Bernard L. Schwartz, former Chairman of the Board and Chief Executive Officer of Loral Space & Communications, Ltd., and a New America Foundation board member, spoke at New America's March 26 Economic Symposium, entitled "Looking Towards the London G-20 Global Growth Summit."

A full transcript of Schwartz's remarks, as well as his introduction by New America CEO Steve Coll, is provided below.

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Steve Coll: Welcome, on behalf of the New America Foundation, to the first of several Bernard L. Schwartz Economic Symposiums. We're really thrilled about what's going to unfold on the stage today.

And besides welcoming you and just setting a little of the agenda today, and giving you a little bit more logistics, I want to set today's event in context, very briefly.

First I'd like to thank not only Steve Clemons and his staff; Bernard Schwartz, who I'm going to say more about in a minute, for making this possible; Sherle Schwenninger, our partner who runs our economic growth program.

But I especially wanted to thank the younger staff members who have helped you find your seats and are going to be available to support you throughout the day. They all have name tags on.

This is a debut for them, in a sense, because this is a new office building for us, this is the first major event we've held in this conference... it's like flying a new plane that has a big fancy electronic dashboard.

We're hoping that everything is going to work throughout the day, but if anything arises that troubles or bothers you, please just find some of the folks in the back. Stephanie and Andrew and Sam and the rest of them are here to help you during the day, if you need directions or support of any kind.

I think for us at New America, like many of you in your spheres of work, the economic crisis presented an immediate challenge about how to respond in our sphere of work, and how to think about the crisis and our contribution to discourse and ideas around it.

I think one of the striking features of the last six or seven months is the extent to which it has framed another presidency, the second in a row, in crisis --

A crisis that by its nature is transformational, a crisis that the president did not prepare for during his campaign, was not campaigning to address, and which has about it, extraordinary complexity and opaqueness, and which has had to be addressed on the fly.

And we have... as you'll remember from the period after 9/11, we have been down this collective road before.

And I think one of the parallels between the pressure that 9/11 put on the Bush administration and the pressure that this economic crisis has put on the Obama administration is that there's a tension built into it between that which is politically possible, politically plausible, and the analytical rigor that's required to actually do the right thing.

And we see this every day in the newspapers -- where as the administration tries to get a grip on the scale and nature of the crisis first, and then to craft policy responses second, that this familiar vector of the politically permissible and then the analytical is at the center of its decision-making, sometimes for good and sometimes for ill.

And I think the purpose of this conference and our work over this year is to try to do two things. First, to illuminate the long run, not just the short run.

These obviously are, in a policy sense and in an intellectual sense, bound together, but the rhythm of Washington and the political pressures on the administration emphasize short-term possibilities rather than long-term outcomes, and I think one of the roles of an institution like this is to think ahead.

And so, in crafting this series with Bernard and Sherle's support, we've tried to consider those subjects that will really shape the political economy that the United States has after the crisis settles and after we emerge from the crisis.

And today, in thinking about demand and where demand will come from after the collapse of the role of the American consumer in our political economy, we've tried to create a broad but very specific forward-looking frame of that character.

And I think the second thing we want to try to do is, through discourse about these longer-run subjects, to break down some of the opaqueness that surrounds this crisis and that limits the politics around the crisis.

This is a very complex set of events that have at their core a great deal of secrecy that is built into the crisis. It's built into the securities themselves that created the superficial financial crisis or the initial triggering financial crisis.

It's built into the policies that protect the markets and the trading, and it's built into, to some extent, the policy response that the Obama administration and Congress have brought forward.

It's not simply a matter of traditional journalistic transparency, but intellectual transparency, trying to see through some of the complexity and the short-term nature of the debate to illuminate what matters. And I think at the end of the day today, if we have succeeded at all, we'll have done that for some of you and for many of our audience.

To turn to the event, then, before I introduce Bernard, my colleague Steve Clemons here who runs the American Strategy Program at New America, will take the podium after Bernard's introductory remarks, and he will serve as master of ceremonies and provocateur and idea generator.

He's also going to make sure that we stay on time and move crisply through the day.

Please be aware that where the program does invite your participation and you stand up, all of this is being broadcast, simultaneously on the web and by other means.

Please wait for microphones to speak your piece, please identify yourself, and please be aware that all of this is on the record and available to the public. So, bear that in mind if you have something to say.

Let me finish by introducing our first speaker, Bernard Schwartz, who has been a very important partner of New America. He's a member of our board of directors. Many of you know him as a thought leader, a very successful businessman with a long and interesting career, and more recently, a very prominent philanthropist in New York and in the United States at large.

He's been on the board of New America for five or six years, I believe, and during my time as president, which has lasted just the last couple of years, I've found him just to be an outstanding partner.

What he, I think, works on as a thought leader and a philanthropist is not a fixed ideological or related agenda, but an environment he tries to create in institutions he works with, an environment that has several important characteristics that I think you'll hear from him today.

First, he has at New America focused on talent, and the Bernard Schwartz Fellows program here is his principal legacy to us. Lots of individuals here benefit from the investments we're able to make in young journalists, scholars, writers, and others.

And this, in a time of shrinking newsrooms and pressured endowments at universities, is an ever more important way for New America to contribute to public policy discourse.

I think he also here has fostered an environment of free discourse, and is interested in the exchange of ideas at a high level of quality, and trying to create an environment where that's possible, again, in this town at this time, feels like a real privilege and increasingly a precious one.

And finally, not just all ideas, but those ideas in free discourse that are critical to the future of the United States, and to its way of life and its standard of living.

And in this crisis, this year, thinking about how to fashion a way out of the economic circumstances and the crisis in the financial markets -- that is really what this conference and the next several that we've planned this year are about.

And so, with that, I'd like to welcome to the podium Bernard Schwartz.

[applause]

Bernard L. Schwartz: Good morning and welcome, and thank you all for being here. Those are particularly kind words, Steve, and I appreciate your saying those.

I would like to say something about this organization and the leadership that Steve Clemons has shown here. With the partnership of Steve Clemons and Sherle Schwenninger, there has been an enormous amount of energy and focus on what is important to the United States and what is important to the development of ideas.

In this city where policy is made for the world, I think it is very important. Your contribution to the dialogue is extraordinary. I am very pleased to be part of it.

The title of the discussion today is: What will take the place of the American consumer? It is an important topic, and it is relevant.

The economic and financial crisis highlights the political challenges, and the simultaneous decrease of consumer and manufacturing activity in the United States, the simultaneous decrease of those two things, is an important but unspoken subject in the United States.

I think it is very important; it is important for the world as well, but particularly here. We are going to, I think, be going through a revolution, a change that was not dissimilar to others that happened, gigantic plate changes in the United States' economic and social structure.

When I was a lad, 43% of American people lived and produced on farms, and now, only 2.5% to 3%. That was not an easy transition. It took 50 years to make that transition. There were dislocations, some of which we are still paying for today.

But the United States successfully made that transition. And it made it through inventions and development of technology, new products, new industries, as well as the employment of the old industries that maintain a level, a style of living in this country which is emulated throughout the world.

The economic and financial crisis that we are going through today presents a particular challenge because of that simultaneous decrease. The economic issues were probably the most important factor in the 2008 election. So even though we don't talk a lot about it, the fact is the American people on Main Street understand what this issue is all about.

What it is all about is not only their jobs, but the security of their children, the useful purpose of their lives; they can make contributions to our society and these economic considerations are significant for us.

I think the title of the event and what will happen here today in the discussion will address those issues in part, and the more we think about them, the more we will see the relevance of them.

Now, since the election day of 2008, the nation's concerns about its economic crisis have grown.

Concerns over [the fact that] two and a half to three million people have lost their jobs. Concern over the wealth destruction in their homes and their 401Ks. Concerns over the shrinking job opportunities for young people just entering the job market. And concerns over the pervasive instability of our financial institutions.

There was also concern and anger over the administration's failure to put forth a coherent and detailed plan. Well, I happy to say that the President, Secretary Geithner, Chairman Bernanke, seemed to have found their footing.

This week, the team put some flesh on the spare frame of its toxic asset program. And the President's press conference on Tuesday showed an awesome intellect, while displaying his aggressive ambition to master this crisis.

He ran the ball back quite a way, but he still is in his own territory. And a good start, but a long way to go. But the performance did restore confidence in his leadership and the leadership of this administration.

And I, for one, believe that he bought the time that he needs, and he will use that time to put American back on the path of growth and prosperity. But the challenges are formidable, and I offer some suggestions to get us over the goal line.

First, the administration's economic recovery plan is too small, too unfocused, and too short term. Its three main purposes of the economic recovery plan--there should have been three objectives--job creation, job creation, and job creation.

Now we have available to us probably the most muscular opportunity for sustained new job growth in the infrastructure investment opportunity. Unfortunately, the proposed legislation only provides for about $200 billion dollars over a two-year period, woefully short of meeting the nation's infrastructure deficit.

And it only provides an employment program for two years. This is the one opportunity that offers an immediate economic multiplier that can make inroads in our unemployment, but so far, the administration's plans for infrastructure investment are timid and tentative.

On a similar note, the proposed solution for the banking crisis is more complex than it needs to be.

It does not detail how the toxic assets will be valued, although it does suggest the process, a process that will not begin to work, by their own admission, until October or November of this year. That is a long waiting period if you are concerned about unemployment and in time of crisis.

And it also does not address the public cost. We do not know what this program is going to cost us, and that is the rub. Nobody knows how to evaluate those assets that have to be detoxified, whatever that word is.

[laughter]

Made immune to the toxicity of those assets. In addition, some very constructive ideas were, I think, omitted from the administration's proposals.

One, we have to modify or eliminate mark to market for determining the solvency of banks and insurance companies and financial institutions. This is very important. It is technical, but it is very important.

The reason why the banks, even though they have liquidity to do so, are not in the lending business as they should be, and therefore revitalizing the trust of our economic growth, the reason they are not in it is because they are woefully short in solvency, and they are afraid of making loans that will jeopardize their solvency.

So in the absence of being able to write off, write down those assets without jeopardizing the solvency, the problem remains unsolved. Where eventually we are going to have to do that, but mark to marketing is an accounting concept; it is not a real concept. It is a fictional way to approach what values are that are on your balance sheet for that moment.

I don't know why that has some relevance, but accountants hold on to this doctrine. We have to do something about that if we are going to make inroads into a revitalization of the banking system.

Secondly, expanding support to regional and local banks that are operating well and providing credit, even during this crisis, should be important to the administration.

Although the banking system is cracked or broken, not all banks are in trouble, and we should be able to give support to those banks that are doing well, particularly in the regional area.

Third, we ought to require a national clearinghouse to be applied to trading derivative securities, such as collateralized mortgage. The reason why they escape the surveillance of the oversight committees, such as that is, the reason why they escape is because there is not a clearinghouse, no record of how those things happen. It happens off in the dark somewhere.

And they themselves, the banking institutions, have lost a control and contact of how big that issue is. How much of the paper is out there, and that's one of our problems in terms of evaluating what the problem will cost us.

Another suggestion, and perhaps the most useful, if not the most satisfying suggestion: we want to kick the regulatory and government's and rating agencies in their rear end.

They have not done their job. They don't even know what their job is. And I include the SEC, I include the rating agencies that are commercially driven, private industry, the banking oversight internally.

Everything broke down during this period. But the reason it broke down is not because the system was not set up. The people acted badly. All of us. There's enough blame to go around.

And it starts from the top of institutions. Everybody who runs an institution understands that it has a personality. The people on top set that personality and people underneath follow the lead of the leadership. That's what leadership is.

This time the leadership left them off a cliff. We ought to do something about waking up the regulatory responsibility in this country to meet the responsibilities.

Some other important remedies that have not yet been included and should be part of any long and short term program. We have to give support to home owners to enforce mortgage foreclosures. There's a human pain there as well as an economic pain, and we ought to address that quickly.

This is a situation that gets worse every day and once you lose the opportunity to help a particular mortgage, you lose it forever. We ought to be quick in solving that problem.

We ought to have a further extension of unemployment insurance because that will not only help in our economic situation, it will help the people out there who need help. I think we ought to give consideration to suspending payroll taxes for a two year period for those whose income are under $80, 000 a year.

One of the inequities of the tax program in the United States is that we talk about a progressive tax for income, and there is no progressive tax in capital gains. And there is no progressive tax really, for payroll taxes. It is ineffective in terms of equalization.

We ought to consider reducing income taxes in this country if we really want to get reinvestment going. And initiating an energy program that encourages all gas exploration, requires all government vehicles to convert to natural gas or hybrid fuel.

And combines the automobile industry, their effort for R & D, to combine that into a coherent, intelligent, integrated program would be good for the United States and I believe all energy R & D that the government has a hand in should be combined into a government agency like DARPA.

The amount of advances that have successfully been put forth in the development of new technology and new industry in this country by DARPA is legion. Why not take advantage of that capability? One other remedy the administration has failed adequately to detail is the reshaping of the automobile industry.

I strongly urge a federally sponsored, pre-packaged bankruptcy restructuring as a debtor in possession, the United States, the government, would be able to face all of the stake holders. The unions, the dealerships, the vendors, the management, the bond holders and demand the tough sacrifices and cooperation that needs to be made for that industry.

It cannot be done without a very strong, steely eyed agent of the people sitting down at a conference where all these stake holders are present and make sure that everybody pays for the recovery, and the recovery of the automobile industry is one of the essential things that any administration needs to do to be successful.

Also let's revisit cost eco[?]. And the rules for short selling. That's some thing that we should do, must do, in order to get back to some regulatory feel for what this country is all about.

Now this is a long list of remedies for a too little and hopefully, not too late attempt to fix our economic crisis. It is not intended to be a negative criticism for this administration.

But rather an acknowledgement of the deepening crisis, what promises to be a lengthy and very costly global down turn. We must not under estimate the gravity of this predicament that we are in.

Some further developments are yet to be faced by us. We know it's sitting out there, but we haven't begun to even measure it. And I'm talking about the de-leveraging of the hedge funds portfolio. And the impending burst of the commercial real estate market.

And of the consumer credit bubbles. Those are yet to be calibrated into the equation. They are going to be very large and it's another shoe that's going to drop.

As the crisis continues, as unemployment rates creep toward double digits. As the implications of a permanent decline in our nation's manufacturing base sink in, and the realization that growth in our server sectors will not compensate for the net job dislocation.

As our behavior changes from that of an ultra consumer, to a savings society, the dimensions of a cumulative impact and the consequences of this deep recession have not yet been realized.

And the longer the crisis endures, the more likely we will face a political crisis, which could substitute partisan paralysis and despair for action and repair. If we accept the concept of the economic crisis and the political crisis that are converging, then the time for both solutions becomes critical.

But not all solutions are of equal immediacy. The need for job creation, a sufficient scale that not only reverses the unemployment trend, but begins to build a permanent substitute for the diminishing manufacturing base here in this country.

This is a need for job creation programs that becomes urgent. And I suggest that the first order of business must be a job creation program, new investment in technology, in energy fuel replacement, all of the things that are necessary to make transport easier, better, more efficient.

Those are things that if we develop them well, we'll be able to export and improve our manufacturing base in this country.

And therefore, our political roles must be those programs that can fill this requirement. A robust infrastructure and investment program, the development of alternate fuel sources, and new technologies and those are the things that have always made America great.

The need for bold, far reaching solutions is both critical and immediate. We can respond and I believe we will respond as a nation.

What we do need is political will. And for the first time in a long while, we have leadership that seems to be up for that challenge. And your presence here today and at similar conferences that begins to articulate what these problems are and potential solutions, I think will be a large part of the solution and we thank you for being here.

[clapping]