would be remiss if i did not bring up the recent changes in the department of justice policies regarding the reimbursement to local government. as i'm sure you are aware, permitting states and localities to seek reimbursement for the cost of detaining emigrants' tries to the felony or two or more misdemeanors. to partition is that a federal responsibility. the program which a knowledge is that our over burden of law-enforcement facilities should now have to bear those costs without some kind of reimbursement or recompense from the federal government since it is the federal government's responsibility. shortly after i was first sworn in as a member of congress some ten years ago, local police officials came to me and explained how a change in desk at funding rules was having a

very profound effect on the budget. and the 2003 reinterpretation in which states only receive reimbursement of a criminal alien is convicted of felony or two misdemeanors and the arrest and conviction occurs in this in fiscal year, which is a not uninteresting requirement, has had tremendous repercussions throughout the law enforcement community, particularly in my state of california. in california reimbursement face it -- timesaver decline from 220 million in fiscal year 2002 prior to the department of justice reinterpretation down to 112 million fan fiscal years 2009. and so ten years now, congress has been working with colleagues on both sides of the aisle, bipartisan issue to try to help the justice recognize the need to return to the original congressional intent of this legislation. police department and shares

departments in my state are already having to do more in terms of deterring crime and protecting constituents with less. and this reinterpretation of the reimbursement really hinders their ability to do that. if they are trying under very difficult but the circumstances to do an incredible job, but you know, they keep asking me what is the federal government going to do. i would love to be able to tell them that the funds that they desperately need a going to be coming. last month i was dismayed to find that your department for the reduced reimbursements under the program which had the effect of only further increasing the pressure on local law enforcement and making their job that much harder. reimburse state and local law enforcement of their holding in

an inmate already in the database. i would like to enter into the record. this suggests that if your department has made this change in 2010 it would have reduced payments to california shares by an additional $10 million, and that is already on top of the 50% cut from 2003-2009. and i just want to quote a section of this that i think the california state sheriff's association summarizes very accurately. the state, the federal government must uphold his responsibility to not allow changes that would weaken the funding provided.

i hope he would give this issue more thought. much more thought to the impact this will have all law-enforcement communities across the nation, not just to mention some in california. and i hope that you will reconsider this decision and consider rescinding it. i just wanted to make you aware of that issue. i will be following up with your office, and i hope that we can work together to try to ensure that local law enforcement entities will be properly reimbursed with a great job that they do in trying to protect the public safety. i guess of just allowed you brief comments and your back to the chairman. >> thank you. the gentleman from arkansas is recognized. >> thank you, mr. chairman. thank you, mr. attorney general, for being here today. i want to ask you if you are familiar with the homestead case that deals with disability law? are you prepared to speak about

that? >> well, not an expert on it. >> that me ask you a few questions about it. in my state we have a number of homes, restitutions for the developmentally disabled. and around the country there have been a number of lawsuits against some of these sounds alleging violations of civil rights. and in some instances these lawsuits are filed with the view that the homestead case contemplates a structure where the institutions sort of are phased out. individuals with -- who are disabled, especially disabled, develop mentally disabled, those individuals moved into more community-based.

my state in arkansas who has been the subject of some of this loss. i want to ask you, do you agree the case requires a movement away from institutional care for the development of a disabled believe these can exist within the framework. >> i am not an expert. i am familiar with the -- with the decision talked-about and unnecessary institutional opposition and have a clashes with the aba. you're asking a question that i think is beyond my -- >> okay. could i get something in writing and let me continue a little bit my concern is that those who are

implementing an understand it, many levels below you. my concern is the son of the civil rights divisions and a special litigation section at doj are pursuing -- and to be fair, some of this litigation began in the last administration, so this is -- this is an ongoing problem. but my concern is that there are some who read the case has if not requiring a move away from an institutional at least some house endorsing the move that those at doj, some at doj have advocated for. and my reading, i think anyone's reading of the case, the actual case demonstrates that that is not what the case contemplated.

that the case was -- made it clear that segregation of those with disabilities will not be tolerated, but that institutions could be a part of the solution. and the fact, the opinion, the plurality opinion said each disabled person is entitled to treatment in the most integrated setting possible for that person recognizing on a case by case basis that that setting may be an institution. and so that is, if you could give me some answers, that would be very important to me. the lawsuit that was filed in arkansas was eventually dismissed for lack of evidence presented by the department of

justice. unfortunately, it cost the state of arkansas and the development center that was involved over $4 million to litigate. in the end it was dismissed for no evidence. and i've won't go into details, but i will just tell you in a small state like ours, and an institution like this, $4 million was a significant sum of money. in fact, it had to be -- timber had to be sold, mineral rights had to be sold to help fund this litigation which was then dismissed because doj had no evidence or did not have sufficient evidence. so if you could get me just your views on that, i would very much appreciated, and i think you for being here today and listening. >> i would be glad to do that. the underlying material that you have shared with regard to this position on those two cases is accurate. what i will endeavor to do is

respond to the question the you have put to me. i apologize for not being able to answer based on that correct factual assertion the you have made. >> think you, sir. thank you, mr grant. the gentleman from florida. >> chairman. thank you for being here. the benefit of having the question you is i may be a last one. thank you for your patients. i want to ask you a couple of questions. the house committee on oversight did receive wiretap application is that it reviewed. and that committee's contention that those applications contain c-span information about fast and furious and go walking. my understanding is you review those applications. it is my understanding that you take issue as to what these applications actually detail as to whether it -- weather fast and furious existed or whether there was any gun walking. >> what i would do, again, i can't talk about the contents, i would align myself with the letter that -- >> is that james coles letter? >> the letter that congressman

cummings set out a couple of days or so ago as he went through his analysis of that same material. i think that his perspective is the correct one as opposed. >> and my understanding, there was a letter january 12, 27 of this year, attorney-general, a deputy attorney general indicated changes have been made two of those changes included. the department of justice changed its way of response, congressional inquiries and has also changed the internal process for wiretappers used. in fact to your office has tripled the number of attorneys our using wiretaps. >> that is correct. >> is that an indication that was done before is inadequate and inappropriate? >> it is in response to office visits i was making were people were saying it was taking too long for them to make request sent to get them processed and washington. get the approvals back. >> nothing to do with another level of review to make sure. >> one of the changes actually does. we now require somebody in the

field, a supervisor, to look at the affidavit and application. we now require that supervisors to look at that. that was not a requirement before to try to make sure we had better accuracy. >> as i understand on tuesday you have a spokeswoman, tracy shalala who issued a statement that said the review process for wiretap publications is limited and specific assessment of whether legal basis exists to support the request, the review process is not an approval and operation. i am sure you agree with that. so the sufficiency of it then has nothing to do with what may be alleged in there. for example, hypothetically if there was a human trafficking operation going on in the wiretap was being requested for that, at what point do you just not look at the legal sufficiency of whether the requirements for the wiretap? what point do you do something to stop the actual operation that is being asserted? >> well, when you get these affidavits, they're pretty broad ranging and described in pretty good detail what is going on in an operation, but they don't go into all of the -- as i was

explaining, they don't go into the nitty gritty of everything that is going on in connection with an investigation. if, for instance, an affidavit did contain, totally hypothetically, an affidavit did contain some indication that trafficking was going on, young girls were being tortured or something, or that guns were being what -- >> right. what i am getting at is we now have in place a process in reviewing these wiretap applications that would prevent another fast and furious. is that correct? >> i think we do with regard to the supervisory level. this is assuming the people who are working on the affidavit are sharing all the information. but we should not have that on the basis of just wiretaps. given the policy pronouncements i have made in the changes i have made, that is the primary reason why we should not have a repeat. >> and believe me, i would love to spend more time on that issue. i am sure you have had enough entertainment on that one. what i would like to address with you is something near and

dear to my state of florida. is it your opinion that you feel that deceased people should vote? >> obviously not. >> and illegal aliens should not vote either. >> no, but veterans should be able to. >> i cannot agree more, so long as they're eligible to vote. but when my state and in furtherance of its obligation to make sure that we have an adequate and sanctified voting process nine months ago requesting the apartment of common security the citizen database and receives not only in know, but no response and then today when they're trying to do what is necessary to make sure that the sanctity of the voting process is preserved and appropriate, the department of justice stonewalls and said, sorry, you are within 90 days and therefore the voting rights act applies and you can't do it. what is my state supposed to do? when t hs and doj does not cooperate in the furtherance of their obligation? >> i can't speak to what detested, but i will say this about the database, it does not

contain people who were born in the united states, so it is not going to be a cure all. >> why would they refuse to give it? now they have to go to the motor vehicle pulls to do their job? that have better tools with that data base them what they have now with their own internal tools. >> i don't know why they didn't, but i can say that the database itself would not be adequate for the kind of purging that is sought by the state of florida. >> and there is no reason that d.h. as -- that they should have released it? >> i don't know what the basis was for that determination by los zetas test. i do know that -- and i am concerned about the numbers of people who have been inappropriately perris from father roles who are citizens who have voted in the past and who, for whatever reason, got those letters. >> thank you. i yield back. >> thank you, mr. ross. mr. attorney general, thank you for your testimony. >> mr. chairman, won unanimous consent. >> it's an elephant texas is recognized for unanimous consent >> thank you. the clarification regarding any

mail sent. this is his testimony regarding any member referred to by the gentleman from the top. the now referred to the wide receiver, and the testimony i am submitting indicates this statement. when i say it is a tricky case given the number of guns that have walked, i am talking is this a leak about. >> the testimony will be made part of the record. thank you again for your testimony. five legislative days to submit additional questions to the attorney general, and we hope you will be timely in your response. this hearing is adjourned. >> thank you. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> on the road to the white house coverage tonight on c-span2, the wives of the presidents of kendis beginning at 8:00 p.m. eastern with an romney in miami and a gala, florida, followed by first city michele obama campaigning in dale city and virginia has surged 8:00 p.m. eastern. also tonight, live coverage of the 68 annual radio and television commercial correspondents' dinner in washington. house speaker and any -- emmy award winning to medium-range area the featured speakers. live coverage starts at nine eastern. again, that's on c-span. >> two days of live coverage from chicago tribune printer's row let fest this weekend.

setting saturday at 11:00 a.m. eastern time gary kristin joe allen on the making a presentation condo. rich : on the banana man. let america when the people shouted yankee go home, they had him in mind. and at 5:00, plane bats was convicted as an adult at age 16. his memoir find some coming of age in prison. sunday at noon gail collins on texas' role in american politics. lindsay melson goes inside the end of khaddafi libya at one. at 2:00, a story to tell in watergate, novel. also this weekend on afterwards, madeleine albright on growing up in knots the occupied czechoslovakia sunday at 9:00. book tv, this weekend on c-span2. >> on thursday senator robert menendez said he was outraged that the u.s. government granted the daughter of cuban leader raoul castro a visa to enter the country while american alan

gross remains imprisoned in cuba . since to 15 years in prison for smuggling telecommunications equipment into cuba. the topic was part of his senate foreign relations subcommittee hearing examining current human rights issues in the island country. >> good morning. the hearing on the western hemisphere will come to order. first of all, our apologies. as you know, the secretary and other witnesses. we had a vote on the floor, and we just came from that. welcome to our hearing on the path to freedom. supporting civil society in cuba . a title that is more than a mere designation of why we're here, but a statement of what we must do for the people of cuba and how we can get there. i want to thank our panelists for coming today. i look forward to hearing their analysis invidious on how we move down the path to freedom.

i want to acknowledge the life of alan gross, judy gross, who is with us today. we are in solidarity with her in her residence and believe that he should never have been incarcerated and that he should, in fact, be free to come home to is family. in addition to the assistant secretary for the western hemisphere, roberta jacobsen and former political prisoner and then this. we will have the unusual privilege of being joined by three individuals who have the time and again risked their personal freedom to advocate for basic, civil, and human-rights with their fellow cubans. this morning they will, again, simply because of their willingness to express their opinions at this hearing, but their personal freedom at risk by telling the truth about conditions in cuba and providing

testimony before this committee via digital video conference and telephone. their participation is so sensitive that we were unable to include their names on the hearing notice and only have this morning following confirmation of their arrival at the u.s. intersection in havana issued a new hearing notice. we are deeply grateful for their courage and their commitment to coming forward to speak about the realities of life within cuba and for their advocacy for freedom of the cuban people. there are jose ferrer who will speak to us by phone and jorge garcia and tonus. take this opportunity to thank the committee and the state department for their assistance in facilitating the technical aspects of this hearing in d.c. and in havana and for providing

interpretation of services as well. let me begin by providing some context for today's hearing. i am at once both encouraged and discouraged by conditions inside cuba. i am encouraged by the tremendous growth of civil society and on thousands of brave cubans to every day stand their ground despite harassment, loss of jobs and rations as retribution for their action. and the ultimate in many cases, their freedom. for those who speak their minds despite recurring physical abuse and arbitrary arrests and detentions. at the same time, those arrests and detentions this year alone i know more than 2,400. that includes 1,158 documented arrests just in the month of march. a level unseen in cuba since the 1960's. the tremendous increase in repressive actions against the cuban people recognized this

week by the un committee against torture reveals the growing level of discontent in cuba and the inability of the regime to grow to control the strong movement. the growth of civil society in cuba is, in fact, extraordinary, particularly if you consider the constraints faced by activists living and island who are subject to continuous observation, continuous harassment, and frequent detentions by cuban security forces. and with limited means of communicating amongst themselves because the island has virtually no free internet capacity and the internal engine that is obviously heavily monitored and completely controlled by the regime. it is even more impressive if you consider that the roots of today's movement began to form inside cuban prisons only in the late 1980's and early 1990's as the soviet union collapsed and the ratio was weakened by the lack of soviet subsidization.

the cuban committee for human rights performance of the first season of civil discontent basing its platform on the universal declaration of human rights. from there the movement grew into 135 groups that made up the umbrella group that declared its determination to struggle for an absolutely peaceful and nonviolent transition to a democratic state of law rejecting all hatred, violence, or revenge and equally embarrassing all cubans of where the regime's efforts of the movement blocked the plans for remaining. february 24 of 96 they arrested the participants. in that moment the regime won the battle but lost the war. the brave actions became legendary on and off the island and their actions inspired others to stand up and face the regime. across the island a diverse collection of liberation groups and freedom fighters sprang to life. they included women's groups, human rights groups, association

of independent lawyers and journalists, artists, and librarians. again and again this pattern was repeated when the regime sought to crush the supporters. the petition calling for a vote in favor of freedom of association and expression, freedom of the press, free elections, the right to operate private business and an amnesty for political prisoners and other activists on march 18 to 2003, an event known as the black spring. cuba arrested and imprisoned at the 75 at that time, including her mondo hernandez who is with us today and has a danielle for argosy of who will be calling on the phone ashore while. armando was exiled to spain after serving seven harsh years as a political prisoner in cuba. jose daniel served eight years before being provided conditional release in march of 2011. seventy-five arrests embolden the opposition movement leading to the creation of. [inaudible] , which has become a national

symbol for unified demand for freedom from repression and tyranny. if past is truly prolog this current wave of repression will only serve to further involved in the movement, bring others into the cause demand eventually lead to the freedom of the cuban people. the purpose of today's hearing is to call attention to the wave of repression taking place inside of cuba. at the same time it is a celebration of the courage of thousands of activists living inside of the island. dozens of cubans to everyday stand against the regime and every day put their personal freedom at risk for the freedom of their countrymen and the nation. let me close with a few facts that we distributed to the audience. according to the 2011 state department human rights report, and i quote, the principle of human rights abuses in cuba were abridgement of the right of citizens to change the government, government threats, intimidation, mobs, harassment, detention than preventing citizens from -- the short-term

detention which rose to the eyes of the number of 30 years. most human rights abuses were official acts committed at the direction of the government and consequently the perpetrators enjoy impunity for their actions according to freedom house, cuba is ranked 190 out of 197 countries in terms of press freedom. between syria and iran. in just the month of march 2012 there were 1,158 documented political arrests by the castro regime in cuba. according to the cuban commission for human rights this represents the highest monthly number of documented arrests in five decades. cuba has also seen its share of martyrs on this journey and the deaths after lengthy prison hunger strikes and that of another after a beating by security officials.

amongst the most recent detainees, arrested march 2nd on charges of public disorder and actions against the norm in the development of a minor. arrested in mid march during a wave of arrests leading up to the visit of pope benedict the 16th to cuba. arrested in march 2017 as he stepped at his home. hopes of traveling to nirvana -- a lot to attend the pope's mass. an activist with the patriotic union of cuba who was arrested april 1st. prosecutors are seeking a two-year prison sentence. danny lopez who was sentenced in april to 18 months in prison after he was arrested in february for wearing a shirt denouncing the castro regime for the deaths of political prisoners.

the ten political prisoners are currently on hunters -- hunger strike in the guantanamo prison demanding to befall international standards for prisons. [inaudible] their courage, their sacrifices so we can never forget in our dealings with the dictatorial repressive regime that has ruled cuba with an iron hand since the middle of the last century. still today 23 years after the fall of the berlin wall cuba remains trapped in a closed society, cut off from the events of the world, repressed, threatened, fearful of saying or doing something that will land him in prison often for years.

so we urge every american to remember all the victims of fidel castro and his brother greuel. just as we remember all those around the world to have suffered and died under the iron fist of of the repressive dictatorships. cambodia under the khmer rouge, ron under the ayatollah, a rock under saddam hussein's , melissa vick in bosnia. as i have said many times before , the cuban people are no less deserving of american support and the millions who were imprisoned and forgotten in soviet gulag, lost their families and left to die for nothing more than a single expression of dissent. i am compelled to ask again today as i have before, why is there such an obvious double standard when it comes to cuba. why are they do lice so different from those of the old soviet union. why are we willing to tighten sanctions against rhonda loosen them accustomed equally repressive regime inside of cuba

. when it comes to cuba, why are we so willing to throw up our hands and say, it's time to forget. it is not. we can never forget those who have suffered and died at the hands of dictators, not in cuba, not anywhere. it is clear that repression in cuba continues unabated, notwithstanding all of the calls to ease travel restrictions, ease sanctions, not withstanding millions of visitors from across the globe, notwithstanding greater resources that the regime has now in terms of currency, not withstanding calls to step back and let bygones be bygones. that is not stop the repression. the repression, the imprisonment, the beatings, torture is still continue. in good conscience i, for one, cannot do that and will not step back to that. ..

just 90 miles from our shores. i think for many americans as we look around the world we somehow come to think that totalitarianism, dictatorship is a civil rights abuses or something that happens somewhere else. they have been in our free on hemispheric or literally within 90 miles from the shore of this country. the had been in cuba and have for a very long time. what exists in cuba is and some cold war relic of interest. it is in fact three things, first of all it's an extremely

oppressive regime as perhaps any other regime in the entire world. a manipulative regime, one that deliberately divides families against each other, then deliberately manipulates people who travel to the island of cuba and deliberately manipulate u.s. policy towards cuba to their a advantage. it is a one-way street even best intentions are manipulated. families are divided by the cuban government. the know they can allow half the family to come here so they can send remittances back to the island to their relatives in a cynical effort to fight not just the cuban people but the cuban families. and the one thing we can't forget that despite the oppressiveness and the manipulative missing the evil that exists it also happens to be an economic one. they are good at repressing people and very good at keeping people in jail on the island. what they are not good at is running a country. they are incompetent leaders. the have no idea, no idea how to run an economy, how to create the conditions for job creation,

and that is the reason the cuban people suffer economically because their leaders literally do not know what they are doing. now, the other thing i would say is our goal here in the united states and as people who care deeply about human rights all over the world is the people of cuba have freedom, the freedom to choose any other economic model they want the freedom to choose their leaders said they could have any other economic model they want. one direction to buy those economically belongs to the cuban people. that's not for us to say. what is for us to stand for is democracy in the right of the cuban people topic. what this debate about is what we accomplish. i think i've been on record in the past questioning the tactics of this administration ought because i question their motives or their intentions, it's because i quite frankly think the tactics of this administration or nine each. the notion somehow by flooding cuba with terrorists and people to people contact, we are going

to somehow change the cuban government is my eve. the government manipulates the policy to their advantage. i repeat it is a one-way street. so why don't think the united states or this administration is doing it out of bad intentions, but i don't think they fully grasp what we are doing here and even among some of my colleagues in the senate who fly to cuba and travel with the notion they are going to set things straight, they are going to be the ones that get things going and talk sense into these folks and many of them return scratching their heads and shaking their heads because they have come face-to-face with how true the manipulative and good at manipulating people in the circumstances this repressive regime has become. i hope one of the things we will be talking about today and the next few months our tactics. one of the things i'd love to see and i've talked to the german about it is figuring out a way to give people access to the internet, fi and of interference from the government because i believe with all my heart that if the people of cuba have access to the internet and can communicate with one another literally could fall of each

other on forever and facebook and get news from the al-sayyid world free to choose anything they want access i do not believe the castro regime could survive that for very long and so i hope we will explore options to doing that. i close my statement with a message to the people who work for the government in cuba particularly those that like to watch these hearings. i know they may even have people in the audience today so let me give you a message to take back. if you are involved in meeting people and jailing people in cuba, if the government is using you with its year in the united states as part of the intersection were in cuba and abusing human rights, your name is being recorded and your part of a government that is not sustainable. the government to work for can all survive. fidel castro is gone and his brother will become a too. when they are on the system of government cannot survive, but your name is going to be recorded coming and you will be brought before justice. if you are a police officer, you are a military official involved in human rights abuses come in

your name is being written down and you will have to answer for those crimes before a cubin court or international order. guinea to think about that before you cooperate with some of the things happening to some of the folks we are hearing about today. because you are part of a system that cannot survive. and long after those leaders are gone, you are going to be left behind picking up the pieces of what you're doing right now. i hope that message gets there. i will be happy to deliver it in spanish as well after the hearing. thank you for mr. chairman. >> thank you very much. let me recognize the assistant secretary roberta jacobs and deputy assistant secretary for the western hemisphere affairs before coordinated citizens' security initiatives in western hemisphere and the deputy assistant secretary for canada, mexico and nafta issues and was the deputy on the u.s. embassy from 2000 to 2002. she has a long distinguished

record in the western hemisphere and we are pleased to have her with us today. so i would ask you to summarize your testimony in about five minutes, your full statement will be entered into the record and we are pleased to have you. >> thank you mr. chairman. german menendez, ranking member rubio, i'm delighted for the opportunity to you today and pushy the engagement in the western hemisphere and your commitment to shared space values, human rights and expanding economic and social opportunities in the americas. in most countries in the western hemisphere we see the government's working to provide greater political and economic opportunity for citizens but they remain exceptions. that is why supporting human rights, space governments and a greater prosperity remains a fundamental u.s. objective throughout the hemisphere but especially in cuba. in cuba deal by administration priority is to empower them to freely determine their own future. the most effective tool we have

for doing that is building the connections between the cuban and american people in order to give cubans the support and tools they need to move forward independent of their government. u.s. citizens engaging in well-defined purposeful travel are the best ambassadors for the space ideal. the hundreds of thousands of cuban-americans send remittances and travel to the islands since we have eased the way for them early in the administration are essentials parts of the strategy to ensure that cubans have these opportunities. our policy also recognizes the importance of engaging with pro-democracy and human rights activists, some of whom he will speak today who will be working for years to expand the political and civil rights of all cubans. programs provide humanitarian assistance to political prisoners and their families, support the documentation of human rights abuses and promote the free flow of information to come from and within the islands. lester secretary clinton recognized the 2011 s rational when an average award and the

state department 20 defenders aboard. in 2010 and 2011 the cuban government from the spanish government in a catholic church released dozens of political prisoners was on the condition of exile in spain. we welcome the release of the prisoners including the last of the 75 activists who were unjustly arrested in the black spring of 2003. unfortunately, the release did not affect the fundamental change in the government record on human rights. the government has continued to punish political dissent increasingly using repeated short term arbitrary citizens from assembling peacefully and freely expressing their opinions and continues to limit the fundamental freedoms. it is continued to threaten and harass peaceful rights defenders including him and that is why we will continue to support an independent civil society and the right of the cuban people to determine their own future for both government policy and the

facilitation of the nongovernmental engagement. despite the cuban government's intolerance of political dissent, faith these organizations have gained more latitude to conduct religious autrey and provide a vital social services to marginalize cubans. the administration has taken steps to support religious groups in cuba by authorizing u.s. religious organizations to sponsor religious travel and allowing the unlimited remittances to support religious activities in cuba. again to the coup against this backdrop we highlight the case of alan gross who has been unjustly imprisoned since december 2009 and i would like to read judy at this hearing. we will continue to seek the immediate release of this dedicated development worker and loving father, husband and son. enhancing access to communications technology will facilitate kube's process of political change. or intersection provides free internet access to human rights activists and other cubin teaches basic information

technology, skills and provides training to independent journalists. to cuba and other governments across the hemisphere our message must be clear, nonviolent dissent not criminal behavior, opposition to the government is not criminal behavior. exercise of free speech is not criminal behavior. to the contrary, free speech is a right that must be defended. i know that the subcommittee is continuing to ensure respect for freedom of expression in the americas and in some countries in the region we have seen new tactics used by governments and other actors determined to silence those who challenge them including threats and violence against joyless and government regulations aimed at silencing critics. wherever the kurds in the hemisphere we need to come from these new measures to limit freedom of expression. in closing let me emphasize that we will be the first to hear what a democratically chosen government in cuba reasons its full participation in the system. the hemisphere has been a trailblazer in trying the space principles and its national institutions to the shared benefit of the peoples of the

americas. these principles remain critically relevant in the hemisphere to its challenges and its future as we underscore most recently in the oas general assembly in bolivia. i look forward to working with you to promote greater freedom and prosperity in cuba and throughout the hemisphere. thank you very much mr. chen. >> thank you madame secretary. let me start off in trying to understand, which i find it very difficult to understand, some of the administration views as it relates to strengthening civil society inside of cuba, strengthening the information flow senator rubio talked about, and the policies that we adopt that i am outraged with the department's decision to authorize the visa for a stream of cubin regime officials to visit the united states starting

with to the stricter for american affairs in april whose husband was ultimately kicked out of the mission in new york. most recently the approval of the visas for the cuban dictator to attend the latin american studies association conference. i do not understand when the castro regime holds an american hostage for over two and a half years and when we have as described the highest monthly number of documented arrests in five decades that we permit that our messaging is that we permit castro to be parading around the united states on a tour largely declaring herself a vigil in the high don't know what of. the reality is i want to know

under what authority the castro and other party officials were issued visas to enter the united states. the department exercised its waiver authority to issue these visas come and hal do you justify giving the visa when you have an incredible recession languishing for two and a half years in castro for nothing more than helping the jewish community tree to be able to communicate with each other. >> thank you mr. chairman. i want to start by saying that no one has been certainly more outraged at the detention as continued detention we will continue to do everything that we can to see that he is home with his family as he should be now with his father and his family. >> everything we can would include sending the regime and

message you can't keep american in prison and then have all your people parade here to read to me that's an oxymoron. >> senator, under the regulations for the visa coming and we look every time that we of the visa applications from any citizen but certainly cuban citizens we look for the full range of the law and regulation including relieving obviously proclamation 5377. in the case is of castro, those cases didn't fall under the exception requirement of proclamation 5377 since 1999 undersecretary albright and so those cubans were allowed to come to the united states to speak openly because in the

country variable to do so despite my not agreeing at all the statements of naray alves castro, and to speak at the latin american studies association and other events. in the case of josina, she had originally applied. she applied for the visa to do work with the intersection here in washington. we applied for the visa to go to havana to work with our own intersection, and we felt that it was appropriate to allow her to come into this country and work with the intersection here under that principal of reciprocity, recognizing that we want to be able to meet with and talk to a range of people in cuba that we possibly can and recognizing that the cuban government does not always allow us that. >> but the reality is first of all are you suggesting that she

is not a communist party official? >> i'm not suggesting that she may not be a member of the communist party, but as a member of the proclamation was a interpreted in 1999 she wasn't a senior party official. >> the united states denies these laws to all types of people all across the world. it has broad jurisdiction in doing so. you exercised your discretion in giving the visa to these individuals who are part of a repressive system and has an american languishing in jail. if you have the authority to say no. you talk about reciprocity. every time i've talked to the head of the intersection both those now and of the past, that reciprocity is an openly observed inside of cuba. they are restricted and their truffle inside cuba they are restricted in their actions in

spite of que bup triet so what we are doing is giving a one-way street sending a totally wrong message. those who fight for freedom inside of to by each and every day and get to come to the united states and do their propaganda. by understand the beauty of the freedom, but there's also a public policy decision to say we do not -- i guess we would allow serious beef of dictatorship to come and express their views. we expelled their diplomats from the united states. the bottom line is we make choices all the time in terms of promoting the national interest and security of the united states and certainly the national interest of the united states has to be to see the democracy in cuba not to allow those that the press it to come to the united states to promote their propaganda. let me turn to another set of

circumstances that i don't understand policy bias, which is local quote on quote people to people travel to cuba. since the administration is restriction on travel and remittances and april of 2009 the castro regime has doubled its hard-currency reserves and foreign banks. the bank for international settlements reported banks in 43 countries held $5.76 billion in cubin deposits as of march of 2011, which is the date that we have figured. compared with 4.2 billion at the close of 2009 and 2.8 billion at the close of 2008. so it's very clear. nothing else has changed insight in terms of revenue source. it's a very clear that we are a essentially bankrolling the regime stashing its currency abroad.

i look at that and i say try self look at the trouble. in that time that we are permitted this trouble we have seen a visit to hemingway's marina, cigar factory tours, performances the cuban national and my all-time favorite par left inside cuba's troup the opportunity to visit the memorial the cuban revolutionary was laid to rest where you meet with the story and to ultimately understand his legacy. this is a tremendously to help civil society inside of cuba promote democracy and human rights. and at the same time, dramatically increase castro's regimes ability to have resources to oppress its people as we see the highest amount as

has been said in five decades. >> senator, there are other reasons as difficult as it is to ascertain the statistics on cubin revenue comco. we have certainly seen those reports. obviously of the increase in reserve but they've also been increases until fairly recently in the prices for nickel and recovery room the 2008 hurricane in cuba. there's also been increasing because of their policies import substitution industrialization increasing numbers of countries and firms that have required to increase cash and reserves because the bad credit risk quite frankly. we believe there are different reasons the reserve may have increased. we do not believe there is a

sole reason for -- >> do you dispute that the largest increase in reserves to the castro regime is a combination of remittances and troubled money that is going inside of cuba? >> i simply don't know that that is the reason directly one to one for the increase vastness axson a call has increased so much that it's now created an increase of a $2 billion or more money? >> well i know that there are multiple reasons they increase the reserves, and i do know that there are obviously increased funds from remittances and travel, but we don't -- >> how it helps create society inside of cuba. >> they are not admitted for the purposes -- demint you created regulations to take place rather widely. >> there are also positive

things happening in the interactions between americans, religious organizations, humanitarian groups and a human-rights outrage that are going under this program. >> and those successes ultimately can be justified in the context of the numbers of imprisonments? >> we think that the benefits over time hour of the increased contact to the cuban people, and the reality to change the situation in cuba will outweigh, but certainly as i stated in my opening statement, we do not in any way condone or tolerate the increased attention and harassment of cubans. >> it's hard to understand how you have this dramatic increase or the one fundamental thing that is changed there is a blood

flow of remittances and in my view on limited visits because all of these quote on quote tours to the memorial, to all of these things where you don't have average, you don't engage average cubans coming yourself reporting so that's why because to create a general license in which anyone can go and therefore you have no room for travel itineraries and engagements, so smoking a cuban cigar made by those that are not free, having won on the beaches which is an oxymoron is not the way in which will bridge the cuban people, giving the regime more money for its apparatus, which obviously in the face of all of these benefits have on the dramatically increased the number, not decrease it, hasn't

created an opportunity to promote themselves is not my idea of success, and i don't know how many people have to be arrested, how many americans have to language in jail before we send a totally different message to the regime. senator rubio? >> i want to use an example, just to see why this doesn't make sense to me. there may be a decade and a half ago the united states in cooperation with the government of honduras conducted an operation to capture a gentleman responsible for the murder of american agent. one was in the united states and a decade and a half later under the government the court system has been indicted for that operation of the united states and honduras was indicted in an operation conducted by the united states in conjunction with the government. sadly, his grandchildren, his

daughter and husband were murdered in honduras about four months ago and he has three grandchildren who have applied for a tourist visa to enter the united states and visit their grandfather and were quite frankly treated every ridley of the consulate. but raul's daughter is operating in the streets of america and obviously i hope that will be reconsidered. it's not a topic of this hearing and you didn't think that this session, but my point is i don't get it how three children who want to visit their grandfather in the nine states are somehow being denied a visa but they gave one to castro where she can come to the united states and justify the fact that they are holding an american hostage, to come and call this despicable parasites, people they want basically is to have

self-determination so i hope we can have a further conversation about that process. i do want to touch on two of the things quickly talk about the internet and i saw on your statement to talk of free internet access to the intersection. that's a good thing. and i talked with senator menendez. an interest in the possibility and i would like to work with you and the state department. the possibility of providing internet access through satellite into cuba. the existing satellites now but are being signals throughout the world. if you have a receiver right now in cuba you could receive satellite signals from any number of satellites that are up there now. obviously you have to be able to pay for the subscription service. if somehow we can figure out a way for the government to do that whether it's through our broadcasting efforts or otherwise we could potentially provide a vehicle by obviously the people of cuba would have to have access to the computer equipment that will allow them to access the internet for the sunlight but it is

technologically feasible for the united states to be involved in sponsoring internet access for 14 million people on the island of cuba, which i think the people in cuba have an opportunity to have access on the street which is difficult we can see it in the outside world sometimes she can't even see her own facebook. somehow they were able to quickly post on youtube videos about the abuses that happening and more importantly they were able to talk to another and have access to the outside world in terms of affirmation. that is why the single greatest contribution the country can make to the defense that of the freedom and democracy on the island and i hope we can work with your office to put something like this together which i think would be a very cost-effective way to further the cost of freedom and liberty and the last thing i hope the state will consider is a mechanism by which we can create if it doesn't exist already and maybe it does a registry where this resistance and others on

the island could register the names of human rights abuses so that the world can know their names so they can be held to justice when the day comes. these are people that are part of the flash mall was on the street, these are people that we're uniforms but in fact or thugs and they beat people and torture people and they are fully cooperating with this government and its endeavors. the names need to be recorded. some of these folks wind up here in the united states come years later they change their mind and decide we don't like what's going on in cuba and then they are walking in miami around the street so i would like to know their names as well. nine of the dissidents keep track of these individuals or and there is going to be a free cuba soon. these folks need to be held accountable and i hope that we will consider sponsoring some sort of registry where we can publicize the name of the folks, who they are and what they are conducting so that it is for the record in the future when the time comes for them to be held.

>> thank you. i look forward to working with you on these issues and in particular as you know we think it is critical for greater information they are accessing information being given to the cuban people that's why so much of our efforts are focused on that weather in the intersection or in our assistance programs. there are some reports that say well over double the number of cell phones in cuba than there were just a short number of years ago when they were first permitted and this is a trend we certainly want to engage with you on. >> one last question. one is on that note one of the challenges of having arrested alan gross is to try to chill the very essence of what our democracy programs are in sight of cuba. and after the arrest the actions were taken and the grantees were

told basically to refrain from activities that ultimately exist about creating the free flow of information for cubans to communicate about what is happening inside of their country. so my question is on hear you say that we support that, and i certainly am very interested in senator rubiera's idea. we would love to see you possibly fund such an initiative. the question is have you not killed all of those guarantees in terms of their engagement inside of cuba which is exactly what the regime wants? >> senator, i don't think we have. i think that what we have tried to do clearly the regime is trying to send a message about the ability to get information at around cuba and connect them to each other and i think we have to continue to try to

ensure that in the environment that our democracy programs operate in cuba we do then safely for the participants and as effectively as we possibly can. that's the intention of our conversations and our review of all of our programs. >> having spoken to many of the guarantees both past and present it seems that we are sending a far different message and in essence we've never permitted our democracy programs worldwide to be in the hinge upon or broadcasting by either jamming or policies of the regime's to stop in essence what we are trying to accomplish in the democracy programs and so i would really look forward to having a sit down about all of the programs and how they are not accomplishing what we want. finally i heard you refer to

mr. gross before, and i want to know what is the present status. obviously he is in jail, but the question is have the regime's made any offers or suggestions about his freedom to the state department? >> certainly they have not responded to any of our demands, requests that he be allowed to come home with his family with any acceptable response, which would be yes, now. there's been no response from the cuban government in our conversations either with them for the public statements that they are willing to do that. certainly most recently we have

focused on mr. gros's mother who is gravely ill and is 90-years-old and the fact that he should be released on humanitarian grounds to see her. we've pressed that very hard and haven't gotten a satisfactory answer at all on that. >> did you not permit one of the individuals who had been released after his custody to go back to cuba and promote a humanitarian of devotee in that respect? >> in that particular case the justice department objected to his return to cuba on the visit. but the court allowed him to go back to cuba. we thought that was a perfect opportunity for the cuban government to take a gesture and let him see his mother and they did not.

>> which is a one-way street. >> thank you very much for your testimony. there may be questions that come to you in the committee. the

another possible recession. the chairman also gave no indication that the central bank was planning on the stimulus measure. according to the labor department in may the economy had the fewest jobs in a year and the unemployment rates rose

from 8.1 to 8.2% before the committee is just under two hours. >> thank you for being here. we are grateful for your presence here and your testimony. after my opening statement will have the vice chairman brady go through this event and then get to the chairman. we look for to the chairman's report on the state of the economy and his perspective on the federal reserve may take to strengthen the economic recovery with the jobs are part this past friday it's clear that washington needs to continue our focus on creating jobs. today's hearing is especially timely for that reason. there are a number of bipartisan actions congress can take right now to strengthen the recovery. we know the transportation bill

is one opportunity to create jobs you have to get that legislation out of the conference and signed into law. we know that that infrastructure transportation infrastructure is central to our national competitiveness and the bipartisan bill passed in the senate with 70 votes, 74 votes i should say would create almost 3 million jobs by accelerating those infrastructure project to be a second, we should do more support small business by targeting the tax incentives to firms that expand the payroll we can help strengthen the recovery. the bill that i ventured this would provide a tax credit of 10% for any increases to the payroll tax base that could be increasing hours were raising wages of existing employees. third they've taken of a farmville which is legislation that cuts some $23 billion with

tremendous bipartisan support helps farmers manage the risks relating to the rampantly fluctuating prices and profits critical support to rural america part of the country that is especially hard hit in the recession and still has major challenges. fiscal challenges to tackle in a bipartisan manner as well without the congressional action spending cuts contained in the budget control act will present a significant headwind in 2013. the congressional budget office recently estimated that real gdp growth will slow to just .5% in 2013 unless washington in fact act. german bernanke has expressed concerns regarding risks that a so-called fiscal presents to the

recovery. i share that concern and i know a lot of others share that same concern. let's be clear there are right ways and wrong ways to balance the budget to grow the economy and create jobs rather than give bad situation even worse. unless we all agree the huge budget deficit and debt that america faces many to continue to cut spending. there's no doubt about that and we can't reduce the deficit by spending tens of billions of dollars on the tax cuts from the wealthiest. additionally just as chairman bernanke was before the committee when we spoke about this i'd like to address very etd to read briefly the currency ventilation especially on the part of china.

we recently learned china allowed the country to weaken more than any other month since 2005. chairman bernanke has testified previously allowing them to appreciate would be good for both of the u.s. and china's economy as well. the chinese government manipulates the currency so that their goods sell for less than they should. some people may think it's so far theoretical issue. but it's not. if the chief we lose jobs. so i urge my colleagues in the house to pass the currency exchange legislation that deals with this issue to pass in the senate and a bipartisan way and we want to get that out of the house. to sum up, our economy while in better shape than was years ago is still recovering from the recession. with unemployment above 8%, the labor market still needs to yield. europe continues to have debt issues as well.

we know that which will continue to impact the u.s. financial markets and the global economy. against this backdrop it's clear we need to stay focused on promoting the stronger economic recovery and of course that means jobs. churn and bernanke think you for your testimony and i will turn to vice chairman brady. >> thanks for holding this hearing and the future and bernanke p from appearing before the committee at this critical juncture to discuss america's economic outlook. while we are anxious for signs of strong sustainable recovery, the recent job support was crème. usn police creating a more 69,000 payroll jobs. job growth over the past two months has dropped by two-thirds in the first quarter of the year business and consumer confidence is down first quarter gdp estimates will revise downward. four and a half years after the recession began americans are enduring the 40th straight month

of the on the employment rate at or above 8%. this is a world war ii record. in much of the employment rate from its high of 10% over 2,000 fine is attributable to americans simply dropping out of the work force. the work force participation rate is scraping a 30 year low without the drop in the number of workers since the recession began the unemployment rate would be nearly 11%. since the recession ended, our economy has struggled to grow at an annualized average quarterly increase of 2.4% and to place in perspective of the ten economic recoveries since world war ii lasting more than a year this recovery ranks tenth and dead last is unacceptable by any standard. today because our economy isn't flying strong and steady at 50,000 feet as it should be rather flying in low and slow we are increasingly vulnerable to

the external shock. the economic crisis in europe has intensified in recent weeks and the bank run has become increase and their depleting their collateral for the lender of last resort loans from the european central bank not just increased but european union as a whole. questions whether greece or other member states of the european union will expert the euro and the national currencies are dominating the news. mr. chairman i hope we will get to your perspective and putting the likelihood from the contagion risk and the consequences for the european union, united states and the rest of the world. when you appear before the committee last october in response to a question about the tools you are considering to mitigate and limit the effort of the economic and head of the united states to testify to the you believe european bank has enormous capacity to provide

liquidity to the european bank the traditional currency swap can provide funding for global money markets but the main line of defense is adequate supervision of capitalized american banks with the fed is standing ready to provide as much liquidity against collateral as is needed for the lender of last resort to the american banking system. is that still your assessment and are you considering any tools beyond those. in addition the american taxpayers lawmakers like counterparts in germany are becoming increasingly concerned that will be asked to bail out however indirectly struggling the european government and banking. there's a growing concern u.s. treasury will be about the zone either directly to the exchange stabilization fund or indirectly to the international monetary fund. the fed has a challenge as well explaining to the skeptical congress like a traditional currency swap with european central banks will not turn into

an indirect bailout from the country. at the same time the european economies are weakening the growth is also slowing in both china and india. given the aspects of the global slowdown some economists are speculating that the federal reserve may initiate a third round of qualitative easing. mr. sherman during the questions i would like to discuss with you with their and under what conditions the federal reserve would consider launching and quantitative easing. it's my belief that the fed has done all that can do and perhaps it has done too much. further, to defeasing would stimulate growth and create jobs has already injected into the economy before they get the expert strategy. i also believe another round of the intervention will create uncertainty among the job creators while ignoring the genuine reason which is sound, timely, fiscal policy.

the businesses i look on main street aren't holding back on hiring because they are waiting to learn of the government will do for them. they are holding back on hiring for fear of the government will do to that. the obsessive push for higher taxes on job creators. the unsustainable structural federal debt and deficit along with the flood of red tape and the fear of the consequences of the president's new health care law these are the two drags on the economy and no matter what actions the fed takes, without strong leadership by the president to date and action by congress now on these fiscal issues americans will not need the jobs of a strong recovery is we deserve. of course the combination of sluggish growth and an accumulation of federal debt is eventually scored a direct be a cadet driven crisis here at home

unless the united states soon reverses course. finally mr. churn and last january the open market committee adopted an explicit inflation target of 2% measured by the price index for personal consumption expenditures by doing so the fed has taken important steps towards establishing a rules based monetary policy going forward that should help achieve price stability and protect purchasing power cut of the dollar over time to the last year adoption of target raises many questions as answers to% target minimum, midpoint or maximum, how wide is the range and how long will federal reserve tolerated deviancy from the range before taking action. i also appreciate you distinguish between that which monetary policy can control naming the prices command that which monetary policy cannot. i will read just give it to request further clarification on the statement in more depth. with that i get the key for appearing before the committee

and i look forward to your testimony. >> thank you. housekeeping matters before i introduce chairman bernanke. we will keep to our time limits because the number of members here. member to the senate has a vote at ten thanks 30. i don't think that is going to change so we will accommodate members for that reason. but we introduced german bernanke. dr. bernanke and a second term as the chairman of the board of governors and the federal reserve system one to be wary first of 2010. dr. bernanke also serves as the chairman of the federal open market committee of the assistance for policy-making body. he took office as the chairman on february 1st, 2006 when he began a 14 year term as a member of the board. dr. bernanke was the member of the council of economic incisors from june of 05 to january of 06. prior to beginning public

service commission was a chaired professor princeton university, he's been a professor of economics and public affairs at princeton since 1985. mr. chairman, welcome. >> thank you. pitcher mukasey, vice chairman brady and members of the committee, i appreciate this opportunity to discuss the economic outlook in the comic policy. economic growth has continued at a moderate rate so far this year. real gdp rose at an annual rate of about 2% in the first quarter after increasing at a 3% pace in the fourth quarter of 2011. growth last quarter was supported by further gains in private domestic demand which more than offset the drug for the decline in the government spending. labor market conditions improved the latter part of 2011 and earlier this year. the unemployment rate of about one percentage point since last august and palin limit increased to under 25,000 per month on average during the first three

months of this year up from about 150,000 jobs added in 2011. in april and may however the reported pace of jobs slowed to an average of 75,000 per month and the unemployment rate ticked up 8.2%. this apparent slowing in the labor market may of been exaggerated by issues related to seasonal adjustment and the unusually warm weather this past winter. but it may also be the case of larger games last year and earlier this year were associated with some catch up in hiring on the part of employers to repair their work forces aggressively during and just after the recession. if so the deceleration of the employment in the recent months may indicate this catch-up has largely been completed and consequently that more rapid gains in economic activity will be required to achieve significant further improvements in the labor market conditions. economic growth appears to continue at a moderate pace over the coming quarters supported in

part by accommodative monetary policy. in particular, increases in household spending have been relatively well sustained. income growth has remained quite modest but the recent decline in the energy prices should provide some offsetting left to the purchasing power. one of the most recent ratings have been mixed consumer sentiment is nonetheless up noticeably from its levels late last year. and despite the economic difficulties in europe, the demand for u.s. exports has held up as well. the u.s. business sector is possible and it's become more competitive in the international markets. however, some of the factors that have restrained the recovery persist. notably households and businesses still appear quite cautious without the economy. flexible according to the surveys, households continue to rate their income prospects as relatively poor and do not expect the economic conditions to improve significantly. similarly, concerns about the u.s. fiscal policy and the

strength and sustainability of the recovery have left some firms as a test to expand capacity. for the market has also been an important drag on the recovery. despite historically low mortgage rates and high levels of affordability, many prospective home buyers cannot obtain mortgages as lending standards have tightened and credit worthiness of any potential for ruler has been impaired. the same time a large stock of houses continues to limit incentives for the construction of new homes and a substantial backlog of the foreclosures will likely add further to supply of the holders. however, a few encouraging signs in housing have appeared recently in putting some pickup in sales and construction, improvement in home builder sentiment and the apparent stabilization of home prices in some areas. making the financial condition and the united states have improved significantly since the deficit of the crisis. notably, recent stress tests conducted by the federal reserve for the balance sheet of the 19

largest u.s. bank holding companies show that those firms have added about $300 billion to their capital since 2009. the tests also show that even an extremely adverse hypothetical economic scenarios, most of the firms would remain able to provide credit to u.s. households and businesses. in terms of standards of generally become less restrictive in the recent quarter's although some such as the small businesses and has already netted the potential home borrowers with less than perfect credit are still reporting difficulties in obtaining loans. concerns about the sovereign debt in the health of banks and a number of the area countries continues to create strains in the global financial markets. the crisis in europe has affected the u.s. economy by acting as a drag on the exports, weighing up the business and consumer confidence and pressuring the u.s. financial markets and institutions. european policy makers have taken a number of actions to address the crisis, but more will likely be needed to stabilize the area banks, calmed

market fears about the suffering finances, achieve a workable fiscal framework for the euro area and lay the foundation for the long-term economic growth. u.s. banks have greatly improved their financial strength in recent years as i noted earlier. nevertheless, the situation poses a significant risk to the u.s. financial system and the economy and must be monitored closely. as always, the federal reserve remains prepared to take action as needed to protect the u.s. financial system and the economy and financial stresses escalate. another factor in the u.s. recovery is the direct to swap was agreed reflecting ongoing budgetary pressures we will spending by local and governments to continue to decline. the federal government spending has also declined on that since the third quarter of last year and the future course of the federal fiscal policies remains quite uncertain as i will discuss shortly. with regard to inflation, large

increases of energy prices earlier this year caused the price index for personal consumption expenditures to rise at an annual rate of about 3% over the first few months of the year. however, we'll prices and retail gasoline prices have since been traced in those earlier increases. in any case, increases in the price of a wheel or other commodities are unlikely to result in the persistent increases in overall inflation so long as paul sold and business expectations and user to become a future price changes remain stable. longer-term inflation expectations have indeed been quite well anchored according to surveys households and economic forecasters and as the financial market information. for example, the five-year forward measure of inflation computation derived from the yields on a nominal inflation protected treasury securities suggest that inflation expectations among investors have changed little since last fall and lower than a year ago. meanwhile the resources in the

u.s. labor and product markets should continue to restrain inflationary pressures. given these conditions inflation is expected to remain at or slightly below the 2% rate the federal market committee judges consistent with ever statutory mandate to foster the maximum employment and stable prices. with unemployment still apply and field for inflation subdued in the presence of the significant downside risk to the outlook pos deutsch trains and the global financial markets, it is continued to maintain a highly accommodative stance of monetary policy. the target range for the federal bridge remains at 02 a quarter% and the committee has indicated in its recent statements that it anticipates that economic conditions are likely to the funds rate at least through late 2014. in addition the federal reserve has been conducting a program last september to lengthen the average maturity of the security holdings by purchasing for hundred billion dollars long-term treasury securities

and selling an equal amount of shorter-term treasury securities. the committee also continues to reinvest principal received from the holding of agency debt and agency mortgage-backed securities in the agency m bs to rollover its treasury holdings option. these policies in support of the economic recovery by putting downward pressure on the locker term interest rates including mortgage rates and by making broader financial conditions more accommodating. the committee reviews the size and composition of the securities holdings regularly and is prepared to adjust the holdings as appropriate to produce stronger economic recovery in the context of price stability. the economy's the fifth performance of the medium and and longer-term will also depend importantly on the course of the fiscal policy. fiscal policies confront daunting challenges. as they do so, they should be of detective. first, promoting economic growth and stability the federal budget must be put on a sustainable long run half.

the federal budget deficit which averages 9% of gdp during the past three fiscal years is likely to narrow in the coming years in the economic recovery leads to higher tax revenues and lower income support. nevertheless, the cbo projects of current policies continue, the budget deficit would pose a 5% of gdp in 2017 when the econ money is expected to be near employment. moreover, under the current policies and the reason the cbo projects the structural budget gap and ratio of the federal debt to gdp but trend upward thereafter in large part reflecting rapidly escalating health expenditures in the aging of the population. this dynamic is clearly unsustainable. at best, rapidly rising levels of debt would lead to the improved formation, slower economic growth and increasing foreign indebtedness. at worst they would promote the fiscal crisis that could have severe consequences for the economy. to avoid such outcomes, fiscal policy must be placed on a

sustainable path and eventually result in a stable or declining ratio of the federal debt to gdp. even as fiscal policymakers address the urgent issue of the fiscal sustainability, a second objective should be to avoid unnecessarily impede in the current economic recovery. indeed a severe tightening of the fiscal policy at the beginning of next year built into the current law so-called fiscal cliff what if allowed to occur pose a significant threat to the recovery. moreover uncertainty about the resolution of these issues could itself undermine business and household confidence. fortunately avoiding this clef and achieving long-term fiscal sustainability are fully compatible and mutually reinforcing objectives. ..

encourage investment in workforce skills, stimulate private capital formation, promote research and development and provide necessary public infrastructure. although we cannot expect our economy to grow its way of have federal imbalances without significant adjustment and fiscal needs come to more productive economy with easy trade-offs faced by fiscal policymakers. thank you, mr. chairman. i'd be glad to take your questions. >> thank you, chairman train three. i'll start with the first round of questions. i'll separate the predicate for the question before asking. based upon three news item.

i'll call them. first of all, we know china announced, just today i guess that it cut its benchmark lending rate for the first time in four years in order to reverse an economic slowdown. secondly, the european central bank can take, at least, that we take no no further action to aid the faltering european economy. and third, to federal reserve were governors as they share janet allen has hinted additional action by the federal reserve. so based upon knowledge three items based upon your testimony, the basic question i have for you, as is the federal reserve planning to take any additional action in the short dash in the short term to spur economic earth and create jobs? >> mr. chairman, first, i think china face rather different

positions. we have to make our decisions based upon what is happening here in the united states. looking forward to our meeting in about 10 or 11 days, i think the main question we have to address has to do it the likely strength of the economy going forward. as i discussed in my testimony, the weakness in labor markets in the last couple of months may reflect the end of a catcher. in which employers were offsetting the very sharp decline that occurred during and after the recession. if that analysis is correct, then going forward in order to see continued improvement in employment and lower unemployment rate we need to see growth at or above the trend rate of growth. that is the essential decision in central question we have to look at. will there be enough growth

going forward to make material progress on the unemployment rate? of my colleagues and i are still working on our own assessment. staff are working on at jaded forecasts. we'll have a new round of economic projections fail to participate in between now and the end of the meeting. that is a key question. if we decide that further action is required, of course we have to decide what action is appropriate or what communication is appropriate. we have a range of options. obviously the traditional reduction in the short-term interest interest rate is no longer feasible. we do have options we can consider. looking on those options we have to make some difficult assessments both about how effect that they would be and whether there are costs and risks associated with those stats that would outweigh the benefits they might achieve. so we have -- obviously i can't

directly answer your question. it is too soon for me to do that. we have a committee meeting which will evaluate these questions. the key question we'll be facing will be, will economic growth is sufficient to achieve continued progress in the labor market? and our mandate for macs and unemployment as we should be looking to try to achieve continued improvement. >> well, thank you here that helps to give us a sense of how you are approaching the question. i want to ask about the so-called fiscal cliff you're spoken to a number of times. a lot of americans have a sense of it, but when you line up the matter is we've got to confront them literally just a number of non, the question of tax cuts, the automatic spending cuts put into place by last year's budget control act, the payroll tax cut expiration of the federal unemployment expires and a whole host of other challenges.

can you assess -- and if you can assess if we want to hear yours essman, at the impact on the economy just on one of those items and specifically, if the tax cuts for middle income folks were to expire, just that particular question. you can make an assessment of that. >> well, the potential x duration and i'm sure it could break it down to the different components, but the potential expiration of the so-called bush tax cuts in 2001, 2003 tax cuts, the single biggest item in the fiscal cliff would have, i think, if everything else held constant, would have been my first effect on spam name and growth in the economy.

that would be significant. no insane not, i am again talking about the size -- the fiscal impact event. i am not necessarily saying that the right thing to do is to extend discounts. there could be other steps to protect that have would have a similar impact, but that is the single biggest component of the so-called cliff. >> in keeping with my orders on time, i'm going to turn to vice chairman grady. >> thank you, chairman. he mentioned options. with purchases and third from be confined to treasuries? or what other debt securities be purchased? >> obviously made no decisions. the law permits us to purchase treasury and agencies -- government agency securities. those are the securities we purchased in the past and i would want to take anything off the table at this juncture.

but i want to emphasize again that they're showing some sense to steps here. the first is to determine whether we think that growth will be adequate to the two further improvement in employment and i think at the same time of course we will be assessing the price stability mandate and the outlook for inflation. if we determine further action is at least potentially warranted, then obviously with a number of different options and we have to consider each of them in the costs and benefits associated with them. but at this point i really can't say anything is completely off the table. >> i guess my more direct question as long-term interest rates other than financial crisis we haven't seen this level since 1950. do you really think that is holding back our economy? >> well, the question is again, code -- again, if additional stimulus could be actions of the

federal reserve to take, achieve additional accommodation, putting aside potential bad side effects or cause that might be associated with that, i recognize that rates are quite low, so that clearly is consideration. i do think that we do have met. we do have tools that would allow us to get further accommodation in the economy and provide some support. it is one thing -- it's not quite the same thing to say that the problem of the u.s. economy is not low -- it's not the lack of financial accommodation. it's not the same thing to say that and say that even if the main problems are coming from elsewhere that the federal reserve might provide some support from using the tools that it has. but i do want to say and i said

this before the monetary policy is not a panacea. would be much better to have a broad-based policy effort addressing the whole issue. other details to congress he leave many these issues. so i would be much more comfortable if in fact congress to take some of this burden from us and addresses issues. the mac i think that's the point i like to make. my belief is that we should take a third from a quantitative easing off the table. i would wish you would put america in the eye and say the fed has done all it can, perhaps too much and i wish you the best president and congress in the eye and say it is time to do your job. it is your tax policy right. it is your financial house in order, a rebalance your regulations so you encourage job creation and mitigate uncertainty and turn over the president's new health care law. i'm not asking you to say that today, but i wish he would because back home on main street

to believe those are the elements holding this economy back. until we get that right, no action from the side look at this recovery moving it away or we would all be satisfied with. may i ask very quickly under a lot of concerns about will happen with greece as acts mean the hero, what type of contagion will occur in europe. last october he said the tools you believed are important are providing liquidity through the currency swaps, ensuring american banks are in strong financial condition and being there to provide the quiddity to solvent banks. are there any other tools do not think you are considering showed that contagion reach western europe? >> no, you have a pretty good list there. we did the slots, as you know. they were very helpful in reducing stress of dollars on a market.

they've been coming down quite significantly from the peak of 110 billion down to 20 billion. so there need seems to be declining. i would like to emphasize on the banking side we have worked really hard to try to make sure the banks and financial system with the resilient to shocks coming from across the atlantic including our stress test, which has shown strong capital positions some liquidity positions. our views -- ongoing reviews of exposures of banks to europe. so we are taking steps to try to make sure we are well prepared as possible in the financial system. and as i said in my remarks, the federal reserve retains broad-based authority to provide liquidity against collateral in the event of intense financial stress that was retained and dodd-frank and its role as liquidity provider last resort and stands ready to do whatever

necessary to protect the financial system. >> thank you, mr. chairman. congresswoman sanchez. >> thank you, mr. chairman. and thank you, mr. chairman for being for us today. i want to go back to -- [inaudible] i want to go back to something you just said to my colleagues on the senate. you are talking about one of the various portions of that fiscal clifford the desperation that the bush tax cut, but she said i'm not advocating not necessarily peer-to-peer or other steps that the congress could do. could you in your wisdom tell us what those other steps might be, just articulate them so i have a to-do list at that the case? >> i think i might enough not to tell you the answer to that question. what i am saying is that the concern here in the short term is that all of these measures

together if they all occur will not to withdraw as spending and an increase in taxation depending on how you count between three and 5% of gdp, which would have a very significant impact in the near-term recovery. whatever benefits you might see in most programs in the long-term. but i am saying is that members of congress, steps should be taken to mitigate that overall impact and that a combination of tax reduction as spending increases that's really up to you. there's no action is taken, what is particularly striking is this is all pre-programs or if you all go on vacation is still going to happen. it's important to think about that and working to see how you might address that concern at the appropriate time. >> that leads me to my second question because i hear this out a lot on television, among some

of my colleagues even. i hear from people back home, that we are all headed towards the greece situation. not to send people to greece situation is, hey, use that to match. he retired early. there are not off workers, not enough economy going to since jane the people who are living on payments, a few of, mostly from the taxpayers. and they're other people saying the greece situation as you cut too much spending and you're trying to cut spending to fast in the economy has contracted and it's almost like a vicious cycle going on. so my question to you is for those people who are saying we are headed towards the greece situation, what do you think the greece situation is and is it

really true that we are mirroring in any form that? i see it in a totally different manner. i would really subject to what is going on in greece with the type of real economy that we have? >> now, i think the united states and greece are extremely different economies. greece is a very small economy. it did in fact -- the cause of the crisis vary quite a bit from country to country. grease and fat was a country that overspent and over borrowed and that's a major reason why it is currently in such trouble. the united states is a large, diverse economy with deep financial markets to international reserve currency, international policy, great credibility after 200 years of paying our debts, which by the way we should be -- is a strength we should not squander if at all possible.

that being said -- so i don't think we are in a greek situation. the evidence for that is we are currently paying 1.5% for tenure money or we can fire any policy. that being said, i don't think we should be placed in. we have a situation, which is not sustainable or we do need to be thinking seriously about how to put the fiscal budget, and the federal budget and on a longer-term. >> thank you. an interest because there's so many members, i was showed that my time and i will call him mr. campbell from california for his five-minute. >> thank you, ms. sanchez. chairman bernanke, you made it quite clear that so-called qe three, a decision that will not

be made for at least 11 days or whatever you said, what i would like to ask for my taste is qe three would protect interest rates potentially and potentially liquidity, neither of which it seems to me our obstacles to grow with interest rates historically low and plenty of liquidity. so my question is, why in considering a qe3, in what way do we believe or do someone believe that would help the current economic situation? >> so again, putting aside the question of whether any further steps, putting aside the question of the adverse side effects of risk and costs associated with given policies, our analysis is quantitative easing programs we did in the past duties the financial conditions.

taylor at interest rates. they lowered the spreads between private rates and government rates. even giving a lover's security interest rate. it could lower the rate paid by corporations. we've lowered mortgage rates. every stop prices and increased therefore wealth of facts for consumers. so in general, we continue to believe that while some may think the effects are less powerful than we need, for example, two dozen and we continue to believe that potentially, these sorts of measures could still add some additional accommodations, some additional support to the economy. but then again, as you point out, they are a consideration in

the cut is to try to analyze what our options are. >> okay, let me move over to europe as i can. and your testimony can be said we could monitor the situation and the federal reserve remains fair to take option and you outline what some of that action should be. what should we as policymakers be monitoring? and what action might be be prepared to consider tuesday? we cannot control fiscal policy, monetary policy for political decisions. if there were to be a deterioration, rapid deterioration of some situation in europe, be it the currency are the banks or whatever, how can we, what things might we be prepared to do, doing what she can to minimize the impact on

the u.s. economy? >> well, the congress and the administration have not had great to any kinds of direct support, but the administration is not asked for additional imf lines, for example. the main things congress can do is strengthen our own economy. the more momentum, the stronger our economy are better able we would be to withstand the financial spillover from problems in europe. that goes back to my earlier point about getting my earlier situation clarified, taking appropriate steps to help troubled parts of our economy from the employment housing market to whatever else you would be looking now. i think my bottom line here is

there's not a whole lot that can be done i can think of to attenuate the problems. we have to monitored very carefully and the best thing we can do is try to make sure here in the united states. >> are the risks to our economy greater today than they were six months ago? >> the risks have waxed and waned. this problem has been going on now for more than two years. this crisis is gone on for more than two years and there. the greater intent to the endless intensity. earlier this year, particularly following their long-term financing cooperations by the european central bank as well as the debt restructuring of greece, the situation calm down fairly notably for a while. but for a number of reasons including the great collections which raise questions about whether the greek when in fact

meet requirements of its program and concerns about spain and italy, the spanish banking system and so on, stresses have risen pretty significantly in the resent month or two. i'm not sure whether it's the highest point it is banned, but it is certainly a point where it is important for european leaders to take additional effective steps to contain the problem. >> thank you, mr. chairman. >> recognized representative comments from maryland for five minutes. >> thank you very much. mr. bernanke, good to see you again. when you appear before this committee last october, you testified in most recessions the house seems that there is usually come and i quote, but it part of the recovery process. you testified many people are underwater and that their last inequity means that they are poor, they are less willing to

spend in addressing the housing situation is very, very. in january, the federal reserve issued caring conditions in the united states housing market the report says this and i quote, continued weakness in the housing market poses a significant barrier to more vigorous economic recovery. chairman bernanke, i assume you still believe that addressing the housing crisis is critical to resolving our economic situation. is that right? >> yes. >> economists and experts across the political spectrum believe that one key tool to addressing the housing crisis is targeted principal reductions for underwater mortgages because they hope homeowners save taxpayers money by avoiding the full. mr. chairman, in two make you said this to the independent community bankers of america. and i quote, in this environment principal reductions that restored some equity for the homeowner may be a relatively

more effect could mean every wording for closure. a lot of people is characterized as helping only homeowners. we please explain why in some cases they actually could help taxpayers, to? >> well, i think we've made some progress. first of all, the housing market looks to be stabilizing, which if true would be good news in going forward and would be helpful to the recovery. there's been a lot of effort since i gave that speech to try to modify mortgages and reduce foreclosures and so on. some of that has taken the form of reduction. mainly that fannie and freddie, at least they are looking at principal reduction for reducing foreclosures and principal

reduction is part of the settlement coming in now, but the servicers. so he gets the more evidence on the safety very soon. the board of governors does not have an official position on principal reduction versus other means of modifying mortgages or otherwise avoiding foreclosure. as a practical matter is limited amount of resources you want to consider whether reducing payments is the fact that in some cases reducing principal owed. so i think there is some important questions they are. but generally speaking, the point i was trying to make a few years ago that while we all focus on the help of way deemed closures to the homeowner also is successfully done reduces the

losses to the lander. it supports the housing market and not in turn helps the broader economy. such of the extent we avoid unnecessary for closures and do so for cost efficient way, then there are benefits that are broader than just the help to the individual homeowner. >> no last november, william dudley the president of the federal reserve justified before the house oversight committee and he said this, and i quote, we think you can devise these programs for home buyers they have mortgages underwater to an sent them to continue to be on this mortgages a given them some a given them some. the devil is in the detail. they have good program design, but we are confident that. the devil is in the detail. they have good program design, but we are confident that one can design a program which would be beneficial, not positive to the taxpayer. you agree with mr. dudley that a targeted prince will reduction

program could be designed in a way that would net present value and investors? >> first, president dudley and it doesn't have an official position on that. for i do agree with him is he the devil is in the details. a lot would depend on what the criteria are for being eligible for principled reduction in how it would for example, some think a useful approach would be to give principal reduction, but to have been adequately sharing arrangement whereby if their future games goes with flow back to the lender. ..