and begin to wonder, we dodged the issue in getting our fiscal house in order with to make a determination as to whether or not we're going to pay now or pay later. and so when the deal goes down, there are people in this country who have benefited substantially from the policies that we have enunciated here. and i'll give you an example of something that just causes me at any beyond reproach, and that is the president's proposed and several of us and doubtless both of you believe that all children in america ought to have an opportunity to have the experience of going through kindergarten. have the experience of going through kindergarten. i saw a statistic just this past weekend. if it's true, every hedge fund person in this country stands

accused of not want to pay the necessary taxes that would allow for that. six hedge fund management. one month of their salary would pay for the entirety of the kindergarten program we can keep putting the money in all of the hands of a few rich people, and i'll tell you that they will eventual eventually -- they all have bodyguards but they're going to need more going into the future of this country. their country that they own and manipulate us in the first place. that's all. i yield back. >> the gentleman yields back his time.

>> thank you so much, mr. chairman. i want to give a special shoutout to congressman frank wolf, who's been such a leader on the human rights issues we had a good working relationship in the foreign affairs committee, and the group that he co chairs with our colleague he's been a leader throughout his tenure in congress, and has been the conscience of the house we'll miss his solid values and principle stance on issues that impact the downtrodden and those who feel they have no voice. he gives them a voice. thank you, mr. wolf for everything you've done and on a personal note. megan adwyer from virginia and

cameron silverblade. from debbie wasserman-schultz district. thank you, megan and cameron for being with us today. and for helping us out all the time in our office. thank you, mr. chairman. >> we're delighted you're here with us today. you need to come up here more often. >> i want to add to the accolade s for chairman wolf, he's been a friend for the last ten years, we'll miss you, frank and can i ask a question about the title iii bill. mr. hastings made the point, we will reach a point where our

ability to co travel with russia to the space station will be exhausted and will we have a way of moving our personnel back and forth from what's been a significant investment made by the subcommittee over the years by the space station. clearly precedes my tenure in congress it's a significant investment. and we want to see our scientists continue to participate in that endeavor. >> we may have a problem. the administrator did not feel we would have a problem. if you look at the comment from the russians in the last two weeks, they are going to cut off 2020. we do rely on the russians that should not be there. >> we have funded these programs at a high level, and it could be a problem. the rocket was cancel led.

he believes they can work this out. it's important to russia as it is to us. if you believe what the russians have been saying, it could be a serious problem in 2020. >> let me just say, i believe that we are fastly moving to a position where if confronted with this program, america would be in a position to respond. i went out and visited the space x development program in california. where the cargo, california, where the cargo rocket ships were being fitted for human occupants. and they've been testing out their systems. and i think the science that is in virginia, is also developing their capabilities and doing some testing. so one of the things that might be helpful to our country would be to be presented with some challenges. and put on a quicker pace. perhaps the fact that -- with

the idea that american ingenuity can figure out how to take human beings from the international space station is defined by the facts. we had a shuttle mission. we know how to do it. we made a conscious decision in the 2006 cr to move it a different direction. shuttle feed was old. it had to be based on the examination that was commissioned under the previous administration, because of the safety issue. it was decided that the shuttle feed had to be put to bed because it was getting old. and -- but even during that whole period, we were flying most of our astronauts through -- russia was delivering them, and the buildout of the space station using the shuttle. but i think we're going to be in a position to deal with this challenge. i also think that the other issue that's really confronted here is the use of the atlas rocket, the russian-made rocket

for -- and whether or not we're going to use an american-made engine at the end of the day, is going to be the next issue as we go forward. but this is a -- it's a challenge. but that's when, you know, you get a chance to figure out -- that's what diversity is about. it helps you figure out who exactly you are. i think america can meet this challenge. >> i appreciate your confidence. i hope that you're correct. thank you, mr. chairman. i yield back. >> i've gone out and visited and seen the work and the buildout on this. >> gentleman yields back his time. i want to thank both of you on behalf of the committee. you've both presented yourselves in an articulate way. and i think you've defended your work very well. i know, and you know, that there are people who serve on this committee and who serve as your colleagues that have ideas, that

make your job even more difficult. but to defend what you do in the context that you have put it in, and especially doing it together, is important. it's important, i believe, for the american people, not only to have confidence, whether it be in the department of justice, or the secretary of state, in the department of state, or in the commerce department. each of these are very vital and crucial areas to the success of this great nation. and it makes me feel proud to know that both of you are not just working together, but finding better ways to do i guess what could be said more with less. thank you for your presentation today. if you have anything that you want to leave in writing, we'd love to have it into the record. you're both excused. thank you very much. >> thank you. >> i'd like to join in what has been said about our visitors. reverend martin, thank you very much for taking time to be with us today.

we normally have a lot of fun up here. today is just fun. but we're delighted that you're here. and for the interns, megan and cameron, who are here with illiana, thank you for helping us with some work today. i know that you -- there was no free lunch today. you probably didn't even get lunch. but i do appreciate you coming up and trying to work with us, so that we would be able to accommodate, including our next two witnesses, two very dear friends of this committee, and your colleagues that are here. we're delighted that you're here. i see you got your name on the front of your work. i know that often you -- we do put our names on our work. but this would be in reference to your final term in congress.

your service, not just to the people of your district, but the people of this country, and the men and women who serve in the military. and i want to join, as i'm sure we go around the room, your colleagues will acknowledge your strenuous support of the men and women of the military, the purposes of thoughtful content. as you go and sell what we do to the military, and work with them on getting things better. so we're delighted you're here. mr. smith, you're a locker mate of mine downstairs and i see you on a regular basis. i don't want to say i've watched you and mr. mckeon on tv. you're thoughtful and careful in your thoughts. and i think meticulous in the product that we expect to see today. i want to thank you both for being here. if you have anything in writing, without objection, that will be entered into the record. mr. mckeon is recognized.

>> thank you very much, mr. chairman. thank you for those very kind words. chairman, ranking member slaughter, thank you for meeting today to discuss our national defense operation act for 2015. i in particular would like to thank my partner, my ranking member, adam smith. we've had opportunity now of working together for four years. and it's been -- it's really been delightful. he does not back down one bit from his position. he argues very strongly for the things that he believes in. in fact, we almost had a blowup in our markup, and we backed off. and fixed it. and i think that, mr. slaughter,

your side should be very happy with him as a ranking member. thank you. but we really have had a great relationship. and i'm hopeful that you'll continue that, as we go forward. because this, our committee -- members of our committee understand that we really are working for the men and women in uniform. and we really are working for the national defense of this nation. and so everybody on the committee understands that. and that's how it's been for 52 years. and we've passed a bill every year. sometimes people think that because we've done it for 52 years, it's just automatic, we do it, and it just happens. and it's expected. but i think we have great staff.

and they do a tremendous job in preparing things so that when we finally get to markup, it looks easy. and that -- and it's not. it's because they do a tremendous job of laying the groundwork. and that's all of our staff. in fact, i think if adam and i were in a room, and all of our staff was there, we couldn't tell you which ones past the first few are democrats or republicans. we don't deal in that. i'm proud of the bipartisan transparent and inclusive process that our committee undertakes each year. our mark is a result of diligent, bipartisan oversight that's been conducted throughout the year. it was made available to the public five days in advance of our markup. likewise, all of our markup sessions were open to the public and video was streamed live. 95 amendments were offered.

of those, 154 were adopted. it passed out of the committee with unanimous support. 61-0. one member left early and went home and went to bed. in the interest of time, i'm looking forward to your questions and i'll provide a short summary of the bill. it will authorize $521 billion for national defense, and an additional $79 billion for overseas contingency operations consistent with the 2013 bipartisan budget agreement, and the house passed budget. it maintains the ban on earmarks. the bill provides war fighters, veterans and their families with the care and support they need, deserve and have earned. it continues to advance our committee's efforts to prevent sexual assault in the military, increases troop pay, and curbs increase out-of-pocket expenses for military families. it provides the authority they need to support an enduring

mission in afghanistan, to continue pressuring al qaeda and its affiliates. while the bill reflects difficult choices, given the limited resources it preserves key war fighter capabilities, and ensures our armed forces are ready and capable to meet current threats, while preparing for future challenges. the bill guards against achieving false short-term savings at the expense of vital long-term strategic capabilities. it also recognizes that we must get more defense for the dollar, and therefore, includes provisions that tie into the committee's recently initiated comprehensive defense reform effort. one thing i want to say, and i think it's -- we face very difficult choices this year, based on the budget control act, based on the lack of resources, and my principle that i've tried to stick to in pushing forward

this year is, keep as much as we could. we were given a budget by the sk and the chairman of the joint chiefs that cut more than we cut. and i understand -- what i'm hoping is that next year, hopefully, we'll do something about sequestration and get something that we can work with better. otherwise, next year's going to be very, very difficult. with that said, i like forward to a robust debate on the house floor this week. i respectfully request that this committee issue an appropriate structured rule for this legislation that allows for full debate on national security matters, while respecting the house ban on earmarks. i also ask that the rule provide all necessary waivers for prompt consideration of legislation, and that the rule provide for at least one hour of general debate. in addition, i ask that the rule provide authority for amendments to be considered and blocked.

thank you for the ability to testify before you here today. i look forward to working with you, and members who are our colleagues getting past the third consecutive defense authorization bill. thank you. >> mr. chairman, thank you very much. we're delighted, mr. smith, that you are here. and the gentleman is now recognized. >> i thank you, mr. chairman. i appreciate that. i want to start by echoing the previous comments. he's been great working with him for the last four years. we work in a bipartisan fashion. neither one of those things are easy. and mr. mckeon has really continued the tradition of -- i'm sorry. and buck has continued -- it's on. sorry. that's all right. buck has continued the tradition of working in a bipartisan way and i very much appreciate that. and i'm always honored to be

able to co-sponsor the amendment today in this bill, after buck have served congress very well, particularly this committee. by and large i agree with his comments about the importance of this bill. it continues to fund our troops who are still at war in afghanistan. the other thing that i really like about this bill is it recognizes that our challenges right now are primarily from terrorism, asem metric warfare. and prioritizes the special operations command and cybersecurity threats. i think it sets the right priorities in that regard. he does correctly point out the challenge going forward. the defense budget is vastly less than we thought it was going to be. you can argue over what's a cut and what's a reduction and an increase. but three years ago, we thought we were going to have a lot more money this year than we do. and certainly, if sequestration comes back next year, it sticks around for the full eight years, there is going to be an enormous

amount less money than what was planned for three years ago. that means we have to make changes. the administration put forward a series of changes, in a bunch of different areas. they proposed a brac. they made reductions in certain compensation. they were going to lay off 11 ships from the navy, discontinue the a-10, and several other -- and to try to make sure we're rearranging the guard issues. for the most part the committee got rid of all those changes. found the money creatively for 2015. the problem is, it creates a bow wave. 2016, 2017, we're not going to be able to do that. so i do think that as we go forward in this process, congress, house and senate, you know, if we don't like the cuts that the administration put out there, we're going to have to put up alternatives. and it's worth noting that the administration asked for 28 billion additional dollars. they acknowledge the budget they were handed from the budget agreement, from this body two

years ago, or a year ago, for 2014 and 2015, didn't give them enough money. but that $28 billion is not forthcoming. so they have to live within the budget that was presented to them. i don't think it's helpful for congress to dock every one of those hard choices and create a bigger bow wave down the road. i'm going to have two amendments on that. one, to forward a brac. i know bracc isn't popular. i know of no rational argument against doing it, other than, oh, my god, i don't want them to close a base in my district. understand, if we don't do the bracc, the estimate came out today that there's $6 billion a year that the military spends on installations and facilities that they do not need, that money comes right out of readiness. it comes right out of our troops. so i think that's a choice we'll have to make. also offering up an amendment to the navy's plan to lay up 11

cruisers and three amphibious ships to save money on the navy side. if we want 11 carriers, we've got to save money somewhere. and by not doing that, by not laying off those 14 ships, we are raiding the ship modernization account to keep them going. that account's got $2 billion in it. it won't a year from now. if we don't do this layup. there are choices to be made. i look forward to the debate on the floor. but i agree with the chairman once again, i think we've produced a good product. we never forget underlying this bill, it is support for our trofam >> thank you very much. both of you spend a lot of time dealing on issues notwithstanding with the military, but also the men and women and their families, and i know that each of you, each year you come up here, you speak favorably about not just the interaction, but favorably about

how proud we are of those men and women. and i know during the hearings that you have, you have regular visitors. i would like to acknowledge, if i can, a gentleman who has just come in to be a part of this hearing, to watch this hearing. he's there the united states army, the 82nd airborne, specialist stephane levon, i believe if i've pronounced his name right, who's joining us. and for those of you who are watching on c-span, this man has served our nation, and i'm delighted he is here today. we will not have him come and make testimony today, but him being here on behalf of not just his branch of service, united states army, but also representing what i grew up with and all of us understanding the

82nd airborne as an important component of our fighting force. and the men and women, representing the men and women of the united states military today. so, specialist, we want to thank you forking here today -- for being here today. the debate that is going on is one where we're trying to determine the policies as we move forward in this next year. and it is the gentleman from washington and the gentleman from california, the ranking member and the chairman, who are bringing together a bill which was unanimously reported out of the committee. and so it's important to note as you are here today representing the military, i think it's important for us to note that we're trying to work together. the military looks at congress to do the funding, to work on the policy, and i'm delighted that you're here and joining us together today. thank you very much, sir. i've got a question for each of

you. mr. chairman, over the last few years your colleague on appropriations, mr. culverson, and you last year spoke about dod and the medical records as it's related to them moving this transition to the va. can you give me an update about that? not the va side, but the transfer of records and that process that's going on. and really the question's to both of you, but, mr. chairman, like to yield to you first. >> i'd -- >> [inaudible] >> we have had a couple of meetings with both secretaries and with both committees, and it's a very difficult thing to

cut through that bureaucracy. the major jurisdiction is with the veterans affairs committee, the problems that we've been reading on the hately -- about lately. but it seems to me that it's a very simple thing. when somebody joins the military, a record is created. and it would seem that it would be possible when they're discharged to just transfer that record to the va. for some reason it's not that easy to do. and they are now, bob tells me, moving our records electronically to the va. that's a big step in the right direction. i think when you talk to members of the veterans committee, you'll find it's a, that's a

huge bureaucracy over there and trying to get them all to even talk to each other is part of the problem. do you have any more to add on that? >> no. just as you said, we're not where we need to be. you know, the medical, electronic medical records have not met their promise at this point primarily because systems do not properly communicate with each other, and that's true between the dod and the va. we're working on the problem, but we've got a lot of progress to make. as the chairman said, there has been some, but we've got a long, long way to go. it ought to be seamless. one of the hardest problems is when you move out of the dod, benefits, a whole lot of things transfer over to the va. we have got to have a better method to get those records over there. electronically is the best way to do it, we've just got to get systems talking to each other. >> from time to time, which means at least once a year when you come up here, i know you hear from members about their own ideas and their own

attributes about the things that they hear are people back home. that they hear from people back home. i would like to, once again without being on record, to tell you i spend a good bit of time in dallas, texas, with veterans, members of our military, people who have served our country honorably, and it wasn't back to a world war ii record, it was over the last four or five years in their service. and trying to document what thai done and -- what they've done and move forward. and i will just tell you, you're in more meetings than i. i appreciate the time that you do spend on this issue. until it is not just resolved, but million it works the -- but until it works the way you think it ought to, i trust both of you. but i remain very skeptical of the department of defense and the va in their effort to effectively deliver what they said they would do. that's not a hit on either one

of 'em, simply a work in progress. but i hope that you will and the chief and, certainly, the staff knows this, stay after this. there are too many people who want and need this to be fixed faster. faster. but i am in favor of doing it right. and so i hope that your attention to that detail will be accomplished. and i look forward to watching the results of what you do. and i know you want it just as much as i do. second matter is one that you can either comment or on or not, but our great nation was rocked once again when to car the occurrence of the military shooting occurred in fort hood. it also happened up here, right two miles from the capital.

it's happening on military bases. and i am very much hopeful that the department of defense will have a chance to come up with better answers. i think it's, i think it's not surprising sometimes that a person or two have lost their way and would take it out, call it workplace violence. i can understand that. but for 10 and 12 and 16 and 18 people to be gunned down without defending themself is a problem. i was in kabul the -- this week during the break. i had a chance to be with lots of men and women. a good number of them from california. as always, a bunch from texas. and i do recognize that they are in a, while not a war theater, they're in a war zone. but virtually every one of them to a person had their weapons on them.

and i believe that there has to be a look at a policy because of the problem. and that policy, i would hope, would be something that you would be a part of. i do not know the status of that, and if either of you would choose to speak about this at this time, i would welcome that, otherwise i would let the gentleman -- no one wishes to speak at this time. thank you very much. i would defer to the gentleman from georgia. gentleman's recognized. >> thank you, mr. chairman. thank you, all. thank you both for your work. we don't have many bills that are unanimously reported out of committee, and i know that doesn't come, doesn't come easy, it comes hard. i'm holding the president's statement of administrative policy, it's the longest veto message i've seen in my three years here and mentions -- >> it was just as long last year, if that makes you feel any better. [laughter] >> i'll have to go back and, it

kind of hits those issues that are, in fact, what you would expect folks to struggle with, whether or not money can be spent to move guantanamo detainees back to the, back to the u.s., whether or not compensation should be slowed changes should bem, made to the army guard system in the absence of a commissioner. i want to touch on that one just for a moment. i've certainly heard a lot from my guardsmen and reservists back home, folks who love this country and want to participate in doing whatever's right, whatever the right answer is but are wondering if we're dealing with a budget-driven strategy or a strategy-driven budget and certainly prefer that when it comes to the national security of america, we're dealing with a strategy-driven budget. and they feel like and certainly our community agrees with them,

that they are a vital part of making that, of making that a success. i don't, i don't know, i don't know the challenges that you all faceing making an entire authorization, a bill come together, but it means a lot to me that with all of the competing pressures that are upon you, when men and women from back home who you know have a love for this country, a love for our armed forces speak out and say we're concerned we may be moving too fast, with we may be moving too far, we want a pause, that you all have been willing to listen to that discussion, and i'm grateful to you for that. mr. smith? >> yeah. i mean, the problem with the budge thing is, you know, as i said up front, the administration has said they want more money. so, yes, the budget is impacting our strategy at this point. but, you know, that's a choice we all make. i'd turn sequestration off tomorrow if i could, but it's

there. so we have to make the decisions in response to that. and on the guard and reserve, they've put forward a plan in terms of personnel and in terms of moving around their air assets that is set in place so save $12 billion over five years, and i've met with and had several phone calls with my agitant general in my state, and what i've said is if you don't like that plan, give us another one that saves the same about of money, because that's where we're at. that's the only challenge we have, is the budget challenge. but keep in mind, you know, this is the number that congress set. and sequestration's going to keep coming for eight years. so if we don't want to see that happen, we'll have to make some changes here legislatively. >> this will be the last ndaa bill where i'll get to visit with the chairman on this. it has made my three years in congress easier knowing that

your hand was at the helm. we battled sequestration being one of many very difficult issues that we have struggled through, and having your voice there was always a comfort because for all the different directions folks are pulled in, i have never seen you pulled in but one direction, and that is advocating op behalf of the men and -- on behalf of the men and women who scrollen tearily -- voluntarily serve in our armed services. i'm grateful the you for that singular focus, and i am grateful for your counsel during these years i've had in congress. >> i've told people i'm leaving congress, i'm not leaving the fight. as long as i have breath in me, i'm going to be arguing for more money for defense be because i look around the world, and i'm scared. i mean, we talk -- you can look at the whole middle east, you can look at what putin's doing in russia, you can look at the

problems that we're having with china. i have people almost daily when i'm here in washington come into my office from around the world -- defense ministers, members of other legislators -- and they all have the same question, where is america? are you going to be here? they see the cuts that we've made. in 2010 we made a pledge before the election that we would cut everything we understand were in serious financial problems. and we, we, the republicans, wrote a pledge that we would cut everything but homeland security and defense. we had 87 freshmen come to town and say, no, everything's on the table. not all 87, but enough of them that we have since that time cut over a trillion dollars out of our defense. for the last couple years and going forward, the next eight, ten years. you don't make those kind of

cuts without seriously cutting our ability to defend ourselves and our interests around the world. and i have the secretary of the navy and the cno and the marine commandant in, and they were explaining to me how we're growing our navy. the secretary said, you know, we're growing the fleet. and i said, explain that to me. so he tried to explain cutting the 11 cruisers out of our 22 cruisers. we're not, we're just moving hem into modernization. we're taking them offline, and then we're going to -- i said, at the end of the day we're going to have 11 less than we have now. he said, no, we're going to modernize 11, and then we'll put them back many as we -- yeah, we're going to have 11 less. i turned to the cno and said how many ships do we have? 283. how many are we going to have

next year? 273. we're supposed to be trying to have 313 or 330 if you go back and look at the qdr. a lot more ships than we have or are going to have. and in the meantime, the same thing. we look at the pacific and the president talked about a pivot to the pacific. everybody in europe when they come in sees, what does that mean? are you leaving us? are you leaving europe behind? no. it means we're also going to put more emphasis on the pacific. but the pay-com commander explained to us the size of the pacific as you could take all the land mass on the earth and put it in the pacific and have enough room left over for another africa and and another australia. and we're going to be taking care of that with less, less ships. next year he'll have 130 days where he has no aircraft carrier.

and, you know, these are the ways that we calm problems. i had a member of the jalapeno please legislature that came -- japanese legislate legislature that came in, and he's laid out to me how much the japanese have been encroaching into their air space and how it's really accelerated the last few years. and he showed me a chart last time he visited, he's spent four times in the last year and a half. eight teak times they had to -- eighteen times they had to scramble their jets, this year 400. so they're concerned, and they want to beef up their defense, their ability to defend themselves because they don't think we're going to be there if we need them. i think taiwan is concerned, south korea is concerned, yo u.n.? it's -- you know? it's a very difficult situation that we find ourselves in. and we -- i voted for sequestration, you know? we had a choice.

most of our votes aren't plaque and white, and -- black and white, and you can just vote for a good thing or a bad thing. it's choices that are difficult in that if we hadn't voted for that bca, the government would have shut down. i was assured by leadership that we would not have sequestration. well, we got it, and we got it in spades. and we're paying the price. and we, those of you who are going to be here, i'm leaving. but i'll tell ya, if you don't pick sequestration next year and if we have to -- next year, i've had a lot of members come up to me, and they're very concerned. they're concerned about the national guard, they're concerned about the reserves, they're concerned about the wart hog, they're concerned about drones, they're concerned about their bases, they're concerned about lots of things. all i can say is as bad as it is now, next year it won't even be comparable. we truly will, next year, hollow

out our military. and i just hope that some way you'll be able to work out something and change that next year. otherwise we will no longer be the power that we are right now. >> want to know if the chairman will join me in holding you to that commitment, that even as you leave this body, you don't leave that fight. you'll jest leave that contact information as you walk out the door. i'm sure you'll find your door ringing as particularly the younger members want for your expertise. mr. chairman, i yield back. >> gentleman yields back. gentlewoman's recognized. >> i thank you both, and i -- mr. mckeon, i don't know if you know it or not, but last week i praised you to high heaven on the floor. i hope that hasn't hurt your reputation. [laughter] but i really so much appreciated

your statement about we did not need more benghazi studies debating the select committee. and i understand that one of the committees is going to do it yet again, has subpoenaed secretary kerry. i don't know how people get their work done when they're constantly called up before committees here over and over again. but about today, i understand exactly what you're saying, but we are obliged by treaty, are we not, to fight for japan if anybody attacks them? and south korea? and australia for reasons i've never understood -- >> we have seven treaties. five of them are in the pacific. >> right. so whatever -- they're worried that we're not going to be there, i'm worried as to how we're going to pay for it. and i'm really concerned about that because we have schools and highways crumbling all over the united states. we can't have high-speed rail anywhere in america. we're so far behind, our

airports. you know, we've built one airport from the ground up in the united states since 1972? stapleton in denver. we've neglected ourselves so bad. so i really appreciated what the first george bush did in the gulf or war. he said, well, if we're going to go fight, you have to give us money. and they helped pay for us. maybe we ought to look at something like that again. but do we need more aircraft carriers, you think? >> pardon? >> you want more aircraft carriers? >> more? >> how many do we have already? >> we have 11. >> and they've cut -- >> by law we have -- >> [inaudible] >> and by law we're supposed to have 11. >> they did not cut one. >> and the atn and the u2s, you believe that they should still be produced? a10 and the u2? >> uh-huh. >> i understand that those were recommended by the administration to do away with. >> yeah. and i support the administration on that. we are different -- >> do we really need those?

i remember when they did the v12, and they said the only time they could really have used that to any advantage was during vietnam, and it was way too late when we started building them. but i i do appreciate and have known since i got here that if you build everything for defense in over about 400 congressional districts, it's going to be very difficult to try to cut the budget. >> i'm reading a series of books right now on world war ii -- >> yeah. >> -- and, you know, we were all in at world war ii. >> right. and we had the draft. >> with i was a kid. >> yep. >> we went from a very small military to a very large military -- >> cavalry at the gunning of the second world war -- at the beginning of the second world war. >> very quickly we did that, but we lost a lot of people. >> we did, indeed. >> we were putting soldiers -- it just, it makes you want to cry reading those people that got sent over there that were going through northern africa

and then through italy and then d-day. the number of people that we lost because of lack of training, lack of leadership, lack of resources. there were people that landed, and their guns didn't land. i mean, you know, we don't want that again. nobody wants that. and yet we did it again in korea. and then every time after a war we've taken our military down, and then we pay the price. they pay the price. afterwards with. because they have to kind of build back up. we built 86,000 planes in one year in world war ii. >> but we don't these that now. it looks -- >> who knows what we need? >> because it seems to me that we're getting so mechanized and so high-tech -- >> we can't, we can't do a thing right now to stop putin. if he wants to take all of ukraine, he's got it. >> yep. well, it's a whole new place. there's no -- >> that's right. that's right. >> [inaudible] >> and they didn't, a few years

ago they didn't do that. >> but it shouldn't be all on our taxpayers, on our men and women who volunteer to go. you know, we were talking about the va a little while ago, and i really think this statement needs to be made. my district, i already had problems with the va when we just had some second world war veterans, korea, gulf, and now in this 10, 12, 13 years of war that we've had we have maimed between 46,000 and 50,000 young americans with life-altering wounds. >> no, we haven't maimed them, the enemy has maimed them. >> we sent them there. >> we sent them there for a purpose. and they've done very well, and we should be proud of what they've done and what they've accomplished. >> i'm proud of what they did, but they did it for us. >> we didn't maim them. >> with i will tell you that we have to be prepared to pay for that. >> you bet. >> the veterans administration,

the contract that we made is the cost of doing war. and i have felt for a very long time that the whole veterans administration should be under the defense department. because that's where the money is. and we should really be able to take care of them. but in any case, we have this wñ want to ask unanimous concept to put the administrative policy in. there is no veto -- >> without objection. >> as a matter of fact, let me read just the next -- [inaudible] .. oh, right. okay. it does say -- i'm sorry. but what he says here, that he looks forward to working with congress to address his concerns, because those are constitutional concerns, including the respect of the president's constitutional authority as commander in chief of the armed forces.

so let me put that in the record. and i yield back my time. >> the gentle woman yields back her time. >> thank you, mr. chairman. and having served on the armed services committee now for a yearand it's been an honor to work with both the chairman and the ranking member. it's great to hear from time to time, a little banter back and forth between the ranking member and chairman but it's always done i think with much decor. you can have differing ideas and you can have differing ideas of how to get from point a to point b. doesn't make either one of them more right or more wrong thing of the. it's just a different viewpoint. i'll be honest with you. i've heard a lot from ms. slaughter, really biting my

tongue, some of it, but first of all i want to go and thank you. i've had a son that is served in the 82nd airborne for six years, currently active duty army, and he was deployed to afghanistan and iraq. but for the grace of god he came back, whole. and there's been so many of our young men and women who volunteered to go into harm's way for this country and for their fellow soldier, i will tell you. and in talking to all of three of my sons asserted this country, he do it for their battle buddies, the guy next to them or the girl next to them. they do it for that reason to make sure they come home. we have been blessed in this country in so many ways, and i will tell you that the armed services i think gets sometimes

not there just do in regards to how you put us in a position to have all the things that we have today. going back, you know, whatever war you want to go back to, those men and women made the sacrifice of so a lot of us could stay home. only 1% today serve, and they do it with great distinction, i will tell you. and i'm very proud obviously because i have three sons who are army and their in love with what they do. because otherwise i don't think they would do it if they didn't. but the armed service committee has tough choices to make from time to time and i will agree with the chairman and i voted for sequestration, was probably the worst vote i ever made. as it relates to our military, as it relates to our armed services. it has put us in a position, and

mistress smith said earlier that we done some things to get us through -- mr. smith. but after that it looks bleak. when you look at what's going on in the world, it is not a safer. and we've had admiral mcraven to testify in front of the committee. he's in charge of special operations command and he was very clear and distinct in regards to what special operations can do, and that a number of folks who thinks special ops can do it all. but like you said, it can't reopen the straits of hormuz. it can push back south korea or north korea if they invade south korea. it can't do the things that a major military force can do. all the generals to testify in front of our committee, and correct me if i'm wrong, i think

of all said we've done a terrible job in the past in predicting our future combat roles spent we've done a perfect job. we have been wrong every time. >> i stand corrected by the chairman. >> so when people say hey, listen, don't worry about it, it's all going to be asymmetric warfare, that may be true but then again it may not because when you see the resurgence of russia and to see what china is doing, and today i believe they indicted five or six chinese military officials for espionage in this country as relates to our businesses and our corporations. and you see what's going on with russia, and particularly where they are in regards to the black sea, and the nile -- the denial they have, access to the black

sea. it has not gotten safer. chairman, i worry just like you and i believe mr. smith does, too, because he talks about the same issues, about sequestration. you've been here longer than i have, and i hate to see you go because you add a lot, a lot of experience ideas in regards to how do we move forward. i worry about all the classified briefings that we sit through that we can talk about here, about the threats that face us. had a son just come back from africa and he said, you know, and they were trained -- training canadian forces in africa, and he said the chinese are operating strongly in africa. if we pull back from the world front, and i absolutely agree that we shouldn't be the world's

policeman, but if we pull back, and this is just my humble opinion, that there are so many other actors out there that will fill that void, whether it be china or whether it be russia or some other state actor that it's going to put us in great jeopardy. particularly our front. we've heard from our friends, and i concur with your statement, chairman, that they are concerned about where are we going to be if needed. if we don't have the ability to protect the force forward, we are going to be in precarious positions i think. so it's really not a question, was more of a statement. i just want to thank both of you, your leadership on the committee, both from them only side and the majority side.

it's been a great year and five months i will tell you. the market that we just went through is painstaking to say the least in regards to all the amendments that are offered by all the members, and tomorrow i'm going to get to handle the rule i believe as relates to the amendments. and that is a process in and of itself. so i want to thank you so very much, and mr. chairman, once again i want to thank this young man for his service to our country, and lastly on the issue of the va, you know, we pre-fund the va. i don't think the va has been turned down on budget requests but what we have seen with the va and i think all of us as members have had to deal with it, is how they deal with our servicemen and women when they need them the most.

and i think we are seeing that come through in any number of instances throughout this nation, whether it's in phoenix. we just had an issue down in the gainesville the hospital, ma but there's others across the nation that are coming forward and i think it's just horrendous that it's not a lack of money. it's a lack of accountability and a lack of direction by the va to make sure they are there for guys like you. and that's, is my heartfelt thoughts on the issue, mr. chairman. i yield back. >> want to thank the gentleman. mr. chairman, as you know the gentleman accepted the assignment to come to your committee. we felt like, i did, the speaker did, we would be better served, and, of course, you see the service is given. to be a part of your committee.

i appreciate the gentleman's comments very much. i need to notify the committee. the gentleman, mr. smith, left as excused. he received notice that he needed to go to the white house. is going to vote and leave so i gave him permission to do that. i normally do not do that, and i did not have a chance to effectively communicate it but we did communicate. so he has headed off, and i want everyone to know that he was not leaving for any other reason. i believe he's been successful at this testimony up to now. but i would direct the committee to understand that he did have to leave, was not for any other reason. the gentleman from massachusetts is recognized. >> mr. hastings and i are at the same meeting, so with -- >> i will yield back my time. >> judge hastings? >> i yield back. >> the gentleman from orlando, florida, is recognized. the gentleman has no questions. the gentleman from louisville is

recognized. >> mr. chairman, i didn't get the invitation to go down to the white house. let me just our to thank the chairman for his service because we are going to not be ago to rely on his services after this term. that's too bad. the country will recover but it will be a struggle. mr. chairman, i just want to thank you for inclusion of sex and -- section 571 which deals with the purple hearts for the soldiers that were wounded in fort hood in 2000. this is important to us back in texas. i appreciate the careful wording of the amendment so that it does not alter the importance of the purple heart award, at the same time recognizes the sacrifices those individuals. thank you, mr. chairman. i will yield back. >> mr. chairman, of what you think you want again, not only for the work that you've

committed to on behalf of yourself, your district, but also the hard work of the men and women of this great country. you will be missed. you've done an awesome job but you also deserve a chance to move forward. and they know tricia will be delighted to have you home. i will miss her also, but we are delighted. i thank you for taking time to be here today. the gentleman is now excused. i would like to also acknowledge, i know we acknowledged a specialist who is here. our dear friend of every single member of congress is here and the company as he does so often. members of the united states military, men and women, from around the country who have been in service to this great nation and are currently either at walter reed or bethesda, and the want to thank bert for being here today also.

you our next. mr. chairman, if you choose. i would now be in receipt of a motion from the gentleman from north carolina. >> mr. chairman, i move the committee grant h.r. 4660 making appropriations for the departments of commerce, justice, state and related agencies to the fiscal year ending september 2015, and for other purposes in open rule. the rule provides one hour job debate equally divided control by the chair and ranking minority number of the committee on appropriations. the rule was all points of order giving consideration of the rule, the bill. the roadways points of order against provisions in the bill for failure to comply with -- the rule provides the bill shall be considered for amendment under the five minute rule. the rule authorizes the chair to a core priority in recognition

to members who have frequented the amendment from the congressional record. the rule provides one motion to recommit with a without instructions. section two provides for consideration of h.r. 4435, the national defense authorization act for fiscal year 2015 under structured role. the rule provides one our general debate equally divided for the committee on armed services. the rule was all points of order and its consideration of the bill. the rule provides that the amendment in the nature of a substitute consisting of the checks of rules committee print shall be considered as adopted and the bills as an shall be considered as but. the rule waives all points of order against provisions in the bill as amended. the rule makes i an order only o those for the amendment sprinted in the report. each amendment may be offered only in the order presented and the report may be offered a bite member designated in the report shall be considered debatable for the time specified in the report equally dividing control

by the proponent and an opponent shall not be subject to a minute and shall not be subject to a demand for division. the rule waives all points of order against the amendments printed in the report. violate the rule provides no further consideration of the shall be in order except pursuant to a subsequent order of the house. >> you have now heard the moti motion. i would you to the gentleman from georgia for an explanation of the rules. >> thank you, mr. chairman. with respect and open rules and what might be unusual, the general debate and the seven initial and maintenance for ndaa, for from the republican side and three from the democratic side to get us started tomorrow so the committee has time to go through the remaining 300 spent i thank the gentleman for his explanation. in fact, as the children did explain, we will be back

tomorrow at 3:00 to consider the other amendments which no decision has been made on, but this was to allow the opportunity to get started on the floor and a chance to try and give a more fuller opportunity for debate. debate. with that said you've never heard of the the gentleman from north carolina. is there discussion or amendment to that? seeing none, the vote will now be on the motion from the gentlewoman from north to let those in favor signify by saying aye? opposed? the ayes have it. mr. woodall will be managing for republicans -- and mr. mcgovern will be managing for democrats. i would like to once again reiterate our just awesome thoughts for the gentleman from the 82nd airborne who

represents the united states military today rules committee, i want to thank you for taking time to be with us. we had a debate. we had a discussion, and i hope that you will be able to note to your colleagues, not just in the 82nd airborne, united states army but also in the military, that the men and women of the united states congress are thankful and respectful of the service and the things which have happened to you in your life, and we will continue to follow them. and thank you for being here today. does the gentlewoman wish to be heard of from this time waiting for the? any other member of the committee? thank you very much. we will now be -- we've completed our work for the day and we will meet tomorrow at 3:00 p.m. [inaudible conversations]

>> today several live events on our companion network c-span3. fcc chair tom wheeler will testify before house energy and commerce subcommittee on a variety of issues including the spectrum auction immediate ownership and net neutrality. we will have at 10:30 a.m. eastern. at 2:00 eastern a house transportation subcommittee looks at pipeline safety. witnesses are scheduled to include representatives of a pipeline and hazardous materials safety administration. the american gas association, the association of oil pipelines and the pipeline safety trust.

>> now, former treasury secretary tim geithner, author of a new book about the financial crisis, he was hosted by politico for less than one hour. ♪ ♪ >> ladies and gentlemen, welcome to the stage mike allen and ben white. good afternoon. welcome to this year's first

book political lunch. it's an increasing sitting here at the hamilton. we are thrilled to have you with us. i've alongside many ben white. >> nobody can do that, mike spent welcome all of you in live strealifestreamline. we appreciate you joining us as well. we are excited to be hosting the former treasury secretary tim geithner. his first public d.c. event since leaving office. to talk to his book "stress test." before we kick it off i'd like to thank the bank of america for making these conversations possible. we appreciate their partnership on this forum to talk about the issues that matter most in washington. we appreciate bank of america for the sponsorship and their continued support of the playbook programming. >> thanks everybody for being here. it's exciting to me to see people eating at one of these events which is sometimes a rarity so i hope everybody

enjoys your lunch. i would urge people have questions year for secretary geithner to senate to his hashtag playbook lunch and will try to get -- >> the twitter mission. >> the actual copy of the book which would like to say is dogeared and underlined. i did pay for this at barnes & noble in new jersey. so anyway will be tracking twitter question. please send them a. we don't have a lot of time so let's not waste any of the. let's welcome to the stage former secretary -- treasury secretary timothy geithner. [applause] >> spent the empty chair. spent out would make the former goldman sachs banker jokes but -- >> is not former goldman sachs. i cannot believe it. anyway. thank you for joining us. we have a lot of ground would like to cover. i want to start with the main tension around the tim geithner

story. and that is on the one hand -- >> not just one. >> the main one seems to be, are you the savior of wall street and the broader economy at the expense of main street and housing and all of these other things? one of the things that struck me in reading the book again on my way down there was some of the discussions around housing reform. i just wanted to read one quick passage from the book. >> you put housing in that same question? >> i'm going to do housing in the same question, the context. >> page 379. >> this was further back in the boat. this is when you're discussing what options are on the table to help homeowners after the system had mainly stabilized to the t.a.r.p. program and baylor. you said we did want to spend tax dollars helping borrowers who could afford to stay current without our help other also real fairness issues as those political issues around using tax dollars to help neighbors or got in over their heads. my question is did you do for

bankers, helping them when they got in over the heads and bailing them out through the t.a.r.p. program and other efforts and basically limpid streams who are unwilling to do that for the most part for homeowners? that you applied some has to joe masek you didn't apply to banks? >> no. that would be mistaken. >> shocked you would say that. >> i think it's important to start with the recognition, this is a classic financial panic. the worst crisis, different from all of the crisis but it doesn't happen that often. people forget what things cost and how damaging they are. in the context the only way to protect the mass unemployment is to step in and try to make sure you prevent the collapsing failure of the financial system. that's the essential, necessary moral thing to do and that -- that is possible if you don't do that. so it's like you're in a plane, you're in the cockpit and the plane is on fire. there's a bunch of people who

are going to do if you don't land the plane safely. and yet people want you to come out of the cockpit and try to figure out, could you negotiate conditions on the banks before you land it? could you figure out how to figure out what caused the plane to be on fire at that moment? or are you going to go land the plane? that was our obligation to that's what we tried to do. it was messy and it was very damaging because of panic at that point had so much momentum. that was the first obligation to of course after we did that we tried to do everything we could to try to get more support for the economy over a longer period of time so on the planet would come down quickly, growth would recover more rapidly and we got a stronger recovery. we worked with that. we tried but didn't get as much as we wanted done in the context but we got the economy going again in six-month, remarkably quickly. i think if you look at the record of our outcomes in this

crisis, even with all the challenges we face as a country, they look very good against the last 100 years of crisis response by governments in developed countries. thinkable panics have caused throughout history but in the great depression just for comparison, in the great depression we had a massive financial shock, cost 25% unemployed, the economy shrank by 25%. there were bread lines across the country for about a decade. a shock at the beginning of this crisis at the beginning was five times larger than what happened at the beginning of the great depression. >> there was a handsome grabbed -- >> thinking. i would like to do a dramatic reading. [laughter] >> mr. secretary, in the book it is public to conduct housing but go but i had. >> finish real quick. >> housing. housing was tragic, chairman hard, terribly disappointing to all of us. nothing we did in housing had as

much traction as much benefit come as much power, as people deserve in this context. why was that? because the scale of the problem was just massive relative to the tools and the authority and the resources we had. why was it so massive? it was massive again because this was a crisis following a huge, long boom in borrowing on credit and leverage. because so many people lost their jobs, because of the force of the initial panic in the recession, in that context we tried to do as good a job as we could with our limited authority, and our use of that authority did help millions of people stay in their homes. millions refinanced and take event of low rates. helped stabilize home prices. those actions were not powerful enough. >> really quickly and over to mike. a yes or no question but could you have taken 700 billion as you did with t.a.r.p. into principle write-downs and allow people to reduce the amount they owed on their mortgages?

>> i asked barney frank the question in this of the financial reform crisis about whether we could merge the sec and the -- he said you could do this, just not in this country. you have to ask yourself -- >> barney frank did that. mamaybe the fight harder and mae it happen. it seems to me where you're quick to give up on ideas speed is i don't agree with that. look at the scale of things we did in this crisis. again, like either all the scars of our mistakes, the damage still left over. i have like a deep appreciation for how much damage is still left and we fail to do. i understand this think if you look at the scale of what we did in this crisis relative to past experience, we did dramatic and remarkably effective things in the face of the perils of that thing. it was messy. it wasn't perfect. and it seemed deeply unfair because paradoxically in a panic

to rescue people from the risk of mass unemployment you will be doing things that look like you're helping the arsonist. it is just inescapable and the hills terrible and we hated doing it. but the alternative would've been much more unfair to the innocent victims of the crises. >> let's talk about the politics of housing. one of the few times in the book we see the president being shirk with you is the president was pushing to do more on housing. >> the president and he would get these letters but i think is written about this, talked about this. he would take home a set of letters every night to read and a huge number of letters understandably and i got the same letters were just about the pain and the frustration people felt. he would pass them on to us and he would put relentless emphasis to try to make sure we're stretching the frontiers. >> are we talking face-to-face? >> yes. you would want him to do that. that's what you want in a president in a time of crisis.

>> you know this president better than almost anyone. you spend more time in the west wing been any cabinet secretary of this presidency. when this president is putting berlin is pressure on you can when you watch to do something that has not been done, what is he like? >> its enormous pressure from the leader of the free world is what you think. >> it's really not that comfortable. [laughter] >> what is his style in a situation? >> let me put it a different way. what he was exceptionally good at doing, and this is a necessary quality for any effective leader, is he would subject the problems we are facing and the choices we presented to him to relentless, tough, brutal debate. without being paralyzed by how bad the choices were come without getting too deep in the weeds with technical issues, and

he was very good at trying to make sure he was exposed to a greedy raw diversity from inside his team and to outside. that was good. it wasn't that comfortable. but it was good and it was necessary and it was just your he could not put itself in the position of saying, well, my secretary thinks i should do x. and put on a. he never did that. but on the other hand, he was willing to do some very hard, tough things after looking at the alternatives. it is the nature of that crisis that none of the alternatives were very good. they were all very messy, but he would expose himself to those, not many of those survived much debate. they run into the realities of life. warren buffett told a story once about mike tyson which i would likely be whi

i kind of felt it was important for him to carry the burden at that time. >> the talking points were too over the top or too weak or what was their problem? >> there's nothing worse than public life than watching people read. talking points, they didn't write, didn't understand, at this artificiality to them. and i'm just not that good at doing that and i'm not, did you

watch an me afterwards? i'm not that good doing that, and i'm not that good at making it up on the moment. >> you have gotten good at it. mr. secretary, in the book you talk about the 2008 meltdown as a 100 year flood. what is the likelihood that in our lifetime it will be another 100 year flood? >> very low. for two reasons. one is the memory of this crisis is going to last for a while. these things -- look at what happened after the great depression. there's a long time people saving for a huge amount of time but it may not last that long but it's going to last for a while. it's also, again, the risk is is there but it's also a low risk because we did a dramatic restructuring of our financial system and cleaned out a lot of really bad things. and forced the system to hold, raise and hold much more capital

than to risk another crisis and passed a set of reforms that are messy and disappointing to many. but at the court that is hugely powerful, important change which is to force people to hold more cushion against the risk of mistakes for things they don't understand, don't know. and yes, it's true over time those will be eroded. overtime water will find a way around those things but these are very tough, conservative and have a good prospect of buying us a long treated of -- not indefinite, not for ever. but at th their core they are vy good, very powerful. >> it sounds like some speech he gave at the new fed leading up to the last crisis. not that you didn't point out there were risks building an assistant, that there was leverage them in the system but also a lot of talk of how much more stable the banks have become, the system has become. when you look back at the usually up to 2008 and the crisis, what are the specific things that maybe you wished you would see more clearly or have been able to react to to do things to prevent a crisis that

we wound up going through? >> this is a common failure of imagination which i'd like to say different but which i was part of, too, which was it did not seem conceivable in this country that we would face the risk of a great depression like financial panic. a run on the entire system. now, i lived in a financial crisis, grew up with and watch them over time. found out how to deal with them than most people in public life. so i new systems were very fragile. i knew they were deeply damaging. i had watched governments mess them up for more than a decade. and when i went to the new york fed i was deeply concerned about these two basic forces at that point. one was we were in the midst of the long boom in credit and leverage. and i talked about a quite openly. but also huge part of that leverage was building up outside the core of the banking system but what it happened after the great depression, as a country we did the right thing.

we put in place a set of constraints on risk-taking for banks with deposit insurance. protection against runs which you need to prevent collapse of financial systems. but over time the market outgrew that. you had institutions, you all know who they are, investment banks like bear stearns and demons -- lemons, even fannie and freddie who grew in size to be larger than the core of the banking system. the fed had no authority over them. no visibility into them. it was a problem and i was deeply worried about the problem. it was sort of a problem that was not amenable to any solution in the force of the boom at that time. and the talk about this openly and very candid in the book. uneasy about how much we knew about whether capital was sufficient. and easy about the risk in the system. we did a lot of work on trying

to look at early stage and try to figure out how would this system there in the event of pretty big losses. and as explained in the book, it took great depression like losses great the vulnerability to panic like this. and that was something which was hard to anticipate. hard to talk people into the view that in the united states of america in 2007, you needed to prepare for the risk of a great depression. people found it inconceivable. most people that house prices were not going to fall. it was sort of a deeper set of confidence. >> were people trying to convince you of the time that there was this crisis in subprime wouldn't happen, that mortgages are going to go bad and all the leverage is the banks used to package mortgages and seldon was going to come back and blow us up to? >> that wasn't the core. remember, if you look at this crisis there are huge amounts of things that contributed to the crisis and it was a terrible

amount of fraud in the system. there's a huge them at risk operating outside. we had this regulatory system with a lot of tribal war, but not much power, not much scope in that context. terrible moral hazard. a lot of things to worry about in our system. a lot of the things were observable. but the thing that was hard to anticipate, appreciate, even imagined was the risk that losses in subprime, even in the event of a deep collapse in housing prices would trigger a run on a modern financial system that had the power, this run head. remember the reason why the run had so much power is because there was no standing set of tools facing it that they could come in and stop the run. that's what was so damaging for us. it was counterintuitive because most people still lived with a

view that this conventional wisdom was that the bailouts were too powerful. it's a little more complicated than that. what happened was the run was allowed to gain huge amount of momentum. it's much harder to slow and reverse, so that by the fall of 2008 we had a republican president has to go to congress to ask for truly unprecedented emergency authority. so it's a complicated story. and we are still feeling this cars and damaged caused by that. >> clearly dodd-frank debut new tools, reassures you about the future but dodd-frank also took away some of your firefighting abilities, some of her bailout abilities does that worry you? >> it does. you can't -- i'm going to mix metaphors because it's hard to find the right one. you don't make fires less likely

by depriving the fire station of equipment. it's just not the way crises work. not the way finance works. >> using the dodd-frank legislation did that to the administration? >> they did some very important powerful things, that gives authority to have more capital against loss. as a systematic part of what we do going forward in supervision, again it's designed to make sure the system is running with the capacity to absorb a great depression like losses. that there are important things. not like in 2007 when they were applied to 30% of the financial system. they were applied much more broadly today. dodd-frank also gave us the ability to wind down a large lae institution without affected by it and without the risk of a lot of collateral damage. we didn't have that authority with bear stearns. very important thing. but dodd-frank also we were

legislating in a deeply populist moment, dodd-frank also took away the fdic's authority to guarantee the liabilities of bank holding companies without congressional approval. that was an unfortunate, very consequential judgment. and there will be sometime in the future, hopefully generations from now, when they won the that authority begin because in a financial panic that's the necessary part of the arsenal to prevent you from running. because and unless you can reduce the incentive of people to run, they will rush for the exits to protect themselves and that's what brings the risk of mass unemployment. >> let's go back for a second. it would and would like to discuss dodd-frank at great length over the lunch on a regular basis but i want to talk about the point where you're trying to convince obama not to pick you as treasury secretary make the case what would not be the right person for that job. ..

she has a good ability to work with people on both sides of the aisle so i think she will be great. >> it is a public service, yesterday's new york times gretchen morgan's and, it is an unanswered question from your book so i will get to you now. how could a huge regulatory army

miss the economy's buildup of risk? >> good question. we read about this, there is a lot of risk in our system and i described it again for you. the main failure was the failure to extend the head of the crisis a basic set of restraints on risktaking in the protections that are essential to preventing financial crises and the dep failure to extend those over parts of the system which were accumulating a huge amount of risk. there were other failures too. left to run with no capital, we had a wild west of consumer finance available protection and those were systematic failures. the lead defense against those failures it is not like you can prevent financial crises by having more regulators necessarily or having central bankers with a perfect view of the future.

it is unrealistic because what causes financial crises is the access confidence produced by long periods of stability and they feel more confident taking on more risk and the only defense against that is this mix of shock absorbers against loss like what the stress test was in our system which you can anchor in reforms and make durable, alongside the capacity to put a lot of money in the window when things fall apart. one is not enough. you have to do both. unless you have that, you are going to leave your country more vulnerable to crises in the future. we are better partnered against those risks but it was never in vulnerable. >> one if your favorite subjects is the aig moment that got paid out. when people who are reasonable criticize the record that are

not ideologically opposed everything you did but certain things they poll out and say this is a missed opportunity to do something that would punish the arsonist, something that would make people feel better about bailing out wall street as that necessity, one thing that often comes up is the fact that after aig got this massive bailout of the first of several bailout, getting multiple doses of the bailout, plans to pay large bonuses to people at aig financial products that were responsible for the blowout. you made the argument that there was nothing in your authority for those bonuses, could not aggregate contracts. is that true, could you not use the force of the office or the force of the presidency as well to say you cannot have this money, because it is bad for america? >> most humans have the same

view, we have no means at that time but as i right in the book we didn't just twitter our lawyers in the treasury to figure out how to work in that context. as the president's went round and announce to the public that monday to ask the attorney general to go back and look too end they did a nice look at that and reached the same conclusion we had in those few days we had to look at it. it would be great if the work otherwise. >> could you have taken into bankruptcy? >> financial crisis caused by massive run produced by a fear of systemic failure across the system. and the system in the united states, even early 2009, think about what it was like then. the economy was falling off of a cliff and shrinking at an 8%

annual rate. even after we had guaranteed or supported or directly about tens of trillions of liabilities there was a gravely dangerous moment and the ideas that we would have been able to protect from the risk of unemployment growing much worse than it was with the economy falling off a cliff by allowing more failure, somehow that would have been fair and just. it would have been terrible. >> had you put a ig in bankruptcy that would have been satisfied? >> absolutely. think about financial crises. they are about the loss of basic trust and confidence. we already had a crisis that was pretty bad because there was a lot of zigzagging by the united states because of limited constraints and deep walt hazzard fever across the country. that is what produced a crisis this terrible, that basic sense that we should let this thing

turned because for the people who took too much worse, that instinct which is understandable, so human, so appropriate in most states of the world -- that is what happened in the great depression and systemic crises in the last hundred years. that is the instinct to let it burn. it is what causes the most damage to the innocent. only if you have authority to protect the guarantee. the ideal thing in this system and we are close to that today, you want to run a system where you can be indifferent to the mistakes of people running big institutions, in different to that failure. that is what you want, that is the ideal thing. to do that, you have to have two things we didn't have before the crisis. you have to have much thicker

stock absorbers -- shock absorbers applied more broadly or better position today. you have to have the ability to definitively break a panic and stop it from running requiring a full capacity to guarantee everything. in march of 2009 that capacity doesn't exist. your question is the right question. the ideal thing, you want to allow the failure to happen in the weakest parts of the system and be able to build a fire break that is so powerful, so broad the fire can't jump and bring the rest of the collapse. that is the ideal thing, we are better off today but not perfect. >> mr secretary, the most fascinating drama in your book hands down ease between you and your former mentor larry summers, who is the economic policy adviser. >> not really a psycho drama.

>> so -- the president's first summer in office, august of 2009, martha's vineyard, he renominated ben bernanke to a second term at the fed. reconsidered nominating larry summers to be the fed secretary. what was your advice on that? >> the president, that was early in his first term, most people felt like the crisis was still with us. very tough economy at that point and he was facing what to do about the succession of the fed. he was pretty thoughtful about it. he sort of said is this the right time for transition of the fed? if i make this change, the change i want to make at the time i have two transitions. transition the fed at a fragile

moment and lose larry summers. seems to me two -- two bad things. he made this decision to ask the chairman to stay and i thought that was a good decision. >> do you advise him to stay the course? >> we talk through it and we talked through all the options and i thought that was the right balance. >> the question, interesting stuff, he argued the case the number of times for possibility of nationalizing city and bank of america and don't have enormously bad implications that then works out and force the management, ways that would satisfy what you are talking about. >> i am in favor of the old testament. i really am. i think it is important for people to understand there was

terrible damage and people deserve a greater measure of justice. putting out the financial fire and making sure there wasn't a great depression wouldn't be satisfying enough and i believe that deeply and was very supportive of trying to make sure we gave our enforcement authorities more resources and better power in reforms so they could go do a better job of meeting the basic thing. i am in favor of that. the debate is not whether it is good or bad but just necessary. it is a different question from the other imperative which is how do you land that plane where it cause the least damage and in a crisis you make choices about the water and sequence in which you do things because you can't have it always. do a little of this and a little of that and do it all at once and be of the country burning. >> nationalizing city, nationalization. larry was a big proponent of nationalization, that is not

true. larry was an excellent and looking at every option, looking at every choice from all sides. sometimes kind of frustrating but necessary and good for president who is curious and existing. he looked all the options and we came into this crisis with no memory of panic and we knew the great depression was catastrophic and we will prevent that and we look at the experience around the world, we had a decade long drift in japan keeping everybody alive. that seemed like a bad idea and there was a sweetening which was and successful example of nationalization and comprehensive guarantees the look of those tuitions and when we were having this debate in the period when the stress test was pending relating of the results we knew there was some risk that the stress test would reveal a level of losses that were so large the market wouldn't provide capital and we would end up putting capital into those institutions and if

that was done on a massive scale it would look like nationalization so we talked a lot about how we were going to do that if we faced that the issue but it was a hypothetical discussion because we were waiting for the results and as you know, this was important and powerful, what happened is the fed released the stress test results, the market judge was incredible, the level of transparency provided was without precedent. the market came in and put capital in those institutions on a substantial scale so we didn't actually have to put additional taxpayer capital in to all but i think one in additional institution. we had a debate about what to do in the event the holes were so large and the market was not willing to finance and the lot of fun public money in and then we were going to do some things that you guys would have told

old testament. >> the great moment in the book with scott brown who then was a senator from new hampshire running for senator -- >> going to new hampshire. >> tell us that part. >> financial reform, complicated process. just trying to give a little context. little scott brown story. it is great. i went to see him because of the financial reform. you was a new senator and i paid a courtesy call on him and we like to talk about different issues and he said to me i want to be with you on financial reform. i thought that was good. you got two things for me. we have two institutions we have got to make sure don't get

caught up in the volcker rule in effect. it was appealing, he asked staff to remind him where those institutions were. >> let me remind you what they are. >> i don't know. it was happening across congress. everybody wanted to be for reform. a lot of people wanted to be for reform could not really be for reform if reform was going to damage the economics of institutions or businesses, it is the reality of life. >> world view is washington is better than we think and congress is worse than we think. >> i don't think congress is worse than you think. >> very hard to do that. >> we will let the luncheon crowd beside.

tell us about your phone call to mark kirk, senator from illinois, when he was in china. >> i went to china pretty early in my tenure. i arrived in china and the foreign service officers who had been falling mark kirk around beijing told me in his meetings he was talking to the treasury's, we would have hyperinflation and might default. i find that remarkable. there was no evidence, no reason to be concerned because the chinese were good investors and most were buying treasuries, would like us to produce more treasury at that time but i was worried about that. a little quaint tradition about water's edge in politics and not a good idea when you are outside your country to claim we are going to end in hyperinflation.

>> you enjoy the occasional expletive. >> very responsive when i said that. >> were you with gentle with him in that conversation as you were in describing it or was that a more heated conversation than you are betting on? >> i was very direct with him but he was very responsive. we did end up working, you might say this, i don't want to impugn his credibility, we did end up working on a bunch of consequential issues. >> one last question. didn't get the fed chair, made a lot of sense to keep ben bernanke in the job. was once again a leading candidate last time paramount. >> the question about timing. >> that is what i am saying. you don't want to set change the fed chair in the midst of a ruling economic crisis. >> if the fed chair is deep incompetent which ben bernanke is. >> did larry summers share that

view? >> that larry summers was -- >> i thought larry was excellent about this. he thought the president was reasonable and understood and ended up staying year in that job in the white house. >> should he have gone at the last time around? part of the reason he didn't get it was the lingering danger at the lack of more punishing, tied to wall street, one of the critiques of him partly as a result of these actions with the possibility of fed is being a casualty of this. >> let's do a little reality. to me, confirmed by the senate, we live in a world where we need 60 votes, 60 votes are hard to find. can't find them in one party. we have a political system that is pretty divided in both parties, not just between the two party so larry summers was

going to lose some democrats, no doubt about it. that probably would have happened any time. you could probably have a booming economy and that would have happened. the question is would there be enough republicans that would join in that context? we are not living in a time when there are lots of moments. >> would have been a good fed chair? >> absolutely. >> over the years what is more irritating to you? the criticisms of the left or the criticisms of the right? >> i try not to be irritated by these things. you kind of -- how should i described this? is it is important if you are in these jobs, you need to understand what your critics say because you want to understand the basics how your policies are being received and described because politics is central to the government.

being able to understand those things and be sure you are exposed to the breadth of ideas but i try not to pay attention to what people wrote about me because generally if you do that too much you will want to go crawl under a rock and not make any decisions because when you make decisions you will make people unhappy. did that respond to your question? >> could be more responsive. you have said that you are not working for wall street. what is the distinction between what you are doing now and wall street? >> i would not say it quite that way. i had this great amazing privilege of working in public life as a public servant for a long time. i had to do something new and different. deeply worried about the

perception, and we regulated. it is a longstanding interest in the investing world, pretty interesting part of the economy. very fickle group. feel lucky to be doing that. this is old school investment firm and i am helping them helping them do all that. >> why would this go to wall street? >> mostly people think i came from there and i thought about validating that myth of going back. >> you are taking all the flak any way. >> this seemed more compelling to me. >> i want to ask one throwback history question that comes a lot when people criticize tim geithner, then and 90s there was an effort to regulate the derivatives market more closely,

have some cleared through an exchange. the cftc, you say in the book you admire some of her ideas but there was no perfect plan that she put forward. was that a missed opportunity to clear up an area of the financial system that would later come back to haunt us? >> just to do the record i do write about this debate in my book but in my time in the treasury before i was secretary at work on the international side of treasury. i wasn't a combatant in those fights about financial reform or fiscal reform. i was doing emerging-market. currency market and things like that. that was a missed opportunity. the instinct was right. it was happening across the financial system. there were pockets of innovation and change and risk growing about side of these basic safeguards and it was hard for people to appreciate the -- what

those risks were and to find solutions they were worried about those risks. they were part of legislation. it was hard because again we hadn't been tested in a long time so people had this -- too much confidence in the stability and efficiency and coolness of our system before the crisis. >> a couple rapid rounds here. an editorial in the wall street journal, tim geithner's missing memoir, ruling by averell judge that you have to turn over evidence of a conversation you had with as and be after you had an overactive conversation with the president. that proved to be more interesting or more boring? >> more boring. was that rapid enough for you? more boring. >> the event that barnes and noble in new york jim kramer asks the people walk up to you and say thank you? >> they do. pretty surprising. people are very gracious to me

except for you two. >> if john mccain had become president there's a possibility would have asked you to be his treasury secretary. >> i don't think so. i don't think so. a lot of people don't know that. that is not at that point. and one rapid-fire question. >> if you could read one review of your book that hasn't been written yet would it be gene sperling's president obama or larry summers? >> you can do better than that. >> i'm trying not to read any reviews. >> haven't read reviews? >> i haven't but at some point i will. my colleagues say they are pretty good. >> we talked about the time you spent in the west wing. what is the role of the administration by vice president joe biden? >> my biggest, most of on my experience was in the situation

room, we were talking about those affairs of state or in the fiscal negotiations we had over the course of 2011-2012. i work pretty closely with him in that context. he was very interesting. he prepares amazingly. he gets very deep and he does a useful thing that i think is important which is he tries to make sure he understands and not just what the opposition thinks but why do they think that? why do they hold that view? what is behind that view? it is so different from ours because that level of understanding is important to work things out. i like the way he prepared and admire him a lot. >> the role played by valerie jarrett. >> valerie has a former responsibility for business

liaisons', intergovernmental affairs, a whole range of work with outside groups, long tradition that functioned in the white house, and she has got a seat at most tables. >> any table you want. >> i am not sure i would say it that way but many tables. >> give us the 30 seconds view of your outlook for the economy and have we shaken off the worst hangover from this crisis? we intend to have long lag times and when we recover give us a quick view on the rest of this year? are we seeing faster growth? >> i don't believe in forecasts. i don't think they are much value so take this with a grain of salt. i think the u.s. economy today is definitely stronger than it has been in the last four years and stronger than it was in 2007-2006-2005 when a lot of growth was based on an

unsustainable foundation. we have healed lot of damage from the crisis and work for a lot of the imbalances, access borrowing, a lot of the head winds the slow growth in the early days of a crisis like fiscal policy turning too tight too fast, those things have faded and if you look at what is left after those head winds fade, and economy is getting stronger and we are such a lucky country. we had this amazing amount of innovation in technology, even manufacturing, bringing plants back from china and even mexico because america is a more competitive compelling place today, energy is a pretty impressive amount of change and we have a lot of challenge to worry about, high rates of poverty, longer period of no growth, median income, damaging increase in equality, and if you grow up in america today how will you do, you go to -- quality health care depends too

much on the color of your skin and how rich your parents are and those are things government can do things about. not powerless against those things. the economy, pretty resilience, pretty good, political system still kind of broken and we have to figure out a way to rediscover that capacity to govern so we can make a bit more of a difference in the basic -- >> outside any quality? >> in this country, on this planet, and i don't see how it happens. i wouldn't look at this problem of poverty or mobility or equality of opportunity. you don't want to look through the prism of taxes. maybe that is part of it but you need to look more deeply at the set of public investments that affect the quality of opportunity people get. >> any chance of tax reform

before january of 2017? >> i don't live in this place or understand it. i am not a good person to ask that. these things are likely but you should ask more about that. >> think about a couple personal questions. in your book you think your collaborator, what is mike green wall like as a collaborator? >> he is awesome. unbelievable. very hard on me as you would expect. and as i deserve. we go back and forth and i send him stuff that i thought was pretty good, poetry even. he would say, he would say looks like you have been typing with your mittens on. try again. people would be surprised to find what you doing your basement. >> oh. torture bankers, old testament justice. i have a long aspiration to learn how to do would better. i have done some big things with

my son. i have done, he taught me to do dovetails, pretty cool and intricate things so i would like to do more of that. >> how is tennis like life? >> i don't think it is like life at all. i can't play tennis when my arm is damaged. feeling better. >> i want to be gracious. last question, the place where you serve on the cape has become infested with great whites in the last couple years with any closing counters? >> it is true. when you surf you are not supposed to surf where there are seals for obvious reasons. definitely more seals out there. i have to be careful. >> when you see a shark -- >> i have never seen a shark. >> he thinks of aig when he sees a sharp. >> thank you for your time. i have a hundred more questions for you but i will just visit you perfectly.

thank you for coming. >> the u.s. senate is about to gavel in for legislative business, general speeches for most of the day today, lawmakers will take a break between 12:30 and 2:15 eastern said democratic senators can attend the weekly party lunges at 5:30 eastern. vote set for judicial and executive nominations. now live to the senate floor on c-span2. senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. god of grace and glory, descend upon us today. make capitol hill a place that honors your name, as our lawmakers depend on your might and power to keep america strong.