europe has basically been living this in the last 10 plus years, and is in the process of essentially reversing. "new york times" quote europe facing economic pain may ease climate rules. bloomberg little -- "bloomberg news," replacing low-cost nuclear. the guardian quote soaring energy and housing costs turns to food banks. a "new york times," renewable energy in spain is taking a beating. .. >> i think you have to acknowledge that in terms of the treatment in this medical analogy hydrocarbon policy has been the equivalent of medieval bloodletting. it has not worked. it is not constraining emissions

in world markets, and it -- there are two things that you have to notice. there is already a market- developed -- market developed not only to argue against taking action with respect to carbon but a market developed in setting up these financial trading desks that trade carbon that want to lobby to undertake this option. it is a strong and a large industry right now, and there are interest groups pushing for this as a solution that, in fact, will not work. >> senator. >> thank you, mr. chairman. i am going to go to the epa administrators. thank you for your service. i have a chart of u.s. gdp since the great depression in 1929. president johnson signed the first clean air act into law in 1963. it was amended in 1970 and 77 as

indicated on the chart. i would just like to get a quick answer from each of you. as gdp gone up or down since each of these clean air -- >> senator, it has gone up. >> thank you. governor? >> i cannot disagree with that. it is fact. >> the clean air act amendment that we were responsible for were followed by ten record-7 years. >> interesting. >> you would not say that. >> thank you. mr. thomas. >> i agree. >> do you think that finding new ways of dealing with climate change and actually create jobs in the economy by unleashing innovation in that marketplace to accomplish that goal? >> there is no question it will

create jobs and an impact on existing employment. >> i look on it as not only creating new jobs in renewal will fields that we have not talked about, but one industry already is producing a lot of jobs and could produce a lot more, and that is the nuclear industry which releases no greenhouse gases or other regulated pollutants while producing power. >> the 1990 amendments created an enormous number of jobs of the natural gas and western crinkle. >> without question jobs would be created. on the other hand it will impact jobs, and we have a responsibility to focus on how we provide assistance to those whose jobs are being impacted. >> let me move to another example, the regional greenhouse gas initiative across the northeast in terms of the impact of that has had in reducing

greenhouse gases and at the same time overlapping with an economy across the northeast as continue to grow over those years. since it was put in place there has been a reduction in greenhouse gases in those states on average rate was put in place in addition it has helped to save consumers money, creating jobs, and generated over $750 million in economic value in the state of massachusetts since 2013. i would like to submit all of that economic data for the record. >> without objection. >> maybe governor whitman, maybe you could talk about that issue, job creation and especially since it seems to be a core argument here, using medieval

bloodletting terms to describe the impact since the states have actually seen economic growth. >> thank you, senator. i think it is absolutely fair to say that there will be jobs impacted with whatever actions we take. that has always been true, and we have an obligation to insure we do the best we can hit those -- for those who will be impacted and find other ways of earning a living and recognize that this is real and people get hurt. one of the things you learned as a governor or anyone in a position to make a decision, you cannot make a decision that has an equal impact on everyone. some people will not see the same benefits as others and may see a downturn and it is in the your job to do what is in the best interest of everyone and mitigate the downside of those who will be negatively impacted. we have seen that time and again >> thank you. we have argued for more direct

observations of claman's variables. you mentioned sea level rises and heavy rainfall in your testimony. sea level rise and make -- rainfall have been measured for decades. they are not theoretical. what are the impacts of those directly observed changes -- >> excuse me. could you clarify what your saying? >> on your own state, mr. thomas. >> excuse me, senator. [inaudible conversations] >> allow -- allow him to answer the question he has been asked. >> as i indicated to senator boxer, clearly south florida particularly is dealing today with sea level rise as it impacts of salt water intrusion in coastal areas, a drainage systems that are critical to the overall well-being of many of the coastal communities in south florida. so today's sea level rise is, indeed, an issue in our state.

just as it is in a number of other states. >> thank you. i know the technological change can occur. the obsolete delivery of milk. the fact that there were not more milkman was an absence of jobs created to revolutionize the way in which that industry operated from the beginning of time, and we have to embrace that it is obvious. >> senator. >> first of all, we keep talking about the clean air act amendments. i want everyone to no, not only did i vote for them, but i was an original cosponsor, and they worked. that was dealing with real pollutants, never meant to deal with carbon dioxide. i think we all understand that. you could actually use that as an argument against going into regulating something that most

of us did not believe is a pollutant. we will make that argument. i think that this senator has pretty much been accused 97 percent that we will hear over and over again. i have a question for the three of you. i will skip you now because jeff already asked the question. i have to say this. scott pruett it holds you in the highest regard of all the attorneys general in the united states. ..

zero to the world it wasn't. the u.k. telegraph, i think that's the largest printing publication in the u.k.. that's the worst thing to fix candle of our generation. the guardian, it is no use pretending this isn't a major blow. i ask you as a scientist, why do you think that there are people who still believe that the signs that was generated and the reason i'm asking this question because if you go back and look at my web site in 2002 you will see that i listed not a few but hundreds of scientists who disagreed with the idc see. comments on that.

>> well senator i've asked myself this question many times because what i do is look at the facts and check all the facts and i found that the ipcc reports are not consistent and bias. now you are asking me why do some of the people believe back? >> yeah that's good. >> i am puzzled about that a great deal. what i can say is that one of my favorite books is by charles mckay published in 1841 called popular. >> i will tell you we are running out of time. >> i don't think there's a scientific answer to why so many people have come to believe th this. it's become a popular issue. all i try to do is look at the facts. i have worked very hard to try to determine the effects of this over my career and i feel the data has changed and that it's

less of an effect and danger than we thought before and i'm surprised and shocked. >> very good and dr. mason you being the only economist on this panel let me ask you a question. years ago when this first started a lot of us were really believing it was true. it happened at that time that i chair this committee and when i found out that they were talking about what the cost would be and if you remember the wharton econometrics survey came out, the m.i.t. came out in charles rivers came out. all of them came to this incompletion that the cost of cap-and-trade would be between three and $400 billion a year. first of all i would ask if you agree with that analysis with them at that time? >> i wouldn't be surprised at

all by that. >> that's one thing is pretty consistent. we haven't had a lot of people disagree with that but my question would be this. those bills that they were talking about, the that person was the mccain-lieberman bill and 03 and 05 the same thing and then it went on up to senator markey when he was -- that bill. all of them are talking about regulating the omissions of entities that emitted 25,000 tons or more. now the clean air act regulates 250 tons or more. i would ask you this if it's true that it's between three and $400 billion a year before the 25,000 tons or more do you have any idea what it would cost the american people if they were able to successfully regulate this under the clean air act? >> orders of magnitude more. >> i think that's a good answer. thank you.

>> senator boozman. >> thank you mr. chairman. professor mason and your testimony you address the goals of states in arkansas is one of the most difficult targets in the country. he said there would be impact that would affect job growth. we explain how these impacts could impact opportunities in states like arkansas and what that will mean for consumers? see very simply to the extent that consumers in the states derive energy from plants in those states again those consumers will pay more for their electricity. this is where things get wonky because you will have cropped state effects. will arkansas be able to for instance by admissions from other states to satisfy their admissions? how are we going to control back?

weich offsets international from hungary which defrauded investors leading to this market shut down that i cited or other third world countries that have been known not to even bother to check the validity of the permits they are selling on markets leading to this broad and international problems. we need to deal with these details and until we are actually going to sit down and look at these and look at the job losses they talk about raising rates. they look at job losses and they look at economic output. i think we need to look at this with each and every increase in energy costs than just waving your hands and sing of code it will be fine is another story because we are getting to the level of policy implications than the scores of magnitude greater than anything we have done before and to me my perspective on the financial crisis arises in problems with the market but also scale and magnitude well into the economic

system. we have lots of many securitization crises since 1990. none affected the economy until it was a big enough products to throw us into recession. we can do this and we can put the economy at risk but i think we need to think about this real hard before just stopping. this is different. >> that is why we have a congressman congressional hearings to go through all that theoretically make sure that we do it you know not in haste but to hit all the unintended consequences. you mentioned that and it's basic like gravity, that in order to make something not be used to have to use the price or that's a method of doing it. you mentioned the 30-dollar figure. what would that do to the cost of utilities? >> well rggi right now is that about $5.

california is about 11 and it's interesting those might not have pushed back in common growth. they are just adding to the cost of energy with no offset benefit in terms of carbon. $30 is going to raise prices for 45% in the northeast was cited today. i would expect prices would go up by a magnitude greater than that and let me just say that there is not a lot of talk today about leadership in terms of carbon policy. leadership is not just grabbing the system out of the e.u. for an end ineffective system out of california and popping it down nationwide. leadership is thinking more deeply about the implementation of carbon policy and coming up with something better than the rest of the world is put together implementing it and then having the rest of the work follow. that is why if the monetary commission with perspective the federal reserve would did that. we have the best central bank in the world. we still lead in that throughout

the world and i think we over to her citizens to put together a very thoughtful approach and a meaningful approach to carbon that can help the world while also pricing and economic externality. >> thank you very much. dr. botkin you being one of the 97% that has talked about it then certainly you feel like man is contributing in this and that but certainly you're not one that feels like the model is acceptable and i suspect that you have many of your cohorts there in the same camp. >> well i think the key thing here is that science is not her rule by majority method. that's the important thing. its discovery and i would like to quote general salk with a polio vaccine. he said i get into dialogue with nature but the question to nature not to my colleagues

because that is wednesday in sherman's comment that is what i do. i always look at the data and richard feynman wanted the great 20th century physicists that science is the belief in the ignorance of experts. so to keep saying it's a majority that is not a scientific statement and is not correct. i spent 50 years working on climate change and a very constructive way and what i can tell you is since about 1990 that data has started to move in the other direction away from an important effect like human beings and that is just what the facts show. >> thank you very much. my concern is you know certainly we need to examine the increased risk of this but i can tell you there's tremendous increased risk for the men and women that are sitting back there and the hard-working people of arkansas

if we are talking about a 45% are much greater probably in my case increasing utility prices as far as jobs. we talk a lot about income disparity in this country. what does that do to working moms and single moms? what does that do to people on fixed incomes? again thank you mr. chair. >> thank you senator boozman. that will conclude the questioning. let me just say some final thank yous to our witnesses who are here. i appreciate particularly the efforts of former administrato administrators. i would ask if mr. reilly and mr. thomas would answer my questions for the record. the record will be kept open for an additional two weeks for anybody who wishes to add material to the record.

i will ask unanimous consent to put in a review of the investigations that were prompted by what is called climategate but i contend it's more accurately called climategate gate. in my view of the phony scandal was hooked up at the expense of a lot of scientific work that was then reviewed i think by six different authorities including american investigators, independent investigators, university investigators and british investigators everyone up which gave a full clean bill of health to the science. so i think that needs to be part of the record if members are going to ring up so-called

climategate and then there has been some reference to the projections by the chamber of commerce as to what this proposed epa regulation might cost. some of our colleagues have left to cite that report but i think it's important for the hearing that we also include the "washington post" analysis of their claims, which earned four pinocchio's from how far you get from the truth you get more pinocchio's rated back to the story of pinocchio the wooden doll whose nose would grow when he was not truthful so i will include the "washington post" four pinocchio finding about that. there's also an organization named politicized which analyzes claims that are made in the political debate and tries to do a very neutral analysis of the accuracy and politicized ruled

that a false for that report so i think it's in the interest of fairness that those be admitted and i will ask unanimous consent that those two documents be admitted. without said -- >> mr. chairman? >> senator sessions. speech is to wrap up i think the panel for your testimony. this is an important issue. i believe dr. botkin is correct in saying that actual empirical data is not confirming the projections that we have seen so far in the host of various and i will be spending some -- to that effect so for congress to ask questions and also i would just say that it's unacceptable that scientists like dr. botkin and

others are being adversely treated as a result of their statements and scientific research that sometimes contradicts the powers that be. thank you. >> you are very welcome. sighs of pleasure to work with my ranking member. however much we disagree on things he's a very courteous colleague and we always work well together. i think that this is not a hearing on the science. it was a hearing with the experience of previous administrators. if we were to do a hearing on the science than i think we'll be adding the scientists from noah and the scientists from nasa and the scientists who back our united states defense establishment and the great establishment of scientists, every major scientific organization in the country and perhaps dr. botkin is right that they are all wrong but i'm not

sure that would be the prudent course for our country. thank you all very much and we are adjourned. >> house energy and commerce subcommittee holds a hearing today on the epa's proposed carbon dioxide regulations for existing power plants. you can see it live starting at 9:30 a.m. eastern on c-span3. >> republican senators marco rubio, ted cruz and mike lee are some of the speakers at today's faith and freedom coalition policy conference. our live coverage from washington, d.c. begins at 12:30 p.m. eastern on c-span3. >> the idea behind 250 and 250 is that instead of trying to

tell the entire history of st. louis as a timeline or era by era, we would absolutely miss vital things. so we decided what if we just gave snapshots of st. louis history that would give people a glimpse of all the diverse things that have happened here, and they could use their imaginations to kind of fill in the rest. so we chose 50 people, 50 places, 50 moments, 50 images and 50 objects and tried to choose the most diverse selection we possibly could. we're standing in the 50 objects section of the 250/250 exhibit right now, and this is what most people would call the real history. this is where the object is right in front of you. brewing is such a huge part of st. louis' history. it's an amazing story with lots of different breweries and, of course, the most famous became anheuser-busch with the large in the world. and in the era of anheuser-busch

talking about millions of barrels produced each year, you know, we think they're producing so much beer, this is from an era when things were a little bit simpler, and it's fun to show people this object and kind of gauge their response. in the days before they had cans or bottle caps, they put corks in the tops of bottles, and somebody had to sit on this thing and do it by hand. you can see it's got food pedals on the bottom. that's where the operator would push down with his feet to give the cork enough force to go in the bottle. and it's got three holest.9j)))ñ three different sized bottles. >> this weekend, the history and literary life of st. louis, the gateway to the west, on c-span2's booktv and c-span3's american history tv. >> eric cantor steps down as majority leader on july 31st. house leadership elections, gop elections are thursday, and we're joined by daniel newhauser up on capitol hill, he's a

reporter with cq roll call. the majority leader race, kevin mccarthy versus raul lab door, who are the major supporters? >> well, kevin mccarthy is the majority whip, so he's sort of the natural successor to cantor. he ramped up early with some top committee chairmen, hal rogers, ways and means chairman dave camp and other people from his whip team. raul labrador got in a little bit late. he took the weekend to really get into his campaign, but he's got sort -- he tapped into the conservative insurgency, this feeling among a lot of members, particularly the younger ones or the newer members who feel like their voice hasn't been represented in leadership. and that's what he promised to represent for them. he said that he would try to empower the committee process, try to make members important

again instead of the leadership staff. but really it seems too little, too late l as mccarthy looks to run away with this in thursday's vote. >> have outside groups weighed in on this election that will be only voted upon by the gop conference? >> yeah. they really don't play much of a factor. this is internal, it's a secret ballot election so these votes won't be publicized. they can whisper in members' ears, but i haven't heard from anybody that they're playing too much of an influence at all. >> the headline on your 218 blog on roll call says mccarthy cruises, whip race still a toss-up, and a picture of the indiana congressman, also steve scalise, the rnc chair and the now-chief deputy whip, peter roskam. tell us about each of those candidates and who's behind them. >> sure. well, roskam is, as you mentioned, the chief deputy whip. he's been mccarthy's key

lieutenant for the last couple of years, helping wrangle votes on the house floor. scalise is the conservative republican study committee chairman, and he's been trying to portray himself as the conservative alternative to roskam. and then substitutesman is a -- studsman is a member of the 2010 class, lots of members. he, like labrador, has been trying to tap into that feeling, and he's portraying himself as the even more conservative alternative to either of the guys, roskam and scalise. so that looks to be a real toss-up race. you know, i would guess that scalise is probably ahead at this point point, but it will probably have to go to more than one ballot, and, you know, it really remains to be seen if anybody can run away with it. >> this gop leadership election on thursday held behind closed doors, tell us a little bit about the location, where the vote will be held. there won't be any c-span cameras there, but how about the process itself? what's that like?

>> if only there could be c-span cameras. it's a fascinating process. it'll be in longworth house office building. all the members meet, no staff allowed. they cast their votes by secret ballot, and whoever gets to 117 wins outright. since the majority race is between two people, whoever gets to that number first wins. the whip race, like i said, might have to go to a couple more ballots. the first number is 73. you have to get at least 78 to advance to the second ballot. whoever doesn't get that number has to then drop out of the race, and their followers, their supporters will have to decide again in a second round of voting who to sport. and that's where the real question is, you know, if as expected marlin stutzman falls short of that 78 number and has to drop out of the race, where do his supporters go? do they go with scalise who's viewed as the next most conservative guy, or do they go with roskam who's viewed as sort

of the status quo guy, the person who can allow the leadership to remain intact as they coast through the final five months of the legislative year. >> well, it seemed important last week that some members said we have to get a leader from a red state. is that still important this week? >> it is. that's a lot of the feeling that scalise supporters have been putting out there. he's from louisiana. all of the members of leadership right now are from blue or purple states, and roskam is from illinois. so he's not really helping people vote for him if they're looking for a red state guy. but he did say that as his chief deputy he would appoint somebody from a red state, so he's tried to quell some of that tension there between the north and south. >> and viewers can follow all the tweets on that leadership election tomorrow from daniel new be hauser, he's to the dnew hauser and, of course, roll call.com. thanks for joining us. >> thank you.

>> the thesis for the book is there's a whole group of america, in fact, a whole swath of america, that is being ignored, left behind, not included in the discussion i think for either party. particularly, though i would argue, the republican party. and that's, i call 'em blue collar conservatives. you know, the folks out there that are working people, most of whom don't have college degrees. folks that really still understand the value of work and the importance of work and responsibility and people of, who understand the importance of family and faith, believe in freedom and limited government. so you say, wow, those are conservative republican voters, and in many cases they're not. in fact, a lot of them aren't voting at all because they don't really see either party talking to them about the concerns they have in trying to create an opportunity for them to live the american dream. >> former pennsylvania senator and presidential candidate rick santorum argues that working

members have been abandoned by their political parties. saturday night at 10 eastern on "after words," part of booktv this weekend on c-span2. and this month on our online book club, we're discussing amity shlaes, "the forgotten man." start reading and join others to discuss the book in our chat room at booktv.org. booktv, television for serious readers. >> federal reserve janet yellen expressed confidence that the economic recovery was largely on track which would allow the fed to begin raising interest rates next year. she spoke at a news conference following two days of meetings of its federal open market committee. her remarks are about an hour. [inaudible conversations]

>> good afternoon. there are the federal open market committee concluded its june meeting earlier today. as was indicated in our policy statement, the committee decided to make another modest reduction in the pace of its purchases of longer term security. the committee maintained its forward guidance regarding the the federal funds rate target and reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. today's policy actions reflect the committee's assessment that the economy is continuing to make progress toward our objectives of maximum employment and price stability. in the labor market, conditions have improved further. the unemployment rate at 6.3% is

four-tenths lower than at the time of our march meeting. and the broader u6 measure which includes marginally attached workers and those working part time but preferring full-time work has fallen by a similar amount. even given these declines, however, unemployment remains elevated, and a broader assessment of indicators suggests that underutilization in the labor market remains significant. although real gdp declined in the first quarter, in this decline appears to have resulted mainly from transitory factors. private domestic final demand, that is spending by nestic households -- domestic households and businesses, continued to expand in the first quarter, and the limited set of indicators of spending and production in the second quarter have picked up. the committee thus believes that economic activity is rebounding

in the current quarter and will continue to expand at a moderate pace thereafter. overall, the committee continues to see sufficient underlying strength in the economy to support ongoing improvement in the labor market. inflation has continued to run below the committee's 2% objective, and the committee remains mindful that inflation running persistently below its objective could pose risks to economic performance. given that longer term inflation can'tations appear -- expectations appear to be well anchored and in light of the ongoing recovery in the united states and in many economies around the world, the committee continues to expect inflation to move gradually back toward its objective. the committee will continue to assess incoming data carefully to insure the policy is consistent with attaining the

fomc's longer run objectives of maximum employment and inflation of 2%. ky2kyq@ reflected in the individual economic projections submitted in con junction with this -- conjunction with this meeting by the fomc participants. as always, each participant's projections are conditioned on his or her own views of appropriate monetary policy. the central tendency of the unemployment rate projections is slightly lower than in the march projections and now stands at 6.0-6.1% at the end of this year. from there committee participants generally see the unemployment rate declining to its longer run normal level by the end of 2016. the central tendency of the projections for real gdp growth is 2.1-2.3% for 2014.

down notably from the march projections. largely because of the unexpected contraction in the first quarter. over the next two years, the projections for real gdp growth remain somewhat above the estimates of longer run normal growth. finally, fomc participants continue to see inflation moving only gradually back toward 2% over time as the economy expands. the central tendency of the inflation projections is 1.5-1.7% in 2014 rising to 1.6-2% in 2016. as i noted at the outset, the committee decided today to make another measured reduction in the pace of asset purchases. starting next month, we will be purchasing $35 billion of

securities per month, down $10 billion per month from our current rate. even after today's action takes effect, we will continue to expand our holdings of longer term securities, and we will also continue to roll over maturing treasury is securities -- treasury securities and reinvest principal payments from the fomc's holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. these sizable and still increasing holdings will continue to put downward pressure on longer term interest rates, support mortgage markets and make financial conditions more accommodative, helping the support job creation and a return of inflation to the committee's objective. today's announced reduction in the pace of asset purchases reflects the committee's expectation that progress toward its economic objectives will continue.

if incoming information broadly supports the committee's expectation of ongoing improvement in labor markets and inflation moving back over time toward its longer run objective, the committee will likely continue to reduce the pace of asset purchases in measured steps at future meetings. however, as i've emphasized before, purchases are not on a preset course, and the committee's decisions about the pace of purchases remain contingent on its outlook for jobs and inflation as well as its assessment of the likely efficacy and costs of such purchases. let me now turn to the framework we will be applying as we consider interest rate policy. in determining how long to maintain the current 0-.25% target range for the federal funds rate, the committee will

aassess progress both realized and expected toward its objectives of maximum employment and 2% inflation. this broad assessment will not hinge on any one or two indicators, but will take into account a wide range of information including measures of labor market conditions, indicators of inflation pressures and inflation expectations and readings on financial developments. based on its current assessment of these factors, the committee anticipates that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the committee's 2% longer run goal and longer term inflation expectations remain well anchored. further, once we begin to remove

policy accommodation, it's the committee's current assessment that even after employment and inflation are near mandate-consistent levels, economic conditions may for some time warrant keeping the target federal funds rate below levels the committee views as normal in the longer run. this guidance is consistent with the paths for appropriate policy as reported in the participants' projections which show the federal funds rate for most participants remaining well below longer run normal values at the end of 2016. although fomc participants provide a number of explanations for the federal funds rate target remaining its longer run normal level, many cite the residual effects of the financial cry is the. these include restrained -- crisis. these include restrained household spending, reduced

credit availability and diminished expectations for future be growth in output and incomes consistent with the view that the potential growth rate of the economy may be lower for system time. for some time. let me reiterate, however, that the committee's expectation for the path of the federal funds rate target is contingent on the economic outlook. if the economy be proves to be stronger than anticipated by the committee resulting in a more rapid convergence of employment and inflation to the fomc's objectives, then increases in the federal funds rate target are likely to occur sooner and to be more rapid than currentlien visaged. conversely, if economic employment disappoints resulting in larger and more persistent deviations from the committee's objectives, then increases in the federal funds rate target

are likely to take place late exercise to be more gradual. -- later and to be more gradual. before taking your questions, i'd like to provide an update on the committee's ongoing discussions on the mechanics of normalizing the stance and conduct of monetary policy. to be clear, these discussions are in no way intended to signal any imminent change in the stance of monetary policy. rather, they represent prudent planning on the part of the committee and reflect the committee's intention to communicate its plans to the public well before the first steps in normalizing policy become appropriate. the committee is confident that it has the tools it needs to raise short-term interest rates when it becomes appropriate to do so and to control the level of short-term interest rates thereafter. even though the federal reserve will continue to have a very large balance sheet for only time.

for some time. the committee's recent discussions have centered on the appropriate mix of tools to employ during the normalization process and the associated implications for the degree of control over short-term interest rates, the functioning of the federal funds market and the extent to which the federal reserve transacts with financial institutions outside the banking sector. the committee is constructively working through the many issues related to normalization and will continue its constitutions in upcoming meetings with the expectation of providing additional details later this year. thank you. i'll be happy to take your questions. >> [inaudible] >> steve liesman, cnbc. the, is every reason to expect,

madam chair, that the pce inflation rate which is followed by the fed looks likely to exceed your 2016 consensus forecast next week. does this suggest that the federal reserve is behind the curve on inflation, and what tolerance is there for higher inflation at the federal reserve? and if it's above the 2% target, how is that not kind of blowing through a target the same way you blew through the 6.5% unemployment target in that they become these soft targets? thanks. >> well, thanks, thanks for the question. so i think recent readings on, for example, the cpi index have been a bit on the high side, but i think the data that we're seeing is noisy. i think it's important to remember that, broadly speaking,

inflation is evolving in line with the committee's expectations. the committee has expected a gradual return in inflation toward its 2% objective, and i think the recent evidence we have seen abstracting from the noise suggests that we are moving back gradually over time toward our 2% objective, and i see things roughly in line with where we expected inflation to be. i think if you look at the sep projections that were submitted this time, you see very little change in inflation projections of the committee. >> what about the tolerance for higher -- [inaudible] >> with well, the committee has emphasized that we have a 2% objective as a longer term

matter for pce inflation, and we would not willingly see a prolonged period in which inflation persistently runs below our objective or above our objective, and that remains true. so that hasn't changed at all in terms of the committee's tolerance for permanent deviations from our objective. and we continue to see the data coming in abstracting from the noise in line with what we had expected and continue to see a gradual pickup over the next several years toward our 2% objective. >> [inaudible] >> robin harding from the financial times. madam chair, could you comment a little bit more on the decline in the long run interest rate projection? is that more to do with temporary headwinds from the recovery, or is it something more permanent about the economy? and is this it, decline to

3.75%, or do you think there is potential for this rate to go lower yet? thank you. >> well, you do see a very slight decline this time in the committee's longer term normal rate of interest projections. you know, i would caution you, however. we've had turnover in the committee, two new participants who joined and are submitting projections and two who departed, and that can create changes in the projections, small changes that are difficult to interpret. but i think it's fair to say there has been a slight decline. and i think, you know, the most likely reason for that is there's been some slight decline in, as i mentioned in my opening statement, of projections pertaining to longer term

growth. and typically, estimates of the longer run normal federal funds rate or short-term interest rates would move in line with growth projections. >> [inaudible] >> hi -- [inaudible] from "the washington post." my question is sort of the flipside of steve's, and it's about your outlook for unemployment. your predecessor has said that the fed has been consistently too pessimistic about the level of the unemployment rate, and today you guys lowered your outlook again. can you tell me a little bit more about how you see the unemployment rate evolving to meet your forecast, why you believe the rate of decline will start to level off and what an unexpected drop might mean for the first rate hike? >> so it's true that unemployment has declined by more than the committee expected, and you do see a small

downward revision in the committee's projections, at least a central tendency for the unemployment rate. now, first of all, i mean, the labor market, i think, has continued to broadly improve. we have seen continued job growth at a pace that is certainly sufficient to be diminishing labor market slack over time. over the last three months, for example, employment, payroll employment has been rising around 230,000 jobs per month, and we're running close to 200,000 over the last year. so it's in no way surprising to see a decline in the unemployment rate. that said, many of my colleagues and i would see a portion of the decline in the unemployment rate as perhaps not representing a

diminution of slack in the labor market. we have seen labor force participation rate decline, and while i think most of us would agree that there has been and will continue to be secular decline in the labor force participation rate for demographic reasons, i think a portion of the decline we've seen in the unemployment rate probably reflects a kind of shadow unemployment or discouragement, a cyclical part of labor force participation. now, if that's correct, we may see that as the economy picks up steam and we see further recovery in the labor market, that those, let's call them discouraged workers, will return either to unemployment or to

employment. and as labor be force participation -- labor force participation begins to stabilize, the unemployment rate will come down less quickly. and i think for a number of people that's a component of the forecast. you asked about implications for the alt of policy, and i would just say the guidance that we have given with, our forward guidance states that the timing of lift ah will depend -- liftoff will depend on actual progress we see and the progress we expect to see going forward in terms of achieving both of our goals; namely, maximum employment and our 2% inflation objective. so we're not going to look at any single indicator like the unemployment rate to assess how we're doing on meeting our employment goal. we will look at a broad range of indicators. that said, as i tried to emphasize in my opening statement, there is uncertainty

about monetary policy. the appropriate path of policy, the timing and pace of interest rate increases ought to, and i believe, will respond to unfolding economic developments. if those were to prove faster than the committee expects, it would be logical to expect a more rapid increase in the fed funds rate. but the opposite also holds true. if we don't see the improvement that's projected in the baseline outlook, the opposite would be true, and the pace of the timing and pace of interest rate increases would be later and more gradual a. >> john and then over to -- [inaudible] >> jon hilsenrath from "the wall street journal." chair yellen, some fed officials and some market commentators have noted that market conditions recently have looked

a little bit like they did last spring before a period of turbulence. volatility is very low in stock and bond markets, risk premiums are very low. and in particular, the market expectations for interest rates, for short-term interest rates look below even the fed's own projections as laid out in your doc. i wanted to ask two questions to that. one, what is your read related on market activity, and are you at all concerned about a sense of complacency in markets and, two, what is your view on market expectations for the rate hike cycle that the fed has laid out in its dot plot? is the market where you think the fed is on that? >> well, i mean, i'd start by saying that volatility both actual and expected in markets is at low levels. the fomc has no target for what

the right level of volatility should be, but to the extent that low levels of volatility may induce risk taking behavior that, for example, entails excessive buildup in leverage or maturity extension, things that can pose risks to financial stability later on, that that is a concern to me and to the committee. i don't know whether a number of reasons have been cited for what we're seeing in the marketplace. i don't know if overconfidence or complacency is one of those reasons, but i guess i would say it is important as i emphasized in my opening statement for market participants to recognize that there is uncertainty about

what the path of interest rates short-term rates will be. and that's necessary because there's uncertainty about what the path of the economy will be. and i want to emphasize as i have that the fomc will adjust policy to what it actually sees unfolding in the economy over time, and that necessarily gives rise to a certain level of uncertainty about what the path of rates will be. and it is important for market participants to factor that into their decision making. you asked me about the dot plot. our forecasts are projections for the fed funds rate, and you do see a range of disagreement among the participants there. so by the time you get to 2016, there is a considerable range of opinion, and i think in part that reflects the uncertainties

that i'm talking about that our participants do see different pace of recovery, different trajectories for inflation. and it's appropriate for them to adjust their thinking about what the path of policy should be to their own view of how the economy will evolve over time. and around each of those dots i think every participant who's filling out that questionnaire has a considerable band of uncertainty around their own, their own individual forecast. >> [inaudible] and then to craig. >> danny applebaum, new york times. you've spoken about the recession has done permanent damage to the economic output, and you've reduced gradually over time your forecast of long-term growth. i'm curious to know to what extent you think stronger

monetary and/or fiscal policy could reverse those trends. are we stuck with slower growth? is there something you can do about it? if so, what? if not, why? >> well, i think part of the reason that we are seeing slower growth in potential output may reflect the fact that capital investment has been very weak during the downturn in the long recovery that we're experiencing. so it diminished contribution from capital formation to growth. those make a negative contribution to growth. and as the economy picks up, i certainly would hope to see that contribution restored. so i think that's one of the factors that's been operative. of course, we've had unusually long duration unemployment, a

very large fraction of those unemployed have been unemployed for more than six months. and there is the fear that those individuals find it harder to gain employment, that their attachment to labor force may diminish over time and the networks of contacts they have that are helpful in gaining employment can begin to erode over time. we could see what's known as -- [inaudible] where individuals who haven't had jobs for a lock time find themselves -- for a long time find themselves permanently outside the labor force. my hope and my expectation is that as the economy recovers, we will see some repair of that, that many of those individuals who are long-term unemployed or those who are now counted as out

of the labor force would talk jobs if the economy is stronger and would be drawn back in again. but it is conceivable that there's some permanent damage there too to them, their own egg billion, their families' well being and the economy's potential. .. so why would anybody loan to a near prime borrower? in fact if you look at federal

reserve bank of new york research, here we are five years into the expansion, and people below fight go up 700 are having worse credit experiences. so it probably isn't -- fico. it's probably because banks and we don't want to take the risk. so as the nation's top bank regulator what can you do to fix it? >> so, i first would start by saying that i really think it's potential in the aftermath of this crisis -- essential, to strengthen financial regulation and to make the financial system more robust and to reduce systemic risk. we can see what the costs of the financial crisis were, and i don't think any of us should want to see that repeated. so i think the regulations that were put in place, most of which

followed from dodd-frank, were highly appropriate to create a more robust financial system but will be a safer in sound or one for our economy going forward. and to think we are making progress on doing that. putting regulation into place, we will try to phase them in in a way that is long enough lead time to make sure that in strengthening the financial system we don't produce a credit crunch. and by and large, my own assessment is that credit is broadly available in the economy, but there are some exceptions. and i would agree with much of what you said when it comes to mortgage credit. i think banks at this point are reluctant to lend to borrowers with lower fico scores. they mentioned in meetings with

us consistently their concerns about put backlist, risks, and the art, it is difficult for any homeowner who doesn't have pristine credit these days to get a mortgage. i think that is one of the factors that is causing the housing recovery to be slow. it's not the only one, but i would agree with that assessment. and, of course, you know, there were a lot of practices in connection with mortgage lending that really need to be changed. we don't want to go back to those days, but it is important to clarify for us to work to clarify the rules around a mortgage lending to create an environment of greater certainty for lenders to be willing to extend mortgage credit. >> good afternoon. chair yellen, the fed has

slashed its projections for this year and you've gone to pains to explain that there is uncertainty in the path of interest rate in the economy. and yet the fed central density projections for 2015 and 2016 remain quite strong. are you confident that the u.s. economy has entered a period of sustained above trend economic growth? thank you. >> well, when you say confident, i suppose the answer is no, because there is uncertainty. but i think there are many good reasons why we should see a period of sustained growth in excess of the economy's potential. we have a highly accommodative monetary policy. we have diminished fiscal drag. we had easing credit conditions. we have households who are becoming more comfortable with their debt levels and more able

to service debt, improving job market. we have rising home prices and rising equity prices, and an improving global economy, at least in my estimation. so i think all of those things ought to be working to produce growth trend growth and a think that's what's reflected in forecast but nevertheless as i said, of course there is uncertainty around about about projection. you know, nevertheless the local market has continued to improve. and over a number of years in which admittedly growth has come in at a disappointing level, we still are seeing the labor market broadly, broadly improve and i expect that to continue. >> anyou mentioned there were

discussions of normalization as you put it. i assume that involved some review of the third anniversary of the june 2011 exit principles that i would like to get you to elaborate in particular, is the committee reaching a consensus about the reinvestment and rollover policies, the timing of discontinuing those policies? i be interested in your personal view on that. >> reinvestment policy was included in our 2011 principles and is one of the things that we are discussing and reconsidering. we have not yet reached -- we've made a lot of progress in our discussions, but we have not yet reached conclusions about that. or other aspects of our package. there are a couple of things,

chairman bernanke indicated in contrast to our 2011 principles, that we would be very unlikely to sell mortgage-backed securities, and that remains the case. broadly speaking, some of the principles that were incorporated into 2011 package, the notion that we fully expect our balance sheet to shrink considerably over time back toward more normal levels, toward levels that would be consistent with efficiently conducting monetary policy. that's still an expectation but i believe it's an expectation that eventually our portfolio will consist largely in treasuries eventually. but there are quite a number of details. we have a number of tools that we can deploy as we move to normalize policy, interest on excess reserves, are overnight

facility, we purchased agreements with the markets, our term deposit facility, and exactly how to deploy that set of tools to meet our objective of raising short-term rates when the time becomes appropriate. and how best to communicate to the public and to market how we are conducting policy, and what our objectives are. those are things we're discussing, and hopefully we will be able to come back with a full description, or let's think of it as a revised set of principles later this year. >> madam chair, donna with american banker. one of the outstanding reform issues on the plate of the fed

is to handle whole term funding. you've been very supportive of this issue but we really heard little progress so far on where things stand. can you please explain to us why it's taken so long to get this proposal out? what are some of the aspects of the fed is considering in their approach to how they rule out this rule and where we may be in that process, thank you. >> so i'm afraid i can't give you a detailed timetable when we will move forward with that rule. i've been supportive of governor tarullo and others have been supportive of taking some action to diminish the incentives for heavy reliance on short-term funding. we still see that as one of the risks to the financial system. it wasn't really trapped in the risk-based capital requirements that we put out or in the liquidity coverage ratio that's

out for proposal. governor tarullo suggested one approach could be to impose a capital requirement that's related to reliance on full-scale funding to a they might own past comments i've been supportive but i'm afraid at this point, and this remains very much on the table, to take some action to address this. it is certainly remains on the table as an unfinished agenda item, but i don't have a detailed timetable for you. [inaudible] >> i'm not, i'm just not certain. i just don't have the details, timetable for you, i'm sorry. [inaudible] >> madam chair, greg with the economist. this is a follow. how did the committee respond if the commit to temporal move above target in a new term before you would achieve full employment? your colleague and the imf have

suggested that the committee might consider allowing temperature overshoot because that might achieve a faster, larger, improvement in employment. second question is will financial stability considerations play a role in when and how fast the committee normalizes interest rates? >> so with respect to the question of overshooting, let me start by saying that inflation continues to run well below our objective. and we are still some ways away from maximum employment. and for the moment i don't see any trad trade-offs whatsoever n achieving our two objectives your people of call for the same policy, namely a highly accommodative monetary policy. so at the best, overshooting this inflation was thought that we will reach our inflation

objective before we have obtained maximum employment. i suppose i would see at most as a risk we could face somewhere down the road. symmetrically, it's also conceivably your risk that we would reach our maximum employment objective before we've actually obtained our inflation objective. so there are different ways in which we could conceivably, there could conceivably arise policy conflicts or trade-offs somewhere down the road. now, white some time ago the fomc adopted and we reaffirm just in january a statement on our longer bundles and policy strategy, and with that statement said is that first of all whenever either inflation or employment are at way from their preferred or mandate consistent levels, it will always be the

fomc's policy to make sure that we get back to those target levels over the medium term. but a principle that is embodied in that statement is that the committee will fall its so-called balanced approach in deciding on its policies. and essentially that means that when we see some conflict between achieving the two objectives, that we would consider deciding on a policy just how far we are from achieving each of these -- each of the objectives, and if the distance from achieving an objective is particularly large, it would be consistent with a balanced approach that we would tolerate some movement in the opposite direction on the other objective. with balanced approaches to general policy strategy i think would follow up.

>> michael mcgee from bloomberg television and radio. i like to ask about your signaling mechanism going forward. at this point you haven't decided on reinvestment. utopia but don't pay any attention, injured two mandates, inflation and unemployment, are backward looking lighting indicators. so if something should surprise in the economy with only four steps and press conferences a year, how do you signal to the market what the fed is doing so that you don't run the risk of an event like last september when people were surprised, or some sort of credibility problem where people feel you were falling behind the economy? >> well, you know, again, we are very attentive to unfolding economic developments and understand that there can be surprises and twists and turns in the road, so that the forecast that we have made him become no longer appropriate and

we need to respond to unfolding developments. i am personally committed to communicating with the public whenever communication is appropriate. we have for press conferences, but i would feel it appropriate for me to give have additional communications, meetings with the press either speeches, or in a variety of opportunities i have to make clear what the committee's thinking is, and my colleagues as well. i think we would feel it is entirely appropriate to make changes, changes in our view. >> hi. pedro from dow jones. thank you very much. since we're currently having a world cup i thought it would be valid to ask a question about the world but i'm surprised, little surprised the optimism of

your forecast given you know, the darkening outlook overseas. you've got conflict in the ukraine, escalation of war in iraq, implications for all prices potentially have global economic impact. you have -- excuse me, a european recovery that is still fairly weak and emerging markets are slowing down trophy. do you think he was can be a blown engine of economic recovery globally? if i could follow quickly on greg's question because you talked about the two side sidesf the mandate but you didn't quite answer the financial stability board. is financial stability currently preventing the fed from being more accommodative than it would like? if not, when the you expect that to happen, if at all? >> so let me, i'm sorry, i didn't answer the last part of greg's question, and the last part of yours, let me start there. with respect to financial stability, we monitor potential

threats to financial stability very carefully. and we have spoken about some. i've spoken in recent congressional testimony and speeches about some threats to financial stability is better on our radar screen, that we are monitoring, trends and leverage lending in the underwriting standards there. diminish risk spreads in lower grade corporate bonds, high yield bonds has certainly caught our attention. there is some evidence of yield behavior. that's one of the reasons i mentioned that this environment of low volatility is very much on my radar screen, and would be a concern to me if it prompted an increase in leverage or other

kinds of risk-taking behavior that could unwind in a sharp way and provoke a sharp, for example, jump in interest rates. and we've seen what effect that can have on the global economy, and i think it's something that is important to avoid. but broadly speaking, if the question is to what extent is monetary policy this time being driven by financial stability concerns, i would say that, well, i would never take off the table that monetary policy should, could in some circumstances respond. i don't see them shaping monetary policy in an important way right now. i don't see a broad based increase in leverage, rapid increase in credit growth or maturity transformation, the kinds of broad trends that would

suggest to me that the level of imagine stability risks have risen above a moderate level. and we're using supervisory tools and regulations, both to make the financial system more robust and to pay particular attention to areas where we have spotted concerns, like leverage lending which is very much a focus of our supervision. let's see, there was a first part to your question, and the first part was about the global risk. and we pay attention to global risks and the likely evolution of the global economy. you've expressed a lot of is and isn't about emerging markets, and i see it more likely -- pessimism. it will pick up there. of course, there are geopolitical risks. the middle east developments in

iraq, of course. they are not only a humanitarian concern, they are a concern with respect potentially to energy supplies and prices. and so i would certainly list that as something in the category of risk, risk to the outlook. >> peter barnes, fox business news. just a follow-up a little bit on what pedro asked about. specifically what about equity markets? right now today the s&p 500 is on track to close at another record high. you have said that you've not seen any evidence of bubbles and equity markets and that they havhave been trading with an historic norms. is that still the case today? >> so i don't have a sense, the committee doesn't try to gauge what is the right level of

equity prices, but we do certainly monitor the number of different metrics that give us a feeling for where valuations are relative to things like dividends. and look at where these metrics stand in comparison with previous history, to get a sense of whether or not we are moving to valuation levels that are outside of the storable norms. and i still don't see that. i still don't see that for equity prices broadly. >> thank you, chair yellen. i'm wondering what the feds general expectation for wage growth this year, next year? and if inflation out pages of wage growth does that make you more hesitant to raise the federal funds rate next year, or if conversely wages rise just enough to keep up with

inflation, moving in lockstep, let's say, is that enough to satisfy what you're looking for in the job market? >> well, thanks. that's a great question. you know, i see compensation growth broadly speaking as having been very well contained. by most measures, compensation growth is running around 2%. so that's really, wage growth and real compensation growth is essentially flat rather than rising. and real wage growth has not been rising in line with productivity. my own expectation is that as the labor market begins to tighten, we will see wage growth pick up some to the point where real wage growth, where compensation or nominal wages

are rising more rapidly than inflation, so households are getting a real increase in their take-home pay. and within limits, well, that might be scientific -- labor market and within limits it's not a threat to inflation because consistent with the level of inflation we have for our 2% inflation objectives, we could see wages are growing at a more rapid rate and a somewhat more rapid rate, and, indeed, that would be part of my forecast of what we would see as the labor market picks up. if we were to fail to see that, frankly i would worry about downside risk to consumer spending. so i think part of my confidence in the fact we'll see a pickup in growth relates to the fact that i think consumer spending will continue to grow with a

healthy rate, and in part that's premised on some pickup in the rate of wage growth so that it's rising more than inflation. >> associated press. today's statement, a phrase there's been use the committee has been using, that is likely to be a considerable period between the end of the bond purchases and the first hike in the federal funds rate. in march, you give us some guidance trying to help us understand that by saying that it's hard to find but it could mean a six month. is that a timeframe that you still feel comfortable with? and if you feel like it needs to be modified, du, could you give us an assessment of the markets seem to expect the first rate hike in the second half of next year.

is that a good assessments be? so what i want to say, the guidance i want to give you is that there is no mechanical formula whatsoever. for what they considerable time means. the answer is to what it means is, it depends. it depends on how the economy progresses. the committee said very clearly in their statement that what they would be looking at and deciding on the timing of interest rate increases would be the progress we are making in achieving our objectives, how far we are from of achieving our labor market objective, and are inflation objective. and we will be assessing that progress and that's the key determinant of when interest rate increases are likely to come. >> next year to? >> there is no mechanical

formula. >> thank you. greg robb from marketwatch. there was a report this week in a salmon colored newspaper, i won't mention, that the fed is thinking about it regulators in washington are thinking about exit fee for bond mutual funds. this has sparked a lot of comments. would you care to comment on this? >> i am not, i am not aware of any discussion of that topic inside the federal reserve. and my understanding is that that is a matter that is under the purview of the sec. >> thank you very much.

>> [inaudible conversations] >> the house energy and commerce subcommittee holds a hearing today on the epa's proposed carbon dioxide regulations are existing power plants. you can see it live starting at 9:30 a.m. eastern on c-span3. >> republican senators marco rubio, ted cruz and mike lee are some of the speakers at today's faith in freedom coalition policy conference. live coverage from washington, d.c. begins at 12:30 p.m. eastern on c-span3. >> freedom of information and i think my colleague and journalism would get a similar grade whether they're liberal or conservative. the freedom of information process has become a joke. it was already well on its way

prior to the obama administration, but this administration has perfected the stall, the delay, the redactions, excuses. and really it's shocking because i feel very strongly information that they would hold and protect many times belongs to the public. we only. but there's no sense of that when you asked for it. they covet it as if they are a private corporation, defending their trade secrets rather than understanding that what they hold its information they gathered on our behalf. >> journalist an investigative reporter sharyl attkisson on the changing face of network news and her career sunday night at eight on c-span's q&a. >> the u.s. senate is about to gavel in on this thursday morning. senators will start the day with about an hour of general speeches. a number of republicans will speak on the floor at about 9:45 eastern on foreign policy and at 10:30 a.m. standards will start work on a 2015 spending bill for five federal departments. and now live to the senate floor

here on c-span2. the presiding officer: the senate will come to order. the chaplain dr. barry black will lead the senate in prayer. the chaplain: let us pray. creator, sustainer and redeemer, strengthen our senators with your spirit, infusing them with power for living. make your truth real to them, enabling them to discover in your precepts light for their path. may your mercy, grace and peace

sustain them through the myriad of challenges they face. lord, set them free from fear as they remember that nothing can separate them from your love. as your grace abounds toward them, give them strength for every weakness and sufficiency for every trial. we pray in your merciful name. amen. the presiding officer: please join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation under god, indivisible, with liberty

and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., june 19, 2014. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable john e. walsh, a senator from the state of montana, to perform the duties of the chair. signed: patrick j. leahy, president pro tempore. mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: following my remarks and those of the republican leader, the senate will be in a period of morning business for one hour. the republicans will control the first half, the majority the final half. following that morning business, the senate will resume consideration of the motion to proceed to h.r. 4660. there was a lot of conversation about how to move forward on this yesterday. late last night, the way of moving forward had not been

obtained, but we're still working on that. we expect to begin consideration of the bill around quarter to 1:00 today, something like that. mr. president, today we celebrate juneteenth. for those who aren't familiar with this holiday, today marks the 149th anniversary of the emancipation of the slaves in galveston, texas. two and a half years after president lincoln's emancipation proclamation and two months after general lee's surrender at appomattox, the slaves of galveston were treated as they were years before. union general gordon granger and his troops arrived from galveston and had one thing in mind -- to right this wrong. general granger addressed the entire city declaring all slaves in texas to be free and granting them -- quote -- an absolute equality of personal rights and rights of property." close quote. upon receiving the news, the newly freed slaves couldn't contain their joy. they were crying. they were hugging.

they were celebrating because they were previously confined to shackles. they were slaves in the true sense of the word. so today, 149 years later, we once again celebrate the occasion of the emancipation so long overdue. juneteenth is a reminder of promises kept, but while maybe late in coming, it is the duty of the government to honor its word and not forget any of its citizens. there are millions of americans, mr. president, who need help today. right now, on escaping the bonds of hunger, unemployment, inequality. so may we here in the senate come to their rescue just as general granger did for the slaves of galveston those many years ago. i would ask that the brief statement i just made appear in the record at one place and what i say now appear in another place. the presiding officer: without

objection. mr. reid: last weekend, there was something strange, it was even unusual happening in southern california. near a place called dana point, which is just north of san diego. the previous night's guests were being ushered off the premises by hotel security. a private security team moved into the property setting up checkpoints at the resort's entrances. hotel employees could be seen sweeping the rooms for electronic listening devices and dozens of wealthy men and women were led into the resort, registering to attend an event deceptively entitled t.n.r. annual sales meeting. mr. president, this meeting, once started, turned into a multiple day event. it was closed to all spectators, journalists and all those not explicitly invited. no official itinerary was available, and details have not been forthcoming, no matter the

inquiries. there are at least two senators slated to -- there were at least two senators slated to attend and they did attend, but their offices have refused to comment on their participation. after all, attendees were sworn to secrecy. high levels of security, concealment, deception and oaths of silence, that doesn't sound like a typical conference. it sounds more like a cult. but instead of being a religious movement or a secret secretary, this is a cult of money, influence and self-serving politics. this is the cult of koch. and i'm referring to the koch brothers. at their twice yearly secret donor retreat, charles and david koch raised millions, millions, hundreds of millions of dollars. they then used it to pursue their radical agenda, and it is radical. this year's conference was especially important to the koch

brothers as they coordinate efforts to spend hundreds of millions of dollars dictating this year's elections. but why cloak their message in secrecy? in his op-ed in "the wall street journal," charles koch invited his critics to -- quote -- try to understand my vision for a free society. it's easy to understand. look at the libertarian run he had for vice president in 1982. they laid out what they wanted to do -- privatize social security and do away with -- just basically do away with government. so his critics -- quote -- try to understand my vision for a free society, that's pretty easy to do. how could we possibly understand the kochs' vision, though, when they and their loyal followers try to do everything in secrecy and they hide from america? the truth is the koch brothers

are concealing their massive fundraising because americans overwhelmingly oppose the purchase of our country. our country shouldn't be for sale, and it isn't for sale, and i think in a little less than five months, that will be proven. so instead of making a case directly to the american people, the koch brothers dump unseemly amounts of money into elections trying to elect representatives who will do their bidding. and, mr. president, again in the paper today, they have all these phony organizations they fund. i forget what it is. they have got now they are spending millions of dollars with some group they call something dealing with veterans. it's just a way to hide the koch brothers. they don't want their name on stuff. they just want to do everything they can to mislead the american people. the influence of unlimited

spending under our political system is not right. it allows individuals to dictate their will on the american electoral process, and in this instance in secret. unlimited campaign spending disenfranchises working americans who don't have the resources to go tit for tat with two of the richest men in the world. when he was a freshman senator, the republican leader himself took exception with the unlimited spending of special interests. he said -- and this is a quote from the republican leader -- "if the american public thinks that special interests are having undue influence on the process, then get rid of the pac's. i will be more than happy to eliminate pac's altogether." that's what he said. i guess times have changed, mr. president. now that the republican leader rails against campaign finance reform when in the past he was in favor of it, so it should be no surprise that he attended the kochs' planning session this

past weekend. evidently, he no longer believes that special interests have an undue influence on our government. but he wasn't the only member of the body to attend the koch extravaganza. the junior senator from florida found the time to fly across the country, kiss the ring of the republican party's billionaire benefactors, and, among other things, told them how outrageous it is that people are talking about the climate changing, that the earth is warming. but he got a lot of applause there, i'm sure, even though we were not able to hear the applause because it's all secret. but i guess what else should we expect? the decisions by the supreme court have left the american people with the status quo in which one side's billionaires are pitted against the other side's billionaires. except one side doesn't have any billionaires. we must undo the damage done by the supreme court's recent campaign finance decisions, and we need to do it now. that's why i support the constitutional amendment

sponsored by senators tom udall of new mexico and michael bennet of colorado. this constitutional amendment grants congress the authority to regulate and limit the raising and spending of money for federal elections. senator udall and bennet's amendment will rein in the spending of massive super pac's which have grown so much since the citizens united decision in 2010. it also provides -- this constitutional amendment states with authority -- campaign spending at their state level. so simply put, a constitutional amendment is what this nation needs to bring sanity back to political campaigns and restore americans' confidence in their elected leaders. let -- mr. president, let's put an end to the cult of dark money and in this instance, the hidden dark money which is corrupting our elections. it's time that we revive our constituents' faith in the electoral system, let them know that their voices are being

heard. mr. durbin: would the majority leader yield for a question through the chair? mr. reid: i would be happy to. mr. durbin: i would ask the majority leader through the chair, yesterday afternoon, the subcommittee of the senate judiciary on the constitution held a hearing and a vote on senate joint resolution 19, which the majority leader has referenced. this was offered by senator udall of new mexico, senator bennet of colorado. it would basically restore us back to that moment in time before the citizens united decision, before the mccutcheon supreme court decision which would allow the federal government and the states to regulate campaign spending. it is content neutral in terms of the efforts to be made by the government, but it establishes -- tries to re-establish new standards in terms of contributions and spending across america. i would ask the senate majority leader, who has followed this closely, as he has followed the amount of money being spent on elections in this country, what you can foresee as the ultimate result if we fail to undo the

citizens united decision? mr. reid: we're already seeing that, i'm sad to say. one state, the koch brothers have spent almost $20 million against one senator, and they say that's just the beginning. mr. president, america should not be for sale. i agree with the republican leader when he said there should be limits put on this. i agree, as i read the quote in the earlier remarks. it is not right that we have two of the richest men in the world trying to buy america. and they're not only trying to buy senate seats and house seats. they are focused on secretaries of states around the country, state legislatures. they have far more money than virtually every government, and they are -- they want to have

their view of government be the law, privatize social security, do away with internal revenue service and on and on with their -- their money-buying program to convince the american people that the koch brothers are right. and, mr. president, i will also say this through the chair to my friend. they not only have all these entities i have talked to you about, they give money to the chamber of commerce. i am sure they are their largest contributor. why? because the chamber of commerce runs ads against us. so i appreciate the question, and i'd like to enter into this dialogue a little longer, but the republican leader is here and we have to close this, but i deeply appreciate my friend who has been such an advocate on the judiciary committee, and i hope

very soon that the full committee reports that bill out so we can move it on the floor. mr. mcconnell: mr. president? the presiding officer: the republican leader. mr. mcconnell: last night the senate democratic leadership pulled the energy and water bill

from consideration. for one reason, and one reason only. to protect the administration's new job-killing coal regulations. so once again, senate democrats are preventing my commonsense are pro-coal measure from moving forward. they've done the bidding of the administration instead of listening to constituents back home. kentucky families especially our coal families, continue to struggle under the obama economy. and the senate democratic leadership's latest action is another example of the lengths they're willing to do to defendant the obama administration agenda, an agenda washington democrats are willing to protect at all costs even when supposedly pro-energy senate democrats try to make it new think otherwise. mr. president, on another matter entirely, historians

will note that president obama's national security policy has been noteworthy for its adherence to consistent objectives. drawing down our conventional and nuclear forces, withdrawing from iraq and afghanistan, surrendering the tools necessary to fight the war on terror, and placing substantial trust, substantial trust, in international organizations and diplomacy. in short, he's displayed an inflexible commitment to policy positions that would erode america's standing in the world, completely erode our standing in the world, and he's refused to change course even as circumstances have changed. i, like many in the senate, profoundly disagree with his view of america's role in the world. i disagree because i believe

that his attitude has left america weaker and will leave substantial problems to his successor. i believe that we as the superpower without imperialistic aims have a duty to help maintain an international order and a balance of power, not out of altruism, but out of national interest. and i believe that international order is best maintained through american military might. in fact, i believe that american military might forms its very backbone. but president obama has always been a reluctant commander in chief. it seems he's always seen things quite differently. that was clear from his first actions in office, and his more recent actions set the other bookend to his presidency, withdrawal from afghanistan. consider that his very first week in office he signed an

executive order that sought to end the c.i.a.'s interrogation and detention programs and sought to close guantanamo within a year. the problem was, he didn't have a credible plan for what to do with the detainees afterwards. he still doesn't. that was one of the first things did he in office. and it parallels disconcertingly with one of the most recent things he's done in office, announcing withdrawal of all our combat forces in afghanistan by tend of his term. i say that because once again, he's announced step a without thinking through the consequences of step b. he seems determined to pull out completely whether or not the taliban is in a position to reestablish itself, whether or not al qaeda's senior leadership finds a more permissive environment in the tribal areas of pakistan and whether or not al qaeda has been driven from afghanistan completely, one of

our primary aims in this conflict from the very beginning. the two examples i mentioned serve as bookends to his presidency. between these bookends much has been done that undermines our national security. for instance the president's inability to see russia and china for what they are. dissatisfied regional powers intent on increasing their respective spheres of influence. the failed reset with russia and the president's commitment to a world without nuclear weapons led him to hastily sign an arms treaty that did nothing to substantially reduce russia's nuclear stockpile. and what we do have to show for the reset of relations now, what do we have to show for the reset? moscow is undeterred in its assault on ukraine as everyone can plainly see. and russia has repeatedly found ways to undermine our national objectives. then there's the president's

tragic pivot to the asia pacific, a plan he announced without funds to fund it representeddering the strategy largely hollow. we see examples of that almost daily with china undeterred in its efforts to intimidate smaller nations. we can't pivot to asia forces, nor can we constrain china's ambitions without investing or developing the forces needed to do so. so i fear that the failure to make the kind of naval, air and marine corps investments that are necessary have tragic consequences down the road. and, of course, we've all seep how eager the president is do declare, to declare an end to the war on terror. the threat from al qaeda and other affiliated groups is now me tast sized. the turmoil in north africa and the broader middle east has led

to ungoverned space in syria, egypt, and yemen. we've seen prison breaks in iraq, pakistan and libya and the release of hundreds of prisoners in egypt. terrorists have also escaped from prisons in yemen, a country that is no more ready to detain the terrorists at guantanamo now than they were in 2009. and the flow of foreign fighters into syria which has fueled the growth of isil suggests that the civil war there will last for the foreseeable future. the dogged dheerches to withdrawing our conventional strength and sticking to campaign promises that created a more dangerous world, not a stable one. as just one example the president's failure to negotiate a status of forces agreement with iraq. an agreement like that would have allowed for the residual military force that could have

prevented. now we see the consz scwens unfolding before our eyes and it's incredibly worrying. president obama's withdrawal at all costs policy regarding iraq has proved deeply harmful to u.s. interests and it ignores the tremendous sacrifices made by our service members, those who sacrifice life and limb fighting to keep america safe. several weeks ago, the president spoke at west point and in that speech he vaguely described a new counterterrorism strategy and pledged to engage partners to fight terrorists alongside us. he made clear that he hopes to use special operations forces in an economy of force and he hopes to deploy, train, and assist missions across the globe. all as he was our conventional forces and as our conventional war fighting ability atrophies. as i said, he will leave his successor with a great many

challenges. so this morning my republican colleagues and i will explain how by inflexibly clinging to campaign promises made in 2008, the president has weakened the national security posture of the united states and why we believe he's likely to leave the next president with daunting, daunting security problems to solve. mr. president, i see the senator from arizona and others are here. i yield the floor. the presiding officer: under the previous order, the leadership time is reserved. under the previous order, there will be a period of morning business for one hour with senators permitted to speak therein for up to 10 minutes each with the time equally divided and controlled between the two leaders or their designees with the republicans controlling the first half of the time. mr. mccain: mr. president? the presiding officer: the senator from arizona. mr. mccain: i ask unanimous consent republicans are allowed an additional 15 minutes.

the presiding officer: is there objection? without objection. mr. mccain: i thank you, mr. president. today, we see reports that now isis has taken over the major oil refinery in iraq. names that we used to hear quite often like talafar, like mosul mosul, fallujah, ramadi, all are under the black flag of al qaeda and isis which is an even worse organization than al qaeda, if that can be believed. we now see the forces of isis marching on baghdad itself, which i don't believe they can take, but the second largest city in iraq, mosul, is now

under the black flag and quantities of military capability and equipment are clearly falling into the hands of what has now become a syria, iraq, largest terrorist, richest, largest base for terrorism in history. this has all come about in the last couple of weeks, and what has the united states of america done? today we see on the front page of "the washington post," u.s. sees risk in iraqi airstrikes. the president of the united states goes for fundraising and golfing, and now is fiddling while iraq burns. we need to act, mr. president, but we also need to understand why we are where we are today. the senator from south carolina and i visited iraq on many

occasions, more than i can count, and know for a fact that we could have left a residual force behind and this situation would not be where it is today. the fact is that the president of the united states if he wanted to leave a residual force never made that clear to the american people. in fact, on october 22, 2012, the president said -- quote -- "what i would not have done is left 10,000 troops in iraq. that would tie us down." he celebrated in 2011 the departure of the last, as he described it, the last combat soldier from iraq. and the fact is that because of our fecklessness and the fact that we did not leave that force behind, we are paying a price and the people of iraq are paying a very heavier price. what do we need to do? despite what -- first of all we have to understand there are no good options. there are no good options remaining. this is the culmination of

failure after failure of this administration. but for us to do nothing now will ensure this base for terrorism, over a hundred, we are tracking have already come back to the united states of america. there are hundreds and hundreds who are leaving not only the battlefield in syria and iraq and they will pose a direct threat to the security of the united states. i say to the critics who say do nothing and let them fight it out, you cannot confine this conflict to iraq and syria. the director of national intelligence has said and the director -- the secretary of homeland security has said that these people will be planning attacks on the united states of america. so what do we need to do? of course maliki has to be transitioned out. but the only way that's going to happen is for us to assure iraqis that we will be there to assist and let me make it clear, no one that i know wants

to send combat troops on the ground but airstrikes are an important factor, psychologically and many other ways, and that may require some forward air controllers and some special forces. we cannot afford to allow a syria-iraq enclave that will pose a direct threat to the united states of america, and if we act, we are going to have to act in syria as well. a residual force of u.s. forces in iraq could have checked iranian influence in iraq. the other question is, what are the iranians doing while we are not making any decisions? the iranians are -- probably the most evil man on earth, the head of the ciewdz force. there are reports of iranian

forces moving into bagged baghdad. i say we must meet this threat. the president of the united states must make some decisions, and i am convinced that the national security of the united states of america is at risk here and the sooner that all of us realize it, the better off we will be. i yield to my colleague from south carolina. the presiding officer: the senator from south carolina. mr. graham: i would ask to be recognized for four minutes. the presiding officer: without objection. mr. graham: mr. president, contrary to what may be popular belief, there are plenty of democrats in this body very much worried about iraq. the question is what do we do about it? it is complicated, i will be the first to admit, but the first thing we have to assess as a nation, does it really matter what happens in iraq. clearly, i think it does. economically if iraq becomes a felled state, the oil production in