expectations about the path of interest rates played an important role, that's something we did in conjunction with asset purchases. obviously we lowered our overnight interest rate effectively to zero, now we have seen some foreign central banks, europe, the ecb, and others that have taken their overnight rate into negative territory, and that's something that i don't contemplate that we wanted to do this, it is something that we could study, of course, we have balance sheet policies and there may be a range of direct policy that we could use as well. but this is something that we have thought about our ranges of options. ..

that we eventually want to operate with a much smaller balance sheet than we have at present. the, that we would reduce the size of the balance sheet to essentially, whatever size we needed to manage monetary policy effective in, in effective and efficient way. now a lot has changed since prefinancial crisis in terms of the financial system and, we are studying, we're engaging in

project at this time. to consider whether a long-run operating framework should look like. so, i can't tell you exactly what size of balance sheet we will determine is the best to operate in an efficient and effective manner. it might be somewhat larger than the very tiny quantity of reserves that we had precrisis. we have not determined that. we have also said that we will, we expect to reduce the size of our balance sheet overtime by ceasing diminishing, ceasing entirely reinvestments and beyond that we haven't given additional guidance other than to say the timing of reductions in reinvestment will depend on economic and financial conditions and i suppose the additional guidance we're giving today when we say, well underway, we want to see, as i

mentioned, there are a number of considerations and the committee's made no further decisions about this but as we've discussed the factors that will be relevant to the decision one factor that we've talked about is the desirability of having some scope to respond to an adverse shock to the economy by lowering the federal funds rate and so it would be nice to have a buffer in terms of having raised the federal funds rate to a certain extent to give us some meaningful scope to respond. now i don't have in mind here any particular level of the federal funds rate. it would depend on the entire economic outlook, how robust the economy is but that is an important consideration for the committee.

it means this is not something we expect to be turning to cease reinvestment very quickly. >> peter. >> peter barnes at fox business, ma'am. on financial market conditions, is there a problem developing in the high yield sector of the bond market, the junk bond sector? as you know last week, a mutual fund, third avenue management halted redemptions so that it wouldn't have to, because of a sharp selloff in these kinds of bonds. are you concerned at all, and did you discuss in the meeting any risk to the financial system, systemic risk because of the conditions in the junk bond market? and individual investors and institutions hold trillions of dollars of these ponds which were sold heavily because of low rates. and did the fed's low interest rate policy sow the seeds for this development? thank you. >> risk spreads in the high-yield bond market have been

widening since last year. partly reflecting falling oil prices. only partly but partly and redemptions in high-yield bond funds have been increasing in recent months but third avenue focus credit fund was a rather unusual open end mutual fund. it had very concentrated positions in especially-risky and illiquid bonds and it had been facing very significant redemption pressures. my understanding is that the sec is in touch with third avenue. and as you probably know the sec has proposed some reforms to address what structural problem of liquidity mismatch and in open end mutual funds. so we continue to believe that financial conditions are supportive of economic growth.

we will be, we have been and will be continue to track developments in financial markets very carefully. i would say that i think we have a far more resilient financial system now than we had prior to the financial crisis and highly capital banks that are well-situated to support corporate lending. i would also point out that many corporations during these years have reduced their interest payments and extended their debt profiles. and i think that should help to mitigate spillovers. but we'll be evaluating this carefully. >> we'll go to elon and come back to jim. >> from "the washington post." you said earlier extensions

don't die of old age but other half of that it is often central banks that kill them off instead. i'm wondering how worried you are that the possibility that the fed will have to turn around and hiking rates? other central banks that tried to hike rates have had to do just that? how damaging would that be to the fed's credibility. >> when you say central banks often kill them, i think the usual reason that that has been true when that has been true is that central banks have begun too late to tighten policy and they have allowed inflation to get out of control. and at that point they have had to tighten policy very abruptly and very substantially. it has cause ad downturn and the downturn has served to lower

inflation. if you don't mind my flipping the question on you, i would point out it is because we don't want to cause recession through that type of dynamic at some future date, that it is prudent to begin early and grad wally. -- gradually. it is true some central banks have raised rates and later turned around. not in every case is that reflected a policy mistake. economies are subject to shocks. sometimes when they have raised rates it hasn't been the wrong thing to do but conditions have changed in a way that they have had to reverse policy to respond to shocks. i'm not denying that there are situations where central banks have moved too early. we've, we have considered the risk of that. we have weighed that risk carefully in making today's

decision. i don't believe we'll have to do it but, look, you know, as, the committee has said, we are watching economic developments closely and we will adjust policy in whatever way is necessary to support the obtainment of our objectives. >> jim. then john. >> hi, from the "l.a. times." you said it is important not to overblow the significance of this first move. as you know there is a lot of attention paid to it. can you explain to average americans what if anything might be different in the next few weeks or few months for them because of this interest rate hike? >> so i think the first thing that americans should realize is that the fed's decision today reflects our confidence in the u.s. economy.

that we believe we have seen substantial improvement in labor market conditions and while things may be uneven across regions of the country, and different industrial sectors, we see an economy that is on a path of sustainable improvement. so, in thinking about the labor market prospects and their financial prospects going forward, i hope they will take this decision as one that signals the fomc's confidence that conditions will continue to strengthen and job market prospects will be good. it's a very small move. it will be reflected in some changes in borrowing rates. longer term interest rates, loans that are linked to longer term interest rates are unlikely

to move, move very much. for example, some corporate loans are linked to the prime rate which is likely to move up with the fed funds rate. and those interest rates will adjust. there are some consumer borrowing rates. i think credit card rates, that are linked to short-term rates that might move up slightly. but, remember, we have very low rates and we have made a very small move. >> [inaudible]. >> madam chair. john hellmuth with american banker. how concerned are you with interest rate risk with banks now that you obviously ended the zero rate era and began the .25% rate era? is that a factor in decisions going forward? is it something that you're concerned about? >> interest rate risk at banks

is something we've been monitoring very carefully for quite a long time. the community banks and smaller banking organizations that we work with, part of our supervision has been insuring that they manage appropriately for interest rate risk and the larger banking organizations that are subject to the stress test and capital planning, the scenarios that we have presented in each of the last three years look at their ability to withstand what would be much sharper increases in interest rates than we're envisioning would happen but we want to make sure that if phere were sharp increases, unlike our expectations that they would be well-positioned to handle it. and we have concluded that, that their capital positions are sufficient for them to weather

it. so this has been very much on our minds. >> lindsey, then greg. >> lindsey dunsmere with reuters. you keep saying things holding back inflation are transitory. yet every day there seems to be new impulses from outside that could seem to drive prices lower. i guess my question is if in a year's time inflation remains where it is today, would you see that as a defeat for your theory and is that part of the reason why the language has been upgraded into the statement to say you want to see actual progress towards your 2% target? >> we said we would carefully monitor actual and expected progress. you know, i think that standard fed policy has been to look through shocks that are

transitory. occasionally there are sequences of transitory shocks. we have had some further declines in energy prices. and, you know, as i said previously, i do expect there is a bottom to that. i expect we will be seeing it. if we, if we analyze inflation data and conclude that clearly transitory influences are holding down inflation, i do not want to say that we would respond to that. but, if we concluded that there were structural factors or that there were a problem with our theory, or some global deflationary force that were simply persisting holding down

inflation in a way that was not transitory, and i don't want to attach any simplistic meaning to what we would need to see to conclude that in the inflation data. but, if we concluded that, we certainly would take action to make sure that we adjusted policy so that we attain our 2% objective. but we would need to feel that what we were seeing in the data suggested a sustained departure from our 2% objective that we really needed to address. >> over here. >> greg robb from market watch. there is a lot of talk and a lot of discussion about the downside risks facing the economy from the global environment. but you say in your statement that the risks are nearly balanced. could you talk more about upside risks you see to the economy? just briefly, some fed officials have been emphasizing lately the

medium, medium cpis from dallas and cleveland. how much weight do you put on those measures? >> starting with the median cpis, we look at a range of statistics that bear on the inflation outlook. and the median cpi has been somewhat more stable in running closer to 2% than the pce. there is a systemic gap between these two measures. our objective is 2% on the pce price index. so there is no simple translation. we do have a pce inflation objective. sorry, what is the other? >> upside risk. >> the upside risks. there are upside risks to the economy. i think, you know, we tend to focus on downside risk. it is right to do so. we want to be careful about downside risks.

but, consumers are in much healthier financial condition. their income prospects have improved. we see them buying a lot of cars housing has been recovering very slowly. but, the demographics would point to considerable upside for residential investment. my main line forecast is for gradual recovery but there is upside risk there. we have seen that the decline in drilling has been depressing investment spending but there is upside risk too. the global economy, we tend to focus, there are many countries that are undergoing very difficulty adjustments or slowing growth, especially with

declining commodity prices. but even recently we've seen growth in emerging markets strengthen. and so it is not only downside risks but we do pay attention to downside risk. the committee said they regard risks overall as balanced. >> [inaudible] >> chair yellen, steve beckner of mmi. you said the fed will be data dependent but you also said in the past you want to avoid being mechanical. now if the data seemed to warrant rate hikes at successive meetings, how will you avoid the perception, market perception you're following into a pattern or you're becoming mechanical? >> well we will try to avoid that. i want to emphasize while i said gradual, gradual does not mean mechanical, evenly timed, equally sized.

interest rate changes so that is not what the committee means by it. my guess is that the economy will progress in a many maker that is not sufficiently even. that we will decide to make evenly spaced hikes. i recognize we want to do what is appropriate. i recognize that is a danger but i do want to assure you that, we will be data dependent as the outlook evolves. we'll respond appropriately. i strongly doubt that it will mean equally-spaced hikes. it is certainly not the intention of the committee to follow any mechanical formula of that type. >> then we'll go to jeremy and then we'll go to nancy. >> bloomberg. you just mentioned it may be possible structural factors are holding down inflation as well and the dynamic that is

happening in top line inflation is happening in core as well. in september the median projection was revised down. again today the median projection was revised down. this is happening at other central banks as well. additionally markets see much lower inflation than central bank models do. within the fed who you are you adapting models now to seem to be a new reality and what are you learning as you do that? >> the main reason we revised down our projection ever so slightly, it is hardly revised for core inflation, is because we have seen further appreciation at the dollar that is holding down import prices that spills over into core inflation. my own estimation, is that, core inflation will pick up. there are various idiosyncratic factors that affect core

inflation. for example, non-market price increases which are a little bit hard to understand. we've been running a at a slow pace. there are factors that have been been affecting changes in medical care prices that have changed over time. so there are some idiosyncratic factors but i personally don't think we're in a world where inflation is being determined in different ways than it has historically. i see import prices and energy prices as holding down headlines but also core. i do believe it will pick up. but as we've said, if that theory is wrong, we do not see inflation is unfolding in the way that the committee expects, we will make adjustments over time in policy. >> you have a background as an academic. are you looking into these models to see whether they need to be adapted? >> i mean we have many people who are studying inflation

models. i have, you know, tried to, let me express some humility about them. i do not think that they're perfect. monetary policy is based on economic for casts. there are theories how government works that reflect many aspects of economic forecasting. whether it is consumer spending or residential investment or inflation. the underlying theories are not perfect. they are subject to uncertainty. this is true in all aspects of forecasting, which is why we change our forecasts and our models. we throw out models that are persistently not working. we're always trying to develop better models. i'm not aware, i will say, of the different model of inflation

that would be superior to the one that we employ but, we have to verify that inflation is moving in the manner that we expect. and if it is not, we need to adjust policy accordingly. >> jeremy and then nancy. >> hello jeremy with french ap. are you concerned about impact your decision could have on emerging markets? are you fear it could trigger financial instability abroad that could financially hit the u.s.? >> so we are constantly foreign economic developments including those in emerging markets. we understand that in the global economy with integrated product and capital markets that are fates are very much linked and that the performance of the u.s. economy has important spillovers

into marriage marriages and vice versa. we have been trying very carefully -- we made a commitment to emerging market policymakers that we would do our best to communicate as clearly as we could about our policy intentions to avoid spillovers that might result from abrupt or unanticipated policy moves. i think this move has been expected and we'll communicate it. at least i hope it has. so i don't like think it is a surprise. this action takes place in the context of a u.s. economy that is doing well. and is a source of strength to the emerging markets and other economies around the globe. and so, that is there can be negative spillovers through capital flows but remember there

are also positive spillovers from a strong u.s. economy. my general view is that many emerging markets are in a stronger position than they would have been in the 1990s. for example, that they have stronger macroeconomic policies. that they have taken steps to strengthen their financial systems. and they are better positioned to deal with this. on other hand there are vulnerabilities there. there are countries that have been badly affected by declining commodity prices. so we will monitor this very carefully. but we have taken care to avoid unnecessary negative spillovers. >> nancy with the last question. >> nancy marshall with marketplace. wage growth is not quite where you would like it to be.

>> what? >> wage growth is not quite where you would like it to be. how much is that going to play into your thinking next year as you're trying to decide whether to raise interest rates more and when? >> so my expectation is in growing labor market we would see faster wage growth. in a expectation that wage growth to be higher than it's been we may be seeing some insipient signs of faster wage growth. we've seen a pickup in measures of hourly compensation and some slight firming in recent months in average hourly earnings. i hesitate to say that this is a firm trend. we've been disappointed in the past. wage growth is not, there are many factors that affect it. it is not differenttive in any

sense determining our policy. it has a bearing on the inflation outlook. it also has a bearing assesses how much slack there is in the labor market and i think, a number of my colleagues looking at the slow pace of wage growth have, you have seen that there are estimates of longer run normal unemployment rate have come down. i think that it is one of the factors that has prompted those adjustments. so, it does, it does affect views about just how much slack thrre is in the labor market and inflation outlook. >> thank you. >> the president will give an end of the year news conference this afternoon before leaving for hawaii.

watch live at 1:50 p.m. eastern on c-span3. this morning texas senator and republican presidential candidate ted cruz will address supporters at a rally in mechanicsville, virginia. we'll take you there live live on c-span3. charter communication tour explores literary and culture of worcester, massachusetts. located approximately 40 miles west of boston, worse played a key role in the american revolution and women's sufferage movement. worcester was major contributor in industrial revolution. on booktv we'll learn about the life of political philosopher and henry george, who published, "progress and poverty" in 1879. we'll visit one of the largest repositories in the country of

books, pamphlets, periodicals related to history of the united states. next we'll talk with author jenette greenwood, to discuss her book, first fruits of freedom of to discover the roots of african-americans to worcester after the civil war. >> there were lots of, when the civil war breaks out there were freed men eight slaves by white worcesterrites and black worcesterrites. this is city is forward-looking and progress live in lots of ways. >> we'll visit mechanics hall. the building is listed in the national register of historic places t originally served as a learning center for its members but also served as a platform for social and cultural activities including women's rights rallies. >> first women's rights convention happened before the hall opened but afterward most people came here to speak.

worcester was a central location and mechanics hall is where everything happened. if anything happened in worcester it happened here in the hall. >> finally we'll tour the clark university special collections of physicist robert goddard, the best known as the father of modern rocketry. we'll talk to fordyce williams to look at goddard's contribution to science through papers, and artifact. >> robert goddard attributes first interest in space travel and first interest in a career in sigh zones to to day in 181919. he went out with a saw and hatchet. 1899. he was meant to trim dead branches off cherry tree. he climbed a tree. he made himself a little ladder to get up the tree. and while he was up in the tree, he looked down on the fields around him and he thought, how wonderful it would be to build

some kind of a device that could leave the earth and maybe even travel to mars? >> watch c-span cities tour saturday at 12 noon eastern on c-span2's booktv. sunday afternoon at 2:00 on american history tv on c-span 3. c-span cities tour, working with cable affiliates and visiting cities across the country. >> former federal reserve chair alan greenspan said expanding the h1b visa program may help increase productivity numbers. greenspan's comments came at the council on foreign relations in new york city. he also touched on the fed's recent rate increase and china's economy. this is about an hour. >> welcome, folks. thanks to the council on -- >> welcome to you. >> we have work to do. thanks to the council on foreign relations to ask me to be in great spot moderating a panel with dr. greenspan after the

historic decision yesterday by the federal reserve. alan greenspan needs no introduction. was federal reserve chair from '87 to 2006. he served under four presidents. he was the 1983 panel that reformed social security. i think we'll be talking a little bit entitlements this morning. also was the economic advisor to president ford and made a very, very important decision sometime in the early '60s, i think not to be a professional jazz my second quarter shun. to be a professional economist. was that the '50s, alan? >> hate to tell you when that was. '45. >> '45. i was giving you benefit of the doubt there, young man. >> you were also factually inaccurate. [laughter] >> alan i want to turn immediately to the news yesterday. i know you have some reluctance to talk about the fed comment on their current policy, but if you would, give me your reaction to

the market reaction. the market seemed to rally on this news. why do you think that was? >> well, remember this particular move was targeted way in advance and the market had adjusted to it. the only question that was out there was, what was going to happen subsequently that, not that what they could, not that you could actually make certain happened but really what the policy was. as it became apparent that the fed was just going to raise rates, and then not do a whole series of rates, then basically, the markets just said uncertainty is gone. therefore, you, uncertainty, income earning assets go straight up. this is just a classic case of

this. i ran into it many times in the sense that choices that we had were always, do you want the market to know exactly what the plans of the federal reserve are, or not? and it depended on a very, very technically difficult problem. how much risk do you want in a system. if there is too little risk, you're bubble-creating and if you're suppressing risk and growth beyond what they should did. federal reserve policy any point in time making adjustment on what level of risk you want in system. so what we often did, as you know, is go or change, change, and markets did not respond in

any of those puce it knew exactly what we were doing and why we were doing it. other times, we would go in50, 75 basis point and shock the market. why? because -- >> that '04 to '06 period is criticized that it created potential bubbles and too regular a rate increase, and something current federal reserve said we're not following this. was that is mistake to go in that particular fashion? >> depends how you examine the conclusion you come to why the crisis occurred. remember, bubbles per se have not been toxic. we went into the go -- 2,000 bubble, the market crashed. people who were essentially hurt were those on the way up. what is critical about the sort of that boom was that various

types of financial intermediaries which held the particular toxic asset, or, or had very little leverage. and unless you have debt, you can not by definition default. and if you can not default, you can not create contain -- contagious defaults which is the basis of the problems we ran into in 2008. for example, in 1987 we had no impact from the collapse in stock prices. in 2000, we had no impact. in 2008 and 1929, we had very significant impacts. those two had in common which were not in common with the other two were degree of leverage that the particular

institutions -- broker loans, for example, were highly leveraged and subprime mortgages were, especially when they got into securities, were heil leveraged -- highly leveraged, more leverage issue than it is the issue of bubbles. bubbles per se is not pejorative term, let me put it that way. >> i want to just ask one more question about the current policy and market reaction and move on to some of these other areas we were going to talk about. notice this morning the long end of the curve, 2.25, basically unchanged, maybe even a little bit lower in yield on the 10-year. it reminded me of the conundrum that you talked about. how much influence would you say now that the fed has on the long end of the curve, which obviously matters? those are the ones that will determine borrowing rates out in the lower end of the economy? could you see a situation where

fed raises rates on shortened but long end of the curve remains stable? >> that's basically what happened to us in period when i said we're raising rates and in 10-year note ought to go up. why? because it always did. but why federal funds rate, which is overnight rate should affect long-term rates was always a great mystery to me and still is. what is not a mystery to me is that long-term rates now and international market, are essentially arbitraged. that the effect of, long-term rates amongst many other countries tend to converge. and the that reason is they're arbitraged. the impact between short and long-term rates is wholly different ball game. so i think that the presumption that you're going to get a

situation where have on excess reserves or federal funds rate or reverse repos they're doing is going to significantly after affect the long term rate is not indicated by any historical beta that i'm aware of. >> do you care to share a forecast you have for the fun rate next couple years, forecast for the funds rate over next couple years? >> i don't even follow you? >> would you care to share with us your forecast for the federal funds rate over next couple years. >> no. >> no? [laughter]. alan, i get paid to ask questions people say no to. that's okay. i'm good on that. let me turn now to a broader he question. none of this would matter a whole lot if we had strong growth out there. yet growth has been at best you could say anemic. we're lucky to eke out 2% growth.

what is holding back this economy? >> first not only ask this economy but the global. if you look at output per hour which is the critical determinant of growth, you will find vast proportions of countries have under 1% productivity growth. , over the last five years on average. and this includes, virtually all of the oecd countries. obviously euro area, united states, canada, with very few exceptions, all below 1% and averaging in many cases below a half percent, and in some cases probably more for statistical reasons than economic reasons is showing five-year negative productivity. now, the question you have to ask, well, why is this? and if you go deeper into the

data, what, you take a look at is the united states because it is perfectly typical of everybody else, what we have in this country is a very unusual and unfortunately very unstable fiscal system. our fiscal system is now driven by entitlements on expenditure side and tax structure as always on the funds raising side. the liability, the entitlements are not affected by the level of economic activity. it is elderly which has got nothing to do with what the economy is. how many people could be become eligible for social security. and, a whole series of other factors which determine essentially, what the entitlements are.

i mean for example, health costs have got very little to do with what the economy is doing. so, if you have a situation in which the entitlements are rising at 8 to 9% a year, and i might add parenthetically that it is in both republican and democratic administrations, and in fact if you want to be actually exact of the numbers, the actual rate rise in republican administration has been greater than democrats. this has been very critical because this rate of growth in entitlements could be funded only if the gdp growth rate is probably 3 1/2 to 4%. remember, these are not related issues. in other words, basically the economy does its thing, entitlements does its thing. if they meet, all well and good.

but if they don't, then you have a real problem. what the issue is now, is that the surge in entitlements is displacing gross private savings. and, the result of that is because gross domestic savings in total, which includes negative government, usually, and entitlements, have tended over the last 65 years to, 50 years, as a percent of gdp, have been remarkably stable. they go like this. which essentially comes down to the fact that a dollar increase in entitlements reduces gross domestic savings by a dollar. but gross domestic savings is the major determinant of capital investment.

incidentally, gross domestic savings plus the current account balance is equal to the, borrowing from abroad. >> right. >> is equal to gross domestic investment with a little statistical discrepancy in there. gross domestic investment is the key factor in determining productivity growth. >> so let me recap, alan, for just a second. you're saying if we save a lot, we invest a lot. if we invest a lot we're more productive? >> correct. >> since we're not saving as much we're putting more stuff into entitlements, we're investing less and our productivity is less? >> perfect. >> awesome. i would come back and i say we have all this stuff around like this. people have a sense of massive technology -- technological advancement out there. how can you say we're not more productive right now? >> basically because, this is a different type of effect.

remember when you're talking about, let's say per capita income, depends basically on number of hours worked or the number of hours in a year, but proportionate thing. the issue of productivity is more out put per hour. the social media stuff is more a direct, it does not improve productivity but it does create other values. remember, when we're in a market economy, we measure it only in terms of market values and market pricing. >> output. >> output. basically, i mean there is no question, i couldn't go out the door with my iphone? where is it? you're getting so dependent on it but that actually only marginally reduces the amount of

hours and doesn't get picked up in the statistics. and there is a big dispute amongst people that are productivity experts how to count this. this is a different type of value. social media, obviously, have value and people pay money for it. but, how should one measure that? >> that was always europe metric i remember. '96, '97, you introduced me to this notion of earnings forecast for tech companies suggested need was out there for these things. therefore they must be productivity enhancing because we see the demand for it in the economy? >> well, remember at that time it was information technology. >> right, right. >> this was not social media. i mean what you are looking at was very significant changes in

values which do show up in output per hour. it this is not. clearly a goodly part of it to the extent it cuts down the work day. for example, i get more work done with new technologies than i could conceivably gotten done with 10 times as many people 20 years ago. >> measuring productivity a bit and maybe -- >> it is definitional question. you have to distinguish between what the economy is for. if you're trying to measure as material well-being, food, clothing, standards of living, old conventional stuff, then all of the technical analyses that were done up through the year

2,000 were unchanged over the generations. this has created a very difficult measurement problem. there is no question that social media obviously creates something. i don't think iphone is social media. there is more to it. >> you have bob gordon who you know is from northwestern. this is not a train. this is not equal to innovation of electricity. not equal to innovation of a car. it doesn't register -- >> one of the really important ones was the telegraph. >> right. >> that was hugely altered -- >> i want to talk broadly about the u.s. economy and the global economy and perhaps we'll get more into fixing entitlements in the q&a with the audience but overall, are you pessimistic about the outlook for u.s. economic growth? do you see it as a 2% economy over the next decade? the. >> unless and until we rein in the rate of growth in

entitlements, yes. because the logic you just went through has got to be broken and only way you break it, is remember, we added 10 percentage points, we moved 10 percentage points in gdp from financing productive capital equipment to funding benefits. you can not do that without a very significant impact. and we're seeing it now. this is the reason why everyone is looking at the data that we have to come to the grips with entitlements. but entitlements are basically the third rail of american politics. you touch it if you're running for office and you lose. >> i got to go there because this is why people hate economists, right? because ultimately in the utopian world you would have more of the entitlements geared

towards productivity growth. , right? that would solve some of the problem. >> no. it doesn't improve product activity growth -- >> sorry what i meant the growth of entitlements would be tied to the growth of productivity. >> oh, yeah. >> that would solve -- >> it could be closely. balance the budget, for example, the reason the budget gets balanced back in the early years we're doing, 3, 4, 5% gdp. but remember when social security began in 1935 when franklin roosevelt signed on it was defined benefit program in which cash receipts scheduled to fund the benefits were actuarially the same as they were in the private sector.

we have now abandoned all pretense. you talk about the 1983 commission. we couldn't even get something as significant as lowering the retirement, raising the retirement age. of course longevity has gone to extraordinarily far since 1935. it was, only thing we could manage in 1983 is to get it in the next century. now politically you got to see that, that's what that was. and the pressures here are system is so governed getting these entitlements sort of, once you get them, look at the word. entitlements used to be something which the founding fathers talked about was with respect to individual rights, liberty about, freedom of the

press. these are physical good retirements produced by whom? you can't answer that question very readily. unless and until we get out of this cycle, unless we get out of the cycle and get back to 4% gdp growth which implies significant rise in output per hour, only way you can get there, given the structure of our working-age population, and very large population of beneficiaries. >> that is the other thing we could talk about which the other side of the growth equation is growth in hours worked. could we enhance that by a smarter immigration policy and a smarter education policy? >> well, yeah. i mean, my favorite before all immigration issues came up politically, i thought the h1b program was much too small.

enables people with special skills to come into the united states, get a green card and the like. >> right. >> every other major country looks to quality of who they are inviting in. we're not doing that we're restricting that very significantly. the answer to your question is yes, if you want to increase productivity, we really open the program up. who called phd physical sciences would be allowed to stay. instead we kick them out. >> we educate them. >> this is bizarre and -- >> ellen, tell me how alan greenspan listens to the current debate about presidential arena on economics and what do you hear? >> what makes you think i listen to it? [laughter] >> sorry for making that

assumption. what you read about the presidential debates which i'm sure you did, is there intelligent debate going on? is there debate that is growing to lead to -- i don't get paid to ask stupid questions which i suppose this is right now. >> i'm still looking. >> yeah. do you, do you hear anything that gives you any sense of optimism that some of these issues you're talking about is going to be addressed or hear the opposite? >> i don't know. look, just on the basis of the type of facts i laid out, either i'm wrong in my economic analysis which i conceivably could be, not easily but -- [laughter] but the point being, look, theoretically, i'm either wrong in my impolice it structure how the economy functions or i'm wrong in it is implications. i have not seen anything, i mean, i wrote a book three years ago which i discussed exactly

these issues. so it's not something which all of sudden has come out. i think we need a fundamental change in culture and we did have it -- franklin roosevelt create ad major change in culture. margaret thatcher did in britain. in fact what is very interesting about it, it, that culture is still there. the labour party when it came in after thatcher did not change what she changed. and ronald reagan made a major impact but both thatcher and reagan failed in the end because they couldn't control the budget. i mean both ran up against very difficult problems. i shouldn't say they failed but they didn't reach the goals that they were trying to reach. >> we're going to open it up in just one minute. i have one more question here which is, the markets got very

excited and concerned this summer when it looked as if chinese growth was weakening, or it finally realized chinese growth was weakening. how big of a concern does china represent to you about the overall outlook for global growth and u.s. growth? >> well, china is a very big player. it is a major consumer of almost every major commodity you can think of. remember, china is positioned probably 50 years behind us. i mean we went through, i remember, when i used to drive up the southern shore of lake michigan and you had one steel company after the other in the 1950s and '60s. they're gone. you had huge amount of commodity production and the physical -- i actually went in one of my earlier books measured physical weight of the gdp. around the weight of the gdp was

either stable or going up virtually year by year. until basically in the '60s, it started to flatten out. the actual physical weight, in other words, we had a huge downsizing revolution. physical weight is not much different from what it was 20 or 30 years ago. china is still in the early stages of this. the reason why you can't go to beijing without choking this sound like what i went through, i remember walking down the streets in thetry angle in pittsburgh in 1961, my shoes would crunch with coke oven coal to breathe. and smokestacks were all over the place. i would like and say, boy this is a real measure of american

industrial capability. then the environmental movement came on, and said, uh-uh, that wasn't so. this is what china is going through. they're moving where we were. now that means that they are the key controller as we were back then of the commodity, the physical part. they're the biggest manufacturer. they are largest steel producer, by far the biggest consumer of oil and most other, i shouldn't say, not oil but whole series of other commodities. and they have got a long way to go, but, they're weakening now is being caused by the fact that china is becoming a more and more, excuse the expression, capitalist economy. the markets are expanding dramatically. the way they handle that stock

market crash indicated they hadn't a clue what they were doing so this is getting away from them. they're moving towards capitalism at very rapid pace and i don't think they are acutely aware of the extent which that's happening. and it's, periodically you run into, you run into cycles. and the first sign that i saw that something was very different going on is when the price of iron ore in australia, all of sudden started to do come down. and that meant essentially, since the major consumer of iron ore at the time was china, something was slowing in china. and all accumulated from there and devastate ad goodly part of emerging world, not to mention indirectly, it would be, rather,

euro area and the united states but not as great as they're impacting on the -- >> before they controlled growth through accounting identity, right? increase spending to the state enterprises and gdp would rise. now what you're saying it is much more variable and inside the capitalist and market system? >> just remember what's happened is that 30 or 40 years ago, state council, essentially the cabinet of china, would order a province, for example, to build 20 buildings. don't ask what they were because the purpose of building them was to create the jobs, not to get the space that they, you might think they wanted. and they then said to government owned by commercial bank, you fund it. . .

they were surprised. and now we are running into the effects of, remember that that when they dip their toes and allowing creative destruction to work, meaning allowing -- then they got cold feet. >> they didn't like it. it's open the floor to

questions. let me start right here with this young lady. >> thank you. good morning, chairman greenspan. thank you so much for joining us this morning. as the federal reserve changes its focus to the interest being paid on excess reserves, i was wondering if we could call on your historical perspective about the changing decision models of the federal reserve over time? since the 1970s, so even before your time as chairman they've seen a focus on things like bank credit, money supply, the overnight rate, even the unemployment rate. and i'm just wondering how much you see the changing of the federal reserve's decision models changing incentives, and essentially affecting the behavior of banks and market participants, and whether you expect to see potentially any positive or negative externalities or other unintended consequences as we

shift to the interest on excess reserves. thank you. >> well, this is a very good question because i used to sit at my desk, the federal reserve, and three times the week i get a report or study or an article, and about the way monetary policy works. different channels, in a sense, we don't yet have a full comprehension of exactly how the monetary system interacts with the physical system. in other words, the models we were using have not worked. the way you know that, go back and look at the history, very recent history, since 2008, for example. the federal reserve, omb, cbo, most of the forecasting models

all showed gdp going up. know, start again. gdp going up, and she began to see, we had so many false moves in this particular period that we ought to be looking and saying, well, maybe something is wrong with the conceptual framework which we are using to understand how these markets are working. and for example, the conundrum issue we discussed before was one of these types of changes. so i don't think it has settled down at the moment, but interest on excess reserves is the key variable, because remember what it has done. when they went to qe1, two and three, of necessity it would expand the asset side of the balance sheet and, therefore, you create a large degree of reserve balances, which by

definition can only be depository institutions who have an account at the federal reserve. in other words, the markets will continue to adjust until the only holders of those balances are depository institutions. so that the issue of fed policy was how do we essentially neutralize them? and the way you do it is you put the interest rate on excess reserve balances. when we put 25 basis points on for sovereign held, sovereign issue, essentially which is what the claim on the federal reserve is, very little in the way of the capital requirements, and essentially a riskless asset with no cost to the individual commercial bank, for example.

so it was delighted to hold them, and while some of that did get out into the commercial market, in other words, jpmorgan, for example, shows a large balance at the new york federal reserve, would draw on that balance and make a loan to ibm. that process creates the money multiplier and expansion. there is very little evidence that that is going on, meaning that essentially the federal reserve largely neutralized the effect of qe1, two and three so it didn't go over into the money supply. because you have to get the reserves going out lending outside -- didn't spill over -- a simple system of the fed buys assets, its balance sheet goes out. that automatically creates a

reserve deposit. since reserve deposits are only legally capable of being held by federal reserve banks, that means that the federal reserve could determine or could control how much in wha in the way of te balances moved out into the market. if you move the rates all the way down, then the loans which are risky and have reserve requirements, all of a sudden they become more attractive. what if you keep moving the rate up, you basically neutralize the system. and the way you can tell is, despite the huge increase in monetary base, which was directly with the assets side, money supply, which is the transaction balance which creates economic activity and inflation and all of the rest of

it, goes along with that, hasn't gone up all that much. so i'm saying the money supply has got to go up, start to accelerate before you can see any secondary expansionary effects coming from qe1, two or three. >> did you just make an argument for negative interest rates? >> what? >> did you just make an argument for negative interest rates? >> no. because you can always convert to currency if you were not too lazy to do it. >> at some point but the swedish national central bank decided to do something useful to them. >> basically defined people are willing to hold deposits of their and -- >> negative. >> it's a tax, central a tax. in other words, if you get stuck with a claim, which has got negative, negative yield on it, what did he do?

the only thing you can do is convert to concern see that you is convert to currency. the point is the central bank of control, india alpert happens, it's question of musical chairs. who gets caught with the wrong side of the liability? spirit let's get another question. limited geographically to the back, the gentleman there. you, yeah. >> hello. ron from amherst college. dr. greenspan, the issue, great issue is inequality, but it seems according to recent reports that economic insecurity is more important to people than economic equality. let's imagine that this room were not filled with the people it's filled with but what sort of average middle-class and working-class americans. how would you explain to those

people they need to do something about entitlements, in which changes would you suggest in terms of reducing entitlements given this great worry about economic insecurity in the country? >> well, take an average low to middle income family. productivity is what determines their real incomes. and what activity is basically as i mentioned is a function of capital investment, and if you discourage capital investment by creating entitlements, what you are doing essentially is something in today's world is you are paying a significant proportion of gdp to people who are retired. that's not where the future of the country is. the future of the country is,

the younger people, it always has been and always will be by definition. so the question is, if you're an average middle to low income person going, trying to go up the ladder, you're being inhibited by programs which shifts the proportion essentially to the elderly. but the issue of inequality is basically another, more interesting issue in general. that is truly a function of productivity. back in the 1950s and '60s when productivity was really moving, especially, the question of inequality never came up, which measures the extent of income inequality, was flat. the question only arises as you get into a situation where productivity slows down and it impacts the middle and lower income wage earners.

remember that qe1, two and three did not do all that he was supposed to do. it was supposed to, one, lower real long-term interest rates, and hence raise price earnings ratios on equities and on real estate. and that actually did work very well and created a lot of capital gains which did spill over into the economy, but it was also supposed to increase the general level of economic activity, which it did not. and so we have is a very significant part of capital gains flowing to a very limited number of people. and so you'll find if you want to do metrics here, you'll find the issue of stock prices versus real wages in today's

environment says that people who are involved in holding assets, which rise as the result of the kiwis, they have capital gains and higher incomes which will always outmatch the wage levels that are created by the standard economic activity. because without getting into the details of it stock prices grow at a rate of 7% a year remarkably stable it. they fluctuate all over the place and the reason they do that, everyone is scared to hold stocks and that causes them to have a long-term uptrend. people are willing to hold them do well, on average, by stock of forget about them. people who didn't do very well. so there's something very unusual in the system which means that to its own devices, the owners of capital assets

will always do better than wage earners. and the result is that if you enhance your price of stocks, you are going to increase the inequality and there's no way to get around it. >> a question right here. >> as you know, the taylor rule posits that the federal funds rate equals the equilibrium rate of interest plus weighted average of inflation gap. there's so much debate about where the gaps are there's a lot of debate about where the equilibrium real rate of interest is. what are your views? is it about 2% or is it around to zero right now? >> let's go back and ask what is the interest rate come from. is basically what economists would call the result of time preference. time preference is the extent to

which we discount claims to the future. or for example, someone standing in line for one of these things back when they were in huge demand, the first day. what would you give to replace, to get a position further up on the line, and get it much sooner? that is human time preference. human time preference has apparently been unchanged as far back as we can go. we have data, for example, going back to every single day we've got a bank of england, since the 1693, or 94, bank of england issues daily discount rates. those rates have been absolutely flat through time. go back to ancient rome, which

is middle to upper, single-digit interest rates. the question is, why? and when you look at this going all the way back up to include -- included something inbred in human decision-making. the amount of time preference is a relatively stable factor, and the reason you know that is not only our interest rates trend was over the generations, but the rate of return on equity or any other type of asset risk adjustment is flat, going back hundreds of years. so that the equation here is, where is that so-called normal rate? and the figure i would say is substantially above where it is now. and i think the pressures of them start to emerge, if they are not already. i am frankly surprised that rates stay down this slope is long. i don't expect that, for lots of

reasons, goes against human nature and that's not a good enemy to go against. >> the historian, economic historian gregory clark from university of california-davis would go back into the textile revolution and 3% with the number he came up since the industrial revolution began. with a rate that speed that would have to be and riskless rate. yeah. >> this lady over here, please. >> thank you, good morning. back to it and productivity, is it possible that the time we spend with the gadgets is really dispensable, and that instead of being productive, new creativity is really rehashing, reliving, re-creating, redoing, showing things that don't take us forward? so it is dumbing down of time actually. >> if you're introducing the

argument that is probably going on. those are the critical questions. this is human value. this has very little to do with economics. on the question basically is what do we want? i mean, if you want material well being, which obviously we are back in 18th and 19th century were still critical, and people are still dying of starvation. i mean, shelter and food, there was unambiguous, what we're all about. but limited to standards of living where we reach, and the vast proportion of the population has a lot of leisure time and a lot of leisure money. it's hard to make the judgment. you're not asking an economic question to you or ask you a much broader question. and i don't think it's going to get solved within the context of the economic.

the economics will tell you what is the material values that are produced, but those are limited to those which are basically enhanced physical life. they don't stress anything about enjoyment or pleasure or other things. in other words, there's always a big dispute, should we have a gdp of happiness? i don't know how you're going to measure it, but have fun. but these are very important questions which go way beyond the issue of economics. economics is essentially restricted to a very limited part of human survival in human beings. and when we go off into the many different aspects, remember there's a great deal about the technologies which really lower the hours input for work. i mean, i find, for example, i'm in the economic consulting business.

i had a firm before i went into the fed, which had 50 people in it. i can do the same sort of stuff now with four people. it's basically the technology which is embodied in them. >> is one of the economic arguments that the economic value we get from it is at least equal to or greater than what we paid for it? or we are being a rational? >> well, that's the question. are you being irrational or are there other criteria that you employ? you're going to find books and editorials and all which raise all of these questions. i've not really seen satisfactory answers, frankly. >> how about in the back left? >> first beagle investment management. and go back to the discussion of debt and contagion?

it seems to be the debt with capacity for contagion is in the sovereigns today, and we've seen a couple of non-lover to funds have liquidity problems in the sense of the mismatch between the asset and liquidity. do you see the leveraged fund such as a long-term credits of the world around with the possibility for contagion come and do you see the political will at the monetary authority level to fix in the same way you did when he became a contagious problem? >> it seems to me that the whole issue is dead. -- the issue is dead. i, for example, wrote an editorial for the financial times, not recently, a couple months ago, which i we raised the issue of what i thought ought to be involved in resolving the issue of debt and banking and all of that.

and i conclude as indeed i did in earlier books that had we every single problem that occurred in 2008, crisis that occurred, would not have occurred if capital was high enough, where the collateral requirements were high enough, and the issue of enforcement of basically all the statutes against criminality had been enforced, we would never have had anything like the 2008 crisis. so i concluded that instead of something like dodd-frank, which is creating a shortage of paper, just so much fog of detail of

everything regulation to which i don't know how you do it. so i'm just parenthetically, small banking is going down very sharply. they can't afford it. so the question is, what have we done wrong? well, had we had, for example, and mandated capital requirement in commercial banks of 30%, the rate of return on equity would not have changed because what the data show, going back to 1869 when the control of the cards he first collected it, is that the rate of return on equity capital in commercial banking ranged between 5% and 10% throughout that period with very rare exceptions. and that particular set of data shows that even during the

period, during most of the second half of the 19th century, equity capital as a percent of assets went from 30%, even higher, all the way down to seven or 8% in the early post-world war ii period. then came back. through all of that period of the ups and downs, the rate of return on equity did not change. now, i think that this is where this is -- i think that implies that if we go, gradually allow the rates of capital, equity capital requirements to rise into egypt to 30% within a reasonable period of time, we can get rid of virtually all of the dodd-frank, all the regulatory stuff because all of that is trying to prevent people

from doing something. but if you have capital hot enough, it's the shareholders of institutions, not the taxpayers, they get involved in if they want to go out and waste the shareholders money, that's the issue between the shareholders and management. but taxpayers are not involved. you can get rid of all the huge complexities that we are not involved with, and i don't know how we are going to get rid of it because it feels like half the population is employed in enforcing the dodd-frank regulations. >> the question raises the issue of the high yield market which recently had i think it pretty major hiccup as a result of perhaps the fed interest rates. you have concern about the high yield market itself, and are the other markets that you believe could be in this balance, and would unwind as a result of fed rate hikes? >> well, i think that the yield was up to 20% on some of the

stuff. this is usually not a good sign. this is the way signals occur when, for example, the first sign of the subprime mortgage problems occurs when bnp ends up saying they were having funds which are losing money, french bank is holding funds in the american market in sub primes? i think, what in the world is going on? that was the first sign that something was askew. and i'm a little concerned when i saw those reports, this is nervous making. i must admit the markets are still moving ahead in the usual, wonderful form. >> we have time for one more question. right here.

maybe another one. ask kate. she's the boss. >> my question is about liquidity deterioration, chairman greenspan. are to profound changes in markets compared to the last 10 years that have created concern. one is the reduction in the number of market participants with heterogeneous preferences, or by corollary, the increase in the concentration of market power in fewer market participants. the second is the unwillingness of the broker-dealers and intermediaries to hold inventory because of the higher costs of capital and volcker rule and variety of things. have we planted the seeds for the next major market dislocation as a result of this change in our cooking and the? >> that's a very good question. let me say that, first of all, let's define what we're talking

about in a certain sense. as far as i can judge, no economic crisis, whether it's economic or financial, occurs in the nonfinancial sector of the economy. you can tell by, frankly, the federal reserve has got its very extraordinary complex economic model which actually does very well for the nonfinancial part of the economy, and it did so right up to 2008. our problems are all in finance, which spill over. and the types of issues you are raising really are essentially what individuals are mainly concerned about. financial imbalances and the like.

if there's enough capital in the system, you can take a lot of defaults, a lot of changes and a lot of structural issues which go way beyond what you're raising, but i am concerned about a number of different things. but as a central banker i was always concerned. my job was what do i worry about tomorrow. anybody who thinks central banking, especially speed is just one is left in this time with mr. greenspan. we believe it or as the u.s. and is about to gavel in for business. lawmakers stand and wait for final votes of the house under $1.15 trillion spending bill that would fund the federal government and related agencies through next october. that final passage vote is underway right now and as soon as that is that as that is the ability to send it to turn to take it up if it comes over from the house the senate is expected to vote on the measure today. and now live to the senate floor

here on c-span2. the president pro tempore: the senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. merciful god, enthroned far above all powers, thank you for the gift of another day. help us to use this borrowed time wisely. forgive us when we forget that you are still on your throne and

that the hearts of humanity are in your hands. remind our lawmakers that your sovereignty is far above any conceivable command, authority, or control. may this knowledge of your unstoppable providence motivate them to contribute to peace in our time. bless the members of our military and their families, surrounding them all with the shield of your divine favor. lord, bless also those who are ill and in pain, poor and i need, worried and in distress,

discouraged and in despair, tempted and in danger. we pray in your merciful name. amen. the president pro tempore: pleae join me in reciting the pledge f allegiance to our 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. mr. mcconnell: madam president? the presiding officer: the majority leader. mr. mcconnell: i ask unanimous consent that notwithstanding passage of h.r. 515, the committee-reported title amendment be agreed to. the presiding officer: without objection.

mr. mcconnell: now, madam president, we know our constituents are deeply concerned about america's struggling economy, so let's take steps, as the legislation we'll consider proposes, to support more jobs, more opportunity, and more economic growth. let's enact permanent tax relief for american families and small businesses. let's set the table for pro-growth tax reform. let's permanently eliminate an energy policy from the 1970's that not only costs american jobs but also strengthens america's adversaries like iran and russia. this will end the absurd position we're in now where the

iranians, as a result of the president's deal, can export oil and the united states can't. and there's something else. we know our constituents are deeply concerned about america's national security, so let's take steps, as the legislation we'll consider proposes, to strengthen our national security in a dangerous world. let's help ensure our military has more of the funding it needs to train, equip, and confront the threats that face us from literally every corner of the dploab. -- of the globe. let's bolster of the f.b.i.'s ability to confront terror within our borders. let's bring badly needed reform to the visa waiver program. the last provision is especially important. let's prevent the transfer of dangerous terrorists from guantanamguantanamo's secure den center into america -- america's

communities. and let's provide the people we represent with some long overdue protection from cyber attacks. let's honor our internets and enact critical reforms -- let's honor our veterans and enact critical reforms. it would also bolster the first amendment. it wo would prevent a taxpayer bailout of obamacare. the last provision is especially important. protecting the middle class from financing a bailout of obamacare means we're likely to speed up america's day of liberation from obamacare as well so here's my view. this legislation helps our economy, helps our national security, and strikes more blows to a partisan health law that hurts the middle class. i think it's legislation worth supporting. now, before i leave the floor,

i'd like to say something about last year. the american people voted for a new majority last november. we were humbled to have their support and to take the senate in a new direction. the senate has made great strides in the year since. i think we've shown how the senate cannot only get back to work but also return to a place of higher purpose. we got committees working again. we opened up the legislative process. we gave senators from both parties more of a say. as a result, we've got an lot done for the american people. there are numbers that help tell the story, like the fact that this senate allowed about 200 roll call amendment votes compared to just -- compared to just 15 last year. but it's the substance of what we passed that really shows what a new and more open senate can achieve for the american people. replacing no child left behind with the most significant k-12 education reform in more thank a

dozen years. addressing crumbling roads and bridges with the first long-term transportation bill in a decade. a balanced budget for the first time since 2001. help for our veterans. hope for the victims of modern slavery. modernizing changes for our military and its acquisition systems. notable, bipartisan reforms for programs like medicare. reforms that set a precedent for future positive action. we brought a permanent end to more of washington's artificial cliffs and manufactured dramas. by working toward real reform instead of just temporary patches. and we'll do that again today. we'll enact permanent tax relief for families and small businesses, we'll bring an end to a job-destroying 40-year ban on energy exports, we'll finally pass landmark cybersecurity legislation after years of senate inaction. and just last night we pass the

first significant environmental reform bill in decades, one that will create more certainty for businesses and ensure uniform safety standards for products our families use. this is all very good news for the american people. nearly all the policies i mentioned were or will be signed into law by the president. others, while important, do not have his support. that legislation includes one to restore -- rescue the middle class from the pain of obamacare, to support keystone's energy jobs, and to protect kentucky's small businesses and coal families from washington's regulatory assault. it's now clear, madam president, that it will take a new president, a new president, to achieve those things for the american people. but we're proving that you can still get a lot done with a president from a different party. we're proving that you can actually enact significant

long-term reforms, achieve significant policy goals an get them signed into law. so i'm proud of what the new senate has' a ccomplished. i'd like to thank the many friends across the aisle who've joined us in passing so many bipartisan reforms for the american people. we're not only putting the senate back to works, we put it back on the side of the american people. mr. reid: madam president, i ask unanimous consent that a staff member of senator tim kaine, ryan willebrand be granted floor privileges for today. the presiding officer: without objection. mr. reid: mr. president -- madam president, i'm sorry --

the accomplishments of this senate, this first year of this senate, this session of the senate, has been a demonstration of what can happen when a minority is not trying to block everything. there's been no need this last year for scores and scores of cloture petitions being filed because we didn't block things. we rarely did that. when in the past, of course, it was done all the time. so we have demonstrated that it's important to have a minority that is responsible. of course, we know that the issues that have passed this year, issues that we'd worked on for a number of years and they'd been blocked by republicans, we're glad to have been part of this congress and were able to move forward on a number of issues that have been languishing for a long time. but of course next year we need to do more for the middle class.

there are lots of things that we haven't been able to do that we should do: minimum wage, being sure that my daughter is paid the same as my granddaughte, an, as a man that does the same wo work. student loan debt, we have to relieve that debt on the american people. mr. president, it's often said that legislation is the art of compromise, and i know that's true. crafting bipartisan legislation is hard, tedious work. it requires complex calibration of competing interests, needs, and realities. the legislation before the body this day -- or will soon be before this body, the combined omnibus spending bill and tax extenders package is a perfect example of a bipartisan compromise brought in good faith. it wasn't easy, though. in fact, coming to an agreement

on this package was a painstaking endeavor by senate and house leaders, and house and senate members. but it was especially hard for our staffs. i'm so appreciative of their exceptionally good work. i know it meant long hours, late nights, weekends spent here in the capitol. but whatever their diligent efforts, we wouldn't be voting on this legislation today. on my leadership staff, no one worked harder than my chief of staff drew wilson. he was my lead negotiator, and he did an admirable job, a tremendous job. he worked very, very hard. i won't go into all the hard work that he did, but i remember one night i was at -- had trouble dozing off, and i called him at midnight, and he responded on the phone. for the next three hours i still

didn't do well sleeping, so i called him at 3:00 a.m. he still responded. he was here at the capitol working, working to make this agreement a reality. in all of his years here, i found drew as a congressional fellow coming from the environmental protection agency, but he was so good that i wouldn't let him leave, and he has been a senate person since then. he was selected by me to be the assistant sergeant at arms, the sergeant of arms, he's been scferg -- everything he's been asked to do, h he has done a remarkably good job. so i wasn't surprised at all that he was able to do the work he did on this bill, on these bills, on this tremendous, difficult legislative issues that are before this body shortly.

i want to take a minute and talk about garry mirich, secretary of the minority. he's been my floor general, he's been my chief of staff, he's -- i depend on his expertise on the issue before us -- or soon will be before us -- and in everything that we do here in the senate. he's an expert on senate rules. and i appreciate very much his good work. bill dowser, my deputy chief of staff, nobody on capitol hill better understands policy on legislation than bill. anytime legislative staff -- not just mine, anyone's staff in the senate -- has an issue with legislation, they know that bill will be available. so i admire him, he is a fine man, i so appreciate the example

he sets and just being good to everybody. kate leland is my senior health counsel. to say she does an exceptional job is an understatement. pete s probably the world's leading expert on obamacare, and she's an absolute expert on all health policy issues. she brought her expertise to this agreement in full force with the able assistance of mackenzie bennett who works on health care issues for me. again, i appreciate very much her hard work. ellen donesky, my chief tax policy advisor, deserves praise. tax policy is difficult. i took a couple courses in law school on tax policy. to be honest with you, it didn't

interest me very much. but for my lack of interest, ellen has been stupendous, even while not feeling well she's worked her way through the last few weeks exhausted, working with democrats and republican counterparts and making intricate tax decisions and putting intricate tax provisions in the agreement that's before this body. alex macdonough my senior policy advisor handles my energy and environment problems. the legislation is one of the greatest investments of renewable energy in american history. it is amazing what we have done in this legislation. and the writing of this legislation was done by alex. madam president, this work that has been done on this bill dealing with renewable energy,

picture 65 coal-fired power plants, average megawatt production of let's say 800 megawatts. 65 of them coal-fired plants, they would be gone and they will be done. that's how much energy will be, fossil fuel will be saved, the pollution from fossil fuel will be saved as a result of the work done here. or if you don't like that example, try 50 million automobiles will be taken off the roads. not five million, 50 million. so alex, i appreciate your good work. very, very much. this legislation wouldn't be what it is today without alex. kevin park, my senior policy advisor and counsel, was here working hard on banking and financial issues in this

legislation. he worked like everyone, long, hard hours on very complicated banking issues, housing issues. so i appreciate and admire his good work, his pleasant personality. he was assisted by sammy swing, who worked with him on some housing issues that were extremely difficult in this bill . my brilliant chief counsel, aisha connor, who works on cybersecurity, surveillance and all kinds of things when i needed a good legal mind to help me work my way through understanding these issues. so i appreciate her tireless efforts. my senior advisor, tit -- tileer

moran. she worked from the white house. i was able to coach her from the white house to work with us and she did an outstanding job on everything dealing with immigration, whether it's the dreamers, whether it's litigation that followed the president doing an executive order, helping their parents, dreamers' parents, whatever it is. children coming across the border, all related issues, including refugees and visas. jessica lewis is one of the most pleasant, nice people i've ever known. she's my national security advisor. i so appreciate her demeanor, her intellect and her hard work. late yesterday when we finished work here, we went down to one of the secure rooms in the capitol here, and we spent time

with her telling me what is going on around the world, a lot of it not very pleasant, but that's her job. so i appreciate her work on foreign policy and intelligence issues. and she's assisted with her, the deputy national security advisor julie klein, who's also really a good person and l really knows foreign policy. sarah moffett worked on interior related issues and other environmental issues, but especially wild horses, sage-grouse and many other environmental issues that kept popping up in this bill. george holland helped me fend off attacks in campaign finance reform and other issues as they arose. karen street spent weeks on eb-5

visa issue. weeks. i found her to be someone who is very intelligent and always available, and i appreciate her good work and her wonderful smile. bruce king, stunningly smart, stanford person. he is director of my -- my advisor, my confidante on issues relating to budget and finance. he's formerly staff director of the budget committee and he worked all budget components of this bill, and there were lots of him. and i admire his soft-speaking and his directness. i just really like him as a person. jason unger is my legislative director. i have such admiration for him. he also is quiet and very

effective. he is a person who believes in public service. this young man who graduated with high honors from ucla decided he wanted to do something in public service, so he taught the america program for five years in compton, california. very difficult job. he taught little kids, and i bet he did a wonderful job as he has done here in the capitol working with me as my legislative director. my staffers were not alone in their efforts. they were helped tremendously by staff from other offices. the four principal leadership negotiators were drew willson my chief of staff, dick nelser, austin smythe and cindy hurl from speaker ryan's office. they worked well together. i'm sure once in a while they would raise their voices at one another, but it worked out real

well. it was a good team, and we have the result to prove it. this were tough negotiations, but these individuals, five of them, worked very hard. they made tough choices and decisions were made. it was amazingly cooperative. it was done in a collegial manner. i believe all leaders were exceptionally well represented by these men and women. i would be remiss not to mention barbara mikulski's outstanding appropriations team. the entire staff deserves our thanks but especially staff director chuck keyfer who is an institution of the united states senate. he is a fine person, and no one understands the appropriations process better than he does. of course deputy staff director

jean eyeson has been remarkably involved. this leaves me to say a word about barbara mikulski. when the history books are written of what's taken place in the united states senate during the last years she will be a principal of that history. i had the good fortune to be able to come to the senate with her. we served on the same committees. we served on the appropriations committee for sure and enjoyed our relationship. there's no one i have served with in public office i have more respect for than barbara mikulski. i admire her. i admire how she has been so dynamic in the united states senate. she is one of the finest orators we've ever had in the senate while i've been here. she does it in a unique way but we all listen. so barbara mikulski, thank you very much. we also had to work hard with

the finance committee. i extend my appreciation to our ranking member, juan wyden. he and i served together -- ron wyden. he and i served together for a long time, more than three decades. but not only do i appreciate his work but also his staff director, josh shinekeman. i may not pronounce his name just right but everybody knows josh. i want the finance committee and all the staff to know how much we appreciate this product that they worked so hard for piecing together. i already talked a day or so ago about dennis mc donough, chief of staff, a remarkably fine staff. katie fallon, president obama's

legislative affairs director. i've already laid out on the record what a wonderful person she is. jason furman, chairman of the council of economic advisors. i extend my appreciation to him, his entire family who i know. marty paone, i talked about him. we really care a great deal about them. i would ask unanimous consent that there are many others who helped craft this compromise, and i would ask consent to submit their names into the record. the presiding officer: without objection. under the previous order, the leadership time is reserved. under the previous order, the senate will be in a period of morning business with senators permitted to speak therein for up to ten minutes each. mr. hatch: madam president? the presiding officer: the senator from utah. mr. hatch: i rise today to discuss the state of the united states senate. in my 39 years of service in this body have given me a -- mr. reid: would my friend allow me to interrupt?

mr. hatch: i will be happy to yield. mr. reid: i like to express appreciation for the majority staff on the finance committee. the chairman of the powerful finance committee is orrin hatch. we've served together in the senate for these many years. there's not a finer gentleman in the senate than orrin hatch. and i apologize for reading over my notes. i appreciate very much your friendship and your leadership. mr. hatch: i thank the leader, and i feel the same way towards him. he and i, we are friends and we're going to continue to be dear friends despite our differences. madam president, i ask that my remarks be placed in the appropriate place in the record, probably right before the vote. the presiding officer: without objection. hatch hatch i rise today to -- mr. hatch: i rise to discuss the state of the united states senate. in my 39 years of service in this body has given me an increasingly unique vantage point to reflect upon this institution. over the years i've seen the senate both at its best, rising

to meet the lofty expectations of the framers and unfortunately seen it at its worst. last year i came to the floor to speak about what i viewed as the abuse of the senate and this body fell into great dysfunction. in addition to identifying these abuses i did my best to lay out a vision for how the senate ought to function, how we could best live up to the best traditions of our forebearers. over the past year since my selection as president pro tempore, i have endeavored to continue to offer what lessons i have learned and what accumulated knowledge i have acquired in my nearly four decades here to help our new republican majority to get the senate working again. after a year of hard work, i can report a significant degree of success. under the leadership of our new majority leader and his team, the senate is back to work for the american people. by the end of last congress, these best traditions of the senate that have allowed it to

serve the republic so well for so long were left, in my opinion, in severe disrepair. the then majority leadership curtailed debate on an unprecedented scale moving to cut off debate before this body could even begin considering legislation. the leaders also used the so-called nuclear option to weaken the opportunity to debate nominations including crucial lifetime nominations to the federal court. in all of last year the senate voted on only 15 amendments with the majority leadership refusing to countenance any amendment it did not support. in the 113th congress, set a record for bills that bypassed committees. this institution's incubators of consensus instead of adhering to the committee process, the legislation was crafted in the back rooms of the leadership offices and brought directly to the floor. and thanks to this institutional did he go gaition, the senate -- degradation the senate about bea

waste land of warfare. much of the time was spent voting on the previous majority's bill. this legislation had no chance of passing the senate and was designed to buttress election year arguments. the time not spent on this political gamesmanship was otherwise wasted largely on rushing through president obama's nominees at a breakthrough pace. our new majority estimates the daunting task of restoring the senate to its proper function so this body can resume its rightful role as the source of wise legislation. these effort efforts are imprese statistics. the this year the senate has held almost 200 votes on individual senators' amendments. that figure is nearly nine times as many as last year. earlier this year the senate voted on more amendments in a single week than all of last year. debate has also fis