would yield to senator kerry. mr. kerry: mr. president? the presiding officer: the senator from massachusetts. mr. kerry: mr. president, i thank the chair, and for the purpose of my colleagues, i will just say we will wrap up very quickly here. again, i think i said it earlier but i want to thank the senator from maryland whose thoughtful involvement in this and his leadership in the caucus has been critical, i think, to helping us build a consensus, and he heads up our helsinki commission, travels himself in the cause of human rights and carrying america's flag with respect to that, and i think he does just a superb job. so i'm grateful to him for his cosponsorship-to-together with senator -- so i'm grateful to him for his cosponsorship together with senator durbin. l a hopeful that the united states will be able to proceed to this relatively rapidly. so, mr. president, i would ask unanimous consent that we return

to legislative session and i thank the chair. the presiding officer: without objection. a senator: mr. president? the. the presiding officer: the senator -- a senator: i ask unanimous consent to set asited pending amendment and called up amendment 509. the presiding officer: the clerk will report. the clerk: mr. portman and others proposes amendment numbered 509. on page 76, after -- mr. portman: i ask that the reading be dispensed with. the presiding officer: without objection. mr. portman: i rise to offer amendment number 509 to the underlying bill, the presidential appointment efficiency and streamlining ablght of 2011. i am pleased to have senator tom udall and other cosponsors of this bipartisan amendment. the aim of the amendment is really very simple and straightforward t would preserve the senate-confirmed status of

our major's chief financial officers. i appreciate very much the thoughtful effort behind the underlying legislation that's before us today. i want to particularly commend my colleague, senator collins, who is on the floor, senator lieberman, as well as senator alexander and senator schumer for their hard work in being sure that the nomination process is streamlined. having been through the process twice myself, it can use some streamlining, and i know that they will continue in their efforts and do even more to reduce some of the barriers to public service that so many people feel. and i look forward to working with them on that. but having said that, in terms of the specific issue of chief financial officer, i think it would be a mistake to take them out of the confirmation process and a very unwise thing to do at this point in our nation's history, as we are facing such serious financial challenges. these are, after all, the chief financial management people and really the chief budget people in our agencies and departments. we need them right now to be at

the highest level possible. some of my colleagues will recall the chief financial officers act of 1990 consolidated the financial positions across 23 federal agencies. it specifically required senate confirmation for the 16 most important departmental c.f.o. positions as well as for the comptroller of the office of the federal financial management and office of management and budget. i worked closely with that individual. also by separate law it requires senate confirmation of the assistant secretaries of the army, navy, and air force who serve as comptrollers for those military services. in its current form, the legislation that's before us today would eliminate this statutory rirnlt that those positions be senate-confidence. the basic principle beyond the c.f.o. act of 1990 is that a nation's chief financial officer should be a key, influential shall manager. i believe that that sprin more

true and urgent today than ever. diligent and skillful stewardship of the taxpayers' dollar is more critical than ever. and these chief financial officers are at the front line of that effort. the nominations would weaken this pending constitutionality currently in law by lowering the stature of these individuals in their departments and agencies. the practical importance of senate confirmation is that it gives individuals stature and credibility they often need to do their job effectively. i don't believe we want a situation in which, for example, the energy department's assistant secretary for electricity, delivery and energy reliable is a senate-confirmed appointee and yet the c.f.o. down the hall who is working with this person on this person's budget and directing this person is not a senate-confirmed individual or the interior department assistant secretary for water and science would be a

sphat-confirmed appointee but the the interior c.f.o. down the hall. i made it a point to meet regularly and personally with the c.f.o. ins our departments and agencies because i thought their roles were so critical and sweeshed be empowering those individuals and giving them more responsibility. these officials do one of the most important jobs in our government. they're responsible for ensuring the integrity of agency budget s i've spoken to c.f.o.'s about this amendment. earlier today i spoke to the c.f.o. of one of the major cabinet agencies and he was page national and very articulate in talking about this issue. he's told me, by law c.f.o.'s oversee the financial management activities realing to all the programs and operations of their agency. but they also play the lead role in preparing the agency budgets and presenting and explaining those budgets to the congress. often this is a more political or strategic role than many

realize. during program execution, they're responsible for cost management and aitding to detect and eliminate wasteful spendle and they're involved in determining which programs are effective and which programs should be terminated. a tough decision in an agency. you want to be sure that person has the stature to make that art and to be heard. these duties are at the heart of sound financial management but also budget policy and strategy. and i believe we should seek to strengthen these positions, not weaken them, particularly given the situation we're in with our fiscal problems. so, mr. president, i would urge my colleagues to support this amendment, which simply preserves the stature of chief financial officers within federal agencies and the accountability that's made possible through senate advice and consent. and, mr. president, i see one of my colleagues is on the floor. i would yield the floor, and i again urge support of this amendment.

ms. collins: mr. president? the presiding officer: the senator from maine. ms. collins: mr. president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: mr. president?

the presiding officer: the senator from wyoming. mr. barrasso: mr. president, i ask that the quorum call be vitiated. the presiding officer: without objection. mr. barrasso: mr. president, are we in morning business? the presiding officer: we are not. we're on the measure. mr. barrasso: i ask unanimous consent to speak up to ten minutes as if in morning business. the presiding officer: without objection. mr. barrasso: thank you, mr. president. mr. president, i come to the floor today as i have each week since the health care law was signed with a doctor's second opinion about the health care law, because it does seem is that each week there is more information that comes out about this health care law that is bothersome to the people of this great country. the more they learn about it, the more concerned they are. and as nancy pelosi said last

year, first you must pass it before you get to find out what's in it. well, the people of this tkupbt continue to learn what -- of this country continue to learn what's in this health care law and continue to be opposed to it. last friday the administration released another round of waivers from the president's health care law. they issued waivers to another 117,000, 117,000 people, a total of 62 new waivers, which brings the total of waivers to well over 1,400 covering 3.2 million individuals. what does that mean if they have a waiver? it means they don't have to live under the specifics of the law that the president signed. well, over 49% of these waivers have gone to union employees, to people that get their insurance through union plans. now, these are many of the people that actually lobbied to support the health care law. so at no time it interesting

that these -- so isn't it interesting that these are the same people that have come out and after they have read it and found out what's in it said we don't want this to apply to us? it's interesting because many union members have gotten these waivers when the number of people in this country who work as members of a union is actually much smaller a percentage. but then let's not forget how the president said in a radio interview while the 2010 elections were going on, he said that he would remember and would reward our friends, he said, and punish our enemies. well, by issuing these waivers each month, this administration has reminded the american people of how flawed the president's health care law is. waivers have turned into a nightmare for this administration. in may, mr. president, i explained that the waiver recipients got a waiver for one year, and they would have to then apply again for a waiver

year after year, all the way through 2014 when obamacare fully kicks in. well, we just learned last friday that the administration is switching course. in fact, the centers for medicare and medicaid services just announced that employers and unions, even those with waivers, the one-year waivers, must now apply again by september of this year for a long-term waiver to take them all the way to 2014. well, it seems to me that this new scheme is designed so the administration can dodge issuing more waivers leading up to the 2012 presidential election, so the american people aren't reminded month after month of the significant flaws of the health care law. it is clear that continuing to issue waivers in 2012 was going to be an embarrassment for the

president. it's also clear that this new change in policy means that even the administration admits that the new health care law doesn't work. you know, the president promised, promised all of us in congress that if you like the health insurance plan you have, you can keep it. but what but what he meant was to keep the coverage that you have today, you will need a waiver from washington mandates. you will need to get permission from the obama administration to keep the insurance that you like. companies and businesses across the country must apply before september if they want to avoid the health care law's crushing costs. in my opinion, i think that we are going to see a tidal wave of waivers before this deadline in september. in fact, i predict that five million people will eventually have to get waivers from this

top-down government mandate. there is going to be increased demand for waivers as more and more people see that they will lose what they have today. as business owners look into this and see how the health care law will cause their cost of providing insurance to go up over the next two years, they are going to be lining up for waivers over the next few months. once again, mr. president, we are witnessing the horrible economic impacts of this new law. i also want to talk for a minute, mr. president, about what happens after this september deadline, after the door closes on waivers. so let's take a look at the economy, 9.1% unemployment, job creators sitting on the sidelines due to the significant expenses of trying to open a business. well, hard-working americans who want to start a new business are going to be forced to choose between two less-desirable

choices. one, they can offer high costs government-approved health insurance, making it much more expensive for them to open a new business an hire workers or -- an hire workers or, number two, they won't offer any health coverage at all because they can't afford the health care law's out of touch and expensive insurance mandates. with the skyrocketing debt we're facing in this country, 9.1% unemployment, this administration's signature piece of legislation, the president's health care law discourages america's best and brightest from starting new businesses and providing for their employees. that's what the president's health care law does. it stifles innovation, strangles the free market, and saddles the american people with more debt. once again, this is another example of how the president's health care policies are making

things worse. his policies are making the economy in america worse. his policies are making the standard of living in america worse. his policies are making health care in america worse, and his policies are making america's debt worse. just this week we learned of another enormously expensive error in the law. this has to be what nancy pelosi meant when she said, first you have to pass the bill before you find out what is in it. it turns out now the president's health care law will let several million middle class people get insurance meant for people with low income. it would allow three million by the -- by the estimates three million members of the middle class to receive medicaid. the associated press reported that this would be like letting the middle-class families get food stamps.

and the medicare chief actuary, mr. foster said, it keeps him up at night. mr. president, this health care law is not fixable. this health care law is bad for patients, it's bad for providers, the nurses and the doctors who take care of those patients, and it is terrible for the taxpayers of this country. this health care law needs to be repealed and replaced and that is why, mr. president, i come to this senate floor week after week with a doctor's second opinion about the president's health care law. thank you, mr. president. i yield the floor. a senator: mr. president? the presiding officer: the senator from texas. mr. cornyn: mr. president, i would like to start with a unanimous consent request. i ask unanimous consent that my navy fellow, lieutenant maxwell

keith, be granted floor privileges for the remainder of this legislative session. the presiding officer: without objection. mr. cornyn: mr. president, i would ask unanimous consent to set aside the pending amendment and call up my amendment number 504 and ask for its immediate consideration. the presiding officer: the clerk will report. the clerk: the senator from texas, mr. cornyn, proposes an amendment numbered 504. mr. cornyn: mr. president, i ask unanimous consent that further reading be dispensed with. the presiding officer: it shall be without objection. mr. cornyn: mr. president, i want to on congratulate senator schumer and senator alexander, senator collins, and others, for working through this bipartisan legislation. it's nice to actually have a piece of legislation we can actually work on together to -- in this case to help streamline the appointment process for some of these lower-level positions

and i congratulate them for their work. i do, however, have an amendment that i think makes an important correction and i've discussed this with both senator alexander and others, and i think they understand and they tend to agree that this amendment is important, but under this bill the presidential appointment efficiency and streamlining act of 2011, three -- three important presidential appointments within the department of defense that are currently senate-confirmed positions would no longer be subject to senate confirmation. these positions within our military departments are aimed at a very important goal, and that is to attain better stewardship of taxpayer dollars by our military. and i am talking about specifically the assistant secretaries of the army, the navy, and the air force for financial management. and there is -- it is no secret that during these tough

budgetary times when 43 cents out of every dollar that the federal government spends is borrowed money and we're looking at an impending debt ceiling vote sometime probably in jun where we are going -- july where we are going to be asked to increase the debt ceiling because we maxed out the nation's credit card, there is no doubt in my mind that we are going to be looking at all sources for budgetary cuts and elimination of waste an overspending -- and overspending. and i don't suggest for a minute that the department of defense should be -- not have that kind of scrutiny. i think it should be scrutinized. if every taxpayer dollar being spent by the department of defense is being spent efficiently and well and the best way to do that is to ensure that professionals who are skilled in financial management at these various departments of

the navy, army, an air force, are in place and subject to appropriate oversight by the united states senate much these officials oversee financial management processes that involve more than $300 billion in taxpayer money. these are, in fact, the budgets of the military services themselves. none of the military services, mr. president are currently able to render a clean audit opinion, something that congress has said must change and will change by the year 2017, but we have been working on the sad reality that, frankly, the department of defense has been spending so much money that it doesn't even know where all the money is and we need to change that. we need to increase transparency and accountability and the only way we are going to be able to do that and put them in a position to produce that clean financial audit is by making

sure that the correct type of professionals, well-qualified professionals, are in place. under the fiscal year 2010 authorization bill, the department of defense is going to be required to produce those auditable financial statements no later than september 30, 2017. i think most people are going to be shocked to find out that the department of defense can't do that today, but, in fact, that is a sad reality. yet, it's my understanding that the department of defense is not currently on track to meet this -- this requirement of the law despite the fact that we are six years away from that deadline. removing the officials in charge of accomplishing the object frif senate oversight -- objective from senate oversight would make it less likely to happen, in the federal financial reform act of 1990, these three assistant sects have been designated as

the chief financial officers for their respective branch of military service. as such this branch functions, these sects formulate, submit, and defend the budgets of these military branches to congress. they also oversee the proper and effective use of appropriated funds to accomplish missions and provide timely, accurate, and reliable financial information to enable leaders to incorporate cost considerations into their decision making and provide reporting to congress on the use of appropriated resources. this is a high standard and unfortunately one that is not being met today but one that congress must in the exercise of our stewardship over tax dollars and making sure that every dollar is spent efficiently in a nonwasteful sort of way, this is a high standard we must insist is met. i believe that moving these he key positions from the senate confirmation process will

inadvertently undermind the effort after the financial management at the department of defense. mr. president, i'm not alone. we received comments from the department of defense comptroller saying while they agree in principle with bill 679, that it goes too far by eroding the ability of these -- of the status an ability of these financial managers to manage these dollars, and i would ask, mr. president, unanimous consent that the letter received from the d.o.d. comptroller be made part of the record after my comments. the presiding officer: without objection, it will be. mr. cornyn: mr. president, let me just conclude by saying these three senate sects -- assistant secretaries should remain presidential confirmed pointees and i ask my colleagues to ensure that they remain senate confirmable and subject to

much-needed congressional oversight. with that, i yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

quorum call:

mr. reid: i ask unanimous consent that at 11:00 a.m. tomorrow morning, thursday, june 23, the senate resume consideration of s. 679, that the vitter amendment number 499 regarding glars anregarding szad concurrently, 30 minutes of debate with vitter or demint or mcconnell or designee each controlling 7 1/2 minutes. upon the use or yielding back of that time the senate proceed to vote on the vitter amendment and the demint amendment in that order. -- prior to a vote, prior to the votes other than a budget point of order on and applicable motions to waive, further the motion to rereconsider be

considered made and the previous orders regarding the amendments remain in effect. the presiding officer: mr. majority leader. mr. reid: mr. president, i want to make sure the record is clear that that vote will occur at 11:30 tomorrow rather than at 11:00 a.m. okay. let's look at this again, everybody. yes, okay. mr. president, the consent agreement should be at 11:30 tomorrow the senate resume consideration of the legislation s. 679. everything else that i proposed will remain the same and i ask -- the presiding officer: without objection. mr. reid: i ask unanimous consent that a time be determined by the majority and republican leaders, the senate proceed to executive session to

consider en bloc nominations calendar number 62, 110, and 145, two hours of debate on currently on the nomination equally divided in the usual form. upon the use or yielding back of that time the senate proceed to the vote or on the nominations, the motion to reconsider be laid on the table, with no intervening action or debate, no further motions be in order to the nominations, any statements related to the nominations be printed in the record, the president be immediately notified of the senate's action and the senate resume legislative session. the presiding officer: without objection. mr. reid: mr. president, i ask unanimous consent that when the senate its business today it adjourn until tomorrow morning at -- tomorrow morning at 10:00 a.m. and that following the prayer and pledge, the journal of proceedings be approved to date, the morning hour be deemed expired, the time for the two leaders be reserved until later in the day. following any leader remarks the senate be in a period of morning

business until 11:30 a.m. with senators permitted to speak up to 10 minutes each with the time equally divided and controlled between the two leaders or designees, with the majority controlling the first half, the republicans controlling the final half, following that the senate resume consideration of s. 679 under the previous order. the presiding officer: without objection. mr. reid: there will be two roll call votes approximately noon in relation to the vitter amendment and the demint amendment and that those two amendments when we finish those, they will -- we will go to set up some other votes tomorrow morning for tomorrow afternoon. if there is no further business to come before the sean, i ask to come before the sean, i ask

federal reserve chairman ben bernanke said earlier today the economic recovery is continuing at a moderate pace but some of the problems slowing the recovery could continue in the next year. we will watch as much as we can until our live coverage of president obama at eight eastern. >> midafternoon, welcome. in my opening remarks today i will review today's policy decision and i will place the decision in the context of our economic projections and policy strategy. i'm glad to take your questions. throughout today's briefing my goal will be to reflect the consensus of the committee while taking note of the diversity of

views as appropriate. of course remarks in the interpretations are my own responsibility. as indicated in its policy statement released earlier this afternoon, the committee decided today to keep the target range for the federal funds rate at 02 a quarter%. the committee continues to anticipate economic conditions including close rates resource utilization and a subdued outlook for inflation in the medium run likely to warrant exceptionally low levels to the federal fund rate for an extended period. the committee's planned purchase of 600 billion of longer-term treasury securities will be completed by the end of this month. the committee will continue to reinvest principal payments from its securities holdings going forward. in conjunctions the fomc participants submitted projections for economic growth, the unemployment rate and the inflation rate for the year 2011 to 2013 and over the long run. these projections are conditional on each person's

individual assessment of the appropriate path of monetary policy needed to best promote the committee's objectives. i will focus on the information shown in the figures that have been distributed. in each figure the dark area is the central tendency of the current projections while the lighter shade area in the full range of projections. the law to become water and projections of each figure represent participants assessments of the rate to which each variable will converge overtime under appropriate monetary policy and assuming no further shocks to the economy. the wanderer and projections for output growth of a central tendency of 2.5 to 2.8%. and the long run projections of the unemployment rate of a central tendency of 5.2 to 5.6%, the same as the april projection. these projections may be interpreted as indicating participants current estimates of the economy normal or trend agreed growth and its normal unemployment rate over the long run respectively.

it should be noted these estimates are inherently uncertain and subject to revision because long-term rates of economic growth and unemployment are determined largely by non-monetary factors that may evolves over time and often cannot be directly measured. the central tendency of the long run projections for inflation as measured by the price index for personal consumption expenditures is 1.7 to 2.0%. since the longer run inflation outlook is determined almost entirely by monetary policy, these projections can be interpreted as indicating that the inflation rate of each participant's judge should be consistent with the federal reserve's mandate of fostering maximum employment and stable prices. in effect, the mandate consistent inflation rate is judged to percent or a bit less. i now turn to the contour of the committee's economic outlook as indicated in today's policy statement, the economic recovery appears to be proceeding at a moderate pace the somewhat more

slowly than the committee had expected. recent labor market indicators have also been weaker than expected. for example the unemployment rate has risen by 0.3 percentage points since march and the new claims for unemployment insurance have moved somewhat higher. the reduced pace of the recovery partly reflects factors that are likely to be temporary. in particular consumers' purchasing power has been damped by - energy prices and the aftermath of the tragic earthquake and tsunami in japan has been associated with disruption and global supply chain especially in the auto sector. however some moderation and gasoline prices are now in prospect and the effect of the japanese disaster and manufacturing output are likely to dissipate in the coming months. consequently as shown in the first figure, entitled change in real gdp, the committee expects the pace of economic recovery will pick up over the coming quarters. specifically participants' projections for output growth have a tendency of about 2.7 to

2.9% for this year and 3.3 to 3.7% for next year. growth rate faster than we have seen so far in 2011. however the committee purchase of pence have also responded to the recent slowing by marking down the projections for 2011 and 2012 which are half a percentage point lower than our april projections. looking further ahead the central tendency of the growth projections for 2012, 2013, sar come is 3.5 to 4% essentially the same as the april projections. as shown in the second figure into entitled to unemployment it is restricted to resume it's gradual decline towards levels of the committee just as consistent with its two-man date. in particular of the unemployment rate is projected to edge, for coming months to 8.68.9% in the fourth quarter this year and then decline gradually over the subsequent two years to a level of 7.0 to 7.5% in the fourth quarter 2013.

still well above the central tendency of participants long-term unemployment projections. in short we expect the unemployment rate to continue to decline at the pace of progress remains frustratingly slow. inflation moved up in recent months mainly reflecting high year prices for some commodities and imported goods. in addition prices of motor vehicles have risen notably as a result of the recent supply chain disruptions. however, has the effect of the factors dissipate, the committee anticipates inflation will subside in the coming quarters to levels at or below its mandate consistent rate as shown in figure entitled pce inflation. specifically the tendency of participant inflation projections to .3 to 2.5% for this year but declines to 1.5 to one point ciro% in 2012 and 2013. the trajectory broadly similar to that of the april projection. the economic outlook provides

important policy context. in particular the committee's policy strategies intended to foster both aspects of the dual mandate that is promoting the economic recovery so that the unemployment rate returns over time to its longer term normal level and ensuring inflation over time is at levels consistent with our mandate. at 9.1% the current unemployment rate remains elevated and progress towards more levels of unemployment is likely to be slow as i noted. moreover, the inflation rate which picked up in recent months is expected to subside at levels at or below the rate of 2% or a bit less than most participants judge to be consistent with a dual mandate. the ongoing labour market slide in the subdued inflation outlook for the key reasons for the committee's decision to maintain the current high degree of monetary policy accommodation and for our judgment of exceptionally low levels of the fund rate are likely to be warranted for an extended period. thank you. glad to take your questions.

>> john from the "wall street journal." mr. sherman, the fomc says it will maintain short-term interest rates have been exceptionally low level for an extended period. does the policy or does that guidance also apply for the fed security holdings? in other words, will they be maintained a very high level for an extended period? >> we haven't made any such commitment. it's true that when we began to allow the portfolio to run off rather than reinvesting that would be a first step in the process of exiting from the currently highly accommodative policies. but, we have not yet chosen to make any particular commitment about the time frame. we will be looking at the atacama trying to assess when the appropriate time is to take that step. >> if i could will, why give

guidance on one policy tool but not give guidance on another policy tool when the fed has talked about the to policy tools working together? >> that's a good question. it's something we have on the table, something we thought about. but to this point we haven't taken that step. >> and the committee lowered not just this year's central tendency forecast but also 2,012th. yet the statement of the committee attributes most of the revision forecast to tender refractors so i was wondering if you could explain what seems to be persisting in holding the recovery back. the statement says impact to the collection to return america to the temporary. are there factors that are producing a worse outlook than three months ago? >> well, as you point out the

temporary factors are in part the reason for the slowdown in other words part of the slowdown as temporary and part of it may be longer lasting. we do believe that growth is going to pick up going into 2012. but at a somewhat slower pace than we anticipated in april. we don't have a precise reading on why the slower pace of growth is persisting. one way to think about it is that maybe some of the head winds that have been concerning us like weakness in the financial sector, problems in the housing sector, balance sheet and deleveraging issues, some of these headwinds might be stronger and more persistent than we thought and i think that it's an appropriate balance to attribute the slowdown partly to

the identifiable temporary factors but acknowledged the possibility that some of the slowdown is due to factors which are longer lived and will still be operative by next year. you know in 2013 we of growth at the same rate as the anticipated in april. >> mr. chairman, could you describe to what extent the situation in greece and europe was discussed at the meeting and what policy conclusions were reached and also can you tell us whether or not in response to the recent slowdown there was a discussion about further easing? >> with respect to greece, that's obviously very important that -- is a very difficult situation. we've been in close communication with our colleagues in europe obviously

not part of the negotiations but we have been well informed. we have a g-7 call over the weekend for example. i think the europeans appreciate the importance of resolving the greek situation. if there were failure to resolve the situation and would pose threats to the european financial system, global financial system and european political unity i would conjecture as well. so yes, we did discuss it. it's one of the several potential financial risks we are facing now. but again, we are just mostly following the situation closely and making sure as best we can our own institutions are well positioned relative to sovereign debt in the so-called peripheral countries. with additional asset purchase

we haven't taken any action obviously today we will be reviewing the outlook going forward will be a committee decision. i think the point i would make no in terms of where we are today versus where we were say august of last year when i began to talk about asset purchases is that at that time inflation was very low and falling. many objective indicators suggested that deflationary was a non-trivial risks, and i think the security purchases have been very successful in eliminating the deflationary risk. i don't think people appreciate necessarily that the inflation can be a very pernicious situation where it could have long-lasting effects on economic growth. in addition, the growth in payroll has actually picked up. in the four months before the

speech in august there was about and 80,000 per month he will increase. so far in 2011 concluding the payroll report in may the average was closer to 180,000. so there has been improvement in the labour market, albeit not as strong as we would like. as of last august we were essentially missing significantly in both come on both sides of our mandate inflation was too low and falling and unemployment looked like it might be beginning to rise again. in that case, the case for monetary action was pretty clear in my mind. i think we were in a different position today certainly not where we would like to be, but closer to the dual mandate of adjectives than we were at that time. so again, the situation is different today than last august, but we will continue to monitor the economy and act as

needed. >> budget cuts that made this your help or harm the economy? what is the fiscal policy like in the year 2012? >> of the affect of the fiscal cuts on the economy depends on the timing. i've advocated the negotiations about the budget focus on a longer-term, say ten years which is the budget window or even longer if you take into account entitlement reform, for example. bye taking the long run perspective, we can help the economy by reducing the risk that interest rates might rise suddenly and increased confidence in the part of households and businesses so i think it's very desirable we take strong action to lower our

budget deficits over the longer term. in doing that i think it would be best not to, in light of the weakness of the recovery, it would be best not to have a sudden and sharp fiscal consolidation in the very near term. that doesn't do so much for the long run budget situation is just a negative for growth. so, my answer is it depends on the timing and i hope that the congressional negotiators will take a long-term view as they discussed the issues. >> myett the business reports on pbs. if i can follow what he said they're seems to be the growing view in the country that the deficit is the problem with jobs and that immediate cuts in the deficit will grow the economy and immediately create jobs. many economists disagree with that. do you want to be little further and talk about that issue and whether you agree with that view

that seems to be taking root? >> i don't think that sharp immediate cuts in the deficit would create more jobs. i can give a very short run that we are seeing already a certain amount of fiscal drag coming from state and local governments as well as from the withdrawal of previous federal stimulus so i think in the very short run a fiscal tightening was at best neutral but somewhat negative for the job creation. i think what people will understand and did understand is budgetary problems are long run in nature. we talk about the debt to gdp ratio will be in 2020, 25 and so on. that doesn't mean we should wait

to ask. the sooner we can act, the better the the most efficient effective way to address our fiscal problems and again i think this is extremely important is to take a longer run perspective not to focus the cuts heavily on the near-term, but by taking a long from perspective and making it a credible plan for reducing future deficits will lower interest rates or prevent them from rising and increased confidence and that could be very constructive, but it's entirely focused on the near-term. >> with "washington post" do you believe the fomc has the authority to set 2% inflation targets on its own unilaterally or do we need to go to congress

to get the target made more explicit if the former are considering doing it of the latter are you considering going to ask them to do it? >> as you know, i have been a longtime proponent of inflation target and i think that it would help anchor inflation and help reach our inflation objective. at the same time it's not at all consistent with our employment objective because keeping inflation low and stable, keep inflation expectations low and stable gives the fed more leeway to respond to the short term shocks to the economy. so we think it is something that is worth considering. in terms of authority i would say that there are multiple models around the world so in the european central banks that bank has a mandate for price stability, period. and they set their own definition of that using input

from economists and others. so i don't think that there is a real barrier to setting a target. however, it is very important that first we communicate to the public what we are doing without sufficient explanations and background many people might think we are somehow abandoning our employment target. so we need to make sure that it's well understood by the public and by congress that having a target would not mean that we are abandoning the dual mandate. also you asked about consulting with congress. under any circumstances it would be important to take the polls to congress we might have the legal authority to do this but i do think we need some body in from the administration and congress to take that step. we continue to this periodically to discuss this issue. it's been part of our ongoing

communications discussion which include this press conference of innovation for its simple. there's nothing eminent, but again, we will continue to discuss this and inappropriate we will be consulting about it. >> new york times. what is your assessment of the impact on the united states economy if there is a default by one or more european nations? what steps has the fed taken to assess the consequences for american financial institutions and in particular, have you examined the impact on derivatives holdings outside the regulated financial system? >> to answer your second question first, we have been very assiduous in examining the exposure of the financial institutions to the so-called peripheral countries. the answer is that the banks the

we regulate are not significantly exposed to those countries directly at least. we of exposure to european banks and then on peripheral countries and indirectly they have that exposure. that statement includes credit field swaps and the numbers with a published do not fully account for a wide variety of hedges and other positions. so we have asked the banks to do stress tests and ask looking out of their positions, all of their hedges what was the effect on their capital if greece desalted and the answer is the effects are very small. it's also the case we don't oversee the money market mutual funds we have been keeping a close eye on that situation. they're again, the situation is

similar in the sense with very few exceptions the money market mutual funds don't have much to elect exposure to the three peripheral countries which are currently dealing with debt problems. they do have substantial exposure to a european banks and the core countries like germany, france etc. as a to the extent there is indirect impact on the core european banks that pose some concern to the money market mutual funds and there's a reason why the federal reserve and other regulators are continuing to look at ways to strengthen money-market mutual fund. in terms of the impact of the problem increase of the united states as i indicated direct exposures are pretty small and we are doing all we can to monitor those exposures. however, as we saw in a small

situation, the small case last spring, a disorderly default in one of those countries would no delroy of the financial markets globally and have a big impact on credit spreads, stop prices and so on, so in that respect, i think the effect on the united states would be quite significant. >> mr. chairman, to talk further about banks, as you know, global regulators are meeting this week to finalize a proposal that would mean the world's most significantly banks and surcharge there are some that are arguing that regulators are going to far too fast, and i am wondering for the regulators where is the line you pass where

you go too far and do hurt credit lending inevitably hurt the economy? >> i will have a chance to hear others use and contribute to the discussion. it's only been two years since we had the worst financial crisis certainly since the great depression and possibly in the history of the united states, and the failure and the near failure of the large financial institutions was a major contributor to that crisis. since we can't know what threats will come in the future probably the best purpose way of strengthening the balance sheets of banks and other financial institutions is by capital and can i'm very supportive of increased capital and better quality capital to ensure these banks will be stable and able to land in of the event of another crisis which i hope we don't

ever see. in terms of the surcharge i think it's also appropriate to have additional capital requirements with of the largest and most systemically important institutions. after all, it's because their failure would have deleterious effects on the financial system we need to take extra steps to make sure that they will be very unlikely to fail. in addition, it provides some more level playing field because by having higher equity requirements of the largest institutions avoid some of the funding advantages that otherwise accrue to firms to begin to fail if so think it's important to do that and we'll be negotiating and discussing with colleagues internationally with the appropriate number of

firms is and criteria are in the amount of capital should be in choosing the amount of capital we will certainly be trying to lay off balance the extra needed safety systemically important firms against the impact on lending and so on. although i would note systemically important firms are only part of the banking system to the extent they reduce lending some of that lending might go to other institutions. in terms of going too far, it's very difficult to make a broad based assessment of the overall impact of all of the rules and regulations, but i would like to make it clear both by law and internal practices the federal reserve does cost-benefit analysis of every rule that we write and we publish those, so we are looking at the cost

benefit for these regulations. moreover, we have worked with the federal reserve actively with the basel committee for the analysis of the capitol requirements on the one hand on the probability of a crisis, and on the other hand the cost of lending and to the effect of growth. the studies have been published, and if you look at them, you will see that we believe that if a capital which has been imposed so far would significantly reduce the threat of a massive financial crisis and on the other hand have a very small effect on growth, so i don't think we are on the wrong side of that trade off at this point. >> from the financial times. mr. chairman, you now expect both headline in core inflation will be close to your long run

objective in 2012 and 2013 while unemployment remains high. does that mean you think the media and trade off between inflation and growth has gotten worse, and furthermore, can i ask has the unexpected rise in the core inflation changed your understanding of the outlook gap? thank you. >> to address the latter question first, that's a possibility. as you saw from the projections we just put out, the committee, every member of the committee sees the long run unemployment rate called by economists somewhere around 5.5% basically, so that would suggest the committee still believes the output cap is quite large. respect to core inflation, some of the effect set least there are also temporary to name two

examples, the supply chain disruption is brought about by the javanese disaster led to a very significant increase in auto prices, new and used automobiles last month, as these problems are resolved and the appear to be on the way to being resolved, we would assume the prices would come back down and incentives restored as competition increases and costs are reduced so that's one example. another would be the fact that energy prices passed through despite the fact it's excluding energy, that's only the energy, direct energy products, things like air fare which are sensitive to the cost of jet fuel are also part of the core. so we would imagine that as the price of oil declines we would see some decline in also the

core measures of the inflation. so, given that there's a large output gap, given that inflation expectations remain anchored, given that some of the temporary factors affecting inflation including the core inflation are likely to recede i think it's reasonable to think that core inflation will fall back towards mandate consistent levels. ..

under what conditions would be extended. met extended even longer? thank you. >> the reason we use terms like extended period is not to be essentially opaque. the reason is that we don't know exactly how long. i think, i think the thrust of the extended period is that we believe at least two or three meetings away from taking any further action and i emphasize at least. but, depending on how the economy evolves and inflation and unemployment, it could be longer. it will depend on how the economy and the economic outlook changes. if we do get both improves job oueation and inflation close to