root of this problem, and i hope you succeed. the secret service has an immensely incredible job, very important job as you know. one of the most important jobs we have out here with our forces. good luck to you. we're here for you as well but we do demand some accountability. thank you. >> thank you. >> mr. young our boys are at-will employees. their boys are not at-will employees. that's one of the differences. >> thank you, mr. chairman. i knew you would find that answer. >> mr. fleischmann.

>> thank you, mr. chairman. mr. director, thank you for your distinguished career in the secret service and for stepping up and taking over this agency at such a difficult time. when i was a young boy i always looked up -- the secret service, wow. i always think of the important mission that you all have. and i share the sentiments with my colleagues on both sides of the aisle. we want you to succeed. this is something that is important for our country, and it's a difficult time. we've heard about the different problems that the individual agents have had. i just after listening to some of the comments, want to ask you this. at the fundamental base of any profession when someone is going through training, we heard from one of our colleagues in the military, i was trained in the profession of law.

there is a great judge, our chairman. there are certain fundamentals that are imparted in the recruitment process and in the training process. you've inherited this service. i guess my question for you is, how do you impart the values the good inherent values of the secret service to the recruits and bring that through the training process so that when an agent comes to the point of becoming an agent, these issues are something that he or she would just stand up and say no to? i think that seems to be one of the fundamental problems that we've inherited. i'd like your thoughts on that sir. >> you're exactly right. in terms of our hiring and recruiting process it's a 7 to 9-month process and everyone gets a polygraph a background check. they're thoroughly checked out. then when we get them into our training, they are given classes on ethics, professionalism, and it's driven home.

somewhere after that training is where we lose them. and i think that's because of my leadership our leadership, that somewhere we lose them where they forget those lessons learned. and i think the only way we get that back is by, again the account accountability that we drive home so people realize there are consequences to individual behavior. >> i harken back to the different professions. there is conditioned training for those professionals who go through either annual or semi-annual updates as to what's expected of them. is that going to be part of the process, sir? >> we do five-year updates to go back into our neighborhoods and make sure they're good citizens and so on. we do continuously do training throughout their careers. but in many ways, it comes to individual accountability. each of us, if you see someone in your presence not performing properly, we've got to step up

individually and correct it as well as of course supervisors have to do it. as an agency, we've just got to work together to try to get through this. >> yes, sir. when can the committee expect your reports of professional reviews required by the secret service as of the 2015 homeland security appropriations act? and as a follow-up to that, do you intend in that report, sir, to address concerns that have been raised on both sides today? >> i'm sure that will be addressed in that report. i don't have a date. does anyone have a -- in the near future, but we'll give you a more definitive date, sir, once we conclude this hearing. >> thank you. and mr. clancy i do wish you the best of luck in your endeavors, sir. with that i yield back. >> thank you for yielding. i've been looking at some numbers over here while we were

talking. in my estimate, you have about 4,600 people in your agency who either carry a weapon or are eligible to carry a weapon. so mr. stewart made a good example. you're not in the army you're not in the military. you have an armed force under your command, 4,600 armed men and women. that's a huge responsibility. >> yes, sir. >> that's the kind of responsibility the chiefs of police in major cities have when they have that responsibility. the chain of command has to be rigid to maintain the kind of discipline that is necessary to handle an armed force. it's just that simple. it's by its definition, it's a dangerous group of people. whether it be the use of the police department or whether it be be your force. okay? now, the concern we hear is

that -- let me say something. on the oji i think i know why you did that, because you wanted to make sure this was a clean investigation from the start. i'm not criticizing any igs here. it can also be a place to go away for a while and you take a long time on the ig investigation before it becomes a current event again in washington, d.c. and a lot can calm things down in that period of time. and having had experience in our veterans administration with some of the ig investigations and the results of those investigations, they can be disappointing. so i don't want this to be a policy of, well we got a problem. part of the time the igs get their job done, i'm going to forget about the problem. because i'm not going to forget about the problem.

i don't think anyone up here will forget about the problem. the ig better light a fire under themselves and get a response to us very promptly as to what's going on here. but in reality you're the head. you've got people above you in the chain, but you are in charge of these armed people. >> yes, sir. >> and there has to be a strict chain of command. the managers of those people should be all over them today. if these two people were senior management you should be all over them today. and i realize you've got union contracts, you've got, you know, civil service issues and all those issues to protect the worker sometimes to the detriment of the agency. it's a weakness that i find appalling appalling. one of the things that if i could wave a magic wand to fix in washington i would think the ability to not terminate someone

for dangerous or bad behavior immediately, quite honestly, i think is unacceptable. but it's not your fault. that is the way it is. i recognize that. but in turn, you're in command. you're the two-star. you've got a division under your command. and you got to make sure that everyone in your command and control structure are meeting that obligation. if everybody is just sitting around watching me talk on television to figure out what it is, you know, i can chew their ass, too. but that's not my job. that's your job and the people in the chain of command. it needs to be done whether the ig is making a recommendation or not. i think it's a barrel push, barrel bump at a tape break. but you're both holding badges. why not get out of the car and go to the scene and say, what's going on, as to being so

arrogant to think you can in intrude in a crime scene. if they are stone sober, you need to ask them, do you think you're so big in this agency you think you can drive through one of my taped-off crime scenes? that should be something they get called to the carpet for. if they were stone sober they were arrogant. >> yes, sir. >> and part of it you can have an agency like you have is people who think they don't put their pants on one leg at a time like everybody else. >> yes, sir. >> they're superman so they can act like superman. they can't act like superman. that's what we're all talking about up here. your job right now -- some of these reports told the president not to hire outside the agency, so you've got a big responsibility, because you got 30 years of friends, but you've also got to start jerking a

knott inknot in their tail. >> yes, sir. >> and that's your job. when i met you i believed you were the guy who could do it. i still believe you're the guy who can do it but recognize what your authority is and exercise that authority. that's not a question. i just wanted to say that because i think sometimes we get so off acting like bureaucrats, we forget you are a dangerous bunch of people. >> yes, sir. >> as dangerous people, you have to be a set chain of command regulated from top to bottom. or something dangerous is going to happen. >> yes, sir. >> that's what we're all worried about here. we don't want anybody under your tutelage to get hurt or to allow someone they're supposed to be protecting to get hurt whether it's the president, the pope, the people at the u.n. or whatever. those are big responsibilities, and i think your chain of

command is haywire. >> yes, sir. >> work on that. >> yes, sir. >> ms. allen? >> thank you mr. chairman. let me just disassociate myself with comments that were made by the chairman. i, too believe that you're up to the task and can do it. last december the panel made a lot of recommendations for training handling, leadership and what happens at the complex. what can you tell me about your schedule for fulfilling those recommendations, particularly in regards to improvements of the replacement of the white house fence? and is the budget request sufficient for allowing you to fulfill all the panel's recommendations as expeditiously as possible? >> first of all, the budget request is definitely a good step forward. and the recommendations from the

panel. the ones we can do short term have been completed such as adding additional posts or some enhancements of security around the complex. the ones that are more longer term, as you mentioned the fence. we are in the process of the -- by the end of april i should get some options to choose what is the best new fence or new structure to protect the complex there. and with the national park service, we'll make a decision on where to go with that. but even after we pick and choose that option, then we go into a design stage at six months. then a procurement stage maybe two months. then the construction phase. so it's still going to take almost a year and a half to complete that project. however, we have been testing at our facility some interim measure for the fences. putting something on top of the fence that will deter people from climbing and will prevent people from getting over in a timely manner. so we recognize that that's a long time to wait a year and a

half. so we're looking at an interim measure to go in place this summer if we can get the property approvals. >> the admission panel also recommended that the next director, which would be you, conduct an honest top to bottom reassessment of the agency and that he -- and this is a quote -- move the service forward into an era and drive change in the organization. what are you putting into place to help you look more broadly at the agency's practices processes and activities to identify places where improvements are needed so that the initial training of new agents you know, isn't lost and senior members help to reinforce the ethics and the training that young agents get rather than whatever is happening today? >> overall, we have begun a restructuring of the executive staff.

first of all, with bringing in some new staff members with new ideas and reinvigorate some of the things that we want to do in the agency. but additionally, we're em empowering and elevating our civilian subject matter experts. just as an example, traditionally the secret service has had a director and deputy director. we now have, and it should go out next week a vacancy announcement for a chief operating officer that will be on the same level as that deputy director. that chief operating officer will ensure that the businesses run correctly, efficiently and we've put under this chief operating officer positions that traditionally have been agent-held positions. we're using for example, the chief financial officer. traditionally the chief financial officer has answered to an agent. now we've elevated the chief financial officer so that we do a better job in the budget world. the same with our technology.

typically that director was run by an agent. we've moved our engineer and chief technology officer now to run that director. we have a nationwide search right now for a civilian private spector cio, chief information officer. so we want to leverage their experiences, their professionalism, their subject matter expertise in our agency. now, additionally, on the operational side, you mentioned the training piece of it. i've split them out to recognize training and the hiring process. specifically the training we're now spending a lot of time ensuring that people get the right integrated training that they need. since september 19 uniform division training has been increased 110%. the agent training has increased 78%.

that's -- we got to sustain that, though. and that's why we've got this new directorate for training, to sustain the training for that level of people that they need. they need that training. in answer to your question we're restructuring the management of the agency. >> thank you. the director general have come up with other things to implement. have you implemented all of them, or what still needs to be done on those recommendations? >> to protect the mission? >> yes. >> the longer term projects for example, you mentioned earlier the training facility, the

mock-up of the white house. we feel that's important. right now we use -- we train on a parking lot, basically. we put up a makeshift fence and walk off the distance between the fence at the white house and the actual house itself. and we don't have -- on that parking lot we don't have the bushes, we don't have the fountains, we don't get a realistic look at the white house. even our canine they're responding on hard surfaces rather than grass. we think it's important to have a true replica of what the white house is so we can do a better job of this integrated training between our uniformed officers our agents and our tactical teams. in fact, when i mention tactical teams, i think special forces before they go out to do a special operation, typically they have a model built first so they know what they're getting into. that's where we would like to be. we would like to have a good

mock-up of the white house where we can train, i think, more efficiently. >> when you look at the secret service, you got to look at the employees that are there, and then the employees that will be there. that is, the -- hopefully a diverse hiring process. what -- how will you focus on the folks -- and i know you've gone over this, but just summarize on the employees that are there and the new hires that will be coming in to make sure that you don't compound the problem. >> there is, of course continual training. you mean the problem we had recently? >> well, the problems have been going on for years. >> yes, you're right. we have continuous training. we hit it hard in the first seven months of training when they're first hired, as well as the background check that we do. we look for any insufficiencies in the background check and the

polygraph. we lose a significant number of people because of the polygraph. we're looking for that character. we think we're hiring very good people. then we go through that seven-month training that the ethics and professionalism is stressed, as well as the operational peels ofiece of our job. although we continue to train, we continue to give classes on ethics and professionalism throughout their career i think as much as anything it has to be how do we react to this misconduct? how do we hold people accountable? i think that's the piece that may be missing, and that's the piece that it's my responsibility to ensure that we hold people accountable. >> do you lose a lot of people by attrition? >> we lose a lot of people by attrition. more recently, i would say, because of their quality of life. when you're working 12 hours a day and you think you have the next day off, and it's canceled, the amount of travel they do

and the stress that we're under. i know maybe folks don't want to hear us talk about that. >> i apologize, sir. do you lose them to other agencies or do you lose them to the private sector? >> we lose them to other agencies. but what i've done since i've come here, for example uniformed division. i've encouraged and insisted that these uniformed division officers who want to roll over to special agent positions, we've got to make that happen. we can't do it all at once, but we've got to make more of an effort to let them become agents because they want to experience that side of our agency. if we don't do that -- and we've invested a lot of money to them. if we don't do that, they'll go to another agency or the private sector. and we lose the investment that you all have supported. >> i don't know how diverse your work force is but do you work with historically universities

or hispanic institutions to expand the pool? you can have a small pool, and then as you vet them, you lose a lot. but if you expand the pool, do you work with those universities to look for potential recruits? >> part of this i have to go on memory. i know that we did, and over the last few years, just our overall hiring process has been limited. but now we're back on track and we are going to go out to those colleges. this fiscal year '16 we've asked for additional moneys so we can have these hiring fairs at these universities and in these -- in the military as well. to get a good diverse group of people that we can hire. >> i've got about 45 seconds. just real quickly. the secret service has a tradition, but lately it's taken a black eye. how do you expect to turn this around quickly? because we've heard other folks sitting exactly where you're at.

how do we take your new initiative to say, this will be different this time? >> it has to start with building that trust and part of building that trust is how we hold people accountable. and that people's views matter. that we're listening to whether you're a brand new agent, officer or professional, that we're listening to your concerns. and then we have to act on those concerns. if we don't act on their concerns and show their value, show their concerns are of value, then they're going to lose interest and we're going to have these discipline problems. but we've got to do a better job of communicating, mentoring, teaching, and each of us, whether you're a supervisor or not, have to take responsibility to ensure that these types of events don't happen. >> i wish you the best. >> thank you. >> mr. clancy, you mentioned in

your statement zero-based budgeting. one of the mission panel recommendations is the need for a new budget structure that is zero-based or mission-based as its subject matter. how is this different from the budget presented in your fiscal year 2016 quest? what type of budget reform is being considered? and how will it be implemented? how might a new type of budget drive future funding needs? have you already identified gaps in funding based on initial reviews of the budget? i can go back over those. >> that's fine. thanks, mr. chairman. again, this fiscal year '16 budget is one that i inherited. i think it's a good budget. i think it's definitely a step forward in a very positive direction. we are in the process now of identifying from top to bottom where are our deficiencies. that zero-based budgeting which

to be candid, our chief financial officer has experience in that in a previous position in another agency. we are going directorate by directorate to see where those needs are so we can have them trained, staffed and give them better equipment. so we are piling a list of those priorities and things we really need. >> my friend talked about the budgeting in appropriating ways the way they do things in the great state of texas. when you have a mission we know when you're defiling what it takes to do a certain mission, we can see where the failings are in each mission and budget accordingly. isn't that what you were pushing me with, mr. cuellar?

it gives you a clear picture and gives us a clear picture of how the agency is functioning. i like the idea. i hope you do well. >> thank you. we're constantly looking at the emerging threats. as we talked in your office about the uass and how we address the emerging threats. that's how we deal with this budget process. >> just quickly, i'd like to follow up on the zero-based budget. can you tell me what the timeline is for completing that kind of analysis? >> initially we were hoping that we might get into -- my chief financial officer just gave me an answer here. 2017 you can expect a mission-driven programs to identify the budget. so by 2017, we will be well on our way to zero-based budgeting. >> great.

what are the one of the central recommendations of the mission panel was to hire 200 more officers. the panel described this new hiring as an interim step. while the agency does the necessary work to recognize initial needs. i also recognize they have struggled in recent years to keep attrition from outpacing hiring and that you have recently taken steps to address that. my question is, are you satisfied that you have resolved the shortcomings in the hiring process, and do you anticipate that the secret service will be able to meet its hiring goals for fy-16? >> yes. in short yes. with regards to the protective mission panel recommending 85 agents come to the president's detail, as of this date we have 30 that have been reassigned to the president's detail.

thanks to your good work with the continuing resolution being resolved, we can transfer more people into washington so that we can fulfill that 85 number requirement. in the uniformed division we are working with your staffs to look for retention measures that may allow us to keep some of these people that are close to retirement or may be looking at other opportunities. the retention pieces is important to us as well. by hiring, we'll surpass our goals. additionally, we plan to have six class of agents, six class of ud. now we're anticipating nine classes and eight uniformed division. >> my time is up mr. chairman. >> mr. cuellar? >> no further questions. we want to work with the director. >> thank you.

>> the budget once again are proposes to eliminate $840 million, including funding for the national center for missing and exploited children. the justification materials indicate that forensic support for missing and exploited children investigations will continue to be provided through the agency's field offices. the secret service has a longstanding partnership with the national center for missing and exploited children going back decades. while i understand there may be a need to prioritize funding for activities within the agency, it seems to me that we should be wary of weakening that

partnership. what would be the specific impacts on the national center if we were to appropriate no funding for the support program in fy-16, and what are the benefits to the secret service from the existing partnership? >> we understand this is a pass-through grant through the department of justice. this has -- this is a very important mission to us. it has so many good things. it's such an important job. we offer a lot to our local law enforcement partners with the forensics that we can do, the polygraphs that we can do for them, and relationship building as well. we can bring a lot to the table to try to help with this very important mission, and we're very thankful to be able to do this moving forward, if we can. >> okay. >> all right, if no one else has any questions then i guess we'll end this hearing. i want to say that this has been

a tough day for you, but it's all a learning process and once again, we're part of that chain and we're willing to help. >> yes, sir. thank you, mr. chairman. >> thank you. federal reserve chair janet yellen spoke about interest rates and the economy yesterday. that's next. the senate budget committee will continue work on the gop 2016 budget plan offered by chair make yenzi. we'll have coverage in about an hour here on c-span. here are some of our featured programs for this weekend on the c-span networks. on c-span2's book tv saturday at 10:00 p.m. eastern, on "after words," eric foner on

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like us on facebook and follow us on twitter. in its quarterly meeting of economic projections the federal reserve cut its inflation outlook for 2015 and reduced economic growth. after the meeting fed chair janet yellen spoke to reporters and was asked about interest rates and the health of the economy. this news conference is 55 minutes. >> good afternoon. as you know the federal open market committee this afternoon reaffirmed the current zero to one-quarter percent target range for the federal funds rate. we also updated our forward guidance indicating that an increase in the target range for the federal funds rate remains unlikely at our next meeting in april. with continued improvement and economic conditions however, we do not want to rule out the

possibility that an increase in the target range could be warranted at subsequent meetings. let me emphasize, however that the timing of the initial increase in the target range will depend on the committee's assessment of incoming information. today's modification of our guidance should not be interpreted to mean that we have decided on the timing of that increase. in other words just because we remove the word "patient" from the statement doesn't mean we're going to be impatient. moreover, even after the initial increase in the target funds rate, our policy is likely to remain highly accomodative to

reach our projectives of employment and mass inflation. i'll come back to our policy in a few moments, but first i'd like to review economic development and the outlook which form the basis for our policy decisions. we have seen continued progress toward our objectives, our objective of maximum employment. the pace of employment growth has remained strong with job gains averaging nearly 290,000 per month over the past three months. the unemployment rate was 5.5% in february. that's .3 lower than the lowest reading available at the time of our december meeting. broader measures of job market conditions, such as those counting individuals who want and are available to work but have not actively searched recently, and people who are working part-time but would

rather work full-time have shown similar improvement. as we noted in our statement, slack in the labor market continues to diminish. meanwhile, the labor force participation rate the percentage of working age americans either working or seeking work is lower than most estimates of its trend. and wage growth remains sluggish suggesting that some cyclical weakness persists. so considerable progress clearly has been achieved but room for further improvement in the labor market continues. we continue to expect sufficient underlying strength in economic growth to support ongoing improvement in the labor market. after averaging about 2.5% over 2014, growth of real gross domestic product appears to have slowed in the first quarter of

this year, in part reflecting a moderation in household spending. in addition the recovery in the housing sector remains subdued and export growth looks to have weakened. looking ahead however, the committee continues to expect a moderate pace of gdp growth with robust job gains and lower energy prices supporting household spending. inflation has declined further below our longer run objective, largely reflecting the lower energy prices i just mentioned. declineing import prices have also restrained inflation and in light of the recent de depreciation of the dollar will likely do so in the months ahead. my colleagues and i continue to expect that as the transitory

factors dissipate and as the labor market improves further inflation will move gradually back toward our 2% objective over the median term. in making this forecast we're attentive to the low levels of market-based measures of inflation compensation. in contrast, survey-based measures of longer term inflation expectations have remained stable. the committee will continue to monitor inflation developments carefully. this assessment of the outlook is reflected in the individual economic projections submitted for this meeting by the fomc participants. as always, each participant's projections are conditioned on his or her own view of appropriate monitoring policy. the unemployment rate projections over the next few years and in the longer run are

generally a bit lower than the december projections. at the end of this year, the central tendency to the unemployment rate stands at 5 to 5.2%, in line with participant's estimates of the longer run normal unemployment rate. committee participants generally see the unemployment rate declining a little further over the course of 2016 and 2017. for economic growth, participants generally reduce their projections since december with many citing a weaker outlook for net exports. nevertheless, the central tendency of the growth projections for this year and next at 2.3 to 2.7% remain somewhat above estimates of the longer run normal growth rate. finally, fomc participants project inflation to be quite

low this year, largely reflecting lower energy and import prices. the central tendency of the inflation projections for this year is now below 1% down noticeably since december. as the transitory factors holding down inflation are bait, the central tendency rebounds to 1.7 to 1.9% next year and rises to 1.9 to 2% in 2017. returning to monetary policy, as i noted at the outset, the committee reaffirmed its view that the current zero to one-quarter percent target range for the federal funds rate remains appropriate. but with economic conditions improving and with further improvement expected in the months ahead we've again modified our forward guidance. in december and january, the committee judged that it could be patient in beginning to

normalize the stance of monetary policy. that meant that we considered it unlikely that economic conditions would warrant an increase in the target range for the federal funds rate for at least the next couple of fomc meetings. well while it's still the case that we consider it unlikely that economic conditions will warrant an increase in the target range at the april meeting, such an increase could be warranted as any later meeting depending on how the economy evolves. let me emphasize again that today's modification of the forward guidance should not be read as indicating that the committee has decided on the timing of the initial increase in the target range of the federal funds rate. in particular this change does not mean that an increase will necessarily occur in june

although we can't rule that out. as we noted in our statement, the decision to raise the target range will depend on our assessment of realized and expected progress toward our objectives of maximum employment and 2% inflation. we continue to base that assessment on a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations and readings on financial and international developments. we anticipate that it will be appropriate to raise the target range for the federal funds rate when the committee has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term. once we begin to remove policy

accommodation, we continue to expect that in the words of our statement, even after employment and inflation are near mandate-consistent levels, economic conditions may for some time warrant keeping the target federal funds rate below levels the committee views as normal in the longer run. this guidance is consistent with the paths for appropriate policy reported by fomc participants. compared with the projections made in december most participants lowered their path to the federal funds rate consistent with the downward revisions made to the projections for gdp growth and inflation, as well as somewhat lower estimates of the longer run normal unemployment rate. the median projection for the federal funds rate is just below 2% in late 2016 and rises a bit

above 3% in late 2017. the median projected rate in 2017 remains below the 3-3/4 percent or so as they run value. even though the unemployment rate at that time is slightly below that of its estimated longer run value and the central tendency for inflation is closer to our 2% objective. participants provide a number of explanations to the federal funds rate running below its normal longer run level at that time. these include, in particular, the residual effects of the financial crisis which are likely to continue to constrain spending and credit availability for some time. i'd like to emphasize that these forecasts of the appropriate path of federal funds rate are

conditional on participants' individual projections for economic output inflation and other factors. but our actual policy actions over time will be data dependent. accordingly, if the expansion proves to be more vigorous than currently anticipated, and inflation moves higher than expected, then the appropriate path would likely follow a steeper and higher trajectory. conversely, if conditions were to prove weaker then the appropriate trajectory would be lower and less steep. finally, the committee will continue its policy of reinvesting proceeds for maturing treasury securities and principle payments from major debt and mortgage-backed securities. the committee's sizeable holdings from longer held

securities should promote financial conditions and make further progress in our objectives. thank you, and i would be happy to take your questions. >> howard schneider. thank you. with this pretty consistent reference to expectations of above trend growth over the last few months, now we're seeing growth downgraded in the concept of very specific references to international and national conditions oil export growth and your own comments on the dollar. my question is doesn't this indicate the feds facing a tougher time kind of going it alone from the rest of the world perhaps more than than you expected last fall? >> it looks like from incoming data pertaining to the first quarter that real gdp growth has declined somewhat below where it was for the last several quarters of last year, and

that's really why the committee indicated the growth is moderated somewhat. there has been a slight downgrading of estimates of growth for this year. you've mentioned the dollar. we noted that export growth has weakened probably weakened. probably the strong dollar is one reason for that. on the other hand, the strength of the dollar also in part reflects the strength of the u.s. economy. the strength of the dollar is also one factor that, as i noted, is holding down import prices and at least on a transitory basis at this point pushing inflation down. so we are taking a count of international developments, including prospects for growth in our trade partners in making

the forecasts we have here. nevertheless, it is important to recognize that this is want a weak forecast. taking everything into account, we continue to project above-trend growth. we continue to project improvement in the labor market by the end of 2015. the central tendency of the participants is they're looking for an unemployment rate that will be down to 5.0 to 5.2, which is consistent with their estimates if it's longer run normal value. so we do see considerable underlying strength in the u.s. economy economy, and in spite of what looks like a weaker first quarter, we are projecting good performance with the economy.

>> marty kretsinger associated press. the policy that talks about one reason you'll need to raise rates is to be reasonably confident your inflation target will be met at 2%. that is coming out at a time when you've lowered your forecast on inflation. which i would think would make euless confident about it. what is it going to take to make you reasonably confident about inflation? >> i don't have a mechanical answer for you. there is no single thing where i'd say we must see such-and-such in order to achieve that level of confidence. we will be looking at a wide array of data. now, we've said we also want to see continued improvement in the labor market. a stronger labor market with less labor market slack is one

factor that would tend to certainly, for me, increase my confidence that as slack diminishes, inflation will move up over time. other things i will be looking at, of course, the inflation data. as we said we expect inflation to remain quite low because of the depressing influence of energy price declines and the dollar. but we will be looking at the inflation data carefully to see if we can interpret, for example, low levels of inflation if we see that, which we expect as reflecting those influences. we will be looking at wage growth. we have not seen wage growth pick up. we may not see wage growth pick up. i wouldn't say either that that is preconditioned to raising

rates. if we see wage growth pickup, that is a symptom inflation will likely move over time. we will be watching inflation expectations. survey measures have been stable. i expect nat to continue. we will be watching it carefully. market-based measures of inflation compensation have fallen near low. if they were to move up over time, that would probably serve to increase my confidence. but there are a wide range of things we will be looking at including further improvement in the labor market. there is no simple answer, a judgment the committee will have to make. >> john, from the "wall street journal." the famous dot plot we always

talk about showed officials expectations where interest rates will end the year in 2015 '16 and '17 have come down fairly notably. i wonder if you could explain us to your analysis why those estimates are coming down. specifically, is it a reflection of what's changed? and is it a reflection of changes in the feds' economic forecast or a change in the way the fed is reacting to the economy it sees its reaction function? function? >> it's always hard to know why each participant has written down the forecast they have. certainly there are changes in the assessments of the economy and forecast for the economy that would point in the direction of downward adjustment in the funds rate path. for one thing you do see meaningful downward adjustment

in the inflation forecast. certainly for this year. in addition importantly, a number of participants have marked down their estimates of the normal longer run unemployment rate. so that range has moved down notice noticeably from previously it was 5.2 to 5.5. it's now moved down to 5.0 to 5.2. downward revision ss to the longer run normal unemployment rate in a way suggests participants are seeing more slack in the economy now than they previously did. i think both of those things would point to downward revision in the funds rate path. >> sam fleming from the

"financial times." the experience from some other central banks, noticeably japan and sweden suggests tightening early when you're zero bound can be a risky protests. the risks of tightening early can dramatically outweigh the risks of leaving it a little longer. i wonder if you can comment on that international experience and how that's influencing the debate at the moment? >> when an economy is operating at the so-called zero lower bound, it creates a situation where there are asymmetric risks. it is possible if the economy proves stronger than is expected, to respond to that by tightening policy. if there are adverse shocks to demand tend to push inflation and economic performance in an adverse direction.

it's not possible to lower rate rates. of course, that's a reason why, for a number of years we engaged in active asset purchase programs. so there is a situation there of a asymmetric risks and does point in the direction of waiting long tore raise rates. i would say this is an influence that we -- and a set of considerations that we've long been aware of and have been taking into account so that it's not something that just comes into play now, it is a reason we have held our rates at zero to a quarter percent for now roughly six years. so we are seeing an economy that's growing above trend. the labor market is improving. i think some of the headwinds that have long been holding the economy back are beginning to

recede, which is reason that the committee wants to be able to evaluate incoming data and consider when it may be appropriate to finally raise rates. that is a consideration we have long taken into account. >> steve liesman cnbc. i don't hear quantitative measures what increasing confidence in inflation or heading back towards or further improvement in the job market, which is unusual for a fed that not too long ago was providing us metrics about unemployment when it would move. with rates. is it now policy to keep the market guessing and is it thought you'd have better policy and economic outcomes from less certainty about the path of interest rates? a kind of related question, if you will, could you see raising rates while the committee still

judges that the risks are balanced? >> so in terms of certainty and providing metrics, we provided a metric for a threshold of 6 1/2% several years ago, and told market participants and the public that we wouldn't consider it appropriate to raise rates as long as the un ploimt raitemployment rate was higher than that level, as long as inflation was well contains. but our policy needs to be data dependent. and we neat to respond to incoming data and our assessment of incoming data, in terms of where we think the economy is

heading and how close we are to our objectives. the markets -- so can we provide certainty? of course, we can't provide certainty because we're not certain what the data will look like and how the economy will evolve evolve. to achieve our objectives we need to watch the data continually reformulate our best guesses, forecast of where the economy is going and respond appropriately. and we can't provide certainty and shouldn't provide certainty because economic developments that will unfold are uncertain. what market participants should be doing is looking at incoming data, just as we are, and forming their expectations for where policy will be going and should be going just exactly as we will be doing by attempting to understand economic

developments, as they unfold. that is what we're trying to say in this statement, that that's what we will be doing going forward. and we don't want to -- and don't think it's appropriate at this point to provide calendar-based guidance. >> the balance of risk and raising rates when the risks are balanced. >> the risks are what? >> the risks are balanced would you be raising rates in that context. >> i guess we said the risks to the outlook are balanced and-i mean, certainly we could raise rates in a situation where the risks are balanced. we need to see as we have said we want to see further improvement in the labor market and we want to feel reasonably confident that the economy is on a trajectory, where we will achieve our 2% inflation objective.

objective. >> from the snorkts"new york times"." there seems to be an awful lot riding on surveys of inflation expectations. yet those surveys are inprecise instruments and don't seam particular ly particularly sensitive in recent years and expectations remain stable even through those changes. could you talk about why you feel those measures are accurate of where those numbers are likely to go and particularly about market-based measures and all correspondence you have about survey-based measures. >> survey-based measures aren't perfect and often the mean or need median of those measures does not line up with actual inflation, so they seem to be biased.

nevertheless they seem to be useful in predicting inflation. because we think inflation expectation are a determinant of price setting, we need to be looking at the best data we can, even if it's imperfect trying to gauge inflation expectations. we do look at survey measures. the fact survey measures are stable even at levels consistent with inflation objective thessien tral bank wants to achieve, that's not a guarantee inflation will, over time, move to be consistent with those expect facing expectation expectations. an example is japan, i would give you, where for many years, the households and businesses expected positive inflation but there was a consistent undershoot. so this isn't single metric that is perfect but it's one of many

things we'd look at. we also look at measures of inflation expectations based on market -- market differentials between nominal and real or tips yields. there also informative but can move around for reasons pertaining to liquidity in the treasury market and the tips market and change inging inflation risk. they're not a pure read either. and we want to look at both things and not take away any simple morals. >> peter and then jen. >> peter barns fox business. i wanted to check in with you whether or not you see or have any concerned about bubbles in the economy, particularly the financial markets and debt and

equity markets and want to refer to your most recent monetary report to congress last month you said overall ec equity evaluations are somewhat higher than historical levels and valuation models in some sectors appear to be stretched relative to historical norms. in the same report last year in july, the report specifically mentioned biotech and social media stocks as being substantial ly substantially stretched. do you still feel that way and can you comment on bubbles and particularly these sectors? >> i don't want to comment on those particular sectors. you know, as we said in the report overall measures have equity valuations are in the high side but not outside of historical ranges. in some corporate debt markets we do see some evidence of

unusually low spreads. that's what was referred to in the report. more broadly, we do try to assess potential threats to financial stability. in addition to looking at asset valuations, we also look at measures of credit growth of the extent of leverage being used in the economy and in the financial sector and the extent of ma surety transformation. taking into account a broad range of metrics that bear on financial stability our overall assessment at this point is the threats are moderate. >> jan laberto "politico." i want to switch gears and ask about exchanges between fed and

lawmakers and some asking for more transparent accountability measures. i want to ask whether there might be room for the fed to consider these measures like a rules-based approach, like the taylor mode and who has a voting seat on the f1 c. to what degree does that make it more difficult to accomplish your mission? >> i believe the federal reserve is already one of the most transparent central banks of any around the globe. we provide an immense amount of information both financial about our balance sheet and monetary policy operations. we have financial statements. we publish our balance sheet every week. if you want to know what's on the folio, it's listed on the website. i have press conferences, we

issue minutes, we have statements that we release right after meetings and transcripts within five years. so if you put all that together we are a transparent central bank. with respect to congressional changes that are under consideration, that would politicize monetary policy by bringing congress into make policy judgments about in realtime on our monetary policy decisions. congress itself decided in 1978, that that was a bad thing to do. that it would lead to poor economic performance and they carved out this one area of policy reviews of monetary policy decision-making, from gao

audits. the gao looks at everything else that goes on within the fed. i think the fed is a central bank best practice, the global experience shows theat giving central banks independent densz to make monetary policy decisions that they think are in the best interest of the country and consistent with their mandates, leads to lower inflation and more stable macroeconomic outcomes. i feel very strongly about that. we are accountable to congress. of course we're ready to provide information congress needs to evaluate the feds decision making in monetary policy and elsewhere. with respect to monetary policy rules, they can be useful. i find them useful and long have

as a kind of benchmark for thinking about what might be the appropriate stance of policy. but to chain a central bank to follow a simple mathematical rule that fails to take account of many things that are very important in making monetary policy. for example, i was earlier asked about being against the zero lower bound which is an important special consideration that would be a very fool publish thing to do and i apologizeoppose it. with respect to proposals having to do with voting and the structure of the fed as you mentioned, a lot of ideas have been mentioned. i would say from my part, i think the federal reserve works well. the system we have was put into place by congress decades ago. i don't think it's a system that's broken.

of course, congress can revisit the decisions it's made about the structure of the fed. there were good reasons for making the decisions made about how the structure vet voting and other things. i don't think the system is broken i think it's working well. so i don't see a need for changes but of course it's up to congress to review that. >> i was wondering whether you could quantify the effect that the stronger dollar has had on economic output so far this year, the extent it sort of acted as its own rate increase and what sort of obligation you feel, if any, to make life easier for the ecb bank of japan and many emergeing markets struggling with some of the issues we struggled with not

that long ago. >> so with respect to the impact of the dollar on the u.s. economy, i don't have a quantitative estimate to offer you, but i certainly expect net exports to serve as a notable drag this year on the outlook. remember, we have to put that in context. there are a lot of things that affect the u.s. outlook. while that is serving as a drag on economic growth, overall the committee continues to see sufficient strength particularly in private spending that we are expecting above trend growth even so. with respect to our neighbors we

look carefully what's happening in the global environment. we realize our own policies affect performance in the rest of the world, and that performance in other countries has an influence on us so we spend a good deal of time discuss discussing global developments. it is important for us to keep our own house in order to put in place the policy that's consistent with the objectives that congress has given us. i think a strong u.s. economy certainly is something that is good for other countries as well. we have pledged to communicate, as clearly as we can, about monetary policy, and i am trying to do that, and will continue to do so. >> nancy, with "marketplace." we talked about the risks of tightening too early. what about the risks of wait

doing long especially since it can take a while for fed actions to work their way through the economy. >> i agree with that. many many studies over decades and decades have showed there are lags in the way monetary policy affects the economy and therefore monetary policy does have to be forward-looking. that's why we spend so much time preparing forecasts and discussing them. we want to put in place a policy that will be appropriate for where the economy is heading. that is a reason that many of my colleagues -- most of my colleagues are anticipating that it will be appropriate to begin to tighten policy sometime this year despite the fact they are projecting inflation will be low. they're looking forward and they

see by the end of 2016 or 2017, with the labor market recovering and assuming inflation expectations remain stable and transitory influences no longer affecting inflation they see inflation heading back to our 2% objective. just as we don't want to be premature in tightening policy and aborting a recovery that we have worked long and hard to proceed as far as it has we also don't want to be behind the curve and tighten given those lags. lags. >> madam chair i'd like to preface this by saying, i do believe you stand for accountability. recently, a bunch of us in a room over there there was a

police car outside and your staff had taken our cell phones and control the internet in the room all this to guard the security of the fomc statement. if one of us had leaked it we would lose our jobs and surely there would be a prosecution and my friends in the press would have a banner day in that story. there was a leak. we don't know what happened. i've asked. i can't get an answer. now, congress is asking. both parties want to know. i'm not going to ask about the ig's probe. i understand that's an active case now suddenly. after two years of just sitting there. i would like to ask what you found at the board. you weren't chairman then you were vice chair, i believe. what answers do you have and are you going to respond to congress? >> so, let me say that the committee and i personally take very seriously our responsibility to safe guard

confidential information. we have a set of policies and procedures that are in place that we're to follow if we believe that there have been leaks of confidential information information. this is something that doesn't occur very often bit ifbut if it does occur we follow those procedures. it has been reported that our inspector general is engaged in a review at this time of this matter. in light of that ongoing review i'm not going to get into details but let me just say we welcome that review and are looking forward to its conclusions with respect to congress congressional inquiries, we have arranged to brief members of congress who have asked about this and will

certainly cooperate in trying to provide them the information that they seek. >> madam chair thanks for taking my question. the banking sector has clearly improved since the crisis in terms of capital retention but there's also, seemingly, a number of scandals involving 4x manipulation libor. do you think that the culture at the banks is where it ought to be, and if not, what is the fed going to do to improve it and when? >> well, it's certainly been very disappointing to see what have been some really brazen a

violations of the law. we absolutely expect the banks that we supervise to comply with the law and to have in place controls that ensure compliance and organizations. while changing the culture of organization is not something we can achieve through supervision, we will make sure the banks we supervise have appropriate compliance regimes in place. to the extent that compensation scheme s schemes might be in centing such behavior that inappropriately reward risk taking that's something that was -- we will, you know, look for in our supervision as well.

>> you introduced a comepensation rule in 2011. when do you think we might see some movement on that rule? >> well, the agencies -- the agencies are working jointly to bring out a rule on this. we do have supervise ryory policies in place concerning the structure of incentive pay and compensation and it covers that topic now and we have seen meaningful changes already in the structure of compensation in banking organizations to diminish ways in which it might in sent incent risk taking. mrk dow jones newswires. pedro. before the ig's investigation according to the republican

congressman's henceletter to your office it is my understanding in the investigation the inquiry was dropped by several members. that pre-dates the ig and i want to know who are the members of the fmc who struck down this investigation and does not looking into these facts mitigate the kind of transparency you're trying to bring to the central bank? >> that is an allegation i don't believe has any basis in fact. i'm not going to go into details but i don't know where that piece of information could possibly have come from. >> his question i think when you get asked about financial crime s crimes and the public hears you talk about compliance, you get a sense that there's not enough enforcement involved in these actions. it's merely a case of trying to

achieve settlements after the fact. is there a sense in the regulatory community that financial crimes need to be punished sort of more forcefully in order for there to be an actual deterrent against unethical behavior? >> you're talking about within banking organizations. so the focus of regulators, the banking regulators is safety and soundness. and what we want to see is changes made as rapidly as possible that will eliminate practices that are unsafe and unsound. we can't -- only the justice department can bring criminal action. they have taken up cases where they think that that's appropriate.

in some situations, where we are able to identify individuals who were responsible for misdeeds we can put in place prohibitions that bar them from participating in banking and we have done so and we will continue to do so. >> steve beckner of mmi. good morning, madam chair. the fnc said it will wait until after the first rate hike before it stops investing proceedings of its holdings and stop rolling over matureing freshlies. what is the thinking how long after liftoff you should stop reinvestments and rollovers. given the large amount of treasuries maturing next year, would it make sense for the fomc

to vary the pace of runoff that it allows? >> so we issued in september a set of normalization principles. as you noted the committee indicated we will eventually cease reinvestments or diminish the pace of reinvestments as a way of gradually reducing the size of our portfolio over time. we said we would do that when economic conditions were appropriate after we begin raising rates because we want changes in our target range for the federal funds ritate to be the main tool by which we shift the stance of monetary policy. we've not made any decision at this point about how long it will be once we begin to raise

rates before we reduce or cease reinvestment reinvestment, we will see how things go and the committee will revisit that and make a decision at a later time. you also indicated we have a substantial quantity of treasuries that will roll off our balance sheet over the next several years. that's true. and that will, i think, over the next two years, almost 800$800 billion will mature. they will be short term obviously treasuries at that point. that's a way in which we anticipate diminishing the size of our portfolio. >> could i follow up? some people have suggested that you might need to manage those runoffs a little more

granularly, if that's a word perhaps pursue a different track for treasuries versus mbs, given quarters when you have very large amount mass touring and there might be a spike in long term interest rates that maybe you would vary the rate of runoff. any consideration given to that? >> that's something for which we have made no plans and i don't really have anything for you on that. that. >> greg and peter. >> greg rob from "market watch." we hear productivity takes a long time before you can understand it. it's been very low in this cycle. what does that mean for fed policy? >> i agree it has been very low. it's been disappointingly low.

a a positive aspect of what is fundamentally a disappointment is that the labor market has improved more rapidly than might have been expected given the pace of economic growth. the unemployment rate has come down more rapidly than i would have expected and the labor market has improved more rapidly than i would have expected. we have written down our estimates of potential output. in the long run, it is disappoint ing disappointing disappointing factor about the ultimate prospects for the u.s. economy if it continues. i would expect it to pick up. as you can see from the longer run growth projections, most

fomc participants believe it will pick up above current levels. but it means it's something if it persists, retard living standards and would likely retard real wairngge growth and improvement and living standards for ordinary households. >> peter, last question. >> peter cook of "bloomberg television." madam chair, one kwep logistically and a follow-up about congress. i want to clarify when you decide to start raising interest rates could that decision happen at a meeting not followed by a press conference. i would like to get your reaction to the treatment you received on capitol hill and it didn't look very pleasant at

moments. i wonder if you're concerned about it. has the relationship between congress and the fed caused you concern and what if anything you can do about it. >> let me say this about the press conferences. i said this previously and will reiterate it. every meeting the federal open market committee has is a live decision we could make a decision. clearly, if we decided for the first time to raise the federal funds rate, it is something i think would be aproep to answer question s questions and explain in more detail. we've long had the capacity to call a press conference after a meeting that we would hold by teleconference, by conference call. and that's the capacity used on a number of occasions by my predecessor during the financial crisis. it is something that remains the capacity we have and would

expect to use if it were necessary. necessary. >> on the second part of your question with respected to testimony, it's very important for the federal reserve to be accountable to congress. we have a wide range of responsibilities. it's entirely appropriate for me to testify and be quizzed on a range of topics by members of congress. i think i need to be ready to answer questions on any aspect of federal reserve behavior. that's an important principle.

>> this weekend the c-span cities tour has partnered with media come to learn about the liters and literary life of columbus georgia. >> right here inside the museum is the css jackson an ironclad built in columbus during the war. those oval shape ss are the gun ports of jackson. the jackson is armed with six brook rifles. the particular brook rifle we're firing today is one of the guns built specifically for the jackson. it was cast at the selma naval works in selma alabama and completed in january of 1865. the real claim to fame is directly connected to the fact there are only to four ironclads from the civil war we can study right now. the jackson is right here and this is why this facility is

here. it's first and foremost to tell the story of this particular ironclad and show people there are more than one or two ironclads, there were many. >> watch all our events on columbus saturday at 2:00 p.m. and sunday at 2:00 on american history tv on c-span3. >> this morning the senate budget committee is meeting this morning to go through the chairman's budget proposeal with the aim to balance the budget and cut 5$5 trillion over the next ten years. opening thoughts and resolutions yesterday afternoon and today, the amendments to the measure. once it goes through the bill and makes changes it's live in the senate. we expect it to get under way in just a moment.

again we're live on capitol hill as we wait to start the senate's budget mark-up for 2016. should begin in just a moment. the senate will gavel in, in about 25 minutes from here and remarks on the human trafficking bill and legislation penalties on people convicted of human trafficking. and prevents money on the fund spent on abortions. democrats are objecting to that language included in the bill. there could be a fourth and fifth possible procedural bill today and could happen noon eastern. you can see it live on c-span2. the house also in session with votes and debates on national

labor rules. see the house live on c-span.

i will call the committee to order and see if we can't have the staff for binoculars for senator sanders and i to see the other end of the table. hopefully the speaker systems are working. you have to push the button in order to speak. we have a busy day ahead of us. i'd like to summarize quickly the ground rules i stated yesterday. members may only offer amendments other than a complete substitute totally offset covered by the budget resolution. in addition the senate amendment amendments non-binding will be ruled out of order as they always have been in this

committee and we will be consulting with the parliamenttarian on offered amendments and consider whether they cause them to lose its privilege. if the parliamentarian advises against such amendments they will be ruled out of order. keep in mind members have the right to modify their amendment or withdraw it. our committee rules do not permit proxy and members must be present for votes to be recorded. if a voice vote occurs members must speak up if they wish to be recorded as aye voice vote. i will have stacked amendments throughout the day. for the alternating amendments i will be using the sides' recognition and marked up to the greatest extent possible and will confer for the best time for major stack votes to occur

to avoid people with conflicting schedules. with this many people it's tough to do and thank members in advance for their flexibility to work with us and finish this mark-up by this evening. in order to keep the mark-up moving i request when senators offer an amendment limit remarks to three minutes and rebutted tall two minutes and then rebut a tall limited toprior to the vote. one of the reasons we're able to get the amendments done in one day the best ones are saved for the floor. the current resolution of the budget for fiscal year 2016 and will now turn to amendment ss i would have the first opportunity to offer one but i'll refer to the next senior one if senator

sessions is ready for an amendment. then we'll go to senator sanders. >> we're just starting. green tablecloth to match the color of money and maybe my green eye shades being one of those kind of republicans. mr. president i'm offering a deficit neutral reserve fund for a welfare legislation to help struggling americans move to the road to personal and financial independence rather than dependence. 70 million working age residents not currently working. 1 in 4 americans between 25 and 54, the prime years is not working. four straight years, more than 40 million americans have been on food stamps. 1 in 3 americans receive some kind of means-tested support, 1 in 3. i agree with senator sanders we have a problem. i think we all agree we have a problem and it's been moving in this direction a number of years

years. middle working americans are being hammered here. the federal government spends $750 million on maintenance-tested welfare and poverty programs. with state contributions, a million dollars a year, the money spread out over 80 programs administered by vast bureaucracy with little oversight and no guiding moral vision about the purpose ultimately of our government action. only 1% of this spending is dedicated to job training while job training is fragmented into 47 different programs throughout the federal government. who among us can say there isn't a more effective compassionate way to spend this 1$1 trillion each year? we could spend $30,000 a year on every household living in poverty and still spend half of what our current welfare bureaucracy consumes each year.

what i would urge colleagues let's create a system a deficit neutral reserve system that will facilitate reform of these programs. my vision is that all government assistance programs would be consolidated into one office. a person in need would go to that office as part of the need that they receive whether it's job training food stamps or other programs, they would also be counseled and evaluated for job programs and work programs that could move them off dependence. it's been over 20 years since the last welfare reform. it's time for another one. this would simply allow us to better facilitate the kind of reform that would help people in need and also help us over time to reduce expenditures. thank you, mr. chairman.

>> any opposition? >> yeah. >> senator sanders. >> what senator sessions is doing is focusing on a very important issue but i think he's approaching it in the wrong way. as i understand it what he has done is lumped in the quote unquote welfare programs, many programs essential for the middle class and working families of this country within the umbrella term "unquote welfare, he includes the earned income tax credit, supplemental security income ssi funding for breast and cervical cancer early detection meals on wheels for seniors, the chip program and many other programs. now, senator sessions is right to point out, as i often do, that we have more people living in poverty today than almost any time in the modern history of america. the very next amendment that is going to be offered i will offer

will create millions of jobs to start putting people back to work when they need those jobs. we're going to be talking today about raising the minimum wage to a living wage so people don't need governmental programs talking about pay equity so women workers can get the same wages as men and in doing that significant significantly cutting poverty. right now we have a whole lot of people hurting, vulnerable. i think senator sessions amendment moves us in the wrong direction. senator stab bbin -- stabineau, you want to add anything? >> this is something we would offer to help struggling americans on the road to financial independentce. we see very different path. this pulls the rug out by those trying to get ahead keeping things focused on those already

wealthy or well-connected. i would say if we really want to lyft people out of poverty we could lift half the women in this country if we just made sure we have equal pay for equal work. we literally would lift half the women out of poverty. i'd love to join with the senator on alabama with those things. that don't punish folks working two or three jobs trying to make it but create a path for opportunity. the intent of this goes unfortunately in the opposite direction. >> mr. chairman a brief response? one minute? >> you'll get half a minute before we vote. >> okay. half a minute before we vote. we won't vote yet stack the votes for later. they get two people and i get one. >> right. that's fair. >> you get three minutes and we get two minutes. >> okay. >> they've gone to three people you might have got an yes.

>> now we'll go to senator sanders. >> thank you very much. >> i accept the goal of three and two. that's a fair limit on time, i suppose. suppose. >> mr. chairman, the amendment i'm offering now address, i think, some of the significant problems facing our country. i doubt that there's any person around this table or very few americans who do not understand that our infrastructure, roads bridges, water systems, wastewater plants, airports levees dams in this country are crumbling. we spent half of what europe does on infrastructure and significantly less than china. today, the world economic forum ranks our overall infrastructure at 12th in the world. we used to lead the world. we are now in 12th place. i hear many of my republicans friends and all of us talking about what kind of debt we leave to our kids. you know what, when your

infrastructure is crumbling and when the american society for civil engineers tells us we need over 3 trillion$3 trillion investment if we don't deal with it now we're leaving that debt to our kids as well. i think we can agree we need infrastructure significant efforts to rebuild our crumbling infrastructure. when we do that, we do something also very important getting to senator sessions point. that is today, real unemployment in this country is not 5 1/2%. if you count those people given up looking for work or working part-time, it is 11%. it is higher among young people and very very high in the construction industry. it seems to me now is the time to put city councilsubstantial funding into rebuilding our crumbling infrastructure and make our system more efficient and productive at the same time, create millions of decent paying

jobs. this is good for the economy good for the country and good for our future. i would hope we can have anonymous support for an effort to put people back to work at good wages while we rebuild our crumbling infrastructure. that's what this amendment is about. about. >> i guess we'd have to take just about the same approach you did on the last one, the title sounds good but the details get into some problems. i don't think there are any of us that aren't interested in increasing the infrastructure, we're just interested in increasing the infrastructure in a logical way that's paid for. that's what a budget neutral deficit does. so senator portman. >> it was interesting because ranking member sanders talked about world rankings we were 12th in the world on

infrastructure -- >> i'm sorry? >> you said we were 12th in the world now on our infrastructure. there's another world ranking put out by the world bank and it says we are 41st now in the country by the world bank and it says that we are 41st now on our ability to get a permit for the construction project. in other words to get a green light something. and we have bipartisan legislation to address that, senator casse kill and myself. i see you've got solutions here on tax loopholes and so on and there may be opportunities to have tax reform that includes some funding for infrastructure, but we've also got to look at this issue and this is why the building trades council supports others how do we green light something? whether it's an energy project solar, energy and gas, it just takes so long and there's so many liability issues that discourage investment in america versus other places. we've got lots of testimony on

that including a hearing last year, so i hope that the member of the committee will look at that legislation as one way to help get our infrastructure back on track. >> using some additional time here i would mention we have a deficit neutral transportation built into the resolution. and it doesn't have to be done through tax increases as this one does. >> i think i have a little bit of time left on my national remarks. this is paid for by one of the tax scandals facing this country. and that is we are losing at least $100 billion every single year. because large corporations and the wealthiest people in this country are pocketing their pockets in the cayman islands and bermuda and paying zero in federal income tax so we should eliminate those conditions, put that money into rebuilding our crumbling infrastructure and

create millions of jobs. that's what this proposal does. zpl i hope that the tax reform folks that are working on this for both sides of the aisle can handle that and i think they can. that's where the appropriate action would be for that sort of thing. senator grassley, do you have an amendment amendment? >> this would be number one. cosponsored by senator ayotte. this will establish a spending neutral reserve fund to reform and improve and enhance 529 college savings plans. many of my colleagues an i were taken back by the president putting forward a proposal in his budget to tax 529 accounts. the president had to quickly backtrack on his proposal based

on prexzexpressed concerns from across the political spectrum. i believe the big reason it was met with disapproval is that we all know first habd through communications with our constituent that is the typical family with 5.9 accounts is a family with modest means. i have some statistics on that. an average, on a national average, the average account balance is under 21,000 and for my iowans who hold 529s, the balance is lower than 18,000. i was pleased to be able to work with senator casey on a bipartisan bill that reaffirms congress' support for college savings. this bill is the basis for my amendment today. it would make three important yet very modest reforms. to 529 plans.

it would permit 529 funds to be used to pufs a computer as other required educational materials that can be paid for from 529. it eliminates an unnecessary aggregation rule that increases paper work and costs on plan administrators, that's the first two reasons. the third and last reason is the bill would exempt any refund tuition from income tax or the 10% penalty tax so long as the funds are redeposited in a 529 account within 60 days and if you think that that, the necessity of that would be somebody starting in september, got sick in october, then if they had to drop out of school, the remaining funds could be

taxed and if you put them back in the 529 account, they can be -- privileges. these changes will help keep administrative costs low and provide little extra incentive for parents to put money away for child's education. in addition to senator casey, my bill is cosponsored by throw democratic finance committee members. and four republican finance committee members. the same bill has passed the house of representatives by a vote of 41-20. so i hope my colleagues will support to send to college savings. thank you, mr. chairman. >> rebuttal. >> i think mr. chairman senator grassley's amendment represents the first appearance in a budget mark up of something called a spending neutral reserve fund.

and we had a very instructive comment from senator king yesterday, pointing out that if you want to address the deficit, we have a considerable number of tools to do so. we can cut spending and have cut a lot of spend ng the course of the past years. we can also raise revenues by closing some smell li loopholes that are on their face, very hard to justify. we can make improvements in health care, which i think both parties have agreed is the real driver and we can make investments to grow the roads infrastructure, better facilities, trains all the things that a modern economy needs. by focusing on spending alone, i think we take our eye off the ball. and so i will categorically vote against everything that is a spending neutral reserve fund because i think it misses the

picture that senator king so well laid out for us. if this were a deficit neutral reserve fund, fine. i think there are plenty of areas i think i'd support senator sessions amendment because he just made because i think these are conversations worth having even if i disagree on where the conversation might go, but when you start and say the only thing we're going look at are spending cuts, i will vote no on this. >> thank you. your side. >> yeah. >> one more. >> when we talk about the economy, there are a couple of important factors. one, the need for employment -- to create millions of jobs and number two, wages are much too low. we have many many millions of working people.

in my state people are working 40, 50 60 hours a week, but their wages are so low and many don't have decent health care, they're really strugging to keep their heads above water. satly, the federal minimum wage today pays only a little over $15,000 a year. that is nearly $1,000 below the poverty threshold for a single parent. since 1968, the real value of the federal minimum wage has fallen by close to 30%. if it had kept up with inflation since 1968 it would be worth at least 10.10 per hour today, so the amendment i'm offer sg a deficit reserve fund amendment. which substantially raises the minimum wage. and what it says to people all over this country that if you're

going to work 40 hours a week or more you are not going to live many poverty. i think as every person around this room knows, there is widespread support for this concept. in those states where the issue has been placed on the ballot, even in conservative states, it has won overwhelmingly and what people understand is you cannot live on $15,000 a year. you can't bripgng up a family. you can't pay rent. you can't deal with health care, child care, if you're earning a starvation, minimum wage of seven and a quarter, so, what this amendment says to millions of working people we understand your struggle. we're going to help a little bit by raising the minimum wage substantially so that when you work 40 hours a week you can live in dignity. and that's what this amendment is about.

>> having been through a number of these debates now the last time was when senator kennedy was with us and there was a raise in the minimum wage but one of the substantial points that is always brought up is that we have higher unemployment as you mentioned, underemployment, we've got a whole bunch of problems with employment right now and beginning wage is minimum wage and beginning skills is the reason for those minimum wages. and what we need to do is increase the skills, which we've given the opportunity through the workforce investment opportunity act i've had discussions with some people who were very offended when the other side referred to their jobs as dead end jobs. i'm visiting with a person who called it that and the person next to me said i work at burger ki