Welcome
Will Marshall, President, Progressive Policy Institute

Speakers
Gov. Tom Vilsack (D-IA), Co-Chair, Independent Taskforce for Climate Change
Rodney Slater, Former Secretary of Transportation
David Osborne, Senior Partner, Public Strategies Group
Doug Ross, Superintendent, University Preparatory Academy, Former Secretary of Labor
Panel Q & A

WILL MARSHALL: My name is Will Marshall. I'm president of the Progressive Policy Institute and I want to welcome you back after a pretty brief lunch. You know, the French have pioneered the 35-hour work-week; it looks like the DLC is going in the other direction, engineering the 30-minute lunch. Sorry about that, but we're on a fierce schedule here and we want to march you through, you know, a very fine program today. And we don't have a minute to waste, so thanks for coming back. And we hope to give you something to digest here, along with your lunch, in the way of big ideas that we think should be part of the mandate for governing that our party and our nominee needs to win in this election year.

You know, our friend Mark Warner of Virginia, who I hope will be the next senator from Virginia, likes to say that when he was elected governor he took one look at the deficit his predecessor had left him and said, I demand a recount. And I think, you know -- I think that Senator Obama, when he wins, may entertain that thought, if only for a moment, because he's going to inherit a real mess. Just think about it: a weak, debt-ridden economy facing the double jeopardy of a recession, and rising inflation such as we possibly haven't seen for two decades in this country; not one but two unfinished wars, runaway healthcare costs, a retrograde energy policy that we talked about a lot here. I think it's really important that our next president not become completely preoccupied with cleaning up after the elephant. You know, this president has got to find space and room to advance a progressive reform agenda, aimed at restoring public confidence in our government again, making our political system work.

You know, as an organization dedicated to ideas and problem-solving, the DLC has long called for change in the tone in Washington, and that's why we welcome Senator Obama's call to rise above the almost pathological polarization we've seen in Washington in the last decade, a polarization that's made our politics dysfunctional and kept us from solving our common problems. But obviously, the task for forward goes well beyond changing the tone and changing rhetoric; we need a deep, substantive policy change in our country to deal with the huge backlog of problems that have accumulated over the last eight years and, in many respects, gotten worse. And change, on the scale that we need, doesn't come easily. It's a truism in politics that the bigger the change, the greater the resistance from entrenched interests.

And that's why I think it's going to take a real clear and specific mandate from the American people, for our party and our nominee, to be able to force Washington to change. I don't think it's all going to be a matter of sweet murmurings into the ears of the special interests and the forces of inertia in Washington. It's going to have to be real, sustained public pressure. And that's why this party needs to lay out a specific agenda for progressive reform between now and November. And what we want to do is talk about just four of the items on that agenda. There are going to be a lot more, but want to dwell on four here: energy and climate security, which we talked a lot about; transportation and modernizing America's infrastructure, which we haven't talked nearly enough about; controlling healthcare costs and fixing our -- and modernizing our school systems, bringing them into the 21st century. And we have a wonderful panel of people to do that.

Just before I introduce them let me say this, that, you know, the Progressive Policy Institute's job is to try to develop this agenda for progressive reform. And we're going to, in the fall, start issuing a lot of short memos to the next president that we think will offer lots of big ideas. And I hope to involve some of the people you see sitting up here in this project, and hope that by Election Day we'll have a whole book of big policy ideas to offer our nominee as he -- and we hope a larger congressional majority settle into the really hard work, which is governing effectively.

And when we developed these ideas, you know, we try not just to sing to the choir, to the true believers, to our good core Democrats, as important as they're going to be in this election. We're also aiming our analysis and ideas strategically at the persuadable voters in the broad center of the political spectrum, who hold the balance of power in this and every election. It's really important, I think, for us to show Democrats that we're not just engaged in a zero-sum struggle with the Republican Party for political power and control. And, you know, that we understand that to win elections, we have to win arguments about the best ways to solve the nation's problems.

You know, one of the great strokes of good fortune I think we enjoy now is that the Republican ascendancy that we saw in this country really since the late '60s, with the Reagan-Nixon years in the late '60s, seem to be melting down. How else can you explain someone like John McCain getting the Republican nomination? And that creates a rare opportunity for Democrats to build and sustain a new progressive majority and not just win elections but perhaps entertain the idea of a realignment in American politics. And for that, we really do need a reform agenda of radical pragmatism that's aimed at restoring public confidence in the problem-solving capacities of our political system in government. And that's what this organization has always been about and what the people you're about to hear from are about.

So without further ado, let me introduce our speakers. We have some great friends and long-time leaders and intellectual collaborators with DLC and PPI. First is Governor Tom Vilsack who, as you all know, was a chairman of this organization between 2005 and 2007. He is now an attorney with Dorsey and Whitney, which is a Minneapolis-based law firm. But we all know him -- his claim to fame, from our point of view, is his wonderful tenure as governor of Iowa, during which Iowa became one of the fastest growing states in the nation and had a roaring economy. And, belying the kind of rustic image we have of the state, Iowa really was a leader in life sciences and financial services that advanced manufacturing as well as advanced agriculture and biofuels.

He's also the co-chair with George Pataki, the former governor of New York, of the Independent Taskforce for Climate Change, which the Council on Foreign Relations organized. I really recommend this report to you. I read it the other day and it's a terrific statement of the urgency of climate change and dealing with it now, and beneath not only for a cap-and-trade system but for America to reassert its global leadership in fighting climate change because without us in the game, this is not a problem that the world is going to be able to solve. So we're delighted to be able to welcome our former chairman back. And let me go ahead and introduce everybody. I'm going to ask you all to speak.

Next is our great friend Rodney Slater. I think we all remember that Rodney was -- became the first African-American director of the Federal Highway Administration during President Clinton's first term, and was subsequently appointed in 1997 U.S. secretary of transportation. He championed legislation to increase investment in surface transportation, and provide safety and security in aviation. He was involved in the negotiations of dozens of open skies agreements with other countries around the world, and now he's with Patton Boggs, where he specializes in transportation infrastructure.

And, you know, some questions have been posed today about, you know, how are we going to stimulate the American economy? Certainly, a large part of that answer has to be a large national project of modernizing our infrastructure, particularly our transportation infrastructure, make it more productive but also building more of it and different kinds; you know, rail, roads, everything that we need. We need a balanced portfolio of transportation just as we do in clean energy. And you know, when we invest in public goods as Adams -- you know, we go back 200 years, everybody -- you know, economists have always understood that the government has to make investments in public goods to have a strong economy. We've stopped doing that in this country. But when we do that we not only create good jobs here, but we create jobs that, you know, can't be off-shores. This is a terribly important priority and we're very lucky to have Rodney here to talk to us about it.

Then, I want to introduce two fellow travelers for the DLC and the Progressive Policy Institute. First, David Osborne is a longtime intellectual contributor to all the work that we've done. We've ripped him off shamelessly over the decades. David Osborne, as I think you all remember, wrote the book, literally, on reinventing government back in the early '90s. It was so influential in the Clinton administration and setting the course for the re-go effort there. He is now senior partner of Public Strategies Group; it's a consulting firm that helps public organizations improve their performance -- all through several books: "Banishing Bureaucracy: The Five Strategies for Reinventing Government." He was a senior advisor to Vice President Gore's re-go taskforce. He was the author of the national performance review report, which has been called by Time Magazine the most readable federal document in memory, but that's a pretty low bar there. But you know, but it really was a great thing.

But David has turned his very prodigious and creative mind now to what I think is the biggest economic problem, biggest long-term economic problem facing our country, which is the unsustainable growth of healthcare costs. It's not just about premiums are going up, although that's bad. It's not just about companies. Our automakers now think that they're in the business of providing health care and they just sell cars on the sides; they raise the funds to meet their healthcare obligations. It's not just the competitive burdens that high healthcare costs impose on American business, it's also the demographic way that we're about to get America's -- us, the boomers, retire and that's going to create an incredible crush and squeeze on the federal budget, that threatens to push out spending for all the priorities that progressives care about if we don't get this under control. I can't, you know, overstress the importance of getting healthcare costs under control, as we do with -- Governor Bredesen talked about, which is finally joining the modern world and creating a universal healthcare system that leaves no one out.

And last, but hardly least, is our good friend Doug Ross. Doug is another veteran of the DLC long march campaign. He has been an intellectual architect of our movement from the beginning. He's a former Michigan state senator. He's a state commerce secretary in Michigan, assistant secretary of labor in the Clinton administration, and someone who doesn't -- you know, and I hate this cliché about walking the walk and talking the talk, but Doug really does it. Not only is he a new Democrat thinker of note, but he really tries to take these ideas and translate them into reality.

And what he's done recently, his latest venture has been to start a charter public school in Detroit; he started it in 2000. And this school's goal was to design a general admissions public school that could graduate a low-income, African-American student body at the same rate as the most affluent suburban high schools surrounding Detroit. Now, that's a high bar. As somebody involved in education reform in Washington, D.C., I know that that's setting the bar very high, a very ambitious target. And Doug undertook to do it with a budget that was lower than that of schools in Detroit, in the traditional school system. He's going to tell us about it, but his first two senior classes in 2007 and 2008 reported graduation rates of 95 percent and 98 percent, respectively. Let's hear it -- (applause). In this -- you know, in cities where we're lucky if we see half the students graduating from high school and going on to college. So we have a murderer's row of really creative thinkers and great public leaders in our country. So without further ado, Governor Vilsack.

(Applause.) (Back to the table of contents.)

TOM VILSACK: Will, thanks very much. And I certainly want to thank you for a lifetime of dedication to ideas and concepts that have made governing much easier for those of us who are open to new ideas. And it is a distinguished panel that I'm part of today. Rodney Slater was someone who I worked with when I was governor and certainly appreciated his understanding of the important role that transportation plays in building the economy. David Osborne certainly helped us redesign government in Iowa, and I would say for all of you who are interested in health care, he has a paper out that is worth reading and adopting, in terms of healthcare policy at the state and local level. And Doug, it's good to see you again; certainly, education is at the core of all of what we have to do in terms of progressive ideas.

But I am here today to tell you that all of what they're going to tell you is totally irrelevant, that my presentation is the only one that matters. And the reason I say that, with almost some sincerity, Al From, is because I think climate change is an answer to a lot of the problems that we've discussed here today. Folks have talked about the need to build a growing economy, the need to rebuild the middle class, opportunities to reclaim moral leadership for the country, the opportunity to reduce healthcare costs, the opportunity to invest in infrastructure, to change the focus and direction of education; all of that, I would submit to you, can be tied to an aggressive, comprehensive effort, by this country, to take the climate change issue and to reclaim it as an issue to rebuild an American economy that allows us to live up to our moral responsibilities here and around the world.

I believe climate change is real, and I think the consequences of ignoring it will be extraordinarily expensive and will threaten all of us. It is difficult to talk about climate change because it's not the problem today, but we are beginning to see signs of it in the weather patterns that are affecting our country. The solution is going to be tied to a substantial reduction in greenhouse gases by almost 80 percent in this country, by 1990 levels. That is a significant commitment that we are going to make if we are to reach a global reduction of 50 percent by 2050.

It's going to take a combination of markets and mandates. Will made a reference briefly to a cap-and-trade system, and there's no question that that's going to be part of it. We have to put a price on carbon and when you do, whether you're limited to our companies or you're limited to energy-intensive industries, or you do it economy-wide, there are significant policy decisions that will be made by the people in this room about the structure and the implementation of the cap-and-trade system. But it will impact virtually everything we do in this country. It is a very significant, important first step in this process, to put a price on carbon.

We're also going to have to take a look at mandating reductions, so that we can tell people to focus on this issue in a long-term and meaningful way. Now, you may say well, it's -- that's a long way out, let's focus on health care, let's focus on education, let's focus on infrastructure. Why should we focus on this issue? There are a lot of pressure points on this issue. First and foremost, the international community is far ahead of the United States in this area, far ahead. I was over in London talking about this issue the other day, and someone from London basically recognized that when you establish a cap-and-trade system, you create a financial market that will the be the largest market of its kind ever in the history of humankind. Eventually, when it becomes a global market it could be as much as a $2 trillion market, and Europe wants to control that market. And the United States, which has been the financial center of so many markets, will lose that opportunity unless we embrace it.

There is the regulatory pressure from suits brought by states against the EPA to regulate tailpipe emissions. When the EPA ultimately decides this issue, as it's now required to do by the Supreme Court, it will not just regulate tailpipe emissions; it will be, by the very nature of their decision, regulating every statutory emission point, which means most factories and industries in this country, impacting every city and state representative. And the levels of regulation that will be implied will be fairly significant and will be a significant burden on industry, unless we address it proactively.

There are court suits. One specifically in Alaska focused on a power company based on conspiracy and nuisance, which is driving us to a point where we have to resolve intake action. Cities and states have been at the cutting edge of this: California, with their major initiative; the Northeastern states, with their cap-and-trade system; the Midwestern states, with their focus on renewable energy. But we can't have 50 different policies. We need a national policy.

And rising energy costs, obviously, are now focusing people's attention. If we think oil is expensive today, wait a few years. Fifteen of the 23 oil-producing countries in the world peaked in their production. The oil that we will have in the future, more expensive to extract, and while there is less of it, there is going to be a greater demand for it as China and India and other developing nations improve their economy and literally, in a couple of decades, double the number of cars and vehicles in the world fleet. So all of these pressure points are suggesting that it is time for action.

This is the greatest challenge economically this country has ever faced. Make no mistake about it. It is the greatest challenge we have ever faced. Just to give you a sense of this, if you took climate change and tried to relate it to something that we all understand, which is productivity, Kinsey just put a report out that said, if you compared it to productivity, labor productivity, and the increases that we saw in productivity as a result of improvements in labor, if you created a carbon productivity index, you would find that, for every $740 of gross domestic product worldwide, we are essentially emitting a ton of CO2 or CO2 equivalents.

In order for us to get to a point where we are in a position where the atmosphere is stabilized, we'd have to increase that $740 number to $7,300 over time. It's been done before. During the Industrial Age, we saw labor productivity increase tenfold. But it was done in 125 years and we have a little over four decades to do it. This is the single most significant challenge we have ever faced.

We have to reduce 27 billion metric tons. To give you a sense of that, that would limit each one of you in this room to six kilograms of carbon emissions a day, which would allow you, today, to do one, but only one, of the following things: You could consume two meals or you could buy two t-shirts manufactured someplace else, but you couldn't actually drive to get them; you'd have to have them delivered to you. You could drive to work or you could put your air conditioning on for somewhere between 10 and 12 hours. One of those four and that's all you could do -- significant challenge.

Three basic strategies that policy-makers need to focus on in embracing this challenge. You all know them: greater efficiencies, which is going to require new standards for appliances; building codes that cities and communities must look at to encourage green development; better land-use planning; transportation systems which have to be focused on more mass transit; incentives in terms of property-tax relief; new financing mechanisms in terms of mortgages with interest rates that might be less for green construction; the purchasing power of government being used to purchase green; increased public investment in R&D.

On the renewables side, Governor Machin (sp) mentioned some of the renewables that we have to obviously expand. There have to be incentives, but there also has to be a new regulatory structure, a new rate structure that gives power companies the capacity and the ability to make the kinds of investments they're going to have to make to embrace renewables. We have to take a look at how we subsidize energy. And this may come as a surprise to some of the folks that were from the Midwest, but we need to phase out the subsidies that we currently have on some of our biofuels and redirect those resources into better research and development.

We need to take a look at the tariffs that currently exist that prohibit more efficient ethanol from coming into this country and therefore stifle innovation. We need to remove, over time, those tariffs. And then we need to redirect those resources in developing clean technologies. We need to figure out how to sequester coal and to store it not for a year, not for 10 years, but for 1,000 years. And we are still a ways away from that. And until we get to there, the hope of Governor Machin and others to expand the use of coal in this country will be very, very difficult environmentally.

And we need to rethink our position on nuclear energy. And we need to put research and development into how to more efficiently use nuclear energy and what we do about the waste product and how we fit this into a foreign policy that seeks to reduce the proliferation of nuclear weapons, not expand them.

You said this is extraordinarily expensive, extraordinarily big. Just so you have a sense of this, what we're talking about is putting about as much money towards this as we do today towards insurance, about 3 percent of gross domestic product. If we could find 3 percent of gross domestic product to put into this, we would create millions of new jobs and they would be jobs that would allow people to earn a decent living working with their hands and their head.

We would reduce the trade deficit. We would clearly have an impact on the budget. Asthma is one of the leading causes of healthcare-cost increases, would dramatically be reduced. And a major effort with presidential leadership would redirect the focus on our education system and put a greater emphasis on the need for avoiding dropouts, higher performance, not just math and science, but also the arts as well because we need a creative, innovative worker for America.

It would allow us to reclaim moral leadership around the world, which we have significantly squandered in the last eight years, not just because of our position on Iraq but our position on international agreements including Kyoto. All of this and much more would result, but it will require presidential leadership. And I believe that the Democrats have a nominee who is capable of inspiring us to take the steps necessary to effect change and to make the sacrifices that are involved in redirecting resources towards this effort.

I will just simply close by saying, every generation of Americans has an opportunity to make a fundamental difference and to write a chapter in our -- in the history of our great country. With the nomination of Senator Obama, we continue to write the chapter of my generation of expanding access to opportunity and the civil rights chapter of our great country. But you, the emerging leaders and the existing leaders of cities and states and counties, you have the capacity to accept the largest challenge we've ever faced and to lead the world to a better and brighter place.

And if that doesn't get you up in the morning, I'm not sure what will. Thank you.

(Applause.) (Back to the table of contents.)

RODNEY SLATER: First of all, we'd like to thank Governor Vilsack for those very poignant and sobering comments and also challenging comments. And for an organization like this, the DLC, it's not an organization to recoil in the face of a challenge. As a matter of fact, this is an organization that was borne out of a commitment to address some of the big challenges of the moment, the big challenges of the day. And, in that spirit, I'd like to commend the leadership of the DLC, Al From and our chairman, Harold Ford, and also Bruce Reed and Will Marshall. We thank you all for the wonderful job that you've made over the years and the job that you've put forth over the years. Also, to those of you who have come from across the country, traveling from near and far, we thank you for being here because you give spirit and energy and, yes, soul and passion to the work of the DLC. And we thank you for your participation.

We also thank you for your leadership on a daily basis as you carry out your responsibilities as elected officials, as community advocates and leaders, and as you serve in the private sector as well, and as you partner, public to private sector or private to public sector, we thank you for the spirit that brings us all together.

Let me also commend all who have appeared on the program up to this point because it has truly been a stimulating effort and endeavor. It is said that once the mind reaches forth to embrace a new idea, it can never, ever return to its former states. These sorts of conversations are oh so very important because they afford us the opportunity to listen to individuals committed to the hard work of the moment, individuals who are willing to tackle the difficult challenges of the moment. And I know that David and Doug, who will follow me, along with Governor Vilsack, have clearly put those kinds of issues on the table and will. And they will give us an opportunity to think with them as we struggle with them to try to find common ground and solutions for some of the challenges we face.

Let me also say that I was introduced to the DLC by President Clinton. And I recall how important this organization was for him over the years, when it gave him the opportunity again to come into the arena of debate and discussion and to bring ideas, but also to bring a listening ear and to thus leave from these sorts of conversations, conventions, with a better understanding of the challenges at hand and also with a renewed commitment to deal with those challenges on a daily basis. And so I acknowledge his role in bringing me to this wonderful organization and the time that we have enjoyed working with the organization over the years.

I also would like to acknowledge the role of Senator Clinton as she worked with the DLC over the last year or so in helping to lift up some of the important issues that would be important ideas for discussion during the primary season. And I think that that, frankly, gives us a wonderful platform on which to build from strength to strength as we come to the aid and assistance of our nominee today, Senator Barack Obama, and ensure him that he has not only the eloquence but also the substance to carry forth a powerful vision and message to capture the imagination of the American people in the general election and to ensure victory in November.

When it comes to transportation for me, it has always been more than concrete, asphalt, and steel. It is, in the words of Frost, "the two roads diverged in a yellow wood," and the life journey that we all take in our pursuit of happiness. It gives us access to jobs, access to education for our children as they pursue knowledge and understanding. It gives us access to markets around the world.

To come to a place like Chicago recalls for me, or brings to mind for me, many, many aspects of transportation that I think you may find interesting. First and foremost, this is a city of broad shoulders because of its magnificent transportation resources, not only the many interstates, but also O'Hare, oftentimes viewed as the busiest airport in the world. It was actually here that Churchill and Roosevelt would gather with those countries coming out of World War II and talk about the future of aviation and how it could be used not only in times of war, but how it could be used in times of peace to bring our world closer together.

I was pleased during my tenure as secretary to come back on the 55th anniversary of that historic meeting here and to talk again about Chicago as an important place to discuss aviation in the coming years and in the coming century. Also, I believe that when we think about high-speed rail opportunities in the future, there is no better place to talk about that than here. To be sure, we've got the Acela service in the Northeast corridor. But what about a significant high-speed rail service here in the middle of the country with Chicago as a hub -- (applause) -- with spokes out to Detroit and Cleveland and Gary and Milwaukee and other places far and near.

That is the kind of vision that we have to bring to this task for a couple of reasons, to not only enhance and improve the efficiency of our movement and the movement of goods, but to also ensure that transportation leaders exercise their responsibility and assume their role in helping, as noted by Governor Vilsack, the country come to grips with the climate change challenges we face.

Transportation plays a big role in dealing with this issue. And, look, we've got to deal with the burden of $145 barrels for a gallon of oil or $4-plus for a gallon of gasoline. The aviation industry is on the verge of, well, having to deal with gasoline prices or fuel prices that are the toughest and the largest expense that they have to deal with as they try to make their businesses run and as they try to make them profitable -- not labor costs, not healthcare costs, but gasoline costs. And those costs have doubled from this period last year. And so, many of those airlines, having fought through bankruptcy now find themselves having to deal with probably coming together in some kind of alliance or mergers just to survive -- and so, these fuel prices, again, affecting our transportation industry.

But a couple of other comments about transportation and then I'll close. It is not just one mode of transportation; it is the many, many modes of transportation coming together as one; not just highways, which dominated transportation philosophy and policy for so many, many years, but also aviation and rail and, as I've noted, transit, and looking at issues like transit-oriented development, where you're not just concerned about the line from point of origin to point of destination, but you're concerned about that entire corridor and the ability to build on that corridor multiuse attractions, be they places to live, but also places to shop and also places to entertain, to enjoy life. And if we do that, then we can minimize our dependence on the automobile.

And speaking of the automobile, I believe that there is an opportunity for the blue-collar jobs of the past to be green-color jobs in the future. And this brings me to that other transportation issue that comes to mind when I think about Chicago. You see, I'm from the heart of the delta. I'm from a place called Marion, Arkansas. It's in Robert E. Lee County. And Mayor Redus here knows my home area quite well. He actually is the mayor of Pine Bluff, the home of my wife.

And many, many years ago, there were those who had to leave that part of the country, Al, to travel along Highway 79 or Highway 61 or Highway 49 in pursuit of opportunity for themselves. You see, when they looked at those two roads that Frost talked about, they felt that they had to take a road less traveled by that would take them from their community rather than leave them with opportunity to move in and about their community.

And so, many of them made their way to Chicago. Many of them made their way to Detroit. Many of them made their way to these locations because they wanted to work in the manufacturing facilities that would build the cars of years past and even today and that would serve as an engine of opportunity and innovation for the creation of the middle class. And when you think about the automotive industry, that is the way to think about that industry, as an engine of progress for the creation of the middle class.

I don't believe that the best days of the big three are behind us. I think that the best days of the big three can be before us. But they have to lay claim to stepping forward and dealing with the challenges that Governor Vilsack has talked about. And many of them, as they deal with having to move from an SUV era so that they can actually build enough volume into the price of the vehicle so as to deal with the healthcare costs and the labor costs that they now have to turn to those smaller vehicles that will get better miles per gallon, that will also be fuel efficient in many, many ways, many of them hybrid vehicles, and many of them in the future fueled by fuel cells or by batteries.

This is the kind of opportunity that awaits us and these are the kinds of opportunities that can be created by an organization like the DLC engaging politicians of the day, reaching out to business leaders of the moment, business leaders of the day, working hand in hand to find those common sense solution and to find common ground. I believe, again, that our best days are yet ahead of us.

I believe that we have a good standard bearer in Barack Obama. But I'll tell you that we have to be that wind beneath his wings. For even though Jefferson was right that eloquence important -- eloquence important -- but truth sometimes needs more than eloquence to have its day. Truth needs the force of will, the dedication, and the resolve necessary to take an idea and to make it real. That's what this organization is all about. That's what the three governors before us here earlier today, that's what they're all about. That's what Governor Vilsack is all about. That's what Governor Richardson is all about. I'm pleased that that is also what we're all about as well.

Let me close with this. There was a story about a little boy who one day was walking along. And he happened to look down and he saw an ant that was positioning itself around a piece of bread. And the little boy said, this ant is going to push the bread. And the ant pushed and pushed but couldn't move the bread. And then the little boy watched as the ant walked to the side of the bread. And he said, oh, I have it now. This ant is going to shove the bread. And the ant shoved and shoved but couldn't move the bread. And then the little boy watched as the ant moved to the front of the bread. Oh, this is it. This ant that can move many times its own weight, that works while it is day because he knows -- or it knows -- that the night cometh when no one can work, is going to pull this bread. And the ant pulls and pulls but couldn't move the bread.

And note that I've said a piece of bread, not a crumb, because these big ideas and big challenges, they're not to be found on the periphery of life, but at its center. And they're not crumbs but they're the meat of life, the things that give sustenance to being. And this little boy wrestling with this reality realizing that in his own life, sometimes he had sought to move his dreams, realized that sometimes he had pushed it, sometimes he had shoved it, sometimes he had pulled it but was unable to move that dream. And unfortunately -- and Doug can talk about this maybe with some of his schoolchildren in years past not today -- he would walk away from that dream, from that opportunity.

But in this instance, fortunately, he had grappled with the question long enough that he had given the ant that had walked away an opportunity to come back. And as he looked up, he saw the ant coming back. But this time, the ant was not alone. This time, there was a lot of ants and they were coming toward the bread. And all of those ants, finding their individual places, circled the bread. And they moved the bread. And so it is with climate change, so it is with transportation, so it is with health care, and so it is with education.

And so it is with this organization that recognizes that once people of good will come together and their minds reach forth and embrace a new idea that they nor their minds can ever return, can ever return to the state before where they were willing to give up on the big dream or the bigger opportunity.

(Applause.) (Back to the table of contents.)

DAVID OSBORNE: It's really a pleasure for me to be here. Will, I want to thank you for inviting me to be part of this. I love the DLC. I've been friendly and involved in the DLC for almost 20 years. And this particular panel is a bit like old home week for me.

I first met Doug Ross in 1985 when he was commerce secretary in Michigan and I was writing a book called "Laboratories of Democracy." Doug was doing the most innovative stuff in the country on economic development. And I learned at his knee. And he's such an incredible American. I was lucky enough to become a good friend of his. And we later worked together, helping Governor Lawton Chiles in Florida reinvent government. And then worked together on workforce development reform when he was at the Labor Department under the Clinton administration.

I got to know Will in the late '80s. And with Will and Doug and Al From and Bruce Reed and Elaine Kamarck and a few other people, we spent a few years in 1990, '91 putting together a kind of intellectual scaffolding that helped Bill Clinton run for president and win that election.

And then, in 2001, I met Governor Vilsack. And he hired my company to help his state government. In fact, I remember flying into Des Moines the morning of 9/11/2001 for a big meeting with the governor. You can imagine that meeting didn't take place that day. But the governor provided such tremendous leadership to that state. And he asked my company to be the official reinvention partner of his administration. And together, over five years, we did some wonderful things. We saved the taxpayers of Iowa several hundred million dollars while improving the results the state government delivered.

So it's really an honor to be part of this group.

Now, my company, the Public Strategies Group, works with cities, states, counties, school districts, federal agencies, foreign governments, helping them deal with their challenges, helping them reinvent their bureaucratic organizations, become high-performing organizations. And what we've discovered in the last five years is that we can work real hard, as we did in Iowa, to improve the productivity of the public sector. But it's a race we're losing because healthcare costs are gobbling up budgets in every public organization in this country from the smallest school district to the federal government.

I just want to give you a couple of statistics. At the federal level, according to the Congressional Budget Office, the best study they've done on this, if you take current policy and current trends and you project into the future, right now, Medicare and Medicaid take 21 percent of federal revenues. In 15 years, they will take half of all federal revenues. And Social Security in interest will consume the other half. Now, that's not going to happen because we can't let it happen. But it just gives you a sense of what we're up against.

At the state level, the average state three years ago spent one third of its money on health care. The trends are that that's increasing at an 8 percent annual rate. And state revenues increase at a 6 percent annual rate. You do the math, as I did, and you discover that 10 years from today, health care will consume half of the average state budget. Education will get less; transportation will get less; corrections will get less; environmental protection will get less.

So we all have high hopes for universal health insurance. But the truth is, that goal is a bit of a mirage if we can't get control of healthcare costs. For the last 50 years, they have gone up an average of 10 percent a year. And if that continues, getting universal health insurance means incredible tax increases -- tax increases the American public has no stomach for. In fact, given fiscal realities at the federal level, saving Medicare and Medicaid as they now exist will require huge tax increases.

So universal access is critical, absolutely critical; but cost control is equally critical and quality is equally critical because we have big quality problems in our system. And in truth, high quality in health care is cheaper than low quality, because high quality means keeping people well, preventing disease. And that's a lot cheaper than treating it.

Now, I hope we get universal health insurance and health reform at the federal level. Senator Obama has a good plan. Senator Clinton has a good plan. Neither of them have a whole lot of cost control built in. And I was there in Washington in 1993 working for the president and vice president, and watched the last attempt at universal health insurance go down in flames. So I know that the 60 votes in the U.S. Senate is an incredibly high bar and it's going to be very difficult.

So I don't think states should wait. I think states can do this. I wrote a book. My first book was called "Laboratories of Democracy." I believe that often in the United States, states figure out how to solve big problems. Some state makes a breakthrough and the rest of us copy. And it ultimately gets to the federal level. Even if we get a federal bill, it's going to have to require a lot of collaboration with the states. Our healthcare marketplaces and regulation are very different from state to state.

So I don't think governors and legislators should wait for the federal government to act; I think they should start now. In fact, personally, I'm looking for a courageous governor and legislature who are willing to transform health care in their state. I've been studying the issue since I figured out that it was consuming public budgets for the last couple of years. And I think there are all kinds of things. It's a complex system. We have to do a lot.

But I think you can boil the big things down to five strategies. First, our leaders need to lead a massive campaign to maintain health by changing personal behavior, by encouraging healthy behavior. The most significant contribution to a state of a population's health is personal behavior: diet, exercise, smoking, drugs, all of those lifestyle things. If we can change them -- look what we did with smoking in our lifetimes. A lot more to do but we can change these things.

Second, Governor Bredesen talked about changing the economic incentives in the system. We need to replace our fee-for-service reimbursement system, which has all the wrong incentives, with managed competition between health plans that charge annual per-patient fees and pay providers not for procedure, procedure, procedure, but for cycles of care for medical conditions. I'll come back to that.

Third, we need either national or statewide interoperable electronic health record systems. You all know this. The Veterans Health Administration has proven the value. It now has the best electronic health record system in the world. Did this between about 1995 and 2005. And over those 10 years, partly -- not entirely but partly -- because of this system, cost-per-patient at the VHA stayed flat while they more than doubled in the private sector.

Fourth, we need new policies to encourage rational end-of-life care. You've all lost parents, I imagine many of you. You know what happens when somebody becomes very elderly, how we throw money at them in those last few years, last few months of life in a way that doesn't improve their quality of life, in a way they often don't want. But our medical system, in our medical system, the default is do everything you can. We need to change to a default that says, that is based on living wills that say don't do everything you can. Help someone die with dignity but don't waste money in those last few years of life. Big complex topic we have not even begun to address in this country, but it's important.

And fifth, we need to deal with medical malpractice. And the best proposal I've seen -- the one that excites me -- came right out of the Progressive Policy Institute, David Kendall. The idea of creating health courts modeled on the worker's compensation system would take a lot of the expense and a lot of the waste out of the way we deal with malpractice.

Now, I only have a few minutes today, so I'm going to only talk about the second strategy: changing the economic incentives, replacing fee-for-service payment with managed competition between health plans that charge annual per-patient fees and pay integrated delivery systems for cycles of care. Now, that's a huge mouthful, so let me break it out down. Fee-for-service reimbursement. It is the biggest driver of high costs and low quality that we have. If I'm a doctor, my incentive, if I want to make more money is to do more procedures because I get paid based on the number of procedures. If I mess up and my patient has to be readmitted to the hospital and I need to do more work, I make more money and the hospital makes more money -- crazy set of incentives.

What's worse, because doctors are trying to do the best -- most doctors are trying to do the best, but the problem at its worst is that knowing that the providers have an economic incentive to innovate, to figure out how to do fewer procedures and keep people healthier, how to prevent disease, how to develop new methods of treating people. Higher quality costs less, but there is no incentive to do it that way because if you do and you succeed, it means you do fewer procedures and you make less money in our current system.

There are some researchers at Dartmouth who have become famous, led by a guy named John Wennberg. They have done decades of research on the Medicare database, and they have proven that in regions that have more doctors, you get more procedures and more hospitalizations. And it's often twice as many from one region to another. And here's the kicker: You also get worse outcomes. More procedures, more hospitalizations, worse outcome. Wennberg says that he believes that one-third of the $2.1 trillion we spend every year on health care is wasted. We could -- with a better system with different incentives, we could get the same outcomes with one-third less money.

The second thing I talked about was integrated delivery systems. Fragmentation is a huge problem in our system. We have all of these different medical care providers and health plans, and as you know, all of the billing craziness that goes on creates an administrative overhead of 25 to 30 percent in our system. It's insane. It also leads patients to fall through the cracks. My wife was a physician. She worked for six years for one of the best HMOs in the country, Harvard Community Health Plan, then she went into private practice in a small group practice.

And after about six months she started saying, you know, I can't believe this. I refer somebody to a specialist and they just disappear. There's just no communication. Back in the HMO, we were always communicating with each other; we were tracking the patients; nothing fell through the cracks. We knew what drugs we were prescribing were drugs the specialist was prescribing. Nothing like that happens. People fall through the cracks all of the time in this -- in my current system.

Also, it produces enormous waste. One out of every five lab tests is done, it's repeated because the doctor who is dealing with the patient now doesn't have the old lab tests. One out of every seven hospital admissions is done for the same reason. So the solutions -- we need to shift from fee-for-service payment to pre-payment for cycles of care for medical conditions; in other words, pregnancy is a medical condition.

So one set fee for nine months of care for a pregnant woman and delivery dealing with all of the complications. One set fee for maybe two years or three years of diabetes -- care for a diabetic. One set fee for certain period of care for heart disease or a knee replacement in dealing with all of that complications that could arise.

If you fund health care that way, providers have a very powerful incentive to figure out how to provide that care in a better, cheaper way. If you're measuring outcomes, if you're buying based not just on price but also on outcomes, for quality -- and that is the stage where all of the states have got to measure the outcomes; it's got to make sure the data is out there, everybody has it; it's on the web. We know what providers produce what outcomes for what medical conditions. And providers have to compete based on that basis. And those choices are made in terms of value for money. That's not how we make our choices today.

Secondly, integrating, how do we integrate delivery systems? Well, Wennberg in his research say that regions dominated by integrated managed health plans have costs one-third lower than other regions because integrated systems can look at the full spectrum of care from diagnosis and prevention all the way through outpatient care, hospital care, and they can make the most rational economic decisions about how best to treat this patient, how to get the best outcome for the least amount of money. They also can make the most rational decisions about personnel, about how to use nurse practitioners and physicians' assistants, and midwives, all of the alternatives to more expensive physicians.

So we have to deal with that fragmentation by pushing towards integrated systems. And we need price and outcome competition at two levels. We need competition between health plans based on how much they charge per year for an individual or a family, and we need competition between providers, provider groups based on how much they charge for a cycle of care for that medical condition and what outcomes they produce.

How do we get there? Well, ideally -- ideally a state would just create a huge purchasing pool. They would put all of the citizens in it, and we would shift from an employer-based system to a tax-finance system. I won't go into why, but that is much more efficient, much more effective in the long run. Employer-based health care in a world where people are constantly changing jobs creates enormous problems. That's tough politically, as you know.

Wisconsin last year, a friend of mine named David Riemer who was a former budget director for Governor Doyle, almost got a bill through the state legislature, got it through this -- one version of it through the senate that would have done that. A wonderful bill, but it didn't make it through the house. It's a high political hurdle as you all know.

So the alternative is the state creating a pool that is big enough to have enough purchasing power to drive restructuring in the healthcare marketplace. I think that's about 30 percent based on our experience. The average state, if you take Medicaid, CHIP program, any other state health insurance programs, state employees and retirees, local government and education employees and retirees, put them into a pool, you've got 21 percent of the market in the average state. If you add an individual mandate, you're going to go up over 30 percent. If not that, you take companies that have big contracts with the state and require them to join the pool. Companies that get big tax incentives, require them to join the pool. Get to 30 percent and then you use managed competition to change the system. You do what Wisconsin pioneered with state employees, and this is where this Wisconsin bill came from.

In 2003, Wisconsin wanted to figure out how to lower its cost of state employed health insurance. So they looked at a bunch of private -- public and private employers like the CalPERS system, the California retirement system, the University of California, Hewlett Packard, Wells Fargo, Stanford University and some others, the way they did it and they copied it. They basically said, okay, we're going to ask health plans to compete every year. Give us their price for an individual and a family of four. And we're going to rank those health plans, those offers based on quality and price into three tiers.

Tier one is the high quality low-cost plans. Tier two is higher cost, lower quality, et cetera. Employees get to pick their plan. Tier one plans are the cheapest for them. They're almost free. But if their physician, their family doctor is not a tier one plan, they can go to a tier two or a tier three plan, they just have to pay a little more. That created incentive for the plans to compete based on price and quality. And of course most of the state employees picked tier one plans. In three years, it began to reshape 

Well, in Dade County, where that state capital is, 30 percent of the people in that market use state employees, in Dade County. So in three years, in that one county, the healthcare marketplace began to restructure. HMOs came in, medical groups began to combine and create more integrated systems, and the price went down. It became -- last year it was 14 percent below the state average for state employees, and 30 percent below the high-cost regions. That's why I believe that if you can get a pool representing 30 percent of the market, you can restructure the state marketplace because if health plans look at this, they want that 30 percent's big enough; they want that business. So if they have to change X, Y, and Z to get that business, they're going to change X, Y, and Z for their whole health plan, not just for 30 percent. So you're going to change the marketplace.

Now, in the process, the state's got to measure outcomes. It's got to publicize that. It's probably while it's developing that measurement system, wants to create incentives for those health plans to begin to purchase not on a fee-per-service basis, but on cycles of care for medical conditions. And once the outcome data is reliable and mature, I think the states should require purchasing based on cycles of care. The states can create other incentives in their ranking system to encourage things like case management, disease management, which have proven to lower costs; quality practices, evidence-based medicine.

We could even have the equivalent of sort of charter health plans for those who are really high-quality and low-cost, give them more flexibility on their state regulations. If we get to 30 percent the market will respond, then businesses will get very interested in joining and we could offer them two or three years of guaranteed prices to join the pool, gradually grow it. And I think once you get to maybe 50 percent of the state market, then that discussion about shifting to a tax finance system becomes much easier. So it's a path. It's a path to universal health insurance with the economic incentives that will drive that inflation rate down from 10 percent to, you know, maybe 3 or 4 percent a year, like the rest of the economy.

Is this managed care all over again? No, it's not. Under-managed care, we made a mistake. Most employers only gave employees one choice, one health plan, and employees didn't like that. We have to give people choices. We have to have a system that gives people choices.

Secondly, we didn't -- in the past, we haven't measured outcomes. We haven't funded providers based on cycles of care for medical conditions. That change will drive enormous innovation in this marketplace, and that innovation is what we need to make the system more productive.

Now, politically, these kinds of reforms are difficult. But if we don't do this, health care will continue its march, will continue to consume our public budgets. It will continue to hurt our citizens who have to pay for it, to hurt our businesses, making them uncompetitive in world markets, and to starve our cities, our counties, our school districts, our states, and our federal government. Our schools will decline, our transportation systems will decline, our public safety systems will decline, crime will get worse, quality of life will decline. That is not a future any of us applaud, so I think the time to begin is now. Thank you.

(Applause.) (Back to the table of contents.)

DOUG ROSS: Well, this is the audience I've been waiting for, for years: people who would wait for the last eight minutes of the last presentation on a two-day conference because either they so care about urban public education, which I hope is the reason, or their flights aren't still for a few hours and this is an air-conditioned place. But nonetheless, you're here. And I will try and reward your commitment with something that is hopefully useful and brief to the point.

The problem of American education particularly the education of poor kids is one we've been talking about for decades. What is so exciting and different now is we have solutions. Fareed Zakaria, in what I found an interesting book, "Post-American World," points out that the top two thirds of American schoolchildren actually are quite competitive on these international tests. It's our failure to adequately educate the remaining third that constitutes the principal economic challenge or a principal economic challenge confronting this country.

Now, but this bottom third consists largely of low-income African American and Latino kids living either in big cities, or in some cases in rural areas raises this challenge beyond economic. The fact that a mother's race and income remains the most powerful predictor of a child's academic performance is a moral affront to a nation that holds equal education opportunity as the path to the American dream for every child, no matter the circumstances they're born into. So education, poor kids, is the civil-rights issue of our time.

Now, at first blush, it seems like a pretty discouraging proposition. A year ago, New York City celebrated the rising of its graduation rate from 49 percent to 51 percent. In Detroit, my hometown, according to a Michigan state study recently, the graduation rate is 32 percent, 25 percent for boys. And virtually every big city education system in this country has numbers in the 40, 50 percent at best.

However -- and this is why I was so eager to come -- beneath these discouraging urban high school graduation rates, there is some remarkably hopeful news. A growing number of public general admission high schools in big cities across America have developed new school designs that produce high school graduation and college enrollment rates equal to those of affluent suburban schools. University prep charter school I helped start in Detroit eight years ago, as Will mentioned, graduated 95 percent of its students in June 2007 using this new National Governor's Association longitudinal measure, sent 91 of its graduates on to college or technical school. And even better news, those students are reenrolling for their second year of college at rates nearly double those expected for African-American students and above those of white students in Michigan.

But the really hopeful development is that I could take each of you in this room on a visit tomorrow to 50 other public general-admission high schools in places like LA, Houston, Boston, Chicago, New York, and Providence to schools that are achieving the same or better results than we did with their low-income African-American and Latino students. So despite all the analogies about landing a man on the moon, we know how to engage urban students at school, graduate from high school, send them on to post-secondary studies. In short, there is no longer any excuse for the continuing high dropout rates that are devastating every big city in America. We know how to solve this moral and economic problem.

So what's the secret? Well, it turns out there is no single design that works. But they all have the following in common, virtually. They have abandoned the big, standardized, anonymous, Henry-Ford-like assembly-line factory school. And they've done it because, particularly for poor children, it is now -- and has been for years -- completely obsolete. It's obsolete for a couple reasons.

One of the things virtually all these schools have discovered is that unlike the middle-class schools you may have gone to that assume that their only job was to provide you with subject-matter courses because you came to school motivated and ready to learn, these schools have all said the job of motivating children belongs to us. Kids come motivated? Great. We take full responsibility for their success, no excuses, no victims, our job.

They also in that context have to create culture. We've all learned that culture trumps curriculum. States can control curriculum because you can mandate it. But culture trumps curriculum. Creating an environment in which high expectation, hard work, aspiration, doing well are socially-valued and rewarded. The schools are also organized so they know how each and every student is doing academically and socially. If you can't know that some ninth-grade boy who reads at fifth-grade level is struggling and losing what little confidence he has left. Or a girl's mother has been killed in a drive-by shooting, you can't begin to expect to graduate those children, much less send them to college.

Now that's it. While there are lots of variation, these successful schools tend to hold these few strategies in common. I mean, if a past-middle-aged ex-politician can do it, it ain't rocket science. So what's keeping us then from getting on with the business of quickly and -- (inaudible) -- beginning to graduate at least 90 percent of all poor children in American from high school and sending at least 90 percent on to college and technical school?

Well, the good news for us in this room is the answer is politics. That's the thing we're probably best at. In my view, there are two major obstacles to abandoning these big factory schools and creating these much more effective motivation-building schools.

Number one, virtually all of these successful schools are managed by their principals and teachers. They hold themselves directly responsible for their students' success and have the power to alter curriculum and learning strategies as they see fit. In other words, they're site-managed. Reform means shifting power wholesale to the individual schools from the large central bureaucracies that direct every big-city school system. These bureaucracies refuse to give up control because they understand it means complicity in their own destruction. And who can blame them? Few of us start our call for resolution with our own letters of resignation. Power has to be taken from them politically.

And second, in virtually all of these successful urban schools, the principal formally or informally controls who works at the school. They hire and fire. On a formal district-wide basis, this means teachers' unions giving up seniority and bumping rights. Most union leaders just haven't been able to figure out the politics of how to do that. A Democratic president could broker a new education deal in which governors, teachers' unions, and the business community gang up on the urban school bureaucracies to transfer their power and resources to individual schools held accountable by state and federal governments. Unions would have to modify their teacher security protections as part of the deal in return for more money and school-level power. It's doable. But it's not easy.

So what we do know -- and there are still some things we don't -- we still don't graduate young people from all of these 90 schools who are academically fully competitive for college, college-ready, with kids coming out of the suburbs. That's the next challenge. We're making progress. We're not there yet. However, having said that, what we do know constitutes an enormous source of opportunity for American urban children. Now, we need to make sure they all get it. It's a great piece of work for an Obama first-term agenda. Thank you so much. Thank you, Al and Will and Bruce, for the chance to come and talk.

(Applause.) (Back to the table of contents.)

MR. MARSHALL: Thank you very much for the wonderful presentation -- very rich and very hopeful. And reminders that we're in the solution business. I think we've just heard several really fascinating pictures of how we can solve problems that until recently have seemed intractable. But I want to put a question to you, Governor Vilsack and Secretary Slater, about, you know, the changes of the wind.

But we don't -- the big question we don't know how is how much change are the American people really willing to embrace, particularly true when it comes to the issues that you all have talked about, because we just tried to move a cap-and-trade bill through Congress. It was a disappointing outcome and fell apart. And one of the reasons it did is the Republicans demagogued the issue so that if you put in a cap-and-trade system that you put a price on carbon, which everybody that looks at this for five seconds knows you have to do, but that this will jack up gas prices. Well, it won't in the near term, as I said, but at a time of $4-plus gas prices, it has a resonance, apparently, at least with Republican rank-and-file members.

So the question is this. You know, you said, Governor, and we certainly agree, that you've got to put a price on carbon. That means that those gas prices are going to stay somewhere higher than what we've expected. They have to be higher in order for the market to drive investment to the clean energy alternatives that we all want to see come along. You know, are the American people willing to accept the degree of sacrifice necessary to change the way we use energy in this society. I think it goes to the cars, you know, whether our consumers and the auto companies are really ready to make the kind of leaps necessary to bring the auto sector to clean car, clean fuel future.

MR. VILSACK: Will, I'll start to answer that question by relating a conversation I had with one of Tony Blair's advisors on the environment. He essentially said, you know, you folks in America have it all wrong. You think that the politics drives policies. That's not how we see things in the EU. He said, we believe that the culture drives the economics, the economics drives the politics, the politics ultimately gets into policy. So you've got to get the culture right. And I think that requires two things. I think first and foremost it requires presidential leadership. The next administration, in my view, needs to seize this opportunity in a comprehensive approach, and essentially, either the president or more likely the vice president basically be directed that this is their issue, that he or she is going to spend every waking minute on this issue trying to get it through the process.

And then secondly -- I mean, I think when you do that, you begin to educate the people of the country about the challenges we face and the circumstances. And then secondly, I think you have to reframe this. Invariably this discussion of climate change is always in the context of the environment, and I think it needs to be reframed as rebuilding the middle class, because if you do this right, it means investing in Rod's infrastructure, it means lowering healthcare cost, it means committing yourselves to education. It also means creating the kinds of jobs that can't be outsourced and that actually involve people making, constructing, and building. And that is precisely how you have a middle class.

The reason we have a shrinking middle class -- it's not rocket science. We're just not making, building, and constructing like we used to. This is an opportunity -- so you sell it as a way to rebuild economic opportunity and as a way of making the American dream more of a reality for all of the country. And I think if you do that, then you begin to get greater political acceptance. And I think you change the culture by saying this is what we're going to do for you.

And then you ask the American people, this is the challenge of our time; this is what we need to do for the next generation of Americans. This is what we need to do for our children and grandchildren. And I think that they will respond. I'm not being Pollyannaish about this; I saw it in my own state when we embraced the energy as an economic development resource. We saw our economy improve. We saw unemployment go down. We saw manufacturing actually increase, and we in the last 18 months in the state of Iowa have seen 20-percent increase in state revenues in part because we are creating new energy opportunities.

MR. SLATER: I would echo the governor's comments, and I would just take it even a bit farther to rural areas because I think when you're looking for the new fuels of the future, those fuels are to be found on farms and in rural areas across the country. They can come from, as you know, woodchips, switch grass, sugar, clearly corn. You've got the debate regarding corn and ethanol, but, still, with the farming community capable of growing more corn. You still had that as a source of energy.

And I do think the comment about viewing it as an economic opportunity is the way to approach it. Also, when it comes to retrofitting buildings, those buildings are in communities, and the people in those communities are the individuals who will have to do that work. And a lot of those individuals can go to the community college. Clearly some can go to four-year institutions and play a role maybe at a higher level. But there will be plenty of jobs all along the spectrum for individuals in communities all across the country.

I also think that there are ways for the domestic auto industry here to work with, frankly, automakers across the globe and clearly those who are building facilities here. I mean, many of these vehicles being built now by Toyota and Honda and Nissan and the like are being built in the U.S. And they are creating significant zones of auto manufacturing outside of the normal big-three auto regions. I know that the governor earlier from West Virginia was talking about the significance of the auto industry in West Virginia. Well, that's the case, frankly, across the Midwest and throughout the South now. And I think that that again bodes well for us being able to find these solutions with the brain power, with the muscle here in the U.S.

So I echo the governor's comments and believe that transportation leaders can be front and center in this process.

MR. MARSHALL: Thanks. I've gather we've got some time for questions and comments. One of the question or comments -- yes, please.

Q: This is regarding health care. I'm Rebecca Chavez-Houck. I'm a state representative from Salt Lake City, Utah. And you spoke of end-of-life care and some difficult ethical decisions that we're going to have to make as a country and as a community. And I'm looking at the beginning of life. I'm looking at the million-dollar babies, the one that provide -- impact our care because we're able to sustain life at an earlier and earlier age. Also, multiple birth and fertility issues. Can you address kind of how some of those ethical issues plus increasing technology in the area of medical care are making decisions more difficult for us to make and how that is going to cost us.

MR. VILSACK: Well, I can just echo your point that technology is driving in that direction and driving costs up in that way. I think -- I don't think it's very fruitful to say that we could somehow draw a line and say that babies born before 26 weeks or whatever are not viable. So I think we need to invest heavily in prevention. I mean, there are programs around the country and the world which work with pregnant mothers, particularly at-risk, if you will, pregnant mothers, to help them lead the kind of lifestyle that will avoid early delivery and create a healthy baby. And I think that's where we need to put our investment.

MR. MARSHALL: Over there.

Q: David, you don't know this, but you've been a mentor of mine for many years from things that I have read. But, you know, whether you believe in big government or small government, whether you're a liberal or a conservative, whether it's health care or transportation or education, or climate change, it seems to me if we focus on performance in government at any level, we're get better government at less cost. What role should the new president, Barack Obama, play in providing that kind of leadership in measuring performance, evaluating performance, and talk about outcomes in all areas?

MR. VILSACK: Well, I think he can play a huge role. I agree with you: If we can focus everything on results, and measure them and create consequences for them, make results matter by creating rewards for organizations that deliver results and negative consequences for organizations that don't, we can change the world.

I would start with the budget, the federal budget. President Obama ought to put together the federal budget the way Governor Vilsack put together the Iowa budget, which is define -- start by defining the result citizens want, then make your agencies compete with proposals to produce those results, rank those offers based on how cost-effective you think they will be in producing those results, buy from the top, and draw a line when you run out of money, and don't buy the low-value programs. That's how they do it in Iowa, that's how they do it in Washington state, that is how they do it in now 15 or 20 different jurisdictions around the country. We call it budgeting for outcomes.

I'd also -- I have this pet idea. That British I have a wonderful thing called the audit commission, and it started in the early 1980s. And the first director was from McKinsey, so he had that kind of McKinsey mindset. And they measure -- they force local governments and healthcare providers and schools to measure performance in a very thorough way and report it. And then this audit commission for local governments publishes annually comparisons on key services.

So if you live in Manchester, you get compare to other big cities. If you live in a small town, you get compare to other small towns in your region. And they publish this data in bar graphs, so it's very visual. You can see where your town or city falls, how close to the top it is, how close to the bottom it is. If you're near the bottom, it's very embarrassing. If you've made their top, it's great; you gets lots of support. And the newspapers love comparisons, so they publish these things. You'll find tabloids with two pages of bar graphs about the local governments and it's very motivating.

Well, I'd like to see us do the same thing. I would like to see the U.S. government require this kind of measurement and reporting, and then publish the results to drive improvement. I think we need to revitalize performance measurement and management within the federal government as well. In 1992, we passed the -- I'm sorry, 1993, we passed the government performance and results act, which was written by John Mercer, the former mayor of Sunnyvale who worked for Senator Roth, and passed because Senator Clinton put his weight behind it. But, you know, we have now have measurement but we don't use it, we don't use it for management, and we have a civil service system that still awards how long you sit in the seat, not how well your organization performs, and we need to take the next steps on that, which lots of places like Sunnyvale and many others have figured out but we don't do yet at the federal government.

So I could go on and on, but there's all kinds of things that President Obama can do to put -- to basically put all of the focus on results. And all of you know in elected office that in the short run, politics may be most important, but in the long run, results are most important. And the way you get reelected is by delivering results.

MR. MARSHALL: I want to claim the privilege to ask a final question of Doug. Doug, I'm curious about two things. One is what can an inspirational presidential nominee do and the president do to clear running room for the kinds of innovations that you and others have done in urban schools against great odds, formidable political obstacles. And secondly, to whom are you accountable, if not to the traditional centralized bureaucracies? How do you report to and who -- (inaudible). How does the public have an assurance of the value of what you're doing?

MR. ROSS: Well, we report to, first of all, the university that gives us our contract or charter, and then of course to all of the state and No Child Left Behind standards, covered by everything. We're a public school; we just are an independent public school authorized by a university.

What I think a President Obama could do is of course give it a prominent standing on an agenda, something he intends to get done. And then I think essentially explain it, explain why these big factory schools don't work well for low-income children virtually anywhere, why they don't, what it is schools have in common that do, which again is out there; it's not that hard to figure out or see. And then work with stakeholders to essentially move power and change the rules of the game.

The other thing I would say is, in terms of No Child Left Behind, in addition to the academic standards, which need to be preserved and continue to be raised, you do need graduation and post-secondary standards, because the incentive now is if you want to do well on standardized tests in your high school, lose the lower half of your students. The more the dropout the better your average is likely to be on the standardized tests. We have to live in that tension. The opposite is no good either. There are no academic standards. You know, I can pay kids to come to school and give them a degree. It's got to be that tension.

It's there to be done. And I remember 40 years and three months ago, I took some students -- I was a young teacher -- to see Bobby Kennedy who campaigned in Detroit. And this is what he was talking about with bright sort of more passion, but he had no answers. Well, it's been real slow in coming, but we have him now, so what a tragedy. Now that we actually know not to finally act in ways that are at-scale and precise.

MR. MARSHALL: Thank you very much. Well, look, I'm afraid we're out of time, so please join me in thanking the speakers for wonderful presentations, really perceptive.

(Applause.) (Back to the table of contents.)