Capital accumulation in the middle. One of the important steps that your administration signed into law was just making it easier and more automatic to save in your 401k plan. Now the majority of Companies Default people into savings and default into auto escalation in saving policies. Next step is take nearly half the population that doesnt have savings accounts at work and give them access to automatic ira. Thats an idea that came out of the Heritage Foundation working together with brooking. Theres a lot we can do to focus on a positive story to create well. For most families, homes are principle source of wealth. We have a bipartisan efforts to put people in houses from the tax codes and regulatory. How do we go back look at housing policy in a more reasonable way . We want people in homes. Its an important asset for most americans. How do we rejuvenate the Housing Market without creating the same we had before . First of all we should be reforming Housing Finance system, should be phasing fannie mae and freddie mac out. That is a backstop after youve gone through a cushion of private capital. Its a backstop that is explicitly financed. As far as goals and affordable housing, those should be explicits. See where the money comes from and goes to. Youre not making it contingent liability. There was bipartisan enthusiasm in the Senate Banking committee from johnson and crepo following up to do that a. There was a bipartisan lack of enthusiasm to take that idea to the senate floor. You had a good start there. It would have would still be i think the basis of where were going in the future getting there sooner would create a lot more certainty. Do you think we can get freddie mac and fannie mae in 2015 . I have a hard enough time predicting the economy. Im not going to predict congress. It would be good to. Theres a core bipartisan proposal. A lot of challenges. A lot of that is because youre taking cost currently impolice impoli as impolice it. Mike negotiates the tpp asia and t tip trade authority. Is the white house fully behind policies . Is that something you think you can get done next year . Is there a near term macro boost if you can get these done . Were absolutely behind them. Theres probably short term mac co boosts. The main argument is medium and long term structural adding to our potential growth rate. We can argue short run long run either way its good. Im confident that its something we can get through congress. Every president has needed trade Promotion Authority has gotten it. Right now theres an open question. Ambassador froeman wrote about this few days ago about the japanese commitment to types of Structural Reforms. They enter tpp they were enthusiastic making sure we see the follow through we need to to conclude a deal. The one thing we dont want to do is lower our standards, narrow the range just to get something done. This is an ambitious agreement, one if not the most ambitious weve negotiated and cant think of a better person to do it than mike. Is the issue of inequality, challenge of income create obstacle to getting trade deals done . Has u. S. Support for free trade, has that now diminished because of Economic Trends weve been talking about . I think it has but hasnt diminished to the point it would threaten getting something done. Ive talked to senators who considered themselves life long free traders and are getting more skeptical. You see leading Academic Research from researchers at mit and elsewhere who are finding that trade with china really did play a big role in the reduction manufacturing jobs since the year 2000. We have to be quite frank about that. I also think this is something i explain to progressive friends. We have to distinguish between globalization which is a phenomenon and particular agreements. We have high standards, high environmental standards, race to the top. In that way, they actually help deal with the challenges people face. That can be confusing. Thats a difficult message to get across. You saw the governor on the stage. Before he became head, he was ibf. If you google financial globization and find work hes done years ago. Were doing work of our own. Its caught up in the globization debate. Its seen as bad, a negative force. How do you think about financial globization given the flows since the crisis and has it returned to precrisis levels . I think the right question is how do you best take advantage of those financial globalization and flows . In many ways its been a good thing. A lot of flows we used to have were aid. They were replaced by Foreign Direct Investment. It increases productivity growth. Its been a period last several decades of enormous tushs lens from crisis to crisis. Its been a period when you take those crises, average growth rates have been high. If you were in those countries youd rather that i canning the growth rate for 1960 from 2010. The question is what you can do to have the Growth Without the crises. Theres some types of steps. In some ways you can look at places like imf. Thinking has evolved from completely free Capital Movement to understanding it. In some circumstances, some c s constraints can be stabling. The other idea is leverage. If you look at the u. S. Economy in the 1980s, debt was 150 . 1990s, 250 . Up to precrisis as high as 350 . We had a long era in the United States of good solid growth. It came at the expense of higher leverage. I think martins book hits on this. We have a credit bubble thats always rashing up. Can we live without leverage . What is that going to feel like . Will the political economy allow the u. S. Economy to grow 22. 5 in a non leveraged environment . We have seen deleveraging our debt to gdp that has fallen from the high. Its still well above what it was 15 to 20 years ago. My guess is its going to continue to rise. Youd like to see it rise at a slower pace and see it matched by the asset side of the balance sheet. Theres no question that leverage a lot of you know, n create the combination of risks that made this crisis so much worse than the Economic Situation that the country faces in 2001. There you saw a broad burst of the stock market bubble. You didnt have leverage as the extra ingredient. And it resulted in lower consumption growth spread across the board, lower investment growth, and a relatively shallow recession. Lemplg can be much more toxic. Thats why trying to deal with it at the household level, the corporate level. We have a tax rate on an integrated basis minus 5 , on equityfinanced investment its 30 . That disparity is the largest of any country in the world. Its inefficient tax policy. We should move closer to equalizing those so at least you dont have taxfueled leverage. You mentioned investment, corporate Balance Sheets are incredibly strong in the u. S. , another positive aspect. Theyre flush with cash. Why dont we see more domestic investment . Its certainly the case that investment hasnt been the shining bright spot we might have hoped. It has picked up. If you look at investment growth in the last four quarters its been faster than it was in the eight quarters before that. Its part of whats sped up our Overall Economic growth. I think an oldfashioned accelerator model, frankly, enplains a lot of it, which is your investment doesnt depend on your cash flow or cost ofal but the demand youre facinfaci and the biggest factor in growth is consumer spending. As consumers spend more, businesses will see more reason to investment and well see more investment. Theres probably other factors. U uncertainty im sure is one of them and hopefully were bringing that down. Were going to turn to the audience for some questions. Let me just ask you about the external environment. Lots of focus on europe in the last 48 hours, germany in particular, but but there is the potential of a third recession in europe in this cycle. Is it something you worry about and worry about in the west wing . Anytime the imf tells you theres a 40 chance of a recession in a Major Economic area, in this case the eurozone, you have to Pay Attention to that. Thats an unacceptably high risk for a critical part of the world to face. And theres tools. Most, you know, structural forums can be part of that equation, but most of the dials you have, if you want to take that percentage, which the imf puts at 40 and bring it down, most of those tools are aggregate demand, and thats Monetary Policy. Youve seen them be very creative about it. The good news on fiscal policy is countries are contracting less quickly next year and the year after. The bad news is that the countries are contracting next year and the year after. And just textbook economics would give you a very different answer to, that especially in the types of countries that have fiscal space, especially in the types of countries that are beyond what, you know, the European Commission worries about in terms of current account surpluses and those types of imbalances. Any of those countries have names youd like to mention . Certainly i would observe that germany has the largest current account surplus in the world. It has an economy that has had a string of weaker data and certainly would benefit enormously from fiscal investment in areas like infrastructure in a way that would benefit germany and its partners. I think theyve heard that from a variety of voices over the last few days. Lets turn to the audience and get a couple questions. Right down here. Near the front. On the inequality topic, you talked about education. And ive seen a lot of innovation in things that seem to be kind of starting to get figured out on the College Readiness piece, but fundamentally i guess about 75 of the population wont go to college. Im wondering if theres any innovative thinking or examples around the world or things youve been thinking about for the broader population as it relates to workforce readiness, training, and helping there. Yep. We actually are getting a higher fraction into college now, but youre certainly right naps not the answer for everyone. Thats not the universal solution. I think Community College is a place where we actually put some of the First Federal investments. And a lot of those investments were designed to catalyze partnerships of local businesses, local Community Colleges, nonprofits to train people in a way that could more directly link them into jobs. I think the Training System as a whole is really critical. The important thing to understand in the Training System as a whole and im going to get these numbers wrong but its going to convey the right impression we spend about 10 billion a year, the federal government, on training, businesses spend 500 billion a year. So were a tiny piece of the overall equation. Were much smaller as a share of gdp than most other or maybe this any other oecd countries. So we can improve our federal training, but, you know, a lot of what we need to do is figure out how to use the resources we have to help leverage, catalyze, convene more, for example, demanddriven training by the private sector by Community Colleges that have other sources of funding. If you had a plumber or electrician at your house recently you know those are good, highpaying jobs. Right in here. Thank you. I come from india. Were very interesting to read a lot of media on the grade in u. S. On the future of u. S. And i dont know whether you have a policy take on that or could you make any comment. The credit agencies globally in many other countries are so, when we listen to whats the debate in u. S. , should we change our policies in other parts of the world, particularly for india . So anything youd like to share . My first e job in washington was at the usxm bank. I think they play an Important Role in the economy. What do you think . I didnt know you worked there, but im not surprised to hear you think that. I think they play an Important Role in the economy pip think its frankly shocking that theres a large faction that wants to abdicate and a very Cost Effective way to promote american exports as well as to help our companies and countries around the world. I think youre certainly right, its turned into quite a big debate and quite a flashpoint. We were able to temporarily extend it. Im quite confident were going to be able to extend it and that cooler heads and rationality is going to prevail on the issue. Great. Right here, please. Then well come back over here. Thanks. Assuming that congress is not going to approve more money for a boost in ift, is there any sort of workaround for the administration either to spend other money or to catalyze infrastructure through some sort of incentives in the private sector. Right. We cant spend money unless Congress Authorizes us to spend that money. So theres no dollars that we can put into anything without that. There are certain things we can do, for example, trying to, for example, speed up the permitting process on infrastructure. Its something weve done with a number of demonstrations. Were taking the lessons we learned from that and applying it more globally. Were trying to do what we can to attract and interest private investors in the United States. The treasury had a conference on this recently, a lot of highlevel investors there to talk about infrastructure and what the barriers are. Weve set something up at the department of transportation to try to create different types of model contracts and other instruments to help with Public Private partnerships and to help both educate states and localities about many of the benefits of them but also investors and facilitate some of that. So were trying to do what we can, but i think we have to be realistic that the most efficient thing the federal government can do is borrow at 2. 3 and invest in infrastructure and we need the permission of congress to do that. The second best thing we can do is a lot of it is at state and local level in terms of whether or not you can have these types of p3s. Certain amount of leverage we have. You mention infrastructure, which makes me think of energy. Last month ive been in mexico and canada, mexico, because the constitution changes, incredible optimism about the Energy Sector there for more exploration and production. We see in canada also enormous reserves, having to challenge how theyre getting it out, going west or east because they cant come south. Why cant we have an integrated Energy Network or infrastructure in north america . Because potentially north america could be Energy Independent. I know weve been saying since richard nixon, but there really is the capacity given Unconventional Oil and gas in this country and whats going on in mexico and canada to have an Energy Independent north america. Were getting a lot closer. Were importing 12 Million Barrels a day. In 2006 people thought that was going to rise. Its fallen to 7 Million Barrels a day and thats partly that were producing more, partly that we are consuming less. Under nafta, we have free trade in energy with mexico and canada, so we already have quite a lot of energy integration. Mexicos Structural Reforms and their opening up of the Energy Sector are i think an important reason why. If you look at this, they downgraded the growth rate of pretty much every major emerging economy in the world relative to what they thought a few years ago except mexico, which got the lucky distinction of having the same growth rate that the imf had projected a couple years ago. So i think youll see more integration, but, you know, you didnt mention any particular pipelines, you know, for certain things. We have to look at the question of what it does to carbon emissions, for example. What about expormts of energy for the u. S. . Gas, i know theres enormous interest in japan to buy u. S. L g. Theyre buying from other places, qataris, australia. Where is the west wing with respect to Energy Exports . When it comes gas and oil are under different statutes. With gas it is a casebycase process. We have to look at what it means for our economy what it means for our environment, what it means for our National Security. And youve seen us approve permit after permit after permit. I think weve now approved permits equal to Something Like 30 of the worlds lng to be exported from the United States. Weve expedited that process. Theres two steps in it that we basically collapsed down to one. As i said, National Security is a part of that process. And the National Security considerations frankly are different now than they were a year ago. Oil falls under a different statute. Its something that, you know, weve take an look at and will continue looking at. Great. More questions from the audience . Well, let me ask you i know youre not in the Political Part of the west wing, but if you look at the polling on the economy, despite a recovery, despite a falling Unemployment Rate, the president is not getting much credit. I know what that feels like from other administrations. Why do you think that is . Why isnt a better economy showing u