Hello, good evening. I'm Brian Jacobs, the Walter Annenberg Professor of Education Policy at the University of Michigan's Gerald Orrd Four School of Public Policy and Director of the Center for Local, State, and Urban Policy, better known as Close Up. I would like to welcome all of you here in the audience, as well as those of you listening online at Michigan Radio to tonight's Town Hall Forum. At Close Up, we work to bring the latest research and policy analysis to bear on the problems facing state and local governments and urban areas, with particular focus on the great state of Michigan. We are pleased to co-sponsor tonight's discussion focusing on three areas that are critical to improving Michigan's future, energy, the environment, and the economy. The challenges facing our state are complex. Our goal tonight is to dispense with campaign sound bites and focus instead on the substantive policy issues at hand. Along with tonight's other co-sponsors, the Gerald Orrd Four School of Public Policy and Michigan Radio, we are delighted to have this distinguished panel of academic experts and representatives for the Obama and McCain campaigns, all of whom will be introduced shortly. And we are grateful to have Michigan Radio's Jack Lessenberry moderating the discussion. And finally, I'd like to recognize some of the people that have worked hard to put this event together, including Laura Lee, Tom Avoco, Bonnie Roberts, and Joe Crane at the Ford School, and Steve Kropinski at Michigan Radio. We look forward to an engaging discussion with active participation from our audience here tonight. And with that, I would like to turn it over to Mr. Vince Duffy, the news director at Michigan Radio. Good evening, everybody, and thank you for coming. The first order of business, if you have something like this or even nicer, like a blackberry or something like that, turn it off so that we don't listen to your ringing throughout the evening. I want to let you know that coming up on Michigan Radio, we always have to have the promos. Tomorrow night, you'll be able to hear the debate on Michigan Radio. If you're not where you can watch it on television, we'll have it live, the last and third presidential debate. Tomorrow night on Michigan Radio. Also, the week before the elections, we'll be having on our station an election series, a series of features produced by Michigan Radio reporters looking at the issues that Michigan voters will be deciding as they go to the polls, both Proposal 1 and 2, a number of the legislative races, and also how a number of issues will be decided in Michigan that could affect the presidential race. Want to remind you that tonight, we are being videotaped, so please be on your best behavior. This is being aired live on Michigan Radio's web stream, and it's also on the Michigan Channel tonight. You will have the opportunity to ask questions of our panelists this evening. There's two ways that you can do that. There are some cards that were handed out, so if you'd like to write down a question and have Jack Lessonberry ask it of the panelists, you can write it down whenever the question occurs to you. We'll have some folks going around that can pick those cards up and we'll bring them down here. Or if you prefer, you can ask the question in person. We have one microphone over here and another that's over here, and so when the opportunity arrives, we'll let you know. You can go to the microphones and ask your question of the panelists then. Our moderator this evening is Jack Lessonberry. I have the pleasure of being able to work with Jack at the radio station. He's a great deal of fun. He has covered Michigan politics for more than 30 years, so he has everything filed away in his memory. You can hear his work not only on Michigan Radio, but you can also read it in the Metro Times. You can read his writings in the Detroit Blade, or the Toledo Blade rather, and he also was a professor at Wayne State University, so he's helping future journalists learn the trade as well.  Seems any politician whose phone number we need, we don't need to look it up. Jack just has it in his head somehow, and we just turn to him and ask him what the phone number is. So right now I'd like to introduce our political analyst and our moderator for this evening, Jack Lessonberry. There's way too generous, unfortunately. I don't know the numbers of any good restaurants. Good evening again and welcome to our panel, election 2008's impact on Michigan, energy, the environment, and the economy. You know, everyone always complains, including me, that campaigns today are too much about personalities and who's ahead in the polls, the horse race, and not enough about the issues that really matter. Well, tonight we're going to try to remedy that a little bit. We're trying to look at the issues as they involve these three major areas, and especially as they pertain to Michigan. We're going to try to establish where things stand in Michigan, and where the two major party candidates stand with respect to issues involving our three areas again, energy, the economy, and the environment. To help us do that with us tonight are three distinguished policy experts in these areas, and also two high-ranking surrogates for each of these campaigns in Michigan. First of all, the experts. Joining us to help understand the economy tonight is Dr. Charles Lincoln Ballard, who's a professor of economics at Michigan State, and the author of the book Michigan's Economic Future. I wish it was a little thicker book, Charles. But our resource person on the environment is Dr. Ted Parson, who's both a professor of law and a professor of natural resources and the environment at the University of Michigan. He's also a former professional classical musician, so if we run out of issue questions tonight, we might want to reel in a piano or something. And our point person on energy issues tonight is Dr. Carl Simon of the U of M's Ford School. He's a professor of mathematics, energy, and public policy, and has used math to explain the workings of the economy through time. You don't do investment portfolios, do you? I was afraid of that. I also like to introduce our two surrogates representing the campaigns. Going in alphabetical order first, representing the Democrats, and Senator Barack Obama tonight is Mark Brewer on my far right, not literally. Mark's been the chair of the Michigan Democratic Party since 1995. He's now the longest serving party chair in the nation. He's both a graduate of Harvard University and has a law degree from Stanford. Representing the Republican Party and Senator John McCain is former congressman and state Senator Joe Schwartz, who's also a physician who still practices in Battle Creek. Dr. Schwartz knows Senator McCain very well. He managed his successful upset primary victory in the state in 2000, and the two men are frequently campaigned for and with each other ever since. Now, here's how this event's going to work. I'm going to start by asking some questions of both the panelists and the surrogates. Each panelist will get no more than two minutes to respond to any question, either mine or yours. Normally, we'll seek to get input from both parties. If a question is asked of one specific surrogate, the other will get one minute to respond if either he or I feel it's necessary. After I put everybody here through the ringer, in a nice way, of course, it will be your the audience's turn. So I want to start by asking Senator Schwartz, surrogate for Senator McCain. Senator McCain has promised large tax cuts if he becomes president, but given the enormous deficit we have now, and also the government's intention today to bail out the banks on top of the other bailouts, how is it going to be possible to do tax cuts? Jack, I don't think that a John McCain presidency would feature tax cuts as the first order of business. As you know, and I know, if you're running for president at this time of the 21st century and probably campaigns out into the future as well, you always have to talk about tax cuts. He has mentioned some tax cuts for things like unemployment benefits, other benefits that accrue to people through the government, which are taxable. And he has said he would probably vote to make the Bush tax cuts, which are due to expire on December 31st, 2010, permanent. Having spoken with Senator McCain about this, on a number of occasions, the last time just a couple of weeks ago, I think he knows what the fiscal shape of the country is, and he knows that tax cuts are not the first item on people's agenda. So do you have to talk about tax cuts in a presidential race? Yes, you do. Does Senator McCain think that he is going to get additional tax cuts through what is going to be a heavily Democratic Congress, perhaps as many as 60 Democrats in the Senate, probably 20 to 25 more Democrats in the House putting that number up at the level of 258, 260 or so. I don't think he believes that. And the first part of a McCain presidency is not going to feature a tax cut program. It's going to feature things dealing with our security, beefing up our military, health care, which is the most important domestic issue out there, and the all-encompassing economy and how to save it, which I must say I don't think anyone knows how to do now. Mark Brewer, same question for you. Senator Obama yesterday in Toledo laid out his comprehensive program for the economy. He talked again, in fact he's been talking more than Senator McCain about tax cuts for the middle class and working class. Where is the money going to come from? Well, first of all, Jack, I want to thank people for inviting me here tonight. It's a great pleasure to be here. It's a great idea to hold this forum, and I can tell you it's a particular pleasure to be here with Joe, tonight, who I've long admired. He's a man of great decency and principle, so I'm glad to be here with him. I'm an otolaryngologist and you notice the chairman is a little hoarse, and so he brought his personal otolaryngologist to take care of things tonight. And he, I would trust my health with, unlike many other Republicans. But thank you. To your question, on the tax issue specifically, what Senator Obama has said, has had many Democrats, is that we intend to let the Bush tax cuts, which we think are unfairly weighted toward the wealth in this country expire, as I believe they're soon set to do. Beyond that, though, as Senator Obama mentioned, said in the second debate, we're clearly going to have to prioritize all these issues that are confronting us. And his first two priorities are addressing the economy. And I agree with Joe. I mean, we don't know exactly what that is going to involve. We're in an enormous crisis, and it's going to require a lot of time and flexibility. A second priority to address as quickly as possible is health care, addressing serious health care problems we have in this country. Then beyond that, the other things in Senator Obama's program will start to be addressed. But for example, the specific issue of social security, which he mentioned in the second debate, while they would start to address that, that is something that I think will receive more fuller attention late in the first term, because the reality is you're going to have to prioritize. So that's a sense of what Senator Obama would do if he were elected. I want to turn now to Dr. Charles Ballard, our expert on the economy. Are tax cuts at this point a good idea? We know Tangians talk about tax cuts as an economic stimulus. Do tax cuts of any form make sense in the current climate? I think given the huge run up of the federal debt that we've had in the last decade or so, we're now at about $10 trillion of federal debt. And especially in view of the fact that we've got the front end of the baby boom generation reaching retirement beginning this year, and the pressures on social security and Medicare are going to be enormous. It's very difficult, I believe, for us to engage in any substantial tax cuts. Now, in terms of the distribution of the tax burden, there is a difference of opinion between the candidates. The Obama campaign has spoken of a more progressive tilt of the tax burden. And that's something that I actually applaud, because one of the biggest stories of the American economy in the last generation has been the huge increase in the gap between those at the top and those in the middle. And in recent years, the top 5% of Michigan households have more total income each year than the bottom 50% of households. So that's a big change from the past. And it would call, in my view, for putting more of the tax burden on those at the top. And that's something that I favor. Thank you. The next question has to do with energy. We've heard for a long time politicians for as many years as I can remember, talk about our need to reduce our dependence on imported oil. Mark Brewer, how does Senator Obama plan to get us there? I've heard a lot of generalities, not a whole lot of specific programs. Well, there are a lot of specifics in terms of how we get there. And it's a long term strategy that we have to embark on. And this, of course, is related to the whole issue of climate change, which Senator Obama very much believes that we have to set a very ambitious goal of reducing carbon emissions, for example, by 80% by 2050. And invest in a clean energy economy has set out a plan to invest over $150 billion over the next 10 years in advanced energy technologies, which will help shift us away from the consumption of oil, but including things like conservation. Frankly, we acknowledge in the short term, there may have to be an increase in certainly domestic oil production to get us through this kind of transition period that we've got here. We're very interested, I think, in the direction, frankly, that Governor Granholm has been taking Michigan in terms of renewable portfolio standards, energy conservation, and those kinds of things to move us in that direction. Does Senator Obama have a policy on renewable energy? We would like to very much like to see a national standard, and I believe the number is a 25% of our energy in this country coming from renewables within the next couple of decades. Very ambitious, but we think doable. Senator Schwartz, same question. How does John McCain plan to wean us off foreign oil? John McCain has been interested for many years in the problems that are obvious with our energy supply and our energy usage. I attended a meeting just Senator McCain and I in June of 2006 in London on global climate change. He will talk about the energy problems that we face at length. In fact, sometimes ad nauseam, if you let him. But first, he believes very strongly in a global cap and trade system for carbon emissions, and has pushed that just about every time I've heard him speak about energy. He believes that renewables are part of the future, probably not as high as 25%, but at least 10% of the foreseeable future, whether it's wind, solar tide, biomass, hydro, we can probably get there. And he is a strong proponent of those. Senator McCain believes in nuclear power. Quite frankly, as do I. I think we have to go there. 80% of France's electricity is generated by nuclear. We're at 20% in this country. Senator McCain would build or encourage the building of additional nuclear plants. He does encourage drilling offshore. That's a controversial question, but he does encourage additional offshore drilling, and I would tend personally to agree with him on that. We have massive amounts of untapped natural gas in this country, in the continental US, and probably, if not the largest, one of the largest backlogs of coal. And we're going to have to find some way to use that until we can replace it with some renewables in a really meaningful way. So I think he has a comprehensive outlook on energy. He is knowledgeable on the topic, and he is willing to work with Congress. Again, a Democratic Congress for sure. He is willing to work with Congress on a solution that encompasses all or most of all of the above. Want to return to our energy expert, Professor Carl Simon, would you please assess what you've just heard from each campaign as far as how realistic that is given what you know about our actual energy situation? First, I want to actually compliment both surrogates for changing your question. You asked about... This happens a lot to me. No, no, I think I'm shocked. But I think that was the right answer. I do think that energy is a really difficult issue. It's a crisis that may be the ruin of all of us unless we do something about it. And it's not just dependence on foreign oil. It's security issues, which are different. It's global warming, and it's in some sense price and quantity. And both gentlemen changed your question from dependence to global change, global climate change. And I think that's an important and healthy piece that should continue to be emphasized. I'm hearing mostly numbers, even from our dear governor, about how much renewable energy is our target. None of neither candidate has really said how they're going to get a really concrete plan to get to 25%. For example, the Obama campaign keeps mentioning biofuels as does McCain. Biofuels at least as a byproduct of corn, I think, has been fairly convincingly... We see it's drawbacks much more than... You're speaking of ethanol. Speaking of ethanol in particular. The fact that it's impact on world food supply and prices, the fact that it takes almost as much petroleum to make biofuels as it replaces. So I especially encourage some kind of a convincing package. Nuclear power. And that's a... Both candidates more or less have come out in favor of increasing nuclear power. Part of a systems approach is that we're going to need far more power than the words we've been hearing. I mean, 50 power plants, the world's going to need roughly the equivalent of 4,000 power plants in the next 20 years. Nuclear power plants? Well, coal or nuclear, no matter how it comes, in order to keep up the energy we're used to. Senator McCain mentions France. I'm sorry. Frequently as... Is that you or me? It's me. They're the gods. As a model for how you can use nuclear power. But I think one of the main concerns, nuclear power is a lot of concerns. The safety, the... But one that's, I think, missing, and this is where the economics comes in. It's incredibly expensive. France has made it happen by basically... It's a government operation. It's a very socialist project. And it's hard to imagine Senator McCain or anyone willing to give as much money into what it would take to really put in these plants. It's also a long run plan, right? The closest we can imagine is 10 years. So the fact that there's just sort of a scattershot feel to both candidates' responses to energy. And it's too important a problem not to be thought of in a very systematic and convincing way. If you were made energy czar, Professor Simon, what would be job one in this country? Wow. There are two pieces to add, if I may. A short one and a long run Do the short one. The short one pieces, I believe conservation. I mean, we really... In the short one, we're not going to do much about supply. Even nuclear power plants are 10 years. Offshore drilling is 10 years. We can do things to change the way homes are built, the way automobiles are made that could make at least as big a difference as all the oil we can get offshore. And a Jimmy Carter sort of kind of campaign, let's not necessarily tighten our belts and put sweaters on and inflate our tires. But all these things together, I think, would a real policy of energy conservation would be, I think, a reasonable goal. Thank you. Senator Schwartz, the other day on CNN, I saw John McCain leaving some kind of rally, and someone shouted at him, what about the environment? And he said, I'm for it. Now, I think, with the possible exception of former Interior Secretary James Watt, every politician has been for the environment... I have to explain to people who James Watt was. That's been a few years ago. Yes, a while ago. Frankly, that's about the level of environmental discourse I've heard from both campaigns. For John McCain, what is the top environmental issue and priority when he becomes president? We just talked about a little bit of it when we talked about energy, because I don't think you can talk about energy without talking about the environment and protecting the environment, the greenhouse gas emissions, and the whole question of global warming, one in which he's extremely interested. Now, John McCain is from Arizona, and he is aware that the estimates of water available for places like Phoenix, Arizona, have been wildly overestimated. We passed the Great Lakes Compact just in time. For years. Yes, we did. Yes, we did. And he supports it, by the way. But McCain is concerned about the dispoiling of areas that perhaps are not, and never were, until the 20th century fit for human habitation. He's concerned about the growth of his now home state of Arizona. He's concerned about the water levels in Lake Powell on the Colorado River, when much of the water for Arizona comes. He takes a look. He has a holistic approach about the environment in this country, one block fitting into another. But I have heard him talk many times about the fact that they're widely optimistic in the state of Arizona and in Phoenix, and I might add, the state of New Mexico and the Albuquerque area, places in California still and elsewhere, that this environment and this climate will support the population that now lives in that part of the United States. And that is his biggest concern, because he does not think it will, and he thinks at some point in the next several decades, that part of this country is in for a kind of a stiff comeuppance, A and B. I'm damn glad we've passed the Great Lakes Compact, because I don't want their water to come from the Great Lakes. And how would Senator McCain address that need? I'm not certain how he would address it, and I must be quite honest with you. He's an environmentalist. He's probably more of an environmentalist than most Republicans. But how he would address it, I don't believe that I can tell you. And quite frankly, I don't think he knows either until he's elected and until some of these things are studied and worked out. The first part, global warming, he's got it. He has nailed that one. He's conversant and intelligent about that. The rest, what is a comprehensive plan for the environment going to be, I don't know. Mark Brewer, we haven't heard a great deal from Senator Obama about the environment, either absent the energy problem. Apart from energy, what would be Senator Obama's environmental job one if he becomes president? I think in general, national water policy on that, I think we agree in terms of priorities. I think we're very fortunate here in Michigan to have somebody from Illinois running. He understands the issues that we have, particularly with the Great Lakes. Every significant piece of Great Lakes legislation, he's been a part of since he's been in the Senate and even dating to his days in the Illinois Senate. He was very much involved in preventing pollution of the Great Lakes. He would go well beyond where we've seen President Bush go, unfortunately. I mean, a lot of acts and authorizations passed, but very little funding provided. We need to move beyond merely enacting laws that say we're going to clean up and restore the Great Lakes. We've actually got to do it. So I think a second priority for him would be national water policy, but particularly good news for us here in the Midwest, a particular focus on the Great Lakes. Dr. Ted Parsons, could you assess what you've heard these candidates, where they ought to be in terms of environmental policy? Okay. And I'd like to go back and actually address some of the connections between environmental policy and energy policy, too, because they really are connected, as several people's comments have suggested. Climate change isn't the only environmental problem that we're going to have to deal with over this administration in the next few decades, but it's the most important one that's really running off the rails right now, that we haven't been responding to adequately, and that's why it's so dominant in the top of people's minds right now. So certainly there are going to be other water issues, there's going to be other air pollution issues, there's going to be new problems that we don't understand clearly yet by human activities messing around in other global scale processes, like the nitrogen cycle, which is connected to all kinds of all kinds of activities, kind of generating all kinds of problems, like air pollution problems, dead zones in waterways and so on. But climate change really is the elephant in the room right now. It's the urgent environmental issue that is like a train wreck happening in slow motion that just nobody's got to handle on right now. Now, we have a climate change problem, we have an energy problem. They're related, but they're not the same, and we have to solve them both. The difficulty is, there's some ways of solving our energy problems of diversification and security of supply that make climate change worse, and there's other ways that make climate change better that contribute to the solution. To solve climate change, we have to move our energy system, and it'll be slow, because the only way to move the energy system is slow, away from the current degree of dependence upon conventional fossil energy sources toward climate safe sources, where we really need the whole gamut, lots of efficiency improvements and conservation, lots of development of renewable sources, further development and expansion of nuclear power, and also development of technologies that allow continued use and even new building of fossil fuels without emitting the CO2 to the atmosphere. These technologies are called carbon capture and sequestration. This is one issue where both candidates, both presidential candidates, get it. Both of them have a serious understanding of the issue, and both of them have reasonable policy proposals. Indeed, Senator McCain was an early leader on climate change. I was at a set of hearings that he convened in the Senate back in 2000 that were among the most scientifically well-informed ones, so they both understand the issue. I'm afraid I can't say the same for Governor Palin, who's made a couple of very disturbing statements about sort of not believing the basic scientific underpinning of it. And they both advocate dealing with climate change via cap and trade system, which is a very sensible component to take as one of the three centerpieces of a policy response. Of course, you don't actually get to say what technologies we're going to do. You have to actually make policies and hope that those contribute to the deployment and development of the technologies we need. Dr. Simon, did you want to briefly weigh on that? As long as we're noting how important that energy and environment cross, I have an addendum to my answer about policy suggestions for short run. And it's one that would be a, during the last eight years, the amount of federal funds in energy research has been dramatically cut. This would be a great, the University of Michigan is well positioned to take the lead in energy research. And, you know, we've, there are all these wild plans, 20, 25%, but I think a well-funded research program understanding how to make batteries and storage better so we can get energy from the wind in the sun. How to, and how to make nuclear both safer and dealing with the storage issues. And finally, a key issue that would address both the environment and energy, in a way, and I've not heard a statement from either candidate is our public transportation system. I mean, in Europe, the price of gas goes up, people, the so-called price elasticity of gasoline is much higher in the United States because they're all alternatives, alternatives that we don't have. And building, we have an incredibly ineffective and embarrassingly bad public transportation system. That would be a wonderful spot to treat both issues. Maybe we'll get a question from the audience on that, but now it's time for the best part. I'm going to come in with a final question later, but we want to get your questions before this forum. Here's how this is going to work. When I raise your hand, when you raise your hand, that won't raise your hand for me. Please come to the microphone, state your name, indicate who your questions for, and ask your question. Please state it as simply and directly as possible. If I feel we need a follow-up from another panelist, I'll ask them to respond. Two gentle reminders, we need to keep your questions focused on tonight's topics, energy, the economy, and the environment. And also I have to ask that you ask a question, don't make a speech, or we'll have to go to the next person. So, who would like to ask a question? One of our distinguished panel here. Yes, please come to the microphone. Please go ahead. Okay. I believe my question will be from Mr. Parsons. The question is on the environment. The question has to do with how will each candidate bring those people in the population who can't readily go out and invest in green technology such as cars, such as houses, and so forth. And help those people to be a part of the green movement so that we have a greater percent of the planet, including here in the United States, where we can see results more readily. It's an excellent question. Great. Thank you. Well, a great deal of the investment that has to happen in new energy technologies isn't investment by individual citizens and households. It's investment by firms and in particular energy companies and electricity utilities. So you can get a lot by putting policies in place that motivate electrical systems and other major industries to invest in new energy sources. So it doesn't depend upon citizens. Now, any serious approach to getting emissions down to reduce climate change is probably going to make energy prices go up. You probably need this both to bring online all the generations of new technologies that we're going to need, which at present appear to be more costly than conventional technologies. And you also need it to motivate conservation. Now, both candidates have also talked in somewhat general terms about how they will use the revenues that they get from their systems of cap and trade to spend on other valuable things. But of course, it's a fixed pot of money and the Treasury needs lots of money these days, and you can only carve it up so many ways. So they're both candidates platforms say they will use some of the revenues to offset the extra energy cost burden of low income households. The other important thing to note about this is that, you know, this is either a slow moving problem or a fast moving problem depending upon how you look at it. And if we go about this right and we're a little bit lucky in terms of how innovation responds to good policies being put in place, then 40 or 50 years from now, the economy might look really, well, not just as it does now, it'll have a ton of innovation and it'll be new in all kinds of ways. But in terms of controlling environmental burdens and greenhouse gas emissions, things won't have changed that much. We'll have brought in new technologies that are providing the energy that people need and people are going about their lives and earning their livelihoods in, you know, similar ways not constrained by environmental burdens. The best news about global climate change is that it's probably a problem that is amenable to a technological solution by changing the technologies we use to get and convert and use energy. And if that happens over 40 or 50 years and we're headed toward very, very low emissions thereafter, then we're doing great. We can solve the problem and we can do it in a way that doesn't fundamentally threaten people's lives and livelihoods. I'm hoping for much better in nursing homes 40 years from now. Mark Brewer, in one minute or less, what would the Obama, what would a President Obama do to help people who are less well off go green? Well, I think Professor, I've got it right in terms of using revenues that are generated by the cap and trade system to, for example, expand the earned income tax credit and other tax devices that are available to assist folks at the lower income level. It may or may not be directly tied to the acquisition or use of more energy efficient appliances, for example. But in general, use the tax code as a way to raise their income level to make these other price increases that may be necessary more affordable for them. Senator Schwartz, what would Senator McCain do? I think much the same. That's a very logical answer to a logical question. The EITC is a good way to go. Revenue from federal programs that are energy saving programs to create programs, especially in urban areas, where people can go green. So I doubt that there's one scintilla of difference between the way either Senator McCain or Senator Obama would approach that specific issue. I have a question from an audience member who wanted me to ask it for them. This is for, first of all, Carl Simon, then Ted Parsons. We've heard a lot from both candidates about the so called clean coal option. Is there any such thing as clean coal technology? Barely. I think, I mean, there are, and I think Ted would have a maybe deeper answer than I will, but it's certainly, so clean coal roughly means burning coal more efficiently. Okay. And coal is, you know, all the processes by which we make energy are incredibly inefficient. So there's not a mine that has clean coal as opposed to a mine that has dirty coal? Well, there are differences in sulfur content for sure, but most of what I, as I understand clean coal, it's sort of more efficient building use of the coal that is, and it's a process that's, again, maybe 10 years away from, from realization. Ted, would you agree? I mostly agree. I mean, clean coal is a slogan.  Coal is mostly carbon, and it has a bunch of other stuff in it that you get as byproducts when you burn it. So you can clean up the pollution from the byproducts like the sulfur, and that's what clean coal used to mean. But now that we're dealing with global climate change, the carbon itself is the problem, the carbon dioxide that you get that is intrinsic to the combustion of the coal to get the energy. So the new technologies I was talking about, which are really one of the most hopeful and promising things that have come into this debate in the past 10 years, are ways to completely transform the way we get energy out of coal or other fossil fuels so that you don't emit the carbon dioxide to the atmosphere. Now, you have to put it somewhere. So the technologies are called carbon capture and sequestration. They involve basically splitting the fuel chemically so you get a hydrogen-rich stream that you burn and the exhaust coming out of the smokestack is mostly water vapor, which is about the only benign pollutant you can imagine us putting into the atmosphere. The carbon gets stuffed underground in deep geological formations, which, although it's very reasonable for environmentalists to be skeptical about it, the early signs look like there's an awful lot of storage space that is secure for very long times at surprisingly reasonable costs. If that turns out to be the case, and it still looks that good after we've kind of done a lot of monitoring and technical assessment and figured out a way to permit these things, then this really is great news because it provides a transitional energy source that lets us move in the long-term toward non-carbon, non-fossil sources, but it gives something that we can do right now. The technologies, they may be 10 or 20 years away from full maturity and full deployment, but one of the great things about these technologies is that every piece of it exists and is used at full industrial scale right now. So it's a problem of building new plants that put together things we already know how to do and have done a ton. And so we could very reasonably say no new full-sized electrical generating station gets built in America that doesn't make provision for carbon capture and sequestration. And the next administration could do that. Thank you. Next question from the audience again, let's try to keep our questions brief and succinct. This gentleman up here, if you could come to the microphone. In fact, why don't some of you make a line and get in line in front of the microphone so we can save time if you have a question for the panelists. We'll get to you next after this gentleman here. Hi, this question has to deal with the joint connection between energy and the environment. Although as Mr. Parsons said, Governor Pellin doesn't believe in incorrectly that the man is responsible for environmental change. Do you think her belief in energy change, it wouldn't make a difference, even if she, since she's hoping to change the energy policy along with McCain, it would benefit the environment as well. Dr. Parsons, you want to take that first? Yeah, I'll answer briefly. I haven't seen any statements from Governor Pellin suggesting what direction she wants to go in energy policy other than more domestic production of oil and gas offshore and from the Arctic National Wildlife Refuge. In a sense, it doesn't matter whether you believe the scientific evidence for climate change or not, as long as you're committed to doing the right thing, but I'd be more confident in someone doing the right thing if they actually understood the evidence that made the problem serious. So you have to move in the long term away from conventional fossil fuels toward all these other things. Efficiency, renewables, nuclear, carbon capture and sequestration. It's sort of it's the usual suspects we've known about them for years. That's the way we have to go. Dr. Simon, do you want to weigh in on Governor Pellin's? No, I agree with you. Great. I have a question from the audience for our economy expert, Charles Ballard. All the suggested things we've been talking about to humiliate climate change and energy require investment. Given our historically low rate of savings and the current economic crisis, is there anything the candidates can really do about this that's realistic? I think both candidates face a real challenge. Whoever becomes the next president in January is going to have inherited an economy that is in a recession, and that means that our taxable capacity will be slowed. And as you point out, our national savings rate has gone down back in the 60s and 70s. We saved 10% of our income. Now that number is down, even though we have a bigger economy and we're more affluent than we were then, that savings rate is down around 2%. We have been on a national consumption spending binge. That's really one of the biggest stories of the last 40 years. Our federal government saves less than nothing by running large deficits, and our private citizens save very little. That means either one of two things is going to happen. Either you get an investment collapse, which hasn't happened yet, or if investment continues, it's financed by it from abroad. But I think that there are limits to how long the Chinese and the Japanese and the Germans and the Koreans are going to finance our consumption spending binge. What it will take, I think, is leadership from whoever is the next president. Real leadership to try to say, our culture has to change and people have to start taking a longer view, not just spend what you make. That's not a good financial plan. Spend every penny is not the way we got to go. And, you know, we're bombarded with all these reasons why we just can't survive unless we have a couple of cappuccinos a day, and a SUV, and a Hummerin, an iPod, and a 42 inch flat screen TV in every room. But that spending, we've been spending beyond our means for a long time. And if we continue to spend on that sort of stuff, it's going to make it all the more difficult to finance Social Security and Medicare and also to undertake these very large investments in energy technology. So there's a real leadership challenge. Briefly in one minute or less, Senator Schwartz would Senator McCain agree with what Dr. Ballard just said. In one minute or less, I think that he would more or less agree with that and has said it a number of times before in a number of different ways. And one of the things that he objects to more than anything else is the $700 billion a year redistribution of wealth on the binge that we're on because we have to have all that oil to run things in this country. And perhaps we could start working on alternative energy. We could start working on other things that would keep more of the dollars in the United States. So in fact, our economy is not, Professor, you tell me the number, maybe $600 billion in debt to China.  More than even. And that has to be done. That has to be done. The House of Cards has partially fallen. We saw it happen with lending institutions and the lack of credit. And it's going to continue to fall unless we rein it in. And I think the professor is absolutely correct. And I would be very surprised if either candidate did not totally agree with that. Now to clarify, the $700 billion you mentioned, this was not the $700 billion bailout bill that both Senator McCain and Senator Obama voted for. This is the $700 billion that we are sending, especially to the Middle East, every year to buy oil. We are sending money to countries that don't like us a whole lot. And they're getting a huge piece of our economy every year. We are redistributing the dollar-based economy every year in the amount of oil that we buy from the Middle East. Mark Brewer, what would Senator Obama do differently? I think when it comes to the revenue generation force we're talking, I'm not sure where Senator McCain is, but Senator Obama has made a very clear that under his cap and trade system all of the rights to pollute, so to speak, would be auctioned off. No company, power company or anything else would be grandfathered in and get these credits for free. And I think that's an important shift we need to make. And then the idea would be to use that revenue to help with investing in energy efficiency and making this transition. There's no question though that it's not going to provide all the revenue that's necessary. It's going to have to be leveraged and you have to provide incentives and inducements for industry and others to make this transition. But that would be the key revenue source that Senator Obama would tap to help us make the transition. Let's go to this. Who's ever next to this lady? Would you please state your name and who your question is for? Sure. My name's LaFleur Stevens and my question is directed to the surrogates actually. It's often said as the as Detroit goes so goes the rest of the state. And so I was just curious about the candidates plans for revitalizing our nation cities, particularly those in the rest belt. Mark, why don't you start? I think that's a great question and absolutely critically important and it ties in so many things. Joan, I've actually been sitting here talking about the importance of public transit, which I think would be great help in terms of not saving energy, help low income people with their energy costs and mobility. So we need to reinvest in our cities. We can no longer continue to subsidize sprawl, not only here in Michigan, but nationwide. And I think now the energy crisis we're going through has just made that more vivid than it's ever been. We're going to have to readjust our lifestyles, frankly, in terms of our ability to buy gas, to commute 50, 60 miles to work one way every day. And reinvesting in cities and rebuilding our cities is an important part of that. And again, will help us address all of these problems. So that's a critically important feature. Joe Schwartz, what's the Republican view? Senator McCain's view, and I know it's very similar to my own view, would not be too far off. The infrastructure in our urban areas is crumbling. We have not made the investments in the infrastructure that we need to make for the last several decades. You can see it. Public education in urban areas is abysmal or quasi abysmal. That investment has got to be made. People aren't going to live in urban areas anymore, if that investment isn't made. I'm a huge, and I know Senator McCain is as well, advocate of urban public transit. That investment has got to be made. But we've had the economists tell us here that we have really, we've been on a binge. We've been in a party for decades. And the where with all is probably not there to do that immediately by the new president or maybe by the president that succeeds the new president. This is going to be a long, long term project. But unless we start spending some of the money that we have smartly at home. And I pray, I hope and pray that we're able to get out of the conflicts we're in right now at 10 billion a month soon and with honor. But a lot of that money needs to be spent at home for just the things that we're talking about. And I would put education, infrastructure and public transit right up at the top. Charles Ballard, is there any money there to do the kinds of things that the young lady asked about? There's money there. I mean, this is a $14 trillion economy in the United States. We've got plenty of resources. The challenge is marshaling them. And I that's where political leadership comes in. I think we can do any of these things if we want. But that means we're going to have to do less of something else. And I think the big, the big challenge is to focus on this public private divide. Because so many of the things that we're talking about involve public investment. The only way that I see that we can finance those is with tax revenues. I don't think the Chinese are going to pay for it for very much longer. And we're locked as both of the surrogates mentioned, we're locked in a situation where we're talking about tax cuts when if you're going to finance social security, Medicare, energy investment, public transit, investment in education and the urban areas, that's going to cost money. I don't see how we can do that without without tax revenues. We can do it if we choose. Question of priorities. It's exactly right. Next question. Hi, my name is Joshua Ferguson and this question is directed towards Mr. Ballard. So China is one of the most powerful and up and coming economies in the world right now. And they used to be largely based on export. They still kind of are but they have been growing a really powerful and wealthy middle class as of the past decade or two. How is their middle class growing going to affect our economy, especially considering the binge that we've been talking about, the spending binge that America's been on for the past few decades? I guess I would say in two ways. One is the growth of the Chinese middle class. Their huge increase in income means that they're consuming a lot more. And we've seen that in recent years in terms of both in China and India. The increase in their incomes, the increase in their consumption has put pressure on worldwide resources. That's a big source of the increase in the oil prices that we saw in the last year or so. The oil prices are coming down now because it appears that the world economy is slowing. But as those poorer, previously poorer countries reach a level of affluence that's much greater than they have before, that puts more pressure on the resources. The second thing though I think is that increasingly there's going to be pressure within China to say, whoa, this has been great to finance the Americans' consumption spending binge. But what about building more things right here in Hunan province? And as those pressures are felt through the Chinese political system, I think they may become more and more reluctant to finance our spending. And that's going to mean that either we in the United States make the changes that are necessary to wean ourselves from that source of funds on our own, or we'll have to have it made for us on their terms. Senator Schwartz, does John McCain see China as more a market or as an economic threat? I think he sees China as both. China is somewhat of a market for us right now, but the yuan is still overvalued. The dollar is undervalued probably right now. So if more is coming toward us then is going toward China. But you cannot, you cannot ignore a country of probably 1.6, 1.7 billion people and say this is not somebody we're going to do business with. We are going to do business with China. It's important that we keep relations with China normalized. It's important that many Americans travel to China, many Chinese travel to the United States and are educated here because the alternative, some sort of conflict or the buildup to some sort of conflict with China is unthinkable. And I can tell you, as a former member of the Armed Services Committee, that there is a section in the Pentagon that takes a look at what the possibilities would be if in fact we had to think about a conflict with China. Fortunately that's out of the scope of this discussion. Which I find unthinkable. Mark Rowe, from the standpoint of economic policy, how would Barack Obama change your policy toward China? I think we need to be much more aggressive in terms of a level playing field with the Chinese. I guess there's a recent study that Senator Carl Levin pushed very hard that documented the amount of piracy of our products here in Michigan, intellectual capital and other things I think was the tune of tens of billions of dollars just for the auto industry alone that occurs every year as a result of Chinese practices. And I think we have to be tougher, more aggressive on those. I agree with what Joe said that does not mean you pull back, you don't engage, you don't maintain normal diplomatic relations, but I think we need to be more aggressive in defending our self interests when it comes to trade. Gentlemen here, again please make your questions succinct. My name is Tom Partridge. My question would start with why are there no candidates for elective offices in the panel of this forum and why the University of Michigan and its affiliated radio and television stations refuses, adamantly refuses to provide such a forum for candidates for the state legislature and United States Congress in particular. Well, let me answer that since I'm here on behalf of the university. This is not the nature of this forum. What we wanted to do tonight, there's plenty of opportunity for candidates. If you'd let me continue. We wanted to elucidate things about the issues. If you'd let me continue on your freedom of expression. You can have freedom of expression. I'd like to know what it will take to bridge the bifurcation of discussion that puts the discussion of our physical environment in the need to green the country and the globe ahead of human factors, human needs. I suggest that we change the discussion of environmental change to put the needs of people first and start with the needs for an affordable life for Americans and for people around the globe and to work toward international agreements to put priority on providing affordable housing for everyone. That's a good point, but it's out of the scope of this discussion. Now, I want to turn. Public transportation, and these are all part of the economics that I understand should be part of this discussion and part of the environment. They are indeed. Now for a question. Thank you for the debate, Mr. Lesson. From a member of the audience. Mark Brewer, should the federal government be in the business of helping out the auto industry and bailing it out? I think it very much should be in the business of helping the domestic auto industry. The programs that Senator Obama has supported and proposes are not a bailout. The loans that have been authorized by the Congress, and we hope will come to versions that are exactly that, loans, the federal government stands to make a profit off of that. The investment in, the long-term investment in manufacturing, particularly more green technology produced alternative fuel vehicles, I think as a long-term benefit to the country as a whole. So we don't see those remotely as a bailout of the domestic auto industry. Senator Schwartz, does Senator McCain agree? And if so, how does he square that with free market economics? I don't think there's anything about free market economics here. If you were totally hooked on free market economics, we would be in deep, deep, deep, deep trouble, more than the deep, deep, deep trouble we're in this country right now. Senator McCain supports the $25 billion. Hopefully it'll be double that in loan guarantees for the auto industry. And I know he and others, and I think Senator Obama has done it as well, quite frankly, have spoken with the Congress. And for some reason, this seems to be going through the Department of Energy and told them we can't wait 18 months for this to happen. It's going to have to happen soon. I know that he supports it. Anyone who wanted to do well in Michigan would be foolish not to support it. But I know in his heart he supports it, just as all of us do. Charles Ballard, from a Michigan perspective, from the economy of Michigan, what is the correct balance between protectionism and the free market? Well, I'll give, I know that this is a very controversial subject. My view is that, of course, there are things, there are places where we want to regulate and have some controls over the international trade. Mark Brewer mentioned intellectual property, which is an area that I think we do need to negotiate very aggressively on. And nobody wants a free market in nuclear weapons and toxic waste. Everybody wants to have regulation in terms of making sure that the products that come in are of appropriate quality. Having said that, I believe that it would be dangerous to have a wholesale retreat from the regime of predominantly free trade that has characterized the United States and the rest of the world since the Second World War. The huge increases in tariffs that the United States passed in the summer of 1930 were all put forth by congressmen who said how wonderful it would be and how it would save American jobs. Actually, it contributed to the depth of the Great Depression and helped to harm employment on both sides of the Atlantic Ocean. And so the other thing that I would mention in terms of trade is there's a lot of anti-trade sentiment in Michigan. I know that. But before we get all hot about cutting off trade, we should look at a map. America's number one trading partner is Canada. The number one gateway to Canada is Michigan. We benefit tremendously from that cross-border trade. The Ambassador Bridge is the most heavily crossed border crossing in the world. In fact, I think what we need to do is get the new bridge downriver built as soon as we can. And I'd love to see the federal government help us with that. This lady here. Hi. This question is for Mr. Brewer and Mr. Schwartz. I'm wondering with regards to large corporations who are oftentimes very large contributors to our environmental problems. Will there be any opportunities to incentivize them to push toward the creation of new innovations within a given amount of time that may have mass outreach and benefit us all? You mean environmental innovations. Yes. OK. Mark, go first. Yes. I mean, we've talked about that a ton of that number of times tonight using the proceeds from the cap and trade auctions to provide those kinds of incentives. I think the renewable energy standard while ambitious of Senator Obama of 25% within the next 20 years will push people in that direction. So, yes, does he answer that question? And at some point, Jack, I want to get back to this question of protectionism if we may, but not right now. Right. Senator Schwartz. Well, the answer is yes. You said incentivize. Is that what you said? Obviously with Obama, he's Mr. Brewer has obviously laid out a good plan for Obama. We've we know about that. I guess it was more toward you and what McCain plans to do in terms of setting stringent benchmarks for different corporations to reach within a given amount of time. I don't know that Senator McCain would oppose that. I don't know that that he is for it. And again, I would say it is it is, you know, five or six or seven down the list of things that new president, whoever the new president is, is going to have to do. But it certainly is not an idea that would be foreign to John McCain. OK. Ted Parsons. Should the government be in the business of telling major corporations they have to do things to that are more environmentally sound? Is this good public policy? Yes, sometimes. On climate change, like on other big hard environmental problems, I think of the kind of response that you need to actually solve the problem as being a three-legged stool. You need incentives through such measures as the cap and trade systems that both candidates have proposed. You need public expenditure on things like subsidies for research and development, public infrastructure and other pieces where you just can't count on private capital markets to bring all the investment you need. Although in many cases, the purpose of the incentives is to bring forward private capital to make the investments you need. And sometimes you need regulations. I know we're not allowed to say that word, but there are some areas of the economy, some sectors, some technologies, some products where you just don't get effective response from the incentives that push through energy markets to kind of change the prices of things that you get from an overall cap and trade system or an emission tax system or something like that. So sometimes the environmental consequences of production processes and of products need to be regulated. And yes. I have an audience question for Carl Simon, our energy expert. And Jennifer Granholm stated the state address. She said we had the second greatest potential for wind energy anywhere. Is this true and how much can we make of it? I don't have the exact figures, but I'm very skeptical. We had a colleague of ours, Meredith Fowley, present a paper with a very careful study. I thought I heard numbers like 3% or 4% of our energy might someday be generated by wind. It's only in some areas, certainly not this part of the world, despite today's weather. We're talking about the coasts of either lake. And a huge problem that still has to be overcome is storage. And wind is fairly non-regular. And so taking peaks of high wind and doing something with it so it keeps, and that being relying on windstorms is going to be quite an issue. Great. Yeah, may I briefly? Briefly. Michigan's got a pretty good wind resource. And Michigan could build a lot more wind power. Although if we build it at a very large scale, a lot of it, the best sites are actually places where people have very expensive vacation properties along the west of the lower peninsula on the east bank of Lake Michigan. So you can build it, but there's costs. Any energy source built at large scale has costs and challenges associated with it. And as the renewables start to expand, we're going to see a lot of fights over them. Now I have a question that's been puzzling me. I've heard an awful lot of mutual agreement from Mark Brewer and Joe Schwartz on many of these issues. Every day I turn on the television and I see Senator Obama and Senator McCain say that if we elect their rival, the world will come to an end. So Senator Schwartz, turning to the issue of the economy, what is the biggest difference and the biggest reason to elect John McCain rather than Barack Obama? Let me say this. The differences, if you come right down to them, between Barack Obama and John McCain, are there. But they're in a just a rip snorting, bang up political campaign.  And quite frankly, neither Senator Obama or Senator McCain on some occasions have distinguished themselves because the campaign has become too shrill and lasted too long. I'll wake up on November 5th with either a president elect John McCain or a president elect Barack Obama. I will still be damn lucky to be an American and live in this country. And while I won't follow either one of them, probably to the ends of the earth, I'm not uncomfortable with either one of them. You are expected to do things, deliver a knockout punch in a debate environment. And that's precisely what they tried to do.  I would think that the environmental, not the environmental question, the economic question is probably the overriding one. One would probably increase taxes which people hate to hear. But as Professor Ballard said, you know, it's revenue versus expenditure and folks, we ain't got enough revenue to do what we wanna do. So that question is going to be there. There are some differences that we haven't even talked about tonight, having to do with foreign policy, having to do with Homeland Security, having to do with the military, having to do with education, having to do with healthcare where there are some significant differences. There are significant differences in their national healthcare plans. And at some point, I hope we have an opportunity to talk about those perhaps in the next forum. Mark Brewer, why would, from the standpoint of Michigan's economy, Barack Obama would be a better president than John McCain? Let me link that answer to answering the question you just posed to Joe. Joe has made a valiant effort here tonight to blur the distinctions between the candidates, but with all due respect, the John McCain he's describing was the John McCain of 2000 who has simply disappeared in this campaign. When you look at his record of voting to support George Bush, flip-flopping on issues like the tax cuts, there's a reason why Michigan Republicans like Phil Arthur-Holtz and others, Bill Millican, our former governor, said in the last two weeks, they're not supportive of this John McCain, because he is not the John McCain of 2000. So I think that's very, very important. There's a lot of blurring of distinctions going on here tonight. But that also leads the answer to your question. Why is Barack Obama better from Michigan? Because he will truly reject the failed policies of the last, not just the last eight years, but the last generation of Republican thinking to which McCain is captive. This obsession with deregulation, even to the extent that it's gotten us into the problems that we have now, not just in the financial markets, but otherwise. I mean, Joe's right. There are significant differences on healthcare. John McCain recently said he would like to do for the healthcare institutions, industry of this country, what he's done in the financial area, i.e. deregulate. So you see that philosophy there continuing, and that is the fundamental difference. That has failed, and we need more accountability, more responsibility, and that is something that Senator Obama clearly embraces while we continue to hear obfuscation, frankly, from John McCain. Senator Schwartz, you want a brief follow-up? Yeah, it's a brief follow-up of that. The difference between Democrats and Republicans at the Marx level and my level probably has to do with the size of government and the magnitude of government regulation and how much largesse is gonna come from the federal government, and there are differences there. No one would deny those. And quite frankly, I won't deny the fact that I was much more enamored with the John McCain whose campaign I ran in 2000 than the beginning of this campaign. However, he's coming around. He's being more like the John McCain I know, and he is trying to make the differences, not personal differences, but philosophic differences. And I think regulatory policy, magnitude of taxation would be two of the places where John McCain and Barack Obama in general would differ. The one place neither one of them knows where they are is on what to do about this economy, and that's gonna have to play itself out over the next months and years. Mark Brewer, I want an honest answer as tough as it may be to give this audience. 10 years from now, where Americans have the same standard of living as they do now, will they have a higher standard of living or a lower standard of living? I hope we have a higher standard of living, but unless we change the current path we are on, it will be lower for all of us. Senator Schwartz. Higher. Why? Because we are still the greatest country in the world. We're still the city, we are still the city on the hill. We still have more energy and more innovativeness and more courage than any other country in the world. There are over 300 million of us now. There will be in 20 years probably 325, 330 million of us, we will still be the greatest country in the world. And if I didn't believe that, I wouldn't think of myself as much of an American.  Sometimes. Based on everything you know about Michigan's economy, which is probably more than any of the rest of us, is Michigan gonna have a higher or a lower standard of living in the year 2018? If we extrapolate the trends of the last 30 years, the top 5% of Michigan's households will have an even more fabulous life than they have now and they have improved their standard of living fabulously in the last 30 years. And the bottom half of Michigan households will continue the decline. That's if we extrapolate. Now, I think that unless very strong public policies are undertaken to try to strengthen the middle and lower part of the income distribution, that widening of the gap will continue. I think there are things that we can do that would shrink it, but that will take a lot of courage and a lot of effort. But we are, let's face it, we are in year nine, our ninth consecutive year of job losses in the state of Michigan. This is no longer a business cycle. We had the business cycle in the 70s and then we bounced back. We had the downtime in the early 80s and then we bounced back. We had the downturn in the early 90s and then we bounced back. And I think Michigan people got used to thinking, well, prosperity is just around the corner. This is not a business cycle. This is a fundamental structural transformation. And it's because of the shrinkage of the manufacturing in general and the automobiles in particular that formed the basis of our economy for so long. And I think that by, so I think that by 2018, it's gonna be a struggle, but I think we'll be where we are or a little bit better, but I think it's unrealistic to look for really strong growth at least in the next several years. And that means that looking forward to 10 years from now, I think we can be on a growth trajectory then, but it's gonna take a lot of hard work and it's gonna take changing of some of our fundamental attitudes. Carl Simon in 20 seconds or less, from what you've heard tonight and the standard of energy, does it matter which of these candidates is elected? I think actually I agree very much with almost with everything Charles said and part of the McCain platform is solving that still is a high reliance on fossil fuels, offshore drilling, in some sense at least for Governor Palin, reliance on Anwar. Our clock's ticking. I think US imports 17 billion barrels a day and it's getting worse and we've got a wean from that and the answer is not in any of the short run solutions that have come. Ted Parsons from the standard of the environment, does it matter which of these candidates wins on November 4th? These are both serious men who understand environmental and climate issues, who believe in science and who have serious policies. But in my view, the Obama campaign has presented a set of stronger goals for reducing emissions and for deploying new technologies, more specific policies and expenditure proposals for how to achieve them and has also been willing to bite the bullet of talking about the need for regulation and new approaches to regulation to attain environmental goals. We've got a lot more problems and a lot more questions, but unfortunately, we've run out of time. We realize that not all questions were answered but if audience members want to stay around and interact with our distinguished panelists, they'd be welcome to. I'd like to thank all of the viewing audience, all of the audience here and especially all of our distinguished panelists who gave up their evenings to be with us. Let's thank them, everybody. Thank you very much. Thank you very much. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.


from Las Vegas. It's theCUBE, covering AWS re-invent 2018.  Okay, welcome back everyone. Live coverage here with theCUBE at Amazon Web Services re-invent. I'm John Furrier, my coach, Lauren Cooney here, breaking down all the action. A lot of announcements coming out of Amazon Web Services. A lot of killer new technologies, but also the IT game is changing. Two great guests from Cisco Systems. Dave Cope, who's the Senior Director of Cloud Market Development, and Kip Compton, Senior Vice President. Cloud Platform and Solutions. We got the big cheese here. We got the marketing development here. The Cisco story, I tweeted just about an hour ago that your story is really aligned with Amazon. You had a recent announcement. The whole eternity of storage, networking, and compute is never going to go away, but it's changing. This is absolutely a big pivotal moment with on-premises activity. You guys are on-premises king at Cisco. How is this changing your business with AWS? Well, no, it's been an incredible year. Dave and I were just reflecting on it as we got ready for AWS. And it's a year where we started with people questioning hybrid, multi-cloud was kind of new. Kubernetes looked like it was going to take off. And I think every major cloud provider now has announced a Kubernetes service. Hybrid is described as a new normal. And of course, Kubernetes in containers are an almost ideal technology for things like hybrid and multi-cloud. So it's been an incredible year. And you mentioned the announcement we made three weeks ago with our hybrid Kubernetes solution on AWS. And we've just gotten incredible interest in that. A lot of people interested in that solution because most enterprises as exciting as public cloud is and as fast as they can move in that environment have things that for whatever reason are on-prem and need to stay on-prem for some period of time. So really being able to bring those environments together is critical. I got to say, Kip, I'm really impressed with Cisco's business model evolution. I've obviously been a big fan from day one, routers, power of the network. We just interviewed John Chambers just two weeks ago. Great to see the legend there. But what a great business model Cisco had with networking. Moving up the stack has always been a challenge, but since DevNet and DevNet Create, you started to see that the DevNet developer community of the Cisco ecosystem was really gravitating towards cloud. Network guys are like fickle. You either win them or you don't. They hold on to their, the network, they got to protect it. But cloud somehow changed the dynamic and cloud native, what is that dynamic there? Because you guys have now stated publicly, developers, cloud native, the Kubernetes announcement, you see a world where the network is borderless. But hybrid is the standard, whatever you want, cloud or hybrid, it is what it is. How has cloud changed Cisco so much? Well, I mean, I think not just cloud, but the network has changed. All of our customers is there adopting DevOps, and I think it's 54% of enterprises have begun a DevOps journey because it just drives innovation at a much higher pace. And we're finding in almost every industry, in order to compete, companies have to be able to move fast and deliver incredible experiences to their customers and their employees in the form of apps. And DevOps is the way to do that. And to do DevOps, you need a fully automated infrastructure. And so that I think is one of the reasons why DevNet, our developer program, has grown so much. We're really excited to see DevNet pass 500,000, half a million members of DevNet, right? And many of these are networking engineers who are learning how to program on Cisco equipment as we've added APIs across our portfolio and brought programmable controllers into the picture as well. So we're seeing that then mesh very well with cloud. Because obviously, DevOps is not just for on-prem, but it's for cloud and it's for hybrid. And as we bring a fully automated infrastructure on-prem, that matches up very well with fully automated infrastructures like AWS and enables these hybrid use cases and DevOps in a hybrid model. That's great. And I think what you're doing with open source technologies is just phenomenal as well. Talk about some of the use cases that you guys see across the industry. If you can mention customer names, that's awesome. If you can't, I get it. But I'd love to hear more about how they're applying the solution today. You know, I think there's a number of use cases. I think one thing that's been really interesting kept reflected on sort of coming out of last year into this realization that multi-cloud was real. And I think we also, there was this realization that it wasn't about just saving money to move to the cloud. That now it was about going to different cloud environments to leverage innovation that could be occurring in different environments. So one of the use cases we see is, you know, how do we maybe develop a new application on a cloud that has a unique service? Maybe like machine learning or AI that I want to leverage. We're starting to see other use cases where people are realizing it's not about lifting and shifting or moving applications. But now I want to take an on-premise resource and maybe give it a facelift with a new pool capability that resides on a different cloud. All of that by having sort of common management, policy-based governance are some of the use cases that we see. Certainly DevOps is a big one. At the end of the day, we talked about developers. At the end of the day, developers want their apps to be able to move into production. And so with DevOps, the cloud, we're starting to see this overlap between developers and IT ops now working together to be able to ensure that these new applications can be put into production across many different environments. What's the biggest challenge you guys see customers having? What problem are they trying to solve? Networking you on the network. Networking's not going the way it's evolving. What's the big challenge that your buyers and your customers have right now? Well, maybe I'll say a few words that Dave can add as well. Networking and security regularly show up at the top of any sort of survey about what's difficult with cloud. And we're very fortunate that those are areas where we have very deep portfolios and can solve a lot of customer problems. It's very interesting to me, and I mentioned this in my talk this morning, but a study we did with IDC on cloud maturity found that only 14% of enterprises had an optimized cloud strategy. And what that means is 86% are trying to improve their cloud strategy and are looking for solutions and things that they can solve. So it's incredibly fertile area for us to help our customers really take advantage of their on-prem assets, but also multiple clouds in a multi-cloud world. I think one of the realizations is the cloud is not like the cloud, it's multiple public clouds, it's private clouds, virtual private clouds. And so even traditional disciplines like security, network management, when you're trying to do that across environments that you both control and don't control, they take on a whole new complexion. And so that's some of the challenges and the opportunities I think that companies are looking for across the cloud today. Well, I think it's an interesting story, too, with Cisco, because this strength is really emerged in the security arena, and that is the one thing that people are most concerned about when they're using Kubernetes. So I think just phenomenally, that's really something that's coming together nicely. Would you say that are you guys working with the security team and really kind of making things more secure for folks to make them more comfortable in utilizing this solution, or can you talk a little bit about that? Yeah, sure, no, we are certainly working with the security team. And as a former Cisco employee, I know you're familiar with Cisco, but one of the things that's different about cloud for us is that every part of Cisco is involved in our cloud strategy, right? So as you know from Cisco and a lot of customers who work with Cisco know, we tend to have big groups inside the company that focus on certain technologies, be it data center or networking or whatever. Cloud is across all of those. And a big part of what Dave and I do and the group that I lead does is work across all of those groups to make sure that things come together for our customers. So for instance, the solution we announced three weeks ago on AWS for hybrid Kubernetes actually works with our security products that has StealthWatch Cloud from our security group integrated in the solution to give consistent security across the AWS EKS environment and the on-prem data center environment. So we very much stitching security into everything we do. When you guys talk to customers, what do you say to them when they say, okay, I'm a Cisco shop, we have a lot of on-premise, I'm looking at cloud, what do I do? How do you describe the ideal architecture and waybook for really working with cloud? For to give the customer the best choice, all the stuff that they want. What's your recommendation? How do you talk about that customer? What do you recommend? Yeah, you know, I don't know if there's a single path. I mean, that's one thing we found is it's, I hate to say it's complicated, but every customer has a different set of apps, maybe different constraints, depending on what industry they're in or what part of the world they're in in terms of data protection. They may have different on-prem estates, applications that maybe they can't move, like an old ERP system, or maybe simply investments that they want to continue to get value out of. So a lot of times we end up engaging with them or one of our Cisco partners ends up engaging with them on sort of a cloud advisory process to understand their environment. But you know, there definitely some trends that we're seeing that I think Dave and I can talk about. One is I've seen a lot more interest in how you develop new experience is in applications. And Dave mentioned it, but a big shift towards accelerating innovation with cloud as opposed to minimizing cost. And I think this is a logical maturation is people see that as a lever to be more competitive. But really every customer has a slightly different journey. Beauty and the eye, behold a scale automation, moving from the command line interface to dashboards. Yeah, yeah, with AP, all about APIs in between by the way. All right, guys, give us the final word here on what's next. You guys got a great deal going on with Amazon. Love this Kubernetes announcement. As you know, we've been high on Kubernetes since it started, but recently there's a lot going on there under the covers. Containers, good for workloads, great for inter-clouding or multi-clouding or hybrid-clouding, whatever word they're calling it these days. What's next for you guys? Give us a quick peek into the, let's come up at Cisco Live in Barcelona. What's on the roadmap? What's your budget look like? Well, I love that look. So I would definitely like to hear about it. Go on, tell us the secret sauce. Maybe I'll just tee it up and you jump in. I mean, when I look at hybrid-cloud and multi-cloud, a lot of the innovation we have seen was first really about cloud management platforms creating some degree of abstraction across clouds. And then along came containers, Kubernetes, you could develop and deploy anywhere. I think the big opportunity and challenge today is all of those have been focused on the app. Now, how do we create this fluidity of data sources across this multi-cloud world? And that's an exciting opportunity right now. How do I not have the requirement to move big loads of data around but access that data anywhere it resides to feed these new applications? So I think that's a big part of where hybrid-cloud is going. Keep your focus. You're hiring, what's the focus? What's coming on? What's the next deals you're going to do? Well, I mean, we're big on Kubernetes as you can tell as well. So you're going to see continued innovation there as well as security. You mentioned that. We think serverless is very interesting for where that could go. It's going to take some time, I think, for that to become mainstream from a developer perspective. But just to pile on to what Dave said, I mean, we started the year with like, oh, is hybrid or is Kubernetes is multi-cloud? All of that seems to be a resounding yes at this point. We're moving from creating similar environments to really starting to integrate those environments. I think what we announced three weeks ago is a good example of where we create a single control plane between those environments. Data exchange and tying that data together for hybrid. And then going from hybrid and evolving to multi-cloud. Where we have customers already saying to us, oh, wait a second, we love your AWS announcement. We remember your Google announcement. You're giving us a common infrastructure on the on-prem side that can connect to multiple clouds. That's lowering the friction, lowering the complexity, make it easier for us. Because customers are saying, look, we need to harvest all the innovation. Like, ADUS is amazing, but you know, TensorFlow at Google is like a real thing. I mean, that's the real deal for some people. And that's the point here in their framework too, Amazon is. Yeah, absolutely. So we think it's an exciting time. And you know, the pace of innovation is going to be, I think that's the, the one thing is, the future is going to be hard to predict. That's the safe bet. You guys are on it. I'm excited to see we've been down there, fist on the table for years. The TCPIP is future is right in front of you. It's called Kubernetes. Really great opportunity. You guys have a good strategy. Congratulations. Let's see how it plays out. Multi-cloud makes looks obvious. Pretty obvious. Thanks for coming on. Appreciate it. Thanks for your insight. Thanks for your insight. Thanks for having us. Live coverage here in theCUBE. Stay with us for more after this short break. We'll be right back. Wall-to-wall coverage here at AWS re-invent. I'm Jeffrey Lauren Cooney. Stay with us.