for just 29 of these programs but the extent of the le fragmentation in this area was unable to identify the totalfore cost for the other 51 programs.u in other words, they couldn't tl even identify with the total cost for the of the programs. that's how messed up it is. the u.s. government also spends1 about 63 billion on 18 different domestic food and nutrition programs. and about $3 billion on 20 hom otmelessness programs.eport n and the report notes, and i'm ce quoting, this can create unnecessary work for both providers and applicants and may result in the use of more administrative resources than ta are needed. let me translate that. that means we have to muchsteful bureaucracy and to much wastefue spending, so the money doesn't n actually get to the people it'sg intendedet to help. it gets spent in the bureaucracy. als we also haove h another almost

$60 million spent on over 100 duplicated and fragmented surface transportation programs, 100 of them. and so, while i am troubled thae the $61 billion from the house just isn't enough to tackle thet problem, i am astounded by what the other side of the ogle has done.grams te tal it also continues many of the wasteful programs the we talkedt about. blic the corporation for public broadcasting has come underbvio, fire. obviously npr this morning the e ceo.o resigned. contr we've seen the controversies there. but the bill also spends tens os unions organize overseas, not even in america, helping unions organize overseas. dealing with american tax payers dollars tax well, today's vote is a choice between modest progress and

-- >> the senator -- excuse me, the senator has used ten minutes.esn >> i woulg d ask for anof additl one minute. >> without objection. >> the house bill needs to be fr the floor for what we accomplished all of this and as i said, the house billl isn't nearly enough, and we allow th can't allow this processis toroe capture a modest improvement iny the name of compromise byomplete watering it down to a complete abdication of leadership. stakes the stakes are really just too a high. t so today, i will be reluctantly supporting h.r. 1, the house $ln bill that cuts $61 billion from last year's spending. it's a step in the rightp direction. a modest step. the other side has put forward r proposal that should be rejected out of hand because it is completely inadequate. we do it keeps the spending money we e do not have. mr. president, i yield the scoor. >> mr. president?e presidinoffi

>> i ask consent to speak up to two minutes and for senatorwing >> without objection. >> mr. president, i wouldn't mind the chart from my friend os nevada staying up because it makes my plate that i will makew in a minute.ill in a few hours, the senate will hold an up or down vote on h.r. 1. proposal that counts along its s casualties such critical priorities as border security, cancer research and food safety inspectors. the house gop proposal is atroj trojan horse, and we will not be fooled by it. it speaks in the name of deficit reduction, but the dirty little secret about the republicanould spending plan is once the dustde is settled of the only decrease the deficit by $5 billion in lot fiscal year 2011. onen you look at the cbs courtti are operating under and compareg

that to the house spending bill, the difference be on cbo and ouo budget outnllays of only annound $5 billion in fiscal year 2011. so we are talking about a $1.36 difference of 1.36 trillion in budget outlays under the curren. kernan c.r. versus 1.35 but about place under the republican proposal. much as my colleague fromlican frvada's chart has shown, in other words, all of the cuts the republicans are currently proposing will shade a grandurry total of .3% from the deficit. m some might say well, it's aht sw start.s but in relation to the damage rl these cutsation will do, it isa meaningless start. the cuts to the domestic domtic discretionary will do nothing to eate j create jobs or spur short-termi, economic growth.everse in fact, the reverse is true ast numerous independent economists point, out, we will see a alm reduction in ecosonomic growth almost immediately with h.r. 1 m

enacted, and these cuts will for harm our ability to prepare for the b future because they get te very priorities we need to be to investing in to help our economy grow. education -- pre >> the centers and has expired. >> i ask unanimous consent to bi given two additional minutes.ad. >> without objection.jection. >> -- energy investment andmr. : infrastructure. so if all of these cuts won't cprove the economy in the neare term, it will tell the economich growth in the longer term and id won't cut the deficit and exactly then what will it do? it will satisfy a very small but vocal segment of the republican. party. that's all. mr. p so, mr. president, it's time foe a dreset. this a morning i called for aude reset of this budget debate. t i think it's important after deb today's votes both sides in the debate take a deep collective breath.ll we should all take stock of how the discthussione until now haso become distorted and seek tohe f reset the terms in the debate.an

it may not happen tomorrow, butw in the coming weeks as the negotiations led by the white sd house reconvened, we should approach the talks with fresh eyes and a new mindset. the rather than continuing the fixation on the domestic whi agscretionary cuts which at them same time this huge damage andte cuts the deficit very littlee oe just because of the way that they have spent the next offer a and counteroffer should includee mandatory cuts and revenue raisers like we'll royalties into the mix. we will only put a dent in the u deficit through shared sacrifice, focusing simply on domestic discretionary and evene leading out the military will not achieve our goal of deficity reduction including mandatory we'll royalties will.his: the bottom line is this colin could the blame for the current breakdown in the budgett notiati negotiations rests with our to failure to think big. comomise n bipartisan compromise simply i will not be found inspendinguts discretionary spending cuts brod

alone. plang we must broaden the playing field.nly the solution will only come frot putting other kind of cuts asue well as revenue enhancement on the table.he doing this will also said the table for the larger budget discussions still to come. my i see my c colleague from vermot is here, so i'm ready to yield the floor to him. i >> all right. i appreciate that, but i thinkoo what they are going to do is tra tock go back and forth --r in ay >> well, all i yield the floor in any case. >> but i appreciate the courtesy from thete senator from new yorh and i would yield with the consent that i then be nator f recognized at the end of the senator from alabama's speech. i i >> without objection.shed >> mr. president, i thank theicy distinguished chairman and the judiciary committee and a congratulate him on a very successful patent bill that ove passed with an overwhelming vote. i was pleased to work with him on debt as a partner for two

years and when i was the ranking member of that committee. and i think it is a good day. sn mr. president, we will soon beda moving towards a vote on the continuing resolution,y goi to b apparently there's going to bepv two options given to us and the question that i was opposed to our colleagues and to the american people is do we have tn do something, or can we do an nothing? is nothing in option? p because that's what the democratic proposal is, nothing, zero, notta. so we had in the budget committee of which i'm thehe ranking member now the testimony yesterday of alan simpson and republican senator from wyoming and president clinton's chief of staff in a well-known business

and democratic leader.y and this is what they told us. yesterday in their writtenhem in. do n we believe that if we do not dev take decisive action, our natiot faces the most predictable economic crisis in history, in def quote. they have spent months wrestling with these numbers. the members voted for the refore the proposed, and they gave a et lot of effort to it. i don't think they went far f enough in some of the areas, but i would say they made a real r significant attemptea to deal wh the crisis we face, and in theio testimony yesterday, they were not even further. what do we mean a crisis?s we crisis in 2007 that put us it the deepest recession we have had in decades.

greece has had a crisis. that's the kind of thing they t are talking about. dolr 40% of every dollar we spend isa borrowed, and senator conrad, our chairman, the distinguishedh democratic leader asked whateadk happened in your judgment to the united states if we fail to gete an agreement in the range of con what the commission concluded is e necessary? the commission proposes an reduc 4 trillion-dollar reduction ince ourr deficit spending over the s next ten years. be should it be more? propose that's what they propose. bud president obama's budget says it reduces it by 1 trillion, but t' when the cbo started the are going to find it is filled withw gimmicks and they will not be any reduction i predict in theba deficit in the obama budget, rey disappointing. dong it is a do nothing of the debt

quote, this problem is going tos happen. pro it isblem a problem. we are going to have to face up and maybe two years maybe a ltle little less, maybe a little more. and mr. simpson, he commented i think you will become before two years. we are talking about a crisis. i'm just saying at some point i aep within a year, at the endwn of a year if the people who hold our debt just thought you were playing with 5.6% of this wholes they are going to say i want some money for my paper. if there is anything money guys love its money, and when they m start losing money the panic, and let me tell you they will. it won't matter what the'll sayi

government does. they will say i want my money.ra i have got a better place for it. it. a year before we have a crisis.r well, this is a serious matter.a it's not a do nothingo-noth circumstance.so w have so we have a simple choice to tk make today. do we take a step, even a small ntep that sends a signal to thei world that we can take action tc preventtion t the crisis, not at after a disaster hits.ng, or we can do nothing as theic democrats' proposal is. the republican proposal would the year. that's a reduction of about 6% t of theio discretionary spending budget.ntie mosts states, cities and countis in america have had bigger that. reductions than that.ll and they are still here.

the have and ceased to exist, if and we aren't going to cease toa resist, but will make aference. difference. that amount to 4% of the total debt, and as i will show in a moment, mr. president, it means a lot more than that. the democratic proposal proposes 6 billion but it's really a clearly only a 4 billion-dollar reduction that's less than one-half of one per cent r reduction in the discretionaryg spending budgets. less than one-half of 1%. now this 61 billion is not going to break us. the gao recently found that the government spends 18 billion on pr programs. 47 different job training dave a programs.li we don't have anyty ability to

save money and do more with less in this country? no business would run the way we run the united states government, and this is just one of the typical kind ofduplic duplications and waste that goes on in our government. we are leaving in a fantasy world if we think we can't find the 1 billion to reduce out of more than $1 trillion in a discretionary budget. under president obama, the discretion of the spending increased 24% in the24 last two years. it's already gone up 24%. tak what do you mean we can't take a 6% reduction? we are facing a crisis, debtcroh crisis. are families across the country aree changing their budgets. they are doing so everyday. washington just keeps on growinw anding, a spending. had we have the education secretary budget committee last week andw.

the proposedth an 11% increase n education spending this year. 11. energy, 9.5% increase this nexte year for energy, they say, and hold your hat, the secretary of rtansportation was an andranspo proposed a 62% transportationase budget increase. now this is where we were, overw $3 trillion we have joined now to 3.7 trillion., how much well, how m monuch money -- so that's a 24% increase. the i'm not making these numbers upa well, what about the deficit y numbers? this year we spend $3.7 trillion, maybe thi

$3.8 trillion. want to know how much our revenue is this here?ion. 2.2.bly i know it's unbelievable. imagi the amenerican people cannot imagine that we are spending 3.8 and taking an 2.2. but it is true. w 40 cents of every dollar we spend is borrowed. this is why mr. bowles and 's e mr. simpson andve every economit that's ever testified that says we are on an unsustainable patht the past that cannot be continued we need to take action now. a this isn't enough, but it's a step. i think in the world financial o market the vigilantes' that word maybe the united states f is in fact on the road to doingantes e something aboutd that.n. the spending that we are in. our debt will soon be larger than the economy, it will exceed

100% of gdp by the end of this c orscal year. f amazingly surging debt for the peole country. keep s we cannot keep spending what we don't have. browing borrowing what we cannot pay bk. back. we cannot do this.ing -- our crushing debt burden is like an anchor dragging on ournomy. economy. it slows the growth. as reinhardt's study showed as'y the secretary treasury geithnerr acknowledged in the ycommittee r already slowing our growth, andg that because it puts us at risk as mr. bowles and some some say for a debt crisis. h's unpredictable when and how it might occur. ary of the that's president obama's have twoember's time has expired. additio >> mr. president, i would askino unanimous consent to have two

additional minutes. >> without objection. >> so we can't keep delaying ang promising to do somethingmisi tomongrrow. we have to have a vote. v we will have a vote today.d we need to act today. democra a vote for the democratic proposal is a vote to do vote nothing. it's a vote to stay in denial. it's a vote that says deficits don't matter, we can just keep on, but deficits do matter.they they have always matter.d. they always will matter, anday some say you can't reduce making any savings from reducing deficit spending. me let me show you this chart. i think the first one -- a $61 billion of reduction is a reduction of the baseline. bas when you reduce the baseline, you save that amount every year even if you have growth in the d future years. and it adds up. it's kind of geometric -- geometrical reduction in spending and debt that we have s

to have come in and it's beenavc working the other way. we've been increasingicly, dramatically, and you knowan dfo your business accounting that 7y return on your money doubles we had 24% the last two years. y that's why the government is the building and quadrupling in size.up but this would show, according r to our budget staff and calculation, if you reduce the e baseline 61 billion of this discretionary spending alone, it would save $862 billion of deficit reduction over teno frez years.at and if you were to freeze theot baselinewo for just five years,e not only would you save 860 billion, but $1.65 trillion. enough money to make a realce. difference. and just one of little act ofitl $61 billion of reduction of the discretionary spending.61 >> the cementer's times -- and w >> i would yield the floor.

>> mr. president?y: >> the senator from vermont. >> mr. president, i would note e appreciate the senator fromr f alabama's help on the patent bih bill which passed last night. is it is one thing that will helps us increase jobs and not add anything to the deficit. i do -- you know, i have to think of the revenue that come ad in. we had what i think was a terrible mistake when thecongres congress voted to support goingf to war in iraq and i was one of the 22 voting against that. but then voted to cut the taxes and borrow the money to pay for the war and iraq. b we've borrowed a trillion a dollars to pay for the war thats hasn't made us safer, it's o created thousands of americans deaths and tens of thousands of

others.o respond otherwise. it has accomplished one thing: a iraq did pose a threat to iran and we have removed that threatr which i'm sorry to say was a wen mistake. we also went into afghanistan with the intent to capture osama bin laden. surro when he was surrounded our cia and special forces were yanked out of afghanistan to go in irae and he simply state into pakis pakistan and a trillion dollars later, we are still there. again, borrowed the money forr t those two wars.supposed to one of them we shouldn't have or been in the first place the we plrrowed the money. and we also cut taxes on oil companies and millionaires and if it appeals.

hardships with war. brave men a only thend brave men and women o over there that have the the res hardship, not the rest of us. and when -- let me talk aboutth how the senate in h.r. 1, how the funding would affect the -- operations. these are both come under a u subcommittee that i chair in thn appropriations.opri i was talkatioing about what isn the house c.r. and what is not - in the house c.r.. it's notable anthe house requir. diplomacy and internationalintea spending.ntegra even if the interpol part they play in security around the globe. t it ignores the view of thesecret secretary of state clinton.se psychiatry defense gates,

chairman of the joint chief admiral mullen, former chairman general powell, general petraeus, president obama,nts former president george h. w. bush and george w. bush, and former national securityal secuy adviser. they've all made clear that theseth investments do protect u.s. security interest.invement. the investment to the house are not part of security interestt f every one of these people live named, they are directlyects affecting the national securityr interest on the front line of afghanistan, pakistan and iraq and around the world. they are not alone.prident president ronald reagan, former homeland security ridge also recognize the direct connection between international assistanco and our security. president ronald reagan said secured the assistance programs, the essential complement to the defense effort directly enhances the security of the united " states.y secretary said program supported by the international affairs budget or the central national

security defense programs. secretary gates said i've never" missed an opportunity to call or for mortue funding for emphasisn diplomacy and development.elop a whole lot of other examples of both republicans and democratsac leaders that seem to have fallee us deaf ears in the house.ho our republican president of the house should know we can't carrt the influence to al qaeda and or other violent extremist orists military forces along.they shod they should know helping countries like southern sudan u rebuild after conflict, the unstable institutions like egypt and preparing the trafficking and the nuclear material and other weapons in the former edua soviet union or educating and j providing jobs to the use that would otherwise be terroristersn recruiters in the middle east. or the corrosive influence of oz organized crime in centraleventa america were preventing the spread of deadly viruses in africa and asia, viruses thatfrm

only for one year plan right away from the united states, ore supporting nato or the international economy. u.n the u.n. peacekeeping, these are all parts of our national security. t and if the diplomats here and ad abroad and the funds the administer that make it possible that make the united states pard of the world community. relea the house press release claims the operations and programs in,d afghanistan, pakistan and iraq. that's empty rhetoric. secretary clinton said the house c.r. on acceptably harm u.s. interest in those countries.thal so in the beginning the house.r. c.r. slash as funding forunding refugees and their victims of emsaster by 40%. that m at the same time, the members of the other sidetdz of the ogle an urging we hagve the tens ofthe thousands of libyans who fled we say that we should be helpine

these people who fled their homes, we should help the egyptians who are now refugees in libya, and i ever read. tm. everybody agrees. but by the way, we are going ton cut almost in half. the budget for the refugees. u can't other. the house c.r. has funding for that prevents ponder and famine in africa and asia. asi and it improves the america spending. it eliminated funding for the clean technologyd wh fund thatoo supports exports of solar, windh and other meanwhile technologiet you know what it does?e because we remove that.emove we removed a major competitor to china.they are the funding. in the hour funding thesewe have technologies.n from we have serious competition.htet theyo are delighted to see us step back so these jobs are not going to be the technology in s, the united states, we are not

going to be exporting this. china will take over. can how shortsighted can this be?ins it's like you own a business anr you've got a competitor on the u other side of town and say well, we are not going to retire, we y are going to carry on today'sds goods, we are going to be theren a couple days a week. w i hope that competitor doesn't m drive us out of business. it drastically reduces the spending to operate the embassies and consulates, whichn every american traveling, working or studying overseaserss depend on. every one of us know that when this been a problem somewhere or americans have a problem they go to their embassy or consulate go abroad. the house c.r. would cut fundina for the global health programs.. hiv/aids, malaria, tuberculosis, other deadly diseases. diseases.

life-saving drugs and other denying services to hundreds of thousands of people, condemning women and children in other parts of the world to death. de remaking our treaty obligations inrnationa to the human, to the international financialinutions institutions and voting shares which our competitors particularly china are eager to, purchase. a time when china's expanding in the house would have us pullback and say here, you guys take oamc over.- you can be the face -- you ca be the power of these countries see, not the united states.he ui well, even great britain's concern of the spending international aid because unlike house, they recognize the matter

youu know, we might see also the impact of h.r. 1 is equallydevan devastating our domestic r fo programs. the programs that are part of our security, but look what it's doing here, the social safety sy net, the programs maintain and expand the country'snd infrastructure. they are going to be slashed. and economists from federal reserve chairman bernanke toberk mark zantia recognize the impact of h.r. 1 to be lost in thehe hundreds of thousands of jobs.ie when the economies begin to stao recover. i hear this deily from my fellow weeks vermonters. they explain how the headstartro proggrram changed the directionf her life. no not only did historic provide a reliable, safe educationalldrent environment for c made it possible for her to pursue a college education, to be a strong tax paying part of

our society h.r. 1 would deny more than 300 of the vermontermt children and families the same opportunity.those those moved by the cuts of headu start it would also devastate one of our best economicopment development tools, community development block grant programs. >> dissenters timeit has expiret >> mr. president, i ask my full statement be made a part of thed record, and i would ask the continued 30 seconds more.mr. le provides $1.68 billion for refugee assistance, which is equal to fiscal year 2010, and $662 million above provided in h.r. 1. i have many, many other examples. we ought to listen to former republican presidents and democratic presidents, former republican secretary of state and crefnts ones and know the need for this. i thank the chair, and i thank i thank the chair, and i thank i thank my distinguished friend,

the senior citizen from new mexico for hiso courtesy. >> mr. president.. b >> senator from new mexico. >> mr. president first i had 16 and is content requests forg committees to me during two-day session of the senate.th visa been approved by the majority and minority leaders. i ask unanimous consent that these requests be agreed to and that these requests be printed in the record. >> without objection. >> mr. president i would ask consent to speak for up to 10ss minutes is up in morning business. >> withoutg >> mr. president, i rise today to talk about the damage that would be done if the h.r. 1 were to become law, and specifically to talk about the few areas than i have been paying particular attention to, science and technology for one, particularly

related to energy, energy policy. second, border security and lawa enforcement and also education.i to me, this is not a question oa whether there should be cuts and our federal budget. clearly there should be cuts,ea but the real issue here is whether we should be smart about where we make those cuts. to me it is clear that h.r. 1 does not represent smart policyu about where to make those cuts. it represents a plan to mindlessly cut t funding during the remaining five months of the current fiscal year in order to send some kind ofo message to te world that we are serious about deficit reduction. in my view h.r. 1 cents aut i message but it is not the righte message. the message it sends is that we in fact are not willing to look

at serious deficit reduction at this point.at the first story of cuts that ine wanted to talk about that are contained in h.r. 1 that will severely impact our nation for years to calm and have an effece on how many jobs we can actually create, that is the area of science and energy innovation. last december, this congress passed the reauthorization of what we call the america competes act, and i was very privileged to work reticular lead with my colleague from tennessee, senator alexander, on helping get that legislation enacted. its purpose was to authorize funding for the department of energy's office of science for the national scienceci foundati, and for the national institutes of standards and technology for

the next three years so that by fiscal year 2016, we would have completed a 10 year doubling of the funding for those agencies. i would like to note that this effort was first started during the bush administration. it has been carried forward during this current administration under president obama. the effort has enjoyed strong bipartisanoy support and garnera endorsements from leading industry groups such as the u.s. chamber of commerce, business roundtable, council on competitiveness. these organizations recognize natione future of our depends on the strong scientific that don't that we need for ourh workforce in order to out innovate our competitors around the world. so it comes as a surprise to me, tc-99 large cuts being proposed by the house of representatives in their fiscal year 2011

funding programs that all of us seem to agree are dated to keep us competitive in the years ahead. what cut semitalking about?le let you give an example.in one example is in the office of science. this is the t nations largest supporter of physical sciences and these are the very areas five v which we intend to suppla new stream of scientists and engineers to companies such asma intel and ford motor company and many others. the house bill proposes to cut to the office of science budget to $1.1 billion or 22%. the result is an estimated reduction of 4500 full-timets scientists and engineers working on basic endeavors in the area of energy science. e it will terminate their early career research program for young faculty and ongoing

graduate programs in the energy sciences.ser national user facilities that the office of scienceff runs for upwards of 27,000 researchers from industry and academia will be shuttered or put into a standby status. this includes that for nanoscience centers across the united states that have had breakthrough discoveries tore propel our industries forward in the areas of solid-state lighting and new drugs and microelectronics. let me talk about some of the other programs impacted in the department of energy, the office of nuclear energy. this is leading the way to a new generation of smaller, less costly reactors at places such as oak ridge and idaho national laboratories.ty t

this effort will suffer. the ability to move this bipartisan program will cease. in the office of energy efficiency and renewable energy, ea barr and e. as it is referred to in the department.illn the house bill will result in n over 31,000 homes that will not be weatherized and that's why -- by july 1 it is estimated that something like a thousand people who are expected to perform thif work will be out of jobs. programs to mix coal with biomass. this is a program that shows great progress, will be eliminated as will programs to fund offshore wind. let me cite some other examples that the damage that the house bill will have on other agencies in the competes act.. the national science foundation will have reductionsen leading o a loss of 10,000 universityvers researchers and graduate students.

being so late in the year, andhs that indicated we have got about five months left in this fiscal year, the effect will be to reduce theto program to train teachers in math and science by 53% at a time when it is widely recognized that other nations are outperforming us in studente test scores in the subjects. mr. president i would like to enter into the leather -- record two letters the first by the council on competitiveness signed by sam allen who is chairman and ceo of the deere company, mike splinter chairmanm and ceo of applied materials, chad holliday chairman of the bank ofan america, william hyde, president of the united association of plumbers and pipefitters and deborah wince smith the president and ceo of the council. the letter says think he states thatet quote scientific research and skilled workers are the basis for new ideas, new technologies, new products and

services, new companies even entirely new industries. the american economy cannot compete and grow if we neglect our capacity to innovate. >> without objection.iden >> thank you mr. president. the other better is from 175 universities and industries in laboratories including the u.s. chamber of commerce and it supports the goals outlined inoe the america competes act and asks, and it goes on to ask the congress to reject the cutshe adopted by the house funding bill. i would ask that second letter also be included in the record. >> withoutct objection.he >> let me move to the issue of homeland security over the last several years. we have had a lot of speeches here in the senate about the need to bolster border security, particularly along the southernn border.

enhance homeland security capabilities. unfortunately with a budget that the house hasec presented falle short in this respect.mp the continuing resolution would severely impact the capabilities of the department of homeland security and reduce essential assistance that is provided tote organizations at the state and local level. it would be a step back in termw of thee progress that we are making in securing our border and ensuring that thend l communities and law enforcemente agencies along the border have the necessary resources to handle crime and to respond to disasters. with regard to border security, the house house continuing resolution would reduce plans technological fencing and security improvements along the southwest f border. the legislation would reduce interoperable communicationt capabilities and cut modernization efforts by 50% making it more difficult for laf

enforcement to respond to emergencies in a timelyen way.ay the house bill would also provide funding for 20,000500 border patrol agents rather than the 21,370 that the senate is proposing to fund. this cup back in border patrol agents i think is short-sighted. the measure but also severely impact aviation security initiatives. the number of advanced imaging technology screening machines, c the k-9 teams, the explosive detection machines would also be slashed by over 50%. let me mention --. >> the senator from new mexico is advised >> i have several points to maki that i understand there's a limited time so i will ask rec unanimous consent that my full statement be included in the record without -- is afraid.

>> senator from utah's recognize. >> thank youid mr. president. this is a solemn responsibilityn and one that should not be taken lightly. and gettysburg abraham lincolntf fought for a government of the r people by the people and for thb people. we are here because of the people and theirle constituents exist they sent us here and every time we vote we represent them.heir we represent their aspirations,n who represent the dreams of growing families and osborne orders. we represent the interest of taxpayers. v of course not all votes are i created equal. some are more important than others and my view that those we are taking today areut transcendent.e o they are quite literally about the future of this country. are we going to be a country without a constitutionally limited government -- know, are

we going to be a country with a constitutionally limited government? are we going to the country that limits the taxation on families andnd businesses or are we going to become to europe?ove array going to move toward t af full full-grown cradle-to-grave nanny government with theer majority on the public dole a small group extending a leviathan on this date. in shorter we going to remain the america to the world?e to or do we aspire to become a second european union with high taxes, high spending and measly economic growth? again i remind you that we represent the aspirations of their constituents.nt i represent the great people of utah.and i and i can tell you that they do not wake up in the morning and say do you know what? america would be much better if it were more like france.ri this is no exaggeration. right now government spending is at 25.3% of gross to mystic do

products. and if we do nothing, that numbers just going to grow pushing past 25 and cruisingto towards 28% of gdp.s the last time we did that was during world warld ii. republicans and democrats have very different ideas about how to addressut this spike in spending. either we can step off the pedal, the brakes, hit the brakes and bring spending back in line with historical levels,u levels of respect our constitutional limited government and respects taxpayers as citizens or we canr keep the car on cruise control and drive the car off the cliff. republicans want to hit the brakes. democrats want to pull a thelmaa and louise with our economy. i for one or not going to sitot back and allow them to do this. let's be clear about what thend democrats and republicans are 1, proposing here. h.r. 1 the bill that passed the house appropriation when chile and $26 billion in non-emergency discretionary spending.pend

the alternative offered by my democratic colleagues would appropriate $1,079,000,000,000 in total nonemergency discretionary spending. h.r. 1 the bill passed by the new republican majority in in the house and then majority tht most closely represents the views of millions of americans who are genuinely scared about her nations fiscal trajectory would reduce spending by $57 billion over the current continuing resolution. the democratic alternative woule reduce spending by justli $4.7 billion. you will hear democrats complain about the draconian cuts in c te house passed h.r. 1. this is nonsense. the fact is when you look at federal nonemergency discretionary spending as a whole which has exploded under thef democrats control of congress and with president obama's acquiescence in their big spending ways h.r. 1t provides modest cuts. the people of utah and thentry people of this country understand this so now the w

republicans are winning the game on spending cuts. m democrats are seeking to move the goalposts. it is now being suggested we convince the gap between these two bills by going after taxdo expenditures. don't get me wrong, we need to address both but i can tell the members on the other side that we areer not going to let you shift the debate. this is a debate right now about discretionary spending. is this is a debate about moving through. last week the governmentice accounting office issued abl report detailing possibly hundreds of billions of dollars in government waste and bloatov. there is plenty of that to beso cut in the discretionary budgetr in doing so would give ourem constituents and members ofbe at congress the courage to go aftea even bigger fish. and yet democrats can find it in themselves to cut an additional $50 billion when nonemergency discretionary spending is well over $1 trillion.nt i am proposing that we get into

tax expenditures. tax expenditures are a debate for anotheran time.disc nondefense discretionary spending has grown by 24% over the past two years. we can cut that back significantly. we need to do so and american understand that going back to 2008 spending levels is not the end of the world. cor i would also like to correct the record with respect to h.r. 1 and medicare advantage. yesterday, just yesterday secretary said they sent a letter toet the chairman of the finance committee senator baucus suggesting h.r. one would have a detrimental impact on medicareha advantage. now this assertion is orwellians the secretary knows full well that obamacare cuts more than $200 billion from medicare advantage program that currently serve nearly 12 million seniors. according to the administrations actuary these devastating cuts will reduce enrollment in this popular program by 50%.hese for the more the cbo has also.o.

found these cuts would reduce importantd benefits by 50% for seniors enrolled in the program. h.r. 1 is intended to hault the harmful cuts to seniors in the medicare advantage program. suggesting otherwise as the secretaryid did is both inaccure and it risks infusing millions of seniors. h.r. 1 is a good bill. at a solid and responsible and i will be supporting it. but itbu is only a starting poi. the fact is we are going to need many more cuts in discretionary spending. the american people and the people who sent uspe here have r signed onto the on to the democrats project of european -- european icing the american economy. citizens never stay want to roll back w spending, reduce the tax burden on families and businesses and restore america' promise of opportunity and economic growth. my colleagues on the other side of the aisle need to get with the program. we will be cutting b spending ad

we need to cut a lot of it. it may not all happen the nexteo two years. the american people might need to speak again and send people to washingtonn in 2012 whol accurately represent theirot interest. this is a big vote today and when we look back, i think americans will say it was just the beginning. mr. president, i suggest the absence of the quorum. >> the clerk will call the roll. >> following this debate the senate voted down at the a republican house pass spending measure that would have had $57 billion over the remainder of the year. and the democratic alternative that would make 4.7 billion in new cuts. the republican backed measure was defeated 44-56. the democratic version 42-58. congressional appropriators are working on measures to keep government programs running. the current resolution expires march 18. the senate is back at 10:00 a.m. eastern.

live coverage here on c-span2. up next on c-span2, a hearing on the state of the u.s. housing market. more than 100 years ago he left china on a steamboat down for america. where he worked as a domestic servant in washington state. a century later, his grandson will return to china as america's top diplomat. >> the current commerce secretary and former washington state governor has appeared on c-span over 60 times. just one of over 115,000 people you can search for and watch any time, all free on line at the c-span video library.

it is washington your way. >> last week, mortgage applications rose by 16% in what could be a sign that the u.s. housing market is recovering. next, the senate banking and housing committee takes a closer look at the health of the housing market. we will hear friend a number of realtors and economists. tim johnson chairs this hour and 45 minute hearing. >> as my colleagues know, we have noticed a hearing for next week with secretary geithner and secretary -- this will begin the long-term discussion regarding housing finance reform and i anticipate many future hearings on this topic. i ask my colleagues to reserve specific questions on that topic for next week. senator shelby. >> thank you mr. chairman for calling this hearing. i hope this will mr. chairman be

the first of many hearings by the committee on the housing market and the housing policy. the well-known problems in the housing market deserve the committee's full attention. over the past three years national home prices have declined sharply from the unprecedented levels reached at the height of the housing bubble not since the great depression has their housing market experience such is the fear correction. today, we hope to learn the present state of the housing market and what the future may hold. how close is the market to bottoming out for example? what will it take her home sales to reach normal levels? how does the housing market very by region and what factors account for the differences? what is the appropriate level of homeownership and why? in addition, it is my hope that today's hearing will set the stage for a discussion of the

future of housing finance. without question our housing finance system is broken. the federal government now backs approximately 97% of all new mortgages. our once thriving private markets have been largely replaced by government programs. i believe this is a dangerous situation that will not only a road innovation and competition, but ultimately reduce the availability of housing and expose taxpayers to future bailouts. the banking committee should fully examine our housing markets with the goal of promptly adopting any needed reforms. i believe we will soon be upon the third anniversary of the american taxpayers bailout of fannie mae and freddie mac. if ever history provides a clear lesson on the importance of congress acting in a timely

manner, it is this committee's failure i believe to address the gse. the demise of fannie and freddie could have been prevented at -- had the committee acted sooner. unfortunately, the gse's were a powerful political force right up until the time that they collapsed. fannie and freddie's disproportionate influence on this committee and congress ultimately cost the taxpayers billions and should be long remembered as a major major policy mistake. finally mr. chairman i would like to take a moment to discuss and recent news reports about a proposal that has been described as a quote global mortgage servicing settlement. based on the facts reported i have serious concerns not only about the substance of the proposal but also about the process. what is occurring appears to be nothing less than a regulatory shake down by the new bureau of

consumer financial protection, the fdic, the federal reserve and certain attorneys general and administration led by elizabeth warren. the proposed settlement appears to be an attempt to advance the administration's political agenda rather than an effort to help homeowners who were harmed by services actual conduct. just last year i warned that the new bureau of consumer financial protection would prove to be an unaccountable and unbridled bureaucracy. i did not expect to be proven correctly so quickly. under the guise of helping homeowners hurt by improper foreclosures regulators are attempting to extract a staggering payment of nearly $30 billion for unspecified conduct. the 30 billion would most likely fund a new slate of housing programs long sought by the

administration but previously rejected by the congress. setting aside for a moment the attempt to end run congress site question whether removing $30 billion in capital through a backdoor bank tax is the best way to jumpstart landing in today's recession. the long-term consequences of the settlement could be even more serious. it would politicize our financial system. for example the proposed settlement requires the appointment of third-party monitors paid for by the banks. mr. chairman, i thought our financial regulators monitored our banks. under this incredible proposal however those days would be over. who might be third party monitors be? a.c.o.r.n. or other community organizers or perhaps other special-interest allies of the administration. i believe we need to know, the american people need to know. is trouble is the substance of

the settlement is the process by which it has been imposed is potentially far more concerning. the proposed settlement would fundamentally alter the regulation of our banks, get this would be done without congressional involvement by this committee. instead it would be done by executive through intimidation and threats of regulatory sanctions. the administration and our financial regulators are clearly hoping that the banks will consent to these new regulations. the strong-arm -- if these tactics can be used successfully on financial institutions, they can be used on any business. i want to be very clear. if any person was harmed by the actions of these banks, i believe they should be compensated to the full limits of the law.

as everyone knows i did not vote to bail out the banks and i strongly oppose it because i believe bank should be responsible for their actions. they should be held accountable here as well. however efforts to help homeowners who were legitimately harmed by the banks should not be hijacked for the purpose of imposing a regulatory agenda the american people clearly rejected in the last election. because of the longer-term consequences of the proposed settlement and serious due process issues involved, i am requesting that this committee began an immediate inquiry into the facts and circumstances surrounding this effort. i am also requesting that the administration and our financial regulators refrain from entering into any settlement agreement until congress, the congress of the united states, has had an opportunity to conduct appropriate oversight on this matter. i think this is truly important for congress to sit on the sidelines. i hope you will heed this

mr. chairman. >> senator reid. >> thank you very much mr. chairman and thank you for providing ron phipps of rhode island to join us. run as the president of the national association of realtors and he along with the skeleton rhode island are a mainstay in our economy and our community so thanks run for being here and gentlemen and ladies thank you all for being here today. we all understand that a sustainable recovery has to depend on a healthy housing economy. and we have seen great turmoil in the housing market over the last two years. i have looked at the testimony of our witnesses. each one of them knows that that the swollen inventories up housing made worse by foreclosures dragging on the economy. so the issues that have been discussed by the chairman and vice senator shelby are how do we resolve these for those are

issues, how do we get these houses back on the market? how do we put a floor into our housing markets to begin to grow again essential not to just the housing sector but to our overall economic development. we also understand that this foreclosure crisis has grown a great complexity because of the allegations of robo-signing illegal behavior of financial institutions, poor supervision by regulators but we also understand as alluded to by senator shelby that the attorney general's of each state have banded together and have taken a lead to protect their constituents and their neighbors and to provide them satisfaction. ..

until we try to resolve this in a comprehensive way, there is going to be a drug, economy, reluctance to move forward not just simply because of homeowners and financial institutions, but the whole array of financial actors. in that spirit i propose and i'm sure there three other proposals, s. 489, the preserving homes and communities act of 2011 to try to address some of these issues. i believe there should be a comprehensive solution. legislatively we should recognize a will take probably, let me say it will not happen tomorrow because things just

don't happen around here tomorrow, and i think that in substance and in fairness there should be the pursuit of some type of comprehensive solution, voluntary because that's the nature of the solution in which the financial institutions feel that it's in their interest as well as federal regulators, state attorney general's, bondholders to come to conclusion and do it rapidly. i think time is wasting. i think we should approach this with the view that every home owner deserves to be treated fairly. some may not be able to maintain their homes but they deserve a fair evaluation of whether there, arrangements and mortgage could be modified and they can get on with their lives either in their home or at least knowing if their effort was made to help them and with that i think you, mr. chairman. >> senator ritter. >> thank you, mr. chairman. i'm going to pass for now and look forward to the testimony of

the witnesses. >> senator menendez. >> mr. chairman, i am going to dever. i know we are going to have a vote and i would like to hear the testimony, and i was unaware that chair is going to permit opening statements. i really want to hear the testimony. i've read some of it already but since we're going to have votes, i will defer. >> does anyone have an opening statement to give? well then, to votes are scheduled for 2:00, and we should get going. i'd like to introduce the first witness, director susan wachter. directors wachter is a professor of financial management, professor of realistic and finance at the worley school.

dr. wachter is the author of over 150 publications and is frequently called upon to testify before the u.s. congress on mortgage markets and financial crisis. our next witness is dr. marcus calabria, who is in addition to being the director of financial regulation studies at the cato institute is also a former staffer for this very committee. dr. calabria has also served as the deputy assistant secretary for regulatory affairs at the u.s. department of housing and urban development prior to his work on capitol hill. we welcome you back to the committee. chief economist and senior vice president at the national association of home builders. director speed is responsible for the nehb economic trends,

research and the home-building industry and consumer preferences as well as economic analysis of government policies that affect housing. welcome, dr. crowe peery our next witness is mr. ronald phips the president of the national association of realtors representing 1.1 million members involved in all aspects of the residential and commercial real estate industries. phipps has previously served in senior leadership positions within. welcome to the committee. >> jeffrey lubell has been executive director of the center for housing policy since 2006 and has been the recognized expert in housing and community

development policy. he has previously served as the director of policy development division in hudna's office of the element and research. thank you for being here, mr. lubell. dr. wachter, will you proceed? >> chairman johnson, a ranking member shall be and other distinguished members of the committee, thank you for the invitation to testify today. it is my honor to be here to discuss the current state of the nation's occupied housing markets. at this time, housing markets for single-family own homes are fragile. the recent data available for the residential price index show that home prices continue their decline in january, 2011 with prices down over 34% for the peak value. for the fourth quarter of 2010, again, the most recent data

available, the census bureau reports homeowner vacancy rates has increased. now at 2.7% up from 2.5% in the third quarter of 2010. this is merely a 50% higher than in the historical average rates for single-family homes. the census estimate is that home prices will continue to decline in the range of five to 10% in the coming months. this is due to the unsolved inventory plus the so-called shadow inventory. their expectations of continued price declines will in itself detour home buying. thus the most pressing issue in the housing market today is how and when the excess inventory of homes will be resolved. although this supply overhang threatens the crisis further, national housing prices may not be far from reaching a fundamental.

the national house price to event ratio is calculated by case schiller is near the level observed in 2002 to 2003. prevailing was not, i believe, significantly stated. today, even lower interest rates and the current rent ratio which is near that is not inconsistent with the housing prices nationally. homes today are also affordable relative to the income according to the national association of realtors housing affordability index, a family of the median income has 185% of the income needed to purchase the homes and of course that leads to the major issues of the ability to qualify. but nonetheless, in the short to medium run the biggest threat faces the housing market is the uncertainty surrounding the supply overhang. assuming the house what information rates do return to their historic levels and they are we believe that as of now, the vacancy could be absorbed

and i emphasize could be in as low as two to three years so that it is possible that by 2014 markets could reach the national basis. but in the short and intermediate run, the slogan of the job growth, the rise in the interest rates or the decline in the availability of credit would delay this and cause further price declines and even a spiral as we saw a year or so ago. with or without the stabilization of prices the properties will continue to account for the large proportion of total sales in the market. the recovery will defend upon the continued strengthening of job markets and increased consumer confidence. for an incipient recovery to take hold, the availability of financing and be a delay of the private capital to finance mortgages is also crucial. given the policy questions before this committee, it may be

useful in commenting briefly on the broad issue of housing finance. borrowers who qualify for home loans are able to access historical and low mortgage rates for 30 year fixed-rate loans, which is helping to shore up the market. questions about whether such mortgages will be available or what will replace them is likely to be an additional and going forward increasingly important factor creating uncertainty in the housing market. the housing finance system in the future and that is yet to be created will be less vulnerable to the economic disruptions if the borrowers continue to have access to standardized mortgages that are not subject to refinancing risks. with that i think you and open up for questions. appreciate it. >> thank you, dr. wachter. dr. calabria. >> chairman johnson, a ranking member shall become a distinguished members of the committee, i want to thank you for the invitation.

it is a pleasure to be back here on this side of the table. for a change. i want to start with saying you're going to hear a lot of predictions about and discussions about where the housing market is at and where it's going, and i largely agree with those. i think there's a consensus about where the markets had and a consensus about the fragility and i think there's some consensus about the direction of prices. i touched on in my testimony, so rather than repeat what everybody else will say, i think i will spend my time talking about my point of departure with other witnesses and that's not to minimize the points of agreement. first, i think we need to keep in mind you can't fight fundamentals. i think to a large degree, we spent the last four years trying to keep price is about what they should be in terms of market clearing levels. alternately prices will get to where they are going and that is driven by households and it's driven by income more than anything else. and we are seeing it get there. i want to see if i can submit for the record an article that was in bloomberg yesterday and i think the title says it all, u.s. home sales accelerate the price declines renowned.

and i think the point that i would like to make is housing markets work like every other market. if you want to clear excess inventory, prices have to come down. and that's the way we need to do it. a point i also want to make is how we've seen the stabilization of the national level, there are tremendous differences across localities. while again we see be in homes to immediate income about a around three, that's the historic trend, and that is i think a healthy trend. that's where the healthy market is that. in san francisco the multiple was still a, so there are a number of markets that are still relatively affordable. i think it is the policy is almost all of the federal policies we have, whether it's federal reserve interest-rate policy, whether it's home buyer tax credit hacked through the demand side of the market and the reason this is important is rigid demand you think back to econ 101, essentially the supply curve there is demand forces prices up, and the markets where you can bring demand quite

easily you end up having excess supply. this is best was treated. i talk about this in my testimony. in san diego they are you essentially the same size, it santiago over the last year has seen price increases a bit minor wear as phoenix has seen in the% decline. part of that is driven by despite the similar population and migration trends, the number of the voting permits in phoenix is twice that of san diego. some local conditions very much matter. we cannot lose sight of that. and i am concerned what looks like a sterilization at the national level is really just an offsetting of what's going on in very different markets and that's something to keep in mind. the other point i want to make in terms of the foreclosure price is ready to keep in mind - equity alone is not the cause of most delinquencies. it's almost always coupled with a life event like a job loss with its health care cost. yes, there are some degrees of strategic defaults which are those that simply walk away because they'll have enough money or the prices declined. i think those are under 25, 20%

and i don't think they should necessarily be the focus of policy so i do think we need to be concerned about solutions that focus on the equity. i think we need to be worried about the impact of the housing policies and our kalona should on the labor markets. it's well appreciated. the ownership rate usually the higher you have and structural unemployment so i think about a percentage we are seeing today is a direct result of the ownership rate we had going into this crisis combined with the foreclosure assistance programs and the other things in the marketplace. i would also say in terms of a balancing of it, i think the risks are much greater if we keep prices above market clearing levels than they are if we allow prices to overshoot on the way down and there are risks if we allow them to overshoot on the way down plant echo something dr. wachter said which is the expectation can have a considerable and kept on keeping homeowners on the sidelines. we are far better in terms of turning the market around if we get to the point by year's believe prices can go no

further. and in my opinion we are not there yet. i want to close with saying i am greatly concerned, as i am sure members of the committee are the taxpayer stands behind almost all credit risks in the mortgage market. we are potentially looking at for the bailout. i think this is incredibly unhealthy. i.t. we recognize under all get ministrations three proposals the interest rates will go down and of course a lot because of the inflation or federal policy. we need to prepare for that now. and i think we need to move away from the sense of having the market not take this risk and passed on to the taxpayers. i noted in my testimony there's a tremendous amount of capacity outside of the gses and the financial industry and i had to go into further detail of that with the q&a and with that, thank you again and i look forward to the discussion. >> thank you, dr. calabria. dr. speed? >> thank you, mr. chairman. my name is david crowe. i'm the chief economist for the national association of home builders. a trade association of roughly 160,000 members who work in the

residential construction industry. i appreciate the opportunity to testify today on the condition of the nation's housing markets and the prospect for the recovery in the housing sector. the state of the nation's housing market is improving but fragile. while the bottom of the market is behind us, the road to the robust recovery for housing remains a long and difficult path. high unemployment, and available by years and builder financing and consumer uncertainty our challenges for the home building sector. the weakened housing sector will hold back economic growth. traditionally, housing has led the u.s. economy out of recession. in the previous recoveries, housing grew at 28% in the first year of the recovery. in this recovery, the housing has grown at less than 5%. construction unemployment remains the highest of any major area of the economy with more

than 1.4 million jobs lost in residential construction and an equal amount lost in the building supply sector. national housing prices stabilized and early 2010 but have weakened due to the elevated share of distressed sales. however, in many areas the ratio of house prices to income has returned to the historic levels. and on a national basis the priest income ratio has returned to this historic average. i think dr. calabria mentioned the same. currently housing production is running around 600,000 units a year. well below the long run trend of about 1.7 million new homes that are necessary to accommodate the population growth and replace older housing stock. the gap between the current production and the trend housing construction is the result of multiple factors. first, the excess existing home inventory is held back prices in

the construction of new homes. nevertheless the inventory of existing homes has fallen from over a year's supply to about a month's supply. inventory of new homes for sale are at a 42 year low and ready to occupy new homes stand at an all-time record low of 78,000. foreclosures remain a drag on prices and demand and are likely, not unlikely to fade. however, foreclosure remains concentrated with very high rate in six states that hold almost half of the foreclosure inventory. one promising sign is the pent-up demand from the deily household formations. young people in particular have not moved out of their parents' home or have been made as roommates. we estimate approximately 2 million households formations have been believed. these households constitute a

shadow demand that will be unlocked as the economy improves. finally and most importantly in terms of the long run health of the building industry the lack of financing available bolted small builders is holding construction back where the demand exists. small businesses are at the heart of the residential construction sector who typically rely on the debt financing. for such firms the credit crunch persists and lending conditions are as tight as ever. as a result of these factors, the near-term outlook for the new construction remains cloudy. these sobering signals have persisted despite record high housing affordability and historically low mortgage interest rates. yet the tight by our finance and challenges with appraisals means housing demand remains at low levels. the forecast is that new home sales and housing production will remain weak in the first half of 2011, pick up slightly in the second half of the year

and build some momentum in 2012. given this week but improving the environment, we urge congress to approach housing policy issues with caution. for builders these policy issues include providing a secondary mortgage market that ensures a reliable and uniform credit for home buyers. preservation of the mortgage interest deduction and other housing tax rules and unblocking the lending channels to permit home builders to contribute to the economy where and when the demand exists. we will soon present legislative proposals to ensure adequate credit availability to the builders. thank you for the opportunity to testify and i will look forward to your questions. >> thank you. >> chairman johnson, a ranking member shall be, members of the committee, thank you for inviting me to testify today regarding the current state of the nation's housing market. my name is ron phipps, the 2011

president of the association of realtors and i am proud to be part of the four generation family on a residential real-estate business based in ryland. my passion is making the dream of homeownership available to american families. i'm proud to testify today on behalf of the 1.1 million realtors who share that passion but also on the 75 million americans who own homes and the 310 million americans who require shelter. most americans understand the value of homeownership and aspire to it. they measure their personal financial wellness in large part in terms of homeownership and the equity they have within at home. o earnings juan home is the first commandment of the self-reliance for most families. so what is the state housing? in a word you've heard repeated its fragile. the housing climate continues to be erratic. mortgage rates jumped from their exceptionally low rate of last

year and have risen slightly expecting to go a little bit further. but the consumer continues to prevail the economy effectively retiring the housing recovery. and we believe the economy may not be able to rely heavily on those consumers with stable jobs to help the overall economic recovery. thanks to some, job creation existing home sales will likely see improvement 2011. however, changes in the median home price will be determined by how fast inventory is work on. assuming the piece of home sales can hold at a near .53 million units this year, than the industry absorption rate is to keep home values broadly stable. this should also observed some of the shadow inventory that will be coming to the market. if we consider the future of federal housing policies we must keep in mind the immense value that the sustainable

homeownership provides aside from the financial benefits over the many years homeowners should improve the community's increases civic participation and improves the test scores. these are benefits that make homeownership a pillar of society. what makes homeownership the pillar of the economy is its ability to create jobs. our research suggests 1 million additional home sales in 2011 can create 500,000 additional private sector jobs. to the housing alone may not polis out of this economy helping its recovery will severely negatively impact the overall economic recovery. we believe the pendulum on the mortgage credit has swung too far in the wrong direction and it is hurting consumers and the economy. the harmful product that led to the bubble and the crash are gone and no one wants us to be brought back. it is making it harder right now for those who can afford to

obtain the saved mortgages to further the recovery. let's be clear, realtors agree the reforms to prevent the recurring of the housing market meltdown. but a necessary raising of down payments and other mortgage costs will have start ramifications for the overall economy. realtors believe that federal regulators should honor the congressional intent by crafting qualified residential mortgages that few exceptions include a variety of traditional well underwritten products for 40, 15, ten year fixed rates and 721 rounds. those flexible downpayments would require mortgage insurance. it is likely to shape housing policy for the future. it's very important. the precursor for the future of the gses is likely to be eligible for por que rn policy doesn't see the congressional

intent and will displace a large number of potential home buyers which in turn will slow the economic growth. further, increases in the fees from the fha and the gse overlays will make it more difficult for people to finance. ten to 50% of the qualified purchasers are being precluded from obtaining mortgages. and remember every two additional close transactions generate 500,000 additional sales and can actually produce 250,000 jobs. during world war ii, president franklin delano roosevelt said a nation of homeowners is on comparable. in the 80's president ronald reagan advocated the need to preserve mortgage interest deductions in order to promote the most important aspect of the american dream, homeownership. americans realtors agree. we see a bright future of housing with america. we ask the congress to maintain a positive aggressive forward-looking approach to overcome the obstacles we currently face and ensure that

the housing and the national economic recovery sar sustained. i think you for the opportunity today and as always, the national association of realtors is ready, willing and able to work with congress to create a bright future for our children and grandchildren. thank you. >> thank you, mr. phipps. because we have to votes, the committee will recess for a short time and resume the hearing after the votes. [inaudible conversations]

>> [inaudible] >> thank you a maturing johnson and ranking member shall be and distinguished members of the committee. for the opportunity to testify. my name is jeff lubell, the director of the center for housing policy. a research organization based in washington, d.c.. we are the research affiliate of the national housing conference, a nonprofit policy organization dedicated to helping ensure safe, affordable housing for all americans. i've been asked to focus on the state of the housing markets faced by working and lower income americans. i'm going to try to do it with the aid of some illustrations here to get at the bottom line is that despite the housing market decline in terms of the home prices, housing affordability for the low and moderate income families have actually worsened. so i know it's counterintuitive, but i will explain why basically the lower home prices primarily benefit those americans who've bought a home in recent years. if you stay where you are or if you are a renter, things have

actually gotten worse and the reason is incomes have gone down, home prices have only gone down slightly about 1% for the working families where as the rand has gone up. succumb costs go up, incomes go down, the number of americans with severe house cost challenges increases. i have here a figure from the worst case report which chairman johnson site in his testimony in his opening statement. as of 2009 come 17.1 renter households had worst-case need for housing. that means to spend more than half their income for housing and have been some fairly substandard housing and have very low-income rent and didn't receive rental assistance. that's an increase of 20% in just two years and an increase of 42% since 2001. the primary factors are falling incomes increased competition for affordable units along with limited availability of rental assistance. but housing affordability challenges are not confined to

their mentors and not confined to the very lowest income families. next slide, please. we've recently released a study looking at working households. these are households working at least 20 hours or more per week with incomes up to 120% of the area median income. this is a group of americans more than 40 million households, 40% of the market. nearly one in four paid more than half the income for housing costs. one and for working families spend more than half of their income for housing costs and 2009. that is 10.5 million households nationwide, an increase of 600,000 households in just one year. as the table shows, there were increases in that share of working households with severe housing cost burdens throughout the country. basically costs went up by a statistically significant amounts in the 25 states. those are the states that shaded blue. they include alabama, new jersey, north carolina and tennessee.

there were -- >> [inaudible] >> the share of working families who spend more than half of their income for housing went up by a statistically significant amount in those states. the 25 states they went down by a statistically significant amount in paris of increases in other states like in hawaii, but because the numbers were not large enough they were not statistically significant. so we report -- >> [inaudible] >> -- why did they go up? >> [inaudible] >> so the reason those numbers went up is that incomes went down, people had less opportunity for work, and so -- and the event went up and the owner went up only slightly, 1%. we talk about the affordability and the market. that's for new housing. very few people were moving. most people are staying where they are and for than the

problem has gotten worse. as shown on the next chart, the housing cost challenges affect a broad range of family types. they are split almost evenly between the renters and the owners. so, basically we have housing cost challenges among voters as well as renters. the most prevalent among families of the bottom of the income scale experienced by families across the spectrum including families with incomes between 80 to 120% of the median income so we have problems across the income spectrum. my testimony includes some specific numbers about the communities. we have very serious housing challenges in the rural communities and we have an increase of about three to 4% of the number of homeless families between 2008 to 2009. i do want to just make a really quick point in my last of two seconds about the impact of the rising energy prices. the cost of living in a place is affected not just by your shelter cost but your utility costs and transportation cost.

as energy prices rise, affordability is going to get worse. and there is a huge connection between housing and transportation costs and they are related. families think about them and treat them as a single budget item. if we want to address this we think about how to improve our coordination of housing and transportation policy to reduce the cost and improve the overall affordability. i look forward to your questions and thank you for the additional time. >> thank you, mr. lubell. dr. wachter, can you discuss the structural housing recovery that may exist in the financial system? >> there is right now course a great deal of uncertainty about the future structure of the

housing finance system. and while that may not be weighing on the housing prices at this moment, as we go forward, that is likely to be an increasingly important factor in the uncertainty of the future of the housing crisis. why would like to reiterate that housing is different than most commodities in that it is an asset. this price is very determined by household expectations of the future. so, flexible, future scarcity of housing finance would impact the housing prices today. >> mr. lubell, are there any barriers to financing affordable rental housing in the current market? if so, how can this be overcome?

>> the short answer is yes, there are barriers to financing affordable housing, particularly affordable rental housing. but also the owner occupied housing, and i -- to some extent they are starting to resolve themselves. the market for equity, for example in low-income housing tax credit has rebounded. but they're continues to be difficulty on the debt side, and one of the things that is really helping is the availability of credit through fannie mae and freddie mac. i know it's not popular these days to talk about the benefits of those entities, but one of the things that those entities are doing is helping to ensure the availability of credit for affordable rental housing particularly at a long term fixed rate interest which is extremely important for financing and affordable property. and those entities and the lending has actually on the

multifamily side, the multifamily side hasn't incurred the same losses we've seen on the single-family site. and so it's important to understand that. i do think that one of the problems we have is the number of families that need assistance in terms of affordable housing has gone up as shown by these charts and there's not enough subsidy available to fill the gap between what the market can pay and so that this in the continued interest as we talk about how are we going to meet the growing challenge of affordable housing in america. >> dr. crowe and mr. phipps, and you discussed the idea of the potential homeowners are not creating a château demand. would you explain what sectors would bring that demand out of the shadows to help assure the excess housing supply.

>> first to you, dr. crowe. >> thanks, senator. several things. one is jobs. young people who have not yet moved out of their parents' home or have remained as roommates are unable to because they either don't have sufficient income or they have no income. and so, the return of consistent job growth will be the first thing. and the second thing is some clarity about where the housing market is going. i think jeff is correct we are going to continue to seek rent increases because we aren't building enough rental units to keep up with the demand. so rent is going to go up. that's when to retard formations and as the house prices remain uncertain, that's going to retard those folks who are moving into a home because they don't want to buy a home as susan mentioned until they are short of the long-term sustainability of the house price.

>> mr. phipps? >> senator, the interesting thing when we testified as the four of us use the word fragile to decide the market. and i'm struck by the parties a handle with care. the problem is the media treats the realistic as a single market across the country. it is all local. one of the things we need to get back to is what is going on in the local market and understand that the financing sources are in fact national. the challenge we are faced with right now is a lot of people who should be able to obtain financing are able to. when fannie and freddie have credit scores that average 60 up from 720 we've got 15% of the market that could help to absorb that shadow inventory. there's a second piece of the shuttle inventory we would like to get it out there and resulted so we can go back to a normal, stable dynamic markets. but there is an opportunity for short sales in the market which just hasn't been realized in an effective way.

that is clearly better for the investor and actually in most instances better for the families. the investor and supposing 37% of principal on average versus 50%. but the process of getting the short sale approved in a timely human fashion is just nonexistent. the final point i would make is we need understanding of mortgages and finance universally. it needs to be something people would stand, and i believe the consumer understands the house and with your buying, but they still have great difficulty understanding what the hundred or 150 pages of documents the synnott closing which by the way they are told you need to sign these now or you won't get the house. that process of understanding and comprehending what happens is really important in order for us to get back to a normal informed market. at the end of the day we need to get through the overhang, we

need to have that access overhang resolved so the market does what markets do and frankly there will be price stabilization we will get beyond that. >> senator shall be? >> thank you, mr. chairman. dr. calabria, some housing interest groups have called for more regulations to govern the foreclosure process which would lengthen the time to complete the forclosures to read some of these even called for foreclosure moratorium. will would be the consequence is in your opinion of these policies on housing market and the economy? >> in the aggregate we would be delaying the interest of the housing market to reach an equilibrium of getting the inventory out of there so i am very concerned that while we need to deal with those -- the vast majority that can't be helped me to move that quicker and it's important to keep in mind from 30 to 40% of the for closure or on vacant properties and so those properties don't do anybody any good so i would

actually say what we need to have is more of a two track approach where we focus on families that can be helped but those we know are not going to be helped or that the unit is vacant that needs to be sped up and that process needs to be quicker. i also want to comment very quickly on a couple of things that the chairman mentioned which is that we need to keep in mind we have to get back to the normal market we have to remember and to those of five, 2006 we are not normal markets and we don't want to go back to that. schenectady warehousing buckles? >> a warehouse in doubles and i believe that professor people mentioned in 2002 to 2003 the was more like a normal market except then massive refinancing boom in 2003 -- >> going back to that is pretty slim i hope? >> in the short term, yes. but this is a country where we have had a long history of housing doubles every ten to 15 years. so i hope we have learned something this time around but i'm not convinced of it. >> dr. calabria, has the force of the prospective homeowner been lost in the discussion of what the government can do to mitigate the market for

cultures? >> this is an important point and i'm sure many of us know, i have friends to try to buy short sales and homes on foreclosure and have those transactions fall through. and this is important to keep in mind which is any time we try to push up prices artificially, we're simply transferring wealth from the potential buyers to sellers and i certainly don't think that is legitimate -- >> and interfering in the market economy. >> we are. we have to have the market find a price -- i would reiterate to meet the fundamental way of getting that demand out there is to get prices to the point by years don't believe they can go any further down. and right now i would have concern that potential buyers feel like if they buy something today they will lose money on it so there's a little bit of wheat to see. we need to get past that point where the only direction for prices to go is up and we are not there yet. >> dr. crowe, in your testimony you state the national association of home builders urges congress to agree to a definite solution regarding the

future of the government sponsored enterprise. and accepting the need for the reasonable transition period of understanding of the deliver to each of congress would you agree congress needs to begin considering how to reform our housing finance system now? >> senator come to simply answer is yes. we do need a solution to this and however, we do need to understand the fragile nature and have the transition, and i would also say that the nahb also supports some alternate backstop by the federal government, and in order to maintain a free year fixed-rate mortgage in this country. >> i want to get into the ham program provided by president obama to help three to 4 million struggling homeowners. to date the program has put only

520 to fill some people in permanent loan modifications. bye contrast, nearly 800,000 people dropped out of the program. this is significantly -- significant i think and disturbing because of the special inspector general neal brodsky of t.a.r.p. recently pointed out in testimony before the house financial services committee, and i quote, "sable charnel modification often leave far worse with the principle -- principal outstanding on their loans. unless home-equity depleted savings and worse credit scores." dr. calabria, do you believe with this analysis? >> i think the inspector general is 100% correct on this and i do think we need to be concerned that many of the people who've been to these modification programs have come out worse than they've gone. it's also important to keep in mind we simply have not and the administration are in the last

administration either hasn't put for the baseline and we don't have the discussion over who should be helping, what is a reasonable number and reasonable expectation. >> is it a good use of taxpayers' money? >> i question whether it has been used effectively. >> okay. mr. phipps, in your testimony, you state that frequent increases in fees from both the fha and the gse in the credit overlays from the lenders weren't on necessarily increase the cost to the home buyers and discourage these consumers who can't otherwise afford the mortgage from participating in the housing market. in both cases, these were existing fees designed to protect the taxpayer. if these reasonable fee increases to the consumer from buying a house, is this not indicating the person is better off renting perhaps? and do you support charging

actuarially sound fees at the fha and the gses to bring the further government bailouts, in other words to hid at taxpayer? >> senator, the short answer is that we believe that the fha serves a specific purpose, and it's filled the void in the market. it's a larger percentage and has historically. there have been actually several increases recently on the fha each time the increase threshold becomes higher. there has to be a balance between cost and benefit, and we actually welcome that conversation and that analysis. the short answer we think the stepping up the cost need to reflect the demand that the market will support. if you raise the first level about the latter too high some people don't get on and we have further compromising of overall value. so, it is woven. it's absolutely woven. we want to get back to a normal

market, where people who can sustain the mortgages have access to the mortgages to enjoy the gift, the benefit of homeownership. >> mr. chairman, i have one last question if you will indulge me. dr. calabria, in your testimony you state, and i quote, "unemployment is the primary driver of the mortgage delinquency." previously this committee heard testimony from dr. paul willing of the federal reserve stating coming and i quote him, "went home prices fall some borrowers can along the positively sell and then the income disrupting life events really take a toll. " one of them he referenced that day was unemployment. does this analysis mean that the best way, and there are other ways the best way to help homeowners is to spur economic growth. >> i would absolutely agree with that. i think a significant amount of the problems in our housing and mortgage markets would go away if we brought unemployment down

significantly. >> do you disagree with that, dr. speed? >> no, senator. >> what about you, doctor? >> on employment growth is a major driver and in fact, we need to strengthen it in order to have the housing market recovery. >> thank you, mr. chairman. >> senator menendez? >> thank you, mr. chairman and for your testimony. i want to talk about liquidity in the marketplace. and, you know, it seems to me, and i would like to get your perspective on this, how do we get banks to commit to lending for real-estate projects again? particularly, you know, right now it seems to me except for a very high asset class, for example on, you know, which attract institutional investors like the luxury high rental market certainly in our area of

new jersey. other than that, you have underwriting criteria on lenders where projects that are performing borrowers have current debt service, for the current and haven't had a blip in that process. ultimately finding themselves because they don't appraise today at level of the loan closing totally, you know, stopping projects in the midst of the project even though loan is performing. so, i look at that liquidity issue and i look at the flip side of the liquidity issue on the consumer side, and see the changes in the underwriting criteria, and we certainly understand legitimate changes to ensure we don't have people buying homes they can't afford. but by the same token, you know, if we have had a 25% drop in real estate value but you could

get 10% down based on your income, that would be taken whatever price level you want, $400,000 home, which $40,000. now you have to put 25 or 40% down so that is anywhere, you know, nearly $100,000. i don't know how many people have $100,000 to put down on of home. so i'm wondering from your perspective, how do we deal with this challenge of the liquidity crisis both for the actual moving forward in the market by those that develop it and from the consumers who seek to purchase it? >> i would like to take a stab at that, senator. i appreciate the question. on the production side, the builders side they are having that difficulty. we have been serving builders for six or seven years through

the boom and into the past and what we find is the greater and greater percentage of them are being said turned down at the financial institutions, and that is the source of funds. builders are small companies and go to small banks to borrow the money to build the houses to sell to their customers and they can't get that money. we've gone to the regulators and we say there's something strange here. we don't see any differentiation in the banks' response between the markets that are in good shape and the markets that aren't. we understand why the bank might say no and a market that is overgrown with excess inventory but we don't understand why they are saying no in a market that's showing signs of recovery and people want to buy a house. we don't get satisfactory answers from the regulators. so in fact c-17 will be representing legislation we hope he will consider that speaks to some of these regulatory

overreactions, things like making pipelines absolute so the regulator has guidelines and yet they turned them into absolute. so there is no braking those barriers. or evaluating properties developed properties at their distressed level instead of the bill out level. but it will be that build level evin chollet that we can't seem to convince examiners that that will correct itself as that market correct. requiring a payoff of a loan when its current but the sell rate hasn't been the same as it should have been and therefore the bank decided they want their money back even though the builder is making regular payment they don't have the sales rate they promised to be finally we would like to see the sba loan system more friendly. it's not a useful program to the home builders right now.

>> anyone else? >> if one starts with the observation that many banks tend to essentially be spread lenders. we recall the sort of a borrower at three and landed six and b of the golf course on six that is a case, there's a degree of truth to it. my point being is that with the -- if we start with the observation that despite the financial crisis, and sure depositories balance sheet is actually increased throughout this crisis and deposits actually increase. what they have done, however, is greatly change what they are holding on the balance sheet. part of this is their incentive. we set up a situation you could easily borrow from the federal reserve near the zero putting the treasury urning very nice spread it is absolutely risk free. and part of that, i mean if you look at the decline of the small-business lending and the commercial bank is almost equal to the increase in the bank lending in terms of government

debt. so we sought out who we have lent to, and what i think is important is we need to change the incentive system of the banks and we need to question as well while the federal reserve has a in the interest of the reserves in the way to get this out of the crisis, it doesn't make sense in the situation where there's not enough liquidity to get out to the economy to pay interest on the reserves. we are encouraging banks to hold excess reserves as a point to keep in mind, commercial insured depositories have a trillion dollars of cash just sitting around. so, there's not a lot that capacity. it's really how we change the incentive system so they put the fund into the risk making like instruction but also small business and other things. and i really think we need to look at monetary policies as a component and with the fed is doing. >> center, the only thing i would add is on the consumer side, your fica stars become the equivalent of your s.a.t. and if the score is still a certain threshold of the lender doesn't look at you in a holistic approach. we need to get back to the

common sense holistic lending and to take the amount down the whole financial profile of the potential borrower when analyzing whether to give them financing or not you don't need 760 as a minimum credit score to be credit worthy and to the honorable in terms of repaying the mortgage. the pendulum swung so far that the rate of default over the 2,009 instrument of mortgages issued at 1.2% which is well below the normal we would have seen in the early 2000 range. so getting back to the medium is important. we've been meeting with the lenders and fannie and freddie and fha to say please, bring it back to the centrist common sense sustainable criteria. we just don't see that and act as quickly as we would like it. but 15% of the market if we move from five to 5.75, that is a lot of transactions and a lot of jobs. but, the problem still is very much present in the marketplace.

>> thank you mr. chairman. i have questions for mr. lubell that my time is over on the affordable housing. i would love to see your answer. we look forward to seeing your legislation and working on trying to change this dynamic. because i don't think we are going to move the housing market until we get the regulators moving in the different direction. thank you. >> senator merkley? >> thank you very much, mr. chairman. let's continue on in the conversation about credit. and specifically mr. crowe, in your testimony you noted that most importantly for the nation's small home builders, congress and financial institutions must work to unlock acquisition development and construction lending channels and like you mentioned that you made in the future a legislative proposal and i just wondered if there was some fund you would like to preview for us. >> thank you, senator. i was given an opening by senator menendez, and so i took it.

in summary, what we are looking for is the concourse to throw its weight of downed if you will because we haven't had any success in convincing the regulator that there is seems to be one systematic regulation concerning home builders throughout the country even though, as i think you heard in testimony today, the markets are dramatically different across the country. and so we have recovering markets in texas, for instance, and some other states and not so much recovery in other states and yet we see no differentiation in the ability for the builders to borrow. so we are looking for is a little more sanity to the regulatory oversight that would allow financial institutions who tell us they are perfectly comfortable with lending to real estate in certain markets. but the been told no by the regulator. cynics recently is a cap on the loan portfolio that can go to

the homes? >> yes. it's several points, but one of them is a guideline of no more than 100% of the capitol going to the real estate is a guide line nevertheless being used as a hard and fast rule. so if the institution has that much loan on its balance -- on the books already, it can no longer had any even though there's another good one out there. >> and individual was telling me on a commercial building they went to get a realistic loan for that building, and in the and the bank did it is in on a real-estate loan lowering the collateral which was an insane decision from a common sense point of view but is the result of this type of cap you're referring to. mr. phipps, i appreciate your point about the intangible value of homeownership. it's certainly something that i feel strongly about, but do you want to mention what you consider to be the intangible

benefits? >> at the end of the day we all need shelter. we need a place to live, and when you look at the benefits, we have scan in the game, center, and i get entertained by that scan of the game is a down payment. schaenman the game is my name on the deed. saying i own that property but i have an investment for my family. now we have gotten away from the discipline of taking another 30 year mortgage and paying it off. but that is the concept, it worked for my parents and grandparents. we need to go back to that. but that's an asset that really has a lot to do with my sense of place, accomplishment and self-worth and benefit to society. we as realtors are committed to the concept of self-reliance. we believe home ownership is a prerequisite for that. and when you get the benefits for the neighborhood, for

community, test results, etc., there are all plus. we watch with great caution because this government has made historic commitment to homeownership. we think in the highest per person for over 100 years. and the game has been played this week for 100 years, so we are very anxious about any effort to reduce the number of bases on the dimond or change the number of things or change the number of the doubt because we think home ownership at the end of the day is right for our children and grandchildren. ..

more likely to go to college, more likely to have higher incomes, more likely to have lower dependence on any future public payment, which is not just intangible. that is tangible. that is a real coming of the tennessee. and it bothers me to hear folks saying that we shouldn't press for homeownership in our society, especially because what they are responding to is the impact of predatory mortgages. if a family was unsuccessful on an exploding interest rate markets, that doesn't mean they wouldn't have been successful if they had been offered a straightforward prime mortgage.

i want to -- in that sense, whenever nature programs is interest reduction in at the very valuable program of the long-term for reducing the size of payments. one thing i've been interested in is more hope at the front end. that is for working families, often it provides only a modest amount of assistance, especially when interest rates are low. a $200,000 house is 5% -- $9000 a year in interest in your first year, which is the highest interest and 9000 per couple is less than standard deduction. for that couple would not get any benefit from the home mortgage and just reduction in lafayette additional itemized bill expenses. and if they did, he would be a modest amount. and so, i have been floating the idea under the temporary down

payment tax credit or better yet ability to use those funds at closing, but permanent. every lease permit me to expensive and too hard for people to seize on, but really what i say as he is the down payment credit as a short-term stimulus. in terms of working families, having matching assisting to get into a home to begin with, spinning a little money in the front end is highly valuable. we spent around $100 billion s-sierra on the home mortgage interest reduction for somewhere around $5 billion a week can make the transition. in the short term, my sense is that it would help absorb the excess inventory to several folks have mentioned. so i thought i'd invite you to share any thoughts about that. >> senator, we actually instigate the proposal and were very very intrigued by it. the experience of the tax credits were effective in

stabilizing the market. in australia right now they have that type of proof and that is working extremely well. we practice a conversation with a mortgage interest reduction and believe the choice is and we think that is the ultimate thing we will defend. but we certainly support and encourage programs that provide for homeownership opportunities for that. >> from the homebuilders point of view, any thoughts about that? >> they think a similar comment. down payment is the single biggest retardant for your home buyer to get into a home. any assistance -- in fact, we still favor higher loan values, lurid down payment mortgages with the appropriate premiums paid for the risks. and so if there's another way to subsidize the down payment for some tax credit, we would certainly be supportive of that, certainly with the caveat we

still believe the mortgage interest is very important to the broad piece of households. >> senator, if they made, one thing that's disturbing for me in a conversation about down payment. the assumption is that someone puts 5% down, but so they put down. closing costs are 2% to 5% additional. we talk about down payment, when he tried let the real cost the homeowner has to bring to closing in order for that to happen. it's more than 5% or 10% or 20%. if that amount plus related closing costs. >> point very well taken. mr. chair, table from a time, so i will follow up with additional comment you all have. thank you. >> thank you, senator merkley. the housing market has several challenges to overcome. we took the steps in.frank by strengthening underwriting standards and risk retention, but we still have work to do.

i look forward to continuing this discussion about the future housing in america and the coming weeks and months. i am hopelessly explorer the board, we'll have more areas of agreement than disagreement. it is essential that we get this right in a sustainable housing market for american families. thanks again to my colleagues in our panelists for being here today. this hearing is adjourned. [inaudible conversations]

>> ireland's new parliament officially alike did edna kenny as prime minister on wednesday. his party won 76 seats in ireland's favorite 25 elections and formed a coalition government with the labour party. following members speeches supporting or opposing the new government, we will hear mr. kenney's first peek at the head of government or prime minister. this is an hour, 20 minutes.

>> it's a great honor as the youngest member of the 31st to rise today to nomination deputy edna kenny. edna kenny bring to the office integrity, honesty and they work great which simply cannot be surpassed. he will use his skills as a leader to preside over a government commitment to public service at a time when such commitment is so urgently required. his ability to recognize the talents and skills of others places him in a very strong position to appoint, lead and preside over a government with the capabilities and determination to work for this nation and its people. at a time in my generation is faced with the grim prospects for forced immigration and unemployment blights our society yet again, we need to restore

stability, credibility and hope to this country. the people expect, deserve and require a government led by one who will put in place plans that are not just restoring our economy, but ultimately build a fairer society. i ensure my predecessors will start a nomination of people that at the core of their nominee was honesty and decency. i find myself in the enviable position today is not just hoping that an identity in kenney, but also my colleagues on these benches and ensure colleagues and outside, knowing that at the core of edna kenny is honesty and decency. today marks the moment in this country's history will be said about realizing the hopes, dreams and aspirations of our people. today the period of mourning is over for ireland. today we hang out our colors in

together under deputy edna kenny's leadership, we move forward again as a nation. it is with pride, honor an absolute delight that i propose to the election of deputy edna kenny is the next patent of this country. [applause] >> it is my privilege on behalf of the labour party to in a motion that the deputy be nominated for vice president. this is an historic moment, a moment for the two largest parties in the state to join together to form a strong and stable government. a government that suffer national interest is best served by putting the people's interest at the heart of everything it does in every decision it makes.

the 31st was one of dramatic change. the government elected here today will have the strongest mandate in the history of our state, a mandate to strive with every fiber of our being that we can be proud to have time to. we face the task with a sense of privilege and with determination. this would be a partnership government, a national government, with the best of both parties, labor and fine gail party connect to serve those who look for hope, for leadership in for unity of purpose. that purpose now in the democratic program would be to ensure that ireland's economic strength are used to benefit all of her people. and the words of a program written by tom johnson for maybe two years ago, our purpose philosophy to secure that no child shall suffer from the lack of food, clothing or shelter and to provide for the care of the nations aged who shall not be

regarded as a burden, but rather to the nation's gratitude. all of these, that is now in a free and fair ireland that we can be proud to call her own. [applause] [speaking in native tongue] >> one of the messages from the people is that they want us to

reaffirm the way we do business in this house. and the contributions here about seeking attention rather than dealing with serious issues at hand. the difference between permanent campaigning in daily business is sometimes frequently difficult to discern. this has become the casing of the first states of each. there is a growing tendency for people with untreated speeches be delivered and the people have just spoken. equally as nominating people for the sake of doing so, but rather the belief that person has a right to pursue the office. today it is my intention to break with this precinct. it is clear that deputy edna kenny will take up the office and should do so in a polishing government and labor parties.

i do not oppose his nomination today. in addition, we will not support nomination of any other person for the office. unless there is some unforeseen developments which proposed to the house later this afternoon. clearly, this decision will not affect the outcome of the votes, but it's an important signal about change the way politics. there is a distinction between the vote which will be held today and support for the program of government. they have agreed to share power, but most of the issues to be addressed. the separate parties and have it pass forces for bridging gaps between them. the fiscal policy is to implement the 2011th point they voted against a few weeks

ago. the financial policy has agreed to change existing policies that if not agree, specifically would stop them. given the energy with which some deputies in fine gael and labour of over 20 when such reviews is more than a bit ironic. in many ways, this is one of the least specific programs for government ever published. it is certainly required to make government work, but the danger contained is that it leaves so many basic points for negotiation. the scale appointed for the majority term in office should be in the government's program. if you do business inevitably lead to firms against unresolved issues. this is the likely cabinet as well and a new site that captures requires a new

approach. deputy kenny's intention is one minister will negotiate the details as i believe a recipe for constitution of conflict is a compromise which is based mainly in a failure to be you should be the minister of finance. i want to reiterate that the fine gael style will be constructive opposition. when we agree with the policy, we'll support. we do not, we will oppose it and we'll send out a credible alternative. we will not follow examples seemed in maneuvering to oppose everything for the sake of popularity. but there is serving a partisan narrative, to others have offered me if i'm hopeful for campaigning offices, could not have the toughest business of governing. it is my intention that fine gael would provide an opposition both construct to.

equally when it's absolutely clear that we will defer to no one in our right to represent the nearly 400,000 people who voted for us 12 days ago. i am leader of a political party, but i am first and foremost an irish republican. this means that i want my country to do well no matter who's in charge. they've serious concerns about deputy kennedys ids and i do not believe we have seen a problem which is capable of adjusting the serious issues of our country. however, i wish him well and i sincerely hope he will be successful. thank you. >> i oppose the nomination of deputy edna kenny of the fine gael labor parliament. the very first sentence of the program for government states that democratic revolution took

place in ireland on the 25th of february. the oxford dictionary defines revolutionize the overthrow of a government or social order in favor of a new system. that being the case, then the program presented by deputy kennedy is a grotesque betrayal of that revolution because it proposals almost to the letter to continue the reaction reprogram of the old order of the late unlamented regime of the great party, a machine that was rightly reviled and reject it and sent to oblivion by the irish people for its economic and political crimes. i am surprised the remnants of that government didn't return with their brows heavily stained with penitential hash to recognize the role that they have played. the outgoing regime endures the

profiteering speculator and grasping bankers, imprisoning a generation of working people in marketers and now a negative equity. and when that inevitably choked on its own access, it treacherously connived with the e.u., imf and the ecb to say the scans of the major european banks that have their snouts deep in the feeding trough that was the irish property market, with a smirk as fanatically as the developer are a big irish banker. and for this and the crash that inevitably resulted coming now we see the sabotage affects on the living standards of our people, which this nominee for government intends to continue. they attacked public services, d.c. the stable and the poor.

a revolution would overturn and reversal that. but this nominee proposes is to confirm and reinstate the discourages program by a discredited government. a poisonous cocktail of us dirty drawn up, concocted by witch doctors in brussels and frankfurt because of the thickness of the european financial system continues to be force-fed to the irish people by this new proposed government, therefore it a vote for edna kenny is a vote for revolution, but for -- not for change, but counterrevolution were the same. for much this constant living standards of workers and the unemployed including with the universal social charge, which should be labeled university antisocial charge, h-hotel privatization of assets notwithstanding the disastrous consequences of previous privatizations to the blatant

tax burden in people with a walter tax and a home tax, a service held to ransom by private seeking insurance companies. the first paragraph of the first chat to your other proposal for government that would be honest would try to answer the question. why should the irish people have the economic lifeblood drained to salvage the tens of billions of euro gambled and lost by private speculators in private deals, from private profits and irish property. what moral code does the government justify placing that under people and we will put that question to bed again and again until it answered. we worked to remember this is not the first time and irish political establishment responded to an irish and uruguay crisis by sacrificing its people. nearly 100 years ago, the

forebears of today's speculating european financiers and their political clients plunged europe into war in the vicious competition for markets, raw materials and profits. the irish parliamentary of the day will be remembered in infamy for its campaign to a generation of youth, to feed the sensational appetite of the lawmakers. today, by sacrificing our people, our services and new for the insatiable appetite of the worst in the european and more financial markets faces the ballot to them accountable greens and labor in unequally shameful role as the irish parliamentary party. it was a great socialist, james connolly who in opposition to

the conflict called for torch to be let in ireland, which in his words were not born until the last round in the last bond and venture was burned. how deeply shamed if he would be today that the labor party he founded marches to become part of a government that will burn not bondholders, not the speculators, not the grasping big thinkers, but the irish people, the working class, unemployed, low and middle income workers. the socialist party and the new united left group asked the raving program proposed by deputy kenny. we reject it with the the financial markets causing such crisis and suffering among our people. we demand instead they are brought into public ownership in ireland in your opinion is that as vehicles for major investment to create projects could quickly

see tens of thousands of our people back to work from the tragedy of laying in the told pew. the government in coming today will have a crushing majority in the dail. they should not infer that that their economic program of savage us dirty will go unchallenged. it is certainly in here. remember this. we have united left will facilitate the mobilization of people power, community power to defend the living standards of the vast majority of our people who are attacked by this program in to defend their livelihood in opposition to new and unjust taxes. [speaking in native tongue]

[speaking in native tongue] [speaking in native tongue] [speaking in native tongue]

[speaking in native tongue] >> terry adams. [speaking in native tongue] [speaking in native tongue] during the election anyone know they were a number of key priorities. these included the need to reverse budget cuts to public services and social welfare, the need to abolish universal social

charge and to cut and put an end to the public money that's been put into the bank. that's hardly surprising if i may say that those that oppose -- does not oppose this nomination, given they put together a program for government with the new government. they also said that a review to attack most vulnerable in our society, the poor, unemployed, people on the margins in those who would ever seen themselves as economically vulnerable, but to our demand on the edge of deprivation and suffering any real distress. we also set our authorization plan with the irish language that we have a long-standing view of the need to continue to foster the peace process and to

build unity with our unions in the north. [speaking in native tongue] [speaking in native tongue] [speaking in native tongue] to introduce water charges in property taxes for households. it's very appropriate we gather here at the beginning, giving

what is said is send in the upcoming. however, is a set at the outside, it's is not a lecture. i respect that synagogue received that was to teach the government well and this is a huge honor for all of those who take up office. be assured that we will not oppose the government just for the sake of it. if by fluke, positive proposals are brought forward, we will support them. would also like to address remarks to give more. you have the opportunity to work for a government for fine gael. by ruling out all other options

for coalition, including with those of us on the left, your own aspirations for a labor government to limit the choice being presented to the public. [speaking in native tongue] so by wishing her well, let me make it clear there should be an ill purveyed or robust and construct of opposition to the government and we will hold them to account for the positions. >> first half like to congratulate you on your own election to the high office which you achieved.

and i think it's particularly a great achievement since he retired from the house so years ago and you'll be automatically reelected in the next election. [laughter] but i say that with great sincerity and they know you'll be a very fine caller. i would like to rise to first of all enough the first split the technical groups which formed itself yesterday. i agree with many of the directions of senator higgins, but one of the great bunches of this group is there is diversity and difference of opinion and we intend to express the diversity in many ways in the weeks and years to come. i think the first thing to say is there is a wave -- an

avalanche of goodwill, of public goodwill moving in the direction of this government. and i hope and pray that they will capitalize on it and that they will fulfill the state, which has been put in them by the irish electorate. i personally, fully accept that deputy kenny has got that mandates and achieve that mandate 10 days ago. but having said that, i am somewhat dispirited by having read the program for government. i understand why fine gael is going to support deputy kenny for labor and that is because they could not do so because the new government, according to his own program is going to

implement the policies which they imposed upon this country. that is something which i find difficult to accept barely 10 days after they had a post-it. because we see exactly the parameters on the economy and the same austerity measures about and i agree with deputy higgins to be imposed but the new government. i was deeply discouraged when i read the program for government but they were so little in it, no decision against deputy martin said, there were some mini reviews, so many budgets that we do not know exactly what they are promising at all, except that they will be the government in the next two years

come or high water. that is not good enough. we needed a program for government, which fulfilled the program of electoral policies, which were made on that side of the house. we did not get that. we did not get edition. take, for instance, the e.u. imf deal. we were promised renegotiation, where we were promised an end to what they called burden sharing. even before the ink was dry on the program for government, sharon was struck last friday of thinking. we have to share the burden is deputy higgins said with those banks who lent to irish and anglo-irish saudi response to

please so many years ago for such a long time. renegotiation means negotiation. it does not mean going into europe and negotiating a cut in interest rates, which you are the new has conceded. that is not good enough. we need a government that is prepared to send people up to brussels or strasbourg or anyone else. we are armed with a referendum given by the irish people, saying that deal is not acceptable. we are getting a government who is going in with the same deal at the last government. the second point is this. the promises which were made about cronyism and an end to the on that issue, the program for government is silent. we have a vague promise and a

deluded promise that there will be a substantiated reduction in crime goes. where are the 145 in the program for government and the promise to reduce or abolish 145? is extensive reduction is not good enough. on top of that, we no longer see any pledges to change the appointments, to state bodies, state agencies, which were promised before the election, maybe this is just an admission. my fear is this, that whereas the government is a welcomed relief in terms of its honesty, its integrity, in terms of it being an end to a dirt. the political rule in ireland.

i fear that the promises of change will be empty and they are already disappearing. because, i want to be certa3 because, i want to be certain that we do not have cronyism replaced by a fine gael rush of cronyism. they did pretty well and in 1894, 1997. the positive power and it is very important that we see a system established so that ugly aspect of irish political light descended. i think, deputy, it's against the rules to interact a speech. [laughter] [inaudible conversations]

i would like to say a word about minister souders, something which cannot affect two, secretary don can, this evening. [laughter] but you never know. deputy kenny is a forgiving type and you never know. but what i fear -- what i fear is that we are just getting, because of the parameters in the economy and because of the restrictions in which they find themselves yielding to the temptation to be a government which is so similar to the last one. not in its methods, not in its

title, but in what he does that but it will be indistinguishable. >> thank you, deputy. deputy shina seelye. >> i want to oppose the nomination of edna kenny. the problem for government is the deep betrayal of working people of the poor and people with and families of low and middle incomes we are seen absolutely no serious change with the weather, but is in fact a continuation of the fine gael policies and what is a much more unfair environment for the public. the continuation of the universal social church in the tax changes in the last budgets

are to continue. yesterday measures are to continue. this is taking place against a background of a 7% rise in the prices foods over the last tape on and is a background of increases in mortgage rates and more to come and indeed rocketing fuel prices, which in turn will raise food prices further. this will of course further depress the economy, leading to further increases in unemployment and indeed in immigration. i believe the commitment in this program for government to eliminate its 25 housing jobs is obscene. and the excess which exists in the higher echelons of ministers not scissoring secretary's offices must be transferred to necessary services and

front-line word teachers, nurses are attempting to make public services to the public costs which we are now promised in this program for government are to continue. i may believe the labour party should hang its head in shame. there's not even this program for government a red cent tax on the asset of the superrich in this country. 6% for 250 billion euros are not paying ball ordinary people are deemed lead, they had no part in creating. gm wrote about the congress of ireland environment. they have endured the humiliation under the e.u., i mst this excuse there is an

intensity. that is in my mind the reveling. they part this reckless lending to irish and other banks, causing irish, greek, portuguese and problems. the labor policy is one of those two powerful banks that would make it a few crimes. james connolly says we are only on their knees. let us rise. i believe we must rise up until the e.u. and the imf that we were not paying the debts of the irish banks. as a combination of these debt and the imminent arcus crisis will cause this disastrous default and will make current problems seem minor.

putting ireland did a much weaker position to remedy the situation. i want also to refer to the organization and delivery of acute hospital services in this country. and i believe that if something very imparted for the patients and their families in the deep fork community. the hospital committee for which i chair has received election commitments from both fine gael and the labour party that they will resist all parties in the hospital. i will be relentlessly pursuing the honoring of those commitments and today i call in the incoming government and the incoming heads to immediately and start the service i could get to hedge the reconfiguration

process. >> on behalf of the people and along with our colleagues in the united left alliance, we also will not be voting for deputy kenny as key shock. and the reason why it relates to a comment by deputy americans martin made about the need to break from certain that traditions in irish politics. one of the worst traditions in politics was we seem to have a particular capacity for in this country the politics of spain went in during an election campaign when you're looking for votes and then doing something very, very different as soon as the votes are in the ballot box. and it seems to me that is precisely what has happened with this new program for government. deputy kenny said that he is

e.u., i mst a de facto for ireland a bad deal for europe. there is a very clear implication that something was going to be done about that, though we were going to stand up to those institutions who are trying to unload the cost of a financial crisis created by bankers and speculators onto the backs of ordinary people and this country. in a deal which will cause immense suffering for ordinary people in this country and also cripple our economy for years to come. that talk, that rhetoric is standing up and doing something about the imf e.u. deal has disappeared with a program for government setting up 30, intention to continue the program of austerity, colts being implemented by the last

government in the interest of pay enough bankers and bondholders at the behest of the e.u. and imf. another promise that plays into almost every fine gael poster was to get governor working. yet, the plan to get ireland working is met with one of the few specific commitments in the program for government two/ 25,000 public or jobs. you don't have to be an economic expert to realize you don't get ireland working by 25 jobs been asked. it means 25,000 more people unemployed. it means less money being spent in the economy. it means more sunscreen. i want to say it is particularly depressing that the labour party are going to support deputy kenny, his government.

labor frankly should be ashamed of themselves to sign-up for a program that is going to ask the jobs of 25,000 of the people who voted for them but very particularly, those with the hope the next edition at their jobs would be safe. they should be ashamed of the fact that on national television and national media, when asked about the issue of charges, he made solemn promises they would not introduce charges and now they assign it to a program for government, which is setting out to implement this very film water charges. they should be ashamed to sign-up for a a program to government talking about selling off our state to pay off the bankers and bondholders and speculators. it is utterly shameful to sell the family silver to asset stripped this country in the name of pay enough bankers and

bondholders. what about the promise to do something about the universal social charge which has salvaged the income of one middle-income families saving hundreds of euros with the results many will not meet their mortgage repayments, cannot pay the bills and the promise that we would instead recalibrate the taxes of those pain over 100,000 with the increased taxes that has been abandoned and now we are told is there will be some kind -- some kind of review. so for all those reasons, it is impossible to support this government or these programs but does want change, gets all the promise, the hope and relates to the desperate desire for change for the people express during the election and to abandon it for a program for government,

which is simply a plan to do more of the same thing caused such suffering to ordinary people and i believe triple our economy for years to come. but i'll finish on this point. deputy kilmer said over the weekend that he feared he would see forests of packard and he and labour party deputies feared -- well, he should fear the government. so should this government. the pledge -- the pledge of the united left alliance -- the pledge of the united left alliance is to support those groups in society who through no fault of their own are now being targeted with job losses, are now being targeted with brutal cuts that will put families under them that are being targeted with savage colts to

the public services on which they depend. we will be facilitating, supporting and encouraging people to take off their placards and in a democratic way resist this is, unjust and economically unsustainable program for government that will do nothing to realize hopes for change that people express in the election and that is the pledge of the united left alliance over the common. thank you, kind caller. >> i is then liberal and so fire -- insofar as that those who are making the speeches. however, i want to remind deputies that strictly speaking, the policy of government does not arise at this point. the nomination and i ask you to confine your remarks. and i have to say particularly those who are making major speeches come what you please confine your remarks.

the next speaker is deputy john howdy nam. >> first of all, kanebo commute to your opposition and they wish you well and i genuinely do. i also want to wish deputy jenner well. in your second talk about national governments, my interpretation of a national government included everybody, so i thought for a moment or missed a phone call from you. however, it is not possible for me to his word. the previous government were put out, primarily because the hurt and distress inflicted hundreds of thousands people in the various constituencies throughout this country and this manifested itself into severe cuts to living standards to middle-class income groups break down to workers and people voted

for change. they voted for a reversal of these cuts. not the same program for government being put forward by this particular government. i had always made her cry 202-737-0001 sent that as confident as the labour party -- it is regretful on this occasion where there is no dishonorable difference between fine gael the labour party did not attempt to put an alternative left and right divide in this department is in many other problems across europe. i think that's regretful. the reversal of the courts promised on placards and posters and statements issued over the country was to reverse the dreadful cuts in case and most of all social charge for which i

would describe as a super tax which has since get hardship on hunches of thousands throughout the constituency. it will however say it is my position as an independent they will do what is heard from a country and constituency. if i believe they are policies put forward by this government taken support, i will be as positive as they can. i cannot tell whether, based on the people that voted for me, based on what i told people who would say that they told the middle-income groups and those people who suffered hardships that i could not support the government and would not do so. >> i wish you well in your term after this. as the outcome of this motion is very obvious, i wish for deputy kenny and deputy gilmore and

their team every success in the social and economic issues defend this country. i will be abstaining in this motion. there are many proposals that initiatives look up to this document that i agree with them they should have been implemented over the past number of years. we need compassionate leadership and in this regard a teacher support for the penal cuts and the last budgets, for example, cuts the blind, disabled and the proposal in the nation and the imposition of universal churches of lower levels of income, the increase in super registration fee to two dozen annually, and

in this regard, i would say the association of various infections of society cannot be underestimated. i say this last night when i received a very alarming phone call from the constituents, an employee to let me know that the work force of 116 but the company now entering into a process -- regarding existence of the company in the union representation. >> you can't raise this matters. >> whether it be a disaster for the work force in the local economy. what i am asking here is that the new minister for enterprise deployment appointed here today would intervene immediately but

the issues that the american companies. i would be following up regarding this for the cvs archive this is a very, very serious matter for our county and country. thank you very much. >> would ask you if you could seek the motion before us. >> i will not be voting for deputy kennedy, but i do honestly wish him well and obviously this country rather than the reverse. i think it is positive and invest interest to people in a certainly support. likewise, anything i find it does not do that, and unafraid to criticize it. i realize the huge majority in

the house and it would be very easy to avoid the opposition for the government, but i think were at the stage where most people agree that this parliament should function in a much better way than it has for a long time. i think you will be very positive if the government were to facilitate working of the parliament. everybody here is representing the people of ireland and we should all be facilitated in play in a role here. i make the campaign. i was very conscious of a huge anger that people. they do find it difficult to understand why the taxpayer

should find the burden of mistakes made by the banking system. i really do think it would be wonderful if the government to go another referendum against the decision of the people. it is probably one of the biggest decisions ever made in the history of the states. there's a lot of things that i have learned speaking to the people. one of the reasons was that i don't think that the people were well served by the political process. i don't think they see there is a real cannot for the people who come in here. i think we can change that. i think we can all play a part in that. what i do think is that we've got to get a stage for decisions

made at this level are made in the best interest of the people and not just in the interest of the business. it's the courage to actually work in the best interests of the people of all times. at the end of this government's term, it would be wonderful if they could actually be proud to be measure by how well they put after the most vulnerable in society, rather than her strength of gdp. surely those who most need is democracy. thank you. >> the final speaker, flanagan. >> thank you, caller and best of luck in your new position. i have to say it is an amazing honor to even be standing here today representing the people of

south lake chairman representing the people because i am to be good for the public at a violent because one will not be able to work without the other. unfortunately, i have to say if the western island man, i will be opposing the nomination today. not because i am in against him personally, but i do not believe he's the best person for the job. before the election, it is quite clear everyone who is running for labor that kilmer was going to be the best person for the job. a short time before the election, it was quite clear majority of people with 10 fine gael didn't think edna kenny would be the right person for the job. there's nothing most people can do about that now. we have a situation where they