hare of gdp since world war ii. we expect that revenues will grow modestly this @@@@@@ rbrbrb fiscal year, the budget outlook is daunting. again under current law, cbo projects the deficit will drob to about 3% of gdp by 2013, but remain in that neighborhood through 2020. by that point, interest payments alone would cost more than $700

billion per year. moreover, maintaining the moreover maintained a policy embodied in the current law to underlie the projections will not be easy. it would mean allowing all of the tax cuts 2001 and 2003 to expire as scheduled not including the amt from affecting more tax but as you know, many policy-makers have expressed their intention not to let that unfold as scheduled but instead they extended all 2001 and 2003 tax cuts. adjusted amt for inflation and may not know whether adjustments for spending in 2020 would be twice the size we project under current law. it would equal 87% of gdp and rising rapidly.

basing my projections annual appropriations will rise only with inflation. instead policy-makers increased such spending was gdp which is what actually happened over the past 20 years the deficit in 2020 would be two-thirds as large as the project under current law. the outlook for the federal budget is bleak. the budget and economic outcome is uncertain deficits could be significantly smaller than we project forcing -- or significantly larger we believe our projection balances the rest. why this that the factors contributing to the bleak budget outlook is a severe recession on the with those implemented analysts' defend the end of a recession as a point* at which output begins to expand. by that definition it appears to have ended in mid

2009 but payroll employment which has fallen by more than 7 million since the beginning of the recession has not begun to rise again. the unemployment rate finished at 10% twice the level of two years ago. unfortunately cbo expects the pace of economic recovery will be slow household spending is likely to be dampened by weak income growth lost will come and constraints under the ability to borrow. investment spending will be slow with the large number of vacant homes and offices although aggressive action by the federal reserve and fiscal stimulus package help to moderate the severity and duration of the sources is expected to wane. employment will almost certainly increase this year but it will take considerable time for everybody looking for work to find jobs. we project the unemployment rate will not return to a sustainable level of

final -- 5% until 2014. more plain -- pain from unemployment lies ahead of us stand behind us. deep recession and protracted recovery mean lower tax revenues and higher outlays for certain benefit programs. cbo estimates the automatic stabilizers will increase the budget by more than 2 percent gdp of 2010 and 2011. and -- in addition the fiscal stimulus package to increase by roughly 2% by gdp this year and smother about next year. as the economy recovers and automatic stabilizers fadeaway budget deficit will shrink relative to gdp although the deficit remains large under current law and of current law is changed that more quickly changes current policy the amount of government borrowing would

be unprecedented in the postwar period a large and persistent imbalance between federal spending and revenue is apparent in the projection over the next 10 years and will be exacerbated a coming decades by the aging population and rising cost of health care. that stems from policy choices over many years. as a result u.s. fiscal policy at an unsustainable path to the extent that cannot be solved by minor tinkering. the country faces a fundamental disconnect between the services they expect the government to provide especially older americans and the tax revenue they're prepared to send to the government to finance those services. the disconnect will have to be addressed if the nation is to avoid serious long-term damage to the population. thank you know, i can take your questions.

>> first of all, thank you for that it is sobering but truthful. i wrote you some time ago and asked you to analyze and have your people help analyze various measures to help strengthen the economy and help create jobs at this time of continuing economic weakness. you came back and the people came back with the analysis and i would like to talk for a few minutes about your views with respect to what measures what helps the private sector employs more people will be most effective in a way that is timely? as i read your analysis

analysis, your top three most impact full policy changes for increasing jobs in 2010 were number one, a tax assistance for businesses that would hire additional people people, additional tax assistance for small business through expensing and as i read the report to, the extension of unemployment insurance. those three would have the biggest bang for the buck and the most immediate impact. is that correct? >> i would just distinguish among the three, among the incentive for greater business investment would be less effective than tax credits for firms that increase payroll or

additional benefits for people who are unemployed. for many years economists believe day temporary tax incentive can have a stimulative effect within the to take the action now. unfortunately the experience of the last decade when they have been tried on several occasions have dampened the enthusiasm for the approach because they appear to be less successful stimulating investment. one piece of intuition when firms have unused capacity as they do today and a lot of uncertainty of future demand and the use of that capacity, they may be less responsive, even to cut rates opportunities to do more investment. that would be the least effective of the three according to our analysis. >> which would be the least? >> business incentives for

business investment which is what i think you mentioned those that would be more effective in our judgment is increasing payments to people who were unemployed particularly because they're short of and come and likely to spend a large share ferry quickly and incentives to businesses that increase payroll because that puts money into this economy and also provides a particular incentive to do more hiring. the effectiveness is just how that is structured. >> i was not hearing you write a thought in your original response, you were putting the jobs credit in the same camp as the small business expense thing. what i hear you saying is said to things that the biggest pop would be in essence a tax break for

businesses that hire people? number one on the business incentives side. and the other thing you see in your analysis is the unemployment insurance extension why would that be of assistance in terms of jobs? >> a chain of reasoning is basically that if people receive money than they spend it that the demand for goods and services means those businesses that sell product have the revenue to hire more people because they need to step up production to be to the increased demand. >> i am running out of time i want to go to the third element that we talked about with the small business expense thing. as i read the report that was seen as positive in terms of helping with good job situation in the country

today. >> that is right it would not have no effect but just less effective than the others. but yes there is some effect of reducing the price of buying investment goods for ticker 84 a limited point* that could encourage businesses investments in the future to do it now. >> are there other things that would be as effective as those three or more effective? system like those of the ones we think of as most effective the one that i would broad -- brought in a bid to one that could just give money to other people in the form of tax cuts or increased benefits the effectiveness depends overall economic activity depends on how much of the money is spent and thus giving it to people who were unemployed is particularly

effective because they will share a larger sheriff it too because it is somewhat smaller to other people as well. >> the infrastructure as i read the report that would be more effective than 2011 kn 2010? >> as correct. our judgment one year-ago and it was confirmed by the experience of the past year that most infrastructure dollars move into the economy somewhat slowly. there are projects i drive on some and that can happen quickly when money is available than many of their projects more substantial projects have a long lag time and it takes time to get money out the door. that is not a judgment if they are doing or not worth doing but the question of pure macroeconomic impact it will take some time to take

effect. >> senator gregg? >> we have violated the fact one of the primary drivers of the growth of the government and the spending will create a structural deficit is health care cost as it relates to the aging population is that correct? >> that is right. >> you sent us a letter that said if you want to control health care costs there were two primary things, one of them was health insurance amount of deductibility should be reduced so people pay more of a share of the health insurance then have it tax deductible? >> yes. we don't make recommendations but we did say there were a few levers the government controlled. >> when we hear the house leadership talking about

changing health care sell less of it so insurance is fully deductible and the cadillac plans are not or are given advantageous tax treatment goes in the wrong direction? >> from the perspective of cost control a very widespread view among experts that using the tax necessity for more generous insurance is one of the very important levers the government has and not employing fact reduces the expense of cost control all else equal. >> you are also in the house bill that passed, there was a massive savings expected in medicare i believe estimated 5 billion over the first few years and $1 trillion over the first 10 years of full implementation and 3 trillion over 20 years of implementation.

that was transferred from the medicare savings are used to expand the other activity of the government's, specifically the expansion of medicaid and the new entitlement that was in the bill. if those dollars were used which were saved for medicare to shore up medicare and in some manner manner, in a medicare reserve fund to pay down debt, could you give us a thumbnail estimate how much that might help correct the structural problems that we have? >> i cannot do quantitative acquisition in my head by you're watching is correct that we estimated almost 500 billion in medicare savings over the 10 year projection point*. and over time if they not

separately quantify. >> let me combine a question come if you did not use it to expand the government but instead to shore up the medicare system by reducing fed debt wouldn't that have a significant positive the event for medicare but also because it would make it more solid the radically but also for the debt situation and? >> yes senator. that would be a significant improvement in the budget outlook. >> there has been a lot of fact taste talking that we could spend it somewhere else. it is supposed to be used for the debt. i want to clarify the fact there is no t.a.r.p money that it has to be borrowed? every set of t.a.r.p money is borrowed from china or somebody? right? >> one pool of government money everything else is

accounting treatments to keep track of those price purposes. and more that's borrowed it more that goes on the federal debt. >> there is no big bank in the bay has as a reserve fund down at treasury they can use to create a new small business programmer new housing program or whatever? >> that's right. the freeze the president has suggested, i give him credit for using the term freeze and stepping up on that turf and i think him for doing that but i try to quantify, because the deficit this year you projected at one point* 34 trillion? >> $1.3 trillion if we did

non-defense discretionary freeze, give me the number that would be that is adjusted for inflation and not adjusted. >> if we did, our report shows what would happen with a full discretionary freeze. with defense and nondefense? >> their proposal. >> unfortunately we don't have enough details to do that calculation i only know what i have seen in the newspapers. when we receive the budget next week we can do that calculation but until then. >> would now range between 15 and 25 billion? somewhere in there? >> it depends what happens after the freeze. if you freeze three years and then go back up some of you would happen otherwise and the savings are just in

those three years and a small, if you maintain or freeze then grow from the end and do not jump back up there can be significant savings over the remaining years but of course, that is a policy choice. >> what i am trying to get that is compared to deficits this year one point* $35 trillion, we are talking this year savings with non-defense discretionary freeze of maybe 1% or 10%? >> less than that we think all would only save 10 billion fy 2011. >> a step in the right direction but that is a lot of money but a marginal impact. >> it is a small step. >> senator fine gold? >> mr. chairman the may begin by thanking you and your ranking member by the bipartisan effort to get the fiscal house in order and a

big-ticket for your fiscal commission amendment to the measures. i had some concerns with the concept of a special fiscal commission i don't think we should outsource the job that we should be doing but i do share your frustration as a consistent failure of congress to confront our long-term budget problems and the issues we consider there comes a moment when you have to decide if you cannot go to maybe although i am not entirely comfortable with this approach, i decided to support the amendment and while it did i get the 60 votes required under the amendment i was encouraged it was supported by the majority of the senate of course, it is obvious it will only get tougher when we have to consider specific spending of revenue policy that will be enormous pressure to resist such a correction that is a per prieta of the way of a democracy.

when that day comes and i hope it is soon the company will -- country will best we served. i thank director elmendorf and work of the cbo please note that some of us truly appreciate the work of the cbo and the chair and ranking member the pressures you face because we are responsible for the pressure per bracelin to acknowledge the limitations of an economic forecast under which a of the cbo operates. keynes said do not predictor if you do, do it frequently. congress will not allow that. however you are wise enough to rick -- recognize the spot replace you and put in your language or uncertainty. without regard to have a place on my bookshelf for the cbo report 2001 the first that included a rather stunning summary figure of

the uncertainty of the projections it shows a possible budget outcomes later outer areas being less likely even the worst scenario the faintly shaded the budget was still projected to be a rough balance. despite what the current policies or at that time it was the last budget outlook prepared by cbo before congress enacted what would be a stunning set of policies that led to the biggest fiscal turnaround in history. less than three years after that report congress inactive to massive tax cuts and authorized to wars and a massive of entitlement program under medicare and none of those measures were paid for. each and every was added to the bill believe our children and grandchildren

and said the each one remains with us today. as i read the report cbo projects expanding expanding -- expanding the bush era tax cuts and amt ads over 4.5 trillion dollars to our deficit over the next 10 years. while it is difficult to project the cost over the next 10 years the medicare chief actuary will say it will cost 5,304,000,000,000 more than half a trillion dollars. one of the biggest potential and tax with the cost of the encoring wars in afghanistan. the latest report for the wars in afghanistan and iraq and related activities are 1.4 trillion. that is a baseline. cbo is constrained in the can -- assumption that it makes.

the actual policy is not reflected on the baseline, cbo anticipates with two alternative budget scenarios but even under the alternative that cbo estimates will have the greatest savings to the baseline reducing troops at 30,000 by 2013 over the next 10 years will cost about $400 billion. cbo middle ground alternative by 2015 over the next 10 years that cost us nearly three-quarters of a trillion dollars. mr. chairman every penny of that cost is added to our deficit that has been the policy for the past 10 years and continues to be. we are not paying for the bourse but running up the enormous tab we're already leaving our children and grandchildren. mr. elmendorf notes is cbo assumed all expiring tax cuts for extended and not pay for the long-term effect

is to lower future gdp because of the greater accumulation of debt. also not only did greater accumulation of debt to fully pay for the wars in iraq and afghanistan will also make -- main future gdp will be lower than otherwise. thank you, mr. chairman. >> senator bunning? when you appeared last year of your confirmation hearing, i ask the question of the cbo practices and now you have a one-year experienced director i would like to ask about policies again current cbo practices assume any law that increase spending will be permanent on the other hand, current cbo practice said in a tax

decrease will not be permanent. to have a plan to address the can -- inconsistency? >> no but senator. they are consistent across spending and taxes when a proposal is put forward if it is a policy and discord is the fax it would have over the 10 year budget window. if it is temporary it is gourde is having those defects. >> that was not my question. current policy of cbo on spending that any increase would be permanent?

on the other hand, the cbo practice assumes that any tax decrease would not be permitted to is that the current policy? >> battery sending policy but many are. that is correct. >> i think it is common sense that taxes help business grow it will pay more taxes the site and sure factoring this into the budget estimates is known as dynamic scoring. do you have any plans to use dynamic scoring at cbo? >> we do not intend to incorporate the policies of the macroeconomic conditions

it is also done on the staff of the joint tax committee the particular branch aides to be directed to them we do not stand to incorporate those effects but to provide analysis for other members of the macroeconomic effects for the president's budget and have for seven years but don't incorporate those are in 102 on the estimates with this legislation. >> your answer is no? >> that's right. >> do think extending the bush tax cuts will have positive and negative the effect on the economy? >> >> extending the tax cuts would have a positive effect in the year or two on the beginning because they would encourage spending and job creation over a longer period of time the tax cuts are extended permanently to

revenues a larger debt that would arise would lower the level if it was extended not and a permanent basis but a temporary basis of to three years that would help the economy. >> in the first few years that additional debt accumulated and major drag to if not set with policies director in my time in congress which has been unbelievably long. [laughter] twenty-four years, i have worked to advance the creation of a strong domestic fuel industry that would provide the government agencies save secure supply of fuel regardless of

policies, a global policies of oil. to this end i have offered legislation that would provide incentives to a mix of loan guarantees and tax credits as where at the -- as well as multi-year procurement contracting for our government agencies. aside from market place stability from price certainty this helps with the budgeting process as the energy demands within the government agency continues to grow, do you believe it is important to provide the government with the authority to enter into these multi-year procurement contracts? >> as you know, senator we do not make policy recommendations but i do understand and agree with your point* on a 74 cost all

else equal that that would complicate the budget process i cannot judge the specific ways in which should make those cost. >> guy vander stand. thank you. >> senator stabenow? >> first one to thank you for your ongoing leadership as the ranking member and focusing on long-term deficit while at the same time talking about what we need to do in the short term to create jobs. i appreciate your balance on both of those which are so critical. i want to take a moment and just ask, we look at two charts, mr. chairman that you have put up. one of those, i think it is important, let me start by saying, it is important not

to look for the purpose of blame but understanding what works are what doesn't work to look at the last eight years and look at the mugabe for that what has worked or not worth. when i came into the budget committee 2001, over debating what to do with the largest surplus in the history of the country. that point* in the '90s was focused on innovation, education, balan cing the budget. but very much focused on investing in people and growing jobs, a 20 million new jobs lost. eight years coming in, a different economic policies were put into place, wants the focused on tax cuts at the top hoping they would trickle-down, a computer class families, prescription drug bill not pay for, the two wars not paid for, the largest surplus in the

history down to the largest deficit. i don't think it is insignificant as we now look at different policies and look at how do we go back, from what worked in the nineties to create jobs jobs, to look at what has happened. first, the fact, excuse me senator nelson, and this is not insignificant that we are in fact, moving in a direction of less people losing jobs and hopefullyple beo have a net plus in terms of creating jobs. that is not insignificant. it is also not insignificant, mr. chairman insignificant, mr. chairman, the economy is improving. we have put in place, a different policies in the last eight years.

at least part of that when we look at the recovery act, i was very pleased that the effort by championed on class for concurs had such an immediate impact in a small amount of time and some economists have credited that with a boost of the short-term boost of gdp. it is not insignificant. it is important that different policies are beginning to swing this in a different direction and that is important. now we again are focused at are focused on middle-class tax cuts and on and innovation, a jobs, and i think that is very significant. i wanted to ask mr. elmendorf and also join my colleagues and thinking you for the incredible job

that your staff have done project early on health care which was incredible, incredibly stressful 24 hour day effort and think each of you for doing that. >> thank you senator. >> you talked about infrastructure spending has a delayed. i assume the dollars that we passed last figure in the recovery act would have more impact of this year than last year? to make the infrastructure dollars, yes. that is correct. >> >> were generally for the program infrastructure is more impact this year than last year. >> you would expect 2010 more impact and more jobs created? >> yes. that is correct. >> could you talk about a little more in terms of creating jobs will help us reduce the deficit? it is different than a top-down approach to put

money into the pockets of middle-class and creating jobs and growth the economy? >> as you say, increase economic growth, a decline in the employ -- employment would decline revenues collected and decrease the benefit payments that go out formerly a the food stamp program and so on. and rough terms, we and said joint committee of taxation think of a dollar extruded gdp total income raising government rate -- revenue by $0.25. we show in our outlook that economic growth is stronger than we project over the next year or two that with the two smaller deficit for it is weaker that would lead to larger deficits we think risk on both sides.

>> it would be fair to say and i appreciate your critique of focusing on some type of job specific credit or business or unemployment extension as well as other investments that not only creates jobs but helps to tackle the deficit? >> that is right. understand the scale of the deficit this year and next year is very large and rude have to be unbelievably falloff with economic growth but that is a step in the right direction. >> i am certainly not minimizing what is a huge issue also i want to reemphasize in all the work that we did last year and continue to do to tackle health care costs which i believe also creates jobs

and it certainly does in my state of michigan and across the country, if you like to reiterate again, your feeling of terms of tackling health care cost to address the deficit and the work of your great staff indicated the bill has passed in the senate to reduce the deficit by $232 billion in the first 10 years and a much larger amount i have heard different numbers but a much larger amount in a the second/sec and/ 10 years. do believe tackling health care cost is a critical part to bring down the deficit? >> certainly reducing federal spending for health care is almost a necessary part of pulling the budget into a sustainable trajectory over time because of the growth of the budget

gap the deficit comes from rising health costs. with health reform will reduce government spending depends on specific reform. as you say the estimate is the bill that passes the senate and house would have a small effect of deficit reduction the first 10 years but $130 billion is large by many standards but not by the size of the deficit we project. by our estimation of those bills were allowed to unfold as written it would be a step in the direction of reducing the deficit but only a small step. >> the second 10 years? >> in both bills again we think it would slightly reduce we have not given dollar values are cells but express this in a range of gdp because we want to emphasize what surrounds that but again if both bills

were allowed to unfold as rich and they would represent flight reduction over the second/sec and/ 10 years as well. >> thank you mr. chairman. >> i got here they to help but has not been asked by other people about the bank tanks with members of congress that financial institutions to repave it every dime they have received for financial stability the president recently proposed he calls a financial crisis responsibility fee to facilitate the repayment. obviously a lot of us agree with the goals articulated it is important to understand the important impact to apply it to some

entities and not others in the application for security and stability of these institutions. does the cbo know if the fee is passed on to consumers and if so? will the the reduce the amount of bonuses paid by financial institutions subject to the fee? >> senator, we add-on of the staff for harder work financially with the many questions you have sent us regarding the fee we hope to get back to you shortly on some of them other questions will have to wait until we get more details ourselves but i don't think i have a good short answer to your question. the incidence of who will bear the burden and somebody will we understand there is no other pool of money it will be borne by somebody. how much will be passed into the loan cost into lowering interest rates paid on deposits vs. how much to the

shareholders or managers? it is a hard question and we don't have an answer now and i doubt we will have a great conviction because of certain businesses. we are looking but i am afraid we don't have been a useful answer to that question. >> i will be glad to wage. thank you for studying and "in-depth" and i am sure we will have some concrete answers. i want to go to interest rates and publicly held that. of the baseline projects that helped by the public exceeds 60% of gdp and approaching 70% by 2020. those are your figures. i have read other places where some people expect that the 10 year window to might evening get up into the high eighties are 90% of

gdp. the net interest is estimated to rise at 200 billion this year over 700 billion in 2020. water the implications for the economy with such large interest payments? >> quickly, the difference what you see really rest on a different assumption on the pass-- -- path of fiscal policy but we have discussed in the outlook and i did say in my comment that if in fact, the law could change in the current policy that that would be substantially larger and 80% negative gdp at the 10 year window. borrowing by the government has different sorts of cost for the economy.

one, debt to crowd out investment in real capital, a business plants and equipment that make people more productive and raise income over time. that happens incrementally year by year when more debt is accumulated. it also poses a brisk of a cataclysmic event in which investors might decide they are not willing to hold treasury dead or became unwilling to hold dollar assets the way they have at this point*. that is a risk and economists are very bad at trying to analyze how big their risk is are what day triggering event might to be. all's we can say is that risk increases as the debt rises relative to gdp that means the debt is the increasing portfolio and leaves the rest of there

reassessing their decisions. whether there is a tipping point* and if so, at what level it too would occur, we don't know. just that the risk is rising as remove our debt from the 60% gdp higher over the next decade, we move increasingly into territory we have not seen in this country more than 60 years and don't see in very many other developed countries. there is a warning in that but not a warning i am able to quantify in any way. >> thank you, mr. chairman. >> thank you senator grassley. >> mr. chairman it is certainly a sobering analysis that we need to do with this. let me make one observation first about the ranking members comments and your response there is just one pool of money that whenever we change your baseline assumptions whether on

spending or revenue, it increases spending or revenues and means more borrowing part of the point* that you made whether that is true to change assumptions or extend tax cuts that are not in your baseline and the need more barring and think about new tax cuts or what that means is more borrowing and makes the forecast even worse in the future and i think you for reminding us of that constantly. i want to follow on the chairman's point* how we can stimulate the economy which could then increase of forecast and help us deal with the long term fiscal dilemma we are in. far was interested in the response to the chairman's point* of the most effective way if we could help businesses hire more employees that would help us on the the forecast.

last night the president promised of dealing with a small businesses and i was pleased to see him say that. historic the most job growth will happen with small businesses. it seems coming at of the recession the more we can help confidence with small businesses and more employees the faster we can see job growth necessary for our economy. targeting the tax credit for new hires to small businesses seem to have a very positive effect. i will go into one additional point*, you mentioned the expensing although positive is not quite as strong as the job credits for new employment, i want to go into the area of credit. i can just tell you in maryland, a small businesses that want to expand to not

have as much access to credit as larger companies. many of that is because they don't have the same type of relationships with alternative financial and institutions to get them through this point*. one of the proposals being made is to use the manner in which small businesses can access credit. not by changing the ground rules that would allow them to get credit but to make it easier for them to obtain that in hopes it would help to expand our economy. i was like to get your assessment to the availability of credit. that is one factor if we can make it easier for small businesses to access credit so they can carry out a business plan that is also reinforced by a jobs credit for new hire how back and

have a positive impact on our future. >> a couple of observations. you are right to small businesses commented access to credit has been hurt by the financial crisis of the past few years. we can see that in the report of small business owners themselves. as part of the project project, about stimulating employment growth focus on ways to improve access to credit. that is not what we considered. i don't have much to say particularly what it means may be effective but the more a general question on employment, a lot of jobs are made in small business but a lot of jobs are lost in small business as well. some succeed and some do not. there is nothing in the economic analysis that suggest one should focus

employment incentives on small businesses. that you can encourage large businesses to hire more, those can also bring down the unemployment rate and create additional tax revenue. there is nothing that says regardless of how many jobs created, there is no reason to think that focusing job credit on small businesses would be more effected a dollar for dollar to create employment then allowing the same credits for big business. >> i agree we need to focus on the entire economy but for small companies, that dexter dollar is so important today to make their decisions and in some cases it means whether they will decide to go after the contract or not. i guess it is the difference

between a small company and a large company is much greater than historical the we have seen job growth from smaller companies but high degree we have to concentrate on the entire economy i was glad to see the president recognize the need we have not reached small businesses with the economic programs as much as we need to to stimulate the company. >> senator enzi? >> thank you, mr. chairman. first 20 think mr. elmendorf for all of the good work he has done with health care and can appreciate all the time your staff had to put into analysis day after day and night after night and weekend after weekend. i am concerned the federal government has not been a good partner in the economic recovery. businesses need a stable

environment to make plans for the future purchasing, production hiring strategies cash flow they cannot be made in a vacuum. how can the business community plot a path toward future when it is looking at the uncertain fate of health care reform, a forest paid sick leave and the business tax extenders? is it logical to assume it has had a negative impact of the job creation and is it possible to quantify the magnitude of the impact? should they move quickly ease with the low paying being fruitwood that have and the fact? >> you are correct uncertainty about future government policy is weighing on business decisions.

i cannot quantify and it is not as much uncertainty about the demand for product their future sales waiting on the of small-business front they also report the biggest uncertainty is whether they can sing. that is the biggest which is weighing on business decisions but uncertainty of government policy also plays a a role. >> there is no question the fate of the income tax congress passed in 2001 and 2003 and as you know, being engineered by the economy i agree that a lot of the jobs laid-off and big businesses are picked off by small business and many of those file taxes as partnerships are limited liability

corporations are subchapter s and pay income tax according to the rate schedule for individuals which puts them in the over $250,000 category so the fate of the marginal cuts in 2001 are very important to them. talking on page 45 i appreciate that in saud 20 days 2011 the blue-chip forecast is 3.1% and is it correct is say the cbo projects for our failure to extend the tax cuts will reduce economic growth by a full percent of gdp next year? is it wise to sacrifice the opportunity. in this environment? if the government wanted to be a good partner in recovery and reduce the uncertainty it seems logical congress should act quickly

to permanently extend all tax cuts especially those that affect small business. what is your take on that? >> we do think if you were to extend the tax cuts on a temporary basis that would provide stimulus to economic growth next year. if you would extend its on a permanent basis that would supply a larger stake in the two the fact next year if you spend a larger share that would be cut for some greater period of time. the problem is of course, if you do that with no other steps then said deficit outlook is bleaker and unless other steps are taken it would pull down activity. with said it increased short-term with the back half of the 10 year window the extension of the tax cuts with an importance to

the two be fact up front with positive economic activity later in the projection window. we do think a large share of the gap between our economic projection and that of the forecasters probably stems from the difference in fiscal policy assumption. we may go guess of what we should not do ourselves. we don't know their assumptions but if we have a permanent extension that would raise economic growth than next couple of years by more than a percentage polite but i vote come back with a baseline projection which are deficits twice the size we're showing now at the end of the 10 year window. that is the other part of the problem you and your colleagues are confronting. >> switching to education and common good baseline

with savings and student fiscal responsibility responsibility, 87 billion and the subsequent estimates it with senator craig estimated only 47 billion in net savings. however, i can print the baseline estimates hence the fact and number of schools have switched direct loan programs how much will fuss gore change with the new baseline and assumption? >> we don't think it will change very much because there were offsetting factors at work. it is true because more people have already switched to the direct lending that has any effect. one direction really our forecast for interest rates over the next decade that has an effect the other direction. we have not completed a

first look but there is not much of a net difference. a significant difference between the officials goer that is based off of 1990 were the alterna way at market risk that senator gregg asked us to produce. >> storehouse apolo questions. thank you. >> senator nelson i just want to thank you for your strong support of the initiatives as senator craig and i advanced. nobody was a stronger advocate for a better press charter four that. i want to publicly acknowledge the work that you did on the commission. >> mr. chairman, the fact we only got 53 votes for setting up a commission in the statutes that you and senator craig proposed, i

think is a shame. we had to reach the 60 broach threshold under the senate rules to get it. and we only got 53 votes. and how many against? forty-six. having a statutory commission to get the national debt problem under control. that says a lot about the willingness of folks to get our fiscal house in order. i want to thank dr. elmendorf, you have done yeoman's work and all of the request that we have had to you to come up with as we consider this health care. me go back@@@ @ @ @ @ @ @ @ @

that because you said in the second ten years, if i reca your projection wise if the senate health bill passed, the second ten year. it would come down from a range of $650 billion to $1.3 trillion. so the way we put that was the sheer gdp, senator. and some people have taken to

doing their own calculations of gdp in the second decade of doing the multiplication. the reacher liberally stop the percentages that dgp. if you can bring the chart back up. we said that the bill would reduce deficit between a quarter and half a% of gdp. so after a decade, that amounts to ten times that. so that would be 2.5% to 5%. 2.5% to 5% of gdp. you can see on that charge, take the end of that second decade, 2029, death is going from 100% of gdp to 200% gdp over the space that they can't be sure, but a decade or two. so we're taking five percentage points off the level for that second decade. it's lower, but i think if we were told to china charter to the next or elegy be honest, you had trouble detecting the

difference. >> now, is it not true that one of the things you cannot score when you do a score about the senate health bill is the insurance reforms? things like that insurance companies can suddenly cancel you for four preexisting condition and we're going to set up a countable care organizations that are going to follow the patient through medicare. the emphasis on primary care doc errors, so that they have to get a.there and you need to go to this specialist. electronic records, so that one physician to the next knows what the other has done and therefore you don't have to repeat all of these tasks that we find in the medicare system right now, where

the medicare recipient goes to this specialist, this specialist, this specialist. there are not going what the other specialists are doing and they are duplicating tests. that's something you can't score, isn't that right? >> well, we tried. so it is estimating the effects of those kind of changes on the budget is very difficult and certainly their other analysts that think we have produced budgetary effects that are too pessimistic another analysts say we are too optimistic. either group could be right. uncertainty is great, but we do think we balance the risks and the projections of the provided. >> well, you certainly agree that health care is a big part of our federal spending and it's going to affect that huge debt. >> yes. a >> in the future.

so maybe there are things like on the private sector, these insurance market reforms that we've got to get into. some of which i just mentioned that's going to affect the federal budget, that it's difficult for you to score. a >> yes qaeda certainly difficult for us to score and certainly everything we do is uncertain. and of course, is your suggesting also, the effect on the budget deficit is not a summary manager of everything that might natter. it's just one aspect, but the aspect on the table at the moment. >> today, and i'll conclude with us, today we are going to be voting on a so-called asu go amendment. and that sounds awfully good, but they're going to be certain exceptions for it. there's going to be an exception for the amt.

we're not going to pay that for two years. all of bringing doctors up to what they should have been getting under medicare, that has this acronym called sgr. that's not going to be paid for for five years. i wonder if it is a pay-as-you-go amendment. and the whole thing we're going to forgive about $1.6 trillion that we're not going to pay and the consequence of that, when you add the debt service to it is going to be about $1.9 trillion. >> none of those estimates precisely, but that does sound like a ballpark that we expected, yes. and that is -- those provisions, those exceptions, the adjustments as they're called in the legislation to suggest the

deficit will be larger than a few in your colleagues passed a similar though that does not have those adjustments. >> thank you, mr. chairman. >> i understand senator whitehouse's head in this direction. do we know how late? >> does anybody else wish to ask any questions of the direct or? we've got a vote starting at 10:30. does the director mind waiting for a couple minutes for senator whitehouse? >> as long as you would like me to way, senator. >> well, i can ask you something. following up on this day go issue, do you have an estimate of how many times the congress has raised paygo in the last two years? >> no. i certainly wish i did now. but i'm afraid that i don't. >> with the total gross amount

and waivers that has occurred of items that should have been subject to paygo in our estimate approximately $400 billion? >> i'm sorry, senator. we can't do that. >> while i will hypothesize that it's a fairly big number and that pedro has become a fairly meaningless exercise around here because it either gets gain weight or avoided. is that not true? >> i think our judgment in the judgment of other analysts that in the 1990's when there was a bipartisan concern about a rising federal debt, that the pay gogo, the discretionary spending cuts helped to restrain action that might other ways increase the budget deficits. by the end of the 1990's, as you know, when the deficits were turning into surpluses, then those rules were rightly

ignored. so they are not by themselves binding, but they can be helpful, again in our judgment when people are already? >> the will is there. >> that's right, senator. >> senator whitehouse? >> thank you, chairman craig. >> thank you. >> dr. elmendorf, thank you for coming back to us again. just a couple of quick questions. first, the president's council economic advisers has calculated that the excess cost and waste in the health care system is in access of $700 billion a year. at the new england health care institute has calculated that it throughout $850 billion a year. only one group and i think it's probably their number of former treasury secretary paul o'neill used because there coincident

puts the number for excess cost and waste in the health care system annually at a trillion dollars figure. do you believe that those studies are in the general right order of magnitude? >> i think the things the right ballpark. i mean, as we noted in our letter to senator gregg and senator conrad in june, there's a widespread limning analyst at barney is not being used effectively. we spent a lot in those that don't. it's impossible to -- make an educated guess. certainly hundreds of billions of dollars. i think that's right. >> in your written testimony, you state that the testimony will be damned by claiming support from fiscal policy as the effects of error, the american recovery act way again.

that state a proposition in the negative. would you be ready to state a proposition in a positive? >> as we wrote in our report on policies, a seemingly gross we think that a fiscal measure can spur economic activity and job creation in the next few years. >> well, good tiered >> we believe and we have written this many times and i said this in my remarks that the stimulus packet has increased level of employment relative to whatever occurred without the legislation. >> so it's been good in terms of getting us out of the economic that we were in? >> we think that it has shortened the duration and reduce the debt of the recession of what would have otherwise occurred. smack him that i would suggest works under the general category. >> yes, it would. >> one other question, what are your observations about the extent to which of the

foreclosure crisis continues to operate as a drag on the economy five and to what extent if at all do you believe that a sort of clear market solution, lake resort to bankruptcy court for families who are in trouble, on their home, first mortgages on their primary residence might help provide clarity in the market so that tanks and everybody else can we find and would not move the foreclosure crisis behind us more rapidly if we had that kind of a clear market signal coming out of bankruptcy court says people have the chance to get their cases called and heard rather than sit on the phone for many hours with banks, finding every

new corners of their telephone answering system to be thrust into? >> so we do think the foreclosure crisis continues to be a very serious problem. obviously for the families that are involved, but also in macroeconomic terms and their analysts who were a good deal about how his process will take another turn down is more foreclosed properties appear on the market. that is a drag. and i think that in greater clarity at the end of that process would indeed help to stimulate economic growth. we have not analyzed particular ways of achieving that clarity and i think in general the experience of last year suggest that the greatest clarity can be achieved with a large injection of funds and that achieving clarity what they saw injection of funds is pretty challenging. so i think those are the issues would have to way, but we have not done a study at this point. we are in the process of working

more on that topic and we will report to you shortly. >> as an observer of markets and economic behavior, if you give banks the opportunity unilaterally to decide how much they are going to lose on a mortgage that is underwater, rather than allow a market neutral process to make that determination, what effect does that have on getting quickly and accurately to the real number and enabling the economy to move on? >> i think the other processes faster than the current process depends on what he set up and how it is run and let the incentives are the people running it. i don't take i can answer that in general terms. i also think that there is an issue -- we have a process under which contracts are negotiated and signed and i think they're legitimate concern about

changing those contracts in the process of which problems are solved doesn't mean we should not. i'm just saying that there are complexities about effects over time as well and that's what really requires that it isn't done yet. >> the efficiency of the american bankruptcy system has been one of the great assets of our economy. there's a good piece on this in the economist magazine just a few weeks ago. as one of the prize of the american family. the bankruptcy system is nothing new. it's existed for as long as the republican republic has aired it applies to every single type of debt, including debts that the banks hold except for one kind and that's the poor residential mortgage holder who years ago for political reasons was carved out of the and denied access to the same quick established resources that every debtor has

access to. i just want to push back a little bit against what i thought was your implied theory that this would be something novel or peculiar if we allow this to have been. it actually lists a novel and a peculiarity and restores it to is traditional, general basis. >> i think that's right, but it would be a novelty in the mortgage market and there are studies that suggest that that particular novelty or peculiar d. of mortgages has helped to keep mortgage interest rates down so there may be a trade-off from what one is doing for people in drabble versus one who does not end up in trouble. i'm just suggesting why don't feel like i can't off-the-cuff analyze your particular proposal. but i understand your concerns. stockwell, very good. thank you for a testimony. thank you for your patience in allowing me to have this time. >> you and your staff and the

extraordinary job you do. we were just a into each other the amount of folks you have done has been exceptional and the quality of it is also exceptional in the integrity of it has been exceptional and we thank you for it. >> can i say, senator, i feel very fortunate to work for such a dedicated and talented group of people at cbo and i'm very grateful to you and senator conrad and chairman spratt for giving me the right to do that. [inaudible conversations] [inaudible conversations]

>> the u.s. senate has reconfirmed bad for nike to a second term as head of the federal reserve. the 7230 vote came after this debate of a little more than an hour. >> nomination federal reserve system ben bernanke to be chairman of the board of governors of the federal reserve system for a term of four years. >> the senator from south dakota. >> madam president, i raise and support of the reconfirmation as chairman ben bernanke to serve another term as chairman of the federal reserve board of governors. as the administration and congress continue to look for ways to restore our nations financial stability, from what academic recovery and work on legislation to ensure that

another economic crisis like the one we saw last year never happens again, we need chairman bernanke's leadership. while there has certainly been criticism about the federal reserve for not doing enough to protect consumers and for unprecedented actions that took during that financial crisis. there is also consensus that mr. bernanke kept the nation out of the depression and has kept inflation in check. as the recession recovers and the challenges in the months ahead, there is no thought that one of the world's foremost experts of the great depression is a benefit to our nation. but it cannot be business as usual for the fed.

like many banks and wall street, the fed must be more transparent the federal reserve cannot just be the organization that picks up other financial institution fails while our entire economy is put out risk in doing so. the status quo at the fed is not acceptable and the nation needs to set a bank that is proactive with financial institutions in the economy. i believe mr. bernanke has committed to these goals and i support mr. bernanke's operations. madam president, i yield the floor. >> who yields time? >> madam president. >> the senator from alabama.

>> madam president, i rise today to oppose -- to appoint the reappointment is ben bernanke for a second term as chairman of the board of governors of the federal reserve system. madam president, the principal reason for my opposition to this nomination is that i believe in accountability. in particular, i believe it is the duty of this body that is the united states senate, to hold accountable those regulators whose oversight of our financial institution and markets helped produce the greatest economic crisis this country has experienced in some 80 years. madam president, because the federal reserve, during chairman bernanke's term failed to take the steps to ensure that our financial institutions were properly regulated and would not need federal bailout to survive, i do not believe that

mr. bernanke should be confirmed for another term. prior to the recent financial crisis, as a member of the board of governors, bernanke enacted policies that contributed to excessive risk-taking. subsequently, as board chairman, he ignored or downplayed the serious emerging risk. he failed to use regulatory authority available to the sides to prevent housing speculation and unfounded and in practices, often misjudged the nature of problems and markets, contributed to market turbulence by appearing to act inconsistently and in an ad hoc manner. he failed to ensure transparency of actions and basically took actions damaging to the political independence of the federal reserve and of our nation's monetary policy.

madam president, i do not believe that chairman bernanke has executed sound judgments and oversight over the fed's monetary policy. the lender of last resort and regulatory supervisory i will explain. chairman bernanke has advocated a policy of remarkably low interest rates for an extended period of time following the 2001 recession, providing an environment that helped fuel a speculative bubble in real estate lending. madam president, subsequently in the face of rising home prices, and risky mortgage underwriting practices, the fed failed to act on the bernanke buy nikes in its rulemaking authority over mortgages to arrest the wiki practices in the grind risk. and yet, madam president, amazingly given a history of

failure in supervision and regulation, chairman bernanke now continues to actively campaign for maintaining and further expanding the regulatory powers of the federal reserve. madam president, the financial panic that our market is experiencing in 2008 was the most severe assays that in modern memory. its repercussions have resulted in our unemployment rates surging to more than 10% and the worst economic growth in a generation. our present economic problems however are no accident. in large measure, they stem directly from the actions of our financial regulators here at madam president, it's the responsibility of our financial regulators to ensure that our financial institutions are properly supervised and that they promote rather than threaten our national economy.

unfortunately, the recent financial crisis demonstrated that our financial regulators did not do their jobs. our thanks for undercapitalized, mortgage lending standards were far too loose and expectations of government bailouts were too prevalent. madam president, dr. bernanke's federal reserve played a key role in setting the stage for the financial crisis that we are in now. first, under his leadership, the chair of the federal reserve failed to ensure that our financial institutions were adequately capitalized that i mentioned a minute ago. indeed, the federal reserve, our federal reserve led the effort to reduce capital, reduce capital, madam chairman, president, in our largest financial institutions through the adoption of the basel two capital accord. the fed even considered abandoning the leverage ratio

which ensures that all banks maintain at least 4% of capital. think about it a minute. as a result when the crisis struck, many of our financial and touche and did not have the capital necessary to withstand the downturn. not surprisingly, the federal reserve been argued that a tax payer bailouts of the bank was the only way to prevent economic collapse. but rather than do his job in ensure that our financial institutions were adequately capitalized, the fed waited until the crisis was in hand and then rescued its banks with taxpayer funds. think about it a minute. ben bernanke also failed to detect and to address the decline in monday's standards and growing use of subprime loans. at the core of our financial crisis is the fact that far too many home loans were made that

borrowers will be unable to repay, probably cover. the failure of der stern, lehman, washington mutual and aig largely stem from the sharp declines in mortgage values. and all the congress gave the federal reserve the authority to address funding standards and subprime loans when it passed the home ownership and equity protection act in 1994, the fed failed to enact strong regulations until 2008, more than two years into chairman bernanke's term. in addition, ben bernanke's federal reserve has failed to adequately supervise many of our largest financial institutions, most notably citigroup. four years it's been no secret of the problems of citigroup have been well known everywhere, but the federal reserve always solved to look the other way,

rather than deal with the complicated problems. by failing to address citigroup during the good times, the federal reserve left our largest financial and addition at that time highly vulnerable to the next downturn. in the end, the federal government had to inject $40 billion in guaranteed more than $300 billion a citigroup's assets. the fed's failure as a supervisor, the regulator can't place to u.s. taxpayers and our economy directly at risk. madam president, regardless of how chairman bernanke performed during the financial crisis, the record of the fed leading up to the crisis should not be ignored by the congress. a close examination of chairman bernanke's performance during the financial crisis reveals that he was too slow to recognize how serious the situation was. and when he did react he reacted in an ad hoc fashion that

greatly exacerbated the crisis. madam president, after the housing market bubble began to burst in 2006, chairman bernanke was slowly entertaining possible spillovers from housing into the general economy and the financial system itself. even after bear stearns failed, chairman bernanke did little to prepare for additional failures. in other words, bernanke fiddled while our markets burned. in the next six months between the failure of bear stearns and lehman, the federal reserve did very little to prevent either another taxpayer bailout or sudden and disorderly collapse of lehman, even though the problems were well known to the side and to everybody else. as a result, when lehman was ultimately about to fail, our markets responded sharply because they could not understand why the fed let

lehman failed, but rescued bear stearns. markets need clarity about policy, especially in times of crisis. yet just when our markets need a clarity about fed policy, chairman bernanke's ad hoc response left our markets in the dark. consequently, the failure of cleveland was disrupted and more damaging than it needed to be. his response to the financial crisis also leaves questions about his judgment. in october 2008 he appeared before the banking committee in the u.s. senate to urge the passage of t.a.r.p. he testified that government purchased assets from banks was the best way to respond to the financial crisis. at the time, as a lot of you know, i post are because they did not believe that purchasing toxic assets with a workable solution or should we bailout anybody. i argued that it was really are making our financial problems

worse by indirectly posing the failure of other financial institutions and it did. despite chairman bernanke's idea that it was the best solution just days after the passage of t.a.r.p., treasury department and the federal reserve abandoned the very asset purchase plan that he judged be the best force forward when he testified before congress men. equity injections were employed because the usual -- because the asset purchase plan was proven to be a workable he said. madam president, the full story at aig has yet to be told. unfortunately, the fed and other regulators have gone out of their way to hide what really has gone on at aig, both before and after the bailout from congress. what is clear however is that the fed knew more about aig's problems and has admitted before. the fed has repeatedly stated that it did not learn of aig's

problems until the weekend of september 12, 2008, and that it was time to learn of its problems. really? yet, in his recent book, too big to fail, andrew weil sorkin reports that the ceo of aig met with then the new york fed president, tim geithner about aig's problems on at least two occasions prior to september 12, 2008. on one occasion, aig ceo gave mr. geithner at that time documents containing aig's financial condition and his exposures to other financial institutions. we still do not know what treasury secretary geithner at that time did upon learning about the problems with aig or whether chairman bernanke knew about aig's meeting with the new york fed at that time. the fact that the fed may have known about the problems with aig before its collapse raises

serious questions here about whether they ignored early warnings and failed to take action on the situation and became unmanageable without tax bailout. madam president, many have said that if chairman bernanke was not reappointed financial markets will remodel. the notion seems to be that continuity of leadership will be valued more by market than the assurance of responsible and accountable leadership of the side here at a buddhist perspective is shortsighted and wrong. it is more important, i believe, to find the most competent person available for the job to simply adhere to the status quo. madam president, it is also wrong to speculate of what should happen if someone other than mr. bernanke service chairman. and it's far more important to consider the facts surrounding chairman bernanke's record than it is to speculate about the impact of his departure.

the record clearly indicates that considerable economic devastation occurred as a result of chairman bernanke's loose monetary policy and weak regulatory oversight. millions of people are now out of work in this country and trillions of dollars in savings have been lost. madam president, those who try to frighten others with notions of what might happen are ignoring the hard reality of what already has happened. it was a whole chairman bernanke accountable, what president are we setting for future regulators. what incentive will they have to take to the tough step necessary to ensure that our financial institutions are adequately regulated. i fear, madam president, that the prospects of a high-paying job on wall street will diminish a lot of the incentives to be a good regulator, unless they know that congress will hold them accountable if they fail to do

their job. how can we ever expect our regulators to perform if after the greatest financial crisis in living memory, not a single couple regulator is held accountable. unfortunately, this is a theme that is repeated too often here in washington. something terrible happens and although congress exposes both institutions, institutional and individual failures, nobody is held accountable in the only one thing that ever seems to happen is that the failed institutions along with their failed leaders get more authority and more money. madam president, this needs to end. the american people likely believe that anyone of us who neglects to do our job, we should be held to account, not rewarded. madam president, mr. president, i intend to do my job and vote no on the second term of ben bernanke.

>> senator from connecticut. >> recognized from a colleague from new jersey for five minutes. >> mr. president. >> senator from new jersey is recognized. >> let me thank my distinguished chairman committee for yielding time. i rise in support of a man whose position i do not envy. chairman bernanke has faced an extraordinary economic circumstances in the us kept a steady hand on the tiller in a perfect economic storm that is threaten this nation's underlying financial stability. faced with an economy that was added in a downward spiral, chairman bernanke in the fed had what appeared to be a set of hops and choices, make tough decisions or preside over a global economic meltdown. i think both of us agree that doing nothing is not an option. having said that, i do believe

there was more the fed could have done to mitigate the housing bubbles, supervised the banks, not muscular consumer protections, provide credit to small businesses. i believe in chairman bernanke admitted himself he could have done more to mitigate risk and require higher capital standards. in the future, expect the fed will be more responsive to the needs of main street where there is a small business innovating something creating the new jobs of the 21st century and needs of american families across this country. i expect it will be more vigilant to prevent a repeat of the economic crisis we have experienced and will get added to future challenges we will face the commercial loans and credit card defaults. but despite his reservations, i will be voting in favor of confirmation because it is my belief that history will show the recession would've spiraled into a depression had chairman

bernanke been timid or equivocal in his actions. i'm voting yes because chairman bernanke has proven his leadership and his value to this nation during this unprecedented crisis. to vote against confirmation would unnerve investors and exacerbate economic uncertainty in an economy that needs confidence and stability, not volatility. i believe chairman bernanke is an astute scholar of the great depression and is now arguably the first and foremost expert on the great procession. at this moment in history, someone who has learned from two of the most devastating economic disasters in american history is certainly qualified to lead the fed. i will vote just because it makes you what we should not do is change leadership at the fed at a time when wealthy need most is a steady experienced and that what appears to be the very beginning of an economic recovery.

i will vote yes because recently chairman bernanke has committed two more muscular regulatory reform that will come out of both on bull street. he has the will to take politically unpopular strategic action, which history will show as necessary under the economic circumstances created by the last eight years of runaway laissez-faire and financial regulatory policy. he understood the importance of keeping inflation low, forcing an interest rate of stabilizing the financial system. at this time, mr. president, his work is not yet done. and i believe we need the wisdom of patients as elizabeth barrett browning said what measure not the work until the day is out in the labor done. i'll quote yes because chairman bernardi is not in a letter to acting comptroller general david rivera to provide all records necessary for a gao audit of the fed to give a clear understanding of his in the fed's actions in the

$182.3 billion bailout of aig. and i will go just because i believe he understands the nature of exacerbating the crisis by tightening monetary policy at the wrong time. mr. president, president kennedy said quote, and knowledge is light, we must think and not act only for the moment, but for our time. he told a story of a man who asked his gardener to plant a tree, but the gardener objected saying the tree was a very slow-growing tree. but it would not reach maturity for 100 years. to which the man replied, not case there's no time to lose. when it this afternoon. as your president, but it's not step back and succumb to the urge to act for the moment, but do what's right for a time. solving our economic crisis surely will not take a hundred years, but the seeds of recovery that are taking place right now need to be nurtured by experienced hands. i urge my colleagues to join me in voting to ensure competence and stability at the side, not volatility on the type of

constant stability that is necessary for our time. without mr. president, i yield back whatever time have to chairman. >> mr. chairman. >> senator from kentucky is recognized. >> thank you. mr. chairman, i yield my time -- yield myself such time as i'm a consumer have up to 30 minutes but i don't think i'm going to need that. four years ago when chairman bernanke was first nominated to be chairman of the federal reserve i was the only senator to vote against him. in fact it was the only senator to raise serious concerns about his nomination. i oppose them because they knew he would continue the legacy of alan greenspan and no sway. but i did not know how right i would be and i could not imagine how wrong he would be in the

following four years. from monetary policy to regulation, consumer protection, transparency and independence, chairman bernanke's time as fed chairman has been a failure. we must put an end to his and the fed's failure and there is no better time than now. the greenspan legacy on monetary policy was breaking from the taylor rule or -- world to provide easy money and that inflate bubbles. not only did chairman bernanke continue that policy when he took control of the fed, but he supported every greenspan rate decision when he was a fed governor before he came chairman. sometimes even wanted to go further and provide more easy

money and chairman greenspan. even to this day, chairman bernanke continues to deny that fed actions played any role in inflating the housing bubble despite overwhelming evidence and the consensus of economists to the contrary. and in his efforts to keep filling the punch bowl, which is a term used by chairman bernanke himself, he cranked up the printing presses to buy mortgage securities, treasury securities, commercial paper and other assets from wall street. those purchases, by the way, led to some nice profits for the wall street banks and dealers who sold them to the fed. on consumer protection, chairman

bernanke went along with the greenspan policy before he was chairman and continued it after he was promoted. the most glaring example is it akin to years to finally regulate subprime mortgages after the fed had already done nothing for the prior 12 years. even then, he only acted after pressure from congress and after it was clear subprime mortgages were at the heart of the economic meltdown. and on other consumer protection issues like credit card, he only act dead at a time when the time approached for his confirmation to another term at the fed. as the economy started to slide and the housing bubble peaked and then burst, chairman bernanke failed to notice the

problems or do anything about them until it was too late. during that time, he made statements showing just how he did not understand what was really going on in the economy or how severe the crash would be. i want to read a few of those statements so that everyone understands just how wrong he has been. in march of 2007, this is chairman bernanke, he said the impact on the broader economic and financial markets of the problems in the subprime market seem likely to be contained. then, in may of that year, he said we do not expect significant spillover from the subprime market to the rest of the economy or to the financial

system. the following february he said, among the largest banks, the capital ratio remains good and i don't expect any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system. a few months later, in june of 2008, he said the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so. then in july of 2008, he said that fannie mae and freddie mac are adequately capitalized and in no danger of failing. finally, in may of last year, speaking about unemployment, the

unemployment rate he said, currently i don't think it will get to 10%. well, we all wish he had been right on that one. i could read a few more quotes, but i think those are enough to show how wrong that he has been on major economic issues. of course, everyone makes mistakes, so i asked chairman bernanke about these errors and written questions i gave an after his confirmation hearing. his answers did not make me feel any better. he said the fed did not understand the relationship between financial firms, how the problems in the financial side there would move to the real economy or how severe the financial crisis would be. that's in his written response to me.

i thought those were the kinds of things regulators and the fed in particular were paid to understand and address. we shouldn't be paying fed chairman to learn on the job. just like with consumer protection, chairman bernanke did not take the job of regulating the banks under the feds authority seriously. instead of close supervision of the biggest and most dangerous bank, he allowed them to grow their balance sheets and increased risk. in the same is true on derivatives. after taking over the side, he did not see any need for serious regulation of derivatives until it was clear that we were headed to a financial meltdown, thanks in part to this product. even worse than the failure and

flawed policies i just mentioned, chairman bernanke destroyed the independence of the fed. he vowed to the political pressures of the bush and obama administration and turned aside into on arm of the treasury. walking arm in arm with the treasury, chairman bernanke buildout of the large financial institutions, including many foreign banks. and he put the printing press into overdrive to fund the government spending and hand out cheap money to the wall street firms. instead of taking that money and lending it to consumers and cleaning up their balance sheets, the bank started to pocket record profit and pay out billions of dollars in bonuses.

and now it appears that chairman bernanke was compromising the independence of the fed to get votes for his confirmation. after a meeting with chairman bernanke, the majority leader issued a statement saying that he had expressed concerns to chairman bernanke about things that the fed was not doing and that chairman bernanke committed to take action. majority leader went on to state that is support for chairman bernanke was not unconditional. i do not question the majority leader's intent or actions here and i certainly do not have a problem with the senator telling the fed chairman about his concerns were urging him to take action. i have done so myself on many occasions and it is not a problem for the fed chairman to

agree that he and the fed need to address concerns raised by senators. so what is not appropriate as the fed chairman making commitments in order to secure votes for himself. i hope that is not what is happening in this case. now with greater power goes the responsibility to use that power in an open and certainly a transparent way. we have all heard chairman bernanke talk about transparency , but his actions speak louder than his words. he promised congress more transparency when he first became fed chairman and he promised us more transparency when he came begging to the congress for a t.a.r.p. well he has published some more

information than before, those efforts fall far short and he still reduces untrimmed refuses to provide details and all of the fed's actions over the last two years. after his confirmation hearings, i asked chairman bernanke waitlisted documents for us to review, although butch are reasonable for congress to see. for example, the list included documents about the bailout of bear stearns and aig, information about the fed's regulation, both banks before and during the crisis. and transcripts of monetary policy meetings that have not been made public. but his answer made it clear that he is not going to put --

do not going to open the fed's actions to review by congress or the taxpayers. instead of providing those documents, what i got in return was a folder full of paper that was printed off the fed would age. that kind of response is not only disrespectful to the senate, but it raises the questions of what are they hiding? following the markup of chairman burnett bernanke's chairman died arranged for the period i thank them for doing that and i took them up on the offer and went down to the fed myself to look at them. in reviewing those documents, some interesting and useful facts came to light that will be helpful as we craft banking

reform legislation. more importantly for what we are talking about today, some of those documents contain new information that raises serious questions about chairman bernanke judgment. leadership and personal role in the aig bailout. unfortunately, under the agreement with the side to get access to those documents, i.e. not allowed allowed to talk about the details and i was not able to copy those details and bring him back and show them to other senators. i think that every senator should be out to see those documents prior to voting and i ask chairman died to subpoena them this week, but that is not happened. senators should be especially concerned about voting now because last week chairman

bernanke himself asked the gao to conduct a review of the same documents, but that review will not be complete and i made public until well after this vote has been taken in the senate. while all of the reasons i just mentioned are enough to vote against chairman bernanke, the simplest reason is that a vote for ben bernanke is a vote for bailouts. chairman bernanke has been in the middle of all the financial bailouts for the financial crisis. it was his fed that buildout bear sterns in march of 2008. it was his fed that buildout aig in september of 2008. andy west chairman bernanke along with secretary paulson who came to the congress, begging

for t.a.r.p. and if you liked those bailouts, by all means, vote for chairman bernanke. but if you want to put an end to bailouts, and send a message to wall street, this vote is your chance. i urge you to vote no on the confirmation of chairman tran ben bernanke for another term as fed chairman. i yield the floor and reserve my time. >> mr. president. >> senator from connecticut is recognized here to >> mr. president, i'm going to have asked to address the chamber for three minutes if i can and reserve the balance of my time for later in this debate. and let me say to my friend in

college in kentucky is a member of the committee and a worthwhile member of the committee and while we disagree, on this nomination, i am appreciative. he raises very good questions. he does so with compassion and conviction on these matters and i appreciate his gracious comments in my efforts to accommodate his very legitimate interest in learning as much as we can obviously about the matter affecting aig were $180 billion of taxpayer money was involved. and as my colleagues are aware, a lot of investigations going on by the general icon in office by state t.a.r.p. as well as individual senators going down and getting information. so while it may not be satisfactory there is an effort be made to make sure that people can be as informed as they possibly can about the matter and of those obviously there is a hearing going on the house side on this issue. the matter before us obviously is whether or not to confirm mr. bernanke, the chairman of

the federal reserve for a second term. i'm strong supporter of his nomination and i want to explain briefly why and i'll complete my remarks a little later in the debate. very simply, mr. president, you get to to be the nominee of ever voted for that i was 100% for, but comes to a nomination with a record that is going to necessarily be embraced by all 100 people here are even those who support nominees. the issue is it's certainly looking back i think is important to do. but the most important issue relative to the two questions looking backward looking forward i think most americans would agree, where are we today and where are we going in these matters? i happen to believe that over the last year, little more than a year, the chairmanship of ben bernanke has in no small measure made it impossible for this nation to avoid a catastrophe i think would've loomed as large as the great depression and maybe even larger because of the

global implications of decisions that were needed to be made. had it not been for ben bernanke and the chair of the federal reserve do think we be looking at a very different america today. now it was not my choice to become the chairman of the federal reserve. the previous administration nominated ben bernanke. i voted for him and then when i became chairman of the banking committee in january 2007 for the first time, i went to a very frustrating year on that committee. on february 7 of 2007 i had my first hearings on the issue of the mortgage crisis in the country and we had 12 such hearings and that committee of the remaining ten months, almost one every month on this issue. and then i could not get the chairman of the federal reserve to pay as much attention as i thought he should have. at beginning and the latter part of 2007 and going forward, his leadership in my view is absolutely critical to avoid any kind of problem this country has

faced. so mr. president, i'll stick for a few more minutes later in this debate, but i think we would make a great error indeed if we were to reject this nomination and not terminate this filibuster, both up and down on this nominee and provide the confidence and stability that our markets demand in this economy has fragile as it is is going to continue to get back on its feet again. to do otherwise i think would do great damage to our nation at this critical moment. mr. president, i yield the remainder of my time. comment today on the nomination of bernanke for a second term at his critical post on the federal reserve. as our nation continues to recover from the worst financial crisis since black tuesday of 1929, and the deepest recession since the great depression, the chairmanship of the federal

reserve is one of the most important positions in the federal government. earlier this month goldman sachs, the wall street behemoth, announced a bonus pool o of $16.2 billion. j.p. morgan recently handed out a $9.3 billion set of bonus payments. and "the wall street journal," reports that bank of america is expected to match the bonus expected to match the bonus "the wall street journal" reports that bank of america is expected to match the bonus level that it paid in 2007 prior to the collapse of the financial bubble and the taxpayer bailout. mr. president, these bonuses make it clear that wall street has recovered from the economic downturn. they recover further indicated by the ted spread which fell today to 0.17, again signaling recovery for the banking system.

in contrast to the restore prosperity being enjoyed on wall street, americans on main street still struggle for the aftermath of the bush recession. and flynn plan in nationwide hovers around 10% and especially distressed areas like my state of rhode island the employment situation is even worse. rhode island's official rate was 12.9% last month. the proportion of rhode islanders who are underemployed, working part-time or add jobs below their skill level is considerably worse than that. families in my state and across the nation are struggling to pay for groceries into stave off foreclosure. the economic distress is so widespread in places like rhode island that hardly anyone remains untouched, directly or indirectly. it is heartbreaking to drive around par to providence where nearly every house on the block is boarded up, where families have been evicted from their homes and the neighborhood is now and physical decay.

the explosion of the housing bubble left wreckage across this nation which will take years, perhaps even decades to clean up. mr. president ben bernanke bears considerable responsibility for the lax regulation that brought about the housing bubble and there is no mea culpa he kanfer fest ee brace that fact from history. to make matters worse a quick review of his public statements in the months leading up to this crisis demonstrates a troubling pattern of false confidence. on february 27, 2008 months before the start of our great recession, chairman bernanke said this. the nonfinancial business sector remains in good financial condition was strong profits, liquid balance sheets and corporate leveraged near historic lows. by 2010 our most recent projections show output growth picking up to rates close to or a little above its longer term trend and the unemployment rate edging lower.

well, here we stand in 2010 and it could not be more clear that mr. bernanke was far wrong. regarding the housing crisis chairman bernanke said on may 17th 2007 we do not expect significant spillovers from the sub-prime market to the rest of the economy or to the financial system. again he could not have been more wrong. regarding the strength of our financial sector chairman bernanke seventh abari 28, 2008, among the largest banks the capital ratios remain good and i don't expect any serious problems. we need a fed chairman with the foresight to anticipate problems and to take action before they occur. chairman bernanke has clearly not demonstrated this capability. as the president of the united states noted in his state of the union address last night the bank bailout was about as popular as a root canal. well, it appears chairman bernanke will be reconfirmed but

i want to express with my vote that the leaders of president obama's economic team must have that from the necessary rescue of our major financial institutions to equally if not more necessary help to america's families. and prioritizing the recovery of wall street leaders at the fed and the treasury i believe made significant errors in several key areas. failing to establish a due process mechanism to legally make adjustments to wall street pay, bonuses and counterparty liabilities so they all had to be paid 100 cents on the dollar. boarding bitar preserve for banks long after banks were securer when families were desperate for help, but no, they clung to that reserve just in case the banks needed it, nevermind the present native american families. third, allowing the banks to prevent families in this chamber fighting against it, access to

bankruptcy courts, to readjust their home mortgage that's the way any of the debtor can do for any debt including the big banks themselves. giving banks and investment banks unlimited access to 0% loans at the fed window to use for arbitrage while profitable small businesses are desperate for credit to use for jobs. other nations, the u.k. and france have announced special taxes on banker bonuses to help pay for bailouts. not here. if you are a scorekeeper of our recovery it looks like it can be summarized in the two word phrase, bank wan's. that is not a balanced score. so i will conclude by saying that whoever leads the fed for the next four years i urge that we start prioritizing help for the middle class. the fed has enormous powers that could be used to help people that can regulate credit card rates, force big banks to reduce

principle one underwater mortgages. provide credit to small businesses. our nation central bank is to regain the confidence of the american people its priorities must serve the american people. i thank the chair, i thank the distinguished chairman and i yield the >> mr. president? >> the senator from new hampshire is recognized. >> i believe my time is being yield godoff of senator shelby's time. mr. president, i rise in support of the confirmation of chairman bernanke to another term into the fed. there are a lot of reasons, a lot of reasons. but let's begin with the most obvious one because i think it is also one of the most important. we were in the fall of 2008, looking over a precipice of massive disaster to our financial structures in the

nation. we were at a point where it was a distinct possibility that the entire financial system of this country was going to implode. what would have been the implications of that had it occurred? what would have been the outcome of that had it occurred? at only would we have lost the basic superstructure of our banking system in this country, which is that the essence of a strong economy, a good banking system because credit the especially in our capitalist system is a critical element in order to create prosperity. people's to be able to get credit in order to take risks and create jobs. but equally important, the implications to just everyday americans would have been overwhelming. and i understand it is difficult for people to appreciate how severe this was because it did, the event didn't happen. the financial system collapsed

as i believe it probably would have, then everybody in this country would have found their lifestyle and their quality of life reduced i suspect. because the capacity to just basically operate its business would have been significantly constricted. just getting money from your bank would have been a problem. the ability to get loans would have basically disappeared for a while. created a massive disruption in our economic structure, which is projected by some would have led to unemployment rates of 25%, as high as 25%. i don't know that is true but that is the projection from some realistic people. this did not happen. yes we went into a very severe recession nds that recession is still hurting americans. there are still americans hurting as a result of that, but

the massive collapse did not occur. it didn't occur because a few people stood up and took a very aggressive action, much of which was totally new and out of the box in the way it was it proceeded and the key player in this are one of the two key players in this effort was the secretary of treasury. and the other key player was the chairman of the fed. two secretaries of treasury stood up and made tough calls treasury secretary paulson said treasury secretary geithner but there was only one fed chairman throughout this whole period and he took the fed down a path which we have never been down before. he injected into the economy over $2 trillion in liquidity. he basically allowed the fed to become the lender of the nation.

nobody had ever done that. the way he did it was extraordinary and in his creativity and the results were that the country's financial system did not collapse and many americans, everyday americans lives were not fundamentally disrupted because of the actions of the chairman bernanke. he deserves credit for having been willing and courageous enough to have made these types of decisions. and that was the type of leadership we need it. strong, infinitively leadership at the moment of acute crisis. that is what chairman bernanke nation. he deserve to be confirmed just for that action alone. now there is no question but you can monday morning quarterback what he did. and you can analyze it and you could probably say he should

have done this better or that better, no question about that but the fact is that the results of what he did accomplish the goal which was to stabilize the financial institutions of this country. the way i've described it is it is as if you are coming up to a bridge in your car with their family and the superstructure of that bridge is about to collapse. but somebody comes along and they fixed the bridge just if you get on it in you drive over the bridge and you didn't even know what got fixed. but it was the extent that hadn't been fixed, you would have had a disaster. well, that is what chairman bernanke and the treasury secretary's paulson in geithner did for nation. so he deserved to be reconfirmed for that reason. the second reason he needs to be reconfirmed is because we are looking at very tough times. and the money, the liquidity that was required to be put into

the system, this $2 trillion, as the system recovers becomes a risk for the system. we all know that. effect liquidity is allowed to play itself out and multiplied, you could end up with a fairly significant inflationary event and as we all know, inflation is the crew list at the vault because it the values peoples savings and it undermines the productivity of the nation. so, how this liquidity comes out of the markets, how we get this $2 trillion plus as a dismal supply data the system is going to be a very complicated but very very important undertaking and it is going to be primarily the responsibility of the fed. chairman bernanke has outlined very clearly and they think it is very positive way how he intends to accomplish that. how the federal reserve will start to draw down the illiquidity and as far as i know it is the only proposal out

there that has any legitimacy and it is an important proposal so we need him in that spot not only as out of respect because he did such a great job and an important job and a successful job in stabilizing the financial situation of the late 2008, 2009 period but because many can to deal with the prospective problem we are confronting. and so that is another reason to confirm him. some will argue that he shouldn't be confirmed because for years he participated, along with chairman greenspan, in keeping the money supply, the rates on interest to low. that is a debatable point. i tend to think rates are too low for too long. i think it is one of the reasons we ended up with this huge bubble in the real-estate industry, and it is one of the driver's blood on think that was the primary driver and what

caused this financial downturn in this huge real-estate bubble. primary driver was a decoupling of the responsibility to land constructively from the people who were actually doing the lending. we have a breakdown in underwriting standards to put it quite simply. people, because we have all these different people relating loans to had no vested interest in the loan because they were selling them and because a lot of our banking institutions had become lax in their underwriting standards loans were being made to people who could not pay the loans back on assets which didn't have the deli to support the loan. people were looking at the loan. they were looking at the fees they were going to get and then they were selling the loans and then the, when the loans got sold and securitized, subdivided and multiplied into the implications.

that wasn't the fed's failure. to some degree in their oversight pinkleton cos you can nike, was the feds failure but i intend to put that more on the bank supervisor's authority specifically on the ground. so, yes, interest rates are kept too low to lung in my opinion but is there reason to reject him as the german? i don't think so. i think that again is a monday morning quarterbacking exercise. the real test of his ability to manage the money supply and to live up to the primary commitment of the fed which is to have some money and a strong economy was how he handled the crisis. and, as a call ariri to that how we intends to handle the impending problems with the liquidity that is in the market needs to come out of the market. so as i have said before fiber looking around for someone to do

this job, this would be the person i would want to hire because i think he is the best person for the job. and is he perfect? no. nobody is perfect anywhere, but has a proven himself to be an extraordinarily talented an aggressive leader who saw the crisis, managed it and kept a lot of americans from having a much more severe impact on their lifestyle as a result of his actions? yes, he has and i think that is the test. that is the test. and so i certainly hope my colleagues will vote for him. i understand that there's this populace fervor around here. populism has always been a heavy strain in our body politicking in america and i understand populism usually have to have an enemy, somebody in test it be an enemy that can be hyperbolized and to a conspiratorial group,

and said the fed, because it is separate from the government intentionally sell and has to be because we did not want the congress managing our money supply. that would be a disaster. think of what we do with the money supply. the fed is a separate entity and it is insular to a significant degree. therefore it becomes an easy target for those who wish to fire the flames of populism. both on the left in the right. endeavor crick honestly the president is joined in this exercise because i think he at from kerosene on the fire and regrettably the fire was blowing towards his own nominee but it was a foolish thing to do because you don't know where the fire is going to do with populism is ignited by populism usually involves the exaggeration and it almost always involves misapplied purposes. the substance is usually significantly different than the actual description of what the

events are and in this case that is true. the fed is not some secret of institution which is trying to undermine the quality of life in america. just the opposite. , that that is a very public institution that is audited fairly completely with the exception of the open market window which should be audited because we don't want congress managing money supply and an audit of that responsibility would put the congress and the business of managing money supply. and, not only does it not undermine america's prosperity, it is the key to america's prosperity, and one of the keys because it maintains a sound money supply. and because in a time of crisis like we had in the late 2008 it is there to step up and make the tough decisions independent of the political process. and it is proven that it can do it. so i would hope it wouldn't

allow all this fervor to find, to find fault with people to overwhelm an extremely talented nominee who deserve to be reconfirmed and to be quite honestly need, who we need in that position as chairman of the federal reserve. mr. president, i yield the floor. >> mr. president? >> the senator from oregon is recognized. >> mr. president and i rise today to oppose the nomination of ben bernanke is chairman of the fed. i do so as a member of the banking committee voted against his nomination and the committee. because, i researched his record and on that record i believe that ben bernanke is not the right person to lead the fed. in short, bernanke's decisions over the last eight years as a member of the federal reserve

board, as chairman of the council of economic advisers, as chairman of the fed helped set the fire that destroyed our economy. now mr. bernanke is a, an unassuming man, response and then throw in his explanations and very likeable. in addition, to keep the analogy, is done a good job with the fire hose of the the last year. he understood that tightening credit during a collapsing bubble economy would be like turning off the fire hydrant in the middle of the fire. he did keep the fire hydrant turned on. and i give him credit for that. but now we need to rebuild our economic house and that takes an architect, not an fireman. that takes its builder, not someone turning on the fire hydrant. based on his performance over

the last ears, i do not believe that ben bernanke is the right architect to rebuild our economy, an economy that "work for working families. consider the following. ben bernanke failed to react to the enormous danger from an interlocking web of derivatives that created high-speed channels for massive financial contagion. let me put it simpler, derivatives turn their financial institutions into a set of dominoes which if one falls, and others fall. and comment ben bernanke did not respond to the growing threat of derivatives. bernanke failed to respond to the increase in proprietary trading. identified risk in both depository, lending institutions and their financial system as a whole. again let me put this more

simply. gambling on stocks and bonds and derivatives is fundamentally incompatible with thanks stability. but bernanke did not respond. ben bernanke supported policies that reduce capital and increased leverage in both commercial banks and investment banks, greatly magnifying risk across the system. he supported green-- greenspan's philosophy of deregulation and self-regulation. he advocated for basel ii and what was basel ii? basel ii was the same to the largest banks in america you can set their own leverage ratios. what did that results in? that resulted in things going to 30-1 leverage. now if you invest money 30-1 in an up market is a killing. and you make all kinds of money. but when you are at 30-1

leverage in the market turns down, you blow up immediately. now, there is not an analyst in america who could tell you add any moment when the market will go up and in the market will go down, but they can tell you that it will go up and down over a period of time. what goes up must come down. there is never going to be a steady upward climb forever. so, if you about 30-1 leverage you were going to make a lot of financial institutions very very happy because they are going to make a lot of money until the market turns down. well, bin bernanke said lose the leverage requirements that paved the path, that set this fire that burned down our economy. ben bernanke ignored the housing bubble. he failed to protect homeowners

from deceptive practices. why is this important? that meeks billante what happened over this the years. families went to their real estate agent in their real-estate agent followed a strict code of con -- at fix inder range to buy a house. then they went to a broker and they assumed that there would be a similar stricter code of ethics and they were going to get a loan for their house and the brokers said the know what? homeownership this got a very complicated, mortgages said that very complicated, i'm going to be our adviser. trust me and sign this loan right here. this will be the best one for you. what was wrong with that is the homeowner did not know that the broker was getting paid a large sum of money called the yield spread premium, also known as a steering payment because they were designed to steer people into certain loans, also known as a kickback.

the broker was receiving those in families that qualify for a prom lines-- prime loans ended up and sub-prime loans. what institution was responsible for consumer protection on mortgages? the fed was responsible. ben bernanke did not do a thing to protect consumers from this gross conflict of interest that torpedoed the financial prospects of millions of american families but he had direct responsibility. in the fed, monetary policy has been in the penthouse, as it must be. that is the primary responsibility. sapiens on this on the upper floors and consumer protection in the basement. we cannot the consumer protection in the basement. i will close with this. ben bernanke was not alone in helping us that this fire. he had a lot of company but

overeat years to make critical mistake after critical mistake that in the short term large financial institutions loved but it set the conditions for our economy to burn down and the consequences for families were extraordinary. loss of jobs, loss of retirement, loss of savings and with the job loss, loss of health care. that is an extraordinary amount someone rebuild our economy and ben bernanke is not that man. thank you mr. president.

president obama has announced nearly $10 billion in grants for high-speed trains. he was with vice president biden habit town hall meeting in tampa, florida. this is an hour and a half.

♪ >> ladies and gentlemen, the vice president of the united states, joe biden. [applause] [applause] >> thank you very much. thank you all very very much. thank you all very much. it is amazing the crowds i draw.

[laughter] it is great to be with t-wall today and i really hope you all cut to hear the president's speech last night. [applause] was in it good? [applause] i think the president laid out with clarity and power what we have done, what we are going to do and how we are committed to getting it done. [cheers and applause] he laid out a clear an ambitious plan, a plan that flows from our core principles, the principles we ran on, our core mission that we said we were going to tend to when we took office a year ago. and now it is very simple, to restore the middle-class in america. [applause] look, because of the president's

old leadership, the weathered the most ferocious economic storm this nation has seen since the great depression. keeping us from sliding into a depression as some leading economists suggested. the president from the outset has understood that is all about jobs but there's a lot of business to attend to. just to keep us from sliding off the edge. ladies and gentlemen the president knows one other thing. and the sense it is more than about jobs. a job is more than a paycheck. it is about dignity and it is about respect and too many people have lost it. [applause] ladies and gentlemen, president obama understands that the longest walk a mother or father can make is a trip up a short flight of stairs to their

child's bedroom to say honey, i am sorry, you are not going to be able to stay at stuart middle school next year or you can't play on west tampa postal khlek teen next year, honey. we are going to have to move. because daddy or mommy lost their job. or because the bank said we can't keep our house. my dad made that walk when i was a kid in their home in scranton, pennsylvania. i remember vividly my father walking up the stairs and i sitting at the end of the bed with my sister valeri who was the only one old enough to understand what he was talking about. he said i'm sorry honey but i'm going to have to move. the first thought they had was god, they are getting divorced literally. that is what worries me. he said i have to move, honey.

u.n. valeri are going to stay here with mom and jimmy and you are going to stay here with grandpa. because dat has to move to delaware. i will be back and it will take about a year but i will come back and forth and we are going to be okay. until i got older i didn't realize how hard that must have been for my father to make that walk, how hard it must have been for him to go into the kitchen before that and say to his father-in-law, ambrose can you do me a favor? can you keep my family? can jean and the kids stay here with you? i will try to do it as quick as i can but there are no jobs. ladies and gentleman, too many floridians have had to make that walk over the last two years and the president and i understand, we understand and we are determined to make sure that every hardworking floridian, every hardworking american is able to walk into this child's

room and say honey, it is going to be okay. that is what this is all about. [applause] that is what this is all about. as you heard last night, that is why we are putting in place the policies that will enable us to reduce the debt we inherited and deal with the spending required to keep us from falling off the cliff this year and during that process, you heard him say how we are free or during our country's priorities. we are investing in health care, education, energy information, technology, health technology. electric vehicles sent batteries. [applause] the investments that will help us build a new economy for the 21st century, investments that will allow us to lead in the 21st century as we did in the 20th. ladies and gentlemen, we are determined to restore america to

its rightful place at the leading edge of innovation, with bold ideas and creating jobs immediately and service-- service in foundation, a new platform. [applause] a new platform to build this economy on that will serve not just our immediate needs but future generations. ideas like windpower, solar energy, this market, broadband. [applause] and high-speed rail, and that is why we are here today. [applause] having made over 7,900 roundtrips literally on amtrak 250 miles a day, i am very familiar with the real.

[laughter] and today you have no idea how pleased i am to talk about the announcement that we made yesterday, the wording in total nationwide nearly $8 billion in the recovery act, the funding to move us in the direction of developing a high-speed rail service in 13 travel corridors covering states all across this country. [applause] ladies and gentlemen, these investments, these investments of several goals. first, to improve existing rail lines to make train service faster and more reliable. 22 poll cards of the road reducing congestion, cutting pollution in increasing productivity and three, to begin to develop new corridors for high-speed trains that will go from 169 to 230 miles an hour.

[applause] ladies and gentlemen right here from tampa to orlando. [applause] so he will be able to get on the train here in orlando and less than one-hour with that bevlin traffic were congestion, arrive a cure destination. ladies and gentlemen this single investment is not going to solve all of our transportation issues overnight. instead, with more than $55 billion of proposals from 50 states all across the country, we are providing $8 billion in seed money in today's awards provide only an initial funding for the rail system. like tampa to orlando, more funding is going to come in the future is progress is made. we have committed to another

$5 billion in funding over the next five years as a downpayment on a truly national program that is going to reshape the way we travel. it will change the way in which we go from place to place, change the ways we. live and will connect communities to each other in a way that in the past was impossible. just like the interstate highway structure did back in the mid-50s. it will have far-reaching consequences. let me ask you a question. how can be the leading nation in the world be in a position for china, spain, france and other countries who have real systems that are far superior to ours? lady's synja lanzmann it is about time we moved at this time, but this time were not only going to be providing a better way to transport, we are going to be taking cars off congested highways, reducing carbon emissions and saving billions of dollars in human productivity loss just sitting in traffic jams as studies point

out in must import we are creating jobs, good jobs, construction jobs, manufacturing jobs and we are going to be treating them right now. [applause] we are going to spur economic development in the future and we are making our communities more livable in the process and ladies and gentlemen it is now my pleasure to introduce the man who is leading us into this new era, the president of the united states of america. [cheers and applause] [cheers and applause] [applause]

[cheers and applause] president barack obama. [cheers and applause] [applause] >> thank you everybody. hello temple. [cheers and applause] thank you so much. thank you everybody. everybody make yourself comfortable. we are going to be here for a little bit.

[cheers and applause] [laughter] thank you. [applause] thank you. we have got, we have got some special guests that they want to make sure we have knowledge. florida cfo, alex sink, is in the house. [applause] representative kathy castor. [applause] your representative. representative alan grayson. [applause] representative kendrick meek. [applause] representative debbie wasserman schultz. [applause]

you are on the air, pam iorio. [applause] the mayor of orlando, buddy dyer. [applause] the president of the university of tampa, ronald mom. [applause] and come into a very special-- to very special guests, brian c. smithey and roger j. pickard. want you guys to know who these folks are part of their members of the theme of lord it's force team canine search specialist. they went down to haiti and

worked 26 hours long shifts, ste.msre victims until they were rescued. the florida task force team saved seven lives. brian worked in a school where his dog, powder, found a young adult female. in the rubble for three or four days of these are the kinds of heroes that make america proud. [applause] stand up. [cheers and applause] thank you. thank you. [applause] and i have not spotted them in the crowd get that i have got to do this. even though i know you all are upset that we took all that success to the colts.

[cheers and applause] he made his name here in tampa, and he is not just a great coach, but he is just a model individual in leader. we are very proud to have them in the house, coach tony dungy. [applause] ndfu want some analysis about the upcoming super bowl, the coach is free to give-- no, i am just kidding. it is good to see a coach. alright, now, the first of all let me say it is good to be back in the sunshine state. [cheers and applause]

it is especially good to be back in january. and it is always nice to be out of washington. it is, and spend a little time with the people who sent me to washington. [cheers and applause] less nye this book with you about where we have been over the past year and where i believe we need to go. and i said what all of you know from your own lives, these are difficult times, these are challenging times for our country. and in the last two years we have come to the deepest recession since the great depression. think about that. a big chunk of the people here, certainly the young people here have never even seen a recession. they don't, it doesn't register

on their minds. this is by far the toughest thing the country has gone through economically since the 1930's, and temple of like so many communities across our country has felt the lash of shuttered businesses and lost jobs and home foreclosures and finished for dwindling savings, and the storm came at the end of what some called a lost decade because what happened between 2,000 now was it to hamlisch paychecks shrank ann jones barely grew in the cost of everything from health care to college education went up. irresponsibility for wall street to washington left good responsible americans who did everything right still struggling in ways they never imagined. joe and i took office in the middle of this raging storm.

we ran for office, the highest office because we have been hearing stories like this day in and day out for years even before the financial crisis hit. so we are not going to rest until we have rebuilt in the economy in which hard work and responsibility are rewarded and businesses are hiring again in wages are growing again and the middle class can get its legs underneath it again. [applause] we will not rest until we build an economy that is ready for america's future. to do that the first thing we have to do was break the back of this recession and that required some tough and in some cases um

popular but necessary-- of which were necessary steps. i mean, i mentioned this last night. none of us wanted to have to stabilize the bank sector particularly since they helped create this mess. [applause] but, as i explained last night if we hadn't come at the financial system literally could have melted down and that would have taken our entire economy and millions of more families and businesses with that, but because of the steps we have taken now the markets have stabilized. the economy is growing again. [applause] the worst of the storm has passed. but, i think all of you understand the devastation remains. one in ten americans still can't find work. that is by creating jobs has to

be our number one priority of 2010. [applause] dutra engines of job creation here in america are america's businesses and there are several steps we can take to help them expand and hire new workers. last month proposed taking $30 billion of the money that went to wall street banks but had not been repaid and use it to help community banks give small businesses the credit they need to stay afloat. that will help. [applause] i also proposed a new tax credits for more than 1 million small businesses that hire new workers to raise wages and while we are at it i believe that we should eliminate all capital gains taxes on small business investment and provide a tax incentive for all businesses to invest in new plants and

equipment. [applause] as joe mentioned we are going to put more americans to work rebuilding our infrastructure. and building our infrastructure of the future. it is important to repaid are roads and it is important to repair our bridges so that they are safe, but we want to start looking deep into the 21st century. and we want to say to ourselves, there is no reason why other countries can build high-speed rail lines and we can't. [applause] and that is what is about to happen right here in tampa. we are going to start building a new high-speed rail line-- [applause] right here in tampa of building for the future. [applause] putting people to work. i am excited.

i am going to come back down here and ride it. [applause] joe and i, you will have a date. when that thing is all set up, we will come down here and check it out. and by the way this high-speed rail line is being funded by the recovery act. [applause] one other thing we can start doing four jobs here in america that i mentioned last night, i talked about this all through the campaign. we put this proposal and our budget and we keep on getting resistance but we are going to keep on pushing to end tax breaks that-- for companies that ship our jobs overseas and give those two companies right here in the united states of america. it is the right thing to do. it is the right thing to do. it is the right thing to do.

[applause] now, i have to say this. the steps that i just mentioned will help accelerate job growth in an economy that is already beginning to grow. but the steps we take a loan won't make up for the 7 million jobs we lost over the last two years. keep in mind, when we were sworn into office, that december we have lost 650,000 jobs for could january, as we were being sworn in loss 700,000 jobs. kodori, 650,000 jobs so before we could even put in place the recovery act, and you had already seen millions of jobs

lost. that is a deep hole that we are going to have to fill in the only way to do that is to lay a new foundation for long-term economic growth and finally addressed the struggles that middle-class families have been grappling with for years. now, florida, that is why joe and i asked for the chance to serve as your president and vice president. because-- [applause] look, we did not seek this office to push our problems of or take the easy road to the next election. we ran to solve problems, problems that have been making at america for decades. we want to solve them for the next generation. we ran to get the tough stuff done. [applause] so, as i mentioned last night, and make no apology for trying

to fix stuff that is hard. [applause] because,-- [applause] i will be honest with you. i will be honest with you. jo-ellen dire both pretty smart politicians. we have been at this a while. the easiest way to keep your poll numbers high is to say nothing and to do nothing that offends anybody. [applause] that is true. no, no, no, you just wave and smile. [laughter] that is how you do it. dominik unactually start doing something, somebody is going to disagree with you. but, but that is what i promise, remember some of you remember the campaign i said that wasn't

going to just tell you what you want to hear, i was going to tell you what you need to hear. [applause] so none of this is new. there's nothing that we have talked about since we entered the white house that we didn't talk about during the campaign and so long as we have the privilege of serving you, we will not stop fighting for your future a matter how many months we have got to take to get it done. [applause] i need to also have to just mention, i am going to mention you know and love you in the media but i will mention this little aspect of our media. and our friends with the pens and pencils, last week that went to ohio, and i started saying

what i'm saying now which is i'm going to fight for your future and they got all worked up. they got worked up last week. >> said is he trying to change his message? is he trying to get more populist? is this a strategy that he is pursuing? to boost this, that and the other? is this something new? [laughter] itis have to doolittle re-wind here of how we ran our grassroots campaign. [applause] because i have got some news. i have got some news of my own here. i have been fighting for working folks my entire adult life and that is why interpublic service to fight for folks in chicago. that is why i ran for the state senate. that is why i ran for the u.s. senate. that is why i ran for president come to fight for people here in tampa and people here in florida and to fight for people all

across the united states of america. [applause] i seem to remember coming to tampa two weeks before the election-- [applause] indian a would i said? this is a quote. people can check. i'm sure it was reported in the newspaper. i said change never comes without a fight. [applause] that was true then, it is true now. change never comes without a fight florida so i won't stop fighting. i know you want either. we are not going to stop fighting to give our kids a world-class education, to make college more affordable, to make sure that by 2020 we have the highest rate of college attendance of any country in the

world. [applause] so we have proposed that graduate should only pay 10% of their income to pay back their student loans. [applause] students like that. [applause] and would i said is we will forgive student loan debt after 20 years but after ten, if you choose a career in public service because if you decide you want to be a teacher, if you decide you want to be a cop, if you are not, if you were not

making huge amounts of money we don't want to discourage you from that because come up because the cost of college in by the way i have been there and michelle has been there. it took us ten full years to pay off michelle postal loans, 15 to pay mine off, so i have been there. and, our belief and i think your belief is in the united states of america, nobody should go broke because they chose to go to college. we want everybody to go to college and you don't want them to go broke doing it. [cheers and applause]