externalities should be paid for and environmental taxes are a way to do that. [applause] >> i don't see any other comments or questions, so moving on to the next presenter. >> the defense alternatives working on transitioning from a foreign policy based on militarism to a foreign policy based on cooperation and diplomacy, and they apply resolution techniques and this leads to cuts in military spending. here's carl. >> thank you. [applause] >> i'll talk about problems in the defense policy, but before i begin, i want to talk about why change is difficult. the pentagon is a drop box, and into that drop box every year goes $700 billion, about $450 of

the billion leaves that immediately to go to industry. industry, and defense industry and contractors employ about a thousand lobbyists, twice as many people in congress, and in the last election cycle, the top defense industries spent $22 million in campaign contributions. the one question that we need to ask ourselves is what do we have up against that? i think what we've learned, what i've learned, over the past year is that what we have is the most powerful weapon in the world which is this. right there. that's a place to start. let's take a look at what's the problem we're trying to solve in the area of defense policy. it doesn't take a lot in terms of forensic science. we don't have to call in csi.

a few observations will do. over the past 12 years while the deficit and the debt was growing, the pentagon budget rose by nearly 100% in real terms. that's 100% after you take inflation into account. all told in the past 12 years, we've added $2.5 trillion to the pentagon's budget above the level it was spending in 1998 so that was the pentagon money surge. that's brought military spending back up to the level that it was in the cold war, although, you look around, and today there's no competitor comparable to the old soviet empire, so why spend so much? well, let's take a look at the $2.5 trillion. half of that went directly to paying for new wars. the other half went to

developing a new strategy that's evolved over the last 12-15 years. that strategy sets out goals and missions for the military that are far more ambitious than the traditional ones of defense and deterrence. the strategy is aimed to do a number of things. it's aimed to take our incomparable military power and to transform the world's security environment. that's one of the goals. it's aimed to try to prevent the emergence of threats, nip them all in the bud before they can grow if you can identify them, the world over. it aims to help stabilize so-called fragile states wherever we choose along the lines we choose. it's a system of nation building, and finally, it's aimed to so-called -- to secure the so-called global common, and that's all this space in between

states, not just on earth, but in space and cyberspace too, so this strategy has bitten off quite a big task for itself and centered the direction guy dance to here in the united states. in a sense, we prieftized social security and made ourselves the per -- purveyors of social security. it's not surprising our military is active in many more places than before. it's preparing to do many more times of thing, and up deed, the pentagon is crowding out the state department, and it has crowded out the state department in pursuing goals that used to be the work of diplomacy and development aid. now, today, we only have about 70% as many troops as we did in the cold war, so how does a

smaller military manage this expanded task list, a list which included prolonged foreign occupations? well, regarding the size of the military, appearances are deceptive. we've increasingly back filled the pentagon labor pool with private contractors. how many contractors does the pentagon employee? it's hard to say. not even the services can say for sure. it's at least 800,000, perhaps it's as many as a million. in that light, the pentagon's total labor fool may be only 15% smaller than it was during the cold war, and that helps explain the return to cold war levels of spending. all right. let's try to assess the new strategy. what can we say about it? how can we evaluate it? i think just about all we need to know we can learn by looking at the wars we've waged. despite all the years, all the

treasure, all the lives spent in afghanistan and iraq, we've been unable to bring reliable security or stability to either of those countries. between them, they constitute just about 1% of the world's people. we've spent $1.3 trillion over ten years on those two wars, and that exceeds the combined gdp of those countries for that entire period. we could have paid everyone for ten year, and what's the outcome? from a security perspective, it's uncertain at best. looking at their neighborhoods, iran, pakistan, it's fair to worry that the security situation is worse, not better. what about the war on terrorism? well, it's grown boundless. it didn't end with the death of bin laden, but it seems to have just grown bigger. we have u.s. involvements and

investments now in multiple internal conflicts. we are involving ourselves everywhere. the strategy appears not to have mopped things up as much as spread them around. at the end of the tum, there's no light at the end of the tunnel, just another opportunity. what to we have? we have undeterminable outcomes. we don't know how it turns out. we have expanding involvements, exorbitant costs, and these are the tracks of a failed strategy, a strategy that was conceived when the federal budget was in surplus and many thought we had trillions to burn. it's surprising to discover many defense leaders and dod defenders seem to agree with this gloomy assessment and agree, they don't intend to agree, but look at the debate in congress. congress is looking at the issue of deficit reduction. defense policy leaders have been

asserting 245 the pentagon needs a special compensation. the pentagon led the way in the increase in discretionary spending over the past 10-12 years, but now they need a special compensation. secretary defense panetta on the democratic side, head of the house armed services committee on the republican side talk from the same script insisting any defense reduction exceeding 7% would be catastrophic to the armed services and would imperil our nation. let's keep this in mind. america and its allies today outspend actual and potential adversaries, including russia and china by a margin of 3-to-1, and that's better than was the case during the cold war when things were about even, so when leadership says that despite this advantage and current levels of spending, $700

billion, the pentagon cannot role back any 7% without risking catastrophe. i think it's fair to conclude that we got the wrong strategy. or we got the wrong leadership, or we got both. [applause] what's wrong with our current approach? it's simple. military power is a uniquely expensive thing suited to very narrow purposes, defensive purposes, not transformative ones. it's a destructive tool, not a constructive one. it conserved diplomacy in some instop signses, but it -- instances, but it shouldn't substitute diplomacy. we have been trying 20 use this instrument beyond the limits of utility. look, when we came out of the cold war, this is what we had in greatest abundance. this was judged to be our greatest competitive advantage, but just because you have a tool doesn't mean it's the right tool. it all you got is a hammer, as

they say, everything ends up looking like a nail. we are misapplying our armed forces, and that's been costing us and others dearly. positive change begins with thinking differently about international security. look, it's not just a case of using the military wrongly, and it's not just a case of biting off way more than we can chew. it's also a case of misunderstanding what security is. security is not a wall. it's not a wall of stone. it's not a wall of fire. security is not a wall that you build on your border. it's not a wall that you forward deploy. get the enemy over there as george bush would say. this is not secure. what security is fundamentally is accord,. security is agreements. that's the foundation on which we build safety. it requires dialogue. it requires reaching out and

when we understand that, we understand we have to give diplomacy pride of place. what are some changes? well, first, we can restore the traditional bounds in the foreign policy tweeness defense and diplomacy. second, the pentagon. let the penalty gone reemphasize the simple goals of defense. these are appropriate to the instrument which should be an instrument of last and infrequent resort. third, let's concern ourselves less with running the show, less with being the indispensable power as leaders assert this, and many of being a facilitator of cooperative action, not just cooperation with friends and junior partners, either, but cooperation that reaches across lines of division. this be joining with others, let's join with others to cooperatively invest in global,

regional, and security institutions. it means advancing the role of international law and being careful to operate within its structures rather than at or beyond its boundaries. [applause] we change along these lines, and we roll back the size of the armed forces and overseas presence, and we can reduce the defense expenditure. we then up vest less in military power and more in the long term preservation of our national strength, and that's our economy and our people. they form the foundation of all forms of power including military power. how much do we cut from defense? it's funny. earlier this year the university of maryland conducted a national poll that asked americans that question. it was a unique poll because it told the participants how much we're spending. many polls on defense spending don't tell people what the sums involved are. this one did, and it asked

people to correct the budget. respondents settled on $109 billion a year. that's in the realm of 16% of so, and that roughly accords interestingly with the president's fiscal commission last year coming up with very similar conclusions which congress tossed aside. it also accords with the nonpartisan sustainable defense task force that i was a part of. we all said let's go with 100 billion. what might be the effect on the economy? $100 billion spent on just about anything other than the pentagon yield a net increase of at least 300,000 american jobs. that's not a bad place to start. [applause] thanks. [applause] >> if there's questions, line up. i see people like to talk about the military, yes. okay.

[laughter] for those who were just joining us, this is coming to you from freedom plaza, and we're occupy washington, d.c.. sign up, get involved, donate, come down and participate at freedom plaza on pennsylvania avenue. first comment or question. >> okay. well this is a complex question i suppose. >> not too long now. >> i'll try not to. a lot of people think back in kennedy's time, that president kennedy was dragged by the military, whatever complex because he did not want to seek first strike capability. he was trying to reach out to end the cold war. i'm wondering, and then you look at the new american century, their goal to control the world's resources. isn't part of this, i don't know where it exists, but there is a whole bunch, a part of the government that's not accountable to anybody, the

security system, the cia, parts of the first. they are not accountable. isn't there an attitude we want to rule the world and totally control it? isn't that really a part of this whole thing? >> you know, i think it's not the type of thing that's said. [laughter] you can go back in history. this is not the first time the question has risen. i like to point to .. kahn who philosophyed the question. he says, you know, every sorch, meaning every king wants security, and they are most secure when they are in charge, so everyone tries to create a security system that's under their own control, and they say that it is to everyone's benefit. of course, other sovereigns

disagree, and that's the genesis of wars, disagreement about who should run things and whose interest is best or who represents the common interest, so i think that plays a part -- it plays a subtle part even among those who don't admit it. we just trust ourselves more, and the real challenge is that others trust themselves more, and that's why the real issue is one of reaching across those lines of division, and the first thing to say in a step towards resolution is to your opponent, well, you've got a point, and to work from there. >> yes, hi, thank you for your presentation. i was glad you started out taking about the thousand lobbyists, and how this is part of perpetuating the system, and that means with the super committee, we don't have even the kind of possibilities that we'd like to see. i mean, some people would like

to see the pentagon budget cut in half. that's not going to happen. frank says cut 25%, that's not going to happen. with the limitations that we have in this corrupt system, is the best that we can hope for in the super committee is that they doarnt come up with a deal, and that there is then a trigger of cuts across the board and how likely might that happen, and would our corrupt congress not allow that to happen to the pentagon, and then within the $100 billion cuts that you talked about, where does most of that come from? there's the ending wars that we shouldn't have been in in the beginning, there's the cutting out of military weapons we don't need, and then there's the issue of 800-plus bases overseas. i've been told by people in congress that cutting the bases would not lead to significant reductions in the military budget because we've have to keep paying the personnel whether they were there,

overseas, or back home. details about where the $100 billion that you suggested would come from. >> sure. there's that suggestion that you gave, and then the super committee. i don't think we should underestimate the capability of congress to fool around the edge edges and change the rules. we may not see this go into effect, that what happens next year is a prolonged fight over redefining it at best with the pentagon defenders. i call them pen gone -- pentagonnists, arguing we need to wall off spending and protect it. let's have where all the cuts go to so-called non-security spending. that's another thing too. they talk two baskets, security, and non-security as though the center of the universe is security.

it's security versus national strength and life. those are your choices, but at any rate, i don't think that we can trust that leads to defense cuts, but i think that the problem the country's facing is one that's not going to go away. i think awareness is growing, and people are looking hard at the defense budget. i've seen in the past two years more movement on this issue than i've seen in the previous decade and a half, so i don't -- i think the battle is just beginning. on the $100 billion and where to get it. by the way, that $100 billion is from the base pentagon budget meaning it doesn't include the wars. you get that savings too. people are expecting that to go down. in addition to that, they are looking for another -- actually it was $119 billion, and that was not exactly the proposal, more in the 100 range, but the point is you reduce the size of the armed forces and tie that

into reducing the task list, not trying to do all of these transformative tasks; right? reduce the task list, reduce the size. that reduces the amount of equipment you need to buy, and obviously, reduces payroll, you roll back the reliance on contractors. it's actually not that hard when you're starting out with $700 billion to find $100 billion to cut. >> three more questions here or comments. make them brief because we have a long way to go. >> will rogers speaking in the latter part of last century said defined diplomacy as good dog until i get a rock. that seem to characterize american diplomacy in the global continuum we live in. the other issue that comes up with a question is there never was a missile gap. misinformation caused the missile gap. we never -- the russians were never ahead of us.

we drove the missile gap, and it was driven by the military industrial complex as characterized so well by president eisenhower. i'm an organizational psychologist with 35 years of experience working in the public and private sector and any organization existing long enough, the final stages is corruption. it's the stage we're in now. given the supporting of the political system by money and politics, how in god's name do you expect any change to happen without stopping the machine and starting over again. thank you. [applause] >> one of my favorite will roger's quotes, i believe he's the source, is one you find yourself in a hole, stop digging. that's good advice to our congress and to the executives as well. i think it's right that we have to have a dpicht approach -- different approach to dismantling diplomacy. we entered the post cold war period with sufficient an

abundance of power relative to other people we felt we didn't have to compromise. now, what happens if you take that approach is that gradually others begin to build power as well, and you eventually end up where i lope we don't. we've been through the cold war. we don't want to do that again and bequeath that to our children, but if you don't learn how to compromise and how to build commonty, that's we with end up. we don't have raise a pure competitor today, we'll find one tomorrow. many the threats are spun out of whole clothe particularly now when you hear people saying that you can't cut by 7% or everything falls apart. you know they are not -- this is not evidence-based approach to security people like to point to china. if i worry about china, before their military.

the chinese theory is that the decision about which is the dominant power, the leading power in tomorrow's world is going to be decided in the economic sphere. that's their theory. that's why thigh spend less of their gdp on defense than we do. i happen to think their theory is right, and it's time for us to move this that direction too to understand that what's really at risk here is long term national strength, and what's been happening is that we have been sapping that strength in order to build short term military power. >> thank you. first of all, just thank you for delineating the source of the problems and many of the problems and what my question is what do you think is the worst case scenario for the -- if there are no changes, if no one can in the entire united states

stop this current phase, and we can see where it's going. you showed this clearly, statistically where it's going, where is it going to morph into? as an american citizen, i still love and hold dear the constitution, and once we defeat all of our so-called foreign enemies, do you think there's a possibility that all of this military might might be turned inwardly on the american population? in other words worst case scenario, what do you think that might be? >> i think there's one thing that would completely unite the tea party and the occupy movement, it would be the scenario you described. i put a lot of trust in the american citizenry that you can only push them so far so i'm not so much worried about that particular worst case scenario.

short of that, what do we see? well, we do see police forces adopting tactics from our armed forces. what we do see is more security functions fielded out to private contractors, domestic security functions. we do see more surveillance on all of us to be used in a number of ways. these are all products of the past ten years and the way security policy is developed. we also see the use or the implied use of so-called anomaly for weapons, not just tasers, but pain waves, sonic weapons, the possibility that will be used for crowd control here and tested elsewhere. there are things along those lines that i think are real. as far as the ultimate, that's when i think -- that's when i think you bring every man, woman, and child into the

streets, and left and right come together, so i'm not so worried about that. internationally, i'm worried we're going to end up in the same type of situation that we had during the cold war which had so many negative effects in terms of development, in terms of sponsoring wars, the worldwide between the soviet block and western block, we may be there with china. this is not a direction we want to go, and it's not a wise direction or necessary at this point. it is avoidable if we are willing to rethink how we use our defense, and if we're willing to rethink deploim se. -- diplomacy. >> okay. last question. >> first, we want to thank god for being with us. if we have god on our side, and we move according to the spiritual forces of our culture, then we're moving in the right direction. i want to welcome you all to washington. we had to do this so many times,

but it's an amazing that the collective force and the intelligence that you bring forth and putting forth in these groups and organizations. i was pleased to see the young man there because it was back in rosa parks day, poe is -- rosa parks hit at the problem we were suffering from, and that is a system of white supremacy that causes oppression and the inequitable distribution of the wealth. now, rosa parks and ms. fdr who was instrumental in forming the new united nations, these were two women of our culture who helped to form a view of how america and the rest of the world could relieve itself of the oppression and the exploitation. i come from the exploitation of the world.

i don't know who my family is other than a few here in this system, but if we get back to the business of doing what the young people told us to do back in the 50s, was to turn the pentagon into a day care center and stop war, shut down the industrial complex, and turn the world community into a caring, sharing, spiritual community guided by the spiritual systems. now, you three -- i didn't hear this man here, but these two i did here, and what you have to say as a young person, i like to know how do you get that message to all of your people, and you in terms was military industrial complex, in terms of turning the

pentagon into a day care center, and there is a group from that period that meets at the pentagon every day to hold a vigil to that effect. i come from a military family, from world war i, and i had a nephew 18 years old who just finished a tour of the -- what do you call that -- the associated with the marines srb seals. they are all in the water as rescues. what are we going to do in terms of stopping the world bank and all the corporate america from running the nation through the banks if you all remember, i think it was president andrew jackson who was very much opposed to the banks and the

power that your sign now says to end corporate rule. i think i've said enough, and i want to thank you gentlemen for being here and to find how you can get the diverse global group, not only should we organize locally, but we have to extend that nationally and globally, and i think that we are at that point now where his parents are willing to listen more closely to what he had to say back then about turning the pentagon into a day care center and what our spiritual leaders such as dr. martin luther king and malcolm x told us about creating a consciousness and an action of peace and justice; then we'll have prosperity and no more foreclosures and no more

displacement from our workplaces. i thank you gentlemen for being here, and the next time have some women up there. they are over here, all right? we want them up there. i thank you very much. continue your good work because you're god blessed and directed. >> thank you. >> thank you very much. let's make room for the next panelists. gar -- margaret and ken. >> you're next, you're coming up. didn't want to ask you to leave, but -- you're going to be after the next speaker, dean. >> can i make just a short comment on last woman's thing? >> no, not right now. next issue. you'll get a chance later at the

end of the session there's more time. next is jobs, a central issue, and that's what we have ken here for, an economist of the communications workers for america, serving as a economist of the north cheyenne tribe, and he focuses on what to do about creating jobs. >> thank you, and thank you for the invitation. what i'll do is talking about what to the to do and then go into what to do. i'll start off with a little story about veer verizon that employees 45,000cwa and -- >> hold it up. >> did people hear what i said before? >> yeah, yeah. >> better now. that's what the goal is. better now; right? [laughter] verizon has been in the midst of a labor dispute.

we went on 45,000 workers, went on strike for two weeks in august, and verizon and what it's been doing is kind of like a model of what's happening nationally. it's a very profitable company in the last three years, 33.4 billion in pretaxed profits in the u.s., and they got actually in the last three years $1 billion in took refunds. tax refunds, so $1 billion in tax refunds on 33 billion in u.s. profits. what do we get for that investment? they should have paid $14 billion in state and federal taxes, but they didn't. what do we get? did we get more jobs? no. those three years, verizon cut 40,000 jobs. did we get more investments? no.

verizon cut $1 billion in the capital expenditures. did workers get better wages and benefits? no. because verizon's demanding right now $1 billion in cuts to those 45,000 union representative workers. that's about $20,000 per worker. and verizon is anti-union, preventing the unionization of the verizon wireless. they are 50 workers, they are doing everything to prevent further unionization of wireless going to the point where there's interest in call centers and they moved them to right to work states. this -- verizon's just a model of of what's going on nationally, and it's basically a corporate agenda whether it's conscious, planned, whatever, it is what is being done, and we know this policy because it's been enacted in bits and pieces, more and more over the past 35 years.

basically, that policy, which is being pushed throughout the world is to actually weaken the ability of whatever institutions stand in the way of corporations, so if there's an attack, a frontal attack on workers and unions. the policies are to weaken or reduce the power or eliminate unions and the rights to collectively bargain. we see that throughout. it's to cut labor costs as much as possible, to increase productivity and to globalize. that hits the power of unions which tradition namely were a boat work against unfettered corporate power. it's also a frontal attack on government. cut government regulations including labor regulations, environmental regulations, trade regulations, financial regulations, and political

regulations. politics is now being deregulated so that with the citizens united, corporations can have free reign and free investment, and believe me, it's an investment that they do in politics because they get the policies they want. they also want to cut government spending on non-business related programs. don't we see that? they want to privatetize government services to make them profitable, not to serve the public interest. you can see that throughout, for example, education, what's happening there. they want to allow corporations the flexibility to do whatever they need, and the latest symptom of this policy a worldwide which is austerity for the many, prosperity for the few, and that's the 99% against the 1% which you all are here, we're here, we're a part of that. it's deeper than just an

economic political policy because it affects our values and what progressive movements have won over the centuries in the u.s. and other places. i think it's very important to show or discuss that this is not just a political economic program. it's a counter reformation, and a counter revolution to put power in the hands of corporations and take it away from the 99%. i'll just mention a few things and then go on to what we want to do or what we can do. the revolution no taxation without representation. well, corporations are getting no taxation with a lot of representation. we're getting taxation with hardly any representation. the civil war, the right to citizenship, the 14th amendment, what's that turned into? the basis for citizens united. that corporations are, indeed, a person..

.. what has happened there? under attack, weekend. civil rights, equal opportunity and treatment before the law. one person, one vote. and citizens united. women's rights, equal opportunity and reproductive rights, those things are being attacked contingently and

environment, the environmental movement, the right to live and work in a clean and healthy environment, not just for us but for our progeny and our inheritance that we give to them. that is under attack and here we have the occupy movement which is just beginning and we will see what happens and how it plays out that contains a lot of these strains that are under attack by the corporate agenda, the neoliberal agenda, whatever you want to talk about it and what we see is what has happened now, the crisis we are in. the massive flow of income from the top 1% undermining decent paying jobs especially in manufacturing, the lifting of power and rights than any person and the weakening of any political and economic institution to stand up to corporate power. that is what we are up against. that is a the policy that was developed and implemented over the past 35 years and is being

implemented over and over again even though it has been seeing -- maxine to fail over and over and over again. just think about the idea of cutting government in a time of high unemployment, firing as a way to get hiring doesn't work. so what is our agenda? there have been some great, i don't know what origin but proposals, right? there have been some great plans put out. the afl-cio has six pillars to creating keep good jobs. is the blue-green alliance and the alliance of unions and jobs 21, eti economic policy institute putting america back to work, the etr has a lot of very good ideas and plans and what i want to do is just, just put out a conceptual framework for this and not get into the specific -- specifics because

they are all there. all these programs are there. one is, the goal is to create 20 some million jobs, right? the chamber of commerce has that is a goal in their programs what i outlined before and that won't work, right? it hasn't worked and it won't work. so there are one, two, three, four elements to this basically. one is improve the standard of living of people. isn't that the goal of what economic development and economic wolesi should read? but how do you do that? we need a living wage. we need living benefits, health, retirement. that's part of the quality of our life. we want to improve the quality of life. union organizing as a way to improve life, collective bargaining rights, inadequate government safety net. right now extend unemployment

benefits that are coming up to expire. these are a sick human decency type of things that make economic sense because the increased demand and increase the demand for products that corporations have so they can make a profit. two, the private sector isn't doing enough for job creation. they are creating some jobs but it is very slow. how many years would it take? just 30 years. maybe it will be 40 or so our whole generation will disappear like go into the desert just to catch up to where we were. well with the private sector can do it by itself and we look at the public sector and we look at the public sector in terms of public investment. this is an investment for our future. that includes raising government revenue to fund this. that was talked about in terms of fair taxes.

cutting expenditures on wars and things like that, but public investment in terms of infrastructure, schools, roads, bridges, broadband. an economy which is under attack right now is our future. the climate change crisis is not a figment of someone's imagination. it is science-based comment is evidence-based in unless we deal with it we will be gone anyway but our progeny will be gone. thisthis is an existential criss right here. this is an boom and bust cycle. this is the last bust cycle. government services, direct jobs. the government has done that. and also regulate, govern for the public interest, environmental regulations, fair trade regulations, labor regulations, regulations on wall street, are ways to protect the public interest and to make sure

that corporations and individuals are directed towards those basic concerns and values i talked about before. finally, two more. when the stimulate private investment. would have been a mixed economy. it is not all government, it's not all private sector. tax incentives for corporations to do job creation and do the right thing, bring back jobs from overseas, a lot of outsourced jobs. we deal with this is the union and finally democracy and accountability. don't separate economics from politics, its economic politics and values. all these policies attack all these things all the time. campaign finance reform, senate rules. the right to vote. that is something that was fought for for generations. that is being whittled away. corporate accountability. we need that. and we need to create, to do all this we need to create a general progressive movement.

is there money to do this? there sure is. the financial bailout, wall street got $7.84 trillion. money is flowing from all over the world into the u.s. because we are here and we have got access to money at very low interest rates. now is the time to invest into public investment. this is it and cutting that investment and cutting government expenditures right now is the absolute wrong thing to do. so to get all this done we need to create a progressive movement that is independent of whatever political party there is an pushes both of these groups to do the right thing and it goes back to the values i talked about before that were fought for in the revolution, the civil war, the great depression, the 50s civil rights, environmental movement, consumer movement, public sector organizing movement.

all these types of things, we can do again. it has been done and makes economic sense, and is true to our values. thank you. [applause] >> thank you very much. two or three comments or questions? let's just take three there. tried to keep them short so we can move on. >> hi. direct government creation of jobs, something like the wto. just to give you an example, we could be winterizing a lot of homes and saving a lot of greenhouse gas. i am just wondering whether the building trades are in favor of this or whether since maybe the government direct jobs would not be unionized whether the trades are actually lobbying against a. >> i can't speak for the building trades but the blue-green alliance which includes building trades unions that support efforts like weatherization, smart grid energy, better use of energy

efficiencies and things like that. >> thank you. >> i just wanted you to comment briefly on what do you think happened to the labor unions over the last 40 years? i have pallone to three different units myself and i found them to be largely ineffective and even corrupt in some cases so would he think has been going on and why are they so we? >> that is a great question and we could sit here for quite a while. it is not just in the u.s. the labor unions are weekend. corruption and unions should be snuffed out wherever possible. that is actually -- i have been with a few unions and i've seen very little of that. that gets a lot of the publicity because that meets the needs of corporations and people who are against organization of working people. but unions have been under a frontal attack a corporations and in every country and in this country it it is almost illegal to organize effectively. and there are a lot of examples,

cornell has done great studies that shows what happens and in our own experience in cwa, at&t wireless before we try to organize, no one would join the organization drives were very few people because the management put the fear of god into them. they fought for five years. what had been the ftc, we got a bargaining neutrality and card check, majority vote basically. all you had to do was show a card. management did not enter into or put the fear into anyone's. singular bought at&t wireless and became the new at&t. within six months we signed up 19,000 people. now we represent 40,000 at&t

mobility workers because corporations did not jump in and put the fear of people's livelihood and jobs which is an attack on people's families and things like that. also changes in the deregulation of areas that were strong union, were union strongholds, trucking, telecommunications. they were deregulated and that has had an effect and also the change in the structure of the u.s. economy from more manufacturing to more service where it is difficult to organize. all the thing -- those things put together but i don't want to under emphasize the impact of the corporate frontal attacks which is also included in policies followed by a whole number of administrations. >> i want to ask, if the budget will be what we are discussing

communities, our environment, our language, our homes? thank you or ghosts be okay. well, basic values, back to government here to serve? what does economic development mean? economic development does not just mean gdp increase and that kind of stuff. it relates to quality of life in a democratic society that is both economically and and are mentally sustainable so i would say here here to what you are saying that the budget should be judged on how it meets our values are good the budget isn't just numbers games. it is a determination of the direction of the country and the values that government serves or does not serve. we should do everything in our

power, thank you, to increase our power and to get what we need, meaning that 99% to have a functioning democratic environmental economic political system. that is the bottom line, and the policies that have been passed and the policies that have not been passed in the last session when there was some majority and some really good progressive legislation in the house tells you the direction we are in and that is going over a cliff. so, thank you. [applause] >> thank you very much. next we go to retirement, dean baker who is the codirector of the center for economic and policy research, writes and speaks on a wide range of economic issues and is an important voice in progressive economics who is going to be focusing on social security and making it more secure retirement

>> thanks. first i should apologize to kevin who explicitly told me i was on the second panel. i wonder to the second panel and made him look bad so i'm sorry about that. i want to talk about the situation of social security but first as a backdrop that is kind of incredible we have the super committee meeting and everyone agrees, all the serious people here in washington that social security's got to be on the agenda. where are they now? we are sitting on 26 million people unemployed, underemployed or giving up looking for work altogether. you would think we would have the super committee meeting about that at no we are having a super committee focused on cutting social security. what's more, the whole story of the deficit, you guys just born yesterday? we did not have a big deficit problem until the economy collapse. we are spending too much on the military and the wars. there is no reason for the bush tax cuts to the rich but the reality is the deficit was not large until the economy collapse. it's black and white and thousands of documents you could

argue over. the deficit was 1% of gdp. guess how long we could do that? forever. there was not a big deficit problem until the economy collapse of rather than trying to get the economy back on its feet we are trying to get the completely backwards, doesn't work and it doesn't make sense. that is the context of the super committee. it's very warped and it's very much, this is the agenda of a 1% and we have to understand it that way. i want to say in terms of talking about social security, i want to talk about three different areas, first a little bit about the situation of the elderly. listening to the d.c. pundits who think every elderly person is living in a penthouse is not the elderly i know but i was a little bit about that. secondly the cuts to social security because we are talking about roe cuts and they do their best to conceal that. they are talking about real cuts that will affect real people and i want to say little bit about the cuts both by the super committee and coming up in some

of the presidential candidates are suggested. lastly a little bit about the size of the shortfall. we have a lot of people running around telling us the sky is falling. "the washington post" had a front-page story of a week ago sunday saying oh my god look at this, social security is a huge disaster. this is scare stuff and they should know better. i don't know if they do or not but i want to talk about that so people know how to put this in context. first off, the condition of the elderly. this is something we shouldn't be arguing over because there is not a lot of dispute about this. every social security benefit is 13,000 a year. we are really concerned about that, 13,000 a year. that is the wealthy elderly, the generous, 13,000 a year. that's not go to jpmorgan and asked them how far -- that is not a days pay. that isn't ours. some of those places. 13,000 years the average benefit. that's about 90% or more of the

income, 90% in many cases 100% of income for 40% of the elderly so that is what they are living on. this isn't like oh they have all their money in the stock market and their real estate and then they get -- no, 40% or so. it's 90% of their income. about two-thirds is more than half their income. so this is who we are talking about. no one has different numbers. i didn't give it two in decimal so someone can grab a decimal on me but those are the numbers. the vast majority of the elderly are not looking particularly well so that is what we are doing. we are talking about cutting their benefits. there was a new measure of poverty and our old measures dates back to the 60s. there was a new measure the census bureau came out with and it showed the poverty rate among the elderly a 16%. that should be cause for concern. we tell younger poor people to get a job. that is a silly thing to tell

them in a lot of cases particularly when they have the unemployment rate that we have. we are telling 80 roads to go out and get a job? that is a real serious problem. 16% of the elderly are living in property and that is a low standard of living if you look at that. that is a really low standard of living so we are talking about cutting benefits for this wealthy group of elderly, 16% and property. last point and i don't know people saw this. people might've heard of pew. it's a major foundation who put out a lot of work. some of it is good. but they put out a study last week or the beginning of this week that talked about how comparing the wealth of the elderly to the of -- well for the young. they look at how did things go from 84 and to 2009? those are the comparison isn't it showed for the elderly that their wealth increase by think 40% and then it took the young, people under 35 and their wealth

declined by 70%. a couple of things, first off the young get very little wealth even an 84. we are talking about $12,000. i didn't have any money and i don't have much now but i didn't have any then. are they moving up the ladder? that is what you want to know in any serious person would do that so this is not a serious measure of the wealth of young. it was a serious measure of the wealth of the elderly. have people heard it defined benefit pensions? they don't today. this is a slack study. that is not the way look at the analysis ' what is interesting here this got picked up all over the place. i looked at this and i go that's kind of a joke. the 1% instead of talking about the class war they have been waging on is they're trying to trick it into a generational war. for take away the social security for the elderly somehow we are really going to help the young. that's not the way to help the young. that is nixon's.

the other thing i wondered, i always wondered what sort of families they lived in. when i was growing up my mother would do anything for my brother and i in the same thing that she is older and we are in the workforce. oh, so yeah we are going to take away her social security so we can get rich. this is literally not. that is the super committee. let me say little bit about the cuts because again there is a lot of game playing with the cuts. the annual cost of living adjustment. they love to find tricks about how they will cut it. social security, one of the great things about social security is the index for the rate of inflation. most people don't have incomes that they can count on rising. the index of the rate of inflation, not a lot of money but if inflation is 3% you will get 3% more money next year and 5% you will get 5% more. it is a enormous protections for social security. they go hey, that index is too

high. it's too high by 3/10 of a percentage point so we are going to change the measure so you will get pretense of a percent less and than they say change. it's a cut, it's a cut. 3/10 of a percent, three pretense of her pretend --% is not much but it is cumulative. 3/10 of a percent after 20 years is 6% and after 30 years as 9% so we are talking about the biggest cuts will hit the oldest people. someone in their 90s will see a cut and they will be getting less. they go that is not a big deal. actually this is a much larger share of the income of the people who were affected than the bush tax cuts are on the wealthy. so if this isn't a big deal then why the hell is anyone worried about the bush tax cuts on the wealthy? it doesn't make any sense. so this is a big deal and we should take that very seriously. raising the retirement age. this one is romney and i think

many of the republican presidential candidates have been saying they want to raise the retirement age. the argument is we are living longer and we are in better health. there is truth about but it is not evenly distributed. most of the gains in life expectancy are in the top quarter. you take the bottom half the income distribution and there is very little gain in life expectancy and by the way we are de did raise the normal retirement age for social security. it was 65. at 66 now and if he hears it will be 67 so we are to get that. we knew about increased life expectancy and they are the raise the retirement age. they were all sitting around in very good health and they have good health care. they will live longer but a lot of people come most of the people in the country are not enjoying the same increase in life expectancy. it is not fair to raise, to expect that they will work later in life because the wealthy are living longer. that doesn't make a lot of sense but that is what we are hearing talked about. the other point about that,

again i go to a lot of meetings here. they go well we have to get used to the idea that my fellow economists, we have to get used to the idea we will have to work until we are 70. i have the a desk job and that's no problem. i will work and some 70 but maybe longer. tht's talk to the custodian and ask them how they feel about working to age 70. you know, that's a very different world, and we did analysis of this. about half of older workers work jobs that are classified as physically demanding or difficult work conditions meaning they work outside all day. it doesn't tend -- it's not economists, but it's a large segment of the work force, and that's what these people should keep in mind. when they talk about cut, i love this, they say we're going to reduce benefits for the wealthy and elderly. peterpeterpete peterson

committed his own money to medicare and focused on cutting the deficit. he goes, i don't need my social security. great, pete, send it back. there's few people like pete. they take about oh, we're going to cut social security for the wealthy, okay, fine. everyone earning more than a million a year, make it $100,000 a year, you don't have to change numbers in the projections. who are they talking about? you see the wealthy talking about taxes here, earned up to 250,000 or a million, well, the wealthy elderly get $40,000 a year. that's not the idea of wealthy. well, if you want to get any money out of social security by means testing, taking away benefits from the wealthy, then your definition of wealthy is $40,000. it's very, v. middle class.

these cuts are the real deal. don't let anyone pretend the cuts they talk about are a joke, they are real deals hitting people in a real way. i love these guys saying, oh, it's a $5 trillion short fall. i was listening to national public radio a couple months ago, and they said $200 trillion. i think there's a prize for coming up with the biggest number. but, okay, let's, you know, trying to put this into context. talking over how many year, and no one other than a few policymakers knows what this is. the short fall from social security, this is from the congressional budget office, is estimated at 5000, six tenths less than gdp. if we find a revenue source or cut, whatever, it's less than one tenth. if you look at the increase in the military budget since 2000, since september 11, the increase was more than 1.7% of gdp,

roughly three times as much. is social security short fall a big deal? maybe. again, the increase in spending is three times a big deal. compare it to something else. how much of the 1% increased their share of wealth over the last 0 years? that's six percentage points so more than ten times as much so if we're looking at this short fall in social security and we have to be really scared about it, well, the increase in wealth going to the richest 1% was about ten times as much. again, if the short fall in social security is a big deal, then the increase in wealth going to the 1%, the share of the wealth at 1% is ten times the big deal, share of income i should say. we are supposed to be scared about this. let's imagine, we're not in this world, but imagine workers got their share of the productivity

growth. if we close the gap, say we might close the gap by raising taxes on workers to pay for social security. raise the social security tax in other words. it would take 5% of the projected wage gains over the next 30 years. okay? that's how much it would take. that sounds bad to people because we're not seeing that money. it's going to the 1%. this just drives home again and again and again this is an affordable program, no big short fall. the problem is that money's going elsewhere and to the military and going to the 1%. last point is if we're southeast -- serious about this, we should be talking about cutting social security for low end earners, and it's cheap. if you talk about raising benefits, we have al gore agreeing to this in 2000 i remember. we got al gore to a package of increasing benefits of low income earners increasing by 10

or 15%. you might want more, but it's not a lot of money or surviving spouses, typically women obviously, but surviving spouses get two-thirds of the joint benefit. if it's three quarters, that's a 10% increase. you can do more, but the point is these are low cost things. we can make social security more generous. that should be on the agenda. the idea we're looking to cut social security at a time like this really is not something that serious people should be talking about. we should be very angry. this is a great program. it does what it's supposed to do. it's protected senior citizens for the decades, and we should make sure it continues to, and we need to make it better, not worse. [applause] >> any questions on social security? take two or three. those are the three. just tree. >> hi, i'd like to make a comment, i began getting my social security insurance benefits on april 15th of this year, and i put it that way

because that is a way that it's not talked about. i have been paying into social security since i was 18 years old when i got my first job, and it's an insurance program which is -- which is the risk is spread over the entire group, and that's one thing, one way it's not talked about is an insurance program, benefits, so another thing that's not talked about is that having a social security insurance program allows people to take risks in their life knowing that there is this safety net. i'm sick of it called an enfit lment, which it's not. one thing, i'll say this under this -- my time to be able to make a comment -- my daughter started a business for which she had a business plan, a beautifully professionally

worked out business plan for which the small business association said they would ensure the loan and was not able to get a loan anywhere, and this was after the bailout. three large banks refused to allow her to lend her money which was not an enormous amount of money, and after the bailout, so i gave her all of my money that i was able to save during the 1990s. i totally bankrupted myself for savings of all the money i was able to save in the 1990s during a period of prosperity, gave her all of my money knowing that i had my social security insurance benefits ability to have an income, so i was able to take that risk. she's employing a half dozen people in her neighborhood. she is a green business. it's a coffee house that is direct trade, organically grown,

all -- she composts everything. she uses only green economic policy items, and is employing people in her neighborhood so that's another benefit of having the idea of the social security. i just wanted to make that comment. thank you. >> do you want to comment? >> questionly. social security is insurance. people paid for it. you're right. there's a right to it, and it's very efficient. if you compare social security, we have prieftized systems. it cost 30 times to administer, so it does what it's supposed to do efficiently. it's a great system that way. >> i'm ken burke. when they came up with a tax holiday talking about the 2% of the social security -- talking the 2% of the tax holiday from social security but yet claiming they need to cut social security, can you explain that? it sounds like smoke and

mirrors, but -- >> yeah, it is smoke and mirrors. i was annoyed by this. president obama, we have a two percentage tax holiday meaning instead of paying 6.2% of taxes, we pay 4.2%. they are reimbursed with that so in principle it's left whole. why call it a social security tax cut? in other words send us checks equal to 2% of the salaries. no reason to bring social security into at tule. they did, and we can argue about it, but it's left unharmed by it. >> how are you doing? thank you, dean. i have a comment and a question. my comment is when we see the democratic party, the party of the people, supposedly, talking first about cutting social security and medicare, that's what we know we have a one party government. my question to you, though, is i've been reading up on this --

the reserve economy, and apparently there's an economy out there that we don't really know about that this so-called deficit that we've got it $13 trillion or $14 trillion or whatever number is made up next week is going to be, that's actually just numbers like in argentina, add a zero on the end of something if you need it or subtract a steer row when you -- zero when you don't need it anymore. there's the treasury securities part and the reserve part. all of these people -- the billionaires and trillion theirs still have their money, china still has their money, still secure, still buying treasury securities, and the problem is this is a coo taken on by the 1%. that's my opinion at this time. is this reserve economy true or not true? >> yeah. i would say there's a lot of issues about our economy.

i mean, there's a lot of things it hinges on in terms of we have accounting conventions. that doesn't mean they're not real. you know, microsoft is tremendously valuable company because there's copyrights. in other words, they will arrest me if i copy windows and distribute them. they will arrest me for that. it's a convention of. it's a law. it's not a physical object in the world. that's true of the economy. there's things like that, accounting conventions, or laws, there's things they do that to my view are inappropriate or corrupt, but it's not making something up out of the blue. you're right with medicare and social security, there's democrats jumping to the gun saying that's what we should be cutting right now. >> am i correct that there's a cutoff point in your income after which you don't pay social security insurance premium on it, and why is that, and if we didn't have that, would that

take care of the, quote, "short fall,," unquote? >> glad you asked that. you don't pay any taxes on your income above $108,000. if you get $10 million, you pay the same amount a senior, schoolteacher, or principal pays who gets $110,000. there's a cap. there's a larger share of wage income that goes over the cap. two points to make on that. one is if we dpnt have the upward redistribution over the last three decades, the program would be balanced over a 75-year planning horizon. that's not the whole story, but a big part as to why there's ever a short fall. right now we're at 2038 not ding anything, but without the upper redistribution of income, it would be 2080, long, long into the future.

the other is raise the cap. bernie sanders has a proposal in the senate saying we'll apply taxes -- nothing if you're between 108 and 250, we'll tax it over that. that leaves the program balanced in 75 years. the money is easily, easily there, it's just a question of getting it. >> okay, thank you. that can correct the wealth imbalance a little bit too. two mr. speakers to go. the next speaks on health care. margaret flowers, an organizer here and congressional fellow for the physicians of a national health program. >> thank you, kevin. you can tell my by twinkles that i live here; right? so i just want to say first off this is tremendous. i appreciate you all for being here today because i've testified before congress. i've testified before the deficit commission. that's not what this looks like. like this is what it should look

like. it should be people who are knowledgeable in their fields. the public should be allowed to attend and comment. it should be out in the open and transparent, not hiding behind closed doors, so i really love this as a model. i'm going to speak about the impact of health care on our economy, on our defer sit, and -- deficit, and and evidence-based solution to improve our health and improve our economy. i want to lay the field. the united states is number one in only one area when it comes to health care. we spend the most of any industrialized nation per person per year on health care. in some cases, we spend twice as much per person per year on health care than other nations that cover practically everybody and have better health outcomes. we leave about a third of our population either uncovered completely or underinsured meaning they have health insurance, but they can't afford health care or they are at risk

of financial ruin if they have a serious illness or accident. medical costs are the number one cause of personal bankruptcy. 6 #% of -- 62% of bankruptcy are due to medical costs, and those people had health insurance. we call health insurance in this country an umbrella that melts in the rain. when you need it, it's not there for you. as i said, our health outcomes are not as good as other industrialized nation. as a nation that prides itself on being one in so many areas, we're 37th when it comes to health outcomes. of all the industrialized nation, the united states was the worst in terms of preventable deaths. they estimated that if we actually had a functioning high call health system, we'd save over 100,000 lives every year. these are people dying from preventable causes. we have widening health disperties, and our infather and

mother mortality rates are upsetting. we see infant mortality rates to that of a developing nation, and because we don't guarantee prenatal care to all women are sometimes two to three times higher than other industrialized nations. for spending the most, we have a poor value for our health care dollar. in terms of our health care impact on the economy, our health care costs right now overall are rising faster than our gdp. that's really not sustainable. if we were comparable, and this is a study that dean did at the cepr, if we looked at -- if we had health care costs that were in line with other industrialized nations, we wouldn't have a deficit; is that right? >> yeah. >> no deficit. we wouldn't have to be here talking 3w0*u9 this. the legislation passed in congress last year, and i worked

hard to get evidence based solutions on the table. it was not an easy task to do in this environment, and that's why i live here. the legislation passed is not going to address these issues. it's estimated the health care costs will continue to rise faster as a result of that legislation than they would have if we had done nothing at all. it adds more bureaucratic complexity to our health care. the -- there's no proven health controls continuing to leave tens of millions of people out with no health insurance. we see already a trend of dropping number of employers offering health insurance. this is expected to continue. under this law, there's an article where big business was saying nobody wants to be first to drop employer sponsored health insurance, but everybody wants to be second. it's going to increase our number of people under insured or left financially vulnerable looking at the health exchanges at the state level. we are driving people into the

individual market, and most are priced down to the lower levels of coverage because premiums are continuing 20 rise. what's looked at in congress is that they are, as we've said, they are looking at cutting medicare, and there's talk about changes medicaid too so that not as many people are guaranteed to get medicaid benefits. what's the result of that going to be if we cut medicare? we can expect to see increasing poverty as already many elderly are bearing a high proportion of their health care costs. we'll see a decrease in health outcomes. what's amazing is that when people in this nation make it to the age of 65 and get on medicare, we start to see the health disperty gap close. it starts to close because everybody now has a single payer system. we're going 20 increase our costs because just taking away health benefits doesn't make the problems go away. it makes people maybe delay or avoid necessary care, and then they end up with a worse outcome that could be more expensive to

treat, or they may day die which some economists say, well, i'm not unsure it's not you -- but say, well, if they die, they are cheaper. i actually heard people say that, so that's not how we want to control our health care costs. our medicare and medicaid, we hear they are under pressure, but they are not the cause of that, but the victims of the fact that in this country we don't have a health system that works. they are under the same pressure of the rising health care costs, but in truth, our social health insurances have lower administrative costs than the private health insurance situation so we could save, if we went to a national medicare for all, instead of spending a third of the dollars on administration, we'd spend 3% to 5% saving $400 billion a year to go towards health care rather than insurance administrators sitting in offices trying to

figure out and work this whole system that doesn't work. so let me move on. i tried a market model in this health care. we're the only industrialized nation that uses this model where it's profit before people. forty year, and we've seen the outcomes. it doesn't work. most expensive, outcomes are not good, we're losing doctors. the burnout rate on primary care physician is 10 to 15 year, and i'm one of them. i practiced for 15 years. there's job lock where people are stuck in jobs longer than they'd like for the health insurance benefits. we see people who want to go on their own and start their own businesses are afraid to because they are afraid of losing their benefits, and it hurts our global competitiveness. physicians for national health program, the organization i work with, advocated for a health

care system for all. we have an example in this country of something that's been proven to work. it's been a model for other nations, and we could improve it and make it work even better. what would that be like? national improved medicare for all means every single person living in this country from the time that you're born until the time you die, you have health insurance benefits that's paid for publicly through taxes in a way that's accountable and transparent. it means having a health system where we can actually plan out the best way to use our health resources. we don't do that right now. we don't prioritize what our health needs are and the best way to use the resources. we can do that under the system. what are the benefits for all, and how does that help the economy? stimulate jobs, improve health? i mentioned the savings of $400 billion a year. are we getting attacked? >> guys, kevin -- move. go the other way.

>> is that a sign? having a national health program would allow us to do something every other country does but we don't do. it allows us to negotiate for fair prices for pharmaceuticals and health care services. we pay the most for our health care services compared to other nations. it would allow us cost controls through global budgets, bulk purchasing, and rational use of our resources. it would allow us having a system to identify where the outliers are, where the problems are so we can address them systematically and correct them. it would eliminate the burden of rising costs of health care on employers that's particularly burdensome on our small businesses. it would enhance the competitiveness of u.s. corporations because they compete with other nations that don't have the high health care

costs. it would liberate our population to open their own businesses or maybe get, you know, get more education. it would allow older workers to retire before the age of 65 opening up jobs for younger people looking for jobs. i can't tell you when i walk into legislative offices and the staffers are like -- well, this is the state level because up there, they are young. i have staffers at the state level that say, yeah, if you had this, i'd stop working. they only work for health benefits. it would stimulate the economy because families would have discretionary spending rather than the high out of pocket corseses on health care. it would improve our overall health, and you can argue with that, maybe our productivity, you know, fewer sick dayings. there's people with chronic illnesses who could work, but because they can't get basic control of their chronic illnesses urges they can't work.

it end medical debt and eliminates the spend down required now for people who need to go on medicaid, and lastly, it would provide true health security for our population, something that we don't have right now. people would not have to choose between health care and paying their mortgage, paying for food. you know, do i get therapy for cancer or put my child through college? these are real life decisions people in this country are making right now. thank you very much. [applause] . >> we're running late on time. i'll invite the final speaker up to present now if you can make room for him. gar alperovitz is a noted author. my favorite book is "beyond capitalism" that talks about what system works beyond our capitalism and state based socialism, and he works on co-ops and building local efforts of shifting power to people at the local, state, and national economies, shifting

power and changing the methods of ownership. welcome, gar alperovitz. >> thank you. [applause] if i don't get the mic right, somebody raise their hand so we get it. i'm a recovering washingtonian. at various points in my life, i managed house and senate staffs on these matters and worked primarily at the national level. in my opinion, we are largely stalemated at the national level, and likely to be stalemated for a long time. i think we have to fight the battle on all fronts zeused. essentially, we are a resistance movement at the national level, resisting the cut backs and tendency to throw people out of work, resisting more and more cut backs on environmental protection. we need to do that, but it's very much rem --

reminisce of the other ray. you see corporate power. if you look at the local level, look at the states, where the rubber hits the road, you see pain and development and people in trouble, but you also see out of that process -- and i'm going to talk a bit about that -- things the press simply doesn't cover partly because they don't think it's important or partly because they don't have the resources, but at the very local level and the state level, something very, very potentially exciting is happening. i'll get back to the national level because i think there's action there too, but let me give an example. in the state of ohio, in the city of cleveland, in the neighborhood where the average income is $18,000 per year, there is a developing series of worker owned companies that are pointing at the buying power of the hospitals and at the universities, and they are real

companies. they are not small companies. there's an industrial scale laundry owned by the workers. there's an industrial scale solar installation effort, there's a 5.2 acre greenhouse which will provide up to 5 million heads of lettuce a year, and they are producing one or two more companies a year under worker ownership, and in a way that's real, not token, and it's a way that is linked to the development of the community itself, so there's a non-profit corporation which in part owns the companies so they don't run off once they make money, but help develop the neighborhood, and it is very serious business. they found a way to do that. what is interesting is because of the failure at washington, because of the losses, this pain is driving people to innovate, and note carefully, they are changing the ownership of

capital. these are the 1% owns something like 50% of the investment capital. the 5% own something like 70% of the investment capital. the top 400 families have more net worth, different measure, than the bottom 60%, so a lot of what we're talking about in american corporate style capitalism is who owns wealth, the means the production? who owns that? what you're seeing at the grass roots level, the cleveland example is one of these, is people beginning to say it's not just taxes. it's not just benefits. the name of the game is power and power comes from ownership to in a way that's democratic. that's one form of it. it's very exciting form, and it's not happening only in cleveland. what's happening in memphis -- there's going to be several developments in this area by the

way, following the cleveland model. memphis is doing. there's one in oakland. another emerging in parts of teaks. why? because the existing arrangements don't work, and people, a lightbulb goes on, we do politics wherever we can, that's absolutely necessary, but we're going to have to build from the bottom up also and change the nature of who owns these institutions. let me underscore that. who owns the institution? we just heard a sol e id -- solid discussion on health care. the name of the glam is half the medical system is socially owned. that's called medicare. that's the half that works, sort of. the other half is owned by the private corporations, so changing the name of the institution, not simply policy, is changing whose got power because the insurance companies as long as they are there, they will use their power not only to run that system, but to oppose

anything else so there's a breakthrough happening. i wear two hats. i'm an economist and historian. there's a breakthrough happening which i've never seen in the modern era that people are understanding build from the bottom to move both politics and changing ownership. now what i suggested so far sounds -- there's a couple of these happening around the country. let me give you a feel for it. there's 120 million americans who are members of co-ops in the united states. that's more than a third of the population. you probably didn't know that because the press doesn't cover it. we just saw the power of that. part is credit unions. we just saw hundreds of millions of dollars moving from the big banks to the credit unions. that's a very interesting, if you think about it politically. they are saying no to the banks. think about it institutionally, they are saying, no, let's build up cooperatively owned democracy

institutions. we call them credit unions. you don't have to get airy fairy in the language or wild in the rhetoric. the institution called a credit union is a non-profit publicly owned institution. we have them all over the country. there's 7500 banks institutions. we call them financial institutions devoted to neighborhood development. you probably didn't hear about that. same thing, non-profit, but owned and directed of that neighborhood. there are ha -- there are 4500 neighborhoods developing. some are large scale. 234 newark, there's one that employees 4500 people. there is a ground work that has been developed over time. there are land trusts in which land development is going forward so the profits are captured for some social purpose. many parts of the country, including parts of washington. for instance, the government here builds mass transit. at the exit signs, there's a

huge increase of values in land and housing because people come in and out there. who makes the money? it's all public investment. in washington, one of the areas that got ahead of the game, but you don't see it reported in the press, that money is picked up because the ownership is public and through various forms of land trusts, and the money goes back into the public coffers. what i suggest to you is if you look beneath the surface, you'll see a lot going on that has interesting long term implications, and secondly, it is developing because of pain, and it's beginning to be politicized. people are saying we have to move this direction. almost all of it is green with an environmental political aspect, and it's steadily building up in this trajectory. it's not just the local level where there's no coverage, but there's now 20 states that introduced legislation, which is

for single payer health care programs. some will pass, some won't. there's a build up if it doesn't happen at the national level, we build it at the state level and again because the pain is growing. the same is true with state banks. there were 14 states considering legislation for state banking, publicly owned banks like the bank of north dakota, which is a publicly owned bank that's been there since the beginning of the century, so it's a popular owned structure, highly efficient, highly popular, ect.. my own state of wisconsin is the state where there is a small publicly owned insurance company to be built upon as well. just trying to give you a feel -- i have a book called "america beyond capitalism" coming out, but it reviews this under brush that is building up. i am not interested in experiments. i'm interested in the developing trend that begins to build power

at this level tieing it to new strategies, and that's what is intriguing about all of this developmental trend. let me come at it from a different way. what you're seeing is a change in the metaphors and a change in the idea about what an economy is. most of what we've been doing so far is a corporate economy with an attempt to hedge it in, regulate it, tax it, maybe put -- we didn't talk enough about trade and how to restrict trade with jobs going overseas, but the central institution is the corporation, and what you begin to see is a different, different model. that is democracy ownership of different kinds at different levels. that's tremendously important because it begins to give people an idea, and it's slowly building power, slowly and steadily, and in my judgment continuing to build power as the pain continues. if you look at it historically,

the great movements had both something at the grass roots level, most of the things that happened in the new deal were developed in the exactly the way i'm talking about. they were developed at the state and local level first. they became the models and principles when the moment arrived politically to move it to the national level. think about what i talk about with the models emerging and discussed. it's on a website called community-wealth. see it not just as models, but if you do larger extensions are likely to become the basis of national movements when we get that power built up over time. it's not simply grass roots stuff. we're generating principles and strategies, and people who know how to do new things are also developed in this way. a little further -- how many people know that 25% of the electricity generated in the united states is done by either

municipal ownership or co-ops? 25%. that's an extraordinary value. again, you don't see it in the press. another example, these are not marginal efforts already and can be seen as the building up of power at that level. let me make a couple more suggestions. we're getting close to the time where we should cut back, but historically what you saw in the early populist and progressive era is that institutions are critical to political power, and to the build up of political power. what do i mean? small farmers as institutions, they were the way the economy of the farm economy was built with a basis of pop pew lism. without the small farmers, you didn't have popularrism. until recently, progressive politics was based on unions. sadly union structure and power is down from 34% to 11% or 12%,

and in the private sector, that's 7% holding the line and build, but that institution up against corporate power is a declining power, so either we build new institutions, not just politics that begin to open the way for a new direction and new vision, democracytizing ownership is implicit in the idea of the 1% and 99%, a new vision, but also hard headed examples and hard headed policies that overtime we begin to build. i say if you want to play, if you're serious about the game, is price is a couple decades of your life. that's what the populists and progressives did. that's what this is all about as the stagnation and decay goes on, building these new trends both politically and institutionally. let me open up another dimension for a naiver of it. when the next financial crisis

comes, i said when, no one disputes what i said. it's almost certain there's a further financial crisis, and the big banks come back to the trough for more money. when that happens, we'll break them up, maybe. we had 33 votes in the senate. when we break them up, they'll get back to the and try to do it again. there's no doubt they'll try to assemble. we say they are gathering, and joint ownership by workers, that's what we've had until recently, still do have in parts of gm, and when the next big crisis happens, then the money was put in from the taxpayers to make them profitable at a loss to the taxpayers, and they were sold off to a private investor. next time around, if the ground work is laid and the development of the ideas and the politics, there's no reason we ought not to take them, keep them in public, and build mass transit, high speed rail, and put the people to work. i'm suggesting a longer term

vision that both stops what's going on as best you can and rebuilding from the bottom up. what i'm suggesting to you, 24 is the hard place for all of us. think about it historically, there's a realistic possibility, not a fantasy of building it because it is being driven by necessity and pain as the old system decays. one of the problems is us. we don't take seriously what we understand we want. we try to resist rather than saying how do we build to change the system? really. one time word, and i think kevin's beginning to get nervous on time. one final word, and it's the way i think about this. my heros in all of this are the civil rights leaders in mississippi. in the 1930s and 1940s. i have great admiration for people in the 1960s, but what

happened in the 1930s and 1940s in the dark difficult times in a state like mississippi was laying the ground work for what came later. it's easy to join a movement when it's moving, but the hard work is building these things that become the preconditions of the next new deal or next transformation or preconditions of an america truly beyond capitalism and also beyond the state socialist models which we know are also decadent. we're creating something very new, decentralized, very exciting at the grass roots level if you peek about it. www.community-wealth -- it's surveying this stuff. it's a web page we run, and hopefully my book, "america beyond capitalism" gives you a better idea of all of things i'm saying all too briefly. thank you very much.

[applause] >> we don't have time for questions, sorry about that. democktizing the economy is a central part of what we're working towards. it's participating democracy versus concentrated wealth. that's what it is about. it'soureconomy.us. put in the economy you're see stuff by gar, and there's a conference in wisconsin where there's a series of what that economy looks like. you can get detames on it there. on freedom plaza, there's a lot going on in a few days. tomorrow, we have first in action. this will be used 234 this -- this house is used in the foreclosed house. we have action at fha calling to reduce mortgage to the real value of homes. 28% of americans are underwater on their mortgages. bankers are profiting from the housing bubble. the bubble burst, and people are still paying the price. that -- the bubble was created by the banks, and people

shouldn't be paying the price for it. we advocate for reduction in mortgages to real housing levels, and that would do a great deal to solidify the economy. we're working on that. tomorrow there's an action against the epa across the street. there's two whistle blowers coming in, and one went to jail for blowing the whistle. it starts at 9:30. noon is the epa rally, and protesting the epa symbolizing the people who died because president obama was not aggressive on the smog rules. we have stuff on al teshtive banking, banking when you get credit for volunteering, and seek volunteers to take care of work you need to get done. that kind of banking system as well as a local currency. we have be more notes in baltimore. there's currencies around the

country. there's a session sunday as well. there's a lot going on. see it on our website occupywashingtondc.org. sign up there, get involved there. there's information at the information table behind here if you are new to the plaza. take that. i want 20 thank you very much for participating in this occupied -- actually liberated super committee hearing, so thank you all very much. we do have -- we do have one more -- we do have one mr. speaker who came in from michigan. he was not on the agenda, but i want to add him. it's john bolenbaugh, an environmental activist trying to uncover the michigan oil cover up. i'll let him speak. thank you. >> thank you. i'm the whistle-blower for the michigan oil spill. i worked for a company called

embridge, and we were being told to cover up oil, put grass over it, dirt, rocks, and i couldn't sleep at night so i reported it to the epa. the epa did nothing. two weeks later after i kept documenting this stuff, i went to the press, and then i went to the head of the company that i had in front of me, and i told him i wasn't going to let them do that. that was my hometown, battle creek, michigan, and i was fired the next day for it. i'm a union worker. i'm a navy veteran for a bronze star, and i will never work for a tar sands pipeline. this is why. [applause] thank you. the tar sands pipeline, we just had 12,000 people just circle the white house the other day, and it was not on the main national news. it was the most important story in the entire world yesterday,

and it wasn't on the news because a lot of the reporters and news stations are bought by the oil companies. i had two death threats, four slashed tires, brakes cut twice, scar on my head for an assault. a foreman said he has more money than i can sue for. i will not quit. i'm in michigan right now videotapes hundreds and hups of sick people. we've had dead people. we had children born deformed. there's people with seizures after the spill, never had them before. we have people with respiratory problems. it's horrible, and i have tried to tell the public in my -- i've been on every news station in michigan, but it's not gone national, and i don't understand that. they don't want to tell people about what these oil companies do and the sick people. tar sand oil is 80% more toxic

than normal oil. i am not against normal crude oil, but tar sand oil, it takes 400,000 gallons of water a day to abstract it from canada. you can never reuse that water again. it's done. done. then, they are trying to build a pipe right now through north dakota,south dakota, nebraska, oklahoma, and texas. if there is one leak in an aquifer, you're done. there is no more water in texas if you have one leak in that aquifer. i mean, it is that bad. their own msds sheet says this kills you if you breathe it in or swallow, and they are about ready to open up the river, the kalamazoo river in michigan, and kids will get in there and oil pops up. i know that for a fact. [no audio]

we have videos on youtube. it's online. i'm going around the country trying to tell the word about what's going on there. i need people to tell their friends and to go to youtube and watch the videos. you don't have to believe me. i have documented proof. i have 70 edits videos on there. i put 2200 hours of my free time, sold everything i own to do this, and i am not gaining anything except for losing a $2300 a week job because i report the this. my entire family has not worked since this. anybody that works in the oil industry that's related to me has not worked. this is how powerful they are. this is how bad they are, and they don't even want you toe no -- they didn't evacuate the people in my community. we have 40 miles of river con

tam enated -- contaminated. it's supposed to be a 1,000 feet evacuation. they did not evacuate anybody. these people breathe in these chemicals, and sometimes it takes a year before you see signs of sickness. companies get you to sign off for $2500 or some are $too 250* for an air pure fier. you sign up, and now you lost your rights because they tricked you. we went to congress, and we had hearings, and they said that these oil companies should not have done that. they must let them, they lied to them, and i'm trying to do something about that, trying to change policies and stop the tar sands pipeline because whether you believe it or not, china has bought a big stake in the canadian tar sands, and we are going to build this pipe to go

to the gulf. it's going to texas. we have already said our military will not use this oil. emissions and carbons are too high. if our military is not using and our cars are not going to use it, we're going to send a lot of it to china because it's easier to come through us to get it there. they use it for their military because they don't care about the emissions and the carbon, and now we're going to increase their military, and some day, they are so big, they are well over a billion people, they are going to run out of area, and they are going to say we need some land for our people, and they are going to -- there's going to be a war because of it, and what are we going to do when we supplied them for ten years of a major source of oil because, and then when we have that pipe coming through our land, it pollutes us and kills us slowly. there was a pipe last year i worked on for the transcanadian pipeline. there was 12 leaks in one year,

12 leaks, talking about 400 gallon leak. hi a million gallon leak in my town. oklahoma just had a still. new york had a spill. chicago had a spill. michigan had the spill. i mean, this -- it's traveling around the country, these tar sand pipelines are like sand paper through the pipes, and that's why they break. we need you to just watch the videos, spread them around. i'm trying to help the environment. i'm trying to help the union members with jobs and other sources because, i, as i said, i will not work for a tar sand pipe line, and anybody that does is going to kill america slowly over the years. i'm trying to do something about that. i love my country, and i will do anything. i'm telling you. i have a bronze star for saving a man's life. i will do anything to protect my country, and i am right now doing everything that i can to protect my country one person at

a time. thank you. [applause] >> again, thank you, all, for coming out today here in freedom plaza. we try to do education as well as resistance, so form is resistance, the federal, fha is doing a morning underwater action as well as epa whistle-blowers here, then going to the environmental protection agency talking about weakening of the air standards is actually killing people in this country. this weekend, on sunday, there's workshops on time banking and local currencies. check out the website often, occupywashingtondc.org or october2011.org, and join us on the plaza whenever you can. thanks. [applause] [inaudible conversations]

[inaudible conversations] >> on this vet rans' day, we're visiting the korean war memorial at the washington mall in washington dc. it was dedicated in 1995. a larger than life squad is on patrol dressed in full combat gear. next to them, a 164-foot granite wall with others etched into involved in the korean war effort. here's a look at programs across the c-span networks:

>> extremism in the defense of liberty is no vice. [cheers and applause] let me remind you also that moderation in the pursuit of justice is no virtue. [cheers and applause] >> he lost the 1964 presidential election to lin don johnson, but barry gold water's ideas galvanized the conservative movement. he's featured this week on the contenders live tonight at 8

eastern. >> between 70% and 80% of native americans living on reservations are unemployed. according to witnesses at a senate banking, housing, and urban affairs hearing on economic development in indian communities. it was noted that federally operated community development funds work well to improve

tribal economic stability. this is about 90 minutes. >> good morning. i'd like to call this hearing to order. during my time in congress, i have enjoyed a strong working relationship with the american indian tribes in south dakota and around the country. i advocated for policies to help improve the quality of life for american indians. while progress has been made, many native communities continue to face significant challenges including staggering unemployment rates, inadequate health care, unsafe housing conditions, high crime rates, and educational inequalities. this is unacceptable. as far as small businesses goes, there's a stop towards

increasing employment opportunities and improving also economies throughout the country during this difficult economic time. small business growth in indian country is no exception. encouraging them to start up and growth of a native american owned business is important to me as chairman, and that's why i've called this important hearing and invited all of you to testify here today. for many years, i have worked to ensure native communities in south dakota and across the country with adequate infrastructure in place to foster an environment where economic development can take place. for being an original co-sponsor of the legislation that created the block grant for housing to helping fund the rural water system to supporting travel bus

transit programs. today, the committee will examine what whajs continue to -- what challenges continue to hinder economic growth in indian country including lack of access to capital, small business lending, financial education, and support for start up businesses. with unemployment rates reaching an astonishing 80% in some areas of the indian country, we must do better to address the problems that causes persistent cycle of unemployment. while it is easy, sometimes easy, to become discouraged when considering all the obstacles that face communities, we will also hear about the great work so many are doing to help address these persistent problems. in south dakota and other states, there are many small business owners, community

developed institutions, community banks, and credit unions, and dedicated public servants working every day to improve the economic climate and tribal lands. just this past august, i had the honor of visiting the cheyenne indian reservation in south dakota where i was able to hear directly from small business owners about the challenges they face and the important assistance they've received from the four bands community fund. leaders of these small businesses, ranging from lakota archy demonstrated the spread of how important cfti programs are

to the country. i am pleased to be joined by such a great panel of witnesses here today, and i thank them for being here. i also want to acknowledge and thank senator akaka. we are all fortunate for his service on this committee, as chairman of the indian affairs committee. i'm prod to serve under his leadership where we've considered many of these important issues. i now turn to ranking member shelby for his statement. ..

the average poverty rate for indians on reservations is 28% compared to 15% for other americans. despite some well known successful gaming operations and other business ventures a majority of those living in the indian country are still struggling. the economic development is experienced by some tribal governments have not delivered improved living standards to all who live on the reservations. unemployment remains high and actress to capital for business formation is ritual in nonexistent. much of the research and work our panelists have focused on over the years highlight the inherent difficulty of doing

business on reservations. due to the unique relationship between american indians and the rest of the population of bureau of indian affairs, such an arrangement requires the bureau approves these development efforts a tribe seeks to undertake. businesses seeking to locate on a reservation must face murky regulatory waters in dealing with the tribal government and the bureau of indian affairs. additionally each reservation is governed by a unique set of laws in court. the patchwork of legal rules and regulations has discouraged business activity and reservations phosphorus -- is specially by financial institutions. the problem is made worse by what some describe as casual approach to the will of law. bank lending on some reservations find they have no recourse when someone default on a loan because tribal courts enforce the time track. these legal and regulatory obstacles have hampered economic

growth. i hope we -- what we learned today, what steps can be taken to alleviate these problems which have impeded economic development in indian country. thank you, mr. chairman. >> thank you, are there any other members who wish to make a brief opening statement? >> if i may? >> senator tester. >> thank you for calling this hearing together. i want to welcome the whole panel. there are two people from my home town. thank you for being here and for your testimony. i also want to thank you, mark tilsen. your responsible for these. i don't know if adam healy got you to come. i haven't heard your testimony but you can come back anytime. i want to thank you all. economic and job creation of a top priority and they are important in every american community and indian american

and any country is no exception. like many places in the country has its haves and have nots. handful of tribes located in population areas have been wealthy with casinos. on the positive side they used federal incentives to do what congress intended and allow them to make up gaps in services left by inadequate federal budget. on the negative side too many people think gaming tribes in indian country and they are not. the rate of unemployment, poverty and vast majority of indian country are higher than the rest of the nation. in some communities many in montana, we see unemployment rates as high as 70% and lack of private investment is crippling to get those numbers down. unfortunately the tough economic condition this country -- indian country is living through it. challenges stem from many sources. rural isolation, let of

institutional investment and poor health care, inadequate staycation and institutions and some are flat cheated out of their opportunities as experts describe as a cycle of poverty. rather each new generation building on the past, the vicious cycle repeats itself over and over again. prevents american indians from achieving their full potential. in this cool aspect, this crew cycle affects almost every aspect of american indian life. tribal members have told me they don't have much to lose. there's not much hope. hopelessness and despair affect kids and adults struggling -- suicide and public safety issues and a lot more. where there are challenges there are opportunities. indian country is full of opportunities. they hold great potential for traditional and renewable energy. they have potential for agriculture, agricultural terrorism, government contract and small business and in many

cases private investment to capitalize on opportunities and it is not there. we need to figure out ways to make that happen. tribes need to adopt uniform commercial code and reliable filing systems that will give outside investors the confidence that they need. they need consistency in government. if they are going to succeed in the world today and create jobs and move that unemployment rate down. i look forward to hearing from the witnesses today and talking to them about potential solutions to making inroads to investment in indian country. thank you for being here. >> senator berkholder. >> tribes in the northwest and oregon have long been tied to timber fishing industry and

other natural resource areas but only a few tribes still have the timber land base and for them they are working on diversification for other groups that do not have that base. any form of tribal business that could provide jobs and economic development. one bright spot for our state has been business and entrepreneur real network. that program has established a number of small businesses in partnership with a fair number of banking partners from u.s. national bank but we don't have enough bright spots in the economy of the native american communities and i look forward to learning about the experiences you are bringing here today. thank you for coming to dc to address the committee as we wrestle with this. >> thank you all. on want to remind my colleagues the record will be open for the next seven days for opening

statements gathering materials. now i would like to briefly introduce those who are with us today. i am proud we have two witnesses from my home state of south dakota here today. of course our first witness is mr. mark tilsen, co-founder and president of native american natural foods located in south dakota and hybrid in the reservation. in 2006 headed by american national foods, a protein bar made of buffalo and cranberry. he makes other buffalo food products. thanks for being here today. i must say i enjoyed a few bars over the years. i am pleased my good friend senator tester suggested mr. martin olsson as a witness.

martin olsson is president of legal bank located on the reservation in mantegna -- montana. the confederated -- the tribes -- is one of only a handful of native controlled banks in the country. i am delighted tanya fiddler leaders the executive director of the community bank fund, a native -- on the chin river indian reservation in south dakota today. it was created in 2000 and has become the leading organization on the reservation in the areas of small business training and financial education.

thank you for your insights. mr. disidarro is an executive director of the native american science officers association. the association works to improve the quality of financial and business management of charitable governments and their business entities and supports native american initial progression. sue woodrow, community development advisor at the montana branch of the federal reserve bank of minneapolis. sue woodrow has worked at the fed since 1990 where she has focused on community development with a focus on indian country, legal issues. we welcome all of you here today and thank you all for your time, especially those of you who have

traveled a great distances. mark tilsen, you may proceed. >> senator shelby and members of the committee, i am impressed by your understanding of the challenges we face and from your opening statements. native american natural foods is located in the middle of pine ridge indian reservation. we are a new approach to economic development and i want to say we grew out of the sea bfi movement. kyle is the location of the first reservation based cd f i formed in 1985. when it was created there were two native american businesses and now there are literally hundreds of native american businesses. we have a reservation based chamber of commerce with several hundred members that have grown

out of the cds 5 movement. the movement provides the essential first round for first-generation entrepreneurs for financial literacy and did most of the large land-based tribes is the only commercial lender of any kind. your support of the american indian cdfi program are essential in their growth is essential for the future of economic development. we're excited on public ridge we have a new trial transportation program this committee supported. this new and growing and helping to become another central part of the infrastructure, have a public transportation system on the reservation that is extremely large. your ongoing support is critical to that and i want to thank you for your support of our travel transportation program. i am going to refer to tanya fiddler on the particulars of

the cdfi and talk a little bit about what we are trying to do with native american food. my co for read myself:hunter who has been in business over the years and wanted to be here but in another conference have been involved in community development and economic development project on indian reservations sincerely 70s and 80s and involved in creating the first radio station on reservation and helping build the first trial call. the reason i tell you that is i want you to know we are experienced entrepreneurs who have worked very hard to build economic development in the community. what we have learned with native american natural foods, the products you have on your desk is the tonka bark based on the traditional food. that product is an example of indian entrepreneurship created by a grandmother several hundred years ago who understood you could preserve meat naturally. that product is now the number-1

selling dried meat snack in the natural food category in america. all across the country it is in thousands of stores and is sold both in health food stores, 275 in the reservations and sold through the internet. what is significant is we have one of the most economically and geographically isolated places in the country and build a national brand. this year will gross close to $2 million. the challenges that means for us is we try to build this whole brand but we are not able to create any equity to keep up with growth. we had a challenge tried to match -- we are unable to qualify for a cia loan. when we started the company in terms of exponential growth we can't meet 20% equity requirement and there is no provision to allow that to be raised. we use a lot of isolated

reservation -- a lot of federal programs. one of our investors is the empowerment that manages easy funds in the troubled charter. what happens there is they are forced a position as non-profit to guarantee loans to qualify for sbas. the dots don't connect. you can't use the sba program. when we bring in outside equity from a social investment community we are told you can't use troubled investment or social investors because they are not making a pure financial decision even though the only ones with the courage and dedication and commitment to invest in these communities and create opportunity are the youth. a lot of dogs don't connect even though there are resources in the system, close to $30 billion in the job act for small-business but every small business will tell you there isn't any lending going on and their needs -- the jobs are not

connecting in that aspect. on the cdfi side there is no guarantee for people who invest in the cdfi many people want to invest but we need to create an opportunity to increase that investment. the cdfis are essentially important on that first ring but we need them to have more resources and more power to help us as we try to grow these companies to be exponentially successful to be large enough to have a real impact on the unemployment and economic needs of the community. i am running over my time. >> thank you. martin olsson, you may proceed. >> chairman johnson, ranking member shelby and members of the committee. thank you for inviting me to participate in this important hearing on economic development in indian country. my name is martin olsson and i am president of eagle bank in montana. the confederated tribes recognize the need to support

credit availability for their membership. 40 years ago tribal credit program was created with a modest investment to assist troubled members with small balance, short-term credit needs not adequately addressed by banks and over the years that revenues retain growth of funds. this program has grown into a $45 million fund providing short-term unsecured educational homeownership and commercial loans and its reserves have grown. the program has returned dividend. the tribes also have a smaller fund for small loans and a grant program patterned after the montana department of commerce equity fund. the tribes are dedicated to providing credit opportunities and branch to tribal members that small and start up businesses that may not have other access to capital. after it nearly two decades of

research and discussion the tribes organized -- to charter eagle bank in 2006. the bank is charged with traditional financial service for all residents in businesses for route the reservation and to provide services for the underserved such as small dollar loan deposit accounts, check cashing that many banks no longer provide. eagle bank also works with tribal and other funding programs to leverage private -- credit for small and start a businesses and surge as an adviser and grant reach your for the montana department of commerce indian equity fund. tribes grant programs and the tribe's economic development community. eagle bank has worked with programs offered by the fdic during the crises. to bore very unlimited fdic coverage on non-interest bearing

accounts has provided significant relief maintaining deposit accounts for the tribes and i hope this temporary coverage will be made permanent not only for eagle bank's somewhat unique requirements but also for the smaller community banks's ability to compete with too big to fail institutions. i also hope the fdic will consider a limited coverage on interest-bearing balances on a fee basis for those willing to participate. lacking an improved fdic coverage for the return of bond coverage, the majority of tribally owned banks earning assets may be required to be invested in securities, restricting funds available for lending. access to capital on reservations has been an ongoing problem with three primary challenges limiting that access. uncertainty created by tribal governments willingness to

support capital, access to capital, uncertainty created by lack of consistency and secure transactions and financial literacy. the major impediment to access to capital is the uncertainty in lending within the jurisdiction of a sovereign entity. some tribes are very proactive in developing statutes to support lending and have consistent enforcement through their tribal courts. other tribes continue to maintain a more protective environment for their membership. tribal governments need to understand in order for capital to be available, lenders must be assured of a consistent recourse in the case of a default through an independent and unbiased tribal court system. recipients of the benefit of the capital must be accountable to retain their debts. troubled governments also need to develop and adopt uniformity

in regulating transactions secured by real and personal property as they exercise their sovereignty. financial literacy is important on reservations with no established bank relationships and low credit scores. many people fall prey to predatory lenders. in conclusion i believe there are opportunities for economic development in indian country but significant challenges remain. confederated tribes approach including chartering eagle bank is making the difference on the flat head reservation with chartering or purchasing a bank may not be appropriate for many tribes. thank you. i look forward to your questions. >> thank you. tanya fiddler, you may proceed. >> good morning to chairman johnson, ranking member shall be and the other members of the senate. as senator johnson said i am executive director of security

funds nationally recognized native service river reservation in north central south dakota. also wanted to note i am chair of the south dakota indian business alliance and chair of the native network. i will begin by saying thank you for the opportunity to appear before you on behalf of the people and organizations that are working to create native private-sector economies throughout south dakota and reservations nationwide. i prepared written testimony to address the opportunities and challengess for economic development from the perspective of native cdfi. this is an undertaking because of the concept landscape we're working in and providing access to financial products and services and development services and we have to factor in the economic conditions and infrastructure limitations that exist on our reservations and throughout many rural communities. our purpose is to strategically respond to those factors meaning people where they are and providing a pass for them to reach for their dreams.

in the time allotted i wanted to lease a three things that i think are important for the committee to understand. the first, the mission is to create economic opportunity by helping people build strong and sustainable business and increase financial capability. we do this by taking an integrated asset build an approach to entrepreneurship in an area of high poverty and low in, and remote access. i am river encompasses counties in the nation. 62% of residents below the poverty level and people travel 50 to 100 miles on poorly maintained roads to access business services. since their inception we provided $3 million in credit building and microenterprise and small business loans to expand 100 businesses on the reservation. 300 people completed the business training class and hundreds more attended talking circle workshops to develop skills and capacity for personal and business development. because of the lack of ownership, reservation we have

an it a program that invested $300,000 in customers' who have invested in themselves by completing training to attain assets by homeownership and higher education. it is the go to organization that creates private-sector economy. we incubate the cheyenne river chamber of commerce and conduct market analysis of the reservation economic opportunities for south planting to help business and loans identify correct sectors products and services needed locally that could be provided by local entrepreneur. we can't afford to speculate on the potential market opportunities when people's livelihoods are at stake. this is the community development side that builds the human capital. the financial institutions side leads me to my next point. with great thanks to the treasury native initiatives program, if it weren't for this none of us could be doing this

work with the success we have. many of us in america believe entrepreneurship sustained a healthy economy but in many cases banks cannot lend in remote areas and sometimes they don't exist in native communities as we heard earlier. my number is 86% of reservation land the have financial institutions within their borders. we're fortunate on cheyenne river. none of them report credit history to our clients. that makes it more challenging for business to start up and secure affordable capital. we invest in what appears on paper to be very high risk low profit target markets but to date we have only written 2.8%, $100,000 over $3 million in lending to the poorest of the poor in the country which is wonderful for us. we see strange and assets in our people developed in turtle systems and external relationships that mitigate risk and help support the creation of

400 jobs. this is important. if banks can't but we can we are even more vital to a diversified economic strategy in reservation communities. our tribe support our work for reservation wide financial literacy and a entrepreneurship in homes and schools and business community. the tribe is the major economic developer and our work complements their efforts. finally it is important to note we are seeing results. i will tell you the economic momentum on the reservations in south dakota that have native cdfi is two or three times that of south dakota at this time of recession. we are playing catch up so median household incomes are less than half of the national average but 55% increased median household income in arbitration communities. i will leave it there. >> thank you. mr. desatorio, you may proceed.

>> thank you, chairman johnson and members of the banking committee for hosting this hearing. i know how important indian issues are to the committee and we appreciate you addressing the economic challenges and opportunities in indian country. my name is dante desatorio. i'm executive director of noaa which has the privilege of helping troubled communities grow their local economies for the past 29 years. we do that by bridging the gap between the banking community and investment community and indian tribes and do that by building capacity and working directly with tribes to develop effective economic policy. i want to use my time today to address three specific low-cost or no cost policy recommendations. the first two are designed to get rid of uncertainty and bring capital into indian country and

the last recommendation is designed to look at some of these barriers and challenges that are getting in the way of tribal governments being able to grow and develop economically. overpass three decades that we have been helping tribes we have seen industries grow and mature. we have seen tribal communities prosper and we have seen a americans having the opportunity to move home to find jobs and more importantly move home to professional careers on a reservation but we still have a long way to go. we all know the statistics. the american indians have the highest unemployment rate. we are still at the low end of just about every social and economic indicators including having the highest suicide rate. that is a true sign of lack of opportunity. as a nation we struggle with sustained economic downturn and the effects of a stalled economy and are now living in the age of austerity with congress having

the challenge of trying to cut another $1.5 trillion from the federal debt. this all makes finding solutions even more challenging and -- three immediate solutions come to mind. the first solution is for congress to remove the uncertainty created by imposing essential government functions test when tribal governments want to raise capital through the tax-exempt market. every other government uses its to affectively but when congress authorized tribal governments to use tax-exempt debt to raise capital they put in a central government function test and did not adequately define the term. because the language is unclear and the regulatory agency interpreted congress's intent to -- too strictly, capital markets your clear of trouble that in creating uncertainty with higher risk and higher costs. the second solution is providing

clarification on how tribes are included as government would comes to accredited investors. is important that indian tribe specifically listed as government and securities and exchange commission definitions of government bodies in regulation. the current definition is extremely broad and because tribes are not specifically referenced in the definition, we see the financial markets are hesitant to extend the benefit of the doubt and regulatory agency is not willing to interpret tribes as fully included. fixing this oversight is simple and will raise capital for same way as any other government. without that the administrative costs and legal burdens this helps tribes held from self. finally i want to discuss supplementing the existing regulatory reform and business development act. this act provides the secretary of commerce convene a 40 to

perform comprehensive review of the laws including regulation that stand in the way of investment and development on indian land. the of 40 terminates when the report of recommendation is submitted to congress meaning there is no added bureaucracy. this type of report significantly impact the development on tribal land. it could address things like probate, leasing, appraisal, and some structural impediments that senator shelby mentioned in his opening statement. we all recognize these difficult and challenging times but we also recognize this isn't the time to throw up our hands and do nothing. it is frustrating enough for native people and all americans to deal with the impact of an economic downturn but as we have seen in the past even more frustrating to see the rest of america recover without indian tribes. we need to support programs that work and clarify language in

laws and regulations that don't. it is clear when tried succeed economically so do local and state governments and we are grateful for the committee for dedicating the time and attention to this matter and we would be happy to help as the committee moves forward to implement these recommendations. >> thank you. miss woodrow, please proceed. >> chairman johnson, ranking member shall be and members of the committee, thank you for this opportunity. my remarks will focus on the efforts of the federal reserve bank of minneapolis to promote travel infrastructure development that will support private-sector business growth in native communities. i want to emphasize these remarks reflect my views and not necessarily those of others in the federal system. let me explain why the federal reserve is involved in this work. the mission of community development or community affairs program is to support the federal reserve system economic

growth objective by promoting fair, impartial access to credit and financial services including low and moderate income communities. the minneapolis federal reserve bank district includes more than 40 indian reservations. accordingly for the past two decades we have sought to assist native communities to overcome the significant barriers they face at credit and financial services. as martin olsson noted in his testimony, one significant barrier is the lack of or adequate tribal laws for secured lending. by secured lending any extensions of credit collateralized by a bar were's personal property which includes anything that is not land for fixed to land. these types of transactions in all state jurisdictions are governed by article ix of the uniform commercial code. state law generally does not comply with travelers diction's and we have found that across indian country with a handful of exceptions secure transactions

law is largely in complete, outdated or nonexistent. the result is lenders face uncertain rules and higher risk, actual or perceived doing business in native communities. consequently loans and other business deals are frequently made at higher costs or not at all. to address this the federal reserve bank of minneapolis provided substantial assistance to tribe across the country that choose to adopt uniform law commission secured transaction, comprehensive law that substantially similar to state law that specifically is tailored for troubled environments. we have also helped facilitate several rival compaqs that enabled tribes that adopted the model to utilize these filing systems for the filing under tribal law. these arrangements complete the tribe's secure transaction systems in a manner that offers

certainty and reliability for lenders and borrowers while at the same time with tribal sovereignty and tribal there's diction. we are also involved in working with the uniform law commission to launch an initiative to draft model trouble probate code to help ameliorate significant problem of fractionated interest in indian owned a lot of land. this has the potential to eventually free up and told a land value for used as collateral or development. again maintaining tribal sovereignty and tribal jurisdiction. to move forward this initiative needs funding to ensure it has broad participation from tribes and date of legal organizations. the minneapolis federal reserve works closely with many indian country partners and others to provide native entrepreneurs a voice through broad cross sector coalitions including the montana, south dakota, minnesota

and north dakota indian business alliances. these alliances collectively have significantly helped elevate the dialogue about the importance of supporting data of entrepreneurship and private sector development in indian country regionally and nationally. because these initiatives are recent or pending and because good data on tribal business environment and outcomes are lacking, we cannot early access their adequacy at that time. we are monitoring progress and in time will provide feedback on which approaches are associated with improved economic performance and small-business development in indian country. in closing many tribes, native organizations and indian entrepreneurs have been working diligently to meet these challengess but much remains to be done. with continuing support for native grassroots leadership and appropriate outside assistance, i see many opportunities for tribes and their citizens to

further develop the legal and civic institutions that will support small business growth in indian country. thank you. >> thank you. thank you for your testimony. as we begin questions we ask the clerk to put five minute on the clock for each member. miss tanya fiddler, you point to the impressive economic data showing an increased number of employed individuals of medium income on the reservations in south dakota over the past decade. this sustains growth and leverage for capital investment. >> the capacity of the community is coming up and people being

introduced into banking, savings and changing their financial behavior's. folks are starting to invest in themselves but also their first introduction to microloans to get the equipment that could be collateralized on larger loans. the other trick to this is a different way of thinking about it but financial literacy and entrepreneurship development reintegrated into k-12 school system and we are replicating it on pine ridge reservation so that is a funny observation. we think of sustainability and the skill level of every kid on the reservation we impact thousand children a year with financial literacy and entrepreneurship in their core subject areas so doesn't push against no child left behind or other requirements in education. we made sure our curriculum meets education standards so we're hoping we work ourselves

out of a job and skill levels come up and people start to change behavior is. the abcs of financial literacy to change behavior and realized they contribute to the economy. the research we have uncovered with business market, institutional marketplace with government and school systems where there spending money to get people to bring the money back home as the tax revenue increases for the tribe and the economy gets more functional and our role would be to back out. people have credit histories because also warehouse through non-profit collaboration with the credit alliance to report credit histories on our clients. now they are actually doing some credit as an asset and building accredit identity that will help them access affordable product so there is a number of different ways we look at this but i think strategically identifying the opportunities for entrepreneurs did fill local

gaps. the next step connecting them regionally and hoping the reservations are seen as contributors to economic development strategies, not just isolated places but more engagement and on the part of wrote sustainability for us means national dialogue on job creation includes rural places as much as urban centers where most jobs occur but we have to look at the -- what we are contributing for infrastructure development and energy highways that will impact us locally because we do have those assets and those kind of things. >> mark tilsen, you encounter difficulty finding a lender willing to loan native american national foods money. to increase the company's capacity to increase product

demand. how critical was the loan you received from the cdfi to a business meeting increased consumer demand? >> our local cdfi was never able to reach the company and if it wasn't for the cdfi clearinghouse out of los angeles in cooperation with the american indian storage of foundation we would have had to close down last may because we didn't have a way to access the money because of the problem of not being able to use the federal guarantee on the fbi side or the b i a side or the dogs didn't connect. we created a complicated transaction in which the tribe made a donor designated granted to the american indians to rigid foundation which is one of the equity investors. they pledge that $250,000 to the

cdfi clearing house in los angeles and that davis $1 million worth of lending. but you got to understand this is a very complicated transaction that we had to do to save the company and that is what i am talking about in terms of a lot of these programs do not connect. i will give you another example. a lot of reservation based businesses we used to work with the american indian employment tax credit but because we have marginally profitable businesses weekend will use it and it is not transferable to minority investors who are much more successful and profitable than us. just by making that credit transferable you create an opportunity to increase investment in equity into small business. there's a series of things like that where we see opportunity

where we just don't -- we spend a lot of creative energy getting these dots to connect. our situation is not unique. i can't tell you about a hotel on the reservation, an entrepreneur trying to open a movie theater. everyone is having for same problem as the first-generation entrepreneurs reinvesting in the community to make it grow into a second level tier. the equity is the big challenge. >> martin olsson, your written testimony makes it clear chartering a bank may make sense for every tribe. can you expound upon what the tribes might learn from experiences in the reservation into determining whether or not it makes sense to charter a bank

and is a credit union easier to charter? >> in the case of the confederated solution of tribe's reservation was open to homesteading in 1910. a significant part of the developedable real-estate is owned by non native americans. you can have less than 25% of the presidents on that reservation claim native american status as heritage in the 2010 census. this provides a broad basis that a bank utilize for gathering deposits and make loans. banks as you well know are somewhat regulated and that may be a topic for discussion down the road. but in those cases you have severe limitations on what you can do in banking in transaction

with affiliate's. if you are on a reservation that is not as diverse, you may not have a sustainable base to support a bank and be able to have adequate lending to generate revenue. i commented in my written testimony that perhaps a credit union might be a more viable opportunity in some of these instances because you are dealing with individuals, small loans and those kinds of things but you are not in a spot that is unique to provide a profit for the bank and shareholder in your regulatory requirements for assisting members in the credit union that appear to be somewhat less stringent than banks. >> senator shelby. >> thank you. i will help move this along. i have nine questions i think

are related to this testimony and i would like to submit these questions for the record. thank you. >> i want to thank all the witnesses for their testimony. i will start with martin olsson. in your testimony you address the technical assistance for entrepreneurs in tribal communities. you point out room for improvement to say the least. one of the deficiencies is some of the folks responsible for technical assistance may not have any business experience themselves which are find unfortunate and that may be an understatement too. can you give me an idea is these folks work for? they work for government agencies or are they private folks? >> in our area we have contract

providers and technical assistance and some tribal employees providing technical assistance under tribal business entities. please don't misunderstand me. the people i know and work with are highly dedicated. they worked hard. they are really trying to do what they are charged to do but unfortunately at least on the area i am familiar with you have a lot of small businesses. what you really need to do is mentor them in understanding how to manage a checkbook to keep track of records for a small business. you don't need to be developing a business plan or chart of accounts or accounting system because the individuals have not grown in their financial literacy to that level. i tend to be a little crosswise

sometimes with providers because i told them repeatedly if they're bringing in a grant application i am charged with reviewing or a loan application, if the information provided is not a business plan the potential recipient has participated in preparing and understands and is able to use that to mark guideposts for his business than it is absolutely worthless. mentoring may be a better way to go if we can put something like that together. not sure how something like that could be organized or funded. >> you answered my second question already and that was if you have any ideas how to put greater focus on mentorship and other folks on the panel have the same experience that martin olsson has. >> i want to add on the other

side of the situation, we are company investigating looking at the new market tax credit but in terms of technical assistance that means we need expertise in integrated supply chain, just-in-time supply chain management to make the next goal and within the current structure resources to pay for those consultants. if cdfi funds have experts to help with exponential growth it would allow us to better utilize tools like the new market tax credit. >> do you have a comment? >> the model is a little different. we have a business coaching model. you connect people with mentors on a case by case basis, bigger business and bigger loans and able to do that so we would be

happy to advise and we have anywhere from five to six native nations that come visit us on cheyenne river a year to learn how we do things because my coaches are low originators and all of the business planning is driven by the client. we don't do for anybody because it is important for them to have the skills and coming out the other side we offer workshops that are specific. we have checked ins we're getting better at doing our jobs with folks. >> the point i find distressing is if we have folks who are going to be successful which is what we are about, creating jobs and successful business interests, no matter how well-meaning they might be and how hard they work, they have to have business experience that can relate with the level of business they're working with whether start ups or expansions like you are talking about. there are ways to help that would be good. i want to talk about property because my time is running out.

trust property is unique to indian reservations. something you have worked with. there are many financial institutions that don't have a clue what it is about. we have had experience through you with one of them and we got the bottom of it. it takes a while. the question is for both martin and su. is there a role for regulators like the fed and the fdic for credit unions in helping financial institutions understand the issues unique to travel community as it relates to trust funds? >> thank you for the question. there's always room on the education front to help financial institutions understand these things. one thing i would like to point out and i will circle back to the uniform law commission's proposed model, we need to begin

tackling these planned issues the we have vast areas of land in indian country that are tied up and unable to use to access credit or for development purposes. this particular initiative will begin to tackle this one small piece which is moving forward to really tackle fractionated interest in a lot of lands. this initiative needs funding to be able to move forward but the intent in our preliminary stakeholder meeting included broad representation not only of federal agencies that are involved in this but also key stakeholders from tribes, native legal organizations and others to come together and work and tackling this issue. i would really look for support for this initiative to get off the ground. it is the critical one. >> from your perspective, regulators have an impact on knowledge about trust funds?

>> there's a definite need for education on behalf of banks that did not participate in trust financing as well as a lot of trouble governments. trust property financing is not currently being utilized. the role and scope of that education is something that needs to be addressed. i am not sure who is best to take that lead. but you know me. i am always reluctant to suggest a regulatory agency providing additional guidance. >> point well taken. thanks. they are great. keep business going. >> senator akaka. >> thank you very much for your leadership in holding this important hearing.

chairman johnson, senator tester and i also served together on indian affairs where we have been examining economic development and job creation opportunities and challenges in native communities. sustainable economic development provides the key to self-determination for indian tribes even though some native communities have seen improvement in economic development opportunities, most tribal economy continue to suffer high unemployment. it is important for us to look at where tribes have been successful and support those efforts because when tribes succeed economically, it doesn't

just benefit their members. it also contributes to creating jobs and pushing local communities and states as well. when we invest in indian country we are making investments that impact all of us, investments that will help us navigate the road to american economic recovery. it is also important to talk about the limitations of restrictions in federal law or a policy that will hinder economic prosperity and self-sufficiency in indian country. to examine what we in congress need to do to remove those barriers. i look forward to the economic development needs in indian

country and surrounding communities. and i would like to ask sue woodrow, federal reserve bank of minneapolis has been proactive in identifying the need in indian country to encourage economic development in native communities. mr martin olsson has testified one of the big problems with access to capital for independent businesses is lack of financial literacy. in your view, how can we continue to improve our efforts to empower native communities to make informed financial decisions? >> thank you for your question. i would agree absolutely with tanya fiddler that the need to

support financial education efforts is imperative in indian country. i know there are a few ways this can be done. first is relief through helping and supporting the development of culturally and economically relevant curriculum for schools in particular for students. continued support for community development financial institutions is imperative. currently it is one of the primary providers of financial education in native communities. support of small sectors, small business sector growth in native communities is also important where we have areas of high unemployment. small business growth will provide jobs, provide opportunities for people to actually work and have an income and have something to financially managed. it is difficult to learn financial management when you have no money to manage. last of all i think -- this is

really from the tribal government side -- to encourage troubled government policy that mandates for requires financial education in the school. >> thank you very much. dr. disidarro, you testified at a recent hearing on indian affairs committee on the impact on the decision on economic development in indian country. can you describe those impacts for this committee? >> sure. first, want to make a comment based on what sue woodrow talked about building capacity and we

focus a lot of effort on building the capacity of a tribal side. organization does that but there's also building the capacity on the other side which is the banking community leaders the investment community and that is part of our job to bring those two together. when we do that we bring more competition and better rates from affordable capital and one of -- is difficult enough to to do financial transaction on its own and like we heard today more difficult in indian country. you have trust land issues to deal with and sovereignty issues. that answers the question of this added uncertainty on the capital markets need to deal with when they deal with indian country and as it was in my testimony today we have that uncertainty when we deal with trying to raise money for tax exempt bonds using the bond market for that. our administrative costs are

higher and our capital costs are usually higher because of that uncertainty. we also have uncertainty when we want to invest and partner with other tribes and paid more each year for the administrative costs. did cartair decision basically adds another layer of uncertainty and another layer of legal costs to our financial transaction and i think besides turning 75 years of federal policy on its head, there is now this idea that you need to have this test for financial firms to do business in indian country. the problem with that is nobody has come out with a firm idea of what the decision -- what drives will be impacted on the decision.

it adds an additional layer of uncertainty. .. >> what barriers do you see that limits access to capital in indian country, and what role does your organization and your individual members play in helping to eliminate these barriers? >> well, i think as some of the panelists have suggested, it is

difficult to set up businesses and access capital on reservations, and you have another layer of issues to deal with. some of the, you know, when there is a study conducted and funded by the kc foundation a few years ago that set out to examine banking on indian country, and it's obvious that indian country is some of the most unbanked or under banked parts of the country, and i think until we get our native consumers and businesses and tribal enterprises in a position where they have competition, where they have different choices for short term loans, home loans, business loan, and enterprise loans, that tribes are going to be if -- in a position of paying for more capital or struggling to make these businesses and enterprises work. our organization plays a role in

trying to bridge that gap and trying to educate the banking community into coming into indian country, and i think one of the tools that we have is the community reinvestment act which tribes are eligible, but for some reason, the bank -- the indian community is not considered a lot of times when banks are making the decisions to invest outside of this specific communities where they bank, so this is a, you know, which comes first situation? we need banks in indian country. we need community reinvestment funds, and we have to continue to educate both on building the capacity side for the investment and banking community and the tribal community, and you know, we're also on the building capacity side. one of our missions, which betake a lot of pride in is to build the next generation of

financial and economic leaders, and we do have programs where we do send and give scholarships and send our kids to lead programs to build leadership skills and we also are working with wall street to give native kids that opportunity to go and learn how things work in different investment communities. it all helps to build that capacity. >> do you see -- do you see them competing with the credit union industry and other entities? >> on both the cheyenne river and pine river communities,

there's a credit union, and we're looking forward for the opportunity to complement each other's work rmt one thing we don't do is take deposits, you know, the credit union model, and getting them up and running. we'll have helpers when it comes to this, financial education that, you know, we're trieding to provide reservation wide, and carry that, the credit unions working in our communities are taking some of that on. they have a different dialogue when they work with the consumer, and we need places where folks can be depositor, and like i said earlier, hopefully their credit worthiness reported out. we gave testimony last year on behaver of native -- behalf of native communities on the look they were doing, and i'd like to send that to the committee after the fact here because there was a lot of recommendations. it's not about regulation and creating more complex systems, but including some innovations

that help people get credit, the banks in my community get credit for their work, in disstressed communities, you know, tagging like that, possible investment that takes place they get credit for, because my local banks don't know they can do that. i don't see us competing, but being ahead in competing in a positive way when we have a better service in a low profit area, i think that has to be considered. it gets all of us performing to the needs of the consumer and that's driving it, not our ideals or top down philosophy. you have to engage and realize what your local community can support and is willing to support and have a conscious in what we do. there's too many payday lenders. they are on main street now, and as much as we do in the financial education side, folks are free to make those choices, but if there's not alternatives for them to develop real banking

relationships, e we do that with the youth, locking them into banks, opening up savings accounts to develop that relationship. coming from poverty, i was not comfortable to going to a bank until my mid-30s. i was terrified of the unknown. we try to do that, complement what we do with the banks and our community with our clients. >> what role does a trust lend circumstances play in developing resources? >> we are the owners of lakota express, and we have a 6,000 square foot paid off building that sits on five acres of travel trust land that we can't leverage to grow our business with. we can leverage the building,

but not the complete asset we've invested in and paid off in ten years. that's one example. the buffalo industry is growing at a tremendous rate right now, but the average age of the buffalo producers is over 60s, and a lot of young people are interested in getting into that, but they can't access capital even if they own their own land, and they don't have the 20% equity requirement to, you know, be able to access that. you know, i think there may be some models to look at like the 8-7-4 loan program that's opened up mortgages for houses that maybe there could be a model similar to that that would allow some kind of leverage to help people get over that barrier. i'm not exactly sure, or looking at creating an equity bank that people could then, you know, use some of that equity, but i also really want to emphasize here

that i -- doing economic development on indian reservation where all the power exists outside the reservation and the historical model of subsidizing businesses, their capital, and labor to move on to the reservation has never worked at wealth creation. now that we have a pool of growing entrepreneurs in indian country, and the age and a growing population in indian country, we really have to recognize that the leadership, the creativity, and the courage is in the indian community, and we have to figure out how to make sure that the minority investor can take the advantage, but the power, direction, and authority both because of sovereignty and because those are the people creating the wealth have to be the ones that hold the power, but we have to have a way to incentivize minority investors whether it's to the tax credit, whether it's

creating some insurances inside the cdfi program, whether, you know, it's structurally within the american indian employment tax credit. it's essential to me that the leadership be allowed to lead. people like tonya and mr. olson who are right there on the front lines because we're often dictated to by all these federal agencies, and you can't get the lines to dot. there has to be from the federal level more risk taking to allow flexibility and allow the leadership. i want to use as an example if you're indulge me for a second. the partnership for sustainable communities, which is our reservation as one of those, is a unique opportunity that gets the tribe, state, federal, county programs to all work together to come out with a sustainable plan, and there's been, you know, it's a great project to people are very excited about it in pine ridge.

it's currently hearings going on in the house side that are going to eliminate -- their going to make it -- the new proposal is that federal agencies will not be able to talk to each other in trying to find solutions to sustainable development and cooperation in that which is the language that's on the house side today. that's the opposite direction that we need to go. if we're going to solve economic development, we need to create more flexibility on the ground level, and the leadership has to come from the people who are actually doing it and reverse this model if we're going from dependency to independence, and i've seen this time and time again, and i'm a big believer this this both in terms of sovereignty, but a use in federal, state, tribal, and entrepreneurial dollars. >> how do you deal with the

collateral you have? do you go to tribal court or state court? and then force the rights? >> senator, where we have a large population that's not native american within the reservation, it makes it a bigger challenge for banks dealing in collection areas. obviously, we are prohibited by inquiring to any nationality, or if you are a tribal member at the time the loan is originated. unfortunately, at the time you end up looking at a collection issue, what we typically do then is to, number one, verify whether or not the individual is an enrolled member of the tribe before we proceed with the collection action. if they are an enrolled member with the tribe, then we do go ahead and use the tribal court system for all collection actions.

if we're dealing with a trust property issue, that is a piece where you know up front that the individual is innative american -- a native american within the reservation. you have to go through a fairly detailed application process and approval by the bia or their delegated authority before you can perfect a mortgage on trust property. fortunately, we have not had to look at cleative action -- collective actions on trust property at this point, so we feel good about that, but if we come to a point that we have to look at the collection action on trust property, that will go through the tribal court system. >> senator akaka. >> thank you very much, mr. chairman. thank you for the work that you

bank to assist tribal members whose needs were not met by traditional institutions. in addition to the programs that ecobank runs, you also observed that the programs that are available for the first time home buyers and students can be effective, so my question to you is how could you expand your coaching services into a more formal program of financial literacy and what would the benefits be? >> senator, one of the premises when ecobank was chartered was to develop financial literacy and work closely with the under bank within our market whether they are tribal members or not. unfortunately, in the current economic environment, our

resources are extremely limited as is our staff time. what we would hope to be able to do is either through increased revenues and retained income or perhaps if there may be some type of grant program available, we would like to be able to offer dedicated staff to the financial literacy and training. we just are not able to do that at the moment, so if you've got some good ideas on how we can increase staff, well, that would be greatly appreciated. >> well, thank you very much. se certainly will -- we certainly will try to work on it. >> thank you. >> can you describe for us the

four bands youth internship program and the benefits you've found by bringing students into this program? >> thank you for the question, senator. so back in the day, it was about 2005 and 2006 when these match savings programs were coming about. our tribe, one of our tribal programs for poverty alleviation wanted to invest in yiewft individual development accounts, but the problem is that the kids need to earn the money somewhere in order for them to be eligible for match moneys. meanwhile, our business community, being low-profit area, can't afford the employees and kinds of things that they need and the wonderful thing about our native business community is they are always giving back whether they can or not. they are a generous place. we matched up businesses with these young people that were needing to earn some money for higher education for the most

part. they do 100 hours of internship with a local business. we pay them a stipend. they save half of the stipend, and many of the kids are saving all of it to go on to college, you know, but it was -- and then there's the teachable moments that includes financial education as part of their internship that they have to do. they have to complete an asset training so if it's higher education, we do have some young single mothers that are looking to get into home ownership through our habitat through humanity office, so they are completing home buyer training, so whatever asset they identify in the internship, they save for, me match, and the businesses get the benefit. many of the businesses don't know what the work force looks like, many of our local businesses pick the kids up after. we have nearly 100 kids who completed the program. most of them made their goals,

are on to college. now, we're studying out to see if they complete it, and the majority of kids are still working on their higher education. our young lady is still working on getting a home for her and her new baby, that kind of thing, so it was an innovative way to address all the short comings we had with lack of jobs and lack of experience, and our businesses not being able to afford taking on the employees they need. they jump up and volunteer to help us out in that way, so that, in a nutshell, is the youth entrepreneurship. >> thank you. >> thank you. >> your success in creating food products, a native american well awareness that feeds mind, body, and spirit is impressive and inspiring. the difficulties you had in secures support to keep your

company alive and growing is sobering. the number of agencies and banks you had to visit is daunting, and if you were to give advice to a native american entrepreneur exciting to start a business in indian country, what are the important lessons you could provide based on your experiences? >> focus and flexibility. you know, we started out with the model of -- we launched a natural food company in the middle of a food desert on an isolated indian reservation because we wanted to figure out how to create a product that would impact our growing rate of diabetes in the community. we thought we could distribute it nationally and make enough money to subsidize it and make

it available at an affordable rate within our school system. that business model has not succeeded at that goal. we still have this -- well, we have a lot of young people involved, and a lot of young people love the tonka brand, we faced the reality of not making it affordable, so we have to be flexible in that, and we have to try to punt out each agencies. like, there's a lot of talk about food deserts right now and a lot of talk about diabetes, but, again, trying to connect those dots and making resources available to get the products into the schools, you know, we're all over the country, but we're not in the high school across the street from my office other than on a special occasion, so that's a real challenge. i guess that's why it takes a lot of focus and a huge amount of networks, and you have to stay focused on your mission and your goal, and we go back to our

mission every day with every decision, and it's the support of the entire network within the cdfi community, the veteran community, and within the local community where so many people want you to succeed, you know, right now there's 50,000 people that interagent with the tonka brand listening on the internet right now, people all over the country and all over the reservation through this web broadcast, and that's the encouraging part, but how do you connect those dots to make it work? that's the challenge, and i think it's -- it takes a lot of focus, and it takes the flexibility to try to connect these dots all the time. that's why it's a great honor to be here because we're able to tell this story. >> well, thank you very much. i want to thank our witnesses very much for your responses. thank you, mr. chairman. >> thank you, all, for your testimony and for being here

with us today. i'm grateful to all of you for the important work you do to make economic development a reality in indian country. as chairman of this committee, i will continue to work to improve the lives of all american indians, and we need to continue supporting your efforts. this hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> on this veteran's day, looking at the vietnam memorial containing more than 58,000 names of those who died in the vietnam war and those missing in action. the stone for the wall at the memorial came from india and was chosen because it's so reflective. items left along the wall are collected by the national parks service, logged, and stored.

>> extremism in the defense of liberty is no vice. [cheers and applause] and let me remind you also that moderation in the pursuit of justice is no virtue. [applause]

>> he lost the 1964 presidential election to lyndon johnson, but barry goldwater's idea and candor galvanized the conservative movement. he's featured this week on the serious, the con tenders from phoenix live tonight at 8 eastern. >> now, the senate finance committee looks at how best to use unemployment assistance programs to help people find jobs. officials from texas and rhode island offer local perspective for what's worked in those states and what hasn't. the committee also hears from a former senior economist for the labor department. this is about an hour and 15 minutes. [inaudible conversations] >> this hearing will come to order. first, i apologize to our witnesses and everyone here for a late beginning.

something came up, but we're going to make up for it. theodore roosevelt said life's best prize is the work that's worth doing. it's kept the prize of a chance to work hard for millions of americans. the economy created 80,000 jobs in october, and it was the 13th uninterrupted month of job growth. that's the good news. however, we need faster job growth to keep this economy moving in the right direction. nearly 14 million americans are still unemployed. more than 42% of these folks have been searching for a job for at least six months. that means nearly 6 million americans have been without a job for half a year or more.

for families who have been hit hard by hard times, unemployment insurance is a crucial lifeline, and it's an essential part of the solution to get folks back to work. families need these benefits to keep their homes, pay bills, stay afloat. you must remember the folks who collect unemployment benefits have worked, want to work, and will work again. i recently spoke of one such young man from mizuola, montana. he worked at a paper plant vital to the community. in 2009, they closed its doors. the boy shared with me that losing that job for him and his coworkers was traumatic. unemployment benefits were a necessary lifeline for his family. the benefits he received was

less than half of what he made. when the mortgage on his home was 30% of the income, while collecting up employment, the same mortgage ate up 60% of that income. after roy's company closed, it was certified, fortunately, for the trade adjusted assistance program. he met with the case manager and went back to school. through this training program, roy found a new career. roy told me he thinks that the best reemployment programs give someone the opportunity to find a job that meets three criteria. his first principle is that the job pays equal to or more than the job someone left. his second is the job provides an opportunity for growth. his last measure is that the job must be sustainable in the 21st century economy, and i couldn't agree more. so today, i encourage us to focus on how our unemployment

insurance system can use reemployment strategies to save existing jobs and create new ones. let's find a way to improve the program. there's several reemployment proposals this committee is considering. some programs partially replace the earnings of the workers who suffered job loss. others help unemployed workers find permanent work either through direct job placement or through retraining. other models are designed to develop entrepreneurs who need to tap into these ideas. there's already a number of states doing great work. twenty-two states implemented a work sharing program. under these programs, to avoid layoffs, states allow employers to trim the hours they pay their employees, and then use unemployment insurance funds to maintain pay for the full-time job. my state of montana has its own version of this. i look forward to hearing

testimony today about rhode island's experience. some have subsidy programs to help employers cover a portion of the new employee's wages to encourage the hiring of unployed worker, and we'll hear more about the opportunities and challenges that rises in these programs. many components of the unployed rehiring program expire this year. we have to extend this program. it's an opportunity for this committee to examine the unemployment system and make improvements. let us smear workers have the skills that employers need as how jobs get filled in our economy recovers. because what people realliment, more than an unemployment check, is to be bark at work. that's really what this is about. let's get the folks back to work, let us heed the words of roosevelt and make sure all

americans have the chance of the prize of working hard at work worth doing. senator hatch? >> thank you, mr. chairman, for holing this hearing. it's an important topic and one worthy of the committee's attention. the fact we're holding the hearing today is another reminder despite a few signs of recovery in the economy, too many americans are unable to find jobs. the unemployment rate is simply too high. while there's differences of opinions about how to solve this problem, we're all in agreement that congress must do more to restore job creation and help get the unemployment and under employment down. today, we'll have another discussion about the nation's unemployment system. i hope to get answers about how the unemployment system can be reformed. the ui system is designed simply to process and distribute benefits to the unployed. individuals and families that face job loss deserve better

than this. ideally the goal would be to help unemployed workers find new jobs. the success should not be measured by the number of people receiving benefits, but by the number of people who moved from receiving benefits into long-term employment. today, i hope we'll hear ideas about making these types of changes. it's gratifying to see we have representatives from state work force agencies in our panel today. i'm convinced if we're going to see reforms in the ui system to get people back to work, those reforms come from innovations frat states or in the states. it's been a state-run program over the year, and states have the primary speedometer -- responsibility of distributing benefits. there's been an expansion in the federal government's role with unemployment insurance, and with

extended benefits, the states have less flexibility to innovate and reform their individual ui programs. this is unfortunate because as we've seen over the years, many states have generated ideas and reforms and have daughter and drastically improved their systems, and when they take action to reform their own programs, they've been able to effectively commune cat their successes and -- communicate their successes and failures with other states. this has led to the expansion of the best practices across multiple states. when i speak with utah officials about their ui programs, which are by most accounts, the most fisht in the country, they continually express their desire to take on more responsibility in designing and implementing reforms in helping people get back to work. more than anything, state officials in utah want to see fewer restrictions coming from the federal level and greater flexibility to innovate. the evidence of state innovation is probably strongest in the area we're discussing today, and

that's reemployment. i'm hoping that today's panel will give us some up sight into what sates have been able to do in this area, what programs have worked, and which ones haven't. most of all, i'm hoping to get clarity about what congress can do as states find set in solving their own up employment problems. there's a number of ui issues to be addressed between now and the end of the year. once again, i'm convinced if we want to see improvements in reemployment efforts and other areas of the ui's system, the federal government's role needs to be reduced. states need to be begin more flexibility to develop their own approaches and to adopt and adapt successful programs from other states. to the exend congress can play a role in the area, it should be getting the federal government out of the state's way. i'm certain in the coming days we'll hear few state officials clammoring for more federal

strings attached to their programs. i look forward to hearing from the panel. i have to slip out for a little while to go over to the judicial committee, but i'll be back as soon as i can. e welcome everybody here for your team and testimony, and i look forward not only just hearing, but reading everything you have to say. >> senator, thank you, thank you very much. i look forward to your return. i'd now like to introdeuce the witnesses. first is dr. stephen wander. second is larry temple, executive director at the texas work force commission. third we'll hear from charles fogarty, director of labor and training department and former

governor of the great state of rhode island, and timely, don peitersen who is at the american institute for full employment in aurora, california. i remind you the full written staples are in the record. i urge you to summarize them, pull out punches, tell it how it is. life's short. you can't take it with you. [laughter] let's have at it. >> chairman, baucus, other distinguished members of the committee, i'm stephen wandner. thank you for inviting me to testify about reemployment services. the views expressed are solely mine, and should not be attributed to the upton

institute our urban institute. returning americans to work is essential to the economic health of the nation and reemployment services are important tools to accomplish that goal. many rigorous and impartial studies have shown that several reemployment services have helped to cost effectively return unemployment insurance recipients to productive work. over the past 25 years, a great deal has been learned about how reemployment services help the job less get back to work. researchers have used rigorous evaluation meftds to assess what works and what does not. during my career at the u.s. department of labor, i participated in much of this research. i was fortunate to have initiated and overseen a serious of social science experiments under the leadership of secretaries from bill bach to robert reish.

these concluded at least three reemployment approaches are cost effective for dislocated workers. they are job search assistance, self-employment assistance, and reemployment bonuses. in addition, work sharing evaluations have shown that program to be effective in the u.s. and a does p other industrial nations. we recommend each of the four reemployment approaches be used nationally to help unemployed workers return to work with employment. these reemployment approaches can be implemented and expanded at little cost to the federal government. let me explain. job search assistance consistents of assessment, councilling, job matching, and workshops. together, they speed the return to work, reducing unemployment

insurance payments and increasing tax payments. they were supported by the recovery act, but these funds have now expired. federal funding is needed to provide substantial amounts of job search assistance to those who need it. self-employment assistance allows workers to create their own businesses and jobs. program participants have been shown to return to work earning substantially more money than nonparticipants. federal law allows states to set up their own self-employment programs, but few states have done so, and the program is little used. temporary federal funding would greatly increase federal adoption and use. work sharing is permissible under federal law and 22 states and the district of columbia have such programs allows reduction in hours rather than laying off workers.

they have a pro-rated share of their weekly unemployment benefits for the days they do not work. work sharing is wide reinvestment used in other industrial nations than in the united states. work shoiring would be -- sharing would be much more widely used by the states if state unemployment trust funds were temporarily relieved of paying benefits. finally, reemployment bonuses of about $1200 for workers who retain a job for four months have been shown to be a cost effective incentive to speeding the return to work. this finding is based on analysis of four unemployment bonus experiments conducted in the united states. i recommend that we try out this approach nationally. each reemployment strategy should be rigorously evaluated to determine how effectively

they work in this period of high unemployment and public policy can be shaped accordingly. thank you for this opportunity to testify. i welcome your question. >> thank you much. dr. temple, you're next. >> thank you, chairman baucus and ranking members. i'm larry temple, director of the work force committee, and i look forward to share with you the exciting things we're going to texas no address uninsurance and those who exhausted benefits find work. our unemployment rate is certainly higher than we wish it were, but in texas, we felt the impact of the national downturn in the economy, but at the same time, we've also from september 10 # to september 11 created nearly 250,000 net jobs, and caterpillar, tie -- toyota, just a name a few selected texas for new plants

and plant expansion. we were rated top by selection magazine as the top state to locate a business in 2011, and i'm proud to say the work force commission and network of local boards have all been a part of this economic team, and through our system, job seekers and employers are connected and by being a part of the team at the economic development level, we're able to assist unemployed and take advantage of the hiring opportunities. over the past year alone, our boards held over 500 job fairs to help connect employers and job seekers. through our delivery model and commitment to claims, we've been able in the past year reconnect over 800,000 back to the work force. we have a demand driven system with the model built around private employers as they are the key to job creation. a little background on how our model is structured.

in 1995, we created the commission by merging 28 work force development programs from ten different agencies in creating the agency. we have 28 low cam work force boards, 240 stops serving our 254 counties. our boards build strong bonds between business, education, job training, and strengthening the economy to benefit everyone. they partner with the community colleges, organizations, development, education partners, as well as our local chamber of commerce. the local flex flexibility serves texas the best. second only to veterans, unemployment insurance claims are the number one priority in the system. it was formally designated by the commission in 2003, and to reenforce this commitment and priority, we self-imposed a measure with the goal standard for us to reemployee claims

within ten weeks, not a federal measure, not a elective measure -- legislative measure, but something on ourselves. the unemployment rate was at 5% with performance of 27% of the people going back to work in ten weeks. ten weeks is a great goal, but we can get them back in 12 or 13 weeks, it's better for everyone involved. to date, we believe that in the first five years alone this initiative saved our trust fund about a billion dollars. it also has put a little over a billion dollars into the households of our claimants and local economic impact with a conservative multiplier of 1.5 puts about a billion and a half in local communities. prior to -- in addition to this,

when we work with our claimants, we have such things we use as the texas back to work program which is a hiring incentive program providing employers with a $2,000 hiring incentive in a four month period, and in less than two years, we placed over 20,000 claimants with about 4,000 employers participating. the targeting claimants coming from $15 an hour or less jobs, and for those who complete the program, they receive 99.4% replacement wages. we had tremendous success with the program. in addition to these programs, we also have a work share program, in 2009, it peaked at nearly 700 companies. to date, we have about 477 companies in about 25,000 people that are participating, but all

of this goes to the that we've had flexibility at the local level to do these things, and whether it be in the ui dollars or the work force funding through wia, we really hope that you'd consider giving states more flexibility because we certain are, the labs of innovation, and we can get much more accomplished in light of budget cuts that we deal with ourselves because we deal with less money as well, but serving more people. thank you for the opportunity to share with you, and be glad to answer any questions, mr. chairman. >> you bet. thanks, mr. temple. mr. pieterson. thank you. >> chairman baucus, members of the committee, thank you for the opportunity to testify. the american institute for full employment is a non-profit think tank with emphasis on reemployment and sub subsidize

wage policy and implementation. we focus on insurance programs is timely. the united states spent $110 billion in this program and exhausting regular benefits and those who receive regular benefits are unemployed for a year claiming $16,000 in benefits. my testimony addresses strategies that offer an opportunity to realize a greater return on the significant commitment of taxpayer resources while returning unployed americans to work more rapidly. according to a study, jock seekers, more than half have visited their community work force centers just once over the course of the entire year. however, brick and mortar work force centers are not the only place to search for jobs. that occurs online, social network, and employer websites. unfortunately, on the whole, states have not kept pace with the online trends creating a mismatch of services. some are applying for benefits

to simultaneously register with their employment insurances program with an immediate connection of reemployment resources by also promoting a more engaged job search. for many states that have not adopted this practice, funding it an issue. congress should allow states to use a portion of their uninsurance dollars to fund reemployment efforts and to provide discipline, this option should be required with a stipulated return fnt state's investment with a program limit of 5% to the unemployment dollars. 've day, they con -- each day, they confront headlines like 7 million jobs. they are easy to report, but leave a confusing impression on the job market. they can sap job seekers of optimism and motivation. by highlighting the 5% of jobs loss, we overlook at significance of 95% of jobs that remaybe. drip by natch -- driven by natural turns, they

provide 50 million hiring opportunities this year alone. there's a far more helpful story to tell, one that suggesting finding a job while difficult is not impossible. to be successful at job search today, you must focus on networking and cold hiring. half of hiring occurs through an employer's network. you have to contact one to two employers every week. it's hardly a recipe for success. we found successful job seekers have two methods. congress is most significant on untapped opportunities. the adoption program with unemployment dollars. in the best programs we've studied, over 80% of job seekers were employed immediately after participation, and 90% employed within three months. they have greater job retention and greater wage gains, and 80% of the employers said the

program help costs, capacity, and/expansion. there's the blending of programs, and it should be modified to eliminate the employer mandate to hire, increase training from eight weeks to 13 weeks, and simplify a dumb -- dumbcumbersome system. because it makes it a legacy or loser, we recommend using existing state strategyies for those who are likely to exhaust their claims. state agencies are full of good ideas and promising solutions, but hand strung by restrictive silos. ui was born separately which was born separately from work force investment act. little has been done to harmon news findings or enable connections. there's temporary assistance for

needy families, but not for unemployment insurance. by providing states more flexibility of waivers in the ui program and funding accompanied by cost effective safeguards built on measured impact based on reemployment, we could make serious ways in getting people hired again. we have to clear a path by enhancing job search engagement, enabling subsidy programs, and giving states freedom and flexibility to devise and employee creative new solutions. thank you, and i look forward to your questions. >> thank you. mr. fogarty. >> thank you, chairman baucus and members of the committee. it's an honor to speak with you today about rhode island's 20 year experience. it's a successful layoff aversion program that prevented often estimated 14,600 layoffs in rhode island since 2007, the

beginning of the economic recession in our state. that's especially important for a state like ours because we've been experiencing double-digit unemployment since march twine. we believe our work share program kept the rate from rising and causing further damage to our state economy. through work share economy, reducing the work hours of the entire work force or all employees within an impalgted division. it can run as little as 10% to as much as 50%. income that would otherwise have been lost due to layoffs is partially reimbursed through unemployment insurance. in rhode island, our average benefit covers approximately 60% of loss wages. for example, a person works full time earning $500 each week or $100 a day. the same person has his or her workweek reduced from five days to four. the participating company pays

them $400 in wage, and unemployment insurance pays him or her $60, 60% of that one day's wages for the remainder of the workweek bringing the total wages to $460. now, had that person been laid off, his or her weekly benefit is $160 less. conversely, the weekly train on the insurance fund would have been $300, $240 more than if he or she was participating in work share. it's available to any employer with two or more employees provided the business meets certain criteria and designed as a layoff aversion program with an unanticipated down turn and can want be applied to a time period associated with seasonal slow downs. only throes employees who work 30 hours or more a week and normally qualify for benefits are eligible to participate. by rhode island policy,

employers enrolled in work share are asked to continue to provide existing fringe benefits. in the case where collective bargaining unit is involved, they must sign off on a plan before the state will approve it. for rhode island, work share has proven to be a win-win-win situation. a win for employees. a win for employers, and a win for the citizens of riled. they get to keep the jobs at which they already excel. that's important in rhode island where there's now seven job seekers for every two job openings. that's tough odds if you're trying to put food on the table and layoff aversion programs like work share are important providing stability to families that otherwise may be facing an average of 30 or more weeks of unemployment. work share is a win for employers because they are able to protect their greatest investment, a trained and productive work force. employers will tell you that

when a laid off worker walks out the dare, all the knowledge and skills they accumulated walk out with them, however, employers who benefited from work share tell you because the employees are on the job part time during hard times, those same employees are prepared and better able to boost production when the economy turns around. i'd like to provide a couple comments from the folks who used our work share program. jeff grove, the ceo of pilgrim's group, a rhode island manufacturing company is actively involved in work share and says by giving small business the option of a full layoff, work share helps us to maintain skells that otherwise might be lost. people in small companies wear many hats so a layoff means a skill is lost to the company when the person leaves unlike in large companies where skills are redundant. mike coolly calls his company the poster child for work share. the single most instrumental

action that put us on the map was work share. we were preparing a cut in the staff, but we had them subsidize the wages until we got through the downturn. we survived the recession, and today we're adding a huge facility and hiring more people in rhode island. for the state of rhode island, the win is simple -- jobs. they keep companies poised for growth tomorrow. thank you for this opportunity to testify about this important economic development tool. >> thank you. thank all of you. in listening to you, i would be curious as to your reaction how these various alternatives work and which ones might work better with respect it our changing economy. the efforts may be relevant to the changes, some my not.

the changing obviously are that with increased productivity, many companies are finding ways to prove the bottom line by automation. other increases of productivity, fewer ploys, it's also the recession caused by the financial crisis which is a cause that's very prolonged effort to get out of the recession because of all the deleveraging that's necessary, both public and private, and international competition, globalization -- it's even more an issue today than it was 10 or

15 years ago, and it will continue to be more of an issue with the world changing so much, so given all of that, and then many companies, you know, you hear the story of how major corporations in the united states have $2 trillion in cash on hand, but they are not spending it because of uncertainty. uncertainty as to what the tax policies may be and uncertainty and other areas. maybe europe, who knows, may be causing additional uncertainty. just how do these programs you're talking about address these changes that continue in a nature of the american economy as it affects jobs? affects, you know, the people working. anybody want to take a stab at that? >> yes, sir. >> mr. wandner? >> well, as far as discussing

productivity, i discussed work sharing, and that's been shown in evaluations to help employers retain skilled workers and prevent them from having to hire new workers and train them over again when demand comes back, so clearly if skilled workers can be retained and be there -- >> you like the rhode island program? >> what? >> you like the rhode island program? >> yes, i like the program. >> it makes sense? >> it does indeed, and rhode island has done more and had more work sharing relative to its size than any state in the country. it has done a particularly good job of it, but job search assistance as well prevents people from losing their skills and being unployed for longer periods of time than they otherwise would, imu a lot of

reemployment services will help us -- >> so what are the new jobs? are the new jobs the same jobs or different kinds of jobs? different skill sets? we have to think ahead a little bit here. >> mr. chairman, in the manufacturing, we're seeing some growth, not nearly what we'd like to see, but the logistics piece is an area that we're finding is really needed in the economy, and working with people and being able to assess and identify what skills they have that are transferable -- >> you say "logistics," what do you mean by that? >> the transportation, getting the products moved around, inventory control and those types of things. it may be manufactured out the country, but comes back in for distribution, and the logistics for that and suppliers. our toyota initiative in san san antonio, one of the primary

pieces of the economic development in the southern part of the state there are the suppliers, and getting those products to toyota on a just in time basis, so that's something that's a different type of work for people have been on a production floor. ..

if you have edman dollars to can use towards reemployment services, the program mr. peitersen was talking about has different restrictions putting people back to work and adult w i as. they had different recording and some flexibility at the federal level to allow states to move part and parcel of these but the various programs really needs a combined effort. we're trying our best with common measures in doing that to where it is a 1-stop shop. >> best way to figure out how to put that once up together. >> i will be glad to provide some ideas.

how we can do that. >> mr. chairman, in rhode island the governor's work force board identified its business driven has identified growth areas we see jobs now and likely in future areas such as defense, high tech, green jobs industry, hospitality and health care and former partnerships with business to identify training opportunities to make sure those skilled workers are there when the jobs are available. ironically even a state where there's high unemployment we still hear from employers who are having trouble getting skilled workers. >> my time is up. thank you very much. >> thank you, mr. chairman. mr temple and mr. patterson. as i mentioned in my opening statement we need to change the culture of the system from one that simply measure is distribution of benefits to one that focuses on getting the unemployed back to work.

for your statement today the changes like this are already being made in a number of states. i am glad to see this but we need to do more to facilitate this shift at the federal level. you both have discussed your efforts to improve reemployment at the state level. what evidence can you point to, ideas you mention, job search and training programs, reduce the length of time individuals spend receiving unemployment benefits, and also what metrics would you use to evaluate these programs that the federal or state level? anybody else kuwait in. >> in texas we impose the ten weekly employment measure on ourselves to rapidly reemployed. we use that as a measurement, as a metric and hold our local

offices accountable to that. by making them a priority and an outcome based initiative is really the key. to my knowledge texas is the only state that implemented statewide self-imposed measure. not a federal measure for reemployment at all. sour model and one of its thing, duration and exhaustion as a metric to produce it but the real deal is priority of making this population a priority to get reemployed and holding ourselves accountable to do that. if you don't measure it it doesn't exist in government and we measure it now and does exist. >> i would add to what mr. campbell said that there's another factor you need to look at which is not just looking at those measures of reemployment. i couldn't agree with you more about getting organizations to

look first at getting people back to employment. should be the main focus where we are going and how we do these things but the other metric is you should measure anything being done as what is that doing to create savings for the trust funds that are sitting out there? by taking any methodology whether it is work share or jobs assistance or whatever it is it needs to be proven that what you are doing is actually making a difference with those funds your spending to get those people back to work by reducing the amount of time there on the unemployment for the trust fund so one of the metrics i would like to see is something that talks about how does this program impact the trust fund and when you impact the trust fund you have pure benefits being paid and people getting back to work quicker and reducing employers' taxes. >> in your written testimony and your statement you describe a number of services texas offers

to claimants. i am hoping we condemn a better idea how these various programs work in practice. so let's say i am an unemployed worker in texas and i filed for unemployment benefits. your goal is to help me find a new job within ten weeks. how do i become aware of your state's reemployment service whether it is a job search or something else? how specifically do i take it chanted of that and what will you require of me to participate? >> tonight every work force board will generate a letter that will be mailed in the morning to everyone who applied for unemployment insurance in texas today. energy into the system giving them a number, location of the office close to them and inviting them to get services. that is not the usual you got to come in and do this.

this is a welcome wagon letter letting them know what we have. we start immediately letting them know. the second thing we do is through our priority and workforce have extensive outreach as we said, 500 job fares in the last month. we communicate through our reach with the claimant. for instance, hiring incentive program, we let them know they cannot take this and go out and sell themselves instead of an employer hires them because it is strictly as a hiring incentives to higher unemployment insurance claimants that they can take that and say if you hire me and know i don't exactly have the skills that your $2,000 to offset the training costs. we are trying to find jobs and let the market themselves at the same time. that is kind of how we start from day one letting them know about the service. we also have an expectation of

job search we implemented in 2003 a minimum of three job searches week. our local board said what it would be. is generally around five around the state from rural areas. so there is an expectation on the claimant part that they're having to look for work in meaningful jobs searches as well. we checked that. the culture of our agency. i myself call one employer are weak relative to a claimant to see if he or she did what he or she was supposed to do in job search. we do 1500 of those 0 weeks within the agency. trying to set culture inside the agency by putting people to work and sending that message to employers that we care and job seekers that we care. >> thank you. may ask what percentage of people receive that letter initially?

>> 100%. >> send out that welcome wagon letter and 100% response rate? >> response? i thought you meant of the letter. i am not sure what the response rate is. i do know that our out reach, rapid reemployment program that we use out reaches 60% and we have a 90% show up rate. >> i am encroaching on your time. >> i commend you for an important hearing. this is exactly what we need to be focused on. i had a great thrill almost 20 years ago when i had a chance to team up with the late senator kennedy and as a member of the house, congresswoman olympia snowe and we were part of the regional effort that became law in 1993 to set up self

employment programs. what this essentially does is allow people who have been carefully screened to draw their unemployment benefits while at the same time being exempt from some of the surge -- search requirements that would be part of unless they were setting up their own business. yesterday we have seen recent success introduced with senator carter and senator casey. senator carter was one of the first in the country focusing on a point senator hatch made about flexibility. our colleague, governor carter, one of the first to use this program in delaware to considerable success. and the reason a number of us are focused on trying to understand it and the president to his credit wants to do this is we're seeing extraordinary success. i want to describe one to you to get a sense of what we would need to do in the future. we have seen an enormously

successful tech startups in our home state. in my home town called urban air ship. what you had were a couple of young guys. michael richardson worked in the technology field, they saw there were a lot of opportunities consumers want to make online purchases with smart phone applications. these are savvy tech software south -- developers. they said let us pull them so instead of having the traditional maintenance to get their checks and look for work they can use the unemployment system as a trampoline, as a trampoline to come up with new jobs, new industries and the like. i have a picture you can see of four young guys in their sneakers and know a lot about technology and this obviously isn't for everybody and i won't

pretend that it is but isn't this the kind of model that ought to be expanded significantly? seeing some of these successes and model programs going back to the early 1990s? >> the answer is yes. the program does in fact reduce the duration of unemployment saving trust fund money and ends substantially increasing the way the earnings of people who participate, the problem with the program and the reason it is only in seven states is because there isn't a dedicated funding source for training and counseling, for on for pretoria latrine in with this program. and so difficult to put the program together and make it work. but we do have a workforce

investment act that has many kinds of training that can be provided to individuals and one of them is entrepreneur real training. i think we need more a change in the way we measure the success of the entrepreneurial training to get greater participation and very important to win gauge small business administration and small-business development center for the experts in counseling and training. >> would it be fair to say that the cost associated with administration and training since we do have some programs that can help in this area are pretty modest compared to the potential benefits? i like to make part of the record an article that describes how silicon valley is tripping over themselves to invest in urban air ship. dr. warner has done is very good

work. i have your book here that mentions senator snowe for example. my time is almost a. for purposes of wrapping this up while there are training costs, administrative costs and the like. that is what we want to address. isn't it fair to say that those costs are pretty modest compared to the potential benefits of self employment? >> yes. in an experiment of benefit cost analysis and benefits are substantially greater than the cost of the program. >> thank you. [inaudible] >> thanks very much. thank you to all of our witnesses. i want to talk more about the growing skills gap that i am hearing about in terms of people who are out of work but not

matching up with the jobs that are available. in talking about that, i wonder if you might talk about that. in michigan we tried to address that with something we call no worker left behind which is helping workers gain skills and credentials they need to gain the employment for jobs available or start with a system. i am wondering from your perspective how we could better coordinate the changing employer needs with training and placement and support for those that need jobs. >> there are many fine training programs out there and what we need is more training, more

that are doing jobs how job development in many states has to be more emphasized and better funded. >> would anyone else like to add to that? >> thank you, you hit the nail on the head with the skills gap and that is what we're looking

at in rhode island and in new england. we are finding college is important but not all students go to college but everyone needs to get a continuing education level above high school. we have a career pathway program in the workforce board looking at setting up a mechanism where people can identify stackable certificates where they can see what are the jobs that are out there and weighs -- what wage i am looking for and what have to get there at a certain level to move up through the process. not a ladder so much as a lettuce. we have that organization which is going to be coming out with this report shortly but what we can do to make that reality so we get those skills levels in the workforce, one that matches the needs of employer because it has to be centered and employer driven. >> anyone else want to respond to that? >> some of the work force

investment act have restrictions and prohibitions of being able to use dollars for incumbent workers and if you are able to upgrade the skills to incumbent workers where they can be promoted and open up entry-level for individuals who are unemployed, build it and they will come type of deal. that is something when we talk about the flexibility that as a practical approach that i want to share. >> thank you. if i could add one more thing. some five very helpful is on the job training grants where businesses are deciding whether to add someone or not they made need skills that they need to train them in place and have to come up with some dollars and we come up with some dollars but in this end is a win/win situation. they get the skilled work they need and the persons employed. we find that a useful tool. we don't have resources to do as much as we would like. >> i would like to add to mr.

fogarty, the beauty of a lot of subsidy programs. they're giving their employer incentive to bring someone to get them those marginal skills they now need to get before they're fully employed. >> my final second, i don't know if you want to respond to the fact that as we look at the need to extend unemployment benefits that we are looking at urban institute has indicated there is a multiplier about every dollar that we spent generates $2 and wondering how important you think extended unemployment benefits is. >> critical. we are planning the consequence if it doesn't happen because once the phase out occurs in march we are looking at a net income -- impact of $25 a month. the impact of businesses as well. folks don't have the reserves.

the jobs are not out there. not that they're sitting home doing nothing. the jobs are not out there. what is going to happen if they have no source of income? we are concerned about that. >> thank you, mr. chairman. >> thank you, thank you for this hearing. i want to thank our witnesses. this is a vital link for individuals during tough economic times as their lifeline and as the last exchange pointed out is counter cyclical. important for the economy to make sure we have a healthy unemployment insurance system. i think we all agree the best results to get people jobs that will help families and our economy. our objective is to make sure you have the tools necessary to get people back to work. i have heard you talk about different tools that you use from job fairs to the texas ten week guideline issues to be

1-stop shops we employed in our state of maryland, work share problems. the proposal that we have been moving forward with on business opportunity. the challenge is we don't have enough jobs out there. for the people who are unemployed in the system and we do deal with the skill levels which increase the availability of jobs but we still don't have enough jobs. the incentive issues i hear about frequently and from the employer point of view it is good to have additional incentives. from the employee be point of view people want to work and we run across the problem that if you are unemployed in a tough economic time and you are looking for a job, your chance of getting that job is less likely than someone who is already employed looking for a job whose same skill level as everything else there is discrimination against people who don't have employment. so my question to you, tell me

specifically how we can adjust the guidelines or policies in federal unemployment insurance laws that would give you the best tools to deal with the challenges we are confronting in this very stubborn economic period. >> what would you like to see us do? i heard from the last exchange you want to extend unemployment. if you could give us some additional specific guidelines. i also understand you and flexibility but tell me specifically how that will deal with the challenges i just said. don't be shy. >> i'm on the flexibility so box but i will give you a good example. we took the encouragement of health and human services and the department of labor the

summer before last to do hiring incentive programs, you that to augment what we have in general revenue and trying to do the one stop for anyone to come in. we were prohibited because of the technicalities, wasn't able to serve anyone that didn't have a child with a single adult came in that didn't have children. we had to fight another pot of money which can't use our money for that and we were trying also to target children who were aging out of foster care who were about to be unemployed. and we weren't able to serve those individuals either. as much as we want to have a 1-stop those were dollars -- >> the challenge is the next step congress usually cuts funds. there isn't a specific reason for having the funds. that is one of our challenges as i have seen as go to more block granting. how do you deal with the discrimination of someone who doesn't have a job?

yesterday college students who can't find work haven't worked so they don't have the work experience that they are trained and someone who has a job -- how do you deal with that in the unemployment system? what can we do to get you a better crack at opening up doors? >> we are promoting these individuals and exactly what employers tell us. employers told us when things were tough as far as finding skilled labor they were saying send me someone that will show up and i will take it from there. the unemployment insurance folks by definition are unemployed by no fault of their own. we say these are people who have the work ethic and are tradable and hopefully with hiring incentives and flexibility to do under things that we are able to bridge the gap -- we sold the

individuals as being -- >> flexibility you want from us? >> chairman baucus will provide a list of things. >> my time is up. >> one problem is a businesses are not hiring as much as we would like to. there are programs like work sharing that will prevent unemployment from happening for the first time and for unemployed workers who are looking for a job and texas can't place they can create their own jobs if you have a self employment assistance program in your own state. so people in maryland create their own jobs. >> thank you, mr. chairman. >> thank you, senator. i am struck by a column i read

in the morning papers. confucianism in asia. this was a column about a young lady in vietnam who worked so hard. her mom is no longer with her. she takes care of the kids. shea bikes an hour-and-a-half to work. gets up early in the morning. she is driven, absolutely driven to succeed. undertaking huge obstacles because she is so driven. she is going to succeed. she is training to become cp a. part of it is the confucianism ethic in asia of education,

striving to succeed. to some degree asians in this country tend to work harder in school and get better grades and work so hard at southern. i am wondering in all these programs we are talking about, as much cultural -- if there is an education component here that makes sense. it is not just -- maybe it is a new skill said. also education to instill incentive to see if there is hope in america. you don't have to be browned out. the thought just occurred to me. i was wondering if any of that makes sense.

i do think -- direct related to unemployment programs work share. maybe it is. i do think that this country to get jobs and have jobs in the future we are going to have to -- more of us have to have that drive to succeed and do well. just provide for family and so on and so forth. any thoughts? >> our state entered the recession earlier than the nation. >> high unemployment rate. >> for a long time. we are in a position now where i think a mind-set has set in that we are in tough times even though the recovery on going statistically most people have felt it. that is starting to bring about a mind-set change in terms of how you approach the work force in terms of what is expected, the fact that you just can't take it for granted that a certain level of education will get you something and i believe

you are talking education by experience education letting folks know that if they want to be successful they have to look at different routes to get there. they have to be more focused in terms of career skills, they can't take the opportunity to waste time when they're on unemployment. they need to take advantage of the training programs that are available. they also understand because of the flexibility in the workplace today that unless they are nimble and unless they continually upgrade their skills they're going to have trouble in the long term. i think that message is starting to get out there and we are starting to see that in the workforce people and i know in our universities we are. i teach part time and see that in some of my students in terms of the approach they take as they get ready to graduate. >> role models often held too.

somebody in your office, they came from if not from the ashes, great difficult background or difficult conditions were laid off and looked around and so forth so that those with whom you are in contact with, old joe was down and out. he has enthusiasm and hope and that is infectious. just curious if that is more psychological than programmatic. >> this is the time to encourage education and training. the unfortunate part of high unemployment is people can't find jobs. when they don't have jobs we should be pushing education and training as much as we can so that when the jobs come back people have the skills to take them. >> thanks sherry much.

i deeply appreciate your jumping in. senator hatch. >> let me ask one other question. let me just ask mr. peitersen this question. i would like to chat about the employer base training program. some states develop the so-called georgia works model. as i understand it these programs would allow beneficiaries to work part time with an employer, receive some job training and possible placement and the work site at some point down the line. this has garnered a lot of attention as the obama administration expressed interest in this idea. i am also aware these programs received criticism from those who claim that claimants are working for free and these programs will encourage on the part of employers, is that a valid concern? have you seen any abuse in these

programs? >> i haven't seen anything. we haven't studied all of them. the ones that have been replicated in other states have not yet but abuses usually not present in these programs. employers, it takes a lot for them to take somebody into their shop for their company and train them and spend resources to get them involved in something. that is what georgia work citizens training program is teaching you new skills and teach in new new work habits giving you time to go to work in today's environment and the nice thing about the georgia work program is it is only three days a week. the other time, the claimant they are still receiving when they're in that georgia works program but also still on their artwork and -- looking for work. statistics show a lot of people who went in ended up getting

employment before the training ended. the eight weeks they had for training. that employers were giving them some skills and abilities to go to work for somebody else and they were doing so. >> i know that the most talked-about version of this is the one implemented in georgia currently undergoing an overhaul. other states are trying out similar programs with variations. in your observation which elements of this particular model has worked and which elements have not worked and is this an idea that can work in large scale in places around the country? >> it can work in large scale but we also need to look at it as just another tool in the toolbox which work force agencies can work with claimants in getting them jobs. another tool for employers to work with providing employees and seeing if they work out and how they can adapt to the new skills they need in the job.

like everything else there are a lot of parts that go into getting people back to work and the more options we have for people to get back to work the more they will be able to. the georgia works is going through an evaluation in georgia right now but that is because it was expanded great deal and they pay a lot of costs for the georgia works program out of state funds and those dried up. they were paying for workers' comp for the people who were unemployed and a them a stipend to help transportation and these types of things all the time when there still receiving the you i. new hampshire is running the program without paying those costs. so we're still looking and seeing what elsie's other states are coming up with as they modify. or the works model and see which one works the best but once again as mr. campbell said while ago what works in georgia may or may not work in north dakota in

alabama or wherever it is. what we need to make sure is we have states with enough flexibility to look at things that are out there that other states tried and are successful with and say that makes sense for me. let me try to do it this way and put it in here. so it is not saying that this is a national program you need to have. needs to be an option for states to say how does it fit? the best thing is to have a subsidy. when you are going to work full time with that employer but the georgia works can oftentimes lead to a step stone that says i put somebody in the georgia works program and got in eight weeks and now that employer like that person and everything so now we can do something on a subsidy program for a few additional weeks to get some further trained on those skills and's they have been having and move them into full employment. just like everything a lot of years going on and they need to

work together. >> i want to thank all four of you for your testimony today. thank you, mr. chairman. >> does georgia works work? i heard somewhere it was discontinued. >> it has not been discontinued as far as i know. it has been ratcheted down. they moved it -- because of the cost. the huge cost. they moved the program. it started as a claimant program in georgia but as the recession got worse they expanded to everybody. they were using georgia works and so there volume went up but the costs were maintaining that with those individuals became too big a burden because once again they reusing state funds for that's the they had to cut back a program to go to the original intent of using it for ui claimants.

>> there's not a rigorous evaluation yet and a lot we don't know about. >> we are a huge complex country. we have 50 states. each to some degree attempting to solve problems of their own. a whole laboratory of ideas. nothing symbol. we have to keep at it with all the people who are unemployed. just a tragedy. new jobs, number 1. number 2 is to get those people back -- bachelor's job. this is very hopeful. we got to digest all of this. mr. temple will send information and encourage others to do so too. figure out how to make best use of it so thank you very much. meeting is adjourned.

[inaudible conversations] [inaudible conversations] >> on veterans day we're visiting the world war ii memorial. an oval shape with two, 43 foot barge is representing the war the atlantic and pacific theaters. 56 volusia represent the state, territories and district of columbia at the time of the war and a circular guard called the circle of remembrance. the world war ii memorial honors the sixteen million who served in the u.s. armed forces and a

400,000 who died and those who supported the war effort from home. here is a look at our programming across the c-span that works. join us tonight for our series the contenders. the focus is arizona's barry goldwater. more on that in a minute. next on c-span2 a recent hearing featuring attorney-general eric holder. coming up in just under half an hour on c-span3, washington classroom program, the story of richard gordon smith talks about failed presidential bids. our road to the white house coverage continues at 8:00 p.m. eastern on c-span2 with the recent debate among presidential candidates hosted by ms nbc and michigan. >> extremism in defense of liberty is no life.

[cheers and applause] >> let me remind you also that moderation and the pursuit of justice is a virtue. >> he lost the 1964 presidential election to lyndon johnson but barry goldwater's ideas galvanized the conservative movement. the senator from arizona is featured this week on the contenders. from the goldwater institute in phoenix live tonight at 8:00 eastern. >> attorney general eric holder vowed tuesday the tactics used during operation fast and furious would never be used again by the justice department. the operation allowed guns to be smuggled across the u.s./mexico border in order to establish links between arms dealers and drug cartels. the attorney-general also said the justice department never knowingly provided congress with false information about fast and furious.

a charge leveled by house and senate republicans. he testifies before the senate judiciary committee during this three hour hearing.

[inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> i understand we have a lot of attendants this morning so i will probably run the clock

little bit. more diligently than usual including for myself. i am glad to have attorney-general holder back with us as we complete this -- continue our important focus on oversight. the attorney general is here -- details emerging about the successful military intelligence operation that killed osama bin laden. we provide a measure of justice and closure for americans resulting from the horrific attacks of september 11th. that was not an isolated success. in the last few years, the obama administration successfully reinvigorated, retooled and refocused our national security efforts. the attorney general in any administration is a key member

of the national security team. under his leadership the justice department last month foiled an assassination attempt in the united states of the saudi ambassador to the united states, prevented a major attack of terrorism on u.s. soil. four men in georgia were arrested in a domestic terrorism plot accused of plans to use guns, bombs and toxic poison to kill federal and state officials. earlier this year, the christmas day bomber was convicted in federal court, pled guilty and faces a possible life sentence. we have to assist efforts to bring terrorists to justice by providing the administration with a full array of authority for counterterrorism efforts. in my view and a view shared by the director of national intelligence and the attorney

general is before congress to hamstring those efforts. as we proceed, we should remember that between september 11th, 2001, and an end of 2010 the liberal 438 suspects were prosecuted by the bush and obama administration and terrorism charges in federal court. 438. the same time, five -- six have been convicted in military commission. only six. five from targets. the record over the last three years with respect to crime is outstanding. over the past three years crime rates have fallen rather than risen which is contrary to normal experience during such difficult economic times. as we proceed each of us will

have questions about matters that concern us. but we should not lose sight of the big picture and the fact of what the justice department is doing to keep us safe and secure. this morning there will be more questions about the bureau of alcohol, tobacco and firearms, investigation along the southern border. attorney-general holder should reinforce longstanding department of justice policy prohibits transfer of firearms to known criminals with proper monitoring and controlled by law enforcement. and administration officials testified at 17 congressional hearings about these matters. i heard that they engaged in a board oversight with respect to prolonged enforcement and prosecutors do their jobs addressing the serious threat of

violence posed by these drug cartels. i do not think anyone wants to hamper the efforts of law enforcement agents against the mexican cartels including the ongoing criminal investigation and prosecution related to the tragic murder of agent brian terry. i think the men and women of the jews of -- department of justice who work to keep a safe and uphold the rule of law and i thank the attorney general for returning to the committee. i look forward to his testimony and kept within my time as i fully expect everyone else to. senator grassley. >> this is a very important hearing. there are a lot of issues to bring up. however, over the time the attorney general was last here are concentrated my oversight of operation fast and furious just over nine months ago. attorney-general holder sat in my office and i handed him two

letters i had written to acting director kenneth nilsson of atf. my letter mentioned one, the death of border patrol agent terry, the allegations that atf sank in the sale of hundreds of assault weapons to straw buyers, allegations that two of those were found at the scene of agent kerri's death and the allegations that whistle-blower provided disinformation were already facing retaliation from the agency. four days later the reply from the department explicitly stated that the whistleblower allegations were false. it also claimed, quote, atf makes any effort to interdict weapons that have been purchased illegally and prevent their transportation to mexico. in the nine months since then, mounting evidence put lie to that claim. documents contradicting department denials came to life.

six atf agents testified powerfully to house oversight hearings. they also confirmed gun walking occurred in operation fast and furious. last week assistant attorney general lanny brewer admitted the department letters were absolutely false but it gets worse. mr. brewer also admitted he knew all along it was false. he could not recall whether he helped edit it but he knew it was false because he was aware of previous operations called wide receiver. yet he remained silent for nine months. he was aware congress had been misled. he made no effort to correct the department's the official denial. much has been said about guns being walked in operation wide receiver during the bush era. doesn't matter to me when it

happened. we need answers. . here prosecutors refused to bring the case. under mr. brewer's leadership headquarters revised it. despite the gun walking issues. it was mr. brewer's responsibility to clearly communicate that gun walking was unacceptable and tends to do oversight and safeguard to shore it did not happen again. he did not do that. mr. brewer admitted before this committee last week that one of his deputies informed him of gun walking and wide receiver april of 2010. he also admitted the same deputy approved at least one of the wiretap application of operation fast and furious. in order to justify tapping the phones of a private citizen the law requires an agency show they have tried everything else first. but the very same facts that would show the need to obtain the wiretap would also show the department knew these individuals were trafficking in

weapons. the government should have stopped the flow of guns to these criminals. anyone reviewing the wiretap affidavits would probably know that was not happening. i would also add that this tragedy should not be used to call for new gun control. they were already breaking the law. they should have been arrested a year earlier than they were. the faulty statistics cited by some about u.s. guns in mexico include u.s. weapons sold to foreign militaries, weapons transferred into mexico years before. guns from fast and furious, stolen weapons and many other sources. as we learn more about the utter failure to enforce our existing gun laws in fast and furious i am eager to ear from the attorney general who he plans to hold accountable. i also want to know how he plans to prevent another tragedy like this in the future. let me be clear.

the bottom line is it doesn't matter how many laws we pass if those responsible for enforcing them refuse to do their duty as was the case in fast and furious. thank you, mr. chairman. >> thank you very much. attorney-general polar, please stand and raise your right hand. do you swear the testimony you are about to give is the truth, the old truth and nothing but the truth? >> i do. >> please go ahead. >> ranking member grassley, i appreciate the opportunity to appear before you today. over the last three years i have been privileged to address this committee on numerous occasions and parter with many of you in advance in goals and priorities we all share. i am extremely proud of the department's historic achievements over the last two years. despite significant financial constraints we have effectively confront a range of national

security threats and public safety challenges. i am pleased our efforts to combat global terrorism have never been stronger. since i last appeared before this committee in may just three days after the decade-long hunt for osama bin laden came to a successful end the department achieved several additional milestones. for example last month we secure a conviction against umr matu a matullah for the attempted bombing of an airplane going from amsterdam to detroit in 2009. we also worked closely with domestic and international partners to force and attempted plot allegedly involving elements of the iranian government to assassinate the saudi arabian ambassador to the united states on american soil. we have also disrupted numerous alleged plots by homegrown violent extremists including one targeting a military recruiting center in washington state and another targeting u.s. soldiers

in texas. in one of the most complex counterintelligence operations in history we brought down a ring involving ten russian spies and last week a federal jury in manhattan convicted one of the world's most prolific arms dealers for his efforts to sell millions of dollars worth of weapons including 800 surface-to-air missiles and 30,000 ak-47s for use in killing americans. the department has made extraordinary progress in protecting civil rights, combating financial fraud, safeguarding the environment and did fanti our fight against violent crime. we file a record number of criminal civil-rights cases and in the last fiscal year our civil rights division voting section opened more investigations, participated in more cases and resolve more matters than in any similar time period in the last dozen years. and reviewing over 5,500 submissions for review under section 5 of the voting rights

act including redistricting plans and other proposed state and local election law changes that would impact the access some americans would have to the ballot box. we also worked to ensure state cannot execute and constitutional patchwork of immigration laws. in recent months the department has challenged immigration related laws in several states that directly conflict with the enforcement of federal immigration policy. not only would these laws prevent resources from the most serious public safety threats but can lead to potentially discriminatory practices and undermine trust between local jurisdictions and the communities they serve. the department has focused its efforts on the fight against financial fraud over the last two years by spearheading the interagency financial fraud enforcement task force and successfully executing the largest financial and health care fraud take down in history. in addition we secured a

conviction in the biggest bank fraud prosecution in a generation taking down nearly $3 billion fraud scheme and through our aggressive enforcement of the false claims act the law strengthening recent years by the actions of this committee we have secured record-setting recoveries that exceeded $8 billion since january of 2009. i am proud of these and other achievements and i am committed to building on this progress. although i hope to spend much of our time discussing the works on going through the department. i would like to take a moment to address the public safety crisis with guns flowing across the border into mexico and local law enforcement operation known as fast and furious that has brought renewed public attention to this shared national security threat. i want to be very clear. any instance of so-called gun walking is unacceptable. regrettably this tactic was used as part of fast and furious

which was launched to combat gun trafficking and violence in the southwest border. this operation was flawed in its concept and flawed in its execution and unfortunately we will feel the effects for years to come as gun that will lost during this operation continue to show up at crime scenes both here and in mexico. this should never have happened. it must never happen again. to ensure that it will not and after learning about allegations raised by atf agents involved with fast and furious, i took action. i asked the department inspector general to investigate this matter and order that a director be sent to the department law enforcement agentso matter and order that a director be sent to the department law enforcement agents and prosecutors stating this filing policy and will not be tolerated. the new leadership has implemented reforms to prevent such tactics from being used in