it is -- i think it important to note, we had an amendment offered by secretary kobac hcht, and it was suggested to me that the form we are in now is not an actually committee meeting for consideration of amendments for adoption, so this may be appropriate in the committee meeting tomorrow that could be discussed for consideration for adoption, so, if you would entertain that suggestion. >> that would be fine. >> the nass business meeting. >> yes. >> thank you. and tomorrow morning we will be meeting from 9 ln 0 -- 9:00 to 10:00 by region and then we will have the nass business meeting as mentioned on issues and items

presented by nass committees. thank you for your participation this afternoon. >> just a couple of moments left in the event. we are live now with the federal reserve chair ben bettrnanke th morning he is testifying on the u.s. economic outlook for this year, this committee is just getting under way. >>. as the ranking member and we want to welcome the federal reserve chairman, ben bernanke back to this committee. this is the fourth time that you have testified before the committee and we are very, very pleased on have you again. and this is timely for your

appearance because of the nature of the recovery. i will without objection insert the full remarks of senator conrad's opening statement, i'm going to turn to the ranking member for his statement before mine. senator sessions. >> all right. thank you, mr. chairman. i hope chairman conrad feels better and value his leadership in the committee as i note you do. good morning chairman bernanke, i thank you for joining us today, i'm eager to hear your thoughts about our financial situation. the congressional budget office confirms that the deficit will top $1 for the fourth consecutive year. we have accumulated almost $5 trillion in gross debt during

which time the total on number of americans actually working has decreased by 1.2 million people. we have fewer people working today than we did 11 years ago. actual working americans is down. that goes across administrations in both parties the deficits we face in the coming decades are more relentless. the federal spending has increase e e e ed 53%, the goves getting bigger and the middle class is getting smaller. the concern i'm wrestling with is even our financial experpetrates are often very wrong as to the dangerer facing the american people and our economy. yet, some in washington and wall street tell us, we should delay

reforms and not take action now only some vague date in the future. for example, the secretary of the treasury's geithner's comments in the federal reserve meet engine 2002006, seem to me indicate that we cannot always be sure that those in positions of leadership see the problem clearly. in 2006, as america verged on a massive housing melt down, secretary geithner told his colleagues that, quote, we do not see troubling signs of collateral damage yet and we are not expecting much, close quote. he was announcing two months later that the expansion going forward still looks good. janet yelling, president of the san francisco reserve bank was more enthusiastic saying it

fitting for green span to leave office with the economy in such solid shape. so, i also recall in 2001, then chairman greenspan testifying before this committee that we were looking at more than a decade with surpluses and he wrestled with what we would do with the surplus still coming into the treasury a as being pron projected at that time. i'm just saying that we are not always as good at predicting the future as we like to do. they were wrong. and the minutes show that you were wrong during some of these periods also. common sense tells us, at least me, more borrowing and more debt

will make us weaker, not stronger. as the last financial crisis the puf future hard to predict but while we cannot predict a day that a crisis may erupt or what unknown event may set it off, we now that we are on a crash course with reality. our majority leader has closed the's bridge and locked the wheel. he said that the democratic senate will decline to offer a budget for the third straight year, not once has happened since 1974. i'm glad that chairman conrad saying that he will markup a budget in committee, but it a doomed exercise if your own floor leader, majority leader decrees that the budget process

will be shut down. majority leader reid has effectivelily declared a senate democrat budget and the president's budget dead on arrival. to me, that, if we do not have a different approach than majority party is failing in the fundamental requirement of leadership and ask that their leadership be taken from them. producing a good budget is important. the president's budget submission on monday will also be a defining test, either the president will rise to the occasion org he will again shir his duty. the choice is his, i find it unimaginable that the president will not layout a serious budget plan for a future that will get us off this unstainable debt

path. a path to decline. he is not even -- he did not even mention this in hesitate third state of the union address. the danger of the debt. what has been called the greatest threat to our national security. real change will not occur without the leadership of the president. and he has not only not led but he attack those like brilliant congressman paul ryan who has led and tried to lead. we hope that his budget at this late day will change our unstainable debt course. based on history, i'm not optimist optimistic, we are in a difficult challenge. we face a number of difficult problems. i am hopeful that the president's budget will do what a budget should do.

layout a sound course for america's financial future. it has not yet, last year's budget did not do that. i hope he will this year. i'm not confident. mr. chairman, thank you for letting me share those remarks, we, chairman bernanke, value your opinion. and you can help us work our way through the most dangerous systematic debt challenge that the nation has faced. >> senator sessions, i am optimistic you said that you are not. i am. >> about the budget that the president is submitting? that is different, i said i'm not confident that he will layout a plan that he will get us off this debt course.

>> i a am optimistic and the president's budget that comes out will reflect the overall optimism that is rising in the country yard to the economy. and it all summed up in this chart. this is private sector jobs. and you can see for about a year and a half there were massive job losses in the private sector in each of the months and of course, this only starts in january of '09 on this chart. you can take it back even further into '08 and that is when the rcrisis started in the fall of '08 and this tells us along about march of 2010, the jobs' picture dramatically changed. and there's the trend line to

the point at which it's now 257,000 in this past month on job increases and that to me shows a trend that is i think reflecting the optimism that is starting to bubble up across america. mr. chairman bernanke, your job has been very stuff over the last few years, with the consumer confidence that has been shaken, the events in japan and europe, threatening to derail our economy and of course, the partisan bickerring that we have seen on the national stage and even on state stages from time to time. and i truly believe that when the history of this password is written, that you, sir, are

going to be remembered as a critical figure because your role has been so prominent in helping avert the complete collapse of our financial system and for that we are enormously greatful. we continue to have major fiscal challenges facing the country. a long-term budget crisis brought on primarily from the rising cost of health care and out dated tax systems and years of political expedience and a near-term economic challenge of a slow recovery as the chart indicates. from that 2008 financial crisic, which if it had not been for, by

the way, the bipartisan cooperation, after september 2000 and eight, when we nearly went into a financial death spiral and the cooperation of an out going republican administration and an incoming democratic administration, the would of them working together to reverse that death spiral. now, cbo report last week shed new light on the long-term budget challenge under their estimates if we continue on our current paths without letting current law come into effect, gross federal debt is expected to reach 103% of gdp this year and then will rise to 120% of

gdp by 2022. as for the economy, it clear that we have come a long way from the depth of '08 and '09 and the recovery has recently shown these signs of the upward trend of strengthening. but it's a long and difficult road back. this is a frustratingly slow pace of the recovery, economists have testified here that they have found that recessions caused by or accompanied by a severe financial crisis like we have had and in particular, a crisis steeped in the housing sector, which is ours, tend to last longer and require a greater amount of recovery estimates than particular typical recessions. and so, i think not only that

this chart has shown the positive signs that we are seeing, we are also seeing the unemployment rate coming down. we have seen ten consecutive quarters of real gdp growth. consumer confidence is showing signs of improvement. u.s. auto manufacturers are returning to profitability and state revenues are showing signs of improvement. it amazi -- it's amazing to meh two minute commercial in the super bowl can stir such issues when it celebratining detroit a the success of the auto industry. so in all the good signs we cannot become comfortable.

there are risks, certainly unemployment is too high, and housing continues to pose a threat and time after time on things that have been tried, they have only been partially successful at best. too many homes are still in foreclosure or underwater. obviously, the political deadlock that we have here, that many of us on this dias have tried to break by coming together in a bipartisan approach and a lot of us have urged the super committee to do that. and by the way, senator sessions, there was a budget act and that was in the budget control act. and that set the course for ten years of caps and had a discipline process which was the super committee which we had desperately hope would work but the deadlock was there.

there'si there's an im balance cuts that could have a negative result and then the situation in the middle east could interrupt the oil supplies and the european debt crisis, he's are all uncertain elements that could disrupt the recovery. two of this most important steps that we could take to shore up the recovery would be to extend the payroll tax cut and the emergency unemployment benefits for the remainder of this year and then, in the process seriously move to redo the tax code and to reform this bloated tax code. and we should also reconsider efforts to rebuild the country's

infrastructure, and so, mr. chairman bernanke, in looking forward, it clear that we have to pursue policies that both strengthen the near term economic recovery and address the long-term fiscal imbalance, these are not incompatible, a policy that widened the deficit for a few years would be beneficial for the economy over that period especially if we were combined with a plan that would later narrow deficits to the current deficit projection, having those pieces together would provide the strongest boost to economic activity in the short-term. that is the cbo director's

words. and so, mr. chairman bernanke, we want to hear your views and i hope you'll speak further about what director elmandorf said. >> thank you very much. >> mr. chairman. >> acting chairman nelson, ranking member sessions and other members of the committee, i appreciate this opportunity to discuss my views to economic outlook, monetary policy and the challenges facing fiscal policy makers. over the past two and a half years the u.s. economy has been fwra gradually recovering, while conditions have improved the pace of the recovery has been slow particularly from the pr speck active of the millions workers that are unemployed.

supply chain disruptions risked to stall the recovery indications have showed signs of improvement. the federal market committee paet a say they expect stronger growth this year. the close monitoring of economic developments will remain necessary. as is often the case the able and the willingness of households to spend will be an important factor in how the economy expands in coming quarters. households continue to face significant head winds. notably real household income and wealth stagnated and access to credit remained tight.

consumer feelings has rise enbut is it low by historical standards. household spending will depend heavily in the labor market. the job market has improved modestly over the last year. private payroll employment increased in 2011. and i'm counting the first month this year. in claims for unemployment insurance decline somewhat. even though, showing the rate of unemployment to population, we have a long way to go before the labor market can be said to be operating normally. particularly troubling is the unusually high level of long-te long-term unemployment. more than 40% of the unemployment have been out of work for at least ten months. uncertain job prospects and tight mortgage credit conditions

continue to hold back the demand for housing, even though the low interest rates and dropping prices of houses have improved the availability of housing, the construction process is still depressed. new construction has low demand. in contrast to the housing sector the business sector has been a bright spot. manufacturing production has gone up and capitol spending has expanded over the last two years driven in part by the need to replace aging equipment and software. firms in services and others have benefitted from strong demand from foreign markets over the fast few years. more recently the pace of growth

in business investment has slowed. however, there are signs that these concerns are abating somewhat. if business confidence continues to improve, u.s. firms should be well positioned to increase capitol spending and hiring. larger businesses are still able to obtain credit at historically low interest rates and corporate balance sheets are strong. though many smaller businesses are facing difficulties in getting credit, credit conditions have begun to improve for those firms as well. globally spill overs from fiscal and financial developments in europe, the combination of high debt levels and weak debt prospects at the european countries has raised concerns about their fiscal situations, leading to increases in borrowing costs concern about the health of european banks and

the concern of availability of credit. this will require action on the european authorities. they are working hard to address their fiscal and financial challenges. nonetheless, risks may unfold favorably and could worsen economic prospects here at home. we are in frequent contact with european authorities and we will know to monitor the situation closely and take every available step to protect the u.s. financial system and our economy. let me now turn to a discussion of inflation, as we had anticipated overall consumer price inflation moderated considerably over the course of 2011. around the same time, supply disruptions, associated with the

crisis in the japan, pushed car prices up. it led the decline to go from 3.5% to 1.5% in the second half. close to the average pace of the proceeding two years. in an environment of well anchored inflation expectations, and substantial slack in labor and product markets we expect the inflation to remain subdued. the fmoc stieded to maintain the stance of monetary policy, they will continue their program to extend the average maturity of the securities holdings to maintain the existing policies of reinvesting principal payments and to keep the target range at 0% to.25%. economic conditions are likely to warrant the rates at least

through 2014. as part of the effort of trying predict monetary policy. the fmoc released a statement. they confirm their goal to foster stable price. the fmoc stated that inflation, at the rate of 2% has measured by the annual change in the price index for personal consumption expemexpenditures n confirmed that unemployment is

5.2% or 6%. the committee will take a balanced approach in its efforts to return both inflation and employment back to normal levels. the federal budget deficit widened with the on set of the recent recession and has averaged 9% of gd over the past three fiscal years. this substantial increase has reflected the automatic response of revenues and spending to a weak economy as well as the fiscal actions taken to ease and stimulate the economy t budget deficit so narrow over the next few years. unfortunately even after economic conditions have returned to normal, the nation will still face a sizeable structural budget gap if current policies continue. using information from the

recent budget outlook from the cbo, one can assume that tax provisions are extended. under these assumptions the budget deficit will be more than gdp assuming that unemployment -- show the structural budget gap significanting further over time and ratio of rising gdp growing rapidly. these imbalances did not occur overnight, they are the extent of a aging population and especially fast rising health care costs. net federal outlays for health care entitlements could rise to

more than 9% of gdp by 2035. although we have been warned about such developments for many years the time is coming closer when it reality. have aing a large and increasin debt runs the serious of economic conquestionsnces. high levels of debt stop the ability of policy makers to deal with other adverse efvents. as we have seen in a number of countries recently, interest rates can sore quickly