National Press Club
September 30, 2008
By Newt Gingrich

Premium Members: Watch the Full Speech from the National Press Club Here

Thank you for coming this morning.  I appreciate this opportunity to share some ideas about where we're at and what we need to do from our current situation. 

I originally had planned to be here today on behalf of The Center for Health Transformation to talk about three major new initiatives in fundamentally reshaping the debate about health and healthcare. 

We have proposals which, in the near future, once we are past this immediate economic challenge, I want to come back to on health based health reform on getting to an electronic health system by December 2012 and on fundamentally changing the Budget Act to establish a science based investment budget.  But those topics, obviously today, have to be postponed. 

I wish I were here today talking about economic growth where I commend Senator DeMint of South Carolina who has, this morning, released a very good package, including zero capital gains, repealing Sarbanes Oxley, substantially reducing the corporate tax rate and doing a number of other steps to create economic growth.  And his instinct is right, because if you don't have economic growth, the fact is that you're not going to be able to successfully mop up the bad paper, and you're going to be back for another bailout next year and another bailout the year after.

So I think it's a sign of the irresponsibility of the current Congress that they plan to leave without having passed an economic growth plan to provide the framework within which a financial plan can succeed. 

And Senator DeMint certainly is providing the right leadership and the right direction.  Third, I wish I could be here talking about energy abundance at a reasonable price.  We just did our Solutions Day Workshop in Atlanta, where people have been without gasoline, literally without gasoline.  One person who wrote an e mail to me yesterday got up at 3:00 in the morning to go look for a gas station that had gas. 

It's not a price problem.  But it is a fact that our infrastructure in energy has collapsed so badly that two hurricanes had stopped Charlotte, Chattanooga and Atlanta from having gasoline I think now for 10 days.  Yet nobody in Washington, nobody in this capital, has seemed to notice that American citizens have been literally unable to get gasoline. 

Recently we released a Drill Here Drill Now Pay Less, a new book outlining a comprehensive energy strategy.  And on Saturday Callista and I released a new movie, "We Have the Power on Energy Strategy."

All three of these are important topics.  Fundamentally rethinking health, recreating economic growth, having energy abundance at a reasonable price. 

But the events of yesterday required that we change today's presentation to talk about the financial meltdown and to talk about what's happening on Wall Street, what's happening on Capitol Hill, and what's happening in the administration. 

And so I want to focus on how did we get here and where do we go from here.  And I'm going to offer an action plan which includes steps that could be taken today. 

And I want to emphasize this.  There are steps that the administration could take today that would dramatically improve where we are.  And I will go into those at some length that could be done immediately with no legislation. 

And it is absolutely irresponsible. If the President believes anything he's been saying on his various speeches about how big this crisis is, he should pick up the phone this morning, call the Securities and Exchange Commission Chris Cox and tell him to suspend the mark to market accounting rules which are a fundamental problem today which can be suspended by the Securities and Exchange Commission and can be replaced over the next few weeks with a more accurate system.  And I'll come back to that.

I just want to emphasize:  If this problem is as big as the President said as recently as this morning, then he should talk to somebody in his own administration about changing things today. 

They don't have to wait for Congress.  They can act today.  Now, my own position, I think, is pretty clear.  I said on Stephanopoulos's "This Week" on Sunday morning that I would reluctantly and angrily vote for the bill that came out yesterday.  I issued a statement yesterday morning saying that as bad as I thought the bill was    and I thought it was pretty bad    I, nonetheless, thought doing nothing was worse. 

And I said that I would, if I were still in Congress, vote yes.  I was surprised yesterday when I got to Oklahoma City for a speech on healthcare to    actually, I walked into an office as the bill was going down. 

And I was surprised.  I thought that Senator McCain had empowered Congressman John Boehner and the House Republicans to substantially improve the bill which last Thursday was a disgrace.

And by yesterday it had merely gotten to be bad.  And that was a huge step in the right direction.  And I thought that that level of improvement, which I, frankly, place directly on    I place the problems directly first on Secretary Paulson's lap because of the way he designed this, and then, secondly, on the liberal democrats, who actually had the gall at one point to have a provision to give $20 billion to a left wing organizing group called ACORNs in a power play that was just breathtaking.

So the so called deal they had last Thursday morning would have bought off left wing activists potentially to the level of $20 billion of taxpayer money.  And that's what Senator McCain and Congressman Boehner blocked and began to reshape.

Secretary Paulson, I think, made it almost impossible to pass this bill by three things he did at the very beginning.  The first is he created a bailout rather than a workout.  And he called it a bailout.  And the American people don't believe you should bail out millionaires and billionaires, and they don't believe you should bail out Wall Street. 

They are prepared to allow Wall Street to work its way out, and they would have been prepared, I think, to support a loan program which would have allowed companies that had bad paper to gradually, over time, work their way out. 

But I think most Americans were deeply offended at the idea that their tax money was going to go to allow the former chairman of Goldman Sachs to take care of his friends on Wall Street in a way that none of them in their small business or their family farm or in their personal lives could expect the government to do.

Second, I believe that the way he wrote the bill by suggesting in his first draft that the U.S. Congress would give $700 billion to the Secretary of the Treasury, which he could spend without judicial review or legislative oversight, was such a fundamental violation of the American constitutional process and the rule of law that it permanently put him in an awkward position trying to negotiate with the Congress. 

Because it was clear that while he may have been a brilliant chairman of Goldman Sachs, he almost has no concept of the job of the Secretary of Treasury within the United States Constitution.

And that led to very, very difficult negotiations.  And, third, I think there's a growing sense that he represents a very narrow Wall Street view.  Something I'll come back to. 

The liberal democrats have done all they could to make the bill more expensive and involve more payoffs domestically.  And it was, I think, ironic to watch Senator Dodd who was the largest recipient of Fannie Mae and Freddie Mac money, and who himself had received favorable mortgage treatment on his homes from Countrywide before it went bankrupt.  But to see him as one of the key negotiators, I think, made it a little more difficult to get to an agreement.

Nonetheless, I thought it was likely that the bill would pass.  I said I would have voted for it, and my advice to my friends on The Hill was to vote for it.  But it went down.  It went down on a bipartisan rejection. 

I just want to make this point because of papers like the New York Times, whose editorial page believes in socialism now, and who had, I think, a totally misleading editorial this morning.  Nancy Pelosi is Speaker of the House.  There's a majority of Democrats in the House. 

It seems to me that if the Speaker of the House cannot pass a bill, it is a little bit clever to decide it's the Republicans' fault that she can't pass a bill in the House where she's speaker. 

And I think in that sense that her speech was sadly inappropriate, very partisan, and deeply embittered a number of people.  And it will be interesting to see, when they come back, whether or not she can deliver at least as many votes as she did last time or whether in fact the Democrats prove even less willing to act responsibly. 

Now, when the vote went down, it occurred to me that we actually have been given a unique and rare opportunity.  If this were just an everyday, a normal day, they would be back right this minute trying to cobble together some amendment to get 12 votes or 15 votes, to get something through with minimum change. 

But, in fact, because of Rosh Hashana, the Jewish New Year, we have several days to think.

I know this is a rare and maybe too high a standard to set for the city, but we do have a chance to think.  It's also doubly ironic, because in the Jewish tradition, the time from Rosh Hashana to Yom Kippur is a time for contemplation, for thinking through what you did wrong over the last year and for preparing to enter the new year in a new and better way.

Now, it seems to me we have a brief moment here, a few days, when the Congress and the administration could actually think.  I know, again, I'm setting a radical standard, but I think it's a useful standard. 

Part of what I'm struck with is the number of very sophisticated Americans who have been coming up with other alternatives.  And I simply want to suggest to you that if both Leader Boehner and Speaker Pelosi and if Democratic Majority Leader Reid and the Republican minority leader in the Senate would, all four, simply set up a website for ideas.  In the next 24 hours, you'd have 6,000 or 7,000 or 9,000 good ideas.  Not goofy ideas.  But ideas from people who are millionaires, ideas from people who are, as the person I met with last night in Oklahoma City who is a Ph.D. in finance, who is a teacher, professor of finance at the University of Oklahoma.  Ideas such as the ones I got in the last 24 hours from very substantial investors in Florida.  Ideas that are coming out from people in Chicago who are very substantial investors.  I think you'd be startled how many smart, interesting, positive ideas there are.  All brilliance is not housed in congressional staffs and treasury staffs. 

And so you actually have a moment here on the Internet when you can surface many, many possibilities of better improvements.  An example I'll give you, I was in a meeting in a business office in Oklahoma City yesterday and someone said:  Why don't we repatriate the money that's currently trapped overseas by American corporations because of our tax system?

And they point out that in 2004 we had a Repatriation Act and charged 5.5 percent tax to bring the money back home.  We got $389 billion pouring back into the U.S.  I sent a note to Ken Keys, who was the former head of Joint Tax and a nationally recognized expert on tax policy.  He wrote a note back this morning and said:  That's exactly right.  And he's actually working with Republican Minority Whip Roy Blunt on developing an ideal along that line.

Well, what if that brought in $200 million in the next two years or more?  Remember, the last time we did it, it brought in 389 billion.  There's a whole range of these ideas that begin to give you a sense.

I want to come back and talk about one or two that have been repeatedly told to me, but I want to give you a flavor.  I think that there are actually, as we come into looking at this, we should take a deep breath and at least mentally clear the slate for a few minutes.  And we should start by asking:  What are the key areas that require attention?

And my standard planning is to think deep first and mid second and near last. 

The reason I say this is, if you go back and you look at Sarbanes Oxley, which was an immediate, panicked reaction by the Congress to the Enron scandal, and which, by the way, everybody who actually broke the law ended up going to jail.  And so while the law worked and while everybody who had broken the law, and Enron was about breaking the law; it wasn't about the law being bad.  Well, the system actually worked.

The Congress panicked because the judicial system is too slow for the lynch mob mood that had set in.  So they passed Sarbanes Oxley.  One of the side effects of Sarbanes Oxley is that it costs an average of $3.8 million per company to do the accounting annually, every year, to do the accounting necessary to become a public company, to be offered stock. 

I spent three days last week in Silicon Valley, and I was told over and over again by venture capitalists that the indirect, unexpected effect of Sarbanes Oxley has been to absolutely choke off new offerings for companies that are start ups. 

Because to earn an additional $3.8 million a year just to pay regulatory costs you have to be a dramatically bigger company.  One leading venture capitalist said we have just extended the lifetime of being inside venture capital for a brand new entrepreneur from five years to 12 on average. 

What does that mean?  It means fewer people    if you said to somebody why don't you go out and start a brand new company, and five years from now you might be on the stock market and you might be an independent free standing company, you get one level of excitement.  If you said somebody:  Why don't you stop doing what you're doing, go start a company and maybe in 12 years you'll be able to go and have an independent stock offering, you just dramatically reduced the number of people who are going to be entrepreneurs in America. 

The second is, companies aren't coming to market.  I had one venture capital firm tell me they had 24 companies that, before Sarbanes Oxley, would be offering stock and going on the stock market.  Zero are today. 

So I would just suggest to you that we need to think    nobody    I don't believe anybody in the Congress believed Sarbanes Oxley was going to become the major anti entrepreneur, anti small business, anti offering stock and becoming a public company that it's become.  And that's why I think you've got to think deeply where you want to go in the long run before you figure out where you want to get in the mid term before you act today.

Again, which is, when you're in a panicked environment, people say I have to do something now, don't ask me to think.  But that's exactly backwards.  Because we're not doing something to get through this week.  We're passing a law which could be here for 10 to 20 years. 

And you have to ask yourself, do you really want to get over your headache by giving yourself cancer?  Or do you want to slow down, figure out exactly what you should be doing?  And if you think deep    as I said earlier I want to drive this home again    you would ask first about economic growth.  You would ask second about energy abundance at a reasonable price.  You would ask third about a financial system of transparency and accountability and reliability. 

And you wouldn't take any actions in the immediate bailout.  And I would argue it shouldn't be a bailout.  It should be a workout.  But I'll get to that. 

You wouldn't take any actions in the immediate bailout that would make it harder for America to grow economically, harder for America to develop its energy resources or harder for us to create a transparent and accountable and reliable financial system.

Now, the immediate focus is to avoid a meltdown.  Let me just say that I'm not totally convinced that we're going to face a meltdown.  I'm convinced by enough people who are very successful that we have a liquidity problem.  And I was prepared very reluctantly to be for the bill yesterday, because I do think there could be a liquidity problem, but I suspect the system, in fact, is going to keep working its way out and that we will gradually solve a great deal of this. 

I also think we have to ask who is accountable for where we are.  I mean, it's been this very interesting rush to let me fix the next problem; please don't ask me how we got this problem. 

So it's been very politically incorrect to point out that, starting with the Carter Administration and accelerated by the Clinton Administration, and, frankly, directly increased by ACORNs, which is the left wing group which the Democrats wanted to give $20 billion to, and who they gave $500 million a year to in the housing bailout this summer, that there's been a perennial pressure for over 20 years now to get very last American into a home even if they couldn't afford it.

Turns out, at the margin, that strategy leads to bankruptcy.  It leads to bankruptcy for individuals and it leads to bankruptcy for lending institutions.

And it's interesting that nobody has talked about the predatory politicians.  You go out and look at ACORNs as a predatory institution.  Go out and look at the people who demanded that Fannie Mae and Freddie Mac buy mortgages that were unsound.  Go out and look at the politicians who demanded that we loan money to people who couldn't possibly repay it.

So the first starting point to look at is an entire strategy that was willing to become financially unsound in order, in the short run, to feel good. 

The second thing to look at, I think, is the rise of a market on a worldwide basis, which is dramatically different than the market for which the Federal Reserve was created. 

I first gave a speech on this on the House floor around 1986, and I warned then that the size of the world market and the speed of the world market was transcending the ability of the Federal Reserve Bank, or what is now the European Central Bank or the Bank of England, to cope with them.  Go back and look at the relative size of these institutions 30 years ago and the size of the marketplace and, in total, cash transactions every day and look at their tiny size today. 

The fact is, we need fundamentally new rules of transparency for transactions that are international that come into the U.S.  We need to understand far more about how some of these things are done. 

And this is a very fundamental question, which, frankly, the collapse of long term capital in, I think it was, in 1999 should have been an initial signal that things are happening out there that can have huge consequence that we don't have the right kinds of mechanisms.

But the goal should not be a bureaucratic regulation.  The goal should be to set standards and principles that are met all day every day in an Internet age so that the transparency allows people to protect themselves.  Because you cannot have bureaucrats protect you in a capitalist world unless you're prepared to slow the economy down to the rate of the bureaucracy.

If you do that, you will kill economic growth.  What you have to do is establish rules that are clear and decisive; and, as I said, in the case of Enron, they worked.  People went to jail for breaking the rules.  But we need more rules on transparency and more rules on people keeping their word and backing up what they're doing, because there are a lot of people who made money.  I want to get to accountability in a minute.  People haven't really turned their attention to this yet.

There are a lot of people who made a lot of money by, at the margins, doing really bad things.  And then they left, leaving behind the wreckage.  The article on Sunday in the New York Times about the AIG unit in London, which was a major cause of the AIG problems and the guy who created it and the amount of money he made out of it and the fact that he's now retired with all of his money, the head of Merrill Lynch who left in the middle of great economic pain with an amazing amount of money as the golden parachute. 

The fact that Franklin Raines made $90 million in six years at Fannie Mae while being fined $400 million for bad accounting and leaving the place on the verge of being a wreck.  All these things lead to lots of questions about how do you create a system of responsibility and accountability?  How do you make sure people don't loot someplace, take the money and get out just before it collapses. 

I think the average American deserves to be told that we are for an entrepreneurial capitalist society of fairness, reliability, accountability and transparency, but we are not for clever people ripping us off and getting away with the money and leaving us with the wreckage, which is why I have consistently opposed the bailout portion, because I think a workout is acceptable, but a bailout is terrible.

If you try to have capitalism on the way up and socialism on the way down, you end up with socialism everywhere.  And what Wall Street is trying to foist off on us is the idea that we should now pay for their problems and we should take care of their problems and that somehow magically we, the taxpayers, are responsible for their mistakes.  I think that is a fundamental mistake. 

If I had one major change I would urge them to make in the bill before it comes back on Thursday, it would be to change the buyout portion into a lending portion and to create a window that would lend at Treasury plus 2%, so the government would actually make a slight amount.  And to say:  If you have a liquidity problem and want to come in and borrow the money for three to five years, fine.  But understand that you own this paper.  You made this decision.  This is your mistake.  And you're going to have to work your way out; we are not going to internalize in the Treasury and have some bureaucrat take responsibility for the bad paper you created.  I think a workout fits the theory of moral hazard.  A workout is a legitimate part of the American tradition. 

I think the American people would support a workout, but I think a bailout is a terrible idea, first of all, because it means some people made really bad decisions trying to get rich and we are now going to bail them out.  But it's also a terrible decision because of the way it was structured, which I'll get to in just a minute.

And this framework, I think that there are a number of steps that can be taken.  Let me just indicate one of them, which was captured in the I think almost grotesque proposal that Bernanke and Paulson almost got passed and which I hope will be changed by Thursday.

If you read their testimony, you will notice that they said that they were going to buy properties at three or four, two or three times the value they currently have.  They were quite clear about this. 

They were not going to pay the current market price because they were undervalued.  Now, there are two things tremendously wrong with this model.  The first is:  If these two terribly smart people, the Chairman of the Federal Reserve and the Secretary of Treasury are so smart that they know that the real value of this property is higher than the current market value, they are telling you something about the current market value.  It's wrong. 

Yet, the current market value is the engine that is driving the collapse of companies.  So what the Chairman of the Federal Reserve and the Secretary of the Treasury are saying to you is:  We're so smart that we realize that we can actually buy all these properties and you, the taxpayer, will not be hurt, because even though we're going to pay two or three times their current value, they're probably worth even more than that. 

You can see    I didn't bring it with me    you can pull up the testimony.  It's in the record.  So what they're telling you is that the strategic reality is that the pricing mechanism of the United States today is fundamentally inaccurate and false.  So the first thing they should have done is fix the mechanism, which I'll talk about in a second. 

But the second thing they're telling you is they're going to decide the market prices.  Now, I want you to think about this.  What they're saying is    presumably this will happen in a real room somewhere and they'll have staff and they'll have data and they'll sit down and they'll say, well, Company X currently has paper that's valued at $100 million.  But, you know, Bernanke and Paulson actually think it's worth 300, write the check.

Now, the next company walks in and they say, well, we think your paper, which is valued at 100 million is actually worth 240 million.  Write the check. 

I mean, what level of stunning arrogance and what enormous concentration of power to suggest that $700 billion is going to be spent priced by the Secretary of the Treasury based on his infinite wisdom and his vast knowledge of the universe, and you think this will be done without favoritism.  You think this will be done without some winners and some losers. 

I'll give you a simple test.  The Securities and Exchange Commission intervened and decided there were 799 companies that should be protected from short selling, a process by which people    and I do think this is actually a problem that needs to be looked into    there are no predatory institutions and predatory wealthy people who literally hunt like packs and who drive down prices in a conscious campaign of short selling that has nothing to do with our market behavior. 

I think as a model it has to be looked at, because when done collectively as a deliberate strategy to destroy a company and then buy at very low prices, it's very dangerous.  And Bear Stearns may have been the victim of a conscious short selling campaign that was in fact an enrichment effort, not an economic effort. 

Now in that setting    and I'll come back to that later because I think it raises some very troubling questions about corruption and about the nature of the current system. 

In that setting, what you have is a system where the Securities and Exchange Commission protected 799 companies.  Nobody got up and said, gee, why wasn't it 797?  Why wasn't it 801?  Where is the paperwork?  How did you decide who is on the list?  What you had was a bureaucratic dictatorship.  Somewhere in Washington there's an office where somebody sat down and presumably on a word processor pulled up a list of companies and said this one gets protected; this one doesn't.  This one gets protected; this one doesn't. 

And they came up with the number 799.  This is very dangerous.  Because if you replace the rule of law with bureaucratic dictators, bureaucratic dictators create whims, and they're corruptable and they can be influenced.  And over time you're designing a nightmare.  You cannot have bureaucratic capitalism.  It is not sustainable.  It collapses into favoritism, a focus on lobbying and, ultimately, corruption.  And it has everywhere it's been tried historically.

To have a free market system, you have to have the rule of law.  You have to have the objective play of information.  And everybody has to have a fair opportunity.  And when one person is going to set price for $700 billion and they're not going to have it done in an open market way, you have enormous danger. 

So I start with:  A, it's wrong because they're telling you that the pricing system is inaccurate; and, B, it is wrong because they're telling you that they're going to centralize power and a very small number of people who are, in fact, going to end up, I think, ultimately having to have favorites and having to make decisions that are not defendable. 

Now, I've been suggesting for a week that a key part of this problem is the mark to marketing accounting system, what is called a fair value accounting system.  This is not just a whim on my part.  It's not just an effort to find something easy.  This is something that Chris Cox at the Securities and Exchange Commission could do this morning and should do this morning, which is suspend it and allow either a transition system or allow for two or three weeks the system to sort itself out.  But to have the current engine is a disaster. 

Let me just give you a series of quotes to give you a flavor of this.  Kevin Hassett, who is a brilliant economist at the American Enterprise Institute, a colleague of mine at the American Enterprise Institute, said the following on September 29th: "Our practice of so called fair value accounting is sheer lunacy.  The problem is that when a run on a risky asset occurs driving its value down, accountants then value the firm that holds that asset's financial position at the latest market price. 

"As the value of risky assets plunges, firms are forced to sell under the declining market to raise cash.  These sales drive the prices down further, necessitating even more sales." 

So here's Kevin Hassett, who is a very respected economist, who says that the current Securities and Exchange Commission mark to market or fair value accounting system is, quote, sheer lunacy. 

Steve Forbes said on September 29th: "Another factor in the U.S. is the peculiar accounting principle which is mark to market.  It is fine for publicly traded companies such as IBM or G.E.

"But when you try to mark to market on some of these securities, there is no market.  What some of these accountants and banks are doing, even though some of the mortgages are in service, is that they mark the value down, which is nuts.  They are worsening prices and timeout on mark to market." 

So Steve Forbes' response is that the current accounting system imposed by the Securities and Exchange Commission is, quote, nuts. 

Richard Epstein, University of Chicago:  "Unfortunately, there is no working market to mark this paper down to.  To meet their bond covenants and their capital requirements, these firms have to sell their paper at distressed prices that don't reflect the upbeat fact that the anticipated income streams from this paper might well keep the firm afloat."

What Epstein, the University of Chicago, captured on September 23rd is exactly the point that Bernanke and Paulson have been making, which is that if you measured the value from the anticipated stream of revenue, you'd have a dramatically higher value than the current value of the forced sale. 

What's happening is mark to market is forcing us to have fire sale levels which then become the value of the company, which then goes bankrupt, when in fact the assets, if you measured them based on the stream of revenue, are dramatically higher. 

Economist Brian Westbury, Chief Economist, and Robert Stein, Senior Economist at First Trust Portfolios of Chicago, blame the mark to market accounting for the current crisis.  This is the quote, September 25th, that really got me intrigued with this.  And I thought I had found a way to begin to explain it in terms of Capitol Hill. 

"It is true that the root of this crisis is bad mortgage loans.  But probably 70 percent of the real crisis that we face today is caused by mark to market accounting in an illiquid market."  Let me repeat:  "Probably 70 percent of the real crisis that we face today is caused by mark to market accounting in an illiquid market." 

Now that's from Brian Westbury and Robert Stein who are economists at First Trust of Chicago.  I finally figured out:  If you take 70 percent times the Paulson request, it means $490 billion. 

So if you could go to Congress and say:  What if, instead of hitting the taxpayer for 490 billion and giving Paulson the power to be king of Wall Street with 490 billion, what if we suspended mark to market, allow people to choose an alternative mark to cash flow or allow them to choose a three year rolling average, and we save $490 billion?  That was the number that began to get traction on Capitol Hill. 

And I would hope today, literally today, that Chairman Cox would in fact suspend mark to market and announce several alternative methods of measuring and allow them to float for three or four weeks, because if it doesn't work, he can reimpose mark to market.  But if it does work, then we understand how much of the current crisis has been artificially created by the government's own rules. 

Former head of the Federal Deposit Insurance Corporation, William Isaac, suggests that mark to market accounting would have had devastating effects during the 1980s credit crisis.  He says the following, this is on September 19th:  "If we had followed today's approach during the 1980s, we would have nationalized all the major banks in the country and thousands of additional banks and thrifts would have failed.  I have little doubt that the country would have gone from a serious recession into a depression." 

Now this is the guy who actually was there in the 1980s.  What he's saying is if they had the current rule in the 1980s, notice these numbers, we would have nationalized all the major banks and thousands of additional banks and thrifts would have failed. 

This is a seasoned    I'm a historian, former elected official.  You don't have to trust my judgment.  This is the guy who actually did it in the Reagan years, who is telling you flatly:  That had they had this rule in the Reagan years, it would have destroyed the economy.  Guess what it's doing now?  Destroying the economy. 

Dr. Franklin Allen, economist at the Wharton School, September 12th, 2008:  "Mark to market accounting in financial institutions has severe drawbacks in times of crisis and needs to be reformed.  According to a study published by the Journal of Accounting and Economics, in economic situations characterized by illiquidty, mark to market prices will distort the situation." 

This is a quote from a study by Dr. Franklin Allen at the Wharton School and Dr. Elana Carlotti at the Center for Financial Studies University of Frankfurt, Germany:  "When accounting values are based on market prices, the volatility of asset prices directly affects the value of bank's assets.  This can lead to distortions in bank's portfolio and contract choices and contagion.  Banks can become insolvent even though they would be fully able to cover their commitments if they were allowed to continue until the assets matured." 

So what they're saying is:  You're now in a setting where people are in fact being forced into bankruptcy by the accounting rules of the federal government. 

Alex Pollock, who is a great colleague of mine at American Enterprise Institute.  I have to say that Alex Pollock and Peter Wallison at the American Enterprise Institute have both been more accurate about government sponsored enterprises than almost anybody else in the system. 

He said the following on July 28th:  "The fair value theory has particularly perverse results when applied in the midst of a market panic, when markets are neither liquid, active or orderly.  What is the meaning of a market price when there is no market?  Of course you can make estimates by projecting cash flows and applying a discount rate.  But which discount rate?  The fair value theory forces the huge uncertainty premium or panic discount of distressed markets into the profit and capital calculations of entities whose contracted for cash flows may all be realized." 

Again, Pollock's line was that it has particularly perverse effects.  Not quite as succinct as lunacy or nuts, but same general pattern.  But Alex Pollock went on to say:  "From a public policy point of view fair value accounting is distinctly pro cyclical, building market excesses of both optimism and pessimism into reported profits and capital.  In the midst of severe busts where we are now, this reinforces the downward cycle of panic, falling prices, losses, illiquidty, credit contraction, more panic, further falling prices, greater reported losses, no active markets.  Fair value accounting adds momentum to a destructive downside overshoot."

"Furthermore, mark to market methods have a proven tradition, proven record of downward pricing."  The Financial Times, March 6th before we got into this total mess.  "Consider the financial statements of bond insurer MBIA.  MBIA reported a $3.5 billion loss in the fourth quarter of 2007 due to fair value adjustments to its illiquid credit derivatives portfolio but the actual cash impairment was just $200 million.  MBIA could conceivably be forced to write off most of its bank equity under fair value accounting, yet still meet its statutory capital requirements on a cash basis.  How does such a presentation help investors?" 

"Mark to market accounting may be less informative and inaccurate.  The National Bureau of Economic Research, March 2006, two years ago:  "The externality introduced by the mark to market contracts causes traders to possibly rationally trade on irrelevant information making the prices used to mark their positions less informative. 

An economist of the European Central Bank issued a stern warning towards moving to mark to market or fair value accounting in 2004.  This is four years ago:  "With a real estate crisis or a stock market crash, a bank under fair value accounting might aggravate the effects of a shock.  Banks may be encouraged to react by panic selling and tightening lending standards, thus contributing to a further deepening of the crisis. 

"Indeed, once a systematic disturbance unfolds, its macro economic effects are likely to be more direct and severe.  Furthermore, as the changes may have a significant impact in income volatility and pro cyclicality, it cannot be ruled out that a systemic disturbance hitting the banking sector during the transition could be unduly amplified.  As a matter of fact, systemic crises in the past were frequently associated with significant reforms, liberalizing markets and a change in the environment in which banks operated." 

This is the European Central Bank warning us in April of 2004 that this particular accounting procedure could have devastating consequence. 

The Federal Reserve itself called for reform of mark to market accounting in 2002.  Susan Bies, November 7th, 2002, Governor of the Federal Reserve said:  "FASB has stated it believes all financial instruments should be reported at fair value when the conceptual and measurement issues of fair value are resolved.  The lack of reasonably specific standards for the estimation of fair values for non traded illiquid instruments could lead to problems for auditors and bank supervisors in verifying the accuracy of fair value estimates.  Therefore, the Federal Reserve has questioned the usefulness of comprehensive fair value accounting for all financial assets and liabilities in the primary financial settings." 

Now I want to particularly thank Emily Renwick, our research associate at the American Enterprise Institute, who has helped pull all this together. 

The hope I have in maybe mind numbing repetition has gotten  across a message here.  There are innumerable experts, intellectual experts, practitioners, former government officials who collectively agree that if we would suspend the current accounting system which has driven down prices artificially, we might find that instead of having Secretary Paulson and Chairman Bernanke spend taxpayers' money to buy undervalued properties at two or three times their current undervalue, that they would naturally rebound to two or three times their current undervalue and you would have, in a matter of weeks, a dramatically more illiquid economy without having centralized power in the Treasury in Washington D.C.

However, I think there are some very disturbing reasons why we should look carefully at why the federal government has not changed.  And I think it is peculiarly difficult to explain the intensity of President Bush's language with the absolute failure of the Securities and Exchange Commission to suspend mark to market.  If this is as big a crisis as the President said in his nationwide address the other day, as he repeated this morning, then why have they not suspended this?  It's within their power.

I'll tell you my personal belief.  They want the money.  I think there are going to be two scandals coming out of this process when we get around to all the historians and the reporters and people who pay attention, because this is now a big enough scandal, you might even get a book by Bob Woodward about this by the time it's over. 

It's reached a stage where you might actually have political reporters trying to understand financial things.  One of the scandals will be the entire process of political donations and power on Capitol Hill and the degree to which people like Senator Chris Dodd, who was the largest recipient of Fannie Mae and Freddie Mac, is also in charge of the committee overseeing them. 

And I suspect you may see a serious proposal to adopt a rule that no one who is members of committee can take money from any political action committee or anyone involved in the industries they oversee.  But we'll clearly have to look deeply at this, because there's something fundamentally sick about watching the way in which the Congress has dealt with this. 

The second, though, is Secretary Paulson.  I received    I think it is profoundly troubling that the Chief of Staff to the President worked for Goldman Sachs.  The Secretary of the Treasury worked for Goldman Sachs.  I am told the person brought in to oversee Fannie Mae and Freddie Mac was a chairman, a past chairman of Goldman Sachs. 

We learned in the New York Times on Sunday that the only private sector institution that was in a meeting at the New York Federal Reserve to discuss the future of AIG was the chairman of the Goldman Sachs.  And that Goldman Sachs had a $20 billion interest in AIG.  And two weeks later the federal government found $85 billion to bail out AIG. 

I received an e mail this morning from a very, very successful businessman who literally is worth hundreds of millions of dollars and is very shrewd, who said    and I can't prove this yet but I will be working on it all day today    who said:  If you look at the collapse of Bear Stearns, that it was his understanding that Goldman Sachs had been shorting Bear Stearns, and that the head of Morgan said he would have paid more for Bear Stearns and was told by Paulson he could only pay $2 a share. 

Now, no one has slowed down    here's what happened.  Liberal Democrats have no particular interest in learning any of this because they like bigger government.  They want more power in Washington.  They believe in bigger spending, so they're happy.  I mean this administration has given them a greater chance to move towards a socialist America than anything in modern times.  They can't imagine how good George W. Bush has been for them being able to centralize power in Washington and spend your money.  They got $152 billion in a stimulus package in spring which didn't work and would have been better off being spent on investments to create jobs.

They got $300 billion this summer for a housing bailout that didn't work.  So they're already up $450 billion.  If you're a liberal Democrat, it doesn't get much better than this.

It's very hard to imagine, if Obama gets elected, how he'll ever match the Bush Administration in increasing federal spending.  And now they have a chance to have $700 billion of the Treasury that they get to spend because they expect to replace President Bush with a Democrat. 

They're thrilled.  Why would they raise any questions?  And on the other hand Republicans are so embarrassed that this is a Republican administration that they have felt timid about telling the truth and raising questions. 

But here are things that need to be looked at:  Was Goldman Sachs shorting Bear Stearns?  Did Secretary Paulson insist on the lowest possible price deliberately?  And, if so, why?  And why did he punish those particular shareholders?

Or was he in fact indirectly rewarding Goldman Sachs?  Was Goldman Sachs actually, as the New York Times alleges, the only company in the room at the New York Federal Reserve in deciding the fate of AIG?  And by what standard?  By what right?

I think this is, frankly, a level of such appearance of corruption, and I think that Secretary Paulson has shown in almost every way his complete misunderstanding of his job as the Secretary of the Treasury.

I cite    go back, look at his original proposal, to give him personally $700 billion with no accountability, no legislative oversight and no judicial review, that I really think the President would be vastly better off to accept his resignation and allow Bob Kimmitt to be the Acting Secretary of the Treasury from now to the end of the administration.  And Kimmitt, who is a very sophisticated student of government and finance, I think, would do a much better job negotiating the next round of this bill.

I say that in part from just the continuing complaints I got from House Republicans who privately would tell me how impossible they found it to talk with Secretary Paulson in trying to walk through these kinds of problems and deal with them. 

So I think we're at a difficult time.  I would hope that Chairman Cox would, today, remove this difficulty.  I would hope that we would see a lot of new ideas and a lot of new approaches and we would see more creativity than we have seen up until now.  And I think we have a chance with the several day period to achieve that. 

But I also want to end on a very optimistic note.  It's a little bit like when you watch the weather channel and there's a storm coming and they maximize the likelihood of damage so that you have to watch all day long to find out what's going to happen. 

And many of you have had this experience.  To a certain extent that's where we are right now with the    I watched one channel the other morning that was almost hoping that the market would collapse.  This was not on Monday but on Friday.  And then they were confused when the market failed to collapse. 

But all their pre market talk was it's going to be terrible, it's going to be terrible, it's going to be terrible.  They kept interviewing the guy who said it was going to be terrible.  When an hour in it was up 170, he clearly didn't know what he was supposed to say, because his talking points for the day were how terrible it was.  I think we ought to take a deep breath.  We ought to step back and realize that, in fact, we've been here before.  We've seen these problems before. 

I want to cite two examples:  Bagehot and Lombard Street makes the point that    Bagehot is the founder of The Economist magazine, the great defender and explainer of market capitalism in the 19th century.  He makes the point that you have to have orderly markets, that money does not organize itself. 

And that you invariably have patterns of panic and you invariably have patterns of bad decision and you have to have structures that surround the play of ambition and the play of greed, that you want people to be able to go out and pursue building factories.  You want them to go out and pursue getting wealthy, but you want to do it within rules that are set by the government.

In many ways Bagehot is the precursor to a Theodore Roosevelt kind of republicanism.  The other example which I was first directed to by Larry Summers, when we were dealing with problems in 1997 '98 when I was the Speaker of the House, and he mentioned to me a book I commend to anybody who wants to understand the current mess, and that's Charles Kindelberger's "Manias, Panics and Crashes." 

Kindelberger was a remarkable historian.  And this starts with the tulip bulb crisis in Holland in the 17th century.  When the tulip had first arrived from Turkey and became a store of value and people got all excited by it and they paid absurd amounts.  Anybody who lived through the Silicon Valley IT bubble at the end and in 2000 will find this to be a refreshingly accurate story.  Turned out, in 2000, that three young guys who had an interesting idea and no market plan and no track record probably shouldn't have been given $50 million. 

But everybody was getting rich and the next 12 companies were all going to be Google, therefore how could you lose?  Well, turned out you could. 

And what Kindelberger does, see this takes you through 350 years of humans being human in a market environment. 

And I think what Bagehot would say to all of us is, yes, you need to reform.  But reform carefully.  And be aware of the fact that, if you're not careful, just as you did with Sarbanes Oxley, you could end up doing more damage than good over time. 

In that framework, I would be glad to take questions and give you a chance. 

Yes, sir.  I think they've got microphones they'll bring you. 

Question:  John Lopey, Financial Times.  Speaker, could you help us with a general question and a specific one?  First of all, MSNBC, one of your favorite channels, I'm sure, was reporting this morning that you were cautioning Republican legislators in the House that this was socialism, this was a profoundly unattractive bill. 

In fact, lobbying them against the measure before your last minute statement in favor of it.  Did that reflect reality in any sense?  And the more general question is:  Do you believe we are now going to be in a better position given the alternatives to being looked at than we would have been if the measure had gone through yesterday? 

Newt Gingrich:  First of all, MSNBC, as it often does, is just wrong.  It's probably wrong deliberately because it is a stunningly dishonest network. 

I believe that if they would simply look at what I released yesterday, if they would look at what I said this week on Sunday, they'll see that what I said was I deeply oppose Paulson's original proposal. 

I deeply oppose the liberal Democrats making it even worse on Thursday.  I did everything I could, and I think that John Boehner and Roy Blunt would confirm this    or Eric Cantor or Paul Ryan would confirm this    I did everything I could over the last five days to improve this bill, not to weaken it. 

And I said with great reluctance I would vote for it, and I gave a statement to that effect to Leader Boehner, who is was going to both put it in the record and share with all of my friends and former colleagues. 

So I was actually reluctantly trying to help it get through.  And I expected it to pass.  Second, I do think it depends on what happens next.  If Pelosi decides to lurch to the left and add back in a lot of junk on behalf of her left wing allies, such as ACORNs, then the bill will become dramatically worse. 

If, on the other hand    Senator Obama had a very good idea last night, which was to increase the FDIC insurance coverage to at least $250,000.  I think you can make a good case it ought to be temporarily unlimited, because you don't want corporations pulling their money out.  You don't want to create safe havens over here rather than over here. 

So if you had a six month or one year guarantee of bank deposits in FDIC institutions, I think that would be something that might be very attractive to Democrats and Republicans alike.  I think if the administration would move on mark to market, they could have a substantial impact on the House, because that would be a very major change.

So there are things that could be done.  You might, by Thursday or Friday, have an improved bill rather than a weaker bill.  And you might have a bill that has more likelihood of actually working. 

That wasn't my goal.  My goal yesterday was to try to get it through because, when I talked to    and this was confirmed for me in Oklahoma City yesterday.  When I talked to people in the business community who are engaged every day in trying to keep their businesses opened and trying to find capital and trying to do things, a genuine crisis of credit is terrible for the entire economy.  It's terrible for every American at every level. 

So I do think it would be good to pass something, but I think it might actually be marginally improved.  And I think if it starts in the Senate, it might be significantly improved and easier to pass when it got to the House, if it was a bill that fit a pattern that Congressman Boehner and Congressman Blunt and Congressman Cantor and Ryan could support. 

Yes, ma'am.

Question:  Maria Pendow with FA News Services.  I was wondering if you could take us back to the actual vote yesterday.  67 percent of Republicans voted against it.  Obviously not heeding President Bush's or Senator McCain's advice.

Newt Gingrich:  Or mine.

Question:  Or yours, as you say.  But I wonder if you could talk about the context of the vote and whether or not the fact that a lot of these people are going back to their districts and hearing from people who are against the bailout, if the fact that they're running for re election played a role in voting against the bill; and, like you said, what would be the next step if people are asking for help for families that are affected by foreclosures, for instance? 

Newt Gingrich:  Let me say, first of all, this may come as a great shock to people who live in Washington.  I would hope in a representative democracy the people who are elected actually pay some attention to the people back home.  I think this idea that somehow the New York Editorial Times Editorial Board really matters and their wisdom is permanent, but, boy, listening to people back home, that's a sign you're not very intelligent. 

That's a total denial of why you have a House Of Representatives.  If you have an idea you can't explain in a way that the American people will tolerate it, why should the people to whom you've loaned power impose it on you? 

I think that's    you can say that Paulson failed.  You can say the President failed.  You can say there's been an absolute inability to convince the American people that they ought to bail out Wall Street.  But it's clear that even for those who showed courage and voted yes, none of them had a majority in their district in favor of this bill. 

And so I think it's a little bit much to say, oh, gosh, they were actually listening to people back home.  I thought that's why you had a free country. 

Second, I think Speaker Pelosi made it much harder to vote yes.  Her speech was radically different from her prepared text.  Her speech was very partisan, very anti Republican.  And at the end she said:  If this passes it's a victory for Barack Obama.  Here you are, you're an undecided Republican leaning yes.  You listen to Speaker Pelosi attack you and then tell you if you vote yes, it's a victory for Obama.  You think this increased the number of Republican votes?

Now, I don't know    somebody should go ask Pelosi.  Why did she not give her prepared text?  Why did she go off on a wildly partisan anti Republican rant?  Because as somebody who used to lead the House, I'll tell you, when you're in that room and people are right at the edge and you know you've got 30 or 40 votes out there that could go either way, to have her come in, give a deliberately San Francisco left wing liberal Democrat partisan speech was very destructive.  And nobody is holding her accountable.  Nobody is saying:  Aren't you Speaker of the House?  Don't you have a majority?  Why didn't you pass it?  I think it's bizarre that it's John Boehner's problem as the Minority Leader to get something through the House that Pelosi made harder, much harder, by her speech yesterday. 

Question:  Jim Pinkerton, Fox News.  Mr. Gingrich, one of the hallmarks of your career has been an appreciation of the power of technology to make new things possible.  In that spirit, and since you cited the distinctly teapot dome ish relationship between Goldman Sachs and the federal government, do you think it would be possible as part of any hypothetical purchase of distressed securities to put the entire process on line to make it fully transparent so that people could bid on these things, and then, if the government chose to pay higher than the market price, it would be fully    it would perhaps be fully available and apprehendable to the Americans what premium the government was paying for these securities? 

Newt Gingrich:  Well, I think you raise two parallel good points.  One is how do you get transparency and how do you use technology.  So let me use this as an excuse to say three things:  One, I do think we ought to insist on a transparent process.  And this is why, frankly, I like a workout with a borrowing window dramatically better than a buyout than a bailout. 

Because in a workout you can say very bluntly, here's what it's going to cost you; if you need the money, you can show up.  You're going to have to pay it back.  It's all a public transaction.  And people will self define who decides they want to try to save themselves by doing that and who decides that it's easier to go bankrupt and absorb the loss than it is to go through that.

I think the idea that we're going to internalize that into the government makes it even more important that it be open.  As I said a while ago, somebody should be demanding that the Securities and Exchange Commission release what was the paperwork, what were the meetings like?  How did you pick 799 companies to protect?

I mean right now we ought to know.  What's this bureaucratic dictatorship that's evolving where one company lives and another company dies and none of us have a clue how the decision was made?

Second, I think that all of the information about the Bear Stearns process and about the AIG process    and we have never seen the report that was done for the Secretary of the Treasury that led him to take over Fannie Mae and Freddie Mac.  It's still buried in secrecy.  So why isn't all that made public?  Lastly, I've been trying to create what Congressman Mike Burgess called the Gingrich Doctrine, which is that all of these bills should be posted on the Thomas system 24 hours before they're voted on. 

We had a start on that this week.  We actually got it posted on the Speaker's system and we got it posted on Congressman Boehner's system.  And for technical reasons, because of the way it was written they didn't figure out how it was posted on Thomas, which was just a mistake.

But if we could establish as a principle for the bill that comes up this Thursday, Friday or Saturday    again, there is no rush.  The system's going to move on.  The idea that we can't let the American people read a $700 billion bill involving their money for 24 hours because we have to get it passed before the Asian markets open, that was one of the arguments I was given. 

This is just    this is exactly the opposite of why we have a Constitution.  Our constitution is designed to slow the process of power down enough that we, the people, have input. 

So I would hope that the Senate and the House would agree that whatever they're going to vote on next would be posted on the Thomas system, available to every American, for 24 hours.  And the reason I want to move to this is you'll suddenly have thousands, probably hundreds of thousands, and maybe even several million people, analyzing the bill. 

And you will have a level of expertise brought to bear.  And you'll find out whether or not the staff put a bunch of hidden things in.  And I want to set this standard because next year I want to argue that the House rules should read that no appropriations bill and no continuing resolution comes to the floor without a 24 hour layover on the Thomas system and you will flush out so much pork and so many set asides and so many little deals that you will begin to change the entire appropriating process.

So creating what Congressman Burgess called the Gingrich Doctrine for transparency and accountability using the Thomas system this way, the Thomas system was launched the second day I was speaker, and it was launched for this purpose.  It was launched in order to create a worldwide capacity for people to be involved without a lobbyist and without paying anything because they can directly see the action of the Congress. 

So your point is right.  We should extend that to the executive branch.  Every transaction involving this bailout ought to be transparent and online; and, frankly, we should have all of the past documentation involving Bear Stearns, AIG, Fannie Mae, Freddie Mac and involving the decisions made by the Securities and Exchange Commission on short selling.  And all those they should    the leadership of the House and Senate should demand those be released today.  That's an action they can do today while Congress is out of town.  So add that to my suspending mark to market as the things that the administration can do to be helpful. 

Yes, sir. 

Question:  Quinn Hillier with the Washington Examiner.  Two questions.  First of all, have you spoken to your old colleague Chris Cox about mark to market and what does he say about it?  And secondly, of all of these 6,000, 9,000 good ideas out there, including some that have gotten a lot of attention like Lucian.
Bebchuk of Harvard or Larry Lindsay's got one or [Inaudible] has one that Jim Pinkerton mentioned.  Of all these sort of immediate steps that would require legislation, which is the approach that you think is the best? 

Newt Gingrich:  Now, I've not talked to Cox about this.  So I can't comment on what he would say. 

Question:  Would it be worth talking to Cox? 

Newt Gingrich:  Oh, I think Cox will know what I'm saying.  I would say that I'd set a simple standard.  Does it increase the flow of private capital?  Does it increase the likelihood of economic growth?  Does it minimize the involvement of the taxpayer and the involvement of bureaucracy in government.  And I would go down the list that way.  I would like to either repeal or dramatically reform Sarbanes Oxley, because I think it's killing entrepreneurial business. 

I would like to see us go to zero capital gains, which is the rate in China and Singapore, because I think if you had a zero capital gains tax you would see a flood of private money mopping up most of the bad paper. 

I would like to see us take steps that are pro market and increase the willingness of people to invest in America rather than take steps which have the government propping up the past and having bureaucracy prop up the past.  So that would be sort of the core way I'd measure these things.  And I'd look at them. 

Martin Feldstein, who was Reagan's Council of Economic Advisors chairman and professor at Harvard had an idea about three months ago, for example, about using a tax credit offset on your mortgage in order to rebalance the value of housing in America and to keep people in their homes. 

It's a complicated intricate idea.  But I like it because it's very simple.  And I want to draw this distinction.  I'm in the tradition of Hamilton, Lincoln and Theodore Roosevelt, all of whom believed in strong, lean non bureaucratic government.  So Hamilton writes the first report of manufacturers and the first report on the national debt, or the public debt it was called.  And both of them involved significant government changes but neither of them requires a large bureaucracy. 

Lincoln is in favor of a transcontinental railroad but he does it by subsidy and incentive.  He doesn't do it by creating a federal railroad building department.  And I want to draw this distinction, because we've had this false distinction that you've either got to be for very weak government that doesn't do anything, or you've got to be for massive government filled with bureaucrats and lobbyists and politicians that does everything badly.  Now, there's a third alternative. 

And so, for example, we clearly have a housing problem.  You go to Florida, you go to California, you go around the country.  There's clearly a housing problem.  What Feldstein suggests is one change in the tax code applied to every single American equally enables you to rebalance the housing market substantially and encourages people to stay in their homes and not give up in their homes.  And it's elegant and it's direct and it's the kind of thing we should be doing. 

I want to make one other comment that will lead back when I come back in a few weeks and talk about health, because I want to imprint this for all of you. 

We have a terrific project called the Alzheimer Study Group, and it is co chaired by Former Democratic Senator Bob Kerry of Nebraska and we have, for example, Former Justice Sandra Day O'Connor serving on it, as well as a Noble Prize winner and the provost at Harvard and a number of very smart people. 

In the baby boom generation, Alzheimer's is going to be a estimated trillion 200 billion dollar cost to the federal government and another trillion dollars to private individuals, as well as being a terrible burden and painful thing for families.  I have a sister in law whose mother has Alzheimer's.  It is estimated that if you could postpone the onset of Alzheimer's by five years you would save $600 billion for the federal government in the baby boom generation.  And you would save an immense amount of human pain. 

Now, you go up on Capitol Hill and they'll tell you we can't really fund the NIH    I say this having worked with Senator Connie Mack and Congressman John Porter to double, think about this, we doubled the NIH budget while balancing the federal budget and controlling spending. 

You go up on Capitol Hill today, they'll say, oh, we don't have the money; we can't invest in math and science education.  We can't triple the size of the National Science Foundation.  We can't invest in the National Institutes of Health, we don't have any money.  But we've got $152 billion to throw away in a stimulus package.  We had over $300 billion to throw away in a housing package.  We could give $500 million a year to ACORNs, because that mattered politically.  We're now going to spend $700 billion because, you know, if you don't take care of Goldman Sachs' chairman and Wall Street, you won't feel good. 

So we can find in one year almost a trillion 200 billion dollars.  The amount that we may spend on Alzheimer's in the baby boom generation.  But we can't find that extra couple billion for NIH.  Boy, that would be really hard. 

I just want to suggest that one of the things that the American people should do is look at the totally hypocritical and dishonest budgeting system in the United States, look at the failure of the congressional budget office, the failure of the Office of Management Budget and look at the total mess this year has been and say to their politicians, fix it, write a new Budget Act, have an investment based budget and invest in the future.  Don't keep throwing money away because you will never get us out of trouble if we keep throwing the money away. 

Thank you very, very much. 
(Applause)