american planning association, the association of university research parks, the educational association of university centers, the international economic development council, the national association of development organizations, the national business incubation association, the state science and technology institute, university economic development association, the national association of regional councils. these are people on the ground very close to our constituents. who could be closer than the mayors? and the counties? i started out as a county supervisor in a beautiful county called marin, and i can tell you on the ground when you see these federal dollars work, it's very exciting because the counties, the cities can't do it alone, but with a little infusion of federal funds that spark $7 for

every $1 from private sector folks, it really makes a difference. so i believe this is a win-win situation for our people. in fiscal year 2010 alone, the e.d.a. approved investments of of $640 million for 928 projects nationwide that are expected to create 74,000 jobs, save 22,000 jobs and leverage $10 billion in private investment. so $640 million is expected to leverage $10 billion in private investments. that's a huge, huge leverage. in my home state of california, we're struggling, mr. president, as so many parts of the country are with high unemployment rates, e.d.a.-approved investments of $24 million in fiscal year 2010 for 27 projects that saved -- that is expected

to create 11,000 jobs, save 400 jobs and leverage $400 million in private investment. so as i stand here now, because of this program in 2011, we are going to see jobs saved and created. imagine, 11,000 new jobs. 11,000 families that can breathe easier, that can pay the mortgage, that can maybe go out to a restaurant once a week, and that money trickles into the community and helps the small businesses. we -- we now know in california, the city of dixon is working on a $3 million program for water system improvements. that's a thousand jobs. the city of shafter, $2 million for city and water improvements which will allow development of an additional 600 acres and

1,485 jobs. nationwide, you could look at boeing. we all know the company boeing. in order to help mitigate the boeing company's decision to reduce manufacturing jobs in rentin, washington, e.d.a. invested $2 million in 2006 to help build infrastructure to serve the commercial redevelopment of a 42-acre former aircraft manufacturing site. this redevelopment has created a mixed use campus used by businesses focusing on commercial services, high tech and life sciences. 2,500 jobs. so i say to my friends -- and right now we seem to have a little struggle getting to this bill. we're hoping to be on it, but at this point in time, we have a republican dissenter who doesn't want us to move forward and they want a little time to look at this. i hope they use it well and they look at these numbers. the american people want jobs. this is a bill that is directly related to job creation.

this is a bill that leverages the federal dollar. why on earth should there be any objection? this is a bill that passed the senate with george bush as president, george w., unanimously. he signed it, it was law. we shouldn't be struggling over going to this bill. we ought to get on the bill, we ought to get off the bill, we ought to send a message to the people we're serious about job creation. in duluth, a $3.5 million grant matched by $2.3 billion from the city billed the duluth aviation business incubator at the duluth airport. and this investment helped aircraft grow from handful of close to 1,012 employees by 2008. the incubator is now linked to cirus design which has the widest chair of the general aviation market.

another one on the east coast. in 2002, the e.d.a. provided provided $2 million to help build the knowledge works preincubator facility as part of the development of the virginia tech corporate research center in blacksburg, virginia. the center and its knowledge works preincubator facility have led to the creation of 2,000 high-wage jobs and the inception of 140 high-tech businesses. let me repeat that. $2 million infusion from the e.d.a. has led to the creation of 2,000 high-wage jobs and the inception of 140 high-tech businesses, as they built this corporate research center in blacksburg, virginia. e.d.a. helps in disaster relief, in addition to helping communities respond to job loss from closure of manufacturing plants, for example, or a defense facility, e.d.a. helps communities respond to sudden and severe economic dislocations due to natural disasters. in 2008, congress provided

e.d.a. with a total of of $500 million in natural disaster assistance, with two supplemental appropriations. with these funds, e.d.a. was able to assume the role of a secondary responder, working with affected communities to support long-term post-disaster economic recovery in response to hurricanes, in response to floods and other natural disasters, and we know how important that is to have a program that can respond to help fema. so i can give you example after example of disaster relief, there was one case in cedar rapids, iowa, where e.d.a. provided funding to construct and install upgraded energy-efficient natural gas fired boiler system following an 2008 flood that destroyed the boiler that had provided steam heat and hot water to saint luke's hospital and cove college. when the utility that owned the

damaged facility decided not to rebuild after the flood, it left the hospital and college without a reliable energy supply, and we all know what happens, what happens when there is a disaster and our hospitals can't function. they came in, they made a a $4.6 million investment, and it was critical in keeping the hospital and college open and saving hundreds of jobs. so i can only say in closing my opening remarks that let's step back and look at the big picture. i think that dick durbin spoke to it quite eloquently. senator durbin was very clear when he said that we're at a

time now where we have got to create jobs, and he gave kind of the overview of what has happened. when bill clinton was president, i was privileged enough to be here, sent by the people of california, my first term here, and bill clinton faced a deficit, a debt and a struggling economy, but with very smart plans, we turned it around. what were the smart plans? we reduced the deficit to zero, but we did it in a smart way. how did we do it? we kept on making investments that made sense, at that time in energy, high-tech research, biomedical research. we made those investments, we cut out the waste and the fraud. and we said to the people who were billionaires, you know what? you can do a little more for us,

please. and they were happy to do it, actually. so the millionaires and the billionaires paid their fair share, and we made smart investments and cut out the waste, fraud, abuse, and we not only balanced the budget, but we created a surplus. in comes george w. bush, our republican friends decided the thing they wanted to do more than anything was to give tax breaks to the billionaires and the millionaires, to the warren buffetts who don't need it, to the donald trumps who don't need it. they don't need it. the average of these tax cuts to these millionaires and billionaires, hundreds of thousands a year, and what that means is we're short funds here, so what do our republican friends want to do now? they want to cut medicare, end

it in order to continue to pay for the tax cuts for the millionaires. it's not necessary to go down that road. well, that's not before us today. what is before us today is while we have that battle of how to get that deficit under control, what are we going to do about jobs? so today we're looking at a program that has strong bipartisan support that leverages the federal dollars, that gets great reviews, that got out of our committee with only one dissenting vote, and it's the e.d.a., the economic development administration. they have six regions. they have six regional offices. each region, east, west, midwest, south, each of these regions gets a fair share of the

appropriations. it goes to place that is have good ideas on how to attract local, state, nonprofit and private sector funding, and every dollar of e.d.a. investment is expected to attract $7 in private sector investment, thereby saving and creating thousands and thousands of good jobs. so, mr. president, i understand my republican friends are going to have a discussion at lunch time as to whether to allow this bill to move forward. i would hope from the bottom of my heart that they will do so, and i would now yield to senator cardin. the presiding officer: the senator from maryland. mr. cardin: mr. president, first i ask -- i have five unanimous consent requests for committees to meet during today's session of the senate. they have 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. the presiding officer: without objection.

mr. cardin: mr. president, let me just complement senator boxer for her extraordinary leadership as chairman of the environment and public works committee. i want to compliment senator inhofe, the ranking republican member of the environment and public works committee. this is an important bill dealing with economic development, the economic development administration. as senator boxer pointed out, this is all about creating jobs, particularly creating jobs in underserved communities. that's what the e.d.a. does. this is a reauthorization bill. it's been -- was worked on in the last congress, came out of the environment and public works committee in the last congress. it's a bill that enjoys strong bipartisan support. it has starkly been agreed to, and it's important that this reauthorization bill move through the united states senate and through the house and the president has an opportunity to -- to sign this bill so that we can continue this important economic tool for our underserved communities.

mr. president, i want to compliment the majority leader, senator reid. the bills that he has brought forward in this congress have been focused on creating jobs. we had the f.a.a. reauthorization bill which was important for modernization and safety of our air traffic system, but it also created jobs, provided economic opportunity for more jobs in america. we then considered the sbir bill which helped small businesses with innovation and growth and job growth. i regret that bill couldn't be completed because of extraneous amendments, but it shows our priority on moving the legislation that will create jobs. so the e.d.a. bill that's now before us, i hope we can get to it. i hope we can get to it and move it quickly because it is, to me, a very important part of our strategy for the recovery of our economy and to create jobs in particularly underserved communities.

in maryland, we have many communities that depend upon the e.d.a. funding in order to be able to save and create jobs. the e.d.a. through the economic development districts are helping plan and build roads to spread commerce, office parks, and business centers for private sector businesses to locate to and expand access to broadband which is so critical to communication in today's global economy. these are the type of projects that the e.d.a. sponsors. they are road projects. there are broadbands so we can connect communities together. the e.d.a. is responsible for promoting job growth and accelerating industrial and commercial development in communities suffering from limited job opportunities, low per-capita income levels and economic distress. as the only federal agency focusing solely on promoting private sector job growth in economically underserved communities, e.d.a. pursues regional comprehensive strategy

development, public works and business loan funds. they have put together a strategy for our areas that have high unemployment, areas that are difficult to attract new job opportunities. they develop a winning strategy to create jobs. in maryland, the e.d.a. and our state university centers and economic development districts are responsible for helping administer public works projects in rural communities on the eastern shore and in the western part of our state. these projects have assisted with the regional commercial needs as well as services to meet the needs of residents. for example, the e.d.a. has been essential in assisting with the planning and installation of the broadband communication network in western maryland. maryland is going to be totally connected by broadband. e.d.a. has helped bring that in underserved areas. we're connecting communities together to create jobs by having broadband capacity.

it's also helping us create more small business opportunities which is what we find the dominant economic growth engine -- we know it's in the nation's small businesses, but when you're dealing with underserved communities, small business growth is critical to their economic future. these insistments go toward revitalizing expansion and upgrading of physical infrastructure in order to attract new industries, encourage business expansion an diversify local economies. in so doing e.d.a. seeks to establish foundations that enable communities to develop their own economic development programs for sustained development. the e.d.a. has an established and proven record of using increasingly limited resources to complete projects in a timely manner that leverage -- leverage private-sector investment. senator boxer pointed out that. we're leveraging private sector investment with a relatively small amount of public funds. in my home state of maryland e.d.a. has supported more than 33 projects in the last four

years that are credited with creating more than 2,500 jobs, retaining over 100 jobs an leveraging 218 -- $218 million in private investment fro from $12 million in e.d.a. investments. that's a much higher ratio than average as senator boxer pointed out. it's important that we provide e.d.a. with the resources necessary to continue this work. many of these projects are in the more rural or underserved parts of the state. most recently e.d.a. provided seed money for two exciting projects on maryland's eastern shore. in torchester county in cambridge, the e.d.a. is investing more than $600,000 of renovation and repair of existing vacant and industrial buildings to be reused by a new manufacturing company that specializes in the production of green products made from repsy

recyclable materials them is a win-win solution. it will recycle an industrial facility, saving jobs. it reduces material waste by making new products out of repsychable -- recycle materials. these 103 jobs would have been lost. instead we have 123 jobs in an area where it's difficult to attract new jobs. leveraging more than $600,000 in direct investment in a facility that is expected to generat generate $6.6 million in private investment once the facility's operational. once again referring to what senator boxer said, the leveraging of public funds for private investment in underserved areas saving and creating jobs. this means for every federal job invested, it generates $10 in private investment. the economies of wakamako and

woster have been linked to the health of the chesapeake bay. closely linked to the bay's impairment is the decline of the low land forest land's. the effect resulted in the decline of jobs in the seafood harvesting and forest tree industry on the lower shore. it is a priority of mine to restore the health of the chesapeake bay and the natural systems and jobs that support a health bay. i also support to address the jobs in the industries on the lower shore by investing over $800,000 in workforce and business development centers that serve the lower counties of the eastern shore. much of the hard work that goes into selecting and developing projects are done by the hard-working men and women on the job working for the local

economic development districts and the university centers. these are the ones with the best understanding of the economic needs of the communities they work in. that is why in the committee i worked hard with my colleagues on the environmental public works committee to improve the potential resources available to economic development districts to do the necessary planning for economic development projects in their district. planning funds are hard to come by. when the environmental public works committee took up the bill last congress, the issue that my economic development district urged me to fight for was increasing the authorizational level for planning grants because they were so useful to their work that they were doing and represented a sound investment of federal dollars in the communities that needed the help the most. planning grants provide invaluable matching funds for economic development districts, tribes and local communities to pursue regional economical development goals and strategies. none of the projects would be

possible without the planning grants. the demands of the economic development districts have increased significantly due to the current economic downturn as well as the new mandates of the economic development districts in the -- and the evolving nature of the global economy. the scope of the economic development district work goes well beyond e.d.a.'s projects and expands into the planning and coordination of rural transportation projects, usda rural headlights as help as h.u.d. -- e.d.a. provides to the economic development districts most rural areas would not have the capacity to apply for at administer economic resources. the planning and administrative work done by the economic development districts, the backbone of e.d.a.'s public works and facility projects and would not be possible without the planning grants. i greatly appreciate the

leadership of boxer and inhofe and am pleased by the bipartisan support of our committee that brought out a comprehensive bill that will allow e.d.a. to continue its core purpose of creating jobs for our community. it's exactly this type of legislation that we need to help continue our economic growth to bring us out of this recession, to create the type of jobs we need, to encourage private-sector capital. this bill translates into jobs. i urge my colleagues to allow this bill to move forward, to limit the amendments, particularly those that are not relevant to the underlying legislation so that we can get this bill to the house and to the president because it will help our communities grow and create jobs. and with that, mr. president, i would yield the floor. a senator: mr. president? the presiding officer: the senator from national park.

a senator: mr. president, i rise today to honor the memory of governor walter peterson, a great nationanewhampshire citizo represented the independent spirit. governogovernor peterson came fe greatest generation. a veteran of world war ii, he committed his life to public service and civic engagement leaving behind a legacy of civility, decency and integrity in politics. following his graduation from dartmouth college, he settled in petersboro new hampshire. a small business man he served in the citizens legislature and rose to the speaker of the house in the legislature. in 1968 new hampshire voters elected him as the state's governor where he served for two

terms. governor peterson represented a special breed of politicians. someone who could disagree without being disagreeable. a strong leader who had the courage of his convictions. he believed it was more important to stand firm for what he believed was right for new hampshire rather than to worry about being reelected. that principled approach and inherent goodness secured his place in new hampshire history as a deeply respected statesman. outside of public life, governor peterson, was the beloved patriarch of his family. together with his wife dorothy, to whom he was married for over 60 years, they had two children, meg andy. the peterson family is well known because of their strong commitment and dedication to the community. andy peterson followed in his father's footsteps and served in

our state legislature with distinction. during my visits to peterboro, the idyllic new hampshire town that governor peterson lived in and loved, i always knew he would extend a warm welcome to me. a steadfast source of yankee wisdom, i came to cherish governor peterson's friendship as much as his keen insight into the beloved people of new hampshire. after leaving statewide office, governor peterson took his special brand of leadership to academia serving as president of the university system of new hampshire. he worked to build higher institutions of learning that empowered students to take full advantage of the opportunities our great country provides believing in the transformative power of education. with governor peterson's passing, new hampshire citizen have lost a wonderful, true,

beloved, loyal friend. ms. ayotte: at this sad time we celebrate his life, grateful to have known a leader who embodied the very best of public service. mr. president, i yield the floor. a senator: mr. president? the presiding officer: the senator from montana. mr. tester: thank you, mr. president. mr. president, when we're able to moaft economic development bill -- move the economic development bill,ly have a bipartisan amendment that will address the interchange issue in a way that i think most senators can support. i would also like to note that i appreciate senator durbin's passion on the issue and with any number of issues we have in common, i look forward to working with him again very, very soon. mr. president, most of the folks in this body know that i'm a farmer. but i come from the agricultural sector. it's important because over the many years that i have been able to be in agriculture, i've watched consolidation in agriculture where fewer and

fewer and fewer companies control more and more and more of the food supply. call it consolidation. the same thing has occurred in our energy sector where we have fewer and fewer and fewer companies, less competition if the marketplace and we're paying that price in both areas. we've seen enough consolidation in the financial area, mr. president. and why is this important? it is important because the amendment that i am going to offer, the bipartisan amendment, will help so we don't further consolidate the financial industry. i also come from rural america. we all know is -- as the senator from illinois pointed out, we're coming out of a very difficult economic time. in fact, the senator pointed out that he voted for the -- the bailout of the big banks because -- it was because of jobs. i want the record to be clear, i did not vote for that tarp bailout. but i am too concerned about jobs. i'm concerned about jobs cries

the country, but particularly in rural america. the amendment that we voted on a year ago had a provision in it that exempted banks under $10 billion from this debit swipe-fee rule. everybody thought it would work. well, at least those who voted for the amendment thought it would work. but the fact is that every regulator has said that thi this $10 billion exemption, we don't know how to enforce it. the regulators said that we do not know how to craft a rule to exempt those small banks, community banks and credit unions under $10 billion. every step regulator has said the same thing. in fact, chairman bernanke committed that it could result in some of the smaller banks be less profitable and even failing. that is because the two-tiered system will not work under the current law. it's not my opinion. that is the opinion of folks whose job it is to regulate

these banks. it's customers, hard-working folks are going to be stuck with higher fees, no access to capital and or even -- or even worse no small banks at all. if any one of the regulators, the chairman of the federal reserve, the chair of the fdic, the controller of the currency told me that the interchange rule we passed would actually protect small banks, i wouldn't be here. we wouldn't have this debate. we'd be moving on. but that's not what happened. mr. chairman, the wall street banks are going to be just fine. my amendment is not about the wall street banks. this can he distribute their costs, they've got a lot of different irons in the fire. they can distribute their costs. the fact is the small banks, credit unions, the community banks, the credit unions cannot distribute those costs. that will result in less access to rural america and i think

across the country. it will result in less jobs because you've got to have capital to grow business and create jobs. look, oftentimes we make decisions based on incorrect information. it's nice when you make decisions based on good information. and that's what we're asking to do here, take a step back, take a look at this stuff and make a good decision, a decision that will work not only for rural america, but for the whole country. this is an important amendment. it is a critically important amendment from my perspective. we shut down access to capital in rural america because community banks and credit unions cannot compete. not only will we further consolidate the financial industry, but we'll take away opportunity for small businesses, opportunity that will allow them to grow and create jobs in a time where we need growth in our economy and we need more job creation. with that, mr. president, i

yield the floor. the presiding officer: under the previous order, the senate will stand in recess until 2:15 p.m. >> members are taking a break to attend weekly party caucus luncheons. when lawmakers return more work on bill authorized to economic development program. debit card usage fees. senate majority leader harry reid filed cloture on a motion to proceed on the motion. the test bill may come as early as tomorrow. more live senate coverage when the gavel comes down at 2:15 p.m. eastern here on c-span2

>> each year congress works to pass the 12 spending bills that fund the federal government the house started work on the first two. follow their progress with c-span's comprehensive resource on congress. congressional chronicle, with easy to find information about your elected officials daily schedules and each day's committee hearings plus video of every house and senate session. congressional chronicle at c-span.org/congress. chairman chancellor angela merkel is in the u.s. for talks with the president. they just wrapped up a joint news conference at 11:35. actually is when the joint news conference got underway. they just wrapped it up a short time ago on c-span. later tonight a state dinner. we'll show you guest arrivals and later the official toast. live coverage of that gets underway at 4:45 eastern with the arrive als and the toast scheduled in the 8:00 hour.

state department official jake sullivan says at the top of the u.s. foreign policy priorities is shaping the political changes in the arab world and getting the transitions in iraq and afghanistan right. mr. sullivan, who heads the policy planning division at the state department, also commented on the impact of recent budget cuts. his remarks are part of a conference hosted by the center for new american security. this is just over an hour. >> ladies and gentlemen, we're about to begin our afternoon session. thank you. good afternoon, everyone and welcome back to the afternoon portion of our

conference today. i'm nora benson, deputy director of studies and a senior fellow of at center for new american security and it is my pleasure to introduce jake sullivan to you today. jake sullivan is the director of policy planning at u.s. department of state and deputy chief of staff to secretary clinton. prior to assuming his post as director february 20 11, mr. sullivan also served as deputy chief of staff for policy since january 2009. he also serves as deputy policy director on then senator clinton's presidential campaign and as a member of the debate preparation team for then senator obama's general election debates. in his past life before coming to these positions he also clerked for justice stephen breyer on the supreme court and was a rhodes scholar at oxford. he will talk to us on american foreign policies in age of uncertainties. for those of you who are here this morning this fits nicely with our conference theme on risks and rewards and i'm sure he will touch

on topics related to middle east and afghanistan and tradeoffs involved we were talking about earlier. so please join me in welcoming jake sullivan. [applause] >> thanks, nora. good afternoon. at least one person said good afternoon. it's a privilege for me to be here to help celebrate the fifth anniversary for the center of new american security. i count myself as one many members of the obama administration an consumer of center's products. i worked very closely with some of your most distinguished alumni. derek and i are constant partners in crime and no one better on asian policy than kirk campbell but no one more interesting or entertaining to travel with. today i have a modest objective which is to share some sense of what's preoccupying us, why we do what we do, where we want to

go and how we're working to get there and more importantly i'd like to hear your questions, your critiques, your take on what we're doing well, what we're doing less well and what just doesn't seem to add up. i was asked to speak on the administration's foreign policy priorities in the complex world we confront today and i'd like to preface that discussion with a few words on what the foreign policy project of president obama and secretary clinton is all about. our objective is to enhance and sustain american global leadership so we can most effectively advance our interests and values and solve shared problems in a changed and changing 21st century landscape. now there's an on going debate between two schools of thought among modern international relations practitioners. one school is about promoting american power at all costs because it is seen as providing a context for everything else. the second school is about preparing the world for the inevitable rise of other actors wielding power and influence. to us the true challenge of

modern american diplomacy is to blend the two approaches. america continues to play an indispensable role and the world looks to us to lead but we also know today's problems can not be solved by any one nation alone and major players there for have a growing common interest in solving problems together. so the fundamental strategic challenge we face is how the united states can shape and lead a set of partnerships and institutions that can translate that common interest into common action that is sustainable and effective. along the way how do we insure that shared action is accompanied by shared responsibility where each nation, not just the united states but others as well step up to do their parts? how do we safeguard and strengthen a system of values, rules and norms that are consistent with the way we see the world and the goals we're trying to achieve. before answering these questions by working to lead in new ways reaching out to new actors, reaching out to

new partnerships and coalitions for old power into new tools. modernizing american leadership this way at this time is necessary and urgent work. we have the opportunity to build a new global architecture of cooperation but that opportunity isn't going to last forever. if we don't seize it there is no guaranty what comes instead will be favorable to our interests. this broader objective helps order our daily decisions and helps define our specific priorities and that's where i want to focus the rest of my remarks. i'm mindful speaking about priorities is a dangerous exercise so before i proceed let me make a few caveats. first, the world is frustratingly unpredictable. so i reserve the right to amend this list rather shamelessly a week or month or year from now as unexpected events unfold and this is certainly the era of the unexpected. second because i know i will never cover all the issues that matter to people in this audience i hereby incorporate by reference key priorities everything that anyone of you cares about

[laughing] i stipulate that the former lawyer i'm actually empowered to stipulate that we haven't forgotten about them and we're very much focused on them [laughing] finally, i've had to make choices about level of generality and discussing our priorities. i'm going to try and talk at 10,000 feet so you get a better feel for some of the concrete issues that we're grappling with. i do so mindful of policy objectives ,000 feet, outlined by president and u.n. general assembly speech in 2009 and our national security strategy, nonproliferation and disarmament, promoting peace and security through conflict resolution and counter terrorism. the preservation of our planet, a global economy that advances opportunity for all people and the spread of universal values and democratic institution. when you strip everything else away this is what forms the core of our foreign policy agenda. so with those caveats, i'd like to talk about five areas of focus that are occupying the energy and brain power of the key

decision-makers on our national security team. each of these has direct bearing on our national security and on our global leadership and we simply have to get each of them as right as we possibly can. first, it will come as no surprise that we're quite focused on managing and shaping remarkable change taking place across the middle east and north africa. the president's speech on may 19th provide as, very useful indeed visionary road map how we intend to proceed and i'm not going to attempt to improve on it here. i will make a few brief observations on key areas where our energy is particularly focused. for starters we're investing heavily in helping egypt and tunisia get their transitions right, recognizing of course these revolutions belong to the people who brought them about. egypt is particularly consequential. one in four arabs is egyptian and getting right there means the order earlyly development of a duringable democratic system that is accountable and responsive, that safeguards

pluralistic values including rights of women and religious minorities and embraces crucial existing arpgments like the camp david accords. i want to emphasize economic modernization as a centerpiece of our strategy on egypt and tunisia. both because it's a crucial ingredient to successful transition and because it's a clear area where we the united states can add value and be seen to be doing some when we traveled to north africa couple months ago we heard repeatedly from all quarters, interim military government to youth activists this is where america could help most. we also recognize how important the arab-israeli issue is to the region and to our leadership. now it's no secret that the peace effort faces some pretty significant challenges but our goals remain clear. the to create the conditions for effective negotiations. to address israeli security need and the legitimate aspirations of the palestinian people. and to promote a palestinian government that is committed to peace.

each of these goals calls for us to define a political horizon and to point the parties toward that horizon and away from ill-advised or precipitous unilateral steps or destablizing actions. that's why president obama articulated principles on territory and security in his may 19th speech, the two issues that lie at the heart of this conflict. those principles reflect not only common sense but also formulas that have long been familiar to the parties and to anyone who comes in contact with the middle east peace process over the past many years. they can help establish a firm basis for substantive talks at the right time and can strengthen those who favor a negotiated peace. an equally complicated project is to advance our commitment to gulf security in a way that is true both to our hard security and our human security commitments. this involves candid conversations with our gulf partners at the highest levels including saudi arabia and the united arab emirates as we address

continuing challenges in bahrain and broader regional trends. we told them we see an urgent need for political and economic reform across the region and we have talked to them about the threat posed it to iran by regional security. iran is not ten feet tall but it does pose serious challenges for our partners and our interests and thus remains an issue of intense focus. of course the ongoing operations in libya, the ongoing brutality and in syria and ongoing uncertainty and increasing violence in yemen are significant immediate issues. i would be happy to address these areas further during the q&a period. the second major area is getting the transitions in iraq and afghanistan right. in iraq, as troops come home our civilians are taking the lead in an ambitious mission of long-term partnership and support for the iraqi government and people, the biggest military to civilian transition since the marshal plan. this has been somewhat overlooked into public but it's getting plenty of

attention across our national security team because it will be a critical test of the u.s. government's ability to translate security gains into foreign policy gains, to consolidate progress that we've made at huge cost and sacrifice. in many ways this effort takes the state department and other organs of our government into uncharted territory and it certainly won't come easy or without risk. it is going to require diplomats and development experts to think and act in new ways as they contend with a broad sweep of challenges in an insecure environment from helping iraqis manage ethnic and sectarian fault lines to training the iraqi police to helping iraq build and rebuild productive relationships in a very uncertain neighborhood. and it's going to require continued support and smart thinking from groups like the center for new american security as we adjust and adapt along the way an equally importantly as we seek the resources we need to get the job done. now i should note of course i could have easily put a rock in the first bucket as

an example of arab state willing to trade political violence for peaceful if complicated political wrangling. in afghanistan and pakistan the secretary's february speech at the asia society sets blueprint for our strategy. i recommend those of you who haven't read it you should do some in many ways that speech has gained a larger audience in the region than back here as people have looked at it very closely as the road map for particularly the diplomatic dimensions of our strategy going forward. its core is to begin to transition in afghan lead this year and end at 2014 while securing a long-term partnership with the government and people of afghanistan. this is familiar i think to just about everyone in the room. the strategy is built on three surges. first a military surge putting under pressure sure on taliban and extreme i've allies. second a civilian surge designed to strengthen government, economy and civil society in sew doing

to weaken the insurgency and third increasingly crucially a diplomatic surge in support of a afghan-led political process designed to split the taliban from al qaeda and help stablize the region. we're supporting afghan-led efforts to reconcile those taliban who meet clear and defined red lines and in pursuing a regional diplomatic initiative to secure the buy-in of afghanistan's neighbors. pakistan is obviously critical to what we're trying to achieve in afghanistan, not to mention to our broader ct efforts. i was with secretary clinton and admiral mullen with their discussions last week in islamabad. it is clear the killing of osama bin laden is inflection point to our relationship with pakistan. we're looking for pakistan is to join us in taking steps to common fight to terrorism and play a constructive role in afghan-led reconciliation. as we do so we have already engaged in and will continue to engage in candid and specific, and yes, sometimes

difficult conversations on the path ahead. and building on the efforts of richard holbrooke, we are intensifying our regional approach to the af-pac challenge. that you discussed earlier today. the third areas effectively managing our major relationships. for starters our allies which is timely topic given the president's trip to europe last week. we worked hard to revitalize our atlantic & pacific alliances and sharpen them for the modern challenges we face and this work continues. when you sit in a bilateral meeting with a european leader and hear the long list of issues we're working on together, endless list focused on everything around the world you realize just how crucial our allies are. across the board we count on them to help share the burden and their contributions have been impressive. 40,000 troops in afghanistan, cooperation on iran, leadership on libya, help with guantanamo, joint efforts on climate change,

counterterrorism, global development, nonproliferation and so much else. we're deeply mindful that we share not only a long history of working effectively together but also the common values and interests that make them our most necessary and valued partnersers in. let me spend a few beats longer on our work to build partnerships with emerging and reemerging powers. worth reminding the rise of these powers is largely a good thing. widening prosperity and economic growth of states with growing capacity of increasingly successful societies. and whatever the bumps and challenges this is positive for our long-term interests and for prospects building the kind of global architecture we'll need going forward but it is also meant to adjusting our focus. so we're investing heavily on relationships and institutions bilateral and multilateral formal and informal that can help channel these new actors towards constructive ends. our strategic dialogue bring

immediate important results in their own right but just as importantly they provide balance for the relationship in moments of crisis or strain. you all probably know about the strategic and economic dialogue with china and the binational presidential commission with russia and u.s.-india strategic dialogue but just as important are the relationships we're institutionalizing with less prominent but still essential players. with southeast asian nations through our sessions with the treaty of amitn and cooperation. through the african union and through enhanced engagement or turkey with the enhanced cab nell level push to enhance trade and economic ties. this week along the secretary held dialogues with brazil and colombia and the conversations in those dialogues were much more global than they were regional. just as crucial is integrating these rising players into reformed international institutions making the g 20 the primary forum for international economic coordination as a good example insuring the governance of the imf and world bank better reflects

global economic shifts some is our enhanced participation in the east asia summit and the regional forum and first in india and again brazil president obama confirmed our commitment to moving toward a reformed u.n. security council that reflects 21st century realities. that will be the first to admit this is learning process and occasionally frustrating one and not just for us. even if having more actors on the global stage is generally a good thing that doesn't always mean they will do what we want, when we want, how we want. but we need to take a long view. and above all, when we go through theries of core objectives that the president outlined at unga in 2009 and i referred to at the outset of my remarks we simply can't achieve them without common action including from these emerging powers that goes for updating and strengthening the nonproliferation regime. it goes for stablizing the international financial system. it goes for finding effective solutions to climate change and so on. the fourth major area is

pursuing economic statecraft to promote growth and protect the international economic system and more often we as foreign policy community realize that is the best means to advance first order foreign policy goals. we recognize that we can not remain strong in the world unless we're strong at home. this is a maxim that i think everybody in here would subscribe to and probably has repeated once or twice. we believe that it should be a foreign policy priority and a core diplomatic mission then to help drive our domestic economic renewal and to advance our economic leadership in the world. even as we finalize trade agreements with south korea, panama and colombia, the legacy items we're pursuing a forward leaning affirmative agenda to promote fair competition to address some new barriers to trade popping up behind borders and to deal with the growing power of markets and growing role of states in those markets. we're equiping our diplomats with new tools and resources to advance our economic objectives and deal with new

economic realities. the bottom line is that our foreign policy can't simply go where the threats are, strategic and economic reasons, we have to go where the growth is as well. in asia where much of the history of the 21st century will be written, we're seeking a deeper and more durable engagement than ever before across the board. secretary clinton speaks often of forward-deployed diplomacy, a rehe can mr. shun of our commitment to embracing america's role as a pacific power in a region growing in strategic and economic influence. among other things we're taking historic steps to the strengthen the institutions of the asia-pacific and we're working to expand our economic ties through vehicles like the trans-pacific partnership. in latin america secretary clinton has talked about the power of proximity. 43% of our exports stay in the western hemisphere. we export more than three times as much to latin america as we do to china. and the region's economies

grew by 6%% last year. the growth we're seeing in our own region can help drive economic recovery, can help generate new and capable partners who can join us taking on global challenges and building stronger economic ties across the western hemisphere is therefore both a strategic and economic priority for us. of course we're also looking to our closest allies to shore up the current rules-based economic system just as we work together to promote global stability and security. europe represents more than a quarter of the world economy. japan is a vital trading partner and a global economic force. and we're looking to redouble our efforts to lower economic barriers between us and to stand together behind our shared economic values. finally i point out that the economic package the president announced in his speech on the middle east is a good example of deploying economic tools to help advance political and strategic as well as economic ends. the fifth major area is changing the way we do

business so that we can effectively, excuse me, so that we can operate more effectively in the 21st century landscape. none of what i'm talking about today is possible without upgrading our capabilities. from the start secretary clinton has talked about three ways in which she wanted to put the state department and usaid on a 21st century footing. these are reflected in the president's national security strategy and quad dren yeel development review. elevating dell haven't as core american power along with diplomacy and defense. updating our approach to development to prioritize accountability and results. second reaching beyond government to civil society, business, people themselves and so on so that our diplomacy more effectively accounts for new actors and new stakeholders. and third, promoting and leveraging the power of connection technologies to empower people and produce positive change. what the secretary calls the

21st century statecraft agenda. now, many of these things, excuse me, many people saw these things, development in diplomacy beyond government and the role of technology, as important and interesting, sure, but a little less develop haven't to our core diplomatic agenda. i bend reporters ears about these and they would say to me that's nice but what about afghanistan or china, the middle east peace process? what events in the middle east over the past few months have shown us is these elements are not on the periphery of the national security space. the growing power of individuals in civil society to take on governments, the political impact of the material conditions of people's lives and the role of technology from twitter to satellite television, these elements have converged along with other important trends to contribute to significant shifts in power. they're helping to transform the political, economic and

security environment across the middle east and we expect them to keep shaping and effecting events and affairs around the world. there are obviously other critical and sometimes more boring but essential pieces to the institutional reform agenda and i commend the qddr or at least the executive summary to all of you unless you want to wait for the movie. the review systematically walks through the ways in which our operating environment has changed and then recommends corresponding changes in how we do business. so for example, we're doing more to empower chiefs of mission in the field. we're creating new capabilities to deal with crisis stabilization and transition. we're reinforcing the trend towards an increasingly operational state department. and we're promoting women's empowerment as a potent means for advancing all of our foreign policy objectives. the review provides an important blueprint now as with so much else, the challenge is execution.

as cnn asked own assessment of the qdr correctly pointed out. so those are the highlights. now, some of you may be asking why this list? what does it all add up to? this brings me back around to the core project of securing american leadership in a changing world. these five areas are fundamental to that project. our leadership depends on one, responding effectively to the biggest change of our time in the middle east. two, protecting our biggest investments of effort and resources in iraq, afghanistan and pakistan. three, managing our biggest systemic challenge, the rise of important new actors in the changing international system. four, strengthening the biggest source of our power, our economy. and five, putting our people and institutions on the right footing for the 21st century. that is what we're trying to do along with everything else i didn't mention but hold so very dear. and we're trying to do it with a measure of

flexibility because if we have learned one thing in the last few months that you have to have flexibility and full measure. with a spirit of entrepreneurship and innovation and bipartisanship, and yes, with a healthy dose of humility. this is really hard stuff. we know that we don't have all the answers and we'll need to draw on all of you to help us work through these challenges over the coming months and years so i look forward to the conversation today and i look forward to collaborating with many of you as we move forward and with that, i would be happy to take your questions. [applause] yeah? >> thank you very much for the broad scope of your remarks and the vision you

outlined. how, my question is very simple and hard. how are the cuts that are inevitably coming in fy-12 going to have an impact on what you're trying to do and how are you planning for it? >> that's a great question. for, for those of you at the back, you may have not heard, she asked about how the cuts that have already come in the continuing resolution and in fy-11 and we hope are not inevitable in the fy-12 budget. we're making the case to congress for every possible dollar that will affect what we're trying to do. i would say three things about that. the first is, it makes the imperative of the implementing the institutional reform agenda in the qddr that much more urgent because we have to be able to make the case to congress that we're stretching every dollar as far as we can possibly stretch it and we have to show them that we are finding ways to increase

efficiency and to deliver more effectively with each passing month and so developing that case and being able to sell it on the hill is an important part of the work that we're doing. the second way is that, we have to take the case beyond the immediate halls of washington and, build a constituency, broader constituency. in this i would like to enlist everybody who is in this room across the country for what we're trying to do. because at a time when you're at, eight, 9% unemployment, people's first instinct quite naturally is, why are we sending a bunch of dollars overseas to places i have never heard of in some instances and places that don't seem to like us very much in other instances? and we have to sharpen and and clarify our answer to that question because we have good answers. at the end of the day the dollars go into the state

department and usaid budget are national security dollars and many of those dollars come at a huge savings what we would have to spend in military action down the road if we didn't do this. these are all arguments familiar to the people in this room but we haven't, a, been able to sell effectively enough beyond this room and b, maybe more importantly, we haven't been able to make concrete for people to really understand it. part of that is institutional issue. with us, building the apparatus to be able to sell this case for effectively and part of it is an issue that is part of secretary and tom nies and are focused on in the coming months as we hit these budget battles but then there is the third substantive answer to your question that we're going to have to make tough choices. we, our esf account got hit, i'm not a budget guy so don't quote me on the numbers but on order of a couple billion dollars. that is a huge cut when you're talking about a relatively small esf account

and it has an impact on countries around the world. and so, it is forcing us to make very difficult choices about where we invest our dollars and where we, where we have to cut back. and, it doesn't just have the impact on money that goes out into countries around the world. it also has the impact on our efforts to rebuild the capacity of state and aid that have been a roading over. the growth rates that we were looking for. other institutional needs that we had. . .

>> we believe we'll be able to make it even more effectively. >> yeah. >> [inaudible] oh, thanks. there's a lot of trouble this united states with unemployment, right? >> yeah. >> and we know that economic development has good effects on security and stability. what about getting americans jobs overseas? what about a big program to employ americans, train americans, send them over to work on, to work on development, and you sort of kill two birds with one stone. >> i think it's an interesting suggestion. i think the secretary and others in our government have been even more focused on creating jobs here at home based on opening

new markets and creating new investments abroad. just to give you a couple examples, one of the largest investors in china is yum brands which owns kfc and pizza hut. there are now more kfcs in china than there are in the united states. the growth of that franchise there, you know, creates more revenue for an american company and can create more jobs back here in the united states as a result. a second example is at the intersection of development and business. countries around the world are spending hundreds of billions of dollars in new infrastructure projects. we should be competing for those projects, american companies, american engineering companies, american raw materials companies should all be competing in a different way as we watch india or brazil or algeria add huge dollar amounts to their capital budgets x. and so when i talk about one of our major

priorities connectioning domestic rule to foreign policy, it's not merely going and, you know, trying to get a foreign government to buy airplanes or ge or whatever. it's new and creative ways to look at emerging markets as places where we can invest effectively to create the kinds of jobs here at home that, ultimately, will power our own economic growth. and let's keep in mind the foreign policy dimension of this. the more that we can consolidate and insure that we remain on a positive economic path and secure our domestic economic renewal, the stronger a platform we have to be able to project economic influence and power around the world and, therefore, overall influence and power in advancing our interests and values. yeah, at the back. >> i'm paul of cherry hope

international. i was pleased to hear you saying you're going to use connectivity oz a strategic advantage. and it occurs to me like things where you could have support, development in afghanistan through connectivity with experts here in the states looking to do that, actually, not relocated but working in the states. so could you maybe expand a bit more on how you guys plan on doing that? >> there's a whole range of different ways in the which our 21st century state craft agenda supports not just the values we espouse, our freedom values we espouse, but development in different places. afghanistan is one example. we've undertaken efforts to, um, promote mobile banking. which has a direct security impact because you can deposit the salaries of afghan national security forces through mobile banking, through connection technology as opposed to drying

to deliver cash to local banks and so forth. the, we have a program called apps for africa where we ran a competition for the creation of new apps that would help people who are trying to drive development in various sectors across the continent of africa. one with example would be being able to get weather forecasts, seed prices and other critical agricultural information delivered to people on their cell phones. and you'd be amazed at cell phone penetration throughout the developing world. and other apps, you know, apply in many different ways. in mexico, for example, we're starting up a program where people can anonymously contact security services in a way they were never able to before, therefore, having to fear relate retribution from drug cartels through a technological service that we've helped create partnered with the private sector and mexico and the mexican government to institute. and those are disparate examples

that each serve different purposes but all point up the growing capacity of connection technology to create greater security, create greater development and at the same time, you know, have us not lose sight of trying to drive the values of openness and connectivity that, you know, played some role. and people can debate how much in what we sell across the middle east and north africa over these past few months. yeah. >> hi, j.j. sutherland with national public radio. i was just going to ask you about a cost effectiveness linked to your process in afghanistan. we seem to have invested billions and billions in that country to not great effect in terms of our national interests. how have those conversations been going and how have they changed in the past few weeks? >> we sort of have two strands to our economic support to

afghanistan. one strand involves support for the military and, in particular, etch sizing support -- emphasizing support to the military as they take the campaign to some of border areas in afghanistan. a large increase in civilian assistance is geared toward creating greater economic opportunity, trying to drive some degree of economic reform and to demonstrate overall that the united states is committed to the people of pakistan over the long term to create the environment for a more effective relationship. now, as the secretary and admiral mullen said when they were in pakistan a few days ago, it's no secret that there are hard questions being asked on both sides about what this partnership is bringing, what it's delivering, and one subset of those questions is exactly the point that you're getting at. i think our view on this is, um,

that we share common interests with the pakistanis on at least three major areas. number one, on counterterrorism, number two on producing a stable region and in particular a resolution to the conflict in afghanistan and, number three, in trying to promote economic growth and economic reform in pakistan so that over time it becomes a more stable and prosperous country. and we have seen some degree of progress in many each of those three areas and also some degree of access setback. and what the secretary conveyed to the pakistanis was that at the end of the day the united states is prepared to move this partnership forward, but with it, of course, has to be a two-way street, and we have to be able to work together to take decisive steps against violent extremists, and we have to be able to work together to promote the kind of political, afghan-led political reconciliation in afghanistan. and, you know, the president has

said repeatedly since the killing of usama bin laden and the secretary as well that we cannot forget the sacrifices pakistan has made in this conflict. they've lost tens of thousands of lives, and they have done a fair bit to help us in the fight against violent extremists, a fight that they have to fight as well because it's in their interests. but we've also made clear there is much more work to do and that that work is absolutely urgent. and so when we sat down with the pakistani leadership last week, it was as the secretary said in her public remarks, in these main buckets, in these main areas, the air of counterterrorism cooperation, afghan regional stability and the area of economic growth and reform in pakistan that the conversation centered as we looked for a path forward that would so solidify the partnershp that we have and, also, answer the very legitimate questions that congress and the american people are asking about the sorts of assistance that we're

providing to them. yeah. >> [inaudible] into a corner where they are left with almost nothing -- if they're not willing to give territorial concessions to palestinians and if palestinians go ahead and declare statehood. now, let's say that happens five, ten years down the road, how are we going to deal with that from an economic assistance point of view, and are we going to continue to -- do you see us continuing to economically assist israel if they were to become, essentially, an apartheid state? >> um, so i was told to never give a speech on priorities, and i broke that rule today. but i've also been told never to respond to hypothetical questions. [laughter] and looking at that question and seeing all of the red flags, i

understand why. [laughter] it is, actually, impossible for me to get into a hypothetical that you describe, but i will say that our commitment to israel's security as a democratic jewish state is absolute, and it's rock solid. and this administration has elevated that commitment through very practical forms of cooperation. at the same time, our commitment to a two-state solution, to secure israel living alongside a secure palestine that redeems the legitimate aspirations of the palestinian people is a core national security interest and objective of the united states. so that's the baseline. i think the premise of your question, um, which is that the status quo is unsustainable, is something that we fully embrace, and we say on an almost daily basis. there is a technological clock

ticking, there is a demographic clock ticking, and there's an ideological clock ticking as the voices of those who say rejectionism and violence will get you more than negotiation and moderation will. and as each of these three clocks tick, the space for a solution, um, a solution the broad components of which, i think, are well understood by all sides begins to narrow. and that is why we believe it is so urgent to stay focused on this. there are some who have said, well, let's just park it. let's park it for a while and come back to it later. but a vacuum in the israeli/palestinian conflict or in the broader arab/israeli conflict has never borne good fruit, and we don't believe it would in this case. and so our goal, as i said in my remarks, is to set out an effective pretty call horizon to give -- political horizon to give shape to the work ahead, to begin to return to negotiations

that could actually lead to an agreement and to promote the voices of peace as opposed to the voices of violence and rejection. and along the way to do the two things at the outset that i said, to keep in mind that a secure israel is something that we will fundamentally stand behind, coming and going no matter what. and that we will remain steadfastly commit today a two-state solution. it's very challenging, very difficult, and this is an area where i think the variety of opinions is as broad and deeply felt as anything i've ever seen. people say you're idiotic for not going far enough, and people say you're idiotic for going too far, and what we are trying to do is manage a set of quite imperfect choices created by circumstances by having some

degree of political leadership that can point forward that horizon that i was describing. yeah, right there. >> um, michael persicke, rutgers university. is the white house worried at all about the future of nato given some of the recent arguments that nato has happened

within the alliance -- germany be involved in libya or some defense soldiers to fight in afghanistan? is there a worry about nato being a weakened alliance, essentially? >> in a word the answer to that question is actually, no. and i don't mean to state that glibly, but i can state it quite firmly. the lisbon summit last year we regarded as a tremendous success. not only did it produce alliance unity on major questions like the future of afghanistan, not only did it produce renewed and creative cooperation between nato and russia and nato and other partners, but it also delivered a new strategic

concept that updates nato's orientation and missions for the 21st century and looks at new threats that the alliance hadn't previously been situated to deal with as effectively as it should have been; signer and counterterror -- cyber and counterterrorism and the like. and we actually look at the libya example as one that has shown what nato is capable of doing. we transition command and control from the united states to nato. nato is sitting in coalition format with arab partners and others and carrying out this mission and doing so in a clear-eyed and effective way so that when we were in berlin for the foreign ministers meeting a few weeks ago, we laid out the objectives with a minimum of disagreement. we laid out the desire for a steady operational tempo to go at those objectives, and that's exactly what nato has been doing in day in and day out. and in many ways it's been quite impressive. when the obama administration

came into office, there were real questions about the nato and the u.s. transatlantic alliance, and i think those questions -- no question is ever answered because the system changes, but we have delivered a pretty emphatic answer in the last two years in terms of what nato has been able to deliver through its troop contributions in the afghanistan, through its actions in libya and so much else. and i think the vision at lisbon is a worthwhile thing to look at for everybody because it does on a broad range of issues show that the alliance isn't just unified which is always nice, but it's on a forward footing. it's looking at the new world and saying, what can we do as a community of shared interests and values to make sure that, you know, we're in the best place to be able to achieve our objectives. so we feel very good about where things stand with respect to nato at this time. yes.

>> i'm the founder and editor of chief of a new journal covering global issues. so my question to you is you said that the world is changing, and the institution should reflect the new world order. you talked about g20 being the main forum. my question to you is about the new chief of the imf. and there's a lot of talk that no longer should a european have the divine right to head that institution. particularly since they are now the biggest debtors to that institution. so what is your administration's stand on it, if at all you are at liberty to talk about it? >> i'm very happy to tell you i'm not at liberty to talk about it. [laughter] and that's not because, you know, we don't have an administration position at the moment which is we're not, you know -- we haven't formally said anything. but as the policy planning

director at the state department, i'm very proudly going to keep my lips shut to any question about the imf. i apologize for that. i'd like to be able to answer your question, but i can't. but the principle, you know, that i stated in my speech is, is one that applies across the board. and, you know, we do feel that questions like the g20, questions like u.n. security council reforms are things that are long-term strategic investments by the united states into a global architecture of cooperation that will more effectively serve our interests and reinforce our leadership over time. yeah. >> kevin greene. i'm with ibm. it's easy to see why problems, threats, challenges fill so much of your time. at the same time, as the world changes new opportunities develop as well, and

particularly with regard to partnerships. in that line and on the same chord as the changing world and so forth, what can we expect to see with regard to our relationship with brazil going forward across the spectrum; economic, diplomatic and so forth? >> so, um, the secretary clinton and foreign minister pat rote that just held the global partnership dialogue just yesterday. i believe it was yesterday, these things all run together where they went over a truly global agenda. and we believe that we have opportunities to engage with brazil on, basically, every significant strategic, economic and dip diplomatic issue in the world. they are a member of the u.n. security council, so the secretary and the foreign minister spoke about the range of issues and how we can work effectively together.

they're a leading regional player, and so there was discussion of questions like the readmission of honduras to the organization of american states. they are a growing economic player, and the kind of economic player who can be a great partner with us in creating win/win economic growth and cooperation. and to that end, there has been an enhanced engagement at the private sector level, ceo forum between the united states and brazil. and that's something that we're trying to reinforce and grow. and they are, also, a growing actor in, um, you know, spaces like values and development. so, for example, when with secretary -- when secretary clinton went to the inauguration of president rue receive on new year's say, their conversation, the point at which each of them got the most excited was talking about joint development projects between the united states and brazil and africa. that would have been unthinkable, you know, some

period of time ago. but brazil has a sense of it growing role on the global -- its growing role on the global stage and, by and large, wants to contribute in those ways. you know, in the climate change space and the sort of sustainable environment space, brazil also has a very important role to play both because of what it is and who it is. and, obviously, it's going to be hosting rio plus 20 next year which will be an important exchange for environmental issues. so i could literally go down the list and talk about all of the ways in which there are opportunities. but at the same time, that doesn't mean we're going to see eye the eye on everything. obviously, the signal example of that in the last two years was the vote on 1929, the iran sanctions resolution. and there are the other disagreements. we called for the readmission of honduras well before the brazilians felt it appropriate to do so.

and that, um, the capacity of the u.s. and brazil to be able to manage those differences, attempt to narrow the areas of disagreement and expand the areas of cooperation will be a great test of whether we're able to take advantage of the tremendous possibilities of this partnership as we go forward. and the secretary and others, including ambassador shannon who had previously been the assistant secretary for the western affairs are very focused on this while mindful it's not always going to be a piece of cake. yeah. >> [inaudible] the past chairman of the open forum -- in learning what steps are being taken now to promote internal discussion, debate and to protect dissent within the department of state on the development of foreign policy, and how much does the foreign policy parts of the department of state draw upon the outside

foreign policy establishments in academia and think tanks like this? how do you draw upon the expertise that is outside the department of state in furthering american foreign policy objectives? >> i actually planted that question because it gives me an opportunity -- i didn't plant the question. [laughter] but it does give me an opportunity to boast about one of the things that i'm most proud of in just the four months that i've started at policy planning. what i've done is, along with the help of my team, is launched a monthly speaker series where we ask the bureaus and the offices of the state department to nominate young foreign service officers and civiller servants who are sort of rising stars to come in small groups, 20-25 people, and be able to sit down with and have an extended conversation, debate, discussion with, um, sort of notable outside foreign policy thinkers.

so we have already done three of these, we had nouriel roubini came in, lindsey graham came to talk about the sorts of questions that you were asking. and so every month 30 or so young members of the department get to come and actually rather than just kind of do their day jobs, come engage in the world of ideas and do so with kind of true luminaries. and we feel like over time this is an investment in getting people to be more creative, to ask more questions, to have a more vibrant intellectual life. so that's one immediate thing that we have done. at policy planning our bread and butter, our way of life is engaging the academic community, the think tank community, policymakers of all kinds. and my goal as director is to try to increase the degree to which that is systematic and that it relates to more than just a nice conversation. but that it actually can have an impact on decisions being taken by people sitting around a table

really deciding things. that's a very difficult thing, actually, as it turns out. it's a difficult thing not only for people inside of government who think of ideas and then want to get them actualized, that's hard enough. but to take someone from outside of government, get their good idea and find a way to run it through the wringer of the interagency process, national security decision making process is very difficult. and my, my view is that cracking that code or coming close to cracking that code is one of the most important things that we can do. particularly later in a term as all of us who have been around since the beginning get just a little more tired and have put all of our ideas on the table and are, you know, increasingly in the market for new ideas coming from the outside. so, you know, one of the things that i would ask of everybody who's here is, you know, to the extent that you're interested in engaging with us, we want to become your partner, and we want

to do so in a way that can be actually systematic and work, that's more than just, hey, i've got an interesting idea i want to throw at you, but to think through how we can translate ideas into policy, infuse it into the policy process is something that we're very, very focused on. and, you know, i'd like to come back here next year and report on how this goes, because it's a work in progress. but it's something that matters a great deal to us, and conferences like this and reports like the ones just recently put out are very widely consumed and read and digested and, you know, wrung out for their ideas. and, you know, i was talking on my way in here with some of the leadership of the center about having some of the officers of those reports come sit down with our experts and really hash it out. so that's the kind of thing that i'm really trying to do. it's a matter of great focus for me, and i'm glad you asked that question.

yeah. >> mark kelly, office of the -- [inaudible] development efforts to be -- [inaudible] and lead to new source of instability or conflict over those added resources. what kind of metrics can we use to insure that the development we do in the developing world leads to efforts that address sources of instability and reduce long-term conflict? >> you know, there's a unique challenge in places like afghanistan because foreign assistance dollars in afghanistan are serving two purposes that should be linked to one another. purpose one is to weaken the insurgency by increasing governance and promoting local economies and strengthening civil society. that's a near term stabilization goal. purpose two is to kind of lay the foundations for longer, more sustainable development.

now, those two do not always fit together totally nicely as i'm sure you've found from having been out there up close and personal. and what we've tried to do increasingly is come up with a way to link, to build the projects that are quick impact, like the aviva plus program that, you know, very quickly provides seeds and other materials to farmers to replace poppy and the like. you know, very fast job creation, infrastructure that is the sort that can put people to work and so forth while at the same time doing it in a way that you're not just creating an unsustainable situation where if you don't keep dumping tens, hundreds, millions, billions of dollars in, the whole thing will just fall apart. it is a great challenge, a very significant challenge. it's a challenge that not just the united states faces, but the united nations, the e.u. as we work across afghanistan. and one of the things we have

really focused on in the last year is an effort to do exactly what you're describing which is to create a set of metrics where you can judge both short-term stabilization not just inputs, not just how many seeds did we sell or give away to be planted, but based on a set of outcomes. you know, the number of trained and effective civil servants who are actually standing up local government, the number of people who, of hectors that are used for lis sit crops as opposed to illicit crops while at the same time, and this is a harder thing because it's over a longer time horizon, having metrics to see whether that can be connected to a long-term development strategy. it's not an easy thing, and i'm not an expert on it. if secretary clinton were here who takes a very great interest in this, they would be able to

speak about it more intelligently than i am. but at a broad level that is what we're trying to do. and we hold ourselves to high standards which creates inspector general reports to say, okay, you made some progress and not enough and so forth, and we're constantly being pushed by not only our own internal monitoring teams, but by the media, by the afghan government, by our international partners to do more, to do better, and it's something that is a constant work in progress. but we feel like we have the basic game plan. it's a matter of executing it as effectively as possible and being systematic about doing so. yeah. >> steve with the project on middle east democracy. you mentioned that the add manager has told our gulf allies the need for political and economic reform. and on the one hand, i think that's very welcome. i think, you know, the president has rightly acknowledged that the stability that is important to our national security can only be, you know, sustained in the region through reform. on the other hand, i don't

really see any signs that our gulf allies have responded to us telling them that. you know, in bahrain despite the king's speech a couple days ago can and can the announcement yesterday of the removal of a state of emergency, unrest and violence continue. and it's perceived across the region that our gulf allies, particularly saudi arabia, are sort of leading the counterrevolution, discouraging it in other arab states. is the administration prepared to do more than just simply tell them of the need to reform and then see them ignore it which, to me, is reminiscent of what we saw in egypt in 2010 before we repeatedly told president mubarak of the need to have free and fair elections, to allow the emergency law there to expire, but that was ignored. and i felt as though the administration was reluctant at that time to use leverage or do more than just simply raise these concerns. next week the crown prince in bahrain is coming, is the the

administration prepared to take steps beyond simply raising the need for reform in the gulf? >> this is a challenge, i think, on which many people both here -- i see i have one minute, so i guess i can't answer that question. [laughter] um, this is a challenge on which many people both in the united states and around the world are very much focused. you know, when the secretary was in doha in january, she talked about the challenges of, of political systems that are not moving forward. and like bicycles, political systems that are not moving forward are liable to fall over. and her case was that the status quo here, as in the case of the middle east peace process, is not sustainable for a wide variety of countries. and that using force and security means to try to bring a situation under control alone is

not going to solve problems. so we have been very candid, public and privately, with the government of bahrain about what our expectations are and about making the case because it's not just enough to say here's what we believe, we have tried to show them per persistently why it is important to engage in a meaningful dialogue and walk along the path of reform. now, this as the president said in his speech is not going to happen in the same way, on the same timetable in every country, but what the united states can do is not just publicly and, you know, put out statements and not just privately say as, like, the fifth talking point on the page, hey, by the way, it'd be nice if you did a little reform, but make it a central part of the case that we make. and that has really been, um, one of our priorities over time, predating tunisia and egypt

going back to what the secretary said at doha, that the region's foundations are sinking into the sand and explain what that means and what the consequences of that are over time. as i said in be my speech, that's bound up in the questions about hard security as well. because, of course, bahrain would say, well, part of this is being fueled by or drummed up by iran. and our perspective has been that we don't think this was generated by iran, it was generated by the aspirations of the shia protesters who went out into the street, but that iran is looking to take advantage of the instability in various places and to cause further instability and not for positive purposes, but to advance a negative agenda. and so we have to have these conversations with our gulf allies in an integrated way that looks at the full picture. , but never looks away from the core message that we have been sending and will continue to

send as an urgent priority for that part of the region and for the region as a whole. um, so that, that does it for me. i want to thank everybody here for patiently listening to me for the last hour, and i meant what i said when i said that, you know, we're eager at the state department and policy planning and, more broadly, to have an injection of new ideas and open conversation and critique and debate about what we're working on and what we're, you know, doing well and not doing so well. so i look forward to that conversation, and i wish you all the best of luck. thanks. [applause] >> german chancellor angela merkel is in the u.s. to discuss u.s./german relations with president obama. tonight he'll host a state dinner in her honor.

coverage begins at 5:45 eastern with toasts and official photographs and a dinner at 8 eastern. we'll have it live this evening on c-span. >> the senate is currently in recess while members attend their respective weekly party caucus meetings. coming up at 2:15 eastern, the senate returns for work on a bill dealing with regulating debit card fees. we heard from senator dick durbin, who wrote the legislation, and senator bob corker on the bill. this is 25 minutes. mr. corker: madam president? the presiding officer: the senator from tennessee. mr. corker: madam president, it is my understanding that i have ten minutes. is that correct? the presiding officer: that's correct. mr. corker: and if i happen to go eight minutes or so, would you let me know i have two minutes left? the presiding officer: yes. mr. corker: i thank you very much, madam president. i rise today to speak about something that's affectionately known as the durbin amendment. during the dodd-frank debate

that occurred about a year ago and upon its passage, there was an amendment brought to the floor called the durbin amendment by dealt with debt coast guar-- withdebit cards ant cards. this amendment had nevada been debated there. had never been a hearing on this amendment. and in the height of i think people being very concerned about the large financial institutions in our country, this was an amendment that passed. i voted against it. i thought it was bad for us as a country to allow the federal reserve to begin setting prices for specific industries, as the durbin amendment called for. but, in any event, the durbin amendment became law, and i know that numbers of people in this body have been contacted since that time about the effects of the durbin amendment. what the durbin amendment did was tell the federal reserve to set prices on debit cards based

on incremental costs. let me say that one more time -- based on incremental covment in other words, when a business does business, there are fixed costs and there are incremental costs. and it would be like saying to a pizza company that sells speat as does across the counter that the only thing they could charge for is what went into the dough. i'm obviously opposed to price setting. i realize we don't have 60 votes in this body to just do away with price-fixing and generalize debit card. a lot of people believe that there is a problem, if you will, with an almost monopolistic-type atmosphere as it relates to debit cards in general. so what i've tried to do is seek a better solution than the one that has come forth. senatosenator tefort and i haved

-- senator tefort and i have worked together. we've made several rerigs to the amendment. and it's been crafted in a way to bring people together. what it really does, the essence of it is it directs the fed, instead of setting prices on debit card based solely on the incremental cost of the transaction, it allows them to consider all costs, both fixed and incremental, something that anybody in this body that happened to be in business certainly would want to be the case. so, look, i know there's been a a lot of populism in this body and a lot of people have tried to rail, if you will, against financial institutions. and i know a lot of people have empathy with retailers that find themselves in a situation where it's difficult for them to negotiator prices, as it relates to debit cards.

what this would do, though, is still leave debit cards as a regulated entity. it's not the solution i would ultimately like to see, but i think that's a solution we may be able to come to in this body. it would leave it regulated, but it a would direct the fed to consider -- to consider all costs, consider fixed and incremental costs. again, it is a very commonsense mairchlt i know there's been lots of discussions about a solution to this durbin amendment. i know it's an issue that most people in this body would like to see go away. a lot of people feel like they're being pitted, if you will, between the financial industry and retailers. i think the solution that senator tester and i working with senator crapo and others, i think the solution that we've come up with is one that meets the commonsense test. it brings people together around a policy, solving a problem that was created. again, without a lot of discussion on the senate floor

and certainly no hearings. so i would just ask the other members of the body to please talk with their staffs about the most recent changes that have been put forth in this amendment. this is not something that's trying to stave off or keep the effects of the durbin amendment from taking place. but what it does is put a more fair structure in place where the fed can actually look at all costcosts relating to a transac. again, think about it. if you were selling pizzas in a pizza restaurant, a retail establishment, and you were told that the only thing you could do is charge for the dough that went into the pizza, nothing else, none of the rent, none of the other costs that go with operating your facility, obviously you wouldn't be in business very long. i think all of us want to see the financial industry continue to innovate. i think all of us see a day when we're going to be able to basically pay bills with our

electronic devices and continued innovation is going to take place, which causes our economy to expand. and i do believe that this amendment has shaped by numbers of members in this body, meets the commonsense tevment i think it provides a good solution for those people who actually voted for the durbin amendment on the floor and realized afterward that what was happening was putting in place a price structure that really is not sustainable for debit cards and over time, no question, over a very short amount of time quickly is going to be very adversely affecting consumers all across this country. so, madam president, i thank you for the time. the tester-corker amendment is an amendment designed to create a more productive solution than we've offered under the dodd-frank debate and the durbin amendment. and i hope that all members of this body will look at this

seriously. i know everybody has been contacted. this is a very contentious issue, i understand. the solution that's being put forth is being put forth, again to solve a problem, not to take one side or another. it leaves the debit card industry as a regulated industry, but it allows the fed, as it should, to take into account both fixed and incremental costs, as they look at what the pricing structure ought to be. in addition, i know a lot of people have been concerned about what's going to happen with small financial institutions. obviously, their costs of debit transactions is much higher than the larger institutions in this country. people have been concerned about the impact on them and what this would also do is give the fed the ability every two years to see if the policy that they put in place is adversely affecting the smaller, rural banks, the community banks, smaller credit

unions, to make sure that if they are being affec being affed adversely, then they can recommend some legislative fixes to that. so, madam president, again, i hope members of this body will see this as a reasonable solution. i urge all of you to contact me personally or senator tester personally to talk this through, if you have any questions. and hopefully we can bring to an end this contentious debate over an amendment that was passed on the senate floor without any hearings, and i think all of us know is going to create a lot of unintended consequences for people all across this country. and with that, madam president, i yeef. mr. durbin: mr. president? the presiding officer: with some reservation, the senator from illinois. mr. durbin: mr. president, i ask consent to speak as if in morning business. the presiding officer: without objection. mr. durbin: mr. president,

there's a prohibition in the u.s. constitution from cruel and unusual punishment, and the fact that you would be presiding in the chair when i am going to be speaking on an amendment which you are offering is truly cruel and unusual, and i'm going to inflict it anyway. i will try to be as gentle as i can in the process. very briefly, i want to thank the senator from rhode island for his comments on the tax code and the need that we have in this country to address taxes in a responsible, humane, and i would add progressive way. i think he has made the point overed and over again, which i will make myself in just a few moments, and i think the senator from vermont may follow me, but before i'd like to address what is known affectionately as the tester-corker amendment, which was brought up on the floor earlier this morning by senator corker of tennessee, one year

ago -- to be more specific, about 11 months, we had a big debate on the floor of the senate about wall street. what are we going to do about wall street and the practices on wall street which hurt our economy? especially we were worried about the last recession and some of the things that happened on wall street at the biggest banks and bifght insurance companies that hurt americans across the board, that reduced the value of your savings and caused us, as a congress, with president bush's cooperation, to pass a basic bailout bill, sending billions of dollars to these banks that had made stupid, reckless decisions that recognidecisionse economy and try to save them from go under. think about that. here are the biggest cooperations in the united states that made terrible decisions -- some would say failed -- which harmed our

overall comirks harmed individual families and businesses across the board, and then as they were about to sink out of sight, they said, you've got to saves, send us taxpayers' money. i will tell you is i voted for that. i am not proud or happy with that situation, but when the chairman of the federal reserve and the secretary of the treasury come and say to you, as they did to us, this could be a catastrophe equal to the great depression, if you don't do something, i thought to myself, this violates every value that i have about these wall street financiers and the way they operate, but i can't let the moron economy go down. and i -- but i can't let the american economy go down. and i think several on this side of the aisle felt that way. hoh how did they reward us? what was the "thank you" dhard they sent to the taxpayers of america? they gave themselves bonuses,

multimillion-dollar bonuses. these same banks in their reckless stupid tirks driveling us into a recession, bailed out by taxpayers, then came back and announced they were giving each other rewards for great performance, millions of dollars -- it final lindhed up being billions of dollars -- it finally ended up being billions of dollars, to these big banks. outrangeous. so last year we sat down with the dodd-frank bill and said we're going to change some of the rules you play by up in wall street so you never have a chance to do this to america again. we went through a broad array of things that we considered. one of the things that we considered affects every -- virtually every single american and that's the use of something called a debit card. you may not think twice about it, but for those of us who've been around a little whiecialtion there was a time when we had cash in your wall

street in ain your wallet and a checkbook. then came credit cards and this new invention called a debit card. a debit card is basically a plastic check. when you swipe that debit card for a transaction, money comes out of your checking account and pays the merchant you're doing business with. it's a great convenience. i use them now, i think, more than half of purchases across america are used to using debit cards and credit cards every day. but at the same time that there was this growth in the debit card use across america, something else was happening that was entirely invisible to the public. each time that a debit card was swiped, the banks ended up taking a feesm you say, that's not unreasonable. they should be taking a feevment they used to collect a fee for processing checks. why wonk they collect a fee for using a debit card?

except something was going on that we weren't aware of until we looked into it closely. they were raising the amount they were taking each time the debt card was used to now the highest level debit card transaction fees in the world. now the federal reserve tells us they charge, on average, 44 cents every time they swipe a debit card. in other words, if you are running a little store in springfield, illinois, and a person walks in -- and i've seen this happen -- and say, i want to buy $1.2-9d pack of gum, hands over the debit card, and they swipe the debit card, that merchant in that little store has got to look at it and say, i just lost money. i wasn't going to make 44 cents profit on the sale that have pack of gum. now i have got to pay that to the bank or credit card company. 44 cents.

so what we did is we said, let's take a look and see what is with a reasonable charge to pay to the bank and credit card company and the federal rerks if anything, has a strong bias toward the banking dry, always has. never viewed as a consumer protection agency. came back and said, it ought to be 10 cents or 12 cents, one-third or one-fourth of what's being charged. the federal reserve, establish a reasonable, proportional debit card swipe fee so that consumers and retailers across america are not giving to the banks across this country, particularly the largest banks across this country, this windfall every time a debit card is swiped. sounds reasonable to meevmen me. these merchants had no voice in determining how much was going to be charged hon a debit card transaction. they were stuck with it and it was invisible and it was killing

them. well, what happened? what happened after we passed this? the banks and credit card companies across america went on a war path. we've got to stop this debit card amendment. they have spent a fortune lobbying congress, working the members back and forth saying, you got to protect us. you can't let this new rule go into effect which reduces the fee we collect every time anyone uses a debit card. why would they lose sleep over 44 cents? add it up. every month in america the banks are collecting $1.3 billion from consumers across america every time you use a debit card to buy gasoline, groceries, go to a hotel, restaurant, make a contribution to the red cross or the middle of a disaster, pay tuition at a university. they're taking a percentage out

of every transaction to the tune of $1.3 billion a month. that's why they have moved heaven and earth to stop this new rule from going into effect, which reduces the fees that these banks, over half of them the largest wall street banks, are collecting. we're going to have a vote on it this we can. it is an important vote. and it is a vote that i think will be a test as to whether or not we're going to come down on the side of sciewrntion small businesses, and retailers in -- the side of consumers, small businesses, and retailers or on the side of wall street banks and credit card companies. interesting test, isn't it? to find out where the senate is going to come down on this. i think it'll be a close vote. and it is important. senator corker of tennessee came to the floor earlier and said, we've come up with a solution. there is a new version of our amendment today which we're going to offer. some members have called it a compromise. it is not a compromise. a compromise suggests that both sides came together and agreed on something. there has not been any input

from the retailers, small businesses, and consumers across america. the only compromise is among the big banks and bigger banks in terms of what they're going to collect on these debit cards. and i will tell you point-blank: if the purpose of this amendment was to protect credit unions and community banks, there is a way to do t we can give them moratessurances beyond what the law already says, which i think is totally adequate. this amendment doesn't even address it. what it addresses is the overall issue and the billion dollars plus that these banks want to keep collecting whoil while a so-called study goes on for another year. they want to include, incidentally, they want to include in the reasonable cost for the debit card executive compensation, compensation of bank officials. how much compensation do we give to those who work at the wall street banks?

it turns out that last year it was $20.8 billion in executive compensation. they want to add that in, part of the operational costs of using a debit card. the bonuses? we're going to pay for the bonuses? that's a reasonable debit card cost? i want to tell you, this amendment is written for and by the banks. look for all the organizations in this new amendment and try to find one consumer group, one small business group, one group of retailers harass par who are. so the debate will ensue for the rest of this week on this amendment of i think it is a critical amendment of i hope my colleagues will stand by me and the federal reserve, the vote we took last year. i see the senator from vermont is here, and i was told i had a few minutes to speak.

and he appears anxious, so i will make my remarks on the other subject brief and ask consent that they be put in a separate place in the record. the presiding officer: without objection. mr. durbin: the sno senator from rhode island talk about the tenth anniversary of the george w. bush tax cuts. these were tax cuts that primarily benefited the wealthiest people in america. and we recently renewed them. there was a decision made to keep the economy moving forward, we weren't going to raise taxes even on the wealthiest people. but it's worth reflection for a moment about what happened when we cut the taxes 10 years ago. the promise then is the same promise now hear from the other side of the aisle. if you'll just cut taxes on the wealthiest people in america, our economy will flourish. well, it turns out that was not the case at awvment in fact, what happened is that we saw the economy suffer.

ten years ago president bush signed into law the first massive tax cut. he said, this tax relief will create jobs. the month that the first bush tax cuts were signed into law in june of 2001, the american economy had 132 million jobs. 1n jobs. three years later we were down to 130.4 million. the economy lost jobs in the three years following the bush tax cuts. and over his eight years in office, job growth under president bush was 4.8% compared to 16.2% under president clinton. before i defer to my colleague from vermont, let me tell you one other fact that is worth noting. first, when president clinton left office and president george w. bush took over, we had a surplus, a surplus that was keeping the social security trust fund flush with money and growing in strength.

at that time the national -- net national debt accumulated since george washington, $5 trillion. $5 trillion. when clinton left office and bush took over. fast forward eight years later as george w. bush left office. what was the situation? the national debt had more than doubled to more than $10 trillion. and the projected deficit for the next fiscal year for president obama, his first fiscal year, $1.2 trillion, the highest in history. what happened? we wage twaod wars and didn't -- waged two wars and didn't pay for them, wars in iraq and afghanistan. we added them to the national debt. and president bush for the first time in the history of the united states did something no other president had done. he cut taxes in the midst of a war, which is counterintuitive. you don't have enough money to pay for the ordinary expenses of government. now you've got the new expenses of war and you're cutting taxes?

not surprisingly this added dramatically to our national debt. so now comes the republican side again with our economy still recovering, unfortunately too slowly, and their recipe is tax cuts for the wealthy. i would say that those of us who are fortunate to live in this great country and to have the comfort of a good salary shouldn't betkpwreupblg paying this country's -- begrudge paying this country's debts and this country's needs. i think it is part of our responsibility of citizenship. there are those who are struggling to get by in lower-income and middle-income categories that i think need a helping hand. those at the highest levels of income -- over $250,000 a year, over $500,000 a year -- shouldn't be angry about accepting more responsibility in trying to help this country move forward. the bush tax cuts did not help create jobs. they caused the deficit to explode and they made it even worse in terms of our inequality

of income. why would we want to do that again? there are 13.09 million people in -- 13.9 million people in this country who want to work and can't find a job. millions more accepted less hours than they would like out of desperation. we should be focusing now on creating jobs in america, good-paying jobs that stay right here at home. we ought to be helping middle- and lower-income families struggling to get by. we ought to deal with the budget in honest terms, cutting spending where there is waste and misuse of funds, and then saying we need revenue on the table as well. we need to make sure that we have a bipartisan approach to this. mr. president, i will continue in that effort to try to reach that goal. but i hope that we have learned a lesson over the last ten years when it comes to tax cuts for the wealthy. they led us to the highest deficits in our history, and at deficits in our history, and at

hardship. >> chairman gensler angela merkel is in the u.s. to discuss the u.s. chairman relations with president obama. tonight to host a state dinner in her honor. coverage begins at 5:45 eastern with toast and official photographs and the dinner at eight eastern. live this evening on c-span. the senate is currently in recess while members attend their respective weekly party caucus meetings. >> "washington journal" continues. host: joining us from new york is ethan nadelmann, the executive director of the drug policy alliance. we brought to want to talk about the report that came out

recently, giving the global sense of the drug war. can you give us the general genesis of the findings? guest: it is a remarkable development in terms of global drug policy. a number of very distinguished former presidents from brazil, mexico, the european union, switzerland -- even paul volcker, richard branson, many others, they came out with a report that was devastating in u.s. and global drug control policies. they say that the reliance on criminal justice institutions devon's -- developed into an enormous disaster, empowering criminals, spreading disease and addiction rather than impeding it. they called for a paradigm shift. saying that people that used

drugs without hurting anyone else should be left alone and that we need new law enforcement strategies that focuses on reducing the power and intimidation rather than drug markets. quite importantly they said that there must be support for experiments in legally regulating drugs, especially marijuana. but even with others, they said. let's try to find intelligent ways to regulate these drugs so that we can reduce the harm of drug coalition and drug abuse. host: what evidence is there from the results that these people wanted to see? guest: the first is the obvious failure of the current approach. when you see the amount of drug abuse around the world, sustained and growing, you see the failure. when you see the violence in

mexico, central america, africa, that is what motivated kofi nanon to join the coalition. remember the prohibition of alcohol? we did so hoping we could eliminate alcohol problems. all that emerged was organized crime, violence, corruption, what have you. the second piece of evidence is that when you look at the countries that have decriminalized the possession of drugs -- places like portugal, switzerland, parts of europe, you see that there is no increase in drug use as a result of those policies, but you do have decreases in overdose fatalities, arrests, people going to prison, what have you. moderate measures of

decriminalized drug use appears to have fewer risks. as for broader legalization, look at the experience of post- alcohol prohibition. we took a major source of revenue organized crime away. in the netherlands they have more or less regulated the cannabis situation for 30 years and the levels of marijuana use of less than here. -- are less than here. people are afraid of what the alternative should be. this distinguished group comes along and says that we need to lose some of our fears. that we need to open up a dialogue and experiment with alternative approaches. host: if you want to ask questions of our guest in this report and the findings that were done in the drug war, as it is known in a global sense, here

is how you can do so this morning. three lines set up. for republicans, 202-624-1115. for democrats, 202-624-1111. for independents, 202-624-0760. you can send us an e-mail, if you wish, at journal@c-span.org. you can send us a tweaked from -- tweet from twitter.com/c- spanwj. fort wayne, indiana. go ahead. caller: i agree with your guest. i think that'd is an absolute neanderthal thinking to say that some sort of bilal will present people from doing what they need to do. i do not think that you should put a person in jail for doing here when, cocaine, alcohol, as long as they do not endanger the life of someone else.

prostitution, drugs, you are legalizing the attacks. the guest was absolutely right. the entire idea of ron paul -- they asked him about legalizing drugs -- with that not make a person to hear when? i do not need a government to tell me not to make that choice. host: is it as simple as that? legalize everything and the problems go away? guest: it is not quite as simple as that, but i basically agree with the sentiment of the caller. alcohol and cigarettes are treated differently from other drugs. i think that the policy of treating them all the same and throwing people in jail for making, selling, buying these things, your respective of the harm they do, is ludicrous and

in many respects violates principles that americans hold dear. when it comes to marijuana -- most americans do not like the idea of legally regulating heroin or cocaine, at least not yet. but when it comes to marijuana the gallup poll has been asking the same question for 40 years. should we legalize marijuana use? in 200536% of americans said yes -- in 2005, 36% of americans said yes. in 2010 that had become 46%. what had been a 24 point gap in opinion became a four. that in the opinion. majority favor a month democrats, americans under the age of 30 -- it is not inevitable that we will move in

that direction, but it certainly seems to be the case that a few states in the united states will try to regulate marijuana rather than persisting with ineffective prohibition over the next six years. host: this message from twitter -- does the report have any chance of changing things policy-wise? what about the federal level? guest: a member of congress came up to me and said -- i saw the information on the global commission and i want to do something on this. often they will focus on what can be done locally in their own jurisdiction. new york city is the marijuana capital of the world in terms of arrests. we are resting 50,000 people per year for simple -- we are a resting 50,000 people per year

for -- we are are resting 50,000 people per year for simple possession. mexico, france, colombia, australia. we will see this debate popping up around the country. in congress on the democratic side and on the right, like ron paul, new voices popping up to say that we need a new way. host: kevin, independent line. how are we doing? guest: good. -- caller: good. i have a question. if we lost -- if we legalize drugs, lawyers would lose their jobs, prisons would close them. how is it that so much drugs fits into this country?

in california i was informed that the cia was bringing a lot of drugs into this country. if we get rid of drugs, people will lose their jobs. how do you feel about this? guest: with respect to keeping drugs out of the country, that is impossible. marijuana, cocaine, alcohol, these are basically global commodities that can be produced in many parts of the world and it is impossible to keep them out of the united states. all of the drug that are imported into the united states to take up 0.00008% each year. if there was as much demand for heroin, those drugs would come in. if there is the man, there would be supplied. by the way, you are right about the cia.

but even if the cia had been squeaky clean, not been involved in southeast asia, afghanistan, because they're working with your starting point was really profound. we now have a prison industrial complex in america. it is growing at a dramatic pace. 500,000 in 1980 until 2.3 million today. we ranked first in the world for accident incarceration. millions of people are employed in this business. we have increased tenfold in number of people walked up on drug charges since 1980. we have locked up more people in

america on drug charges than western europe. they have 100 million more people than we do. there are private prison builders and prosecutors and police departments. my view is even if we legalize marijuana and other drugs, there is still other crime they can deal with. the prisons will not be so filled. some people will have the same jobs they used to. there is other crime that the goment n to spent -- should be paying attention to. >> we leave this program now and take you back to the capital for live coverage of the u.s. senate. here on c-span2.

mrs. boxer: i ask that the quorum call be dispensed with. officer without objection, so ordered. mrs. boxer: mr. president, earlier today i was on the floor speaking about the importance of a program called the economic development revitalization. and it's been in place since 1965. the a run out of its authority. and our committee, the environment and public works committee, in a near-unanimous vote, almost unanimous, decided it was really worth making some reforms to the program to make it even work better and to

reauthorize it. and i'm going to turn the time over to my wonderful friend, jim inhofe. he and i, as everybody knows, are good friends, and we work really well together. there are issues on which we sharply disagree. i think they would fall into the environmental side. but when it comes to public works, when it comes to building the infrastructure of our country, when it comes to jobs related to the private sector, we are very much joined at the hip. and on this particular issue, we are together because we look at this and we say at a time when there need to be jobs, over a two-year period beginning in 2509, grandees -- 2009, grantees estimate e.d.a.-funded projects created over 160,000 jofnlts

every dollar invested by the federal government, $7 came from the private sector. we're very pleased with this. it is my pleasure to of course make sure that my ranking member can speak to this issue whenever he'd like to. mr. inhofe: thank you, madam chairman. the e.d.a. is something that's worked very well in our state of oklahoma. let me first of all say that the senator from california is right. there are many issues in which we do not agree. in fact we have fought tooth and nail for a long, long time against the cap and trade and a lot of these environmental issues and will continue to do so. however, the thing that we agree most on is not necessarily the e.d.a. program but is the need for a reauthorization of transportation. we have a really serious problem that, in my state of oklahoma,

just a short while ago, a young lady who was the mother of two small children was driving under a bridge and it crumbled and it fell and killed her. and, you know, there's things like that the crisis that are going on right now. we were very proud when we had a very robust, rethought at the time, highway reauthorization bill, transportation bill reauthorization bill in 2005. while the amount sounded like quite a bit, it was really not -- just barely enough to maintain what we had. so there's some things government is supposed to be doing. i've always said that i'm always ranked as one of the most conservative members. but i am a big spender in some areas like national defense and like infrastructure. and so that's one of the needs that wevment i woulneedsthat we. there had been a g.a.o. report that talked about duplication. i put language in in order to

have them identify anything that would be duplicative so that that would come out, because that was a little bit of a surprise to a lot of us. i don't question the report. i think it was probably accurate. but we took care of that because we don't want to have any duplication of efforts. in my state of oklahoma i think the chairman said there is ads 7 to $1 ratio. we've actually done better than that in oklahoma in one eamplet it was a $2.25 million e.d.a. grant in he wil elgin, oklahoma, adjacent to a live range. it was one that was intended to actually produce a 150,000 square foot manufacturing business employing many, many people because this administration axed some of the military programs, didn't turn out to be that beneficial.

but the ratio there was still well in excess of 10:1. so if you want to get the economy moving, this is a way of doing it. we have to do it in a way that is well-thought-out. i'm hoping that this bill would be -- it is my understanding that it's going to be open to amendments, and there are going to be a lot of amendments and a lot of my friends who are not supportive of this want to have this vehicle for that purpose. i certainly respect that. and we look forward to working on this bill. i yield the floor. mrs. boxer: mr. president? the presiding officer: the senator from california. mrs. boxer: mr. president, i want to thank my ranking member. i know he has a series of meetings, and he's to have that. but i just want to again thank hism i know he may look at reducing this authority and that's his right to do so. my own opinion is, if there was ever a time to support programs that leverage dollars the way this one does, this is one of them. but i respect whatever he feels

he needs to do to feel better about the bill. i think that the -- he talked about one of the important amendments that he wrote, which would eliminate duplication. there are other reforms that allow private parties to buy out the federal government investment. there are many things we've done to update this program, but it is very important today. the one word i've come to use -- perhaps overuse -- is leverage. leverage is useful. we know that we're facing deficits and debt. we know that we have to do something about spending, so we want to be wise. we want to so that when we do spend a dollar of federal money that it really has a punch behind it. and this is one example, again, of that occurring. $7, on average, for every dollar invested. in the case of oklahoma in this one example, $10. there are others where it is even higher than that. i think it is very clear -- we see now -- i'm not sure this is

the up-to-date list, but we have many, many, many supporters of the e.d.a. so i'll -- i'm going to show you some of them here. the u.s. conference of mayors, the american public works association, the national association of counties -- i mentioned it this morning. i started out in my first elected office as a county supervisor. they understand how important the e.d.a. is because they're on the ground in these counties, as the mayors are and the cities. and they see the needs in these underserved areas, in these redevelopment areas and they want to attract the private capital, so they really need the help that the e. dea. gives them to do t the association of university research parks. let me tell why you they like this. we have seen incubator projects, small business incubator projects that start out in these research parks that grow into

mature, job-producing businesses. e.d.a. is the spark, the leverage that we need. that's why you see the association of university centers, international economic development council, national association of development organizations, national business incubation association. we know today -- it's tough for some businesses to get the capital. some of them are fortunate, they go to silicon valley. they'll get some dollars there. some will go to banks. they'll be told, you know what? it's too risk chism the banks aren't lending like they frankly should to create the jobs. so the leverage that has gotten for these -- that is gotten for these programs from the federal government goes a very, very long way. state science and technology institute, university economic development association, national association of regional councils. so we see here we have a record of job creation, we have a lot

of support, and in 2009 -- this really says it all -- 160,000 jobs over a two-year period in 2009. now, this is a story that's a success story, and it's why senator inhofe and i joined together on this. i know that this is going to be a contentious time in the next few days on this bill, because i there are some contentious amendments that have nothing to do with the underlying bill that are going to be offered. all i would say to colleagues is, let's not allow this jobs bill to be weighted down so that we do nothing. the american people are sick of it. we had a small business bill, mary landrieu stood right here, the chairman of the small business committee, day after day, begging colleagues, don't offer poisson-pill amendments to that -- poison pill amendments

to that bivment you know who lost? not mary landrieu. the american people lost. the small businesses lost because this bill, the small business bill, became the way everybody offered everything they've ever dreamed about and thought about and a lot of it was controversial. and so i just would urge colleagues on both sides of the aisle, if you're going to offer amendments that are not related, will you please agree to time agreements. let's get rid of these amendments, one way or another. if they pass, fine. if they don't, that's life. but let's get to the reauthorization of the e.d.a. it started in 1965. it has saved jobs. it has created jobs. and any problems that we've had because of some of the rules we've addressed in this reauthorization. so i have here a letter, a legislative alert, right hot off

the press from the afl-cio. they support the passage of s. 782, the economic development revitrevitalization act. the e.d.a. has played an often unherald job spurring economic growth in economically distressed areas. the public investment supported by this legislation make a little funding go a long way by leveraging private dollars in support of these projects. resources for technical, assisting in the development and implementation of economic development strategies helps revitalize communities. e.d.a. has established an admirable track record in assisting economically troubled, low-income communities with limited job opportunities. by putting their investments to good use and promoting needed job creation and industrial and commercialvestment today they say, when the lack of jobs and income stagnation are the

primary issues facing us, it's a bipartisan bill, s. 782, that can help make a difference. we urge congress to pass the economic development revitalization act of 2011. i think that really says it. and i have one more letter i just got. we have a letter from the u.s. chamber, the business civic leadership saying how much they support the program and they say, i'm writing to share with you the u.s. chamber's business civic leadership center's positive experience in working with the e.d.a. e.d.a. has served as valuable partner in many communities they site san jose, california, seattle, washington, cedar rappedz, iowa, mobile, alabama, new orleans, louisiana, boca

raton, florida, newark, nothe nw jersey, and many others. i so some of the programs that went in these cities by the relatively small investment by the federal government spurring all this private-sector capital and local and state funds. they say they worked with the e.d.a. in conducting regional reforms to bring provisions together with -- professionals with economic experts. they provide opportunities to build up relationships between and among companies and government agencies. they developed a report that maps how and why companies invest in communities across the u.s. and they believe that as they work with them on these programs, including working with local chambers of commerce in disaster-affected regions to provide local recovery grants, that that worked very well. they say they are the corporate

citizenship arm of the u.s. chamber. they work with thousands of business and local chambers on community development and disaster recovery. and they're consistently looking for best practices, lessons learned, technical assistance, planning and strategy support and other insights, tools and techniques to make their communities as economically competitive as possible. they say in our experience e.d.a. members displayed a high degree of professionalism and technical expertise. they engaged with us on multiple levels from consultations at the national level to sharing valuable field experiences at the state and local levels. they say they canvassed many businesses about their community development needs and they almost unanimously tell us that some of their highest priorities include business recruitment and retention and helping small and medium-size businesses grow. they also tell us that support for regional economic development planning that transcends municipal boundaries is an increasing area of

interest. and this is a unique ability that e.d.a. can and does support. as you consider e.d.a.'s future role and responsibilities, we'd be happy to share with you our experience and lessons in working with the agency and provide you with additional information. it is signed by steven jordan, executive director. the business civic leadership center of the chamber of commerce. so here we have an arm of the chamber of commerce sending us a letter of praise for the e.d.a., and we have the afl-cio doing the same. so it's another one of these examples. senator inhofe referred to the highway bill. that's another example where we have both sides coming together. and what i want to say to colleagues who may be watching in their office or hearing this as they do their other work, please let's get this done. every single person in this chamber goes home and talks about jobs, jobs, jobs and jobs and jobs.

so if we mean it, if we're not just posturing or posing for pictures and we really mean it, then let's get it done. we had a bad experience here with the small business bill; got loaded up with things that had nothing to do with anything and we didn't get time agreements and couldn't get it done. let's hope that this gets done. i can't imagine anybody holding up this bill when we know that in 2009, over a two-year period, 160,000 jobs. at a very small cost to federal taxpayers, because that cost is leveraged. so, i could go on about e.d.a., and i will later. i think i've spoken enough at this particular time, and, mr. president, unless there's someone on the floor, i would note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: we're in a quorum call, is that true? the presiding officer: we are. mr. reid: i ask that be vitiated. i ask unanimous consent that the cloture motion with respect to the motion to proceed to s. 782, the economic development act, be withdrawn and the senate adopt the motion to proceed to s. 782. the presiding officer: without objection, so ordered. mr. reid: thank you, mr. president. further, that after the clerk reports the bill, the committee-reported amendment be agreed to, the bill as amended be considered as original text for the purpose of amendments, the motion to reconsider be considered made and laid on the table with no intervening action or debate and that senator tester be recognized to offer an amendment followed by senator durbin to be recognized to offer

an amendment. following that, senator boxer and inhofe be allowed to give their opening statements on this legislation. mrs. boxer: reserving the right to object. senator inhofe and i have already spoken on the floor. what i would appreciate is just two minutes before we turn to senator tester just to set the stage. mr. reid: i think that i have protected you in that regard. i want to get the amendment laid down and the second-degree amendment laid down. so i renew my request. the presiding officer: is there objection? without objection, so ordered. the clerk will report. the clerk: calendar number 38, 782, a bill to amend the public works and economic development act of 1965, to reauthorize that act, and for other purposes. mr. tester: mr. president? the presiding officer: the senator from montana. mr. tester: i have an amendment at the desk that i would like to call up. the presiding officer: the clerk

will report. the clerk: the senator from montana, mr. tester, proposes amendment number 392. at the appropriate place, insert the following. mr. tester: i would ask that the reading of the amendments be suspended. the presiding officer: without objection, so ordered. mr. tester: mr. president, is it appropriate that i could speak for a few minutes? mr. reid: mr. president, the consent agreement was that he would offer his amendment, durbin would offer his amendment and then boxer would be recognized. that's the order. the presiding officer: the senator from illinois. mr. durbin: mr. president, i ask for the yeas and nays on the pending amendment. the presiding officer: is there a sufficient second? there appears to be. the yeas and nays are ordered. mr. durbin: mr. president, i have an amendment at the desk. the presiding officer: the clerk will report. the clerk: the senator from illinois, mr. durbin, proposes an amendment numbered 393 to amendment numbered 392. mr. durbin: mr. president, i ask consent the reading of the

amendment be dispensed with. the presiding officer: without objection, so ordered. the presiding officer: the senator from montana. mr. tester: i -- over the last month, mr. president, senator corker and i have worked with several senators who are concerned about the unintended consequences of the debit interchange amendment that the senate adopted last year. we voted against that amendment. we were concerned about the impact of those consequences on folks, especially across rural america, who rely on their small banks and credit unions. the federal reserve's rules

based on this amendment are about to go into effect, and the result is going to be bad for the small banks and credit unions and ultimately for the whole country, but especially rural america. even chairman bernanke admits the rule could result in some smaller banks being less profitable or even failing. i am proud to be joined in this effort by senators crapo, senator bennett, senator hague and several -- snoring hagan and several others, all who share my concern about debit interchange fee on local banks. senator corker and i began with the concern that local community banks and credit unions would end up being subject to the same one-size-fits-all regulation designed to address the excesses of some of the world's largest financial institutions. as i have said over and over and over again, those big wall street banks are going to be just fine. they have plenty of sources for their revenue. no one needs to shed a tear for them. but the main street banks and

the credit unions will not be okay if these rules are implemented. let me give you one example. community first credit union has two branches, one in mile city and one in ecalaka, montana. those two towns are about as far away from wall street as you can get. ecalaka is pretty far away from just about everywhere. but last year, the senate approved an amendment that was aimed at holding the big banks accountable for the fees they charge when you swipe a debit card at wal-mart. folks were promised that we would have a split system where big banks like bank of america would get one interchange rate and community first credit union would be able to get a higher rate. the reality is going to be quite different. without changes, the small guys like community first will not see this promised benefit. this so-called two-tiered system will not work under the current law, and that's not my opinion. it's the opinion of the folks who regulate these small banks. what ben bernanke and sheila

behr and others say is that market forces will inevitably push the rate down to the lowest level. that push has already started. retailers are seeking laws at the state level to give them freedom to deny purchases with debit cards that have a higher interchange fee. given the amount of money the big box retailers are putting in their lobbying campaigns, it is only a matter of time before they're successful. so what happens to the consumer who does their banking at a small community bank or credit union? these are the folks i am concerned with because they are the majority of montanans. unfortunately, they are going to get stuck with higher fees with no access to capital or even worse no banks at all. and let's be clear. if any single one of the regulators, whether it be the chairman of the federal reserve or the chair of the fdic or the comptroller of currency, had told me that the interchange system proposed last year would actually protect small banks and credit unions, we would not be

here, but that is not what happened. the chairman of the federal reserve said that without changes, the system that will be implemented on july 21 will cause small institutions, the kind of banks that serve most montanans, to suffer and some could even fail. the chair of the fdic said that unquestionably, these banks would be hurt, the credit union administrator agrees. perhaps they will make up for those losses by raising rates on checking accounts. maybe it will be higher fees when a small business comes in looking for a loan to expand or that will surely help the biggest banks to capture more of the market share at the expense of the smaller banks like community first. this week, we have a chance to stop and rewrite these rules before they hurt those small banks, before they hurt those small credit unions, before the new rules hurt the consumers and the small businesses in rural america that prefer to do their banking business with the folks who know them and who are part

of their communities. rural america is what i know. it is where i am from. and as i have watched consolidation in the agricultural industry and have watched rural america get smaller and smaller, i'm not about to let this happen in the financial services industry. fewer banking options in rural america is a death knell for rural america, and that is where we are headed today. one way to stop this from happening is for us to slow down and fix the debit interchange regulation so that the small banks that serve rural america don't get hit. we also know how dangerous it is to set a price for a product without understanding all of the costs that go into that product. small business owners certainly couldn't stay in business if they didn't understand their own costs. likewise, if we're going to be regulating debit interchange fees, we need to understand all of the costs associated with the debit transaction and debit programs. when we voted on this amendment last year, we thought we were

voting to allow the federal reserve to consider all costs. however, the reality is that last year's interchange amendment limited the costs that could be included. some fraud costs were allowed to be included but others were not. some technology costs were included but others not. the result is a proposed fed rule that sets the debit interchange rate at seven or 12 cents for all transactions, a level that most folks agree is too low. i'm sure that the big box retailers think that 7 cents or 12 cents is too high. in fact, they have argued for rates closer to four cents. i have heard from many of my retailers in my home state. some have said that 12 cents is probably too low. they understand you absolutely can't set the price of doing business below the business that it costs. if we're going to be regulating this market, we must do it in a way that's fair, in a way that still directs the fed to determine what is reasonable and proportional, but to give them the discretion to look at all of

the costs associated with debit transactions. that does not mean executive pay. that does not mean the cost of a corporate jet or a special rewards program. all the costs will still need to be justified, but the fed will not be limited arbitrarily in what they can look at. that is why my friend senator corker and i are offering this amendment today. this amendment is a compromise, and that's how we do business in montana. we find the common ground and we work together to do what's best. senator corker and i first proposed a two-year delay of the fed rules to allow adequate time to study the impact on small banks and rewrite the rules based on what we learned in that study. the fed tells us now that it may be able to do this joint study in six months. so that is what our amendment proposes, just six months to study whether the rules that will govern debit interchange marketplace can protect small banks. in this amendment, we outline the topics that the study should address, including taking a

closer look at all of the actual costs associated with debit card transactions, the impact on consumers and whether an exemption for small banks as proposed in the interchange amendment last year will actually work. if after the study at least two of the agencies involved determine that the current rules don't take into account all costs, that the rules may harm customers or that the exemption meant to protect small banks and credit unions won't work, then the fed has six more months to rewrite the rules considering all costs. that's one year, mr. president, to address our concerns and to make sure rural banks don't get wiped out by this rule. if the agency finds that the rules consider all costs, consumers would not be harmed and that the smallisher exemption will work, then the current rules pending would move forward. and what about the little guys? well, we put into place a process that will address any potential impact on smallishers. my contention has long been that market forces would drive fees

for smallishers to the lowest rate. since we cannot fully understand how the market will operate until interchange regulation is enacted, we direct the fed to report the actual impact of the market on smallishers a year after the rules are implemented. and the fed has to present a report to congress in every other year thereafter on the impact of a regulated market on smallishers. most importantly, the report will include recommendations for how to resolve any potential harm to smallishers and to enforce the exemption.this willt when congress acts, we will have the facts about how it would impact small banks. that means the regulatory process is over in 12 months and congress does not have to revisit this issue. let me say this again. congress does not have to revisit this issue. and at the end of the entire process, there is still a regulated market for debit

interchange fees. that's what the senate voted for last year loudly and clearly. and we preserve the marketplace. we will have a regulated marketplace once we fully understand all the costs. and the impact of these rules an consumers and small issuers. that's what the majority of the senate voted for last year and that is what we will get, that it will be a regulatory framework that does not penalize small banks and credit unions and is fair by not setting prices below costs. when every banking regulator who has a role in underseeing the debit interchange market, then we ought to listen. today's liberty interchange market is not fair for some retailers so i understand their desire to see a fix. but the answer is not to create a new system that is unfair to the small banks in montana and other parts of rural america.

the amendment that the senate approved last year was designed to punish wall street but the result may be the banks who will lose customers and potentially even fail. let's measure twice and cut once. let's do it quickly. but let's make sure we get this right and that if we're going to create regulations, we're doing it in a way that is fair and consistent with the intent. i urge my colleagues to support the amendment. with that, i yield the floor. mr. corker: mr. president? the presiding officer: the senator from tennessee. mr. corker: thank you, mr. president. i rise to speak favorably towards the tester-corker amendment of amendment. mr. durbin: i would ask my colleague how long he might be speaking in. mr. corker: eight to ten minutes. mr. durbin: thank you. mr. corker: thank you. i do want to say that my friend from montana has been a great partner in this effort. i knee lots of times people use

a lot of rhetoric down here to talk about what's happening and the fact that anyone who might be proposing this type of amendment might be supporting wall street institutions, but i think you can see that my friend from montana is anything but wall street and certainly i think all of us are just trying to come up with a solution that makes sense. and i just want to give just a brief history. dodd-frank came to the floor last year. there were a number of amendments to the bill. one of the amendments that i come to the floor was called the durbin amendment of. it was an theament had had no -- it was an amendment that had had no hearings. and a lot of us -- people like myself, people who are opposed to price-fixing, what the durbin amendment assist said was that the fed was going to set price fixes. a number of us are opposed to it. a number of people in this chamber supported durbin because they were frustrated with where retailers were and their

inability to negotiate prices with visa and some of the other companies and they thought this might be a solution to the dilemma of not being able to have appropriate negotiations. i think what all have understood is that the durbin amendment didn't actually give the fed the ability to set prices as it relates to cost on debit cards. it only allowed certain costs. in other words, the incremental cost of a transaction. and i think the retailers that i know are very strongly supportive of the durbin language know, they al tell me n this private, they know that they couldn't operate themselves you understanunder that same sc. but they're frustrated. what tester and i and others, crapo who voted for durbin, kay hagan who voted for durbin, senator bennet from colorado who voted for durbin, what people

have realized is that the durbin amendment is way too narrow and doesn't allow appropriate costs to be considered whenning the rates. so my friend who has a number of rural institutions, we all realize that this is going to be highly detrimental to the financial system. and so what we've tried to do is come up with a compromise that works for sides. and i mentioned, senator crapo, senator brown, senator carper, a number of people have gotten involved in this and come up wp a one-vote strategy. i know numbers of people want to vote and get this behind thevment i understand that this is one of those issues where we got retailers on one side, you got bankers on the other side and you feel like in some way you're trying to deal, you know, you're trying to pick between friends. what i think we're trying to do just put a good, sound policy in place, a place that the retailers should be very happy because they're going to end up with a regulated market, something candidly that i don't

support. but i think the senator from illinois has been very successful in that front and basically the retailertailers wn this because they're going to end up with something that's regulated. they don't feel like they have the ability to negotiate with visa and other companies. on the other hand, those senators, most senators in this body that understand economics, understand business, also know that you cannot run a business you're only going to charge the increment at costs. it would be like a pizza parlor selling pizza literally and only being able to charge for the dough that it takes to make the pizza, not to be able to charge for electricity, not to be able to charge for the other things that it takes to run that particular place. so i think we've come up with something that is a good middle-of-the-road solution. the fed is directed to consider both fixed cost and incrementality cost, something that any retailer or any

business in america would want to be considered if they're being regulatorred. and so we've come up with a play -- we've also come up with a solution that allows the fed to look back every two years and make sure that those smaller institutions that senator tester is so concerned about and i'm so concerned about, that the fed looks at those and ensures that every two years these policies that are being put in place don't disproportionately negatively affect those institutions. if so, they recommend -- they don't prescribe -- they recommend to congress possible legislative recommen remedies. as the senator suggested, i think we should measure twice, cut once. i'm feeling momentum building around this. i will say that the senator from illinois is an outstanding legislator. i think he's done a very good job championing this issue. i don't think we'd be where we are on this issue without the

efforts that he has put forth. but i think he realizes possibly that, you know, by not keeping in place all costs as it relates to the transaction, what you're really doing is limiting the availability of that to the public down the road. you can limit innovation. you limit the amount of technology investment that goes towards these transactions. i hope very soon to be paying my bills by just swiping, you know, my electronic device in front of a cash register. i think we yo all see us moving towards this. what the durbin amendment in the form that's it's in now is basically say to these institutions, bh you conduct these types of transactions, debit transactions, you're going to lose money every time do you it. i don't think that's where we want to be. so i again -- again, there are going to be some unintended consequences. whenever there is a bill the size of dodd-frank that passes, surely, all of us can come together and figure out more

commonsense ways of solving problems like this when they arise. i would have to say that i really like the way this body is functioning ardz this issufunct. we have people on both sides of the aisle that have realized that this policy is one that's detrimental. we have people on both sides that have tried to work together. we've got three iterations of corker-tester that's trying take into concern th account the conf retailers and small banks around this country that are going to be devastated, as all the regulators have said -- this is unusual, by the way. we talk about regulatory overreach in this body. this is case where we've given the regulators the ability to regulate and they're saying, please don't make us do this. this is really bad policy. that rarely happens in washington. but it's happened on this case.

so i don't think of respect for the tremendous amount of work that so many people have come into coming up with a slightly better solution than the senator from illinois, who worked so hard on this issue put forth originally, i would just ask every member to please - sit don for 10 minutes and allow your staff to at least explain -- i know a lot of people have made commitments ten days ago, a week ago to be on the other side of this. but i think most people haven't seen the last iteration that puts this in the middle of the road, that keeps debit coast cas regulated but gives the regulators the ability to consider the cost that any normal business has when it functions. so with that, mr. president, i thank you for the time to talk about it. i thank the senator from illinois, who looks like he's getting ready to speefnlgt i

thank him for the way that he's conducted himself. as a matter of fact, i think we've come up with such a great solution, i would hope that the senator from illinois would consider being a cosponsor. with that, i yield the floor. mr. durbin: mr. president? the presiding officer: the senator from illinois. mr. durbin: to my friend from tennessee, not a chance. so my wife over the weekend in springfield said, i'd like you to clean the garage and i said, well, i've decided to clean half the garage. it is a compromise. she said, who did you compromise with? that's what we're faced with here. senators corkerrer and tester have come to the floor and say, we have a compromise. who did you compromise with? it wasn't with the people who were affected by these debit card fees. no. they compromised among the banks. the banks all set down and said, let's work this out among us because we're talking about real money here and that's their compromise. it's not a compromise. what is in all about? the average person listening to this debate is going to think,

what are they fighting over there in the united states, this bipartisan battle? what we're talking about here is something we all kind of carry around in our wallets and purses these day, a debit card. and if i take this card and go to a local restaurant, well, let's use a different one. if i went to a local convenience store and said, i want a pack of chewing gum, wrigley's, because that's based in chicago, here's my debit card, and they take the debit card these days and they swipe it, and they complete the transaction, what you don't know -- but the merchant knows -- is he just lost money on that because it costs more to the merchant selling the good to process the piece of plastic than they could possibly profit on the ghoodz they'r they goodse selling. you wonder, how did it reach

this point where the use of this piece of plastic costs so much? it reached that point because the giants of credit card, visa and mastercard, said to merchants and retailers across america, if you want to accept plastic at your place of business, you are going to pay us a swipe fee every time it goes through the reader. and how much is that swipe fee? turns out it's 1.10%, on average. doesn't sound like a lot, but it is. the banks that issue these cards receive each month in swipe fees from all across the united states, from convenience stores, restaurants, hotels, charities -- if you gave your donation to the red cross and used your

debit card, guess what? visa and mastercard got a percentage of it. the amount that you thawrpt giving to the chairkts college book storks you name it. every time you swipe these, it ends up generating for the banks across america $1.3 billion. each year more than $15 billion in swipe fees. and what do the mehr schantsz to say about how much they were being charged? nothing. take it or leave it, buddy. you don't want to pay the swipe fee, don't take plastic. so over the years, as you might expect, the merchants and retailers said, this is a rotten deal. not only is this an invisible charge that we have to add to the cost of doing business on everything, we have no control over it. we're faced with paying a swipe fee or not accepting plastic and in this day and age, imagine how long you'd last. in many businesses if you didn't accept debit cards.

so, four or five years ago i called for a study. what is a reasonable amount to charge? and i was opposed, naturally, by the banking industry. they put out an all-points bulletin, kill the durbin study of debit fees. they didn't want to study t all the study can do is put the spotlight on them. they don't want that to happen. they don't want that to happen. we waited and waited. last year we had the wall street reform bill. i sat here on the floor patiently saying i want to open this amendment, finding a way to regulate this fee, which is not a product of competition and isn't transparent or disclosed. the vote finally came along. after 25 amendments on wall street reform, they decided this vote wouldn't require a majority. it would require 60 votes, a supermajority. i'm ready to live with it.

we call it. we won. 64 votes in favor of our position. well, it surprised a lot of people. it sure as heck surprised the banks. they didn't think that this senate on a bipartisan basis would hold them accountable for the fees they're charging on the debit card. so what do we say in the law? the federal reserve, a nonpartisan bank regulating agency, would have the authority to determine what is a reasonable and proportional fee for swiping the card. and that fee would go into effect this july, july 21, one year after we passed the law. and we said in the meantime, anyone who has any thoughts, ideas or comments, send them to the federal reserve. they got 11 thousand-plus comments. everybody had an idea. some of them didn't like the

law. some did; on and on. so they came out with a preliminary report -- not a rule -- a preliminary report in december. you know what they found? they found that the average charge per transaction in the united states was 44 cents, and the average cost to the bank for processing the debit transaction, about 12 cents. about one-fourth. so the plot thickens. it turns out that the banks issuing these cards are not only charging this invisible fee, they're dramatically overcharging merchants and retailers. and guess what, mr. and mrs. consumer? all of us too. we pay it. we pay it in additional charges. even if you go into that store to buy the package of chewing gum with cash, the price has been raised because they're expecting you to give plastic instead, and you pay more. so then the battle was on. whether or not the federal reserve would issue this rule

establishing a more reasonable fee, swipe fee for these debit cards. and it is a big battle. imagine, if you will, what it means to the biggest banks in america when they have on the line $1.3 billion a month. pulled out all the stops. a friend of mine who is a lobbyist downtown in washington said, durbin, praise the lord. come up with some more ideas. this is a full employment amendment. everybody who is a lobbyist in washington is working on this amendment. we just love you to pieces. well, the sad reality is it's coming maybe to a close with a vote on this amendment. but the banks and the credit card companies started piling it on. and let me be fair. the other side did too. the merchants and retailers finally said for goodness sakes, we want fair treatment. and if we want to -- if we have

to fight, we'll fight to do it. that's where we are today. senator tester and senator corker have offered an amendment which i'm about to describe. this is interesting, though. they are offering an amendment in an effort to stop the federal reserve from issuing a rule that establishes how much that swipe fee is going to be. how soon would the fed issue the rule? within the month. within a matter of days. they are desperate to get this amendment to the floor to try to stop the federal reserve from saying what is a fair swipe fee and to protect merchants, retailers, small businesses and consumers across america. the banks want to stop them. so there's one other part to the story that's important. we decided when we wrote this law that we would give smaller banks, community banks, and smaller credit unions an exemption. in other words, they're not covered by the federal rule. you say why? from a consumer's point of view, all the arguments you made still apply. well, that's true, but many of these smaller institutions are

more financially vulnerable. and i happen to agree with both senators tester and corker. i believe in community banks and local banks, and i want them to survive. so we carved them out and said if the value of your bank is below $10 billion, you're not going to be affected by this. if the value of your credit union is below $10 billion, you won't be affected by this. how many did we affect? out of 7,000 banks in america, only 100 would be affected by the law. out of 7,000 credit unions, only 3 would be affected by the law. then there's another part of the story. it turns out that the three biggest banks in america are the ones that make the most money on debit fees. each month they collect more than 50% of the debit fees. what are those banks? chase, wells far tkpwoerbgs and bank -- wells fargo, and bank of

america. they have been fighting viciously to stop this rule from going into effect because there are billions of dollars at stake, and they don't want to lose that income. so let's have a little trip down memory lane about these banks. do you remember a few years ago when these banks got us in the biggest economic mess in current memory? did you notice any change in your savings account? perhaps your ira, the money you put away for your retirement. well, i sure did. i think loretta and i lost about 35% of our value because they were playing games with subprime mortgages and new derivatives and a.i.g. offices in london, and this holy mess ended up being visited on families, businesses and consumers all across america. and we were in a panic. the chairman of the federal reserve, ben bernanke, and the secretary of the treasury, hank paulson, came and met with us in

a room not far from here seined if you don't do something and do it immediately, banks across america are going to fail and our economies are going to collapse not just here but around the world. you've got to come to the rescue. you've got to come up with a bailout for the banks. remember that, taxpayers of america? how did the big-three debit card banks do in the bailout? chase, $25 billion in taxpayers' money because they had acted so recklessly and endangered their bank that they needed a helping hand. bank of america, $45 billion in taxpayer bailout funds. wells fargo, $25 billion in taxpayer bailout funds. remember that, taxpayers of america. when the same banks that are going to profit from these debit card fees were so desperate that they needed a helping hand from taxpayers to save their banks,

and do you remember how they expressed their gratitude to us? it was heart warming. as soon as they could, they called a meeting with the board of directors and awarded one another bonuses -- bonuses -- for their reckless conduct. just warmed my heart that they were so appreciative of the taxpayers across america sacrificing with their taxes to save these big old banks. well, i've got news for taxpayers. they're back. they're back today. and now it's smaller, i'll concede. it's only $15 billion a year. but these same big banks are asking for a handout and a subsidy from the senate. are we going to get shaken down a second time? that's what this debate is all about. because i'll tell you, at the end of the day if this amendment that's pending on the floor passes, then for at least a

year -- and i think way beyond it -- these banks will continue to bring in $1.3 billion out of the wallets and purses of consumers across america every time a person uses one of these plastic cards. i don't think it's fair. i don't think it's right. i think there is a way to deal with this and deal with it honestly, and let me tell you what it is. let the federal reserve issue its rule this month. they're going to come out with it and let's look at it. nobody knows what it's going to say. i've heard both senators who introduced this amendment say, well, this rule, we can't accept this rule. they don't know what this rule is and neither do i. it hasn't been issued yet or published. at a minimum, shouldn't we wait to see it before we say it's unacceptable? i'm ready to wait. i trust the federal reserve will do its job. i think it can produce a good rule, a rule that's fair to consumers, retailers, small

businesses, and banks too. let me go to senator corker's point. senator corker said you know the problem with durbin's amendment? he just doesn't allow the banks to add in all the possible charges and costs in a debit card transaction. he's just allowing them to count the value of the dough on the pizza and not all the other things they might add in. no, what we said was you can charge a fee reasonable and proportional to the cost of the transaction. pretty simple; right? reasonable and proportional. well, this amendment on the floor here decided to open the door wide open. it's no longer reasonable and proportional. they have full pages here describing all the different things the banks can add in to establish the fee they charge small businesses and consumers. are you trusting of these banks to be careful in what they add in? i'm not. and i can tell you that when you look at the list of things that

they can include, it includes executive compensation because it's about the cost of the operation of the program. that happens to include a lot of managers and officers as well. and i don't know what else it includes. it is wide open. so here's what the banks have said. incidentally, i guess it is somewhat gratifying when your name gets associated with an amendment and you hear it over and over and over again. chase, for example, wrote to every person who is a customer in my home state of illinois and said beware of the durbin amendment. if the durbin amendment goes through, it reduces the debit fee charge, that we can charge. your fees are going up. your benefits and premiums are going down. here's what chase failed to mention, and the other banks as well. the total amount the big-three banks take in a year from debit card fees is about a little

over, almost half of the total amount collected. it's about $8 billion a year. so the argument that j.p., diamond and chase are making, it's one of those things, the cost of doing business. what mr. diamond and others in the business failed to note is that last year on wall street the banks awarded in bonuses -- bonuses -- $20.8 billion. so when they argue that an $8 billion loss means fees are going up, oh really? or does it mean bonuses might go down on behalf of consumers and businesses all across america. that's part of it. let me tell you a few things about the pending amendment you should know. as i mentioned, it's not a compromise. second, it includes costs that cover the whole ballpark, that they can start saying we're going to add in the cost of a.t.m. machines to the debit

card fees pretty soon. get serious. they are right back up to 44 cents a transaction. that's how it's designed. third, they very carefully wrote this so there's no effective date for the rule. they talk about 12 months. it says in here the board will decide what the effective date will be. there's no effective date for this going into effect. and that is awful. and finally, the arguments that are made on the floor over and over and over again is we just want to protect the community banks and credit unions. that's why we're doing all this. not a word in here -- one reference. take that back, one reference and one trigger to the smaller exempt stphaoubgs institutions: there are ways to have more protections and reassurances for the smaller exempt institutions. they didn't include them because that isn't what this is about. this is about all the banks and particularly the big, giant banks on wall street that have a stake in this amendment, $8

billion a year in profits. $8 billion a year in subsidies through this amendment and through the second round of bailouts. it's a good test. it's a good test for the senate. i don't know how it's going to end. i won last year, but they poured it on ever since. and the banks have done everything they can to reverse what we accomplished last year. it's up to my colleagues now. they have to decide whose side they're going to be on. it's pretty simple. they're either going to be on the side of the banks and the credit card companies or on the side of consumers and businesses across america to give them a fighting chance. how many speeches have we heard on the floor of the senate about small business? boy, if we could just give small business, unleash the power of their expansion and hiring more people, we can turn this economy back where it should be. well, this will be a direct hit on small businesses all across america if this pending

amendment is enacted. this is our chance to say to the big banks on wall street, if you can have $20.8 billion in bonuses last year, you're doing quite well, thank you. incidentally, one of these banks had a 48% increase in profits. they're doing0, folks. we don't need a tag day for any of the wall street banks. secondly, if you do believe in businesses, particularly small businesses, stand up for them. fight for them. that's what they're asking for. that's what this debate is all about. let's defeat this amendment. let's see what the federal reserve says. and i have given my word, i'll say it again. i will work with any senator on either side of the aisle. if we need to have any kind of reassurance or protection added to what we have done in this law, i'm there. as i've said many times, the only perfect law that i'm aware of is carried down a mountain on stone tablets by senator moses. the rest of the time we just do our best.

and if there is a way to improve it, i'll be there. but let us at the end of the day finally, finally, finally stand up for consumers and small businesses across america and say to the wall street banks and visa and mastercard sorry, this party's over. i yield the floor. a senator: mr. president? the presiding officer: the senator from tennessee. mr. corker: i rise to speak about the tester-corker amendment that hopefully will be before us shortly. i have to just say i witnessed a great discussion of populism, and that is, you know, if -- if an institution is making some money, let's take it from them and give it to others in the name of fairness. mr. president, i think everybody knows that certainly there are a lot of tremendous numbers of small institutions across america that are very concerned about the durbin amendment and its effects. and a number of small retailers. but there is no question, let's face it.

the big boxes, my friends, wal-mart, home depot, target, they have funded this effort as he mentioned on k street with the lobbyists, and there is no question that a lot of the larger financial institutions have funded the effort on the other side. there is no question. but the people that i think senator tester and myself and you and others listen to are those folks that come in from our home states, the small community banks and credit unions around our country that are very concerned about this. let me talk about a couple of things. number one, the senator from illinois talked about the timing. well, we have been trying to find some vehicle to attach this amendment to for some time. the fact is the senate hasn't done any business this year. i mean, we come in from time to time and vote on a noncontroversial judge, but we have been trying to find some vehicle to attach this to. we have been trying to do that for months. secondly, the fed, the federal reserve, which has been asked to

put forth this rule, they are the ones that have been saying what you have asked us to do is not appropriate. i mean, they have testified publicly saying that the durbin amendment is inappropriate. let me describe what he just said about reasonable and proportional. that means that, mr. president, if you went out and built a debit system, you invested in all the technology, the computers, the marketing, the fraud prevention, all the things that went into that, what the fed can look at now in setting the price is after you have set all that up and you're processing millions of transactions a year, if you send one more transaction across the wire, what does that cost you? after you invest, that's what he is saying about reasonable and proportional. there is no way that any business in america could possibly operate under that

scenario. again, retailer after retailer after retailer has been in my office and said we know the criteria that's been laid out by the durbin amendment is absolutely inappropriate. we couldn't function, we couldn't function with that criteria, but we don't know of any other way of solving this problem. we hate to have the fed involved in price setting, so all of us set out to try -- many of us set out to try to solve that. and what we have come up with is, in fact, a compromise, and what it says is okay, we -- we agree the debit card industry should be regulated. we agree that retailers are having difficulty in negotiating with visa and others. let's get the fed to set the prices based on the cost of the transaction, which do include, i hate to say, some fixed costs in technology and other kinds of things, fraud prevention. the fed has asked us to do that. okay. it's not as if we're usurping

the fed coming in and making a rule. they have testified publicly that the way the durbin amendment is written is going to be terrible for community banks and rural banks. i mean, i think we all know the senator from illinois likes to use these larger institutions, but all of us know the big guys just get bigger, just get bigger when we do these kind of things and create hardships for the smaller institutions. and the fact that some two-tiered system was set up won't work. i mean, the fdic has come in and said look, you cannot make it work where the small banks and small credit unions are held harmless. it won't work. the o.c.c. has come in and said it won't work. market forces will take over. this will not work. they're going to get crushed. the state bank commissioners have come in and said the durbin amendment as written is going to be disastrous to consumers. it's going to be disastrous to

the smaller institutions with which we all deal. so look, i'm not trying to carry water for either side. i'm trying to come up with a solution that's fair. i have worked with senator tester, senator crapo, senator hagan, senator bennet, senator brown, numbers of people to try to come up with language that hits that sweet spot. and the senator from illinois is right. we probably never developed a perfect law, but i think we have a responsibility when we know that something is about to happen that won't work, that is going to be devastateing. i think we have an obligation to try to come up with something that meets the test of trying to be fair to both sides, and i think that's what this amendment does. you know, the senator talked about all kinds of things being added in. the banks can't just add it in.

the feds regulate them. the fed will decide what is reasonable and proportional. the fed will decide, but they will use all of the costs that it takes to actually do those operations and the costs which the durbin amendment did not do. so look, i think that this amendment meets the test. i know there are numbers of people that voted for the durbin amendment in the past that have co-authored this. they co-authored this because they realize that the durbin amendment was far too narrow, that the durbin amendment didn't take into account anything but again the cost of adding one transaction on top of an infrastructure that you had already built. there is no business that could operate that way. the presiding officer used to be part of a -- a weekly broadcast, and if all you charged was the

incremental cost of that going out and being broadcast to other television stations around the country and that was the only cost you could get, there's no way that our presiding officer would have been known to america the way that he's known because there is no way that operation could have succeeded. this is a very commonsense solution, and those people who supported the durbin amendment during this debate, even though there was never a hearing heard -- a pretty major issue to never have a hearing in the banking committee, but to pass at the height of the time when many people around this country were upset, rightfully so, with some of the larger players in our financial system, people have woken up, they have realized that this is a really bad piece of policy, but if we tweak it, then the retailers still end up with a regulated market, whether or not overcharged, and yet the institutions that are providing -- this is a service, by the way, or people wouldn't use it. the retailers like getting their

money instantly. people like being able to carry around plastic to pay their bills instead of cash, but what this amendment does is put it in the middle of the road where it's fair to the retailers, it's fair to the institutions that are involved, and most of you will it protects consumers around this country. i mean, i think you have seen the letters that have been sent out as to what's going to happen to consumers if the durbin amendment goes into effect as it is now laid out. so the senator does a really great job, i know, in taking a few of these institutions that -- that no doubt behave badly and causing the whole thrust of this to be about sticking a stick in the eye of these institutions that have paid bonuses and made bad decisions, but the fact is that this is a bad policy as it exists. the tester-corker amendment along with many other cosponsors is something to try to bring that in the middle of the road.

and i just ask that each senator, please, just spend ten minutes with your staffers to understand what the third round of revisions does. look at what a commonsense solution that has been put forth by the best of this body happening. that is, people working together to try to get there. and hopefully we can end up with a piece of legislation that we're all proud of. we can continue to have a financial system that's strong, that includes the many small players that we depend upon in small communities across this country, and we can also continue to have a vibrant retail industry that really counts on the additional sales that they get from having access to these types of transactions. with that, mr. president, i thank you and i yield the floor. a senator: mr. president? the presiding officer: the senator from california. mrs. boxer: mr. president, i just wanted to make sure the senator from tennessee knows that his amendment is pending. it has already been put into

play, and we are on it at this time. i just wanted him to be sure he knew that. mr. corker: thank you. there was some discussion a minute ago about how that was going to occur. i thank you for that and i thank you for your deft management of this bill. mrs. boxer: well, thank you very much. you probably won't agree with my position on your amendment, but i do know that my friend has worked long and hard with senator tester and others. i really appreciate all the time that you have put into trying to come up with what you consider to be a compromise. i do want to say this: you talk a lot about the durbin amendment. there is no durbin amendment. it's the law. the durbin amendment was included in the bill. it is now the law of the land. so it is a question of saying that we should essentially repeal it or delay it. you could study it, whatever the word is, before it has a chance to actually go forward. i -- i understand that, and i just wanted to say for the record where i stand on it is

that, you know, i have met with all sides. i have met with the retailers who were very strongly supportive of the durbin law, and i have met with the banks that are fiercely against it and the credit unions who were very worried that they are going to get hit with a situation where they won't be able to compete with the banks, and i have told them all the same thing, which is i think what's important when we pass a reform is to see if it's going to work, and if it doesn't work, i agree with senator durbin, we'll do everything in our power, and i understand that the fed says help me, give me guidance. i think there is a lot of guidance in the law, and i think every bureaucracy in the world would rather have the details fall on us, and i think the details fall to them, so i am going to be voting no on the amendment. i do appreciate, however, all the work and all the time and

effort that went into trying to pull us all together. i'll say the last thing on the swipe fee that i find compelling , the law was signed -- the swipe fee reform that my friends want to delay was signed into law last year. it places reasonable constraints on the fees that visa and mastercard fixed on behalf of the nation's largest banks, but here's the thing. the u.s. has the highest debit interchange fees in the world, and the rates just keep on going up. the average debit interchange fee in the u.s. is 1.14%. the average debit interchange fee in the european union is ..20%. and the average debit interchange fee in canada is zero. so it's not as if the banks are taking it on the chin here.

i just feel give this a chance to work. i'm not standing here saying it's the perfect law. as senator durbin said -- maybe there was one tablet, the ten commandments, but as far as laws here, they could all be made better, and it may well be once the fed acts, that we're not happy and we can move at that time. but i wanted to really get back to the bill. the underlying bill that we're debating, which is the economic development administration reauthorization, and to thank senator inhofe for his remarks that he made on the floor about it, and his pointing out that we have a lot of work to do here to create jobs, and when we have a program that takes a dollar of federal funds and it attracts $7 of private investments and many, many jobs, we ought to come together. i'll just go through a couple of charts here.

the e.d.a. is an efficient job creator. they just are. in 2009 and 2010, investments by e.d.a. created over 160,000 jobs and saved 45,000 jobs. $1 of e.d.a. investment is expected to attract -- and this is a fact that has attracted $7 in private sector investment, on average. sometimes it's $10. sometimes it's $15. sometimes it's $4, $3, $2, but the average is $7. the e.d.a. project funding creates one job for every $2,000 to $4,600 invested. so you can see that the average cost of creating a job is very, very low in terms of the federal investment. this is terrific. i mean, this -- this program really works. and there are a couple of things that we felt we ought to take a look at -- dumb indication, a

way for a community to -- duplication, a way for a community to buy out a share after federal project. so we think that we have really strengthened this law. and again i want to thank the democrats and republicans on the environment and public works committee. i went through this morning some of the programs in california, the stiff dixon, $3 million for a water system created -- is expected to create 1,000 jobs and leverage $40 million in private investment. 3 million, attracted $40 million in private investment. the city of shafter, $2 million for stained water. it is going to develop an additional 600 million acres to enable continued growth of the east shafter logistical strvment and expected to create 1r,400 jobs and leverage $253 million in private investment n san hoe

say, $3 million for the renovation of the -- of an expansion for the center for employment training. they can then expand their capacity by 860 students, expand access to the g.e.d., the lit a circumstance language, and small business entrepreneurship classes to low-income areas. this is key -- absolutely key. i mean, it really should bring us together, because they are training students so that students get out and get their g.e.d.'s, get their lit a circumstance and can really make sure that the community is growing and thriving. that particular grant is expected to leverage $3 million in private investment and 4,900 jobs. so it is a one to one. in that case it is $3 million public and $3 million private. nationwide, i talked about this, i talked about other examples -- i didn't mention actually -- on

the west coast, in the central valley, 23,000 square foot water and energy technology incubator. and the incubator has housed more than 15 entrepreneurs since it opened in 2007. they've obtained $17 million in private cast and created jobs for californians. so $1.8 million, attract $17 million. we have a case of boeing, where they were able to expand one of their campuses. it created 2,500 jobs. and i talked about, mr. president, to you about duluth. a grant matched by $2.3 million from the city of did he liewlgt helped build the duluth aviation incubator at airport. this helped sirus aircraft grow from 1,012 employees in 2008.

the incubator is leased to the design corporation which has the largest share of the worldwide generation market. so when we're talking about the e.d.a. and we're talking about the way i it attracts private-sector funding and creates jobs, this isn't hyperbole. this is reality. and this is a program that's been going on since 1965 -- 1965. and republicans and democrats have supported it. the last time it was authorized was when george w. bush was president. it passed unanimously. so i stand here today on the opening day full of hope, full of hope, hoping that is not naive. hoping that we'll see a few amendments. that's all fine. we don't mind amendments. amendments are fine. but let's have reasonable

discussion and reasonable time set aside and move on. there's case in the may tag plant in newton, iowa. they -- they employed 1,800 factory and strife workers. it was closed down. we all know how painful that is. we remember back when we were losing 700,000, 800,000 jobs a month. it wasn't that long ago. by 2008, the city identified two new manufacturing operations that could be located at that plant, t.p.i. composites inc., a wind turbine blade manufacturer, and trinity structural towers inc., a manufacturer of massive steel towers for windmills. e.d.a. invested $580,000 in 2008 for grading, site preparation, surfacing for a wind storage facility that was leased to trinetory, created 140 jobs and generated $21 million in private investment that same year

$670,000 to central iowa water association in newton to help build a booster station, a storage tank to serve st. p.i. this helped create 500 jobs and generated $40 million in private investment. on the east coast in 2010, e.d.a. gave a $750,000 grant to seatco financial services, seatco used this to provide capital to subzero installation and refrigeration facilities, a manufacturer of us can testimony, environment lally friendly, insulated commercial truck and van liners. subzero is pretty fame use and they are reelected in brooklyn, new york. they had been denied financing by a major bank. see, this is the thing. a lot of our companies can't get -- while the banks want to charge very high, you know,

swipe fees, they're somehow absent when our companies needed them and in 2010, that's just last year, subzero was denied financing. e.d.a. provided the access to capital which allowed subzero to fulfill its contract with edible arrangements to outfit delivery vehicles and win contracts on ford, chevy and dodge. they hired 15 new staff in it h. starting in 2004 with just three vehicles, producing 75 vehicles a year. the company has produces 400 vehicles year. it goes on. e.d.a. provided $2 million to help build the knowledge with preincubator facility as part of the development of virginia tech and now we've seen 2,000 highway jobs created and the inception of 140 high-tech businesses. the way e.d.a. works, mr. president, is there's regional offices, about civics

them, they get funded throughateppropriations committee through the commerce department and then each region makes the decision as to which projects really meet the goals of the legislation, which is to bring economic development to distressed areas, create jobs, and leverage the dollars. so in addition to this, e.d.a. in 2008, we gave them an extra $500 million in disaster assistance to give to areas which were experiencing disaster problems, and they assumed a role of a secondary responder working with communities to support long-term post disaster rebuilding. an example of that -- again, back in iowa, they provided funding to help construct and install an upgraded energy-efficient natural gas-fired boiler system following a flood that destroyed the boiler that had provided steam heat and hot water to st.

luke's hospital in coe college. we all know what happens when a hospital can't count on a backup generator, they can't count on energy. we know what happens with that he 0 curse. everybody shuts down and people are in peril. e.d.a. steps in ands in these areas and while fema is dealing with the immediate impacts, they're looking a little bit more at the long-term work that could be done so when and if there is another disaster, the community is ready. so all i can tell you is, you know, it's -- nothing is perfect and i'm sure there are examples that we have that aren't as good at ones i mention. i'm sure there are, because nothing is perfect and nobody is perfect. but this is a very good program. time-tested, signed into law by democratic presidents, republican presidents. the last time passed here by unanimous consent, voted out of the committee in which i'm

privileged to chair, with almost unanimous consent. we had one dissenter. and that's fine. i hope that we will win over that discertainty. but here's where we are: we have a chance to reauthorize this program. there are reforms we've made. i want to share with you some of the reforms we've made. you know, this can go on without an authorization and stumble around, but what -- what's important in this particular time, when the main three issues on people's minds are jobs, jobs, jobs, we got to do a jobs bill. you know, this -- this is a jobs bill. this creates jobs at very low cost to the federal government. this creates jobs in private sector, in some of our cities, and public works areas. so this is what we did in order

to help people understand why we think it's important to reauthorize it. working with my rank member, senator inhofe, we came up with some good reforms. we changed the current cost-sharing requirements so we increased the federal share for areas in which unemployment is especially high and per capita income is especially low, because we want to make sure that when we go into an area that's deeply in need, we do a little more for them. we require additional planning assistance, if overall funding levels increase. in other words, we want to keep our eye on these proodges. we want to make sure that they're meeting their goals. we modify the existing reinvolving loan fund program to allow recipients to convert an existing revolving loan fund to carry out another e.d.a.-eligible project. so that we take the bureaucracy and say, look, if they have a better idea, let's go forward and let them use those funds in that way. we modify rules to allow

recipients of grants more than ten years old to buy out the federal government's interest rat a depreciated rate. in other words, if a state, city, county participant say, you know what, we want to do this on our own, this is an older grant and we feel we want to take it over, neck buy out the federal government's interest. we emphasize that e.d.a. should work with its federal, state, and local agenciess' partners ad senator inhofe mentioned his reform that he made sure happened, which is that we're not duplicating other programs. that's important. we want -- we don't want to be duplicative. we want to be sure that what we're doing is not being done elsewhere and we walk in and we frankly do something that people need now. we create jobs. and we leverage. that word "leverage" has become the first word out of my mouth when i tuck about things that i

support now. that's why i support the highway bill this we hope is going to come here in a bipartisan way. we leverage dollars. any time you can leverage dollars, you put a dollar down for something good and people come to the table from local government, nonprofit sector, profit sector, state, all the different agencies, all the different parties come together and say, this is a great idea. if we all kick in just a little, we're going to do something big. and that's the idea behind the e.d.a. and i visited projects in my own state, shopping malls, other things that were done in these very difficult communities where it's tough to get capital, where the banks just turn their back, where perhaps the venture capitalists are say, well, this isn't our cup of teavment so that's why this is a successful program. so, again, i hope that we'll have debate today on the

tester-corker amendment. eights a very dishts a very controversial one. it's not happy because it's one of these things where do you one thing 50% of the people think you're rievment you do the other, 50% think you're wrong, although senator durbin says the polls show that people support these lower fees. ands in this case. but i respect the fact that the amendment was offered on this bill. it is a -- an amendment that is directly related to our economy. by hope we vote tomorrow as early as possible and i hope that we don't have a lot of amendments dragging us down because, ghast? people are look at us and they're thinking, why aren't they doing more to create jobs? and this will send a significant that will that we're make the e.d.a. a priority. this is not a big spending measure. this is an authorization. and the number we're authorizing at has been frozen. so we're not adding to it.

but we are sending a signal to the appropriators and to the commerce department that we think this is a good and important program. mr. president, i thank you very much and i've said my piece for the moment, and i will note the absence of a quorum. sphir officer the clerk will call the roll. quorum call: quorum call:

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