>> as that spending has now beginning to, you know, come down, you are seeing a drop in the total spending. this is what i said in my remarks that there is at this point a net drag and that's what that shows in terms of the government component of total demand in the economy. this is why i just urge some

caution to the composition or the timing of your work on the fiscal issue so that you don't unnecessarily weaken what is at this point still not a very strong recovered. >> thank you. >> mr. hensarling. >> good morning, mr. chairman. >> good morning. >> we i believe have seen the greatest fiscal and monetary stimulus thrown at our economy in history of our country. perhaps the history of the world. regardless of where we were in september of '08, to round down some of the analysis in your testimony, we now are at 29 consecutive months of unemployment, and being above 8% when the president told us if we pass the stimulus bill it would not exceed 8%. we know we have had three months

now where unemployment has been on the rise above 9%. since the president has taken office, there's been a for you% increase in the number of americans who receive food stamps, one in seven. the average number of weeks it takes to find a job, according to the bureau of labor statistics is 39.9 weeks. the longest in recorded history. and there has been now entrepreneurship or new business starts apparently are at a 17 year low. so, after the largest monetary and fiscal stimulus in history, and if i had my figures right, and i believe they came from the fed, public companies are sitting on roughly $2 trillion of excess liquidity. banks have about a trillion and a half of excess reserves. i believe that is according to your data. in your testimony you mentioned a lack of consumer confidence,

but nowhere in your testimony did i hear a lack of business confidence. and what i believe i'm seeing is the economy is not so much suffering from the lack of capital, but a lack of confidence. ends of you and i are looking at different business surveys and talking to different people, but i was curious why that was not part of your testimony. >> well, the business conference picture i think is more mixed. i mentioned in my testimony equipment and software investment has been quite strong. which suggests that firms are not hungry down completely. they've been very slow to higher though, you are correct. in terms of the surveys, some of the recent purchasing manager surveys have been at least positive, but small business confidence has been week. i think that would be consistent with what you're saying. >> trying to come spoken to a number of fortune 50 ceos, very large investment fund

managers, people are most important to the small business people in east texas that are represent, i can tell you, the anecdotal evidence is overwhelming that job creators and investors lacked confidence in this economy. we can argue about the underlying cause. what i am hearing is the fear and uncertainty surrounding the president's health care plan. frankly, major portions of the dodd-frank legislation. attacks snapback that is already in current law, regulatory overkill on the epa, and last but not least, certainly the national debt that looms before us. so again perhaps we are speaking to different people. speaking of the national debt, and the nation is somewhat focus on the debt ceiling, although i think the investment community is still somewhat focus on the euro zone, i believe that

august 2 is a very, very serious day, but i do want to separate fact from fiction. when people speak of debt, i believe, rather of default, i see that as something very different from sovereign default. in your opinion, does this administration lacked either the will, the means, or the authority to keep bondholders current? >> let me just say one word about the previous thing which is i don't think we ought all in that much disagree. there's lots of uncertainty in the economy, and also about the sustainability of this recovery so i agree with you on that. on the ability to pay debtors, i think there are some operational risks and concerns but i think for at least for a while the administration will do all that it can to pay the debt. a question arises if we don't, to do that we stop and other operations, government contractors or speed is the

question was specifically on default on sovereign debt. my time is just about to run out, but the president today is gone elevenths ago, when i tried to explain to them is number one, if you look at the numbers, then medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up. my time is out. but perhaps in writing you could respond to the extent whether you agree with the president and to what extent that -- >> would've allowed people to give a brief response if your question ends. if you want to respond. >> indian with a long-term structural debt -- >> let him answer. >> well, as you know, medicare is not a fully funded program. the premiums are paid in only cover a portion of the costs. there is a trigger when the reserves get to a certain point which forces congress to look at it. but i think from a fundamental

economic point of view it's clear that the increasing health costs, the age of the population makes this a larger and larger part of our economy, very, very difficult to find revenues to finance it. in its current form. >> thank you. at this time mr. cleaver for five minutes. >> thank you, mr. chairman. thank you, mr. chairman. i'd like -- like mr. hensarling dominated texas. in fact, i was born not far from where he lives. and so believe it or not there's a town in texas called qaeda and shoot -- cut and shoot. i grew up in public housing so i learned the term cut and run. home. and so now we are having a new version put up called cut and grow. and i'm just wondering if that

is real, if we can cut spending dramatically and then the economy grows, if that is an accurate description. can you help me understand that? >> well, i think again, you have to maybe look at it on several different dimensions. first, again we have a fiscal sustainability problem over the long term. so we need to take a long-term perspective on that. but we do have a problem and we do need to address that. secondly, in terms of longer-term growth, we really just don't want to cut, cut, cut. or look at what we're cutting and how we're gone. we want to make sure we're making the lessons that will help the economy grow. that includes things like fixing the tax code and so on. but in terms of very short term as we discussed earlier, i think you need to be a little bit cautious about sharp cuts in the

very near term because of the impact on, potential impact on the recovery. that doesn't at all preclude, in fact i believe it's entirely consistent with a longer-term program that will bring our budget into a sustainable position. >> thank you. couple of quick, if i can get them in. if cutting taxes creates jobs and we cut taxes over the last 10 years and fell into a recession, historically impactful recession, is it then logical that if we continue to cut taxes, that all of a sudden we will grow because we said taxcutting will somehow create jobs?

>> well, the very severe recession which we have recently experienced and which were still trying to recover from was cause primary by the financial crisis, and many, many causes, regulatory, private sector behavior and so one. so i think of that as something that happened that wasn't directly related, very much, the tax policy, for example, except very indirectly. so i wouldn't draw that connection. i think taxes can be viewed as having to roles. one is that they, like tapes -- payroll tax cut they provide extra income to consumers in a very period of weak spending to give the more income to provide demand for the economy. in the longer-term, you want of a tax tax code which promotes good economic decisions, work efforts, saving, investment, efficient choices and so on. there is somewhat different. you don't want to conflate those two.

depending on the state of the economy those two sources for benefits taxes, cuts are somewhat different. >> but if we paid $1.3 trillion in wars, that shouldn't be continuing, we took $250 billion out of the economy with medicare part d, which is give the american public without paying for, i'm convinced that all of have put together with the tax cuts and some other factors that you mentioned, created a problem. we are not able to create jobs right now, so here's what's happening i think in my district in missouri, kansas city, missouri, area. someone lays off 10 workers, line workers, and then they decide they will hire again. this time they hire two, maybe three workers in tech jobs, which means that most of those

people who are laid off will never get their job back. is this a time we probably should have some workforce retraining in order to make sure that we have a workforce that can actually compete with foreign companies for productivity? >> as i mentioned earlier, one of the big problems we have which will last even beyond this recovery is the fact that we have millions of people have been out of work for six months or a year or more. we have millions of people who are insufficiently trained, you know, to work with new technologies and to compete on a global basis. let me be clear. i'm not just showed a government training program. there are many ways to help people get up to speed, you know, through technical schools or a whole variety of programs, but i do think that was the important things we need to do

for our working people is to make sure they have the skills they need to get decent work. and those of skill requirements are only going to go up over time. >> i'm sorry. mr. miller. >> thank you. could you have your, mr. bernanke. enjoyed your testimony. i've agreed stability in the market place is having impact on the recovery. you also see people are not consuming because of the wealth of loss and housing sector and i think you're absolutely correct in that. that there's a lack of confidence in housing market today. mortgage refinance is have continued to fall as you said. mortgage brokerages is continue to decrease and applications continue to default. in california, -- recently set a positive impact on the marketplace, yet at the same time now we're going to decrease those low limits in those high-cost areas which any other side will have a hugely negative

impact on those markets, and the loans that are being made in those workplaces right now seem to be some of the best producing loans that they're making. this is without a doubt freddie and fannie as they currently exist have to go away. there has to be a viable replacement for them to say which is going to get rid of them without having a viable alternative is unrealistic. it's going to be counterproductive to the marketplace. but at the same time housing action needs to be taking place at this point in time, i need for a viable secondary market place after established, taxpayers must be productive -- must be protected. do you believe that now is the time for major reforms to the housing market? >> yes, sir. this was the main unfitted piece of unfinished business in the financial regulatory reform, the area that was not addressed. as you know treasury has put forth some propositions.

the number of members of congress have put out plans. i think it would be very helpful if we could begin to get some clarity about that. it would probably increase confidence in part of mortgage originators and so on the tube you will find secondary markets for their mortgages. >> and lack of clarity is killing the marketplace. no-brainers what to expect tomorrow. then you're pulling back today because you don't know what to expect. you see the potential for future for private capital playing a strong role in the function market for mortgage lending? >> certainly. i think many plans have been proposed involved private capital. one example is the so-called covered bonds, where banks sell bonds backed mortgages to private investors. doesn't involve any government funding at all. or we could have some system

where securitization function performed by fannie and freddie is done by private financial institutions. so i think it's entirely possible. it should be noted, and i think fair to note that fannie and freddie were effectively subsidized, and, therefore, a private market system is probably going to increase the cost of mortgages a little bit. but that's just a consequence, taking away subsidy which any improved be very costly to our economy. >> the problem with that fannie freddie hiebert was taxpayers were at risk and others that all the profit. that's unacceptable. what you see for home loans would be? >> well, currently there's that much private capital because of concerns about the housing market, concerns about still high default rates. i suspect though that when

housing market begins to show signs of life that there will be expanded interest. i think another reason, go back to what mr. hensarling was saying, is that the regulatory structure under which securitization, et cetera will be taking place is not tied down you. so there's a lot of things that have to happen, but i don't see any reason why the private sector can play a big role in the housing market securitization, et cetera, going forward. >> we have introduced a bill last week that we believe does that. it sets up a functioning of the facility recognizing housing is critical, stabilizing the economy, driving capital must be the dominant source of credit. the government must have some continuing role, but it must be protected and safety and soundness underlying principles must be in place to protect the taxpayers. but the problem we have today is that most of your investors are looking at mortgage-backed securities doubt the confidence,

the gses are the only ones they have confidence in that they will be paid their investment back and receiver return on it. but it seems like there needs to be a facility available that prioritizes safety and soundness but provide liquidity to the secondary market from the private sector. and we think that has to be done. the longer freddie and fannie goes the larger the losses will be. i yield back. >> thank you. mr. akin. >> thank you, mr. chairman. chairman bernanke, welcome. good to see you. all of us on this side of the table ran for office seeking the jobs that we have. many of us told people who put us here that we understood that the first priority had to do with jobs, and we pledged to make jobs our first priority and

to do everything that we could do to improve the job situation and increase the number of jobs and helps you create jobs. jobs are not just a concept. you don't have to explain to people. they understand the consequences of having one, or not having one. many of us also to the great applause of some crowds told people that we would never, and took blood oath, never raise the debt ceiling. and the crowds yelled their approval. the debt ceiling is a lot more difficult and is more conceptual to a lot of people, and they don't really understand it and a lot of people use phrases about sit around your kitchen table and balance your checkbook and people said yes, that makes a lot of sense. a number of us pledged

affirmatively on both, the jobs and the debt ceiling. well, in a very short number of days the rubber will hit the road or something is going to hit the fan, or we'll have one of those moments, but it's going to be very telling. if indeed the people who took the blood oath on the debt ceiling, and swore to people on jobs, refused to move and we actually do not raise the debt ceiling, could you explain the correlation and how many jobs we would be creating? >> well first, the analogy about balancing your checkbook, getting your finances in order is wrong. the right analogy for not raising the debt limit is going out and having a spending spree on your credit card and then refusing to pay the bill. that's what not raising the debt limit is. i know you get it. now, in terms of jobs, you know,

i think the worst outcome if you don't raise the debt limit is that at some point, you know, we default on the debt and that would create, that would ask a be a huge financial calamity which in turn would affect everybody and was set job creation back, significantly. but even -- >> when you say significantly, is that quantifiable? >> well, we saw what happened in 2008-2009 where we at the consecutive quarters of negative growth in the economy. i think something in that order of magnitude would be certainly conceivable. but even though, even if, again, mr. hensarling's question, even if we are able to maintain payments on the debt and interest by prioritizing it, and avoiding, operational issues and so on are solid and confidence retained, it still would involve

a very substantial reduction in government payments, including social security checks and military pay, things of that sort. that would of course force people to cut back on their spending, reduce the congress, would no doubt have a very adverse effect very quickly on the recovery. so even if we were able to continue to pay our debts it would have a negative impact. >> so you just said we would lose jobs and not create jobs? >> if we don't raise the debt ceiling. yeah, i'm quite certain of that. >> i have a second question not related, and that has to do with the conforming loan limits that are about to change. i represent one of the counties in the country, and our 669 such counties, and they are in 42 devastates that will be affected by this. the housing market in one of my counties is pretty high. doesn't mean the houses are way above modest.

it means that real estate prices are very high. it could be the regional market up in new york and on long island. these are not necessary mansions, but there are many of them as the are in the other 669 districts that have this kind of situation that are affected. you make note in your statement that this is, the housing market and the low level of new homebuyers is a huge problem. the people looking for these homes are among the most qualified buyers by any set of standards and circumstance -- >> mr. ackerman, let him answer the question if you can get on. >> how do we reconcile the fact that these people are not going to buy homes when they are qualified to do so and to absorb some of the homes on the market? >> well, as far as fannie and freddie are concerned there's a trade off their. between supporting the higher priced homes and weaning the system off of an unusual limits

are put on during the crisis. i understand that the private sector is taking come at least a significant number of the so-called jumbo mortgages, but maybe the higher costs. so it's a bit of a trade off there. i don't really have an answer other to say we have to get our housing finance system back into working order. >> thank you. mr. westmoreland. >> thank you, mr. chairman. mr. bernanke, you made a statement that not raising the debt ceiling was like going out on a spending spree, and then not be willing to pay your bill. with these people with a spending spree draw and not understand they eventually would have to pay it back? >> i don't know. spiff the point was that debt is to pay for tax decisions and

spending decisions the congress has made and the president has signed and is already been implemented. >> because i know the debt ceiling was raised in june of 2010, after a spending spree of deficit spending. the senate has not passed a budget in almost 800 days. we continue to operate our government i a continuing resolution until april of this year. so, the people that were in charge of spending this money either didn't care if we have to pay it back, or they didn't think we had to pay it back. there's something there, so i agree with you think that, yeah, it's not like paying your debt, but i don't know if the people that are a key thing is that what they had in mind for the program. and to me, the people that spent

the money and got us into this that have come up with no solution to how we should fix it. so the people that didn't run the debt of are the ones trying to come up with a solution. let me ask another question. you are talking about the housing market. and i come from an area in georgia that had a lot of new development, a lot of growth. with that 65 bank failures in georgia, a lot of those were due from the fact that people were being so heavy into commercial real estate acquisition and development and so forth. what's your take on a bank that either received t.a.r.p. funds, or a bank that came in under a lost your of an acquiring bank, and fire sold the assets of either their bank or the bank

that they acquired by putting them on an auction, selling them for 30, 40 cents on the dollar. and by doing that, because they had a lost year agreement with the government, or because they had gotten this t.a.r.p. money, that the community banks that had loans in the same area, owned real estate, their values were deflated. i mean, knocked down. homeowners that lived in these subdivisions and had bought these houses, their value was knocked down. they no longer have any equity. not out of any fault of their own but because the government had given money to banks or enter into lost year agreement. for them to come in and flush the so-called troubled assets away, and we've had a lot of communities that have

immediately, community banks, had to write down these loans. they close them. because they don't have the capital. they can't raise the capital reserve. and so, do you see a problem with that? and alas question of giving a chance to answer, on the neighborhood reinvestment act, we just had a situation in my district where a county purchased some homes from a bank, then foreclosed so the got the bank out of the deal. this is federal money that we gave them for the neighborhood revitalization. this is an active neighborhood. this is a fairly new neighborhood. people have just moved in. there are still builders and they're building. this county gets the money, goes in, we have the houses, and gives anybody wants to buy $120,000 for down payment. it kills the builders.

it kills jobs. and so those are three examples of government intervention coming in to try to do something good that is actually destroyed jobs, destroyed wealth, and destroyed commuters. i've counties that don't even have a community bank. could you kind of explain some of the thinking behind that? >> i'm not the money with those specific cases. i do know that fire sales from failing banks, or from banks that are just trying to get their capital position in better shape, or distressed sales of our yo, real estate owned by banks have brought down prices, have brought down a press and that's one of the reasons the housing market is weak, because it's hard to get along because your house is appraised at the level that you would think it would, because houses are in distress conditions but i think that's a major issue. we need to address that.

i think that -- i didn't quite understand the part about the down payment, but one of the things that's also harming homebuyers is being in neighbors with a lot of foreclosed houses around it i think efforts to rehabilitate neighborhoods and perhaps to divert if necessary old homes to rental homes or do whatever is necessary to restore the integrity of the neighbor, that cannot be good for housing prices if you can do that. socially a question of executing these policies in a constructive way. >> thank you. at this time, mr. carson. >> thank you, chairman vargas, ranking member frank, thank you. some are still expressing concerns over and unduly lackluster economy, problems that will doom heavily. i did support t.a.r.p. because i believe the consequences of inaction were far too grave than to not respond at all. however, banks are still living to the public and final small

businesses. how do you plan on encouraging banks to lend to our nation small businesses and the american public in general? and secondly, as you know, more bank 70 tightened their lending standards and that eased them. does the fed plan to keep interest rates low for an extended period of time? are the feds and actions are meaningless unless banks are willing to lend? and lastly, what are your thoughts on the requirement of 20% down for a payment? and deeply this will impact homeowners significant or not at all? >> well, banks, first of all, they have thought that should stop typing their lending standards going to her service. they have begun to ease him, particularly for international loans and other types alone. small businessman is still constrained both because of bank reluctance, but also because either lack of demand because they don't have customers or

inventories to finance, or because they are in a weakened financial condition. federal reserve has been very focused on trying to promote small business lending. i do want to take all your time, but we have provided guidance as to our examiners. we worked with our examiners to tell them how to balance between the needs of safety and soundness and the needs of making good loans to small businesses. we've had meetings and conferences all of the country with small businesses trying to get their perspective. we have an ombudsman. if anyone wants to tell us about a problem that would like to know about it, that's on our website. so we have been working hard to do that. our low interest rates i think to support the economy to a number of mechanisms. including lowering mortgage costs and lowering carloads and other types of rates. on the 20% down, i think you are referring to the qualified residential mortgage, qrm.

this is a rule which we head out for comment. were still listening to the common. the idea was that congress to pass a risk retention requirement of 5%, if you silly securitized package of mogadishu it to keep 5% of that as a guarantee essential that you have, that your guaranteeing those mortgages as being of good quality. the qrms are the mortgages that congress intended to be exempt from the requirement for presuming that should be mortgages at a very high quality. we look at the criteria that affects mortgaged legacy rate and high down payments are one of the things that really stood out as being one of the factors to keep delinquency rates down because people have a lot more cushion if they have a big down payment. we don't think that this would necessarily block homeowner should because there was to be a large market subject to the risk retention requirement where down payments requirements would be

set by the originators, as that is now the case. but again we are taking comments on this and will certainly listen carefully to whatever public has to say. >> thank you, mr. chairman. >> thank you, mr. chairman, and mr. bernanke, i appreciate this opportunity, i am talking can fast and i may be sending out a letter with some additional questions, but i want to flash back a couple of, made a couple of weeks ago, a month ago where the republican caucus met with the president at the white house. one of my colleagues from wisconsin who's the chairman of a new committee, dukakis that he created that i'm a member of, small business owners caucus, some would say job creators caucus, had been said mr. president, there's three things that those of us in small business are looking for, one is consumer confidence. do is credit availability. and the third is certainty. we are looking for certainty. and i really would be the basis

and foundation for recovery. want to try to work for a couple of those, and i appreciated my colleague from california talking about housing. my background is in real estate and developing, and also in construction. my family has a ready mix concrete company, and i own our gravel company and gravel sand company. so i can tell you on page three when you talk about residential construction, it's at extremely low levels, that might be the understatement of your remarks. especially coming out of michigan for protected time here we've had some very difficult times. but i want to kind of focus in on, what i'm concerned about consumer confidence, which you reference on page three of your remarks as well. on page eight you reference temporary shocks to the economy, and i'm looking at that and seeing inflation. i'm saying oil prices, which translate directly at the pump.

food and commodities and those types of things. then on page four he had also said that his rise in inflation is transitory and you expect inflation to subside and i'm carries, what is going to society? oil prices? gas prices? housing prices going to recover so that people are going to have that cushion that you just talking about? i'm curious. i want to know what you believe is going to cause that confidence to increase. >> welcome on the the question of inflation, you know, we had substantial increases in oil prices earlier this year. it was about a 25-dollar jump per barrel in oil prices after the libyan revolution began. so, oil prices were driven of about 10, $15 above where they are now. since then they have come down, gone sideways so gas prices are down about 35 cents, something

like that. so gas prices and oil prices were a very big part of the inflation that we saw and that seems to be leveling off and coming down some. same way with food. a lot of the increase in food prices had to do with bad weather, bad crops. there have been some expectations now of much bigger harvests say, and corn which is driving down those price. we will see some relief in food prices as well. >> sorry, i'm running out of time and i want to quickly move on. i understand where you're going. i do need to express though, i was recently in iraq in saudi arabia. i had a chance to meet with the oil minister in iraq, and oil minister in saudi arabia. oath of them libya they actually ramped up their production. it is not a production issue. we are asking specifics about why gas prices were going to be coming in, and i broached the subject with his excellency and said, what about the u.s. dollar and evaluation of the u.s. dollar?

he paused and then look at me and said congressman, i was trying to be polite. they recognize that what we have done by devaluing our dollar as an artificial increase in oil prices. because oil is paid for one went around the world in u.s. dollars. and i'm concerned about that as well, and i'm curious if you can address that. >> well, the falling dollar which is falling for a lot of reasons by the way, reduced safe haven, demand and so on, has contributed some to the increase in oil prices. >> if that was the only factor, prices in euros and other currencies would be going down. prices are rising and are currently so it's not just the dollar. >> not according to to oil minister. >> it's a fact. >> made we can address that ends the more dialogue, but i'm concerned that my wife is from canada originally. 18 years ago when i had an opportunity to marry her, it took 64 cents to buy the a

canadian dollar. yesterday it was $1.4. and i just simply don't see how we are not going to have, or how we are not going to avoid inflation in the future, and isn't that sort of a consequence of some of our monetary policy as we are moving forward? >> there are two separate concepts. the buying power of the dollar which is inflation domestically, and then the exchange value of the dollar external in which is what you are talking about. we have kept inflation low and steady since the '80s. '80s. >> internally. >> internally, yes. as far as the monetary policy is concerned, one thing you we can do is support the dollar is keep our inflation rate low and that's what we have done. so the reason the dollar is falling over a longer period of time has to do things with close ended trade deficit. >> and not as printing money? >> no. >> thank you very much.

>> thank you, mr. chairman, and thank you, chairman bernanke, for being with us today. i have just a couple of questions. the first is based on the fact that it is a parlor game around you, perhaps nobody satisfied them by mr. westmoreland question whether those people were drunk to you in making policy over the last couple of years to attach blame and to try to sow the president or the majority or the minute with responsibly for the economy. i was struck by your testimony that any score in particular there was a significant effect around temporary factors, the earthquake in japan, oil prices, perhaps the drug. i would if you could elaborate on that and give us a sense for with a magnitude of the effect was over the roughly three quarters drop in gdp growth? and though you obviously can't predict events in future health is likely to to taper off in the coming quarters. >> well, we saw pre-significant

effects on both the production and sales and prices of automobiles coming from the supply chain disruptions in japan. they were also some effects on the tech industry as well, but much smaller. oil price increases really hit come as you know, family budgets, gasoline prices, and that was a reason that consumer spending in the second quarter was extremely weak. so we are looking at first half growth rate in the vicinity of 2% or maybe a little bit less which is not enough to bring down the unemployment rate. the fed reserve is expecting 3% plus growth second half. we will see if that's the case. that would represent in particular a resurgence in auto production and sales coming from the fact that these supplied chain problems are being dealt with in gas prices are a little

lower. and we think consumers are more stronger because they're more income. >> thank you. my second question was i was struck that in your testimony you list for headwinds facing the economy. the fourth of those headwinds was fiscal tightening at all levels of government. i share with mr. lucas and mr. perlmutter the believe we need to put together a large package that will involve cuts over time for fiscal sustainability. but there's also a current circlet and the congress and elsewhere that there's a notion that severe cuts now will contribute to the health of the economy. you are listing as fiscal tightening at all levels of government is a head wind would seem to be a rebuttal of that notion. i'm wondering if, in fact, you would consider that a rebuttal of the idea that severe cuts now are economically positive? >> to the extent possible, we should make the cuts over a long

term, because this is a long-term problem. that's what the issue of sustainability is but i do think you need to be careful about shortcuts in the very near term, exacta for the reason you mention which is the economy is growing very slowly. for example, the job market report just last week, the private sector job creation which, of course, is very important was a little bit better than the headline number because there were about 40,000 jobs lost at the state and local governments. it's not just jobs with a government. it also involves the indirect effects of procurement or tax cuts or whatever is working to the rest of the system. so i think some care needs to be taken at the same time i realize being credible and strong about long-term addressing the deficit problem. >> understood. know, and i agree with that. i mean, would you agree with my plane back to the notion that very significant cuts to government spending now with its effect on aggregate demand runs

the risk of adverse economic consequences? >> i think that's a consequence that really needs to be taken into account. >> thank you. a simpson-bowles proposal which i thought was a good start on such a big package suggested that significant cuts perhaps be postponed into late 2012, early 2013. i wonder if my remaining time you can give us a few understands, from the standpoint of not doing damage to what is a hesitant recovery how you might encourage us to think about the effects at different levels of cuts over time on the gdp? >> that's a tough question. it depends in part of course how quickly the economy recovers. we been disappointed so far, it's going very slowly that it will continue to be a problem. at some point is an issue of being credible and demonstrate that you are serious, and so i think beginning to facing cuts along the lines simpson-bowles

talked about or a couple years down the road, is certainly something that you may have to do in order to convince the market that you are going to take action against the deficit problem. >> thank you, mr. chairman. >> thank you. mr. duffy for five minutes. >> thank you, mr. chairman. and hello, mr. chairman. could you give me the exact number of what you mean by severe cuts? are we talking billions over 10 years? trillions over 10 years? >> oh, over 10 years. several numbers have been put out. spent quickly. what is your number. >> the so-called grand bargain that's been discussed, something into the city of 4 trillion over 10 years. >> is that too much? >> no, it's not too much. it has the advantage if they can be done, it has the advantage that it will stabilize our ratio

and they'll be very encouraging. >> thank you for the because out to make sure we are all on the same page. >> we are talking about timing also. i'm talking to kenya when or a 12 year window. >> would you like to see him backloaded or cats up front? >> it can't be completely backloaded for reasons as i said. i need to be careful in the short term. >> as i'm talking to my job griscom i represent the next -- the northwest quarter of the scott spence talk about uncertainty in the marketplace. it comes from this health care reform bill, it comes from the stem this bill. it comes from our government picking winners and loser. but i'm hearing them talk about the massive debts, 14 trillion plus dollars debt, the fact that were borrowed $1.5 trillion this year. when i keeping them talk but is we're concerned about where interest rates are going and we are concerned about inflation. we are concerned about punishing tax increases to pay for this day. so if i'm looking at expanding a growing my business, i don't

know that i'm going to do that because of all the uncertainty that is created in the environment today. it doesn't necessarily hurt them. it hurts folks who in our communities who need jobs. you talk about certain numbers of how much we should cut and we wish ago. right now we're at 70% of gdp. we'll be at 90% of debt to gdp. i think that's disconcerting because i'll have a real impact on our account. maybe this is rhetorical but if i'm not going to cut now, when? if you look at the political difficulty that we face today, when we have a debt that is $200 trillion in interest payments, when we go back to historical, it's going to be 400 plus in interest payments. at what point would still be political courage to get debt under control if we can't do it today? this whole conversation does

come back to jobs. and my friends across the aisle talk about where it is the republicans job plan. we tried this game is bill, it was a silver bullet at the white house council of economic advisers came out and told us that really it was about $278,000 in government spending per job that was created. >> that's not a very good investment for the american taxpayer. but my question goes to this. as look at unemployment rate of 9.2%, and do think that we can help our jobseekers by taxing our job creators a little bit more? put more people back to work if we raise our taxes? >> i'm not going to get into the breakup of the deal by want to agree with what you said early which is if you were to really do something significant to solve the fiscal sustained the, i think would have benefits in the short term. >> do you think we can put people back to work by raising taxes on those?

>> there's trade-offs between fairness, between efficiency. >> but putting people back to work, will we put more people back to work by raising taxes? >> depends what the alternatives are. the question, you know species maybe we'll put people back to work? >> i'm talking hypothetically now because i'm not taking sides on this issue, which also talk of benefits of reducing deficit. if there were some tax increase with a lot spending increases, maybe that would outweigh the costs. >> let me move on to different question. we talked about qe2 with dr. paul. when you buy assets can where does that money come from? >> we create reserves in the banking system which are just held with the fed. it does not go out to the public. >> does it come from tax dollars? >> it does not. >> printing my? >> not printing money.

we are creating reserves. >> i only have 2 20 seconds lifd to talk about a potential additional stimulus. can you assure us today that there's going to be no qe3? or is that something you're considering? >> i think we're to keep all the options on the table. we don't know where they come is going to go pick up a good 2.4 we liked, the recovery is faltering and we're looking at inflation dropping down towards zero or something, you know, where inflation issues are not relevant, and we have to look at all the options. >> and qe3 is one of those? >> yes. >> i yield back. >> mr. peters for five minutes. >> thank you, mr. chairman, and thank you, chairman bernanke, for being here today. in blue of some of your comments that you made to some of the questions regarding short-term fiscal policy and the importance of that in getting the economy stabilized, i'd like to some of your comments on an issue that we will be taking up in congress next week, which is a balanced

budget amendment. as i know you are very aware that with federal policy and fiscal policy is in times a week economy, oftentimes tax revenues are going to drop and yet the demands for government will go up for unemployed compensation and other types of stabilizers as a result of that. do you have concerns about a balanced budget amendment? and your ability as federal reserve chairman to do with a weak economy and employment issues in a future where fiscal policy is certainly a key component of that along with your monetary policy? would you comment on balanced budget and them and are you concerned about that for the future? >> sure. first of all let me just reiterate again because i don't think anybody has heard me that i am very much in favor of a substantial reduction in our fiscal deficits over time and i think we need to do that. and it may very well be that some kind of structure, whether some kind of caps and triggers or whatever, they may be

effective in helping congress meet those goals. if you were to do something like a balanced budget amendment, i would just like to say that it would be very important to make it sufficiently flexible to deal with different contingencies. for example, what you do during recession, drug war, during a natural disaster. congress mention stabilized. one of the benefits now is when economy weakens, tax revenues actually automatically declined, spending automatically rises, it provides stability the economy. so i wouldn't rule out by any means that kind of approach but i think it has to be written very carefully to create the necessary flexibility to deal with unforeseen circumstances. at the same time, this is what makes it very hard, if it's completely, you know, if there are no binding rules, no disciplines, it's probably not going to help you very much. it's a tough challenge to write an amendment like that that will

accomplish everybody's goals. >> so flexibility is very important, so i know in this particular amendment we need three fist of the vote. is a pretty difficult thing to come by in this congress about flex but is in that proposal and it sounds as if you have some concerns with that. but i want to switch gears a little bit and move to an article that bruce bartlett wrote yesterday and i thought was interesting i don't know if you saw, he was senior policy adviser to president reagan and bush, and talk about the parallels of what we're seeing now to the 1930s, and i know you are a well-known scholar of the great depression era of the 1930s, and appreciate your comments. i quote below but here. he shows friday's jobs report that indicates the economy remains weak, if the pressure to reverse sting was and began tightening fiscal and monetary policy has become overwhelming. he goes on to say some economists are getting very nervous with the economy in a fragile state and may not take much to bring on another

recession, even a small amount of fiscal monetary tightening may be enough to do that. and i thought it was interesting in his comparisons to 1937, and he goes on to say the combination of fiscal and monetary tightening which conservatives advocate today actually which is what they did in 1937, brought on a sharp recession beginning in may of 37 and ending in june of 38. according to the national bureau of economic research real gdp fell in 1938, and unemployment rose to 12.5% from 9.2% in 1937, i believe we are at 9.2% right now. do you see some parallels between what happened in the late 30's? >> well, it's true that most historians ascribe the 37, 38 recession to premature tightening up of fiscal and monetary policy. so that part is correct. i think every episode is given. we have to look at what's going on in the economy today. i think with 9.2% unemployment,

the federal reserve is doing what we can to provide monetary policy accommodation. but as we go forward we will want to make sure that as we support the recovery that we also keep an eye on inflation, make sure it stays well-controlled. we are aware of that lesson, but we have to take each situation as it plays out. nclb outlook varies, according to new information that we receive. >> i'm glad you are aware of the lesson. hopefully congress will also be aware of history, so we don't have to repeat it. i appreciate those comments. thank you, mr. chairman. >> thank you, mr. peters. and i think that it's one thing they did right in 1937. what the chairman refers to, i think that did help. mr. renacci. i mean, they made a mistake by tightening, i'm sorry. one of the things they did rig right. >> thank you, chairman bernanke,

for being here. industry research that patients and moderate expectations are necessary. but with 9.2% unemployment nationwide, sitting at 10% in my district, and up or 16%, my constituents can no longer really afford lot of expectations or tolerate those. patience is a virtue they can no longer afford to have. to me the whole thing we're doing here in washington has to be about jobs, jobs, jobs. tax reform, stepping away harmful mandates and over burdensome delays in getting our spending down to sustainable levels, free trade agreements, the whole thing. all needs to be about economic growth and leading businesses create jobs. i believe and my believes are not a political statement at my believes are for being a businessman for 28 years, employing over 3000 people, creating jobs, being the cpa for multiple businesses that today, the business committee and the

financial services sector are locked up in uncertainty. our economy is drowning in unprecedented of new reforms with each wave of new regulations, and the regulation is crashing down on their heads before the effects of the last wave. can really be understood, evaluated and properly implemented. the pattern better job market has taken by these ways has not gone unnoticed by me, not by the unemployed or underemployed constituents in my district. you made some headlines about a month ago at a press conference when jamie dimon asked you about performing an examination of the agenda to the effects of these new mandates. dodd-frank, basel iii, not to mention health care. on jobs in credit availability. as i recall your response was that you can't pretend that anybody really has, because it's just too complicated. now, i learned a long time ago

in my business career that anything i do in anything we do should be smart. smart is an acronym for specific, mr. kibble, attainable, realistic and timely. the measure will want is the one i had a problem with. it's been a month now that banks are now looking at must understand much higher. nosac higher compliance stop. has the fed began such an examination study yet? can we expect to see it? can we expect to see some measurability of what these regulations are? >> yes. let me first say that i agree with a lot of which is it about free trade, smart regulation, fiscal stability, all those things that help and i hope congress would pursue those directions, tax code into one. it is very difficult to figure out all the interactions of a complex system, but i do want to be clear that the fed does do

cost-benefit analyses at every rule that we put out, and we publish those cost-benefit analyses. we are doing our very best to take the statutes that congress gave us and try to make it, make it as i'm burdensome as possible and still achieve the objective. we have a very difficult balancing act here. we don't want to hamstring the financial system because it is so critical to the economy to growth. on the other hand, its own backup of your sins with his enormous financial crisis which does in his deep recession. so we do have to take necessary steps to make sure it doesn't happen again and we are trying. i assure you the federal reserve has always been very attentive to try to make sure that the rules and regulations that we promulgate consistent with the statute are as cost-effective as possible. and we do, as i said, do this on these rules. >> you said that based on the statute you have been handed, do

you ever look at them and say these jets are not working, and come back and say it's not working, here's the problems? because again we have so much uncertainty in the marketplace. we have to get some predictability here to get this job market created again. >> we are working to get this done and clear as fast as possible. i think broadly speaking the statute addresses the main areas where there were problems, and there's certain parts of it that we may want to revisit that there are others we might learn more about overtime. so i'm guessing it's a are for you by any means but i'm not claiming that all. but also grew with you that we need to make out regulations as clear and as effective and is quickly done as possible, and we are aiming to do that. >> i know some people have asked in previous questions, but do you put uncertainty as a concern? again, being a business owner in the past, uncertainty will cause a lockout.

we can talk about the government cutting costs and cutting jobs, but the private sector, small business owners greet almost 67% of our jobs. we have to give them the certainty so they can create jobs. >> you're not interested in my ph.d thesis of 32 years ago but it was entitled uncertainty and investment. and it was about how uncertainty can reduce investment spending. and i believe that, but there are many kinds of uncertainty. there's certainly uncertainty about regulation and those sorts of things but there's also uncertainty about whether this is a doable recovery. people don't know whether to invest or higher because they don't know whether the recovery will continue. so i think part of what we can do, we want to address the regulatory trade, tax environment, we also want to do whatever we can to make the economy grow faster and make people more confident. i think we'll see a dynamic going forward if, in fact, the economy begins to pick up some. i think confidence will improve because people have more certainty about the sense that

this will be a doable recovery. i think that's an important thing to be looking for. >> thank you. .. you support significant reduction in fiscal deficit but you have also warned against what you call -- you cautioned against sharp cuts in the short term. could you characterize it in a way, the kinds of cuts, the kinds of programs you tried to

shy away from that kind of thing. we have discretionary domestic spending, discretionary military spending, mandatory military and domestic and these big entitlement programs. i'd just like your view on those kinds of cuts as it relates to your caution about sharp cuts in the short-term. >> let me preface this by saying there's a good bit of fiscal contraction going on in the sense there was a big run up in spending related to the stimulus and so on. that is being withdrawn from the economy. similarly, states and localities have been under continuous pressure because of limitations on their budgets which has led them to be cutting. we are experiencing a good bit of fiscal tightening going on and that is part of the reason there is some head wind in the

economy. i can't really pick and choose among programs. you want to think about the efficacy and desirability of these programs on their own merits of course but i want to be clear that, you know, cutting programs or raising taxes in ways that will reduce demand of spending and the ability of consumers to meet their bills and purchase goods and services is going to slow the economy and that will offset the benefits of the cuts because it will reduce revenue that make the deficit worse in the short-term. >> let me suggest an approach based on the chairman -- he displayed on the screen which showed entitlement program spending that created the real challenge in the long term.

you said yourself long-term deficits were really the problem. that suggests structure of those long-term -- those entitlement programs is what we ought to focus on in terms of long-term and in the short term it different kind of approach. >> yes. i don't think anyone is proposing big cuts in medicare this year. >> the chairman pointed out you have to look at the graphs to see medicare and health care spending generally whether you are talking medicare, medicaid, military or healthcare is the big -- >> i was going to say this graph shows a long trend we have to be worried about. that means this is a long-term problem we need to address over a period of time. sternly entitlements are part of the picture and we need to look at those and make sure they are

providing support and medical care they are intended to provide at least possible cost. an important thing for us to be doing. but again, that is a long-term issue that will take place over not just ten years but 20 or 30. the more we can do now to persuade the markets and the public we are serious about this and making changes -- >> that is the point with respect to having a plan in place to raise the debt ceiling. important to raise the debt ceiling and have a plan in place is what i heard you say. >> the two legs, both important. >> let me explore with the thirty-second have left with the interchange i have with mr. duffy. putting people back to work -- will we put people back to work by raising taxes? i think i heard you say that depends on how you do that. can we strengthen our economy in the long term with additional

tax revenue through tax reform or some other way? >> with the preface that these are congressional decisions, i think the structure of the tax code matters a lot. for example, the incentives are most affected by the marginal tax rates. that is an important thing to look at. there may be tax expenditures or exclusions which are discovered spending in disguise or breaks that are not really achieving anything. that might be a place you would look and be able to maintain or even lower marginal tax rates and improve efficiency of the tax code in that way. most economists agree broadening the base by eliminating breaks and cutting or at least maintaining marginal tax rates gives you a better tax system to promote growth. >> you think additional revenue is part of the picture. >> your decision. i was talking about how tax

structure -- >> thank you. we will go to mr. schweikert. we would like to end on a balanced -- if possible. our last two questioners of the day. thank you. >> thank you. i have been interested in your thesis from 32 years ago. that was funny. in the uncertainty you have about 99 economists that the fed. >> i don't know. more than that. >> i have been struggling to find good data modeling of the uncertainty of a regulatory environment and i know some of that may not be -- it is propagation and were riding and dampening effect that could have

economic growth or people willing to engage in activities. win you are doing your model, here is where we are and what we see coming in the next year and next month but this is what we see in the regulatory environment whether it is dodd-frank or some of the other things. do you ever model the dampening effect of rulemaking? >> we have been trying to analyze that. if you look at things like stock market volatility in banks or things of that sort that reflect the uncertainty banks have it is really hard to disentangle regulatory uncertainty from other kinds of uncertainty like the state of the economy. we have tried to find some kind of effects and its certainly plays a prominent role if you read the minutes of the fomc you will see we discussed that issue quite substantially. >> it is an area i have an interest in particularly rulemaking and squeezing down

the time line because knowledge is true decisionmaking more than what is coming. you touched on something earlier and this is something we had the opportunity to talk about before. the overhang of nonperforming assets that are still on balance sheets and this could be everything from the home down the street that is under foreclosure to not performing to -- still be sitting on balance sheets. from personal philosophy i am one of those who believes we will be better off if we aggressively push through not performing mortgage debt through the economy. and got them sold whether it is sold to investor. any personal opinion on how much overhang is created by nonperforming debt and am i right or wrong in your opinion and being somewhat of an evangelical getting it consumedt

area where this was most relevant in the housing market, we want to do all we can to keep people in their houses to avoid foreclosure and stabilize neighborhoods and so on. there have been long delays because of servicing problems and so on, moratoriums that have slowed this process down and it is true as long as there is a large number of distressed properties overhanging the housing market will be hard for the housing market to recover. addressing that problem is an important one. i agree with that basic point. >> we have seen some charging that one large servicers have gone into mortgage forbearance, we had robot signing and other issues and hold 90 days and we have values coming down more aggressively. i don't know of the anticipation of another wave of foreclosures

or typical uncertainty. i have often heard in some of the discussions here were the positive of the fed buying quantitative easing. would you be willing to share for every positive side there's a negative. what would you say is the dampening or costs into the economy of fairly rapid monetary expansion? >> the main one is there has been some contribution to commodity prices which we anticipated. again, supply and demand factors globally were by far the more important. that increase in commodity prices offset some of the benefits that lower interest rates and more accommodating financial visions have for growth and addressing the risks of deflation which we saw last

august. the inflationary pressures. >> you saw that on many commodity classes. were they in the range expected? >> they were much larger. because again, the bulk of those movements can be attributed quite directly. i recently gave a speech that went into some detail on this issue on global supply and demand conditions. on the oil side it is striking the u.s. is using less oil today and importing less oil today that it was ten years ago. all the growth in emerging markets which are growing quickly that demand is going up substantially. we see construction on supplies. those factors have been important. we did anticipate libya. we didn't anticipate japan. -- [talking over each other] >> as the chairman -- you broke ron paul's heart when you said gold was running.

>> thank you. i think you will survive. >> thank you very much for being here. we are always pleased to see you. i would like to ask you a little bit about the tremendous power that you have. it seems that there are 21,000 transactions that are being examined. basically it is about the billions that you were able to lend out to banks and hedge funds, what have you. this article i am sure you have seen on a rolling stone, mentioned billions in bailout to places like mexico and bahrain and japanese car companies. more than $2 trillion in loans each to citigroup and morgan

stanley and billions more to millionaires and billionaires and on and on. loans in the cayman islands which caused concern. you know the reputation of the cayman islands. this is what caught my eye. the shadow budget. there was a loan that was reported on to something called waterfall tap opportunity, a company whose chief investment included the wife of morgan stanley chairman john mack and the widow of a close friend who said the president of morgan stanley invested in the bank division. these women had no business experience to amount to anything but an investment of $15 billion they received $220 million in cash from the fed to purchase assets bucks securities like student loans and commercial debt. with the investors keeping 1% of

anything taken 90% of losses. the reason i point that out is you know i have been in your base for a long time about opening up opportunities to minority banks for example and the discount window. they are undercapitalize. if they have money they will lend money to our businesses and create jobs in the minority community. the unemployment rate is unconscionable. this can't get any capital. how is it in this program, you and the shadow budget they are referring to could make it possible for waterfall opportunity to end up with a $15 million investment getting $220 million when i can't get any money from you for the small minority banks. answer me that. >> we have to look at that story. i am very skeptical.

>> you have not read this story reinvestigated to see what happened? >> what i'd do know is the story completely misrepresented how the program worked and what the goal of it was. the goal was to get the asset backed securities market working again which we did very successfully at no cost to the taxpayer. it works similarly to the treasury where any u.s. company minority or otherwise could if they purchase assets could use part -- >> i don't want to interrupt you but i understand what that was all about. i was deeply involved in all of that. as i talked with you over the years you always remind me of that minorities need to concentrate on education and training and competency and as you know i created these opportunities to make competent investment bankers and asset managers and brought them to

washington. you have been generous and come to our meeting. why is it something like this company with these two women with no background and no experience and no education can end a because they are connected yet this kind of money and i can't open up these opportunities for minorities. >> that was open to any u.s. company. >>, many african-americans did you fund through the program? >> any who >> no. [talking over each other] >> we can try to find out. >> i really do need some answers. if you can't tell me today can your office give to me the number of minorities and african-americans in particular under the test program similar to the way these two women were who have no experience. >> i don't think that story is very accurate. i am not sure we can because we

lend to companies with what the shareholders and i am not sure we can identify -- >> i will follow-up and expect some answers on that. have a few seconds. banc of america settle with investors. in countrywide -- >> your time is over but i will let you ask one more question. >> $8.5 billion. the new york fed is one of the investors in this deal. some have questioned if the deal is favorable to b of a and conflict of interest. does the federal reserve bank of new york have a conflict of interest, how can they both be the regulator and a party to exact the settlement of a lawsuit? the $8.5 billion settlement is for $174 billion in mortgages. this amounts to a 5% rate. given that independent investigation suggested that two thirds of the loans had

representation at 8.5 billion mistakes awfully low. can you explain that? >> bank of america is not regulated by the bank of new york but bank of richmond. the bank of new york led this lawsuit in order to recoup as much as possible for the taxpayer. that is the objective of that. >> that is all they could get? >> we went through all we could. >> $1 billion in mortgages? >> this was a collective suits with many participants and this is what this court said was willing to award. >> thank you very much, mr. chairman. >> let me compliment you on your testimony. and your answers to our questions. one thing that i do want to say is you always stressed and i agree with you and mr. carney was agreeing with you and there's agreement on both sides

of the aisle that long-term structural changes, long-term structural changes in our programs particularly our entitlement programs are in our tax policy, will bear short-term benefit. i think you agree that if we don't make those long-term structural changes there will be consequences and they could be immediate. four years ago you said that there would be a time when we would run out of time. i hope that is not the case. we all do appreciate the consequences of this country's never defaulted on its obligations and i would hope that we can -- we were disappointed we would not seek a ground bargain. i think also what many members on this committee realize is tax

spending and tax subsidies, quite a different thing from a tax increase, tax rate. sometimes that is more spending than it is a tax. we appreciate that and i will say to members on both sides some of their questions and mr. peters talked about in 1937 your studies that there was an overtightening of credit restriction, monetary policy that can be very deflationary and adverse upon the economy. i believe we have gone from being too loose on our housing, our lending particularly mortgage lending to -- too

restrictive. i do believe the 20% and qualified risk potential down payment and the other things could be problematic. we would appreciate continuing the dialogue we had with you and as i said we are pleased -- many of us on this committee believe your approach has been very beneficial and i am glad you are going to maintain some flexibility and you don't get straightjacketed in to not having flexibility which could be needed because we don't know what tomorrow brings. thank you for your testimony. the chairman notes that some members have additional questions for ben bernanke which they may wish to submit in writing and without objection the hearing will remain open for 30 days for members to submit

written questions to please responds in the record. the committee appreciate your testimony today and your service to our country. this hearing is adjourned. thank you. [[inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> every weekend american history tv on c-span3 commemorate the civil war. this week historians on the events that led to the april, 1861 attack on fort sumter and in two week the first major battle of the civil war, the battle of bull run with 48 hours of civil war programming. the civil war every weekend on

american history tv on c-span3. >> in a few moments the chamber of commerce forum on jobs that includes comments from the head of the white house council on jobs and competitiveness, jeff immelt, ceo of general electric. in half an hour the chamber of commerce event a discussion of the role of congress in job creation. the senate is live at 9:30. today's agenda includes this year's first spending bill covering veterans and military construction. a couple of live events to tell you about on our companion network c-span3. ben bernanke testified before the senate banking committee at 10:00 a.m. eastern. at 1:30 p.m. eastern we bring live coverage of the memorial service for the late former first lady betty ford in grand rapids, michigan. she got on friday at the age of 90. >> the library of congress is considered the greatest photographic resource in the

world and this is the civil war photographic exhibit. if you look at every photo in the library's collected and spent a minute on each how long would it take? you will find lots of answers about this unique librarian c-span's documentary the library of congress airing this monday night. we will look at the jefferson building including the great hall and the reading room and rare books and special original thomas jefferson library and presidential papers from george washington to calvin coolidge and using technology to discover hidden secrets in the collection and preserve holding for future generations. join us for the library of congress this monday night at 8 eastern and pacific on c-span. if you looked at every photo in this collection and spend one minute on each it would take 24 years to see them all. >> this weekend on booktv on

c-span2 on afterwards, marine maj jane malware relives her experience on the front lines in iraq. richard white gauges the impact of the transcontinental railroad on the gilded age. in eisenhower 1956 david nichols looked at the suez canal crisis. eisenhower faces the change in the cold war's balance of power. go to booktv.org and sign up for booktv alert. the weekend schedules in your in box. >> the fourth of the white house council on jobs and competitiveness jeff immelt, ceo of general electric spoke to any event hosted by the chamber of commerce. this is half an hour. [applause] >> thank you very much. our next speaker leads one of america's greatest, most

innovative and successful companies, general electric as it is commonly known. jeff has one of the toughest and best jobs in the world. ge is the sixth largest firm in the united states with a dazzling array of product from light bulbs to fuel cells, entertainment programming to get engines. it is the single largest exporting entities in america. it is one of the or original 12 companies that form the dow jones industrial average and still remain there 115 years later. ge is a great american success story because of its people including its leaders. jeff became chairman and ceo of ge in september of 2001. crew 9/11, two recession that the globalizing economy he has provided smart, steady and visionary leadership.

during his tenure jeff has been named one of the world's psc eos three times by baron's and most admired company in a poll conducted by fortune magazine and one of the most respected companies in polls by baron's in the financial times. no wonder president obama tapped him to chair his counsel on jobs and competitiveness which is identifying needed actions to improve our economic performance and put americans back to work. jeff is following a proud tradition of other ge leaders to flint time, energy and expertise in service to their country. ..

>> not just about how we create jobs here in the united states, but also the kind of leadership that's required to do just that. coming off of a disappointing jobs report on friday, we know we have a lot of work to do, but i'd like to begin by saying i'm confident we can put people back to work and compete. a lot of you know last month we had a jobs council meeting with the president in durham, north carolina, but i'd like to start by telling you what i did right after that meeting. i went to one of our aviation

plants in durham. there's over 300 highly-skilled employees there. 60% are veterans, and they're producing the world's largest jet engine and also the world eat most efficient jet -- world's most efficient jet engine. people sometimes ask me if i have a favorite project, and it's impossible to answer because we do so much, but still everybody should have a chance to see a jet engine on the factory floor. in many ways, it's the future of american technology and the future of american manufacturing. i talk about durham not just because of what they're producing, but for what they stand for. every single day they prove what we know is true: that america can compete. now, an important part of my job is to be a cheerleader for our company and for the work, but really the results speak for themselves. last month at the paris air show we sold $27 billion in service and engine deals.

so, listen, we have some real challenges in this country. friday's jobs numbers are unquestionably bad news. but i'm here today as an optimist about the global economy and about america's future. in the last month, i visited china, africa, russia and europe. i saw growth opportunities for every ge business in every region, and i'm confident that we can compete, and we can grow. we're experiencing record order intakes at many of our businesses even today. as a company we've realized that the playing field has changed. growth looks and feels different than it did in the past. think about our history. for most of my career, companies grew by developing and can selling into the domestic market and the infrastructure of a growing and great nation. and the u.s. consumer was the engine for global growth. but today in the early days of the 21st century, customers and growth opportunities aren't just here, they're quickly growing outside the united states.

and over one billion consumers will join the middle class and the emerging markets. as a country, we have more competition than ever before, especially from china. the financial services and housing engine that's fueled consumer spending and growth for decades is on the sidelines. and advancements in productivity mean more work is done by fewer people, normally a good thing, but one that can lead to short-term dislocations. due in large part to delayed investments, the u.s. has a far less competitive infrastructure than in the past, both physical infrastructure -- things like roads and broadband -- and what i'll call intellectual infrastructure, the commitment to training and education we need to be competitive. small businesses historically a big job creator has been hurt by financing issues and economic uncertainty. as a result, the u.s. is growing more slowly than it has in preestles recovery -- previous recovery periods. we've not created enough growth,

we have fiscal issues and few easy solutions to stimulate growth. and these challenges have impacted opportunity in ways that don't always seem fair or in line with the dreams of previous generations. national confidence is low, the mood is pretty bad, and let's face it, people are angry. american business is faring better. even though the broader economy is not. corporate exports are growing, competitiveness is strong, and cash is available. we've dealt with a difficult recession. and while we're still dealing with volatile markets and government-induced uncertainty, many american companies feel that they've emerged from the financial crisis in better shape. at the same time, we have a jobs crisis that threatens our long-term competitiveness, and be people are fed up. so we really do have a serious disconnect. business is good, but unemployment is high. it's not healthy, and it's not sustainable. now, companies can only be at

their best when they're at peace with the government. that doesn't mean we should agree on everything. we shouldn't, and we don't. but we can't always be fighting, and we can't lose our sense of national purpose. and our country can only prosper, ultimately, when people are at work. so we need to act in the private sock to have -- and the private sector can't do more. that's why i'm leading the president's council on competitiveness. i believe the private sector can and should do more to improve the performance of our country. so i'd like to give you an update on our activities, but i also want to say something about leadership because i don't think any of us came to the council thinking that we would discover a magic potion for jobs. there isn't one. but even if there were, it wouldn't mean much if we don't have the will to implement, the

courage to make hard choices or a commitment to lead. we're serving on the council because we truly believe we can be a catalyst for action. the council consists of 26 members representing global and domestic companies, large and small enterprises, great entrepreneurs, union leaders and economists. the group has been together for four months, and we are hard at work. the council's approach has been to identify and focus on the specific and actual ideas that will create jobs and increase competitiveness. we will report on them simply and clearly without regard to politics. we're business people. and our metric isn't who has the upper hand in a political stalemate. it's action and demonstrated results. now, i could show you dozens of studies on job creation. i could produce hundreds of speeches. those are just words. we want the council to be about

action, and that's what will make a difference, and we need your help. now, we have five guidelines that we started with as we shape the council and the activity for the council. first, our approach is primarily nonlegislative. while we want to bridge the public and private sector, we're trying to operate around washington gridlock. two, we're developing a comprehensive analytical sector-by-sector jobs plan. we would like to identify millions of job opportunities over the next few years, and we're focused on the highest pockets of unemployment and the strategic opportunities for growth. third, we're going to create specific job-creating business plans. jobs come from be specific activities, not macroconcepts. we've identified dozens of job plans so far, and i expect we'll have more than 100 by the time we're done. fourth, the council has key operating partners inside the white house. each one of our industries has an owner in the government, and

this is particularly helpful to drive ideas to action. we're reviewing the process every two weeks, and cabinet members and administrative staff are being held accountable and are in the game. lastly, we will connect with people throughout the country through frequent outreach sessions to interested groups. these include what we call listening in action sessions where we can incorporate a broad range of ideas into our specific programs. there will always be cynicism, we know that. but you offset it by including people and by being transparent. our approach has been to start in the areas where we can build some short-term momentum. we reported a series of these quick action ideas to the president in june, and these ideas were to focus on jobs, supply and demand. our goal was to identify programs that could get people back to work fastment -- fast. we identified simple ideas that could generate up to a million new jobs because we think that

doing small things builds the confidence that larger initiatives are possible. i'll give you a few examples. we believe there's 300,000 jobs available in the hospitality industry by reducing visitor visa cycle time. we've lost massive market share in global travel over the decade, and improvements are underway in the government today. we're focusing on education and training. we're forming a plan to graduate 10,000 more engineers in the u.s. every year. the ceo of intel is leading this effort, and when you put a focused leader like paul on important initiatives, you can get results. we're already engaging the schools, but the people in this room could do more too. i've asked other u.s. companies to commit to doubling the number of engineer interns that we recruit from u.s. colleges and universities. work force training for jobs and competitiveness also matters. there are thousands of open jobs in the advanced manufacturing and health care fields, but our

training programs have not evolved to keep up with changes in technology or the needs of employers. darlene miller, who's a member of the chamber, is the ceo of permac industries in minnesota. she's on the council, and she'll be the first to tell you manufacturers can't find people to fill the jobs. the health care industry has a persistent, unmet demand of hundreds of thousands of jobs, and we're finding ways for manufacturers to partner with community colleges and technical schools to enroll more students in certification programs and help build the kind of work force that will thrive in the global economy. the national association of manufacturers is working with us on this challenge. we're working on ways to put construction workers back to work through commercial building retrofits. we already have nine projects underway with more to come, comd we've lined up private financing. penny and john are leading this approach through the better building initiative. now, over the summer we're working on idea that can bend the curve on unemployment.

these are bigger ideas that can create more jobs but may take longer to implement like infrastructure. that's an area where tom and i plan to work together, and that's why we're hosting an infrastructure summit on september 1st in dallas. we want to highlight the important link between transportation and infrastructure investment, job contribution and competitiveness. we want to push the enactment of a multiyear service transportation reauthorization to give certainty to private investment l, and we want to reform how infrastructure funds are allocated, and we'll promote private financing options to get these infrastructure projects moving. steve case is leading a team that will accelerate the formation of high growth companies. these start-ups have been the engine of job creation for decades but have been massively affected during the recession. we need to unlock entrepreneurial aspirations, increase access to resources,

remedy structural impediments and release market opportunities. we need to build support for entrepreneurs. under armour, in this area, in the baltimore area s a perfect example of the kind of company we're talking about. it was started by a maryland football player who was selling shirts out of the trunk of his car. he got a $250,000 small business loan, most of which was guaranteed by the sba, and from that has built a billion dollar company and a leading global brand. we think there's hundreds of these companies out there today. antonio press is leading another team that's focused on increasing american investment in the u.s. by global and american companies. we believe that the u.s. can peat today as a production -- can compete as a production site. such investment has declined since the crisis. at the same time, i know that there is some outsourced work that can return to the united

states because of our innovation and productivity. we're also working on ideas for other long-term competitiveness areas. these include tax reform, regulatory simplification and education investments. but these are going to take courage and time. and it will take facing into gridlock. ultimately, we must reform all of our systems of competitiveness to drive growth, and we will need faster growth to sustain employment at acceptable levels over the long term. by year end we expect to recommend a set of business plans that could create millions of new jobs. and we're grinding the numbers, the process changes and who will be accountable. job creation will always be facilitated by broad economic growth, and there are many places where the u.s. could lead based on our great strength and innovation and entrepreneurship, but we must get our confidence back, our will to compete. and that starts with jobs. our next meeting will be with the president in september, but our work is ongoing.

and it will remain what it must be: specific, comprehensive, practical, nonpartisan and you are general. urgent. and, of course, actionable. focused on real results because leadership is not about talking about the path, it's more than just showing the way, it's about getting the job done. and ge will do our part. over the last decade, our percentage of global revenues have grown from 30% of the company to 65% of the company in 2011. our revenue in emerging markets will grow by 20% this year. nonetheless, we'll add almost 15,000 jobs in the u.s. including 6500 manufacturing jobs. and in 2011 our o exports should exceed $20 billion, up from $7 billion in 2005 which is creating jobs in the united states. our competitiveness is based on the factors that mirror america's opportunities. we're dedicated to r&d, spending

6% of our revenue back into innovation. and because of that commitment we're launching 30% more products this year than at any time in our history. manufacturing is our core competency. we have insource capability over the past three years moving production and software development back to the united states. and we have oriented the company towards solving big problems like clean energy and affordable health care. ge is the world's largest clean energy company with $21 billion of revenue, and we're launching 100 new health care products that lower cost, improve quality and advance access. i know it is possible to increase competitiveness in the united states because we've done it. just like ibm, hundrednywell and others. i'm an american, and i want to see us compete. but none of this will happen without important changes in attitude and leadership in the public and private sectors. coming out of the financial crisis we are at each other's

throat more than is necessary. there is no shortage of need or ideas. what is lacking is a commitment to action and a commitment to leadership by all parties. in the business world we have what we call a say-do ratio. that is the math between rhetoric and action. on american jobs the public and private sector has a low say-do ratio. we all have a stake in this. we simply need a different style of leadership to create jobs. first and foremost, leadership and job creation requires a sense of urgency and a sense of prioritization. the president thinks jobs are important, so does congress, so do the republicans and the democrats, so does the business round table, and so does this chamber. but the only thing we aren't

really taking action on is jobs. last thursday, the day before the disappointing june jobs numbers were released, i read "the wall street journal" cover to cover. for more than 50 headlines, only one story referenced job creation. now, this is more symbolic than substantive, but it does say that we're distracted, or if jobs really are important, we need to do a better job of prioritizing. so let's do something. let's do something. let's take, for example, the three free trade agreements. we know this will create jobs, growth and make us more competitive. nonetheless, they are late, stuck and at the risk of going nowhere. we should get these approved. and get moving on other trade deals, and we should do this today. meanwhile, south korea's already signed trade agreements with

europe, and china is becoming the biggest economy on earth because they have a single-minded focus on creating jobs. and we should have a similar focus. second, leadership requires metrics. every initiative should be measured against a job standard. this is true in the public and private sectors. nowhere is this truer than with regulation. the heightened regulatory structure that has been put in place in the u.s. over the past 10-15 years may be justified on some grounds, and some agencies are better than others, but it is clear that activist regulation is hurting jobs and hurting competitiveness. that is why we're pleased with the executive order the president issued this morning, and since the council was created we've been urging the administration to streamline the regulatory processes for independent agencies. and they listened. and the council exists to make these kind of recommendations and to be a catalyzing force and make it happen. as i said earlier, we've

conducted multiple listening and action sessions. in dayton we met with 100 small businesses. they gave story after story about the red tape associated with financing and government contracting. similarly, in durham we met with 50 entrepreneurs, many launching start-up companies in health care. they referenced their difficulties with the fda. and many of them decided to launch their businesses in other countries. we simply need a healthier debate between agency actions and jobs, and we need it now. we also need to make sure that all of the resources that are headed in the direction of job creation, like other global companies, we favor repatriation of our foreign cash back to the united states where it can do some good. at the same time, i believe that senator schumer has a good idea; taxes created from repatriation could go towards creating an infrastructure bank that in turn creates jobs. job metrics should be included in all of our policy thinking.

third, leadership requires more coalitions and fewer causes. the american mood is poor, and people are angry. but i think we can say this quite definitively, anger doesn't create jobs. teamwork does. exports are an example of a coalition that's working. big business leads, small business follows, and the government assists. the president's goal to double exports is a rallying cry. this unifies people, and you know what? i know we can succeed. next we need to build a coalition around important industries like energy. we're the only country in the world that lacks any kind of broad energy theme. every other country in the world is creating jobs around clean energy investment from germany to china. the edison electric institute, the trade association of the industry, says there's millions of jobs available with some policy clarity around grid development or energy standards.

all of these, all of these can be privately financed. similarly, the u.s. has a chance to be the natural gas leader for the next century, yet we have no plan to drive this leadership. and instead of leadership, each group is battling for turf, or worse, trying to block new investment. business has got to speak with a louder and consistent voice about the need for common sense ideas that support growth and competitiveness. fourth, leadership requires risk and create it. now is the time to try new things. this is true in business and government. indiana and texas are proof that governments can create incentives in if a regulatory climate where jobs can be created. heck, even in new york we have seen more flexibility and entrepreneurship in the last year. as states compete for jobs, we'll have a few best practices that we can work on on a national level. but at the same time, businesses need to innovate to create american jobs as well. ge is experimenting with u.s.

competitiveness by insourcing work. in software centers in michigan and montana, we are cost effective versus india. our manufacture anything kentucky can outpeat mexico -- outcompete mexico and china. mississippi and pennsylvania are the most cost competitive in the world. our work force is well trained, and we've invested substantial resources in manufacturing technology. i would ask even of you to review your outsourcing. that is jobs that have left the u.s. truly for cost reasons. u.s. you productivity and cost position has improve inside the past decade, and i'm convinced some of these jobs can return. at the same time, we must reunite the entrepreneurial leadership that's always exist inside the u.s. small business is lagging, as are ipos, and there are many opportunities to improve.

lastly, leaders have to speak with confidence and not fear. people want to be led, businesses need stability and confidence to invest. but right now we are now offering stability or confidence. ge's a legacy u.s. company. we've been around a long time, as tom said. we've weathered the toughest recessions. but through multiple cycles in the last decade since 2000 we've earned more than $175 billion, the third most in the world. believe me, the financial crisis and the recession were tough on ge, but we always had a vision for our own people. we never reduced the billion dollars we invest each year on training, and in addition we recently signed a new four-year contract with our unions. our team is well paid, and they do great work. nonetheless, we needed changes in wage points, health care and pensions. we had a few tough moments, but we got a deal done. we have built trust with our unions, and i'm committed to

create more work for them. as a country we must transition our work force for the global realities in a post-crisis world, and this will require more training and more innovation. we must show the american workers a vision for the future and help them to compete. now, we all know today that the president and congressional leaders are continuing talks on the federal deficit. and it is, of course, clear that these talks are at a critical juncture. but we as a country need to be solving the tough problems, and it is really time to get this behind us. the country is looking now for that kind of leadership, leadership which will create economic certainty and stability, and leadership which will help, ultimately, to create jobs. we can't stop the rest of the world from developing and modernizing, but what we can do is compete, and we can win. and i'm convinced that members of the council recognize that new leadership imperatives are required to do that, and i know the president believes this as

well. today i'm really asking for your help, i'm asking for the chamber's help. the private sector must take the important first steps to build confidence in the economy. focus on the jobs you can create, review opportunities to insource capability, take a few risks on investment or supporting small business, and build a few bigger coalitions, and we've got to move today. we've got to move fast. this building, this chamber and what exists around the country is a symbol of capitalism. you know, now the critics of capitalism are still out there, but their criticism has proved to be wrong and ineffective. similarly, the people that are part of the business sector, the people in this room and all of our colleagues, we have to stop complaining about government. and get some action under way. there's just no excuse today for lack of leadership. so let's get with it. i know that no company will

benefit if u.s. economy -- if the u.s. economy stagnates until the 2012 elections, so i want to work with the president constructively to make the country more competitive and create jobs. i've always believed in the 21st century american companies must serve two roles. they must be competitive for investors, and they also must be a positive force for change. as the country emerges from the financial crisis, i think we're fighting the wrong battle. in the end, more regulation, class warfare and partisan politics aren't going to help the country grow. but business must regain it voice and its credibility to drive competitiveness and create jobs. i want to be part of that conversation, and i want to be part of the solution. but the truth is we all need to be part of the solution, every single one of us needs to be a catalyst for action. so you know what? the world is getting better. the world is getting better.

but it's impossible for american business, ultimately, to win if country and its work force are losing. it's just not sustainable. job growth is important to build national confidence, and the council serves as a catalyst for job creation. we welcome your input. and your participation. and we need it. because together we can make the right ideas happen. american workers don't want to push this aside until the next election and wait to see what the political landscape will look like. they can't afford that. and for ge or any other country, that's not an option. we need to lead, we need to act, and we need results. and i speak for the entire council, i really do. i really do. all of our members. when i say, we are determined to make a difference. and i'm convinced with your help, we will. tom, thanks. it's great to be here. has.

>> well, thank you very much, jeff. that, that was a very well thought out message. we particularly liked it because it said again some of the things, the messages we're trying to carry. you'll get the help from people here and from around the country in the business community because you've really set a focus that talk's not very important, but results are. and we'll do everything we can to help you succeed. the message that i mouth want to thank you for -- that i most want to thank you for while i'm thag thanking all of the other speakers and everyone that came to help us today is that action what's going to provide the results, and we have to get on with it. thank you so much for being with us and your very strong message. [applause] [inaudible conversations]

[inaudible conversations] >> this u.s. chamber of commerce forums on jobs included a discussion on the role of congress. this is a half hour. >> ladies and gentlemen, please welcome bruce josten, executive vice president of government affairs at the u.s. chamber of commerce. >> good afternoon, everybody. um, let me first apologize. i think you all can understand the reason we don't have the chief of staff to the speaker of the house and the chief of staff to the senate majority leader who had agreed to spend some time with us today as they are with their bosses across the stre o