Transcripts For CSPAN Key Capitol Hill Hearings 20140426 : v

Save money by paying for fewer Police Officers regardless of the local agency in response for stationed officer at checkpoints. A consistent presence at these checkpoints is critical. I look forward to a bright discussion regarding security today and in the future. I firmly believe that we should not adjourn without at least continuing to address this issue. I want to thank the chief for his perspective on this. He gave me a new insight about predictability and the fact that if it is known that there is an officer of the checkpoint they become easy targets. I appreciate that. I want to thank mr. Cox. You gave us another way to look at this. You talked about how this possibly could be done, and that is why it is so important to continue the discussion because i think we can be creative and we can try things. I think there is no reason why we cannot take several ideas, try them out, see what works best, but i do not want to give up on this discussion. Thank you for allowing me to be here today, and i thank you. It gave us a better insight. This is an important facility. Lax is an economic engine of this area. All of the south bay. And my district. I appreciate you. I appreciate all of the tremendous responsibility that you have. I want to be part of the solution, not a part of the problem. I think the gentlelady. Thank you, and i want to thank you and the chairman and the Ranking Member thompson for having this important hearing here today. As someone who travels every week to and from lax, i feel very safe. As chairman mentioned, we cannot be complacent, and this incident informs us on changes we need to make to improve all of our security. I want to thank chief gannon and all the men and women who serve with you, who protect us here at lax, and mr. Pistole, and all the tsa officers who work very hard every single day and who put their protection or our protection over theirs every single day to ensure our safety. I have to state that when serving over 200,000 people every single day here at lax, it is likely major public event that takes place every single day. So i want to thank all of the witnesses who are here today and their willingness to answer our questions, and hopefully the tragic death of tsa officer hernandez and a passenger on november 1 will never happen again. [please stand the country that succeeded in being the guarantor of the global system taff Second World War, underwriting the i. M. F. , the world bank, the United Nations and systems of global integration. Its distressing igns of fatigue with the world most demonstrated by a reluctance to support International Organizes organizations, a distressing difficulty in mobilizing political consensus for trade agreements to promote fair to do a whats in the interest of erican workers and support a concern ilure to a desire to ramp back military spending in a world where our potential military spending is growing rapidly, a reluctance to become embroiled in foreign too enges because they are hard. Ultimately whether we will ultimately be judged by history to have won the peace after the ld war as we did after the Second World War is in more doubt today than would have seemed likely five or 10 year ago. In part its the conventional security challenges, the conventional economic integration challenges that ive talked about. Its also the challenge of Global Public goods and Global Public bads. The world is not moving on Global Climate change. It is i dont know how to describe it. But it is profoundly wrong that a moment when the science becomes ever more clear year by year that Climate Change is a political problem, that the fraction of American People who believe that Climate Change is a critical problem has gone. Own over the last five years you have to look at what was agreed in what was 1994 with regards to Nuclear Proliferation and ukraines giving up its Nuclear Weapons and see what is happening now and think that the worlds Nuclear Proliferation regime is threatened to a substantial extent. So i think we are at an absolutely critical juncture not as to whether global integration will continue. Theres no question about that. What matters for one country is going to matter for another country more than it ever has before. But whether thats going to be successfully managed and whether its going to be successfully managed by the ofrpbl country by the only country that can plausible aspire to leadership on a global scale, the only country that maintain as serious presence with respect to america and to the middle east and with respect to asia and that is the United States. Nd that is what is very much several ver the next years and if i might say, i think the reaction and the behavior of people in the Business Community like the business in this room is going to have a great deal to do with where we come down in this country. You recognize that and push and insist that that the United States have a great stake in our success in maintaining leadership of a global system, that is one thing. If you abdicate that responsibility and focus only on the issues that are of immediate concern to your commercial interest that is a different thing. The United States investment in the i. M. F. Has paid off hundreds to one in Financial Stability and in crises averted. We are going to spend hundreds of millions of dollars as we support it, as we measure it in order to guarantee you 1 billion of loans to ukraine. Point we cannot at this get u. S. House of representatives to approve legislation that would enable a smaller measured outlay to support hundreds of billions of dollars mostly of other peoples money leveraged to support Financial Stability around the world at a time when theres plenty of incipient volatility. So yes, globalization and global integration will continue. Whether it will continue successfully depends on the United States and depends on the United States broad commitment to international leadership. And my most important wish is that a period of economic distress and a certain fatigue, the most dangerous possibility is that that will cause the United States to turn inwards at a moment when the world has needed the United States to be engaged more than ever before. Is this a crisis of leadership as well . Its a crisis potential leadership. Erican if this were a different kind of conversation and i were a different kind of person we could discuss how much should be attributed to this part of the white house and this part of the congress and so forth. Im not going to go there. Im not going to go there but this has its roots in a much broader set of attitudes. This has its roots in what Public Opinion polls say about United States international engagement. This has its roots on what issues bring c. E. O. S to washington. How much is it its country parochial issue and how much is it National Issues of broader International Concern . This has its roots in our willingness as a country to be ultimately strategic about where our National Interests are. We surely cannot do everything. We surely cannot respond to every outrage. We cannot respond to everything that is morally problematic. Ut the able to draw lines in support of a system on which our prosperity and our security depends, nothing is more important to our ultimate National Interest or if you take not a twoyear view but a 10 or 20year view our economic success. Let me suggest one possible explanation for why there is is crisis of world leadership, call it what you want. Tom picketty has come up with a book the capital in the 21st century that looks at inequality that talks about a return the preSecond World War area where the returns of capital are greater than Economic Growth where the pa tri moan yall capitalist is in the asen dense and clearly that has a political impact. First of all, do you agree with theory in the worsening in equality . And secondly what are the affects on the prospects and the Political Climate . Piece of monumental scholarship. I cant think of an economic book that has been as galvanizing of the debate in a very long time. And certainly not one thats full of tables, figures and models. Mathematical his proposition that the shir of income and wealth that is going to a very the share of the income and wealth what that is completely compelling. Whole sure i buy his hypothesis about pay patri moan yall capitalism and an iron law of the market system. His idea is that because capital earn as return greater that the growth rate, the capitalists will ultimately ake it all over to oversimplify. I think its a more dynamic process. Forbes went back and looked and those on the forbes 400 in 1982, only 46 were still on the forbes 400 in 2012. I think its a much more dynamic process and that the way to understand increased inequality is to think about how much easier it is to be a Mark Zuckerburg than it was to make that kind of fortune quickly 30 year ago. I think the way to understand is to understand yourself the greater sunts that have come to exist for good or for ill in the financial growing financialization of the economy. Pickettys focus is on the process of capital accumulation but if you look at what happened to the top 1 its much more about their labor incomes than it is about their capital incomes. So i think he doesnt have the primary mechanism driving u. S. Inequality and therefore i am less fatalistic than he is. He basically argues that unless we can have some kind of Global Wealth tax, were doomed to inexserable change. Think if we build labor bargaining arrangements, if we can find a way to give workers a greater share in their firms success, if we can strengthen the systems of education and capital that prepare people for e kinds of jobs that are that to exist if question has tax system that has more until the ess hole swiss cheese that we can do a greel address inequality. So i have much more of you that these are problems that are dressable with the right kinds of actions. And so i dont think he has quite the right theory even though the data he has presented and the debate that e has given new energy to is a huge, huge, and positive accomplishment. You know, i i bring to go to the second part of your question, im struck by the change in the tone of our politics. John kennedy, First Political speech i ever listened to and remembered when i was 6 years old asked americans not what they could do not what their country could do for them but what they could do for their country. Today, we compete with middleclass bill of rights that are whall our country can do for people that are all what country can do for people. Goes to undoubtedly broad socialist systems that i cant understand. But when john kennedy said we had delivered to the middleclass over the 15 years better schools for their kids, support their homeownership for the first time in their lives, near universalization of employer based health insurance. Pidly rising real wages in median family incomes. And so we could ask them what theyre going to do for their country. When thats not being delivered for them its much hard tore ask what they can do for harder to ask what they can do for their country. All. I. Bill, the f. H. A. Of that was par and parcel of at made the martial plan and bretonwoods possible. And so the agenda of leadership and the support for the middleclass are not opposing political priorities. Theyre necessary compliments to have to come in tan dwem each other. Tandem with each other. And thats why ive said in times i think the fixation ith the deficit as the Central Economic issue facing the country over the last four years has been so dangerous and misguided. Im worried about deficits. Im worried that we are bequeathing our children a deferred maintenance deficit when we massively underinvested our infrastructure. Im worried about deficits. Education about an deficit when the paint is coming off the walls and kids are getting the signal about how much we do or do not care about their education from that. Im worried about the deaf zit in scientific leadership when at time of unprecedented promises in science, a time when the 21st century is going to be a century of Life Sciences just like the 20th century was a century of the physical sciences, the atomic bomb, the semiconductor, the internet. Those were physical sciences. Signs are scientists are going to like that in the 21st century. Nd we have cut the budget of science. The average age that people get into Life Sciences are 42. Thats leaving a deficit behind too. You know if we increase the growth rate of this economy by one quarter of 1 that will eliminate the whole fiscal gap as the c. B. O. Estimates it. Shouldnt that be our objective. Isnt that where our priority should be if we want to make this system work . Are we really going to rebuild confidence in the security for the future that lets make take an outward looking and broad minded view of International Problems by having more debates about cutting Social Security benefits which never, never no atter what you do get passed 36,000. Cutting those benefits 20 years from now. Should that really be the focus of our National Political debate . I dont think so. Think the focus of our National Political debate by putting and that to work kind of debate will address the deficit down the road. Build the also foundation for American Leadership in the world at time when that has never, never been more nest. Let me take a line from monty python and try and look at the bright side. Theres an Energy Revolution and there are many people people representing companies here that are Economic Opportunity coming from the oil. Gas revolution and whats the potential for American Growth in general and manufacturing in particular from this Energy Revolution in your view . When you dont achieve because you cant achieve, its sad. When you dont achieve because you wont achieve, its tragic. And thats the way to think about this. F we open up the possibility of exporting natural gas, we open up more fully e open up the possibility of exporting crude oil. F we regulate strongly and soundly but also decisively and quickly, we have the potential to change the American Economy and to change the world. We have the potential, there is no question, within the next decade for america to have the kind of influence in the world influence in the world because of its ability to export fossil fuels that saudi arabia has had for the last several decades. Think about what that means for our influence in the world. Think about what that means for our capacity for prosperity. That is within reach. The geology is there. The fuels have been found. Its a matter of finding the will to take the necessary steps. Can it conceivably make sense. Ven on environmental grounds in the 21st century for the of Oil Transportation to be trains and trucks on the ground . Can that possibly make sense . No. But if were going to move passed that we need to build an ppropriate kind of flexibility Pipeline Infrastructure and that means we need get passed sm that has been too constipating of our economy and our society for too long. This has the potential to create jobs in the millions. This has the potential to political geo formulation. Its not only the energy sector. Even when we fully export natural gas to our potential, all of this is going to mean that Domestic Energy is still going to be far cheaper than energy in your or asia at a time when because of what robots are doing the relative importance of energy costs and labor costs, us changing profoundly in manufacturing. So this is a huge opportunity for us. And the question is will we take advantage of it . And anyone who believes in u. S. Competitiveness has to believe that when youve got a massive advantage and a new opportunity, you need to be able to export it. Thats what weve told every other country in the world for the last 50 years and we need to tell it to ourselves and that means were permitting for the export of natural gas and that means moving to permit the export of crude oil. I dont know whether there will be time for questions or not because i havent got my iphone up here. But a quick last question for me before we go to audience questions. The map has growth potential. Hes under great execute ni in 2014. Weve had 5 of growth, way lower than you would expect coming out of a recession. Weve had no media income growth. Weve got a longterm unemployment problem. And Interest Rates remain zero. What does it suggest to you, all the good things happening in energy not with standing what does it suggest to you about americas growth rate . Are we in a new normal or are we going to escape velocity some time in the next year or two. All the good things in energy could happen. But it depends on Police Officers<\/a> regardless of the local agency in response for stationed officer at checkpoints. A consistent presence at these checkpoints is critical. I look forward to a bright discussion regarding security today and in the future. I firmly believe that we should not adjourn without at least continuing to address this issue. I want to thank the chief for his perspective on this. He gave me a new insight about predictability and the fact that if it is known that there is an officer of the checkpoint they become easy targets. I appreciate that. I want to thank mr. Cox. You gave us another way to look at this. You talked about how this possibly could be done, and that is why it is so important to continue the discussion because i think we can be creative and we can try things. I think there is no reason why we cannot take several ideas, try them out, see what works best, but i do not want to give up on this discussion. Thank you for allowing me to be here today, and i thank you. It gave us a better insight. This is an important facility. Lax is an economic engine of this area. All of the south bay. And my district. I appreciate you. I appreciate all of the tremendous responsibility that you have. I want to be part of the solution, not a part of the problem. I think the gentlelady. Thank you, and i want to thank you and the chairman and the Ranking Member<\/a> thompson for having this important hearing here today. As someone who travels every week to and from lax, i feel very safe. As chairman mentioned, we cannot be complacent, and this incident informs us on changes we need to make to improve all of our security. I want to thank chief gannon and all the men and women who serve with you, who protect us here at lax, and mr. Pistole, and all the tsa officers who work very hard every single day and who put their protection or our protection over theirs every single day to ensure our safety. I have to state that when serving over 200,000 people every single day here at lax, it is likely major public event that takes place every single day. So i want to thank all of the witnesses who are here today and their willingness to answer our questions, and hopefully the tragic death of tsa officer hernandez and a passenger on november 1 will never happen again. [please stand the country that succeeded in being the guarantor of the global system taff Second World War<\/a>, underwriting the i. M. F. , the world bank, the United Nations<\/a> and systems of global integration. Its distressing igns of fatigue with the world most demonstrated by a reluctance to support International Organizes<\/a> organizations, a distressing difficulty in mobilizing political consensus for trade agreements to promote fair to do a whats in the interest of erican workers and support a concern ilure to a desire to ramp back military spending in a world where our potential military spending is growing rapidly, a reluctance to become embroiled in foreign too enges because they are hard. Ultimately whether we will ultimately be judged by history to have won the peace after the ld war as we did after the Second World War<\/a> is in more doubt today than would have seemed likely five or 10 year ago. In part its the conventional security challenges, the conventional economic integration challenges that ive talked about. Its also the challenge of Global Public<\/a> goods and Global Public<\/a> bads. The world is not moving on Global Climate<\/a> change. It is i dont know how to describe it. But it is profoundly wrong that a moment when the science becomes ever more clear year by year that Climate Change<\/a> is a political problem, that the fraction of American People<\/a> who believe that Climate Change<\/a> is a critical problem has gone. Own over the last five years you have to look at what was agreed in what was 1994 with regards to Nuclear Proliferation<\/a> and ukraines giving up its Nuclear Weapons<\/a> and see what is happening now and think that the worlds Nuclear Proliferation<\/a> regime is threatened to a substantial extent. So i think we are at an absolutely critical juncture not as to whether global integration will continue. Theres no question about that. What matters for one country is going to matter for another country more than it ever has before. But whether thats going to be successfully managed and whether its going to be successfully managed by the ofrpbl country by the only country that can plausible aspire to leadership on a global scale, the only country that maintain as serious presence with respect to america and to the middle east and with respect to asia and that is the United States<\/a>. Nd that is what is very much several ver the next years and if i might say, i think the reaction and the behavior of people in the Business Community<\/a> like the business in this room is going to have a great deal to do with where we come down in this country. You recognize that and push and insist that that the United States<\/a> have a great stake in our success in maintaining leadership of a global system, that is one thing. If you abdicate that responsibility and focus only on the issues that are of immediate concern to your commercial interest that is a different thing. The United States<\/a> investment in the i. M. F. Has paid off hundreds to one in Financial Stability<\/a> and in crises averted. We are going to spend hundreds of millions of dollars as we support it, as we measure it in order to guarantee you 1 billion of loans to ukraine. Point we cannot at this get u. S. House of representatives to approve legislation that would enable a smaller measured outlay to support hundreds of billions of dollars mostly of other peoples money leveraged to support Financial Stability<\/a> around the world at a time when theres plenty of incipient volatility. So yes, globalization and global integration will continue. Whether it will continue successfully depends on the United States<\/a> and depends on the United States<\/a> broad commitment to international leadership. And my most important wish is that a period of economic distress and a certain fatigue, the most dangerous possibility is that that will cause the United States<\/a> to turn inwards at a moment when the world has needed the United States<\/a> to be engaged more than ever before. Is this a crisis of leadership as well . Its a crisis potential leadership. Erican if this were a different kind of conversation and i were a different kind of person we could discuss how much should be attributed to this part of the white house and this part of the congress and so forth. Im not going to go there. Im not going to go there but this has its roots in a much broader set of attitudes. This has its roots in what Public Opinion<\/a> polls say about United States<\/a> international engagement. This has its roots on what issues bring c. E. O. S to washington. How much is it its country parochial issue and how much is it National Issues<\/a> of broader International Concern<\/a> . This has its roots in our willingness as a country to be ultimately strategic about where our National Interests<\/a> are. We surely cannot do everything. We surely cannot respond to every outrage. We cannot respond to everything that is morally problematic. Ut the able to draw lines in support of a system on which our prosperity and our security depends, nothing is more important to our ultimate National Interest<\/a> or if you take not a twoyear view but a 10 or 20year view our economic success. Let me suggest one possible explanation for why there is is crisis of world leadership, call it what you want. Tom picketty has come up with a book the capital in the 21st century that looks at inequality that talks about a return the preSecond World War<\/a> area where the returns of capital are greater than Economic Growth<\/a> where the pa tri moan yall capitalist is in the asen dense and clearly that has a political impact. First of all, do you agree with theory in the worsening in equality . And secondly what are the affects on the prospects and the Political Climate<\/a> . Piece of monumental scholarship. I cant think of an economic book that has been as galvanizing of the debate in a very long time. And certainly not one thats full of tables, figures and models. Mathematical his proposition that the shir of income and wealth that is going to a very the share of the income and wealth what that is completely compelling. Whole sure i buy his hypothesis about pay patri moan yall capitalism and an iron law of the market system. His idea is that because capital earn as return greater that the growth rate, the capitalists will ultimately ake it all over to oversimplify. I think its a more dynamic process. Forbes went back and looked and those on the forbes 400 in 1982, only 46 were still on the forbes 400 in 2012. I think its a much more dynamic process and that the way to understand increased inequality is to think about how much easier it is to be a Mark Zuckerburg<\/a> than it was to make that kind of fortune quickly 30 year ago. I think the way to understand is to understand yourself the greater sunts that have come to exist for good or for ill in the financial growing financialization of the economy. Pickettys focus is on the process of capital accumulation but if you look at what happened to the top 1 its much more about their labor incomes than it is about their capital incomes. So i think he doesnt have the primary mechanism driving u. S. Inequality and therefore i am less fatalistic than he is. He basically argues that unless we can have some kind of Global Wealth<\/a> tax, were doomed to inexserable change. Think if we build labor bargaining arrangements, if we can find a way to give workers a greater share in their firms success, if we can strengthen the systems of education and capital that prepare people for e kinds of jobs that are that to exist if question has tax system that has more until the ess hole swiss cheese that we can do a greel address inequality. So i have much more of you that these are problems that are dressable with the right kinds of actions. And so i dont think he has quite the right theory even though the data he has presented and the debate that e has given new energy to is a huge, huge, and positive accomplishment. You know, i i bring to go to the second part of your question, im struck by the change in the tone of our politics. John kennedy, First Political<\/a> speech i ever listened to and remembered when i was 6 years old asked americans not what they could do not what their country could do for them but what they could do for their country. Today, we compete with middleclass bill of rights that are whall our country can do for people that are all what country can do for people. Goes to undoubtedly broad socialist systems that i cant understand. But when john kennedy said we had delivered to the middleclass over the 15 years better schools for their kids, support their homeownership for the first time in their lives, near universalization of employer based health insurance. Pidly rising real wages in median family incomes. And so we could ask them what theyre going to do for their country. When thats not being delivered for them its much hard tore ask what they can do for harder to ask what they can do for their country. All. I. Bill, the f. H. A. Of that was par and parcel of at made the martial plan and bretonwoods possible. And so the agenda of leadership and the support for the middleclass are not opposing political priorities. Theyre necessary compliments to have to come in tan dwem each other. Tandem with each other. And thats why ive said in times i think the fixation ith the deficit as the Central Economic<\/a> issue facing the country over the last four years has been so dangerous and misguided. Im worried about deficits. Im worried that we are bequeathing our children a deferred maintenance deficit when we massively underinvested our infrastructure. Im worried about deficits. Education about an deficit when the paint is coming off the walls and kids are getting the signal about how much we do or do not care about their education from that. Im worried about the deaf zit in scientific leadership when at time of unprecedented promises in science, a time when the 21st century is going to be a century of Life Sciences<\/a> just like the 20th century was a century of the physical sciences, the atomic bomb, the semiconductor, the internet. Those were physical sciences. Signs are scientists are going to like that in the 21st century. Nd we have cut the budget of science. The average age that people get into Life Sciences<\/a> are 42. Thats leaving a deficit behind too. You know if we increase the growth rate of this economy by one quarter of 1 that will eliminate the whole fiscal gap as the c. B. O. Estimates it. Shouldnt that be our objective. Isnt that where our priority should be if we want to make this system work . Are we really going to rebuild confidence in the security for the future that lets make take an outward looking and broad minded view of International Problems<\/a> by having more debates about cutting Social Security<\/a> benefits which never, never no atter what you do get passed 36,000. Cutting those benefits 20 years from now. Should that really be the focus of our National Political<\/a> debate . I dont think so. Think the focus of our National Political<\/a> debate by putting and that to work kind of debate will address the deficit down the road. Build the also foundation for American Leadership<\/a> in the world at time when that has never, never been more nest. Let me take a line from monty python and try and look at the bright side. Theres an Energy Revolution<\/a> and there are many people people representing companies here that are Economic Opportunity<\/a> coming from the oil. Gas revolution and whats the potential for American Growth<\/a> in general and manufacturing in particular from this Energy Revolution<\/a> in your view . When you dont achieve because you cant achieve, its sad. When you dont achieve because you wont achieve, its tragic. And thats the way to think about this. F we open up the possibility of exporting natural gas, we open up more fully e open up the possibility of exporting crude oil. F we regulate strongly and soundly but also decisively and quickly, we have the potential to change the American Economy<\/a> and to change the world. We have the potential, there is no question, within the next decade for america to have the kind of influence in the world influence in the world because of its ability to export fossil fuels that saudi arabia has had for the last several decades. Think about what that means for our influence in the world. Think about what that means for our capacity for prosperity. That is within reach. The geology is there. The fuels have been found. Its a matter of finding the will to take the necessary steps. Can it conceivably make sense. Ven on environmental grounds in the 21st century for the of Oil Transportation<\/a> to be trains and trucks on the ground . Can that possibly make sense . No. But if were going to move passed that we need to build an ppropriate kind of flexibility Pipeline Infrastructure<\/a> and that means we need get passed sm that has been too constipating of our economy and our society for too long. This has the potential to create jobs in the millions. This has the potential to political geo formulation. Its not only the energy sector. Even when we fully export natural gas to our potential, all of this is going to mean that Domestic Energy<\/a> is still going to be far cheaper than energy in your or asia at a time when because of what robots are doing the relative importance of energy costs and labor costs, us changing profoundly in manufacturing. So this is a huge opportunity for us. And the question is will we take advantage of it . And anyone who believes in u. S. Competitiveness has to believe that when youve got a massive advantage and a new opportunity, you need to be able to export it. Thats what weve told every other country in the world for the last 50 years and we need to tell it to ourselves and that means were permitting for the export of natural gas and that means moving to permit the export of crude oil. I dont know whether there will be time for questions or not because i havent got my iphone up here. But a quick last question for me before we go to audience questions. The map has growth potential. Hes under great execute ni in 2014. Weve had 5 of growth, way lower than you would expect coming out of a recession. Weve had no media income growth. Weve got a longterm unemployment problem. And Interest Rates<\/a> remain zero. What does it suggest to you, all the good things happening in energy not with standing what does it suggest to you about americas growth rate . Are we in a new normal or are we going to escape velocity some time in the next year or two. All the good things in energy could happen. But it depends on Public Policy<\/a>. It depends what happens with regulation and nimbisim. I depends if we allow the export of oil an natural gas on an every day basis. Thats all potential. Thats not all firmly established. I think we think to a natural extent is like that more broadly. Usually basically in all the macroeconomic classes i taught until i went to washington to work with president obama in 2008, the idea always was that it had a tradeoff. You wanted less unemployment and you wantedless inflation. So you sort of needed to hit the accelerator if you wanted to do something about unemployment. And you needed to hit the fwrake you wanted to do something about inflation. And so it was a really complicated balancing act. Now, we have inflation thats below our target. And so whatever you look at you need more of the accelerator. I dont think that we know what the potential of this economy is until we have enough demand for all that we can produce. It may be as pessimists fear that there has been some decline in the growth of the economies potential. But we will not put that proposition to a test as long as we allow there to be substantial unused capacity, substantial unemployment above normal and enough slack in the economy that we have such low and continuing inflation. So we may have supply problems and i would be the last to say confidently that we dont. But right now, it is demand rather than supply that is holding this economy back and thats why it has been a great mistake to be slashing Public Investment<\/a>s these last years. Thats why im relieved that the slashing is not going to continue on current projections at the same rate over the next couple of years. But we still dont have an Aggressive Program<\/a> of renewal in place. And if we want to maximize our potential for the middleclass on which Everything Else<\/a> depends and our potential for leadership in the world, thats what we need, a serious commitment to renewing this economy. But just to pick up on that, many its monetarily implications we have a meeting next week if you assume theres not going to be a new demand action for the political side in the next year or two the ownness will be on monetarily policy. Youve talked about secular stagnation, the fact that negative Interest Rates<\/a> might be the equilibrium of the u. S. Economy Going Forward<\/a>. What can a central bank usefully do knowing fiscal policy has been if you tary think you understood the answer, im about to give you one that will think you misunderstood. What i said. Look, the core of this is that inflations too low and unemployment is too high. Bias t means the policy needs to be towards expansion. And that is the core of interest here. It is in my jum much more healthy that that come from the side of support for private investment, come from the side of direct support for exports, from the side of Public Investment<\/a> rather than trying to blow up prices which is what monetarily prices can do. But to fail to support growth in this economy would be to allow millions of extra people to remain without work and experience suggests that when people have been without work for a substantial period of time, they lose their capacity to get back to work. So its not just a short run cost but a long run blithe. So i think the emphasis on policy needs be on the side of expansion. I think weve got time for a cup of questions. Weve got a lot of hands. Im not sure what the mic system is. But the laidingly the front second from front table. Is there somebody with a microphone . There is a mic being raised. Could some charitable soul tell time is . He one more and please be brief. Thank you, secretary. My name is jeannie. The key is in expansion. Expansion of growth, expansion market and expansion of our free market, i would call. So now the president is in asia. And in october, beijing will be hosting the aipac. What is your vision and what do you think needs to happen for e tmple p. P. To be t. P. P. To be successful so we can grow the market and we can level the Playing Field<\/a> with the biggest market, second biggest market in the world, china. Discuss the currency situation, the inflation in the job market, everything that we suffer now. Ok. Thank you. Weve i think obviously got to watch very carefully what happens in china. We have to watch carefully Going Forward<\/a> with respect to the currency. We have to watch very importantly what happens to pickup to u. S. U. S. Trucks. Eve got to negotiate a t. P. P. Job is about fundamental tion, not an amall amalgum that have particular commercial issues that they are pushing on the ustr agenda. Its got to be anchored on u. S. Jobs. If its not a u. S. Job, it shouldnt be a major negotiating priority. Thats how we should think about negotiating the t. Pfrlt t. P. P. But its not going to be the negotiation that takes place in asia. Its going to be the negotiation that takes place along pennsylvania avenue. I hope that we can find the will to pass a t. P. P. Agreement. Thats going to be critical for the United States<\/a> role in asia. A final quick question. Madam here in the front table. And keep it short, please. That, i can do. I was just interested in what you think the changes in the Education System<\/a> here in the United States<\/a> need to take place . What changes need to take place in order to achieve this Economic Growth<\/a> particularly for the middleclass and im particularly interested in alternative higher education. Your opinion on that topic. So apprenticeship, vocational education. Education, i would say a few things. Market essence of the system is that providers try to make customers happy and try to give customer what is they need. The essence of the communist system is the opposite. For too long an too much of education itself been run for the convenience of the teachers and the professors and the schools rather than for the benefit of the students. And we need a fundamental change in attitude on that question. Two, we need to make a core decision, very fundamental decision, its a decision for kindergartens and its a decision for colleges. Do you believe that selfesteem comes from achievement, or do you believe that achievement comes from selfesteem . And i believe that in too much of the United States<\/a>, we have embraced the latter philosophy to our great peril. If you look attests around the World Americans<\/a> rank terribly in their capacity to do mathematics. If you look at comparisons on the question are you good at math . We think were number one. You laugh but its a serious deal and we need to change in that philosophy. On hird, we need to focus the whole of the population. Where we do worse in the country is with those who are not headed towards leading colleges which are the best in the world. Ut those who need a practical, useful kind of Vocational Training<\/a> and we need to renew and revamp our systems in that regard. But we need to do it in a way that recognizes that its a very different economy that we are headed into. And thats not about preparing people for the jobs we wish existed. Like the ones that existed in the 1980s. But its about preparing people for the kinds of jobs that are going to exist Going Forward<\/a>. And there are jobs like that. I mean, just to say one last thing, i talked about the potential for energy, and i think what i talked about in terms of the various regulatory questions and the ability to export is the most important barrier towards are fulfilling that vision. The shortage of people who can weld on the gulf coast is also an important barrier as well, and we are not investing in preparing and training those people, and if we were, we would have a lower unemployment rate, we would have a stronger middle class, and we have more exports and a stronger economy. John kennedy said and it is this thought he said that mans problems were made by man. That is true of every problem we have discussed here this morning. He said also, it follows that they can be solved by man. And that is true, too. And it is also true and im sorry we did not get a chance to talk more about it, that for all the concerns and challenges that i have talked about, if you think about the capacity to produce the elon musks of this world, if you think about the energy resources, if you think about that kind of concern with the future of Public Policy<\/a> that the thousand people in this room represent, for all our challenges, having spent the last three years since i left government traveling around our around the world, i would rather have the challenges and the opportunities that the United States<\/a> faces than those of any other country in this world. Thank you very much. [applause] [captions Copyright National<\/a> cable satellite corp. 2014] [captioning performed by national captioning institute] tonight, the Supreme Court<\/a> hears oral arguments in a case that could decide how people watch broadcast television. And a look at detroits chapter nine bankruptcy, the largest in history. Later, a field hearing a on the response to shooting at Los Angeles International<\/a> airport. Burnomorrow, hannah tho looks at current relations between russia and ukraine. And cindy shield of American Petroleum<\/a> institute discusses the keystone xl pipeline and to delay approval. Plus your phone calls and comments and tweets. The Supreme Court<\/a> heard oral arguments in a case that could change how people watch broadcast television. Aereo is a company that charges subscribers a small fee to watch broadcast tv on computers and mobile devices. The court will decide if the technology is like individual home recordings or an unauthorized retransmission of copyrighted programming. This oral argument is one hour. Well hear argument next in case 13461, American Broadcasting Companies<\/a> v aereo. Mr. Clement. Mr. Chief justice, and may it please the court aereos Business Model<\/a> is to enable thousands of paying strangers to watch live tv online. Aereos legal argument is that it can make all of that happen without publicly performing. But Congress Passed<\/a> a statute that squarely forecloses that rather counterintuitive submission. Because although the internet and the thousands of mini antennas are new, the basic service that aereo is providing is not materially different from the Service Provided<\/a> by the Cable Company<\/a> before this court in 1969. Why arent they Cable Companies<\/a> . Theyre not im looking at everybodys been arguing this case as if for sure theyre not. But i look at the definition of a Cable Company<\/a>, and it seems to fit. A facility located in any state. Theyve got a, whatever they have a warehouse or a building in brooklyn, that receives signal transmissions or programs broadcast by Television Broadcast<\/a> stations. Theyre taking the signals off of the theyre taking the signals, right. Im sorry, they are. Makes secondary transmissions by wires, cables, or other communication channels. It seems to me that a little antenna with a dime fits that definition. To subscribing members of the public who pay for such service. I mean, i read it and i say, why arent they a Cable Company<\/a> . Well, Justice Sotomayor<\/a>, a couple of things. First of all, i mean, i think if youre if youre already at that point, youve probably understood that just like a Cable Company<\/a>, theyre public theyre publicly performing and maybe they qualify as a Cable Company<\/a> and maybe they could qualify for the compulsory license thats available to Cable Companies<\/a> under section 111 of the statute. But it just gets it mixed up. Do we have to go to all of those other questions if we find that theyre a Cable Company<\/a> . We say theyre a capable company, they get the compulsory license. Well, no. Theres lots of conditions on the compulsory license. And i think the first place the reason that we havent been debating about whether theyre a Cable Company<\/a> is because they dont want to be a Cable Company<\/a>. They have a footnote in the red brief that makes it clear. They are not a Cable Company<\/a> in their view. They dont want to be a Cable Company<\/a>. And i think thats because coming with a Cable Company<\/a>, it might potentially get you into the compulsory license, but it brings with it a lot of obligations to come with being a Cable Company<\/a> yes, but thats why they dont want it. Exactly. That isnt the question. Well, heres the other thing is i think the question is are they . I dont think they are. Thats really ultimately a question under the federal communications act. But heres why, if i could i think mr. Frederick will certainly speak to this if you want him to. But i think the reason they dont want to be a Cable Company<\/a> is because i think their basic Business Model<\/a> would not allow them to qualify with compulsory license anyways. But id still like to know the answer to the question, in your opinion. And, of course, if you want a reason, ill give you my reason. If we take Public Performance<\/a>, maybe we run into what professor nimmer saw as a problem. Why isnt what used to be called a phonograph record store that sells phonograph records to 10,000 customers a Public Performance<\/a> . It seems to fall within that definition. But if it is, theres no first sale doctrine and its a big problem. So we could avoid that problem. Now, thats why im very interested in the answer, not just what they want. Well, i dont think they are ultimately a Cable Company<\/a>, and we could debate that question, but its not the question before you. So maybe i could give you some comfort about why you dont need to decide that question. Well, perhaps we should remand it, because my reason for wanting to decide it is what i said. And what youve read in their briefs is they, in their supporting amici, have thrown up a series of Serious Problems<\/a> not involving them, like the cloud, which the government tells us to ignore, and many others, which make me nervous about taking your preferred route. So thats why i was interested in this question. But, Justice Breyer<\/a>, i think its very important to understand that even if theyre a Cable Company<\/a>, it doesnt make all these problems go away. Because they would be a Cable Company<\/a> that by very virtue of what they want to point to, which is their user specific copies, i dont think they would qualify for the compulsory license. I also think the better way to avoid your concerns is to maybe take them on directly. The reason that the Record Company<\/a> is not involved in a Public Performance<\/a> is its not involved in any performance at all, but thats different, of course, from an online music store, which not only provides a download of something, but actually performs it and streams it and allows it live. And that is a basic distinction thats not only recognized by the Second Circuit<\/a> in the ascap case, but its also recognized in the real world by the way these Different Services<\/a> are structured. If you provide downloads of music, you get a distribution license or a reproduction license. If you provide streaming of music where you also have a contemporaneous live performance, then you also get a Public Performance<\/a> license. Is your definition i mean, Justice Breyer<\/a> has already asked you said hes troubled about the phonograph store, and the dropbox and the icloud. Im also worried about how to define or Public Performance<\/a> or the performance of a work publicly, which i guess is the better way to do it, according to you. How do i define that so that someone who sells coaxial cable to a resident of a building is not swept up as a participant in this . Or someone who the sort of passive storage advisors that this is really hard for me. Ok. But let me how do i what do i do to avoid what do we do, not me, but what does the court do to avoid a definition or an acceptance of a definition that might make those people liable . Ok, well, let me try to take those are actually two different examples, and i think the answer to both of them is somewhat different. I think the provider of coaxial cable is if its just a simple sale of the cable is not performing at all. And so i think if youre somebody and all you do is take a piece of hardware and you sell it once and for all to a user, then the user may be performing with the equipment, but youre out of the picture. And thats different from an Ongoing Service<\/a>, like a Cable Company<\/a> or like aereo, who still owns all these facilities and theyre providing, through wire transmissions, these performances on an ongoing basis. What if you get it through dropbox . Well, thats Something Else<\/a> before you get to Justice Sotomayors<\/a> second half of the question, but something more along the lines of providing hardware. Suppose a company just gave the antenna and a hard drive, thats what they sold to the user, and the user was able to use the antenna and the hard drive in her own house or apartment in order to get all these broadcast programs. Would that be a performance . I think the end user would be doing a performance, but it would be a purely private performance, and i dont think the person that sold them the hardware or really anybody else, if i understand your hypo, would be involved in a performance. And the answer to these hypos i mean, this isnt something that im making up on the fly. I mean, its right there in the text of the statute. But then it really does depend on, like, where the where the hardware is. In other words, if aereo has the hardware in its warehouse as opposed to aereo selling the hardware to the particular end user, that is going to make all the difference in the world as to whether we have a Public Performance<\/a> or not a Public Performance<\/a>. Well and, again, i think that goes to what i was about to say, which is lets just not because, you know, we like one better than the other. Its because of the text of the statute congress wrote. One of the ways that you can public perform. I mean, they start with the classic Public Performance<\/a>. Right . A singer in a concert hall. They sold tickets. But then they say, wait, its also a Public Performance<\/a> if you take the singers performance and you transmit it, and theyre thinking over the airways and all sorts of other ways, if you transmit it to the public. And the definition of transmission, then, is to communicate it from one place to another. So there is a geographical aspect, if you will, built right into the statute so that if you sell somebody hardware and all theyre doing is transmitting it to themselves at their home, theres not going to be a transmission thats chargeable to the person who sold you the hardware. But if you provide an Ongoing Service<\/a> from a remote so you think that in my hypo, theres a performance, but its a private performance and then you move the hardware and it becomes a Public Performance<\/a>. Is that it . It becomes a Public Performance<\/a> on behalf of the sender, but it still would be a private performance on behalf of the receiver. And thats one thing thats really important to get in mind, is that in this statute as to the Public Performance<\/a> right, theres nothing particularly anomalous about a single transmission that from the senders perspective is a Public Performance<\/a>, but from the recipients perspective only allows for a private performance. If you think about the classic cable context, which is what congress was trying to address in 1976 with the transmit clause, you have the Cable Company<\/a> and theyre taking a performance off of the airways and theyre transmitting it to all the endusers. Now, the Cable Company<\/a> is clearly performing to the public, but that same transmission is allowing each enduser to turn on their Television Set<\/a> and to make a performance proper, which is a private performance. So roku is roku is paying a license for no reason. Im sorry . Roku is paying a license for no reason . They sold me a piece of equipment. I dont know all the details of that particular piece of equipment. Im not sure whether theyre paying a license or not. But if there was really a transfer and theres nobody else providing a transmission, i dont think that just operating the hardware in the privacy of your own home is going to result in anything but a private performance. Go to the idrop in the cloud. Sure, now, theres, i think, its a slightly different situation. Here, i think the ultimate statutory text that allows you to differentiate a cloud locker storage from Something Like<\/a> what aereo does is a language to the public. And i do think that in all sorts of places, including the real world, theres a fundamental difference between a service that allows that provides new content to all sorts of endusers, essentially any paying stranger, and a service that provides a locker, a Storage Service<\/a>. And i think if you want a real world analogy off of the internet, i think its the basic decision the difference between a car dealer and a Valet Parking<\/a> service. I mean, if you look at it from 30,000 feet, you might think, hey, both of these things provide cars to the public. But if you looked at it more closely, youd understand, well, if i show up at the car dealership without a car, im going to be able to get a car. If i show up at the Valet Parking<\/a> service and i dont own a car, its not going to end well for me. And so what is the difference i didnt mean to interrupt your well, i was just going to so i think there is a very real way in which you would say, you know, at the end of the day, the car dealers providing cars to the public, the Valet Parking<\/a> service is not. Its providing a parking service. Why isnt and i dont want to stretch it too but why isnt it like a public garage in your own garage . I mean, you know, if you can park your car in your own garage or you can park it in a public garage. You can go to radio shack and buy an antenna and a dvr or you can rent those facilities somewhere else from aereo. Theyve got an antenna. Theyll let you use it when you need it and they can, you know, record the stuff as well and let you pick it up when you need it. Mr. Chief justice, thats not an implausible way to look at this. Thats exactly the way that this court looked at it in fortnightly decision. But congress in 1976 decided it was going to look at it differently, and it said that if you are providing a service, even if you are providing a service that one could reconceptualize as just renting out antennas that somebody could put on their own house, the person that provides that service on an ongoing basis and in the process exploits the copyrighted works of others is engaged in a Public Performance<\/a>. That is clearly what they were trying to do in the 1976 act by adding the transmit clause. Well, the Second Circuit<\/a> analogized this to its cablevision decision. So maybe you could explain to me what is the difference, in your view, between what aereo does and a remote storage dvr system. Is the difference does the difference have to do with the way in which the Cable Company<\/a> that has the remote storage dvr system versus aereo acquires the program in the first place . Does it have to do with the number of people who view this program thats been recorded . What is the difference . I think the potential difference, and its both the cloudlocker storage and this example, i dont think this court has to decide it today. I think it can just be confident they are different. Here is the well, i dont find that very satisfying because i really i need to know how far the rationale that you want us to accept will go, and i need to understand, i think, what effect it will have on these other technologies. I had the same question. Just assume that cablevision is our precedent. I know that it isnt, but lets just assume that it is. How would you distinguish the cablevision from your case and how is it applicable here . Assume that its binding precedent. Just thats a hypothetical. Ok, but, justice kennedy, i would like to answer both your questions by assuming that the result in cablevision is right, but i dont have to necessarily buy the reasoning, because i think the reasoning of cablevision is profoundly wrong, so let me circle back to that. But the reason theres a fundamental difference between the rs dvr at issue in cablevision and what aereo provides is, as Justice Alito<\/a> alluded to, the fact that theres a license in the cablevision context to get the initial performance to the public. And so then i think appropriately the focus in the cablevision context becomes just the playback feature and just the time shifting thats enabled by that. And in that context, if you focus only on that, then the rs dvr looks a lot like a Locker Service<\/a> where you have to come in with the content before you can get content out and you only get back the same content. And here is what really i think aereo is like. Aereo is like if cablevision, having won in the Second Circuit<\/a>, decides whew, we won, so guess what . Going forward, were going to dispense with all these licenses, and we are just going to try to tell people we are just an rs dvr, thats all we are, and never mind that we dont have any licensed ability to get the broadcast in the first instance, and were going to provide it to individual users, and its all going to be because they push buttons and not because we push buttons. If that were the hypothetical, i dont know how that wouldnt be the clearest violation of the 1976 act. Thats exactly our problem. Im hearing everybody having the same problem, and i will be absolutely prepared, at least for arguments sake, to assume with you that if there were ever anything that should be held to fall within the Public Performance<\/a>, this should be. All right . I will assume that. Im not saying it. But then the problem is in the words that do that, because we have to write words, are we somehow catching other things that really will change life and shouldnt, such as the cloud . And you said, well, as the government says, dont worry, because that isnt a Public Performance<\/a>. And then i read the definition and i dont see how to get out of it. Here is the way to get out of it, Justice Breyer<\/a>. Ultimately the words youre going to have to interpret are to the public. To the public . You see, separate, at the same time, or at different times . Separate or together . So a thousand people store in the cloud the same thing, as can easily happen, and pull it back at varying times of the day. If all they can do is, just like the valet car parking service, is get back what they put up there, i think you could easily say that that is not to the public. And that is not just me coming up with a clever distinction. Thats the distinction thats really been drawn in the real world, because not all Cloud Computing<\/a> is created equal, and there are some Cloud Computing<\/a> services that use Cloud Computing<\/a> technology to get new content to people that dont have it, and they get licenses. And there is other Cloud Computing<\/a> that just has Locker Service<\/a>s and they dont think they need a license, and so im not saying that you have to bless what the market has done, but i think its a profound indication but what if, mr. Clement, its not so simple as a company that just allows you yourself to put something up there . What if how about there are lots of companies where many, many thousands or millions of people put things up there, and then they share them, and the company in some ways aggregates and sorts all that content. Does that count . That, Justice Kagan<\/a>, is precisely why im asking you not to decide the Cloud Computing<\/a> question once and for all today, because not all Cloud Computing<\/a> is created equal. The details of it might matter. If i can take my Valet Parking<\/a> service one more time. If a Valet Parking<\/a> Service Starts<\/a> renting them out and sort of has a little Zipcar Service<\/a> on the side and says, hey, while we have your car, if somebody else needs a car, were going to rent it out to them, i think thats different from the pure Valet Parking<\/a> service. If i could reserve the rest of my time for rebuttal. Thank you. Thank you, counsel. Mr. Stewart. Mr. Chief justice, and may it please the court i would like to begin by reinforcing two of the points that mr. Clement made. The first is that what aereo is doing is really the functional equivalent of what congress in the 1976 act wanted to define as a Public Performance<\/a>. As the chief justice said, one potential way of looking at this is that aereo and Companies Like<\/a> it are not providing services, they are simply providing equipment that does, in a more sophisticated way, what the viewer himself can do. Its a plausible way of looking at the world. Thats what the court in fortnightly and teleprompter said, but congress acted to override that and to make clear that Cable Service<\/a>s, services that used one big antenna to pull broadcast signals out of the sky and reroute it to their subscribers, those people were engaged in Public Performance<\/a>s and they ought to be paying royalties. The second thing that i would like to 10 reinforce in mr. Clements presentation is that there is no reason that a decision in this case should imperil cloud Locker Service<\/a>s generally, but, as mr. Clement was pointing out, that the term Cloud Computing<\/a> how about simpletv or nimbletv, which is not quite a hybrid . I guess im not familiar enough with the precise details of the operation, but just let me say in general terms there are obviously services that provide Television Programming<\/a> over the internet. Some of them are licensed because they recognize that they are publicly performing. If a particular company, for instance, recorded Television Programs<\/a> and offered to stream them to anyone who paid the fee or offered to stream them for free and make its money off advertising, that would be a Public Performance<\/a> because those companies would be providing content to people who didnt have it. I think the basic distinction, the one that at least defines the extremes, is the distinction between the company, whether it be internet based or a cable transmitter, that provides content in the first instance and the company that provides consumers with access to content that they already have. If you have a cloud Locker Service<\/a>, somebody has bought a digital copy of a song or a movie from some other source, stores it in a locker and asks that it be streamed back, the cloud locker and Storage Service<\/a> is not providing the content. Its providing a mechanism for watching it. Can i ask my same question to you that i asked to mr. Clement . How about if theres a company that allows sharing and that aggregates all the content that different individual users put up and that in some sense sort of sorts and classifies the content in different ways . How about that . I think you would have to you would have to know both the details of the service and you would have to be making a harder call there about how to draw the line, because i dont pretend that there is a bright line between providing a service and providing access to equipment. If you look, for instance, at the extremes of a person putting a rooftop antenna at his own home, everybody agrees that the rooftop antenna manufacturer is not performing at all and the individual is engaged in a solely private performance. At the other extreme is the Cable Company<\/a>, one big antenna, makes transmissions to a lot of people, congress clearly intended to define that as a private performance. Somewhere in the you could come up with lots of hypotheticals that look more or less like one of the other extremes, they are somewhere in the middle. Its an authentically hard call as to where to draw the line. So i dont have a good answer for you. How do we get out of the example . I mean, how do we get out what words do i write to get out of this, throwing into this clause a music store that distributes via federal express, a device, or the u. S. Postal service or even someone over the counter, distributes to 10,000 people a copy of a record which they then will take and play it . They have, to the same degree, transmitted something that will electronically make a performance of the music. So are they when they sell the record violating the display clause . No, theyre not because . Because . Because the definition of to transmit goes on to transmit a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent. Of course they are. The sounds are received beyond the place. It requires the person to take the record, put it on a machine, and then play it. Well, there is a separate exclusive right. Of course there is. And that separate exclusive right has such things as first sale doctrine is attached. But if they also flow here, if they if this covers them, which is why nmpa wrote the paragraph that was quoted, if this covers it, there is no first sale doctrine, and that has a lot of consequences. I think so. Anyway, if you dont know and you havent got something right there and you havent thought about it, youre not going to think about it in two minutes, nor will i. No, no. I have thought about it. And i think the answer is that the word transmit is being used in a particular sense. You are correct that there are some contexts in which we would say that a person who sends cds or vital albums over the mails is transmitting those. Thats not the sense in which the term transmit is used here. Its talking about transmitting in a way that causes the sights and sounds to be received, transmission through radio waves, through cable, et cetera. And if there were any doubt about the word transmit, remember that its part of the definition of the word perform. And ambiguities in the definition should be construed in light of the defined term. And nobody would say, in ordinary parlance, that a person who transferred a copy of a record was performing it. Mr. Stewart, before you finish, mr. Clement in his brief made the point that we would if we took the position that petitioner urges, there would be an incompatibility with our international obligations, that is, aereos view of the Public Performance<\/a> right is incompatible with our obligations under the Berne Convention<\/a> and under what is it, wyco . On pages 44 to 45 of his brief, he says that aereos view of what the Public Performance<\/a> right is runs straight up against our international obligations, and he cites a case from the European Court<\/a> of justice and i think another case. We havent made that argument. We believe that existing u. S. Copyright law properly construed is fully sufficient to comply with our international obligations. But that that doesnt mean that we think that whenever a court misconstrues the statute, we will automatically be thrown into breach. Its certainly possible. But if this case were decided in aereos favor that some of our International Trading<\/a> partners might object, but im not going to take the position that we would concede those objections had merit, so were not making that argument. The other thing i would make say to reinforce the point that mr. Clement was making about the phrase to the public, using his example of the Valet Parking<\/a>, using a comparable example of a coat checkroom, there are situations all the time in which people place property momentarily at the disposal of another and then retrieve it later. And its distributed to them at that later date, not in their capacities as members of the public, but as the true owners of the property. And i think some kind of distinction along those lines is essential in much more mundane applications of the copyright act. For example, if i invite 10 friends over to watch the super bowl, thats a private performance. Its not a Public Performance<\/a>. Thats not because my friends are not members of the public. They are. And in some other capacities, it would be important to regard them as such. If the theater down the street had a screening of casablanca and it happened that those 10 people were the only 10 people who attended, it would be a Public Performance<\/a>, because they would be in there in their capacities as members of the public. So i think for in a wide range of situations dealing with Public Performance<\/a>, distribution to the public, its essential to ask not only are these individuals members of the public in some sense, but are they acting in their capacities as such. And if you have the pure cloud Locker Service<\/a>, the service that doesnt provide content, it simply stores content and then plays it back at the users request, that that service would e providing content to its true be providing content to its true owner. We can assume its a binding one. Lets assume that. The reusing of cable vision if you really adhere to the idea that the only performance that counts is the individual transmission and asked does that go to more than one person . Then its hard to see how you could rule in favor of our position here. But as far as the bottom line of cable you can accept the governments position and say cable vision was decided the right way. It was realtime. The only thing that was in issue is the supplemental d. V. R. Service. And they thealed the recording of those programs by the subs due ers who were viewed in time that it could be private zed as a performance. Thank you, mr. Stewart. Thank you, mr. Chief justice and may it please the court. I want to address the cable question. But before i do that can i just say the three points i wanted to make is the interpretations of the texts that they offer, absolutely threatened Cloud Computing<\/a> and this case is really a reproduction case masquerading as Public Performance<\/a> case. Now, we are not a Cable Service<\/a>. The reason were not a Cable Service<\/a> is because cable takes all sig nats and pushes them down. Theres a head in defined by constitute. Its a regulatory structure that deals with taking a lot of content and pushing it down consumers. Area was an economic provider. Nothing happens until a user initiates the system. Er initiates the system by pressing this is the program that i want to watch. That then tunes in antenna activates the recording that will be made and then the user is able to play back the recording. I always thought and im trying to be careful about it but not awesome enough probably like every other member of the take a hat if i otograph of a record and dislocate it a million times that way you did it and then i publish a copy to the public then why is it not an illegal act. If you can make these millions of copies and sell them to the public because youre telling the public when theyre going to buy it they can call it up and hear it. So why arent you . It imply cats the reproduction right. Thats the exclusive right of the copy right hole tore restrict the number of copys that is made. Thats not a purr Performance Rights<\/a> question. They abandon their challenge in the preliminary junction proceeding to the reproduction like issue because it runs right into the sony decision in sony this court held that consumers have a fair use right to take local overtheair broadcast and make a copy of it. D. V. R. s is providing and antenna to make sure that they can do when theyre at home and move the antennas and d. V. R. s to the internet. You said theres no technically sound reason to use these multiple antennas. The only reason for that was to avoid the breap of the copy right act. Was there a technical reason to have all these dime size antennas . This is a very complex question Justice Ginsburg<\/a>. There are technical reasons why the individual antennas provide the same functionality than one big antenna. As a startup business aereo is enticing consumers what they can do at the cloud at lower cap cost ander efficiency. The judge had no basis on which to make this basis at all in his defense because these are not on the record. You cant do multiple channels over the internet anyway. You can only do a single video stream at a time. So whether you have one big antenna or whether you have lots of little antennas you still have to compress the signal and only one can go over the internet at the time. Justice ginsburg there is a very real consideration for why multiple antennas make sense if youre in new york city you want to put an antenna on top of the building. You to get a Building Permit<\/a> if you want to pit thereupon with the crane you have to get a subway permit before you do all of the things to put a big antenna in new york city to get broadcast signals. Theres a reason you need 10 10,000 of them . Theres no technological reason for you do have 10,000 dime sized antennas other than to get the copy right law. The point of the copy right law shouldnt turn on the number of antennas. It trumps whether the person is s receiving the signal privately performing they getting a data stream having that signal compress sod that it can be streamed turnover internet and throw in a user specific user initiated copy. That may well be but it doesnt contradict this chief justices question. Youre saying it by doing it this way you dont violate the copy right laws. But is there any reason you did it other than not to violate the copy right laws . There is a reason. You can replicate the experience at very small costs. You know you have a right to put an antenna on your roof and put a d. V. R. In your living room. We can provide the same antenna and d. V. R. For a fraction of the cost but its not. Youll give them space when its available when they call in. They dont have, this is my little dime thing and this is my copy thats going to be there. Theyre there and when they want something you provide the service of giving them that. They dont have a dedicated antenna in brooklyn. Well, some of the consumers do the record is clear that vom staticly assigned to users. But that doesnt answer the question, the statuetory question that is in cable vision thrazz user specific user initiated copy that when viewed to buy the use ser a private performance. That organize of the operation of the system works the same way. The fact that cable vision able to compress them to make them accessible to a single antenna they choose to do it, they go with having a big antenna should not matter for the copy right laws. Were still talking about renting equipment that consumers have a right to get over the air signals that are free to the public. Using public speck thralm the government has allocated aereo provided a service that would take 45 seconds. And he could get the broadcast without advertising. And they would have some way to screen the evidence. You can watch the entire baseball game without the ads . They would probably violate the predux rights. Would aereo be a performer then . They would not be a performer. And this does go into the technical details. Here the position between the parties is quite stark. They say that the facts dont matter. We have a well developed factual record. If thack that it would matter in your hypothetical bowl whether or not the initiation of the advertiser had been done by the consumer or whether it had been done by the cloud. No, the consumer makes the choice. Two. Button one or button i dont understand why youre the performer in one case and not the other case. Because the action of who is the performer turns to who is acting to make the sequence of sounds and images perceivable. Where youre talking about taking out advertising, what youre doing is youre altering the copy and infringing the reproduction right. Thats something you can do in the area of technology. I have no brief to defen that. At doesnt matter in terms who have who is defending a private performance because that is being done in the home. Mr. Fredrick, your plan is just using this for local signals right now. But the we prove that is there any reason it couldnt be used for distance signals as well . Possibly. There is possibly a reason that it could possibly be used . It cant be used for distant signals. What would the difference be . You could take hbo, you can carry that before performing. Hbos not done overthe air waves. Ts done through a private performance. It does not imply cament the private performance and Public Performance<\/a> distinction because even if you were to take distance signals and make them available at home its still through user initiated user specific copy. The question then becomes is is there a fair use right to be able to do that . What sony said because sony was dealing with local over the air broadcast an making a copy of local overthe air broadcast, it said that consumers have a fair use right to make a copy of that. Sony did not address the distant signal. And the question bowl balancing the fair use factors whether it was appropriate for a consume tore be able to get access to that programming without being able to otherwise implicate the free public spectrum. The way congress hazardsed that, congress hazardsed that by saying that when there are distant signals that then get pushed through a cable system there is a copy right royalty that gets paid. But i want to make absolutely clear, satellite, cable, do not pay copy right royalties for local over the air broadcast. Why . Because the local over the air broadcast channels wanted it that way. They didnt want to be in a situation of having to figure out how to divy up all the copy right royalties to the various holders. So when they talk about how congress overruled fort knightly what they ignore is that in section 11d and in section 122 c of the copy right act, Congress Said<\/a> the retransmission of local overthe air broadcast through satellite and cable shall be exempt from the copy right regime. When they talk about retransmission issue theyre really trying to conflate a total different regulatory system every other transmitter does pay a royalty. Far re the only pay orso that doesnt pay in royalties at any stage. Person who sells an an antenna doesnt pay royalties. And the company that provides rental service for me to put an tan na antenna dont pay royals either. The question is how significant should it be how long the cord is between the antenna and the d. V. R. . The sans very significant and the reason very significant because what the local intended person doesnt do but you apparently could do even if you dont is with the same kind of device pick up every television signal the world and send it into a persons computer. And that sounds so much like what a catb system does or what a satellite systems does. It looks as if you were escape an escape that was imposed on this. Thats what disturbs everyone. What disturbs me on the other side is i dont whauns the decision for you or against you when i write it is going to do l kinds of other technologies. Im certain that i understand it well. I didnt think it was your problem but it might turn out to be. [laughter] let me try to make it their reserve think you can that tchace might say it might raise a different issue but the facs that here would not entitle them to provide the service. Now with respect to the second aspect of this. The reason why their interpretation of the transmit clause causes so much problem, so many problems for the Cloud Computing<\/a> industry is that its twofold. Number one they are conflating performance with work in the transmit clause. What they are saying is that so long as the work is always perceived in some fashion through a performance that is privately done through the playback of a recording that that because of initial work was disseminated to the republic that imply cathes the Public Performance<\/a> rights. What that neens every time somebody stores something this the cloud, whether its a cloud, a video image or the like if it happens to be snag somebody else has stored in the cloud, the fact that one person initiating it and perceiving sit going to implicate the Public Performance<\/a> right. And thats why the Cloud Computing<\/a> industry is freaked out about this case because theyve invested tens of billions of dollars on the notion that in user specific, user initiated copy when perceived by that person is a private performance and not Public Performance<\/a>. The second thing that they do statute ng with this well it says transmit a performance they say transmit performances. Because they acknowledge that the way the Technology Works<\/a> or aereo is its a user initiated copy. But they say no matter if you add enough of them together you can aggregate that to become a Public Performance<\/a>. Theres no reason its a user specific copy, is it . It would be much easier for you to make one cop yip an everybody could get a copy. Thats where the issue about replicating what happens in the home matters mr. Chief justice. Because if im in my home and i start the program two minutes aztecnology, i miss the two minutes. It happens to be when i push the button just like when im at home watching on a d. V. R. That will be different because i have control over it surely you can make a bram you have just one copy and starting it at different times. You dont need every viewer to have his own copy. But that is the kiedis tippings between video on demand and the sthaffs aereo provides. We dont have a brief to defend the master copy because in the master copy situation thats indisputably public because theres no right to exclude anyone else. With aereos technology if im making a copy using the system no one else can look at it even if you watched the same prab. You cant watch my copy. I cant download it. Theres the reason we call them copies because theyre the same. [laughter] all im trying to get at an im not saying its outcome determinative, im saying your technological models is on legal prohibitions you dont want to comply with. Lawyers do that. Im just wonder whige whether you can give me any technological reason afrart the particular legal issue for technological minds . Its much simpler to add modules when you are are starting up rarping up. What were talk about with any cloud industry is youre starring with any group of servers. Almost like lego pieces. Thats a technological reason why the cloud works the way it does, mr. Chief justice. Th the antennas an d. D d. V. R. S we can serve tens of thousands of people in the new york area. Question provide the antennas tan d. V. R. s and its a very compact maul space. And then if we expand and were able to continue to be in business and we get more subscribers in brooklyn, we might add another role which would be the part of the Council Tables<\/a> behind me. That aspect goes to the modules that are used for Cloud Computing<\/a> where you can add additional server or hard disk space. When they sign up their system is completely empty. Theres no content being provide. Theres economic thats being provided. So when they activate the system and they say i want to watch the news at 6 00. They then start the process that then steals that story until the 6 00 news. But until that happens there is no content being provide it would ben that everybody would provide an antenna and a d. V. R. And if thats true the implications are quite massive. You can understand why that would fly in the commuter industry because that terns puck lick performers. You can get any of these things. Its not as those you the subscriber initiates it. You have these choices an theyre providing you these choices. Its no different that if im at home and have rabbit ears on tv its its no different from a uses perspective. Its no different than watching cable, right . You just have a different content intersection. But it looks the same to you. The mean you Justice Kagan<\/a> and Justice Ginsburg<\/a> is what is technological available. There are broadcast signals that are available and they are limited because thats what the broadcasters make available. And simply providing a user guide that says you can tune to this channel or you can tune that channel if you want to pick up one program or another cant be the difference between getting provider and the use of your quim. I want them to have a chance to replay. The thing that frightened me somewhat in your brief was i think of the clouds storing everybodys music, vasts amount of music and then they send it down to perhaps a Million People<\/a> at time who want to hear the same song. What you said was if i understood but explain it as it is. But that there is a provision of the copy right law that says when it happens its subject to a compulsory license. Then exeem get it and its paid for by somebody. But if we side with them there would be a different prosthration would come into play. And it wouldnt be subject to the compulsory license. What i want to no have i got your argument correctly and if not what is it in i think that your argument is its not an argument or a parody or a correct version of yours theres no compulsory lie swens respect to music or video. There are different ones with respect to satellite and cable that captures all signals. So that would be the same . Thats not going to be a problem. Whats going to be a problem is if im watching a particular program and youre watching a particular program and Justice Sotomayor<\/a> is watching the same program, we are engaging in the company ha has allowed us to make a copy of that is engaging in Public Performance<\/a>. Ere you to deal with infringement is volition. If im making yiment available it should work out in a parallel way that is when i look at the program, i am making a cop yoif the program and therefore im violating the exclusive right to copy. If thats fair use and therefore i can do it, it should also be fair use if exactly the same thing happens but it comes from a cloud. Let me further answer your question about music which i o mitted a key piece of information, which is there as Music Distribution<\/a> license. Its under sex 115. 115c3. Right. But that is exactly the same way satellite and cable work as well. If youre broadcasting in the local area it is for free. It is like a copy rightfree zone. The reason for that in the music world is because they want local radio broadcasters to play songs because that drives sales of the records thats a totally different Business Model<\/a> than in to tell vision world. But the reason why this matters for your perspective is that the court the second thing cable vision did is user specific use their initiated copies are private performances. They are not Public Performance<\/a>s. But now youre saying that hulu all , netflix, ten. Ey get their con they leet you choose what they beyond to say. The difference is they do not exclude anyone. And the difference between property law is cls a right to exclude. If i have public property im not excluding others. Theyre not excluding anyone. I happen to know why to exclude anyone else. They are making their product, their content stroible all content their available to all without exclusion. The only distinction you are offering subscribers legends of subscribers. So i dont understand that. You say they have to you selected and some people want to use your service . Youll take everyone who can pay, right . If we pew up antennas and install their d. V. R. s and we send them a bill every month to pay us because we provided that quim. It would be the exact same position, Justice Ginsburg<\/a>. And that cant be a copy right violation. This should be different. Isnt the supposedness of law fullness that cant work and would impearl the cloud. Heres why. When a person is accessing local overthe air television is doing so because that is free public spectrum. Sony says we have a right to make a copy of that free use. The government argued that theres an imployed law license when a person accesses local over the air telecast in that way. So it can want be the distinction between our situation and cable vision that there is somehow a difference because if im watching over the air broadcast tv i dont have to pay a royalty for i. Thats the analogy that would be appropriate there. How would that affect the cloud . Well, if you turn every type of performance that an individual makes from some content that gets downloaded from the cloud, the cloud provider cant tell whats legal or not legal. Some stuff could be pry ratted or perfectly licensed. Ha the position on the other side of the case is those people are liable of the Public Performance<\/a> right. And thats why the cloud industry is very concerned that if you have two expansive an interpretation of what is the Public Performance<\/a> right, you are confining home to potential mr. Fredrick, why isnt sufficient to create a line which is the one mr. Clement said which is do you provide the contend . That put you on one box. On the other hand if you are not providing the content, if the user is providing the content and youre providing the space for them to do that and to share the content that puts you in another box. Justice kagan i know my friend didnt translate this at all when he offered that distinction. In order to get there, you have to make up words to put them in the transmit clause. But even if you were to think that that was good for a policy reason, you would industrial to explain why the hundreds of thousands of certain people dont have exact same fear. Now all those people not aerial subscribers but they happen to have a home. She has the right to get that access and the fact that theyre doing it doesnt make their antenna or their antenna provider a content provider. A lot of people pay for the area of service. Do the same thing all by themselves . Because if you dont have to buy a tv, a d. V. R. And an antenna which might cost you thousands of dollars. You want to look at programming selectively. You pay 8 a month. Its a rental service, Justice Ginsburg<\/a>. That kind change the copy right analysis. And just because you ran uipment does not transform that performance as a public performer. You initiate every set of signals that activate the setting in the program. If there are no furrer questions, well submit. Mr. Clement you have three minutes remaining ming first, i have to correct the fundamental difference. Mr. Fredrick said that if you only if youre thats just wrong. Here is a minimum royalty that every Cable Company<\/a> pays so that is just wrong. This is not a case as mr. 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