it's killing our kids, it's damaging our family, it's wreaking havoc on us. and president zadao, without bli blinking an eyelash, said, mr. president, with all due respect, until you americans deal with the demand side of the problem, we're never going to be able to address the supply side skpch. and that is so true today. [ applause ] >> we're almost out of time, but before asking the last question, i have a couple housekeeping matters to take care of. first of all, i would like to remind you of our upcoming luncheon speakers. on april 24, we have deepak chopra of the chopra foundation. on april 5 -- on april 7, michael weiner, director of the baseball association will discuss collective bargaining. second i would like to present our speakers with our traditional mug.

and for the last question, we only have a short amount of time, but if each of you could briefly say, if you could add one thing to the bill as it is, what would it be? >> your involvement so that we can come up with all those other follow-on things. so i want to thank carol mcday, who is going to be helping us, i want to thank richard frank who has been so helpful toul us. i want to thank all of you who have helped us come so far. this is only going to happen when you and i and jim and all of us make sure we'll have the best outcome that will be shaped with your involvement with these parity hearings across the country. thank you all for coming today. [ applause ] >> i, too, want to thank all of you for being here today. it shows your level of concern for this problem and the solution, and we enlist the support of those of you who have not been active in the coalition.

we appreciate the hard work that all of you have done as members of the coalition, members of the treatment and prevention, and awful you who have been so helpful, some of you since the very beginning in 1996. to answer the question what would be the one thing i would want to add? the final rule. thank you. [ applause ] >> thank you all for coming today. i would also like to thank the national press club s journali institute and broadcast center for organizing today's event. finally, there is a reminder that you can find more information about the national presssite. also, if you would like to get a copy of today's program, please check out our web site at www.press.org. again, thank you all very much for joining us and we are all adjourned. [ applause ]

in a few moments, federal reserve chairman ben bernanke on the economy. and in three hours, mary schapiro, member of the securities and exchange commission, talks about the dodd frank regulations law. these fans wrote to the white house coverage continues with a republican caucus and three primaries this month. on saturday, the missouri caucuses will continue determining delegates for the national convention. puerto rico hold its primary on sunday with the illinois primary on tuesday. on march 24, it's the louisiana primary. and in the beginning of april, contests in the district of columbia, maryland and wisconsin.

the associated press reports that the republican delegate count found that 495 for mitt romney, 252 for rick santorum, 131 for newt gingrich and 48 for representative ron paul. 1,144 delegates are needed for the party's nomination for president. this count includes republican national committee delegates who have told the ap which candidate they support. federal reserve chairman ben bernanke recently told the house financial services committee that the economy is doing better than expected and that the fed is not planning to do anything now to stimulate the economy. this is three hours.

>> this hearing will come to order. we meet today to receive the semi-annual report to congress by the chairman of the board of the federal reserve system on the conduct of monetary policy and the state of the economy. pursuant to committee rule 3-f-2, opening statements are limited to the chair and ranking minority member full committee and the chair and ranking minority member of the subcommittee on domestic monetary policy and technology for a period of eight minutes on each side. without objection, all members' written statements will be made a part of the record. for purposes of opening statements, i recognize myself for five minutes. in my opening statement today, i'm going to avoid making any predictions about future events since i do not have a crystal ball, nor do you, mr. chairman. instead i'm going to address two subjects. the need for long-term

entitlement reform and the federal reserve's dual mandate. for the last three years, we've operated in a low interest rate environment, which has artificially lowered the cost of debt servicing. this temporary rest will not last forever. ed? thank you. for the last three years we've operated in a low interest rate environment, which has artificially lowered the cost of our debt servicing. this temporary respite will not last forever. chairman bernanke, in each of your past experiences before this committee, you and i have discussed the dangers to the u.s. economy posed by our record levels of debt and the critical need for entitlement reform. we have discussed how long-term restructuring of our timed program will have clear benefits for our economy today and will

give our country a greater chance of success in the long term. unfortunately, and sadly, too few in washington appear to be listening to this discussion. let's have order in the committee and respect all the members, and that will go for the staff, too. we have discussed how long-term restructuring of our entitlement programs will have clear benefits for our economy today and will give our country a greater chance of success in the long term. fortunately and sadly, too few in washington appear to be listening to this discussion. your appearance here today is yet another opportunity for us to have this important dialogue, and it's my hope that congress and the white house will join together and address entitlement reform. and as we've discussed, this is not something the federal reserve can do. you've kept interest rates low.

it has given us an opportunity, but it's not an opportunity that will last forever. your appearance is also an opportunity for us to have another important dialogue, this one on the federal reserve's dual mandate, and you discuss this in your opening statement. the federal reserve's conduct of monetary policy through the manipulation of interest rates and its control of the money supply implies a certain level of government management of the economy. while this makes some americans uncomfortable and makes me uncomfortable at times, there is a general recognition of the need for independent central -- of an independent central bank to set monetary policy, yet if one closely kpz texamines the fl reserve's dual mandate, it becomes important that while the first part of that mandate demands monetary policy, the

second is merely a function of economic policy. you acknowledge this, chairman bernanke, in your testimony for today's hearing when you state that, quote, while maximum employment stands on an equal footing with price stability as an objective of monetary policy, the maximum level of employment in an economy is largely determined by non-monetary factors that affect the structure and dynamics of the labor market. by giving the federal reserve a mandate that includes maximum employment, it is fair to ask whether we have surrendered too much control in an economy to a government agency and whether that mandate is more centrally focused on monetary policy would be a better approach. in other words, federal reserve would continue to deal with monetary policy but would not have responsibility or the burden and, really, you don't

have the power to control economic events. indeed, for the first 65 years of your existence, the federal reserve did not operate under a dual mandate. it was only in 1977 that congress passed a law requiring the federal reserve to promote both maximum employment and price stability. it therefore may be appropriate for congress to revisit the dual mandate with an eye toward refocusing the fed on its poor mission of long-term price stability and other matters that constitute monetary policy. the congress, on the other hand, could focus on employment and -- because it is and continues to be our responsibility to focus on jobs. chairman bernanke, i know all of us look forward to your testimony. i now recognize the ranking member, mr. frey.

>> thank you, mr. chairman. i will accept your invitation for a civil debate on the subject. let me begin with deficit reduction, which i believe is a great requirement. but i disagree with this focus which you reflect on entitlement reform. before i reduce social security payments to elderly people, particularly, for example, for those who want to reduce the cost of living increase so that 82-year-old women living on a fairly modest income would get less of a compensation for inflation, particularly since health care costs are a major cost for them and go up more than regular inflation, i think we should withdraw from afghanist afghanistan. i support the president's decision to withdraw troops from iraq, and i know that many on the republican side have been critical of that. we do have to reduce spending but we spend far more as a favor to much of the rest of the world on the military than we need to.

and before i will impose costs on americans, i should add i regard the enactment of social security and medical care than anyone in this country. they were opposed from the moment they came. there are some areas where there can be greater efficiencies, but the notion that that's where you continue to get savings when we continue to spend 5% of our gross domestic product on the military, when our nato allies spend 1.7% and get the benefit of an enormous subsidy from us makes no sense. when people are critical of the president's proposal and begin to withdraw from afghanistan, i think it ought to be done more quickly and then tell me they want to cut the deficit and not raise taxes, i fear for social security and medicare, because to do that would require cuts in those programs that go far

beyond efficiency or efforts to reduce what goes to people in the upper income bracket. secondly, i would particularly welcome this debate on the dual mandate because i think there is logic in the way it was just stated. it is true that the federal reserve has more direct control of the monetary policy than it does over employment. the point is monetary policy, the level of interest rate, hasn't affected unemployment. the notion they aren't connected, obviously, isn't the case. the chairman didn't say that, but i think that's the implication of saying the federal reserve shouldn't be dealing with employment. in fact, let me give an example. we have had a debate about what should have been done because of mortgages that were given that shouldn't be given. one argument that was given was the federal reserve should have shut down the whole economy to some extent by raising interest rates, that it should have deflated the bubble by raising

interest rates. many of us believe instead the federal reserve under mr. bernanke's predecessor, not him, should have used the authority this congress gave him in 1994 to prevent the bad mortgages. that is, they should have been more targeted efforts to deal with this rather than to fight the economy as a whole as a way of dealing with that problem. we do have a series of employment bumps. it is to mr. bernanke's credit that he has taken seriously this dual mandate. this shouldn't be a partisan issue. i think people may sometimes forget that mr. bernanke, who h -- whose work in this job i greatly admire, was one of the highest ranking appointees on economic matters by president bush. it was mr. bush who appointed him to the federal reserve. he is an example of bipartisanship. and what i find a lot of my colleagues like bipartisanship, they just haven't found something about it they want to

tolerate. mr. bernanke's concern for inflation and unemployment is a big one. the notion we should say, okay, to the federal reserve, you don't pay attention to unemployment, we'll handle that and you should simply try to prevent inflation invites them to impose an interest rate machine which would be unfortunate. by the way, i would contrast the federal reserve under our dual mandate with the european central bank until recently with the unitary mandate of just inflation. i think frankly the federal reserve's record of trying to balance the economy has been a better one, and to some extent the european central bank is improved because they almost explicitly have been following the model of the u.s. federal reserve which has cooperated with them. so yes, i think we should reduce the deficit, but to talk about doing that by cutting social security and medicare to the exclusion -- in fact, many of my colleagues want to spend more on the military as a great gift to

the world, they should set interest rates for regard with no impact on employment, and i think the country would benefit from that kind of debate. >> i thank the gentleman. let me simply say that i think we could address both of them. i don't think they're mutually exclusive. as you know, i have a son that served in the marines, and -- >> chairman, i was simply responding to what you said, and you are representative of a large group that talks about entitlement, and the military only comes up as an afterthought. >> well, i think it needs to be a grand bargain. we've discussed that and i think we agree on that. everything ought to be on the table, but without entitlement reforms, we won't get there. >> are we going to continue this debate after our five minutes? >> mr. paul is recognized. your thorn in the flesh? for three minutes. >> thank you, mr. chairman, and

welcome, chairman bernanke. you know, i guess over the last 30 or 40 years, i have criticized the fed on occasion, but the congress deserves some criticism, too. the federal reserve is a creature of the congress, and if we don't know what the fed is doing, we have the authority, and we certainly have the authority to pursue a lot more oversight, which i would like to see. so although the fed is on the receiving end, and i think rightfully so when you look at the record. the fed has been around for 99 years, almost a few years since you took it over. in 98%, 99% of the dollar value is gone from the 1913 dollar, so that's not really a very good record. and i think what we're witnessing today is the end stages of a grand experiment, a philosophic experiment on fiat money. they always end badly, they always return to market-based

money which is commodity money, gold and silver. but this experience is something different than we've ever had before, and it started in 1971, where we were actually given an opportunity in many ways to be the issuer of that currency. and we had way too many benefits from that than people realize. years, and people keep arguing from the other side of this argumwking, and yet from my the viewpoint of the free market economists, all it's doing is building a bigger and bigger bubble. and the free market economists were the ones who predicted the nasdaq bubble, thewe never hear the liberal central bankers saying watch out, there is a bubble out there, too much credit, we have to deal with it. usually we get reassurance from the fed on that. but i believe there is a logical reason for this because the

federal reserve is given a responsibility to protect the value of a dollar. that's what stable prices are all about. we don't even have a definition of a dollar. we ask about the definition of a dollar, and it's whatever it buys. every single day it buys less than the next day. to me it's like building an economy and having an economic plan like the builder had a yardstick that changed its value every day. that's why we have an imbalance in our economic system. but it was a system designed to pyramid debt. we have a debt-faced system. the more debt we have and the more debt the federal reserve buys, the more currency they can print. and they monetize this debt. no wonder we're in a debt crisis. it's worldwide. it's something we've never experienced before, and i think the conclusion will either be a vindication for sound money, or if you win the argument you'll

say, yes, we are great managers, we know how to do it, we want the credit for the good times and credit for getting us out of the good times. going to know. of course, i'm betting the market is smarter and nobody is smart enough to have central economic planning. so i'm anxiously waiting for this day for the conclusion, because reforms have to come. they're already talking about when you see robert zolic talking about monetary reform and gold, our time has come for serious discussion on monetary reform. thank you, mr. chairman. >> thank you, dr. paul, for that statement. this time mr. wyatt is recognized for three minutes, the gentleman from north carolina. >> thank you, mr. chairman. i appreciate the opportunity on to substitute for my friend lacey clay, the ranking member of the subcommittee because he's unable to be here because of a conflict. i'm glad to see my friend

president paul back from the campaign trail. this seems to me like deja vu all over again. i got to go back-to-back with him quite often. since i'm substituting, i think i can do something kind of out of the ordinary today, and that is praise the work of my good friend chairman bernanke for doing his job. and really not bowing to the political pressure of the right or left or political pressure of republicans and democrats since the federal reserve is supposed to be free of all of those influences, and i just think

he's done a magnificent job and the fed has done a magnificent job of navigating us through some very, very difficult times even though i will experience in today's sharing in the midst of criticisms about the dual mandate, which the chairman has already raised, which i'm sure the federal reserve certainly can't do anything about. we gave them that mandate. they can't refuse to do it. criticisms about inflation fighting policies, steps required for recovery of the economy, interest rate policies, quantitative easing, transparency, involvement with the european union and the rest of the world, involvement with the imf, there's going to be

plenty of criticism to go around today, and so i'm pleased to have this opportunity to say thank you on behalf of myself and hopefully some other members of the committee and certainly members of private enterprise who believe that the fed has stayed steady, followed a course of action that is really saved our economy rather than leads us into the kind of defaults and problems that we could have experienced in these turbulent economic times. i say that, and i yield back, mr. chairman. >> thank you, mr. watt. i think you gave a very thoughtful statement, and i think mr. clay would approve of your statement. and i will pick up on what

mr. watt said and thank you for being here, chairman bernanke, and you do have a difficult job that faced the country. the chairman has informed us that he will need to leave at 1:00 p.m., which is a gracious accommodation to be here for that length of period. so the chair will strictly enforce a five-minute rule. without objection, chairman bernanke your wart of the record and you will now r recognized for the summary of your testimony. >> thank you, chairman backus, ranking member frank and other members of the committee, i'm pleased to present the monetary result to the congress. let me begin with current economic conditions and the outlook and turn to monetary policy. the recovery of the u.s. economy continues, but the pace of

expansion has been uneven and modest by historical standards. after minimal gains in the first half of last year, real gdp increased at a 2 p.25% in the second half. the limited nfx available to 2012 is consistent with growth preceding in coming quarters at a pace close to or above the pace that was registered during the second half of last year. we have seen positive developments in the labor market. private payroll employment has increased by 165,000 jobs per month, and since nearly 250,000 new private sector jobs were added in january. the job gains are relatively widespread across industries. in the public sector by contrast layoffs by state and local governments have continued. the unemployment rate has moved down appreciably since september reaching 8.3% in january. new claims for unemployment insurance benefits have also

moderated. the decline in unemployment rate over the past year has been somewhat more rapid than might have been expected given that the economy appears to have been growing during that time frame at or below its longer term trend. continued improvement in the job market is likely to require stronger growth and final demand in production, and notwithstanding the better recent dat tashgs the job market remains far from normal. the unemployment rate remains elevated and long-term unemployment is near record levels and the number of persons working part-time is very high. household spending advanced moderately in the second half of last year boosted by the fourth quarter surge in motor vehicle prrp purchases facilitated by an easing of constraints and supply by an earthquake in japan. fundamentals that support spending are weak. real household income and wealth were flat in 2011 and access to credit remains restricted for many potential borrowers.

consumer sentiment has since rebounded but remains relatively low. in the housing sector affordability has increased dramatically as a result in the decline in house prices and historically low interest on conventional mortgages. umpl, many potential buyers lack the down payment and credit history required to qualify for loans. others are he reluctant to buy the house now because of concerns about the neck, unemployment prospects and the future path of of house prices. on the supply side of the makt about 40% of recent home sales consistent of foreclosed and resident properties and it puts downward pressure on house prices. more positive signs include a pickup in construction in the multi-family sector and recent increases in home builder sentiment. manufacturing production has increased 15% since the trough of the recession has posted solid gains since the middle of last year supported by the recovery in motor vehicle supply chains and ongoing increases in

business investment and exports. real business spending for investment of software rose at annual rate of 12% over the second half of 2011, a bit faster than in the first half of the year. while real export growth slowed somewhat over the same period accelerated particularly in europe. the members of the board and the presidents of the federal reserve banks recently proekt judged that economic activity in 2012 will be at or above the pace registered in the second half of last year. the pro jekdzs for growth this year provided in conjunction with the january meeting of the fmoc aa central tendency of 2.2 to 2.7%. these forecasts were lower than the projections they made last june. a number of factors have played a role in the assessment.

first it indicated that the recovery has been somewhat slower than previously estimated. in addition, fiscal and financial strains in europe have weighed on financial conditions and global economic growth and promises in u.s. housing and mortgage markets continue to hold down not only construction in related industries but also household wealth and confidence. looking beyond 2012 they expect that economic activity will pick up gradually as these head winds fade, supported by a it continuation of the highly accommodative stance for monetary policy. with output growth in 2012 projected to remain close to the longer run trend, participants do not anticipate further substantial declines in the unemployment rate over the course of the year. looking beyond this year, they expect the unemployment rate to continue to edge down only slowly towards levels consistent with the committee's statutory manda mandate. in light of the somewhat different signals received recently from the labor market