy hand.
HARWOOD: Governor, let me follow up, because...
HARWOOD: ... the auto bailout is part of a larger issue facing your candidacy, as you know. Your opponents have said you switched positions on many issues. It is an issue of character, not personal, but political, you seemed to encapsulate it in the last debate when you said, "I'm running for office, for Pete's sake."
What can you say to Republicans to persuade them that the things you say in the campaign are rooted in something deeper than the fact that you are running for office?
ROMNEY: John, I think people know me pretty well, particularly in this state, in the state of Massachusetts, New Hampshire that's close by, Utah, where I served in the Olympics. I think people understand that I'm a man of steadiness and constancy.
I don't think you are going to find somebody who has more of those attributes than I do. I have been married to the same woman for 25 -- excuse me, I will get in trouble, for 42 years.
ROMNEY: I have been in the same church my entire life. I worked at one company, Bain, for 25 years. And I left that to go off and help save the Olympic Games. I think it is outrageous the Obama campaign continues to push this idea, when you have in the Obama administration the most political presidency we have seen in modern history.
They are actually deciding when to pull out of Afghanistan based on politics. Let me tell you this, if I'm president of the United States, I will be true to my family, to my faith, and to our country, and I will never apologize for the United States of America. That's my belief.
HARWOOD: Governor Perry, I want to ask you about this, because you have raised this issue yourself about Governor Romney. And you are running as a politician with strong convictions.
HARWOOD: From the flip side, Ronald Reagan raised taxes when the deficit got too big, George W. Bush supported TARP and the auto bailout when he thought we might face a great depression -- second great depression. Does that -- examples like that tell you that good, effective leaders need to show the kind of flexibility that Governor Romney has shown on some issues?
PERRY: The next president of the United States needs to send a powerful message not just to the people of this country, but around the world, that America is going to be America again, that we are not going to pick winners and losers from Washington, D.C., that we are going to trust the capital markets and the private sector to make the decisions, and let the consumers pick winners and losers. And it doesn't make any difference whether it's Wall Street or whether it's some corporate entity or whether it's some European country. If you are too big to fail, you are too big.
BARTIROMO: Speaker Gingrich, Federal Reserve Chairman Ben Bernanke has called unemployment in this country a national crisis due to the amount of days people are out -- months that people are out of work and the number of people out of work. Many of you have come up with tax reform plans. Why is tax reform the path to job creation? And if it's not the only path, what else can you implement to get people back to work?
GINGRICH: Well, first of all, I think Ben Bernanke is a large part of the problem and ought to be fired as rapidly as possible.
GINGRICH: I think the Federal Reserve ought to be audited and we should have all the decision documents for 2008, '09 and '10 so we can understand who he bailed out, why he bailed them out, who he did not bail out, and why he did not bail them out.
GINGRICH: So, I'm glad that Ben Bernanke recognizes some of the wreckage his policies have led to.
The reason we follow -- I think most of us are for tax policies that lead to jobs is because we have had two cycles in my lifetime, Ronald Reagan, and the Contract with America, both of which had the same policy: lower taxes, less regulation, more American energy, and have faith in the American job creator as distinct from the Saul Alinsky radicalism of higher taxes, bigger bureaucracy with more regulations, no American energy, as the president announced again today in his decision on offshore, and finally class warfare.
So I would say that all of us on the stage represent a dramatically greater likelihood of getting to a paycheck and leaving behind food stamps than does Barack Obama.
BARTIROMO: Congresswoman Bachmann, same question to you. How can you create jobs as quickly as possible?
BACHMANN: Well, I think one thing that we know is that taxes lead to jobs leaving the country. All you need to know is that we have the second highest corporate tax rate in the world.
And if you go back to 1981, and you look around the world, we had a lot of high corporate tax countries. It was 47 percent on average on a lot of countries across the world.
But if you look today in the United States, we have an effective rate if you average in state taxes, with federal taxes, of about 40 percent. But the world took a clue, because capital is mobile, and capital went to places where corporate tax rates went to 25 percent and falling.
We're still stuck in a 1986 era of about a 40 percent tax rate. We have to lower the tax rate because it's a cost of doing business, but we have to do so much more than that.
Our biggest problem right now is our regulatory burden. The biggest regulatory problem we have is Obamacare and Dodd/Frank. I will repeal those bills. I have written those bills to repeal those bills that have got to go. But beyond that --
BACHMANN: But beyond that, we have to legalize American energy. And here is something else that we have to do that will help the economy. We have to build the fence on America's southern border and get a grip on dealing with our immigration problem.
HARWOOD: Senator Santorum, you proposed a zero tax on manufacturing businesses.
HARWOOD: I understand the sentiment behind that. And the state of Michigan has lost hundreds of thousands of manufacturing jobs over the last few decades. Isn't that the kind of distortion in the tax code that people want to get away from in order to get rates down: flatter, simpler, fairer?
SANTORUM: I think getting the rate down to zero is down -- is pretty far down. That's good.
HARWOOD: But it's down for the manufacturing industry, as opposed to people doing other things. Isn't that picking winners and losers?
SANTORUM: It's down for a sector of the economy, not picking an individual winner or loser. It's down for an entire sector of the economy that we are getting our hat handed to us by losing jobs.
We see that here in Michigan, we see it across this country. And the reason is government has made us uncompetitive.
We need to compete on taxes. We need to compete on regulations. We need to repeal Obamacare. We need to -- I've said I'm going the repeal every single Obama-era regulation that cost businesses over $100 million. Repeal them all. We'll -- we'll send a very clear message out to manufactures in this country and all over the world that America will compete.
Some have suggested we need to go into a trade war with China and have tariffs. That just taxes you. I don't want to tax you. I want to create an atmosphere where businesses and manufacturers can be profitable. We'll lower taxes, repatriating funds, 0 percent tax if you repatriate those funds and invest them in plant and equipment.
And then, of course, an energy policy that everyone on this stage is going to agree with that says, we are going to produce energy in this country. I'm different than many of them, that I'm going to cut all the subsidies out and let the market work, as opposed to creating incentives for different -- different forms of energy that the government supports.
BARTIROMO: You have all said that -- that you will repeal the president's health care legislation. We will get into that, because we want to know, then what? What is the plan once you repeal Obamacare?
But, first, Mr. Cain, the American people want jobs, but they also want leadership. They want character in a president. In recent days, we have learned that four different women have accused you of inappropriate behavior. Here we're focusing on character and on judgment.
You've been a CEO.
CAIN: Yes. BARTIROMO: You know that shareholders are reluctant to hire a CEO where there are character issues. Why should the American people hire a president if they feel there are character issues?
CAIN: The American people deserve better than someone being tried in the court of public opinion based on unfounded accusations. That's...
And I value my character and my integrity more than anything else. And for every -- one person that comes forward with a false accusation, there are probably -- there are thousands who would say none of that sort of activity ever came from Herman Cain.
You're right. This country's looking for leadership. And this is why a lot of people, despite what has happened over the last nine days, are still very enthusiastic behind my candidacy. Over the last nine days...
Over the last nine days, the voters have voted with their dollars, and they are saying they don't care about the character assassination. They care about leadership and getting this economy growing and all of the other problems we face.
HARWOOD: Governor Romney, when you were at Bain Capital, you purchased a lot of companies. You could fire the CEO and the management team or you could keep them. Would you keep a CEO -- are you persuaded by what Mr. Cain has said? Would you keep him on if you bought his company?
ROMNEY: Look, look, Herman Cain is the person to respond to these questions. He just did. The people in this room and across the country can make their own assessment. I'm not...
HARWOOD: Governor Huntsman, let me switch back to the economy. The...
Many Republicans have criticized the Occupy Wall Street movement, but we had an NBC News-Wall Street Journal poll this week that showed a large proportion of the American people -- 76 percent -- said they believe there's something wrong with our economy that tilts toward the wealthy at the expense of others. Do you consider something wrong with the structure of our economy in the income inequality that it produces? Is that something government should do something about? And if so, what?
HUNTSMAN: Let me just say that I want to be the president of the 99 percent. I also want to be the president of the 1 percent. This nation is divided, and it's painful, and it is unnatural for the most optimistic, blue-sky people this world has ever known. We are problem-solvers.
When I hear out the people who are part of the Wall Street protests, I say, thank goodness we have the ability to speak out. I might not agree with everything they say. I don't like the anti- capitalism messages. But I do agree that this country is never again going to bail out corporations. I do agree...
Thank you. I do agree that we have blown through trillions and trillions of dollars with nothing to show on the balance sheet but debt, and no uplift in our ability to compete, and no addressing our level of unemployment.
HUNTSMAN: And I do agree that we have institutions, banks that are too big to fail in this country. And until we address that problem -- we can fix taxes. We can fix the regulatory environment. We can move toward energy independence. So long as we have instant banks (ph) that are too big to fail, we are setting ourselves up for long-term disaster and failure.
HARWOOD: So, Governor, you agree with Governor Romney that the bailout that Governor Snyder supports in Michigan was a mistake?
HUNTSMAN: The bailout here in the auto sector, $68 billion worth, we are going to end up footing a bill -- Governor Snyder knows that -- of probably $15 billion when all is said and done. I don't think that's a good use of taxpayer money.
Instead, there ought to be some way of taking the auto sector through some sort of reorganization, get them back on their feet. The people in this country are sick and tired of seeing taxpayer dollars go toward bailouts, and we're not going to have it anymore in this country.
CRAMER: Governor Romney, do you believe public companies have any social responsibility to create jobs, or do you believe, as Nobel Laureate Milton Friedman, the most important, most influential conservative economist of the 20th century held, that corporations should exist solely to create maximum profit for their shareholders?
ROMNEY: This is a wonderful philosophical debate. But you know what? We don't have to decide between the two, because they go together.
Our Democratic friends think when a corporation is profitable, that's a bad thing. I remember asking someone, "Where do you think profits go? When you hear that a company is profitable, where do you think it goes?" And they said, "Well, to pay the executives their big bonuses."
I said, "No, actually, none of it goes to pay the executives. Profit is what is left over after they have all been paid."
What happens with profit is that you can grow the business. You can expand it. You have working capital and you hire people.
The right thing for America is to have profitable enterprises that can hire people. I want to make American businesses successful and thrive.
What we have in Washington today is a president and an administration that doesn't like business, that somehow thinks they want jobs, but they don't like businesses. Look, I want to see our businesses thrive and grow and expand and be profitable. I want to see more --
CRAMER: Governor Perry, 30 seconds to you.
Do you think that companies can both be profitable and be able to create jobs? Do you think it's a dichotomy? Do you think they can do it?
PERRY: There better be. And that's the reason the tax plan that I laid out, a 20 percent flat tax on the personal side and a 20 percent corporate tax rate, that will get people working in this country. We need to go out there and stick a big old flag in the middle of America that says "Open for business again."
CRAMER: Mr. Speaker, how about to you, can corporations do both?
GINGRICH: Sure. Look, obviously, corporations can and should do both. And what is amazing to me is the inability of much of our academic world and much of our news media and most of the people on Occupy Wall Street to have a clue about history.
GINGRICH: In this town, Henry Ford started as an Edison Electric supervisor who went home at night and built his first car in the garage. Now, was he in the 99 percent or the one percent?
Bill Gates drops out of college to found Microsoft. Is he in the one percent or the 99 percent?
Historically, this is the richest country in the history of the world because corporations succeed in creating both profits and jobs, and it's sad that the news media doesn't report accurately how the economy works.
BARTIROMO: Mr. Speaker -- I'm sorry, but what is the media reporting inaccurately about the economy?
BARTIROMO: What is the media reporting inaccurately about the economy?
GINGRICH: I love humor disguised as a question. That's terrific.
I have yet to hear a single reporter ask a single Occupy Wall Street person a single rational question about the economy that would lead them to say, for example, "Who is going to pay for the park you are occupying if there are no businesses making a profit?"
CRAMER: Senator Santorum, I want to talk about a high-quality problem our country has.
I just came back from North Dakota. We have made the largest oil discovery in a generation there. Not only is it a -- the find a big step toward creating energy independence, it stands to create as many as 300,000 jobs. But what the guys tell me up there is that they can't handle the rush without federal help.
Would you favor incentives, incentives to get workers and businesses to where the jobs are to support this boom?
SANTORUM: No, because we have done it in Pennsylvania. Pennsylvania has Marcellus Shale. It took a while for us to ramp up, but we're drilling 3,000 to 4,000 wells.
The price of natural gas, because of Marcellus Shale, which is the second largest natural gas find in the world, has gone from $12 to $3.65. And we let the marketplace work. So, no, we didn't have the federal government come in and bail us out.
I want to make the point about manufacturing jobs again, because if you're -- if you're talking about creating jobs that trickle down, I agree with Newt. We have folks who have innovators. But he always -- he talked about innovators that -- that created jobs for blue- collar workers. The unemployment rate among non-college-educated is well into the double digits in America. It's 4 percent or 5 percent for people who have college degrees.
The reason I put forth this manufacturing plan is not just so we can say "Made Here in America," that we can create opportunities for everyone in America, including those that don't have that college skill set, people who built this country, like my grandfather, who was a coal miner. So -- so that is a very important part that Republicans, unfortunately, are not talking about.
We need to talk about income mobility. We need to talk about people at the bottom of the -- of the income scale being able to get necessary skills and rise so they can support themselves and a family. And that's what manufacturing does, and that's why I'm laser-beam focused on it.
BARTIROMO: Let's get back to tax reform. Mr. Cain, let's talk fairness in taxation. Ever since this country started taxing income 100 years ago, our system charges those people who make more money a higher rate than those people who make less money. Governor Perry has said he doesn't believe in that approach, and your 9-9-9 plan suggests you don't, either.
Why now, when the higher income group is doing better than the rest of America, is the time to switch to the same rate for all of us?
CAIN: My proposal is the only one that solves the problem by throwing out the current tax code, which has been a mess for decades, and we need to put in something different that I proposed, 9-9-9. It satisfies five simple criteria. It is simple. The complexity costs us $430 billion a year. It is transparent. People know what it is. There are thousands of hidden sneak-a-taxes in the current tax code. That's why I want to throw it out.
It is fair. The reason it's fair is because of the definition in Webster which says everybody gets treated the same. All businesses get treated the same, not having Washington, D.C., pick winners and losers. This is why I have proposed a bold plan of 9-9-9, 9 percent business flat tax, 9 percent tax on personal income, and a 9 percent national sales tax. It treats everybody the same. And it will boost this economy.
BARTIROMO: How do you ensure that, when the government needs more revenue, that the sales tax doesn't go up and that plan doesn't turn in 19-19-19?
CAIN: Tax codes do not raise taxes. Politicians do.
And as long as (inaudible) the people will hold the politicians' feet to the fire. It's not the code that raises taxes. It's the politicians, because the code -- because the approach, 9-9-9, would be very visible, the American people are going to hold the rates at 9.
HARWOOD: Governor Romney, Mr. Cain's got a flat tax. Rick Perry's got a flat tax. Congresswoman Bachmann is talking about a flat tax. You don't have a flat tax. You're proposing to preserve the Bush-era tax rates. What is wrong with the idea that we should go to one rate? Why do you believe in a progressive tax system?
ROMNEY: Well, I would like to see our tax rates flatter. I'd like to see our code simpler. I'd like to see the special breaks that we have in the code taken out. That's one of the reasons why I take the corporate rate from 35 down to 25, is to take out some of the special deals that are there.
With regards to our tax code, what I want to do is to take our precious dollars as a nation and focus them on the people in this country that have been hurt the most, and that's the middle class. The Obama economy has really crushed middle-income Americans.
This president has failed us so badly, we have 26 million people out of work, working part-time jobs that need full-time work, or stopped looking for work altogether. Median incomes have dropped 10 percent in the last three years. At the same time, gasoline prices are up, food prices are up, health care costs are up.
And so what I want to do is help the people who've been hurt the most, and that's the middle class. So what I do is focus a substantial tax break on middle-income Americans. Ultimately, I'd love to see -- see us come up with a plan that simplifies the code and lowers rates for everybody. But right now, let's get the job done first that has to be done immediately. Let's lower the tax rates on middle-income Americans. HARWOOD: Congresswoman Bachmann, Governor Romney is accepting the premises of the Democratic argument that you have to have a fair approach to taxation that preserves different rates for different people. Why is he wrong?
BACHMANN: Well, I would say President Obama is the one that's wrong, because President Obama's plan for job creation has absolutely nothing to do with the true people who know how to create jobs. He should really be going to job-creators if he wants to know how to create jobs. Instead, he continues to go to a General Axelrod in Chicago to look for his orders to figure out how to deal with the economy. That won't work.
We know what needs to be done. We have a real problem. When you have 53 percent of Americans paying federal income taxes, but you have 47 percent of Americans who pay no federal income taxes, you have a real problem.
And that's why in my tax plan, I have everyone paying something because everyone benefits by this magnificent country. So even if it means paying the price of two Happy Meals a year, like $10, everyone can afford to pay at least that.
And what it does is create a mentality in the United States that says that freedom is free. But freedom isn't free. We all benefit. We all need to sacrifice. Everybody has to be a part of this tax code.
BARTIROMO: Congressman Ron Paul...
BARTIROMO: ... you have said you want to close down agencies. Tell us about your tax plan as well as closing agencies -- federal agencies. Where do those jobs go?
PAUL: Well, eventually they go into the private sector. Then don't all leave immediately when the plan goes into effect. But what my plan does is it addresses taxes in a little different way.
We are talking about the tax code. But that's the consequence, that's the symptom. The disease is spending. Every time you spend, spending is a tax. We tax the people, we borrow, and then we print the money and the prices go up, and that is a tax.
So you have to address the subject of spending. That is the tax. That is the reason I go after the spending. I propose in the first year cut $1 trillion out of the budget in five departments.
(CHEERING AND APPLAUSE) PAUL: Now the other thing is that you must do if you want to get the economy going and going again is you have to get rid of price- fixing. And the most significant price-fixing that goes on, that gave us the bubble, destroyed the economy, and is preventing this from coming out, is the price-fixing of the Federal Reserve, manipulating interest rates way below market rates.
You have to have the market determine interest rates if you want a healthy, viable economy.
BARTIROMO: So you think the economy would be stronger if interest rates were higher right now?
PAUL: You would have more incentive. You would take care of the elderly. They get cheated. They get nothing for their CDs. Why cheat them and give the banks loans at zero percent? And then they loan it back to the government at 3 percent. They are ripping us off at the expense of those on fixed incomes and retirees.
BARTIROMO: Even though higher interest rates would make it much more expensive to borrow, mortgages.
PAUL: But you want is the market to determine this. Whoever thought that one person, the Federal Reserve Board chairman, knows what the money supply should be? Just in the past six months, M1 has gone up at the rate of 30 percent. That spells inflation. That spells lower standard of living and higher prices and watch out. They are coming.
BARTIROMO: We are just getting started tonight. When we return, how will the candidates breathe new life into the lifeless housing market?
HARWOOD: Plus, the view of the economy from the corner office.
(UNKNOWN): I think we are in serious trouble. Business people are struggling.
(UNKNOWN): The problems in the economy didn't arrive in 20 minutes and they won't be resolved in 20 minutes.
(UNKNOWN): The most important economic issue of concern to me is lack of leadership in government, and the lack of any focus on building confidence both with consumers and the business community.
HARWOOD: So how are the candidates going to turn things around? CNBC's "Republican Presidential Debate" will be right back. Stay with us.
BARTIROMO: Welcome back to be CNBC's Republican Presidential Debate.
With us for this portion of the program, CNBC's senior economic reporter, Steve Liesman.
Welcome, Steve.
LIESMAN: Great to be here, Maria. Thank you. BARTIROMO: Most economists agree that there can be no economic recovery without a recovery in housing. American families have lost some $7 trillion in home value in the last five years. Right now, four million people are behind on their mortgage or in foreclosure, 25 percent of homeowners owe more to the banks than their house is actually worth.
Governor Romney has said that the government should let the foreclosure process play out so that the housing market can recover and the free markets can work.
Speaker Gingrich, is Governor Romney right?
GINGRICH: We, he's certainly right in the sense that you want to get through to the real value of the houses as fast as you can, because they're not going to rise in value as long as you stay trapped, as Japan has done now for 20 years. But I think there are two specific steps you have got to understand in terms of housing.
To pick up on something Congresswoman Bachmann said, if the Republican House next week would repeal Dodd/Frank, and allow us to put pressure on the Senate to repeal Dodd/Frank, you would see the housing market start to improve overnight. Dodd/Frank kills small banks, it kills small business. The federal regulators are anti- housing loan, and it has maximized the pain level.
You could also change some of the rules so it would be easier to do a short sale where the house is worth less than mortgage than it is to do a foreclosure. Today, the banks are actually profiting more by foreclosing than encouraging short sales.
But in the long run, you want the housing market to come back? The economy has to come back.
When you are at four percent unemployment, you suddenly have a dramatic increase in demand for housing. When you're at nine percent- plus unemployment, it's hard to get the housing market to come back.
BARTIROMO: Governor Romney, respond in 30 seconds. Not one of your 59 points in your economic plan mentions or addresses housing. Can you tell us why?
ROMNEY: Yes, because it's not a housing plan. It's a jobs plan. And the right way to get --
ROMNEY: The best thing you can do for housing is to get the economy going, get people working again, seeing incomes, instead of going down, incomes coming up so people can afford to buy homes. The things the Speaker just indicated are excellent ideas as well. You have to let the market work and get people in the homes again, and the best way for that to happen is to allow this economy to reboot.
What we know won't work is what this president has done, which is to try and hold off the foreclosure process, the normal market process, to put money into a stimulus that failed, and to put in place a whole series of policies from Obamacare to Dodd/Frank that it made it hard for this economy to get going. You want to get America's economy going? We know how to do it. Just do almost the exact opposite of what President Obama has done.
LIESMAN: Governor Romney, we have created 2.7 million jobs since February, 2010. Over that period of time, the housing market has continued to decline. We are at 2003 price levels now.
LIESMAN: If we keep going the way we are going, in four or five years, we'll be at 1999 price levels. The $7 trillion figure that Maria mentioned could almost double.
Are you willing to let that happen in America?
ROMNEY: And exactly what would you do instead? Would you decide to have...
LIESMAN: I'm asking you.
ROMNEY: ... well, to have the federal government go out and buy all the homes in America? That's not going to happen in this country. Markets work. When you have government play its heavy hand, markets blow up and people get hurt.
And the reason we have the housing crises we have is that the federal government played too heavy a role in our markets. The federal government came in with Fannie Mae and Freddie Mac, and Barney Frank and Chris Dodd told banks they had to give loans to people who couldn't afford to pay them back.
And so -- and so our friends -- our friends in Washington today, they say, oh, if we've got a problem in housing, let's let government play a bigger role. That's the wrong way to go. Let markets work. Help people get back to work. Let them buy homes. You'll see home prices come back up if we allow this market to work.
LIESMAN: But, Governor -- Governor Perry, every quarter I get to report the GDP figures, and it's a negative number for housing, and we've lost some 2 million construction jobs. Housing creates jobs, as well, doesn't it?
PERRY: Not a negative number in Texas. And one of the reasons is because we have put policies into place that follow my plan to get America back working again.
LIESMAN: OK, so translate that plan to America.
PERRY: When -- when you look at what I've laid out, whether it -- the energy side and getting the energy industry going -- and Rick Santorum is absolutely correct on that, is let's get our energy industry freed up, federal lands, federal waters, pull back all of those regulations. Everybody on this stage understands it's the regulatory world that is killing America.
The tax side of it, yeah. Have a flat tax. Have a corporate flat tax in there, as well. But the real issue facing America are regulations. It doesn't make any difference whether it's the EPA or whether it's the federal banking -- the Dodd-Frank or Obamacare. That's what's killing America.
And the next president of the United States has to have the courage to go forward, pull back every regulation, since 2008, audit them for one thing: Is it creating jobs, or is it killing jobs? And if that regulation is killing jobs, do away with it.
HARWOOD: Congresswoman Bachmann, in one of the last debates, you were asked what you would do about foreclosures, and you told moms to hang on. But your advice, as your colleagues have mentioned, was let the economy recover. So you agree with Governor Romney that the way to fix the housing market is to let the foreclosure process proceed more rapidly?
BACHMANN: Well, what I agree with is that we have got to stop what we're doing now. When we had the financial meltdown, 50 percent of the homes are being financed by Fannie and Freddie. Today it's 90 percent of the homes. In other words, the government is the backer of the homes.
Well, let's take a look, an analysis of what a great, brilliant job Freddie and Fannie are doing. They just applied this week for another $7 billion bailout because they're failing. The other one applied for a $6 billion bailout because they're failing.
But what did they do? They just gave bonuses of almost $13 million to 10 top executives. This is the epicenter of capital -- crony capitalism. That's what's wrong with Washington, D.C.
For these geniuses to give 10 of their top executives bonuses at $12 million and then have the guts to come to the American people and say, "Give us another $13 billion to bail us out just for the quarter," that's lunacy. We need to put them back into bankruptcy and get them out of business. They're destroying the housing market.
HARWOOD: Since -- since you mentioned Fannie and Freddie, Speaker Gingrich, 30 seconds to you, your firm was paid $300,000 by Freddie Mac in 2006. What did you do for that money?
GINGRICH: Were you asking me?
GINGRICH: I offer them advice on precisely what they didn't do.
Look -- look, this is not -- this is not...
HARWOOD: Were you not trying to help Freddie Mac fend off the effort by the Bush administration...
GINGRICH: No. No, I do -- I have never...
HARWOOD: ... and the -- to curb Freddie Mac.
GINGRICH: I have -- I assume I get a second question. I have never done any lobbying. Every contract was written during the period when I was out of the office, specifically said I would do no lobbying, and I offered advice.
And my advice as a historian, when they walked in and said to me, "We are now making loans to people who have no credit history and have no record of paying back anything, but that's what the government wants us to do," as I said to them at the time, this is a bubble. This is insane. This is impossible.
GINGRICH: It turned out, unfortunately, I was right and the people who were doing exactly what Congresswoman Bachmann talked about were wrong. And I think it's a good case for breaking up Fannie Mae and Freddie Mac and getting much smaller institutions back into the private sector to be competitive and to be responsible for their behavior.
LIESMAN: Mr. Cain, government-sponsored entities Fannie Mae and Freddie Mac, as Congresswoman Bachmann said, now underwrite or guarantee 90 percent of the home financing in this country. What would you do with these -- with Fannie Mae and Freddie Mac? Would you shut them down even though it could mean higher interest rates for America? Does it make it even harder than it is right now for Americans to get home loans?
CAIN: You don't start there. You start with fixing the real problem, which is growing this economy, which is why I have put a bold solution on the table, 9-9-9.
Secondly, then you get the regulators off of the backs of the banks like someone mentioned. Get the regulators out of the way, such that the small banks and the medium-sized banks aren't being forced out of the business.
They would then be in a better position, and they might develop a desire in order to help homeowners reset their mortgages if they were able to see, number three, some certainty. Uncertainty is what's killing this economy. And until we throw out the tax code, and put in something bold, get government out of the way by reducing the regulatory environment, we are going to still have our housing problem.
LIESMAN: I'm sorry, Mr. Cain, but you would come into office and Fannie Mae and Freddie Mac would be there. The question was, what would you do with them?
CAIN: OK. After I did those three things that I outlined, then deal with Fannie Mae and Freddie Mac.
You don't start solving a problem right in the middle of it. So we've got to do that first.
I would also turn those GSEs into private entities. The government does not need to be in that business. I would find a way to unwind Fannie Mae and Freddie Mac, such that the marketplace can determine the future of the housing market.
HARWOOD: Governor Huntsman, I want to go back to the issue that you raised before about too big to fail. If anything, that problem has gotten worse since the financial crisis than before. The 10 biggest bank holding companies in this country now hold nearly 90 percent of all the assets in the banking system, up from 75 percent in 2006.
So, what would you do? Would you break up the banks to remove the risk, or diminish the risk for American taxpayers?
HUNTSMAN: Let me just say, on the housing discussion here, lost in all of this debate is the fact that there are people tuning in tonight who are upside down in terms of the financing of their homes. They are feeling real pain. People who probably heard today that they lost a job.
These issues are very real. They are complicated. For us to say that there is an easy solution to housing, that's just not right, and that's not fair. The economy does have to recover in order for the housing market to pick up its slack and for us to get on to housing starts, which ought to be 15 percent of our nation's GDP, and today it's two percent.
With respect to the banks that are too big to fail, you know today we've got, as I mentioned earlier, six institutions that are equal to 60, 65 percent of our GDP, $9.4 trillion. They have an implied guarantee by the taxpayers that they will be protected. That's not fair, that's not right for the taxpayers.
HARWOOD: So you break them up?
HUNTSMAN: I say we need to right-size them. I say, in the 1990s, you had Goldman Sachs, for example. That was $200 billion in size. By 2008, it had grown to $1.1 trillion in size. Was that good for the people of this country, or --
HARWOOD: Well, how would you accomplish that? How would you right-size that?
HUNTSMAN: I think we ought to set up some sort of fund. I think we ought to charge some sort of fee from the banks that mitigates the risk that otherwise the taxpayers are carrying. There has got to be something that takes the risk from the taxpayers off the table so that these institutions don't go forward with this implied assumption that we're going to bail them out at the end of the day. That's not right, and it's not fair for the taxpayers of this country.
BARTIROMO: Let's stay on regulation for a moment. You have all said that you will repeal President Obama's health care legislation.
Down the line, 30 seconds, if you repeal Obamacare, what's the answer?
Jon Huntsman?
HUNTSMAN: I would say -- and I would meet with the 50 governors of this country, and I would say, I did health care reform in my state, it took us three years to get it done. We delivered an insurance connector that was not a costly mandate.
You can sit down with the 50 governors and you can address cost containment. This is a $3 trillion industry, half of which any expert will tell you is totally nonsense and superfluous spending.
How do you get costs out of the system? How do you empower patients to better understand what they are getting when they go into the doctor's office?
Number two, we need to do a better job in harmonizing medical records so that we can pull up on a consistent basis the most efficacious course of treatment for patients.
HUNTSMAN: And third, we need to close the gap on the uninsured without a costly mandate, letting the free market work and bringing people together with truly affordable insurance.
BARTIROMO: That's time.
We want to get each of your comments on what the plan is.
Ron Paul?
PAUL: We need to get the government out of the business, and we do need to have the right to opt out of "Obama-care." But we ought to have the right to opt out of everything. And the answer to it is turn it back over to the patient and the doctor relationship with medical savings accounts.
So I would say that we have had too much government. I have been in medicine, it has gone downhill. Quality has gone down. Prices have skyrocketed because of the inflation. So you need to get a market force in there, a medical savings account.
But this mess has been created -- it's a bipartisan mess. So it has been there for a while. So what we need is the doctor-patient relationship and medical savings account where you can deduct it from your taxes and get a major medical policy. Prices then would come down.
BARTIROMO: Thirty seconds, Governor Perry?
PERRY: Obviously on the Medicare side, you have to have an insurance type of a program where people have options of which -- give them a menu of options of which they can choose from. I think you have to have the doctors and the hospitals and the other health care providers being given incentives on health care rather than "sick care."
And then on Medicaid, it is really pretty simple, just like Jon and Mitt both know, you send it back to the states and let the states figure out how to make Medicaid work, because I will guarantee you we will do it safely, we will do it appropriately, and we will save a ton of money.
BARTIROMO: Mr. Cain. CAIN: The legislation has already been written. H.R. 3000. In the previous Congress it was H.R. 3400. And what that does -- it has already been written. We didn't hear about it in the previous Congress because "Princess Nancy" sent to it committee and it stayed there. It never came out.
CAIN: H.R. 3000 allows the decisions to be with the doctors and the patients, not with the bureaucrat in Washington, D.C. The legislation has already been written.
BARTIROMO: Governor Romney?
ROMNEY: Health care in 30 seconds is a little tough. But let me try. Number one, you return to the states the responsibility for caring for their own uninsured. And you send the Medicaid money back to the states so they can craft their own programs. That's number one.
Number two, you let individuals purchase their own insurance. Not just getting it through their company. But buy it on their own if they want to, and no longer discriminate against individuals who want to buy their insurance.
Number three, you do exactly what Ron Paul said. I don't always say that. But I have got to say it right now.
ROMNEY: And that is, you have to get health care to start working more like a market. And for that to happen, people have to have a stake in what the cost and the quality as well as of their health care. And so health savings account, or something called co- insurance, that's the way to help make that happen.
And finally, our malpractice system in this country is nuts. We have got to take that over and make sure we don't burden our system with it.
BARTIROMO: Mr. Speaker?
GINGRICH: Well, I just want point out, my colleagues have done a terrific job of answering an absurd question. To say in 30 seconds...
BARTIROMO: You have said you want to repeal "Obama-care," correct?
GINGRICH: I did. Let me finish, if I may. To say in 30 seconds what you would do with 18 percent of the economy, life and death for the American people, a topic I've worked on since 1974, about which I wrote about called "Saving Lives and Saving Money" in 2002, and for which I founded the Center for Health Transformation, is the perfect case of why I'm going to challenge the president to seven Lincoln- Douglas style three-hour debates with a timekeeper and no moderator, at least two of which ought to be on health care so you can have a serious discussion over a several-hour period that affects the lives of every person in this country.
BARTIROMO: Would you would like to try to explain...
BARTIROMO: Would you like to -- would you like to try to explain in simple speak to the American people what you would do after you repeal the president's health care legislation?
GINGRICH: In 30 seconds?
BARTIROMO: Take the time you need, sir. Take the time you need.
GINGRICH: I can't take what I need. These guys will gang up on me...
BARTIROMO: Do you want the answer the question tonight on health care or no?
BARTIROMO: Do you want to try to answer the question tonight, Speaker?
GINGRICH: Let me just say it very straight. One, you go back to a doctor-patient relationship and you involve the family in those periods where the patient by themselves can't make key decisions. But you re-localize it.
Two, as several people said, including Governor Perry, you put Medicaid back at the state level and allow the states to really experiment because it's clear we don't know what we are doing nationally.
Three, you focus very intensely on a brand-new program on brain science because the fact is the largest single out-year set of costs we are faced with are Alzheimer's, autism, Parkinson's, mental health, and things which come directly from the brain.
GINGRICH: And I am for fixing our health rather than fixing our health bureaucracy because the iron lung is the perfect model of saving people so you don't need to pay for federal program of iron lung centers because the polio vaccine eliminated the problem. That's a very short (inaudible).
BARTIROMO: Congresswoman.
BACHMANN: The main problem with health care in the United States today is the issue of cost. It's just too expensive. And President Obama said that's what he would solve in Obamacare, we'd all save $2,500 a year in our premiums.
Well, we have Obamacare, but we didn't have the savings. So what I would do to replace it is to allow every American to buy any health insurance policy they want anywhere in the United States, without any federal minimum mandate. Today there's an insurance monopoly in every state in the country. I would end that monopoly and let any American go anywhere they want. That's the free market.
Number two, I would allow every American to pay for that insurance policy -- their deductible, their co-pay, their pharmaceuticals, whatever it is that's medical-related -- with their own tax-free money.
And then, finally, I'd have true medical malpractice liability reform. If you do that, it's very simple. People own their own insurance policies, and you drive the costs down, because what we have to get rid of is government bureaucracy in health care. That's all we bought in Obamacare, was a huge bureaucracy. That has to go away.
SANTORUM: This is, I think, the difference between me and a lot of the candidates here. I heard a lot of responses, but I haven't -- I haven't seen a lot of consistency in some of -- some of those responses on the last few questions.
When it comes to health care, back in 1992, I introduced the first health savings account bill that everybody up here said was the basis for consumer-driven health care. I was leading on that before anyone else was even talking about it. Secondly, I was someone who proposed a block grant for Medicaid way back in 1998 with Phil Gramm, again, leading on this issue. Same thing, reforming the Medicare program back in the 1990s, again, I led on these issues.
I was always for having the government out of the health care business and for a bottom-up, consumer-driven health care, which is different than Governor Romney and some of the other people on this panel.
Number two -- and I didn't get a chance to answer any of the housing questions. I was on the banking housing committee in -- in the United States Senate. I was one of 24 people who wrote a letter to Harry Reid saying, please let us bring up this housing legislation, which I voted for in the committee, that would have put curbs on Fannie and Freddie. I -- I was out there before this bubble burst saying this was a problem. I -- I was in Scranton, Pennsylvania, the other day, and I had one of a -- a home-builder, who was a head of the association, came up to me and said, Rick, I'm here to apologize. We came here to push you so you would oppose, you know, putting caps on Fannie and Freddie. You were right; we were wrong.
Time and time again, Wall Street, the Wall Street bailout, five of the eight people on this panel supported the Wall Street bailout. I didn't. I know that we saw problems best from the bottom up, not the top down and government intervention in the marketplace.
BARTIROMO: Governor Romney, you have 30 seconds to respond.
ROMNEY: That's -- that's fine. I believe very deeply in the functioning of markets. The work I've done in health care, actually worked as a consultant to the health care industry, to hospitals and various health institutions. I had the occasion of actually acquiring and trying to build health care businesses. I know something about it, and I believe markets work.
And what's wrong with our health care system in America is that government is playing too heavy a role. We need to get our markets to work by having the consumer, the patient have a stake in what the cost and quality is of health care, give them the transparency they need to know where the opportunities are for lower cost and better quality, to make sure that the providers offer them the broadest array of options that they could have.
And once we have that happening, you'll see us -- 18 percent of our GDP is spent on health care. The next highest nation in the world is 12 percent. It's a huge difference. We have to get the market...
ROMNEY: ... to work to make sure that we get the kind of quality and value that America deserves.
HARWOOD: But, Governor, let me ask you about health care, because Congressman Paul said, put it back to the doctor and the patient. You said a few moments ago that you thought states should have the responsibility for insuring the uninsured. And, of course, in Massachusetts, you enacted an individual mandate and subsidies to have people who didn't have insurance get it. So you think there's a pretty large role for government in this area.
ROMNEY: Well, I think that people -- that people have a responsibility to receive their own care, and the doctor-patient relationship is, of course, where that -- where that exists -- where that exists.
HARWOOD: But the government has the responsibility to force them?
ROMNEY: I -- I didn't know whether Ron Paul was saying we're going to -- he's going to get rid of Medicaid. I would not get rid of Medicaid. It's a health program for the poor.
What I said was I would take the Medicaid dollars that are currently spent by the federal government, return them to the states so that states can craft their own programs to care for their own poor, rather than having the federal government mandate a one-size- fits-all plan in the entire -- entire nation. Obamacare is wrong. I'll repeal it. I'll get it done.
(UNKNOWN): John?
HARWOOD: Congressman?
PAUL: My plan of cutting the budget by a trillion dollars does deal with Medicaid. And that is that it preserves it, and there is a transition period, with the goal that eventually we would hope to move that back into the economy. But right now, it would be too much to do it in one year.
You know, finding a trillion dollars was a job and a half, and getting rid of five departments.
So, yes, my budget takes into consideration health care for the elderly, health care on Medicaid, as well as child health care. At the same time, we deal with the bailouts, the banks, and all the benefits that they get from the financial system, because what we're facing today is the crisis in this housing crisis.
If I could just have one second on that.
We face a housing crisis once again because it's price-fixing. They're fixing the prices of these mortgages too high, and this