tv Key Capitol Hill Hearings CSPAN November 10, 2015 5:00am-7:01am EST
administrative costs would be a benefit. the transitional term, unlike the uncertain prospect of a cbr reenforces that they should be able to return to work and provides help for them to do so. so in conclusion, the ssdi benefit is $13,890 a year, only slightly higher than what constitutes the poverty threshold. we believe individuals with disabilities deserve better outcomes that are consistent with the disabilities act. studies have indicated that age, health, and time on the rolls are characteristics related to activity and success. and we brief limiting time on the rolls for a small subset of these beneficiaries who have a
high likelihood of medical improvement coupled with supports and services aimed at improving health and increasing employment re-entry will facilitate better economic outcomes and overall improved quality of life. thank you. >> thank you, kim. rachel? >> i'm going to discuss two big-picture reforms here. the first is an optional private disability component within the current ssdi system. and the second is a flat benefit. i'm going to start with three statistics. there are over 20 million working-age people with disabilities in the united states today. about 11 million people are on the disability insurance rolls, and yet, 75% of people with disabilities, that 20 million figure, would like to be working in some capacity. but very few of them are. only 30% are employed. so what this says is that there are actually more people with disabilities than are currently on the system.
but yet, there are more people overall that want to be working and that aren't able to, and so a lot of those who are receiving ssdi benefits would like to work, but they're not able to. and the current system is impeding them from doing so. this first chart here shows the percent of the population, the working-age population that has been on ssdi since its inception in 1956. it started at less than one half of a percent, and now we're at over half of all people working-age receiving t we are seeing that life expectancies increasing, medical innovations allowing people to recover from whatever disability they have to get back into the workforce. there are workplace accommodations, and our jobs are a lot more sedentary than they used to be. it's not that there are a bunch of manufacturing and physical labor jobs, but there are a lot of jobs today that only require minimal physical effort.
so why have the rolls been increasing, despite that? a study by the federal reserve looked at the change in beneficiaries between 1980 and 2013. they were able to account for half of it. they attributed it to three factors, first an increase in social security retirement age. so people ages 65-67 will now be on disability as opposed to social security if they become disabled at that age. second, there's the aging of the population. the baby boomers are reaching older ages your they're more likely to become disabled. and third, we've seen a rapid rise in women's labor participation. so as they were not eligible for ssdi before, they are now. yet, that leaves about half of the rise, which is equivalent to 3 million people a year that's unaccounted for. now there are a lot of problems
within the ssdi system. but we can categorize them into two things. there are too many people getting on the rolls to begin with, and too few people are ever leaving the rolls. the proposal i'm suggesting here is an optional private insurance system. that would address both of those components. private disability insurance exists today for about one third of workers. now it's a totally different structure than the ssdi system. it's the same product. it's disability insurance, but the insentives are entirely different and entirely different because of the incentives that are there. private disability insurance have to provide a product to employers that is valuable to them but they also have to provide it at a low cost. and they do it through a very efficient and effective determination process. as you can see on the first chart here, the average wait time for that initial decision from a private disability
insurance provider is 41 days. almost nobody goes beyond the initial decision. it's not like ssdi where everybody appeals. most people have that decision within 41 days. in that time period, they're assigned a caseworker who is meeting with the individual, who is asking who's the individual's doctor, meeting with them if needed. meeting with the employer and trying to figure out what kind of medical help do they need, what type of workplace accommodation would allow them to get back to the job, or do they need a different education because they can no longer perform the job they were doing before. now on the other hand, the social security system, individuals sit and wait for five months without working before they can apply for benefits. after that, they wait about 100 days for an initial determination. most people are denied at that stage, and then he they they go appeal it to an administrative law judge.
during that time, individuals are losing whatever link they had to the workforce. they're losing their skills and education. and they're beginning to believe that they really cannot work. the second component of the private disability that is more effective and efficient is the determination process. the second graph just kind of gives one glimpse of that. we've seen in the ssdi system that now 63% of all claims that are approved are for mental and musculoskeletal disorders. now those illegitimate disorders but the more subjective ones that are harder to diagnose, on the other hand, in the private market, you see that only 35% of those claims are for the muscular and mental disorders. so, in addition to providing more workplace accommodations and having the goal of getting people back to work as opposed to just approving them, because that's easier than denying and
continuing to pay benefits, because that's easier than going through a cbr, as we heard, there are more than a million people waiting to have their cdrs. so in addition to that, the private market is not only providing higher benefits but at a lower cost. the first chart here shows the level of benefit the individuals would receive by income levels. as you go to the right, that's higher income individuals. and the light blue bars represent what they would receive from ssdi currently. the dark blue bars are what they would receive from private disability insurance. ssdi replaces on average 44% of the employee's income, whereas private replaces on average 66%. it's doing a higher benefit at a lower coast. it coas costing about $245 per year as opposed to $865 per year in ssdi taxes. it's hard to do an apples to
apples comparison, because there's an offset, but even after accounting for those things, i get analysis that showed that the private market could continue to pay their 60% replacement rate for half the cost of what individuals are currently paying in payroll taxes. so the proposal here would be to allow employers, if they wanted to, to offer a qualified private disability insurance that would be at least equal to what ssdi provides now. employers who choose to offer this would receive a payroll tax credit, a portion of the current 1.8% on the employer themselves. they would receive the credit, allow them the funds to purchase the private disability insurance. individuals who have an employer that goes through this private system would first apply through the private system. they might still be in their job and having trouble, and they would be able to apply without having to sit there for five
months and wait another 500 or so days to get a determination. they would have access to all those return-to-work supports and rehabilitative efforts, and after the initial decision, they would, if they were determined to be disabled, they would receive those benefits for the first two to three year, and after that time, if they're still disabled, they would transition to the ssdi system. because there's no point to continue on a private system if they've been continually determined to be disabled. it's more efficient probably to let ssdi pay their check, but we've benefit of that initial determine nation, the individual having support along the way, and all the efforts that try to get them back to work. and then when they're determined not able they would transition over. this has the benefit to the individual who has more support along the way. it's an advantage to the employer who could reduce their
employment costs and an advantage to the ssdi system, because the private employers, the payroll tax credit would be less than what it is costing ssdi itself to provide those benefit, and they would have a reduction in the rolls as a result. the second proposal i'd like to talk about gets at the original intent of social security. astery said, this is a nearly 60-year old program. it was to ensure people who disabled are not destitute and living in poverty, and yet, as we see here, social security provides the largest benefits to the people who have the highest pre-disability incomes. the graph to the left there shows that somebody with the highest income would be making, receiving $2800 per month in ssdi benefits, whereas a minimum wageworker is going to be receiving only $866 per month. as a result of this, we see that nearly 2 million people who receive ssdi benefits are living
in poverty. that wasn't the intent of the program, it was to prevent poverty among the disabled. so those who are below poverty are either without enough income or turning to other government programs that are having an additional cost. if we were to implement an anti-poverty, flat benefit, equal for everybody who goes into the system, this would be an increase in benefits for about 35% of the population and a reduction for about 65%. now we wouldn't propose to change benefits for anybody currently on the rolls, but, going forward, and this is something that actually could be implemented relatively quickly, those in the future would receive this flat benefit. the reason we could do it today or start it a year from now is that disability is not like social security where individuals plan to retire and they know they're going to need that money some day. disability is an unplanned event. so to the extent that an individual wants to ensure that they're going to have a certain amount of income if they become
disabled, they can go out tomorrow and purchase disability insurance in the private market that will ensure that level of income. and this is getting at the proper role of the disability insurance system. it is that anti-poverty benefit. and anything beyond that is left up to individuals to decide, do i need 50% of my income? do i need 100%? what is it that i need, and the government does not need to dictate that and set it at a certain percent, but the individuals can go out and purchase whatever additional amount they would need. in addition to restoring social security disability insurance program to its original intent, this proposal would go beyond solving social security's shortfalls. over the next ten years it would solve about two-thirds of the shortfall, and that's only because we would grandfather anybody in the current system. the graph shows the light blue lines are social security shortfall in billions of dollars. the dark blue lines are the savings that would be accumulated as a result of
implementing this flat benefit. as you can see, beginning in 2023, the savings exceed the shortfall. that is you're going to have money left over from the shortfall, and we could take that money and reduce the payroll tax if self, give money back to individuals, more after tax take-home pay would allow hem to purchase private disability insurance to bring them up to whatever level they believe they need if they become disabled. so, in short, these two proposals get at the two components. they address the problems inherent in the current system through the private option and look at returning social security to its original intent and bringing about the financial savings that we need to keep the program solvent. i think we'll turn to questions now? >> yeah. thank you, rachel. now it's your turn. while you're formulating your question, i'm going to start with one of my own, and that's just ask our pl panelists.
they've described a program that is manifestly broken in many ways. it has a terrible incentive structure, provides inequitable benefits. the bureaucratic inefficiencies in running the program are terrible. it discourages people who are currently disabled from returning to work through punitive measures. as senator cotton says, it provides incentives that lush people into long-term dependency that effectively makes them wards of the state for their entire remaining lives. and we've heard some very innovative and it sounds like reasonable proposals for reforms to the program. and i, i would just ask our panelists, briefly, what are the politics of this? is this something that really is amenable to bipartisan action? or is this going to be another
one of those failed debates in washington where the two parties talk past each other and nothing actually ever gets done to fix what is clearly a broken program? romina? >> i'll take a stab at this. i think in many ways it's interwoven with the social security benefits in general where one party stands on the position that no matter what, no benefit cuts, and they define benefit cuts in all sorts of interesting ways. so many of these proposals that would return people to work, some people would say that this is a benefit cut, that they are due this benefit for the rest of their lives and we should not put anytime limits or anything that could potentially do any harm to individuals, even when what we're really trying to do is to help them be independent. the other issue, i think, is
that disability is a much, much smaller program than social security retirement program and is much less understood. it is highly complex. and lawmakers, many lawmakers don't understand if very well. and so they fear getting involved with the program. they might make a mistake. there are only a few that have shown leadership and willingness to learn about the program and really lead on these issues. with the reallocation of money from the retirement trust fund to the disability trust fund, it takes urgency to fix the issue in terms of legislative action off the table, but what we should now stress is are the costs and the potential benefits to the individuals currently in the program and those joining the rolls now, if we were to make the program work better for these individuals. and the taxpayer, and not rely on the next legislative
opportunity which will be seven years down the road and could very likely not be seized either. >> i think the recent budget deal just shows that this is a politically difficult topic. lawmakers showed behind closed doors, they negotiated a few small changes and came out and said look, we've done some things to solve social security, we're paying for it, but really all they did was kick the can down the road, steal the money from social security and make programs worse off down the road. the same thing is going to happen come 2022 when disable is running out of money again, and there so far has not been the initiative to do any real reform on this rather than to try and merge the two programs and the further that we push them back the more likely we are to see a tax increase and nothing that's going to change the problems that exist within it. >> i would agree. the challenges, complexity, lack of urgency now with the new
budget deal that's passed for sure, and there's not, there's not a coming together of parties or even constituents to try to tackle some of these very difficult challenges that the program faced. not only in terms of long-term, you know, having benefits, full benefits, be paid, but also in terms of one of the other challenges that we have is the statute really is, really doesn't say very much in terms of defining disability. a huge amount of responsibility is placed on the social security administration to develop the supporting policies, to update the policies, and really, to maintain the program. and, you know, as we know, that's technically chparticular for the social security administration. so we have all these competing issues that makes for this cocktail that in my view ultimately hurts people with
disabilities. >> thank you. questions from the audience? one right lehere. if you could just wait for the microphone and identify yourself and state your question. we have a microphone down here? in the front? thank you astrid. this gentleman right here. >> yeah, i wondered if you could talk about senator cotton, his proposal and why lawmakers are so hesitant to take positions on this type of issue. >> thank you. panelists? >> kim, you probably know it best. >> well, i think the, what we know, essentially, is the description that the senator just gave today. it's not been introduced yet, so we still, we don't have the details of the proposal, so his comment tear eye, really, i think speaks for itself in terms
of the principles that he has. and so we'll see when the legislation is actually proposed. but i think another challenge, it's very difficult, rarely do we find true leadership in terme of members of congress who really want to stake out a claim for this position. oftentimes the, some of the individuals receiving benefits and their advocates are, can be very resistant as my fellow panelist said, they can be resistant to change and be very afraid of change. so it can be a very scary thing. any changes to them. and that also makes, you know, our representatives and senators a little bit hesitant to take on these very complex, very big challenges. at the end of the day, i think if members can find bipartisan partners, i think that will also help tremendously, and i think we're starting to see a little bit more of that behind the
scenes, this budget was probably one of more minimalist approach certainly, but all of this discussion is helpful to helping the members understand the challenges the program faces and maybe we can work together. >> i think another challenge is historical experience. congress did phase in reforms in the 1980s that strengthened the continuing disability review process, and the social security administration was encouraged to identify more individuals who were no longer eligible to receive those cash benefits. and the cash benefits were terminated. and there was huge backlash, and congress received many, many, many phone calls from constituents who had been relying on those benefits, even if their medical condition made them no longer eligible, but they had no other sources of income, and when you have a constituent calling saying that they can't pay their mortgage anymore, that has a certain impact on a member of congress. and i think that has a lot to do with it as well.
how many other economic opportunities are there for these individuals? and this is, i think, one of the issues that the program does act for too many individuals as a long-term unemployment or early retirement program, and there are lots of incentives in the program that should be changed to not abuse the program in that way, because, in the end, a benefit that goes to someone who is not truly eligible is, that's money that's not available for an individual who truly cannot work. >> and i think these proposals, transitional benefit and telling certain people that they are expected to return to work, it's, it incites fear in those on the rolls now. i've had phone calls from people who say i've read this, i'm terrified. are they going to up my review and take my benefits away? but that's a result of the current system. that's when i was talking about five months of waiting before you can apply, and then another two years before you get
benefits. by that point, individuals believe they are disabled and that they cannot do any work. if you start at the beginning with the transitional benefit, and you say here's system you go through, and it looks more like a private disability insurer, where they're working with the doctors, seeing what kind of workplace support can you have, what type of medical corrections might allow people to perform jobs or a new type of job through education and training, and people are there along the way showing them how they can get back to work as opposed to receiving a phone call one day saying hey, you're done, your benefits are up. so if we can switch to that structure the fear isn't there. >> one of the major issues is, when you face a long-term fiscal overhang like we do in this disability program or the social security program overall, you can make rather modest reforms
now, and the problem of the system and the deafness that has afflicted us all, you can make rather modest reforms now, or can you make very radical and punitive reforms later, and so it's very distressing when the congress just kicks the can down the road. and just opts in effect to do nothing for the next seven years, that, to me, seems like a very strong abdication of responsibility. we have a question in the back? >> question for you, kim. you said that about 3% of the current ssdi respondents are categorized as expected to have improvement and you also proposed other reforms. what do you think the percentage would be at the end of that overhaul? >> you know, it's difficult to tell, because the combination of the criteria not being updated
for examiners, to make the right decisions, we also know that the quality review is very limited on these decisions, if any, so essentially, unless an individual is clearly expected to medically improve, those are the kinds of people that the examiners are going to give that diary type of category. everyone else, there's a medical improvement not expected. those get a seven-year diary. and then there's a very large cohort in the middle called medical improvement possible. so one of the reasons, too, yeah we believe that the redicktive analytics is important is that they'll use the data itself to show what are the types of impairments that really do result in medical improvement and those predictive analytics continue to use the data on an ongoing basis to ensure that not only do we have a process that's much more accurate in terms of
diaries but also a process that's much more fair and consistent across the country, because we've seen some of the challenges that the program has faced, especially when as my colleagues have said, there's a lot of judgment in certain times of impairments, when one is establishing their functional capacity. their capacity that they still may have even with their disability. those functional capacities are determined by individual examiners, they're determined by administrative law judges. there really is a lot of subjectivity there. so i think the more that we can have the data and the experience of individuals to drive the accuracy of the diary designations, i think definitely, we would see a larger population expected to medically improvement but make no mistake about it. the program really is an important program for those who are not expected to live a long period of time because of their very severe impairments.
so we're talking about those who do have those conditions that have expected to improve and what are the kinds of supports that they're getting. right now they're getting nothing under the current program. most often they're continuing disability revies are delayed. and all of a sudden they get a letter saying guess what, now we're going to review your claim. they've had no supports up to that point, and if they're ceased, they're provided no supports at that moment, and we don't believe that that's very compassionate. >> and i think we have time for one more question. so right here in the front. okay. we have time for two more questions. we'll start here in the front, and then we'll come back to you. >> elliot young with the institute to reduce spending. so just a question for our panelists. given what we've seen with the recent efforts to replenish the
highway trust fund and the way people talk about taxes in terms of trying to find ways to reallocate spending, how do you see sort of a long-term effort to smooth out changes in ssdi? i feel like there are a lot of similarities between the sort of concentrated benefits of disbursed costs and just implementing another tax increase that may be more politically salient even if that's not best in the long term. how do you she playing out, and what are ways that we can perhaps put something on to light that fire? >> the longer we wait, the more likely it will be some type of tax increase fix because you're
going to get to a point where the shortfall is imminent and any policy reforms that you can possibly adopt unless you're willing to cut benefits abruptly and steeply, which seems very unfair, and nobody really wants to do, you're going to have to raise taxes or take the money from somewhere else. right now, the money is being taken from somewhere else. but, in the end, it is, you could see it as just another portion of the tax increase that is to come. because if you are thinking about the last reform effort in social security that was in the '80s, there was a massive tax increase, and there were some small reforms. small reforms that, in today's environment, i would actually consider big reforms like raising the retirement age that probably are small reforms considering the vastness of the problem, but since we haven't had any reform at all in today's context, these would be big
reforms. so we need leadership in the congress. presidential leadership can do a lot on those kinds of programs. beyond that, with no legislative urgency, i don't see how we going to get all the interests to come together. you sort of have to face a that will ultimately make us better off. i would juster: point to the administrative changes. a lot of the decisions and the way this program is structured and functions as determined by ssa and there are a lot of things that can be then there to increase the efficiency of it and determine who is disabled and who is still disabled and that will go a long way in reducing the cost. that adred: i would add very fundamental question is that social security is essentially self financed. workers pay taxes to get disability survivor benefits eventually. the question is, is social security in the future going to
remain simply self financed or other outside income revenues? these are some of the very clear choices that members are going to have to think about, given the challenges of medicare and tax reform. these are very large questions that really face in them and the american people. i think that is a very important first question. everyone pays into social security and everyone get something out of it. how about if people start getting less out of it? are we going to continue to have public support for the program? these are tough questions, but they will have to be answered. ambassador miller: now for the final, final question. >> i didn't know if anyone could speak to what the senator mentioned about the regional usage of the benefits. is there a reason for that?
i thought that was an interesting point. kim hildred: she was asking about the difference in the regional benefits. just seeing the percentage of people with disabilities employed. it ranges from 50% of the dakotas and places like louisiana and virginia. to over 25% in places like louisiana and west virginia. and i think part of that is cultural and the communities that develop. and oftentimes when a parent is on disability insurance they can get a child on ssi or di benefits, and my guess is that a lot of the cause of that is the community in which they live and others are able to get on benefits and how they're able to get on them and it encourages that. >> it can also be a signal that there is fraud going on. that has certainly happened in some communities where lawyers,
disability lawyers have partnered up with physicians. and there have been kickbacks and doing that kind of statistical analysis, sometimes can reveal these sorts of fraud schemes. but i think a lot of it is what other economic opportunities are available in this community, and when there are few then disability becomes a substitute for earned income. >> just briefly, the congress, or in the law in the statute, in order to determine disability, one has to consider age, education and work experience. how those are implemented by the social security administration is through the so-called medical vocational rules. these rules have been in effect since the '70s. efforts to update them have not been successful in the past. social security has embarked on an effort to begin that updating
process, but that's a piece of the social security program that's out there that can cause, you know, differences in award rates, depending upon, again, age, education, work experience of individuals, and so, you know, it's always important to try to keep those rules as current as possible. so. >> thank you very much. please join me in thanking our panel for the discussion today. [ applause ]
p.m. eastern. laura first lady labo bush on hiring for heroes. hosted by the george w. bush institute. on veterans day, c-span's "washington journal" from 7:00-10:00 eastern on veterans issues. conversations with freshmen members of congress, beginning with representative set molding, a former marine who served for tours in iraq. then, representative steve russell, a former army ranger, whose unit help hunt down saddam hussein. live coverage of the veterans day ceremony at the tomb of the unknowns at arlington national cemetery. then, more from freshmen members of congress. kinky talks about by service in iraq, followed
a former marine who decide to serve in iraq. follow online at c-span.org. >> israeli prime minister injamin netanyahu i was washington this week for meeting with president obama. they are to discuss security issues in the middle east. they spoke to reporters before this private meeting. president obama: it is very good to welcome prime minister netanyahu to the oval office. there is no foreign leader who i've met with more frequently and i think that is a testimony to the extraordinary bond between the united states and israel. i want toet started, say a brief word about the jordanian attack that we
discovered earlier in the fact in military dressed uniform carried out an attack at a training facility where it there may have been two or three u.s. citizens killed and another individual injured. a full investigation is taking place. seriously andery we will be working closely with the jordanians to determine exactly what happened, but at this stage, i want to just let everyone know that this is something we are paying close and at the point where the families have been notified and our deepest condolences will be going up to them. i also want to extend my condolences to the israeli people on the passing of former
president. obviously, a supporting figure in israeli politics and we extend heartfelt condolences to his family. this is going to be an opportunity for the prime minister and myself to engage in a wide-ranging discussion on some of the most pressing security issues that both our countries face. that thesecret security environment in the middle east has deteriorated in many areas, and as i have said repeatedly, the security of israel is one of my top foreign-policy priorities. and that has expressed itself not only in words but in deeds. we have a closer military operation than any two .dministrations in history
the military assistance that we provide, we consider not only an important part of our obligation to the security of the state of israel, but also an important part of u.s. security infrastructure in the region as we make sure that one of our closest allies cannot only protect itself but work with us and otherng terrorism security threats. in light of what continues to be chaotic situation in syria, this will give us an opportunity to discuss what happened there and we will have an opportunity to discuss how we blunt the activities of isil and hezbollah and other organizations in the region that carry out terrorist attacks.
a lot of our conversation will be on understanding and negotiation. it will be inspiring. years, we went to get a head start on that so both the united states and israel to plan effectively for our defense needs going forward. we will also have a chance to talk about how implementation of going.n nuclear deal is it is no secret that the prime minister and i have strong disagreement on this narrow issue. but we did not have a disagreement on making sure that iran does not get a nuclear weapon and we do not have a disagreement on the importance of us blunting destabilizing activities that iran may be taken place in. we are working to make sure that we find common ground there. we will also have an opportunity to discuss some of the concerns that both of us have around violence in the palestinian territories. weant to be very clear that
condemn in the strongest terms palestinian violence against israeli citizens and i want to repeat once again that it is my strong belief that israel has not just the right but obligation to protect itself. i also will discuss with prime minister his thoughts on how we temperature this between israel and the palestinians and how we can get back to a path toward peace and relations are met through the political process even as we make sure that israel is able to secure itself. so there's would to be a lot of work to do with too little time, which is why i will stop here and once again say, welcome. thank you.
mr.e minister netanyahu: president, first let me express the condolences of the people of israel for the loss of american lives. we are with you. other in morech ways than one, and want to thank you for this opportunity to , whichhen our friendship is strong, strengthen our alliance, which is strong. i think it is rooted in shared values and buttressed by shared and it is driven forward by a sense of a shared destiny. we are obviously tested today with instability and insecurity in the middle east as you have described it. i think everybody can see it. isis andsavagery of the aggression in terror by iran
and the proxies in the combination of turbulence has now displaced millions of people. they have butchered hundreds of thousands. we do not know what will is apire and i think this tremendously important opportunity for us to work together to see how we can defend ourselves against this aggression, this terror and how we can roll it back. it is a daunting task. equally come i want to make it clear that we have not given up our hope for peace. we will never give up our hope for peace. i remain committed to the vision of peace, of two states for two peoples, in a demilitarized palestinian state that recognizes the jewish state. do not think that anyone should doubt israel's determination to defend itself against terror and destruction.
buteither should anyone doubt israel's willingness to make peace with any of its neighbors that genuinely want to achieve peace. i look forward to discussing with you practical ways in which we could devote attention to increased stability and move toward peace. finally, mr. president, i want to thank you for your commitment to further bolstering security and the memorandum of understanding that we are discussing. israel has shouldered a tremendous defense burden over the years and have done it with the generous assistance of the united states of america. i want to express my appreciation to you, the appreciation of the people of israel to you, for your efforts in this regard during our years of common service and what you are engaging in right now. israel'slster security, how to maintain israel's cal qualitative
military edge so that israel can defend itself by itself against any threat. so for all these reasons, i want to thank you again for your hospitality, but even more so for staying and strengthening the tremendous friendship and alliance between israel and the united states of america. thank you very much. president obama: thank you a much, everybody. thank you. israeli prime minister benjamin netanyahu received the 2015 irving kristol award at the american enterprise institute. the award is given for contributions to prevent government policy, social where fair -- welfare and political understanding. mr. netanyahu also been reports that the event. this is an hour and 20 minutes. >> ladies and gentlemen, please take your seats and turn your attention to the screen.
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[applause] >> good evening. i'm arthur brooks, president of the american enterprise institute and i'm so altered to welcome all of you to the 2015 eight yeah i and crystal award lecture. do you believe that america is a force for good in the world? before you say yes, consider that this is a very serious commitment. it is saying that our ideas of democratic capitalism market for and asood for others generous and decent people, we are willing to share these ideas. we cannot deny america's errors, but we still see the motive of our nation as fundamentally just and the net effects of our influence making the world better place. i believe these ideas are fair
and right because i've seen the evidence all around the world. one week ago, my aei colleagues andi were in an indian slum buy. that is the area that was featured in the famous movie "slum dog millionaire pickup we were shooting our new film called "the secret to happiness." i walked for hours in the narrow alleyways among pottery factories and plastic recycling plants with a 34-year-old man by the name of krishna. he started out with nothing, dirt poor in ways that we cannot imagine. he has pulled himself out of poverty with a small business. krishna is truly proud of his success. i asked him his secret. entrepreneurship and what does that mean? here is his definition.
build something, earn a living, serveothers, built on and . where do you suppose he got these crazy ideas. he will tell you himself from america. he has never met him before, but he knows this. this is what we stand for. this is our egos, spreading around the world and within the people like him in countries like his. krishna is not alone. he is not even an isolated case. people970, 2 billion around the world have been lifted out of absolute poverty and billions have seen democracy for the first time. why? two reasons. first, they saw how we lived in the united states. an open society, the rule of law, copyrights, and the rewards of entrepreneurship and
hard-working they saw our freedom and prosperity. by copying leaves ideas come of inspiration and drive that makes , theyountry so great throughout the chance of poverty by the hundreds of millions. america isy saw that a service leader nation. military, diplomatic, and cultural commitment to sharing our values and assistance around the world, usually peacefully, but when necessary, with force. in the futureppen if we retain our confidence in the greatness of our nation, believe in the fundamental goodness of our values, learned from our mistakes, and maintain a commitment to serve the rest of the world. and we need one more thing. we need friends. we cannot honor our commitment to the world ourselves. we need friends who share our values. we need outposts of democratic capitalism. we need people who believe in equality, freedom, and the
fundamental potential of every single human being. hard tore very find in the world today. too many nations are silently glad that we leave and find it convenient to free ride on theica's strength, enjoying benefits while publicly grousing about the morality of our cause and the principles behind our leadership. for others, american values are threat. i threat to their power that they maintain at the cost of the poor and of the oppressed. friend we do have a true , a collaboration in the joyfultic jo experiment for the people who knew that the most, it is important to show that friendship and how much it means to us. that is what we do to. -- what we do tonight. [applause]
no basis of the world is a better friend and partner to a better cap and the fight for freedom and democratic capitalism that israel. there is our values more frequently. it is truly a sister nation in a fight for a more better and just world. is aunited states, israel beacon of hope and a model for its neighbors in the region and the world. tonight, we will have a conversation about this friendship and this future with israel's prime minister benjamin netanyahu. prime minister netanyahu tonight receives the irving kristol award, the highest honor. in a very real way, honoring our friend is our commitment to our nations of values. that is a commitment that i know each one of you probably shares. before i am minister netanyahu to the stage, i first went to him the microphone to bill kristol, who will explain the irving kristol award and has father's great legacy.
following bills remarked, the chairman of the aei council of economic advisers will talk about how the council each year chooses the recipient of this award. ladies and gentlemen, bill kristol. [applause] bill: thanks. it is an auger on behalf of the kristol family to join in and of you to this irving kristol award dinner. and it is a particular honor to us and the prime minister of israel, benjamin netanyahu. my father would have approved of the choice of the prime minister . not on my own authority but on that of my mother. [laughter] but you can be sure it is correct. let me say word about my father since many of you -- and increasing number each year i suppose as time marches on --
did not know him personally. let me not try to capture him and my own words, but in those of our guest, prime minister netanyahu. here is a letter he wrote to my mother a little over six years ago. "i was sad to hear of irving's passing. he was a man of prodigious talents and exceptional humility. is intelligible contributions will be felt for many, many decades to come. his unwavering defense of the values and principles of a free society made him a mentor to generations of bakers and influence presidents and prime ministers alike. so he made thent way and most prodigious intellectual circles. he broke the proudest of jews. just of israel's defenders, setting a powerful example for others. i will always treasure my conversations with him throughout the years that which is ice twinkle in his wisdom showed. with the respect, benjamin netanyahu."
thank you, mr. prime minister, that wonderful condolence letter which meant so much to my mother and was an accurate portrayal of my father. for those of the interested in reading my father's writings were about to come to a website -- irving kristol.org. this guide to my father's work is a work that is put together and devoted to making the work of contemporary thinkers more easily accessible to all of us, but especially to students and future generations. this project isn't directly involved with or connected to aei, not affiliated with the american enterprise institute, but turns out to be in a way and unintentional tribute to aei. it is amazing how many of these influential and important thinkers of the last half-century, have been
affiliated in one way or another with aei. toill mention only want verbs, martin dimon, leon kass, and many more that you can find at content freethinkers.org. one of the next websites going up is devoted to the work of charles murray. this enterprise has reminded me just how central aei has been and remains to america bought an american public life over the past several decades. you're not here to hear from you. as difficult as that is for me to believe. [laughter] and you're not even care to hear about aei. to hear from benjamin netanyahu, the prime minister of israel. he is perhaps the preeminent leader in the free world today, if we are still allowed to use -- free world. when i see benjamin netanyahu, i think of the free world. mr. prime minister, thank you for honoring us by your
presence. -- let me turn the over this podium to the chairman of aei, george priest. [applause] george: thank you very much. as bill mentioned, i am the chair of the aei council of economic advisers. i the official host of this event. believe it or not. i am absolutely nothing to prepare for this. the principal focus of the event is to the stove the irving kristol award. , hisve seen bill kristol son, and the wonderful tribute to irving, but there are also other members of the kristol family here tonight that i would like us all to recognize. kristol irving's window. with her, i circled counsel.
we are very happy to have her here tonight. [applause] we also have witnessed tonight, elizabeth nelson and susan kristol and we are very happy to have them, too. [applause] now many of you might think that tonight's event is just a big d.c. party with a prominent speaker followed by dancing. is wrong. it is that, but it is also an academic event. the council of economic advisers of aei comprises a set of academics from leading univsi country to serve twoaei duties. first, to review the work produced by aei scholars, to
make certain that work meets academic standards. these are not the standards of phd dissertations. the scholars cannot be responsive to moving events if they were forced to adhere to those standards. the job of kristol award. as arthur mentioned, it is the highest honor the start by aei. as arthur mentioned, it is the highest honor the start by aei. we have delegated this task to an academic council, not just to its executive board. a group of academics can select the person who has made extra intellectual or practical contributions to contribute to government policy and welfare.
this year, we have chosen to bestow this award to benjamin netanyahu, prime minister of israel. we are very honored to have you here to receive this award. as arthur mentioned, tonight's program will consist of a discussion between prime minister netanyahu and daniel putka. the director of foreign and defense policy studies. danny, i am certain we will raise many important issues with the prime minister. i would like to address him with all humility in order to set the that we saw aion and discussed by members of the council and is of broad concern
to all of us, including all citizens around the world. how's a possible to achieve peace in the middle east? 20 years ago, at the time of the first, i asked this question to a friend who teaches at yale. who was later the chief justice of the israeli supreme court paired it is common, maybe just for americans, to believe that wars have a beginning and an end. the recent experience and afghanistan and iraq might be changing that. i asked my friend, when will there be peace? he said we have been fighting for 2000 years, why should end now? deep truth toly a that. although it is not very assuring.
i would like to put this question to prime minister yet can yahoo!. -- netanyahu. institute, the american enterprise institute is committed to promoting third studies the benefits of free markets, free trade, open interaction among citizens as to help best improve their lives. there is an old law and political science that provides that democracies do not go to war. there is no strong theoretical report for the proposition citizense idea that voting democratically would not support wars. the proposition has been belied empirically. in particular by the palestine israel dispute today. if one can view its citizenry as a functioning democracy. the more important
generalization might be that wars do not occur, and have no reason to occur. that is among countries that embrace the market order. there is nothing to gain in the long run in the context of market economies that cannot be achieved more sustainably through mutually beneficial transactions in a market. so, with all respect, i will question to pry mr. netanyahu, why shouldn't israel promote a lively economy for the west bank? put them on their feet. i believe a vibrant economy will change the relationship between israel and palestine. i'm very conscious of the security concerns that remain, they are not at all trivial. i believe they could diminish over time as the west bank develops.
they need the arrival of consumers. just as a small town in america will arrive with new neighbors. i'm sure that dany will raise this and many other issues and our discussion tonight. were all looking forward to the remarks of the prime minister. [applause] >> now the main event. this is the largest annual dinner in our history. why is that? perhaps you are thinking of how the food in the band. that is not wrong. we have an honored guest. we are fond in america of favorability ratings and polls. it is no surprise mr. netanyahu is pulling better than the leaders of either of our
parties. [applause] this, i suspect, presents an interesting opportunity for the prime minister given that we have an election coming up. prime minister netanyahu has been an unflinching supporter of the values we share at aei and in this room. he has not only a great political but also a great economic leader. a wildly successful startup nation and along the way he has maintained toughness for his country and shared our cause in a world that is frequently hostile to both. benjamin netanyahu is an unapologetic friend to america. not democratic america, not republican america, not jewish america, but to every one of us.
prime minister benjamin netanyahu: yes. >> can anyone hear me? i know you are here for me. [chuckles] [indiscernible] >> this is my opportunity to thing. we apologize for that momentary disturbance. mr. prime minister, let me welcome you again to the american enterprise institute. we are delighted to have you here. make you very much. prime minister benjamin netanyahu: i am not used to receiving awards in israel.
especially not from the media. i do get them from the public on the election day. but, it is very moving for me to be here. i do remember irving kristol as a great intellect. he was a fearless intellect. political correctness was thrown out of the window, he called it like he saw it to ent had a profound influence on many. he had a profound influence on me. i consider myself honored and privileged to have spent many hours with him. i think he has left a great legacy and a great family and i want to especially welcome his wife. i have read her books. believe it or not, -- it is a tremendous book. this is a tremendous family that
goes on into next generations. i am deeply honored to receive this award from you. thank you. [applause] >> i do not think anybody sitting here in this room would underestimate the affection with which the american enterprise institute, our entire family and community has for irving's legacy. thank you so much for saying that. now, let me pick up where i was. just a quick -- for those of us who have been with us before, in years past we have had our honorees give a speech from the podium. the sure, we're going to have a conversation. we thought it would be more interesting, a little bit more and lightning for some of us, and in addition, it would
provide an opportunity to hear about a range of issues of importance to everybody. more importantly, there are some who might be a little disappointed that i'm not going to interrogate you in washington style about a variety of issues. i would like to remind our guests that aei is not a news organization. we are a think tank. we are interested in the big questions. if we can take something away, i hope it will be big answers. prime minister benjamin netanyahu: i hope this catches on. it is wonderful. danielle: we are all about leadership. mr. netanyahu, you have said israel is oh-american. it will always be pro-american. you have spent many years in the united states, as did your
father. tell me what is at the heart of your affection for the united states. prime minister benjamin netanyahu: freedom. the idea of individual choice. that is developed with a collective purpose. that defines israel, it defines america. these are two societies built on a purpose. on the idea of freedom. i have spoken to congress a number of times, into each time i look and i see the emblem of moses. it says a lot. the idea of the promised land. the land of freedom, freedom from bondage. freedom to pursue your huge. so, i think this is the identity of conviction. there is something else that i
think has to be seen in an historical context. we were a people scattered among the nations, we had no capacity to defend ourselves and we should have disappeared. most stations that existed in the past do not exist today and certainly a nation scattered from its land into becoming utterly defenseless, subject to the whims, the worst whims of humanity, should have disappeared. we gathered into came back to the land of israel, the promised land. rebuilt our country when we repossessed the power to defend ourselves. it was said here before, that our -- all powers, all countries, even great powers need alliances. we need alliance, too. we did not have that alliance in
the first half of the 20th century. when the founding fathers of zionism identified the threat of the anti-semitism, the going threat of anti-semitism in europe. we had no capacity to build our nation. the building to as we lost 6 million of our brethren. i believe if the united states had been the preeminent world power in the first half of the 20th century, things might have turned out differently. yet, israel was born in mid-century. the united states became a level power at that point. what a difference it a. it made a difference for the whole world. it made a difference for us in that we had a partner.
i think that not only the common ideals of israel and the united states that were mentioned here, i think it is also the active role of the united states in defending liberty around the world and standing by its allies, in this case the best ally of the united states, israel. i think it has made a world of difference. i bet on this alliance. i would not sell the united states short, i would not sell israel short, and i'm not at all diminish the importance of this alliance. i think it is pivotal for the future of this world. if yes we about it more, i will tell you more for -- i will tell you more. this is what i believe. [applause] i have a sore throat. danielle: you like the united
states and you -- like the united states, which was founded on a big idea by people seeking freedom, israel, too, was founded on a big idea. the country is come a long way since 1896 and the jewish state. is zionism still the animating idea of the state of israel? is there another direction that israel goes in? where does israel real go in the 21st century? prime minister benjamin netanyahu: having not had a state for 200 years, we have secured it again but we have to secure the jewish future. that is what zionism is about. giving the jewish people the ability to have their own independent state.
this is an ongoing effort. the challenges keep changing. you want to make sure you have the inner strength to confront these challenges and also to make these alliances that i talked about. nobody makes alliances with the week. t --he weak. and nobody makes peace with the weak. so we have to make sure the country is strong. strong militarily, but that is expensive. i hope you know that. very expensive. so, the only way you can actually find israel's defenses to safeguard the jewish future is to have a very vibrant economy.
the only way you are going to have a very vibrant economy is to make sure it is a free market economy. that is something that i devoted a good part of my life to do and i think that we are successful in doing that, because in israel what is happening now is that we are harnessing the power and innovation to the power of free markets. if you have intellectual or technological brilliance, but you have no free markets, it is not going to go anywhere. the former soviet union had incredible metallurgists, and incredible physicists, incredible mathematicians, -- incredible physicists, and incredible mathematicians. if you took them on a plane and them in palo alto, they would reduce in three weeks. israel had incredible technologists, scientists, but we have to liberate our markets. it is a us as i have something to do with.
as a result, it is becoming, i would say, the preeminent or one of the two great centers of innovation in the world. as a result, our ability to make alliances is shifting. we are now in a extraordinary relationship with two small countries in asia, india and china. in japan. together, we account for roughly 2.5 billion people in the world. they are all coming to this new israel. you ask where israel is going. in the century of conceptual products and knowledge, the ones who will prosper are those who can innovate faster. israel is a speed chess innovator. we do not have that large a number of innovators, but we
have a very, very large number of very fast innovators. our culture promotes that. so, i think israel is moving into a leadership position. in technology. i will give you a number to illustrate this because i think it is important that i take this away from general concept and make it concrete. in 2014, as a result of a deliver it policy that my government is leading, israel had 10% of the global investments in cyber security. that is 100 times our size. in 2015, he trumped that number. they received double that amount. we received 50% of the global investment in cyber security.
in cyber, we are punching 200 times above our weight. this is an indication of how you can increase short capacities and how you can harness your nat ingenuity both for international power and connections. i read a book by a wonderful writer named will durrant. he wrote some oval volumes on history -- some 12 volumes on history. towards the end of his life, he wrote a small book. 100 inches long. -- 100 pages long. it is called, "the lessons of history." well worth reading. i've as they repented. every sentence is pregnant with meaning and insight. -- i suggest they reprint it. every sentence is pregnant with meaning and insight. if i could crystallize what
durrant is saying, he says in history numbers count. that is, big nations overcome smaller nations because they have bigger gdp. they can have your military and so on. and then on to its 19 or so he says, there are exceptions sometimes when nations can harness a cultural force. he says the young state of israel may be an example of such an exception. well, half a century later, i think we proved a point. where do we go? we maintained the defenses of the jewish state will stop we maintain its economy. the allow our ingenuity to floors. we become a technological
powerhouse. income will with the help, that in the great battle between mentor -- modernity and medievalism that afflict our area, more dignity winds. -- modernity wins. in that case, we all win. [applause] danielle: there is a big battle between medievalism and more dignity and your part of the world. you talk about markets in capitalism being the idea that we'll all israel into the century and beyond. there are other ideas at play in the region. there are a lot of people in suggest that in fact, one of the things animating those terrorist groups that have risen up through the region and dark tyrannize saying most of the
people, many of the people of the middle east, that to they are founded on in idea. the many drone strikes, it airstrikes, even the ground is that happen without having an people, many of the people of idea to substitute their. we cannot win. you cannot be something, as one of my colleagues says, with nothing. what i want to ask you is as the leader of one of the only truly democratic market economies in the middle east, what is the idea that is going to beat this? democracy? benjamin netanyahu: it certainly created freedom. there is a process in which the arab world and parts of the islamic world would move toward the idea to greater freedom. it is not automatic. it is certainly a good contrast to the tyranny and severed three they are experiencing now. the apprentice afflicting muslims. millions have been displaced,
hundreds of thousands butchered. they have a good idea of what they do not want. i actually think that sometimes in these kinds of battles, it is first of all important to win physically. win. fight. i mean, combating nazis, beating them, first of all, you have to win. [applause] prime minister benjamin netanyahu: it is very important not to allow these east's to powell. -- these beasts to prowl. you have these two human streams spreading misery. i spoke to the prime minister of italy and to david cameron and two angela merkel in the last
few weeks and i said, i do not want to talk about isis, that is politically loaded, you can ask me later. but i wanted to speak about boko haram, you know, there must be at least 12, probably closer to 20 liters of african nations who came to israel, just as asia is coming to israel and they only won three things from us. israeli technology, israeli technology, and israeli technology. the african states all, and they say, we want israel he technology in agriculture and health care and irrigation. they'll come down to one word. security. help us in security. i suggested to some of the european countries a simple partnership. the form consortiums. to deal with -- the form consortiums to deal with foreign countries, help them with
security. the islamist movement in africa is not yet strong. they can't be defeated today. they can be defeated today. it -- they can be defeated today. they can be defeated today. you have to win the battle. the earlier you win it, the cheaper it will be. the longer you wait, eventually these forces will dissipate because there is no hope. there is no future for a world of darkness. i think the islamists will lose out. but it may take decades. it may take cap a century. nazism was defeated, but it claimed the lives of tens of millions of people, and one third of my people. defeating them early is
important. we will defeat them in the battle of ideas, but let us defeat them on the ground as well. [applause] danielle: i hope you will not mind if i push you more on this question. there are plenty of voices growing in volume both in the united states and i think even in israel who suggest we are better off with the qaddafi's and the sidearms and the us odds in place to attempt down on the islamists who rise up and that secular dictatorship is really the solution we should look for for the rest of the middle east. others say democracy is only there for islamism to rise up. where do you come down on their? prime minister benjamin
netanyahu: there was a woman, jean patrick -- [applause] prime minister benjamin netanyahu: and i read an article she had written called dictators and double standards, and she said, basically in this article, she said, we are committed to the larger battle against soviet totalitarianism and on occasion we d side for the larger goal, to make arrangements with secular dictatorships. that is basically what she said. now, mind you, saddam was horrible. horrible. a brutal killer. so was could off he. there is no question of -- so was qaddafi.
i had my own dealings with each of them. what i do want to say they were in many ways neighborhood woollies. that is, they tormented their immediate environment. but they were not wedded it to a larger goal -- they tormented their immediate environment, but they were not wedded to a larger goal. even though hamas is sunni, the militant sunnis led by isis, they had a larger goal in mind. not merely the conquest of the middle east, it is the conquest of the world. it is unbelievable. people do not believe that. they do not believe it is possible to have this quest for a caliphate in the me first century, but that is exactly
what is guiding them. and, again this larger threat that could, that would present 2 islam extent, each one of them seeking to arm themselves with weapons of mass death. chemical weapons, nuclear weapons, that this is a formidable threat to our world. if i had to categorize the threats, i would say these are the larger threat. it does not mean you have to form alliances with secular dictatorships, in means you have to categorize what is the larger threat. that is something i think is required from all of us. political leadership involves always choosing between bad and
worse. i seldom have had a choice between bad and good. i welcome it when it happens, but these are by far the easiest choices. it is choosing between bad and worse that defines a good part of the leadership. i think i know how to choose that. [applause] danielle: let's talk about syria and then turned to iran. syria is out of control. the situation seems to be going from bad to worse. when you think about this, how do you see the implications for israel? how do you see this affecting israel? how do you see solutions that israel can affect? prime minister benjamin netanyahu: i have this weakness,
you know, i have done a lot of economic reforms in israel. about 60. a lot. you can ask me later about them. these economic reforms, the most difficult problem in the country is what people would think is conceptual. it is getting the concept right. especially if you can or would from others and see what work. then, you just have to fit it to your own country. and then you have the battle with all of the vested interests and so on but i find that boring. it is the first part, deciding what is the right thing to do that always takes the largest effort and also the greatest intellectual investment. it is pretty easy to do in economics, in education, in other things. if i see a situation where i do
not have a clear concept, i do not charge in. in syria, i do not see a simple concept. because, you choose here between a horrible secular did leadership or the two other prospects that would be buttressed by iran. you would have iran run syria, a horrible prospect for us or dash. when two of your enemies are fighting each other, i do not say strengthen one or the other, i say leave them both. or at least, do not intervene. which is what i have done. i have not intervened. i think i was the first country several years ago to put to
military hospital 10 yards away from our border with syria. we have taken in thousands of syrians. children, women, men, him to you today to it, horrible conditions. given them treatment and israeli hospitals. we never show the because of they are photographed and they are seen and then rehabilitated and they go back to their villages or towns, they will be executed on the spot. but other than that, i have left the internal battle in syria untouched, because i am not sure what to choose. you have to openly admit it. here is what i do define in syria. i do not want syria to be used as a launching ground for attacks against us. in i have said this to vladimir putin when i flew to moscow to see him.
i went to see him first to make sure that our planes do not crash at each other. not a good idea. but i told him, here is what we do in syria. we will not allow iran to set up a second front in the goal line -- in the goal line and we will act forcefully to prevent that. we will not allow the use of syrian territory from which we would be attacked by the syrian army or anyone else. we have acted forcefully against that. and we will not allow the use of syrian territory for the transfer of game-changing weapons into lebanon. into hezbollah hands. we have acted forcefully on that. i made it clear we will continue
to act that way. i said to vladimir putin -- i said, whatever your goals are in syria, these are our goals and we will continue to act that way. think that message was received. now, there is talk now of in arrangement in syria. i spoke about it today in a very good conversation with president obama. i said that any arrangement that is struck in syria, if one is achievable, i am not sure. i am not sure hoped he dumped it can be put back together. i have strong doubts. i am not sure of syria as a state can be reconstituted. but whatever arrangements are made in syria, that do not preclude iran from continuing its aggression against us directly or transferring weapons to hezbollah, that does not a blushes. we have very clear policy
demands in syria. we keep them and will continue to keep them. the defense of israel is what concerns me is syria first and foremost. on that, we will continue to act forcefully. [applause] danielle: let me ask you about iran. the arabians are embroiled in syria. these are good times for them. we see them interviewing and yemen without too much push back. in bahrain, in lebanon. they are active in the west bank in gaza. they are everywhere without push back. do you see iran as being constrained or in some way moderating its actions because of the joint comprehensive plan
of action, that are known as the iran deal? how do you see iran's ambitions playing out? prime minister benjamin netanyahu: it is no secret we had a disagreement. on the nuclear issue. that deal was signed. i think right now, we have to concentrate on three things. to prevent iran from -- i was concerned with two things. one that iran violates the deal, the other than iran keeps the deal. in 15 years, they have a clear path to producing the and richest uranium for a massive nuclear arsenal. i am still concerned with that aspect. right now, we are in agreement that we want to creep -- keep iran's feet to the fire to make sure they do not violate the deal. the president and i spoke about that today.
we will cooperate to make sure iran does not cheat and believe me, it has a proclivity for cheating. they have a vested interest in by we, i mean the united states and israel, not only israel, to prevent iran's conventional aggression. remember iran is not only arming hezbollah, the trying to build a second front. supplying hamas and gaza and islam it she had with attack weapons. acting in yemen trying to undermine jordan. you name it. also, building and arms industry 50,000 men strong that produces submarine satellites, precision rocketry, and many other
advanced weapons. iran could pursue this aggression if it is not met with force. i think the second thing, other they on keeping their feet to the fire, is supporting your allies. the most important ally and the most important counter venture in force with iran is the state of israel. support israel. [applause] if i can be subtle enough, and the president and i discussed today a memorandum of understanding for american military support for israel for the next 10 years. imagine the middle east without israel. what do you think would happen? in our immediate vicinity so mark i have to be diplomatic, i will leave it to your imagination. now imagine a middle east with three as well as.
one in afghanistan, one in israel, one near yemen. it would be a different situation. the support for israel i am talking about, the united states supports israel to the tune of $3 billion a year. ok? you spend on the war in afghanistan and iraq a trillion and a half, so that is five centuries worth of support for israel. i think secretary carter and the president today said that supporting israel is not just important for israel, it is something we deeply appreciate, but it is also a very solid investment and american security as well. we are in ally that does not ask for any american troops. we never have and we do not attend -- in 10 two.
we can defend ourselves we just want to have the tools. the second thing and fighting iran is giving israel the tools to defend itself and deter iran. there is a third item that i think is essential. iran is not merely practicing in aggression in the middle east, iran is building a terror network in both hemispheres. adding another cell roughly every four weeks. when i say both hemispheres, that obviously includes the western hemisphere. this hemisphere. i think this terror network that is growing rapidly should be torn apart. so three things. deep their feet to the fire. support your allies. -- keep their feet to the fire. support your allies, this ally first. and it will be left to history to see if iran will modernize
and reform under this clique. i have my doubts, i hope i am wrong. i suspect i will be proven right, but i will be delighted if the takeover in around has not yet happened. daniel: i think we'll all be delighted. normally i would cut things off, but i want to press you on an issue i know you are reluctant to talk about. israel's economy. prime minister benjamin netanyahu: i love that one. daniel: you tell us. what do you want people to take away. that is my last question. go for it. by minister benjamin netanyahu think the supremacy of free markets is not self-evident. i think it has to be explained. i think first of all you have to get things conceptually right.
the second thing is to communicate it effectively. when i became finance minister in the midst of a crisis in 2003, we were in a horrible crisis. our economy was shrinking, our gdp per capita wished thinking. we had terrible unemployment and so on. most people thought it was because of the intifada we had at the time or the collapse. the bubble bursting and so on. that had an effect on us. that certainly contributed to it, but i did not think that was the major problem. i had about three weeks to come up with an economic plan that ultimately made many changes in israel. i thought, how do i communicate
this to a country that does not have lemonade stands when you are a kid. in when i was a child, you could see this was a made fighter and this was a mig fighter. we did not have lemonade stands, we had a fairly semi-socialist economy. so how to i explained the idea of free markets and their centrality in today's free world? so, three weeks later i did a is conference and i said, i want to fall back on my first day in basic training in the israeli paratroops. the commander put us in a straight line and he said, you are now going to take a race. a special kind of race. each man looked to his right, you are the first man appointed to me. but the gun to be right on your shoulder.
the next mandate that. the guy after him did that. and then, i got a pretty big guy. he was heavy. the next guy was the smallest guy in the platoon into he got the biggest guy on his shoulders. the third guy was a big eye into are got a small guy. and so on. and then, the commander blue the was so. i barely managed -- blew the whistle. i barely managed to move forward. the next guy, the small guy with the bad guy on the shoulders, collapse. the third guy took up like a rocket in one the race. i said, in the modern economy, all national economies are like sector sitting on the shoulders of a private sector. in our case, the book sector became too big too fast. we are about to collapse. -- the public sector became too big too fast.
we're about to collapse. we have to strengthen the man at the bottom, that means lowering tax rates. we have to remove the obstacles to the race. the barriers to competition. by the way, this became known as the fat man-in man thing. taxi drivers could reap that. effectively, we ended up doing exactly that. constrained the growth of public spending. we lowered tax rates. i had a big argument about that. they said, who is this guy? i said, no. his name is laffer. we actually tried it. it works. it worked for us. big-time.
[applause] we instituted a lot of reforms. even earlier, as prime minister, in my first term. i removed all constraints on foreign currency. that was supposed to collapse our economy and of course everybody was warning me that a mountain of money will move. it did. into the country. you know, so we did all of these forms. the consequence of that as we grew 5% a year for a decade. the exception is 2008. we still grew, but we grew at high percent per decade. we have now overcome, you know, past -- many leading economies in the world. if we can continue to it here to free market principles and encourage innovation and open new markets to these new products, new markets, deregulate should and, and infrastructure which we are investing in mightily, i think
israel has a brilliant economic future. the thing that i have to tell you is that although our gdp cap it is rising rapidly, we have a small gdp. we have 8 million people. we can be number one in cyber. we are. we can be number one and many other things, but we are small and therefore we have to compensate that with other means. among others, the american military assistance which is in valuable. but i think that the race that i described, the thin man-batman race is ongoing -- the thin man- fat man race is ongoing. you have to fear economy. you have to make sure your government does not interfere with ingenuity but promotes it.
you can never rest on your laurels. never rest on your laurels. life is competitive. the life of nations is competitive. you should always hold your competitive edge. in this is not something that consultants tell you. it is something that leaders have to do. you have to own the competitive edge of your people. you should have as much alliance as you can with other like-minded states like the united states of america. [applause] danielle: amen. let me say -- prime minister benjamin netanyahu: someone asked me to say why we don't have peace.
here is my short answer. i have two rules when i am in a press conference. when i have journalists. they ask me questions, i write all the questions. i write all of the questions. i go to each one. here's my answer to that, here's my answer to that, and on this one, i am fudging. i do not want to fight. i tell them if i am fudging. i want to tell you what the answer is. the reason? first of all, the conflict we have in the middle east is multiple. it used to be said the core of the conflict, in the singular and the middle east, is the israeli-palestinian conflict. that went by the window. when you see around collapse, syria collapse, yemen collapse, libya collapse, everything else in turmoil, nothing to do with us. the core of the conflict's in
the middle east is the battle between modernity and early, primitive medievalism. that is the core of the conflict. [applause] it is palestinian refusal to recognize a jewish state in any boundary. this is why this conflict persisted for 50 years before there was a state, before there were territories, before there were settlement. if that were the core of the conflict, the settlements, why did it take place when my grandfather landed in jaffa in 1920? jews were murdered then. or what? there was no west bank. there were no settlements. that continued in 1921, 1929, 1936, 1939, 1948. what was that all about?
1967. for nearly half a century. we were being attacked because there was a persistent refusal to accept us in any boundary. well, we got into these territories as a result of the conflict. and what arab propaganda has done by endless -- is to return this. how do we know that is the case? we left gaza. every last centimeter, and they are still firing rockets at us from gaza. when you asked him, why are you doing this, is it to liberate the west bank? they say, yes, sure, that, too. but it is deliberate.
jaffa. they always get back to jaffa. so, now we turn to the other guys. to the palestinian authority, not to hamas. at least they do not practice violence, but that is important. i say, what about you? are you willing to recognize the jewish state? are you willing to recognize the fact you have a nation-state for the palestinian people, how about a nation have been state for the jewish people. after all, we've only been there almost 4000 years. we recognize there are two peoples there, we are willing to make the deal. are you willing to make the deal? are you willing to recognize the jewish state? because there is no point in making another palestinian state, another arab state, that will continue the battle against the jewish state question mark are you willing to end the conflict? give up the claim, make peace? you know what happens when you ask them not? they move.
they say, i am willing to recognize israel. i did not ask israel. i said, are you willing to terminate all claims to the jewish state? you won't get jaffa. you will not get refugees. the answers, they will not will stop. we will have peace when the palestinians will afford us what they ask us to afford them. we are willing to let them have a state of their own, but they have to reconcile themselves to the fact that we have a state of our own and it is here to stay. that is the core of the problem. i [applause] in the mideast, medievalism against identity, is the against the palestinian, refusal to recognize a jewish state in any boundary. i hope that will change. but i have my mind on making sure until it changes, that yes, we work up the economy to create at least and economic future.
concludes the formal part of our program. we move on now to delicious dinner, dancing, and a safe drive home. god bless america, god bless israel, and god bless all of you. will [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> today we look at the human rights situation of guantanamo bay prison. we will join the organization for security and cooperation in democraticfice for institutions and human rights starting at 9:00 a.m. eastern time on c-span3. >> tonight, louisiana governor's debate and republican senator david, and democratic state representative john edwards. at 8:00to baton rouge p.m. eastern time on c-span2.
c-span has your coverage of the road to the white house 2016 we'll find candidates, debates, speeches, and your questions. this year, we are taking our coverage into classrooms across the country with our student camera contest. during students the opportunity to discuss what important issues they want to hear most from the candidates. follow the student camera contest and road to the white house coverage contest 2016 on tv, the radio, and online at c-span.org. >> live today on c-span washington journal is next. at 3:00 p.m. eastern time remarks by the israeli prime minister at the center for american progress. >> coming up in 45 minutes, tim
roemer talks about his article in political magazine -- politico magazine. at a: 30, david mcintosh on conservatives in 2016. it is the washington journal. in new orleans, an appeals court blocked president obama's executive order on deportation. where thein misery president of the university of missouri has stepped down over his handling over incidents of racism after student and faculty protests and the decision by the upcoming football team to boycott an upcoming game. there were to get your thoughts on for the