universal coverage. now, some people who have health insurance and are sitting well in their own financial circumstances wonder why should i care about this? this doesn't affect me. this doesn't affect my family. . but the reality is that each one of us in this country pays a hidden tax right now of $1,200 a year so that people with no health insurance who go to the hospital emergency room and will be given treatment because those hospitals cannot turn them away, somebody pays for that care. and we all pay for it in the form of higher tax burdens and in the form of higher insurance premiums for the coverage that we have. so, that's why this issue is so compelling and it's something that we have to address and the sooner we address it, the better. the reason why it affects us all is because seven out of every 10 cents spent on health care goes

to cover chronic diseases. things like diabetes and obesity and all of the complications that can come from them, including con jesstive heart failure, high blood -- con jesstive heart failure, -- congestive heart failure, high blood pressure. the thing about chronic diseases is this, most of them are preventable through education and early intervention. and that's why our system right now is broken. because we pay for health care on a fee for services basis which means if you get sick and you seek medical treatment, we will pay for that treatment. but we don't provide incentives to individuals to get healthy before they need a doctor or have to go to the hospital. and that's why a national health care policy that makes sense has to emphasize prevention and wellness.

that has to be one of the cornerstones of how we reduce that enormous burden of chronic disease in this country. so let me start by briefly reviewing the pop us will caucus health care reform -- populous caucus health care reform principles and then i'll talk more about the details of each one. the first goal of the populous caucus in addressing health care is providing more affordable health care and we recommend a values system in this health care bill that ensures that every american has access to affordable, quality health care coverage. now that sounds simple in theory. in reality it is a challenge that has faced this country since its founding. the second component of our health care reform principles for the populous caucus center around choices for families. populous values. the first aspect of our values for health care reform under choices for family is, keep your coverage if you like it, and

that is included in the house version of the health care reform bill. it allows consumers to keep their courage coverage if they like it. so if -- current coverage if you like it. so, if you have an employer who's currently providing you high quality health care at an affordable price, maybe a company like john deere which has -- employs many people in the first district of iowa. nothing in this health care reform bill is going to change your ability to keep that coverage. if you like it, you get to keep it. second, one of the most important factors in choices for families is no discrimination. and you have to have a populous value that says, in insurance coverage you have to eliminate discrimination that allows insurance companies to exclude people from coverage based upon pre-existing conditions. now we know this is an enormous problem in many different ways. there are millions of americans

who are denied health insurance coverage right now because of pre-existing conditions. i have a nephew who lives in malcolm, iowa, he has a young son named tucker and when tucker was a year and -- was 1 1/2 years, he was diagnosed with liver cancer and he was very, very fortunate that he was diagnosed and had an opportunity to have 2/3 of his liver removed at a very young age to save his life. but tucker also faces a very bleak future because he has a long history, a long life of expensive medical care ahead of him. many of the existing health care policies have a cap on lifetime benefits and once you meet that cap, you get no more coverage, no matter how sick you are, no matter how old are you, no matter what your medical needs are. and if you have been diagnosed

with a serious disease like liver cancer and your family wants to move or your parents want to look at other job opportunities, right now there's very little chance that you're going to be able to make that switch and get coverage because they will write an exclusion in the policy based upon pre-existing conditions and say we're not going to cover you because you have this expensive treatment. that's one of the major problems with health care in america today. and it's just not on access to care. it has enormous implications for employers and employees. because right now in this country literally hundreds of thousands if not millions of workers are working in jobs they don't like and the only reason they're there is because those jobs offer them some level of health care coverage. and they know that if they leave the job they have there's a very

good chance that a family member, a loved one won't be able to get coverage under a new plan at a new employer because of pre-existing conditions. and this bill that we are considering in the house right now eliminates discrimination in health care coverage based upon pre-existing conditions. one of the other very important elements of our populous caucus family values emphasis is including a robust and meaningful public health insurance option that operates on a level playing field with private insurance companies, increases consumer choice through a public option for insurance coverage, that does these things and these are critical achievements. one, competes on a level playing field. two, maintains minimal levels of coverage that ensure quality care for its enrollees. and in the house plan there are three basic forms of coverage

that will be available. a basic plan, an enhanced plan and a premium plan. and then there will also be something called a premium plus plan. and all of those plans will provide a minimal level of coverage designed to provide basic and emergency types of health care coverage for every person in america. another component that emphasizes these family values of the populous caucus is that this public plan option must reimburse health care providers adequately and equitably and we're going to spend some time talking about what that means. another family value in the populous caucus health care package, it helps address current geographic disparities in health care. this is one of the most significant challenges that we face and one of the most significant problems with our

health care delivery system. another key family value is that the existing infrastructure of medicare, which will be used under the current plan, a medicare plus 5% reare imbursement payment system, that that -- reimbursement payment system, that that has to be used to create a provider network but it should only use medicare as long as improvements are made in the way that medicare's reimbursement structure and geographic disparity issues are discussed and i'm going to be spending time talking about the challenges that we face and the problems we currently have in medicare reimbursement. now i want to move on to another key component of the populous caucus health care values, saving taxpayers money. every medical economist who looks at our current health care delivery system is in agreement that the number one problem is a problem called overutization.

using too many medical services -- overutilization. using too many medical services that aren't necessary and result in worse outcomes. we have to address the problem of overutilization of care. it creates unnecessary costs and adds hundreds of billions of dollars and can lead to harmful medical errors. now, medical economists at the dart moth at lass project and places like the commonwealth fund who have looked at this estimate that every year in our health care delivery system we lose between $500 billion and $700 billion every year due to year lootlyization. and they have also analyzed patient outcomes arising from that overutilization. and the figures are shocking. they estimate that every year 30,000 people die in this country because of too much medicine. that exposes them to risks and

actually results in their death. there are hundreds of thousands more who are injured because of overutilization and it's not achieving the desired goal of medicine which is to cure patients who need help and to provide it in a meaningful fashion. one of the other concerns about saving taxpayer money is emphasizing prevention and quality care. we've talked about that, we need to shift to a health care delivery system that moves toward incentives toward high quality care prevention, nutrition and wellness. and we have to reform medicare part d, the drug package for seniors and people on medicare. and one of the most essential components of that is to clos the doughnut hole, give medicare the ability to negotiate with drug manufacturers and seek rebates for all medicare beneficiaries from those pharmaceutical manufacturers.

now, i want to talk for a moment about this problem that i mentioned called geographic disparities and payment for health care. this chart was prepared by the commonwealth fund to focus on the relationship between the quality of care and medicare spending. so, on this bottom axis, it provides cost numbers to show annual medicare spending per beneficiary in dollar amounts for every state in the country. and places them on the chart according to that access -- axis. the vertical axis has an overall quality ranking and those quality rankings are taken directly from medicare administrative claims data and the medicare quality improvement organization's program data. so it's information already collected by medicare.

and the chart numbers are shocking in terms of showing the existing disparity in how we pay for medicare and the direct correlation between how much we spend and the quality we get for our medicare dollars. many of white house represent states who are up in the top five to -- 5% -- not top 5% to 10%, but the top five to 10 in rankings, these states right here inside this pink circle, states like new hampshire, vermont, maine, north dakota, iowa, wisconsin, utah, minnesota, oregon and montana are consistently providing the highest quality of care to medicare patients at the lowest cost because they also rank in the bottom five to 10 states in medicare payments per beneficiary.

then contrast that with what we see at this end of the chart. this chart reveals that the most expensive state in terms of what we pay for medicare per patient is the state of louisiana where we pay right now about $8,500 per patient. guess which state is also ranked 50th in terms of quality outcomes? according to medicare data. louisiana. that is the hall mark of an in-- hallmark of an inefficient payment system for health care delivery and it's a symbol of what's wrong with our health care payment system in this country. that's why we have to address this problem of overutilization which is directly driving up these costs, rein in unnecessary and wasteful spending so we can use those savings to pay for a comprehensive health care reform

package that provides access to care for all americans. so i want to move on and talk about some of the stories from my district that have shaped my commitment to making change in health care delivery. since i was elected to congress in 2006 and was sworn in in 2007, i have received almost 12,000 letters and emails on health care. health care is the number one issue that my constituents write to me about and this year alone i've received over 4,000 letters and emails relating to health care. in fact, this small stack represents just a small portion of my constituents who have had serious issues with our health care system. and just in my hand i have over 200 stories from constituents of mine who have taken the time to write to me and explain their frustrations and concerns with

our health care system. these stories are the backdrop and provide the compelling evidence on why we need true health care reform in this country. so let me start with this compelling story from sandy in davenport, iowa, which is right on the mississippi river, beautiful old city in iowa, largest city in the first district. . sandy starts her story with my story is not unlike others. in august of 2007 i was diagnosed with stage three breast cancer, until that time i was rarely ever ill and looked forward to retiring like most other women in their 60's. until january, 21 of 2009, i worked for a company and was employed as an executive assistant to the c.e.o. i raised three children all now educators as a single mom and i

finished a four-year degree at st. ambrose university. in the spring of 2007 i had my usual mammogram and i told the technician i had a sore spot and she made note of it. it came back as no change. as the weeks went by it became more pronounced and painful. and i went to a nurse practitioner who sent me for another mammogram immediately. over time it was discovered that my mammogram test was positive and i received a call at my office with the news that every patient dreads. i'm sorry to tell you that you have cancer. i set up an appointment with the surgeon and with the help of my nurse practitioner i found a wonderful young surgeon, dr. melinda haas of trinity hospital. i met with her. went through all the necessary workup. and later received a follow-up

phone call sailing my cancer was much worse than they thought and i could have cancer in both breasts. they found out the cancer had spread to my lymph nodes and so i began chemo therapy. the beginning of the third week my hair began to fall out in the shower. i shaved my head, bought some caps and scar everybodies, and moved on. i worked throughout the chemo by scheduling time off and going to work when i began to turn the corner from the side effects. in december 26 of 2007 i had bilateral breast surgery to remove both breasts. i made this difficult decision because i didn't want to have the chance of reoccurrence in the other breast. during the surgery, 22 lymph nodes were removed. however 17 of the lymph nodes still had cancer. the feeling hi that morning still gives me chills. my fight wasn't over yet.

i underwent another round of chemotherapy a few weeks after the surgery followed by 36 radiation treatments. i was physically spent and took a medical leave of absence and returned to work in august of 2008 ready to hit the ground running. needless to say i love my job, the people that i worked with and was looking forward to being there until i was old enough to retire. i was so pumped up that i unlocked my office door and prepared for a busy day when i came back to work. about an hour later i had a phone call from a friend in customer service saying their assistant had just been let go. a few minutes later my phone rang and it was my boss asking me to come to the conference room upstairs. what happened is my boss greeted me with tears in her eyes, a big white envelope in front of her. seated at the table was the v.p. of manufacturing and the two of them broke the news to me that

my job had been eliminated. it was only weeks after i had been declared cancer free by the 60-day checkups. i was stunned. they both assured me it had nothing to do with my performance. the response was predictable. they told me that i would have to leave the building immediately and could return to the office later to pack up my office. everybody in the whole office was very shaken. so now i'm unemployed. i have unemployment insurance and through cobra continue to pay for health insurance on my own. that was-l last through july of 2010. at that point i will have to have some kind of insurance until my 65th birthday in november of 2001. i continue to look for a new position. i have applied for several and may try to work part-time to help pay for the cobra coverage.

i have done research about getting further coverage and i have found can i not get coverage due to my pre-existing condition. there's some kind of stopgap health coverage through h.i.p. of iowa. however since i paid health insurance premiums for nearly 20 years, i feel i should be able to keep it until i'm old enough for medicare. health care reform is essential to all americans. the time is now and i'm willing to help tell my story to get the bill passed. here's another story. this one's from ellie in iowa, in northeast iowa. she is 1-year-old and has been diagnosed with cystic fibrosis. her family had cobra insurance which is an extension of your insurance after you leave your job until you find more employment, from her dad's former employer in minnesota. her dad's employer offered a more affordable plan to the family but when they realized

the family resided in iowa, they reversed the offer. because of ellie's diagnosis, this family was unable to get private insurance in iowa. her mother quit her job so that their income would decrease enough to get her on medicare -- medicaid. quite understandably her parents are frustrated because they believed they shouldn't have to quit their jobs to get health care coverage for their daughter. they believe that insurance needs to be accessible for all children, including those with chronic health conditions. and that is one of the number one objectives of the health care reform bill we are considering right now. here's another contact i got from mark in davenport. mark was doing insulation in his mother's home so she could take advantage of some energy savings rebates which is something every american should be encouraged to do. unfortunately while mark was

putting the insulation in his mother's home, he fell through the ceiling and severely injured himself suffering a collapsed lung, broken ribs, and dislocating most of the ribs from his vertebrae. he was lucky to survive but he had no health insurance because he was a self-employed private contractor. his medical bills were over $20,000 and because of those high costs, he was forced to file for bankruptcy so he could get out from under his debts. here's another contact from cynthia in denver, iowa, who 3 1/2 years ago lost her husband to diabetes and heart disease. since then she's had to deal with major debts because they, like millions of americans, did not have health insurance. when they tried to get coverage, they were told cause of her husband's pre-existing condition they would have to pay for premiums for a year without

coverage for those claims. she continues to be without coverage because she's still paying off the bills from her husband's doctor and hospital costs. here's another story from gus in waiverly. his daughter jamie lives in des moines and works for a life insurance company. jamie, like many americans, has certificate brie bral palsy and is confined full-time to a chair. even with her limitations, jamie chooses to work and the only type of insurance help that she gets is through a miller medical trust that allows her to work but she can't work full-time. because of the limitations of that trust, she has lost a much deserved promotion, she hasn't taken a pay raise in years so she could choose to work and be be a tax paying citizen. many of her advisors and social workers have told her that she

should just go on full disability and her benefits would increase and be easy to get. since she qualifies as a quadraplegic. and yet jamie is a perfect example of the american spirit. she wants to work and she continues to work and does everything she can and her father doesn't understand why we would punish people like jamie who want to work but still need critical access to health care. let them earn more money that pays more taxes and help them support their own services. who could argue with that? that's what we want to do with comprehensive meaningful health care that addresses these populist caucus values. here's another letter from julie in seeder falls -- creedar falls, iowa. several yearsing a when she was moag her lawn she was severely

injured when a bolt on the lawn mower cut her arm. she had to go to the emergency room for stitches. later she learned that her emergency room visit was not covered by her health care coverage because according to them she should have waited to her arm when the doctor's office was opened instead of visiting the emergency room. given the severity of her wound, she couldn't have waited until monday to see her doctor. the emergency room was the only option available to her at the time. jamie -- julie believes that the problem with health insurance companies is they look for any excuse to deny payment for an existing claim. this is a letter from nick in davenport who was born with congenital heart disease. nick has had three open heart surgeries. the first at age three weeks, the second at age 16, and the last at age 45. he owns his own company and

employs 11 people and provides group health insurance to his employees because it's the right thing to do, but also because he can't buy an individual health insurance policy with his congenital heart disease because it would be a pre-existing condition. he says we are charged at the highest rate possible and our rates go up by the maximum amount allowed per year because of my heart disease. the past two years we have risen to 60% and 75% increases. in order to keep providing insurance to my employees, i will have to drop out of the program next year to keep the rates manageable. this story is from randall from leclair, iowa. his wife died from pancreatic cancer in august, 2008, at the age of 56. and like many couples, during her illness randall had his own health emergency.

he was diagnosed with prostate cancer and as he described it, we were launch food a health care arena impact dramatically by how our health insurance performed. randall like many americans tells me that he was reasonably satisfied before this point with how his health care insurance carrier had functioned. his wife was a registered nurse so she was a very good medical consumer. he was in the property and casualty insurance business and been a certified paramedic in the state of iowa for the last 25 years. and as he notes, this would suggest that beth and i were above average medical consumers. it also means according to his background and his business, including a b.a. with a business administration degree from simpson college that he would have been an above average medical insurance consumer.

here's the problem. even though their health care plan said it had a maximum out-of-pocket of $1,500 per person in network and $3,000 per person out of network, we paid just over $10,000 out of pocket during calendar year 2008 for our health care. here's how randall describes it. you see, one has to read the fine print to find out doctor office co-pays, prescription co-pays, and emergency co-pays do not fall under the maximum out-of-pocket expenses referred to in the bold print. while beth's care did not include an out-of-pocket network expense -- hers did, mine did not, which means we spent an additional $5,500 of out-of-pocket items that were not included in our limits.

we are fortunate. we could pay the additional although not easy but some cannot. for some, the situation could be financially devastating and we know that by the high number of medical expense related bankruptcies we see every year. this should be clear and more concise as it can have a substantial impact on the financial futures of many citizens. randall, you are absolutely right and one of the reasons why i introduced a bill to incorporate plain language into every insurance policy sold under the national health insurance exchange that's part of this health care bill is because i have had my own experience, not just as a consumer of health care, but helping clients in the 23 years i practiced law before i came here, who had disputes with

their insurance companies over coverage benefits. and one of the things i learned is that when you force insurance companies to write those policies in language that insurers can understand, you eliminate the type of confusion that highly sophisticated health care consumers like randall and beth brought to the table and still wound up with unfair treatment based upon language in their policy that was difficult to understand and not part of the clearly stated coverage. . i'm very proud of the fact that my plain language amendment is incorporated in the american health care bill that we are currently considering in the house of representatives. and i want american health consumers like randall and --

beth to be able to look at that policy and see it written in language that is specifically intended to be understood by them so they have a deep appreciation for what they have and they also have the ability to go into that national health insurance exchange and compare it to other policies that provide the same basic types of coverage and say, is this policy a better policy for me than the one next to it? does it provide better coverage? does it have fewer exclusions? does it cost less and will it guarantee me the access to health care that my family needs? that's one of the major focuses of the populous values appropriation -- approach to health care reform. so what else is important? well, we spent time talking about how we can move from a

system that rewards volume of medical care to a new model, a new system, that rewards value outcomes. and we pay for performance. and i am very proud to be introducing an amendment along with my friends, lee terry from nebraska, a republican, and batter stupak from michigan, who is the chair of the oversight and investigations committee on the energy and commerce committee. the medicare payment improvement amendment, which has a very simple goal, to increase the quality of health care in america and create long-term substantial cost savings. so what will this amendment do? well, it starts by restructuring the medicare payment system that i talked about earlier by finally adding an incentive for physicians to provide high quality care and decreased costs and the way the bill does it, it adds a figure that measures

value and includes it in the medicare reimbursement equation. that value figure measures both quality of care and the cost of care, two components that directly relate to the overutilization of medical services that drives up our national health care costs. one of the things we know is that regions that provide high quality carat low cost will see their medicare reimbursements improve and increase because it's a reward for providing value in the system. in contrast, regions that provide low quality carat high cost will see their reimbursements decrease. now this may come as a shock to most people, but that's the way an economic system is supposed to work. that you provide incentives so that people in a marketplace who provide the highest quality at

the lowest cost will create the most demand. and drive consumers to their product or services. every student of economics 101 can tell you that's the way economic models are supposed to work in this country. but our health care payments system is flawed and it's reflected in this chart and it's reflected in the hundreds of billions of dollars of waste in the system. now one of the things that we can do is to shift from a fee for service reimbursement model to one that rewards quality and shifts the focus to provide efficient care. now, a lot of people mistakenly believe that when you're talking about efficiencies you're only talking about cutting cost. that is not what i'm talking about and that is not what the populous caucus values are based upon. because true efficiency and a

health care delivery system is a system that consistently provides the lowest possible cost for the highest possible value over the lifetime of a patient's care. that is efficiency in health care delivery. so this bill, the braley-terry-stupak medicare improvement amendment accomplishes that and provides a transition from our current quantity-based system to a value-based system. how do we do that? well, here's how. our amendment instructs the secretary of health and human services to measure quality and cost for hospital fee schedule areas, which have already been established, or other more narrow areas if the secretary deems that appropriate. that could include hospital referral regions or even on down to the individual provider.

two, our amendment instructs the secretary to create a quality component to measure quality and to do that in consultation with the already existing agency for health care quality and research and an advisory group consisting of health care providers, health care plans and other government agencies and other knowledgeable entities including consumer groups who have knowledge about how to build efficiency. and reward value. three, the braley-terry-stupak medicare improvement amendment ensures an open and transparent process in the development of this quality opponent. and during some of our conversations about how you could possibly do this, we hear concerns expressed from people in this part of the country, you're not taking into account this factor. we hear concerns expressed from people in another part of the country, you're not taking into account this factor.

well, the harsh reality is that the medical economists who have been studying this issue for decades have already looked at every possible racial, ethnic, socioeconomic, regional, cost of living, cost of workforce factor and can find nothing to justify the reimbursement disparities we see right now. to give you an example of that, one of the most significant factors contributing to overutilization in this country is what we pay for end of life care. and one of the things that researchers have discovered is spending more for end of life care does not yield better results and does not make people more satisfied and their families more satisfied with the care that they got and in fact the compact opposite is true. so let's talk about geographic

disparities and how it relates to this problem ofover utilization. -- of overutilization. researchers and medical economists who look at the last two years of spending in the life of medicare patients at garfield hospital in los angeles concluded that on average we were spending $106,000 per medicare patient in the last got years -- two years of their life. that was contrasted with the mayo clinic in rochester, minnesota, two hours from where i live. another world class medical facility, a teaching hospital. at the mayo clinic patients in their last two years of life, medicare paid on average $33,000 , a threefold decrease from what's being spent in los

angeles. and you can look at all those other factors i laid out earlier and none of them can justify that kind of a payment disparity. and in fact when you look at the regions of the country that are spending the most on those last two years of patient care in a patient's life and you look at the quality assessments that are used, you'll learn that patients in the areas that spend much less are much more pleased with their quality of life at that in stage phase because more attention is placed to providing hospice care, providing a way for those patients to interact with their family on a meaningful basis, to be able to return to their homes and spend as much time there as possible, without a lot of necessary tests and medical procedures that are very costly and do very little to improve the length of the patient's life or the quality of their life. and that's why this bill, this

amendment, the braley-terry-stupak medicare improvement amendment focuses on how we motivate health care providers to get better outcomes, spend less and get better quality care. so going back to my example, according to the 17 existing quality factors that medicare uses to assess facilities, the mayo clinic ranked above garfield hospital in every single one of those quality assessments. and that is what we're focusing on. quality outcomes at the best possible price over the life of the patient. that is efficiency. another component of the braley-terry-stupak medicare improvement amendment is that it instructs the secretary to create a cost component, to measure cost based upon the hospital fee schedule area or

other more narrow areas. and that cost component is the cost per medicare beneficiary compared to a national average. which should be a reasonable thing for anybody looking at how we spend money and how you decide who is outside the norm, who's below the norm and whether they're getting the types of results that they should. the braley-terry-stupak medicare improvement amendment also includes a risk adjuster in determining the cost component. this insurance -- ensures that any area with a significant at-risk population, high rates of obesity, other socioeconomic risk factors that build into the system, shall have them taken into account when determining the cost for that area. and then the sixth component is to provide a transitional period from 2012 to 12014 when this quality cost -- 2014 when this

quality cost figure is applied in place of the current work geographic practice index. the work gypsy as it's known is currently used to measure the value of a physician's work only through the amount of inputs. our amendment shifts the muff sis to a measure of value that is quality and cost. so you may be asking yourself, well, how in the world do you measure for quality in a system that has so many variables? here's how the braley-terry-stupak medicare improvement amendment measures quality. first, we look at health outcomes and the health status for the entire medicare population. we also focus on patient safety, which could fill up another hour by itself. why? because the institutes of medicine have published three seminal reports on patient

safety and have identified the enormous problem in this country with patient safety. in fact, the institutes estimated that every year as many as 98,000 patients die because of preventable errors. this is the institute of medicine. which is not a partisan entity. they also estimate that each year over 1.5 million medication errors occur and that every hospital patient is subjected to some type of a medication error every day they're in the hospital. patient satisfaction this gets back to what we were talking about with end of life treatment. increasingly how patients receive care and respond to care is directly related to how they perceive their access and quality of care. it also measures hospital re-admission rates because we know that one of the biggest

drivers of the cost is patients who were discharged from the hospital and are later readmitted for a condition that may have been prevented if there had been better information communicated to them or better coordination of care upon their discharge. another factor we look at is mortality related it to health care. are patients dying in greater numbers as a complication of a specific problem? we know, for example, that hospital infections are an enormous problem. they lead to many hospital readmissions, prolonged patient stays, increased cost of care and in the worst outcomes, death. we also know that many hospital infections are entirely preventable, from standard, simple precautions like hand washing procedures that are not only adopted but are enforced.

and then another thing that we use to measure quality is other items determined by the department of health and human services. and if the advisory group has other recommendations, we certainly want the secretary to take those into account. . how do you measure the cost? they are under the medicare expenditures under part a for that area and also allows the secretary to use other methods if appropriate. so how much cost savings are we talking about? hundreds of billions of dollars. we know that by changing the incentives away from a fee-for-service to a fee-for-high quality and low cost model we create incentives for health care providers to improve their outcomes, decrease their cost, and that we can use those cost savings to build a health care system that truly is universal and helps us all.

nobody said this challenge would be easy. and yet those of us who are committed to comprehensive universal health care that is paid for, that is reliable, affordable, efficient, and high quality are committed to spending the time necessary to improve this bill and make it work the way it needs to work, it has to work if we are to function as a country. so i ask you to join the populist caucus, call your representative or your senator and make sure that they know how important health care is to you just the way my constituents called me, wrote me, sent me emails. this is a challenge that the time has come for bold action. americans deserve better.

americans demand better. and it is our responsibility in this chamber, mr. speaker, to finally deliver on the promise of health care for all that is high in quality and low in cost. with that i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the chair will recognize the gentleman from iowa for a motion. mr. braley: mr. speaker, at this time i would move to adjourn. the speaker pro tempore: the question is on the motion to adjourn. so many as are in favor say aye. those opposed, no. the ayes have it. the motion is agreed to. accordingly, the house stands adjourned until 10:00

members debated a number of bills under the suspension of the roles. the house plans more work on fiscal 2010 spending roles. more live house coverage when the gavel comes down here on c- span. up next on c-span, some of today's development on health care policies. we will hear from senator max baucus, the finance committee chairman, talking about the ongoing negotiations on health care legislation. in comments from president obama at the white house and mitch mcconnell on the senate floor. here is senator baucus.

we made significant progress today in an afternoon meeting that started at 3:00. if it no longer than three hours. we brought in the head of the joint committee on tax so that we could discuss offsets. he was very helpful. i mentioned this morning we broadened insurance actuaries said that we could understand the interplay of its subsidies at the been at that level and other issues. this afternoon it was an expert who could give us some advice. there were a couple of reference points.

we spent a lot of time on the cost curve, potential offsets of some significance. and also the cell -- a second reference point is to be designated -- deficit neutral 14 years. we have a high level of comfort and better understanding, not to be completely resolved on the offset issues, but a higher level of comfort. we will be coming back tomorrow after 10:00 and he will be there as we test some ideas -- as he replies and some ideas that we gave him. i like this man. it is very comforting that ask questions and get some answers. he gets back to us quite quickly.

he is going to go back to his people again tonight for further refinement. we are making headway. i talk to the president today just a half-hour or so ago. he asked me how things are going and i explained and he said great. it sounds like we're moving along. we are making headway in progress. the same positive attitude in the room, morning to get this done, and we agree -- both sides of the aisle, and not to suggest that there -- we're going to get this put together an active at about this. >> also grumbling from today --

the republicans that -- the democrats that the white house is not giving clear direction. could you address that? >> i spoke to the president today and gave him a progress report. it was very amicable, warm, conversation, we talked a little bit but -- i was very comforted. >> did you ask him about specific policies? >> i asked him about a couple. it was a very constructive conversation. he said that he would find that encouraging. it was very good. >> that the president expressed that he was happy about the timing? >> he did not express that you one way or the other nor did he applied. he asked how it was moving along.

he seemed very encouraged. >> senator kerry has mentioned the idea of a premium tax as a new fund raiser. is that something that you discussed today that would benefit the cost curve? >> that is an idea that is on the table. if we are looking at it among many but it is one idea that is under consideration. i don't want to get into -- i think that that would help. but i do not want to get into specifics at this point. you never know where we're going end up. we're getting very close. i think we will be a little less than $1 trillion. he thank you, everybody. after the meeting tomorrow, we'll be further down the road. i was hoping that we would, but the senators could not make it. [unintelligible] i am not going answer that one. thanks.

yet, thanks. >> now president of hamas' comments today on health care andd the f-22. he spoke to reporters in the rose garden for about 20 minutes. >> good afternoon, everybody. before i talk about the progress we're making on health insurance reform, i want to save a few words about an important but it just a place in congress. long before i took this office i argued that meeting our president should -- meeting our greatest challenges would mean changing the way that we do business in a washington. part of that change would be eliminating waste and inefficiency in our defense projects, off reform that would better protect our nation, our troops, and save taxpayers tens of billions of dollars.

as commander-in-chief i will do whatever it takes to defend the american people. this is why we have increased the funding for our military and why we will always gb our men and women in uniform the equipment that they need to it get the job done. but i reject the notion that we have to waste billions of taxpayer dollars on an outdated and unnecessary defense projects to keep this nation secure. i've taken steps to break with -- to greatly reduce no bid contracts. i have signed overwhelmingly bipartisan legislation to eliminate overruns before they spiral out of control. i am grateful that the senate budget against a $1.70 billion dollars to buy f-22 fighter jets that military experts and members of both parties say we do not need. at time when we are fighting two wars and facing a serious deficit, this would have been an

inexcusable waste of money. every dollar of waste in our defense budget is a dollar we cannot spend to support our troops or prepare for future threats or protect the american people. our budget is a zero sum game, and that more money goes to these jets, it is our troops and citizens to lose. -- who lose. i when i think every member of congress that the politicians decide to do what is right for the american people and the american taxpayers. i want to particularly thank senators 11 and mccain for making this happen. i am also said that health care costs are the biggest drivers of our deficit. no one disputes that. i'm looking for to meeting with members of congress who were working to pass health insurance reform that will bring down long-term costs, expand coverage, and provide more choice. i know that there are those in this town that openly declare their intention to block reform.

it as a familiar washington script that we have seen many times before. they would rather score political points than offer relief to americans who have seen premiums double and cost growth three times faster than wages. they would maintain a system that works for the insurance and drug companies while becoming increasingly unaffordable for families and for businesses. but there are many others who are working hard to address this growing crisis. i know that there is a tendency in washington to accentuate differences instead of underscoring common ground. but we are closer than ever before to the reform that the american people need. we are going to get the job done. i have urged congress to act on the health care reform bill, making its way to the respective committees, reflecting the hard earned consensus about how to move forward. let me let out a substantial common ground in the current bills. we have agreed that our health

reform bill will extend coverage in include unprecedented insurance protections for the american people. under each of these bills you will not be night -- be denied coverage if you got pre-existing medical condition. you will not lose your health care if you change jobs, if you lose your job, or if you start a business. if you will not lose your insurance if you get sick. we have agreed that our health reform bill will support choice. americans will be able to compare the price and quality of different plans and pick the plan that they've won. if you like your current plan, you will be able to keep that. let me repeat that -- if you like your plan, if you will be able to keep it. each bill provides for a public option that will keep insurance companies on as, ensuring that competition necessary to make coverage affordable. we agree that it will emphasize prevention and wellness by investing in programs that help

americans live a healthier lives. we will increase the competitiveness of our country. we have agreed that are health reform bill pro will protect american families from financial catastrophe if they get sick. that is why each of these bills has out a pocket lemons that will help ensure that families do not go -- out-of-pocket limits that will help ensure that families do not go bankrupt. it will include dramatic measures to cut costs while improving quality. each of these bills improved oversight on cracking down on waste. each will help reduce giveaways to insurance companies in medicare. each of these bills will provide incentives so that patients will get the best care, not just the most expensive care. the consent said that we have forged is not limited to congress. we forced a level of consensus on health care that has never been reached in the history of this country. health care providers have

agreed to do their part to help curb the rate of growth. the pharmaceutical companies have agreed to spending limits that will help make a prescription drug more affordable the seniors. the american nurses association and the american medical association will represent millions of nurses and doctors, and they have announced their support for reform. with travel long and hard to reach this point. i know that we have further to go. but i have to say that the american people are absolutely clear that this will not be easy but that the road that we have traveled does not to stretch back through the six months of my administration. it stretches back year after year, decade after decade, through all the times that washington has failed to tackle this problem. time and again we have heard excuses to delay and defeat reform. time and again the american people have suffered because

people in washington play the politics of the moment instead of putting the interest of the american people first. if that is how we ended up with premiums rising three times faster than wages. that is how we ended up at businesses choosing between shedding benefits and shutting their doors. we have had huge gaps in coverage. that is the status quo. that is what we have right now. at the american people understand that the status quo is unacceptable. if they do not care who is up for the was down politically in washington. they care about what is going on in their lives. they do not care about the latest line of political attack. if they care about whether their families will be crushed by rising premiums, but the businesses they work for will have to cut jobs, or whether their children will be saddled with debt. i understand that some will talk -- if some will strive to delay action until the special interests can kill lead while others are scoring political points. we have done that before.

if we can choose to follow that playbook again and we will never get over the goal line and face an even greater crisis in the years to come. that is one path that we can travel. or we can come together and insist that this time it will be different. we can choose action over inaction, progress of the politics of the moment, we can build on the extraordinary common ground that can -- has been done, and we can do the hard work that will finally pass the reform that the american people deserve. when we do pass this bill, history will not record the demands for endless debate or debates in the news cycle. it will record the hard work done by the met -- the members of congress to pass the bill. if people who sent us here to washington insisted upon change. that is the work that we have come here to do and i look forward to working with congress in the days ahead to getting the job done. thank you, everybody. [captioning performed by

national captioning institute] [captions copyright national cable satellite corp. 2009] >> also today, the president met with democratic members of the house congress committee to discuss the health care legislation. the group included members of the blue dog coalition, a group of conservative democrats who have expressed concerns about costs of the president's health- care proposal. the congressman talk to reporters following their white house meeting. the members of the energy and commerce committee, also members of the blue dogs, had great concerns over the cost of the legislation and how it would be deficit neutral. that is a few that is not just there's but ours as well. the rest of the democrats on the committee. the president expressed to us

his great strong firm commitment that the legislation that he signs will have to be deficit neutral and will hold down the costs in the future. how to call on congressman wright -- mike ross u.s. and the task force chairman of the blue dog organization. -- is to has been that task force chairman. >> i am one of the seven blue dots on the house energy and commerce committee. we had a very lengthy and good discussion with president obama and his senior members of his staff, as well as chairman waxeman among others. the president indicated that he wanted to see four things accomplished and health care reform. must be deficit neutral. he said it must contain costs and reduce health care inflation. he said that we have got to cover as many people as we

possibly can, making health insurance affordable for them, and that we need ensures reform and we have got to cover pre- existing conditions. we share all those principles and concerns. a meeting with the president lasted for little more than an hour. we talked about ways to bend the cost curve. as you know, health care is growing at twice the rate of inflation. we talked about how to get it growing closer to the rate of inflation. there are a number of potential cost-cutting measures which i think the american people expect it will begin to consider any type of your revenue. they want is to squeeze every ounce of savings that we can out of the current system. that is what we are demanding. there are 10 issues that we're concerned about. cost cutting is first on that list. the more than the hour that we spat with the hour, we focus specifically on cost containment. there are a lot of ideas out of

there, a lot of good negotiations. it was productive. no final decisions are made on cost containment measures because we have to wait for the cbo to score the bill as well as these potential cost-cutting measures. >> now senator minority leader is mitch mcconnell comments on the senate floor. >> mr. president, americans are eager for health care reforms that lower-cost and increase access. . easy for everyone to agree on, such as reforming our medical liability laws, strengthening wellness and prevention programs that would encourage people to make healthy choices like quitting smoking and losing weight, and addressing the needs of small business without imposing new taxes that kill jobs. the administration is taking a different approach to health

care reform, and the more americans learn about it, the more concerned they become. so it's good that the president plans to spend a lot of his time so it's good that the president plans to spend a lot of his time in t administration's plan for reform because people need to know what the administration's plan is. specifically, americans have concern about losing the care they have and spending trillions of dollars for so-called reform that could leave them with worse care than they have now, especially if it's paid for by seniors and small business owners. one thing americans are extremely concerned about is the prospect that they'll be forced off of their current plan as part of a government takeover of health care. despite repeated reassurances, the budget office says that just one section of one of the democratic proposals we have

seen will force 10 million people off their plans. americans do not want a government takeover. they do not want the government to spend trillions of the tax dollar to pay for it, especially if the care they end up with is worse in the care they received and if the money that is spent on these reforms only as to the national debt. both the house and senate reform bills that we have seen would do just that. the director of the congressional budget office has sounded the alarm over the administration's claims that the reforms would cut long-term health-care costs. on the contrary, the administration is reform would actually lead to an increase in

overall cost. concerns like these have been building slowly for weeks. another growing concern in the higher costs in medicaid. at a time of tight budgets, this is something governors from both political parties are not very happy about. new mexico gov. bill richardson has said, and i'm quoting him directly, "i am concerned about the cost issue, particularly the $3 trillion figures being thrown around." expanding medicaid may look like an easy way to expand access, but it will mean passing spending increases for both federal and state taxpayers. this could be devastating blow for many who are struggling to pay the medicaid costs they currently open a -- they

currently owe. the two crew setting targets are the last groups that would be expected, seniors, and small- business owners through higher taxes. to me it is just common sense that in the middle of the recession the last thing we should be doing is raising taxes on small businesses. both bills we have seen would do just that burda under -- would do just that. some would rise as high as roughly 45%. this means that in order to pay for health care reform, democrats would increase the tax rate on some small businesses to about 30% higher than the rate for big corporations. taxes would go up so much that the average combined federal and state tax rate for individuals would be about 52%.

52%, mr. president. let's consider that figure for a moment. in order to pay for health care proposal would not even address of the concerns americans have about access and cost, which might increase overall health- care costs, democrats in the house would raise the average top tax rate in the united states to about 52 is arm. -- 52%. the charge behind me was created by the heritage foundation and appeared last week in the of a " wall street journal, " it shows the bill would raise the top u.s. rate of but even france. of the 30 countries that it measures, only belgium, sweden, and denmark have higher rates. five u.s. states would have tax rates even higher than both belgium and sweden.

the u.s. is in the middle of a recession. we have lost more than 2.5 million jobs since this january. families are losing homes. the last thing they need is a government takeover that kills even more jobs, as the ballooning national debt, increases america's long-term health care costs, and leaves americans pay more for worse here than they now receive. the proposals we have seen are not just incomplete. but they are indefensible. this is a time of spiralling debt and ever increasing job losses. maybe this is why the administration started to insist on an artificial deadline for getting its reform proposals through. we certainly do not need to russians and $1 trillion to enact this flawed proposal -- a recess of $1 trying to enact this law proposal.

healthcare reform is too important to register and get it wrong. we saw what happened when some rust and spent a trillion dollars on an artificial deadline with a stimulus. the american people do not want the same mistake to be made again. instead of setting a three week deadline on legislation that would end up affecting 1/6 of our economy, we should focus on meeting existing deadlines. the mid-session review about unemployment, economic growth, government spending, and the outlook for the deficit, has been released in mid-july. now we are hearing the administration may not release its mid-session review until august. that is after is congress has adjourned.

and they made the decision to close guantanamo by january 2010. the task force on detainee policy will say it will meet the deadline for making recommendations. it seems premature to announce closing guantanamo without knowing where these detainees may be sent. the most recent delay is even more reason for the it is rationed to show -- for the it is rationed to show flexibility. americans want republicans and democrats to enact real health care reform that reduces costs and makes health care more accessible. they do not want a government takeover of the health-care system that cost trillions of dollars. one that leaves them with worse care than they currently have. before the administration rush to spend another trillion

dollars, it needs to slow down and focus on fixing our economy and addressing the issues that it is already falling behind on. i yield the floor. >> on washington journal tomorrow, we will look at the health care debate with sam youngman, dr. ray givens from the mayo clinic, and gene green. we will take your questions on the economy. michael of the "los angeles times" examines the budget agreement between governor schwarzenegger and the state legislature. a local washington journal" is live on c-span at 7:00 a.m. eastern. >> join the conversation on civil rights and race relations with npr and fox and news analyst one of williams' -- juan williams.

>> republicans to to the house floor today to talk about healthcare and the economy. here are some of their speeches and a response by house majority leader steny hoyer. this is 25 minutes. for what purpose does the gentlewoman from north carolina rise? ms. foxx: i ask permission to address the house for one minute, mr. speaker, and to revise and extend my remarks. revise and extend my remarks. their extravagant spending would create jobs. americans are hard working and resilient people. i was excited when i heard from a laid-off constituent of mine from north carolina who was working on starting off -- starting his own people. he is planning on hiring 20 people. if the democrat health care bill becomes law, the new taxes and rules would take a devastating bite out of his ability to grow jobs. he said he would hire only half the workers if this legislation

becomes law. this is a travesty. this congress should be implementing policies that create jobs instead of burdening all entrepreneurs with a job killing taxes and a new government mandates. i yelled back. >-- i yield back. >> i was struck by the chilling similarity between the taxes under the waxman cap and trade tax and this new terrorist attacks of 1930 that economists blame as one of the major factors in the great depression. one of hoover's blunders was the act of 1932. its centerpiece was an increase in income tax rate from 25% to a teaser. if that sounds familiar, it should. it was in the health-care bill that was -- that would raise

taxes to fit these terms and most it. -- taxes to 50% in most states. i am reminded of ben franklin's observation that fools will learn in no other. these policies are lengthening and deepening this recession, because this administration will not learn from experience. >> for what purpose does the gentleman from texas speak? >> thank you. i think pushing government controlled health care is a way for the democrats to divert attention away from the economy. the white house said we had to pass a stimulus because it did not want unemployment over 8%. unemployment is at 9.5% and

slated to retire. the white house said it did not want a general motors. now they own general motors. they said they did not wanting pork in the stimulus. now we are paying money to clear away money for monitoring volcanoes and earthquakes. they did not want to increase the deficit. the u.s. deficit broke pass $1 trillion in june, a testament to the financial crisis. where are the jobs? the democrats spend $1 trillion to create them. >> the gentlemen from arkansas. >> thank you. we must reform health care. to many americans do not have access to quality and affordable health care. instead of resolving these problems, the president prescribes an overhaul bill will deny americans treatment they

need and make them wait to get treatments. this is not the way to reform. my constituents agree. i receive many calls from people from kansas like michael who recently told me he owes his life to the fact we do not have a system like the british run government help structure that has been hastily propose. in 2007, he was diagnosed with a carcinoma, something his doctor would not have caught had he had his hand tied in a red tape health procedures. we cannot rush through legislation that will have serious implications on care of americans like michael. we need to take a reasonable amount of time to listen to the concerns of americans like michael and craft a common sense bill that addresses the real problems. >> what purposes the gentle man

from florida rise? >> thank you. last week, democrats released a health care bill which said to american seniors, drop dead. despite their purpose to care for our seniors, they have decided that it is too expensive to care for my senior constituents and everyone else's. this bill would cut an additional $156 billion from the medicare advantage program in order to pay for the government expansion of health care for the young, healthy, and wealthy. this is the second attack on our seniors this year. the first came in march when the administration announced that social security recipients would not receive a cost of living increase. seniors have special needs. this bill ignores the needs of florida's health care system.

we should be fixing what is broke, not disseminating the care of our senior population. this is changed our nation cannot afford. >> the american people are hurting. they are asking, where are the jobs, the administration promised that the stimulus would create jobs immediately. last month, we lost almost a half a million jobs. now unemployment is at 9.5%. the stimulus package is not working. their response is to increase spending by 12%. they want to pass a national energy tax that will increase costs, less competitiveness, and drive just american shores. now they are trying to give as a health care plan that will raise

taxes on businesses and force people into a government-run healthcare plan. we need to focus on jobs. you do that by controlling spending and reforming health care. let's focus on creating jobs in answering the american people's cries. >> thank you. it has been fascinating watching some of my friends go to the floor, making some pretty outrageous claims. the most recent one, my good friend from florida, suggested that having the administration follow the law, that if cost of living has not increased efficiently that there is not a cost of living increase for social security that somehow an administration assaults is on

senior citizens. it is a bizarre notion we think about their record when they were in charge, is seeking to undercut formulas like that and move them back in the other direction. their prescription medicare drug coverage program did not seek concessions from the pharmaceutical industry we are trying to move forward in a constructive fashion to give the american people choices, follow the law, save money. >> the american people are concerned about keeping their jobs in the huge deficit that we have occurred here in this senate.

we are passing the debt on to future generations. the democrats' health care bill cost too much, spends too much, and will destroy jobs in america. health care reform should be about loring costs, providing quality care for all americans. this debate must consider that every individual has different health care needs. americans are struggling to pay their bills. leadership has failed to address these needs by supporting the same tired proposals of the spending, increased regulation, which will cost the united states more jobs. a bigger check will not do it. their plan amounts to an $18 billion in new taxes and businesses. these taxes will crash are small-business owners and destroyed thousands of jobs.

it will put it bureaucrats in charge of our health care and the american people do not want that. >> thank you, mr. speaker. the majority democrats in this congress are trying very hard to pass a health-care bill that will be a good bill for the american people. our friends on the other side do not want to cooperate. it is a national disgrace that 47 million americans have no health care coverage. it is a disgrace to our emergency rooms are being used to cover people that have no coverage. is a national disgrace that so much of our health care money is going into the administration costs. we are trying to craft a plan that will put america back on the road so that every american will how health care, so that health care as we know it will be improved, so that people that like their health care can keep

it, and those without can get it. we know the system is broken. i do not want to hear people talk about deficit, because when they ran the majority, they give is the biggest deficit in american history. they left us with red ink as far as the eye can see. i would encourage my friends on both sides to put our heads together and come up with a good plan that we can be prada. >> -- be proud of. >> madam speaker, where are the jobs? unemployment in my district has hit 14 serve. 14%. washington is doing nothing but making matters worse. the yourself in the shoes of only people that can take it out of this recession, small- business owners. they are facing higher energy cost because of this democratic cap and trade tax on energy.

they are facing higher health care costs because a government take care -- takeover of health care. they are looking at higher health-care costs and higher personal income taxes. the liberals are already proposing it. people are out to touch a small business owners and are doing the wrong thing. i urge leadership of this congress to do the right thing. do not kill the goose that lays the golden egg. to not kill small-business owners. to not turn this economy anymore. >> the policy proposals coming out of washington are repeating job creation and caring people. there are five reasons driving this. stimulus spends too much and delivers too few jobs. a budget doubles the national debt in five years.

a car check bill that is undemocratic. in national energy tax that will cost $66,000 of pennsylvania and jack up a lecture bills. a house health care bill that would give the tax increases and mandate on small businesses. enough is enough. it is time for washington to get out of the record o -- to get out and help. >> we heard some interesting rhetoric about the impact on small businesses. here is a statistic. if we do nothing the cost of healthcare on our small businesses in the united states over the next 10-years will increase to 2.4 trillion dollars. that is one to have a crushing burden on the ability of small businesses to do they do best, create jobs. only 48% of our small businesses

currently provide health care. if we allow the increases to occur by doing nothing, we are gearing tearing that -- guaranteeing that fewer people will have health care. doing nothing has a profound cost. that is why we need health care reform. we have waited 60 years. the time has arrived. >> does anybody see what is happening? does anybody even care? we've got car companies and banks. we own them. then we took the money away from the funders and bondholders and given to unions. this stimulus package only stimulated more welfare. it has not created jobs.

now we are looking at a government takeover of health care. that is going to lose 4.7 million more jobs. this has never been about jobs for the democrats. it hasn't even been about healthcare. it is about power. who is going to make the decisions over your life? the democrats think they can. does anybody see what is happening? does anybody even care? [applause] >> thank you. $700 million for wild horses last friday. $50 million for radar cranes and dogs and cats. they deny even live in this country. we have had problems in this country. a hundred billion dollars in

stimulus have not stimulated anything. i just left a crime hearing. we found out that out of 270,000 people in federal prison, the 3000 are not citizens, and non- u.s. citizens. most of them were illegal. there are the 3000 jobs americans did not want. -- there are 53,000 jobs americans did not want. here is a mom had all these kids and grandchildren and she has gone to a bank and said, give me money, alone in the money. you would take this beautiful children away and given to somebody that would be responsible. we can do better. >> it is time to admit the

failure of obama. where are the jobs? 2 million more people are unemployment in this country. 9.6% unemployment, the highest in a quarter of a center. what do we have to show for obamanomics? more bailout money. we have the national debt to be increased, tripled, in the next 10-years. we have family historic debt. we have a founded the historic bailout. where are the jobs? you cannot bail out and spend your way to prosperity. it does not work. it is time to put america back to work with tax relief for small businesses and american families. that is the republican time.

[applause] >> a number of my colleagues have asked, where the jobs? i do not know exactly where they are, but i can tell you where they went in one company. that is chrysler. when democrats opened this congress, -- almost an hour -- 40 -- 4000 people were out of work. 11,000 people out of work and we had to pass the monkey safety act. everybody likes monkeys. 16,000 people out of work, arnold palmer. 80,000 people of the work, the most important thing they open on the floor is national trading.

later today we are going to vote to support the goals and national dairy month. [applause] >> as congress takes on the essential task of strengthening america's health-care system, we have a choice to either russia legislation, costing more than $1 trillion, or to lead a serious analysis on the fundamental question of how we improve outcomes and reduce costs. one major consideration should be how any proposal would affect small businesses. they generate 60%-80% of jobs this year. and my home town, at 80% of those in the private sector are businesses with 25 or fewer employees. this will place an 8% payroll tax on certain small businesses

who do not provide the government mandated coverage. as many as 4.7 million jobs could be lost as a direct result of this overall health care proposal. this does not help anyone. there are more creative solutions to get people the care they need and help families manage ever increasing costs. >> i have been listening to this litany of where are the jobs. i have been here long enough -- you oppose the program in 1993. you said it would destroy this economy. you said it will blow deficit sky high.

it created 216,000 jobs per month on average. you then supported an economic program and 2001. you said it would be a habit for jobs in small businesses. you created not to under $16,000 per month but 4240. though the figures you will want to come in. -- i'm sure those to the figures you'll want to come in and say i was wrong. under your program for the last eight years, 4240 jobs per month. that is a very substantial difference between 20.8 million new jobs under the economic program that you did not support in 1993 that we propose and pass.

when you talk about jobs, you ought to talk about the experience that you have had under our program in your program. you failed. we succeeded. in the last year of the bush registration, we lost 3 billion jobs. during the last year the clinton administration, we gained 1.9 million jobs. that is a 5 million job turnaround by your economic program. keep talking. american knew the difference. american made a decision. they said would you have been doing was not what they wanted. they changed. we have lost 200,000 less jobs per month than bush lost in his last three months. is that where we want to be? it is not.

it is 200,000 better than your last three months in your administration. those are the facts. reheat them if you can. keep talking. [applause] >> tomorrow, the house appropriations committee worked on the annual defense spending bill. the whitehouse is proposing spending on the budget next year. live coverage starts at 9:00 a.m. eastern on c-span3 and online at a c-span.org. >> susan jacoby on the ongoing fascination with the espionage trial in the house on american activities hearing. and in o'clock p.m. eastern on c-span. >> topics of tuesday state department briefing include negotiations over the political situation in honduras and the

middle east peace process. robert would speak with reporters for 15 minutes. -- woods speaks with reporters for 15 minutes. >> good afternoon. welcome to the briefing. i'm sorry we got a delay did little bit. let me just lead off with the secretary of what she is doing. she arrived in bangkok earlier today. she met with the thai prime minister and took part in the meeting. tomorrow as she flies to forget phuce to phucet. richard holbrooke is traveling to pakistan and then to

afghanistan. we are still trying to work through his schedule in afghanistan. we will get that information to you when we can. he will focus on the range of economic and security issues and a situation of the internal refugees and reconstruction plans. he is scheduled to meet with the president, prime minister and the general. he will have breakfast several leaders. that is all i have. >> he is in bangkok now? is he with the secretary? >> no, he is not. >> he is in washington? >> i believe he is on his way to pakistan right now. >> from washington? >> i believe so.

>> what about the meeting? >> we are doing our best to get that information to you. senator mitchell will be leaving shortly to travel. they are working the last minute detail out. i will try to give you the itinerary as soon as possible. i do not have much more. >> what about the rumor about the donn mitchell predict that the mitchell would be waiting [unintelligible] did you hear about that? >> not all. >> the prime minister of north korea has said that u.s. calls for a freeze on west bank settlements between the two

nations and could undermine u.s. credibility. do you have a reaction? >> i do not have anything beyond what we have said. we have been very clear on the issues of settlements. there has been no change. >> what about the agreement between the u.s. and israel? >> i think secretary has -- secretary clinton has spoken to that issue in quite a bit of detail. i just really do not have anything more to add. i think you all [unintelligible] at the third again, but you've all heard it. -- i could go through it again, but you have all heard it. this is what senator mitchell is trying to do. he it has traveled to the region a few times. he is trying to create conditions on the ground that

will allow us to resume negotiations between the palestinians and israelis. >> of these become israel does not want to do that -- obviously, israel does not want to do that. israel packs and will act in line with the national interest. it cannot be challenged. they just reject all calls from the u.s. and the russians, from everybody. >> no one is asking israel to act outside the national security interests. what we are asking both parties to do is to fill the road map obligations. both sides have committed to do that. we are working with them to try to help them to fill those commitments. senator mitchell is trying to help create the conditions on

which we can build negotiations. it will eventually lead to discussions on the other track. this step is not easy. and it was easy, it will be resolved. senator mitchell will work very hard to the parties. we expect there to be ups and downs. we will continue to push. this is in the interest of the u.s. government. >> with the u.s. be ready to exact some financial pressure on israel to convince the government? >> it is premature to talk about that. what we are trying to do is create an environment that is conducive for talks to go forward. senator mitchell is working very hard on this.

what we all need to do is support this effort. that means americans, and arabs, israelis, need to do what they can to foster a climate where the two sides can come together and negotiate their differences peacefully. >> the agreement that we had with the americans is binding on us and them. he added that they should keep the agreement. he is calling the u.s. to keep to that agreement. what we have been very clear with that regard. that includes national growth. the israelis are well aware of our position. we will continue to have talks with the israelis on the subject. our policy remains the same. >> they are continuing? >> we are having discussions with our israeli partners about

this issue and others. that is the best i can offer for you. >> change of subject. i will give back to you. but there is a report that u.s. and north korean negotiators are in talks about to release of these two reporters. can you characterize what the efforts are to try to get these women out besides calling for amnesty? >> i do not want to talk about things that may or may not be going on diplomatic key to resolve this issue except that we want to see these two journalists released. and do not really want to go into. what is it fair to say that you are talking with the north about this? >> we have been able to communicate with the north. >> through new york? >> the various channels,

including new york. >> maryland children are being detained in china because of a scare of swine flu. do have any information on that? >> i have seen some reports. we can confirm that some american citizens were quarantined. we have noted in a trouble lurked that there is a bit into for -- reported that there is possibility of being quarantined in the possibility of having the virus. our officials are working to try to provide that information >> can you confirm if it is this is the particular group? what i cannot confirm a particular group. there are privacy issues.

our staff is working on trying to deal with this. >> thank you. the telegraph newspaper -- the agreed in principle to share intelligence to come at reticles in that part of the world. will the united states support this and how? >> we work with a host of countries around the world in terms of fighting violent extremism. we have had discussions with both government and others on how we can enhance the corporation -- cooperation. there is this big government in terms of interviews that they are how they are contributing.

we will and have provided support. what we are trying to build is a broad network of cooperation among states to fight violent extremism. this is boat -- india and bangladesh has had to fight this. both countries know they can count on us to support them. >> beckham follow up on that. will there be any special support, financial support, in order to pursue this ongoing dialogue with india and bangladesh? will the united states share intelligence in the region in order to help the process? >> we certainly share intelligence when we can. in terms of what type of

assistance to my provide, both countries -- we will have to see how it develops. we have assisted both countries in fighting violent extremism. we will have to see it in the future there will be additional financial assistance. >> thank you. >> [unintelligible] can you give it a read out of that? >> i have not spoken with tom at all today on that issue. let me just tell you what that thing. it is my understanding that talks will start tomorrow. i want to reemphasize what we have said. we are recommending the president's effort. we want to call on all the parties to commit themselves to this process.

we are in constant contact with a number of countries in the hemisphere in regard to the situation in honduras. we believe this is the right way to go. we believe the time is now. we are going to providing -- to be providing all the help we can. >> there is a venezuelan opposition group in town as well. they are opposed to chavez. is anyone meeting with them? what i'm not aware of that. >> there is the worsening food situation in africa. something has to be done. you have any comments about the night states and what they are trying to do? >> we are very concerned as well about the food situation.

we are trying to revive resources -- provide resources. it is a major concern. security is a big priority. we are going to be doing all that we can given the resources we have to address this issue. it is going to take more than resources from the united states. it is going to take the assistance from other countries who can help. is a very serious situation. we need to all act together. >> japan earlier said there will be national election held next month with the strong possibility of significant change. how closely are you guys following this and you have any specific reactions? >> this is an internal japanese

matter. we will work with the current japanese government and with the future government of japan. we have a lot of important interests that we cooperate on. japan is a strong and important ally. we depend on japan to help us deal with a number of situations around the world. i do not have anything to say with regard to this. it is an internal japanese matter. >> i've a small question. -- question about neda. -- about nato. the chief is in the hospital? >> we have heard that he was invented. my understanding is that he is ok. we are very relieved. we send him his best wishes.

>> it was reported today that china has been cracking down on social networking sites within the country. do you have any reports from diplomats or reports -- or reporters getting information? >> we do get reports from time to time. there are restrictions on social media. i do not have anything new to add to that. you know our position with regard to freedom of expression. we obviously express our -- have expressed our concerns about these issues. i do not have any comment on that. i've not heard anything new. >> going back to honduras, when you say we have to act now -- yesterday, the secretary clinton said that the government of honduras is working [unintelligible] micheletti said we invite

hillary clinton to come and see the situation here. do you think she will go to honduras? what do you mean by acting now? is there any proposal coming from the u.s.? >> what i meant is we have a process that is in place. it is being headed by president ariane. he is trying to resolve the crisis. he has given the party's 72 hours in which to respond one side i believe has responded. we await the de facto regime is a reply. -- --regime's reply. we believe this is the best way to get order. we want to see that happen now. 72-hours will expire tomorrow. we will have to see what happened. right now, our diplomatic efforts are focused on getting

all the parties and others in the hemisphere to support and get back into the effort. that is what we are going to be doing. we will have to see what happens come tomorrow. >> thank you. >> coming up, ben bernanke talked about the economy at a capitol hill hearing. then we would hear about healthcare from senator max baucus, president obama, and mitch mcconnell.

>> tomorrow, the house appropriations committee worked on the annual defense spending bill. the white house has proposed spending five for $34 billion on next year's defense budget. -- $534 billion on next year's defense budget you can find out more online at c-span.org. >> this weekend, what a 1997 extended interview with the late frank mccord, talking about his book "angeles ashes." -- into"angela's ashes." >> how was c-span funded? >> fundraising? >> how is c-span funded?

30 years ago, america's cable companies created c-span as a public service. it is a private business initiative, no government mandate, no government money. >> federal reserve chairman ben bernanke today told a house panel that the u.s. economy is improving and predicted the recovery would be sluggish. his remarks were part of a semi- annual report to congress on the economy. this will provide our portion begins with the opening statement by barney frank. ement by house financial-services chairman barney frank. >> i >> i welcome the chairman. i think it is very important that i saw his article about the question that is on people's mind. the united states government has it in the lead for the right reasons.

federal government was deeply engaged in increasing liquidity in putting money into the economy, particularly to a place -- to place a restriction of credit. people are concerned that this will be inflationary. i think the chairman has shown consistently that there is an awareness of this and that they are prepared to deal with it. when you talk about inflation, you are talking about perception. if people think there is inflation, that is inflationary. it is important for him to address these concerns. i am persuaded that we are able to undo what we had to do so that there will not be that inflationary impact. i believe that the inflation danger is not in the current

most important one, but it is a good opportunity for the chairman to address. i also want to talk about another matter. i want to make a confession. . and want to make a confession apparently of the leverage is of apparently my vision is deteriorated more rapidly than i hope to would be. i have looked carefully at deliberations we have seen about the bank of america merrill lynch issue and our colleagues on the government committee have had a number of hearings on that. i must say one of the interesting and potentially constructive things that cannot was secretary paulson's explaining that he couldn't because he has never sent them. that is a practice of i recommend to many others will follow myself, but as i studied

all of this here is my problem. i cannot find the villain. i cannot find the villain. ma various fillings. they tend to be private sector or public sector depending on the ideology of the founder. but as i look at what happened, what i see is a very difficult situation that threatened further severe damage to an economy already damaged. a repetition of the attack on the credits issue which is central to the functioning of our economy which we have seen in earlier failures, and i believe we had people faced with a difficult situation to say to some of my democratic friends have been critical of the bank of america as i have been and other areas they've not done what they should in modifying mortgages. i would have plenty of criticism to make in the financial but people health said well, why was

he not focused entirely on the shareholders? many of my colleagues who have made the criticism said they don't want private-sector people looking up the narrow interest of the shareholders but they do want them to take into account the broad impact of what they do. possibly terrible credit crunch would hurt their shareholders. as to the federal reserve and the treasury, i think they had a very important responsibilities not to see a repetition of the collapse of merrill lynch by bank of america they would have had very negative consequences. i think there was one thing people need to remember. solutions cannot be more elegant than the problems they seek to resolve. brandt you have a terrible mess it is unlikely those who try to immediate danger of that mess will come out looking clean. not for the first time as an elective officials on a and the economists believe a, how have

available to them in a medical approach the counterfactual economists can explain that the given decision was the best one that could be made because they could show what would have happened in the counterfactual situation. they can contrast what happened to what would have happened. no one has ever gotten reelected with a bumper sticker that said it would have been worse without me. [laughter] probably you can get a ten year without but you can't win office. [laughter] i understand that but we shouldn't let that distort house. and it would not i think eckert collis every so often to admit not every action by every public ficial was a bad thing and sometimes we should give people credit for trying to cope with the unpleasant reality they can. the gentleman from alabama. >> i thank the chairman. thank you for appearing before the committee today for your professionalism and service to the country.

all of of us in congress appreciate your willingness to make yourself available on countless numbers of cases both to congressional committees as we confronted this crisis. so why thank you. over the past year we have witnessed unprecedented government involvement in the financial rackets. for sometimes republicans on this committee have expressed a growing unease over the magnitude of federal government involvement and manipulations of our economy. trillions of dollars of capital commitments guarantees, loans have been extended. what started out last year is a large but temporary stabilization effort to prevent a financial collapse has evolved month by month into seemingly permanent government intervention gratian. this included ad hoc bailouts of institutions deemed too big to

fail. many of the competitors of those too big to fail corporations deemed too small to save are no longer in business. today i read with interest your op-ed in "the wall street journal" acknowledging the need for an exit strategy. something republicans have called on since last fall. simultaneously the obama administration has been spending a staggering amount of money to fund an economic recovery and stimulus that is slow on coming. it's been almost half of the year since congress passed a $787 billion so-called stimulus bill and yet we continue to see record job losses. on the planet has spiked 9.5% and seems headed higher. your testimony predicts the elevated on and went well last

through not only this year but next year confirming that and that is despite the assurances that if we pass the stimulus package the unemployment would peak at 8%. other federal government interventions have failed as well. the administration's $75 billion for closure prevention initiatives intended to keep three to 4 million homeowners and their home as are offered only 220 try all loan modifications. at the same time the private sector and private efforts have their efforts have resulted in millions of homeowners staying in their homes. the american people can be forgiven for increasingly asking tough questions about these enormous government outlays and interventions because so far, mr. chairman, they're has been very little bang for the

taxpayer's buck. it's not only these, but the multitude of new proposals coming from the obama administration and their allies in congress calling for more government control and management, from health care to energy to financial services. one of the central questions the committee needs to answer as it considers reforms or a financial regulatory system is whether regulatory power should be centralized in the federal reserve at a time when our country is facing unparalleled fiscal and monetary policy challenges. the fed has made big mistakes and historic leave the board has reports of identifying and addressing systemic risk before they become crises. a prime example of this is troubled linder c. i.t. allowed to convert to a bank holding company last december and placed under the fed supervision. only after the fed declared it was adequately capitalized.

this inability to access risk once again threatens to undermine the fragile economy and erase the 2.5 billion in tax payer funds provided cit under t.a.r.p.. they would make the fed responsible for identifying and regulating those findings that in the fred's you are systemically significant and preventing systemic shock. republicans believe the fed's core mission and conduct of monetary policy seriously undermined its regulatory responsibilities or expanded in this way. let me conclude by saying at a time when our economic economy faces serious structural problems and threat of inflation if we maintain our current course on spending patterns it distracted and overextended central bank subject to potential political interference is a luxury we cannot afford.

republicans believe really think the federal reserve cut its current regulatory responsibilities and focusing on the core monetary policy mission would enhance the fed ability to execute an effective exit strategy and ensure interest rates that are greatly -- affect both individuals and small businesses with a single goal in mind, sound monetary policy. the proper conduct of monetary policy is the best way the fed can serve the american people. asking the fed to serve is a systemic regulator is just in fighting a false sense of security that inevitably will be shattered at the expense of the tax payer. thank you, mr. chairman. >> the gentleman from north carolina is recognized for three minutes. >> chairman bernanke, look forward to your discussion on the status of monetary policy and the economy. it is good news that many

experts say and that the economy has improved since the last time your before this committee in feb to the extent that is true the federal reserve certainly deserves some of the credit. unfortunately my constituents are not yet feeling it. growing unemployment, foreclosure all are around and the like of much if any rebound in the value of their investments contained delete continue to feed their and sunday and uncertainty whether we have in fact turned the corner but the fed has been a sturdy methodical hand. more public exposure with the fed does has also stimulated discussion about some other things a lot of people had taken for granted. the level of independence from political influence by the legislative and executive branches of government that is appropriate for the fed to have in order to achieve its

long-term policy goals. the extent to which the fed's operation is even monetary policy discussions and decisions should be subject to regular audit. the extent to which the various parts of an operation of the fed should be subject to more transparency. whether the fed having a field along with other financial regulators to pay the equivalent attention to the consumer protection responsibilities as it did to other responsibilities should be stripped of these responsibilities in favor of a new consumer protection agency focused soly on consumer protection. and whether as proposed by the obama administration the fed should be delegated even more power and responsibilities for systemic risk regulation. this certainly is a critical juncture for the fed and i want to assure my colleagues on the

committee that our subcommittee on domestic monetary policy, which i chair with the knowledgeable input a ranking member ron paul has been grappling seriously and consistently with all of these issues. for a change we have even had some members who are not on our subcommittee showing up at our were subcommittee hearings. imagine that three it in the wake of the great depression, concrescence drafted rules that served us well for 75 years. we are facing another once in a generation opportunity to fashion of rules that should serve well for the next 75 years. and chairman bernanke's testimony today is yet another step and harming us with the knowledge and information we need to address these important issues. i welcome the chairman and yield back the balance of my time. >> the gentleman from texas, the two minutes remaining on the republican side, we will make it

two and a half. >> thank you mr. chairman and good morning chairman bernanke. the federal reserve in collaboration with the banks has created the greatest financial crisis the world has ever seen. the notion of limited amounts of money and credit created out of than error has delivered this crisis. instead of economic growth and stable prices it has given a system of government and finance that threatens the world financial and political institutions. real unemployment is now 20% and there has not been economic growth since the onset in the year 2000 according to an on government statistics. permitting debt and credit expansion past 38 years has come to an abrupt end as predicted b free-market economists. pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems and prevent the required expanding debt when it was a

principal cause of the crisis is foolhardy. extensive government and private debt as a consequence of lose federal reserve monetary policy. once the debt crisis hit, the solution must be paying off or liquidating it. we are doing either. the net u.s. debt is higher. it peaked at 301% it previously. services require 14% of disposable income, and historically, and between 2000 and 2007, credit debt expanded five times as fast as ddt. was no restraint on spending, and with revenues dropping due to be weak economy, raising taxes will be poison to the economy. buying up the bad debt -- with no restraint on spending and with revenues dropping, rising taxes will be poisoned. this is destined to do a great harm.

the national debt has arisen over $2 trillion. u.s. foreign indebtedness is $6 trillion. purchases of u.s. securities in may were $7.40 billion, down from a monthly peak of $95 billion in 2006. peak of $95 billion in 2006. the fact the fed had to buy $30 billion worth of government security last week indicates it will continue its complicity but congress to monetize the expanding deficit. the policy is used to pay for this those lusatian of america and maintenance on wise policy and make up for the diminished appetite of foreigners for our debt since the attack on the dollar will continue i suggest the problems we faced so far are nothing compared to what it will be like with the world not only reject other debt but our dollar as well. that is when we will witness political turmoil which will be to no one's benefit.

>> the time for opening statements has expired and for once, i think not before the patience of the audience. the chairman of the federal reserve is now recognized for his statement. >> chairman frank, mean the delete kringen number bachus and other members and pleased to present the annual policy report to the aggressive policy actions taken around the world last fall way to becoming have averted the collapse of the system and even that would have had extreme adverse consequences for the world economy. even so the financial shock it hit the global economy in september and october were the worst since the 1930's and helped push the global economy to the deepest recession since world war ii. the u.s. economy contracted sharply in the fourth quarter of last year and first quarter of this year. more recently the pace of the decline appears to have slowed significantly and final demand and production have shown signs

of stabilization. to labor market however has continued to weaken. consumer price inflation which fell to levels late last year remained subdued the first six months of 2009. to promote economic recovery and foster price stability the committee last year brought its target for the federal fund rate to historic the low range of 02 a quarter% where it remains today. the excelencia purchase of its conditions are likely to warrant maintaining federal fund rate at exceptionally low levels for an extended period. at the time of the february report financial markets at home and abroad were under intense strained with equity prices at multi-year los riss spreads for private borrowers at elevated levels and some important financial markets essentially shot today financial conditions remain stressed and many households and businesses are finding credit difficult to obtain. nevertheless on that the past

few months have seen notable improvements. for example interest-rate spreads and short-term money markets such as the bank market and commercial paper market had continued to narrow. the extreme risk of last fall east somewhat and investors are returning to the private credit markets. reflecting this great investor corporate bond issuance has been strong. many markets are functioning normally with increased stability. equity prices at the low point in march recovered to roughly the level set the end of last year and the banks raised significant amounts of new capital. many improvements in financial conditions can be traced in part to policy actions taken by the federal reserve to encourage the flow of credit for example the decline in the rates and spreads was facilitated by the actions of the federal reserve and other banks to ensure financial institutions have adequate

access to short-term liquidity which in turn increased stability of the banking system and the ability of banks to lend. interest rates and spreads on commercial paper dropped significantly as a result of the liquidity facilities the federal reserve introduced last fall for that market. quote purchases of mortgage backed securities and other long-term assets helped lower conforming fixed mortgage rates and asset backed securities loan facility or to talf help restart the markets for various causes of consumer and small-business credit. earlier this year the federal reserve and other federal banking regulatory agencies undertook the supervisory capital assessment program popularly known as the stress test to determine the capitol needs of the largest financial institutions. the results were reported in may and appear to have increased investor confidence in the banking system. subsequently the great majority of institutions that underwent

the assessment raise equity in public markets and june 17th 10 of the largest u.s. bank holding companies all but one of which participated paid a total of nearly $70 billion to the treasury. better conditions in financial markets have been accompanied by improvements in economic prospects. consumer spending has been relatively stable so far this year and the decline in housing activity appears to have moderated. businesses continued to cut capital spending and liquidate inventories but a likely slowdown in the case of inventory liquidation in the coming quarters represents another factor that may support a turnaround in activity. although the recession and the rest of the world led to a steep drop for exports the drag in the economy appears to be winning as many trading partners are also seeking signs of stabilization. despite these positive signs the rate of job loss remains high and unemployment rate continued a steep rise.

job insecurity together with the declines in home values and tight credit is likely to limit gains on consumer spending. the cost stability the recent stabilization household spending will prove transient is an important downside risk to the outlook. in conjunction with the fomc meeting board members and presidents prepare economic projections covering the year 2009 through 2011. fomc participants generally expect that after the declining in the first half of this year output will increase slightly over the remainder of 2009. the recovery is expected to be gradual in 2010 with acceleration in activity in 2011. although the employee rate is projected to pique the end of this year the projected decline in 2010 and 2011 would still leave on employment well above fomc purpose of the views of the longer run sustainable rate. all participants expect inflation will be lower this

year in recent years and most expect to remain subdued over the next two years. in light of the substantial economic lack monetary policy remains focused on fostering economic recovery. accordingly as i mentioned earlier the fomc believes a highly accommodative stance of monetary policy will be appropriate for an extended period. however we believe it is important to assure the public and markets that the extraordinary policy measures we've taken in response to the financial crisis and recession can be withdrawn in a smooth and timely manner as needed thereby avoiding the risk policy stimulus could lead to a future rise in inflation. the fomc has been devoting considerable attention to issues relating to the strategy and we are confident we have the necessary tools to implement the strategy when appropriate. to some extent our policy measures will on wide automatically as the economy recovers and financial strains ease because most extraordinary

liquidity facilities are priced at a premium over orland tristani spreads. indeed total federal reserve credit extended to banks and other participants has declined from one of roughly 1.5 trillion at the end of 2008 to less than $600 billion reflecting improvement and financial conditions already occurred. in addition bank reserves held up the fed will decline as the longer-term assets we don't mature or are prepaid. nevertheless should economic conditions warrant a tightening monetary policy before the process of unwinding is complete we have a number of tools that would enable us to raise market interest rates has needed. perhaps the most important such tools is the authority that congress granted the reserve last fall to pay interest on balances held up the fed by depository institutions. raising the rate of interest paid on reserve balances will get substantial leverage over the federal funds rate and other short-term market interest rates. because banks generally will of supply funds to the market at an

interest rate sycophant ehlers a tichenor risk free by calling balad balances of the reserve. indeed many banks use ability to pay interest on reserves to help set a floor on market interest rates. the attractiveness to banks leading the excess reserve balance with federal reserve can be further increased by offering banks the choice of maturities for their deposits. but interest on reserves is by no means the only tool we have to influence market interest rates. for example we can drain liquidity from the system by conducting purchase agreements in which we sell securities from the portfolio with an agreement to buy them back at later dates. reversed purchase agreements which can be executed at the primary dealers and sponsored enterprises and a range of other counterparties are a traditional and well understood that of managing the level of bank reserves. if necessary another means of a tightening policy is outright sales of holdings of longer-term securities not only such sales trade reserves and raise short-term interest rates also

put upward pressure on longer-term rates by expanding the supply of longer-term assets. in some we are confident we have the tools to raise interest rates when that becomes necessary to achieve the objectives of maximum employment and price stability. our economy and financial markets face extraordinary near-term challenges and strong and timely actions to respond have been necessary and appropriate. i've discussed with financial stability the congress also has taken substantial actions including the passage of a fiscal stimulus package nevertheless even as important steps have been taken to address the recession and intense threats to financial stability maintaining the confidence of public and financial markets requires policy makers begin planning now for the restoration of the fiscal balance. prompt attention to questions of fiscal stability is particularly critical because of the coming budget and economic challenges associated with retirement of

the baby boom generation and continued increases in the cost of medicare and medicaid. addressing the country's fiscal problems will require difficult races but postponing the choices will only make them more difficult. moreover agreeing on sustainable long-term fiscal term path now could yield considerable near-term economic benefits in the form of lower long-term interest rates and increased consumer business confidence. unless we demonstrate a strong commitment to fiscal sustainability we risk having the financial stability for durable economic growth. a clear lesson of recent financial turmoil is we must make the system of financial supervision and regulation more effective in the united states and abroad. in my view comprehensive reform should include at least the following elements. a provincial approach that focuses on the stability of the financial system as a whole and not just safety and soundness of institutional once and that includes mechanisms for identifying and dealing with

risks. stronger capital liquidity standards for financial firms with more stringent standards for large complex and financially interconnected firms. the extension enhancement of supervisory oversight including effective consolidated supervision to all financial organizations that pose a risk to the system. enhanced bankruptcy resolution regime model on the chrysostom for depository institutions would allow financially troubled eckert and non-bank financial institutions to be wound down without disruption to the financial institutions a system and the economy. enhanced protection for consumers and investors and financial dealings. measures to ensure payment arrangements are to shocks and practices relating to the trading and clearing of derivatives and other financial instruments do not pose risk to the financial system as a whole and finally improved

coordination of cross-country's in the development of regulation and supervision of internationally active firms. the federal reserve has taken and will continue to take important steps to strengthen supervision, and prove resiliency of the financial system and increase the macroprovincial orientation of oversight. for example we are expanding the use of reviews of the financial firms to provide more capri and some understanding of practices and risks in the financial system. the federal reserve also remains strongly committed to carry out the responsibilities for consumer protection. over the past three years the federal reserve has written rules providing strong protection for mortgage borrowers and credit card users among many other actions. later this week the board will issue a proposal using authority under the truth and lending act which will include new consumer tested disclosures as well as rule changes applying to mortgages and home-equity lines of c

we are expanding our supervisory activities to include riskin's focus reviews for subsidiaries of holding companies -- to include risk-focused reviews. for organizations specializing in foreclosure mitigation. we have board with nonprofit groups and strategies for neighbor stabilization. the federal reserve compensation and supervision positions us well to protect the interests of consumers in their financial transactions. we look forward to discussing with the congress with to further formalize our institutions strong commitment to consumer protection. the congress and the american people have a right to know that the federal reserve is carrying out its responsibilities and how we are using taxpayer resources. the fed is committed to accountability in its operations. we report on our activities in a variety of ways, including like the one that i presented to

date. the fomc releases detailed minutes of each meeting on a timely basis. we have increased the frequency and scope of the published economic forecast of the participants. we provide the public with detailed annual reports on the activities of the federal reserve system that are audited by independent firm. we also publish a complete balance sheet. we have recently taken additional steps to better inform the public about the program's been instituted to combat this financial crisis. instituted to combat the financial crisis. we expanded the website this year to bring together already available information as well as considerable new information on policy programs and financial activities. in june we issued a report to the congress that provides even more information on federal reserve programs including breakdowns of lending a seceded collateral and other programs a established to address the

crisis. these steps should help the public understand the steps taken to protect the taxpayer as we supply liquidity and the key to financial markets. the concourse recently discussed proposals to expand the gao over the federal reserve. as you know the federal reserve has aubrey subject to reviews by the gao. the gao has brought authority to the operations and functions. the congress recently granted the gao the new authority to conduct extended by the federal reserve to single and specific companies under the authority provided by section 13 the federal protection act including lunesta but does provide to work. for aig or bear stearns. the gao and in special inspector general have the right to audit our t.a.l.f. program which uses funds from the troubled asset relief program. the congress however purposefully and for good reason to exclude from the scope of giglio reviews erie is notably

monetary policy durations and operations including open market and discount window operations. in doing so the congress carefully balanced the need for public accountability with strong public policy benefits that flow for maintaining appropriate degree of independence for the central bank in the making and execution of monetary policy financial markets and in particular likely proceed guarantee authority in these reviews to the gao as a serious weakening of monetary policy independence. because the gao reviews may be initiated members of conagra's review or the threat of reviews in these areas can be seen to try to influence monetary policy decisions. a perceived loss of monetary policy independence could raise your about future inflation and lead to higher long-term interest rates and reduced economic financial stability. we will continue to work with congress to provide information it needs to oversee activities effectively yet in a way that is not compromised, terry policy

independence. thank you, mr. chairman. >> thank you. let me begin with one question because i am pleased that as i said you've responded to the fear of inflation because i think that you are all capable of control and i also think it's important they not be invoked prematurely with the greater problem i believe the federal reserve commonly thinks is still further on the negative side, and one looming threat we hear about a lot is the commercial real estate issue. there was a great deal of fear that there would be in commercial real estate issue a series of failures that some of the economic problems of the home mortgage would be reproduced. we've discussed this. what is your current posture? do you expect there to be problems, and how were you and other elements of the government ready to respond? >> mr. chairman we are watching

the situation very carefully. there's a lot of loans coming up for refinance and the capacity is limited which opposes the possibility of foreclosure and commercial space. much as in the residential situation. we are urging banks to continue to make loans to creditworthy borrowers and examiners are presenting a balanced view in their discussions with banks. the others that we've taken to address this problem is that we have recently added to the t.a.l.f. program both new and legacy commercial mortgage-backed securities by doing that we hope to open up the mortgage-backed securities market which is an important source and finance for the crc market. >> i know there's been some who have been critical. i don't share that on the other hand in some cases but some people said what about commercial real estate? and the fact is they had to do some work. let me ask you now i was interested in reading the report

on page one you note consumer spending has been supported by the boost to dispose from the tax cuts and increases in benefit payments that were part of the 2009 fiscal stimulus package. with regard to state and local borrowing you know interest rates on long-term bonds declined in april as compared to the credit quality with the fiscal stimulus plan which included substantial increase of the federal grants and state and locality and in the discussion of the labour market there was reference to the fact that ironically one of the things that makes is the participation rate has gotten higher and that is a good thing because you know the emergency unemployment insurance from last july contributed to the participation. i am pleased these are three references by you to the positive impact to intervene in the economy in terms of boosting consumer spending in helping

state and local governments directly by revenue and than by keeping down their interest cost one of those counterfactual as you get to have fun with. we have problems and i think as i said it's good to know that you can on wind. i think a premature on winding would be a great mistake about the counterfactual is had we not passed the economic recovery plan in february of this year with the economy be better or worse? >> mr. chairman as you describe reading the and affected consumers and state and local authorities to have improved the situation so in that respect there's been positive impact but i would withhold the overall judgment since we've only seen about a quarter or less of the money being dispersed and i think there is some time to wait and see how significant the impact will be. >> the impact would have a

positive impact -- >> you would so it would tend to raise consumption, yes. >> i appreciate those points you have mentioned. let me just ask one last question. if the resulting authority resolve does appear to be dissolved, if that authority were vested in the appropriate agencies of the federal government would be aig and lehman brothers and merrill lynch situations have come out differently? >> what they have -- >> come out differently? >> of course it wouldn't have been necessary for the fed or even the treasury of t.a.r.p. to intervene in the situations with a good resolution of 40 we could have wound down the company's and the creditors take loss to eliminate or reduce the too big to fail problem. at the same time of waiting the very destructive effects particularly in the case of lehman on the world financial system. >> thank you. the gentleman from alabama.

>> chairman bernanke, the chairman frank asked about the commercial real-estate market. you mentioned t.a.l.f. programs for the new and legacy program. the new program has been in an operation about a month, is that right, taking loans -- >> yes, that's right. >> and the legacy just about a week, is that right? >> yes, sir. >> i noticed you were going to cut those of december 31st? >> the program right now is slated to end at the end of the year bill we will be reviewing those programs and others to assess whether or not they are needed beyond that time. >> i noticed several others on through the end of 2010. >> be extended several through february, not to the end. >> what is the state of the commercial real-estate market?

>> well, for a good bit of the recent years the commercial real estate market was pretty strong even as the residential market was weakening. but as the recessions have gotten worse the last six months or so we are seeing increased vacancy, falling prices and more pressure on commercial real estate which is raising the risk of lending to commercial real-estate so that is a negative and as it was mentioning to the chairman, the facilities for the refinancing commercial real-estate either through banks or the commercial real debate coke market seemed more limited so we are somewhat concerned about that and paying very close attention to it. we are taking the steps we can to the banking system and through the securitization markets to try to address it. >> i think that may be the wild card and i know the way to think this week came out with a report and barney last week obviously raised concerns.

you have talked about a resolution of 40 to veto authority for non-bank financial institutions. and you have referred to that as expedited bankruptcy. would it be within the bankruptcy code? would it be part of the bankruptcy regime? >> it would be a specially -- a special regime invoked only under circumstances of financial stress and it would be analogous to the law we currently have resulting failing banks which allows the regulators to intervene before the actual bankruptcy occurs to avoid the negative impact of bankruptcy on the market. so yes it could be a broad bankruptcy regime but there would be a special category of bankruptcy invoked only during financial crisis. >> enron, world,, drexel works very well, the bankruptcy regime and do you agree that it's very

important that you force creditors to internalize the cost of their credit decisions? >> absolutely otherwise you have it too big to fail institution which doesn't have any discipline other than the regulatory oversight. >> so this regime would totally reject the too big to fail? you wouldn't be asking taxpayers to guarantee or backstop losses. >> absolutely. too big to fail is an enormous problem. if we don't do anything else we need to solve that problem. this is critical because it would mean creditors would take losses if there are resolution costs the presumption is they would be paid by assessments on the other financial companies. >> with the republicans have proposed our financial services regulatory reform proposal includes an expedited bankruptcy within the bankruptcy code and i would ask you to particular

attention to that. one thing that i am also concerned about is even having the financial system take those losses or the taxpayers and i would hope that we would preserve a true if we call it expedited bankruptcy it is in fact expedited bankruptcy. thank the chairman for his testimony. >> the gentleman from north carolina. >> thank you mr. chairman. chairman bernanke, let me inquire into two areas i need a little clarification on. on page eight of your testimony this morning, you say that we are expanding our supervisory activities to include risk focused reviews of consumer complaints in non-bank subsidiaries of holding companies. what's the authority for that,

and i've been under the impression that one of the reasons that was not done previously is the fed didn't have that authority. is there a new authority or what, under what authority argue acting? >> well, the gramm-leach-bliley, that he would defer to the regulator in dealing with nonbanks, in and we have done this in collaboration with those bodies. the pilot program in iran to do the examinations of nonbanks, this was done in collaboration with these other bodies, and we believe in the cooperative spirit in looking at our responsibilities, and we believe there is a somewhat more pro- active stance that is justified.

that being said, i think that congress ought to clarify the presumption of its ability to look into these. >> it is clear that the fed had not been real proactive in the area prior to this crisis. is that right? >> yes. ok. all right. on page 5 of your testimony, you talk about the payment of interest on reserve balances, which we authorized last fall. had the fed not had that authority prior to last fall at all? ok. that seems to me to be, perhaps, it an even more powerful tools then the adjustment -- perhaps, and even more powerful tool -- an even more powerful tool than

the adjustment -- i guess i am a little surprised as to why some central banks have had that authority previously, and the fed has not. can you just give us a little history lesson on that? >> certainly, sir from banks do have that authority. -- some central banks do have that authority. there is a floor or backstop. the fed authorities go back to the 1930's, and we're actually, some of them were limited in these areas than other central banks. other central banks -- for example, we had to evoke an authority to amend it to be primary dealers for the investment banks, whereas in europe, for example, any financial institution can borrow from the central bank. institution can borrow from the central bank. >> am i overstating the power that is a potential tool for the

fed to use or do you perceive it in much the same way? >> many central banks around the world use what is called the carter system where they have an interest rate on reserves as the floor and then a lending rate like the discount window rate as the ceiling and that keeps the interest rate market interest rate between the two levels. a lot of banks use that so yes it is a very powerful tool and we wouldn't have been able to expand the balance sheet as we had if we hadn't had that tool to help with the exit. -- in your singing until last fall actually the fed extended the fed power before we granted this authority was actually substantially less than a lot of central banks around the world? >> that's right. >> okay. well, i guess that is a double-edged sword from some of

my colleagues. it gives the fed more authority they would likely future. your assessment is that as we wind down these positions that would be as important or more important than the fed funds rate? >> that interest on reserve rate will help control the fund. they should be closely together so they should be closely tied and both affect longer-term interest rates. so they will be working together. >> thank you, mr. chairman. >> the gentleman reminded me that decision to grant the fed that power was bipartisan, and in fact it first passed the house when the republicans were in the majority, the gentleman was the chairman of the subcommittee, did not pass the

senate, there was a lot of that going around, and it then came up again and it was again passed so that has been broadly supported on this committee although not unanimous which brings me to the gentleman from texas. >> thank you, mr. chairman. in the past, most members of the federal reserve board including your predecessor when they come before the committee endorsed in general the idea of transparency. they don't just say we are against restaurants, it's the definition that counts most members then but also argue for independence, which generally means that they don't want congress to el xm ackley what they are doing -- i saw an article in "the wall street journal" and there are a few quotes i wanted to ask you about, and i do know that all of us can get misquoted in the newspaper, but i want to clarify this because it is either

misleading or somebody is confused. and i want to see if i can figure this one out. and the first had to do with you saying that mr. paul's bill, 1207, the transparency bill, would interfere with the fed's interest rates decision and since i wrote the bill and the intention, and i know the intention has nothing to do with interference with monetary policy or interest rates manipulation there's nobody in the concourse going to be monitoring the federal open market committee. it is after the fact and all it can occur and find out what transpired. there is no management. so, is that your position that this bill if it were to be passed would interfere directly with interest rates, setting interest rates? >> welcome conagra's and paul, as you know at some point we are

going to have to start raising interest rates to avoid inflation and people talked about the politics of that and how whether the fed will be able to do that without intervention or interference. if we were to raise interest rates in a meeting and someone in the columbus didn't like them and said of the gao to audit the decision wouldn't that be viewed as interference or at least that exposed -- >> i wouldn't think so. this is just reviewing it and you can do what you want. what about today? interest rates are artificially low. could there be rates to keep interest rates low? it has been documented and written about how other federal reserve chairman, you know, they are on the verge of reappointment and they know the president and all of a sudden, so it's not like it isn't politicized now. it's just fact they can issue a low of loans and special privileges to banks and corporations that is political, this idea that it would be political because we know what

happened afterwards. it just doesn't seem to add up. since the time is short of want to go on to the next quote which i find fascinating because hopefully i can agree with you on this one because in actual quotes this says we absolutely will not monetize the debt. that's one of the major reforms in the distant future there would be beautiful because it would stop all of this chaotic monetary policy inflation and depression and recession and all the mess we have. but you say you will laugh at the same time i quoted the $38 billion that was bought last week and the plan to buy $300 billion of u.s. securities, these securities are bought by dollars you create, if you're buying u.s. securities, what is that if it's not, and besides, if the markets really believe that, that you would absolutely not monetize the debt i think the markets would get hysterical so it seems to me like i would

understand exactly what you mean by that. .. the true definition of inflation is when you increase the money supply in the immediate consequence is, it sends out false, that information to the marketplace so whether it is when the bubble is being formed

or afterwards, all you are doing is inflating constantly, doubling the money supply. interest rates are artificial and people make mistakes so it seems to me that you are in the midst of the massive inflation but i guess you have a different definition, when you double the money supply that is not inflation itself? or are you looking only at prices? >> may i respond? inflation is the change of the consumer price level which is very stable right now in their various measures of money and the broad measures of money, the measures of money in circulation like m-1 and m-2 are not going quickly. >> the gentlemen from california, mr. baucus. >> first oall i want to thank you and the ranking member for computing this hearing and i want to thank chairman bernanke for taking the time to be here once again. by first question is in reference to the derogatory reform plan put forth by the obama administration that puts a lot of faith in the federal reserve's ability to oversee the largest most interconnected firm

in the marketplace to prevent against failures. i have a question related to the financial oversight relate in this test. how you envision the role of the financial oversight council taking shape, just one of the questions and then it is my understanding that the council will play a purely advisory role have been no real power or wait in our regulatory issues and can you describe how the federal reserve would work with the federal consul under this proposed plan? >> yes sir. there is i think, of a misapprehension that somehow this plan makes the federal reserve a super regulator with powers to go wherever it likes. in fact there is a multiple part plan, multiple plants as you point out. a critical component is the council which will oversee the overall strategy and will look for emerging risks and advise regulators on what steps to take so in particular this issue about which large institutions

that that would oversee i think that would be prepared for the council to make that determination and not the federal reserve. the federal reserve will work closely with this council which again will have broadbased ability to gather information and look for gaps and problems in the regulatory system. and other major portion by the way is the resolution resume which would not be the fed be there. that would be the treasury of the fdic. that is critical to winding down firms. the feds role as envisioned by the administration is a modest three irritation of our current system. under our current system the federal reserve is the umbrella supervisor of all financial holding company so we are already the supervisor of essentially all the firms that would like to be identified is tier 1 terms-- firms under the administrations proposal, said the main differences would be we would have some additional authority to add capital liquidity it requirements based on-- and stromer ability to look

it nonbanks of says we were discussing before, vis-a-vis. the biggest challenge would be to take a provincial approach rather than looking at each firm intellectually the intellectual challenge would be to us the question is this not only is this from safe in its own situation, but does its failure threaten other firms, other markets ended so how should you adjust capital and other requirements to accommodate that so the challenging thing for us to do but it does not radically reorient our senate powers. >> as a follow-up question, would you then be in favor of increasing the authority of the council or are you confident the collaboration of the fed and the council would work as stated in the white paper? >> i am very open to discussing the role of the council. i think it is a very important role, to coordinate regulators to oversee the system to identify risks and so on but there may be situations, where

the counsel could have authority to harmonize different practices or to identify problems and to take action, so i think we should discuss you the congress, should discuss of the council should, what powers that should have. >> i hope we do in congress here, but let me refer back to an article that appeared in the "wall street journal this is july 20th, and in their the death of a global recession has required a highly accommodative monetary policies and you go on and on. bennett says we have greatly expanded the size of the fed balance sheet to the purchase of long-term security through targeted lending programs aimed at restarting the flow of credit. what do you mean by this? >> congressmen, our policy is using our balance sheet to try to improve the functioning of credit markets which been disrupted by the financial crisis over example we have been purchasing mortgage-backed securities which has lowered mortgage rates for every day american down to 5%.

we have opened up a program that is called the talf, which has helped increase funding in reduced rates on consumer loans like ata loans, steve loans and small business loans. we have taken actions to improve the function of the commercial paper markets of these various steps have tried to address the fact that during the crisis many markets have become disrupted and our actions have been trying to stimulate improvements and we have been fairly successful what doing that. >> in the second paragraph , you state that these actions have soften the financial crisis and have also approved a functioning key credits including the market for interbank lending, commercial papers, consumers, small business r your time expiring is not a good time to ask a question. but we cannot just extended that way. >> in those markets, t