>> the afl-cio president richard trumka sits down tomorrow to discuss the economy and the state of u.s. labor unions. to get started at 8:00 a.m. eastern. and on c-span3, a forum on mexico's decision to private investment for the first time in 75 years, ending the state monopoly. that is live from the atlantic council at 8:30 p.m. eastern. >> like so many of the viewers, you know, i would do the annual consideration of the things they care about because they were important to us as we grew up and at martha's table, they

delivered hot meals to the little park outside of the gates foundation and the dc offices and i would see that then. every night. and i would see the lines of people there every night. and i knew that it was 10,000 volunteers, 80 hard-working staff. and that they had enormous influence in the community that they were serving that was a great brand, and i thought, why would i not join that organization and see if i can put my skills to work and also see if i can understand better. and why do we have this issue that is persistent with child poverty. and so many children that are graduating high school and going on to college and being able to attach to careers the way that i was able to?

>> this is part of c-span2 and q&a. >> president obama's top economic adviser says on ex-immigration should be the next economic priorities for congress, the third way think tank hosted this with bill schneider moderating. >> welcome. we are happy to have jason with us so let's start with it and then we will turn it over to you. do you think that the budget deal that has been passed by the senate can be passed today? that represents anything bigger than republicans to talk about another shutdown? >> i cannot tell you what it represents for the republicans. but what it does for the economy, it is more certainty and more ability to fund things like infrastructure and

education and research and less of a fiscal drag. and i can tell you that when people were dark about the possibility of this agreement, i was always optimistic because i thought is something we would like, more deficit reduction and to do a little bit more now, and someone care about infrastructure. but the basic trade was a clear win-win. and we will win out over all the inertia in washington. >> go ahead. >> ronald reagan, bill clinton, barack obama, they all got elected because of dismal economies.

and so where's where is the obama second term boom? that is the question. >> you know, if they put the economy in context, we went through incredibly deep financial context we will not have consumer borrowing leading out of the way. and if you look at these countries that went through these 2007 in 2008, only two of them have re-attained the gdp per worker that they had before the crisis in the united states and germany. so if you look in a global context, we are way ahead of the pack and we need to be doing a lot better. but if you look at the last two quarters, it has grown an annual rate of 3% and you're seeing some of that going into next year and he will have less of a

fiscal headwind and that will further aid the growth for next year. but it's tough since the great depression to get yourself out of this and it takes time and we are continuing to dig ourselves out. >> immigration reform is part of the second term agenda. and what is the economic argument for immigration reform? >> economist recoil at this and we just love to borrow people with trade-offs and downsides and negatives. and it's as close to a win situation in public policy as we have. the budget office says that it will add $1.4 trillion to the economy and that's not just the extra workers than it brings in, but what it is is expanding what economists thought were factors of productivity and innovation

and ideas and bringing in talented entrepreneurs that will create jobs and who will invent things and it brings down the budget deficit by over $100 billion. over the next decade and it is part of this as a country. >> is a cost because they use services, public health, public education. and how do you counter that argument? >> i counter with the facts. there's no better referee in the congressional budget office. and they said it would cut the deficit to $160 billion over the next decade. and a lot of these people here are not necessarily paying taxes, strengthening the economy, all of this stuff, all that is good for the budget deficit. >> recently the president has been addressing the inequality

issue and what specific policies flow from that concern? tax reform? anything else? >> if you look at the speech, the first thing they said was economic growth and we need to go this and it's a much better position to address with these problems if we have a larger economy. but it's not a guarantee that the benefits flow to the typical family and that's something where the minimum wage comes in and to a degree we have in this includes some households. >> what you pay attention to the

most every month for a data point, and how the country is doing? >> the one i pay attention to is the median household income and we only have that every year. but i will answer your monthly question. and that is the timely measure of the economy and there's a good reason that others pay attention to it as well. >> right now the affordable care act looks like a political obstacle for democrats and will there be an economic upside and will we see a? >> we are seeing it with the underappreciated things in the economy. real per capita health costs are at the last 50 years and a decade ago, there was a lot of lamenting and competitiveness of businesses with rapidly rising

premiums and that is helping our business is in this includes strong job growth. and i includes the health benefits. and part of it is the economy and i think that that is an important factor. it started about six or seven years ago and the health system. and partly the affordable care act. and it builds they built on those trends and did some important things. for example, cutting down the hospital readmissions. >> what would this mean to the american economy? >> what this would mean is that our businesses would have a greater scale and now it is a quarter of the world economy and

they live outside of our borders. and it's a very open country. and these are adventitious to everyone, especially to the united states in the trade agreements that are in part of this in europe, some of the most promising things in terms of expanding the that are businesses can operate with and high-paying jobs as well. >> okay, so what is the biggest source of frustration? >> is that the business community? >> and you know, there are so many things to me it seems so obvious. one is that we should be doing less to/spending up front and more to cut our deficit over the medium term and long term and

the right thing is part of this and this includes a reasonably similar vision in the upper 20s to pay for that and this includes a more competitive tax code. and i think that integration is another situation in some of these things seem like they should have a lot of agreement in congress. >> okay. >> we have a lot of information with its instructional research. and what do you expect to get in those areas? >> we are not getting the

president's major infrastructure with that. we are not getting this proposal is part of that. but we are going to not have the same cut so we might have might've had to be improvement program for two head start. and so they are now writing appropriations bills. >> so you are avoiding cuts. and does this give you more ability? >> yes, by buying back 60% of the domestic sequester. we are going to be able to spend and invest more %we are going td and invest more in areas like head start and the airport improvement program and all the things that are in that. >> it's a big investment in that area. >> he proposed a grand bargain on jobs, infrastructure, dealing

with a together. this is not a grand bargain. this is not the major investments that we wanted to make. that will mean more in all the areas that are keyed up. >> michael? >> yes, asking about inequality in the tax code. and i'm sure that you know and i have not read it in french, but i do have to say that he says that we can't really address the inequality without the tax code to do so. and he talks about this in the area, something near 70%. so not every dollar earned, but i don't expect you to enforce that. but how do you tackle this without using the tax code to do so? >> well, let me give you an

example. in the president pushed for higher rates and high income households. and this is deciding to apply for this, they have a tax benefit for that that might be two or three times as large as what a middle-class family would get. and we have a proposal that limits this, instead of the 39.6 now. and that is why you can think that progressive taxation is, you know, it is part of the solution. and we have done us and what we are looking at now is reforming

the tax code. it also makes it more efficient when you have those types of subsidies. and it's actually an efficient way and some have called it spending through the tax code there is an important conversation as far as how we reform our were former tax code and how we deal with this challenge. and taxes are part of the conversation. and we can do this through cutting tax expenditures. >> perceptions of the economy continue and i'm wondering if there is a way for the administration to make that case to convince americans that the

economy is improving, and is the state of the union an opportunity to do that? >> yes, we did see consumer confidence rising pretty strongly of through september. and we saw the government shutdown, and that was a big blow to consumer confidence. if i were watching what was going on, i would have been a lot less confident as well. and so you did see it. you saw it and some people are more willing to believe the strength of the economy. but i don't think this will depend on president obama, but the monthly jobs number and it will just depend on when families are seeing it. in wages, you look at wages and it has been increasing recently and inflation has been following. as we have seen that strengthen and that is after a time when

they have been stagnant. it has come down by six tens in the last 10 months. and so i certainly believe that all of that is real and that it is translated into public perception we will continue to do so. >> as you said, the economy has seen more to do with this. and many people are still looking for jobs. >> it is true. >> when you are in politics, and economics, you have to understand that things are obligated and i don't think it's that hard to understand. we went through a very deep scarring thing. and as we get further away, it's harder to remember.

and the typical time it takes you to get your economy back to the same level that it was at, before the crisis, it is a decade and four and a quarter years. and usually it's a decade. but it has a serious effect. and we are still digging out of it. >> you can say that it is morning in america. >> yes. >> there was an astonishing transformation and it's now back up what it was. we have massive deleveraging, and this includes private sector jobs or the profits that are at corporate level cash holdings, financial failure is way down.

and yet the administration owns that record. but it doesn't seem to be a part of this. but the question is there have been positive things that have happened with the auto industry and good things at a record level and a lot of positive things that are real and not false. so the question is why is it a failure of this construction on the part of the president or the fact that the lack of wage growth and income kind of trumps all of that. >> you certainly hear us talking about it. there is no shortage of these private-sector job growth. in the united states starts

unwinding and we are fully out of that and everything president obama invested at the previous investment as well. and senator jack reed has a proposal to do a clean three-month extension of it, which would prevent the 1.3 million people from being cut off. the president strongly supports that unemployment insurance as one of the highest priorities and most immediate things that we can do to help the economy out. and the reason we support that is we have created really strong job growth and we have broke the unemployment rate down a lot.

and this includes insurance benefits to lapse. and that is just one example and it is one of the things that we need to do to build on that record and strengthen it. >> so the federal reserve going forward, impacting the economy. and secondly, how do you see the role of president obama would regard to executive orders so what is most frustrating with my current job is that one of the most interesting topics is always the federal reserve and

one of the topics of the federal reserve, we have always thought that this would be in better shape without executive branch officials. and obviously in broad terms and i think that she will be doing this from me or anyone else or any of my colleagues. and do things like the deals

that the president would like to do it b-schools, infrastructure, and there is -- we are going to be doing everything that we possibly can. and one thing is this long-term unemployment issue that i mentioned before and we need legislation and there's a lot to do administratively on that. and this is part of the regulatory agenda as well.

>> so inequality. the president was talking about the defining challenge of our time and how does that link to job creation? so this is unemployment and long-term unemployment. >> i think that unemployment is part of this and if we get it down from 7% where it is now to where was in the 1990s, you would see personal people's earnings go from zero who are unemployed up to 30 or 40 or 50 or 60 for a job. and so moving this, getting the unemployment down, part of what

the president is saying is that we have had several decades and we would still need to worry about that in the deep deeper forces and most of them find that it's very close to zero. and that is because the benefits of reduced turnover increase motivation, better productivity and it offsets the extra cost associated. >> let me follow that again. can you really promote inequality without redistribution? >> what is most troubling is how highly correlated it is with the lack of mobility.

and so if you could have a really unequal society and people were likely to move out and have a prominent situation on it, you'd worry a lot less about inequality. but it's an empirical fact when you look across the country is, the countries that are more unequal are also those that are less mobile and ultimately, i think everyone in our society subscribes to the quality of opportunity. you can't be serious if you don't have a high-quality preschool if you don't have a middle class family having a same shot at saving for their retirement and there are a lot of elements of a quality that show up in the income distribution as well. and it's expanding and making sure that everyone has enough.

>> for what you are saying, it sounds like the inequality framework, it is a broad framework for presenting the agenda and understanding what the agenda actually is. and i'm wondering if that is new inequality things that we haven't heard about that you can tell us about and that was a good description of it last week. and that was not a speech where he was -- they have all been motivated by this, and it's also the freedom that we are using as

we think about policy proposals going forward and you always see new policy proposals. >> with the labor market, the participation rate has declined fairly sharply. and there is a debate among economists as to how much is structural with things that would happen anyway and how much it is perhaps temporary, people just discourage about getting work. and is there an estimate as to how much you would allocate to each cause? and do you have an expectation assuming the economy strengthens that there will be a flow back into the labor market and they stopped looking for jobs? >> okay, we spent a lot of time looking at that. and people should understand the

participation rate falling at this point in our countries history. or something that was very much predictable or predicted. the economic report of the president put president put down by the council of economic advisers in 2004 in this includes a decline after 2008. the cbo was projecting this after 2008. and that's because the first baby boomers turn 62 years old and became eligible for social security benefits and the labor force participation rate goes down. so we always expect this. the question is the magnitude. and we have seen since the end of 2007 the participation rate falling by 2.7 percentage points and we think that it explains

about half of them. .. as the economy continues to heal, demography is still going to be bringing out the

participaparticipa tion rate down. that cyclical component will go in the other direction and will start raising the participation rate and i think it's reasonable to think that this will roughly offset each other. i would not roughly expect the participation rate is going to rise over the next couple of years and it back over the next decade and it's likely the participation rate will fall but the demography is going to be with us for a long time. spews the participation rate reported as a percentage of all americans are working age americans? >> its american 16 and older. if you are 100 not working that counts as a nonparticipant. >> well yeah and people are living a much longer time which may be built into it. i always thought of the first -- participation rate as the americans working. speak at the prime age so 25 to 54. that has also come down for the

cyclical reasons we were talking about but it hasn't come down nearly as much as if you look at 16 through 120 or whatever age it is americans can work until. >> the things the president can actually do to get at inequality to get through congress. where does making sure the affordable care act survives and thrives fit into that? is that the most reasonable thing that he can get done to get to inequality with the last three years he has got? he has a lot of special things happening in this town were nothing special has happened for a while so the affordable care act and making sure it works the greatest thing he can do on the inequality front that he has actual control over? >> like a lot of people that know a lot of bout politics at this table that can predict the future better than i can but the affordable care act as an really important part of that and that

is why we have been working so hard to get the web site working to make sure it's implemented effectively. i think -- i don't think he's just going to sit there for the next three years just trying to take the web site veteran better and better. raising the minimum wage. the last time we raised the minimum wage and with signs of two law was president bush in the time before that it was best a speaker gingrich and signed into law by the resin and clinton. there's no reason why we shouldn't be able to do something like that. infrastructure and the highway reauthorization expires at the end of september. we are going to need highway legislation by the end of september. we could extend for a month and extend for another month and extend for another month or we could do what the chairman of the transportation committee and the house wants to do. the chairman and the people with

transportation the president what to do which is something bigger and something longer-lasting, something that gives us more of an investment going forward. preschool, we talked to business leaders all the time and economists who think that's an important ingredient to our growth. there are a whole lot of things we have been able to do in the past that they are forcing events around doing now or a bipartisan support we should be able to get done all of which matter for inequalitinequalit y and the economy more broadly. >> i want to ask a question related to the kerfuffle and the way it found itself. even with the implementation of dodd-frank and the publication of the volcker rule there seems to be this unresolved anger directed towards banks and financial systems on congress. and maybe more the democratic party.

is that fair to you think that anger is still there and that the community seems to be feeling the community at price per pound of flesh still needs to be gotten from the banks for what happened in 2007 in 2008 and how are the bank stating today affecting the pace of the economic recovery, bank lending? is it a drag on the recovery at all? >> so, banks play a really important role in our financial system. they help allocate capital. they help revive liquidity when they function as they should. they also help better allocate risk but when you have poor regulations and when you have poor decisions banks can do the opposite of all of that. they can miss allocate capital and put it in the wrong places that hurts our economy.

they can freeze up with the ability to have liquidity and rather than diversifying if they can concentrate it and expand that risk and hurt the economy. and you know a lot of that depends on the regulatory incentives that those half if you tell a large financial institution that heads they win and tails the taxpayer loses, that means a perfectly rational and agile institution is going to end up making decisions that are contrary to the public interest and contrary to the economic interests. we have had a lot of that else into our system leading into the the financial crisis in 2007 and 2008. a lot of this is about changing the incentives that you have. even with the right incentives, banks are like anyone. they are going to make mistakes.

a lot of businesses to make mistakes might go out of business. it's a very localized thing. we can prevent that. that's going to happen and things are going to succeed and we will thrive in move up and down. banks tend to create a lot more damage to the economy as a whole when they run into problems and that is why it's very appropriate to have a set of rules on banks above and beyond the set of rules we have on our corner dry cleaner. none of those rules are saying, no one is nationalizing banks are saying we shouldn't have banks. we are saying they need rules of the road and they created a lot of a lot of damage direct economy and we want to make sure that doesn't happen again. i think this is very forward looking and motivated by the economy. >> in terms of the behavior now how are they right now? >> i think this is the saying

that larry summers likes to repeat which is the paradox of the financial crisis is one of the things that causes them is too much lending into much blacks lending and then you want to get out of them by having more lending and having more blacks lending. certainly chairman bernanke has talked about how credit standards on home mortgages for example are too tight now. they are much tighter than they were in 2003 before the run-up in credit at a time when most of the loans we were making were perfectly good loans that were repaid terry at so you know a credit to small businesses. still remains relatively tight so there are a lot of ways in which we like to see the flow of credit expanded and more certainly trying to work on the parts that we can do. a lot of that is decisions by and dependent regulators and by the banks are its speediest oracle folk note i wrote about

constitutions than 100 some years ago when we were much more agrarian society banks were the most aided institution in america. banks and railroads. there was a huge crusade against banks. the progresses in teddy roosevelt and woodrow wilson. banks were evil institutions when many americans were farmers. that transformed. after world war ii suddenly found tanks were among the most respected institutions in the united states and the most highly-regarded. i don't know if that transformation has really changed. >> with the budget. >> we can't hear you. stay with the budget deal expected to pass now, what do you see as the biggest risk to the outlook and specifically how concerned are you about the expectation that interest rates are headed higher next year? >> i think the most immediate risk is that we don't extend unemployment insurance benefits. we estimated that that is the

difference between 240,000 jobs and the purchasing power associated with those unemployment insurance benefits. that's similar to the estimates from cbo jpmorgan and others in similar order of magnitude so i think that's the single most most -- policy challenge in the policy challenge to those 1.3 million workers that would be cut off. i think it's also a challenge to our overall macroeconomy. beyond that, i take senators like mcconnell at their word that they are going to raise the debt limit and we are not going to see another round of rings winship but if you went down to the wire on the debt limit and if you went down the wire on the debt limit that would be a major threat to the economy. there is no reason that should happen and i'm confident congress will not want to put our economy through that. beyond that, i don't want to

talk about and forecast the future of interest rates but if you step back and look at the fundamentals of the housing market i think there is still a lot of room for growth. we are building 900,000 houses a year. we add about 1 million households a year, existing household also depreciates of the steady state of the housing production to 1.6 million homes in here. how we will get from 900,000 to 1.6 million in the next year, think we will over the next year but if you look at the fundamentals of the housing market in the demography that ultimately drives the plus the fact that housing is relatively affordable if you look at the affordability indexes and take into account housing -- i think that's an area where

there's a lot of potential and upside still. [inaudible] >> the translation is interest rates affect the economy but if you look more fundamentally at the driver, the ways in which it matters you seethe business investment is relatively slow over the past year. that is the things that hasn't been as good in the economy but the cost of capital overall is relatively cheap or were businesses and stock valuation is high and profitability as a share of the economy is high. i think a lot of the fundamental determinants of business investment are strong and affordability and below the steady state value so a lot of fundamental determinants of housing are still strong. i think we have an ability as an economy to grow robustly. >> i want to draw on the minimum wage a little bit. you know, as people here pointed

out your confidence in unemployment notwithstanding there's a lot of discussion of whether cost george -- jobs a lot and an emotional. how do you see that happening given the climate in watching 10 before 2014 and a second question, wasn't going to assess but your response to the that gentleman kind of forces me to. i wonder whether you think you would be a good person to be involved in monetary policy? >> so, on your first question and you asked a political question but let me drill down a tiny bit more into that to try to understand the effect of minimum wage on unemployment. it's always hard in economics to do cause and effect because a lot of different things are happening at the same time. ideally what you would like is a randomized experiment. if you can't find one title at

the closest thing. alan krueger and david card years ago published the american economic review and found the closest thing to the random experiment which is new jersey raised its minimum wage. they let the counties on both sides of the border and looked at fast food restaurants and noted the fact that job growth is the same on both sides of the border. that was a great study. the problem with that study was it was a few counties in two states at one point in time. since then i think it was about two years ago a paper that use basically the same methodology was published in a review of economic statistics but rather than looking at just one pair it looked at over 1000 pairs of different states and counties where one neighbor raised its minimum wage and one didn't and that's what happened with unemployment. so they looked at over 1000 on

average the employment difference between a place that raised its minimum wage in the place that didn't was zero. it's that type of quasi-random experiment that is as close as we get to real science and empirical economics that is the type of data we looked at in assessing the employment impact of the minimum wage. that plus these meta-studies where you look at 64 different different studies and you find the bulk of them and found a fat that was near zero. in terms of the politics, i have a little bit less expertise in that area but i have noticed that it tends to be a popular issue with the public and tends to be a popular issue with independents and it tends to be something that you have seen political figures say it will happen over their dead body in the year 1995 and 1996 the person is still alive and it didn't pass. but you know congress is different now so i can say what

it ought to be from the economic evidence from what people have done in the past. in terms of you know i think stanley fisher is an outstanding economist and an outstanding policymaker and knows an awful lot about how the world works. i think he would be good at a large number of jobs that he could possibly do. >> i wanted to follow up on the question and i know it's still being implemented and as you said these things are unknowable in advance but i wonder how you were a assessing the success of the white house and aligning incentives for banks and whether the white house would take up financial regulation in the next three years again for any reason? >> this is still a large task of implementing dodd-frank. we have put a lot of the most important pieces in effect in the volcker rule is the most recent of the pieces. one way to measure the success

is you have seen the rating agencies talk about or downgrade some of the largest financial institutions and not downgrade them because they think they are risky or unsafe but because they don't think that they are going to be bailed out by the taxpayers if they run into trouble. that was the central feature of dodd-frank and i think that is being increasingly understood by markets and increasingly understood by the people who assess this that there are going to be any more taxpayer-funded bailouts. part of that is about reducing the chances that you are in that situation again with things like volcker rule and preventing that from happening but also making sure if you are in that situation no rule is going to be perfect to prevent every problem from happening. and if you're in that situation that you have resolution mechanisms that we didn't have in our -- at our disposal to resolve those taxpayers put in a lot of money

at risk for tarp. it was all prepaid. we made a profit on that investment which is a testament to the economic management we saw from the fed and from the treasury and from president obama. but you can't count on that happening every time in the future and that is why in terms of going forward as i said there's a lot of implementation. >> i think -- was still a big mistake. so what's the best economic policy to address greenhouse emissions and will regulating power plants be done in our economy? >> so the best thing we currently have at our disposal is the regulatory authority and environmental protection agency has over both sources and existing sources of rain house

gases under the clean air act and that is something the president has instructed them to do and they are working on it. if you step back, that is an area where you can do quite a lot administratively. there was whacks them -- waxman-markey in 2000 which a president supported him because it was legislative they didn't just rely on existing authorities. it was an even more comprehensive approach to dealing with climate and affected every source of emissions done in a comprehensive and flexible way. i think something like that is even closer to the ideal but i think there's a huge amount we can to administratively. in this area, a lot of what you are doing in climate is going with a grain of the economy. you are seeing especially with the decline in price we have seen for natural gas, the increase that we have seen in

renewables, a a lot of what the epa is doing is going with a grain of that helping accelerate the transformation that is already underway in american energy and you know certainly as an economist would i do is look at the cost-benefit. this is an area where it is very easy to design policies for the benefits that massively outweigh the costs. >> the keystone pipeline decision a long time coming. i know there's an environmental impact. do you look at the economic impact in following up on his question various red -- do you look at the economic impact? >> i will answer that question from myself recently which is i haven't been personally involved in looking at the economic impact of that because it is something that the state department is focused on and the

state department -- the president is very much looking at the impact on climate. in terms of jobs insofar as i have read anything about it my understanding is the impact on jobs in the long run is pretty small. i can't remember, it's a couple thousand or something like that and so either way the argument this is a huge help to the economy or huge damage to the economy if you don't do it, if you did this to the full accounting of costs and benefits and impact that would have and that part of the debate is overstated. as i said it's something the state department is doing. [inaudible] >> i have noticed that it looks like that sometimes. >> i was surprised and a lot of people were with what paul ryan said last week that you can't get nothing for raising the debt

limit which is what you get is protecting the full faith and credit of the united states and you get the avoidance of a world financial crisis. that is something. is the administration prepared to bargain on this issue or just to stonewall at? >> we are not prepared to bargain the full faith and credit of the united states. we said there should be a bargain over the sequestered and that was exact to the model. we dealt with is a question that forced us as a country to do medium and long-term deficit reduction. there are a lot of things that could force a discussion about our fiscal future but going into default this and one of them. the last few times we did this, we did it without negotiating with the ransom and hostagetaking and there's no reason we can't follow the same model we all it in 2013 and for frankly most of the 100 years. >> we voted on it several times.

>> give and long-term unemployment insurance why wasn't included in the debate? >> the president wanted it there. senator murray wanted it there. leader pelosi wanted it there and you know there was absolute refusal from the other side. president bush. the president absolutely pushed. there's something really really important in this agreement and we are not going to blow something up that is an important step forward for our economy and our certainty for investments and all the things we need to invest in. when there will be other opportunities to get insurance but would love to have seen it there. the most important thing is that i get done so right now senator jack reid has legislation and the president strongly supports to actually get it done in the senate is going to have it both

on that. we have had 12 votes. the unemployment insurance has passed 12 times since extended benefits started in june 2008. in june 2008, the unemployment rate was 5.6%. the average number of weeks of unemployment was 17 weeks. now the unemployment rate is 7% and the average weeks is 36 weeks. president bush did extended employment insurance in 2008 surely there's more reason for us to be doing it today. the drumbeat in the pressure is just going to grow on the nation. >> my formulation looks like this. republicans believe economic growth is sufficient. if the economy is growing people can solve their own problems and the democrats believe it's necessary but not sufficient. we still need a safe he met. is there any kind of safety net that the white house can pursue on its own unemployment compensation requires congress. health care is a safety net

program but will require congress. what can the white house do on the safetynet? >> i think you put that quite well which is growth is absolutely necessary but as we have seen is not sufficient and we need to make sure that growth is shared and the growth is stronger when it is shared. i think far and away the best instruments we have for that our legislative and require legislation. we are trying to to do a weekend and i will give you an example of long-term unemployment working on what we can do with skills connecting businesses and community colleges and workers to improve skills. we are looking at a range of other actions that would affect wages and inequality. but the biggest dials are still legislative. >> does the administration have any kind of backup plan? this may be beyond your purview. if not i get enough young healthy people sign up for the affordable care at, what's going

to happen? i mean, i teach a university course and the students are all saying what is this year about a penalty and why am i going to have to pay this? i said well it will be in april 2015. they say april 2015? that is never. they aren't worried about paying a penalty. what are you going to do if they don't sign them up? the numbers don't look that good or young healthy people. >> we actually don't have a great demographic right now but what we do have is there was a big increase in enrollment in november relative to october and we have seen increasing demand in december although we don't have the final numbers and we don't have the demographic right down. we are obviously making if not a planned beet -- b a plan a to do the most aggressive enrollment effort you can with young people in using social media. you see the insurance companies doing paid advertising.

it's in the insurance companies interest to sign these people up to the part of what you did in the affordable care act was we created a private system but then we tried to create the right incentives for those private at yours. rather than keeping those people away they have the incentive to bring people in those customers up so i think we are doing everything we can but unleashing the private sector and the large amounts they will spend on advertising might even more important. >> that you have no particular backup plan? >> there's a plan a which is to enroll as many young and healthy people as we possibly can. >> okay, well let's hope we see the light. thanks very much. thank you all for coming and we wish you all a happy holiday. a white house task force recommended changes to the national security agency surveillance program. white white house spokesman jake kearny spoke about the report which was released wednesday. you can read it at c-span.org. here is jay carney.

>> the review board, the review upon intelligence and the communications technologies finished their report as you know and this morning the president met with the members of of the review group to discuss that report. which they submitted last friday. we will have a read out of that meeting for you later today. for now i just note that the president is grateful to the group. ritual -- richard clarke cass sunstein and peter swire for devoting himself to the separate and providing input file full and put for the administration to consider as we include the review of signals intelligence collection being led by the white house. now over the next several weeks, we will be reviewing the review group's report and its 46 recommendations as we consider the path forward including

sorting through which recommendations we will implement, which might require further study in which we will choose not to pursue. it's a substantive lengthy report and it merits serious review and assessment. when we finish the internal review the overall internal review in january the president will deliver remarks to outlying the outcomes of our work. anticipating this question i will go right to the answer. while we had intended to release the review group's full report in january as i said earlier given the inaccurate and incomplete reports by the press about the report's content we felt it would be -- to draw their own conclusions and we will be doing that this afternoon releasing the full report. >> is the president going to speak on that at all today? >> i wouldn't expect that. i don't have any scheduling or

announcements to make of that nature and i can tell you not to expect that he would speak because as i was saying earlier this is a serious document. forward so president is greatly appreciative. a lot of work went into it. it's long and contains a number of recommendations, no more than 40, 46 i believe is the total. he wants to end his team wants to take time to assess it, to review it and that is why in january when the overall internal rep you the president will make remarks about the work that he has undertaken in the outcomes of his review.

>> mr. president the white house released by the presidents review group on intelligence. the message is very clear. the message of the nsa is not coming from every branch of government, from every corner of our nation. nsa, you have gone too far. the ball collection of american stated by the u.s. government has to end. the review group came to the same conclusion that i have about the utility of this section 215 phone records program. the same conclusion that judge leon found just the other day calling it unconstitutional. they said section 215 was not essential to preventing attacks and could literally be obtained in a timely manner using 215 orders. they say what many of us have

been saying that just because we can collect massive amounts of data doesn't mean we should do so. and they say quote although we might be safer if the government had ready access to a massive storehouse of information about every detail of our lives the impact of such a program on the quality of life and individual freedom would simply be too great. senator lee and i and others have legislation to curtail this i think for the sake of our nation and the sake of our constitution we should. >> up next on c-span2 a senate panel investigates data brokerage companies that collect and market information about consumers. a.

>> it government report shows that marketing companies are collecting large amounts of consumer information including income data, credit information and medical history. up next for senate commerce committee investigainvestiga tes this marketing of consumer information. the chairman is jay rockefeller of west virginia. [inaudible conversations] the this hearing will come to order. there are at this point to people sitting at the dais and two wonderful people but i would be pleased if there were more. senator blumenthal and senator

pryor and senator markey, senator fisher senator warner will be here but this is the day that we all must vote on the budget actually. we always find ways to do it. you have a motion to proceed and then you have a motion to whatever and then tomorrow at some point we vote on the budget just be grateful you're at -- [inaudible] okay, you've are all welcome. the disclosures about u.s. intelligence activities of the few months have sparked a public debate in this country about what kinds of information the government should be gathering and how we protect the privacy of americans live done nothing wrong. the snowden disclosures have harmed our country's national security but they have made americans think more than they usually do about how their lived off-line can be tracked

monitored and analyzed. people are aware of that, not to the extent that they are great written where they are accustomed accustomed to the videotape done everything they do. we are still going through that adjustment period terry at i'm glad we are talking about these important privacy issues in general and today we have benefited from the rapid advances in computing technology but we also cherish our personal freedoms. we always use that word cherish our personal freedoms that we do. it's a complicated subject. we want to be able to protect ourselves and our loved ones from the unwanted gaze of the government and our neighbors. what has been missing from this conversation so far is the role that private companies play in collecting and analyzing our personal information. a group of companies known collectively as data brokers are gathering massive amounts of

data about our personal lives and selling this information to marketers. we don't hear a lot about the private sector data industry but it's playing a large and growing role in our lives. let me provide a little perspective. in the year 2012 which you will recall is last year the data broker industry generated $156 billion in revenues. that is more than twice the size of the entire intelligence budget of the united states government. all generated by the effort to learn about and sell the details about our private lives. whether we know it or like it or not makes no difference. one of the largest data broker companies axion recently holstered to its investors that it can provide quote welty's first insight into approximately 700 million customers worldwide.

when government or law enforcement agencies collect information about us they are restrained by our constitution and our laws and they are subject to the oversight of courts, inspectors general and the united states congress through the intelligence committee. i have served on the intelligence committee since before 9/11 and i think declare to you absolutely without a single thought that the protection that nsa provides to the security and secrecy is far better than what we are going to be talking about today. they have rules. they have all kinds of judges and hoops that you have to jump through. they involve doj and is very tight. every day you read the paper you think it didn't exist which is the government gone wild. particularly when it comes to

domestic which is called section section 215, it's very tightly monitored and there is never content, there is never e-mail and there is never a name. there is never a name. just a telephone number. that data brokers go about their business with little or no oversight. while there are laws on the books that protect the privacy of americans health and financial information they do not cover data brokers marketing activities. collecting consumers information for marketing purposes is not a new business. for decades before the internet was invented retailers marketers and yes political candidates compiled naming lists they used to send catalogs coupon books or other materials to their potential customers.

but the data broker industry has been revolutionized in recent years by the tremendous advances in computing and data analysis and as consumers spend more and more time socializing and shopping on line they are generating rich new streams of personal data to collect and analyze. on the part of the data brokers. these days data brokers don't just know our address, or income level are political affiliation most probably but they probably know the weight of everybody in the family. they have collected thousands of data points about each one of us and we are simply not aware of it except in theory. they know if you have diabetes or suffer from depression. they know if you smoke

cigarettes. they know your reading habits, your browsing habits. they know how much you and your family members weigh and they may even know how many -- whiskey drinks you have consumed in the last 30 days. we wouldn't reveal that kind of information, would we? like the pieces of a mosaic, data brokers combined data points like these into startlingly detailed and intimate profiles of american consumers. under current laws we have no right to see these pictures of ourselves that these companies have created, no right. for the past year this committee has been trying to bring some much-needed oversight to the data broker industry. where is a copy of a report?

it is under here. i have got it. we have been pushing the data brokers to answer the same kinds of questions many americans have been asking the governments since the snowden fisc lugers. what information are you collecting about us and how are you using the information? today's hearing is the first time we are publicly discussing that we are learning -- what we are learning in this investigation. the congress and committee staff have prepared a report for me from the ranking member on the progress of this investigation. it is us, more to come. i ask unanimous consent to put a copy of this report in the record of this hearing. one of the things that we have learned in this investigation is that data brokers --

they help businesses find potential customers but we have also found some practices that raise some serious consumer protection concerns. in particular i'm disturbed by the evidence showing the data brokers -- categorize them into categoriecategorie s and name those categories based on their incomes and then they sort vulnerable customers into groups with names like rural and barely making it. i'm not making it up. that's one of their categories. a tough start for young single parents. rough retirement, small-town and rural, seniors and zero mobility i want to know how and why data brokers are putting american conservatives into categories like these and i want to know

which companies are buying these lists to target their marketing to these groups. maybe it's totally innocuous and benign. i don't start accepting that but maybe it is. that is why we are doing this investigation. some companies in the data broker industry have responded positively to our oversight efforts. when i became chairman here several years ago, we went over to henry waxman and stalled a couple of his best people and set up an investigation. for some reason we never had it and we gave ourselves subpoena power. for some reason we have never done that. it's a powerful tool when you are doing investigations which is we tend to do -- what we tend to do. i want to know which companies are buying these lists to target

their marketing to those groups. some companies in the data broker industry have responded positively to our oversight efforts over the past year they have provided complete answers to my questions even the tough ones but several of the largest data brokers specifically actually up salon and experion are continuing to resist oversight. just resist it. to date they have not given me complete answers about where they sell to get their customers data to consumers and to whom they sell it. putting these three companies on notice today that i'm i am not satisfied with their responses and considering further steps and i have steps that i can use, that i can take to get this information. we have oversight over this type

of beauty in american commerce and if you do oversight whether it's over intelligence and he do it seriously you do it with a purpose and you want to get the truth. so i'm putting these companies on notice that i am not satisfied and i have further steps that i can take to get this information. i want to assure that the oversight efforts in this committee that we have started will continue. i call now on my distinguished friend from a similar urban state ,-com,-com ma senator john finn. >> thank you mr. chairman for holding this hearing and thank you also to the witnesses for coming today. our economy is increasingly data-driven and data brokers could rolling roll in serving consumers. data or information broke her start companies that collect

data including personal information about consumers from a wide brady of sources such as public records web sites and retailers for purposes that range from verifying identity to preventing fraud to marketing products. as the chairman noted in his initial letters to several data brokers the purpose of this inquiry has been to better understand the industry and i look forward to today's hearing is the locus on how the information collected by the nurses use for marketing purposes. without question data-driven marketing can lower the cost of products and services because businesses can target marketing more precisely. it also can help this does is create and sell products that consumers want lowering startup costs for new businesses. dave -- data-driven marketing are one reason we are able to use search engines for free and allows consumers to receive frequent shopper benefits and coupons and promotes targeting resources to reduce the amount of junk mail and catalogs tailored to

consumers particular interest. put simply this industry is at the center of something the commerce committee cares about, commerce. in today's economy data-driven marketing is used across wide areas of the economy. it's used by nonprofits governments and pluggable campaigns. many media outlets have noted how the use of data resources for help the president's re-election campaign 2012. as we hear the marketing data and she's helping to fuel job creation and technical innovation and are slowly recovering economy. a lot of the industry creates benefits and this hearing will ask or important questions about the privacy implications of data or's activities including issues of transparency profiling and concerns about allegations of differential pricing. questions have been raised about whether consumers are where the emphasis in which their personal information may be collected

body and soul for soaping calls for more transparency into data broker practices. advocates have also raised concerns and data per providers including health conditions. these are important issues and i look forward to the discussion today. in a rapidly changing marketplace the federal trade commission has done important work concerning data brokerage and privacy issues including developing educational efforts. they have also brought enforcement actions under the ftc act and the fair right reporting act. the ftc is completing a study about texas is in the data roper industrieindustrie s that will provide recommendations to congress based on their findings next year. i look forward to their testimony. the government accountability office says produced a report on the david broker industry to help inform this committee. i will be asking a witnesses have data broker practices for marketing as me impact consumers

positively and negatively. i'm interested in hearing how the industry can work to balance the privacy concerns of individuals with information needs for businesses and our economy. i would like to express my thanks to our witnesses and a special note of thanks to tony hadley from experion. having only one of those companies testifies a good way to keep the number manageable in light of the disease senate schedule. i'm sure many of the other companies are grateful for your willingness to testify in advance our understanding of the date of roker industry. i know i certainly am. i want to thank you again mr. chairman for having this hearing and they do look over to hearing from our witnesses. >> thank you senator then very much. i will do one by one.

jessica rich is the director of bureau consumer protection at the federal trade commission. i will go down the line as -- could you give your testimony please. [inaudible] >> you have got to push the little button. it is called technology. >> i assure you i know something about technology. i am jessica rich rich director of the bureau consumer section at the federal trade commission and i appreciate this opportunity to present the commission's testimony and date of brokers. this is a highly -- to examine the practices of data brokers as logical to velma's have allowed for the dramatic increase in the collection and use of consumer information. data brokers collect consumers but personal information for my wife right of sources and resell it for a friday purposes without most consumers knowing of their existence much less the friday practices in which saying gauge. many of these practices as you noted fall outside of the scope

of flaws. i know this committee is well aware of the lack of transparency of data broker practices. chairman rockefeller we commend you for your leadership on this issue and stand ready to work with the committee in congress on ways to improve transparency. the report you released today is a key initiative in this effort as is does the study requested from gao. at the ftc our work on data broker goes back to the 1970s. for decades policymakers have expressed concerns about the transparency of companies that i and sell consumer data. indeed the existence of companies selling consumer data for credit and other eligibility determinations in visibly and behind the scenes have led to the enactment in 1970 at the fair credit reporting act. since then the commission has been active in data brokers. be abused three primary tools in this effort. first we bring enforcement

actions when company practices violate the law. perhaps erma ramaz well-known data broker case involves choice pain -- choice point. we elected choice point implemented blacks security procedurals resulting in sensitive report information ending up in the hands of nonidentity thieves. or recently we entered into a consent decree with on line data broker spokane. according to our complaint spoke he had collected personal information from hundreds of on line and off-line sources including social networks and compiling the data into personal profiles. they market these profiles for use by human resource departments in hiring which made a subject to the credit reporting act but fail to abide by the accuracy and privacy requirements. the order contains strong injunctive relief and an

$800,000 civil penalty. second the commission conducts research and issues reports addressing data broke her issues. for example for 2012 privacy report made best practices and legislative recommendations for consumer privacy including specific recommendations regarding data brokers. among other things they report reiterated a long-standing commission recommendation that data brokers provide access to this data maintained in depending on how the data is used the ability to correct it. or recently in order to shine a light on the industry we issued orders requiring nine data brokers to provide information regarding how to collect and use consumer data. the commission is close to completing a report based on this information and expects to release it in the coming months. in the spring of next year we plan to host a series of privacy workshops including a seminar on what is called alternatives

scoring products offered by data brokers. products the company is to predict consumer behavior and shape how they market to particular consumers. our final tool is educating businesses and consumers on privacy issues and practices of data brokers. for example the recently sent records to roker said provides tenant streaming services warning them about their duty to comply with the fair credit reporting act and for consumers who produced a video on data brokers and published frequent blog posts and update related to the data broker industry. in closing as the collection and use of consumer data continues to explode we share the committee's commitment to continue examining data brokers and we stand ready to work with the committee on this critical issue. >> thank you very much mezrich. pam dixon is the executive director at the world privacy forum. you are on.

>> she is gloating. >> chairman rockefeller, members of the committee thank you for the opportunity to share what i have learned about the date of broker industry today. i appreciate it very much. i was a moderate in the privacy debate and in the privacy world. i have come to a troubling conclusion. the data broker industry as it is today does not have constraints and does not have shame. it will sell any information about any person regardless of sensitivity for 7.9 cents a nama list of -- which was recently sold. the list of rape sufferers, victims of domestic violence, police officers, home addresses,

people who suffer from genetic illnesses, complete with names, home addresses, ethnicity, gender and many other factors. this is what is being sold and circulated today. it's a far cry from visiting a web site and seeing an ad. what it is the sale of the personally identifiable information and highly sensitive information of americans. so senators i would like to make three points. first, scoring. there are now pseudo-scorers, which are comprised of factors that are nonfinancial or i should say noncredit rep word -based. these pseudo-credit scores are used in lieu of actual credit

scores because they completely circumvent the fair credit reporting act. so a business or an employer or an insurer can purchase these scores and use them with no ill consequence or any consequence at all. this needs to change. secondly, health. they are our lists of millions of the old better categorized by the diseases that they have ranging from cancer to bedwetting, alzheimer's, terrible diseases, some of them benign and some of them related to mental illness. there are lists of millions of equal and what prescription drugs that they take. these lists exist entirely outside of hip to. >> outside of what? >> hipaa. any kind of federal health protection unless the data is held at provider or a covered

entity under hipaa. forget it, hipaa doesn't apply. this industry that is selling these lists, there has been a lot of mention made of marketing purposes for these lists. these lists are being sold without constraint. we don't know if employers are buying them, if insurers are buying them. we don't know who is buying them but the lists are being sold for apparently billions of dollars which suggests to me that we need to find out who is buying these lists. in terms of solutions my third and final point. we need to expand the fair credit reporting act so when there are consumers cores that are pseudo-credit scores that this is brought under the fair credit reporting act so consumers can exercise the same rights they would have if a credit score had been pulled. if the information is to

stickley as accurate and has the same effect as the credit score than why isn't regulated under the fair credit reporting act? they should be a bright line here and i don't think that is too terribly difficult to draw. there needs to be and actually there is an urgent need for a national data broke her requirements for an opt out. we favor an opt out that is highly granular so consumers don't always have to take the layer option and get entirely off of every list. we favor consumers having the ability to make their own choices. maybe a consumer wants her name and phone number on the list but nothing else. certainly nothing about her weight, certainly nothing about the number of children she has or maybe she does but the point is consumers need to know when they are on the list and they need to make choices about what appears on most lists.

we need to re-examine hip to and decide if health information that is not helped by health care providers deserves health care protections and privacy. i believe they do. this is going to be the beginning of an important public dialogue that is going to be incredibly important for all of us to engage in. if we have an industry that has not curtailed the sale of names of anyone with a highly sensitive information for 7.9 cents a name then we haven't done enough. thank you for this opportunity and i look forward to your questions. .. , without fear. without fear of consequence. and then we need to do something about it. that will be a judgment that we

will have to make, but as you ,uggested, a change in hippa which is to be sacred, and still is, but not in all cases. i thank you for your testimony. professor? the associate dean for graduate studies at the annenberg school for communication at the university of pennsylvania. >> thank you, chairman rockefeller, members of the community. i would like to address two key questions about the collection of data for market purposes. first, if we take sensitive -- first, if we take sensitive topics like health unemployment out of the equation, what possible harm could come from using this data for marketing purposes? we are talking about targeting for product advertising. second, had these lessons not been around for a century? what makes it different from the past? let's start with a history

question. the compiled list of prospects goes back to the 19th century. the lists became more detailed in the 20th century, but the difference between the lists of 35 years ago and today are extreme. the distinction is the amount of information that brokers have now and how they deal with it. lists from the old a's were static. the number of data points the company had was small. today data brokers can collect huge amounts of information, tens of millions of people, even hundreds of millions of people. they update the information frequently and they use high- speed computers and advanced to state six to draw conclusions that previous generations could hardly have imagined. consider the recent data catalog. it contains 41 pages of information about individual america and sold to marketers. the information ranges from the amount of money taken to the amount of vacations taken to the

number of friends on social media to the value of neighbors to diseases to how tall they are to whether they gamble, to the media uses and much more. they sell any number of items tailored to markets from different industries. in addition, the data broker has created a kind of universal follow people and across desktops, laptops, mobile, and 10 -- tablets. like axiom, other data brokers continually run programs that connect the dots for marketers and then attach them to other ideas marketers have about us. the brokers bring together pieces of information people did not expect would emerge when they disclosed them separately to various online and off-line entities. the results are buckets of descriptions and stories of our lives and economic value and potential we did not know exists

. merges can charge you more than others for products raised on teachers they tagged you with you do not know they shared. by -- buygularly anti-acids. that is great news to travel company searching online for those types of people. using personalized coupons, the physical and virtualized stores whathange prices based on they know about you. they can add your lifetime value and the results can dictate the kinds of items you see and how much the discount will be. connecticut -- negative data brokers said know how long you wait for customer service and being rejected as a customer and offering coupons for not nutritious foods. with on engagement addressable ads, they can change the news and entertainment offerings you sees.

you systematically see different worlds from your friends or work colleagues because of the stories brokers tell about you. many of these examples are already taking place and all of them are quite plausible. they trumpet they often make individuals they sell anonymous. anonymity is not reassuring. if i am followed online and off- , it doesuckets of data not matter what my name is. and with our full personal information, data brokers are engaging and encouraging a world of data- driven discrimination that is becoming widespread precisely because it comes with all sorts of advertising. surveys i have conducted consistently suggest americans worry about what firms learn and think about them. i have heard people say they will change activities or how they talk about themselves better bybe treated

marketers. the difficulty is that it is often impossible to know whether and how that will work. we are only at the beginning of a data-driven century. data brokers will be central to how we think of ourselves and how we lead our lives. for the sake of democratic ideals and relationships, let's limit how much they can collect and share until as a society, we know how to create regimes of data respect, where people have control over the most important elements of their identity. thank you. >> thank you very much. >> experienced senior vice chair. we welcome you. >> thank you. good afternoon. and i am theny vice president of government affairs and policy. andading provider of data

information services that brings significant value to consumers and the economy. committee'she interest and dialogue in the marketing data industry and the to describe how we collect and use data. i have submitted a fuller statement but i will summarize a couple of points. believee truly responsible information sharing significantly enhances economic productivity in the united states and provides many benefits to consumers. economists have called the manner in which u.s. companies collect and share consumer information among affiliated companies and third parties the secret ingredient to our anductivity, innovation, ability to compete in the global marketplace. we shared data to help make consumers and small-business lending more efficient. help facilitate

access to fair and affordable credit. protect consumers from fraud, including identity theft. greaterconsumers gain financial literacy. and to help companies reach consumers with a timely and relevant communications and marketing offers. marketing data in particular brings lower prices and greater consumers byo strengthening competition. nonprofit organizations and government agencies also depend on consumer data. to serve the needs of people and citizens. important, experienced data allows small companies, including many in the state of west virginia and other states around the nation, to compete with larger companies who maintain very sizable consumer databases. it provides small businesses with the same datasets larger competitors have

so they can compete and grow companies. a significant point i would like to make also is that operations of marketing services and the data it collects and uses and shares is completely separate from experience operations as a consumer credit euro. no eligibility of the terminations were able to credit insurance, employment, housing, or any other decision, is ever made with marketing data. experience has in place strict policies, as well as technological management, procedural controls to make sure there is complete separation. it shares data responsibly by carefully safeguarding compliance with all privacy and consumer protection laws and industry self-regulatory standards. we even for most -- promote new regulatory standards.

the committee has also sought for pacific information about clients and data sources. experience provides market data to a wide for -- wide variety in the private, government, and nonprofit sectors, that market to consumers through multiple channels, both online and off- line. sectors we serve are retail, media, and financial services. our products were used i nearly all sectors of the economy. include the sources for specific products, in which the kitty hat -- the committee has expressed interest. most of our data comes from and publiclys available information, such as zip code level census information, local property records, and telephone directories. added to this, many people voluntarily provide data to experience by filling out surveys and questionnaires.

these multiple sources of data are aggregated at the household level and then analyzed and modeled for household preferences and propensities. such methods result in a group of consumers receiving messages in advertising that they are more likely interested in responding to. done, weis said and help marketers make the best about what messages and marketing solicitations a group mostnsumers may be interested in responding to. finally, i want to emphasize it has made every effort to be forthcoming and cooperative throughout the inquiry launched by the committee this year. we have spends -- considerable time and resources to make sure the information and documents we have provided are helpful to the committee's work in understanding the marketplace. today, the committee has been provided with eight submissions,

totaling over 3000 pages. we believe this provides a full description of our products, services, and we are here today as the only one in the -- in this. the role wederstand play in the economy and the lives of consumers, thank you for your attention. appear invited guests to here. we look forward to continuing to work with you. i will answer any questions the committee might have. thank you. >> thank you very much. i want to get this right. jerry. did i say your name right? >> you did it correctly. thank you. i appreciate it. >> i am thrilled. the senior vice president of government affairs for the direct marketing association. we welcome your testimony. >> thank you.

dmaers of the committee, appreciates the opportunity to be here today and to talk about this important subject. on a personal note, i want to say i have testified before this committee many times, testified before other committees before congress, and, today, my last day of work before i retire, i -- i want to thank congress for the opportunities they have given me to participate in dialogue here before the congress. i appreciate it. senator, i will not be here when you retire at the end of the congress, so i want to say, personally, we thank you for your service to the united states. back to why i am here today talking about data. >> are we allowed to ask you questions? >> you can ask questions. sadly, they know where to find me. to get the questions to me. phone call away and i promised they could call

me and i did not promise i would answer the phone. anyway, data. every consumer facing business in the united states uses data today. it is important. it drives our economy, driving our current recovery. it is very important. to our members. in that light, dma has created drivena -- data- institute. to take a look at the value and -- and uses of data in the american economy. we employed -- we used a professor from harvard business school and a professor from columbia university and they conducted this data study and worth 150 $6 billion a year to the american economy, 675,000 jobs. influence is related to sharing of data i companies.

even more importantly, the data sharing helps small businesses and it helps write down barriers to entry so small businesses can come in and compete with the big boys. once they get a foothold, it keys them on a level playing field. it is not new. this has been happening for a long time. i will give you a couple of withles. l.l. bean started a list of nonresident main hunters. that is that -- that is how they started. of thecover card, one first credit cards, a reward credit card, began with a list of sears treaded caught -- credit holders. without those lists, the companies would not have started. the benefits from the two companies would not have been realized. it is important. it is. personal information that is used. strongted states has

privacy laws. the online privacy protection act, hippo, data task, and so forth. those laws are complemented by self-regulation by the industry. i can speak only for dma here. dna has a pure ethics committee that meets monthly and handles complaints from consumers and other businesses brought to it against members and nonmembers. most of them comply with our guidelines. those that do not, we publicize them on the webpage. if there is a violation of law, we turn it over to the federal trade commission and the postal inspector -- inspection service. as we looked at this, the federal trade commission said they support the complementary effort by self-regulation. we want to continue that. we continually update the today'ses so they meet real world efforts.

the things we can talk about, all of this is in fact working. the american consumers are voting with pocket books and feet. e-commerce is growing. it is growing multiple times the rest of the economy, because, they have trust in the process. think about it. they need product -- trust. they are purchasing something theyaying for it before receive it. they need to have that trust. ins data-driven economy is fact working. think about the great american success story. really great american success story, amazon. on cyber monday, it sold 300 items per second. that shows americans have confidence in this. their needs as american consumers are being met in the data-driven economy. there are clearly concerns. there are concerns about what is

happening. you have heard them and it is in the report. we have for them today. the improperus on use of data and figure out how to prevent the improper use of data. one of the things we cannot do and stopway responsible uses of data that are driving the use of the economy. that is something we have to be very careful of as we are part of the dialogue we are having today. the american economy, small businesses, american workers, and american consumers, rely on responsiblefrom data use. america leads the world in that category and we hope to keep it that way. thank you very much for the opportunity and i look forward to answering any of your questions. >> thank you very much. i will start the questioning and then we will do it according to order of arrival.

mr. hatley, one of the products your company sells to marketers is called "choice score." targets under banked consumers. let me read your description of the under banked consumers. new legal immigrants, recent graduates. widows. followers of religions that historically have discouraged credit. transitoryrs with lifestyles such as military folks. mr. hatley, the populations of this group are very vulnerable to financial scams. we have experienced that in this committee because we have done hearings about that, particularly with near military bases, where people -- these are relatively young people overseas

and back for a while. they are very vulnerable because they need cash and people can come in and really clean their and we have testimony to prove that. last month, we held a hearing about companies that target fraudulent financial products to service members. they are honorable because of their financial inexperience. and their steady paychecks. mr. hatley, what does your company, or why does it single out and sell lists of economically vulnerable groups like immigrants and widows and military personnel? it is a very important question to me. you set the probable response to whom your questions are aimed in your marketing is aimed at, you can fairly well

predict the type of product you will get. a nicer vacation, a less nice vacation, etc.. when you put people in categories and they are that is not the l.l. bean model. i would like you to respond to that question. >> thank you. very concerned if lenders were using that information for scamming purposes. and procedureses in place to ensure nobody gains that purpose. for >> how does it work? >> we have and on boarding system by which we take on a client that gets our information, to know who they are, and we also have a mail piece review process to know what they will offer the consumer. if it is anything that looks predatory,ory, or,

we will not provide a list to them. >> this is your self-regulation? >> this is our self regulation under dma standards. if we were to volley -- violate that, we would be under violation of regulation and contractual standards within clients. important is there are somewhere between 45 and 50 million americans outside the marketsam of the credit in the united states. these are under banked and whorserved consumers financial institutions cannot reach through credit scoring and credit report. they do not have financial identities. or a big enough or even the presence of a credit them intoder to bring the mainstream of financial markets. it does not mean they do not eat -- need access to financial services. this data to try to reach out to consumers, who they can help to empower them and not

scam them. we do not want to do business with financial institutions trying to scam people, only to empower them. this is their best way to find those individuals outside the mainstream, immigrants. new to credit like recent college graduates. to give them an offer, and in -- invitation to apply, so then they could make an eligibility determination regarding that application, under the fair credit reporting act. this is marketing literature, not eligibility determination. >> can i add to that for you? >> not entirely. can you tell he which are the companies that buy this choice score product from you? would be banks and financial institutions and members of the financial community. >> that is a general answer. >> yes. i cannot tell you who are clients are. that is a proprietary list of

hours. it is like our secret ingredient. the ones who would want that most are our competitors. our counsel has informed me they do not believe our ability to give that to you can be shielded from disclosure to the rules of the senate. if we thought they could be, for example, under a law enforcement action, where he could be fromded and protected disclosure us, we can do that, but not under the situation under the rules of the senate. we are sorry about that here and we simply cannot do that. our counsel will not let us. >> there are a lot of councils out there looking for work. keepint is you have got to up with competitors. my point to you would be i am not necessarily approving of what competitors are doing. maybe you want to keep up with them but maybe they are doing exactly what you're doing but on

a larger scale. upwe do not want to keep with those competitors. >> a lot of other companies gave us the precise information that i want from you. >> i would hope the focus of the committee and ftc and others interested in these types of uses of data would focus on those data brokers. it is not experience at his doing that. we would not have that within our business model. >> all right. can you please provide the names of the companies that buy lists of economically vulnerable consumers from experiencing echo >> i can tell you the types of categories. good -- a really >> do you not understand how that does not work appear? the types of categories? buys themtell you who and that -- i can name a few because they are public. reflectsntation system the entirety of the economic range of our economy. we do not leave out low income

individuals. economyst within the and need products and services, two. the most frequent users of that segmentation, the economically disadvantaged senator are typically government agencies and public policymakers trying to get a view into them. so that they can deliver them messages and marketing materials about public services they are eligible to. among the users of those are the west virginia department of health and human services, the services.tts health the new jersey health and human services. they want to reach those people. theyhem know what benefits are eligible for so they can come and get them. they also use this data to for theirress lists clients. >> you will knit that -- you will admit that if a state hhs,

so to speak, will use that information, that is quite a from ant kettle of fish for-profit bottom-line oriented -- >> we would put the departments of hhs through the same review of who they are and what you want that information for. we would not want them to use our information to disadvantage those consumers. only to empower them. they would go through the same review. >> all right. my time has expired. you happily engaged in a process . you selectively named some of your clients. you can selectively do it, you can broadly do it. >> those are a matter of public record. >> that is the point. what you do should be a matter of public record. this is an oversight committee

and a serious matter. we have the feeling people are getting scammed or screwed by this feeling. it is up to you to talk us out of that. >> not by experience. i can assure you the experience acted as our watching this right now i'm hearing what you're saying. we respect your point of view. responsive to you. seriously. thee look forward to dialogue. >> anyway, my time has expired. johnson,ooker, senator then senator blumenthal. hold everybody here. >> good evening and thank you very much for your wrist -- rich testimony. the internet now, the ability for big data to be used is a service to many users. it serves me every time i am going online and shopping. i love the fact i can use this little device and things will be pushed to me that are very

valuable. data sharing helps fuel our economy. so many great advantages. i have worries on the backend of that. and senatorhairman rockefeller is making a point. those are the concerns of consumers. .ne quick question what frustrates me, that i know my browser history, these cookies are on my computer and they are tracking and tracing what i am doing, and i understand the upside and the benefit of it. that is a little problematic to me. >> sure. there is a group that we are part of, the digital advertising alliance online, following where people are. we have created an icon and a

to allow consumers to ,pt out, totally or selectively from any cookies used to track their browsing activity across unaffiliated websites. that icon is a little triangle with an eye. >> usa the industry is trying to and find a way because you recognize this is a problem. >> i am a tech savvy guy and i never heard of this peer that is problematic to me. i am in fair -- i am very engaged in tech. so the industry is trying to correct what they know is a problem. >> you