doing. so i'm limited in what i can say in an open forum. >> one thing that struck me is on october 5, there was a successful rd into libya to capture that libya, which i congratulate all of the fbi and at one who worked on that capture. and it just led me to raise a course in my own mind when we went into libya on october the, if there are individuals that need to be captured, why we wouldn't captured them as well. i know that may not be something you can answer in an open setting, but people are frustrated that these people have not been brought to justice. so i do want your commitment that they will be brought to justice. >> you have a. i think the al libi case i hope illustrates for the american people that what i said before, we will never stop and we will never give up. he has been wanted for over a

decade. so the work will continue. >> are you getting cooperation from libya on this issue of capturing and seeing that those who committed the attacks on our conflict are brought to justice? >> i don't want to talk in particular about particular operations or particular conversations, but as we have said publicly the leaving government has been cooperative with us in this investigation. >> we expect them to be cooperative with everything we've done and the support we've given them. let me ask you, in terms of the al libi capture on october 5, as i understand he was captured on october 5, placed on ship and then was interrogated for, this is going to all public information, now he's been publicly indicted, until the 12th in which is brought into civilian custody, is that right? >> i don't know the exact dates spent just about a week of interrogation? >> sounds right.

>> mr. beers, identify the beginning of al qaeda as the attacks on our embassies in africa, and, of course, al libi has been charged with those attacks on our consulate. he was a very major capture, was he not, at al qaeda? >> he is alleged to be one of the founding fathers of al qaeda. >> yesterday we had the nominee to take over for mr. beers, jeh johnson. and he described interrogation as a treasure trove, as an opportunity of course for us to gather information to protect our country. you would agree with that, wouldn't you, director comey? >> yes. >> was seven days long enough interrogation in your view to find out everything that al libi new about al qaeda and its operations? >> i don't want to comment on the particular case. longer is always better, more is always better. interrogation, i agree with jeh johnson, interrogation is a

critical and is often a treasure trove. >> here's the problem we face. let's take it out of al libi for a moment. he was put on the ship instead of being brought to guantánamo because obviously this has been policy political decisions in the of administration not wanting to put anyone in guantánamo. but is it practical we can put everyone on ships, of his major? >> that's a hard question for me to answer. >> i guess the question i have is, tomorrow let's say we get -- let's say we get the current head, al-zawahiri here tomorrow. what we put him what you need to interrogate him. not only you but our intelligence officials to protect our country. what do we do with him? i would hope that were not going to only interrogate him for a week. do you know what we do with them? where we detain them, how he's

treated? >> i don't in particular. i'm aware of a variety of options. my goal would be to have our agents and our intelligence community colleges have the opportunity to interrogate him to get the information. >> do you think he should be randomized? >> who are you asking? >> al-zawahiri. do you believe he should be read his miranda rights? >> as my predecessor particularly the more flexibility we had to delay the reading of those rights, the better. but it didn't the reason i'm hesitating is it would depend on where he is and whether a court case pending against and all those kind of things but sure, the more flexibly the better for us. >> that is obviously because he captured a known terrorist, you tell them has a right to remain silent, that could have the potential to interfere with your interrogation, is that right? >> sure. would end of the interrogation. in situations like that it's not that i'm looking for confessions to be able to use in the court. >> you are trying to get

information to protect the country, right? and that's different than gathering certainly they can be committed, together, but the priority has to be in gathering information to protect the country, is that right? >> sure. and that's the way we approach it. >> i worry about the al-zawahiri situation because right now the ministry has chosen not to use one. the administration is putting people on ships, but al libi's, it seems to me where using opportunity to gather intelligence and i hope that director comey, you're new to this position, that you can work on a policy for detention and interrogation that will allow you to fully interrogate the worst terrorists that continue to post threats for our country. so i thank you all for what you are doing. >> thank you, senator. i want to return to my earlier question.

we are under cyberattack everyday. it's just not, could happen, it does happen. it happens in a lot of different ways. a lot of different directions. i want to come back to it in my original question, director comey and mr. olsen, are you guys working together? what are you doing better than you were? what can you do better still? how can you help -- how can we help, please? >> i think to questions i get had to the answer that rand beers did already. i agree very much. what we're doing better together is talking to each other and sharing information very quickly so that we can discharge our responsibilities likely. the one area, so that the first response. second responses it's our need to get information from the private sector quickly. that's critical. otherwise we are patrolling -- i picture us as police officers patrolling the street where the

walls on either side or 50 feet high. we can make sure that the street is safe but we can't do what's going on in the neighborhood. that neighborhood in my metaphors all the private network and all the private companies that are the victims of these attacks. we need to find a way to lower those walls so that we can learn the information we need quickly to be able to respond to the attacks. that's what we could do it better. >> how could we help? >> as secretary beers said one of the things that's very important is to create incentives for private companies to cooperate, to address their concerns primarily about liability and their concerns about the reputation. something that liability issue since with congress because they can offer them the protection because i think that's very important. >> talk more about that liability protection. >> private companies are concerned that if they turn over information they will end up getting sued by people whose personal information may be somewhere in the database applaud, or competitors may

complain about them turning over, or it will be used against them in some fashion in a government contract competition down the road. so all these things make their general counsel, which i used to be, segregated, we want to share, we d do not want her to e stockholders of this company by sharing so what's our protection. that conversation just to me 10 seconds to see. that's a struggle our conversation inside any country. that threat is moved at the speed of light so that's not just sustainable. >> what are the short and medium options that we should consider in addressing those liability concerns? >> i don't become expert enough yet in the pending legislation to offer you specifically so i would defer to secretary beers who i think knows it better than i. >> is that true quick do you know better than he does? >> i've been at it longer as secretary. >> you want to take a shot at that, the liability side?

>> well, as export with senator coburn, i think what we need is for the liability protections to create a willingness for the private sector to share information about a data breach as soon as they experience it. so that we can help them as quickly as possible and we can protect others as quickly as possible. so how the liability protection is constructed, i'm not a lawyer. i can't define that in the legal terms that you will need to put into the law. but i certainly would be -- we are ready and willing to help with technical assistance on trying to define precisely what that ought to look like as we tried earlier on, with a last

attempt to write the legislation in this body. >> mr. olsen? >> i don't have anything to add on the cyber legislation. >> all right, thank you. >> to talk a bit about the lone wolves, american citizens in many cases the become radicalized. in some cases by traveling abroad, being exposed to jihadists activities. other cases just being radicalized here, and over the internet or maybe in their own communities. i worry a lot about that. i know you do. share with us what we're doing, trying to address that threat, and how you're working together. how can we help you? >> let me go ahead and start. in addition to the great investigative work that the

bureau does, the three of us, along with the department of justice leadership, have a regular dialogue among ourselves about how to craft a common approach to assist in the identification of individuals, the prevention of them carrying out their acts. we do this under three large categories of activity. the first is to look at all of the events that have occurred and see what transpired in those events so that we can create a body of knowledge about behaviors and indicators that can inform us and state and local law enforcement, and

citizens, of what kind of indicators might provide us with a warning of an event. we then take that information, provided to all of our law enforcement partners. we conduct training in association with that. we conduct exercises in association with that. and we -- as matt olson indicated, that's not just before the event but also what do you do after an event has begun to occur. all of the active shooter training that we do is designed to assist in that, although it is a much broader residence in terms of those kinds of events. and then the last is community engagement, to talk to people in the communities, to hear what

their concerns and issues are and to provide that information to them as well. and all three of us participate in that effort, either as individual agencies or in concert with one another. that's the broad scheme of how we work together. >> director comey, would you add to that, please? >> the thing i would add in respect to the travelers, in some way the travelers are easier or us. they are still huge challenge than a homegrown violent extremist who stays in his basement the whole time radicalizing himself through the internet. is a huge challenge has secretary beers said trying to develop a set of indicators, what i was looking for, what should we equip the police officers were told that neighborhood to look for? that's something we're focused on the the travelers we can see them come in and out of the country so they can outsmart ways to assess what they're doing and have conversations with them very useful to us is something we're working together on.

>> mr. olsen? >> if i could usually a good the comments of my colleagues. the challenge of a homegrown violent extremists is exactly as director comey described. it could be an individual who doesn't travel, doesn't communicate. may be a passive consumer of radical information on the internet. so really doesn't get any of the tripwires that help us discern when somebody is mobilizing to violence. ireland. so we are working closely together -- mobilizing to violence. the strategy has three broad categories that triggers laid out of engagement, training and expertise with state and local law enforcement as well as countering, countering the al qaeda narrative. we talked a minute ago about fusion centers. fusion centers to provide a very good way for us to help to develop the expertise at the state and local level. around the country there are a million first responders between

police officers and firefighters. those of the individuals who will be most likely to see someone who is on the path from radicalization mobilization. and helping equip them with how to find those signs is a key part of the strategy. >> my time is expired. let me ask you, take a few seconds and answer this question. if somebody sees something, they say "see something, say something." if someone sees someone being radicalized, who should they say something to? >> usually the first instance is the local law enforcement agencies. >> agree. and i would urge people, listen to that feeling in the back of your neck and don't write an innocent narrative over fact that initial strike you as strange. just tell somebody. >> and if i could add. the key element to this is to build trust with those committees, particularly the american muslim community so they have the confidence and trust in our law enforcement agencies, if they see something

that gives them concern to come forward. >> thanks so much. senator levin, you are recognized. >> director comey, let me start with you. the law now does not allow detainees to be brought from guantánamo to the u.s. for detention and trial. should this law be changed? [inaudible] spent be brought from guantánamo to the u.s. for complex can they be properly tried? kennedy center getting? >> the policy question i think is one better answered by the department of justice. i know from my personal experience though, terrorists can be safely detained and tried. i've been involved in many cases myself in civilian courts in the u.s. so that part i can answer in the answer is yes. >> what is the personal experience? specifically, have we tried individuals for terrorism in federal courts the?

>> many, many, many. i was a united states attorney in manhattan after 9/11 and we have cases pending them. we are very good in a united states at safely detained bad people, all kinds of threats. were successful detention to the bureau of prisons i used to supervise when i was deputy attorney general and there's nobody better in the world. our courts have a proven track record going back to probably the largest case was the initial east africa bombings case brought in seven just in europe and the stride. it was the case al libi was just arrested on. so long track record. >> the trials that are held in federal court more likely to be conducted in a speedy manner compared to trials before military commissions? >> i don't have enough experience i guess we have as a country with a military commission so me to say about that. so what i can say is i do know the federal courts have long

been able to move these cases, protect classified information and get them done in a reasonably prompt time. >> the argument has been made that bringing terrorists to trial, either directly for trial in the united states or from guantánamo somehow or other creates a security threat for those communities in which they are held to do we have any evidence to support that kind of conclusion? >> i don't know if any, senator, with respect to a threat greater in the area of a prison facility. our super max prison an in the h desert in colorado is fairly remote. i don't know if any threats around that facility. we've house in episode some really bad people for a long time. >> mr. beers, is there any position that dhs has taken about the security threat from drawing in detaining terrorists defendants? >> i don't have any information

indicating any significant threat to a particular trial that's taken place. >> senator, if i may just jump in for a moment here. i would want to fully endorse director comey's comments about the federal court. i share at least in part the expense of having been a federal prosecutor, and the ability of our federal courts to handle these cases. the one element i would add is what we've seen in certain cases in certain important cases is the ability to obtain intelligence information from individuals who are brought into that system. from my perspective at the national characters in center it's important we do whatever we can to in game that intelligence and we been able to do that in a number of important cases where individuals have been cooperative in providing important information. >> is there any evidence --

maybe director call me and others, you can compare the kind of intelligence old in terms of quantity and quality that the fbi has been able to obtain from terrorist suspects compared to there being held by other elements of our federal government. >> senator, i'm not in the kitchen to compare because i don't know enough about the track record in getting information by other agencies like the one state to the fbi's, which is longer is one of the things we do best is get information from people, especially bad guys. >> and is that also -- doing so consistent with the guarantees in law for interrogation of suspects? >> absolutely. >> let me ask you a question, director, about a bill that senator grassley and i have introduced relative to u.s.

states in the united states, incorporating entities that have hidden ownership. is there a problem by law enforcement point of view in not knowing the real owners of corporations? and in this regard i think you may be familiar with what happened at the g20 summit where 20 leaders, including president obama, reached a consensus that it was time to stop creating corporations with hidden owners. president obama has issued a national action plan which calls for federal legislation such as we've introduced to require our states to include on their incorporation forms a question asking for the names of the real owners of the corporation being formed now, do you support that bill?

does the fbi want to know the real owners of corporations? is there a law enforcement purpose? we've had all kinds of letters from law enforcement groups, federal law enforcement officers, associations, fraternal order of police, assistant u.s. attorneys association, on and on saying it's critically important that you know the beneficial owners of corporations. because otherwise, suspected terrorists, drug trafficking organizations and other criminal enterprises continue to exploit the anonymity afforded to them through the current corporate filing process. that's going a letter from the federal law enforcement officers association. do you support as director of the fbi our passing a bill which would require states to ask one question on the incorporation forms, who are the real owners, who are the beneficial owners of the corporation that you seek to

incorporate? and if you do support it will you tell us why? >> i don't know enough about the bill in particular to have a position to answer the department of justice is working on it but i agree with your premise. it's important to our investigations across a whole range of cases get to learn that information. >> by? give as examples but why does it make a difference to law enforcement? >> if you're conducting an investigation of a transnational organized crime group is involved in human trafficking or drug smuggling and they are laundering money for a particular corporate entity, connecting the entity to the bad guys is going to be a critical step in your investigation. you could take that and make it an analog in a different kind of case, a terrorism financing case, a bank fraud case, a ponzi scheme, although some argue to find people who are hiding behind particular names or shells. >> thank you. my time is up. >> and just to follow up on the question, that exchange you just had with senator levin, this is an issue he has pursued for some

time. interestingly enough, the states are uncomfortable with the manner that has been pursued. states, especially states have expressed their concern through their secretaries of state, and we've encouraged our own secretary of state in delaware to work with other sectors is dead across the country to meet with the fbi, engaging conversation with the fbi, other law enforcement agencies to find a way that addresses the concerns that senator levin has expressed that you, and i think many americans would share, to do so anyway that the states do not find overwhelmingly difficult to administer. i think there's a sweet spot there, and there's negotiations that have become to we appreciate participation of the fbi and other law enforcement agencies in that discussion. back to senator coburn. >> thank you. director veers you mentioned a

minute ago a national suspicious activities group, what was the polling? [inaudible] >> would you punch -- >> sorry. spent this morning a news article broke that 4904 people, personal social city members, addresses and professions, and lots of other detail, came out of the dhs is customs and border protection was leading an investigation on some information about how to get around a lie detector test in a book that was sold. and if you read this report, i don't know if you're familiar with this or not -- >> no, i have not seen it. >> this is really concerning to me. first of all, it looks sloppy on its face in terms of the number of people, and what i would direct you is, today's news

story, but this is the kind of thing where we give, because it's not done right and it looks to be very inappropriate in the expanse the in the circuit court of the agencies will keep this information for longer to time on these individuals, and the american people want to know why and what did we do wrong. because we wanted to read a book, not the federal government has shared all our information with 20 some other agencies, including our personal data. i think there's a balance to where we're going and i would love for you to have both, brief my staff and also respond to this news story, if he would later today. i know i'm taking you off guard, but we need to protect ourselves but we also need to protect the fourth and first amendments. and to me, on the face, and i'll reserve final judgment until i hear from you, is this is way

overboard. and way beyond -- i would hope you would address this. director comey, as you know, senator graham has held up and is holding up all nominations of the president coming before the senate because, in his opinion, and the congress ought to have the right to interview and discuss what happened with benghazi with the survivors. i have two questions for you. one, number one is why does the congress not have the right to do that? and number two is, senator graham inappropriate in trying to have the american people know what happened in benghazi by interviewing those survivors. >> my reactions are, i don't know to the first question, and no, to the second question. doesn't strike me as inappropriate. as i said in response to a question, my interest are in

making sure that we balance, the fbi's need to be able to protect our witnesses and find those people, bring them to justice. but i don't see anything inappropriate with the inquiry. >> well, that is my understanding he's been told he cannot interview those survivors, is that correct? >> certainly not by me. i don't know. >> the fbi has no problem with congress intervened the survivors of benghazi? >> no. >> all right, thank you. one of the concerns that i hear from the private sector, mr. beers, secretary beers, on the executive order. and by the way, i call them the president on his executive order on cyber. i think they listened well, build a good plan and so far it has been executed well. so i congratulate him and you on what's been done on the.

one of the concerns is about what's coming with executive order in terms of regulations. one of the things that i believe is stifling our economy now is just tremendously excessive. and if we want private data should with the government so we can actually protect us. do you have any concerns or two you have any feel for what we're going to see in terms of regulations? >> at this particular point in time, as we negotiate the original cyber bill that was considered in this body and in this committee, it was not our intention to seek regulation and association with that. it was a very light touch. i think that remains our posture with respect to going forward. the part of the executive order that seeks to catalog regulatory authorities is in effort to pull

that together to see what we, what authorities do currently exist that allow regulation that's already underway. where we go from there, we have not completed that particular -- >> you would agree that voluntary compliance, if people were made aware of it and made aware of the benefits of it, is a better scenario than forced compliance or forced compliance should, after we see a failure of voluntary compliance. would you agree with that? >> yes, sir. >> thank you. i have no further questions. >> senator johnson. >> thank you, mr. chairman. like to follow up on question on benghazi. director comey, for 14 months it's been consistent excuse of his imagination the recent members do not have investigation -- you're aware of that, correct? >> i'm not. senator, i'm not.

>> so just getting back to what senator coburn said. there should be no reason that the fbi investigation should be used as an excuse for us to not have access to question those witnesses, whether it's an opening or any secure briefing said in? >> i don't know as the fbi director, i don't know, i don't have an objection to the other know whether the prosecutors would feel differently or is there some other reason i'm not speaking of the speaking from my perspective, yes, i do have an objection to that. >> director olsen, i would just like to maybe, for both director here, talk about the difference between our desire to prosecute and the difference between gathering intelligence. from my standpoint with the threats you are far more aware of than i am, to me it sounds like intelligence gathering is a far higher priority than bringing people i guess to eventual justice, particularly when we can hold them as unlawful enemy combatants. can you kind of discuss the

difference between the desire to prosecute, which we all what people brought to justice, but they need, the requirement for intelligence gathering. >> i think there's no conflict in that. in other words, from everything i've seen in the work of the national counter isn't center and, therefore, the number one goal in any of these instances involving terrorist suspects is to gather intelligence as the overriding objective. at the same time we need to have an option for this position. and with respect to, for example, al libi to we discuss is an intuitive was indicted and disposition option was readily available in the federal courts. but every case is different and every case is treated on the basis of the facts presented. and in every case intelligence gathering is the priority. that's what i experienced. >> i made a trip down to guantánamo wit's end ayotte and we spoke to the people there,

continue to interrogate over a very long period of time. the detainees down there. very strong opinion of those individuals doing those interrogation say the most effective interrogation occurs over years. where you gain the confidence and it's slowly and surely, you obtain the little threads of information, the types of threads that i think eventually to the killing of osama bin laden. do you agree with that? i mean, to me i think it's absurd that we think we can actually gather the types of intelligence that is possibly the end the week on a ship, or couple days before we ran that somebody. do you disagree with that? >> as a general proposition i think it's clear that the longer opportunity we have to gather intelligence, to interrogate someone, the better. >> don't you believe we really out to be using that first class facility on in guantánamo to detain these individuals so we can gather the types of

intelligence we need? >> in every case there are going to be other considerations that will come into play. >> any higher consideration of gathering the intelligence we need to keep the homeland save? >> there will be other considerations and that was what was in place with al libi. so again, the number one goal is to gather intelligence and that's what i've seen in these cases. >> i wish that were the top yorty but it doesn't seem to be so. secretary beers, on may 23, 2012, we held a hearing on the very unfortunate events in cartagena. we were pretty well led to believe by the then director of the secret service that that was a one time occurrence. i really wanted to believe that. i think it's incredibly important to secret service has total credibility and that their important mission of securing high government officials and national security information is paramount.

in my capacity as ranking member on a committee that has oversight of that, we continue to dig into exactly what happened in cartagena, hoping it was a one time occurrence. that does not appear that it was. we have, through whistleblower accounts, found out that similar incidents occurred in 17 countries around the world. again, that's just a limited snapshot. we've had limited access to individuals who might know better. other day, to secret service individuals were disciplined for misconduct and hotel here in washington. one of those men, we've come to find out actually was involved in cartagena into the and interviewed secret service personnel. the question i have for you is we've been waiting for a court report from inspector general's office now for 18 months. you know when the colts report will be released because sir, i

do have a specific date. i know that it is near completion and we're expecting shortly but i can't give you -- >> do you think 18 months was kind of in inordinate amount of time to take to determine something i think is so important to find out whether there's a real cultural problem with secret service? >> obviously we would prefer to have the report sooner rather than later. >> connected your commitment to check into that and get that report completed and released as soon as possible? >> yes, you have it. >> thank you. no further questions, mr. chairman. >> dr. coburn. >> i just had one other thought as we went through the boston marathon bombing and we look out the sonnets. the one thing that was never covered -- tsarnaev brothers. became your confidence in your under an asylum visa. except the parents are back home and have been for a number of years. has anybody looked at our

techniques, processes, requirements for granting asylum to individuals? because obviously with the ability to return home to their own city, from which they were granted asylum in the first place, something has changed to either we got it wrong or something markedly changed in chechnya. i don't think that's the case. so is anybody looked at that? and i know that the state department issued, probably more than homeland security, or maybe it isn't. any comments on that? >> let me start. tsarnaev family sought asylum from tajikistan where they had moved to avoid the violence in their home area. their requests for asylum was that they were being discriminated against at home,

and that was the basis of the initial printing. so that was the way that it happened in then they as you quite correctly say chose later on go back to the place that they were actually from, that they were actually born in. those are the facts of the case. with respect to the asylum, yes, we are looking at this as a regular issue since dhs is a persistent in the granting of asylum. in part at least too often, to legal permanent residence status and naturalization. so we are very much a part of that. >> thank you very much. >> thank you.

director comey, i want to follow up on a discussion that we had on the jttf task force and the memorials -- memorandums of understanding. because when commissioner davis i testified before our committee about the boston bombing, editing all of us agree that there was great cooperation there in the boston police department did a phenomenal job along with the federal partners. he had some concern about how the m.o.u. was operating and i wanted to follow up on where we are. with the communication on the jttf task force for the memorandum of understanding can use concern is local officers and information wasn't flowing downward. >> thank you, senator. yes, that is a concern that we've been discussing with the major city chiefs and sheriffs. i had a lunch meeting last week with them to follow up on that. so it's a work in progress i think we're going, our goal is the one you and i discussed just to make sure there are not impediments either real or

perceived. and so his concern is being acted on. i don't have a date for when it will be done but it will be for us in. >> good. i would very much love if you would report back to the committee to just give us the answer because i know it's an issue of importance to you just a we know this is operating and information is flowing directly downward and upward. >> short. >> also, mr. olsen, i want to ask you about your testimony. you mentioned something about the withdrawal of coalition forces from afghanistan could enable core al qaeda veterans to reconstute there. right now the administration, we are in a key moment with regard to what happens in afghanistan. decisions that are going to have to be made and what the follow on force will be in 2014. and so i guess i want to hear from you, does it matter? i've heard some people say, what can we accomplish? and i was intrigued by what you said because i share that belief

that we could have a reconstitution of al qaeda or other terrorist groups there. so could you enlighten us on the? >> i think domenico's perspective we are concerned about afghanistan and pakistan and the border region. no doubt because of the presence of extremist groups, including the remnants of core al qaeda in that region. we've seen that there has been an interest in al qaeda important of concern, particularly northeastern afghanistan. and it's going to be an issue that will have to monitor very closely after 2014 tuesday what types of activities al qaeda, or other allies of al qaeda, for example, the haqqani network, undertake in that region. >> and, in fact, haven't we seen rejected the by al qaeda or activity by al qaeda in iraq with what's happening there right now? we weren't able to come to an agreement on a follow on force in iraq and now we're seeing

some there. can you describe that? >> we've seen an uptick over the last several months in violence in iraq. much of it we believe perpetrated by sunni extremists in iraq. almost all of it focused on iraqi targets, not u.s. targets necessarily, but certainly there has been an uptick in the violence in that country. >> we certainly want to avoid a scenario where afghanistan becomes a launching pad for terrorists again, do we not? >> absolutely. >> thank you all. >> senator levin. >> i just have a few more questions. , you indicated you don't have a personal problem with congress into giving the witnesses from benghazi, but that you haven't talked to your prosecutors. is that which is that? >> i don't know. i haven't discussed it with the department of justice to see whether there's separate concerns about from the assistant u.s. attorneys

handling the matter about it. and when i say witnesses, i thought the question was about the survivors which are the u.s. personnel to -- >> correct, correct. is it possible that you would have a different opinion if you talk to those prosecutors? >> it's always possible, sure. i don't know. >> of the question has to do with going back to the beneficial ownership issue of corporations when we don't know who owns the corporations. we have some apparently testimony or some indication from some of the secretaries of state that the fbi could obtain and other law enforcement agents could obtain corporate ownership information from the irs on a form i guess called s. is for, but corporations have to fill out those forms to get a u.s. taxpayer id number.

does that work from the fbi's perspective, try to get the important information that you described from the irs instead of from the applications are, in corporations speak with a low enough to say, sir. i just don't know the specs are you not familiar with the argument the fbi could get that information from the irs that? >> i'm not. >> thank you. >> that's the only questions that i have. i just want to thank you all. >> sander levin, if i could go but to question with respect to benghazi. the one point i would like to offer to the committee is, over the course of the last year and several months since the benghazi attack, we have presented a number of briefings to member of this committee as well as a number of other members. public over a dozen briefings that presented a multimedia presentation, including

surveillance video, overhead imagery, witness statements describing every facet that we had from an intelligence perspective about those attacks. we've had a number of opportunities to present everything we know from intelligence community perspective about the attacks in benghazi. we would certainly offer that again if the committee was interested in seeing that spent i was just curious about the drifters comment about not having talked to the prosecutors, whether or not that might impact his opinion as to whether or not, for some reason, congress should have access to those survivors. i don't know any reason either by the way. i got together, i think this whole thing was not handled appropriately, but that's not the point. the point is i don't see any reason myself why congress should have access to anybody congress wants to ask us to come whether it's overdone it or not, they will leave tha it up to myn personal opinion and others to resolve. but i don't see a personal problem either, but i sure as heck before i knew prosecutors had a problem with it, i would

want to hear their view before i reached my conclusion. and i was kind of surprised that the director said, well, it's his opinion that there is no problem. but the prosecutors may have a different approach. so that was the reason i was pressing the director on this issue. i could leave it at that. going back just to clarify one question about some of the positions the secretaries of state have taken about the fbi going to the irs to get the beneficial ownership information. would you find out, give us an answer for the record as to whether or not the fbi believes that that is a satisfactory alternative to knowing the beneficial owners from the corporation documents? would you let us know for the record? >> sure, senator. >> thank you.

>> i've got a couple of closing questions and then we'll give you an opportunity to make a short closing statement of your own. so think about that while i ask these questions. a lot of americans, probably most americans are concerned about their personal safety in this country, either from crime in their own communities, their own states, or the threat of a terrorist attack. people are more mindful of the threat of cyber attacks than they have been ever and we are reminded of those threats every day. people in this country also are concerned about their own privacy and the ability to have their privacy protected. and sometimes there's attention -- a tension between those two deserve. we want to be safe but we want to make sure our rights of privacy protected. we talk about the tension that exists between those two rights

and concerns and how we are trying to strike the right balance, please. mr. olsen, do you want to go first? >> sure. this is an issue obviously that is front and center today, and i can assure you, mr. chairman and the committee that it's an issue that is part of what we think about everyday at the national counterterrorism center, and i know it's true from my experience at the other places i've worked, including the national study agency and the department of justice, particularly with respect to wear him out at the national counterterrorism center, we are charged with responsibility of preventing terrorist attacks. we do that by integrating and analyzing information. we understand that when you access to a lot of information, government collected information in order to do that, in order to analyze information, look for particular thread, look for threats. share the information again with agencies like the fbi and others who can act upon it but we also understand that in so doing, in handling that information we are

responsible for being stewards of that information. and that we are entrusted in protecting it. it's part of our training, part of everything we do in terms access to information that we understand the laws and policies and regulations that apply to protecting that information to ensure that we do so in a way that's consistent with civil liberties and privacy of all americans. >> what further could you say to the american people who have these concerns about the right to privacy and their concern that is being violated, could be violated? what more could you say to reassure them that this is indeed a concern the administration and those whom you work are mindful of? >> i think what i would say is, again, the training and the oversight that we are subject to is unlike anything i've seen anywhere in the world.

and it surpasses that which we experienced 10 years ago, or even five years ago. so the degree of oversight that we are subject to by congress, by the judicial branch, by other elements of the executive branch, i believe it should give the american people confidence that we are handling this information in a way that's appropriate and that secures privacy and civil liberties. that said, we depend on the confidence of the american people in being able to do our job. so we are committed to being as disparate as possible in how we do that in order to continue to gain and maintain their confidence. >> director comey, we have people that are concerned that folks at nsa are reading the e-mails, looking at their text messages, listening to telephone conversation. what do you say to reassure almost all americans that that's not a concern they need to have,

or can you? >> the first thing i would say is i agree very much with director olsen that this is something every american should care about. every american should care about how the government is using its authorities to protect them and where the government is being mindful of the liberties that make this country so special. what i tell folks if look, our founders were geniuses. they divide our and created three parts of government to check power. so if you care about these issues, and everybody should, you should first ask is the government working? is the oversight? how is that being done? is a balanced? the second thing is i tell people you should participate. everybody should ask questions about government is using its authorities and how the system is working to happen to think the angel is in those details. what's gotten lost in a lot of the discussion about how we use our authorities is just how the design of the founders is operating to balance and to oversee the use of those authority. a challenge for all of us are charged with protecting american people is funny a space in american to have that

conversation. because it can't be on a bumper sticker it requires me to say look at how the inspector overseas need to look at what the courts do. but what i report on but that seems kind of boring but that is the most important part of what we do to show people that the government is working. >> thank you. secretary beers. >> i would certainly associate myself with the comments about my colleagues big only thing i would add is, as a practical and operational matter at dhs, we have a privacy office with the chief privacy officer and we involve him in all of our projects to both collect, store, and share that information. it's not -- almost none of it is what you would call intelligence but it is information and it is private information about applications for citizenship for travel information or these is -- visas.

there's a lot of it, and it is certainly one of major activities that we engage them in order to ensure that we are good stewards of that information, as we gain, store and share. >> should there be a similar kind of entity within, let's say nsa, or the fisa court that focuses on privacy as well speak with what works for us is what works for us. but i do know that they do have individuals who work on these issues with their staff, just as the director olsen mentioned. they do at nctc. it's not like it just happens that uniquely we have an office that is part, formerly part of the organization with a chief privacy officer. >> could you say to the american people with insurance that the

gatherings of all this information, and i realized that it's impossible for nsa to actually listen to every album conversation, to read every e-mail, can mindful of all of the text messages that might be sent, but is there some way that you can reassure the american people that all the effort that is underway we're talking about is actually, for some good purpose? buffer demonstrated purpose because it has made us safer? again and again and again. can you provide any reassurance along those lines? >> what i can tell you and the american people is, this is an agency that is not some rogue actor. the nsa, we worked very closely with them. they have a very strong compliance culture. and they are overseen in many, many different ways in their activities. what i say to folks to discuss with me this look, if you think the law ought to change, that's a discussion that with congress.

i see no indication the nsa is acting outside the law are outside the scope of their oversight responsibilities. i just know from working with those folks they are accessed with compliance and with staying within the law. >> i would agree with the director. and as i mentioned, i served as a vision accounts of the national security agency. it is an extraordinary agency and it is an agency that is committed. and i think using director comey's words, obsessed with compliance. they have a chief compliance officer for every general counsel's office. the leadership on down reiterates and reinforces the importance of compliance with the law and the civil liberties and privacy of americans. they follow the law when it comes to the collection and information involving u.s. persons. they do not indiscriminately collect information around the world. they serve to protect americans lives. and that's what i saw when i

served there. >> all right, thank you. let's turn to the issue of dirty bombs, devices that could be used with ecological mature. could sicken a lot of people, could cause significant psychological and really economic damage on a community. the nuclear regulatory commission, the department of energy's, i think it national nuclear security administration, i believe they are responsible for the security of radiological sources. i think that you were poor qantas about a year ago, maybe september of last year, an audit that revealed the u.s. medical facilities that house radiologic majerus still face some challenges securing their supplies from potential threat. director olsen, you get any dealing with this but what is the intelligence community's assessment of the likelihood that al qaeda or one of its affiliates will seek to acquire

radiological materials in order to try to make a dirty bomb? >> i think what i can say in this setting is that we've seen, over time, some degree of interest along those lines but nothing at this point that i would consider to be more than the sort of most basic aspirational type of interest by a terrorist organization. and on a summit with the report that you referenced. >> and director comey and secretary beers, what roles do you agencies play in preventing terrorists from building and potentially detonating a dirty bomb in the u.s.? >> i cannot answer for both of us but we share a responsibility. at the fbi we execute them our weapons of mass destruction directorate is responsible is to work with dhs to understand what other potential sources of material that terrorists could use to harm us and what are the

aspects we can know if something suspicious is happening around that material. >> all right. secretary beers? >> the only thing that i would add is we do have the ability to at least screen with radiation detectors at our ports of entry. obviously, it's possible you could shield of that information, but at least it gives us a first order of essential system to try to determine whether or not that information comes into the united states. we also, there are grants program, help state and local authorities obtain first order radiation detectors so they can also look for that material within the country. but the key here is that we in the bureau work together very much on this kind of effort spent we talked a little early,

this is my last question, a little earlier about terrorists travel, going to place for a while overseas and in a place from which they can fully travel back and freely travel back to you as. let me just ask you. what are we doing to better track and monitor people traveling to war zones and terrorist safe havens and then deciding to return to the u.s.? >> it's an important question and a matter of significant concern for us, thank you. in particular i would reference syria as a place where concerned about because of the ongoing conflict there and the presence of extremist elements including a group connected to al qaeda, especially it has become a place where literally thousands of individual from other countries have gone to syria to join and fight a number of them to join with this group connected to al qaeda. lef..

>> we have a handle on what their activities are. >> all right. >> let me add to that. this is truly an integrated effort. we sit together in terms of trying to pull together the lists of individuals that we have identified as potential threats to the united states. we also have a program with our, particularly our european allies

because of the visa waiver program to share information that they and we might have nationally with one another in order to add to the database that we have of the individuals who are of concern. we at dhs also support this effort through our travel analysis, looking for people who we don't know might have gone to syria or might have gone to syria for me fair yous purposes. -- nefarious purposes. we have a number of indicators that help us identify individuals who we might want to speak to at ports of entry as they return to the united states. i don't want to go into the details of that because i don't want to give away the way we

actually do that, but we have a number of techniques which will allow us to identify somebody who it's not clear this terms of their travel record leafing the -- leaving the united states and coming pack that they were anywhere near syria. but there are other indicators that can give us indications that we might want to talk to those individuals. and that's part of finding the unknowns as opposed to tracking the knowns which, i think, we're pretty good at. >> good. thank you for responding to that question. that's the last question i have except this is an opportunity for you if you'd like to each just give a short closing statement, please. and could be something that comes to mind, something you want to reiterate, something you heard another colleague say that you think is worth emphasizing. go ahead, please. >> be well, mr. chairman, first, let me just thank you and this committee for holding the hearing and really for your consistent and steadfast support for the intelligence community

and for all of our efforts with respect to protecting the home lapp. the one -- homeland. the one issue that comes to mind goes back to director comey's opening comments, and that is on the budget. we are struggling like all government agencies, to deal with sequester cuts, and this strikes at the core of our work force, and it's something that i think bears raising in this forum. >> i'm glad you did, thank you. >> but otherwise, i would just offer again to continue to work closely with you and the committee going forward for whatever you need from us as we work together. >> thank you. director comey? >> mr. chairman, i would just thank you for having this hearing. these conversations are critically or not to the american people -- to the american people. they should demand to know how we're doing our jobs and how we're using the power we've been given. i shouldn't be doing anything, we shouldn't be doing anything we can't explain. sometimes it has to be in a closed setting so the bad guys don't know what we're doing, but

these conversations were what the founders intended, so thank you. >> you're welcome, and thank you. secretary beers? >> i certainly would be remiss not piling on on the budget question. it, obviously, affects us enormously at dhs with 240,000 plus individuals and a vast array of programs. the second point i would make is the point that we talked repeatedly about, we really do need the cyber legislation. i know that you are and this committee are trying to do something on that, but as we have sat here can and told you and you have told us that this is a critical vulnerability that the united states faces. not having that legislation leaves that vulnerability open, and we owe it to the american people to be able to recollect them and protect them -- to protect them and protect them better. >> those are all really good notes on can to close. i want to, again, thank you for

your preparation and clearing your schedules to be with us and spend as much time with us. dr. coburn said to me too bad the other members of our committee could not have been here to hear this and to participate in the conversation. almost all of them, in fact, all of them have several hearings going on simultaneously, and it's just difficult for them to go to every one of them. but about half of our colleagues were able to join us for part of it. their staffs are, in cases, here but also watching on closed sir television back this their offices, as you know. director comey, it's the first time you've been before us to testify, and i was very impressed at how you handled yourself. these other two fellows are seasoned pros, and they lived up to their reputation. rapid, thank you for taking on -- rand, thank you for taking on all these responsibilities over at dhs and doing them well while we work hard to get a secretary confirmed and the deputy secretary confirmed so you can be a little less

frenetic. thank you very much. i think the hearing record's going to remain open for 12 days, that's until november 26th at 5 p.m. for submission of statements and questions for the record, and with that, this hearing is adjourned. thank you again very much. [inaudible conversations] >> house and senate conferees met wednesday to work on creating a budget blueprint for 2014. that's next. and later this morning, an fda safety and oversight hearing. that's live at 10 eastern here on c-span2. >> this weekend on c-span road to the white house 2016, maryland governor martin o'malley in manchester for the jefferson jackson dinner followed by congressman paul ryan at a birthday party

fundraiser for iowa governor terry branstad. governor o'malley is live starting saturday at 7 p.m. eastern. on c-span2's booktv, hear from five of the finalists for this year's national book award for nonfiction. sunday at 1. and on c-span3's american history tv, go back in time to 1996 with the internet archives way back machine, sunday at 7 p.m. >> the head of the congressional budget office, doug elmendorf, testified tuesday before a house senate budget conference committee. the committee was created by the deal that ended the government shutdown and avoided a federal debt default. the panel has until december 13th to reach an agreement on a budget blueprint for 2014. [inaudible conversations]

[inaudible conversations] [inaudible conversations]

>> the conference committee will come to order. if everybody could take their seats. morning, everyone, and welcome. i want to thank senator murray and the entire committee for all their work so far. since our last meeting, altty and i have been talking -- patty and i have been talking, discussing the parameters of a common agreement. we're trying to find common ground, but we're not there yet. there's a big gap between our two budgets if anyone photoed, and that's why we're talking. as i said the last time, the reason we are here is to get an agreement. we've spent a lot of time talking about our differences. of we've got that part down cold. that's the easy part.

the hard part is figuring out where we agree. so here is how this is going to work today. i'm not going to start with an opening statement. we are hear to hear from our cbo director, dr. elmendorf. he's going to give us a brief on the budget, on the economic outlook and on the long-termor economic budget, outlook. then we'll open it up forrief discussion. i'll recognize any member for p to two minutes for a discussion or to ask a question of the cbo director. the director's answers will not come out of that perp's twotw minute -- person's two minute allotment. people can be recognized more than once if they choose to do so, and we intend to adjourn ate noon. with that, i'd like to recognize senator murray for any comments she may have before we recognizt dr. elmendorf. >> thank you very much, chairman ryan, and thank you, dr. elmendorf, for being here today and all of our committeed members who are here to participate. iel think we all recognize our nation is facing some very serious economic challenges. t our economy's recovering, butg far too slowly, and our highestl

priority has to be making sureev we meet our short and medium term needs to create jobs and boost the economy, and as dr. elmendorf will talk about today, we face serious long-ter fiscal challenges as well that we've got to work together on. i think chairman ryan and i both know this is not easy. our budgetswe are dramatically t different, but itog is extremeln important, and we agree that we need to step out of our partisan corners and make some compromises and lay down axtre foundation for some long-term bipartisan agreements. be we have been, as he said, had a number of discussions sincerts our last meeting regarding the thes of ar potential -- parameters of a potential deal, and i've been very encouraged by those conversations. they are going to continue in the days ahead, and i'm hopeful we will get to a bipartisan compromise very soon.in so i, too, look forward to this productive of discussion todayto to help us reach that goal, and i thank everybody for being here. >> thank you.

dr. elmendorf, the floor is yours. >> thank you very much. my colleague us and i are very happy to be here. i will briefly review the economic and budget be outlook, and then we'll try to answer and questions that you have.here i'll be referring to the charts that are in front of you forand people in the room and those charts have just been posted on cbo's web site for people who o are watching from afar. and this february we projected that economic growth would be slow this year and a more rapid expansion would begin next year. that is still our view. in particular, real gdp is on track to rise about 2% this year, a little above the 1.5% that we'd envisioned, but still only a modest increase. the unemployment rate shown in your first chart at the bottom the front page has come down more than we had expected, but employment has not grown more than we expected. fro instead, there has been a further decline in the number of people in the labor force. as a result, the share of the

population with jobs, shown in the chart at the top of the next page, is very close to what it f was four years ago. this ratio is trending down gradually because of theit retirement of the baby boomers and other demographic factors, but it has fallen well below its trend. we estimate that employment is now about five million jobs has short of what it would be if the unemployment rate were back down to a sustainable level and participation in the labor forcd was back up to it trend.ac to its trend.stai the primary cause of the f distress in theor labor market s a shortfall in the demand for goods and services relative to the productive capacity of thers economy, and therefore, in the demand for workers. the primary reason why demand is weak is the lingering effects of the housing bubble and financial crisis.wo but fiscal policy has mattered too. the positive short-term economig impact of the spending increases and tax cuts in the 2009

recovery act has been fading fos threeh years. other stimulative measures have expired, and the congress has enacted additional legislation to reduce budget deficits in the near term.ave the combined effect of theas deliberate policy choices youen have made and automatic stabilizers in the budget has i been to reduce the deficit from about 10% of gdp in 2009 to about 4% in 2013. d that is the most abrupt fiscalgp tightening since the end of the second world war. and though that tightening has had the beneficial effect of showing the a-- slowing the accumulation of government debt, our analysis indicates it has also slowed economic growth during the past few years.is moreover, uncertainty about fiscal policy has been unusually high. owing to the surge in debt and stark disagreements about tax and spending policies. disagreements that have ledgh, repeatedly to delayed enactment of appropriation bills, worries about defaults on federal debt

and showdowns over other budgetm issues. that uncertainty is also probably dampening growth, although we do not know by how much. the further tightening of fiscal policy built into current law for the next few years as well as ongoing uncertainty about fiscal policy representw continued headwinds to the economic recovery. at this point we think that 2014 will see an upswing in housing construction, rising real estate and stock prices and increasing availability of credit. as well as a reduction in fisca drag relative to 2013 givenstat current law. in our judgment, all of thaty will help to spur a virtuous circle of faster growth in employment, income, consumer spending and business investment. however, everyone should be cautious about that outlook. researchers who have studied the historical record of housing bubbles and financial crises have been warning since 2007 that working off an excessiveicl

housing stock, improving balanc sheets, restoring credit and regaining confidence generally takes time. we think the economy will turn theg corner next year, but no oe canit be sure. in addition to the near term economic challenges, the country faces significant long-termbe economic and budgetary challenges. for one thing, the to longed weakness -- prolonged weakness in the economy has lowered its productive capacity for years th come. has persistent long-term unemployment, shown this your nexte chart, will lead some workers to leave the work force earlier than they would have otherwise and willoy erode theti skills of other workers. in addition, lower capital e investment and productivityise growth will reduce future output and income. moreover, as you know the aging of thein population, the expansu of federal subsidies for health insurance and rising health cary costs will put increasingof t pressure on the federal budget. if you flip to the next page at the top, your next chart shows

our projection of budgetu fl deficits for the coming decadet under current law. al hoe deficits will fall in 2015, they will begin to increase again reaching 3.5% of gdp or nearly a rl dollars by 2023. moreover, under the extended baseline in our long-term budger outlook, deficits continue to increase beyond the coming decade. as a result, federal debt held by the public shown in the chart at the bottom of that page woul reach 100% of gdp25 years fromlc now even without accounting for the harmful economic effects of that increase in debt. there are at least three reasons why we and other analysts are concerned about the long-term budget outlook.. first, debt is already largers relative to the size of the economy than at any point in our history except for a brief period around world war ii. even if debt remains near its

current 73% of gdp, future wages and incomes will be lower than they would be with less debt. also the government's interest costs will rise dramatically when interest rates return to more normal levels. your ability to use fiscal policy's to respond to future financial crises, recessions an international threats will beliy much more constrained. and the risk of a financialcr crisis, a fiscal crisis, excuse me, will be higher than it would be with less debt.an alld of those problems of keepig debt at its current share of gdc will be worse if if debt rises t significantly and persistently relative to the size of the cu economy. second, we project that under current law debt will rise significantly and persistently relative to the size of the economy. projections and especially long-term projections are very uncertain, but our long-term outlook showed that the federal budget is on an unsustainable pr path under a wide range of possible assumptions about some

key factors that influence federal spending andbu revenues. you know the main reasons;assu retirement of the baby boomers and the rising costs of health care are pushing up the costs of the largest federal programs. your next chart, top of the next page, shows federal spending ane revenues under cbo's baseline t compared with past averages. for example, in the top-left corner of the chart you can see the social security outlays represented 4.2% of gdp on average between 1973 and 2012, the last 40 years. 4.9% of gdp last year and will be 5.3% of gdp we project in 2023. if you take spending for social security and medicare together, that was about 6% of gdp on average over the past 40 years. but it will be more than 8.5% of

gdp by 2023, and in our long-term outlook we show by 2038 it'll be more than 11% of gdp. meanwhile, defense spending shown in the third bank of the numbers is on track to be a shrinking share of gdp. and all other noninterest spending taken together, everything but social security, medicare and defense will be roughly the same share of gdp in 2023 that it was on average in the past 40 years and that it ip today. i want to make it clear that the steadiness of this gdp share of the all other category masks some very different patterns among its subcomponents.h as youar can see on the chart at the bottom of the page in thisns other category, means-tested health care programs are taking a growing share of gdp owing to the expansion of insurancee pr coverage through the affordableg care act and rising health care costs per person. in contrast, nondefenseable

discretionary spending is on track to be a sharply shrinking share of gdp owing in part to the caps from the budget control act. we show figures like these not to suggest that you should try to repeat the budget configurations of the past, but instead to help you and others g understand which parts of the federal budget are expanding relative to the size of the economy and which are shrinking. there's no particular reason that outlays for social security and medicare need to be cut bac to the historical average share of gdp when a larger fraction of the pop ration is old enough to receive -- population is old enough to receive benefits from those rams. however, if those programs are not cut back, then we will need to collect a larger share of g, the p in -- gdp or cut back on other federal benefits and servicesou relative to what we have been accustomed to. the third reason for concern about the long-term budget outlook is that current laws underlying our baseline projections include provisions that would restrain deficits in

significant ways but might raise widespread objections as they tookec full effect. i'll unfortunately two examples, both of which can be seen in the charts i just discussed. first, given the structure of the tax code, revenues wouldwhic rise above the historical average share of gdp in just a few years and would keep rising reaching more than two t percentage points abovehe that historical average by 2038. at the same time, outlays for defense and nondefense discretionary programs would be smaller relative to the size of the economy in 2017 and beyond than at any point in at least 50 years. indeed, discretionary funding for the next decade under the current caps would be about $1.s trillion less what would be needed to provide the benefits and services that were provided in 2013. to be sure, depending on one'spv goals and priorities there would

not be anything wrong with east of those development cans. my point is either of thosethin policies is not main taped -- either the increase in tax receipts or the sharp drop in discretionary spending -- if those are not maintained and other changes not made, then deficits will be greater, maybe a lot greater, than we're projecting under current law. to sum up, we face both short-term and long-term economic challenges, and thosehn challenges are related to fiscal policy in different ways. the long-term challenge can bege addressed in part by reducing ae future deficits.eren whereas the short-term challenge has been exacerbated by the recent sharp reduction in red deficits. policy changes that led to less fiscal tightening in the near term but greater tightening in later years would improve the economic outlook for both time horizons relative to our currenu projections. to help you and other members oe congress make informed decisions about possible policy changes, we have just completed our

biannual volume of specificrmed options for reducing the deficit. we'll be posting the report on our web site at noon today. i want to close on a photoof b optimism.on on a note of on the to mitt romney. i worry that finish optimism.otn i worry that it discourages people from tackling these problems. that would be you are the. ofbl course -- unfortunately. but even if if that is notfort feasible right now, reallocatinr elements of the budget toconc comport better with the bu country's priorities as you vie them while reducing uncertainty about fiscal policy next year and improving or at least not worsening the long run budget outlook would be a good thing for theg economy and for our fellow citizens. even if it left significant challenges to be addressed in next year's budget process. a thank you.for >> thank you, doctor.

instead of making this more of a formal hearing type procedure, i think we'll make it a little more of an informal discussion. i'll just ask members to put your placard right side up if you want to get in the queue to speak. we'll limit members' comments or questions for the director to two minutes not including his ee time, and members can speak more than once, of course.omm so i see mr. portman, i'll go with mr. portman and thenurs mr. whitehouse in the queue after him.r. >> thank you, mr. chairman. and, director elmendorf, thank you for your insights this morning. and as you said at the end, you have kind of depressing information for us which is that , and they't look good could be even worse unless we continue to see these relatively high rates of revenue, as you't said, over the coming decades and continue to see these

relatively low rates of domesti discretionary spending.ue i have two questions for you quickly, one is with regard toa tax revenues, one is with regard to interest rates.onar you did not mention interest rates, and it seems to me if we go back to an historical level m on interest rates, we also have a huge rob. specifically, i think a point is about $120 billion a year increase in o deficit. so if you could give us an answer on that, what do you120 consider to be the historic rate, if we went back to that historic rate of interest, and what would bhee the impact on te deficit. and secondly with regard to taxes, you mentioned that we are -- reading from what you said tax revenues are going to be above historic levels bye 2038, two points above the historic level. what will be over the next decade the average tax as a percent of g,dp? i think that figure is 18.9% if i hook at your material you gave

us, and how does that compare to other decades? my sense is that other than between 993 and '02, we've never had a ten-year period with revenue at that level. if that's accurate, i'd like to hear it.'ve if it's not, i'd like to hear it. and then second, what will be'd like in the next decade or if you can give us two decades. so two questions one on interesc rates, what the effect on the deficit is and, second, what aru we ien terms of taxes as a percent of the economy, and how does can it compare to past decades? >> senator, we expect interests rates will remain fairly low for another few years because the economy will be although recovering, we'll still have significant unused resources and low inflation, and we think that'll keep theug federal resee on a fairly easy posture for monetary oil and will keep private credit demands low. so we think rates will stay lowa but thenry we think they wille r return toward more normal levels. we project that short-term

interest rates, rates on three month treasury bills will risele to 4% by 2018 or so, and we think that ten-year treasuryeasu note rates will be a little over 5%, 5.25% at that point.we t and that normalization ofea interest rates have a profound effect on the interest burden. so nominal interest payments be by the federal government last year, net interest, was a coupl, hundred billion dollars, and we project in 2023 it'll be aboutyr $800 billion.e from a little over -- [inaudible conversations] >> in 2023 alone as a share of gdp interest payments will rise from less than 1.5% of gdp to more than 3% of gdp over those years.ents >> and there can be different projections as to whether that's a conservative estimate or not, but you're talking about almost a trillion dollars. >> it's a lot of money, senator. on the question about tax revenue, as you know, the the bureau of economic analysis

revised historic data thisnow, summer, and we've incorporated that into our projections as a share of gdp, so the number i have in front of me is that tax revenue will average 18.3% of gdp over the coming decade. that's just taking the larger level of g, the p that the -- gdp that the ba has built into t history and projecting it,le taking the same projection of dollar revenues that we had ford may. so we get 18.3% now, thatpr compared with an average we historically, as i said, of 17.4%. and if we look further out by 2038 under current law, we think that fraction will be up to 19.7 president. >> and have we ever had giventh the apples to apples comparison, have we ever had 18.3% for any decade in our history? >> no, i don't think so, senator. >> so we are historically high rates of taxation as a percent of the economy for the next decade and then as you say continue to increase after thatn >> yes. taxes are moving well above whao

they've been historically under current law. >> yeah. i think you'll find from '93 to '02 we had similar rates, perhaps close, but that was in part due to a bubble as we all know now, and it also did not continue at this sustained rate, and this projection is to continue at the highest sustained rates in our history. thank you. >> thanks, rob. many whitehouse.d >> thank you, chairman. mr. elmendorf, welcome. >> senator. >> i think we come into this discussion with spending cuts that we've already accomplished of $1.5 trillion adding to $1.75 trillion counted associated interest savings with tax rate increases increasing revenues bn $600 billion, count that $700ith billion with associated interest savings roughly and with tax deductions, loophole closing, etc., of zero dollars, nothing yet. and i'd like to put up a slide,

if i could, that shows the ratio between -- it's over here -- show it is ratio between what we collect our tax system ask what goes out the back door through deductions and loopholes. and you'll see that in the green and blue for every dollar that we actually collect through the tax code, 90 cents goes out the back door for individual taxes. and for every dollar that weoe actually collect through the corporate tax code, 60 some i cents goes out the back door through deductions and we loopholes. now, mr. elmendorf, you said, cbo said in a report last year on choices for deficit reductiod that expanding tax bases -- which i think is cb be o language for reducing that money going out the back door of the tax cold, you're nodding yes -- quote: would reduce the deficitn and generally have a smaller negative effect or even adefi

positive effect on how efficiently the economy operates. now, small or negative effect was in reference to reducing the deficit by raising tax rates.iv but you did mention not only a shawler negative effect, bute also the chance of even ag positive effect on the economy from reducing the tax spending and the loopholes. could you explain that? >> yes, senator. the different treatment ofyou different sorts of consumption and different sorts of investment in the tax code because of a whole slew of provisions that congress has enacted over time distorts the decisions that households and businesses make. and it in some cases, those distortions may be an effort to correct some other distortion that exists in the world. maybe we think people don't doef enough of something to achieve some social gain, but some of them distort behavior that would otherwise be efficient and

becomes inefficient because of the greater tax subsidy or lower tax rate on certain sorts of activities. so to the extent that tax reform effort were to reduce some of the differences in the tax treatment of different house old -- household or business decisions, it could leades i households or businesses to make more efficient decisions, and that would improve of, potentially, gdp and people's well being. it depends, of course, on theeni nature of theal changes that are made. not anything that is labeled tax reform be would have those effects, but certainly tax reform could have those effects. >> and just to be clear, the gains from tax loophole closing would go disproportionately to the highest income sectors of the economy --osin >> not trying to cut you off, but i just want to make sure that the two minutes -- >> i was following senatory, portman's example. >> yeah, i know.of >> we'd with treated alike. >> i will just say quickly we've done an analysis of the distribution of tax expenditure

expenditures, certain ones are received by higher income people, others are received disproportion that itly by lower income people. but i encourage you to look at that report, and we're happy tor send the copy for you all to look at. >> thank you.pe let's go with senator sessions, then mr. clyburn. >> thank you, mr. chairman. with regard to tax loopholes, we do need to close those. we have got a far too complex system that's causing abuses too occur. the finance committee in the senate i know is working very hard. they're trying to reform our system, and senator baucus and n senator hatch have solicited ideas, and i hope we can make progress on that. an and i would support it, for sure. looking at your chart, mr. elmendorf, on table 6.2, it's so -- i think it helps explain why it's important that

we constrain at least the growth this spending. we're not talking about long-term spending reductions, we're talking about containingai orn constraining the growth in spending. and you indicate on that chartst thatra if we were to maintain or actually reduce spending over the next ten years by $4 trillion, that that we would achieve greater growth than$4 would otherwise be the case. indeed, your chart shows that by 2038 we'd have 7% more growth.ie but if we were to maintain our present course and not achieveot $4 trillion in spending m reductions, we would end up with a minus 7%. that's a very dramatic difference. wou i'll just share this with you,

office of management and budget, the federal reserve have missed the growth projections in thebu future. you might be close this year, but in the past you've missed ii quite significantly.yo and, colleagues, i just saw barron's magazine had a coverd story on slow growth. they project for the next 20 years growth would be 1.8% based on a number of research numbers. mark zandi, who's testified several times, projects 1.8% for the next five years. a so, mr. elmendorf, this prescription suggestses we coule have better growth -- suggests we could have better growth the we get serious about constraining our spending. is that accurate?on >> senator, as you know, you're referring to, i think, figuret 6.2 which looks at the longer a term effects of different paths for federal debt. we do not distinguish here o between the effects of reducing spending or raising revenues. this is simply an analysis of

the effects of having narrower deficits, and you're absolutelys right, narrower deficits will be good for the economy in the longer term. as i said earlier today and on many occasions, the deficit reduction that's occurred over the past few years has actually been a headwind on economic growth because the near term economic problem is primarily a shortfall in the demand for goods and services. that's rather different from a medium and longer term economic challenge which is to boost the supply of the of factors or production of labor and capital and technological progress. >> mr. clyburn. >> thank you very much, mr. chairman. mr. chairman, on yesterday the wall street journal ran a front page story dealing with the str widening job gap in our economy. and you may recall, mr. elmendorf, that during the so-called supercommittee you and i had a little exchange about

the impact of unemployment rates on our deficit. and there was a stark correlation between the two. now, this report that we just saw on yesterday, if we looked at the 30 years, 30-year that you reported to us or that was released while we were having those discussions, the so-called supercommittee, it means that things have gotten even worse since then when it comes to unemployment rates and the imact that is having on our -- impact that is having on our deficit. and i really would be interested this how you view this study as well as there wasef a study, i

think i uc berkeley, indicating that all of this, the increase in wages, that 90% of those increases went to the upper 1%,n and most of that to upper .1.nt now, i'm really, really interested in that, but i'm also interested in whether or not you will define spending as many others are beginning to defineee spending. a lot of people say, and i would not disagree, that we ought to look at just cutting spending. but the question is whether orag notre entitlement programs, if u call that spending, would you call tax expenditures tax entitlements? because rai have noticed that a lot of economists are now looking at what we call tax expenditures as tax entitlements

because this occurs time and time again and gets back to whad senator whitehouse has said. i would be interested in your views on tax entitlements versus tax expenditures. >> so, congressman, to start i'm not, i'm afraid, familiar with all the studies you mentioned, but it is certainly true that there's a great diversity of f economic experience in thisies country, that all of the charts that i tend the show about the average unemployment rate or overall income growth are all missing. the diversity lie ares underneath that. so, for example, if one looks at unemployment rates, although the overall unemployment rate in october was 7.3%, the unemployment rate for people between 20 and 24 years of age was 12.5%.ploy much, much higher. the unemployment rate for people with less than a high school diploma was almost 11%. the unemployment rate for

african-americans was a little over 13. so there's a tremendous -- and, ofle course, there are categorie groups of people for whom the unemployment rate was less thanr the national average. so a tremendous diversity of experience in how this recession has hurt seem and the extent to which people's to have chungs have d improved or not during t recovery.exte there are also, as you mentioned, long-term trends which are larger over time a growing share of the total national income is going to people at the higher end of the income distribution, and more particularly, people at many other points of income distribution have experiencedcoe rather small gains in income over a period of many years. and we do ongoing analysis of that, and we are working right nowd to update our analysis tha, the last onewe we released was last year, there will be one shortly that will update the distribution of tax burden and distribution of income in theook country. the testimony tax expenditures i

is an old term, it is in theon budget act that established cbo almost 40 years ago, but i think there are a large number of analysts on both sides of the political spectrum with a wideti range of views about appropriate policy who think from an analytic perspective tax expenditures are best viewed ass a form of government spending because they are direct actionsn by the federal government to give benefits to particular activities or groups of people much like federal spending programs. >> thank you. let's go with senator crapo and senator baldwin then. >> thank you, mr. chairman. dr. elmendorf, i kind of want to ask a two-part question like senator portman did. first of all, in 2009 when we had the $800 billion stimulus package beforeue the congress, w believe you were cbo director or. you were just starting then. >> yes. >> and cbo issued a report that

is a common type of report thatn we see from economists whossue testify before us which said that the stimulus package which was entire libor rowed money -- entirely borrowed money would in the short term have a stimulative effect and in the long term, which if i recall quickly was starting in two or three years, it would start to have a depressing effect on the economy because of the impact of the borrowing. is that your recollection of that report? >> so our analysis, senator, ant we actually still update thisio pursuant to federal law on a regular basis is that the recovery act provided thed we biggest boost to the level of output in employment fairly soon after its enactment and hasthe provided a waning boost since then. we think that the extra debt will start to be a actual drag on the level of output later ini this decade. not yet. so i think your qualitative point is right, but i wouldn't

say a few years -- >> so my question is this, anded the second aspect of it is as wn look at the fact that we are getting closer and closer to thi drag of thats stimulus spendinge and the debt it is a growing, i think you've indicated we're onc an unsustainable path. and as we look at the question of the tax expenditures that senator whitehouse pointed out that we need to look at, be many of us have been fighting not to raise revenue because of the utilization of the tax increases, but to reform the tax code by flattening the base and reducing the rates. i believe that you haveea testified in the pastse that tht would have a very positive stimulative effect on thehe economy if we approached the reform of the tax code this tha fashion. would that be true? >> i think it would have a the stimulative effect.the the size depends on the nature of the tax reform itself, but i think it could be a verysi positive factor, senator, i just want to be careful about attaching particular adjectives

to just a general notion of taxa reforms. as you understand, lots of things could be labeled that, and it really does depend to the extent which you and your colleagues are willing to do thd base-broadening measures, removd theep tax expenditures in ordero bring down the tax rates. >> thank you. >> thank you. >> senator baldwin.r >> thank you, mr. chairman. wanted to talk a little l bit more about the chart you have ok the second page, short term versus long term unemployment rates. .. page, short term versus long-term unemployment rates. the federal reserve recently released a paper that stated that long-term unemployment or long-term unemployed people become less and less attached to the workforce, obviously, lose skills that they once had, and

as their productive capacity diminishes, it also diminishes the growth capacity for our overall economy. the paper concluded that what la has the potential to become structural. has the potential t become structural. and i guess i just want to hear you dig down a little bit deeper on this topic, because when i look at that chart, this is an alarming figure. in terms -- if it were the top priority of this conference committee to dig into that problem, what are our key fiscal policy options to prevent this from, you know, moving from a cyclical problem into a structural problem? >> so, senator, we do think that the weakness in economy over the past five years has reduced the

productive capacity for the rest of the coming decade. what we've said so far is that we've reduced our projected level of potential output for the end of the decade by 1.5% because of the downturn, and that's partly through workers leaving the labor force or losing skills. that's partly reduced capital investment, partly through lower productivity, but we are carefully reevaluating those estimates. now beginning our process of doing next year's economic and budget projections, and we may conclude these effects are larger than we had expected, and i think you're absolutely right that the persistently high level of long-term unemployment is a very worrisome factor for the economy. we wrote a report a year or two ago now about policies that could be used to bring down unemployment. i think some of those are on the macro economic side. basically, it amounts to stimulating the demand for

firm's products so firms need to higher workers in order to meet that demand, could be done partly through monetary policy but also fiscal policy, and the primary way to stimulate activity in the short run is lower taxes or raise spending now. however, to be clear, there's a consequence of doing that without taking other steps to pay off that debt later, and that's the point that senator crapo was making about what happens over the medium term and long term. there's also some economists would call microeconomics to improve the skills of workers by strengthening their training or by improving their ability to find jobs for which they have the right training, and our report detailed a number of things that can be done. i don't think any of them can be seen as silver bullets, they are mostly ideas worked on large scale.

>> just as a closing comment on this, you know, i was talking about unemployment, short term versus long, but if you look at the jobs reports, you know, we have greatly diminished manufacturing and construction sector, and what added employment we have seen has been increasingly in lower-wage sectors like leisure and hospitality and retail, which also relates to the productive capacity of our nation. >> yes, that's right. it is importantly a matter of people finding jobs but also a matter of finding jobs that use their talents in ways that contribute to the economy and also allow them to receive higher pay. >> thank you. >> let's go with dr. price and senator sanders. >> thank you, mr. chairman. i want to commend you and senator murray for continuing to provide opportunity for exchange of ideas and gaining information. dr. elmendorf, welcome back once

again. i was struck by your three conclusions, one, debt larger than after world war ii, two, debt will continue to rise and we are on your words an unsustainable path, and, three, that current law, if followed, will result in a decrease of congress' ability, the people's representatives ability, to provide prioritization and spending on defense and nondefense areas to a smaller level than any time in the last 50 years in 2017 and beyond. real fundamental change in the work that congress does. now i'm hopeful that we can reach a large agreement. i think we can reach an agreement. i'm not sure how large it can be, i'm hopeful that it is large, but i think we need to walk before we can run, likely. so my question is a specific question about sequester. the discretionary side of spending will decrease january 15th down to 965, 967 or so. many believe that's not

appropriate and we ought to mitigate that. i've been intrigued by some that have come to me and say a possible way to mitigating that is to accelerate the contributions that states make to the expansion of the medicaid program that was contained in the aca. as you know, for the first three years, that's 100% federal subsidy. would that -- is that one option that might be able to allow us to mitigate the problem, the challenge, of sequester and also potentially decrease federal spe spending? >> well, congressman, that is one way to reduce federal spe spending, is to have states bury larger portion of the medicaid costs, and if you were to do that and simultaneously raise the caps on discretionary spending, then, i think, you could accomplish the aim you are suggesting, yes. as you know, the point of the big book, there are an awful lot of ways to cut spending or raise

revenue in ways you can reduce the debt relative to our projections or offset projections that you don't think are a good idea for the country. >> thank you. thank you, mr. chairman. >> mr. sanders. >> thank you, mr. chairman. thank you, mr. -- dr. elmendorf, for being here. dr. elmendorf, i thought your president was very, very strong and interesting, except you, i think, kind of left out some very important facts of contemporary america, and i'm going to tell you what i think and you tell me if you agree or if i'm wrong. one of the difficult jobs that this committee has is not only trying to come up with a budget, which is hard, but also within the budget, deal with priorities. when you spend money, cut money, it impacts real human beings. now, my impression is, that in america today, we have the most unequal distribution of wealth and income since the 1920s, late 1920s, that, in fact, in terms

of financial wealth, the top 1% owns about 38% of the wealth of america while the bottom 60% owns all of 2.3%, and my understanding also is, top 1% today in terms of income earns more income than the bottom 50% and between 2009 and 2012, 95% of all new income went to the top 1%. does that sound roughly right? >> senator, it sounds roughly right. we have not done analysis ourselves through 2012 nor back to the 1920s, but you are certainly right that the distribution of income and wealth in this country is much more uneven now than it has been in decades. >> and i say that, because as we go forward in terms of our priority and some folks want to cut social security, medicare, medicaid, programs for low-income people, we also have to recognize, correct me if i'm wrong here, there are more people living in poverty than

any time in american history, 46.5 million people. is that right? >> as you know, senator, the poverty rate is a complicated business. the standard series excludes many benefits the government provides to low-income people. i'm just not familiar -- >> okay, let me ask this also. i think this is an important point. again, it's important to understand the past as we go forward. your chart that you gave us tells us that up until 2001, i think '98, '99, 2000, 2001, we actually had a surplus. we had a surplus. now, is it fair to say that the reason we began to go into deficit was because we went to war in iraq, which by the time we take care of the last veteran is going to cost us about $3 trillion. how do we pay for that war? >> so, senator, as you know, congress cut taxes and then spent significant -- >> you mean in the middle of the war you're not suggesting in the middle of a war which cost $3

trillion, congress actually cut taxes for the rich, you're not suggesting that, are you? >> senator, congress cut taxes for a lot of people, and the congress spent a lot of money fighting overseas. >> point being, the reason we're in a deficit today is because two unpaid wars, medicare part d program unpaid for, large tax breaks, trillion dollars of which went to the wealthy, and i only say that, as we go forward to figure out where we want to be as priorities, you got to remember that fact, as well. thank you, mr. chairman. >> so, let's go with senator johnson -- >> mr. chairman, may i just -- >> go ahead. >> my only response would be to note we released a study earlier this week of the distribution of federal spending and taxes. this is from 2006, which were the latest full set of data that we could collect, but it goes through in great detail the ways in which different federal programs, cash transfers and other sorts of transfers and also federal revenues, how they effect people, households, different categories and income

levels, and those you are particularly concerned about, the distributional impact you're considering, we hope this information would be helpful for you. >> it is a helpful body of work, i encourage members to read it. let's go with senator johnson and congresswoman lowey. >> looking at the last chart looking at the dramatic -- i want to ask a multipart question on the affordable care act. certainly, when i learned the details of the act, in no way, shape, or form did i think every american would be able to hold on to the health care plan. i knew millions of americans would lose their health care plan, which is why in our budget process here in the senate, we passed an amendment on a bipartisan basis asking the cbo to score what would happen when 30%, 40% of employees would get put in the exchanges and how much that costs in terms of subsidies, so three-part question.

first of all, did you believe the question when he repeatedly said if you like your health care plan, you can keep it. two, has the cbo done any work to actually give congress that estimate of how much obama care is really going to cost, and, three, your current cbo estimate says over the next ten years obama care will cost $2.4 trillion. i think the estimate about $1 trillion of tax revenue associated with the plan. where does the other $1.4 trillion come from? >> so, senator, your first question, as >> as you know, our initial analysis showed in our judgment some people would lose -- would not have employer sponsored insurance, who have had in the absence of the act and we discussed at some length with congress at the time our view that people who were buying insurance in the nongroup market, not through their employer but on their own, would face on average increase in the

premiums they pay for health insurance because the policies they would be having to buy under the affordable care act would cover a larger share of health care services. so that their co-payments would be down but their premiums would be up. we made that information available to the congress in 2009. and your second question, as you know, we have done very lengthy analysis of how the cost of the coverage expansion under the affordable care act would vary depending on different sorts of responses by employers and employees and the incentives of the act. and we did a very long analysis of what would happen in term of sources of insurance coverage and cost to the federal government if employees and employers behave in rather different ways than we had expected. we think that is plausible.

as i said, senator, we viewed as a wide range of plausible possible outcomes. on the third issue, the affordable care act has a cost over the current ten-year period from the coverage provisions that we estimate to be about 1.3 or $1.4 trillion. and the -- that money is offset in our estimate by a combination of cuts in other sorts of spending, primarily in medicare spending relative to prior law and increases in tax revenue of $1 trillion. >> what am i looking at when i'm getting $2.4 trillion over the next ten years? >> i'm afraid i don't know,

senator. i have the table in front of me contained in the aca. the bottom line over the coming decade is $1.4 trillion. >> mr. chairman, i ask the record of our proceeding include the letters submitted by the appropriation subcommittee chair along with a statement by each kolg for sequestration to be replaced. >> without objection. >> as we're all keenly aware, january 15th is the deadline for passing legislation to keep the government running. the shut down caused our country 120,000 jobs, billions of economic activity. this conference committee must be successful in reaching agreement on a funding level for fiscal year