2009. guaranteeing approximately 30% of loan purchase volume and half of all loans for first-time home buyers. with fha's temporarily increased role comes increased responsibility and risk. that is why fiscal year 2011 budget presents a careful,@@@@rr seller concessions to industry norms and, fourth, to increase measures aimed at lending responsibility and enforcement.

fha implemented a plan to ensure its technology, infrastructure and personnel needs meet this responsibility. last friday, as you mentioned, the congressional budget office released its estimate of the president's 2011 budget, including their view on fha's proposed changes. although the cbo re-estimate includes a more conservative assessment of how new loans made through the mmi fund will perform in coming years, both cbo and the administration forecast that with our proposed fha changes, such credit activity will result in significant net receipts to the government. we differ, however, on the amount. while the president's budget forecast, as you said madam chair woman, $5.8 billion in receipts resulting primarily from insurance premium and other fees, cbo re-estimated the net savings at 1$1.9 billion.

jenny may and our gi/sri fund will produce another roughly $1 billion in receipts. while recognizing that such a difference with cbo complicates budget resolution development, it is important to note that the forecast used in the president's budget will determine the receipts transferred to fha's capital reserve account. this will help that fund get back on track to be capitalized with a statutorily mandated 2% of insurance in force. i would note that based on extensive modelling and analysis, we remain confident in our forecast for fha. even with increased fha receipts, however, because of broader need for fiscal responsibility, we have had to make very difficult choices in this budget. we have chosen to prioritize existing rental assistance in section 8, public housing operating fund and other areas,

which has required to us propose difficult cuts in a number of our capital programs, as you mentioned. and to target our funding to the most catalytic uses. on that note, allow me to highlight some key initiatives. the first is hud's multiyear effort called transforming rental assistance or tra. hud's rental assistance programs desperately need simplification. hud currently provides deep rental assistance to more than 4.6 million households through 13 different programs, each with its own rules administered by three different operating divisions. in my career in both the private and public sectors it was a constant struggle for capital funding resources into the local, state, and private sector financing that was necessary to get the job done. but i dealt with hud programs for a simple reason. because the engine that drives capital investment at the scale needed is a reliable long-term

market-based stream of federal rental assistance. no other mechanism has ever proven as possible of unlocking private and public resource toss meet the capital needs of affordable housing. that said, the status quo is no longer an option. with the public housing program that has unmet capital needs upwards of $20 billion, now is the moment to permanently reverse the long-term decline in the nation's public housing portfolio and address the physical needs of an aging assisted stock. this initiative is anchored by four guiding principles. first, that the complexity of hud's programs is part of the problem and we must streamline and simplify them so they are governed by a coherent set of rules and regulations that better aligns with other federal, state, local and private sector financing streams. second, the key to meeting the long-term capital needs of hud's public and assisted housing lies in shifting from the federal, capital and operating subsidy

funding structure we have today to a federal operating subsidy for private and other public sources. third, that bringing market investment to all our programs will also bring market discipline that drives fundamental reforms. only when our programs are built, financed and managed like other housing will we be able to attract stakeholders that we need. fourth, that we must combine the best features of our tenant-based and project-based programs for resident choice and mobility. tra reflects hud's commitment with the benefits that are reliable, property-based, long-term rental assistance subsidy can have for neighborhood revitalization efforts and as a platform for delivering social services. to be clear, this commitment to tenant mobility is not to restart old ideological debates about place-based versus people-based strategies. to revitalize neighborhoods of segregation, we need the best of both approaches. we look forward to continue to

go work with the subcommittee and authorizers on our choice neighborhoods initiative to make the redevelopment of public and distressed public and assisted housing the anchor of broader community development efforts. choice neighborhoods buildses and expands on the lessons of hope 6. not only the investment at scale can effect dramatic change at the community level but also that for an investment to be game changing it must take into account more than housing alone. for too long hud's community developed programs have lacked such a targeted tool for creating jobs. that's why our budget proposes $150 million for a catalytic fund designed to help distressed communities reorient their economies for the 21st century. hud can't afford to make housing investments in isolation from community development investments. particularly when so many communities are ahead of us in terms of combining housing, economic development and transport tagz. that's why it was important to launch our sustainable

communities in 2010 to support these efforts. i want to thank the subcommittee for making this possible. i recognize that i've asked you to help hud make these investments in a difficult fiscal climate. nowhere is this clearer than the area of homelessness. we have seen a 30% reduction in chronic homelessness the last four years. our budget request to its own programs with a $200 million increase. but as chair of the agency as well charged with producing a federal strategy to end homelessness later this spring, it reflects a commitment to working across silos to end homelessness, embodied by our joint services for demonstration with the department of health and human service and the department of education. lastly, let me say a few words about hud is transforming the way it does business at the agency. with your help, hud's 2010 transformation initiative is

allowing us to take long overdue steps to upgrade and modernize our department, helping us replace computer programs written in the 1980s, senator bond, you mentioned this, and we have been growing our resources for technical assistance, and demonstrate what works and what doesn't. it has begun to provide us with creating cost-cutting initiatives. a critical next step for 2011 is to take this further. in part is a matter of additional fund to go move forward with large multiuse projects and just as important as the flexibility to use up to 1% of hud's budget as unexpected needs arise during the year. to revamp fha in the mortgage market or technical assistance trying to use neighborhood stabilization funds in the most impactful ways. these are the most flexible investments other cutting-edge organizations have the ability to make and they're essential to building the nimble

resorts-oriented agency we need and our subcommittee deserves to oversee. with the housing market showing signs of stabilization, our economy beginning to recover and the need for fiscal discipline crystal clear, now is the moment to reorient hud for the challenges of the 21st century. with your help, i believe we can and that we will. thank you. >> thank you very much for your statement, mr. secretary. let me start, because i talked a little bit about in your opening statement, and i did as well, that omb and cbo differ considerably on the amount of receipts that the estimate f hh mrts will generate in 2011. how would a reduction of that magnitude impact hud programs? >> obviously that kind of reduction would be substantial. again, let me point to the fact

that cbo does agree that the changes we are proposing in legislation would have a positive impact on the fund. my fha commissioner is testifying today on the house side in front of the authorizing committee on those changes. i believe it's critical that we do get the authority to increase our annual premium. and that we continue to do the kind of risk management changes and others that we need. cbo fundamentally agrees that those changes will add to the receipts. we have begun to work closely with cbo to look at the reasons for the discrepancy. we would be happy to work closely with this committee, as well as the budget committee, to look at the reasons for that discrepancy. obviously, as you know, while the cbo view is important, it is ultimately advisory and the budget committee can make a determination on its own about which of the forecasts make the

most sense and what it's going to choose as the path for the budget. and i would further add that, as i mentioned in my testimony, we have substantially increased our capacity at fha to model the health of the fund, made numerous changes and improvements in the way we project it. and, in fact, thus far this year, we are running ahead of our projections in terms of losses and receipts to the fha fund. i would also add to ensure we were being conservative in the president's budget, we did use a relatively conservative house price forecast that has been below what has actually happened in the housing market since then. so for all of those reasons i continue to be confident in our projections, and we would be happy to provide whatever information you and the budget committees might need to make a final determination about the path of the budget. >> and are you working with the

budget committee on that? >> we have been working closely with omb on it, and they have been leading discussions with the budget committee. >> okay. one of the paths that you just talked about was having to do with the increasing the premiums on the fha mortgages. you know, those premiums that are used to cover any claims on mortgages. but the recent -- losses in recent years have caused the capital reserve for fha to fall below that mandatory 2%. in order to recapitalize that, you're planning on increasing the premiums? under existing authority, fha will increase up front by i think 2.25% in april. but you also are saying you need authorizing language to do that. how is your progress going with the authorizing language -- with the authorizing committees on that? >> so, we have proposed, and we do have the current authority, to raise the up front premium to 2.25%.

we believe, and i think there's broad agreement, however, that it is a better approach both safer for homeowners and ultimately better for the health of the fha fund, to have a combination of an increased upfront premium, as well as an increase in the annual premium, and we currently do not have the authority to raise the annual premium. that is the authority we are seeking through legislation. we have had numerous meetings with both sides of the aisle on the authorizing committees, have heard a lot of support. in fact, ranking member capito introduced her own bill yesterday that included a broad range of the proposals that we have. and so i am encouraged by the progress that we're making with the authorizing committees on that. i would make two other notes. one is that not only is increasing the premiums something that's important for the heating of the fund, but in

addition to that, increasing the premiums i think is the single most important thing fha can do to encourage the private market to return. we are already hearing, once we announced the increase in our upfront premium, a number of private mortgage insurers and others beginning to move back into the market. >> the 2.25%. >> the 2.25%. so i believe it is important, given that we believe fha's current role is a temporary role, that raising the premiums sends the right signals to the market, the broader market and will help others return to the market. the last thing i would note is that we do have the current authority to raise the upfront premium even further. so increased receipts along the lines proposed to the budget are not completely dependent on the legislation. >> increase above the 2.25.

>> above the 2.25. >> do you have the ability to do that? >> we have the ability to go up to 3%. however, there is wide agreement on this, it is a better path not to raise the upfront premium that far or even to keep it at the 2.25 that we have already proposed to raise it to, but to increase the annual premium h 'rrer in order to provide mor2 2012 or 2013 based on

conservative assumptions in house prices. >> would it have to be enacted to have that date? >> one of the keys about getting the legislation enacted as quickly as possible is that our estimates are that -- every month the sooner we get the legislation is another $300 million in net receipts to the fha fund. so every month that we get that, either later or earlier, has a $300 million impact on those funds. >> okay. all right. well, we move on. it seems every day there is a new report out there on the state of the housing market. but the reality is that economists often arrive at completely different conclusions from the same housing market data. you've testified that housing prices have held steady or risen since last april, which provides reason for optimism. in january, new home sales plummeted to the lowest level in 50 years and many regions in my

state continue to experience severe home value losses. do the reductions in home sales that we saw in january make you concerned about the stability of the market and when do you expect that we may see home prices stabilize? >> what i would say about that data, there were widely expected with the original expiration of the home buyer tax credit that there would be a decline in sales during december and january. i would say the decline in january was somewhat worst than expected. part of that was weather driven, frankly. even beyond that, there were, i think, notes of concern that we took from those numbers. i think what it highlights, most of all, is that the levels of prices in home sales continue to be fragile. they are still above where they were a year earlier, which is i

think an important benchmark. but one of the reasons we supported the extension of the home buyers tax credit, as well as we continue to support the importance of fha, gses and other interventions keeping interest rates low is we are concerned about the fragility of the housing market. overall, again, and this goes to your point earlier, when we came into office, widely predicted economists on both sides of the aisle and more broadly across the spectrum expected on average another decline of 5% in home prices last year. that did not happen with the support of the administration. home prices were basically level during last year. so i think we have had the impact of stabilizing the market, but it is fragile and we need to continue to focus and do more to ensure we're on the right path with home prices. >> one of the programs the federal program is going to end is the purchase of

mortgage-backed securities has helped quite a bit and the home buyer tax credit is going to expire here shortly. are you concerned that if we don't extend those important initiatives we're going to add to that fragility. >> typically the home buying season is slowest during these winter months. and we will all be watching very closely the sales numbers as we move into the spring and as we get closer to the expiration of the tax credit. i would say it's too early to decide. my strong belief based on the indicators that we have seen, is that the federal reserve is taking a very measured approach to stepping back that program and we will be watching the market very closely. we will be doing the same. but i think it highlights the fact that, with fha, while we have significantly stepped up our risk management, increasing underwriting requirements, down payments, raising premiums, that

we must take a balanced approach and not go too far to exclude buyers that can be successful in the market. and so that balanced approach i think is critical, as well as watching the numbers over the next few months in the spring buying season very, very closely. >> okay. senator bond? mr. secretary, we have reached a gentlemen's agreement. i'm going to finish the questions i need to ask you right now and then turn the gavel over to senator bond, who is going to ask his questions and then come to the energy committee, if that is okay with you. so i want to ask you about the -- making home affordable program. one of the programs in that -- the home affordable modification program, hamp, produces a home

owner's monthly payments by lowering the rates or spreading on the mortgage out over a period of time. that was supposed to help 3 to 4 million families by 2012. but as of january, only 116,000 homeowners have received permanent modifications under that. we're hearing servicers have been struggling with burdensome changing rules and borrowers are confus confused. i wondered what changes you were looking at on that program? >> so, first of all, i would say that there is no question that there were early implementation problems with servicers who did not have the capacity to be able to reach borrowers and that there has needed to be and there has begun to be a significant increase in focus as well as resources at the servicers. we have also taken a number of steps to streamline the process,

streamline documentation, simplify the process. one of the most important changes is that we have announced we will be requiring all documentation to be gathered up front rather than at two different points at the beginning of the trial modification and before permanent. that should greatly simplify the process. and we have also done an enormous amount of outreach in locations around the country to bring homeowners and servicers together with fares and a whos . they are literally going door to door to try to get homeowners qualified. what i would point out is based on all of those efforts, we were able to reach just one year

after the creation of the program, just one year after the creation of the program, more than a million homeowners with trial modifications. and i think it's very important to point out that those trial modifications are having a significant positive impact for those families. average savings per month of over $500. and significant benefits to them. so based on that, we are on track to reach the 3 to 4 million homeowners that we originally committed to. we are concerned that the permanent modifications have not been moving quickly enough. we have significantly increased the pace of that. and today we are seeing 50,000 new permanent modifications a month based on our recent experience. and so i do believe, while we still have some improvements to go, that we are making significant progress in terms of affordable modification. i would finally just say that -- and by the way, we have almost

20,000 of those in the state of washington and would be happy to share more detailed information with you on that. finally, i would say that is only part of the broader strategy. with the announcement the president made that you referenced in nevada just two weeks ago, as well as a number of other steps that we're taking, i believe we are -- >> let me ask you about that. you announced this program to help these five states that in nevada a few weeks ago. what is the specific timetable for implementing that program and when would we start seeing results on that? >> so, on that program, what we determined is that we have a number of national efforts. we continue to examine new national efforts. but that the challenges facing those places are quite different depending on the state. for example, michigan's challenges are very different from nevada's orca qaa's.

and so what we did was to ask the five states -- statehousing finance agencies, to come in and propose tailorred programs for those states that would most effectively target the problems that we're seeing. we have seen very effective state programs in a number of places, pennsylvania and others along these lines, particularly targeted at unemployed homeowners and underwater homeowners. we have asked the states to come in and propose to us within the next few weeks plans. we will then review those plans, and we hope to be able to approve them within the next month to six weeks, and then to be able to start implementing those programs immediately at that point. again, many of the state agencies have programs up and operational that we could enhance or change that could get going very quickly. >> okay. and are you looking at expanding that in my home state?

we have about a quarter million washington state homeowners today underwater, representing about 16% of our homes. especially in two of our counties, pierce and clark counties. are you looking at expanding this to any of the other states? >> what we are looking at, madam chair, is broader national efforts around negative equity and unemployment that could target the issues that you're talking about in your state. one of the reasons we wanted to take the approach on the program that the president announced in nevada is to test models that then potentially could be used in other states. so we don't have any immediate plans to expand. until we have begun to see the results. but we are working on other efforts, which i'd be happy to follow up with you on and talk more about that would nationally target the negative equity issue and unemployment that could have real benefits in washington.

>> okay. we would like to hear more about that. i wanted to ask you about the backlog in capital improvements needs and public housing now estimated at over $20 billion. the president's budget proposes the first phase of an ambitious plan to leverage significant private sector resources to tackle that backlog and preserve those assets. i agree. we've got to find a long-term solution on this. but i'm concerned about the absence of detail in the proposal so far and its cost. for 2011, the administration is looking for $290 million in additional subsidies in order to leverage those private sector dollars. when fully implemented i understand the program will cost $1.4 billion each year. how would you accommodate this major new requirement given the president's commitment to freeze discretionary spending the next three years? >> i think one of the important points to make about this initiative is that the fundamental change that we're

talking about is shifting from a operating and capital approach to one which has only an operating stream. so while there are increasing that we're proposing in operating subsidies in the budget, we will have particularly over the longer term, significant savings and ultimately not require any capital funding for public housing in a separate account. and so that is one way that we have offsetting savings that comes from the way that we are proposing this. a number of other points, though. that does not account for efficiencies that this will achieve. i talked in my testimony about the enormous complexity of the current range of programs. &h and how difficult it is to achieve mixed financing and other things.

part of that is operational costs at the department which we have the potential to do a significant savings on. we have begun to estimate those. those are not simple to estimate. >> so are you going to prefer proposals to cut the operating stream side of it, the expenses? >> the capital? >> yes. >> yes. there will be offsetting reductions possible in the public housing capital stream as a result. because we will be moving to a system where there would only be operating subsidy going to those developments. they would use, just as is currently done in almost every other program that we have, funding could be raised privately or from tax credits or other sources to pay for the capital needs. so we would go from this more complex two subsidy system we have with public housing to a one subsidy stream. it would require the operating subsidy to be higher but allows

us to offset that increased cost to the operating subsidy with reductions and ultimately elimination of the capital stream. there will also be significant savings in terms of reduced complexity for the development' options even though from what i see the funding is going to be tied to a particular unit. now, i understand that you are modeling this proposal on one of the provisions of the section 8 tenant-based rental assistance program. under the existing program, fha's are allowed to commit for

voucher to a particular unit. >> that's right. >> this enables the pha's to leverage private resources, to finance the rehabilitation of those units. but with pha's are able to make sure they have mobility by providing them with another tenant-based voucher if a person decides to move. your proposal would allow participation by entities that don't have voucher programs, whether public housing authorities or owners of other hud-assisted housing. the lack of vouchers would appear to be a barrier to mobility in these systems. in these cases, how do you recognize residents living in this type of housing with mobility options? >> it's an excellent question. and it is a mechanically, working out the operations of linking those housing developments with vouchters is a very important part of the

proposal. and i would say broadly we have spent a lot of time working with stakeholders, talking with omb within the administration and also reaching out to the authorizers as well as your staff to discuss a lot of these issues. and we expect not only to have authorizing language but also far more details based on the input that we're getting from stakeholder meetings and others that we're doing. on this mobility point specifically, first of all, what we are looking to do is to make sure that if a housing authority or another entity does not have control of a voucher program themselves, that we link them with a voucher program in the area where the project is located to ensure that there are vouchers available for those families that would move. what we are looking at is sizing exactly how big that pool would be and to ensure that we're not

creating too much of a need for additional vouchers to be able to do that. because as you rightly said, the cost of that and the potential pressure on the voucher program overall is important. we believe, based on our latest modeli modeling, that we can achieve significant mobility. if not complete mobility, with the existing resources that we have but we want to come back to you with a number of options on that that would say if we want to do this amount of mobility here's what we could do if we wanted to do further mobility among a broader population, here's what the cost would be and here's how we might be able to work. so we're working on a lot of detail with that. >> we want to be continually updated on where you are. >> as always, you have hit on a very important piece of this, an important point about how we achieve mobility. >> and lastly, i wanted to ask you about the hud voucher program. you know this is important to

both senator bond and i. we have worked very hard to include it in our budgets and appropriations over the last several years. i've heard wonderful stories from veterans in my home state in walla walla, washington that have gotten jobs, gotten health care, gained sobriety because they had these vouchers. there are similar stories across the country. but i know this program has faced some challenges and implementations in some parts of the country. and the va, as you know, is struggling to quickly hire case managers and adapt to this new model of permanent support of housing. based on the most recent data, it appears now that only about half of the vouchers that we provided in fiscal years 2008 and 2009 are actually being used. can you tell me what hud and va are doing to overcome these problems and make it successful? because we know when it gets out there and people are using it, it makes a huge difference for our veterans. but having administrative

challenges at any level, here or on the ground, is a disservice to the veterans. if you can talk to me about what hud and va are doing. >> absolutely. let me just start by saying your support and championing of this program has been absolutely critical, and we believe it is having a tremendous impact on veterans despite some of the challenges that you talked about. i also would put it in the context of the commitment that the president and the secretary have made to end veterans's homelessness. va has included a $265 million increase in funding for veterans homelessness in its proposal for 2011. so this is in the context of broad support for the intent of the program and more broadly ending veterans's homelessness. the way i would characterize the challenges largely are that va is an expert in health care.

what has been required in order to make the program effective and to fully utilize the vouchers has been building the capacity beyond health care that includes community-based outreach and the ability to connect the health care and other services available at va hospitals with the housing and other support services that may be necessary. where we've seen great success is where va hospitals have built that capacity. and we've begun to connect them with our continuums of care, community-based providers where they can form links to ensure they're finding veterans whether on the streets or in shelters, as well as helping to build their capacity and understanding about the late 6st techniques, whether housing fist, supported housing and others. whether it's in washington, d.c. or in many other places, we're seeing significant increases in

utilization of those vouchers with those targeted strategies. and we've now developed with va a plan to try to more broadly spread those. we have spoken about this. and you had a number of good points the last time we spoke, that we're incorporating into that thinking. >> we really want to work with both you and the va to get this out. i was disappointed the president's budget didn't include any funding for 2011. we can't let administrative lack of dialogue or lack of working out problems keep these vouchers going to our vets. we want to keep working with you on that imputation. clearly that remains a high priority for this committee and i thank you for being committed to that and working with the va on that. >> thank you. >> senator hehey has joined us. i have to run to the energy and water committee really quickly. senator bond is on his way back. i will turn the gavel over to you and allow you to go ahead

and question the secretary. senator bond will be back shortly. and if you finish before he gets back, if you could just put it in temporary recess, he will be here. >> of course. i'm going back to a markup in judiciary. i was able to get permission to leave the judiciary meeting. funny how that works. thank you, madam chair. and thank you for the tremendous job you do on this and other appropriation matters. secretary, it's good to see you. and i appreciate having you here to discuss the administration's budget request. so many of your programs in your department have served my state very well. you have one heck of a portfolio. and there are probably days you probably wish it wasn't quite as much. i welcome you up to vermont

sometime to see the good things hud has done to provide affordable housing, especially in our rural communities. we always say housing in urban settings, but my whole state has only 660,000 people. and a lot of it is very rural. but it's something that works in rural vermont could work in rural california or texas or elsewhere. now, i know others have asked you about the president's proposal to cut the budget so the 101 and 202 programs and the home program. i worry about this, because as i look at the budget i'm afraid there's this shift of priorities from rural areas, rural america, to urban areas. and i remind everybody that

rural america still is a third or more of america's population. of course it's back in the time of franklin roosevelt, they were concerned about rural america. they had a number of programs that made an enormous difference in society. my grandparents in vermont and others. but vermont and other rural states have relied on these programs to build affordable housing for low income, elderly and disabled residents. so if congress agrees with your budget proposals, how are you going to deal with the problems of rural america? >> senator, thank you for the question. i look forward to visiting you in vermont. i probably shouldn't say this in a senate hearing, but it's one of my favorite states. i spent a lot of time growing up there. >> mine too.

>> it's just a beautiful, beautiful place. let me say a couple things about this. first of all, we had to make some very difficult choices in the budget this year given the broader outlines of the federal budget deficit. we made a fundamental choice to focus on existing households that we serve and ensuring that we were fully funding our major rental assistance programs. that required capital cuts in a number of different areas. just to be clear, those rental assistance programs are critical in rural areas of the country as well and we'd be happy to get you more detail on how they support rural areas. i would also say that today the single most important way that we fund housing for the elderly and disabled in rural areas and other areas is through the tax credit programs. eight times more senior housing is developed through tax credits than through 202 and over ten

times more for people with disabilities. >> but i still come back to my basic point, i worry about the way this is set up, that we're seeing a shift from rural to urban. and that's what i'm going to be most concerned about. because there's no way i could support the appropriation that did that. >> and i believe that that is, in fact, not the case. 202 and 811 is equally available in a range of areas. but let me point to a few things that i think are particularly targeted to rural areas in the 2011 budget proposal. first of all, we will, for the first time ever, be establishing a program specifically targeted to rural homelessness in 2011. that has never been done before.

we have, because of the work of this committee in our 2010 budget, we will be making sustainable communities funding for the first time with a specific 25% set aside for smaller communities. and that is a critical effort. we are also building on our experience in investing in rural economic development through a proposed catalytic investment fund which will be an important resource available in rural areas as well. so not only do i believe that we have housing resources specifically for constructing senior housing and disabilities in rural areas but we are increasing our focus on rural areas with a number of different proposals in the budget. >> thank you. and also i look at some of the different things you've done over the administration has done, congress has supported to promote home ownership.

in hud's previous budget request, they expressed interest in a model known as shared equity typically run by nonprofits. they promote home ownership among low and middle income families by providing down payment assistance. the home is retained when the buyer eventually sells the home. the nonprofit recoups what they put for the down payment and also a part of the appreciation. they also usually have the right of first refusal to buy the property. if congress included funding for a pilot program to increase shared equity programs, is that something your department would support? >> we certainly not only believe in shared equity models, but there are a number of ways that we have begun to support those.

what i had suggest is that we would love to sit down with your staff and explain what we're already doing around shared equity and see if there's a way to get to a pilot of the kind that you're talking about even under existing@@r i think we all know the societal value of home ownership and community value and everything else. say nothing about the economic well-being of the country. i'm concerned about something that will slip through the

cracks, what i hear most often when i'm home in vermont that some of the lenders of the program aren't abiding by the rules. homeowners have been having a hard time getting straight answers. and it's frustrating because i'll hear questions, whether walking down the street or at the grocery store or whatever. they say, we can't get a straight answer. is your department and treasury looking at this issue, whether this is happening in states? because it's to all our benefit that people can be homeowners but they're going to have to be able to get the answers they need. >> there's no question that particularly in the early months of the program servicers, there were significant problems with servicers. there continue to be significant problems in some cases. we have both pushed servicers to

create better communication, more resources, more people in their call centers, going door to door to do that. but we have also created very specific standards for exactly what the timelines need to be for servicers to get back to homeowners with a clear response on whether they're eligible or not. we did that just a month or so ago. and in addition to that, we have begun to impose penalties on servicers not following those guidelines. so, yes, we are hearing those issues, and we are taking action on them. >> good. and i must mention, as senator bond knows, when somebody corners you in the grocery store and they have a concern, they've got a concern. and i sometimes find those -- actually, i like that. in a small state like ours, everybody knows everybody.

nobody has a problem coming up and ask you a question, saying this is occurring too often to make we think it's just a random issue. senator bond is here, who knows these issues as well as anybody. and i'm going to turn the gavel over to him. >> well, i appreciate getting the gavel back from my good friend, senator leahy has outlined the concerns we have in rural america. i had raised those earlier, pat, before you came. and we had one little $25 million rural housing program for hud to work with usda, and that was gone. so i was interested to know that the secretary has said while they have zero budgeted that, something new is going to spring full-blown out of somewhere. and i can assure you that those of us who live in places where we don't have a rush hour, we

have a rush minute, there are -- radio stations can't even sell drive time advertising because nobody is in the car that long, unless they're driving to another city. >> last week i got in the car. we were driving somewhere. and in the driveway i decided to reach to hit the traffic report as i do when i'm driving back and forth in washington. i'm, like, what am i doing? there is no traffic. but i've been in some of the rural areas of your state, which are beautiful, that made me think of home. but the needs are the same. and with that, now that we've done our bit, i assure you we care about rural america. but secretary donovan, i know you do, too. so thank you. >> thank you, pat. mr. secretary, maybe you want to comment on that.

you have a new rural housing initiative? >> well i mentioned as you were coming in, a range of efforts in the budget, an issue i know you care a lot about. we will be implementing the first-ever rural homelessness effort, specifically in the budget and that's something that particularly given that we've seen a 56% increase in rural and suburban family homelessness over the last year, absolutely critical. we are expanding efforts for economic development, the $25 million that you talked about was targeted to economic development. and we are proposing $150 million fund in the budget, which would have a portion of it will specifically targeted for rural areas so i don't believe that we're not going to have the kind of effort. >> i just asked the question, are you going to work with the

usda rural development? >> absolutely. >> which is -- that's one of the secrets because you need the housing. you need what usda can bring and i think it is important that you maintain that collaboration if you're talking about moving 25 to 150, i'm happy with that. but i just -- i want to work with you to make sure that it continues to work because as senator leahy said and i know, there are problems there. let me go to the issue of transparency and i mentioned to you before we sat down, i'm concerned that h.u.d. addition making is open and objective. is there -- are there political decisions which enter into that as the -- is there any -- do you get directives from either the top of the administration or

congress on how you make those? are those transparent and -- absolutely. >> yeah. and to what extent are those involved in the decision making? >> let me be very clear. my absolutely was to the transparency. we make our decisions particularly on competitive grants in a highly transparent way. we publish the criteria for those as we did with nsp 2. we have with every single recovery act grant, we have made those available on recovery.gov, our website, with detailed information about where the money is going, how it's being used. we have every applicant who wants to sit down with us and go through the details of how their application was reviewed and scored. we respond to those requests. we'd be happy to sit down with

you about any specifics around that. as you know, whether it's hope 6 or a range of others, we run competitions and we follow very, very strict guidelines in terms of how they're evaluated and. >> is there any notification or transparency as to those who apply? we hear about some. we don't even know if we know all the ones that are coming from our states or we can follow them. is there a posting of the applications? >> we will notify members in advance of making those announcements. >> yeah, but when you get the -- when you get the applications, do you notify, is there any public notice of the application, who's in there? do you advise the representatives in congress of those in advance of the process?

>> i will say i am not sure if we have a standard process for notifying members about applications in advance. we can certainly get back to you with more detail on the process we do follow. >> we have -- staff has some questions about that, and we are -- we are a little concerned. we'll look forward to working with you on that. >> okay. >> because i think most members certainly over on the senate side and i would assume on the house side would like to know if, you know, if they're three, ten, 15, 20, coming in from our state because we want to work with them and we may be able to shed some light on community support because we're out there. we're listening to the people. we know some of the challenges they face, what the state and local priorities are, as well. and we want to see those taken

into account. if the state is putting money into it and the locality has some skin in the game, to me, that is a -- that is a very good indicator that this is something the feds should look at carefully. let me ask some questions about question, major question about sustainability. your d.o.t. friends call it liveability. and that debate's been going on for a long time, but i want to make sure that once again, that the federal government is not forcing conclusions on local communities. how -- how do you make these sustainability decisions? do you do it with d.o.t. and e.p.a.? how much involvement does the --

do the state and the local governments have in working with you to make those sustainability determinations? >> let me say two things about that. first of all, we here -- the fundamental issue here is that more and more american families are spending a huge portion of their budgets, the average family today spends 52% of their budget on housing and transportation combined. and not only that, they're sick of sitting in traffic rather than seeing their family or having long commutes in rural areas in some cases to get to jobs. there's a whole range of challenges that we see. and so we feel we're responding to local needs and choices on that front. but the problem has always been that housing and transportation investments haven't been coordinated at the federal level

because there wasn't the kind of partnership that we're talking about. so we have begun to coordinate very closely with the department of transportation with d.o.e., department of energy and environmental protection administration just to give au example. on the recent tiger grants that were awarded as part of the recovery act, we had hud staff and epa staff actively involved in the process, first time it's ever happened of evaluating tiger grants to look at the connection of those to housing. so that's an example of that. on the state and local piece of this, we believe very strongly that this is not a one-size-fits-all and so the very first initiative we're undertaking in our sustainable communities initiative is to provide, thanks to the committee's leadership, planning grants for local communities to be able to decide how they want to coordinate housing and transportation. this is not about us telling them. this is us providing help to

them so that they can do the kind of planning and coordination, provide technical assistance, what are the best practices and in fact, we -- i don't know if you were here. 25% of that planning money is specifically directed to smaller places to ensure that this isn't just an urban or even suburban investment but that we're doing planning. tom vilsack is very eloquent about this. we've worked a lot with him and his department is how do we ensure in rural areas, whether it's a main street where stores are leaving that main street, whether it's figuring out what to do with the upper floors of buildings along those main streets in small towns, whether it's connecting seniors to the services that they need with kinds of transit that you wouldn't see in larger urban areas, a whole range of ways that we can work together and those planning grants are the key first step funded by our 2010 budget to be able to help

local communities decide how they want to meet these challenges. >> i think that's very important that you have a right to ask of the local communities or regional areas what their plans are. and you know, that's something i've worked on for about 40 years. and making sure they have -- they have it all together and know what they're doing is important. and we would hope that the -- that the federal agencies would make sure they're good plans and support the plans. now, how many ftes at h.u.d. are working on this? are you adding people? are you reallocating people from other areas? how many folks do you have working on that? >> just ask my folks to get me the precise details. we have establish add office of sustainability housing in communities. it's a small office and the idea of that office is to coordinate,

as i just talked about, with other departments that are working on this, as well as within the agency so for example, where we are retrofitting public housing, >> for 2010 and this was a discussion i believe we had in some significant detail on your staff on the committee. we had 20 ftes for 2010 and we expect in 2011 to have 20 ftes. it's a relatively small office just discussing policy and programs across -- between the departments as well as across

different silos within hud. >> i know the coordination is very good. you ought to decide with d.o.t. whether it's sustainability or liveability would be helpful if you could at least agree on a title, that would be a good -- a good start. on the fte are big deals. are you dealing with the overall staff problems, making sure you have enough in fha while you're moving people around? we know you need help. do you have the ftes you need? >> thanks to both investments you made in the 2009 budget as well as the investments in 2010 and some flexibility that you gave us in 2010, one of the concerns that i had when i came in and we've worked very collaboratively with you is that

we had created very specific restrictions across nine different pieces of hud in terms of ftes. and the flexibility that you've given us has allowed us to increase hiring substantially in fha. we have literally hundreds of additional staff that we're bringing on to do that. while trying to make sure that we're not overall increasing the size of the staff of the department beyond what's necessary. >> i have, as i indicated, i have some concerns about the -- if there's cutback in the 2012 budget based on problems with the deficit. i'd like to know how hud would like to deal with it. and when you've put funding on hold for 2002 and '8, and '11 are you going to make sure those

programs -- we will not overlook the people who are served by 202 and 811 while you push the current priorities? how are we going to make sure that those people are covered? >> first of all, i think one of the most important things to recognize is that the vast majority of housing for seniors and people with disabilities today gets produced not by 202 and 811. but by the tax credit and other funding sources. the issue -- and i will tell you very honestly, i dealt with this very directly in my prior work both in the private and public sector? it is very, very difficult, close to impossible in some communities to develop new 202 and 811s because the program is really designed, frankly, for the 20th century not the 21st century.

and because of the amount of funding that's available and the way it's distributed and the rules that apply, there's almost no case where a community can develop a 202 or an 811 without finding tax credits and a range of other sources to complement it. and yet, at the same time, the rules are not built so you can combine those sources. just so we can be very clear is not that we eliminate the program. we believe the intent of the program is absolutely critical. but what we need to do is reform the program so that it works efficiently with today's way of producing affordable housing for seniors and people with disabilities. there's a reform bill that is being discussed on the house side where we agree with a large number of those changes. in addition we believe there are

other steps that could be taken, for example, to link up with the health funding streams at hhs that are often necessary like pace for seniors as they age in 2002s. and we need to make sure that we get the program right, we believe, before we continue to build new units under 202. >> what i'm worried about i guess we're letting loose of the trapeze bar and i want to see one to hang onto to. and i want to manage -- to continue the services and providing services in many of these target populations is critical. that's why senator murray and i promoted the vash program and the hud policeman because these programs are very near and dear

to my heart and have problems that cannot be fixed with housing alone. i want to make sure that we continue those services. and certainly you'll have no argument from me on a need to clarify, consolidate and simplify the hud programs. that has been -- that has been -- that has been the thicket that every hud secretary i've known has found to be unmanageable. at the same time, as senator murray referred to it i have a minimum amount of high confidence of the authorizing committee's ability to deal successfully with these legislative changes in time to assure there is not a gap. and we're going to have to work with you on that because this -- anybody who looks at the

legislative calendar in united states congress knows that even getting our appropriations bills done is going to be a challenge. and we're going to have to have some discussions because i -- the banking committees are trying to bite off financial regulation. and that one is not -- that one is not going to be a simple markup in two days on the floor at least in the senate. man, there's not enough time to do it. so we need to work with you on that. the tra program -- it's very -- very optimistic. i would just ask you what do you see as the key elements and the advantages of the tra program over current programs? >> so today given the way

particularly -- let's take public housing as an example operates. because it functions with both an operating subsidy and a capital subsidy, it is essentially 100% government-funded. and because of that, it is almost impossible short of hope 6 to create with public housing the kind of mixed income, mixed use, 21st century housing that i believe our residents deserve and that our communities deserve. and so fundamentally what tra is trying to achieve beyond the simplification and all the benefits that come with that is to bring public housing and our other programs into the -- into the mainstream. to stop having them in some ways a parallel universe, if you

will, from the way the rest of our housing market operates. and if you look at -- whether it's tax credits or the new ways that we develop affordable housing, they have all of those benefits. public housing has not been able to. at the same time, public housing has been underinvested because it hasn't been able to access whether it's tax credits or more broadly private capital, other forms of public capital. the fundamental reason for that is because we have this dual system of operating in subsidy and capital subsidies. what may seem deceptively at one level but has very powerful benefits is not consolidating all these programs but shifting to a system where we have one operating stream that allows public housing to leverage private debt, mix uses, mixed incomes, all of the things we do in the best affordable housing

today, we can achieve by shifting from this. and the last thing i would say is the fact that a low-incomed family has to make a choice between keeping their subsidy or moving -- whether it's to get a job in a different community or a different neighborhood, to follow family or for whatever reason they may choose to move, that fundamental choice that they have to make today, i believe isn't fair. and so one of the key areas the program would try to change that is to say, let's give families more choices for mobility as we do in certain of our programs today. but at the same time, ensure that we keep the project base long-term stream possible for that property that you believe and i agree are so important to keep communities strong. >> i think when tra was

promised -- was proposed, the legislation was promised this month, it is clearly a big and controversial effort. lots of questions with it. and i think we need to have discussions with you about it and debate, i hope, at some point -- i don't know when we can get floor debate but have it brought up for thorough congressional debate. so when are we going to see it? and what -- how much legislation is needed? my staff is saying that perhaps 90% of it can be done by regulation. what -- what do you see as the process? when will we see the product? when will we get to start on the process. >> first, let me say i agree with you that this is an ambitious large scale effort and i want to be clear. this will not be achieved in one

year or one budget cycle. and so what we proposed to begin it in 2011 focusing on 300,000 units out of a much broader stock that's probably 10 times that size. so we don't we believe that it's achievable -- i think it aligns with all what you said that all of this can be done in one year. it's going to take some time. having said that, we will -- we have been working very closely within the department with stakeholders, begun discussions with the authorizing committees as well about legislation. we will -- we are committed to meeting the timeline that we laid out to get draft legislation. and i would suggest that we'd be happy to sit down as soon as possible with you and your staff to begin to answer any questions that you have. >> we want to see what needs to be done. if you're focusing on 300,000

units, that goes back to my initial concern. all the other programs that are being zeroed out, what's going to happen to those needs and areas that are not covered by the 300,000 units. so -- i mean, there are a lot of questions and i think we'll have to -- we'll know the scope of the questions when we see your proposal. so we need to have that soon. at least in the appropriations process, we need to -- we need to have that and to deal with it where we can and see what regulations you can come -- need to be done. what has to be fixed legislatively or by appropriations. or by regulation. >> yep. >> and the other thing -- i appreciate your mentioning my old friend hope 6 again. how is choice neighborhoods better, bigger, longer, stronger, and improvement. and what's going to be different about choice neighborhoods? >> so let me try and be as specific as possible in terms

of -- >> capacity lies it if you can. >> i go to places all the time and hear how great hope 6 is. and i want to be very clear, this program is building on hope 6, not doing away with it in any means. one of the constant issues i hear is we've done this wonderful hope 6 redevelopment. but across the street is a project that is assisted with a different hud program that we have no tool to be able to redevelop. and specifically what i mean is our multifamily programs don't of that same option. or there are 10 or 24 closed homes on the next block that are the real problem in that neighborhood. they're creating crime. they're bringing down values. and yet, we don't have the flexibility in hope 6 today to be able to include that kind of housing as well.

so what we want do with choice neighborhoods is to say, it's been so effective on public housing, let's allow it to be used for our privately owned assisted housing or for other housing in a community. and that could be combined with public housing. in other words, the housing authority could come in and say we're going to do this public housing development but we're also going to do the assisted housing across the street. we got many examples where they're in the very same neighborhood or even across the street. or if the most challenging thing that you have in st. louis or any other community is not a public housing development. and i know a number of them in st. louis, for example, or kansas city but it's isn't it a fact a privately held development. this would be a tool available to redevelop that housing. so i think that's in some ways the most fundamental change. it's takes what's been successful in hope 6 and expands us to our broader program.

it just doesn't make sense to me frankly, senator simply because we fund something with a different program at hud and this is a little bit the theory of tra that we ought to have totally different rules and programs available to them. this is trying to spread the lessons and broaden hope 6 to other forms of housing. >> is that something -- what you're talking about, needing to reach out and deal with other -- is this something that should be fixed -- can it be fixed by the home funds that are given to the localities? >> i don't believe fundamentally that it can be fixed by the home funds because traditionally the way hope funds are used in moderate rehabilitation or new construction. these are much more complex really neighborhood revitalization schemes. and redevelopments.

>> we want to know how -- i mean, are we wasting money on home. i thought that home was going to do that. so we have a limited pot of money available and i want to work with you to make sure we use those dollars the best way we can. >> i think, you know, hope 6 as well as as anybody. and what has been the secret is it goes behind bricks and mortar program. home is a bricks and mortar program. whether it's hope 6 or choice neighborhoods allows you to build in whether it's a community room that has computer services available, whether it's the services that are available for literacy things. all of those things that has made hope 6 possible because it's more than the bricks and

mortar. he home is a bricks and mortar program. >> well, as you know i fought -- i worked long and hard to get child care centers and education centers and community centers. but when you're talking about a budget of foreclosed houses you got a bricks and mortar problem in the community. well, anyhow, this is a lot more discussion to be had later. let me ask a final question on fha mortgage insurance reform. how are you dealing with the mortgage default problems especially in light of the proposed fha reforms? how will the reforms affect homeowners who are seeking help with mortgage defaults? is fha -- are these defaults primarily a gse problem or is

fha going to get in and start -- and put more taxpayer credit cards on the line explicitly rather than the implicit situation we have now? >> so going forward we clearly believe -- and this is why we've proposed the legislation and the changes that we have that there are things we need to do to tighten to avoid future defaults. it's why we've suspended over 170 lenders last year to say we would no longer do business with them. we're taking a number of steps that we are proposed legislatively to allow us to have greater powers to get rid of not just lenders but the principals of those lenders from our programs. so we have a range of things we need to do more strongly. what i would say, though, if you look at what's happened over the last year, defaults in fha have

certainly risen but they have risen much more slowly than subprime and even prime mortgages at the gses. to the point where today subprime defaults are triple what we see in fha. so there's did he ever more that we can do. -- definitely more things we can do. the underwriting, fixed rate, no liar loans -- all of the things we've done traditionally and that we're strengthening to ensure that we don't make the same mistakes that were made in the subprime movement have helped us not have the same level of defaults. the only other thing i would say we have the most expensive, most aggressive lost mitigation set of tools that exist. they allowed us to help about a half a million homeowners last year stay in their homes despite the fact that they were struggling to make their payments.

and so that along with the home affordable modification program and other new options that we've introduced, i believe, allow us not just to avoid future defaults but also to ensure that existing families that are struggling with unemployment remain in their homing where possible. we're not going to stop every foreclosure nor should we -- >> in missouri we had a very aggressive u.s. attorney who files a number of criminal indictments. and some of these are not just people who should be disbarred but i hope that where you find the requisite criminal intent you refer them for criminal prosecution because some of this is shoddy. but in some instances it's criminal. obviously there's much more to discuss but the good news is i'm being advised that i am running

late for a whole bunch of things that are stacked up. so we'll have to let you go with things. we look forward to continuing to work on many of these things. we just started the discussion. the hearing record will remain open for additional question. this hearing is adjourned. the subcommittee will hold the next hearing on thursday, march 25 at 9:30 on the federal housing administration. thank you very much, mr. secretary. >> thank you, senator. let me just recognize the great work and partnership that we have with ken donahue who's our inspector general around a lot of these fraud issuing. i don't want to let the record close without recognizing his partnership. >> very important additional tool that you and we have and we appreciate his good work. thank you. >> thank you. [inaudible conversations]

[inaudible conversations] zmrsh

[inaudible] >> my group is very keen on the fact that the european service for external action take full responsibility in terms of budget and policy. i look forward to your comments. [speaking in native tongue] >> translator: thank you very much. you know that the creation of the common external service is

one of the most important innovations of the lisbon treaty. the service will assure the coherence of our foreign policy through the high representative. it will allow member states to participate more and to have -- be more and more involved in the area of common foreign and security policy. so it's not putting this in the intergovernmental arena. quite the contrary. an agreement was given to the creation of the service by the parliament. we had -- we will have a meeting at the college next thursday. we would like to have a strong european service that will be a strategic coordinating instrument that will allow for expeditious exchange between member states and the other institutions in this area.

thanksgiving -- this will be under the representative and we have to look at all of the aspects of this service. [speaking in native tongue] >> translator: thank you very much. the group of -- the progress of alliance of socialists and democrats. mr. schultz? [speaking in native tongue] >> translator: thank you, mr. president. the euro crisis was unleashed by incorrect figures provided by greece. i'd like to know from you whether you can confirm that at no point in time before the latest budget figures were supplied by the greek government you or any offices in your

commissioned already been informed about the correct figures. and secondly, can you confirm that the director general had considerable doubts as early as 2004 and 2005 which he reported in relation to the data from athens? what did you do to support your acquisition of data? and thirdly is it correct that inspectors informed you that they had considerable doubts about athens data? [speaking in native tongue] >> translator: thank you very much. >> it is precisely we had doubts against -- regarding the greek figures, namely the commissioner, was leaving his file over the last five years with great competence and great impartiality and great

objectivity that not only that we made the point several times with the greek authorities but, in fact, we had put forward in regulation in the council to propose to give to the audit powers. and fortunately this was rejected by the member states. they did not want to give the european commission more powers to go in depth in the national accounts of greece. i'm very pleased to tell you that the first decision of the new commission was to put forward again that regulation. and that at this time at least some of those countries that have voted against the regulation -- this time they told me already that this time they will vote for more transparency. [speaking in native tongue] >> translator: thank you very much, mr. president. on behalf of the audi group -- >> yes, please.

[speaking in native tongue] >> translator: thank you. i've understood that he was responsible but i was asking about your intervention. perhaps you can tell me what you yourself did. did i understand you properly, mr. barroso, that the blame lies with the member states for the greek crisis because they refused to follow your proposals and will you tell us, please, which heads of state in government were involved? >> first of all, if you ask me about blame i don't use that blame but it's the greek authorities. it's because of this we have a huge problem. regarding the commission, with my full support and the support of the performed his job in an exceptionally competent way. and this issue of the council of greece was several times addressed in area meetings. regarding the list of member

states that voted against this matter, i cannot by heart tell you exactly. but i know, for instance, germany voted against it and it was germany that told me at this time they are going to vote for it. [speaking in native tongue] >> translator: thank you very much. [speaking in native tongue] >> translator: president, today there is consensus to say that we need strong economic governance in the eu. and that's a huge change vis-a-vis the past few years. last sunday it was stated that he was favorable to a european monetary fund. there are other proposals, other options, for example, the creation of a european debt agency's euro bonds or perhaps a european crediting agency.

so, mr. barroso, we see that things are moving quickly at least for the time being. so i have three very specific questions. exterior that the commission is currently working on a proposal to create this european monetary fund? secondly, is it true, as mrs. merkel states -- i have my doubts -- that it's necessary to change the treaty in order to do so. third, do you agree that this fund couldn't only be a first step towards a true european treasury which we will need in order to sustain this monetary union? >> first of all, regarding the proposal of the emf it was made that that idea -- was put forward by the minister of finance of germany. without giving any details of such an institution. it seems, however, an instant contribution of the current debate about the euro.

the emf is, however, a longer term proposal which might probably require a change in the treaty. what we are working in is we are preparing some initiatives forced economic policy coordination and surveillance. we cannot at this stage exactly tell you what will be the format of this. of course generally speaking as you said we support everything that goes in favor of increased economic governance but we have to see exactly the details and to make the proposal at the right time. having said this, the issue of the emf could not solve the urgent issue of greece. it's a separate issue that requires more analysis and that is for a longer term. [speaking in native tongue] >> translator: thank you very much. first of all, i'd like to thank the president of the commission for the reply.

and i would agree with him the fund as such cannot solve the problems right away. and that's why i ask in the commission's reflection that there should be various options put on the table. you've got the emf. that's a long term project. you've got euro bonds, another idea that can naturally help in the greece case. then you have the credit rating agencies. of course, we've been working with foreign agencies but we could have our own. and then we could have a european debt agency. we could put all these ideas together to come up with a coherent idea from the commission rather than from member states. [speaking in native tongue] >> translator: yes, it's specifically to avoid what is happening now. everybody is proposing different ideas. sometimes within the same government.

and it's for this reason that we don't want to be hasty. we want to prepare this. and the commissioner stated this already. we will be working on the basis on a communication on coordination of economic -- strengthened economic policy and surveillance country by country within the context of the euro's own. and perhaps also within the general context of the european union. that's what we're preparing right now. and we don't want to work with the new proposals every day. we want to work in an objective and responsible way. and i think it's in this manner that we'll be able to get the best results. >> thank you very much. [speaking in native tongue] >> translator: mr. president, in view of the situation in the european union that there is no real market or demand for the cultivation of gmo potatoes for

which there are alternatives i would like to ask you why you lobbied so hard to ensure that gmo potatoes were fast-tracked in the authorization procedure? i'd like to have an explanation when there was no need. what encouraged the new health commissioner simply to ignore the w.h.o. tests. why didn't you wait until they had presented its new directive which is just being written on risk appraisal in terms of risks in the biosphere in general riseing from gmos? and why the contamination levels for foodstuff and potatoes were raised to 9.9%. i think this is a risky strategy which will not find acceptance

among our citizens. [speaking in native tongue] >> translator: thank you very much. i would like to thank you. we have seen your protest. thank you very much. [applause] >> well, mr. president. please, the floor is yours. >> the commission has decided move ahead with this gma -- gm in accordance with the www.european law. -- with european law. we have to take a position, yes or no. a considerable amount of time has elapsed since their application was launched. and this is because this authorization is subject to scrutiny of our independent agency in terms of foot security. we wanted all concerns regarding the presence of an antibiotic resistance marker gene to be fully assessed. after an extensive and complete

review there was no scientific that required no further amendments from our competent agency that was not part of the commission so we believe all scientific issues have been fully addressed and, in fact, i was expecting from you a word of congratulation because the commission has the intention to propose to give the member states the possibility if you want or not to cultivate the gmos. this is -- this is, i think, the reasonable position when we know -- when we know that there are deep differences among member states. some very much in favor and some very much against. [speaking in native tongue] >> translator: commission president, i got no answer to

the question about the need for this genetic potato which is supposed to be supplied in greater quantity by industry. there are alternatives and why take the risk. why the contamination level. why 9.4%. i think we discussed the evidence and thresholds for foods and foodstuffs when it comes to an antibiotic-resistant potato. i think this is at significant risk. you didn't address this and i would like to know whether additional authorizations before the director is in place. for example, imported race or maize? what's the time? thank you. [applause] >> seeing the enthusiasm of your group and i want to congratulate you for that manifestation, you

have a strong position against, okay? any gmo, that's clear, you have the right. i don't have -- i don't have any position in favor or against. it depends on the opinion that is given to me by experts. i don't have any prejudice in favor or against gmos. and the commission -- and the commission has a position that is to follow in those matters. i don't see the commissioners now discussing ideological about its gmo. what they should do regarding each one. the commission takes a position based on an independent assessment that has been making to us. not because -- not because -- not because the gmo is necessary but if there are -- there is not evidence that it is a risky, risky for public health or environment in that case we feel obliged according also to the obligations we have and the wto we feel obliged to accept it

if -- if there is nothing that prevents us scientifically for doing so. [speaking in native tongue] >> translator: european conservatism, reformers, please. [speaking in native tongue] >> translator: president, i promise you that following the gmo, my question is going to be more simpler. i believe that one of the things that we should talk about is the economic situation, the economic process that is right. and i'm sure the european union citizens are far more interested in employment and jobs than in gmo potatoes.

some people in this hemi cycle are for central, very strong government. on the other hand, i represent the ecr group. and i don't think that strong governments create jobs or employment. i believe that businesses are responsible for the creation of new jobs. three questions, as for the independence rate, are you going for the economic problems? are you going to leave some leave aid for member states to deal with these issues? second thing, can you promise us and cut in legislation, european legislation, that is slowing down and do you agree we should have less regulation and less harmonized regulations that that should help? that that is the best solution for our current economic problems? thank you. [speaking in native tongue] >> translator: thank you. >> we recognize the diversity of

our member states that's why in european 2020 strategy we are making that point very clear. that's why we address the issue of diversity precisely. with instruments like the social and economic policies. so the situation of the member states are not the same. at the same time we need as was said earlier stronger economic governance because it makes no sense not to coordinate in euro area and as european union because if the member states certainly they will not have the leverage to discuss the great challenges we ever now globally with the united states or with china in an equal footing so we need at the same time to have a common approach but then we have to design specific measures for a different member states. regarding the issue of reducing the burden that has been an important point in my action and we believe we should pursue seeing pragmatic seeing where

our european legislation is needed and avoid legislation when it's simply not needed. [speaking in native tongue] >> translator: thank you very much. [speaking in native tongue] >> translator: mr. barroso, last week you made a proposal for an economic strategy and there are a number of very important objectives within that overall framework. greece has had a savings program been imposed upon it which i think is really asking the impossible because here we're talking about a level of gdp 3% and so on. but, in fact, you're looking at this against a backdrop of the failed stability and growth pack. at the same time several member states are turning to the imf. now, are you in your euro 2020 proposal, are you going to

rework that 2020 proposal to somehow intergrate monetary fund. i mean, what about tax dumping and so on? how is that going to be tackled? are you going to adopt measures immediately with member states to put a stop to speculation against the euro banks that have been bailed out with taxpayer money. >> we believe that greece has taken necessary measures to reduce the government deficit this year. these measures show the determination of the greek government to attack their problems. at the same time we are doing what is necessary to secure the financial stability of the areas. the commissioners have been actively working with euro area states to design a mechanism which greece could use in case of need. such a mechanism would be in conformance with the lisbon treaty. it will include stringent conditionality.

they are ready to propose a framework for coordinated assistance which will require the area of euro member states. this is what i can tell you about greece and about our response for euro area stability. regarding the proposals of the 2020 i don't see any need to change it. we have put them forward. they are not going to be discussed by the council and we hope it will be a very fruitful discussion. >> thank you. [speaking in native tongue] >> translator: i'm not entirely satisfied. the %uestion is that taxpayers money is being used to engage in speculation against a greek state. i mean, this money comes in part from german banks and nothing is happening.

we hearing talks some other measures are going to be adopted. i'm disappointed by the fact so little is being done. to prevent, to ban things from things happening in the e.u. to put a stop to speculation so that we really can concentrate on growth. >> regarding speculation, let's be clear that the current problems in greece were not caused by speculation. it is mainly caused by overspending and not respecting the european framework in terms of the stability. namely, the excessive debt. but, of course, afterwards it may happen that speculators act against the sobering debt of that country. it shows the fundamental reform derivatives market that is taken by the commission. in the 20 october 2009 the commission has become a program of efficient solid derivative markets.

the proposals that the commissioner represent before the summer and also those concerning the market abuse directive -- that the commissioner present by the end of the year will increase market transparency and reduce the risks. beyond the systemic risk bonds a new reflection is needed on credit default swaps regarding solving the debt and naked practice needs protection in this context. it is not justified by an insurance, by unseen interventions on the risk on the purely speculative basis. in the short term we must achieve necessary coordination to ensure that member states act in a coordinated way but most particularly for the practices in this context commission will examine closely the relevance of banning purely speculative sales on credit default swaps and at the same time we'll push for international coordination because these markets are very opaque. we're going to bring this issue to the g20 and we have also

raised some of these issues by actual context particularly with united states. [speaking in native tongue] >> translator: i didn't want to disturb you because it was very important elsewhere, of course, while the specific question specific answer this time was slightly longer for giving answer. [speaking in native tongue] >> translator: from the europe of freedom and democracy. [speaking in native tongue] >> translator: thank you, president. the question i wanted to ask has already been posed. as a greek member i wanted to make the point to you that greece will get through this tough period of testing and we are responsible for this. it's a test of endurance and of discipline for greece.

mr. president, i'm very happy to hear you speak of the g20 as a group in which the question of swaps will be debated. on top of the sins of greece, we have been hard-hit by market speculation in greece. and i'd like to hear you say a little more about that in the g20 context. are you going to put forward any initiatives to establish clear rules with respect to uncovered purchasing -- naked purchasing of credit default swaps? >> it's important to say it comes from excessive depth. probably there were also speculative attacks but because they saw there an opportunity. now, you have to support greece. greece has now announced very important measures and we fully support those measures. at the same time, we have to look to the broader issue.

i already said we will examine closely the relevance of banning purely speculative nature of credit default swaps. the connection of transparency of regulators particularly on access to information on these practices also deserves to be raised. also in the g20 and in other fora also bilaterally. last year the commissioner organized a meeting with the regulators to see what we can know about the action of some of these speculators against the sobering depth and we need an in-depth analysis on credit default swaps analysis so to better determine how these functions function and if they are the subject of questionable practices. if needed the they will use the powers it has also in that matter. [speaking in native tongue] >> translator: thank you very much.

[speaking in native tongue] >> translator: is there any kind of timetable with respect to this mechanism for fighting speculation? i'd like to hear if so. that way we'll have some idea about borrowing capital on the international markets? >> the commissioner will present before the end of the summer some changes -- some legislative proposals regarding the directive on derivatives and concerning the market abuse directive. the commissioner will present before the end of the year also a plethora proposals. we believe it will increase markets, transparency and eliminates the risk. the issue of the credit default swaps we intend to put it in the g20 that's in june.

[speaking in native tongue] >> translator: thank you. mr. barroso, openness and transparency are fundamental values of every self-respecting democracy. if people in administration can't have their expenditure monitored by citizens then a fear of greed and enrichment can occur. we've seen that in the u.s. and the u.k. in the dutch press it's been recognized that 230,000 euros that's not a ludicrously large amount but it's quite a feat. imagine declaring 2,000 euros a day. hats to you, mr. barroso. but on a more serious note, these declarations is something that really has to be dealt with. because an internal audit is occurring and people are allowed to give it their sale of approval. -- seal of approval. i would ask mr. barroso and the commission as a whole to move away from this culture of

secrecy and publish their declarations openly and transparently on the internet so all european citizens can see what it says in them. i would appreciate a response. >> i'm surprised by these kinds of comments. in fact, the so-called representation expenses are expenses we make at the service of the european union namely travel of the members of the commission, myself and the other members of the commission. and, in fact, if you compare these amounts is what is spent by governments or heads of government, you'll find that these are very small compared to those expenditures. the budget authority, you are part of that and this budget has remained the same for five years only adapting to inflation. the expenses we believe they are reasonable and proportionate for the public goods. and we are, of course, using

full transparency. we are presenting to the budget authority, to the auditors, all the elements that have been request from us. [speaking in native tongue] >> translator: thank you, mr. president. [speaking in native tongue] >> translator: thank you. well, apparently parliament does get access to the declarations but that's none since. -- nonsense. everything happens behind closed doors. everything is shrouded in secrecy. if mr. barroso wants to share in responsibility he ought to make it public if he doesn't want to, admit it open and honestlily. why can't thee declarations be published on the internet. maybe he's afraid of the reaction of the public. just make them public. >> thank you. in a system of law we respect the rules. [shouting]

>> mr. president -- mr. president barroso will give an answer. mr. president, please start. >> in the system of law we respect the rules of law. and to make, let's say, an analysis of the intentions of people is at least is unfair. you cannot attribute to me what is the intention behind what is the respect of the rule of law. and once again i think we have to make a distinction between what are the obligations of the european commission or any public body regarding the rule of law or what is to give up to some demagoguics attacks. the european parliament, the european institutions in general have the highest standards in terms of transparency. and so i do not accept this kind of easy criticism, poplistic

demagogue cal. [speaking in native tongue] >> translator: thank you, mr. president. thank you for your answers. we have completed the first round of questions to the president of the commission. of a general nature. now we shall focus on the one topic that is the implementation of the new new treaty. and the basic rights. the first speaker has one minute, please. [speaking in native tongue] >> translator: thank you very much, president. i hope that i'm not going to depart from the question that's going to be asked. i'm convinced that mr. barroso and i agree that respect for fundamental freedoms of people is the most important element within the eu. and between the eu and other countries. now, the eu has got relations --

for the period between 2009 and '13 set aside billions of euro for helping. now, i don't know if mr. barroso is familiar how that money is going to be spent but i appreciate whether mr. barroso could talk about his attitude towards the state because very often when you talk about countries with authoritarian government in power you don't mention it. so i would like to hear what mr. barroso thinks about the state of it. thank you. >> thank you for recognizing that the commission defends the right. and we defend it not only in european union but unless our extended relations. it does not mean we can only have relations with countries that respect fundamental rights. unfortunately there are many countries in the world that do not respect fundamental rights and we have to keep relations with those countries.

it raises us concerns in terms of the respect for fundamental rights in that country. ... [speaking in native tongue]

>> translator: i would like to draw your attention to the issue of european airports. one of the principles of the european policy is in the protection of health and safety and fundamental freedoms of the citizens of europe. so we must not agree to a situation in which foreign feeling of free of security and safety. we are so easily waiving the right to protection of privacy. i have a feeling the situation is very similar to the one which we lived through during -- the flu pandemics. we have invested a lot of money into vaccines, which were not needed and we know that today. we believe we also trying to force the situation in order to use that. mr. president, i would like to hear your opinion on this issue. are you for or against this? thank you.

>> i would be in favor of it if member states agree. because i think it should be as possible and immunization after rules of security and safety in our airports. what happens now is that some of our member states are introducing body scanners in their airports, others are not. so we will come as you know, the commission has presented sometime ago a proposal for body scanners. that was refused. we believe of course this raises some concerns, but we should try to find, if possible, a neutral position of any security device in the european airports. if not, we can have kind of a discrimination in the evaluation of the security in our airports. >> thank you. [speaking in native tongue]

>> translator: the treaty respects rights of local authorities and regions across europe. this will be an important factor, for example, when you start discussions on the future of policy that i wonder if you could tell us when you start those discussions, for example, discussions on the croatian report that you were shows that you will have those discussions with local authorities and regions on the policy and the course with this parliament. >> this is not fundamental rights, but, of course, we will discuss these issues with local and regional authorities. you know how important it is for us, social and economic, this is now recognized also by lisbon treaty as one of the goals of the european union. in the year 2020 strategy that i presented sometime ago, we make it clear that it will remain a

central feature of our proposals. and we want to have all the time consideration of commissioned of such policies. this is part of our dialogue with regional and policies. i also mentioned in the document, i have just referred to, i also mentioned that needs to consult for regions. >> thank you, mr. president. i would like to raise an issue, a fundamental right. i recently visited in scotland and i was approached by the boy who want to raise the case of an -- this relates to what the first speaker was saying about eritrea. is family was martyred in eritrea for being christians. and he managed to escape to italy and then to glasgow in

scotland were others took her in and cared for her and looked after her as their own daughter. she is now 17. she is facing deportation back to italy where she first sought asylum and we're doing all we can to race her case to appeal to all those that can help her. and she requires remain in the loving care of allison and robert. her case has been raised by human civil rights organizations and churches across a scotland that it was even mentioned on radio yesterday. what can the commission due to protect our fundamental rights? thank you. >> thank you. this specific case in scotland, and this is a general point i had to make, mr. president. this for political debates. you cannot expect the president of the commission, even if he is relatively hard-working person, to do all the cases that are extremely serious that happen in

europe. so of course, i can give to you our concern, express our conciliation to any person that sees its human rights are violated. but about that specific case, i have not have elements here, but i will be more than happy to react in writing to the question that you have just posted. thank you. [speaking in native tongue] >> translator: enka, president. the fifth of march the president of italy signed a decree into law, and interpretation, legal interpretation which allows for the ground rules to be changed in the election campaign. and on his own side, the presidential palace the site it says in a meeting on thursday, the text produced by the

internal ministry was endorsed by me in 57, article 57, the italian constitution. it says the president shall promulgate laws and legal acts. and they cannot themselves be involved in the drafting of legislation or legal degrees. and he says that this is a distortion of our democratic system, and it's against the constitution. this degree change the electoral ground rules as undemocratic. and those who broke the law can do so for electoral advantage. i wonder why as parliament is always happy to act on its own laws, but won't do anything -- >> one minute questions. please, keep it small. it's very important.

mr. president? [speaking in native tongue] >> translator: madam, once again don't ask me to get involved in an internal political issues. the commission has responsibly in the area fundamental rights we're talking about executing european legislation, either on the european or national level. but this is not the application of law that is in question here, but from what i can gather from you or contribution, this is more of an internal issue in your country. perhaps it does have a dimension that links into legalities, but we really can't get involved in the issues of political personnel is your. >> thank you. [speaking in native tongue]

>> translator: the church of fundamental rights is, thus far, the only international document that talks about discrimination on the basis of sexual orientation and bands that form of discrimination. now, europe has made an achievement here. now within the e.u. there are three countries, the u.k., poland and the czech republic, which have not incorporated the fundamental, church of fundamental rights. so i would like to know about what you intend to do in the commission of to protect the rights of homosexual, gay, lesbian, bisexual and transsexual people to defend their rights. now here we have got directives on employment legislation, and we want to stop discrimination. we want people to be able to

cultivate their love lives without fear. mr. president? >> there are two questions there. i don't know if i can respond in one minute. first of all, regarding discrimination on sexual orientation, you know the commission has proposed previous commission, directed against any form of discrimination, including based on sexual orientation, outside also the employment. we're committed to ensure that european legislation and members measures, fully respect the prohibition of discrimination on grounds of sexual orientation. they are, these pencils as you know, enshrined in european union charter of human rights. regarding polling and united kingdom. the application of the charter in relation to the laws of old and united kingdom, and is stability within these member states. it states in particular that the

charter does not extend to build of the court of justice or any court or tribunal of poland or of the united kingdom to find that the laws, regulations, our provisions, practices or actions of these member states are inconsistent in fundamental rights, freedoms and principles that reaffirms. so we have to see still what is going to be the way. european court of justice w the protocol of those two member states. >> countries around the world have finally worded bills of rights in the constitution. rather fewer of for genuine protection to their citizens. do you agree that what matters is not the structure of protection of rights, but rather how that protection is practiced? in the united kingdom, we face a general election within three months. if elected, the conservative party will repeal the human

rights act and replace it with our own bill of rights. this would mean that the european convention of human rights would no longer be directly applicable in the u.k. domestic law. mr. president, we you explain what do you will take into account the different positions of the member states? my party also seek a treaty change to guarantee the charter of fundamental rights does not affect the u.k. how will you ensure that the e.u. doesn't interfere with the uk's right to have doubt of the structures we don't wish to participate in? thank you. >> i partly already answered the question when answered the previous question. united kingdom and other countries, they have a protocol regarding the charter of fundamental rights. and it has that right. it was negotiated and we have an intergovernmental treaty that recognizes this. having said this, of course, let

me tell i would prefer all member states to accept the charter of fundamental rights, because i believe this charter is fundamental companies for all policies. we are also now ready to accede to do convention on human rights. is european system of protection of fundamental rights. certainly, i respect it much and i thinking them as democracy, one of the countries that is given during the centuries most important contributions to democracy, that's what i really regret that the 19 does not want to be with all its partners in the first line to of human rights, not only at national level, but also as european project. [speaking in native tongue] >> translator: thank you very much. president, president of the

commission. women's rights is a basic fundamental human right, and we need to champion that in the european union. but we see that there are huge inequalities that exist and are actually becoming worse, including salary differences between gender. we also have more poverty and more precarious work among women. and so it's not enough to pay lipservice to women's rights. it's not enough to do that, unless we have full discussion with organizations who work with women. and i'm wondering if the commission is available to give a priority to the subject with true measures, for example, by drying up a strategy in favor of

equality, the european parliament is a drawing of a report on the strategy. [speaking in native tongue] >> translator: now, last friday, commissioner redding and i presented a document in this area, and we reaffirm our commitment to work in this area. in september, the document in question will be followed up through a strategy in favor of equality. so we do have a broad framework for the commission to work under, to provide more equality between the genders. so we are very much in line with what she said, because we do have to guarantee these rights. the letter was published to

celebrate the 15th anniversary of the beijing summit. and the commission and various committees at the european parliament are working in this area, tomorrow will be having another meeting, so this won't be the first one. >> president barroso, the question i would like to raise today concerns a financial situation in greece. article want one of the lisbon treaty is for the first time be used to push through structural reforms in that country. the good people of greece now find themselves stuck between a rock and hard place. and have been become very clear you are running the show in that country are not the elected government. so does this mean as you've said in your officials to sort out the great financial situation, that you cannot be addressed but only as president of the commission but also as governor of greece? if the measures your officials put in greece don't work, do you

have a plan b.? if so, is greece to use it to lead a eurozone? and funny do you intend to send in your officials to other countries suffered financial hardship, perhaps, portugal, it italy, spain? thank you. >> i would like to explain to you that our topic is implementation of the neutrality and respect of fundamental rights. so please keep in this topic. are you ready to give an answer? split it always try to be ready for questions of members of this parliament, mr. president. your question, distinguished member of parliament, comes out of an assumption that is not correct. it is that it is because greece is an euro area it is having some problems. in fact, we have countries outside the euro area that have similar problems. in fact, in some cases even more

serious. in the european union and every call for incidents the grave situation of iceland, that now is asking european union to join european union, precise because i suppose someday to join european union as well. it is a complete mistake to think that problems of greece are result of european euro. is precisely greece has not respected the heels of sutherland respected greece is now facing difficulties, and that we will of course have to pay some cause of difficult adjustment it has to make. [speaking in native tongue] >> translator: thank you, mr. president. and i just ask a question with respect to the storage of data which the german constitutional court has ruled on our in the month, saying that it was no

lymphoid to soar telecommunications data, but it is still unclear to what extent unsupervised data storage and access and data is compatible with human rights. clear notice was given to the spot on the swift agreement and e.u. directives of the storage of data. or the catalog of fundamental rights in the e.u. treaty must come into force there. should we not check whether the catalog of fundamental rights in the treaty is correct with respect to the provisions on data storage? smack it is recognized by article eight of the opinion. thanks to lisbon treaty we cannot establish a comprehensive framework for protection of personal data. this is essential to protect the privacy of our citizens to assure common approach to all

data processing activities within european union, and european our that will be involved in the framework since the procedure also applies for the former third pillar areas. we must also ensure that fundamental rights of europeans citizens will be protected when personal data late in this context it the agreement on personal data protection, could be important and we are working for this. we are currently taking consultations to ensure transparency and collect the views of stakeholders and citizens. the commission plans to to take a recommendation to authorize negotiations with united states. [speaking in native tongue]

>> during the last decade international cooperation on counterterrorism has been made more difficult because of human rights concerns, including in the practices of the u.s. administration. we had hoped to put that behind us with the obama administration. sadly, we learned that unfair military commissions and indefinite detention without trial will carry on, even if guantanamo is closed. the supporters from international and domestic legal norms make trans-atlantic data shared projects even more problematic than they would otherwise be. what representations is the commission making to the u.s. administration in order to uphold fair trials? and warning that their absence will prejudice cooperation. and i hope that nowadays, unlike the past, there is no danger of the e.u. or its member states colluding with gross breaches of fundamental rights in counterterrorism.

>> the european union of being the first, as far as i remember, to raise the issue with the united states president, former united states president of the needs to respect fundamental rights under rule of law. also when dealing with terrorism. namely, regarding the issue of guantánamo. it was myself and then the former president, then prime minister of australia raised the issue, and that matter has always been an issue of dialogue with our american partners. and so you may be assured there's going to be very highly on agenda. regarding data protection, we believe that it should work also with united states for a fun work. i just mentioned that in the previous response. but the same time we need to have a framework to combat terrorism together. so the question is to find the right way of responding to to needs that are important. the need of freedom, of respect and protection, but also the

need of security because we don't seek security there is a possibility of freedom. [speaking in native tongue] >> translator: one minute, please. [speaking in nativplease. >> with this new strength in foreign policy, we as a union must be more active in the promotion and defense of human rights and fundamental rights in third countries. therefore, my question to you are, what are you in others plan to do to strengthen the e.u. promotion of democracy policy. second question, will you be supporting greater funding for the european for democracy and human rights in the next budget? human rights always seem to take second and third place in our dialogues. i think we need to spend more

time and money in the promotion and be a true you european endowment for democracy. i would like to hear your opinion on this issues. thank you. >> the provision of the treaty works for promoting human rights of the world that we have promoted on issues raised from death to to the prevention of tort or. to support for human rights defenders. and under these guidelines your opinion implement a wide range of actions ranging from public declarations or diplomatic to trial. i myself of and raising issues of human rights in summit with heads of him from third countries. just recently, in a dialogue with morocco, we have made the point on fundamental rights just in the last summit. in the summer we had just last week. european union has established

them human rights dialogues with a partner in countries around the world. would serve as indicated for detailed discussions on that issue. on human rights, the commission programs around 150 million each year to support human rights, ngo's across the globe. and we try to insert the human rights clause in every framework with which we conclude with a third country. [speaking in native tongue] >> translator: one of the fundamental principles is freedom of movement. in the light of the issue between libya and switzerland, hundreds of e.u. citizens, workers, that cannot and are libya to work. my question is, what is european commission doing to seek a

solution to this issue? and is it acceptable that one country such as switzerland takes a unilateral decision that affects all citizens, and in particular the workers that would like to work in libya to earn their daily bread? thank you. >> we are very concerned with this case. commissioner has already expressed the suspension by libya that it is a measure. in addition, it is not clear. with a positive end of relations between libya and european union. and tents to provide efforts are ongoing to find solution to the crisis. one of the two citizens has left libbey. this is a positive step. europeans have discussed issues on the toy second and with the 25th of february. and has supported the continuation of diplomatic efforts.

i believe it is essential to keep dialogue open and make the effort of understand its parties positions with a view to finding a solution as soon as possible. [speaking in native tongue] thank you for giving me the floor. we've had the ratification of the treaty of lisbon, respect for fundamental human and trade human rights has been enhanced. if you look at a number of decisions, rulings passed by the court of justice, we do have to do something about strengthening these rights even further. in the case, in fact, this is how implications for trade union rights are care we are talking with equal treatment of people earning their wages, irrespective of their nationality. that he we are talking about workers being given the same pay and similar working conditions

to domestic workers, workers from that country concerned. now, i think that we have to look at what mr. barroso, said in the past before he was elected as president of commission. this is my question. the commission to put forward the legislative proposal to sort out this problem which has come in to being after the court ruling. and the commission president already today give assurance? >> with these rulings were made public, we express our position very clearly. myself and then commissioner spieler, are responsible for employment and social affairs. making it clear that in our understanding those rulings could not put in question for the mental rights like the right to strike, like the right of trade unions, like the

specificities of some mechanisms of labor relations in our countries. we are working on some proposals to address this issue. i cannot get enough concrete dates, sorry, because i was not expecting this question now, but i can tell that this, as i said before, the election of this commission and is has been said also by the responsible commission is an issue we will address shortly. [speaking in native tongue] >> translator: thank you, chairman. i would like to ask fundamental rights, the new treaty and external action. according to the budgetary control committee, there have been 43 deficient financial transactions. how does the treaty, our

engagement for fundamental rights, will it enhance the reduction of the number of errors in the budget, its performance and reporting 43%. that's a symbol showing the level of financial error. . . does speak about

how we are -- >> and we'll leave this recorded program and take you live now to a discussion on the senate's use of the filibuster. parliamentary maneuver that blocks legislation. unless 60 senators vote to end it congressional democrats are considering the use of another maneuver known as reconciliation. in order to avoid a filibuster of healthcare legislation. discussion here at the american enterprise institute with norm ornstein and former senator parliamentarian robert dove. >> good morning. my name is carla bowman. i'm a member of aei political's person and i'd like to welcome

all of you washington early birds and our c-span audience of the past, presence and future of the filibuster. in 1982 when norm ornstein and i were barely teenagers we were introduced a series of sessions at aei called politics watch called election watch, excuse me. and that is now the longest running election program in washington. but this year we decided to supplement the election programs that will begin in june this year with another session called politics watch where we would look at the hot issues of the day. and, of course, the -- i can't think of an issue that's hotter than the filibuster is right now. i'd also like to recommend you another institutional announcement. if you aren't subscribers of our aei political report, you can give us our cards at the end of the session and we'll sign you up for that. i'd like to turn the session over to my colleague, john

fortier who will be monitoring the session. >> we have the world's most distinguished panel of people who know the filibuster but more importantly people who know the senate and congress because the filibuster is another way of saying that are there are deeply embedded rules and traditions in the senate that allow for unlimited debate in many what's we'll talk some about the filibuster, some about cloture, one of the procedures that we use to close off the filibuster. we'll also hopefully delve into some issues that are of very pertinent interest today with healthcare being potentially debated on the floor in the next few weeks where we might use procedures called reconciliation. a procedure that doesn't require a super majority as does breaking a filibuster by cloture. so we really have today not only some thoughts about a deep question that people have raised for many, many years. certainly going back to famously

woodrow wilson where the question of should a majority rule in the senate and how should a legislative body operate? whether it's a good thing or not. whether it's being used more today than it should be. or appropriately. but also some very particular policy questions of how our debate on healthcare may proceed in the next few weeks. let me just say a few things about how -- to oversimplify how one might think about the role of the filibuster. on the one hand we think the house is different than the senate it's a majoritarian debate. where the party leaders have very strong control over their members. now, the senate is a more individualistic place where individual senators can debate, shape the debate, stall debate and often groups of senators, particular group of senators sometimes in the middle of the spectrum can come together in

ways to craft solutions to political problems that are not necessarily the solutions of their particular leaders in the senate. i think that's one of the arguments that we may hear for the filibuster or for the rules of unlimited debate. that the senate is a different place, has a different kind of consensus and maybe this type of procedure in the senate is what we might need in a time with polarized parties and not much of a middle in the political debate in washington. on the other hand there certainly are long standing arguments against the filibuster or against the tradition of unlimited debate against the need for a super majority to proceed. that it's not democratic. that there's no majority rule. and also that it slows down the senate and prevents congress and the political process from not only getting to something particular and of moment and consequence like healthcare but also the many things the senate and the political process have to do every year. getting through the budget.

getting to authorize many bills that we don't think about in the very public political debate but that the senate is often slower at and the ability to limit debate causes some sclerosis as some people have described it. so these are the large issues we're going to discuss today. we have panelists who will talk for about 10 minutes today. i'm about to introduce them. we also want to have some debate amongst the panelists and then turn it over to you in the audience for some questions as well. i will start right here to my right with gary andres. gary is also -- had time in government especially in connection with the senate as the deputy liaison to the senate for legislative affairs for president george h.w. bush. and also writes frequently around town about procedural and process matters and is a

public-spirited lobbyists let's put it that way. sarah binder is part of the brookings institution. also a political scientist, a professional of political science at george washington university. the author of many books, several of them on this particular topic of particular note "majority rights, majority rule partisanship in the development of congress." that's in 1997 and then also "stalemate causes and consequences of legislative gridlock" coming out -- i'm missing another one, too. particularly on the filibuster. let me mention one more. another commercial here for an excellent book on the filibuster "principle filibustering in the united states" also with brookings in 1997. robert dove is the parliamentarian emeritus. he served as the senate parliamentarian in the parliamentarian's office for 35 years in the united states senate since retiring in 2001,

he has been a counsel and taught at george washington university and from his time inside the senate and talking about it outside probably knows more about senate procedure than certainly almost anyone in washington. but we're really happy to have him here today and talking about the -- not only the filibuster in general but i think we might be able to ask bob some questions which the current parliamentarian is being asked by members on both the republican and democratic sides about how the debate of healthcare will proceed. norm ornstein is a senior fellow at the american enterprise institute. the author of many books on congress. one in particular recent book "the broken branch" which is -- what is it now it's in tenth edition and the movie version is coming out next year. but a distinguished scholar of congress. a columnist in roll call and one who has been involved in a number of efforts of reforming and improving the process, the legislative process in washington. so let me now turn it over.

i'm going to -- actually i think i'll start with norm because i know norm may have to leave a little bit on the earlier side and we'll come down the panel this way. we'll have norm, bob, sarah and gary proceed. >> thanks. the movie version actually goes on and on and on. i've written a weekly column for roll call the newspaper of capitol hill for about 20 years. and i would write occasionally about the filibuster in the early times but the last five years it's been a topic that's come up on a fairly regular basis. a couple of years ago i wrote a couple of columns back to back and the second one i said last week i wrote about the filibuster and people can't stop talking about it. and that, of course, is a reality of our current and contemporary politics that this issue has come up more recently. and, of course, it's come up more recently in part because we've actually seen some change

in the majority control of the senate. something that we went for a quarter century from 1954 on without seeing. and when the majority shifts, we almost invariably get complaints from the new majority as it realizes that it cannot act simply as a majority. and, of course, as we now see we have the delicious hypocrisy that always happens when parties shift control and move from being great defenders of minority rights to decrying the ability to bring the majority to bring the institution to a halt. this has increased a great deal over the last few years as we saw with the frustration of republicans and the discussion of the so-called nuclear option by majority leader bill frist back when republicans were in the majority. moving at least -- at least considering moving to unilaterally change the rules in

the middle of the game over judicial nominations and, of course, the frustration over healthcare but not just healthcare. and i don't want to talk so much about healthcare because that issue, which is an issue of great national significance is one that since the -- we had a rule 22 would have been considered in the rubric of issues where you could imagine a filibuster, civil rights questions, other great issues where you have intense feelings by a minority. the real reason that i focus more on the filibuster in the last few years has less to do with issues like healthcare and more to do with the dramatic changes in the way the senate has operated more generally. and the dramatic increase in the number of cloture motions and either filibuster attempts or feints at the filibuster in modern times. you can find tables everywhere. i wrote a piece for the aei

magazine, the american, back in 2008 with a table showing the number of cloture motions over time that just goes up dramatically in the last few years. and this, frankly, is less a problem of the rule and much more a problem of our larger political culture. filibusters in the past were available for use. they did occur on an infrequent basis. and when they did, of course, going back to the '40s and '50s, they fit at least in very rough terms the old mr. smith goes to washington pattern. not one person taking the floor but a number of people, the senate bringing in cots and going around-the-clock and getting at least some national focus on the issue until you either had the will of the minority broken and something going through in part because there was a public backlash

against the minority position or a majority finally unable to get that super majority which of most time two third senators present and voting backing off eventually to try and regroup for another day. in recent years has seen a particular and sharp increase in the last three or four years. we've had very different use of the filibuster. but let me also add that the political culture began to change towards a much greater sense of individualization in the senate going back at least 20 years. and that is the -- basically the threat to filibuster or to bring the senate to a halt over nominations or bills done by individuals, not by a group representing a significant minority, you know, the 16 or so necessary to really formally call for a filibuster through the practice of the hold.

the hold, an informal device not in the senate rules where an individual says that he or she will deny unanimous consent if a leader tries to bring something up. it has been around for a very, very long time. but its use escalated over nominations going back particularly, i think, to the clinton years, maybe a little bit beforehand. but where leaders just began to tolerate the ability of individuals to simply unilaterally block consideration of a nomination not just for a couple of weeks or a brief period of time but indefinitely. and that set the stage, i think, for what's happened in the last few years. but what's happened in the last few years is that we are seeing filibusters or threats to filibuster used on routine matters. and now used simply as a tool of obstruction, not as a way to dramatize an issue of great national concern and have a

great national debate over it. the best example to me this year was a bill to extend unemployment benefits that saw two filibusters and then eventually passed unanimously. when a bill passes unanimously and you have a filibuster on the motion to proceed and a filibuster on the bill itself and all of the time necessary that's in the rules to allow it to play out, two days after a cloture motion is filed, 30 hours of debate on each, you can tie up the senate in knots and basically just for the purpose of throwing gallons of molasses on the road or to make it look worse, that damages the fabric of government, it seems to me. and what we've seen is the combination of multiple holds on nominations and the process of

clogging up the senate has meant that the basic elements of governance doing authorization bills on agencies and programs, doing appropriations, letting people get into government so they can actually do their jobs is being significantly damaged in a way that most people don't see, but they are going to feel it in their day-to-day lives. another good example of that is the head of the general services administration. effectively, the chief operating officer of the united states had her nomination held up for about 10 months in the senate and eventually was confirmed by an overwhelming margin. one individual doing this basically for no particular reason other than to hold hostage. so what to do? of course there are people now who feel their views represented by the majority who just want to scrap the whole rule. i'm not one who believes moving

the senate towards simple majority action would be a particularly good idea. but there are ways of adjusting the rule to expedite the process and so that you can have a filibuster available for these issues of great national moment put some burden on the minority if they're going to do it to have to perhaps operate around-the-clock and actually be there. and move things along so that filibusters intended simply to obstruct matters but not over issues in which they have great disagreement can't block the process for long. one of the big problems we have now is that any change in the rules requires at least some broader consensus. and so making even modest changes that could preserve the fundamental issues but moving it along will be very difficult to do without majority imposing its will on a minority and creating even more damage to the basic fabric of our political culture

which is already so afraid. -- frayed. we can get into some of those specifics a little bit later. but it's simply important to reiterate that the problem here is less the specifics of the rule and more the nature of our political culture now, which is a very dysfunctional one in my judgment. >> i come here as a defender of the senate as it operates right now. for a number of reasons. first of all, it is my belief that the fault is not in the rules but in the senators, if the senate is not working well. the senate has worked, i thought, exceedingly well in the past both under a rule that required two-thirds to end debate.

that was the situation when lyndon johnson was the majority leader. and when it was changed to 60. that was the situation when robert byrd was the majority leader. and it worked well because both of those leaders knew how to play the game. and it is a game. it is a game in which the senate plays a very different role than the house of representatives. and anything that would try to transform the senate into the situation that you have in the house of representatives. i think would be a disaster. it is my view that the whole role of the senate is to be a forum in which it is difficult to pass legislation.

and i agree that the senate is an inefficient legislative body but i think that is its reason for being. in contrast to the house which is a very efficient legislative body where basically the speaker rules through the rules committee. the senate is not ruled by its majority leader. it's ruled by a consensus which has to be built by both the majority leader and the minority leader. but as i say, it can work. and it can work very well. i personally remember the situation when president carter sent the panama canal treaties to the senate. robert byrd was the majority leader at the time. and those treaties were opposed by two-thirds of the american

public in every poll that i saw. and senator byrd's job was to get two-thirds of the united states senate to vote to ratify them. he did it. he did it by reaching out to the minority leader, senator baker. he did it by basically traveling to panama and preclearing the amendments that would allow those treaties to be ratified with the panamanian government. hard-working majority leaders who know how to play the game can operate very successfully in the united states senate under its rules, whether they were the old rules before 1975 or the new rules after 1975. i hear the comments on holds. i'd like to point out what a hold is.

it's a letter. it's a letter directed to the leader of your party saying that you have a certain range of options with regard to something that may come up. those letters are very valuable to the leaders. they keep calendars in which all of those holds are marked so that they know what it is they will have to face when they want to go to something. it doesn't stop them from going to it. it gives them information. but those holds are a reflection of the enormous power of united states senators. and my view is that's the reason people leave the house of representatives where most members have very, very little power. and want to come to the senate. where not only are they powerful but they have an incentive to

work across the aisle. i can remember a senator who was a very conservative republican sitting in the chair and telling me that when he was a member of the house, he never talked to anybody in the minority party because they were irrelevant to his life. they couldn't do anything for him. in a sense he was talking sadly about the fact that he really had no relationship with any member of the minority party in the house, and he was just glorying in the fact that in the senate not only did he have a relationship with a liberal democrat. the only reason the senate operates is because of those kinds of relationships. they seek out some common ground on some issue and then push forward on that issue. to me it is not that the senate

doesn't work. it does work. but it works in a very different way from the house of representatives. i was told by the parliamentarian who hired me in 1966 that his view of the senate rules was that they were perfect and if they were all changed tomorrow, they would still be perfect. that actually is also my view of the senate rules. but i do not think the problem is in the rules. i think the problem in the senate is in the senators. >> thanks so much for including me. i have to admit that bob and i both teach at g.w. and we often have students who are taking my class and bob's at the same time and it's not unusual me to start talking about the filibuster and the hand goes up. that's not what professor dove says. so it's an honor to go after you but i'm sure you'll come back to respectfully disagree.

but i want take a look a minute to think about the senate's for lack of a better word -- what strikes me as byzantine ways of doing business as we've been referring to the use for super majorities, often the placing of holds, the requirement for negotiating unanimous consent agreements and so forth and clearly the loss of the democrats 60th senator have woken up democrats of the predicament they face without 60 reliable votes. i thought i would offer some observations first about the nature of the filibuster. second, about the politics of senate reform and then just briefly a little bit about the predicament harry reid faces in the run up to the elections. in the nature of the filibuster, about almost 15 years ago steve smith and i set out to write a book about the filibuster when we realized that there really hadn't been any systemic empirical look at the origins of the filibuster, the use of it

historically or the consequences of using the filibuster probably apart from the movie "mr. smith goes to washington" and treatments of the 1940s. when we got in the work of thinking and looking at all of this sort of history of the filibuster, you almost immediately encounter what we thought first as claims but then we sort of termed more as myths about the filibuster. and so i thought i would pick a couple of them out and we can come back to some of these later. first, this idea of the claim that the filibuster is part of the framers' intent for the senate. that it has some constitutional basis or at least some constitutional aura to it. when you go back to the constitutional convention as well as thinking about looking at what the framers were saying about the articles of confederation, it becomes very clear the framers the no love for super majority rules. they had lived under them under the articles of confederation and they did not like the experiences that they had trying to legislate under them. and neither do we find much

evidence in the original construction of the senate rules that there was any priority put on requiring super majorities. in fact, if anything we find the house and senate started out with identical rules that they cleaned up the rule book and got rid of the one rule that could have been used to cut off majority vote and that's the historical accident and we can come back to that later. the second claim we often hear particularly today is that filibusters were once reserved for the most important issues of the day. and that today it's become either newly politicized or just taken on this partisan aura. when you go back into the history of the filibuster, it turns out particularly in the late 19th century much of our views and our myths about the filibuster are just that. that there was plenty of parochial and partisan use of the filibuster and that it was not reserved for the most important issues of the day, probably not until the civil rights era of the 1940s, '50s and early.

-- '60s. there were appropriations bills, presidential appointments, the appointment of the senate printer and many of the coalitions that emerge on these votes. we didn't have cloture to study but if you look -- when you actually got to a vote they tended to be partisan. so this concept that we have that if we just went back to original uses of the filibuster, things would be better, i'm not so sure that the history supports that. the third claim about the filibuster is essentially that it does little harm and if anything it does good because it moderates legislation. this turns out, i think, to be the toughest one empirically to crack and i think our evidence is pretty mixed in the times the filibuster does good and the time it does harm and clearly we can point to civil rights history to show in which for decades the filibuster kept measures even from coming to a vote on the senate floor. this issue of whether the filibuster moderates legislation -- it's very tough and the best we can do is to

certainly find that there's no necessary connection between pleasing the 60th senator and getting his or her vote and making measures more moderate. and that's certainly the case on nominations where we can't divide up the nomination. you can't divide a nomination. either you get it or you don't and so we might think filibustering of nominations is different because there's no moderation involved there. on the question of whether, in fact, you do get changes by accommodating the 60th senator improves measures, we can find for and evidence against it. we think of the ben nelson the cornhusker deal what it took to get senator nelson's vote for healthcare reform. i don't think that medicare deal was moderating. and certainly if we live in a senate as many folks have talked about with liberal democrats sort of clustered on the left and conservative republicans clustered on the right the 60th senator is not very close to the 51st. in fact, you might have to