SEN. EDWARD KENNEDY (D-Mass.): [In progress…] I’d ask Senator Enzi if he would say a word, we’ll go to Patty Murray, and then move on to your comments.

SEN. MICHAEL B. ENZI (R-Wyo.): Mr. Chairman, I thank you for holding this hearing. I think it’s at a particularly critical time, and Mr. Gates is an outstanding person to present.

This year marks 50 years since Sputnik went up, and that’s the last time that we really had a huge turmoil in this country worrying about engineering. It had a drastic effect on our system of education. It inspired people to be the best.

Since that time, of course, computers came along, and stimulated us. I remember some of the early RadioShack models that kids got to play with, and adults admired. And people were stimulated to write programs. Now, programs have gone to a whole different level from that time, and, in fact, I think one of the things kind of stymieing kids is how far it has gone, how can they possibly do something as complicated as what’s out there already.

Of course, the game industry kind of came along, and that stimulated a few more to do some different things in the computer area, but somehow we’ve got to have the kind of a revolution that got the minds working in that new area of innovation. We’ve got to have more kids that are entrepreneurs and risk-takers.

And so, I admire you for what you’ve done, and you’re a great symbol for the country, and an inspiration to kids. I appreciate the effort that you’re making through a lot of different programs with your foundation to make that emphasis.

Anything we can do to get more risk-takers and entrepreneurs out there will make a difference, and, of course, we will have to rely on people from other countries, and hope that they come here and become a part of the innovation that later moves to other countries as it becomes old technology.

So, thank you.

I would ask that my full statement be a part of the record.

SEN. KENNEDY: All statements will be part of the record.

Mr. Gates, if Senator Murray doesn’t give you a good introduction, we’ll make sure we find someone up here that will. (Laughter.) But we’re confident that she will. As you well know, she’s been one of the great voices in this institution and in our country in terms of supporting innovativeness and creativity and competitiveness.

Senator Murray, we’re so glad to have you here.

SEN. PATTY MURRAY (D-Wash.): Thank you, Chairman Kennedy.

SEN. KENNEDY: As well as our veterans, I might add. Thank you.

SEN. MURRAY: Thank you, Chairman Kennedy, ranking member Enzi, members of the committee.

When it comes to making our country more competitive, improving our schools, and preparing our workforce, we face real challenges today. Those challenges require innovative solutions, and that’s why I’m so pleased to welcome to the Senate one of the most innovative thinkers of our time, Bill Gates.

We all know about his work launching Microsoft back in 1975 and turning it into one of America’s most successful companies. Microsoft software is used here in the Senate, on most of the PCs around the world, and increasingly on servers, mobile phones, and broadband networks.

We’re also familiar with his visionary work through the Bill & Melinda Gates Foundation, which has quickly become a global leader in philanthropy, protecting and saving millions of lives around the world.

From my work with him over the years, I’ve seen firsthand his commitment to making our country more competitive. Over the years, he’s tackled these issues from several perspectives. As the leader of a high-tech company, he’s familiar with the challenges of finding highly skilled workers. He supported educational programs and training partnerships with schools and the private sector. And he understands how technology can help move us toward a system of lifelong learning that reflects the reality of tomorrow’s economy.

As the head of a major foundation, he’s invested in education and workforce solutions in the U.S. and around the world. His analysis of our high school system has been provocative and thought-provoking. As someone who helped develop the tools of our knowledge economy, he’s working to make sure that all Americans can benefit from the opportunities that technologies offer.

Personally, I can tell you he’s done so much to support the economy and workers in my home state where Microsoft and Gates Foundation are pillars of our community.

I am very pleased that he’s agreed to share his insights with us here in the Senate today, and I really want to thank him for his leadership, vision, and eagerness to help us address the challenges that are facing our country.

Thank you very much, and welcome to the Senate, Bill.

SEN. KENNEDY: Mr. Gates, we have a rule about having our testimony from our witnesses usually 24 hours. You have broken that rule; you got yours here a week ago. (Laughter.) And we thank you. It gives us an idea, again, about efficiency, and we thank you very much. It’s a very extensive testimony, let me add.

BILL GATES: Thank you.

Should I go ahead?

SEN. KENNEDY: You may proceed.

BILL GATES: Thank you.

Well, thank you, Senator Murray, for that kind introduction and for your leadership on education and so many other issues that are important to Washington state and the nation.

Chairman Kennedy, Ranking Member Enzi, members of the Committee, I’m Bill Gates and I am the chairman of Microsoft Corporation. I am also a co-chair, with my wife Melinda, of the Bill & Melinda Gates Foundation. It is an honor for me to appear before you today, and to share my thoughts on the future of American competitiveness.

Any discussion of competitiveness in the 21st century must begin by recognizing the central role that technology and innovation play in today’s economy. The United States has a great deal to be proud of in this respect. Many of the most important advances in computing, healthcare, telecommunications, manufacturing, and many other fields have originated here in the United States.

Yet when I reflect on the state of American competitiveness, my feeling of pride is mixed with deep anxiety. Too often, it seems we’re content to live off the investments previous generations made, and that we are failing to live up to our obligation to make the investments needed to make sure the U.S. remains competitive in the future.

We know we must change course, but we have yet to take the necessary action. In my view, our economic future is in peril unless we take three important steps:

First, we must equip America’s students and workers with the knowledge and skills they need to succeed in today’s knowledge economy.

Second, we need to reform our immigration policies for high skilled workers so that we can be sure our workforce includes the world’s most talented people.

And third, we need to provide a foundation for future innovation by investing in new ideas and providing a framework for capturing their value.

Today, I would like to address these three priorities.

First, and foremost, the U.S. cannot maintain its economic leadership unless our workforce consists of people who have the knowledge and skills needed to drive innovation. The problem starts in our schools, with a great failure taking place in our high schools. Consider the following facts:

The U.S. has one of the lowest high school graduation rates in the industrialized world. Three out of 10 ninth-graders do not graduate on time. Nearly half of all African-American and Hispanic ninth graders do not graduate within four years. Of those who do graduate and continue on to college, nearly half have to take remedial courses on material they should have learned in high school.

Unless we transform the American high school, we’ll limit the economic opportunities for millions of Americans. As a nation, we should start with the goal of every child in the United States graduating from high school.

To achieve this goal, we need to adopt more rigorous standards and set clear expectations. We must collect data that will enable students, parents and teachers to improve performance.

And if we are going to demand more from our students, we’ll need to expect more from teachers. In return, we must provide teachers the support they need, and we must be willing to reward those who excel. The Teacher Incentive Fund is an important first step.

Making these changes will be hard, but positive change is achievable. I know this through my work with the Gates Foundation and our education partnerships throughout the country, and through Microsoft’s education initiatives, including our Partners in Learning program. I mention several examples of progress in my written testimony, but let me mention three in particular:

The Philadelphia School District joined with Microsoft to create a 750 student “School of the Future”, which opened last September. This public high school is rooted in the vision of an empowered community where education is continuous, relevant, adaptive, and incorporates best-in-class technology in every area of learning.

Second, New York City has opened almost 200 new schools in the last five years, with many replacing the city’s most underperforming schools. Our foundation supports this effort through advocacy and grant-making. The first set of new schools achieved an average 79 percent graduation rate compared to graduation rates ranging from 31 to 51 percent at the schools they replaced.

Early-college high schools are perhaps the most innovative initiative underway nationally. The approach is to recruit low-performing students to attend high schools that require enrollment in college courses. The results are astounding. Currently, there are more than 125 early-college high schools in operation around the country. So far, more than 95 percent of the first class of ninth graders at the original three early-college high schools have graduated, and over 80 percent of students have been accepted into four-year colleges.

Such pockets of success are exciting, but they are just the start. Transforming our education systems will take political leadership, broad public commitment, and hard work. This committee has done very important work in this regard, and as you consider legislation during this Congress, there are opportunities to build on this work.

The challenges are great, but we cannot put them aside. That is why our foundation has joined with the Broad Foundation to support the Strong American Schools Partnership. This is intended to inspire the American people to join an effort that demands more from our leaders and educators, while ensuring that all of our children benefit from good teachers, high expectations and challenging coursework.

A specific area where we are failing is in math and science education. In my written testimony, I detail concerns about the alarming trends in elementary and secondary schools. We cannot sustain an economy based on innovation unless we have citizens well educated in math, science, and engineering.

Our goal should be to double the number of science, technology, and mathematics graduates in the United States by 2015. This will require both funding and innovative ideas. We must renew and reinvigorate math and science curricula with engaging, relevant content. For high schools, we should aim to recruit 10,000 new teachers and strengthen the skills of existing teachers. To expand enrollment in post-secondary math and science programs, each year we should provide 25,000 new undergraduate scholarships and 5,000 new graduate fellowships.

America’s young people must come to see science and math degrees as key to opportunity. If we fail at this, we won’t be able to compete in the global economy.

Even as we need to improve our schools and universities, we cannot lose sight of the need to upgrade the skills of people already in our workforce.

Federal, state, and local governments and industry need to work together to prepare all of our workers for the jobs required in the knowledge economy. In the written testimony, I highlight some of Microsoft’s work during the past decade to provide IT skills training to United States workers, such as our Unlimited Potential program. We’re working with other companies, industry associations, and state agencies to build a workforce alliance that will promote the digital skills needed to strengthen U.S. competitiveness.

As a nation, our goal should be to ensure that by 2010, every job seeker in the United States workforce can access the education and training they need to succeed in the knowledge economy.

The second major area, and one I want to particularly underscore today, is the need to attract top science and engineering talent from around the globe to study, live and work in the United States.

America has always done its best when we bring the best minds to our shores. Scientists like Albert Einstein were born abroad but did great work here because we welcomed them. The contributions of such powerful intellects [have] been vital to many of the great breakthroughs made here in America.

Now we a face a critical shortage of scientific talent. And there is only one way to solve that crisis today: Open our doors to highly talented scientists and engineers who want to live, work, and pay taxes here.

I cannot overstate the importance of overhauling our high-skilled immigration system. We have to welcome the great minds in this world, not shut them out of our country. Unfortunately, our immigration policies are driving away the world’s best and brightest precisely when we need them most. The fact is that the terrible shortfall in the visa supply for highly skilled scientists and engineers stems from visa policies that have not been updated in more than 15 years. We live in a different economy now, and it makes no sense to tell well-trained, highly skilled individuals – many of whom are educated at our top universities – that they are not welcome here.

I see the negative effects of these policies every day at Microsoft. In my written testimony, I discuss some of the shortfalls of the current system. For 2007, the supply of H1-B visas ran out four months before the fiscal year even began. For 2008, they will run out even earlier, well before degreed candidates graduate. So, for the first time ever, we will not be able to seek H-1Bs for this year’s graduating students. The wait times for green cards routinely reach five years, and are even longer for scientists and engineers from India and China, key recruiting grounds for skilled technical professionals.

The question we must ask is: “How do we create an immigration system that supports the innovation that drives American growth, economic opportunity and prosperity?” Congress can answer that question by acting immediately in two significant ways:

First, we need to encourage the best students from abroad to enroll in our colleges and universities, and to remain here when they finish their studies. Today, we take exactly the opposite approach.

Second, we should expedite the path into our workforce and into Permanent Resident status for highly skilled workers. These employees are vital to U.S. competitiveness, and we should encourage them to become permanent U.S. residents so they can drive innovation and economic growth alongside America’s native born talent.

Finally, maintaining American competitiveness requires that we invest in research and reward innovation. Our nation’s current economic leadership is a direct result of investments that previous generations made in scientific research, especially through public funding of projects in government and university research laboratories.

American companies have capitalized on these innovations, thanks to our world-class universities, innovative policies on technology transfer, and pro-investment tax rules. These policies have driven a surge in private sector research and development

While private sector research and development is important, federal research funding is vital. Unfortunately, while other countries and regions, such as China and the European Union, are increasing their public investment in R&D, federal research spending in the United States is not keeping pace. To address this problem, I urge Congress to take action.

The Federal Government should increase funding for basic scientific research. Recent expansion of the research budgets at the Department of Energy and the National Science Foundation is commendable, but more must be done. We should also increase funding for basic research by 10 percent annually for the next seven years.

Second, Congress should increase and make permanent private sector tax credits for R&D. The United States ranks 17th among OECD nations in the tax treatment of R&D. Without a renewed commitment to R&D tax credits, we may drive innovative companies to locate their R&D operations outside U.S. borders.

We must also reward innovators. This means ensuring that inventors can obtain intellectual property protection for their innovations and enforce those rights in the marketplace. America is fortunate that our leaders recognize the importance of intellectual property protection at home and abroad. I know I join many other Americans in thanking this Congress and this Administration for their tireless efforts to promote such protection.

The challenges confronting America’s competitiveness and technological leadership are among the greatest we have faced in our lifetime. I recognize that conquering these challenges will not be easy, but I firmly believe that if we succeed, our efforts will pay rich dividends for all Americans. We have had the amazing good fortune to live through a period of incredible innovation and prosperity. The question before us today is: “Do we have the will to ensure that the generation that follows will also enjoy the benefits that come with economic leadership?” We must not squander this opportunity to secure America’s continued competitiveness and prosperity.

Thank you again for this opportunity to testify. I welcome your questions on these topics.

SEN. KENNEDY: Well, thank you very much, Mr. Gates, and thank you particularly for your extensive testimony. I hope members will get a chance to sort of take that with them. It’s a very detailed, elaborate testimony that expands on each of these points with an enormous amount of useful and constructive information.

We’ll try and do four-minute rounds. We’ve got quite a group here. I thought of less than that, if we can do – hopefully we’ll have the questions short and have the answers. Let me – so, we’ll do four-minute rounds.

Let me ask you, we’re going to address a number of these issues on the immigration issue. We had a chance to talk, and we’re continuing to talk, and I think the points that you make, make a lot of very, very good sense, and we’ll work closely with you when we have an opportunity to get to that.

I’d like to ask you a broader question, and that is about sort of the spirit of innovation and discovery. Your company is the company in the world that really epitomizes innovation and discovery. We have seen this nation at different times, whether it’s building the Brooklyn Bridge, or going to the moon, whatever, different times in our country where we had this spirit of innovation and discovery.

I’m interested in what you would say, or what your comment on the broad theme about how you generate that kind of spirit of innovation and discovery, and have it something that’s valued by the American people, so that they expect leadership in these areas by those who are going to lead this nation. How do we get to the point where this nation is just not eating seed corn from the past generation, as you kind of referenced, but really is going to be the kind of generation that is going to add an additional dimension to our society, and in all the areas that are out there? I mean, the life science century here in terms of human progress and the human genome and stem cell research; the possibilities are virtually unlimited. How does the nation, what should we expect, what can you tell us and tell the American people about what they ought to expect and what leaders ought to provide?

BILL GATES: Well, the opportunities for innovation in the computer field and in the health field in particular are much greater than I think people recognize. The pace of innovation in those areas will be far more rapid than ever before. And so there will be some wonderful breakthroughs, computers that we can talk to, and continued low cost, even using computers in education in some ways that we’ve never seen before, so that every kid can access the world’s knowledge and find other kids who have similar interests. I think as people see that, there will be a great level of excitement.

The world at large, and these two things that the United States has, we have the world’s best universities, the top 20 universities, a list, anywhere from 15 to 19 of those people would say are in the United States. Now, that’s recognized by countries overseas, and they’re likewise making investments in their universities, but that is a huge advantage.

And even if you look at where the companies that do technological advances, biotech or computer companies, where they’ve grown up, it’s largely where the top universities are, as opposed to just the large population centers.

The other thing that people envy is this is the country that the most talented people in the world want to come and work at. And so if you look at any of the technology companies, which are the ones I know best, they are quite a mix of people who grew up in the United States and foreign born people.

The excitement about these breakthroughs, we definitely need to do more to share that story, because if we look at the enrollment trends in science and math, it continues to decline, and the declines are even more pronounced if you look at women in those fields or minorities in those fields. And so you have this contradiction, here you have Apple, Google, Microsoft, great companies doing neat things, and you’d expect that would draw the young people into those fields, and yet because of the curriculum or the quality of the teaching in those areas, it’s not happening here, and that’s partly why there is this shortage, and yet other countries are putting the energy into that.

SEN. KENNEDY: Let me just ask, because my time is going to be up, you outlined in particular the areas of education, and it’s – and you’re noted for accountability. What do you expect of the business community? This would be extensive kinds of investments that you’ve outlined in terms of the kinds of recommendations. What should we expect of the business community? What role can they play in terms of helping to move in these directions, particularly in the areas of education? Do you see a role for them in there? What should we expect from them, what should we ask them?

BILL GATES: Well, first and foremost, the business community has to be an advocate for high-quality education, that those investments are fundamental to their future. The business community also will be a leader in terms of workforce training. There are some very innovative ways of using online Internet training and skills testing that is starting in the business community, but I think will even start to be used in universities as well.

Businesses like Microsoft that have a particular expertise, in our case software, can provide that to schools, can make sure our employees are volunteering and getting the computer science learning, even down in the elementary schools to be as strong as it can be.

So, I think business is seeing this as a top issue, and wants to get more involved. In some cases coming into the schools and helping out, that’s hard for them to do, but I think the desire is definitely there.

SEN. KENNEDY: Senator Enzi. Thank you.

SEN. ENZI: Thank you, Mr. Chairman.

I really appreciate your comments about rewarding teachers who excel. We did have in our appropriations a little over $100 million for doing that, but there seems to be some concern about paying a little bit more to somebody who does well, and that got pulled out of the appropriations in the final bill.

A year ago I was in India. We were trying to find out why they graduate so many scientists and engineers. I did have one person that I thought had some great insight. They said that they didn’t have any professional sports teams. (Laughter.) So the highest pay and the most prestige that they could get was being a scientist or an engineer or a doctor, something in that kind of field.

We’re trying to strengthen America’s competitiveness in this global economy, and we know that workers have to know and understand math and science, and once kids drop out of math and science they never seem to get back into it.

So, how do we do that? Do we have to fire them up with fear or just desire of knowledge? How do we get kids interested in the science and math fields?

BILL GATES: Well, one of the positive data points in this area is that there’s over a thousand high schools that the Gates Foundation has helped support, that take a bit of a different approach. These are smaller high schools. These are where kids are taking fewer subjects at a time. And a number of those have themes, and the themes are quite varied. Some are early-college, some are high-tech, some are art, construction, aviation, Outward Bound. But it takes the math curriculum, and instead of it just being math for math’s sake, they teach it in terms of solving a problem, dealing with a project.

And many of these schools are seeing much higher percentages of kids interested in going into math and science. For example, High Tech High, which there’s quite a few of those now, over 30 percent of the kids say they want to go into math and science, and so that’s more than double the number that you have out of the typical high school.

And so I think the quality of the math and science teachers, that they are engaged in their field, they can share the love of their field, and some improvements in the curriculum are a very important element to that.

SEN. ENZI: Thank you. There’s a first robotics competition that gets kids interested in engineering and some of those things, too. And I’ve been doing an inventors’ conference in Wyoming every year to stimulate kids to think about inventions, not necessarily ones as complicated as computers, just some basic changes, and that’s been having some success at getting kids into science.

Since we have a lot of people here, I will go ahead and relinquish the rest of my time. I really appreciate your testimony, and I’ll be inviting you to my inventors’ conference.

BILL GATES: Excellent. Thank you.

SEN. KENNEDY: Senator Dodd.

SEN. CHRISTOPHER DODD (D-Conn.): Thank you very much, Mr. Chairman.

And Mr. Gates, welcome to the committee, and all of us want to underscore the comments of Senator Kennedy and Senator Murray in the opening remarks. We have great admiration for you, what you’ve done with your company, but also what you’re doing with the foundation, and your deep commitment to these issues, so thank you immensely for that.

Vern Ehlers and I have a piece of legislation on voluntary national standards. We emphasize the word voluntary because of the problems with mandated standards. We’d invite your attention to take a look at it. We provide some incentives in there to try and get them, given the fact that we see states dumbing down in too many cases test scores here so that they’re allowed to stay in operation but certainly not providing the kind of standardized judgments that we want to make about whether or not we’re reaching the goals that we all want to have for us.

And I appreciate you mentioning the university high schools. We had a hearing of this committee at the University of Hartford several years ago, which is one of those institutions you talked about here, where the university has the high school on the campus of the University of Hartford. In fact, Senator Alexander and I had a witness before this committee of a young man who is a student at that university high school who was very compelling to all of us here in the experience he’s having as a result of being drawn out and brought into that environment, and making a difference with it.

The United Technologies Corporation in Connecticut, George David, who I think you may know the chief executive officer there, offers to all of their employees worldwide the time, the cost, and the incentive of offering stock to students who get a higher degree, who are employees of United Technologies. The cost to the corporation is obviously a significant amount, but the advantage has been tremendous in terms of retention and productivity of their employees. So, there are very creative ideas that are occurring all over the place.

I want to draw your attention, if I can, to a subject matter — we’ve spent a lot on this committee over the years dealing with zero to three. In fact, one of your great pals and friends, Warren Buffett, his daughter, Suzy Buffett, is very involved in this issue as well.

I wonder if you might draw some attention to that question here in response to this idea of early intervention with the brain development. We start identifying – in fact, many people tell you that by the time a student is in the third grade, already if you’re not succeeding and moving forward, their ability to succeed and develop the appetites for math and science diminish to a large extent.

And there have been some suggestions of starting things like universal pre-K programs where you really have quality childcare, so that you begin to get that parental involvement early on to develop and nurture the ability of these children to be ready to learn, to then accept the disciplines in math and science.

I know you’ve done a lot of work in the health related areas, but I wonder if you might just address some of the early interventions that might be made to increase the possibility of students developing these appetites.

BILL GATES: OK, first, in terms of the tests, I think it is important for us to know where we stand. Mathematics is not different in one state versus another state, and so having a clear understanding of where our 4th graders, 8th graders, seniors are in these areas, we’re certainly a big advocate of that.

The problem you get into is as soon as you realize how bad the situation is, then it’s like a hot potato, people say, well, what’s the problem? And I think NCLB, one of the great things is it has pointed out these deficits. There’s a lot of discussion about how that can be improved, but I think overall that’s a big contribution that people have seen the minority achievement is not where it should be, and various high schools are not where they should be.

In terms of the early learning part, there’s varying data on this. If you take the United States at the 4th-grade level, we are still largely at the top in testing of 4th graders. By 8th grade we’re in the middle of the pack, and by senior year we’re basically at the bottom of rich countries.

And so there’s clearly something happening there to our broad student people. We have the highest dropout rate, and that’s why the foundation, you know, even though early learning is important, elementary is important, we took high schools as our big focus, particularly because there wasn’t a lot going on in that area.

We do in Washington state have a couple of early-learning pilots that are very similar to what Suzy Buffett has done in Omaha, and what a number of people have done in Chicago.

Some of the tracking data suggests those early interventions last, some of the data suggests those early interventions fade in benefit because the environment, both the social and home environment that those kids are in, that within, say, three years a lot of that has gone away.

Some of these tough issues in education like merit systems that teachers will embrace, or curricula that uses technology in new ways, those are some of the issues that in the middle of next year, as I get moved to be full time at the foundation, I want to spend a lot more time sitting and watching what goes on, and learning a lot about.

Early learning has some real benefits, but the numbers are still there’s quite a range of opinions about how impactful it is.

SEN. DODD: I appreciate that very much, look forward to that as well.

Thanks, Mr. Chairman.

SEN. KENNEDY: Senator Gregg.

SEN. JUDD GREGG (R-N.H.): Thank you.

Let me join my colleagues in thanking you for your efforts in putting your dollars behind your language, on the issue of education especially. And I agree with you that the issue is at the high school level. And when Senator Kennedy and I were putting together the No Child Left Behind, we focused on math and science because it was a quantitative event, but we didn’t get into the high school, because the federal government really doesn’t have a role in high school, we don’t fund high schools.

The one place we do have a role is in this area of immigration, which you’ve mentioned. And I’m also in total agreement with your view, which I would characterize, maybe inappropriately, as going around the world and picking the best and the brightest, and having them come to the United States. And that’s what we’ve done as a culture, and we’ve been very successful.

So, I guess my first question to you is, do you have a number that you think we need relative to the H1-B visa program? Today it’s statutorily set at about 65,000, but we’re up to 520,000. Do you think that number should be raised to 200,000, 300,000? What would make America – give us the capacity to get the people we need to come here to take advantage of our society, and we take advantage of their abilities?

BILL GATES: Well, my basic view is that an infinite number of people coming, who are taking jobs that pay over $100,000 a year, they’re going to pay taxes, we create lots of other jobs around those people, my basic view is that the country should welcome as many of those people as we can get, because people with those great talents, particularly in engineering areas, the jobs are going to exist somewhere, and the jobs around them are going to be created wherever those uniquely talented people are.

So, even though it may not be realistic, I don’t think there should be any limit. Other countries have systems where based on your education, your employability, you’re scored for immigration, and so these people would not have difficulty getting into other rich countries. In fact, countries like Canada and Australia have been beneficiaries of our system discouraging these people with both the limits and the long waits and what the process feels like as they go through the security checks.

There are some suggestions about if we could, say, in the green card system not have to count the family members. If you somewhat more than doubled that, you could start to clear the backlog and not have that be a problem.

Likewise, with H1-B, if you had a few categories, like people who are educated here in this country, that you gave an exemption outside of the quota, that somewhat more than doubling would get us what we need.

But to some degree that’s sort of like a centrally managed economy, so we’ll —

SEN. GREGG: Unfortunately, because my time is going to be up, unfortunately that’s what we have here. I agree 100-percent that we shouldn’t have a limit on highly skilled people coming into the country, but we do have a centrally managed economy, and right now it’s not being managed well.

So, I would presume that if we were to double the number, say, to 300,000, you wouldn’t have any problem with that, since you’re willing to go to infinity?

BILL GATES: Well, it would be a fantastic improvement. And I do think that there’s a draft bill that has provisions that would largely take care of this problem.

SEN. GREGG: We also have something called a lottery system, which allows 50,000 people in the country, simply because they win a lottery, and they could be a truck driver from the Ukraine. And last year I offered an amendment, which would have taken that system and required 60 percent of those to be people with advanced degrees in order to participate in the lottery, so you’d have to be a physicist from the Ukraine before you could win the lottery. Do you think that would be a better approach maybe?

BILL GATES: Well, I don’t – I’m not an expert on the various categories that exist, and I don’t actually know that lottery system. I know the engineers at Microsoft, nobody comes up to me and says, “Hey, I won this lottery.”

SEN. GREGG: Well, that’s the problem.

BILL GATES: But there’s a lot of different categories in there, and I’m not sure how they should all be handled. But I do know in the case of the engineering situation, we should specifically have that be dramatically increased.

SEN. GREGG: Thank you.

SEN. KENNEDY: Normally, Mr. Gates, we’d have Senator Murray here. She’s chairing a veterans committee at this time, and I think we understand the importance of that, particularly at this time. So, she is necessarily absent, and wanted to extend her wishes.

Senator Clinton.

SEN. HILLARY RODHAM CLINTON (D-N.Y.): Thank you, Mr. Chairman, and welcome, Mr. Gates. We’re delighted to have you.

Senator Enzi made reference to Sputnik 50 years ago, and one of the ongoing results of that event was to really focus America’s attention on what we needed to do with math and science education, to try to provide loans for school, the NDEA loans. I got one, even though I was not a math or science person. And I think it’s really appropriate that in 2007 we would take another look at what we need to do to be competitive, and to maintain our scientific and technological edge.

You said in your testimony that we should set a goal of making sure every young person graduates from high school, which I agree with, and there are benefits to that; even if the curriculum is not as good as we would want it, or the outcomes, it is still a positive.

And then in your testimony you also talk about the skills of the existing workforce. And I’d like to turn our attention to that for a minute, because clearly we have an existing workforce that we hope can be supplemented both by people coming from abroad, but also by a better pipeline of our own citizens.

How do you see the most effective way of trying to improve the skills of the workforce here? I know you have a couple of programs that Microsoft has used to try to do that. Could you give us a little more detail on what works to improve the IT and computing skills, and how we could perhaps focus on that also from this committee to try to improve the outcomes?

BILL GATES: Many of the Microsoft programs have focused on the areas where you have industries which are reducing the number of employees, and then going into those situations and giving the training – and fairly basic training, this is not high-level engineering, this is training somebody so they’d be effective in a call center environment or an aid type work, which is very good work. And so we’ve gone to the hotspots where you have, say, a factory shutting down, or significant employment, and made sure that the opportunities to learn are there.

One of our most successful things, that wasn’t really intended as a workforce training thing, was actually the libraries program, where we went to all the libraries in the country. The computers were funded by the foundation and Microsoft gave the software. And it’s been amazing to see people coming into those libraries who are looking at job opportunities, and then looking at what kind of training can be available.

One of the new trends is that training instead of just being in a classroom, that the videos, great videos and great tests for these things, are starting to become available on the Internet. And so if you’re lucky enough to be able to get to a computer, either in a library or a community center or somehow, then you can access all of this great learning material, and even test your skills and even get accreditation.

And so Microsoft, Cisco, and a number of others have created accreditation tests not just for high-level engineering but for like operators and other jobs. And people with those certificates are able then to move into the workforce in a fairly straightforward fashion.

So, we can use technology to improve these training opportunities, we can go after the hotspots, and then just broad infrastructure, going beyond libraries, can give people more access.

SEN. CLINTON: I also think though that some of these programs would be useful in our high schools, and even our junior high schools, because a lot of the data that I’m seeing says that kids are bored, they don’t feel stimulated, there’s not enough technology in their school environment compared to their outside of school environment.

Finally, Mr. Gates, you made a brief reference to health IT as you made your initial remarks. This is something that Senator Kennedy and Senator Enzi and I and others have been working on for a number of years to try to create an architecture for a national system of health IT in the medical field, which we think will have innumerable benefits for patients and providers and others.

Could you say just an additional word about what you see for the future of health IT, and how important it is that we begin go set up some kind of a system so that everybody knows what the standards are, and how we can begin to implement that?

BILL GATES: Well, yeah, the current state of health IT is surprisingly poor. That is, the amount of paperwork, the information that’s incorrect, the overhead in the system of just trying to shuffle things around, and we see that, whether it’s in the costs or also in the outcomes. If you’re away from your normal location, and you’re injured, how do they have access to the information? And so far a lot of the things have just made you sign more privacy release statements.

And so I think Microsoft, Intel, a lot of the technology companies are saying we’ve got to invest more in healthcare. We created ourselves just two years ago a new business in this area, because there’s really an opportunity to create the software.

We’re also seeing that consumers are interested in looking at their healthcare costs, not for themselves partly but also, say, you have an older relative that you’re helping to manage their bills, what’s going on; how do you easily see what’s going on and make sure the right choices are being made there?

And if we could get some standards, then this idea of having it online and having people make choices, even being able to look at quality data, look at cost data, we’d get more of a market dynamic into the health system, which is a very important thing.

So, there are some initiatives that we’re behind, and we’ve got some of our experts coming out and spending time talking about that. There is more that Congress could do on this, because within the next three or four years we ought to be able to make a dramatic change and reduce those costs, and create the visibility that better choices and incentives are driven into the system.

SEN. KENNEDY: Thank you very much.

Senator Bingaman and Senator Alexander have been particularly involved in this, in competitiveness legislation, as are many members of this committee, and so we acknowledge that effort, and glad to call on Senator Alexander.

SEN. LAMAR ALEXANDER (R-Tenn.): Thank you, Mr. Chairman.

And, Mr. Gates, thank you for coming.

I’m especially glad that you came, because it calls attention to what Senator Kennedy just mentioned. Two years ago, we asked the National Academy of Sciences a simple question: Exactly what should we do to keep our brainpower advantage? And they gave us 20 specific recommendations in priority order, starting with K-12. Up to 70 senators have been working on that in one way or the other over the last two years. And our two Senate leaders, Reid and McConnell, introduced that on Monday into the Senate with broad support, and it includes most of the provisions that you recommended, or at least many of your recommendations that were in your excellent testimony.

So, your presence here helps call attention, is getting more attention than our announcement on Monday, and I’m glad to call attention to what’s going on, and it’s not enacted yet.

Also, as Senator Gregg mentioned, the immigration bill that many worked on had several provisions, stapling a green card to the lapel of the PhD or master’s degree person, foreign-born person, and there is an opportunity I would say this year as we work on immigration to significantly expand that. I think there’s a broad consensus in the senate that we ought to give more preference to highly skilled, foreign-born people. We should be insourcing brainpower, and we just need to think of the ways to do it.

My question goes back to a comment that Senator Enzi made, a reference you made to your work with the foundation. Twenty-five years ago I noticed that not one state was paying one teacher one penny more for being a good teacher. I was governor of Tennessee at the time. Now, I didn’t know that until my second term as governor. So, I set about to try to change it. And one of the persons I worked with was Albert Shankar, the late head of the American Federation of Teachers, who said, “Well, if we can have master plumbers, we should be able to have master teachers.” But we’ve made very little progress on that since then, because we haven’t been able to find a fair way to reward outstanding teachers and outstanding school leadership.

Yesterday, Senator Kennedy hosted a discussion where every witness talked about the need for gifted mentor teachers, gifted teachers to go into the inner city, gifted teachers to teach gifted students, I mean, exceptional men and women, and yet we dance around the problem that we have no way to reward them for their excellence with higher pay.

Now, the teacher incentive fund you mentioned in your testimony was in No Child Left Behind. It is President Bush as recommended $200 million for next year, but it got cut, maybe by accident, in the confusion between last session and this session. But it basically has a series of programs across the country, Philadelphia and New York, places where you’re working, some working with local union leadership to find fair ways to reward outstanding principles in teachers.

So, my question for you is, and my hope would be as you move more into your foundation work, do you think it would be useful the next five years to encourage such efforts as a teacher incentive fund, and private foundation efforts to crack this nut of finding multiple fair ways of rewarding excellence in teaching and school leadership by paying people more for teaching and leading well?

BILL GATES: Yeah, absolutely. Having the incentive system work is very, very important. And one of our challenges is that these two areas, health and education, that are a higher and higher percentage of the economy, bringing the right type of metrics and sort of market-based activities to those has proven to be very difficult. And I think in terms of how teacher evaluation is done, we should encourage lots of experiments and make sure that people who are doing the experiments get some extra funds to go and do those.

This is a great example where we don’t know the answer today of what is a merit system that would pay great teachers more, that teachers as a whole would feel is a predictable, well run system. And as we do these experiments, we might have to invest more in teacher remediation or reviewing what’s going on with teachers.

Technology can help. The cost of actually seeing what goes on, helping teachers see how they can do better and letting them learn from other teachers, seeing what they do and using their curriculum, the cost of that is coming down quite a bit.

So, we need to make sure that a willingness to try these things that are out there, and that some of the extra money that it requires is there. Simply if you just say we’re going to do merit-based today, people don’t think the measurement approaches are going to be predictable enough for them.

SEN. ALEXANDER: Thank you, Mr. Chairman, and I think the datacenters that Mr. Gates suggested in his testimony might be helpful in gathering the increasing information on student achievement, and relating that to teacher effectiveness.

SEN. KENNEDY: Thank you very much.

Senator Reed.

SEN. JACK REED (D-R.I.): Well, thank you very much, Mr. Chairman, and welcome, Mr. Gates. Thank you.

Your testimony I found was very persuasive, and you said, committed quality teachers are the linchpin of a good education system,” and I think many of the questions you’re getting today are sort of circling around that issue of how do we get quality teachers into our system. And I’m just very curious in general what are your thoughts of the things we could be doing, things that we could do in partnership with private foundations like your own, what are the impediments that you see from your perspective to getting good teachers technically qualified in the right places?

BILL GATES: Well, I definitely think if you could have an incentive system that allowed good teachers to be paid more, you would draw more people into the field. So, you have this Catch-22 that because there’s no good measurement system, you don’t have people who like to have that type of approach taken.

And historically we’ve probably benefited – it was unjust, but because women had less opportunities in other fields, there were super-talented people who went in, even though the economic rewards were not that great. That’s changed; a lot of those talented women are now the majority of our business schools, our law schools, and that’s a good thing.

SEN. REED: Some of them are sitting right next to us.

BILL GATES: Absolutely.

And so the under-attention to making it attractive to be a teacher, and having measurement systems there, now it’s more important than ever.

There are some of these charter schools that we’re involved with that have been given permission to certify teachers, and so they’re able to take people who are math and science oriented, and who do not have, say, the broad set of requirements that a normal teacher certificate would require, but they’re allowed to come in and teach in those areas. And so how much loosening up you could do to let people come in both full time for a number of years, or even in some cases part time to come in and share their enthusiasm and be part of that mix, I think we need a lot more experimentation with that. And the charter structure in many states has allowed us to try some of those things out, and in California in particular it’s been quite effective.

SEN. REED: Well, I agree with your insight that the metrics are very important, and hopefully that would be something that you would be working on through your educational issues, and other thoughtful individuals and groups.

And then the second issue, if you’ve got the metrics right, how do you actually do the compensation? Some thought has been given to using the tax system now, because it might avoid the whole issue of who decides in terms of the pay, is it a local level. And a group of policy people of the Horizon Projects have suggested significant tax breaks for qualified teachers who meet certain criteria.

And it just strikes me is that might avoid some of the fighting we’ve seen at the local level between this notion of merit pay is distrusted because who’s going to distribute it, how are they going to decide, et cetera, and I’m just wondering if you have a thought or comment.

BILL GATES: Yeah, I don’t see any technique that avoids the hard fact that a merit-based system involves making judgments about you did a good job, you did not do a good job. It’s kind of like in healthcare where you say this expense is reasonable, this expense is unreasonable. Who’s willing to stand up and say, yes, I made that choice?

And in terms of saying, you know, to a teacher, no, you need to go under remediation; or, no, you’ve been in remediation three times, you’re not the right person for this career, that’s in a political sense very, very difficult. But all these merit-based systems involve those judgments being made. No matter what the source of the money is, that really needs to happen.

And in all these educational things you have to always be careful, because when you create new schools, you often attract, even if you have no criteria for it, the better teachers will just show up there, and the better students will just show up there. And so when you look at these results, you have to be very careful that you’re not just seeing that effect as opposed to some new approach.

That’s partly why we’ve gone in the foundation to 1,400, and we’ll get up to about 2,000 high schools, a large enough number that it’s not just a few good people or that effect. And so there are some big cities, including New York, Chicago and Washington, DC, where we’re trying to do things at large scale.

Some things are less controversial, like having the smaller high schools, or having the theme-based high schools. The pay-practice issues have been the toughest. And so although there’s been some changes, for example, in New York the mayor took some of the worst things of the seniority system, of people being able to bump other teachers around, and was able to override that. But most of what we’re doing is more about curriculum and structure, and so far, although we’d love to have it be about it, it’s not been so much about the teacher evaluation.

SEN. REED: Thank you very much.

Thank you, Mr. Chairman.

SEN. KENNEDY: Do you remember who was your best teacher when you were growing up?

BILL GATES: Yeah. I hate to say it, I went to a private high school myself.

SEN. KENNEDY: OK.

BILL GATES: But, yes, absolutely.

SEN. KENNEDY: But, I mean, you remember who the teacher was. Was that person the person with the most degrees, or was it –

BILL GATES: It was a person who understood science, one science teacher, one math teacher, who loved the field. That is, they had a college degree in the subject, but they also were interested in following the subject, and just loved the idea that somebody else was interested in what they were interested in. So, it’s that engagement certainly made a huge difference for me.

SEN. KENNEDY: That’s good.

Senator Burr.

SEN. RICHARD BURR (R-N.C.): Thank you, Mr. Chairman.

You remember who was the strictest teacher you had? (Laughter.)

Part of the challenge that we’ve got is that we’ve got a generation of kids that are relying on us to make the right decision. And I want to thank you for your willingness to come in, and more importantly, I want to thank you and your wife for your passion for education, but also your investment in education.

I think this weekend you might have spent some time with the president of our university system, and your wife’s familiarity with Duke University, you know about higher education in North Carolina.

I want to talk about high school, because I think that should be our passion today.

You made a statement in your testimony, “The goal should be that every child should graduate prepared to go to higher education or to work.”

And the need to transform America’s high schools for the 21st century, let me ask you, do our expectations for high school students limit our ability to transform the system?

BILL GATES: Yeah, absolutely. The low standards we have today allow us to think we’re doing better than we are; and they don’t challenge the students. One of the most amazing things about these early college schools is they are taking the kids who did poorly and by asking them to do literally more than they were doing in the school they dropped out of, a very high percentage of them rise to the occasion. They were essentially bored, it wasn’t hard enough for them in the high school that they were in. And particularly if it’s a curriculum that gets connected to this is what you need to do to achieve some job that you’re interested in, it works amazingly well.

There’s been a move afoot to raise the standards, the state level standards for high schools. North Carolina has been a leader in this to say that you should have three years of mathematics, and that those math classes shouldn’t be just balancing the checkbook.

So, in the last couple of years, I think it’s almost 30 states now have raised this high school standards. It’s still not where it should be.

SEN. BURR: I want to emphasize something that you said, that the boredom, the dislocation of students is not always because they just don’t want to be in class and they don’t want to learn; in many cases it’s because they’re not challenged enough. And that’s one of the unique things about the Gates high schools. I’ve found that it engages every student at a different level, and it engages them as a team in many cases.

Should states consider, those that haven’t, raising the age that one can voluntarily disengage from high school education from 16 to 18?

BILL GATES: Well, I don’t know about that. I mean, the question is, OK, say you raise that age; what are you doing to that 16-year-old? Are you going out and finding them and handcuffing and dragging him in? I mean, this issue of these demotivated students, who just aren’t connecting, is a very tough problem.

One of the things that’s happened in all the high schools we back is we make them small high schools. And what I mean by small is that the total high school size is about 500 to 600. And that’s very different than the big high schools that get up in 2,000 to 3,000.

In those high schools the goal is that every adult knows every student, and so that when you’re walking the halls, they say, hey, you’re supposed to be over there; hey, I heard you didn’t turn your homework in, do you need help? And so if you create a smaller social environment, then it really changes the behavior in the high school. You don’t think, okay, I’m just a motorcycle gang guy, I’m not supposed to work hard, and you only end up with this small percentage who are the hardworking students.

So, this small size, although it’s still somewhat controversial, looks like it’s making a big difference. And the nice thing about that, it’s not more expensive. You may need to pool some things for the sports program, but it’s not an increasing expense. And so that’s one of the few things we’ve found that we think really does draw the kids in, and create relationships that have expectation that get them to step up.

SEN. BURR: Great, thank you.

Thank you, Mr. Chairman.

SEN. KENNEDY: Senator Sanders.

SEN. BERNARD SANDERS (I-Vt.): Thank you very much, Mr. Chairman.

Mr. Gates, let me add my voice to those of the other senators here in applauding you not just for the huge amount of money that you have provided all kinds of groups, but the innovative quality of your foundation that you and your wife head, and not just in the United States but all over the world. You’ve done an extraordinary job, and I applaud you.

Now I’m going to take a little different tact than some of my colleagues, and I want to know how you’re getting along with your dad. Because when we talk about many of the challenges that we’re facing, we have to do it within the context of a country which has an $8 trillion national debt. And I certainly agree with you that we need more innovation in education and a whole lot of areas; they’re going to cost money.

So, let me ask you a question. Your dad and Warren Buffett and others have been very loud and articulate in saying that repealing the estate tax, which would cost us about a trillion dollars over a 10-year period, is not a good idea, that some of the wealthiest people in this country are doing just fine, they don’t need for their families that additional wealth that repealing the estate tax would provide. Do you agree with your dad that repealing the estate tax is not necessary?

BILL GATES: Well, I think there are very few people who speak out for a tax. Many people come, and like I have today, said, OK, research is more important, we need to spend more on that. Education, although the federal piece is only a small piece of it, there probably needs to be more put into that, and so those things do create budget challenges.

In my dad’s case, he’s actually saying that there’s merit in terms – for a number of reasons, including the revenue raised, that that tax be preserved.

I myself in terms of speaking out publicly have chosen the innovation issues that are key, and trade issues that are key for Microsoft, and the global health and education issues that are key to the foundation. And so that’s a lot, and so those are the things where I’m speaking out as much as I can.

I do agree with my dad. I think what he’s doing there has got a lot of merit. He, together with a colleague, wrote a book about the issue, which actually after I read that, I thought there were a lot of good arguments in there that I had not heard before.

SEN. SANDERS: I won’t ask you what your kids feel about it, but you do agree with your dad that repealing the estate tax is not a good idea, is that what I’m hearing you say?

BILL GATES: Yes. I haven’t chosen in terms of speaking out. I’ve picked global health, education, and some key innovation issues around Microsoft as the ones that I’m developing expertise and really putting the time into, but I think what my dad has done is right, and if I had a vote on it, I would agree with what he’s saying.

SEN. SANDERS: Thanks very much.

Let me ask you this, and this is a sensitive issue, and a touchy issue. I think there is no disagreement on this committee or in the Congress that as a nation we’re doing a terrible job in math and science, that it is a disgrace how few engineers we are graduating. And you have done a fantastic job in focusing on that issue.

But there is another side of the coin where you and I may disagree, and I’d like your comments on that, and that is the issue of outsourcing. And that is my understanding is that from January of – this is according to the Bureau of Labor Statistics, that from January of 2001 to January of 2006, the information sector of the U.S. economy lost 644,000 jobs, et cetera, et cetera.

Also, I think you would probably agree that many major corporations, including your own, if they can hire qualified labor, engineers, scientists, in India or China for a fraction of the wages being paid in the United States, they’re going to go there. And we have quotes from people like Andy Grove and John Chambers, leaders in information technology, who basically predict that the IT industry may end up in China.

Now, how do you address that issue, understanding we are in agreement, all of us are, the need to do a heck of a lot better job in education, high school education, math, science, but isn’t there still going to be a lure, unless we get a handle on it, that companies are going to be running to China and India for qualified workers who are often paid a fraction of the wages they are in the United States?

BILL GATES: The demand worldwide for these highly qualified engineers is going to guarantee them all jobs, no matter where they’re located. So, anyone in the United States who has these skills, no matter whether they’re born here or came here, not only will they have a super-high-paying job, there will be many jobs created around them that are also great jobs. And so we should want to have as many of those people be here as possible, and have those jobs that are created around them.

We’ve been increasing our employment in the United States, and a limiting factor for us is how many of these great engineers that we can get here. And, yes, that does cause a problem.

The IT industry I guarantee you will be in the United States to the degree that these smart people are here in the United States, and that’s why I think it’s important to maximize that number.

You know, by and large, you can say is this country a beneficiary of free trade, and the answer is overwhelmingly yes. Why can our inventions, whether it be drugs or movies or software or planes, why can we invest so much in those products? It’s because we’re able to sell them into a global market.

And by having people of this skill level, we can have an economy that has very high defense costs, very high legal costs, very high medical costs, and yet continue to capture our fair share of the economic improvement that takes place. If we do things that artificially shut off our ability to engage in that trade system, then the impacts on our leading industries would be fairly dramatic.

So, we love these high-paying jobs, and our industry has continued to draw people into these jobs. We pay way above the prevailing wage rate because of the shortage that we see.

SEN. SANDERS: Well, thank you very much.

SEN. KENNEDY: Senator Isakson.

SEN. JOHNNY ISAKSON (R-Ga.): First of all, I want to thank you. And my company in the 1980s and ’90s, I credit you with doubling the productivity of my employees and my agents. Microsoft Windows is just a phenomenal product, and all of us, the whole country has benefited from your innovation.

Which reminds of a quote of Robert Kennedy’s years ago when he made a pretty well-known, famous speech during the African famine when he said, “Some people see things as they are and ask why; others see things as they never were and ask why not.”

You obviously are a “why-not” guy. I mean, nobody could have envisioned Windows without having had a vision to say, well, why not?

What is it about this country that you attribute contributing to your can-do spirit, and your ability to envision that? This is a great country. We criticize it a lot of times, and I think it’s good also to – I don’t think you could have done what you did anywhere else in the world but in America, so I’d like to hear from you who did that some of the good things about this country.

BILL GATES: Well, absolutely. The success that I’ve had and that Microsoft has had has benefited immensely from unique characteristics that this country has. These are characteristics that the country continues to lead in; they’re not unnoticed by others. But if we renew those strengths, we can stay in a leadership position.

The quality of our universities is high on that list. You know, I personally went to a great high school. I attended some years at Harvard University. I didn’t graduate, but I still had –

SEN. ISAKSON: You’re a famous dropout. (Laughter.)

BILL GATES: – some benefit. And then I proceeded to hire lots and lots of people from the great universities. And these were people who were willing to take risks.

It was actually during the 1980s the country was sort of worried about Japan, but that was actually the time when the Internet, which benefited immensely from research funding from the U.S. government, was actually becoming the standard not just for computing but for information sharing and efficiency in the entire world economy. And so certainly in the ’90s, and even today we’re the envy of the world in terms of how many jobs our economy has created. We have by many measures record low unemployment. Despite some imbalances, our economies continue to do very well.

And when you go out overseas, people look at our university system and they say, “Well, you’ve got alumni that give money, how do we duplicate that?” When they look at social services, they see that philanthropy is widespread at all levels of income, not just at the highest levels, but philanthropy is a value that is very strong through our citizenship, and other countries don’t have that nearly to the degree that we do. And that engages citizens in seeing what the nonprofits are doing, what the government can do better, and gets an active dialogue that allows us to be smart about those things.

Protecting intellectual property, including the patent system, the copyright system, yes, you can read about how people want to reform and improve those things, and we’re one of the advocates for tuning those systems, but fundamentally incentives to invent are very strong here. Things like the Bayh-Dole provisions that allow even work done under government-funded research, that there are some royalties for the inventors in the university, other countries have been very slow to match that, and that’s benefited us in a great number of fields, particularly in fields related to biology.

So, we build on a foundation of strength in these issues, but when you see us turning away these graduates from these great computer science departments, and force them to go back, you say, wow, is that renewing the magic that’s put the country in that top position?

SEN. ISAKSON: Thank you very much.

SEN. KENNEDY: Senator Brown.

SEN. SHERROD BROWN (D-Ohio): Thank you, Mr. Chairman, very much.

And, Mr. Gates, thank you for your unprecedented work on combating global poverty, especially infectious disease. Not since a fellow Ohioan – and I think you’re a native of Ohio also, if I remember right – a fellow Ohioan, Dr. Henderson, organized a worldwide project to eliminate smallpox, I think your work since then has been the greatest – yours and your wife’s and the foundation’s greatest contribution to global health of anybody since Dr. Henderson.

I want to shift to something a bit different. When I hear you talk about – and thank you for your comments about protecting intellectual property, I think that’s a very important thing that we as a nation need to do. I want to talk about international health a bit. And I think that the strength of our economy in this country over the last century has been that we as a nation have shared in the wealth, the workers have shared in the wealth they’ve created. We’ve done that through trade unionism, we’ve done that through education, we’ve done that all under the umbrella of a democratic system of government, so people that are productive have shared in the productivity and shared in the wealth that they’ve created.

Our trade agreements have not worked so well in the same direction, and I know you and I have very different opinions about trade. But I look around the time when you began Microsoft, we had a trade surplus – just a year or so before that we still had a trade surplus in this country; today, we have a trade deficit of approaching $800 billion.

And in terms of what you’ve done for international health, and what we need to do for international health, when I look at our trade policy, whether it’s Mexico or whether it’s multilaterally, we simply haven’t found a way to help those countries really share – those workers share in the wealth they create. And that means they’ve not established the healthcare system, they’ve not been able to bring up standards of living, because those workers without labor standards, without environmental standards, without the kinds of things that we’ve done in this country – again because of trade unionism, because of the democratic government, because of education – that we’ve been able to lift people up.

Discuss for a moment how we should revise our trade policy. You talked about – and don’t go into the H1, I mean, that’s just a whole other issue, but just generally our trade policy, what we should be doing to lift standards in the developing world, so your efforts on healthcare, your efforts from vaccines to combating TB, malaria and AIDS, and all that, can build on a foundation of a better structural healthcare system, and in the developing world.

BILL GATES: Well, in terms of trade, you know, we’ve seen the results of countries like, say, North Korea, that chose not to engage in the world trade system. And we can put that, compare, say, South Korea and North Korea, one who’s a trade-oriented country, one who’s a non trade-oriented country, and see what sort of outcomes come out of that.

So, yes, I –

SEN. BROWN: With all due respect, that’s an outlier. Let’s talk about countries we deal with, poor countries. North Korea is –

BILL GATES: OK.

SEN. BROWN: Fair enough.

BILL GATES: Health conditions in Mexico continue to improve quite substantially. One of the consultants to our foundation, Julio Frenk, who is the secretary of health down there, and they’ve done a number of very innovative things, including payments to poor families relating to following health practices and keeping their kids in schools. And, in fact, that’s an approach that now other countries are looking at where you use economic incentives to get poorer families to engage in these things.

Health statistics worldwide are improving quite a bit. Even with some negative trends – of course, the AIDS epidemic is very negative, drug resistance in the case of malaria and TB are negative things, but despite that, overall health conditions are improving quite substantially. And, for example, measles back in the ’70s, before widespread immunization, actually killed 6 million people a year – children – and now it’s down under 600,000.

And so I see a very positive picture in global health. It’s one that we need to invest more in, and accelerate it in a faster way.

Having there be jobs in those countries and not over-regulate it so they can create jobs in those countries is one of the best things. The commodities boom has been a great thing for a number of African countries. The exports of coffee, even some products like cotton that are extremely distorted by subsidization policies, there have been increases in the exports of those things. And that is a great development, because in the long run you’ve got to have the agricultural productivity, and that means you’ve got to have exports. Most countries that have gotten into the virtuous cycle have done it by being allowed to export, and participate in the free trade system.

And whenever we look at the standards for these countries, we should say, okay, when we were at their level of wealth, what were we doing on the comparable things. It’s always an interesting comparison to make.

SEN. BROWN: But when we were at their level of wealth, we didn’t have an outside economic power with the kind of influence American corporations did playing in our country to the degree that many of them do in ours.

BILL GATES: I’m not sure what you’re saying. I mean, the United States economically was way behind Europe in its early days, and it benefited from investment and trade.

I believe in trade, so this –

SEN. BROWN: As I do.

BILL GATES: You know, the Doha round in particular would be quite beneficial to the African countries where our foundation focuses a lot of its efforts. So, I’m very hopeful that something can happen there.

SEN. BROWN: If I can make one more comment, Mr. Chairman, on the question with Julio Frenk in Mexico, the AMA said the area along the U.S.-Mexican border is the most toxic place in the Western Hemisphere, because we had no environmental standards, real enforcement of environmental standards in American companies, and other companies near the Mexican border, south of the border in terms of disposal of waste, and there’s no reason we shouldn’t – I assume you’d agree with that – no reason we shouldn’t build that into trade agreements. That’s not a trade barrier any more than intellectual property is a trade barrier, I don’t believe.

BILL GATES: Well, when we have a common river like the Rio Grande or something like that, certainly we have a very close interest in it. I’m not an expert on that issue. And some basic environmental things clearly are of global interest.

SEN. BROWN: Thank you.

Thank you, Mr. Chairman.

SEN. KENNEDY: Senator Hatch.

SEN. ORRIN G. HATCH (Utah): Well, Thank you, Mr. Chairman.

Welcome back. I just want to make one comment, and that is that you and your wife are very high in my eyes. You’ve done so much with your wealth that is so good for mankind, that I don’t think anybody should fail to recognize that. And I just wanted to be here to tell you that, because I usually don’t lavish praise on anybody, but I think you deserve it.

And anybody who can get Warren Buffett to come in with all this, where he’s a mutual friend, and I’ve got to say one of the most brilliant people I’ve ever met in my life, as you are.

But I’m just very grateful to you for what you’re doing in so many ways.

Let me just say one thing. I’m also pleased with what you’re doing with Medstory. You acquired that company, and I think that you can do an awful lot there to help people all over the world.

But I’m not going to ask you any questions. I just wanted to personally express my regard for you, and for your wife, and for Warren, and for what you people are doing, and just really are making a difference in this world. And I agree with virtually everything you’ve said in your statement. I think that it’s a very precocious statement, and very much appreciated by all of us here.

Thank you, Mr. Chairman.

BILL GATES: Well, thank you.

Medstory, for people who don’t know, is about letting consumers find health information. And the interest in that has risen, and they did some very innovative work to make it easy to find medical data, so that’s become part of our new investments in that medical area.

Thanks for your comments. You know, Warren has been incredibly generous, and now we have to justify the trust that he’s put in us.

SEN. HATCH: I figure that would be a very good combination, but I just raised Medstory because a lot of people don’t know about it, and it’s an innovative thing that I think can make a real difference in healthcare all over the world. Thanks, appreciate it.

BILL GATES: Super.

[Editors’ note, March 7, 2007 – The remainder of this page has been added since original publication to complete the transcript.]

SEN. KENNEDY: Senator Roberts.

SEN. PAT ROBERTS (R-Kan.): Thank you, Mr. Chairman.

On page 6, Mr. Gates – and I guess I’m showing my bias if I say mega dittos in regard to all the accolades that have been mentioned to you, and all of them well deserved.

BILL GATES: Thank you.

SEN. ROBERTS: On page 6 you say, “The problem begins in high school, international tests have found our 4th graders among the top students in the world, above average in math; by 8th grade they move closer to the middle of the pack. By the 12th grade we’re down at the bottom.”

My question to you is why. I think you answered it a little bit – this is the Enzi question – really by saying that your favorite teacher was somebody that made math pertinent or it was relevant, as opposed to math for math’s sake. And you could also include science in that category.

Why is it that China and India are getting their students to be so terribly interested at a young age in these academic pursuits, but somehow we can’t generate the intellectual curiosity in math and science from our adolescents?

BILL GATES: Yeah, first, to be clear, the comparisons there where we go from the top to the middle to the bottom, those are against the industrialized, the rich countries. So Korea would be part of that, Japan, Singapore, the Nordic countries. Among the top are countries like Korea and Singapore.

India and Japan, as you say, are getting a higher and higher percentage of their students go into science and math. They’re the only countries where you see significant increases. Europe, the United States, Canada are all seeing these declines. So whatever we’re doing about making the field interesting and attractive and showing the opportunity, there’s something shared across a lot of the rich countries.

India and China to some degree, as was mentioned, they don’t have – these are the professions that are most admired, and people are most excited about. They don’t have, say, the equivalent of Wall Street or other things.

SEN. ROBERTS: Well, how do we generate that excitement here?

BILL GATES: Well, to some degree I’m very surprised we haven’t been able to do better in this, because these jobs are very interesting jobs, and perhaps the image of them is that they’re not very social, but, in fact, if you’re designing a software product, you’re working with a lot of people, you’re getting a lot of feedback.

We’ve worked with a number of universities, including a group called the Anita Borg Association, to really go down and talk to high schoolers and ask them what do they think about this field. And the misperceptions are a real problem for this. When we show them examples, particularly examples they can relate to, so showing the women a woman who’s very successful, she comes out and shares her enthusiasm, that can make a big difference.

SEN. ROBERTS: OK, pardon the interruption. Senator Reed mentioned teachers. I gave a rant in this committee the other day about the fact that – well, I’ll give you the example. You can’t teach in the secondary school because you don’t have a certification, and it takes five years. And yet I would think you’d be a pretty damn good teacher in regard to science and math, not only because of your reputation, but it would make it real, it would make it pertinent; they could touch it, they could feel it, it would become exciting as opposed to I have to take math courses.

Is there some way that we can arrange to shorten up that certification process to let people like yourself, or in the military or the business world or whatever, to say, well, I’ve had a career here, I’d like to at least teach, but I can’t teach in a secondary school? Now, you could in a university, which I’m sure you do all the time. What’s your comment about that?

BILL GATES: Yeah, I definitely think that particularly where we’ve got this huge shortage, and as you say, the benefit of somebody who’s engaged and excited in the field makes such a difference, that perhaps making it simpler for them to come in, either as a full time teacher, or even in some cases come into the schools on a part time basis and talk about the things they do and be part of that teaching process, I absolutely think we need to encourage a lot of more openness and a lot of experimentation in that. We’re seeing some of it in some of the charter systems that we’re involved with, but that’s one of the regulations that even the charter system often doesn’t let you get around.

SEN. ROBERTS: I understand that on page 10 you say, “I appreciate the vital national security goals that motivate many of these policies.” We’re talking about immigration. “I am convinced, however, we can protect our national security in ways that do less damage to our competitiveness and prosperity.” How? As a former chairman of the Intelligence Committee, I’d just like to hear your comments.

BILL GATES: Sure. As part of this immigration process, at many, many different points during the process you undergo a security check. The same person many, many times, if they actually go up to Canada briefly, they often can’t get back into the United States because these security checks are now taking months to take place. It’s done on a very manual basis without many resources. In fact, it’s done in a way that one doubts that it’s working very well –

SEN. ROBERTS: Yeah, that it’s working.

BILL GATES: – at all. And so I think that some of the humiliation and delays that come through the security check process could be eliminated without dropping the goal of being able to check a list or whatever the security concern is there.

SEN. ROBERTS: I appreciate it very much.

Thank you, Mr. Chairman.

SEN. KENNEDY: Senator Allard.

SEN. WAYNE ALLARD (R-Colo.): Thank you, Mr. Chairman.

I’d just like to join my colleagues up here in their accolades for you and your wife and the foundation.

I want to delve into this issue about performance at the high school and elementary. I agree with you that we need to be very concerned about what is happening at the high school level, but I think we have to be careful by saying that because students are performing well, that’s where their area of interest is going to be, and that we need to say, well, if you’re interested in science, for example, and I’m a scientist, we have to catch their fascination, we’ve have to somewhere at that point in education they’ve got to view science as magic or math as fun or wherever.

I happen to think, disagreeing with my colleagues, that even though they’re performing well, that starts in the elementary school. I mean, it’s the 3rd, 4th, 5th grade that you kind of say, well, because of somebody you know – in your case maybe a teacher, I don’t know where your fascination started, but my fascination started in science when I was in 4th and 5th grade because of people I knew and interacted with.

And I think somehow or other we need to get teachers in those grade levels excited about it, so they can share that with their students. And I think we need to figure out a program or something that gets elementary school teachers excited. The reason they teach there, I think science is intimidating. They get into the heavy science courses or heavier science courses in college and high school, and I think the seed needs to be planted in elementary school.

Have you given that any thought, and would you comment on what I just said?

BILL GATES: Well, I agree with you that elementary school is where we start to lose people. It’s not where we really lose the bulk of the people, but having teachers at that level who can make the subject interesting and fun, and not have people self-labeled as though I’m not one of those people who likes math, that’s a geeky guy over there, that labeling, there’s some of that that happens in elementary school but it gets way more extreme in high school.

And I think that thing that characterizes a great elementary school teacher is more about their teaching technique and less about their depth of knowledge in the subject. So, yes, I think there should be a focus there.

The place where we really need people who majored in the subject in college, and have a pretty in-depth knowledge of the subject, that’s more as you move up to the higher grades, that if you’re going to teach algebra and geometry, that they are very comfortable with the 9 through 12th grade curriculum.

So, I think what’s beneficial to teachers to have them keep kids interested is somewhat different at these different levels, and our expertise, because the foundation is focused on high schools, is much more at that level. But you do see a drop off in elementary school, you see it in high school, and then there’s a huge drop off, people who enter college thinking they’re going into science and math, that starts out at about I think 14 percent, and then it’s less than 5 percent follow through on that by the end of the undergraduate four-year period.

SEN. ALLARD: That’s very interesting.

I wondered also when coming out of the Sputnik era and science was being stressed and everything, we also I think in the TV programming we had some fun science programs. I never was one to spend a lot of time in front of the TV, but I think we had those sort of programs. And I’m wondering if there isn’t some way maybe on the Internet to begin to establish an Internet location where you could have fun science. The fascination for young people today is not TV so much, I think it’s more the computer and the computer screen, and if we can somehow or the other reach out to them and make a fascinating program and kind of pull them into this idea of science I think might be something worth thinking about.

BILL GATES: Yeah, absolutely, and Microsoft and others are very involved in getting this started.

I think there are two flavors of that. One is the student who’s motivated to actually go out there and say, OK, let me see how volcanoes work or how global warming works or how space flight works. The other thing is to take and gather the material so that a teacher can go to those sites and then draw down kind of the images, the animations, the stories and bring those sort of real-life science neat stories into the classroom. And that ability, some great teachers have always been doing that but they didn’t really have a way of publishing and sharing their ideas, and then having other people build in those.

By creating communities on the Internet of these various types of teachers and the material and things they’re doing, or even videos of the best practice, there’s a lot more we can do to make teaching less isolated, let them benefit from one another. And that spans all the way from the elementary to the collegiate level.

In the extreme case we’re actually saying to universities that let’s get all the great lectures online, and so, say, a community college wouldn’t have to do the lectures in a subject like physics or chemistry, but they would do the study groups, and so they would take the world’s best lectures, but then do that. And so education can be more specialized and more efficient as we use the technology.

SEN. ALLARD: Mr. Chairman, thank you, and thank you for your testimony, Mr. Gates.

SEN. KENNEDY: Thank you. Thank you very much.

Mr. Gates, when you were talking about interest in science, I was up at the Museum of Science in Boston not long ago, and they had Mr. Ballard, who was a great oceanographer, found the Titanic and the Bismarck and the Lusitania, and he was conducting, they had this submersible that he was down in the Galapagos Islands, and steering, letting the students steer this submersible through the Galapagos with all of the sea life that was there, and they had 600 inner city children in that auditorium, and you could hear a pin drop, absolute pin drop, the interest these children had.

And then they had – I saw a fellow named (Lessor ?) who was the principal cellist for the Boston Symphony Orchestra, talking about the sound, how sound moves through the air when he played his cello in a room with 50 inner-city school children, and the fascination, the opening of the mind, the interest by these children in both music and in technology and science unlimited. How we get that kind of interest is going to be the challenge, but you’ve reminded us about this.

Let me quickly go into another subject. Mary Robinson, president of Ireland, head of the World Health Organization, met with a number of us. She’s very concerned about just the brain drain to the United States, particularly in health and health professions. And she pointed out that the flow, for example, at a time when we have eight or nine applications for every nursing slot in my state of Massachusetts at community colleges, we can get one applicant that will take it because we don’t have the training facilities, we don’t have the professions for the training of nurses, and we are considering an amendment on the floor now on the Homeland Security bill the increase of the number of nurses on this.

Now, here are some of the countries, Nigeria, we have 2,500 doctors here from Nigeria, and 8,900 nurses. From South Africa we have 1,950 doctors, 877 nurses. In Kenya, HIV rate is 15 percent; 865 doctors, 765 nurses. Ghana HIV rate, doctors 850, 2,100 nurses in this.

Her point was that many of these countries around the world, so many of these doctors and the nurses, health professionals that are so vital in terms of trying to deal with the challenges of healthcare here in the United States or coming to the United States, working in the United States, this is costing these countries, they’re training these people, it’s an outlay for training them. How do we balance this versus what you’ve said about sort of the open-endedness in terms of having skilled people be able to come into the United States? What’s really – where do we really begin to draw the line? When do we say, well, we’re going to try and invest more to develop more opportunities for Americans to become nurses, Americans to become the doctors, if we have qualified people that don’t get into our great medical schools or into our nursing, but what’s the balance in there?

BILL GATES: Well, when foreign labor comes to the United States, there’s this incredible benefit to the country that they come from of the remittances they send back to the country. And that’s a huge thing in terms of bootstrapping those economies, letting them send kids back there to school, and having the right nutrition and great things. So, I don’t think the right answer is to restrict that ability to come and earn a high wage and have that go into the economy that they came from.

Clearly, when you get shortages like that, the systems like the community college system are usually quite responsive in creating capacity and meeting that demand. I’m not an expert on the nurse situation –

SEN. KENNEDY: That’s OK.

BILL GATES: – in this country.

I do know that as we think about global health outside the United States, and people have talked about this, this talent drain, I don’t think putting restrictions on letting people come and work would be the way to solve that, because there are other countries that they would end up going to. And what you need to do is deal with the supply.

Also many of the medical inventions that we need, need to be things that don’t require an expensive healthcare system, because the reason many of those people are leaving those countries is that the healthcare system doesn’t use their talents very well; that is, they don’t stock drugs properly, they don’t have electricity and a number of these things. So, getting those countries to invest in healthcare, and having things like vaccines that can actually be given without advanced medical training – for example, if we had an AIDS vaccine, which is a very tough thing, we’d greatly reduce the burden on those healthcare systems. In fact, if we had a malaria vaccine, that would have this amazing effect to free up that capacity for dealing with other health problems, because that actually puts more people in these hospitals in many countries than anything else.

So, I’m optimistic about the vaccines coming along, and that those will change, get rid of the unbelievable overload in the health budgets of these countries.

SEN. KENNEDY: Just one additional point. In the H1-B there are provisions in there where they pay a fee into a fund so that they train Americans and upgrade their skills as a part of the H1-B.

Let me just finally ask you this. You’ve given a number of recommendations on competitiveness and immigration and others, in education. What’s your – just if you could summarize your sense of urgency, how much time do we have? I mean, what’s the framework, where would you say, as somebody that’s obviously thought about this a good deal, has specific recommendations, and is familiar with these forces in other parts of the world, what guidance can you give to us about the sense of urgency? I think for all of us who deal with education think every day that’s gone by with a lost child, for a child to lose that opportunity for learning is a day that probably can’t be recaptured. There’s a sense of urgency in terms of education as years go back and we lose these opportunities. What’s your sense just in terms of the country, the competitiveness, and what’s happening in other parts of the world?

BILL GATES: Yeah, I think both of these are incredibly urgent issues. Education, because as you say, it takes a long time, and so you’ve got to get started now improving the teachers and trying out the new incentive systems – even if it’s going to take decades, the sooner you get going the better.

In the immigration case it’s much more of an acute crisis in that the message is clearly here today that you come to the U.S., go to these great universities, and you go back and not only take your very high paying job, but also all the jobs around it back to another country. And other rich countries are stepping up and showing the flexibility of trying to benefit from the way we’re turning these people away. In every way this country benefits by having these very high paid jobs here in this country.

And so if you talk to a student who’s in school today, going to graduate in June, they’re seeing that they cannot apply until they get their degree, and by the time they get their degree, all those visas are gone. If somebody is here on an H1-B, if you’re from India, say, with a bachelor’s degree, the current backlog would have you wait decades before you could get a green card, and during that time your family can’t work, there are limits in terms of how you can change your job. There was one calculation done that the fastest way you’d get a green card is to have a child who becomes a United States citizen, and then your child sponsors you to become a U.S. citizen, and that’s because there’s more than 21 years in some of these backlogs.

So, this is an acute crisis. And it’s a thing, as you say, there are fees paid, and Microsoft makes no complaint about those fees. We end up paying a lot more to somebody who comes in for these jobs from overseas than we do to somebody domestically. We have every reason – we have 3,000 open jobs right now. We’re hiring the people domestically, everyone that we can. In fact, there’s a great competition, this wage rate continues to go up, as it should.

And the wage rate for this type of skill set is not that different in other countries. It’s escalated very rapidly in India and China. And particularly if you include the tax cost and the infrastructure cost that we pay to support this kid of job in those countries, this is not about saving a ton of money for a top engineer, this is about being able to put them here in this country where the other skill sets around them are the best in the world, and there’s not a shortage in those other skill sets. And India and China haven’t yet – and it will take them a long time before they’re as good at the management, testing, marketing elements that go around those engineers.

So, this is an acute crisis and one that in terms of the taxes these people will pay, the fees that get paid around them is fiscally accretive to the United States immediately in terms of what happens. So, to me it’s a very clear one with basically no downside that I can see whatsoever.

SEN. KENNEDY: Senator Alexander.

SEN. LAMAR ALEXANDER (R-Tenn.): Thank you, Mr. Chairman.

Two comments and a question. One is you’ve been a very eloquent spokesman for what I like to characterize as “insourcing brainpower”, and I think helping our country understand that insourcing – we talk a lot about outsourcing jobs, but insourcing brainpower is insourcing jobs, too, which you’ve said several times today, and which is a point we don’t make as well.

The second comment, in our little discussion about teacher incentives where we were talking about this difficult area of finding fair ways to reward teachers and school leaders who excel, and how a good way to do that is not to impose suddenly a big system, but to encourage this effort across the country where communities are – as new leaders for new schools is in Memphis, for example, and they pay a third of the principals $15,000 more if they go to Wharton and learn and they stay a part of the system and learn to be leaders, and the teachers make $6,000 more if they’re highly effective teachers, and their low-income kids improve.

So, the point being that one of the big differences between today and 20 years ago is that we now have a number of ways to measure student achievement. Dr. Sanders was at the meeting Senator Kennedy hosted yesterday. And there are other methods. And because we’re now able to say this low-income child in a New York school is making great progress because this teacher consistently helps that, then there’s perhaps a fair basis for rewarding that teacher or that school leader, because we can see improvement.

So, I hope – the reason I bring that back up, and here’s my question, is because that’s an area where I think we can hopefully move ahead with the Teacher Incentive Fund, and perhaps you and others in the private sector can do the same over the next five years, and we can work in parallel and learn from one another.

Here’s another area. We [have] long lines at two-thirds of the places around our country of people who don’t know English, who want to learn English. Now, I’m not now talking about making people learn English, or English only, I’m talking about the huge number of people who live here, who don’t speak English, who want help learning English. And the Senate adopted my amendment to give $500 grants to prospective citizens who want help learning English so they could take it to the Puente Learning Center in Los Angeles or other places where for $500 you can learn English pretty quickly.

So, I’ve had in my mind for many years, and I’m going to put this in legislation, but it will be hard to do in government, that if we had $100 million bank or 200 or whatever amount, and we said that virtually anyone who’s living in the United States, if you want help learning English, we’ll give you a $500 voucher, which you can then spend at any accredited center for learning English, with the hope that you’ll one day pay it back; no strings, just with the hope that one day you’ll pay it back. My guess would be that that bank would grow over 5 or 10 or 15 years to be a very big bank that would turn over and over and over again providing an easy way for people who needed a little help to learn English.

So, I wanted to take advantage of you today since you’re here by suggesting that idea to you, that I’m going to introduce it in legislation here, but it will run into a lot of problems if we try to set it up with all the government rules and regulations and accounting, as a purely private matter, a bank to help people learn English, which we hope they would pay back, I think would help equal opportunity, it would help improve our workforce, and it would be a big help toward national unity by encouraging our common language, but not in any sort of coercive way.

BILL GATES: Yeah, in terms of the Teachers Incentive Fund, as I said in my comments, I’m a big believer in that, because having the money that lets you try out merit pay be viewed as incremental allows people to go along with it, even if in the early days they think, okay, the system is unproven, and they’re worried about that. At least they’re not being told from the beginning, hey, it’s purely zero-sum-even when the system isn’t proven. The fact that during that experimental phase it’s incremental, then they see that they are not a loser, and they see, okay, here’s federal money that we don’t get unless we do a merit-based system, so it will encourage experimentation.

And I do think there are – in these labor practice areas we should have 100 such experiments, because I think 90 of them won’t work. You know, we’re certainly not at the point where you can test people going into a class, have them take a class, and test them going out, and just pay the person based on, okay, here’s the delta in those test results. It’s too – the testing is good, we know a lot more, but at that level of granularity it’s not viewed as predictable enough to put a huge reliance on it. And so figuring out, okay, how do we supplement that, do we have teachers who come in and do evaluations, anyway, a lot of things that should be tried there.

In terms of English, it is one of the advantages the United States has. English is being adopted as essentially the second language globally. And every country I go to they are saying how they’ve changed their education system to teach English at a younger age, and they’re very proud of the percentage of people in the country who speak English, not as a primary language but as a second language, and so that is helping us.

The demand for English training, as you say, actually demand is very high today. People are moving to do that. There are some things on the Internet that can help with that. There are some self-training courses where the prices of those have come down.

I haven’t thought about a way of encouraging people to do that. It would be interesting to think would you actually have a lot more people who would learn because of that incentive and what follow-on benefits might you get from that. Obviously as you think of different age groups it’s different. Kids going into school we want them to get comfortable in English very quickly, because that could be a huge challenge to a school system, and in many of these urban school systems it’s unbelievable the variety of languages that they have as native languages. It’s great, but it’s a challenge for them. And so some innovation in that, and encouraging it would be good. For young people it’s really actually quite necessary for them to benefit from the education system.

SEN. ALEXANDER: Thank you, Mr. Chairman.

SEN. KENNEDY: Senator Sanders.

SEN. SANDERS: Thank you, Mr. Chairman.

And before I ask Mr. Gates a question, I did want to comment that I thought your statement on nurses was right on. My understanding is that we have some 50,000 Americans or so who want to go to nursing school in the midst of a nursing crisis, and can’t get in because we don’t have nursing educators. And, in fact, that’s what I want to talk to you on Friday about the higher education bill.

SEN. KENNEDY: We’ll do that on Friday, and I’m sure Mr. Gates will be interested in that. (Laughter.)

SEN. SANDERS: Mr. Gates, I think there is no debate that we have got to focus a lot of attention on urban schools. How minority kids are treated is a disgrace and so forth.

I represent the very rural state, the state of Vermont – and by the way, we’d love you to come up and say hello, visit us. It’s only 20 below today, but it will warm up in a few weeks.

In rural America and in rural Vermont we have situations where there are not a lot of good paying jobs. And kids don’t really get a sense of why they need an education, because they don’t see much in front of them. Kids are dropping out, kids are doing self-destructive behavior, drugs, crime, so forth and so on.

What thoughts do you have about how we might be able to revitalize education and create excitement in rural communities around this country?

BILL GATES: The foundation schools, a very high percentage of them are urban schools, because that’s where we’ve seen where you’ve got the large minority populations, and you have these super high dropout rates.

I agree with you that the rural situation is not some panacea. In fact, when we first got involved, I said, well, hey, if it’s just urban, let’s just copy what they’re doing in the rural areas. In fact, as you say, it has some particular problems in terms of the breadth of teacher skills. Often for political reasons school districts that should merge together do not want to merge together because that comes down to the point of, okay, we should merge the schools to try to get scale, and that takes some political leadership, because there’s a hard choice there about as you have less students how do you create that critical mass. So, I do think there should be a lot of school district mergers take place would help a lot in these rural areas.

There has been some work done by the foundation in rural areas, and I’ll get them to write that up and send you and I a copy of it.

SEN. SANDERS: Good.

BILL GATES: We do think that some of these technology things where you can go and get great courses over the Internet and have even rural areas sharing with each other where one is very good at one thing and one is good at another thing, that those can be quite advantageous, because in Vermont you have good broadband connectivity, most of the schools are hooked up, and so it should be very possible.

SEN. SANDERS: OK, thank you.

SEN. KENNEDY: Just finally, we have – Mr. Gates, we have 77,000 jobs that are waiting in my state of Massachusetts, probably 300,000 people are unemployed, and we get 24 applications for every job slot existing today. I mean, under our existing – you know, listening to you talking about upgrading our training programs and the education and ensuring people are going to be upgrading and the skills, there’s a lot of work for us to do.

This has been an enormously helpful hearing. You’ve raised all of our sights, and raised our spirits as well. We’re going to be busy concentrating and learning from that extensive testimony, and absorbing those recommendations. And I think you’ve seen that members of the committee have been enormously appreciative of you taking the time to join with us, and we look forward to keeping in touch with you as we move forward on many of these initiatives. We’ll value very highly your ideas and recommendations, suggestions, and we have benefited immensely this morning. We thank you very much for taking the time, and the committee stands in recess.

BILL GATES: Thank you.