fail is an agenda and what the moral hazard that comes from it is an agenda that we should all share and that we should all pursue regardless of what happens in other areas. .. --

>> sure. absolutely. i mean, that's why we made as much attention as we have in the capitol area which i think is critical to making sure not only to other countries adopt basil 3 so i agree with that proposition. it is a little different, though, to ask the question, does every country need to have exactly the same regulations for all of its firms? and -- some other countries don't have -- they put constraints on their firms on way that is we don't so we have to make a judgment, i think, collectively as too whether this is something which goes to the heart of the ability of a big

international financial firm to compete. >> the gentlelady's time has expired. the panel agreed to be out of moon. i would like to have an even number from both sides of the aisle to be able to question the panel. so for additional -- would be mr. scott has just come and asked -- >> thank you. thank you, mr. chairman, for that time. let me just ask -- i want to share with the committee and with you my major concern with the implementation of the volcker rule. it's not whether or not we should do it but it's to make sure we do it right. i'm very concerned -- we're moving forward in a very, very strong economic recovery period. unemployment level has been going down 8.5%. we've increased the jobs just last month in the private sector of 200,000 jobs that have come on. auto sales are up. we've got general motors moving from the door steps of bankruptcy now to where we've got them pivoted right back up to the top as being the number 1

automobile manufacturer in the world passing toyota. great signs which means consumer confidence is going up, business confidence is going up. this volcker rule goes at the central nervous system of our entire financial system and could really have a devastating impact in my opinion if it's not done right because the general thrust of this volcker rule is in capital formation which clearly impacts the whole question of liquidity. so as we move forward with this interpretation of this rule, let us keep in mind that we do not want to do anything to get us off-course from the great upward movement we are making in our economic recovery. so i have two central questions. first of all, ms. schapiro, one over -- it touches every area but one of the areas that we

talked about the swaps and in the hedging and i want to commend you first of all in your work that you've done with intercontinental exchange and that's particularly within the portfolio margining requirement for clearings, for clearing members and i commend you for that. and i hope that you will proceed in extending that margining of -- of portfolios for customers as well because i would think it would help. but i understand there is a pending request before your commission for an exemption to permit the commingling of security-based swaps with index-based cds in an account overseen by the cftc. here's how this little wrinkle works, for example. has your staff made any progress on this request or identified any policy issues that stand as an impediment into granting this

request which i understand is critical to ensuring the buy side utilized central clearing for these same products? and this is particularly, in fact, because the cftc has an impact on this as well. how does that work between the two of you? >> congressman, i'm going to have to get back to you, from my staff where those come from but chairman gentzler may have more information. >> the two agencies are working together on swaps and security base swaps and this regulation and this one area that you mentioned credit default swaps where narrow-based and individual swaps are the jurisdiction of the sec and the individual swaps are over at the cftc, i share the goal that you mention that market participants can get the benefit of central

clearing and the benefit of portfolio margining and, of course, the devil is in the detail because of two statutory regimes. but i know staffs have been working together with market participants on how to achieve that and the cftc i believe is committed to do that. i haven't heard any concern from the sec but given the capacity of all that we're doing, your highlighting it just helps us to remind us to keep attention to it. >> thank you so much. finally my time is getting short but i'll go back to my general concern about the overall health of this economy, making sure that we get this rule right as we do it so it doesn't interfere with the great progress we're making in the economic recovery. there's some studies that have shown that there could be a significant impact on u.s. companies, particularly, our financial companies and increased borrowing costs if the volcker rule is not implemented the right way.

given the complexity of this task, the significant downside of getting it wrong and the fact that the cftc just released its rule, what is the downside of taking comments and reprosing with greater clarity based on these comments? >> as i said earlier, congressman, i think whether we do that or not will depend on the comments that we've received. if there's not a fundamentally different track down which to head, then i think it would actually be in everyone's interest including the firm to have a sense sooner rather than later than what the ultimate rule is going to look like. if on the other hand, we do think that we need to change fundamentally, i haven't seen it yet -- >> do any of you believe that in the process of interpreting this rule and putting it in place, that there is a downside to it having a negative impact on the

great advantage we're making on the economic recovery especially in the job creation? >> i think as you say the rule is implemented properly, and that's probably most importantly focused making sure that the underwriting making functions are able to proceed in a productive fashion, then we shouldn't see that kind of impact. might we see some shifts from one firm to another and, for example, being able to run a proprietary desk seven yeah, we might see some of that, but that's, i think, was the congressional judgment that that kind of proprietary function was not necessary for the firm itself and raised certain financial stability risks. but if we do underwriting and market-making right, i think that the capital flows for which you're most concerned are going to be preserved. >> thank you. yes. i'm going to conclude the first panel. i want to thank the witnesses. i think we have some great

questions and you have been very forthright and i thank you. i'll call the second panel up as soon as they're able to switch places. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> if i could ask everyone to take their seats, please. and we'll proceed.

at this time, we have the second panel of witnesses before us, i will introduce them individually. i understand chairwoman haworth will make an introduction which i'll save till we get to your constituent. our first witness is mr. anthony j. carsang who's on behalf of the u.s. chamber of commerce. welcome. [inaudible] >> you need to turn the microphone on and pull it close to you. >> thank you, madam chairman. >> thank you. >> and ranking member -- >> and speak up. >> and members of the committee. we're pleased to present to the committee today on such an issue of such importance to the stability of the financial system. my name is tony carfang. we're the world's leading consultcy of management. we've been working with

corporate treasurers and cfos helping them manage their daily cash flows and growing their businesses. we also consult in the financial institutions who provide treasury and liquidity services to those corporations. we're speaking today on behalf of the u.s. chamber of commerce. it's 3 million members and 3 million treasurers of those companies who will have to deal with these regulations and what i would like to do today is share with you the untold story of how these regulations will impact the daily management of america's businesses. as a matter of fact, there are five points that i'd like to make. there's five chapters to this story. number 1, american businesses are the most capital efficient in the world and the volcker rule will change that. number 2, as every treasurer knows, risk can either be created or destroyed only transformed. and while the volcker rule may remove this risk from the banking system, it puts it right

in the lap of every u.s. corporation. number 3, the process, the rule-making process that you were discussing earlier is so unaligned in terms of the comment periods and in terms of the implementation that that further adds to the uncertainty and increases the possibility that all except the largest banks will either scale back or reduce the number of services they offer all together. fourth point i'd like to make is that this is one of four major pieces of regulation impacting corporate treasurers along with basil, along with proposed additional money market fund regulations and along with derivative regulations, all to impact financial institutions but landing right on the desk of every corporate treasurer in

america. fifth point i'd like to make there are no do-overs here. there are no do-overs. corporate treasurers will be realigning their balance sheets, reprogramming their e.r.p. systems as they change banks and change the way they manage risk and raise capital, those are long-term changes. you know, it may take 12 to 18 months for even a midsize company to make these changes. and once made, they're not going to be easily reversed. i'd like to dwell on the first point of capital efficiency. the treasury strategies we're with the corporate treasurers day in and day out helping them manage their cash, u.s. corporations keep cash balances before $2 trillion here in the u.s., which is 14% of u.s. gdp. in europe the comparable ratio is 21%, about 50% higher.

should, you know, banks exit some of the capital raising and risk management businesses, companies will need to increase their cash buffers and essentially will see the cash efficiency decline. should that $2 billion of 14% rise to the european level of 21%, that would -- that would mean an extra $1 trillion. corporations would have to raise and, in fact, the idle sideline, $1 trillion if capital efficiency decreases to european levels which could well happen under the volcker rule. that $1 trillion is more than the entire t.a.r.p. bailout. the $1 trillion is more than the stimulus, that $1 trillion is more than the recent federal reserve's quantative easing and to take that money out of the system and sideline it would have huge economic impacts. that could only be done through downsizing or deferring growth and expansion plans, postponing

maintenance and capital investment, you know, not a good outcome. we encourage you to think very carefully about how all of this plays out. there are four major regulations designed to impact financial institutions that will impact the way corporate treasurers manage their cash day in and day out. the volcker rule, potential money market regulations, derivative regulations and basil 3 and they are all untested and they will hit the markets simultaneously. ladies and gentlemen, this has not been thought through. this has not been thought through. we would encourage you to take the time necessary to think this through. and finally, you know, the ultimate question is, when a u.s. corporate treasurer calls his or her bank in order to raise capital or manage risk, will there be anybody there to

answer the phone? thank you very much. >> thank you. >> i'll be happy to answer any questions. >> ms. hayworth? >> i have the pleasure of introducing mr. scott evans who happens to be a constituent. i'm privileged to be his representative in congress in the 19th congressional district of new york. he's the executive vice president and president of asset management of it. i.a. kraft. he's the chief executive officer of the advisement subsidiaries so he has oversight over nearly $541 billion in combined assets under management. he previously served as chief investment officer and prior to that, he was head of kreft investments. his b.a. from tufts university and the kellogg school of management and he's a chartered financial analyst and a member of new york society analyst so i'm privileged to welcome you, mr. efbz and you thank you for your testimony and thank you, madam chairman and i yield back.

>> thank you. mr. evans. >> thank you, congressman hayworth for that kind introduction. my name is scott evans. i'm the i'm president of the our asset management division and i appreciate the opportunity to speak with you about some of the effects of the volcker rule on the insurance industry. specifically, as it correlates our ability to invest in certain financial vehicles. please allow me to tell you a little bit about tiaa-cref. we're the nation's largest provider of retirement benefits. we have not-for-profit heritage serving 3.7 million americans in the academic research medical and cultural fields. we're an insurance company managing $4 billion in assets, providing over $10 billion a year in retirement income to teachers, nurses, campus service personnel and the others in the not-for-profit sector. in order to provide our

participants, our clients, with a comprehensive set of financial solutions we also own a thrift institution. many of our participants have a lifetime relationship with tiaa-cref and trust us to provide for their long-term financial success. our thrift further enables us to meet our participants' lifetime financial needs by providing them with a banking partner as they live to and through retirement. now, our thrift currently compromises less than a tenth of a percent of our total assets. however, it still qualifies as an insured depository institution under the proposed rule. and thus, subjects our entire enterprise of the volcker rule. while the proposed regulations provide an exemption for proprietary restrictions for insurance companies, this exemption does not expressly extend to allowing insurers to

hold an ownership interest in covered funds defined to encompass private equity funds. this is a concern for tiaa-cref and others in the insurance industry since private insurance investments are an intrical part of the insurance agency. they are used to diversify our portfolios and enable us to deliver in the long-term commitments that we have to our participants. our insurance portfolio primarily compromises core investments with stable return characteristics. private equity investments allow us to diversify our portfolio while also seeking higher yields over extended investment horizon. this investment blend enables us to meet the long-term financial goals of our participants, providing them a steady stream of income in retirement built on a variety of asset classes. additionally many private equity investments provide essentially long-term capital to important

sectors of the economy including infrastructure projects to build roads, airports, water treatment facilities, desalination plants and energy distribution facilities. we believe that the intent of congress with respect to the volcker rule as stated in the dodd-frank act was to appropriately accommodate the business of insurance. we do not believe the proposed rule follows this intent as it subjects our entire enterprise to limb that'ses designed to regulate the investment activities of the thrift. tiaa-cref appreciates that congress is conducting responsible oversight of the regulations to implement the volcker rule and it's our hope that the final regulations will not result in any significant disruption for insurers or the individuals depending on us for their long-term financial security. thank you again for the opportunity to testify before you today, and i look forward to taking your questions. >> thank you.

professor johnson? >> thank you very much. i'd like to make three points, if i may. the first is regard to the costs of financial crisis including the cost of the last crisis and the cost of any future crisis. i've listened to the hearings so far this morning. i've heard very little discussion of what we lost and what we could stand to lose in the future. you can measure it in different ways. you could talk about more than 8 million jobs lost, you can talk about the loss of growth that we'll not get back. i would stress the fiscal costs according to the congressional budget office, the change in medium term debt of the united states, of federal government debt held by the private sector is roughly 50% of gdp. $8.5 trillion. that's a huge cost. and what is the mechanism through which we encountered the previous financial crisis and what are the risks that we face going forward? this is my second point, a lot

of these risks come from the behavior of very large banks. and despite the best intentions and attempts by congress to deal with this problem of so-called too big to fail banks, i'm afraid these structures we still with us. there is a distorted set of incentives that these banks have. they get the upside when things go well, they get the profit, the compensation for executives. when things go badly the risk, the costs get shoved onto ultimately the american taxpayer. that's the point of the $8.5 trillion in losses. and the way that you blow up a bank, the way that lehman was destroyed, the way that bear stearns was destroyed, the way that merrill lynch incurred such large losses was precisely and exactly through proprietary trading properly defined as defined bit the statement and by mr. tarullo's statements this

morning. it was the intent of those institutions to buy and hold securities hoping to benefit from short-term price movements that led them into what were regarded as very highly rated investments, aaa securities were, in fact, where they suffered their most damaging losses. mr. tarullo said we shouldn't be fighting the last war and he's exactly right. the volcker rule as written, and as attempted now to be implemented, is precisely on a forward-looking basis to prevent the big banks from again putting their hand into the pocket of the american taxpayer. now, my third point is i understand that the industry is concerned about this, and i've read carefully the documents that was sponsored and put out through various organizations and individuals. and i'm deeply skeptical for the

reasons expressed in my written testimony of the estimates of the so-called liquidity costs or reduction in liquidity. i think the methodology that's used, for example, in the oliver wyman report is deeply flawed. i've explained that in my testimony. i'm happy to take that up with you further. however, let's say there are some small liquidity costs, let's say we should be evaluating and thinking about potential costs and you all have done that very carefully this morning, we must weigh those costs, surely, against the benefits. surely, the question is not can you find this or that small nickel and dime costs in various parts of the economy, but what are you doing to the risk that this society will face another massive devastating financial crisis because we have banks that are so big that when they threaten to fail, they can bring down the entire economy.

we can talk about alternative approaches. we can argue that there should be more capital in the financial system. i argue this day in, day out with regulators both here and around the world but you won't get it. basil 3 will not give you enough capital. there is nothing else on the table that will make meaningful progress in this area. and i would close by re-enforcing and reiterating the point made by barney frank in this morning's panel, which was if uncertainty is an issue and if we want to get past the process of resolving what happened before and what is the basis of the rules going forward, then you shouldn't have more delay. you need to have rules now and the rules are available, the rules can be put into place and i would urge you not to encourage the regulators to delay any further. thank you very much. >> thank you, professor.

mr. elliott? >> thank you all for the opportunity to testify today on the volcker rule. i should note that while i'm a fellow at the brookings institution, my testimony today is solely on my own behalf. i believe that the volcker rule is fundamentally flawed and will do considerably more harm than good for the economy. i base this on two decades on wall street as well as on the years i have spent at think tanks since then. despite being a former banker, i should note that my views on the volcker rule do not stem from opposition to the dodd-frank reforms. indeed, i'm on record as a strong supporter of the overall approach of the legislation. my core problem with the volcker rule is that it tries to eliminate excessive investment risk at our major financial institutions, but without measuring either of the two key attributes. the level of investment risk and the capacity of the institution to bear the risk. instead, the rule focuses on the

intent of the investment. i believe that the globally agreed basil rules on bank capital take a more intelligent approach by explicitly measuring both investment risk and the adequacy of capital to absorb those risks. one can validly argue about the techniques used to do this but it makes a lot more sense to fix any flaws in that approach than to act as if we have no ability to measure risk or capital. focusing on intent creates fundamental problems. for starters, the concept of proproprietary environments is highly subjective. i surmise that the underlying rationale is to try to separate out activities that are intrical to banking than those that are not. by focusing on investments alone, the volcker rule implicitly assumes that lending is good. ..

>> which will be extremely difficult. we are in danger of forcing regulators to micromanage banks in one of their core activities, the ownership and trading of securities. in addition the rule of mrs. investments that are taken on with an acceptable intent but would still represent excessive risk. for example, we want thanks to

safe and highly liquid securities to meet sudden demands for cash without having to make a fire sale of loans or other assets. therefore for the proposed rules provide an exemption from liquidity activities. but a large portion of investment losses and commercial banks and the crisis were on their holdings of security purchase for liquidity purposes. they bought aaa mortgage-backed securities, as professor johnson noted, which recorded liquid at the time of purchase. the intent would've been considered acceptable but banks still lost a lot of money. these critical flaws means of local rule will do a poor job of identifying or eliminating excessive investment works, will be costly even when it correctly identifies risk, and will be even more costly when it discourages risk-taking that is incorrectly treated as if it were excessive. the rule will raise the cost of

credit to our suffering economy. securities markets will be harmed by a substantial reduction in the liquidity provided by banks. this will widen the bid-ask spreads and make the issuance of securities more expensive. meanwhile, banks themselves will have a reduced role in profitable lines of business that are integral to modern banking. forcing them to recoup the lost revenue through other ways of charging more to their customers. as a result of all of this, businesses will pay more for funds to invest in new plants or r&d, or to hire additional workers. they decreased efficiency of markets will also spur investors to demand higher risk premiums, reducing the price of existing stocks, bonds and other assets, potentially including housing. u.s. banks also lose market share to global competitors. this will further reduce their profits, leading to the path to

more costs and destroy some high paying u.s. jobs. ideally, i would like to see congress repealed the volcker rule. they are that, congress should send a clear signal that regulators are to implement the rule in a modest and relatively simple fashion that focuses on only stopping those activities that very clearly violate the rule. thank you again for the opportunity to testify. i look forward to your questions. >> thank you, mr. elliott. our next speaker is alexander marx competitive global trading fidelity investments. >> thank you. ranking members, members of the subcommittees, thank you for your opportunity to testify today. my name is alex mercer might have global bond trading for fidelity investments. initial am responsible for the bond trading that supports the investment products for which fidelity serves as investment adviser including fidelity's mutual fund. fidel is one of the worst leading providers of financial

services with assets under administration of $3.4 trillion come including manage assets of more than $1.5 trillion. fidelity provides the best investment measure, retirement planning, for further guidance, brokerage, benefits outsourcing, and other financial products and services to more than 29 individuals and institutions, as well as 5000 financial intermediary firms. we manage over 400 mutual funds across a wide range of disciplines including equity, investment grade bonds, high income bonds, asset allocation and money market funds. the assets we manage belong not to fidelity but rather to the funds and the shareholders and customers have entrusted us with their savings to in this role for deadly is the fiduciary duty to serve in the best interest of these clients are mostly small investors such as retirees, parents saving for college, and other individual investors as well as pension plan participants and institutional investors such as governments, universities, nonprofits and

other businesses. it is in this fiduciary capacity that i appear before you today to make you aware that the implementation of the vocal role as proposed would have significant negative impact on fidelity's customers. fidel is not to represent the interests of wall street but is a by side capital markets participant who is interested in ensuring the u.s. capital markets remained the most liquid and efficient in the world. we have two primary concerns with the regulations that been proposed to implement the volcker rule. first the rules as proposed will have significant burdens on banks and engage in principal trading. the result of this is the funds will make more cacheability of comet shareholder retentions causing a loss of investment opportunities and higher transaction costs and children will be to reduce return investors across the fund industry. second, the proposed rule could slow growth in the economy by raising the cost of capital issues for u.s. companies and municipalities which would come at a particularly unfortunate time as the economy continues to

strive for recovery. as an investment adviser fidelity is not a bank to be directly regulated by the proposal. indeed, we recognize that volcker rule as passed by congress regulates banks in seeks to reduce the likelihood is a proprietary trading conducted by those banks could put the u.s. economy at risk. the banks provide liquidity and capital markets to their ability to commit capital to trade seekers with our funds at any point in time. is customer facing principal trading with the dealers, depends on one side of the trade and fidelity's funds as the principal on the other is significantly different from the speculative proprietary trading that the volcker rule sought to limit. yet this distinction is not adequate address in the proposed rules. we are concerned the proposed market making exemption will be so burdensome for the dealers that they would either have to charge market participants more for trades or in some cases dealers will choose to exit market making in certain businesses altogether, resulting in less liquidity come increased

volatility, and higher transaction costs for investor. additionally, banks regulated by the volcker rule serve critical roles as underwriters in the capital markets. as underwriters, the banks purchase security from corporate and municipal issuers and sell the secret is to investors such as fidelity's funds. the proposed rules would likely affect the men in which banks conduct underwriting services, potentially resulting in higher costs to capital issues for bar with the higher borrowing costs for small to mid-cap issuers could potentially cause downstream effects on health that u.s. businesses and their ability to hire workers and invest in new markets. the resulting higher capital costs and less efficient markets may compromise the competitiveness of u.s. businesses globally. lastly due to the narrow definition of municipal securities in the proposal, there will be higher debt cost of many issuers impairing their ability to fund critical projects. the impact of the volcker rule proposal would have significant impact on equity markets as well as fixed income market.

for example, the proposal would jeopardize the abilities of your to engage in risk trading with a large institutional investors like fidelity's funds. my written statement with additional details on the effect on equity markets. in conclusion, we look forward to working with congress and the regulars to ensure that any final rulemaking is a properly tailored and will not create negative unintended consequences for investors, capital formation, and economic growth. i'd like to thank the subcommittee and a staff for their work on this issue, and for holding this hearing to consider the implications of the proposed regulations related to the volcker rule. i would be happy to answer any questions. >> thank you, esther markert our next witness is -- okay. on behalf of the americans were financial reform. >> may i speak only of the for finance reform from a coalition of more than 250 organizations who have come together to

advocate more reform of the financial sector. i'm reminded today of a time 33 years ago when as a young attorney i was commissioned to write testimony for a partner of goldman sachs to be delivered to a committee of congress on half of the seekers industry association. that's a predecessor organization of sifma. the goal of the testimony was to resist repeal of glass-steagall -- >> could i beg you to pull the microphone closer? >> the goal of that testimony, on behalf of the goldman sachs to resist repeal of glass-steagall. so it's to protect investment banks and competing with commercial banks and the cheap and capital they would have. those issues are really sort of still central to what we're talking about today. there's been discussion of the volcker rule as, based on intent or based on looking into the hearts of people, or using

psychiatrist and whatnot. in reality, and looking at the rule, volcker rule is all about prohibiting a line of business which has a purpose. so we have to define what the purpose is of the business. that is a direct threat in terms of run on the financial system. in other words, proprietary trading, large positions that we're marching calls are recorded in regards of what the crisis is, the vehicle that is most threatening to the financial system has historically in this country been a run on a. that's what does. proprietary trading is not made illegal. trading demand can't and under the rule will be met by other institutions in the system. the act surgically excised only those trading practices which cause the greatest risks it and tries to leave, as permissible client oriented trading. however, what's happened over

the years is client oriented trading, the fever has sort of infiltrated client oriented trading. so it's hard to tease out what's client wind and what's not. that's why the rules are so long and complex. 90% of the 300 pages is about discussion, and to those 300, that 90%, most of it is about trying to tease out what is client oriented and what is not. having prevailed with numerous exceptions and permissions in the volcker rule, it's ironic that banks now complain that the rules are complex. that is somewhat inevitable. the industry sets forth a number of objection, but the centerpiece is that liquidity in the trade markets will dry up posing large costs on society. and studies are put forth to support that. but the study, these studies

don't withstand scrutiny. for example, an explicit assumption of the oliver wyman study that said the commission is reduced bank activity will not be replaced. that assumption is transparently false. proprietary trading that is profitable and useful and makes sense will migrate out of banks and into other organizations and the capital behind that will follow it. is really remarkable that all of the industry comments assume that this will not be replaced. they pound the drums about business moving off düsseldorf, but they ignore the possibility when they do the numbers and come up with their costs at the business but actually just moved across the street. the claim that, the cost of the loss of liquidity is a complex one. in fact a lot of the trading there's going to be prohibited isn't actually about liquidity.

it's about come its trading of other types. there's an interesting study done at stern school it found over now -- overall financing cost of the entire real economy has asked increase over time despite greater ideas of efficiency. a financial industry that sustains an expansion of railroads, steel and chemical industries and the electricity and automobile revolutions was more efficient than the current finance industry. this reduction of liquidity asserted by the commenters is based on all the misleading assumptions, using market data from stress situations and the rest. but worse, the commenters and to the costs and risks arising from subsidized too big to fail trading. and, finally, in all of the cost benefits, the value to the public of avoiding bailouts is not even considered. thank you for the opportunities become and i'm happy to answer

questions. >> think of it our next witness is douglas peebles, chief investment officer and head of fixed income, alliance bernste bernstein. on behalf of securities industry and financial markets association, management core. >> that afternoon, chairman garrett, ranking member's waters and baloney come and members of the committee. my name is douglas peebles. i'm the chief investment officer and head of fixed income at alliance bernstein. a global asset management firm with approximate $400 billion in assets under management. alliance bernstein is a major mutual funds and institutional money manager, and our clients include, among others, state and local pension funds, universities, 401(k) plans, and similar types of retirement funds, and private funds. today i will focus on provisions of particular concern to alliance bernstein, and sifmas

asset management group. we believe significant changes must be made to the intimate and regulations, particularly with respect to the market making exemption. market-making is a core function of banking entities and provide liquidity needed by all market participants, including pension funds and individual investors. the simplest market making activity involves exchange traded equity securities, where in most cases market makers are generally able to resell securities quickly. other markets, however, are more complex and less liquid. in a fixed income market, for example, a single issuer may have many debt instruments outspend with different terms and as a result there is fragmentation and intermittent liquidity for any single dead issue. because in fixed income market buyers and sellers are much less likely to wish to trade at the same moment in time market makers bridge the gap and provide the liquidity necessary for these markets to function.

in carrying out this function, market makers are required to evaluate all the risks in purchasing the securities and transact with investors at a price that reflects those risks. the dodd-frank act expressly seeks to protect these functions by providing an exemption for the purpose, sale, acquisition, or disposition of securities and other instruments. in connection with underwriting or market-making related activities. unfortunately, there are several problems with the proposed regulations. one significant issue is that they're trapped from the perspective of regular and market-making activities for equities a pretty straight on organize markets such as the exchanges. where indie media is generally act as agents. the proposal clearly fails to account for different types of market-making environments, particularly those related to fixed income and other over-the-counter markets. we believe the failure to take into account different otc

market-making activities reflects a major oversight in the proposal and could have devastating effects on fixed income markets that exhibit intermittent liquidity. the potential impact on liquidity would have negative consequences for mutual funds investors. products that feature less liquid investments like many fixed-income funds could experience difficulties with subscription and retention activity. if banking entities reduce the role and there's no other counterpart if it within mutual funds my face challenges in redeeming shares in stated net asset i. the result could be either do products in the market or a limited universe of securities for them to invest in, which would harm capital availability. such a change could have consequences to the average retail consumer. for those who are living on a fixed income such as seniors, if these assets are in a liquid or have significant decrease in value, it could have a negative impact on her aging populations ability to take care of

themselves. it is also important to note the negative impact it will have on those individuals who are doing the right thing by saving for their future retirement. rather than establishing applicable standards to permitted activities, the proposal creates a presumption that any cover financial position held for period of 60 days or less is a prohibited proprietary transaction. essentially prohibiting market makers from holding inventory. the proposal allows for rebuttal of the 60 day presumption is the banking entity can demonstrate the position was not acquired for any of its several list of purposes. we believe this combination of a negative presumption with a list of restricted conditions will encourage market makers to dispose of every position as quickly as possible to avoid the possibility that the transaction will be considered a prohibited proprietary trade. it is imperative that implementing regulations take into account the fact that market-making often involves the need to take short-term

positions that will result in profit and loss. this activity is a natural economic result of a market makers wind is to commit capital to facilitate orderly trading. this proposal fails to recognize that there are not perfect hedges for all security. it is impossible to predict what the behavior of even the most highly correlated hedge will be versus the underlying asset being hedged. in general the realization of some profit and loss is unavoidable even went a market maker commits capital to facilitate orderly trading of liquid securities with properly structured hedges. the impact of the regulations will have broad implications to the ability of the corporate issuers to raise capital in the u.s. by selling the debt securities is dependent on that date ability of secondary market liquidity. which is largely provided by banking entities through the market-making activities. we are convinced that the proposal will significantly reduce the liquidity of secondary market for debt securities and is likely to have a profound and unintended

adverse effect on our capital markets. >> thank you, mr. peoples. our next witness is the president and ceo of rbc capital markets on behalf of the institute for international bankers. >> thank you, chairman capital and garrett, ranking members alone and boulders, watchers, my name is mark standish and i'm president and ceo of rbc capital markets, the corporate and investment banking platform for the royal bank of canada. now, so his british by birth, american by choice, it is an auditor testified before the gap of the institute of international bankers. the members consist principally of foreign banks that have substantial banking, securities and other financial operations in the united states. our members contributed significantly to the depth and liquidity of the u.s. financial markets, into the overall u.s. economy. a.i.d. and members u.s. operations have approximately $5 trillion in assets, generate

a quarter of the commercial and international bank loans made in this country, employ tens of thousands of americans and directly contribute to the u.s. economy, more than $50 billion in annual expenditures. at u.s. operations subject to u.s. regulations and supervision. our activities outside the u.s. are subject to regulation by authorities in the countries in which we operate. and our home country breakers to provide our global activities. like u.s. banks, we have concerns regarding how the proposal impacts our u.s. operations. however, today my remarks will focus on the cross-border implications at the proposed regulations. the iibm supports the coal a financial report of we acknowledge the agencies artwork and the challenges in developing regulations to implement the volcker rule. however, we said that the proposal as currently form is inconsistent with congress' intent and would not advance reform goals. congress is clear that foreign banks trading in funds

activities conducted outside of the u.s. are not subject to the rule. recognizing that these activities are regulated under foreign law by home country supervisors. the proposed regulations, however, failed to adhere to this long-standing u.s. policy. for example, the proposal would restrict a foreign banks trading desk in london, toronto or tokyo from buying or selling for its own account any securities traded on a u.s. trading platform, including the new york stock exchange, or our employees in houston would not be able to market a non-us funds to clients in south america. a canadian bank could not sell interest in canadian mutual funds to the 1.2 million canadian snowbirds that regularly visit the u.s. foreign banks would be restricted from transacting in liquid securities of whole market issue is necessary to fulfill our roles in supporting our domestic trading markets. and, finally, the proposal would frustrate our ability to

actively and dynamically manage our balance sheets in currencies outside of our home countries. in short, the extraterritorial reach of the proposed regulations restricts activities that would pose no threat to, but rather directly and indirectly support u.s. jobs and the u.s. economy. the proposal extends trading in u.s., securities but fails to allow principal trading in non-us government security. regulated in canada and japan have written to the agencies explaining that such an uneven playing field could undermine the liquidity of government debt markets outside of the u.s. as well as impede the ability of foreign banks to manage their liquidity in funding needs. iib strong urges the agencies to adopt an exception for trading foreign government securities. lastly i would be remiss not to comment on the extreme complex compliance requirements. they impose extensive

quantitative reporting requirements on banks that engage in permitted activity such as market making and risk mitigating hedging. apart from the question the use, such requirements should not apply to the non-u.s. operations of foreign banks without regard as to whether the u.s. taxpayer is put at risk. in conclusion, we are very concerned that the burdens of the proposed regulation will far outweigh the alleged benefits. it will encroach on the autonomy of foreign banks and regulators. it will harm the competitiveness of u.s. markets, the global markets, that u.s. counterparts transacting. we urge the hc to take the time in developing regulations to implement the rule to make sure they get it right. we would submit the bottle through requirements very well may achieve the objectives sure to be addressed by the volcker rule. thank you and i look forward to your questions. >> thank you, mr. standish. our first -- chairwoman biggert?

five minutes. >> thank you, mr. chairman. and my questions are for mr. evans to start out with. and i'm glad you're here. i didn't have the opportunity to ask the regulators about the insurance issue, but i'm going to submit several questions that i have for them also, so i think your testimony has been very helpful. you stated in your testimony that the dodd-frank act provides an exception from the volcker rule for insurance companies. but there seems to be part, part extension, any questions about the private equity. if you could give some examples of the private equity investments that are attracted to ensure his editors were long-term, and could you explain how that will, to those investments differ from private equity firms?

but is there a clarification and the volcker rule that these are acceptable or exemptions are not? >> thank you, congressman, congresswoman for the question. the dodd-frank act says that the regular should appropriately accommodate the business of insurance. and they accommodations could take the form of comment give you an extension for proprietary trading or getting an exemption for covert funds, private equity funds, hedge funds, et cetera. the interpretation of the rulemaking seems to be that it exempts only proprietary trading, which makes no sense when you think about it because proprietary trading is a short-term activity, insurance companies invest for the long term to provide come in our case, lifetime income for 3.7 million people in academic, medical, cultural field. and so for us is extraordinarily

important that we maintain an ability to make these types of investments. now, we do all kinds of investing that would be considered covered fund investing. but to give you some examples, of long-term investing that helps us a lot our 3.7 million participants to have large and stable lifetime income. we are invested in a power plant in the northeast, a toll road in the southeast, electrician, electricity transmission business in the southwest, and a clean coal gasification plant in the midwest. these are long live in vestments, 20, 30, 40 years in duration. they're designed to provide steady streams of income that can support the average working people's lifetime income after their working years. >> okay then, obviously we have

been working on making sure that insurance countries, which are regulated by states, and so this bothers me that they really bring this into the volcker rule on this. how to state insurance investment laws later protection from equity speculation that insurance companies affiliated with the bank? >> state regulators have regulated insurance companies like tiaa-cref for many, many years, and they have a number of restrictions. it's no accident that in insurance companies are structured in a conservative manner, and made it through the recent downturn in relatively good shape. ..

the business of insurance that they were speaking of proprietary trading and covered funds particularly since insurance companies don't engage in proprietary trading. so in our minds they must have meant covered funds and we think it's very important that the rules, once they become finalized, specifically exempt covered funds activity for the reasons that i mentioned.

>> okay, thank you very much. >> thank you. >> mr. carfang, do you think the volcker rule has the potential to raise the cost of capital for both nonlarge financial companies and small to midsize american businesses? >> thank you for the question, madam congresswoman. absolutely. because of the volcker rules eliminating or restricting the activities of market participants, the costs will go up. there are fewer bidders to bid down price but i think is the crowding out of small businesses. as we continue to have concentration in the larger banks and the volcker rule exacerbates that, larger companies will still have access to the largest and highest credit ratings will still have

access to credit and there's a question whether there's enough capital to avoid the crowding out of smaller businesses at any cost. >> we've been working to try and increase jobs that take down the barriers for small businesses to be able to do that, the only jobs the dodd-frank bill seems to increase is compliance. and so is this one of -- one of the costs that would be increased? >> well, exactly. costs will go up in terms of -- >> and i hope you'll forgive me, ms. biggert -- >> the operating services. >> thank you, i yield back. >> thank you chairman biggert. representative maloni are wanting those on her side to have an opportunity to ask questions. >> thank you, mr. chair and thank you, congresswoman maloni.

[laughter] >> and thank you to the panel. i appreciate all the help that you've given us to understand these issues but i just want to ask kind of a basic question first. do you all agree with the basic premise that trading operations of banks shouldn't be subsidized with deposit insurance, access to the discount window and other federal subsidies? do you agree with that basically idea? how about you, mr. carfang? >> i generally agree with that statement. however, like everything else -- >> thanks a lot. i only got a limited time. does everybody basically agree with that or anybody that disagrees -- >> if i understood the question correctly, you're asking whether we agree with the subsidies, with the existing structure of subsidies? >> no, no. do we basically agree with the goal and the intent with the volcker rule? do we agree with the premise that trading operations of banks should not be subsidized? >> absolutely.

>> i know you agree. but i'm -- >> it's a more complex question that it might appear on the surface. >> i want to ask you about that. >> right. >> so if we agree on the basic idea that -- that -- that banks should not be subsidized by deposit insurance, basically the taxpayer, if they want to engage in investment which can lose our -- >> i don't believe they should be subsidized in any of their activities based on things like deposit insurance. however, if you subsidize them at all the money is fungible. you end up effectively subsidizing any of the things that they choose to do. that's why i view it as a more -- >> okay. thank you for asking that because, you know, then again, before i got to congress, i was a public defender. this stuff is complicated.

but i'm aware that between the establishment of glass-steagall and graham leech bily, for banks -- the core functions of banks and insurance companies and investment banks were separated and they couldn't do this kind of stuff and the system seemed to be pretty stable, and now they can do it, things seem kind of unstable and what everybody except mr. johnson seem to be saying that we absolutely have to allow banks' trading operations to use -- to use, you know, subsidized insurance deposits and discount window access and the -- and the accounts associated. we have to do that 'cause if we don't, we won't have access to capital. overseas investors will outcompete us, we'll lose jobs. that seems to be it. tell me why the system was stable for so long when we couldn't do this and how it's so

essential that we have to do it now? >> i actually remember the old system. >> okay. >> me too. >> i think you hit on the real issue, not that this business is going to, poof, going to go away but we're talking about moving the business by being subsidized by capital being subsidized by free market properly priced capital. i think it's absolutely correct and i think one of the things that was part of the genius of the new deal was they figured out, yeah, you put in the safety net for the banks but you also separate out this trading activity so that one doesn't overlap the other. i think mr. elliott is absolutely right. even though deposit insurance, for instance, doesn't directly subsidize the capital, it indirectly does because you can't -- you can't let those -- >> well, it seems to me in the absence of something like the

volcker rule, we have a heads, i win, tails you lose system in which -- if i'm a bank, i can go out and buy mortgage-backed securities, aaa-rated, and if they make a bunch of money, i keep that. i don't give that to those depositors who i use their money for, but if i lose a bunch of money, then i'm going to the taxpayer to save me. and it just seems so unfair. and as we go through this debate, a lot of you guys who are so smart, you know so much and i'm so impressed, but it seems like what you're doing is, well, you know, we just -- this ten exceptions, no, 20, no, 30, let's it's complicated let's just keep it how it was since 1999 and it just doesn't seem right. if we can't fix -- and have everything perfect, that we can't do anything which, of course, is a good deal because if i said, look, i am going to

use somebody else's money, invest it, maybe put it in mortgage-backed securities or if i make a bunch of money, i keep it, and if i lose a bunch of money, somebody else pays, why would anybody want to stop that if they're on the plus side of it? and i guess what everybody said except for mr. johnson and mr. tuberville, no, we don't want to stop it. we like it. so tell me why i'm wrong. >> i've been a big supporter of dodd-frank which contains many things that are far from perfect but move us in a safer direction but i want to be clear about that. >> okay. >> the thing is -- the premise of your question and the explicit comments of professor johnson are that the volcker rule would actually increase safety in some appreciable way. that i do not actually believe. for instance, holding the mortgage-backed securities -- the holding mortgage-backed securities most of them would have been perfectly okay under the volcker rule.

you can lose money on these investments without being in danger from the volcker rule. >> but -- well, let me -- >> congressman, you're exactly right. the volcker rule proposes to remove the subsidies from some very powerful people in our society, not surprisingly, they would like to keep those subsidies and they are telling you that today. and with regard to access to capital, and the cost of capital, this is not just unfair, congressman, this is incredibly inefficient. what has has destroyed access to jobs in the past four years it was the behavior of the firms in the largest sector the way they used those subsidies in a reckless manner and they will do it again. >> i'm out of time? >> yeah, but it was getting interesting. [laughter] >> sorry, about that. >> thank you, mr. ellison. a statement for the record, american bankers association, bond dealers of america, the business round tail, tms energy,

ici glabl, silicon valley bank, duffy's comment letter without objection placed in the record. i'm going to yield myself five minutes and see if i can actually do a little continuing on parts of this discussion. professor, i've actually heard a couple of members of the panel, at least one, but maybe two talk -- touch on basel iii and basel ii.5 that is currently out there, on creating enough capital safety net. can you comment on that? >> yes, congressman. basel iii is very unlikely to provide enough capital for the financial system. remember, this is the least common denominator across industrialized countries. and it includes europeans and i'm sure you're -- >> are you picking on the europeans? >> they brought it on themselves. >> i think germany may have the -- the first stage of downgrade may have happened

today. >> what about germany today? i'm sorry. i didn't hear the point. but europeans don't want capital in their banks. deutsche bank, for example, is very likely capitalized banks. they have resisted from all accounts within the basel community attempts to raise capital standards even by the levels that mr. truhillo was talking about. does basel iii do enough to keep our society safer? absolutely. capital requirements should be beyond what you get from the framework. >> to that point, mr. standish, you actually touched on basel iii. help me understand where the professor is right or half-right or wrong? >> thank you, congressman. we have actually adopted in canada large parts of basel iii and by the first of january, 2013, we will have also adopted basel iii in our trading books. the effect of that from precrisis levels has probably been to increase the amount of

capital supporting our trading activities by two to three times. i think what's probably appropriate is just touching so the members can understand basel iii a little bit better on the key characteristics of basel iii. banks will need to hold substantially more capital than is required today and, again, i just mentioned that it's heavily in trading books. bank capital will be comprised predominantly of common equity and that's versus tf3, types of capital. banks will need to hold substantially unencumbered liquid assets to enhance their liquidity and reduce dependency. and that also includes increased term funding of their businesses. banks will be required to establish loan loss reserves that consider full economic cycles and here we're talking about countercyclical capital. when things are great everyone thinks it's going to continue so you don't think you need to hold much capital against those ex pose you'res. those will be reversed.

banks will have balance sheet leverage and that includes being on balance sheet the impact of off-balance sheet vehicles that were the cause of a lot of the problems with the shadow banking system. so i feel basel iii does a tremendous job and actually does a better job of volcker in addressing the shortfalls of the financial system. basel iii is applied globally differently by jurisdiction depending on the risks of individual jurisdictions. >> and i'll have you go real quick because there's a couple of areas that i want to touch on, shoot. >> just to counter on the point whether there's enough capital, deutsche bank as far as i'm aware almost basel iii compliant at this point has total assets of 1.9 trillion euros. it has bank capital compliant with basel iii of about 6 billion euros. it faces potential losss on its sovereign lending and exposure to other banks in the european context. this is a very thinly capitalized major bank around

which the germans and the europeans are negotiating. they have a 50 to 1 leverage according to the official federal reserve statistics and that's okay also apparently under the way we operate. >> only because i'm down to a minute left but actually i'd love to have a side conversation with you on this. i actually had some real issues. mr. evans? your book of business is somewhat unique with what you do and the population you serve. how would we exempt you? how would, you know, the hedging practices particularly the number of folks -- and i must admit i think actually i even have some resources with you also. the annuities and the other products, tell me what volcker rule does to you and mechanically how you see yourself either needing to be exempt or the costs we just push fund to your members? >> thank you, congressman. i think it's actually a pretty

straightforward if the rule-makers adjust their interpretation of your intent to include your intent to appropriately accommodate the business of insurance to include an exemption for covered funds activity, i think that does the trick because that will enable us to make these investments in what are loosely defined as private equity securities but we -- we recognize very long-term investments in infrastructure and other assets. so i think it's actually pretty straightforward in terms of what needs to be done to correct this. >> you win the award for the simplest answer of the day. my time has expired. >> thanks to the chair and to the panel, excellent testimony. i think all of you make legitimate points. i draw some different conclusions than some of you do. and mr. carfang, you really had a cogent -- you laid it out

nicely. to begin with, and then you sort of countered by the professor and sitting here is kind of the political guide to decision maker. we want to have robust efficient markets. yet, we don't want to stick the taxpayer with a ton of responsibility if those efficient markets somehow fail. and so the more efficient they are going up the more efficient they are going down. and in america we tried to sort of limit that a little bit and that started with the new deal, with the glass-steagall separating investment banking from commercial banking. and, you know, over time that eroded. unitary banking went, you know, the investment banking piece went. we still have the fdic which i think is the third piece of glass-steagall that's left. so when this all came to us, we started out and mr. miller and i

had a one page amendment that was not the volcker rule but sort of the precursor to the volcker rule that said -- i first said if you're a systematically significant organization -- it could have been an insurance company. it could have been a bank, whatever, and your trading places the economy at risk, then you can be ordered to divest it. so there was a danger piece to it. mr. miller said well, we ought to have that for banks generally so we added banks but there was a danger piece to it. we did some carve-outs, you know, for the insurance industry for their hedges and their covering and all that stuff, went to the senate, they said, no, we're just -- we don't like it. but we'll do a few exceptions and then they went to the conference committee and said you can't do this except and they go through all of the market-making insurance kinds of issues, foreign banks, holding companies and now we've placed the regulators with a

responsibility to take what i think, you know, 619 is a pretty proscriptive section. we asked them to make rules from this to try to deal with who can trade and who can't and when can they and when they can't. so, you know, from my point of view, i think we did a pretty good job. i appreciate some of the comments mr. peebles, and you mr. standish -- do we have two englishmen on the panel today? >> i'm mostly an american, congressman. >> but the accent -- >> yes, it does originate elsewhere. >> okay. all right. americans but english by birth, okay, well, nice to have you guys on the panel. [laughter] >> we came over on separate boats. [laughter] >> but let's go back, you know, we are where we are. we had a tremendous fall. and it may be a trillion dollars in costs and inefficiency to the

capital market but by my calculation, just the drop in the stock market between the summer of '08 and the end of '08 was a 6,000 points, that's $1.3 billion per point or $7.8 trillion. that's $26,000 for every man, woman and child in america. and so we got to deal with that. i have to deal with that. what -- i don't think you can delay this any further. we're not going to go back to glass-steagall. that is the bright line test. so, mr. carfang, give me -- do you disagree with what i've said? i mean, don't we have to have some restrictions in there. >> i absolutely agree that unbridald risk-taking should not be supported by taxpayers, by deposit insurance. the issue is the gray area and the lack of clarity around the regulations and a lack of a precise definition of proprietary trading.

you know, much of what could be falling into this gray area is -- has become standard risk-taking practices that every company uses. you know, even individuals use. and without that lack of clarity, the fear of corporate traders is banks will air on the side of conservativism and withdrawal from businesses making medium size and small businesses totally without access to capital raising and risk management tools. we absolutely agree that -- >> so my question to you then is, should we -- i'm not sure it's the rule-making as it is getting rid of -- from your position getting rid of section 619? >> we already have a robust system of capital requirements that basel ii is making even stronger with the -- with the additional capital requirements for systematically important institutions. in addition to that, you know, regulators have substantial

latitude in terms of the risk-waiting of assets on bank balance sheets and i think that is where you manage the problem, not simply coming up with hundreds of pages of proscriptions on how -- you know, 3 million u.s. treasurers should do their job every day. that's not doable. >> thank you. >> thank you. i yield 5 minutes to myself. mr. elliott, you write in a book -- you write that we will survive the implementation of the volcker rule but that it is unnecessary, self-inflicted wound. you also write that you would like to see congress repeal the rule. is it possible for the regulators to adopt a volcker rule that does not have the negative consequences you describe or has congress given the regulators a mandate that simply cannot be fulfilled in a way that benefits -- that the benefits will outweigh the costs? >> frankly, i think it's the latter. i think there is such a lack of clarity as to what proprietary trading is, an inherent lack of

clarity. that there isn't some platonic answer that if we just search for it, we'd find it. it's inherently subjective and an arbitrary choice. it creates all these other issues. i would rather have seen, as i mentioned, an approach similar to the basel approach if -- if you end up feeling that isn't nearly conservative enough, then quadruple the levels or something. but at least it would say we're going to measure risk, we're going to measure the capital to take the risk and then we'll make sure there's enough. >> it's interesting 'cause one thing i seem to have learned today from both panels is there is still a lot of uncertainty in the implementation. mr. marx, you testified that the volcker rule will reduce liquidity which will have a negative effect on fidelity customers. can you expand on that? who are your customers? why do they invest with fidelity? what does reduced liquidity mean for them? will the volcker rule mean your customers will have to work longer to retire or won't be able to save as much as, you

know, for their children's education, for example, just things like that? >> as i mentioned -- as i mentioned in my statement, the customers that we have are retail investors, parents saving for college, for their children. 401k pension plan participants, institutional investors as well. when i talk about the fact that it's going to cost more, i talk mostly in the markets arena where the transaction costs are going to be precipitously higher depending on the asset class that you're referring to. so the ability for investors to get in and out of funds with regards to redemandtions, the ability for -- for issuers where they're trying to come into the market, it's going to give us is moment of pause as far as investments on behalf of our shareholders and, therefore, ask

for more from issuants. all around it's going to cost more -- it's going to cost the issuers, whether they're corporations or municipalities in order to give us the protection that we need for the investors, that's just the buffer. it isn't that they're getting something incremental in a new issue, it's to get them the buffer to get them out from a liquidity perspective. >> do you have some modifications that you think would work, that would make the volcker rule, you know -- would make it work as far as liquidity in bringing some of those issues to the table? >> i think at a high level, the most important thing -- there are two or three important things. one is really truly identifying the difference between principal risk-taking and proprietary prospective risk-taking. if you can take the time to figure out the two, you're going to be in a lot better space and it will allow dealers to feel more comfortable that they're not going to get in trouble with the regulators. i think that's the biggest --

that's the biggest thing. the second issue for me is when you think about this legislation and other legislation that's trying to be enacted right now, it's too granular. you're trying to solve for all of the answers at once, and i think if you take it up, you know, we use the term take it up to 50,000 feet as opposed to to try to get it all done at 10,000 feet and you give it time to sort of focus through, you're going to realize what the unintended consequences are as opposed to all of a sudden i'm them being right there for you. >> and, again, i think your response relates back to a lot of things i've heard today in just trying to figure out the differences and we need to take that time. professor johnson, if market-making becomes the view of nonbanks because it's difficult to distinguish between proprietary trading wouldn't the risks to the financial markets be greater given that nonbank firms mf global would not be in

the strict oversight bankings institutions would. >> no. they would have the ability to designate any financial institution that's systemic important and, therefore, to regulate them. i'm well aware of the arguments by darrell duffy that you put into the record that doesn't make any sense. if there is anybody who's a significant player becoming a significant market maker who you think is generating potential damage to the financial system, they can absolutely be covered under the systemically important provisions of the dodd-frank act. >> thank you. my time has expired. i know recognize representative carney for five minutes. >> thank you, mr. chair. and thank you to the panel for coming. i must apologize, i wasn't here for your opening statements so i'm going to ask probably some of you to repeat some of what you said, but in the first panel i noticed some of you were here. governor terrell has said if there's a comment, if there's a

better -- [inaudible] >> we're open to it. does anybody have a better idea -- i've heard some specifics but does anybody have a better idea of approach on this? that's one question and part of that question is i've heard some of you say that you don't think it's possible to make the distinction clearly enough. i think mr. elliott, between market-making and proprietary trading and so i guess i'd be interested in what everybody thought about that so start off with those two quick questions and then i only have five minutes. >> well, sir, it's our sense that among the better ideas are many of the regulations that are already in place as i mentioned earlier on capital requirements and on risk weightings. there's four major pieces of legislation that are impacting corporate treasurers, none of which have been tested. the capital requirements of basel ii, the volcker rule, money fund regulations and derivatives regulations.

we think a better idea is not to do all four of them at the same time. >> okay. he mentioned basel ii. how about basel iii? are you saying that the volcker rule and basel iii are unnecessary? they're in some way basel iii accomplishes what the volcker rule is attempting to accomplish? >> yes, congressman. i do. i think the issue currently with basel iii is the current complimentation plan is 2018 globally. i would contend that should be accelerated and sped up and it will, i believe, meet certainly all the checks and balances on the financial system. >> i don't know the details but doesn't basel ii and iii deal with capital requirements? >> it does. but it takes it to another level. it focuses not just on increasing trading book capital. one of the negatives i will admit is that it penalizes our applies more capital to support market-making trading activities in lower rated securities. where i do have an issue with

someone else stepping up in supporting markets is in smaller lower-rated companies. i think that will end up being a bit of a black hole market that should concern the members. >> so unless there's somebody else who has a better idea, please, quickly. >> in my written testimony, congressman, i suggested that putting the firms in charge of compliance, which is -- >> i read that. >> that strikes me not a good idea and that's a relatively easy thing for them to address. >> right. so i'd like to go to this fixed income market question, so what -- what dynamic do you -- are you saying will create the effects that you just mentioned in response to his question? what do the volcker rule -- i talked to some of the folks from fidelity and vanguard and i heard some of those arguments so i'd like you to speak to them for the record. >> i think if you take a very basic example, if you take the high income market versus the

investment great corporate market, which is probably three times in size from a new issue perspectives on an annual basis over the last couple of years so if you think there's any sort of fear that liquidity will dry up, which it will, based upon people's inability to take risk or for afear of dealers to take risk because they don't -- they don't want to be at odds with the regulators and the rules that are being implemented, you're going to see a market that is three times the size of the high income market, approach spreads and liquidity that are in the higher income market and that's a significant -- that's a significant change as far as the liquidity that's going to be provided. >> so people have their hands up. would you like to add to that? >> i completely agree with what mr. marx just said. just to give you a very simple example, right, so fidelity or alliance bernstein owns but let's say we own all the corporate funds, today there's a

trading notion that takes place in those bonds and tonight we receive redemption orders from our clients, right? and those redemption orders we process at today's closing price. we wake up tomorrow, we see collectivity we have redemandtions and we have to go to the marketplace to sell the securities to fund those redemptions. and the price that we expected to be there as of close last night is very far away. so the 65-year-old woman from iowa who wanted to raise $1,000 now has $750 in terms of her redemption. that's a big problem. >> so i get 10 seconds left. how do you fix it? i have another part of it but i only have 10 seconds. is there a fix? >> to me the fix -- the fix truly is identifying the difference between principal risk-taking and proprietary risk-taking. we need prudent risk takers in the market. >> i would love to hear from if

my colleague would allow it. >> congressman, it strikes me we should have more confidence in the market. the assumption here is thatth liquidity will only be provided by the existing big banks that are highly subsidized and if you withdraw those subsidies and somehow the liquidity provision will go away. why? but if there is genuine opportunities there, if there's really profit to be made in these markets, making the markets, the business will shift. that's the problem with the oliver wyman study. they take exaggerated numbers, very extreme sumtions, the logic should be that the market will adapt. that's the basic principle of how these deep financial markets will work. >> thank you. >> okay. i want to recognize ranking member maloney for five minutes. >> well, first, mr. tuberville you had your hand up. did you want to comment? >> yeah. there's another way to look at this, is that when someone goes

out and places a block and they're going to have a liquidation or they need to buy some securities, they go to a bank and they put the block with the bank. what's happening there is that institution is renting the bank's balance sheet, right because they're saying we're going to move these securities over to your balance sheet. so the question is this and professor johnson is just right. do you want the balance sheet that is rented to be a subsidized balance sheet supported by too big to fail or do you want it to be an unsubsidized balance sheet with an institution that is not subject to the safety net and subject to too big to fail guarantees. >> thank you. mr. peebles, i know that many people have questions on it and we can follow up with written questions on it, are you familiar with the global legal entity identifier? >> no, i'm not. >> is anybody on the panel? you are?

do you think that this identifier will provide financial regulators and the public sector to have a better review of the benefits and can better control what's happening? do you think that this is important to manage finance and prevent -- prevent failures and risk the identifier? >> besides from the issues we're talking about, perhaps being able to monitor the markets and understand what's going on, and having data is absolutely the most important thing. the first threshold issue is the legal entity identifier which is to sort out what the legal entities are that are involved in all these transactions. i believe the fact is that lehman brothers had 2,500 or more separate entities inside it when it went under and caused a massive systemic problem. so the legal entity identifier is the linchpin, the first part of getting a handle on what's going on in the financial markets. >> who do you believe should

bear the cost of implementing the legal identifier? >> i believe that the cost -- if i were in charge of everything, the industry would bear the cost. >> and going onto the implementation of the volcker rule, do you believe that we will see an increase in trading firms, people are saying people will be moving overseas? there's a likelihood they might move across the street and open a trading firm. could you comment on whether or not you think this will have the impact of increasing trading firms or not? >> i think it's right. i think it will increase trading firms and trading will change in the different firms, even professor duffy in his paper talks about that. i mean, nobody -- nobody really believes this business, if it's -- if it's a sound business, if it's profitable, if it makes sense, if the trading business makes sense, the people will find a place to do it and

the capital will find its way to those institutions. >> but won't that increase liquidity? >> i think it will net liquidity. but what will find its own surface. i think what will happen, though, if you don't have capital devoted to trading, that it's a too big to fail capital that's subsidized, some kind of trading -- it probably doesn't add -- i'm sure it doesn't add anything to liquidity but probably the drag on the economy, some of the layers of intermediation and some of the trading that has nothing to do with liquidity and nothing to do with things that you're -- that's been talked about in this panel will dry up so that kind of trading will cease. >> will trigger banks' revenues increase or decrease in your opinion? >> i think too big to fail will decrease in which the years they blow themselves to smither marines and create massive

financial problems for the economy. but i think also their capital will shrink and their businesses will change. >> and in your opinion, what will be the impact on the financial industry and more importantly, how will market hedge funds, the public and bank reacts to increased trading volumes? what will the increase in trading volume have on the system? >> liquidity will survive and the liquidity purpose will be -- will be fulfilled. it's entirely possible what i meant to suggest in my opening statement, is that -- it's entirely possible that the system itself now, the financing system and the trading system, is efficient from the banks' perspective but is not selfish from corporate america's perspective so the actual cost of financing and raising capital is higher now than it was 50 years ago. there's some research to suggest

that that it's possible in the post-volcker world if indeed moving proprietary trading out of banks causes some of this not productive trading except for the financial institutions to go away, that it will actually be beneficial. >> okay. i want to thank -- >> that's okay. >> did you want additional time? >> yeah. i would just like mr. johnson to comment if he could briefly -- there were many causes out there for the financial crisis, but would you say that one of them was the inability of regulators and interested parties to see financial transactions and track what's happening and see what's happening? one of our goals is that we created an office of financial research that would be capable of providing risk assessment and stress tests based on real time data and would that have an impact that could prevent loss

and prevent prices? some ceos that testified before us said that this central system could be very effective in preventing crisis in the future. what is your opinion? >> congresswoman, i was the chief economist of the international monetary fund in 2007 through august 2008. i was involved in discussing the details of the financial crisis as it developed including the highest levels of government both in this country and around the world. and the lack of data was a very big problem. my concern even now, even after the crisis of the office of financial research with derivatives markets in particular remaining so opaque in many regards and with cross-border transactions continuing to be extremely complex and now under massive pressure with what's happening in europe, i'm afraid the sensible steps taken to collect better data and provide for better analysis are not enough. you also need to supplement that with many of the measures including the volcker rule. >> yes. >> thanks, mayor, in keeping

with the theme dealing with england, i'd like to offer and place into the record an excerpt from a chapter by adair turner, professor of the london school of economics of the future of banking. >> without objection. again, i want to thank the pam members for their testimony today. the chair notes that some members may have additional questions for today's panels which they may wish to submit in writing. without objection, the hearing record will remain open for 30 days for members to submit written questions for these witnesses and to place the responses in the record. with that, the hearing is adjourned. [inaudible conversations]

[inaudible conversations] >> closing out this hearing on bank industry regulations and consumer protection, as members are heading over to the house for votes on a resolution of disapproval on president obama's request to raise the debt ceiling. members have been deliberating the rule for debating that resolution both on that are underway right now. they're expecting general debate later this afternoon and a vote on final passage somewhere between 3:00 and 4:00 this afternoon. you can see live coverage on that debate on our companion network, c-span. also we learned a short time ago

that the obama administration is expected to formally reject the permit for the keystone xcel pipeline today. that project would pipe oil from canada down to refineries in texas. republicans have strongly supported the pipeline as a job creator. the white house has opposed the project on environmental grounds. an official announcement is expected later this afternoon. >> remarks now from earlier today, house democrats offered their agenda for this term from a briefing earlier today. >> good morning to everyone and welcome back. happy new year. good cheer in general. we'll be joined shortly by the vice chair of the caucus and -- who is also one of our conferees

but we come back after a long recess with what my constituents still believe is the dark abyss of uncertainty, the lack of jobs that they need vitally and with the opportunity to the leadership of the republican party to place on the floor the president's bill that will put this country back to work. instead, what we read about is that instead of addressing the needs to put america back to work, we're going to be just further mired in political debate aimed directly at the president. that's not how the country is supposed to work. that's most unfortunate. i hope that our colleagues on the other side of the aisle are ready as we are to roll up our sleeves and address the important issues that face this country and the number 1 issue that continues to face this country is to put the nation back to work.

we also understand that we have items left over from the last session, most notably, dealing with the payroll tax, dealing with the extension of unemployment and dealing with what we commonly call the doc fix to make sure we protect our seniors on medicare. we have to put choices on the table again i think that are important to the american people. not the least of which, especially, as we observe the debate in the republican party, and we learn astoundingly in the case of what many consider to be their ultimate presidential candidate that he paid 15% in taxes. secretary's rank-and-file citizens all across this country pay far more. is it fair to continue to protect the nation's wealthiest

1% and have those amongst us especially in the middle class that are feeling the squeeze have to bear the burden of two wars that are unpaid for, to pay for tax cuts to the wealthy, people in this country will have to suffer and continue to see programs cut so that the mitt romneys of the world can pay 15% in taxes? come on, there's a better way to do this. there's a fairer way to do this. and the american people understand that. this is a time of shared sacrifice. this is a time when we need to roll up our sleeves, put this nation back to work, do what the president has asked, extend this payroll so we put money -- this payroll tax so we put money back in the hands of people, make sure that doctors are going to see their seniors and for those that are out struggling to get a

job and through no fault of their own can't find it, extend them the benefits so they can continue to pay their taxes, not see their mortgages go into foreclosure and then have congress roll up its sleeves and address the issues of the day. put the president's jobs bill on the floor. vote it up or down if you're opposed to it, if you got a better idea, bring it to the floor but extend the courtesy of a vote. that's what the american people expect. not this political gamesmanship where they're not going to -- they're going to continue to try to block everything that the president does. it's just flat-out wrong. i hope our colleagues will -- >> we are going to switch up here and take you now live to the white house for today's briefing. spokesman jay carney is talking about the keystone xcel pipeline. this is just getting underway. >> what the state department in the corner would severely hamper their ability to review an alternate route and a new pipeline route in the proper

way, a way that has long been established by precedent and that would take into consideration all the criteria that are so important in decisions like this. economic impact, national security impact, environmental impact, the effect on the water that our children breathe -- rather, the water our children drink and the air that they breathe. they made clear that the state department in a statement prior to the signing of this legislation that imposing an arbitrary 60-day deadline on this process would make it virtually impossible for an adequate review to take place of a route, an alternate route, that to this day does not exist. so i'm simply reviewing the facts as we know them. >> but he signed the law. >> and we made clear -- well, he signed a law that forced a decision to be made in an arbitrary fashion, no question. and i don't have an announcement about any decision that would be

forthcoming on that. but i'm just reviewing the facts as they existed yesterday as well. >> let me get erin. >> well, to follow up on that you don't want to get ahead of the president or the state department. but the law says it's the president's decision so there any reason this announcement would come from the state department? >> again, i'm not going to get into details. i made clear that we may have more information for you on that later today. and i'll look for that. i would urge you to look for that for guidance on that question. >> just to be clear, are you saying that there has not been a decision made or -- >> i'm not saying one way or the other regarding that. >> and can you speak to some of the republican criticism that's already coming out in anticipating what the decision will be that the president hates jobs, et cetera? >> well, i think i did

anticipate some of that in my opening remarks but i would make dearly that there is a proper process that has existed for many years and many administrations by which a process like this is reviewed or a permit is either granted or denied. because of concerns expressed by numerous stakeholders including the republican governor of nebraska, it was decided that an alternate route through nebraska was necessary. the choosing of that alternate route has not been even completed yet, the state department which conducts and overseas this multiagency review process made clear at the time in december that inserting this extraneous provision in an attempt to get a political victory because for some reason extending a tax cut to 160 million americans wasn't a victory enough, the republicans put in jeopardy a process that could be immune from politics,

should be conducted on the basis of pragmatic and considered analysis and tried to hijack it through that. and the state department warned that that would create various problems. so the president's commitment to jobs creation has been amply demonstrated by policies that has pursued, that he has signed into law that have contributed considerably to the creation of 3.2 million private sector jobs. they've been demonstrated by his fierce commitment to doing everything he can, both working with congress and acting independently to further assist the economy as it recovers from the worst recession since the great depression and to assist the economy as it creates more jobs, more recently his proposal, the american jobs act which if the republicans were

committed to job creation, they would join with him in making sure that all of the provisions of that law of that proposal became law including the provision that would put 400,000 teachers and first responders back to work, a provision that would help rebuild our infrastructure and put idle construction works back to work, hundreds and hundreds of thousands of americans who would have jobs were the republicans to finish the work of passing the american jobs act, so that would be my answer to that criticism. >> you say that the move by congress to force the president and the state department to make a decision within 60 days about this pipeline is part of it? >> uh-huh. >> how is it any less political for the president faced with this difficult choice between jobs and environmental concerns

two important constituencies for his re-election to say you know what? i'm going to delay until re-election in 2012. how is that any different than what congress did? >> because there's an established process by which these reviews are conducted. because of the concerns expressed by many stakeholders including the republican governor of he be in, a decision was made that an alternate route needed to be considered, that process needed to be delayed. and the full review needed to be conducted on the alternate route. i mean, that's -- that's the way this process is supposed to work. >> but what if the president hadn't intervened? >> the state department -- first of all, again, the decision to create an alternate route was made based on the requests of stakeholders affected by the original route including, again, the governor of nebraska and others in that state. and that necessitated as deemed by the state department which

has to conduct this review postponement and the allowance of enough time to thoroughly review the new route. again, i think it's important to note as the state department made clear, that the 60 days is not enough time. we don't even have an alternate route identified yet so how could anyone possibly review it, thoroughly, in a manner that is expected in this process? so the point is that this -- these things are supposed to be decided in a methodical responsible manner so all these criteria are properly weighed because a decision like this has long-term implications for our economy and for our environment, for our national security. and those criteria all have to be considered as the decision is being made. the effort to score a political point in a process that was wholly unrelated because they were unhappy about the fact that the president was pushing for a payroll tax cut extension for

160 million americans i don't think makes a lot of substantive sense in terms of the issue that proponents of that course say they care about, which is the -- a decision that needs to be made on the pipeline and the potential positive economic impacts that would have. you got to let the process unfold the way it's supposed to unfold without this kind of extraneous political interference. and then a decision would be made on the merits. >> to clear this up, the president signed this into law. it says that unless he finds that it is not in the national interest of the united states, within 60 days, then the project will go ahead and takes no action. it leaves the state department out of the equation and puts it squarely on the president? >> again, i'm -- i'm not going to preview for you any information we might have about

this process or decision prior to that taking place. i'm not quibbling with the president. i'm saying who can review and the state department which through decades of precedence kuk this review made clear back in december what it felt the impact would be of an arbitrary deadline set by political reasons. if your issue -- if your concern is who's going to make the decision? you know, i'll suggest you wait for the decision to be made. >> the logical extension is that the president would find it's not in the national interest to go ahead. >> what the state department said it would be highly unlikely if not impossible if not to conduct a proper review of an alternate route that again on january 18th, 2011, does not even exist so how could you possibly review it. >> you would have to do it? >> again, i point you to the

future, 2012, what did i say. -- he's not okay with the original route. that was one of the primary reasons -- >> it should go forward while an alternate route is looked for. >> you don't grant a permit for a pipeline with a significant portion of it missing. >> you keep citing that he opposed -- >> his opposition was important to the decision to seek an alternate route, which then delayed the process. and then the process requires the permitting of the full pipeline. it's not, you know, a partial proposition. >> can we say on this? >> yeah, we can. >> i just want to change the subject really quickly.

[laughter] >> officials in iran reached out to the western powers to -- [inaudible] >> do you have any response to that and could you talk about your administration's getting back to the table with iran? >> our position has been clear and has not changed for a long, long time here. we have made clear from the beginning when the president took office that the path is open to iran to get right with the international community, to fulfill its international obligation, abide by its commitments and that the international community including united states would be willing to work with iran if it were willing to do that to ensure, for example, that it had access to nuclear technology for

nonmilitary purposes. and that stands. iran's behavior and its refusal to engage in serious discussions about this issue, its refusal to live up to its international obligation, its persistence in pursuing a nuclear program in a manner that's not consistent with those international obligations has lead to the consistent ratcheting up of pressure on iran led by the united states but together with many, many international allies and partners and that process continues and it has put enormous pressure on iran. it has isolated iran. and that continues. but the fact remains that there is an alternate course here available to iran should it respond to the letter from the p5 + 1 and live to up its obligation. this is a simple choice that has been available to iran from the

beginning. >> in general -- thank you, jay. in general the president doesn't oppose the construction of pipelines. after all, this is just an extension of an existing one. overall, does the president think they're an important part of the oil infrastructure? >> definitely. and i think that's an important point to make which i made yesterday which the president's commitment to expanding domestic oil and gas production is firm and it has been demonstrated by the fact that again in 2011, as was the case in 2010, the united states produced more oil and gas than at any time since 2003. and he has continued to make more territory available, both in the gulf and alaska and elsewhere to production and development and he has done that in a way that at the same time maintains the standards of safety and responsible development that he thinks are key.

so he takes an all of the above approach here. he believes firmly that he needs to continue to exploit if you will our domestic resources. we need to continue to invest in clean energy technologies, and doing so, taking this approach that includes oil, natural gas, nuclear power and clean energy -- other clean energy technologies is the best energy policy and the surest way to ensure that we increase our -- improve our national security and reduce our dependence on foreign oil. and so -- this is not an either/or proposition. it's a both and. you can do this. you can increase domestic oil and gas production as has been the case on his watch and do it on a safe and responsible way and doing it in a safe and responsible way includes ensuring that the proper reviews are conducted for a proposal like this keystone pipeline in accordance with long-standing bipartisan tradition and multiple administrations. >> this is an extension to the

canadian oil fields. does he have an opinion of bar sands -- >> the president is a firm believer in the fact that we need -- that we can and we must develop energy sources in a safe and responsible way. and, obviously, there are -- you have to take a lot of factors into consideration when you do that. the overall issue here is about economic security and national security and that's why it is so important to embrace the possibility of further development and ensure that we do it in a way that's safe and responsible and that's true for oil. it's true for natural gas, true for nuclear and it's clear for clean air technology, i'm sorry, clean air technology. i'm getting ahead of myself. mr. henry again. >> thank you vermu can i follow up on iran real quick and then a question on taxes. you talked about the p5 + 1 and that is a channel that the u.s.

can use but there's a lawmaker in iran and a foreign minister in iran are both on the side that a letter has come from president obama that there should be direct u.s.-iranian talks. has a letter been written and are you open to the talks? >> our position has not changed. any communications we may have with the iranians are the same in private as they have been in public and that is along the lines of what i just restated in terms of our position and our policy. the p5 + 1 structure is in place. if the iranians are serious about restarting talks then they need to respond to that letter. that is the channel in which the -- the mode by which the restarting of those talks would take place. again, our impression of our position is the same in private as it is in public. the statement that there is a

path here towards renewed talks and a path here for iran to pursue if it so chooses that would allow it to get right with the international community that would allow it to top the process that has been isolated further and further. and it remains available to iran to this day but iran has shown no inclination thus far to make that choice, to make that decision. and what we have seen over the three years since the president has been in office that he has -- by pursuing the iranian issue in the way that he has, he has ensured that a world that was in conflict over this issue is now united and an iran that was united is now in conflict. and the -- and that is the effect that the president's policies have had on iran and on

this process. he has brought to bear a level of consensus in the international community on the need to pressure iran and isolate iran on this issue that did not exist prior to him taking office. >> but could you address going back to the '08 campaign then republican candidate john mccain was complaining that direct talks with iran that the president had talked about then in the campaign would show weaknesses because why would you sit down with a country -- for direct talks that -- >> the president always made clear -- the process by which negotiations or talks would take place is the p5 + 1. the president has always made clear that as he did when he took office, as he stated during the campaign that by offering the possibility of resolving this dispute with the iranians through negotiations and talks would be in the united states' hands because if iran agreed to do that and fulfilled its

international obligations and abandoned its nuclear -- pursuit of a nuclear weapon that would be to the greater good and in the interest of the united states as well as its allies and partners around the world. and if it did not, it would be clear to the whole world that iran was the problem here, not the united states. and that is exactly what has what happened. we have a level of international consensus about iranian behavior that we did not have before. we have a situation where iran's economy is clearly suffering from the effects of the international sanctions j.c. penney as well as the unilateral sanctions that various nations have placed on iran. and that isolation has caused disunity within the iranian leadership. and made clear to the world that they have isolated themselves outside of international norms. >> the last thing on taxes,ied

when nora asked you about mitt romney saying that they say tax rate at 15% and that mentioned at warren buffett that he pays less than his secretary because of the rate of capital gains, from a policy standpoint, what is he talking about a solution. but in terms of law, is it to bring capital gains tax rates up closer to income tax rates so it's more fair. what's his proscription. >> i appreciate your question and it's a legitimate one. the president has made clear what his principles are in terms of tax reform. he is for both corporate tax reform and individual tax reform and one of the principles that he would bring to the table in the development of individual tax reform is the buffett rule, which would ensure that millionaires and billionaires, because of the nature of their income, do not pay at a lower rate than middle class americans. that warren buffett does not pay

a lower rate in taxes than his secretary, as mr. buffett himself has said. how you get there is a matter that i will leave to the president and others to propose because tax reform -- yeah, there are many ways to skin the cat and it's a complicated process but the process of the buffett rule is what he believes is important because it goes to the situation that i said yesterday and that you raised. it's simple as a matter of fairness, it does not make a lot of sense for millionaires and billionaires to be able to pay -- pay taxes at a much lower rate than somebody making $100,000 a year or less. and so that is a principle he would bring to bear here. there are a variety of ways -- there are a variety of loopholes within the tax code that -- or elements of the tax code as well as loopholes within it that create that situation and least not of which which is the

carried interest loophole that allows hedge fund managers and private equity managers to take income for their labor and have it taxed at a capital gains rate. the president believes that's just -- in the world we live in right now, when middle class americans are struggling, when they've seen their wages stagnate or decline, or when there's enormous economic pressure on hard-working american families, that's just not fair and we -- you know, we have important things that we need to do in terms of -- to ensure that america is strong and that our economy is powerful in the 21st century. and so we need to make sure that everyone has a fair shot, everyone pays a fair share. april? >> realistically, now there's -- [inaudible] >> what's the timeline in terms of an alternate route? when do you think -- >> i would refer -- first of all, i don't have any announcements to make regarding any decisions on this, so i

would just take issue with your question in that regard. [inaudible] >> i've been reviewing facts that have been true prior to the to today. as far as pipeline proposals of the nature that are -- of the nature of keystone that are transnational -- i mean, those would go through the normal channels through the state department and their duration in terms of the review process would be, again, absent extraneous political interference would take place in the normal -- in the normal manner. so but that's just the way the process exists. >> a 60-day process -- >> the 60-day thing was the arbitrary element inserted into an unrelated tax cut bill but that's not the how the process works. the process works in a manner that the state department run -- designed and run for many years. >> and the reason why i asked that question is because there

are already concerns about the fact tens -- quote-unquote, tens of thousands of jobs will be lost because of the trainjection. so would you consider this a deferment of job creation? >> well, let me just make clear here, as the state department decided and the president concurred, the review process was extended because of a decision to change the route. that process should be allowed to take its course. the review should be allowed to be conducted in the appropriate way with all factors weighed and considered, overseen by the state department, that is certainly the way this thing should happen. unfortunately, because of the decision by republicans to insert this extraneous provision within the tax cut bill, you know, there's than arbitrary deadline of 60 days forcing the

administration's hand. but, again, the broader -- the broader process will continue to work the way it has always worked again redating this administration. >> i'm talking about the process of job creation and that people are dreaming that tens of thousands of jobs -- >> april, you have -- these projects -- you have to weigh a variety of considerations, economic impact, environmental impact, health and safety, national security, and that's the way it should be. there are hundreds of thousands of teachers and first responders who could go back to work right away if congress would act to the american jobs act, if republicans would stop blocking the provisions within the american jobs act that this president proposed and -- there's tens of thousands of construction workers, infrastructure jobs, not unlike the building of a pipeline who could be going back to work, rebuilding our infrastructure,

making us more competitive for the 21st century if the republicans would support as they often have in the past the kind of infrastructure investments that are included in the americans jobs act. i've said earlier this month in briefings, we remain optimistic that that kind of cooperation could be forthcoming this year because it really is incumbent upon every elected member of congress as well as the president to work together towards these -- towards the goal of improving our economy and creating jobs. >> just to follow up a bit on what april is asking, the bottom line is the keystone pipeline has become a political lightning rod this year. so what's the administration's level of concern that the debate itself really in some ways pits this administration against some unions who are saying -- >> i would simply say that on issues like this, there is a

nonpolitical professional process that has been in place, was established long before this administration came to office, and is the proper way to conduct the reviews for applications for permits for these kind of transnational projects. that review process is run by the state department, it was being run by the state department, a change in the route was made of concerns expressed, legitimate concerns expressed by stakeholders in nebraska and elsewhere. and because of that, the process had to be extended. that's how it's supposed to work. there are a lot of factors to weigh in these kind of decisions including national security factors, issues of health and safety of our children and the residents of the folks in the area of any proposed pipeline, economic impacts, job impacts, the effect on our energy

security. and that's the kind of process that the extent overseas. it involves inputs from many agencies and that's the way this should proceed. it should not become as you say highly political in the way that it has become because of the decision to insert an extraneous provision within a tax cut bill. >> i understand there is a nonpolitical process but given that we're in a re-election year, isn't it impossible for us not to take some -- >> it's up to others to decide how political they want to be about any kind of decision like this. you know, this president, this administration, has tasked with the responsibility of these matters that's appropriate that takes into consideration all the different criteria that need to be brought to bear in a decision like this, and that's the approach the state department has taken and the president has taken and we'll continue to take. >> on another topic, a

representative peter king, chairman of the committee as you know back in august raised some concerns over kathryn bigelow's osama bin laden's movie and there were potentially some classified information that was leaked about the kill and capture of osama bin laden. last year the cia and the defense department officially opened an investigation into this project. what's the administration's reaction? >> well, the cia and the defense department are part of the administration. and i would point you to them in their announcement of their look into this. what i made clear at the time is that there was some loose reporting in a column about what the white house did, and i made clear that in discussing that mission and those days with folks involved in making this film or writing books or articles or doing tv pieces we said all the same things and none of of it was classified. >> are you confidence in this investigation -- >> i would refer you to the

defense department and the cia with regard to that because i was part of that process. with regard to the white house in engagement with reporters like everyone in this room practically as well as others who are working on magazine articles or books or films, you know, we provided the same information to everybody and none of the was classified. >> my question is a process question. why, knowing that you do in the keystone issue and indeed why would you announce that after the briefing and, therefore, put yourself in a position where you won't answer any questions about it and we won't have -- >> well, i'm not going anywhere. you guys can ask me questions, you know, i'm here most days and, you know -- >> all right. i'll call you -- [laughter] >> i know it's hard to believe, but the schedule of decision-making and policy, processes and stuff are not all

dependent on my schedule or the briefing schedule or the communication shot and that's how it should be. so, again, you know, you guys probably don't like me to brief in the middle of the evening or something. so i would just point you to the fact that we may have something more to say about this later today. margaret? >> on keystone, without confirming a rejection, can you explain to us what a rejection would mean? [laughter] >> no, no -- >> no. >> so if trans-canada has to submit a new route does that like -- does the clock start at zero again? are we looking at another 10-year process. you can say republicans forced their hand on it. i'm trying to to understand what would rejection mean? >> well, let me make two points -- let me make two

points. first of all, these reviews are conducted by the state department and the details of how they work are best explained by the state department. however, i would point out that absent the payroll tax cut and the insertion of an extraneous provision within it that had created this arbitrary 60-day deadline there was a process in place that wasn't 10 years but when the route had been changed was -- i think it was 18 months if i'm not mistaken. and that's because that's the amount of time that the state department believes -- was necessary -- would be necessary to properly review an alternate route. i would refer you to the state department for more details about how that process generally works depending on, you know, whatever decision was made because of the necessity created out of this legislation. >> but does the white house understand this would probably begin another 18-month time clock? >> i don't -- i don't have a

white house view to express on that except what i just said which is the process -- that depends on a lot of factors including the outcome of this decision. but the, you know, as you noted even in your question there are players in this process including companies, private companies. there's another country involved which is the reason why the state department is engaged in this. so it would be -- i would not want to speculate. >> it may have been eight months from now that you guys gave it a green light. what i'm asking is that option now totally obviated? >> i would just refer you to the state department. i just don't have details for that. and, again, it's based on the premise of a decision that i'm not announcing from here. >> any white house reaction in just working principle as you've gone through your day? has the internet provider and website protest affected you guys in any way?

>> well, i don't have any effects or impacts to -- that i've noted beyond to point out that we made it very clear over the weekend our views on this, and we had tremendous response to our "we the people" initiative and we think it's an important process here that has been conducted where there's a lot of external input expressed about the many important issues that are at stake. our firm belief is that we need to do something about online piracy by foreign websites, but we need to do it in a way that does not impinge upon the free and open internet. and what that means is that both sides, you know, loosely defined, the two sides on this issue need to come together and find a solution that strikes a

balance. and i think that process has been identified -- has been benefited by the interests in the number of voices that have been heard on this issue. you know, we've been impressed by the volume of response that we've gotten online to what we put out over the weekend. >> jay, can you give us a little bit more on the president's visit to florida tomorrow and some of the republican criticism that he's going to be there 60 days before the republican candidates will arrive and the polls are down in the state for him? >> well, you know, i've discussed his travel. i mean, he goes to states all across the country and every president should travel across the country to meet with americans from as many states as

possible. that's a principle this president pursues. he will travel tomorrow to florida to orlando to walt disney world where he will unveil his strategy that will significantly help boost tourism and travel, which is an important and sometimes overlooked sector in the u.s. economy. the action will be taken as part of the president's we can't wait agenda of executive actions that will aid job growth and do not require congressional approval which goes back to the point i made earlier, which is he's pursuing every avenue possible here to tackle what he thinks is our most important challenge which is growing the economy, creating jobs, positioning the american economy to compete and dominate in the 21st century and this is another indication of that effort. >> is that two days out from the florida primary being started -- >> you could argue that. but, first of all, our schedules are made with a lot of different

considerations well in advance. you know, i think i read reports a few weeks ago that this thing would be over after iowa, you know, you can't -- that would go into may or june as it did in 2008. that would make it impossible -- if we were guessing in the weeks in advance that we make travel arrangements like this, it would make it very hard for us to go to many, many places, you know, this is -- it's obvious when you're making a tourism and travel announcement that one of the premier sites of the u.s. tourism industry is orlando, so that seems pretty self-evident that you would do that, so -- >> was the president disappointed that senator nelson won't be with him tomorrow in orlando? >> i'm not aware of any opinion he expressed on that. >> apart from general -- >> i'm sorry. the next one is jackie. >> what's president's message

next week -- >> well, since he'll be talking about the subjects that he raised in the state of the union, if i were to talk about the subjects that he'll raise to the visits, i would be getting ahead of the president. [laughter] >> look, i think -- one thing you can be sure of and this is broadly speaking, you shouldn't rule out other subjects but that he is fiercely focused on economic growth and job creation. and pursuing every -- using every tool available to him to assist in that project. that will certainly be a topic generally of his address next week. and it will be a topic that he discusses on the road, both after the state of the union and beyond as he has so frequently prior to the state of the union. >> and i appreciate that, you

know, the florida planned nothing to do with the fact that florida is about to vote and then he's going to nevada which is the next state up to vote. this is awfully coincidental. >> we would have to rule out -- remember what happened in 2008, we would have had to decide back in december or november, you know, when we make decisions that are fairly far in advance about where we're going to travel that we couldn't go to a state that didn't have a primary that's 50 states basically, you know, because all of them could be the place where the nomination was decided in the other party. we can't do that. this president, as every president has, this president is all of the united states of america, of all the people in the country and he's going to travel around the country to talk about the issues that are important to americans in every state including most importantly economic growth and job creation. i'm sorry, did i miss you this whole time? okay. >> you talk about these are processes that have been in place in other administrations.

i mean, the president has talked about kind of greased the wheels to create jobs. isn't this one of these bureaucratic red tape on removing. >> when you process on his regulatory look-back process that has eliminated a lot of rules or -- and regulations to make life easier for american businesses, but you do that in a careful review to make sure that you're not eliminating processes or rules that are vital to either health and safety of the american people or national security or energy security so, no, you don't -- you don't ignore central issues involving the health and safety of residents in numerous states who would be affected by this

pipeline. you have to. it's your responsibility and that's why this process is always done in a manner that's very thorough, very contract, that weighs all the different factors that are at stake here in a decision like this. >> but wouldn't it -- wouldn't it -- >> i mean, the issue is to short-circuit a process and approve a pipeline -- the route for which hasn't even been decided. >> i'm not saying it in a haphazard way, but wouldn't it be better to move forward some way in tandem with the state review, some way to move forward instead of being hit as he's going to be hit over and over by republicans who are saying, you know, according to trans-canada which is 20,000 jobs. they're going to put it over and over, different pieces of legislation and it will be a fight over and over. isn't he better off moving forward -- >> there are going to be a lot of fights and i understand the republicans, you know, for lack of alternative arguments to make on the proper way to balance our

budget or on tax reform or how we should best pay for the kinds of investments we need or why they oppose putting 400,000 teachers and first responders back to work or why they oppose putting construction workers back to work, they will grab on some other arguments but that doesn't mean the president doesn't have the responsibility or his administration doesn't have a responsibility to do this by the book. >> private sector jobs, they don't require any expenditure by government -- >> that's not the issue. the issue is the impact that a development project like this, transnational development project like this would have on the health and safety of the american people in the region, on our economic security, our -- on job creation, on our energy security. there's a variety of factors that have to be considered and they -- they should be considered. they should not be set aside out of -- you know, for political

gain. .. an attempt to hijack a process, the short-circuit a review process that needs to be conducted properly and ordered that all the prerogatives here are considered. and that is how it should be and that is how it will be. george. jackie, sorry. >> on another issue with

constituencies against each other company match on saturday the blog post about the issue of intellectual property rights in paris a comment that you are just trying to urge decides to come together on a solution, but it was widely interpreted, you know, that the white house taking sides with google against hollywood. why do you think that's the right way to look at it? >> because as i just stated, we believe everything you need absolutely to address the problem of online piracy. conducted by foreign websites, which is the real driving issue here. we may cleared and the statement that we put out over the weekend that we oppose the nfl to her and made clear what our principles are and how we pursue or how the government ought to

pursue the online privacy. and in doing that it must not impinge upon the freedom that the internet because the internet is such a vital resource for our economy and for the american people. but there are absolute issues here that all sides of this debate have here they are legitimate and that is light and needs to be the kind of dialogue, we believe, that could bring us to a resolution that could result in a resolution that is alan and address the concerns about online privacy, but doesn't impinge upon the freedom that the internet. >> bills moving forward each house towards america and typically this administration is if anything deferential towards the legislative process. >> to everybody here that? >> by the time he advised it on a saturday? the timing is unusual.

the mac look, i think there was a great deal of focus and intensity on this issue. you know, we have the we the people process and solicited opinions on this issue. and the threshold was met for us to respond and we did. i think it is entirely appropriate for us to put a word our view on this pending bill as you stated, at least on that provision in particular with one of them or those that they are on the dns filter and the overall guided this process. anybody else? george, iou and that will be at. and share like i your time back hair. >> i just want to clarify your answer. are you confirming the president sent in a letter to leadership? >> i'm not -- we don't discuss diplomatic communications. i would say we have a variety of

channels through which we can communicate with the iranians and not any message we communicate to the iranians about these issues would be entirely consistent with what we said publicly, what i said public way as president, of state and others. and you can be sure of that. cheryl. >> to personnelissues. >> is the president can do during -- [inaudible] and is the president actively looking for a new omb director? >> he became at team director for the second time. so i don't want to foreshadow anything. the president is very appreciative of chess.

his willingness to be acting director in the past and do it again now is a very important role. it is very important, specifically as regards our interactions with congress. so he's very pleased that jeff is taking on this responsibility. yeah? [inaudible] >> i don't have any cause to announce. thanks. [inaudible conversations] >> i have nothing more to say on the matter. [inaudible conversations] >> we should expect more in the white house decision on the xl pipeline later this afternoon

and a possible state department briefing. we look at that to you as soon as we find out what is happening there. we also expect remarks in the pipeline from house speaker john boehner this afternoon. he'll be joined by majority leader eric cantor and other republican lawmakers. we plan to carry that live on c-span 2. that gets underway at 3:15 eastern. a live picture from the house radio tv gallery on capitol hill this weekend. we are expecting house minority leader, nancy pelosi, to discuss the democrats agenda today. she may also have more in the keystone xl pipeline as she discusses the a chance agenda. it's expected to start shortly here on c-span 2. [inaudible conversations]

[inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

>> at this time, good afternoon. here we are back to work, hopefully ready to work. we all know what is at stake here. the first order of business is to pass a federal tax cut for 160 million americans, past insurance for millions of americans who are out of work through no threat to the row number tens of millions of seniors for us to pass legislation, which will enable him to see their doctor under medicare. this is something that we all know is a possibility as we've been over this for a long period of time. i can just as soon with the absence of washington that they come back ready to work and colley conference we can get this time and it can be done in a short period of time. but let me say of that, that

with the unemployment insurance, the unemployment sharon's traditionally most of the time has not been paid for. but if it needs to be paid for, same thing with the payroll tax cuts. i think it is the double standard of the republicans. tax cuts for the middle class have to be paid for. we said let's join them together. let's have a tax cut for the middle class pay for by surtax in our country, those making over $1 million a year. that can also cover the unemployment insurance costs as well. as far as the sgr, the ability of seniors to see their gear under medicare we think can be paid for by the worst savings finance, otherwise known as the overseas contingency account. and so then we have the same

nature provisions of the legislation that was passed for a two-month period in december. we can take it to the end of the year. if the republicans insist on paying for federal tax cuts to the middle class as they have not insisted we have a way to do that. it is again we are in session days. our distinguished minority witness hoyer has told us it will be to actual full days as there is plenty of time for conferees to meet on a directed by legislative-based test to get the own. it is just a matter of priority. we know from the time is that the payroll tax cut, unemployment insurance are not only good for the individuals, for these families, but it's good for our economy and as a macroeconomic affect. money will be spent quickly

injected into the economy to create jobs. let's create jobs for the middle class and do so in a way that does not increase the deficit. with that, of course monday, martin luther king day, what a wonderful day to do so this year seeing the beautiful monument. imagine martin luther king standing there comfortably on the washington monument, jefferson memorial, lincoln memorial, fdr memorial, another great presidents of our country come a great leader for our country. he talks about the fierce urgency of now and that we couldn't afford the luxury a narcotic of gradualism. we don't make gradualism now. we need strong, strong statements to create jobs to reduce the deficit and to make the future brighter for our children. so i'll let you ask any

questions. >> can you talk where you are on the online piracy act? there is a crisis of this in the past couple of days. people are criticizing that though -- >> i'll be happy to answer that. i just want to see if anyone has questions on the legislative business which is imminent. you know that we need to pass it, that it has to go forward and if it needs to be paid for, their charge on the wealthy were saving for the sgr and let's just get the job done. >> as you know, republicans have all along said it absolutely knows to a surtax on billionaires. so thousands were in the same position that we were prior to -- prior to the recess. so is there any movement at all?

it seems like we are sitting in the same positions that we saw from both republicans and democrats in the beginning of the cycle. >> let's repeat that. we have many objections to what republicans for proposing before. many of them legislative language on this bill, much of which they won't do a frown. or are walking away from. but the fact is the simplest easy way to pay for it. if the republicans have other suggestions, let them put them forward. democrats are not going to give with one hand to the middle class and take away with the other hand and that is what republicans want to do. okay, we want a payroll tax cut, except we want seniors to pay more for their medicare or whatever it happens to be. if this is the middle income tax cut, it's not going to be paid for by penalty to the middle class. so if you have another idea,

tell us why the surcharge is not the best way to go. yes, sir. >> republicans make the point that they pass the bill in the house and that democrats didn't offer an alternative in the house, so they don't want to negotiate with themselves. they say does that to democrats to come up with alternatives. >> we just made a suggestion, but it's really up to the american people. the american people know that our economy will benefit by the financial side of having the tax cuts for the middle class. the insurance brings a lot of money into the economy. as a mentioned before increasing demand and jobs. so this is about jobs and it is about doing so in a way that is fair to the middle class. we will continue to make that argument. if they don't want to accept the surcharge, but are they suggesting in its place? are happy to listen, but we are

not giving with one hand and taking away with another. we always continue on the surtax if it doesn't work here if it is absolutely necessary for us to have fairness in our budget decisions than in our tax decisions. >> this is related in that it was part of the extension that the president was due to announce the system. >> that's a little bit off the subject. i'll come back to it. it is close to this, but nonetheless. you're right. it was in the bill. okay, we'll come to you next. >> with the savings from the workouts, disney's core on the practical level, those expenses are not expected to happen in the future. so there's a very strong

question of this and that certainly can agree that people are sort of tired of hearing about we pay for something with sort of phantom -- >> is that the republicans use an alliance budget. they used bioko money offshore to the overseas contingency account for that. so look, one of the biggest things -- favors that we can do for america's seniors that really shouldn't be a favor. it's something they deserve, to take off the table forever whether they can see there.during their medicare. this is something that even the republicans and the senate have been inclined to spend some cocoa, some savings to do for a partial. we are saying, we can do it all right now. let's get it off the table. and that removes the uncertainty let me say this because i've

been following this issue for a long time and fighting along time. the sooner you do it, the less the cost. as you check it out, it just increases the cost to the taxpayer. so no, it is not any marketing than when it was used for either initiatives along the way and a financier. what's your question? [inaudible] >> speaker boehner made the point this morning that it would be the job creators in this country and as a consequence the first china rather than united states. are there this? >> let me make a few points on the subject of the keystone pipeline. first of all, they haven't made any announcement yet. i don't have any heads up except i just came back from the u.s. conference of mayors and a member of mayors came up to me and said was untrendy rumor was

as you describe. second of all, if republicans care so much about the keystone pipeline, they would not dare the president options i putting it on the time frame they did. they left him very little choice if in fact the decision is as you communicate, which i don't know if it is. third of all, this oil was always destined for overseas. it's a question of whether these canada by way of canada released canada by way of united states. so without taking a position on the pipeline, i don't create the stipulation is going to chime now for the u.s. it was always going overseas. i don't know where to, but it wasn't for domestic consumption. that is really an important point because the advertising is quite to the contrary. their arguments remain on both sides and i'm interested to see what the president has to say later. we shouldn't be building the pipeline because the oil listing in the u.s. because it is an weird and again, republicans need to own a look in the in the

mirror at why this decision if it is a no because there's just no no way in that timeframe that the president could do anything else. i don't know if it's going to be a definitive answer. we just don't know until we hear. yes, sir. >> thank you are coming back to me. so on the -- there's been an avalanche of reducers in the last 24 hours on both sides. i know obviously folks in your neck of the woods of north carolina were very involved, wikipedia went blank. what do you think about wikipedia point blank, nature portal and number two, is there a compromise that can be forced? obviously there's bipartisan opposition the latest those that now. >> was at five to six questions he gave me? are you okay with that? [laughter] well, here is the thing. in california i take pride in our great golden state. it is the center of imagination

for the world, whether you're talking about content, largely in southern california in the alternate content are your talking about a technology distribution also throughout our state. so this imagination i'm sure will be able to come up with some type of go fix for us to deal with protecting intellectual property and copyright law not in treating freedom of expression on the internet. the more particular to what you had to, that some of the site shutting down i heard a great deal from it to insurance on the subject as you can well imagine, as users, but also as sites of go, you have to come there and see the most amazing place in terms of a technology for the future. i like what google has done.

they blanked out, but they have a statement that says in regard to protecting intellectual property. we have to sit down and get together and do some game that has consensus to go forward. i'm not doing justice to the statement, but that is the essence of it. all i saw was a blank, but again i have heard from many, many, many, many, many, many constituents and they are very concerned about the freedom on the internet. some are concerned about the impacts on content. you develop content if it is going to be already taken by someone else. on the other hand, were in a different relative communication technology. we should be able to work this out. the conference of mayors has endorsed and i just came from

there and some of the mayors are not for. it's a wonderful opportunity for us to have a national debate about a policy that has an impact on people that they realize that young children want to know why is wikipedia shut down today? what is this about? in with the internet is about privacy and also about security and those entries must be good and also have to protect intellectual property. >> this is between silicon valley and hollywood. is it fair to say on the side of silicon valley? >> i'm on the side of the american people in the future and i hope we can find a way to have a bill that addresses the protection of content and freedom of distribution and take elegy. >> how is 60 days adequate time to come to a solution to a

long-term extension for a payroll tax cut in the ustr, the 60 days to come up with a decision on a project is not. >> none of the provisions of payroll tax cut are new. everybody knows this is a shark a sport that we have seen over and over again of possibilities that mix-and-match. there's nothing new about it. when you're talking about all it takes for an international agreement and undecided state department is involved, because the pipeline will cross an international border, you are talking a much more complex issue. when i was in canada last year for the 10 speakers meeting in september, this is topica, subject day. to my questions to them, why don't you take it up to canada where they don't want to?

they don't want to take it out in canada. they want to take it out to the united states, but it is going out. there's many complexities to it and just by putting a timeline on it, it's predetermined with the logical response will be. now with the president's statement he dispositive for definitive? i don't know. we'll see in a few short minutes. i'll be gone by then. >> the president coming up next tuesday for an address. have you had a conversation in the white house about the things or ideas are going to ring up your? and if not, would you want them to say? >> i would not engage in a conversation with the white house except to say that you have expressed the appreciation of our caucus to the president for his taking of the message of fairness to the american people. i think without his involvement out there, let me save in the

positive. the president's involvement at the wonders of the middle-class in in america by giving the middle income tax-cut. and the house for the attack six, seniors six, sgr. they want to see their own that are under medicare. so we're very proud of the president. our theme, the enduring theme in america is reigniting the american dream, building ladders of opportunity for all who want to play by the rules and take responsibility and work hard. there's plenty of work to do. we believe that we will strengthen the middle class, we built the middle class by engaging in the abc is the type about before. make it in america. america made not to be protectionist, but to be self-reliant. build the infrastructure, whether it's broadband or

pipelines of america and see community recovery. i hope -- and i don't know if this will happen, but part of the democratic message is that we want to meet politics for the future, new politics or he of the heavy influence of special interests, especially exacerbated on the supreme court decision. so disclosure would be an important part of that. every american has the infrastructure through community recovery is disclosure to shine a bright light onto the snake and his contributions. that is part of where we go from there. disclose, we do some of that now. we firmly have to win. a man in the longer-term operation. all of it important to strengthen the voice in the middle-class to fight after. i don't like to say suppress the

vote is to just urging. we must protect the rights of all voters and make sure that they can vote and that their votes will be counted. so it is about the end -- a vision about the american dream, which is what our country is about. it's about ways, which are largely part of the presidents americans job, the job sacked contains many of these provisions. so we have a lot in common. how he phrases communication that we feel, not knowing anything about what this speech will be. not only what the visions and values are, that our -- our vision and values will be reflect it in the speech as well. with that -- one more. one more question is the one i shouldn't take. you be the judge. >> republicans today, their attempt to disapprove the debt

limit. just your thoughts on that. >> well, the thing is that the very idea that the country had to undergo the juvenile behavior of republicans this summer when they were willing to jeopardize the full safety and credited the united states of america to such an extent that our credit rating was downgraded to such an extent that our reputation for seriousness was questioned i think santa message to the american people that it was important for them to know about the tea party congress. today is just another exercise in not juvenile behavior. thank you all very much. did i wish you happy new year yet again? >> are you betting on the niners as a new york member? [inaudible] >> are you going to bed shimmer or gillibrand or a new york member may be?

>> i said yesterday -- one of you guys. i just cannot wait to be eating chocolate ice cream. if you saw it in a, used by how can we suspend our disbelief long enough to think this is how do you go. but i am from baltimore, maryland where we pulled off two touchdowns in the last two minutes as a matter of course. my kids grow up in san francisco with joe montana, said he. two touchdowns, two minutes to go, no problem. and so we saw that happen. so i'm going to be in the midwest, a number of places on my way home this weekend. why don't know whether i'll be going through green day for the game or if new york one or two san francisco. i'm really happy to be going home. all taken a bad, anybody?

was not thrilling football? the poor babies, the broncos. four of my children are born in new york, said they have new york is sort of a second or third and depending where they are under reagan's. so baltimore, new york, san francisco, my son-in-law is from colorado. my daughter and her husband live in houston, so my three grandsons are rooting for houston. i have almost everything where someone is going to win and be happy in the family. but we are really thrilled. >> niners, ravens is the final? >> would not be great? [laughter] except for the horrible times. it's easy for me. i'm from san francisco. i'm from baltimore, but i'm for

san francisco, too. but how would it be to have the two sons as the coaches. if they made the movie did say it's not possible. will see, but isn't it great to watch the sports? >> so you'll be up again? >> albeit the game. thank you all. >> house minority leader pelosi finishing her first legislative briefing at the near-term, discussing some elements on the house agenda for the year. one item is the keystone accel pipeline and the announcement the president to is officially rejecting the pipeline would bring millions of gallons of oil and gas from canada to refineries in texas. we expect the official announcement this afternoon. in the meantime, john boehner and other house republicans leaders are holding a briefing on the president's decisions that for 3:15.

earlier today, house republican lawmakers discuss the keystone pipeline as they outline their agenda for 2012 during a capitol hill briefing. >> bochum -- welcome back to the second session of the 111th congress. you know, american families and small businesses are continuing to struggle in this economy. the number one issue is to continue to focus on those policies that we believe to get our economy going in and to create jobs. we passed 30 bills sitting in the united states senate. but it's also clear that the policies that have been implemented by the obama administration and the democratic congress to have that preceded us, have made the economy worse than made it more difficult for small businesses to create jobs. the issue of job creation in our country is critically important. we are going to continue to focus every single day we are here in washington, representing the interest of the american

people. >> good morning. our members are back in town and we are about to go on a retreat. the question we had today i think could be cared raised as one in which our members are united around the realization that the policies that have been promoted by this administration have not were. when you look at the spending a new look at the continued expansion of washington, what hasn't happened is the expansion of the very job creation. so our members are going to be hyper focused on how we go about creating small business jobs. we all know that the engine of jobs in this country are the small businesses. that will be our focus. we will continue to try and work with our colleagues on the other side of the aisle to make sure we do everything we can to make small businesses the centerpiece of this country again.

>> as member comes back on their outlets are constituents. and what they've heard is they want to see job creation. they also heard many times why they wonder the senate will not bring bills and bring up the house. the house will continue to knew to look at exactly what the speaker and later said. the biggest creation of jobs in small business. they've heard me say before, you should measure would create jobs in america. if you go back to the beginning of the and the last recession, beginning of this one or 2001, 2007 did they say there's a lot of people work at this time. job creations during that time, small business out of 7 million jobs. corporations cut 1 million. there is an opportunity here to actually have new job creation. we are at an all-time low, 16 years for new starter. the senate has got to act.

we've been trying time and time again. legislation comes up this book, not just by 218 votes, but by a bipartisan member posts. some as high as 400 sitting on the senate. you begin to wonder, why would they not even allowing this to go forward when you look across the country to meet you for job creation and getting back to work. >> three years ago this month, the president was inoculated. we were told that if we passed a stimulus plan, the economy would improve. we were told if we passed a health care plan, the economy would improve. we are told if we passed the..frank at it would improve. three years later among us might have lost their jobs. unemployment remains at 80% to 9%. we have more americans on food stamps and any time in our

history and as a website, new business startups are at a 15 to 16 year low. regardless of the president's good intentions, regardless of the president motivation, his policies have failed the american people. it is a new year. it is time for new policies. we would ask the democratic majority leader of the senate and the president of the united states to let our jobs those past. >> happy new year, everyone. yesterday the president jobs council issued a report. it was really interesting because it really reinforced many of the proposals that the house republicans have been talking about. it violated our efforts on tax reform, and also on energy exploration in america. the workings of american energy. a report talked about it all an energy strategy. and it talks about the importance of opening up the public oil, natural gas and

coal. now, one of the big bozos the house republicans have been forwarding is the keystone project. it's been 26 days since the president has made a decision on the keystone project. this is a project that has bipartisan support, would create up to 100,000 jobs and it is time for the president to make a decision. we are calling on the president to make a decision. it's get americans back to work a month start moving forward on those policies that will help america's economy. >> speaker boehner, speaker boehner -- >> they told us this is a tuneup in congress and the entire 30 years they've never seen a more unproductive session in the last year. can you refute that argument? >> repast jobs bill after jobs bill after jobs bill. the house's donuts for. but it takes two to tango.

and that is where members are frustrated as well do we've got 30 bills that will produce more american jobs in the united states senate. harry reid, senate democrats. they are playing hide the ball and instead trying to help the american people get the economy moving again. >> however at the same time, 2011 ended on a pretty loud out with members critical of your leadership, especially on the tax issue. >> listen, we've got a lot just with voices in our company. i'm the president on the payroll tax credit extended for a year and so do we. we didn't think the senate should leave. it was pretty clear that the senate wasn't coming back. but we were taking the right place. i would argue are depicted at the the wrong time. [inaudible]

[inaudible] >> listen, this bill is an committee. they've had a number of hearings. it's going to america and it is pretty clear to many of us that there is a lack of consensus that this point. then i would expect that the committee would continue to work to try to build a consent is before this film is. [inaudible] >> the decision could be imminent. the understanding is so be approved and their reasons have been played out a long time. but what you say to that? >> the keystone pipeline has been over three years has passed every approval process as required by the law. even the president's own state department has indicated seeing

how to move forward. it is clear that it would create 100,000 new jobs here in the united states. we also see this morning that the canadian arctic conversations with the chinese. if we don't build this type went to bring back canadian oil and pick up the north dakota oil and deliver to our refineries are in the gulf coast, that oil is going to get shipped out to the pacific ocean and sold to the chinese. this is not good for our country. the president wants to put the sauce until it's convenient for him to make a decision. that means after the next election. the fact is the american people are asking a question right now. where are the jobs? the president has the opportunity to create 100,000 new jobs i must immediately. the president should say yes. thanks. [inaudible conversations]

>> remarks from house speaker boehner from earlier today. we are live now on capitol hill, where house republican leaders are about to respond to the president's decision to block construction of the keystone xl pipeline. we expect members of the house republican leadership to come to the podium to discuss this, including house speaker john boehner. the state department has released a statement on the keystone xl pipeline. today the department of state recommended that president obama presidential permit for the proposed keystone xl pipeline be denied and at this time the transcanada keystone xl pipeline be determined not to say the national interest. the president concurred with the department's recommendation, which is predicated on the fact that the department does not

have sufficient time to obtain information necessary to assess whether the project in its current status in the the national interest. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> again, we are live on cat is

awaiting house speaker boehner and members of the house republican leadership to put together a briefing on the president's decision on the xl pipeline. it is expected to start any moment now. in the mean time, the white house has released a statement from the press named. earlier today received the secretary of state's recommendation on the pending application for construction of the keystone xl pipeline. as the state department made clear last month, the russian arbitrary deadline insisted on by congressional republicans prevented an assessment of the impact especially health and safety of the american people as well as their environment. as a result of the secretary of state has recommended the application be denied in after reviewing the state department's report, i read. the president expect it to make that decision sometime today. in the meantime, we're still waiting for comments from house republican leaders on the keystone xl pipeline.

[inaudible conversations] [inaudible conversations] [inaudible conversations]

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[no audio] >> from "the associated press" is afternoon, cedarbaum administration officials says the white house will reject canadian companies plan to build an oil pipeline from canada to texas. the official says the february deadline set by congress is not a proper review of the $70 billion project to do this at republican provision part of a tax bill that the president signed into that before christmas. the president had until that day to decide whether the pipeline is the national interest.

the 1700-mile pipeline would carry oil from tar sands to refineries in texas and we are awaiting remarks from house leadership under president's decision on the keystone xl pipeline. google also been so nice to get your reaction to that decision today. [no audio] >> president obama is destroying tens of thousands of american jobs and shipping american energy security to the chinese. there's really no other way to put it. the president is selling out american jobs for politics. the president was given the authority to block this project

only and only yes she believes it's not in the national interest of the united states. is it not in the national interest to create tens of thousands of jobs here in america with private investment? is it not in the national interest to get energy resources from an outlay like canada that is supposed to have some countries in the middle east? the president has said he'll do anything he can to create jobs. today, that promise was broken. the president expedited approval of this lender loan project, but won't approve a project that has been under review for over three years. yesterday the president's jobs council said the energy pipeline projects like this one can create hundreds of thousands of american jobs. the union supported. the state along the supposed

brass supported and it has bipartisan support here in the congress that the united states. and yet, the president decided to reject it anyway. the president won't stand up to his political base, not even in the name of creating american jobs. and now canada is going to have to look to other nations, like china, to sell its oil reserves two. the president's policies are making the american economy worse, rather than better. in the latest decision is just that the latest example. i'll just say this. this is not the end of the state. republicans in congress will continue to push this because it is good for our country and good for economy and it's good for the american people, especially those looking for work. >> thank you, mr. speaker. tim griffin, arkansas to. today, president obama has

decided to create jobs in china instead of the united states. why do i say that? i would to the canadian embassy weeks ago, met with officials there. they said they want to do business here in the united states. but if they can't do business here, they have to take those oilsands somewhere to have them assigned. they said they would do that in china. now, this decision impacts not only the country, but specifically my district on the second district american. we have a company well spent. both but makes the pipe for the keystone pipeline and they laid off some workers right after the president met the that this decision would be after the next election. the folks were hoping for the opposite decision today, approving the pipeline. i spoke with them a little go. they said their concerns are, number one, that now they have all this type, hundreds of miles

of pipe, sitting around that will flood the market, reduce the cost of pipe and they may have to lay off workers because of that. and also commend this is indian company that came to the united states and invested in little rock and now they fear that this is going to deter other companies around the world for making a series of capital investments because of political decisions like this. so i'm going to work with the speaker and do everything i can to get this reversed. >> good afternoon. you know, a few weeks ago, in fact on january 7th, in the president's weekly address, she vowed to quote, do whatever it takes to get the economy moving and create jobs. unquote. and so today, what we see is the

president has shown through his action that those actions do not match their better. and by deciding to block the development of the keystone pipeline, he has essentially decided to block the creation of 20,000 new jobs. as has been said by our speaker before, this was a bipartisan pipeline project, bipartisan support in the house that will put people back to work right away and will boost our domestic energy security. examples have been shown. now, that energy supply will go elsewhere. the job connected with this project will go elsewhere. either we are going to get serious about the number one issue, which is creation of jobs are not. clearly the president has decided that he is not serious if this is the decision he's going to make on this particular project. there is no question that the

president's policies has consistently failed to create jobs. this decision is another wrong move for america and the small businesses that we need so desperately to start creating jobs again. >> three years ago, barack obama was inaugurated as our president. we were told that if we passed his stimulus plan, his health care plan, dodds frank, it would help our economy. instead, we have the worst serial unemployment since the great depression. many more have lost their jobs in the three years since he's become president. his policies have failed. it was an opportunity to train new policies and after studying keystone for three years, 20,000 shovel ready projects just got

very. canada has energy and jobs that could be tested and to the united states of america and this administration has just decided instead perhaps they should be destined for china. it is a sad day for struggling american families who want jobs. >> fred upton from michigan. as you know, it's been more three years since this administration has been studying the keystone pipeline. the 91 october 2010, secretary clinton was indicated that she was inclined to support this project. in august, this last august august 2011, the state department completed their analysis and agreed that the proposed route was in fact the preferred route. in the payroll tax legislation that we passed, senate as well, we had a provision that the president should decide based on whether it's in the national

interest or not as to whether the keystone pipeline should move forward. president obama took off this, the national gas price was $1.83. my district this past weekend was $3.69, more than twice as high. this is a pipeline that will bring as much of a million barrels a day. so, where do we go from here? we have asked already, secretary clinton to come testify before a committee next week. the president will say yes. we want to let the american people know that we will. no option is going to be off the table. we can't wait and as a sponsor of legislation relating to keystone, a member of the energy and commerce committee, lee terry. >> thank you, mr. chairman. as a supporter of the pipeline and author of two of the bills, in support of the pipeline, i am

deeply, deeply disappointed that our president decided to put his politics about the nation in job creation and energy independence, the two things that keystone pipeline brings to the united states. this isn't over. the president's statement did not mention in any specifics why denying the permit is in the national interest of this country. the governor of nebraska said yesterday in a published article, that the keystone xl pipeline, at a time with a .5% unemployment, is in the national interest. it's a no-brainer. i agree with the governor. now, they say they need time. but as fred mention, this is the same state department of was telling us all summer that they had all of the information to make their decisions.

two press releases by the state department. the secretary clinton made public statements that all this in order and in fact they had, in essence, already chosen about by telling transcanada where the pipeline should go. instead they don't see any reasons to deny this. then now, seven months later, they changed their mind. to me it's pretty obvious it's all about election-year politics. also, july 25th, the white house through omb issued a statement that says they have all the information, that they are working diligently. the state department and that they will have a decision by december 31, 2011.

but yet here in the middle of january, they are now saying something completely different. .. appalachian region and they obstructed the ability to get permits on the outer continental shelf. you know, three's a pattern and

this is a pattern that we've seen from this administration that they will -- they are willing to sacrifice -- you know, they talk a lot about infrastructure jobs and how great infrastructure jobs are. what are more -- more prolific infrastructure jobs than building a major pipeline through the center of our country? for the life of me, i can't understand it. and so as the speaker said, we join with him. this is not the end of the fight. we're going to continue to fight this because this means that much to the american people. next, marsha blackburn from tennessee. >> thank you. even though i represent tennessee, i grew up in south in mississippi with a dad that worked in the oil industry. and i remember as a child from time to time i would have classmates at school or friends from church whose dad went away to work on the pipeline. and there was always a sense of pride that was tied to those

jobs. yeah, the pay was good, the work was hard but the work was consistent, but it was doing something that was mighty important for our country. and that was making certain that we had energy. i kind of liked that. i kind of liked that feeling that we were all in on this team together, working to make this country great. now, as ms. capito said, how in the world did the president arrive at this decision? and i think many americans that are looking for work are out there thinking, how could he look at the fact as mr. terry said, they told us this summer, they had all the information they needed. all the information points to the fact that we need this project, we need these jobs, we need this energy. our country needs energy

independence. so it leads us to believe that the president chose to make an antijobs political decision that does not support what the american people are wanting to see done, to grow jobs in this countr country. >> any questions? >> the president said you forced his hand in the country until the end of the game, what is the end of the game? what is the next step? >> all options are on the table. but understand something, while the president may say we forced his hand, the facts are indisputable that the state department has had this under review for three years. all the reviews have been finished. and under the agreement that was in the legislation, the president had to make a decision and it had to be based on what was in the national interest of

our country. and for the president to say that the keystone pipeline is not in the interest of our country, i think most americans are scratching their heads wondering why. >> speaker boehner, do you suspect to play a role in the negotiations to extend the payroll tax cuts for the rest of the year? >> all options are on the table. >> what could the options be? i know you're saying there's a lot on the table. the american people that are -- >> this fight is not going to go away. you can count on it. >> but what are the options? the american people -- they get a statement from the white house saying they are rejecting the permit, what can congress do that congress couldn't do before until they had to wait to hear from the president? >> there are legislative vehicles that will be moving in the next -- in the weeks and months ahead. and republicans on capitol hill

look will do everything we can to make this a positive decision for the country. the american people are still asking the question, what are the jobs? here the president has got an opportunity to create 20,000 direct jobs and over 100,000 indirect jobs and he says no. we're not going to give up. >> is he still going to be the president in 2012? >> i am not. >> was it worth it considering you've now seem to take the two month expense of the payroll on the keystone fight and we're 17.5 days and he said no? >> listen, this pipeline is important to our country. it's important to what the president says is the number 1 issue in the minds of the american people and that's creating jobs. he said he'd do everything he could to help create jobs in america but yet he didn't. >> is there another hearing --

[inaudible] >> written the supreme leader of iran calling for direct talks. do you agree with that or do you think that makes the united states look weak sitting down with the leader of iran? >> i think it's very difficult to have talks with a country around the world who's vowed everything to wipe us off the face of the earth. i don't think this leads to a constructive discussion and i do think think it makes america look weak. thanks. [inaudible conversations] [inaudible conversations] is ther

[inaudible conversations] >> speaker john boehner and house republican leaders reacting to the news today that the state house has recommended the white house to reject a canadian company's efforts to expand their pipeline, their oil and gas pipeline from canada into the united states, the keystone xl pipeline. we will open up our phone lines and get your reactions to that, specifically whether you are for or against this canadian company being allowed to get the permit to expand their pipeline. here are the numbers to call. if you are for that the number to call is 202-585-3885. if you're against the pipeline, the number is 202-585-3886. make sure you mute your television and if you called into c-span, make sure you give

other people a chance to call. the state department briefly -- they said that the state department is recommending to the president that the presidential permit for the proposed keystone xl line be denied and at this time the trans-canada pipeline be determined not to serve the national interest. the white house also issued a statement from the president in part read -- the president saying i'm disappointed that the republicans in congress forced this decision but it does not change my administration's commitment to american-made energy that creates jobs and reduces our dependence on oil. again, part of that statement from the white house. and i expect that those statements will be shortly on our website at c-span.org. we have ralph in favor of the pipeline. >> caller: this is really bizarre i'm north of columbia. it's politics as usual. to sell us right down in the

river right down to the chinese again. we can't seem to get our own supply of oil in this country no matter what we do. thank you very much. >> host: here's richard in minneapolis who opposes the pipeline. why is that, richard. >> caller: the reason why i'm against it is because it's big business. it's going to make money off of it and everything else and do the rest of the american people really make that much off of it? sure, it would create jobs but they would be temporary jobs and they wouldn't be permanent. and all they care about, big business is, making money at the expense of everybody else. that's all they care about. you know, and plus -- plus, do we need -- do we want another oil disaster like we had with bp down in louisiana and off the coast? do we want that again? and then, who do you blame when there's a big mess again? who's going to clean it up and who ends up paying for it? the american taxpayer and then they get stick footing the bill and everything else and then people lose their livelihoods and everything else just like down in louisiana and off the

coast. do we need that again. >> host: originally the decision on the keystone pipeline was put off by the president back in november of 2011. they pushed it off after the elections in 2013 but they changed over the debate of the payroll tax cut legislation and in that legislation, that short-term legislation, a date of february 21st was made by which time the administration was to make a decision. well, obviously, they've moved quicker than many people had expected with the announcement today that they would deny that permit by the canadian company trans-canada. in washington state, here's liz and it says, liz, you are from snowbound, washington, or does that mean you're snowbound in washington. >> caller: that means i am snowbound. >> host: okay. >> caller: i'm watching the c-span. i'm glad the house of representatives are back in session and they're absolutely correct in their stand about the keystone xl pipeline. we need the jobs.

we need the oil. we need to get rid of getting oil from overseas. i mean, it's ridiculous to think that we have all the resources here in our great country that we can't get jobs and money within the united states. and what this president is doing, i don't understand at all. it doesn't make sense and it's going to be interesting on his state of the union if he can even say what his reasonings were to make us believe him. >> host: just a reminder the state of the union is coming up tuesday night. we'll have that live for you, of course, another view from washington, bob, is opposed to the pipeline. bob, tell us why. >> caller: according to the u.s. census, our biggest export is fuel. our refiners exported 117 million gallons per day of gasoline, diesel, jet fuel and

other petroleum products offshore to the world community while america remains the world's largest importer of crude oil. from january to october, our country imported $2.7 billion barrels of oil worth $280 billion. sorry, i'm a little nervous. >> host: that's all right. >> caller: the mantra of the republicans is that we need to produce more oil in our pristine wilderness and clean oceans to obtain clean energy independence. republicans are demanding that the keystone pipeline be built, our oceans soiled and wilderness cleared for the profits of the oil companies who sell our energy overseas. we pay higher gas prices so the oil companies and their political supporters can make a bigger profit. it should be a crime to export energy until we are truly energy independent. wow! that was hard. >> host: bob, thanks for calling

in. the chairman of the energy and commerce committee was one of the speakers in that briefing, and he said during his brief comments that the committee has requested that the secretary of state, hillary clinton, testify before the committee next week and explain the decision. no word yet -- or he didn't indicate any word as to whether she'd accepted that invitation to testify. here's madison, west virginia, and chris is in favor of the pipeline. >> caller: yes, sir, i am. i just don't understand what this administration is thinking. you know, we have a secured neighbor who's offering us is very sweet deal, a chance for us to have a secure supply without them holding us at ransom, you know. i don't know of any canadians that burn effigies of uncle sam and teach their children to hate all infidels and to kill

americans, you know. i just get sick of this constant -- it's like we're held by gunpoint by opec or by the arab nations over this oil. here we have a grand opportunity to have a secure and trusted neighbor, you know, giving us is supply of oil, the opportunity -- we're lacking jobs in this country. there is no more production in this country, no production jobs. we're all a service-based industry just about. and it just really -- really gets to me. i mean, i just don't understand what this administration is thinking. we have an opportunity to create, 20, 25,000 jobs now, good-paying jobs and have a steady supply of oil -- the last caller was talking about us exporting, yeah, we export, you know, refined oil. but, yet, we have to pay a jacked-up price from the middle east for this oil. >> host: chris is calling us from west virginia and shelly capito a republican also spoke in the briefing and she said

there's a pattern in the administration denying these permits. she was talking about offshore oil-drilling and the pipeline as well. orange, new jersey, is next, east orange, and ann's on our opposing line. ann, you oppose the pipeline, tell us why. >> caller: yes, i oppose the pipeline for the simple reason -- the republicans keep talking about 10,000 jobs, 50,000 jobs, 100,000 jobs. i don't believe it. and the minute something goes wrong -- a lot of republican governors of some of these states don't want that pipeline, the minute it will damage their state they will blame president obama just like the bp drill. why wouldn't he let us drill, when they drill the spill every day they are on c-span and the news and fox news. why can't he plug up the hole? we need somebody new in the white house. it's always the same. this man can't do anything right. he's trying to listen to all

these different sides. and when the -- the oil pipeline did go through, they're going to take the oil and ship off. >> host: we're going to let you go there. a couple more calls getting your thoughts on the denial of the administration -- the advice from the state department to the president to deny that permit by trans-canada. here's bill in park hill, oklahoma. bill is in favor of the pipeline. that's kind of in your neighborhood, right, bill. >> caller: yes, it's kind of right down my back door. i've been a registered democrat for almost 50 years. and i don't believe in what these democrats are doing now that's in office. i don't understand why we can't go ahead and get away from the iranians' oil. >> host: well, what's your sense of how many jobs this would create? there's republicans and other supporters have said it could create upwards of 20,000 jobs, does that sound reasonable? do since you live in the region.

>> caller: absolutely. if it's 12,000 it's going to help this what they're doing right now. they haven't done anything to help the people of the united states get a job. i don't understand why they're holding this up. >> host: thanks, bill. raymond is in johnstown, pennsylvania, who is opposed to the pipeline. go ahead, ray. >> caller: yes, good afternoon. i have a question. mr. boehner was just on tv. he's in favor of the pipeline, but he don't tell you how safe the pipeline is. if the american people would watch chris matthews' show, ed schultz's show and get some information, listening to specialists in those areas where it's going to go through, it's going to harm waterways, farm land. it also was noted on tv that the pipeline is unsafe. the crude oil that's coming down from canada is thick as peanut

butter. it's noted that it needs heated up to make it flow through the pipes and also they said the pipes are unsafe. >> host: raymond thanks for your call. one more call from david, in shepherd, texas, who's a supporter of the pipeline. how >> caller: how are you doing? >> host:. caller: i have a son that works in a refinery as well. i used to work in a refinery. i was a electrician for 30 years. we had refineries down around these parts for years. and there's been no, you know, severe damage living around them and everything else, occasional smells, that's about it. but no environmental damage. we already have one pipeline coming from canada understanding in oklahoma -- >> host: this one, david, goes from the -- the extension, i guess, would come down towards houston and also port arthur. how close are you two those

areas? >> caller: about 70 miles. >> host: okay. . i don't see an extension over a pretty flatland is not -- you know, the other pipeline we haven't had any major problems with that. why is everybody so upset with this one? you know, especially when we're in such a crises with iran around. i'm also ex-military. i hate to see our boys going over there fighting iran. that's going to be a very dangerous conflict. we've got ally israel involved in this. we've got a friendly neighbor willing to sell us oil and we're willing to refine it and ship it off after we bought the shale oil product from canada. so it's win-win situation for america and i don't understand why all these people are so -- you know, it's trehugers, i hate to say that, 'cause i love the environment myself.

i'm a hunter and fisher, and i hate to see the environment messed up but people get a little bit overboard from it. >> host: that's david from shepherd, texas. thanks for all the calls and thanks for weighing in this afternoon. again, the white house saying it will reject a canadian company, transcanada, their plan to build an oil pipeline from canada to texas. the february 21st deadline that had been set was written into that gop provision into the payroll tax cut legislation. this afternoon on the house floor, they have one issue and that is the raising of the debt ceiling. it's called a resolution of disapproval. it's expect to vote on that coming up in about 45 minutes or so -- and that's over on c-span. up next, we're going to show you this afternoon's white house briefing. now, this briefing happened before the news came out about the administration's decision on keystone.

>> good afternoon, ladies and gentlemen, welcome to the white house for the daily briefing. it's a pleasure to see you. i have a couple things i want to say at the top. first, following the president's state of the union address, he will begin a five-state, three-day swing across the country. he will begin his trip with a visit to the cedar rapids area followed by an followed to the phoenix area before traveling to las vegas on january 26th. on january 236th the president will hold events in the las vegas area and the denver area before traveling to detroit that evening. the following day, january 27th, the president will deliver remarks in the detroit area before returning to washington, dc. more details including information about the president's events and media credentialing will be released as they are available. secondly, i want to anticipate a number of questions you may have on a particular subject based on

reporting in anonymous sources about the keystone pipeline, and i just want to get it out of the way up front that i'm not going to confirm any reports. i'm not going to get ahead of the administration or the secretary of state or the president. we may have more information for you about that later today, but i'm not going to get ahead of the secretary of state or the president. i would ask that you review the facts here, which is that in a precedent established long ago that has held through many administrations, both democratic and republican, pipelines like keystone that cross transnational borders as this one would, the permits for those pipelines have been reviewed in a process led by the state department. that was the case here. when in the case case of kean a

pipeline -- concerns were raised about the environmental impacts on the air and water quality in nebraska by among others the governor of nebraska, a republican, a decision was made that an alternate route be sought. and that, therefore, the process had to be delayed. so that an adequate review could be undertaken following the same standards that have always been in place, that were in place -- that were in place at the beginning of this process for this particular pipeline have been in place for these kind of projects for many years. in a purely partisan effort to score a political point, republicans in congress insisted on inserting an extraneous provision within a bill that had nothing to do with pipelines but was a bill to extend a tax cut to 160 million americans, a tax

cut that this president fought very hard to get and to extend. even prior to the signing of that legislation, the state department which reviewed this process made clear that setting an arbitrary deadline through this purely political effort would put the state department in a corner, would severely hamper their ability to review an alternate route and a new pipeline route in the proper way, a way that has long been established by precedent and that would take into consideration all the criteria that are so important in decisions like this, economic impact, national security impact, environmental impact, the effect on the water that our children breathe -- or rather the water our children drink and the air that they breathe. they made clear that the state

department in a statement prior to this legislation that imposing a 60-day deadline on this process would make it virtually impossible to an alternate route to this day does not yet exist. so i'm simply reviewing the facts as we know them. >> yeah, but he signed the law -- >> and we made clear -- well, he signed a law that forced a decision to be made in an arbitrary fashion, no question. and i don't have an announcement about any -- any decision that would be forthcoming on that. but i'm just reviewing the facts as they existed yesterday as well as today. [talking simultaneously] >> let me get erin. >> well, to follow up on that, you're saying that you don't want to get ahead of the president or the state department, the law specifies that it is the president's decision so is there any reason that this announcement would come from the state department -- >> again, i'm not going to get into details, you know, i made clear that we may have more

information for you on that later today and i'll look to that -- i would urge you to look to that for guidance on that question. >> to be clear, are you saying there has not been a decision made -- >> i'm not saying one way or the other regarding that. >> and can you speak to some of the republican criticism that's already coming out anticipating what the decision will be that the president hates jobs, et cetera? >> well, i think i did anticipate some of that in my opening remarks but i would make clear that there is a proper process that has existed for many years and many administrations by which a project like this has been reviewed and a permit is either granted or denied. because of concerns expressed by numerous stakeholders including the republican governor of nebraska, it was decided that is an alternate route through nebraska was necessary. the choosing of that alternate

route has not been completed yet. the state department which conducts an and oversees this multiagency review process made clear at the time in december that inserting this extraneous provision in an attempt to get a political victory because for some reason extending a tax cut to 160 million americans wasn't victory enough, the republicans put in jeopardy a process that should be immune from politics, should be conducted on the basis of pragmatic and considered analysis and tried to highjack that through that and the state department warned that would create serious problems. so the president's commitment to job creation that be amply

demonstrated for policies that he pursued and that has contributed considerably to 3.2 million private sector jobs. they've been demonstrated by his fierce commitment to doing everything he can both working with congress and acting independently to further assist the economy as it recovers from the economy through the worst recession since the great depression. ..

>> you say that the move by kars to force the president's to make the decision within 60 days of this pipeline is partisan. how is it any less political for the president faces a difficult choice between jobs and environmental concerns, two important constituencies for his reelection, to say, you know what c'mon back to the l.a. decision on this until after the reelection in december of towards a trough. how is that a less political? >> there is it the sabahs process by which these reviews are conducted. because of the concerns expressed by many stakeholders, including the republican governor of nebraska, the decision was made that an alternate route needed to be considered in that process did to be delayed and the full

review needed to be conducted on the also the route. that is the way this process is supposed to work. >> will would happen if the president had not as a rain? >> first of all, again, the decision to create an alternate route was made based on the request of stakeholders affected by the original route, including the governor of nebraska and others in the state. and that necessitated, as deemed by the state department, which has to conduct this review, to postpone it. the allowance of a enough time to thoroughly review the new route. again, i think it is important to note that, the state department made clear that 60 days is simply not enough time. we don't have an alternate route identified yet. how could anyone possibly review it the rally in the manner that is expected in this process. so the point is that these things are supposed to be

decided in immethodical responsible would serve all these goods area properly weighed. this is unlike this has a long-term vacation for our economy and our environment, nestle security and the stretcher in have to be considered as a this is is being made. the effort to score political points in a process that was wholly unrelated it is the route happy about the fact that the president was pushing for apparel text of a sense in for 160 million americans fifth makes a lot of substantive sense is of the issue that the proponents say they care about. this is an enlisted man of a pipeline and the potential economic, positive economic impact seventh half. the half to lead the process unfold the way it is supposed to unfold without this kind of experiment -- exchange is

political interference. the decision will mail the merits. >> not in the interests of the end bettis is kamala than 60 days. >> it will take no action. it leaves the city department out of the equation. >> i'm not going to preview for you any of permission we might have about this process or decision prior to that taken place. i'm not quarreling with the legislation the president signed into law. i'm making a broader segment of us who conducts a review and the fact that the state department, which, again, predicted the president indexes for you meatier back in december what it felt the impact would be of an arbitrary deadline set by, you know, for political reasons. so if your concern here is who

is going to make the decision, you know, i will suggest you wait for the decision to be made. >> the excess in would be the president would find that it is out of the nestle interest in just a wet. >> i would point to with the state department said, it would be impossible or highly unlikely if not impossible to conduct a high-level review of an alternate route that again, on january 18th, 2011, does not even exist. how would you have do? >> he has to do it. for us to get to my party to the future. and all the gabba made the mistake. >> he does not have these concerns anymore and he is okay. >> he is that okay with the original route. >> as you go forward. >> speedo brand of permafrost pipeline with a significant portion of the missing.

>> he keeps setting that he is opposed. >> his opposition was important to the decision to seek an alternate route which then delayed the process. the the process requires the permitting of the full pipeline. it is not a, you know, partial proposition. i want to -- >> can we stay on this? >> yes, we can. >> avoid the chase this a victory quickly. professionals have said they have reached out of values a program. >> our position has not changed for a long time.

we have made clear from the beginning when the president took office that the path is open to run to iran with the investment community, fulfill the obligations, buy back amidst it would be willing to work with the ron bronze behavior in its refusal to engage in serious discussion about his refusal. its persistence in pursuing a nuclear program in a manner not consistent with the international obligations has led to the consistent dredging of the pressure on tehran led by the united states, but having --

together with many, many other international allies and partners. that process continues, and it has put enormous pressure on iran. it has isolated iran, and that continues. but the fact remains that there is an alternate course year available to iran, should its response to a letter from the -- plus one and be willing to live up to its obligations. this is a simple service that has been available from the beginning. >> in general the president does not oppose the construction of the pipeline. overall the president thinks there are an important part of the infrastructure. >> definitely. that is an important point to make. this president's commitment to expanding domestic oil and gas fraction is firm and has been

devastated by the fact that again in 2011, the message for is more -- than any time since it doesn't three. he has continued to make more territory available in the gulf and alaska and elsewhere to production and development, and he has done that in a way that, at the same time, man maintains the standards of safety and responsible development that he thinks are key, so he takes and all of the above approach. he believes firmly that we need to continue to exploit, if you will, domestic resources. we need to continue to invest in clean energy technologies, and doing so, taking this approach, includes oil, natural gas, nuclear power, and clean energy, other clean energy technologies is the best energy policy and the surest way to ensure that we increase -- improve our nestle

security and decrease our dependence on foreign oil. and so this is not an either or proposition. it is a both hands. you can do this. you can increase domestic oil and gas production as has been the case on his watch and do it in a system responsible way. doing it in a sieve and responsible way includes ensuring the proper reviews are conducted for proposal like this keystone pipeline. >> does he have an opinion on tarp? can and must develop energy sources and as safe and responsible way. obviously we have to take a lot of factors into consideration when you do that.

the of brought economic security in as a security. that is why it is so important to embrace the possibility of further developments and is sure that we do it and away the vociferous possible. this year for oil, natural gas, nuclear, and clean energy technology. getting have myself. >> can i follow up? talking about the -- plus one. and that is a a channel that the u.s. can use. but they're both on the record stating that up record has come from president obama directly to the supreme leaders sang the there should be direct u.s.-iranian talks. has such a letter be written commander you're open to such stocks? >> our position has not changed. in the committee cases we may have had with the iranians are the same in private as they have been in public.

the long lines of what we have stated. the mobile the restarting of the starts to take place. semiprivate as is in public. the statement the statement that there is a path here towards renewed talks in the path it toward bronze super it -- to pursue if it so chooses that would allow it to get right with the agenda is the community, allowing it to stop the process that is isolating it further and further has been apparent from the beginning and remains available to run to the state. but they have shown no inclination this far to make that choice, to make that

decision. we have seen over the three years this president has been in office, he has, by pursuing the iranian issue in no way he has he has insured that a world that was in conflict over this issue is now united, and then assess the community, and in a run that was united is now in conflict. and the -- and that is the effect that the president's policies have had on iran in on its process. he has brought to bear a level of consensus and the international community on the need to press for a run and isolate iran and this issue that did not exist prior to and taking office. >> going back to the 08 campaign . republican candidate john mccain was complaining that direct cost with iran, the president had talked about, that would show weakness because one can sit down with a country, direct talks.

>> the process by which negotiations or talks would take place would be five plus one. the president has always made clear that, as he did when he took office and stated during the campaign, that by offering the possibility of resolving this dispute with the iranians in negotiations and talks would strengthen the united states because if iran agreed to do than and filled its international obligations and abandon its nuclear -- its pursuit of a nuclear weapon, that ruby to the greater good than to the -- in the interest of the united states as well as its allies and partners around the world. if it did not it would be clear to the whole world that and ron was a problem here, not the ad states. that is exactly what has happened. we have a level of its national consensus about iranian behavior that we did not have before.

we have a situation where the economy of iran is clearly suffering from the effects of the end-all sanctions regime and the unilateral sanctions that the various nations have placed on iran, and that isolation has caused this city within the iranian and made clear to the world that they have isolated themselves outside events of national norms. >> less the on taxes. yesterday the tax year was about 15%. warren buffett paying a lesson the secretary because of the raid the capital gains a taxed. what is the president's foreign policy standpoint? what then is his solution? these sudden drop the bofa rule, but in terms of law, is to bring capital gains and tax rates closer to income tax rates? is it, you know, what is his prescription?

>> i appreciate the question, and it is a legitimate one. the president has made clear what his principles are in terms of tax reform. he is for both corporate and individual tax reform, and one of the principles that he would bring to the table and develop individual tax reform, the buffett rule which would ensure that millionaires and billionaires, because of the nature of their income, to not pay at a lower rate the general class americans. if warren buffett does not pay lower rate than his secretary. mr. buffett himself. how you get there is a matter that i will leave to the president and others to propose because a tax reform is, in many ways, a skin the cat complicated process, but the principle of the rule is one that is important because it goes to the situation there were talking about yesterday. that is that it simply as a

matter of fairness. as a make a lot of sense for millionaires and billionaires to be able to pay taxes and a much lower rate than simply making $100,000 a year or less. that is the principle that he would bring to bear. there are a variety of ways that -- is a variety of loopholes within the tax code, elements of the tax code as well as the tax code itself they create that situation. he has headed by this as they carried interest loophole that allowed hedge fund managers and private records him to -- private equity managers to take income for their labor and have a taxable capital gains rate. the president believes in the world that we live in right now where no class americans are struggling, enormous economic pressure on hard working american families, that is is not fair. we have important days that we need to do to ensure america is

strong, the economy is powerful, and the 21st injury, we need to make sure everyone has a fair shot and pays their fair share. >> avenue. realistically a timeline, what is the timeline as far as an alternative route? >> i don't have any announcements to make. but i would just take issue with your question in that regard. [inaudible] >> i have been reviewing facts prior. as for pipelined proposals of the nature that are -- you know, of the nature of keystone that are transnational, that would go to the normal channels to this department's. iteration in terms of the review

process would be, again, absent an extraneous political interference that would take place in the normal manner. as to whether process exists. >> the 60 day was the arbitrary element inserted into the unrelated tax total of that is not how the process works. which in a manner that the state department has run a design -- designed and run it for many years to assess the question but is their are concerns of the thanks of quotas and "tens of thousands of loss because of this rejection. would you consider this the department of job creation? >> of me just make clear, as the state department decided in the president concurred, the review process was extended because of a decision to change the route.

the process should be allowed to take its course. the review should be allowed to be conducted an inappropriate way with all factors weighed in considered, overseen busted department. that is a little with this thing should happen. and partially because of the decision by the republicans to insert @booktv serve this extraneous position, you know, there is this arbitrary deadline of 60 days forcing the administration sand. again, the broader process will continue to work the way has always worked. where should tighten but the issue of job creation. people are screaming that tens of thousands jobs. >> these projects, you have to weigh a variety of considerations. environmental embezzler health and safety, security, and that

is the way this should be. there are hundreds of thousands of the first responders who could go back to workhouse live coverage of iraq and the jobs. there are tens of thousands of construction workers, and researcher jobs he could be going back to work rebuilding our infrastructure, making us more competitive for the 41st century if republicans would support, as they often have in the past, the kind of infrastructure investments there are included in the americans of zacks. aziz said earlier, we remain optimistic that kind of cooperation could be forthcoming because it is incumbent upon every elected member in congress as well as the president to work together towards the goal of

improving our economy and creating jobs. >> the following all what april is asking. the bottom line is the keystone pipeline has to become a political lightning rod this year. what is the mss is level of concern that the state itself has really in some ways better this is administration against some union sewers sank that they should go back to work. >> i would simply say that on issues like this there is a non-political professional process that has been in place this that was established long before the assertion came to office and is the proper way to conduct reviews for applications for permits for these kinds of transnational projects. reprocesses from busted department. it was being run by the state department. the change in the rye was made because of the concerns expressed, legitimate concerns expressed by stakeholders in nebraska and elsewhere, and

because of that the process had to be extended. that is how it is supposed to work. there are a lot of factors to weigh in the extended decision, including nestle security factors, a season of the health and safety of our children, the residents of folks in the area of the enclosed pipeline, economic impacts image of the backs, the effect on our energy security. as a tender process of the state department overseas. it involves an but for many agencies. the decision to insert. >> in reelection year, isn't it possible for this not to take some sort -- >> it is up to others to decide

how politically want to be about any kind of decision like this. yeah, this president and administration pass with the responsibility of reviewing the matter is in a way that is appropriate. takes in the consideration of the different rich area that need to be brought to bear in a decision like this, and that is the approach. does a person as it were missing teeth. >> represented peter king, the security committee, as you know, he raised some concerns. raised concerns that there was essentially classified information that would be leaked. last year the cia and defense department officially opened an investigation. >> rudd, they are part of the administration. the vote went to them there was

some liz reporting about what the white house did. i made sure that in discussing that mission and those days, folks involved in making this are writing books or doing articles are tv pieces, we sell the same thing, and none of those classified. >> confidence in this investigation. >> well, the defense department and the cia. with regard to that because i was part of that process of her art to the white house amazing days ago with reporters, like everyone in this from practically as well as others are working on the books or films, you know, if we provided the same information to everybody. none of it was classified. >> my question is a process question. why, knowing as you do, the interest in the keystone issued in knowing as you do that the decision has been made up.

why would announce that after the briefing in there for put yourself in a position where you won't answer any questions about it and where we won't have -- >> i'm not going anywhere. you guys can ask me questions. i am here most days. >> all right. >> endo it's hard to believe. schedule, decision making, policy processes and stuff like that are all dependent on muzzle the residual weather communications shop. as so should be. yes so let me to brief in the middle of the evening. i would point me to the fact that we might have something more to save this letter in the day.

>> without confirming a rejection can you explain what their rejection would mean? [inaudible] >> if transcanada has said cement a new route does that just -- does the clock started zero? >> let me make points. these other reviews conducted by the state department. the reviews that were best explained. however, i would point out that absent the payroll tax cut and the insertion of that extraneous position within it s created this are jersey city deadline, there was a process in place. it was not ten years.

it was not ten months. that was the amount of time the state department believes was necessary, would be necessary to properly review and of their route. i would refer you to the state department for details about how the process generally works to pentagon, you know, forever decision was made because of the necessity created out of this legislation. >> the understanding that this would probably begin another 18 months time clock. >> i don't have the white house view to express on that. that depends on a lot of factors, including the outcome of this decision. but the, you know, as you have noted your question, there are players in this process, including companies, private companies, another country involved, which is the reason why this -- why the state department is engaged. so i would be -- by would not

want to speculate. >> it may have been eight months from now that you guys gave the green light. lambasting, is that option no longer -- >> i was just referring to the state department. i don't know or have to adjust for that. again, is based on the promise of a decision that i am not announcing. >> their reaction in principle as you have gone through your day, hasps the internet provider and website protest affected you guys? >> well, i don't have any effect or impact is that i have noted beyond the point out that we made very clear the weekend. our views, and we had a tremendous response to our vides the people initiative. we think it is an important process where has been conducted where they're is a lot of excellent put in this press

about the melia board indices that are at stake. and as our firm belief has been, we need to do something about online viruses. we need to do it in a way that does not infringe upon a free and open internet. both sides of this issue need to come together, find a solution that strikes a balance. and i think that process has been benefited by the interest in the number of voices that have been heard on this issue. you know, we have been really impressed by the volume of response that we have gotten on line to what we put out over the weekend. >> did you give us a little bit more?

some of the republican criticisms? >> well, i have discussed the travel. i mean, he goes to of states all across the country, and every president should meet with as many as possible. he will unveil a strategy that will boost tourism travel which is an important and sometimes overlooks sector in the academy.

he is pursuing every avenue possible to tackle what he thinks is an important challenge is listening to compete and dominate. >> you could argue that. our schedules kamala of the for incineration. i read reports that this would be over after iowa. it could go on and tell me, that would make it impossible. it would make it hard for us to go to many, many places. it is obvious when you're making

a tourism travel announcement that one of the premier sites is u.s. tourism industry is our window. pretty self-evident. [inaudible] >> i don't -- i'm not aware. [inaudible] >> a blogger from general state of the union followed what is the president's message text we? >> well, he will be talking about the subjects he raised in the city the union. i would be getting ahead of the president. he should not blow other

subjects but he is fiercely focused on economic growth and job creation. that will certainly be a topic generally that he has addressed next week and will be a topic that he discusses on the road both deficit of the union as beyond as he had so frequently prior to the city's union. he is of the president of. >> we would've had to decide back in december or november, making this is is fairly far in advance, we could not go to any state that had a primary. that is 50 states, basically,

because all of them could be the place where the nomination was decided. we can't do that. this president, as every president, the president of all the as this of america, all the people in the country, and he will travel around the country to talk with the issues that are born to americans in every state, including most important economic growth and job creation. >> on keystone, processes that have been in place and other illustrations. greasing the rails and some cases to create jobs.

he did to the major you're not alone netting proceeds or rules that are vital to health and safety of the american people you don't ignore the health and safety. you have to. is your responsibility, and that is what this process is always done the matter that is very thorough that weighs all the different factors that are stake here and a decision like this. the issue here is -- to short circuit a process, and the approval pipeline, a route for which is not even been decided. >> and mustang and haphazard way

it -- >> are proposed. >> wouldn't it be better to handle with the state review some way to move forward on this instead of being hit over and over by republicans who are saying transcanada, 20,000 jobs. it will be over and over. chrysler will bill of rights. there are a lot of arguments to make to balance the budget on tax reform or how we should best pay for the kind of investment that we need your why they oppose building 400,000. why they oppose putting workers back to work. they will grab on to others, but that does not been the president does not have the responsibility and is the administration does not have the responsibility to conduct there of the like this properly and buy the book. >> private sector jobs to not require any expenditure by government.

>> that is that the issue. the issue is the impact that a development project like this to my transmissible the project would have on health and safety of the american people in the region, our economic security, job creation, our energy security. a variety of factors must be considered, and they should be considered. they should not be set aside out of, you know, political gain. let's go back to how this happened. the result proposal was to expand so that americans got a bigger tax cut. republicans went from opposing that being ambivalent about its sudden the deciding that they needed because there are going

to have to go along with it in the end because it was the right thing to do and their constituents are telling the mayor was the right thing to do to decide in his sons are a political victory, and this is with a settlement. an agenda hijack a process, a short circuit a review process that needs to be connected properly. that is how should and will be. george -- jackie, i'm sorry. >> on another issue. he mentions that in a very long posed about the issue of intellectual property right and piracy that you were trying to urge the sides to come together on this solution. it was widely interpreted, you know, by some as the white house taking sides against hollywood. why do you think that is the wrong way? >> because, as i stated, we

believe that there is a need absolutely to address the problem of online piracy. conducted by foreign websites, which is the real driving issue here. we may clear in this statement we put our the weekend that we oppose the filter. we made to order principals are the government ought to pursue addressing the issue of all on privacy and in doing that it's, you know, must not impinge upon the freedom of the internet because the internet is such a vital resource these -- there are absolute issues here and interests that all sides of this debate have and are legitimate, and that is why there needs to be the kind of dialogue the to bring us to a resolution that

could result in a resolution that is balanced and addresses concerns about privacy does not impinge upon the freedom of the internet. >> anything differential to the laws of the process. >> why the timing? why on a saturday? there are so many aspects of the timing of this that are unusual. >> well, i think there was a great deal of focus and interest and intensity on this issue. we have the -- the we-the-people process. solicited opinions. at the threshold was meant for us to respond, and we did. i think it is highly appropriate for us to put forward our view on the spending bill, at least

some provision in particular within one or both of them on the deanna's filter and the overall principle that we think should get this process. >> i just wanted to clarify your answer. are you confirming the president said the new letters of? >> we don't discuss specific in the cases, diplomatic communications. i would say we have a variety of channels through which we can communicate with the iranians. any mess is that we communicate to the iranians about these issues would be entirely consistent with what we said publicly, what i said publicly. you can be sure of that. >> to personnel issues. >> i have no personnel

announcements to make. >> is the present considering larry summers for the head of the world bank. >> said don't have any personnel announcements to make. [laughter] and is the president actively looking for a new omb director? >> well, he just became acting director for the second time. so i don't want to foreshadow anything. the president is very appreciative of jeff's excellent service, his willingness to be evicted director in the past and let mr. do this now. a very important causes of the as regards our interactions with congress. he's very pleased that jeff is taking on this is a possibility. i don't have any foreign calls to announce. i don't have any foreign cost announced.

thanks. [inaudible] >> why the warm-up acts? have nothing more to say about that. [inaudible] >> coming up at 7:00 eastern here on c-span2, michigan governor rick snyder delivering the state of the state address live from the state capitol in lansing. >> only those to show their resolve to defend the freedom of the west can be trusted to safeguarded in this challenging turbulence and the unpredictable times that lie ahead. [applause] the decade in this century which opened up must see the lasting strength of liberty, of common cause, the world needs britain, and britain needs us.

>> nicknamed the iron lady by the soviet media, margaret thatcher is currently being portrayed on screen by meryl streep. the premises question time. >> some countries in the common market's which i would like to handover, so the financial affairs to a european central bank, and i -- that is not our view. regina west andover further powers from this parliament to of the parties. >> search, watch, click, and share what you want when you want. >> the south carolina primary is this saturday. results and speeches saturday night on c-span. from there it is on to florida with the presidential primary january 301st. on february 4th caucuses get underway in nevada and maine. the kendis debates, a town hall meetings in the campaign rallies

and more on the c-span tv networks, siege of radio, and c-span.org / campaign 2012. mitt romney campaigning in south carolina with a rally in spartanburg. we will hear from that candid it's wife and south carolina state treasurer who introduced mr. romney. [inaudible conversations] [applause]

♪ [applause] [applause] >> good morning, good morning, good morning. good morning, everybody. that is our clear and not to say anything else. good morning. i am a southern baptist, but i am not a baptist minister. if i was a baptist minister or i

would say is what a beautiful day the lord has given us. [applause] and i don't know if it is just me, but i think the mitt romney crowds are getting better every day. thank you all for coming after tonight -- this morning. it is very important. it is very important. south carolina has an outside burden. we are first in the south, and people see that as a privileged. well, that is our burden. we have to elect somebody that we can send that just to win the nomination, but to be the next president of the united states. [applause] we need a leader, a leader that has private industry experience, somebody who can create wealth, jobs, leader, and we need him now. we don't need to wait for years. we need to stop mr. obama and send him back to chicago. as you know, the campaign in south carolina gets rather heated.

we have everybody from barack obama en is newt gingrich's attacking us because we believe in free enterprise. ms. romney is a obsessed with free enterprise, andrew will take the skills to the white house. [applause] he has come here today because he believes in spartanburg county. do you believe in spartanburg county? [applause] he is trying president, giving about valuable portion of his life because he believes in america. do you believe in america? [applause] do you believe in mitt romney? [applause] well, so do i. it is my honor to introduce not just he but his lovely wife. so, ladies and gentleman. [applause] >> thanks, buddy. thanks, buddy. you're wondering who this guy is . deasy know who this day is here?

yes, that is current legends david pearson. to you want to say i? just say hi to everybody. >> okay. i'll say hi. [laughter] >> that is the kind of speech highlight restated to the point. did the job done. it's great to be here. i have been here before. this is a good spot. love it here. what is south carolina day. this is gorgeous. what kind of tree is that, i don't even know. that's a mitt romney tree. there you go the as a kind. it is a little brisk, but how beautiful it is. i love this country and the chance to be doing what i am, going across the country and the wonderful folks. eyebrow one of the best people in the whole world with me here today, not just david or curtis, but this person over here. this one here i saw her in elementary school. she was in the second grade and i was in the fourth grade.

at a particularly remember that moment, but i'm sure we sites other passing. when she turned almost 16i really did take notice. she went to a party at a friend's house, and i was there. i went up to the fellows who came within system a you know, i live closer to air that you do, how what i ever ride of real. he agreed, and we've been going steady ever since. my sweetheart. >> thank you. it has great to be here, and disease in children here. wonderful to have the children. we have been married a long time. he mentioned that we met in high school, so there are no secrets here. we know everything about each other. we have had an extraordinary life, and now it is time for some serious things to happen in this country. at estimate a question a year ago. i said, i am not asking you, ken or can you get the nomination.

i'm asking you, if you do, can you make a difference and turn the country around? he said yes. this is, okay. and what we have to do. you have to deal in renminbi barack obama. [applause] we can get distracted by a lot of things going on right now, but you have to ask yourself who can be obama? this to read here. yet test is another question, only one other person, the sky right here. i have all the confidence in the world in him. a great husband and father. i was a young mother and the boys were driving me right up a tree about as big as this, he would remind me that what i was doing was more important than what he was doing. my job as a mother was going to bring as lasting happiness, and it has, and it is great to deal to know now to see my five sons married and to see these great

grandchildren now we have, and other great joy is was in my grandchildren misbehave. when they are really naughty is when i love it the most be reelected my sons and i went to you guys deserve a second of this. but it is great. it's great to see that they follow the example of their father and are just wonderful husbands and fathers. that gives us great joy. so i am excited about where we are right now. south carolina, you have a job to do. you have to make sure and make the right decision right now because you have to decide who can beat obama. it is an important thing did you have to ask yourself, and you also have to ask you can turn this country around. it will be this-right here. thank you. [applause] >> thank you, sweetie. after she speaks people ask me why don't we let her run for president said at me. i have to take the microphone away from her a little earlier,

i am afraid. see is the best. i have had the chance of the last how many months now, many months, to go across the country and see america, talked to our friends across the country. a lot of people hurting. there remember the campaign promises were he promised change and hope. begun change but not hope. i go into people's homes, and they're having a tough time. i spoke with a woman the other day with tears running down her face is said, can you find me a job to make enmity for a job? almost 10 percent unemployment in south carolina. it just breaks your heart to see what is happening across the country. i see people who had planned on retiring, and now they're working minimum-wage jobs. i see people who are thinking of starting a family, and they're having a whole lot because they cannot find the work there will make starting a family possible.

this president has run out of ideas. now he is running of excuses. to running out of time. we're going to get rid of him. he has failed on almost every dimension. when he ran for president he said he would get this economy going. he went on the today show shortly after being inaugurated and said, if i can't turn this economy around in three years i will be looking at a one term proposition. we are here to collect. you have 25 million people in america the route of work, they have stopped looking for work. they can find part-time work and need a full page to muffle some employment. median incomes that have dropped 10% to last four years. soldiers streaming home from the wars they cannot find work. did people coming out of colleges and universities that expected to have a great job waiting for them.

they can't find work, and if they do it is well less than the kind of skills that they were trained and prepared to deliver to the free enterprise system. these have been tough times, and so the american people want to see something that is different. they won a turnaround. spin my life learning how to turn things around and make them better in bed understand how that has worked. and have the chance to run for different enterprises. what's the business was in trouble. i turned that around. of the rest of the business on my own and it became successful. now of world leader. i was sent out to alberta the olympics. games in trouble, scandal. should we give them back? together our team turned that around and made it a success. i came here to massachusetts. we have the $2 billion shortfall, $3 billion shortfall in our budget. people wonder if we can turn around. i had that experience. that is what i know how to do. if there's ever been a time that the nation needs a leader nasa to turn things around is now.

[applause] this is a type of choice for america. decide which path to go down. president obama who fundamentally believes the government is the source of our strength. believe the people of america of the source of america's greatness. [applause] president of bollixed to the capitals of europe for inspiration. i look to the towns and cities of america for my inspiration. he wants to see government that is larger and larger and larger. i want to see government that is small and simple and smart. he is a compatible with trillion dollar deficits. over the coming decade that will take us on the course inexorably to become like greece or italy come in there is no one big enough to bail us out. i will not build those massive deficits. i will insist on with jim demint has been fighting for, which is to calves than the god cap spending, into a finely balanced budget. [applause]

repeal obamacare. forcing something known as card check on american and workers here in south carolina. his people at the nlrb said the boeing can i build a factory in south carolina because there is not a union factory. they are wrong. we believe in free enterprise. [applause] the president seems to be pursuing a policy internationally of appeasement. perhaps sensing that other nations are growing stronger and that america cannot lead during the next century as we need to be nice to everybody because we all share common interests. i do not agree. i think some people than not share our interests. some seek to suppress other people. that thing some have the intent of expanding their power to other nations.

i believe the right course is not to appease other nations are to assume that america will be in decline, but to recognize this century must be an american century and we must continue to lead the world. [applause] the president's path is one of declining investment and the military. i hope you saw the significance of this decision to cut $350 billion out of our military budget and his plans to go ahead and cut of the 650 billion. we will cease from being able to engage into conflicts at once, which has been our strategy since german. instead will go to a strategy of saying that we can only compete in one conflict of one. the you know how small our navy yesterday? is smaller than at any time to 1917. our force is smaller and older than a time since it was founded in 1947. the president wants to pull back troops. my view is that we must maintain

a strong military so superior to anywhere else in the world that no one would ever think of testing america's military might. [applause] the president -- one of the things that i find as i go across the country and talk to small business people pet and the mess and there are few of your city, people said to me, why is the president attacking business? dodd-frank made it harder for community banks, and they are the ones that loan money to small business. obamacare raised the specter of higher costs for employees, and so people will back. the idea of making the national labor relations board an arm of unions made businesses less likely to invest.