this of this school for the finance committee in perils health care reform. it gives us all a chance to work toward progress. change is not going to happen overnight. we certainly understand that. >> do you know anything about the finance are the swearing in? >> i promise to check on that. i will look at that. i will try to have something in the week ahead. i would encourage you to talk directly to the supreme court. they may have a better sense of when she would be sworn in. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] . .

>> the senate voted on the confirmation of judge sonia sotomayor to the supreme court. she was confirmed by a vote of 68-31. nine republicans joined with 59 democrats to approve her confirmation. senator edward kennedy of massachusetts was the only senator not voting. a portion of the final hour of the floor debate. this is about 50 minutes. judge sotomayor to the supreme court i pledged we would treat

her with respect and our questions would be tough but always fair. it's an important office. i believe we have lived up to that obligation. again, i would like to thank chairman leahy and the members of the judiciary committee for their efforts. i think we it did help provide a basis for full debate in the senate. and i would like to thank judge sotomayor for her kind words regarding how the process has been conducted and the way she conducted herself. we've had a robust debate in the senate floor over these past few days and we've addressed many important questions and issues. the debate over judge sotomayor's nomination began with president obama's radical new vision for the american court system. according to the president, all nominees to the federal bench would now have to meet an "empathy" standard which requires judges to reach their most difficult and important decisions through "the depth and

breadth of their empathy," and "their billio billion"their brot america should be." this is a stunning ideology and turns law into politics. the president of the united states is breaking with centuries of american legal tradition to enter a new era where a judge's personal feel, about a case are as important as the constitution itself. the president's empathy standard is much more than a rhetorical flourish. it's a dangerous judicial philosophy where judges would base their rulings on social, personal, political, views. it's an attempt to sell, really, an old discredited activist philosophy by marketing it under a new label. it is this activist philosophy now under the guise of empathy that has led judges to ban the pledge of a becaus of allegianct

contains "under god," and to create a new right for terrorists who attack the united states -- rights never before found in our country or any other country, while robbing american citizens of their own rights to engage in activities like even a silent prayer. that philosophy also helps explain request judge sotomayor's panel on federal judges allowed the city of new haven to strip 18 firefighters of their elgibility for promotion on the basis of race and explains why judges have permitted cities and states to ban guns despite the constitution's clear language "the right of the people to keep and bear arms shall not be infringed." and it explains why judges have allowed governments to seize private property for private commercial development despite

the constitution pos guarantee'e that private property may not be taken but for public use. the standard may sound nice but it's cruel, it is, in truth, a bias standard. the power to rule on empathy is the power to rule on religion disasand thprejudiceand the powf any or all and embraces empathy at the expense of objectivity and equality and fairness. 18 firefighters in new haven worked, studied and sacrificed to pass the city's promotion exam but when the results did not fit a certain racial quota the city leaders just scrapped the results. the firefighters put their faith in the system and the system let them down so they took their case to court. but judge sotomayor summarily dismissed their case in a

one-paragraph order that did not even consider their civil rights claims. but the judge sotomayor who testified before the committee did thought effectively explain her ruling to deny the firefighters their day in court. she also did her best to distance herself from the activists philosophy she has so long spoken and championed. but it was an unconvincing effort. i believe she failed to offer a critical explanation for her critically important rule uniteo eviscerate gun and property rights. she failed to offer a credit build explanation of her policy role in a group that took extreme positions while, when pursuing racial quotas advocating that the constitution requires that the government fund abortions and opposing reinstatement of the death penalty. her effort to rebrand her

judicial approach stretched the limits of credulity. nevertheless, i believe we have had a deeply valuable public discussion. by the end of the hearing not only republicans and not only democrats but the nominee herself ended up rejecting the very empathy standard the president has used when selecting her and this process reflected a broad public consensus that judges should be impartial, restrainted, and faithfully tethered to the law and the constitution. it will now be harder, i think, to nominate activist judges. this is not a question of left v. right or republican v. democrat. this is a question of the true role of a judge v. the false

role of a judge. it is a question of whether a judge follows the law as haven't or as they might wish it to be. it is a question of whether we live up to our great legal heritage or whether or not it is abandoned. empathy-based rulings no matter how well-intentioned do not help society but imperil the legal system so circumstantial to our freedoms and so fundamental to our way of life. we need judges who uphold the rights of all, not just some, whether they are new haven firefighters, law-abiding gun owners or americans looking for their fair day in court. we need judges who put the constitution before politics and the right legal outcome before their desired personal, political, social outcome. we need judges who understand that if they truly care about society and want it to be strong

and healthy, then they must help ensure that our legal system is fair, objective, and firmly rooted in the constitution. our 30th president coolidge said of the constitution "no other document devised by the hand of man has ever brought so much progress and happenness to humanity, the good it has brought can never be measured." i certainly believe he is correct. that document has given us blessings no people of any country has ever known which is why real compassion is not found in the empathy standard but in following the constitution. judge sotomayor, however, has embraced the opposite view. for many years before her hearings she has bluntly advocated a judicial philosophy where judges ground their decisions not in the objective rule of law but in the subjective realm of personal

"opinions, sympathies and prejudices." a supreme court justice wields enormous power over every man, woman and child in our country, the primary guardian of our magnificent legal system because, i believe, judge sotomayor's philosophy of law and her approach to judging fail to demonstrate the kind of firm, inflexible commitment to these ideals, i must withhold my consent. mr. president, i see my colleague, senator leahy, is here. he has handled many of these cases over quite a few years. we didn't agree on a lot of the things that came up in the hearings but he committed to giving the opportunity to the minority party to have a full opportunity to ask questions and to raise issues and speak out.

thank you for that. i think you did credit to the senate. i than the chair and i would yield the floor. the presiding officer: the senator from vermont. mr. leahy: thank you, mr. president. mr. president, i thank the senator from alabama for his kind comments. as he knows i made similar comments about him this morning in the senate judiciary committee and i reiterate that here today. we did decide, both senator signaturesignatures and i we woo make sure much was heard. we may have difficult outcomes on how we will vote but we will have much heard. that has been done and i compliment the leaders of the senate. i ask unanimous consent that joy cheney of the democratic policy committee be granted floor privileges during today's session of the senate. of. the presiding officer: without objection, so ordered. mr. leahy: thank you, mr. president. we're about to conclude senate

consideration of this nominee. i thank those accepts who have evaluated this -- those senator whose have evaluated this nomination especially the republican senators who have shown the independence to join the bipartisan confirmation of this historic nomination and i thank all senators on both sides of the aisle who spent hours and hours and days and days in our hearings. some critics have attacked president obama's nomination of judge sotomayor by contending the picture for the supreme court to substitute "empathy" for the rule of law. these kittic critics are wrong t the president, they are wrong about sonia sotomayor. let's leave off the rhetoric and go to the facts. when the president announced choice of judge sotomayor ten weeks ago he focused on the

qualities he sought in a nominee. he started with rigorous intellect, mastery of the law. we should all agree with that. he then referred to recognition of the limits of the judicial role when he talked about an understanding that a judge's job was to interpret not make laws; to approach decisions without any particular ideology or agenda. but, rather, a commitment to impartial justice, a respect for precedents, a determination to faithfully apply the law to the facts at hand. that's what president obama said. and then he went on to mention experience. he said "experience being tested by those suffering barriers and hardship and misfortune, experience in persisting and ultimately overcoming the barriers." it is the experience that can give a person a common touch and a sense of compassion and

understanding how the world works and now ordinary people live. that is request it's a necessary ingredient in the kind of justice we need on the supreme court. and then the president concluded by discussing how judge sotomayor has all these qualities. the president was looking not just for lawyerly ability but for wisdom, for an understanding of how the law and justice work in the every day lives of americans. in a subsequent radio and internet address the president reiterated the point when he said -- and i quote -- "as a justice of the supreme court she will bring not only the experience acquired over the course of a brilliant legal career, but the wisdom accumulated over the course of an extraordinary journey, a

journey defined by hard work and fierce intelligence and the enduring faith that in america all things are possible." now, president obama did not say that he viewed compassion or empathy as a substitute for the rule of law. in fact, he has never said he would substitute empathy for the rule of law. that's a false choice. in that opposition -- and that opposition to this nomination is based on a false premise. when she was first named, judge sotomayor said, "i firmly believe in the rule of law as the foundation for all our basic rights." judge sotomayor reiterated time and time again during her confirmation hearing her fidelity to the rule of law. she said, "judges can't rely on what's in their heart. they don't determine the law. congress makes the law.

the job of the yuj is to apply b of the judge is to apply the law. it is not the heart that compels in cases. it is the law enforcement the judge applies the law to the facts -- the judge applies the law to the facts of the case." those who ignored her testimony should at least take heed of her record as a judge. judge sotomayor has demonstrated her fairness and impartiality during her 17 years as a judge. she has followed the law. there is no record of her substituting her personal views for the law. the many independent studies that have closely examined judge sotomayor's record have concluded that it is a record of applying the law, not of bias. what she has said and what we should all acknowledge is the value of her background shall

the value her background brings to her as a judge and would brin to her as a justice, our first latina justice. judge sotomayor is certainly not the first nominee to discuss how her background has shaped her character. justice o'connor has acknowledged we're all creatures of our upbringing. we bring whatever we are as femme a jobpeople to a job, liee suprem-- like thesupreme court. everybody knows that. all 100 of us bring what we are to the united states senate. many recent justices have spoken of her life experiences as influential factors in how they approach the bench. justice alito and justice thomas nominated by republican presidents did so famously at their confirmation hearings, and then they were praised by the republican side of the aisle for doing so.

indeed, when the first president bush nominated justice thomas to the supreme court, he touted him as an intelligent person who has great empathy. some of those choosing to oppose this historic nomination have tried to justify their opposition by falsely contending that president obama is pitting empathy against the rule of law. not so. not so. this president and this nominee are committed to the rule of law. they have recognized the role of life experience not has a substitute for the law or in conflict wits mandates but as -- with its mandated but as informing judgments. the question is whether there is a double standard being applied by those who supported the nomination of justice alito and

justice tom moss but choose to oppose the historic nomination of judge sonia sotomayor. judge sotomayor's career and judicial record demonstrate that she has always followed the rule of law. the point is, mr. president, we don't have to guess what kind of a judge she's been. she's had more experience on the federal court, both trial level and appellate level, than any nominee in decades. she will be the only member of the u.s. supreme court with experience as a trial judge. we don't have to guess. there are well over 3,000 cases. we don't have to guess. attempts at destroying that record by suggest that is her eth nighs tirks her heritage will be the driving force in her decisions as a justice of the supreme court are demeaning to women and all communities of color. i have spoken over the last several years about urging presidents from both political

parties to nominate someone from outside the judicial monastery. i believe that experience, respect, and understanding of how the world works and people live and the affect decisions will have on the lives of people are very important qualifications. by striving for more diverse bench, drawing from judges a wider set of backgrounds and experiences, we can better ensure there will be no prejudices and biases controlling our courts of justice. all nominees have talked about the value they will draw on the bench from their backgrounds. that diversity of experience is a strength. it is not a weakness in achieving an impartial judiciary. mr. president, i have voted on every member of the united states scosht. i've been on the hearings of all

but one. and that one i voted on the nomination. i sat in the hearings of judges -- justices no longer there either because of retirement or death. i have conducted thousands of nomination hearings, everything from courts of appeals judges, federal district court judges, members of the department of justice, the rank and member of supreme court nominations and conducted this one. i mention that to thank the senator from alabama for his cooperation during it. you know, after those thousands of hearings, you get a sense of the person you are listening to. now, i met for hours with judge

sotomayor either in the hearing room or privately. you learn who a person is. you really do. you really do in asking these kinds of questions. you have to bring your own experience and your own knowledge to what you're hearing. there's only 101 people in this great nation of 300 million people who get a say who's going to be one of the nine members of the u.s. supreme court. first and foremost, of course, the president, who makes the nomination. but then the 100 of us who must follow our own conscience, our own experience, our own abilities in deciding whether we'll advise and consent to that nomination. mr. president, it's an awesome responsibility, and we should do it not because we are swayed by

any special interest group of either the right or the left. in fact, i have a rule -- my office knows this very well -- that in supreme court confirmations, i will not meet with groups of either the right or the left about it. i'll make up my mind signature through hours and days -- sitting through hours and days of the transcripts and hearings. i would urge all senators to do that. i think it is unfortunate if any senator of either party made up their mind on a supreme court nominee based on the whims or the ideas of special interest groups or special pressure groups from either the right or the left. that's a disfavor to those hundreds of millions of americans who don't belong to pressure groups of either the right or the left. they expect us to stand up.

that is what we should do. that is what we should do on judge sotomayor. this is an extraordinary nominee. i remember when president obama called me a few hours before he nominated her. i was out with our troops in the fields in afghanistan. and he explained what he was going to do in just a few hours. he talked about that. we talked about asmg we talked especially about-- --we talked about afghanistan. we talked especially about her. he said, they are web sites already developing opposed to her. within hours we had leaders calling her the head of the ku klux klan or being bigoted, senators on neither side joined with that. it would be unfortunate.

mr. president, we're almost at a time for the vote. i would hope every senator would search his or her conscience and say, are they voting for this based on their oath of office, based on their conscience? or are they reflecting a special interest group? when the judiciary committee began the confirmation hearings on this supreme court nomination and when the senate this week began its debate, i recounted an insight from dr. martin luther king jr. which is often quoted by president obama, "let us realize the arc of the moral universe is long, but it bends toward justice. it is distinctly american to continually refine our union, moving closer to our ideals. our union is not yet perfected, bu"but with this confirmation we

will be making progress. years from now, mr. president, we will remember this time when we crossed paths with the quintessentially is american journey of sotomayor seentdz when our nation took another step forward through this historic confirmation process. i urge each senator to honor our oath, our constitution, and our national promise by voting his or her conscience on the nomination of sonia sotomayor to serve as a justice of the united states supreme court. i will proudly for for her. i see the republican leader, and i would reserve the balance of my time. the presiding officer: the republican leader is recognized. mr. mcconnell: mr. president, once again i'd like to thank the chairman and the ranking member

of the judiciary committee, senator leahy and senator sessions, and their staffs for conducting a dignified and respectful hearing. from the beginning of the process, i assured judge sotomayor that republicans would treat her fairly. at the end of the process, i can say with pride that we kept that commitment. this particular nominee comes before us with an impressive resume and a compelling life story. yet the question that we must ask ourselves today is whether we believe judge sotomayor will fulfill the requirements of the oath that's taken by all federal judges to administer justice, without respect to persons; that is, to administer justice even-handedly? president obama asked himself a different question when he was looking for a nominee. the question he asked is whether that person has the ability to

empathize with certain groups. and as i've said, empathy is a fine quality. but in the courtroom, it's only good if the judge has it for you. what if you're the other guy? when he walks out of the courthouse, he can say he received his day in court. he can say he received a hearing. but he can't say he received justice. now, at her hearings judge sotomayor was quick and even eager to repudiate the so-called empathy standard. but her righ writings reflect a belief not just that impartiality is not possible but that it's not even worth the effort. judge sotomayor's record of complex constitutional cases concerns me even more. because in judge sotomayor's court, groups that didn't make the cut of preferred groups

often found that they ended up on the short end of the empathy standard. and the consequences were real. one group that didn't make the cut in judge sotomayor's court were those who need the courts to enforce their first amendment rights to support candidates for political office, free from government interference. she is free to express her personal opinions on this issue, as she did when she wrote that merely donating money to a candidate is akin to bribery. but as a judge, she was obligated to follow clear supreme court precedent. and when it came to this issue, she followed her political beliefs instead, voting not to correct her circuit's clear failure to follow the supreme court precedent in this area of the law. ultimately, the supreme court in a 6-3 opinion authored by justice breyer corrected this error by her circuit on the

grounds that it had failed to follow well-established precedent. another group that didn't make the cut were those who need the courts to protect them from unfair employment preferences. as a lawyer, she advocated for and in fact helped plan lawsuits that challenged civil service exams for public safety officers. and as a judge, she kicked out of court, with just six sentences of explanation and without any citation of precedent, the claims of a group of firefighters who had been unfairly denied promotions they had earned. this past june, the supreme court reversed her ruling, making her 0 for 3 this term with all nine justices finding she had misapplied the law. gun owners didn't make the cuss, and -- make the cut, and they haven't fared well before judge sotomayor either. she has twice ruled the second amendment isn't a fundamental right and, thus, doesn't protect

americans when states prevent them from bearing arms. and here too she didn't even give a losing party's claims the dignity of a full treatment. in one case she disposed of the party's second amendment claim in a one-sentence footnote. in the other, she did it with a single paragraph. property owners weren't on the list either, and they too haven't fared well in judge sotomayor's court. in an important fifth amendment case, the amendment that protects against government taking private property, judge sotomayor broadened even further the government's power, a ruling which one property law expert called one of the worst property rights decisions in recent years. in her ruling in this case, fit an all too familiar pattern. she kicked the agreed party's theory as constitutional claims out of court in a summary order with only a brief explanation as

to why. these important cases illustrate the real-world consequences of the empathy standard in which judges choose to see certain facts but not others and in which it's appropriate for judges to bring their personal or political views to bear in deciding cases. lieutenant ben vargas, one of the firefighters who did not farewell under the empathy standard, may have put it best. speaking of himself and the other plaintiffs in that case, he said, "we did not ask for sympathy or empathy. we ask only for evenhanded enforcement of the law, and we were denied that." lieutenant vargas understands what most americans understand and what all of them expect when they walk into a courtroom. that in america everyone should receive equal justice under the

law. this is the most fundamental test for any judge, and all the more so for those who would sit on our nation's highest court, where a judge's impulses and preferences are not subject to review. because i'm not convinced that judge sotomayor would keep this commitment, i cannot support he. the presiding officer: without objection. mr. reid: mr. president, on may 17, 1954, the supreme court of the united states handed down a ruling that would begin to reroute america toward a more unified union. when the justices unanimously directed in brown v. board of education that our children's schools must no longer be racially segregated their decisions he echoed far beyond e courtrooms in washington, d.c. or a classroom in kansas. the decision paved the way for countless future terms that would make our nation more just and its people more equal. not six weeks later after that

opinion, sonia sotomayor was born in the south bronx. in her lifetime, this senate has sent to the supreme court the only two women and the only two americans of color to ever sit on that bench. in the ten weeks since president obama made history by nominating judge sotomayor, many have emphasized the importance of putting the first hpanic on the nation's highest court. this is truly historic for our entire nation, but especially for the young latinos in this country who will see and judge sotomayor, concrete evidence of the heights to which they can legitimately aspire. but it is no less significant in a country where women represent half of our population, judge sotomayor will be the third woman -- only the third woman -- to ever serve as a justice and will be one of only two women serving on the court today. in many ways justice sandra day

o'connor and ruth bader ginsburg have made this day possible for judge sotomayor. because of the trail these women -- that is o'connor and ginsburg -- and others like them have forged, judge sotomayor has been recognized throughout her career for her intelligence, talent, and accomplishments rather than being defined by her gender. it wasn't easy, mr. president. justice o'connor finished high school at age 16. and when she finished stanford law school -- one of the finest law schools in the world -- a year early, she did it in two years, she was third in her class. two behind justice rehnquist. no law firm in california would hire justice o'connor as an attorney because -- because -- she was a woman. the most one firm would offer her was a position as a legal

secretary. when justice ginsburg arrived at harvard law school, she was greeted by a dean who asked why the nine women in her class -- a class of about 700 people, mr. president -- why nine women in her class were occupying seats that could otherwise be taken by men. little did he know she would later join another group of nine legal experts whose membership was long restricted to men, the supreme court of the united states.like justice o'connor, je ginsburg did not receive a single offer with any of the 12 law firms with which she interviewed even though she finished first in her class at harvard. when she was recommended for a clerkship to supreme court, at least two of the justices refused to hire her. why? she was a woman. america's grateful that o'connor and ginsburg didn't give up.

we're fortunate that their voices and the real world perspective they brought to the table were part of the debate during some of our nation's landmark cases on gender equality. in the lily ledbetter, 2007 case before the supreme court, justice o'connor's successor, sam alito wrote the majority opinion in a 5-4 ruling that made it virtually women and other victims of pay discrimination is fight back. justice ginsburg, who herself had been a victim of pay discrimination on more than one occasion because she was a woman, read her powerful dissent allowed from the bench. it's rarely done. but she voiced her dissent in the 5-4 opinion and she invited congress to correct this injustice. and we did that. we changed the law. and after we passed the lily

ledbetter fair pay act this year, it was the first piece of legislation president obama signed into law. similarly when supreme court heard the case of a 13-year-old honor student, a girl, who had been stripped searched at school, justice ginsburg and her colleagues minimized the humiliation that this 13-year-old girl has suffered. justice ginsburg noted that she was the only one in the court who had -- and encouraged her colleagues to take that into account -- had been a 13-year-old girl. and encouraged her colleagues to take that into perspective. the court rightfully ruled tha a search was unreasonable. that would not have happened but for ruth ginsburg. judge sotomayor's life decisions will not dictate her decisions anymore than ginsburg, scalia, o'connor have let their pasts

ascribe their own rulings much she will bring a perspective not only as a woman and hispanic, but also as a former criminal prosecutor beings commercial litigator, trial judge and appellate judge. she'll share the depth and breadth of that experience with her colleagues just as they'll able to share their own unique views on any case with her. their own views. justice o'connor has said that the first african-american justice, justice marshall opened for his colleagues a different world and was able to relate for them experiences that they could not know. justice ginsburg and o'connor did the same and so will judge sotomayor. a more diverse supreme court is a better supreme court. judge sotomayor's journey to this day, mr. president, has not been without obstacles. but because of the struggles fought by those who came before her, she has been able to succeed. today the senate will make

history by confirming the first hispanic, the third woman, and the third person of color to supreme court of the united states. but equally as important we'll also make history by confirming someone as qualified as sonia sotomayor. her experiences come not only from the legal world, but also the real world. her understanding of the law is grounded not known theory, but, mr. president, also in practice. her record is beyond reproach. her respect for the limits of the judiciary are resolute and her reverence for the law is unwavering. sonia sotomayor is an american of tremendous credentials. both her academic record and her career experience are second to none. she graduated summa cum laude from princeton university and excelled at yale -- again, stanford, harvard, yale, always

in the top three of law schools of the country. she excelled at yale where she was a member of the law review. the prestigious yale law review. mr. president, after she's confirmed, she'll be the only justice who has seen trial from every angle. she's seen a trial from prosecuting civil and criminal cases, she presided over them as a judge and also as an appellate judge. that is the kind of justice we need on the supreme court. mr. president, i've had concerns for quite some time that we have far too few judges on court who have had trial experience. as a trial law, i've tried more than 100 cases to juries, that experience to someone sitting on that court is important and she will bring that. and that's so important. we have too many supreme court

justices who have never conducted a trial. many never been involved -- some of them never involved in a try. they looked at the cases from an appellate purview. i want someone who has looked at a case from a trial court perspective. as the distinguished ranking member of the senate judiciary committee, senator jeff sessions of alabama said shortly after her nomination of -- judge sotomayor's nomination, and i quote -- "she's got the kind of background you would look for. almost an ideal mix of private practice, prosecution, trial judge, circuit judge. " end of quote. mr. president, i couldn't agree more with my friend jeff sessions. her experience as a trial judge will be invaluable to the supreme court. as a former trial lawyer, as i've just indicated, mr. president, a judge is more than just a political title to me. it is someone who understands

the law and sees every day how it affects people -- real people. when i look at judge sotomayor, i see someone who knows what really happens in a courtroom, which is an arena unlike any other arena in the world. we tend to think of supreme court cases as major milestones that change the arc of our history and define our principles. and they do. but they often begin as ordinary, routine cases before a trial judge. it could be a traffic stop that winds up in supreme court. it could be a protest in a park. it could be the placement of some monument in a park or some public place. it could be a dispute over money. linda brown was a girl just trying to go to a public school close to her house in topeka, kansas, setting in motion of the beginning of the end of segregation, brown v. board of education. linda brown was that little girl

who wanted to go to school close to her home. judge sotomayor understands people like linda brown. she's developed a 17-year record as a moderate judge who's squarely in the mainstream. one of her colleagues on the second circuit court of appeals for our country has credit card sotomayor with such an insightful and convincing understanding of the law that she changed his mind many times. he said and i quote -- "i would read one of the memos she had written on a case and say -- i think she's got it and i don't." end of quote. this is one of the reasons that both republican and democratic presidents have nominated her to the federal bench. it's the reason she's been confirmed twice by this body with strong bipartisan support. it's the reason that liberals and conservatives a like in the -- alike in the senate today will vote to confirm her.

this woman's brilliance was on display last month. remember, mr. president, she had just broken her leg. but she stood four days of grueling testimony with some of the finest legal minds in our country, the democrats and republicans of that judiciary committee, and she did a good job in a very difficult situation. she was asked tough questions and she gave honest answers. judge sotomayor has been credit card with saving baseball in one of her opinions, hit that out of the park in her testimony and her -- her presence before that judiciary committee. if it were ever a home run, she hit it. i thank chairman leahy, my dear friend who has been so good to me for so many years. i think back fondness of our time here together in the senate. i thank ranking member sessions,

who has always been a gentleman to me. we disagreed on many public issues, political issues, but never do we disagree on our friendship. so i appreciate chairman leahy and senator sessions for running a thoughtful and thorough confirmation hearing. i appreciate the generous and genuine cooperation of my colleagues who support this nomination as well as the respect of those who have shown their dissent. but, mr. president, i commend barak obama, the president of the united states, for selecting such an accomplished and qualified nominee to replace justice souter. mr. president, it's with some sadness that i stand here today and recognize that david souter will no longer be on the supreme court.

i can say about no other member of the supreme court that i can say about david souter. david souter was my friend. she did things socially and we had meals together. what a wonderful human being. i'll miss him. he's always been a powerful defender of constitutional rights, whether it is the state of new hampshire constitutional rights or our country's constitutional rights. all americans thank this good man for his decades of service to this nation. and he has more to give. i'm confident, though, that judge sotomayor will soon build upon her impressive record, which is already very impressive when she is across the street at supreme court. i'm certain she'll leave the -- leave the writing of the law to those of us on this side of the street. and that's our job. and that she will impartially an faithfully fulfill her constitutional duty to apply

only the laws that we pass here. now, i also -- i'm also convinced, mr. president, she'll pledge when she soon takes the same oath, every justice before her has taken, i'm convinced she'll administer justice without respect to persons and do equal right to the rich and to the poor. sonia sotomayor has risen remarkably from the trials of a modest upbringing in the south bronx in new york, to presiding over major trials on the federal bench. and all americans, men and women of every color and background, can be confident that she will ensure equal justice under the law in our nation's very highest court. that's why, mr. president, i am so proud to cast my vote in just a few minutes for the confirmation of sonia sotomayor as an associate justice of the united states supreme court.

>> president obama met with reporters following the vote. the final vote was 68-30. this is less than five minutes. >> i am pleased that the senate has voted to confirm sonia sotomayor as our when hundred 11th supreme court justice. i want to thank the senate judiciary committee. thank you for giving her a thorough and serious hearing and for doing so in a timely manner so that she be fully prepared to take her seat when the court's work begins this september. the members of our supreme court are granted life tenure and are charged with the vital and

difficult task of applying principles set forth that our founding to the controversies of our time. members of the senate judiciary committee have assessed her fitness for this work. they scrutinized her record as a prosecutor and as a judge. they engaged her respect for the proper role of each branch of our government, her commitment to faithfully applied the law to the fact that hand, and her determination to protect our core constitutional rights and freedoms. with this historic vote, senate has affirmed that she has the intellect, temperament, history , integrity, and the independence of mind to a police serve on our nation's highest court. this is a role that the senate has played for more than two centuries, helping to ensure that equal justice under the law is not merely a phrase

inscribed of of our courthouse door, but a description of what happens every single day inside the courtroom. it is a promise that whether you are a mighty corporation or an ordinary american, you will receive a full and fair hearing. in the end, the outcome of your case will be determined by nothing more and nothing less than the strength of your argument and the dictates of a lot. these core american ideals, justice, equality, an opportunity are the very ideals that make justice sought my your -- justice sonia sotomayor's journey so important. it is moving us a step closer to a more perfect union. like so many other aspects of this nation, i am filled with pride at this achievement. i am filled with great confidence that she will make an outstanding supreme court justice.

this is a wonderful day for sonia sotomayor and her family, but i think it is a wonderful day for america. thank you, everybody. quote following the vote, the senate democratic leadership talked about the confirmation to the supreme court. this is just under 15 minutes. >> my maternal grandparents told my mother and my siblings that if you strive, you can accomplish anything because this is america. my wife's parents emigrated to this country. again, it was, you do any thing, you work hard. it is america. here we have somebody with a

distinguished career as a trial court judge, a court of appeals judge. more experience than anybody who has been nominated in decades. this is -- this is the american dream. it is the dream that we all speak about when we campaign. what we have done now is make it real. we have several members of the judiciary committee here, as well as leadership. >> i just want to say, thank you to our chairman who drove the

judiciary committee through these hearings. finally, here we are. we have a new supreme court justice. i think it is truly a great day for the united states supreme court. i think it is a great day for the law. i think it is a great day for justice. i think it is a great day for every young woman out there that says, yes i can, i can do it if i work hard. that is the message of this particular justice. as has been said, she brings 29 and a half years of legal experience to the supreme court. she has seen every aspect of the law as a prosecutor, as a business lawyer, as a district court judge, as an appellate court judge. she knows the federal courts and she knows what justice is up close and personal.

she visited with close to 90 centers. she had a broken ankle. i know a little bit about what that is like. she sat behind that table with the leg propped up and in pain day after day. she did not lose our cool. the questions were hard. they approach, they tested, and she did not respond or take the bait. i think she is going to be a wonderful supreme court justice. i think our nation is going to be really well served and the supreme court is really lucky to have her. >> thank you. as new yorkers, we are so proud -- as americans, we are so proud. this is a great day. it is a great american story. i am glad that she was voted on by more than 2-1. that will say something about

the best of america. i want to salute our nine republican colleagues who had tremendous pressure on them. this was not a free will decision on their side of the aisle. there was all kinds of pressure to vote no. nine have the courage to do the right thing and vote yes. that is important as well. i believe that sonia sotomayor will become a great justice of the supreme court. why? well, this actually was the idea when i talked to the president about her. he said, what makes the leaders of the court are their experiences and their powers. she has got it. she is not just going to be another vote. she is not just going to be another voice. she is going to be a real leader that will lead this court back to the mainstream, which is what this country needs. i want to thank all my colleagues. i want to thank chairman leahy

who led this fight, leader reid who was undaunted in making sure that this happened before the august break. it is just a great day. >> centre menendez is joining us. >> thank you. let me start up by thinking chairman leahy and all the members of the judiciary committee for the incredible work that they did in making sure that the real judge sonia sotomayor appeared before the committee in terms of what her experience was, and for the leadership as well in making this happen. for hispanic americans, today, the metal over the supreme court that says equal justice under the law becomes one step closer to reality. sonia sotomayor and i were born in the same year. we lived on opposite sides of the hudson river.

i was raised in a tenement and she was raised in a public housing project. if you would say that i would be one of the senator's casting a vote for sonia sotomayor and you ask her, would you be a supreme court justice, which probably would have told you at that time, it is highly unlikely. it is the promise of america fulfilled. it is a promise that we will one step closer to making this the more perfect union. it is the coming of age in america. she will be, i believe, one of the great supreme court justices that we have seen in the history of the court. >> thank you for your skillful leadership and your determination that sonia sotomayor be given her day before the committee. i would like to congratulate the republican members of the judiciary committee. i think they conducted

themselves with professionalism. in just a few days, the doors of the supreme court will open for the new justice, sonia sotomayor. when those doors open, the door of opportunity is going to open a little bit wider in america. each generation gets a chance to open that door a little bit wider. today, we use that opportunity to give sonia sotomayor a chance to serve her country at the highest levels of a record. >> are there other members of the judiciary committee -- i want to thank everybody here.

i want to think so many others who work hard on this. i really appreciate the members of the judiciary committee who sat through all of these hearings, work hard on them, and if anybody has any questions, for this chairman, it is a very happy day period. -- a happy day. .

whether you were mexican-american, puerto rico-american, myself as a cue can-american, it was united because not just of the pride but because of the pride of someone who was eminently qualified and who showed her abilities before the judiciary area committee. but what it says to us as a community for so many of our colleague, and i do appreciate those that joined us in this

vote, i think it's important to look at the person not just the partisan. for hispanics, we often get told, you have to work harder. so when you have someone who graduates from princeton, fy baita cap -- phi beta kappa and who is exemplary in her work and who goes on as a corporate it will gator then goes on to the district court with great distinction, then goes toe appellate division. and finally comes to break the barrier and come to the united states supreme, if you meet all of the challenges that you are told to meet and still you can be told know despite fidelity to the constitution, law and precedent, then it sends a tough message to our community.

and that message will be seriously viewed in the days ahead by the community. >> mr. chairman, the fact that republicans -- i wonder if there is another vacancy to go ahead and dominate whoever you want? >> i advise the president to do exactly -- exactly what he did this time, pick the most qualified person possible. and nominate them. that's what he did. that's what he will do if there's another vacancy. this is not a political -- and this is he nominated the most qualified person. he nominated a very good person. i am delighted to see another woman on the court. i'm delighted to see a hispanic on the court. but most importantly, as senator menendez said i'm delighted to see someone well qualified. there was some as i had a

feeling as i said before that president obama voted moses the law giver, they would have voted "no." i mean, god. the message to the president, just keep doing what you've been doing. nominate the best person you can find. we'll get them through. >> yeah. >> ok. thank you you all very much. >> well, done, chairman. >> i said you're move -- the white house. >> today the full senate confirmed sonia sotomayor as the newest supreme court justice. this saturday on c-span watch high lights from the senate floor debate on "america and the courts." and enter the home to america's highest court.

the supreme court. >> coming up next on c-span, remarks on the economy by christina roamer. after that a senate hearing on the status of the u.s. postal service. then a portion of today's floor debate on the confirmation of sonia sotomayor to become a supreme justice on the spream court. -- supreme court. >> on tomorrow's "washington journal" joel simon executive director on the committee to protect journalist, talks about the jailing of the jourgeis abroad and conditions of reporters working abroad. max pappas discussing that organizations efforts protestors of president obama's health care initiatives at

congratulations conferences. illyse hoge will be talking about about the conferences. >> sunday frank rich talks about future of the internet, the white water hearings and his column following 9/11. sunday on c-span. now christina romer, president of the white house council of economic numbers talks about the economic package. the economic club of washington host this is event. it's 50 minutes.

>> can i have everybody's attention? could i have your attention for a moment? thank you. we're going to start right on time. >> i first want to acknowledge the presence of some special guests, the ambassador from india. ambassador shakar's here. [applause] >> and the vice chairman of the d.c. city council, councilman jack evans. and we have representatives from the embassies of poland, australia and russia r russia here as well. -- russia here as well. >> let me begin by introducing our special guest dr. romer. as many of you may no dr. rome is the chair of economic advisors. that position was established by the employment act of 1946 where it was decided that the president of the united states

needed some independent objective, economic analysis and advice and from the time that the chair and the council was created in the late 1940's it has has some of the most ex-twinished economies in our country. ar author burns, paul mccraken, ben bernanke and air lan greenspan. dr. romer is certainly within that tradition. she is one of the best known economist in the country, one of the best macro economistists in the country. she served at berkly. and in that position became an expert on the depression, the history of the depression, and the consequences of the depression. she came the leading expert on fiscal policy and what type of effects it had on the economy by changes in tax policy. she did a lot of this work with

her husband who's also an economist economist. and that shows a lot of interpersonal skills. being married is difficult enough. being married to someone in the same difficult is difficult but also writing articles and still raising three children very, very difficult. she pulled it off with her and her husband. they hope that their eighth grader will go into economics. she has a unique role in this respect. historically people who have been the chair have often fought for time for the president of the united states because there are people who want to see the president. and the chair doesn't get to see the president quite as much as they would like. but in this case, i think she

has had more time with the president more face time with the president than any of her predecessors over the years and that's in part because she participating in the daily briefing of the president on economic matters and as a result she sees the president every day, if not several times a day. she play as leading policy role in helping to formulate the economic policies of this administration. she would like to talk about the fiscal stimulus and the consequences of it. i think after she's done her remarks, we will have time for questions from the audience. so thank you very much. now it's my honor to introduce the council of economic advisors chair dr. christina romer. [applause] >> i think you took my speech. [laughter]

>> all right. well, thank you. it's lovely to be here. it's an honor to speak in front of such a distinguished group. a couple of weeks ago we hit the five-month anniversary of the american recovery and reinvestment act. the recovery act provided $787 billion of tax cuts and government spending or roughly 5% of g.d.p. making it the boldest counter cyclical stimulus in american history. it was a central pees of the administration' wide-ranging program to rescue the economy from the worst recession since the great depression and to build a foundation for a stronger more durable prosperity. over the spring and the summer there's been a lot of chatter about what the recovery act was doing. and i'd like to spend a little time this morning presenting a clear-eyed assessment of what

its accomplished and what we can expect going forward. this week as a natural time for such assessment coming on the heels of last friday's g.d.p. result. this report gave us a look at the overall economic performance and a clearer sense of the depth of the recession over the past five quarters. now in a somewhat unusually whimsical moment, i sent in as a title for my talk "so is it working? " given the provocative title i should probably get straight to answer. absolutely. the recovery act taken to stabilize financial markets is helping to slow the decline and change the trajectory of the economy. it's providing a crucial lift to aggregate demand at a time when the economy needs it most. and we anticipate that the

effects will build through this year and the beginning of the next. let me begin by discussing the motivation for the fiscal stimulus and the logic blind its design. the u.s. economy slip into a recession in december of 2007. the initial down turn was relatively mild. real g.d.p. declined at an annual rate of .7 of a percent. and job loss was about 100,000 per month. indeed a tax rebate began going out last april in late april of 2008 contributed to positive g.d.p. growth in the second quarter of last year. unfortunately, worsening decline and house stock, stock prices led to a fall in consumer spending and sent shock waves throughout our financial system. the collapse of lehman brothers set off a panic and led to a devastating freezing up of our financial system and a collapse

of lending. by the time president obama announced his economic team just before thanksgiving, it was clear that the economy was deteriorating rapidly. now just how sick the economy would prove to be and how fast it would fall we're still unclear. new data on the u.s. and world economic conditions was coming in each day. but there was no question in our minds that the economy was in its most precarious position since the great depression. at a meeting in chicago in mid december we urged the president elect to hit the financial crisis and the burgening recession with as much force as possible. now the corner stone of our suggested response was a bold fiscal stimulus. our reasoning was simple. the federal reserve had done a great deal to stimulate demand and to help ease the credit crisis following lehman's collapse. but by mid december, the fed was running low on ammunition. the federal funds rate was near zero. and the fed has created a

multitude of special lending facilities. with the demand offal and the rapid spread of the down turn to our key streading partners there was no real prospect that the private sector would generate a turn around in demand any time soon. thus, although stabilizing the financial system and helping to stress home owners was essential it would not be enough. we needed to bring the other main tool that a government has to counter act a clatcliss mick decline in the past few months some have tried to portray the fiscal stimulus as an exotic tool. it is a tried and true remedy supported by economists across the political spectrum. to use a medical analogy. this is a well-tested anti-biotic. it can help to counter act a recession. it's almost as widely accepted as any in economics.

up there with supply and demand and the quantity theory of money. it has helped both parties. franklin roosevelt enjoyed spending greatly. dwight eisenhower expanded the highway program and accelerated other types of spending to try to counter act the 1958 recession. gerald ford in 1975 and george w. bush used tax cuts to help end recessions. there's also ample evidence that fiscal stimulus works. many studies has been done to help measure the effects. now this sense that fiscal stimulus is the obvious step to take is born out by the actions of other countries. so this figure shows the size of fiscal expansions in a

number of countries in 2009. virtually what you see from this is that virtually every country has enacted fiscal expansion during the current crisis. they've done so because it works. with the fiscal stimulus that that they helped to create was not only bold but well-conceived. the president aimed for a package that was large and got good employment bang for the fiscal buck. it was designed to provide lift for two years because we knew the economy was going to face an extended period of weakness. at a a time when it was already large, we could not create jobs by digging ditches. they had to satisfy genuine needs and leave us with public investments. now the final legislation was very well diversified. some of our critics seem to have missed the fact that

roughly 1/3 of the $787 billion took the form of tax cuts for american families and businesses. another third was aide to state governments to help them keep workers employed and to not help taxes and a, people hurt through the recession, by programs. and state budgets have swung into extreme deficits. both of these types of spending look even more crucial back in december and january. finally, roughly 1/be of 2 stimulus package was for public investments. now much of this spending was for conventional infrastructure, roads, water profpblgts. but some was more uniquely 21st century. investments and r.l.d. a smarter electrical grid. so far i've reminded you of why we took the actions we did. why we worked so hard to pass the recovery act. let me turn to the question i

started with. so is it working? well the first thing to say is that the money is absolutely going out the door quickly. as of the end of june, more than $100 billion has been spent. those numbers are rising. and we are in track to spend 70% of the total by the end of the last fiscal year. some believe ha -- that the government can never do something well. but it is a model of efficiency and transparency. the biggest problem so far occurred when a blogger misinterpreted an entry and reported that we spent $1 million for two pounds of ham. it turns out it was for 760 pounds of ham in two-pound packages. that went to food banks and soup kitchens. i can tell you that the vice president is a man on a mission and is determined to get every

dollar -- every dollar will go out quickly to the high value projects that it was designed for. >> and the program is working. millions of unemployed worker have seen extra money in their unemployment checks. 95% of american households saw a tax cut. my father and all the other social security recipients got their $250 check in may. state and local governments employees like teacher, police officers and firefighters are still working because of the increase of the federal spending to the states. 2,500 road construction projects are underway. the recovery act signs that we see popping everywhere will be as ubiquitous as the n.r.a. blue eagle was back in the 1930's. all right. well, even if this it's recovery act is working on the

ground sense, there's still the question of whether we can see it in the overall performance of the economy. and here i can't resist pointing out a fallacy in a common critique. throughout the spring i frequently heard people say, the unemployment rate sp even higher than you all predicted without stimulus. that means the policy isn't working and may be actually making things worse. >> well that argument is to quote a recent "new york times" editorial. "just plain silly." >> suppose that you go to your doctor for strep throat and he or she pribes an anti-biotic. some time after you get the prescription and even after you've taken your first pill, your fever spikes. do you conclude that the anti-biotic caused your infection to get worse? where are you probably conclude that it was more serious than you or your doctor thought and are very glad that you started

taking the method sin when you did. -- medicine when you did. >> it is true that the u.s. and world economies went down much faster last fall and winter than we and almost all forecasters exmented. the revised g.d.p. statusics was about twice as large as the preliminary estimates at the time indicated. and the rise in the unemployment rate has been exceptionally large even given the large fall in g.d.p. that we now know occurred. the fact that the economy degenerated between january and march simply reinforces how crucial it was that we took actions when we did. having gotten that off my chest, let me return to the question. a little more than five months after the recovery act was passed, can we see the effects on the macro economy? and again, the answer almost

surely yes. the reason i say almost surely is because the recovery act has been in effect for five months. that means we only have one quarter of economic data -- data on economic outcomes. if there is one thing i have learned is not too read too much into any one number. but with that disclaimer in mind, let me show you a graph of the growth rate of real g.d.p. after falling considerably and indeed progressively more deeply in each of the 3/4's before the most recent one. the fall in g.d.p. mod rated substantially. after declining 6.4% in the first quarter of 2009, it fell at a rate of 1% in the second quarter. now to be sure the economy is far from healthy. and we obviously, have a tremendous distance to go. real g.d.p. after all is still

declining. but economies don't switch from rapid decline to robust growth all at once. given what we now know about the frightening momentum of economic decline in the first quarter. it would have been hard for the economy to stabilize much faster than it does. now this graph shows you the growth rate -- shows you the change in the growth rate of real g.d.p. for the last 25 years. the rise in g.d.p. growth from the first quarter to the second was the largest in almost a decade. and the second largest in the past quarter century. all right. now this picture shows the change in payroll employment over the recession. a key independence caste kay tor of just how brutal this reception has been is the fact that in the first quarter of this year, we lost nearly 700,000 jobs per month in the second quarter, we lost on average 436 jobs per month. this rate of job loss is

horrendous. but the change does suggest that we are on the right trajectory. this figure, again shows the change in the change in employment. and the movement in job loss from the first quarter to the second was the largest in almost 30 years. in other words, after we administered the medicine, the economy that was in freefall stabilized. stabilized substantially. and looks as though it could begin to recover in the second half of the year. of course, identifying the effects of the recovery act from the behavior of just a few data points is inherently difficult. we don't observe what would have happened in the abscess of fiscal stimulus. one way to try to add rigor of the analysis in the behavior of key indicators is to do a formal economic exercise.

we forecast the usual behave wror of g.d.p. and employment jointly using data from 1990, through 2007. what we're going do do is forecast g.d.p. growth and average job loss in the second quarter of 2009 using actual data up through the first quarter of the year. all right. what this picture shows, is the forecast of employment change that's the light blue that's the light blue bar using this procedure. with the baseline forecast implies is further substantial job loss in the second quarter. indeed based on just the past history the implied average decline that we would have predicted for the second quarter was about 600,000 jobs what you see that's the dark blue line is what actual job loss was in the second quarter. it came in substantially lower than the forecast. these calculations imply that

employment is now about 485,000 jobs above what it otherwise would have been in the second quarter of 2009. this number is very similar to mark zandy's estimate. relative to what otherwise would have occurred. i do however want to be very cautious. the approach we use sd one of a number of sensible ways of predicted what would have happened in the absence of stimulus. other evidents would lead to other stimulus. now the results for this forecasting exercise for real g.d.p. are shown here. all right. so again the dark blue lines are actual data. the light blue line is our forecast. and what what past history says that real g.d.p. would continue

to decline at a substantial rate in the second quarter. the projected decline is 3.3%, again substantially worst than the actual decline which was 1%. this way of specifying the baseline confirms that something unusual happened in the second quarter. g.d.p. growth was 2.3 percentage points higher thran the usual time series behavior of g.d.p. would lead one to expect. private forecasters across the political and method logical spectrum attribute much of the unusual behavior of g.d.p. to the recovery act this table shows you that analysts estimate that the fiscal stimulus add commir between 2% and 3% in the second quarter. now if you look at the different pieces of g.d.p., you can see tell-tale signs of the roll in stabilizing the

economy. so this figure shows you the contribution of each of the main components of each of the g.d.p. to overall growth in the first and second quarter of this year. the role of the recovery act is clearest in state and local spending. sharp falls and revenues and budgets requirements have been forcing states to tighten their bets. -- belts. no one can downtown that the $33 billion of state relief that has gone out is a key source of this increase. another area where the role of the recovery act seems clear in investment. firms purchase machine, structures, software. this type of investment which had fallen a mind-blogling 39%,

fell at a much more moderate 98% in the second quarter. one important component was investment incentive. businesses received about $14 billion of tax relief in the second quarter and this may have contributed to the slower investment decline. for the personal consumption component of g.d.p., the picture is more knew answer. it fell sharply but has largely stabilized despite rising unemployment and falling g.d.p. the making work pay tax cut and the improvements in confidence as a result of the recovery act and the administration's other actions almost surely contributed to this stablization. at the same time the fact that consumption fell slightly in the second quarter after rising slightly in the first quarter could be a sign that households

are initially using the tax cut mainly to increase their saving and pay off debt. because the evidence from the path of the economy over time can't settle the issue of what the effects have been, it's helpful to also look at other types of data in particular i want to mention two kinds of comparative evidence. the first involves comparisons across countries, countries responses to the crisis have varied substantially. one can ask the question whether countries that have responded more aggressively seem to be recoverying more quickly. to get evidence of this question we started with four casts of growth that were made way back november. after the crisis had hit but before countries have formulated their policy response. we then collected analyst's recent best guesses of what

quarter growth will be in those countries. and what this figure shows is the relationship between how countries second quarter growth prospects have changed from what was expected last november and the country's discretionary fiscal stimulus in 2009. well the fact that those points lie along an upward sloping line shows that on average things have improved more in countries that adopted bigger stimulus packages. and the relationship is sizable. on average a country with a stimulus that's larger by 1% of g.d.p. has expected real g.d.p. growth that's about two percentage points higher relative to the november forecast. a second comparison that we expected involves individual states in the u.s. the largest portion of aide to the states under the recovery act so far as taken the form of additional matching funds for state medicaid spending. so what this figure shows you

is the correlation between employment growth from february to june in a state and the size of those extra matching funds per capita. what you're supposed to see is that on average, states that received more funds lost fewer jobs. now there's an obvious element of reverse causation that's pushing the relationship in the other way. state's who's economies are weaker tend to get more of these funds. but preliminary analysis by several members of my staff addresses this issue by focusing on a subset of the spending that isn't a response to states economic conditions. they find that the results hold up well. more spending is associated with less job loss. well, obviously, this is a very preliminary analysis of the data's across countries and states. and it doesn't account for all the factors that are at work. but a look at these numbers provides further evidence that

stimulus spurs recovery. well, so much of what i've discuss sod far is focused on the role of the recovery act. in moderating the g.d.p. decline and in saving jobs in the second quarter of 2009, the obvious next question is well, what can we expect going forward? well, first, the impact of the recovery act will almost surely increase over the next several quarters. we expect the fiscal stimulus to be $100 billion in each of the five next quarterings. the impact of this steady stimulus, however, will increase overtime because the multiplyier effect will rise before it wanes. the early stimulus was weighted towards tax changes and state fiscal relief. where as going forward, there will be more direct government investments. these direct investments have a

short-run effect, roughly 60% larger than the tax cuts. second, we can expect going forward, because of the recovery act, other rescue measure measures that we've taken, and the economies natural resilience, most forecasters are predicting that g.d.p. growth is likely to turn positive by the end of the year. ben bernanke seconded this opinion in recent congressional testimony. however, as is always the case, especially around a turning point there's substantial uncertainly and there's even greater uncertainty of how strong the recovery is likely to be. it's important to realize that job growth will lag the turnaround in real g.d.p. growth. the consensus turn around is for the unemployment statistics that we get tomorrow to show

that jobs were lost in july. this is all but inevitable. and it's unacceptable. but fortunately, even once g.d.p. begins to grow it will likely take still longer for unemployment to stop rising -- for employment to begin to rise. given how far the economy has declined, the economy will be a long, hard process. even if g.d.p. growth is robust going forward, it will bring the unemployment rate back down to usual levels. but the president is committed to job creation. and this has been the faux call part of our everett -- focal part of our efforts. we are no doubt in for more turbulent times. the actions we've taken particularly the american and reinvestment act has clearly

changed the trajectory we're on. their doing what the president also needed to be our top priority, rescuing an economy on the edge of the second great depression. and i firmly believe that when the history of this period is written, the recovery act will be seen as the beginning of the end of this terrible economic crisis. well the focus of my talk has been the recovery act, restart lending and help home openers in distress. the president's always made clear that rescue is not enough. the u.s. had problems even before the current crisis. for this reason the administration is working with congress to help rebuild the economy better. it's as if when you went to the doctor for that strep throat you discovered you had high

blood pressure as well. he described a healthy dose. he's urging health care reform to slow the growth rate, attain the budget deficit and provide all americans with secure health insurance. we're working with congress to pass regulatory reform to make sure that we never again walk as close to the edge of the cliff as we did last september. and we're committed to stimulate the mood to combat climate change. and in short, we are urging serious medicine for serious economic problems. if we can accomplish these important changes, we will not only come through this current crisis, we will emerge even stronger and healthier than before. thank you. [applause]

>> ask a few questions, and please fill out cards and hand off the cards to me and i'll go through those. first question we have in light of your comments on the stimulus bill, is there anything that the administration would have done differently if it had recognized how deep the economic -- this economy's problem was going to be in changing the legislation? is there something you would have changed in hindsight? >> i think one of the things i tried to describe, is try to hit this thing with as much force. we did know it was a very serious down turn. we're aiming what could we get out the door very quickly. and that's why things like the tax cut and the stated fiscal relief were so terrific because they did get out the door quickly. the other thing i'd want to say an answer to that, i very much want to give the sense that the recovery act is a piece of a much bigger plan. so all of the work that

secretary geithner and the rest of the administration did to help rescue the financial system, the housing program, all of those were things that we did precisely because as we saw the economy getting sicker, it needed everything we could give it. >> next question, you didn't exactly predict what your own -- or give your own views on what we thought we would be in positive g.d.p. territory. would wow say, the first quarter shr quarter, the second quarter, the third quarterer or you're not going to say? >> i will tell you that i will think the consensus forecast is doing very well. they're predicting we will see it before the end of this year. and that's a reasonable prediction. >> on the cost of the health care legislation. what is an acceptable 10-year cost for the legislation? >> again. wide ranging questions, you

know, the c.b.o. is doing its job which is trying to give congress estimates of what they think bills will do. i think it's important to realize that a c.b. oompletose job is to think about the 10-year budget window. here we are in complete agreement. we have said from the beginning that anything we do, any expansion of coverage absolutely has to be paid for with hard scoreable savings that c.b.o. says are there with revenue changes that are there. so that is completely a place where we're in complete agreement. i think they're numbers on things like the kind of reforms we've been talking about for medicare absolutely line up with ours. i think where we might have a difference is much more on the longer run because if you look at the long run budget projection what is you know is the number one problem we have is skyrocketing health care cost.

that's so much of what the president has been trying to do with the health reform act or the legislation as it's going forward is to make sure that there are all the health insurance economists need to be there. that's why we propose the independent medical advisory council, a structural change to give us a chance to slow the cost. c.b.o. inherently doesn't intend to do long-run projections. so we're going to have to go with what the analysts tell us. all of those things they tell us absolutely will slow the rate of costs. and we feel needs to be in the legislation. >> you give us a hint about whether it's likely to hit double digits come out. and when do you think it will recede to 4.5%? >> so the first thing to say, i

have not seen any numbers. so they do come out tomorrow. i'm not going to make any predictions other than to tell you that the forecast what market experts are telling us is that we will lose hundreds of thousands of jobs. i know they're anticipating that job rate will go up. we are improving the trajectory. there's no denying the fact that we are in stuff times for the american people. how quickly it comes back down, right, so i mentioned in my talk, even once g.d.p. starts to grow, right, there's usually a lag between when we see g.d. prment growth and unemployment start to go in the better direction. it depends on how fast you grow. you actually, g.d.p. needs to grow at about 2.5% just to keep it where it is.

we have to have growth above 2.5%. what we want to see is not just g.d.p. growth but strong g.d.p. growth. that's the thing that would bring it more to normal quickly. >> are you worried more about inflation or deflation? >> the truth is i am thrilled that inflationary expectations seem to be pretty darn flat. and that's a tribute of the federal reserve. i think it's the fact that we've had pretty steady inflation is the reason we haven't seen movements in eeth direction. that said, given how bad the recession has been, given the fact that we have unemployment again, over -- at 9.5%, i think the greatest risk is on the up side. that i for one, i don't believe that inflation comes, you know, we know the fet's balance sheet has gotten much bigger. but i think the evidence tells

that inflation doesn't come out of nowhere. it doesn't come from a lot of the fed's balance sheet. we are so far from overheating, i think we have a long time before we really have to worry about inflation. >> let me ask you, the next question is -- do you have a view on the direction of the dollar? is it going up or down o is it staying the same? >> i have only been in washington for six months, but i know than what to speculate on what the dollar's going to do. especially in front of five tv cameras. >> well, i thought you would say that. but had to ask it anyway. >> is there any wiggle room on the president's position that no one in the middle-class will see any tax increase of any type during his presidency? >> could i go now? [laughter] >> you know the president has made it very clear through the campaign that middle-class families have really gotten a

bum deal not just in this recession but probably for at least the last 10 years, and that's why he doesn't want to do anything that burdens middle-class families. and obviously, no one is talking about raising taxes. we're in the middle of the worst recession since the great depression. that's why we gave tax cuts to 95% of american families. what is true is that we have a long-term budget problem. and the president is committed to dealing with that. and right now the way we're focusing on that is on health care reform that as i mentioned there's simply nothing that is causing more trouble in those long-term budget projections than the predicted path of health care expenditures. doing everything we talked about slowing the growth of health care cost. >> what is the biggest surprise you've seen compared to what you thought you would see before you came here?

>> i'd say, the most positive, it's been a positive development, which is i'm surprised at what sa role analysis and empirical evidence plays. i often say this as a tribute to larry summers who as you mention sd the head of the national economic council. larry is a fantastic economist and one of the things is, right, he listens to good arguments. i learned very early on in the transition that the way to be useful and listen is to do good analysis. i have many members of my staff that wanted to come with me today. but i have the world's best staff. we have just a great group of incredibly that lened economists. i've been rea really pleased at the degree which people say, tell us what's true, not make us some numbers that support our position. they want to actually know what the effect of various things are going to be. that's a really positive sign

about the policy process. >> can you give us any insights about what the daily presidential briefings are like on the economic policy and what's the president's comprehension understanding of economics for somebody who wasn't trained in that area? >> i tell you the scariest things is to be in one of these briefings and for one of us to answer a question and the president answers it. you know, the briefings are one of the things that's been hard to. there's often a scheduled topic. people will take turns. today we'll brief the president on what can we expect about inflation or deflation? what can we expect about the jobs numbers? one of the things you can do is you need to change on a dime. you might have a beautiful slide deck for the president. and he said, you know, i'm really worried about the auto economies. ok. switch agree gears. so you do have to be ready to

-- you have to be ready to switch gears. so you do have to be ready for that. they are often good and lively discussions. it's a great way to spend 40 minutes every day. >> we're going to have some questions from the audience and then we have a few minutes for that. there's a microphone, so somebody have a microphone for this speaker? that's gary shapiro. >> hello. thank you, david. but this is an economic club. so i want to ask a tougher question, if i may. >> rising deficit, the trend is clear. it's phenomenal and the ambitious goal is half this phenomenal record. rising protectionism. proposed increasing for taxes for those that create jobs, how is this justifiable in the long-term economically for the overall health of the country? i feel like we're fiddling and

rome is burning. >> first of all, you described cutting the deficit in half as an ambitious goal. first of all, we inheritted a budget deficit that's $1.3 trillion. the first thing the president did was call a fiscal summit because he felt cutting it in half wasn't enough. i couldn't agree with you more. it is absolutely a problem. and something we absolutely have to deal with. i'd bring it back to health care reform. you look at any study by the congressional office, the thing that will really wreak havoc is if we don't get the growth rate of health care cost under control. that is why in the middle of a deep economic crisis in the

middle of the time, we need to deal with energy independence. the president said this can't wait that the status quo is precisely what is going to cause real problems for the deficit and for the country. and that's why we are working as hard as we can to not only make sure we do health care reform, we do good health care reform. that slows the rate of cost. it's absolutely crucial. >> ok. one more question from the audience. anybody? ok. >> your mic. >> what is your biggest frustration in your current job? is there anything you don't like about your current job? >> it's very hard. no, i think i will have to say i have my 19-year-old son home from college. and i got home at 11:30. last night i got home at 11:00. the night before -- so i'm frustrated that i don't goat be at home nearly as much. that my husband's had to learn

how to do the landry. all the cooking. it's hard to work. >> husband's do that all the time. >> yeah, he's always did half the work. he's now doing all the work. >> one last question. >> there's been some recent news about some changes in administrative policy regarding fannie mae and freddie mac. we all know the importance of those entities and creating a secondtary market -- secondary markets. i'd be interested to know what change that would be? >> it is an issue. one of the things that we have again, we've been through a real crisis in our financial markets and that's why, again, in the midst of all the other things, thinking about how you reform the system so that we don't ever face this again. one piece of this has clearly

been the government-sponsored enterprises and their role in mortgages and all that and the extraordinary actions we need to take. how do we, as we move out of the media crisis, how do we think about reforming those just as we're thinking about reforming the financial regulatory system. i don't want to get ahead of the process because obviously, we are at the very start of anything that we're doing on a whole range of these issues about the financial markets. but it is something we're going to be looking at. >> thank you very much, dr. romer. [applause] >> one second. let me give you this prize. thank you very much. here's our little gift for your speech today. thank you all very much for coming. and i hope you had an enjoyable

time. thank you very much, dr. romer. >> well, thank you. >> all right. well, you get points for persistence. all right. shoot. >> so in your speech, you talked about -- you suggested that g.d.p. growth was 2.3 percentage points higher than usual. it -- you said private advisors

-- what is your numbers as far as your estimate of what the stimulus package did? your personal one. you were citing these others, but do you agree with these? and is that what's going to show up in your numbers? >> it's actually, it's a great question. one of the things i was trying to do in this talk -- so back in the transition, right when we say what stimulus was going to do. we would use estimates, here a normal multiplyier. we got them from the fed. we said this is how much we're going to spend. this is the tax cut. so this is what we think it's going to do. we were trying to get away from just saying for the amount of money we spend, we create this amount of jobs. go with a baseline. that's why we did the vector auto regregs. my chief of staff made me take out of the text.

that's a way to get a baseline. and to say here's the difference. that said, i think the numbers we see coming out of goldman and macro advisors are pretty much in the range. if anything, our estimates say it's bigger than that just because i think, you know, we've got -- because recovery.gov is so good they can get the spending data we had. we had an advantage once a upon of time. but a lot of money is going out the door. >> just a general question. going forward, after the stimulus package is there a move in the white house in the administration to go for a more sovereign welfare approach. we talked about a national infrastructure bank that this fund is going to produce an internal rate of return, etc.? >> you know, back -- you probably remember back to the original discuss of the stimulus, there was talk of an

infrastructure bank, there was, you know -- i think -- i think from my own point of view, one of the things we've been pushing even more than is sort of cost benefit analysis to make sure that infrastructure's being done well has the highest rate of return because we're putting it in the projects that need to be done. that's where my focus has been in these days and in thinking about as i move forward, i wow like to see more of that. again, once you give money to the states, saying, are you guys doing some cost-benefit analysis to make sure you're building in the right place? where it goes after that, your guess is as good as mine. >> what are the lessons learned for the cash for clunkers? is the impact being -- and should we expect some more retooling of reallocations of funds going forward?

>> it has been a big success. we knew people would respond. but boy, did they really respond. and so, you know what, it does say that incentives matter. we're seeing the same thing with the new home buyers tax credit. when we talk to people in the real estate market. they say, god, there are a lot of first time home buyers out there. and we think that that's a sign that that kind of thing is working. right now we're concentrating that the clash for clunkers get expanded. we're pleased that congress is work hard on this. and we anticipate good news there. you know, we are always re-evaluating things. one of the things that we put in place, the things that we thought needed to be done is kind of an example of we're always monitoring things. thinking is there something that works better with our

foreclosure program. we're thinking, is it working as well as it could? are we getting these things modified as quickly as possible? i would expect we would do evaluations of these things going forward. and if we think of better things, we will do them. >> what kind of consumptions -- incentives are there? >> i think the big picture is surely the case that savings rates are going to end up higher than they were back in the mid 2000, that american consumers have lost so much weal. they are i think never going to go back to their free spending, free credit card ways. that's just something we have to factor into our planning, that this is not going to be an economy driven by consumption grothe going forward. that's realistic and just

something to know. the important thing thinking going forward is what's going to fill the gap? if consumers aren't going to do all the buying, what's going to create aggregate demand? i talk about business fixed investment. i think that's going to be crucial. it's good we have these investment incentives in the recovery act. .

>> is it possible the u.s. economy could go into a second dip, the latter half of the year? >> it is not what most private forecasters are anticipating, but we will obviously be watching this as closely as we can. and gave the analogy in my talk about fiscal stimulus as an antibiotic and how we had other problems. it was my chief of staff who said one of the rules of an antibiotic is do not stop it before you finish the whole course, right? it is important that the fiscal stimulus carries through to the end. that is something we think will be providing lift overcome --

through the end of 2010. it is important that is their precisely for preventing any kind of a second dip. >> along those lines, i know you have said we have to focus on spending the stimulus we have in place now, but are there any triggers the administration would look for to start thinking about a second stimulus? >> we do have a big fiscal stimulus in place, and the first order of business is to get that $787 billion out the door, and there's so much we can do with that. i do want to come back on how much we have to begin doing all the other things. if secretary geithner were here, he would rattle off the 900 things that treasury has done, just as i have been talking about what the recovery act has done. all of those are so important for getting the economy going again. our program to help homeowners we think is something that is

important to get us going again. there is not a hard and fast trigger. in my own mind, i know that these numbers are ramping up. goldman sachs just tweaked their numbers. they now think of fiscal stimulus is going to add 3.3% to real growth in the third quarter. what i want to know is, do we see that happening? that is what we anticipate, that this thing will build in terms of impact. i think we ought to give it time to work. that said, if we come to the end of the year and we are not seeing the kind of results we anticipate, i would certainly -- we would start thinking about other things that need to be done, or we need to make some of the changes we have been talking about. the president has always said we will do whatever it takes to get the economy out of this thing, so we are just going to wash. we think we have the right medicine in place, but a good

doctor always monitors. >> there has been a lot of talk about when we start to unwind some of these actions. maybe it is more of the central bank's, as inflation gets to be a concern. are you concerned that we could be starting to unwind some of this too soon? for example, the purchases of mortgage backed securities and treasury debt by the fed has really held mortgage rates low, and if they do not continue that, where you concerned that will put housing off the rails? >> i will go back to my antibiotic analogy. absolutely, i think it is important we put in place this whole range of programs because the economy was in very serious trouble. i absolutely do think it would be -- you do not want to unwind things too quickly. you want to make sure we are firmly on the road to recovery.

one of the things chairman bernanke has said, which makes the months since, is that a lot of the fed's special programs sort of naturally unwind. when they are no longer needed, people did not go to the commercial paper facility if there is a private commercial paper market that is functioning. i think his anticipation is that these things and wide as the economy does not need them. i think it is a very good characteristic. right now, the focus just absolutely has to be on doing what we are doing and keeping on this good trajectory. i have tried to make the case today that the trajectory is still changing, but you have to come back to the unemployment rate. we anticipate we will see more job losses tomorrow and the unemployment rate will go up. we know that gdp in the second quarter fell less than in the

first quarter, but it fell. that is not a time to pull back when the economy is just beginning to stabilize. you want to see serious, good, strong growth before you think about an exit strategy. the other thing about not talking about the exchange rate that i have learned, i do not talk about the fed. thank you very much. i need to get back to work. >> for more on the economy, check out our economic stimulus website at c-span.org/stimulus. it contains links to government and watchdog groups tracking the spending. up next on c-span, a senate hearing on the status of the

u.s. postal service. then a portion of today's floor debate on the confirmation of judge sonia sotomayor to become an associate justice of the supreme court, followed by remarks on the confirmation by president obama. >> the deputy secretary of iraq pose the council of representatives talks about issues facing that governing body, including the nationwide vote there in january 2011. live coverage from the u.s. institute of peace at 10:00 a.m. tomorrow on c-span. >> sunday, a look at british politics on the bbc, including the mp expenses scandal, resignation of the house speaker, and debate over military operations in afghanistan. sunday night at 9:00 eastern and pacific on c-span. >> now to a senate hearing on the financial state of the u.s. postal service.

usps announced a third quarter loss of $2.40 billion. expect to lose more than $7 billion by the end of the fiscal year. tom carver of delaware chairs the governmental affairs subcommittee on federal financial management. this portion of the hearing is two hours, 10 minutes. >> good morning. our hearing will come to order. our thanks to our witnesses and to our guests for joining us today. this hearing is the latest in a series of hearings over the past half dozen or so years that this subcommittee and this committee has held on the postal service's struggle to adapt to the changing male and communications industry, and out through a deeply troubled economy. the economic crisis has had an impact on just about every family and every business. this downturn has impacted the

postal service and some of its biggest customers are more than most. financial data that the postal service released yesterday for the third quarter of the current fiscal year bears this out. the data also tells me that the title of this hearing is accurate. our postal service is, indeed, in crisis. according to the postal service, mail volume was down last quarter more than 14% when compared to the third quarter of last year. this led to a loss of some $2.4 billion, an amount that nearly equals the postal service's total losses for the last fiscal year. this latest quarterly loss brings the year-to-date loss to four $0.7 billion. current projections point to a record loss of more than $7 billion by the end of this fiscal year. this projected loss takes into account $6 billion in savings and cost savings to the postal service that -- and its employees are expected to achieve by the end of next month.

alarming. i should point out that the postmaster general has said that the mail will continue to be delivered. postal employees will continue to be paid. the path of this situation is clear. the postal service next month must get some measure of financial relief. not a bailout or lips service. a prudent measure of a fiscal relief. perhaps some tough love. i mentioned earlier that the postmaster general has assured me that the mill will continue despite the dire projections we will discuss today. absent from some action from congress or the president in the near term, we cannot comment that that will be the case. in recent months, we have come

to the conclusion that the most appropriate way to give the postal service a measure of relief is to restructure the aggressive retiring fund. the schedule has a sprained more than $5 billion a year to pre- fund its future health obligations to its retirees. this is on top of regular payments for current retiree premiums. the combination is taxing. we have introduced legislation. the postal suffers -- service retiree health payment schedule should be restructured so they can get through it over the next several years. our proposal works much like a mortgage renegotiation for a

family where someone has lost a job and needs the negotiation to keep the family able to stay in the house. if a young couple is married and both have jobs and buy a home and then in years, they could start to take a 10 year mortgage. life goes on, kids, long, someone loses a job, they go back to their mortgage broker and say they want to restructure the mortgage. we cannot meet the payments. is too aggressive given the tonnage a reality we face today. we would like a 20 year mortgage instead of a tenure mortgage. something more -- 10-year mortgage. something more reasonable that we can play. our bill is similar to that. a bill is not a silver bullet.

it does not solve all the problems. work needs to be done in a number of areas to streamline postal operations further and bring back some of the business that has been lost. much of the cost-cutting discussions focus is on our proposal to move to a five-day delivery instead of a six-day delivery. it estimates that making this change would save $3 billion a year or more. a clear majority of american people would not oppose the elimination of those services. we had a postal reform bill in 2006 that gave the postal debarment the authority to reduce frequency of deliveries. since then, congress has decided to prevent the postal service

from exercising that authority. the situation the postal service is facing now calls for an evaluation of this prohibition. congress needs to reevaluate the position it takes on facility closures. the postal service clearly maintains that 35,000 retail outlets in more than 400 places around the country. it maintains that many. this network developed before e- mail and a number of communications that have revolutionized our society. we do not need all these facilities these days. congress put up roadblocks whatever there is a mention of consolidating some of those facilities. the postal service itself needs to continue to find new ways to continue to find new ways overtime to make the postal service needs to

continue to find new ways over time to make the services it offers more relevant and increase the demand for them. weekday the new commercial flexibility back in 2006, opposed reform law. they have been able to take advantage of that flexibility in some instances. one example is the flat rate box promotion that a lot of us have seen on television. that has been successful and very well received. there's a great partnership between the postal service, ups, and fedex. i understand you share their aircraft, and there is a variety of things you are doing to be more entrepreneurial. we need to see more of that. the response has also been good for a so-called summer sale in the coming weeks. i am also certain that more can be done in in fusing and newark spirit that the postal service.

we are going to explore that today. finally, i would be remiss if i did not mention labor costs. all four major reports for union contracts are set to expire in 2010 and 2011. it is my hope that these unions will continue to work constructively with the postal service through these negotiations to just pay, benefits, and workgroups to reflect -- reflect the reality the postal service faces today. government provides for people in this country. few of them are -- as much as the postal service. i have seen approval ratings and customer satisfaction ratings for the postal service. the postal service numbers are better than most of ours. we want to make sure that level of service and satisfaction continues to be held by the american people.

we look the workers at the postal service will continue to be proud. let me turn to my colleague. >> thank you, mr. chairman. thank you for a comprehensive statement. and what you think you and senator cullis for your very hard work that you and the members of the committee have done on this issue over the years. i would point out that in two dozen 6, i believe the legislation was passed -- 2006, i believe the legislation was passed overwhelmingly. we address the problem for years later with a bigger problem. the post office loses $2.4 billion in one quarter. i read your statement. i see no specific proposals you

have except that maybe we should close some post offices. the would not commit to an exact number of closures but some facilities could consolidate operations what others vacate their principal location. we need some specific proposals to get the post office back onto at least a zero-loss of basis. we have had a lot of hearings for pass legislation. so far this year the estimate is $7 billion loss. we cannot do that to the taxpayers of america. we have every right to expect some specific recommendations from mr. potter and the

administration said that we can enact the law. a lot of this is due to the fact that america has changed. just as we went from horses and buggies to automobiles and now from hand delivered mail to text messages and e-mail and all the other means of communication. the post office will have to adjust to it or they will go the way of the horse and buggy. so far we have not seen from the administration or from you, mr. potter, who i understand is well compensated for your work, a specific proposal to bring this situation under control. the 2006 bill did not solve the post office problems. maybe we have some consumer

advocates, and testify before this committee as to their ideas on how we can solve this problem. we are not getting it from the it administration. >> that we turn now to our chairman. thank you for being an original cosponsor of this. >> thanks. i want to thank you and senator collins for your extraordinary work over the last several years. normally i do not come to the subcommittee meetings. we are in such a moment of crisis that i felt it was my responsibility to be here. i wanted thank you for what you have done. the post and reform act of 2006 represented a remarkable accomplishment in terms of the variety of different stakeholders' that were brought together. i think it was a constructive and progressive piece of legislation. as you know now, the problems confronting the postal service of the united states went beyond

what the postal reform act of 2006 could do. in one way we are already familiar with the extraordinary revolution that occurred in communication in our time in terms of e-mail. it is a new reality of our life. the second painful reality that we did not foresee that time with the great recession that we have gone through in the last couple of years. in my own view, the postal service has made them great efforts to try to put the boat back on an even keel. the usgs has reduced $6.1 billion this year by a recent 87

million work hours. executive salaries were reduced. trying to reduce the cost of some existing contracts that result in some long-term savings. the oddest -- the obvious reality is the loss of $2.4 billion. the postal service is in a downward spiral. unless we act forcefully, this great american institution created in our constitution -- that is how serious the founders of our country believed the responsibility was to provide for post offices.

unless we apply some tough medicine, this dollar spiral could become a death spiral for the postal service. we do not want that to happen. the u.s. postal service health retiree funding format -- i think it is good response to the crisis. without it, there would not be enough money to pay its bills. the postal service has made clear that it will continue to deliver the mail and pay salaries. this might change would be proposed. it is critically necessary to do

this rescheduling of payments into the retiree health benefits fund. payments are now being done on a level that is way above any other government program or private-sector program as well. the reality is that that is not going to be enough. it is ia short-term stepped that will enable the postal service to keep going after october 1. we need to do something that will save the postal service. it will not stabilise if we continue to do business the way we have been doing it. when i say that, i speak not just to the postal service, its workers and management, i speak of us in congress.

none of the measures that we have talked about is going to be enough to make this work. all of us have to think about doing things we never would have thought about doing with the postal service. an amendment was introduced that requires the binding arbitrator in the labor-management dispute to consider the financial condition of the postal service. until our friends in the unions are very upset about this. i did not see how i could justify voting against that amendment. it is not mandatory. it is a statement of reality. that same reality has to now be adopted by those who are privileged to serve and have the responsibility here in congress. i know there are discussions of

consolidating work at branch offices. a five-day a week mail delivery. these responses we never would have considered at an earlier time. i do not see how we can keep this american institution can keep going without taking steps exactly like that. the constituents will not be happy. every time they expressed their unhappiness to us, we have to say if we do not say some of these tough moves, what it means is we will either have to raise your taxes make greater payments to the postal service from the u.s. treasury, and put it on the government credit card. that is an act of irresponsibility, because we are turning the burden of repayment over to our children and

grandchildren and those who follow. those of the choices we are going to have to make. i remember some years ago there was a little postal service in connecticut. people love that little post office. it was not busy, but they loved it. all of our congressional delegation went to bat for it. the post office was kept open. those were different times. we simply cannot do that anymore. this great postal service of ours is an iconic american institution. it is always delivered for the american people. now it is time for the management workers and congress to deliver for the postal service. if we do not apply the kinds of tough measures or tough love if you want, this institution which we depend on is simply not going to be there. thank you. >> thank you.

i think senator collins for her work then and now. >> thank you, mr. chairman. that may commend the chairman for having this important hearing this morning. i appreciate the opportunity to join you. i must say that it is most disappointing to once again be discussing the dire financial condition of the u.s. postal service. just 2.5 years ago, congress had a crucial reforms that i offered that left the postal service from the high-risk list. now it is in a financial crisis. it has landed on the high-risk list.

in 2008, the agency lost $2.8 billion. this year it is projected to have a net loss $7 billion. the postal service matters to our economy. it is the essential to a $900 billion milling industry that employs 9 million americans. what we are talking about a fax from more than just the employees who are working at the local post office or distribution center. it affects 9 million americans working in fields as diverse as paper manufacturing, printing, publishing, direct mail, and financial services. indicative of that is one of our witnesses today, the chairman of

a paper company that has a large plant in maine. @@@@@@@@@ @ @ @ @ h@ @ @ @ @ @ are links to the postal service. the postal service work to resort to excessive rate hikes or decrease delivery service, it has ramifications for all of these companies. they may have to respond with layoffs, increased prices to consumers, or reduced services. any of these adjustments would contribute to an even more perilous condition for the postal service. why? because when businesses cut their costs, they reduce mailing

costs, and that leads to a further erosion of the postal service's shrinking mail volume, which in turn will prompt more proposals for rate increases and renewed calls for truncated delivery services. lieberman said, this is a vicious cycle that has no good outcome. we must prevent downward spiral. we must put our shoulders to the will and accomplished the difficult task of transforming the postal service. the postmaster general has offered three major proposals for congress to consider. first is adjusting the payments to the retiree health benefits fund. i support a judgment in this area, the bill approved by this committee would have an increase in the unfunded liability of $4

billion. i think that is a problem. second, the postmaster general has proposed to eliminate six- day week mail delivery. and he has proposed closing or consolidating post office facilities. the post office is reviewing a 677 of as 3200 stations and embraced -- branches nationwide foreclosure or consolidation. this proposal along with other plans would give reduced services to customers. is that really the right response to this crisis? the question is will it make a real difference in the cost structure of the postal service back if it will, we should consider those moves. when you look at where the costs

are in the postal service, it raises a lot of questions in my mind. the postal service can also not expect to gain more business which is desperately needed if it is reducing services. the proposal for closing or consolidating the branches -- the non personnel costs of these facilities account for about six tenths of 1% of overall postal service operating costs. if the postal service were to close all the branches and stations on the list -- let us say they close every one of them, it would reduce the operating costs when you include

personnel by less than 1%. so we need to look at whether that is worth it. or whether there are better more effective means of reducing costs. last week before this committee , they're looking for relief. our committee adopted several amendments to address some of the cost structures and made the bill more fiscally responsible. additional changes need to be made on the senate deplore. there is no question that we do have to act. we must rescue an institution dating to the early days -- the earliest days of our nation. we cannot allow the postal

service to fail because it is too fundamental to our economy. it is going to take an honest assessment of where the costs are. it will take everyone working together, management, employees, members of the mailing community, this congress, and the administration to contribute to the solution. we must work together to find a real, lasting and fiscally responsible solution. thank you. >> thank you for your hard work on this floor. our bill increases the and the unreliability fight -- by $4 billion. . . we would have less

it will have less money in it and thus earn less interest. it is a drawback extending relief at all. you are recognized for years this -- for your statement. >> i am pleased to be here today as we consider the challenges facing the u.s. postal service and its employees. i know that we have a large group of witnesses here today, so i will withhold giving a major opening statement. i certainly will have some questions during the question and answer session. today will be john potter. he began his career in the

postal service in 1978. he is postmaster general and has been so since 2001. our next guest is here as well. he is scheduled to serve until 2014. president clinton appointed him. thank you for your service. our third witness is david williams the inspector general of the u.s. postal service. he has a lot of experience. he has been inspector general for five federal agencies during his career. our next witness is nancy.

she is the says its director of the human resources and office of personnel management. thank you for your work. our next guest is no stranger to this committee. nameless said a variety of government programs. each of you will be recognized for roughly five minutes. try to stay as close to that as you can. your entire statement will be made part of the record. mr. potter, please proceed, and thank you for joining us. >> good morning, mr. chairman. i appreciate the opportunity to speak with you today.

i want to express my sincere thanks to the various committees for your tremendous progress in moving s15 forward for consideration with the senate. thank you for supporting a strong and national postal service system. enactment of this bill will enhance our liquidity at a time where we really needed. it would reduce our projected losses by over one-third in 2009 and 2010. we support those amendments, in particular one that improves hour arbitration process. another then accelerates the report on our business model. this will initiate a broader

debate about the manner in which postal service can help the american public. i offer you my full support and cooperation as we work with these goals. we believe that a fundamental restructuring of the legislative and regulatory framework of postal services is required. that is the future of what has been since the nation's founding. the right of every american to send and receive mail. the postal service exist as a governmental entity whose mission is universal service to all. that mission is a direct reflection to the values on which this country was founded. those values of equality and opportunity continue to drive the postal service today as they have for more than 200 years. to adjust the challenges we face, which must push

operational efficiency to the limits permitted by current postal laws. when must foster growth by increasing products and services to our entire spectrum of customers. it is possible by enhancing our performance-based culture. we need an extraordinary amount of commitment from postal stakeholders. the cost of underwriting and ever expanding universal service network and other government obligations are needed. a modern, self-sufficient postal system can be constructed to continue to provide universal service for all at affordable prices. to do so requires new flexibility to adjust not corpses and services and to minimize trans governmental and work rules and expectations that carry with them costs and

inefficiencies. it the post a community is up able to achieve this, then it appears to us that the remaining option will be more unpalatable for more stakeholders. the postal service must operate at of its antiquated business model until they are able to have a new model. these statements are taken almost verbatim from the transportation plan we developed in 2002 at the direction of congress. we achieve in exceeded many of the goals of the plan. service and customer satisfaction continue to set new records. we have removed more than $40 billion in humans of costs, increasing efficiencies as our delivery base and its costs have grown by the addition of a loan -- 11 million new addresses. we are innovative with pricing

and initiatives. we are producing results. our employees are more engaged than ever. even with the success of these efforts and new levels of flexibility, our situation is more tenuous than ever. this does not reflect a change in will but in priority for a change in command of. it reflects changes in the economy and the use of a male patterns. the costs are beyond our authority to control. the issue is not the value of the mail despite the best technological changes in the last decade. the male is still a fight -- vital channel for financial, personal, and business communication. it is one of the most structured services in america. it is one of the most effective. the offer is unsurpassed value. we are working to increase the

value each and every day. at the end of the day, for focused uncomplimentary efforts, we can protect a vital and vibrant national postal service. it must continue to bring efficiency of service to the highest level. we must identify a new business model that will offer success in any business environment. ms. close the gap between our revenues and our costs. we want to increase efficiency to narrow the gap even further. we cannot only eliminate that gap of return to profitability without placing any financial burdens on the american taxpayer i going to a five-day delivery week. it will take patience and cooperative efforts by everyone who has a stake in emailed.

we must advance the common interest. the nation's mail system was created to serve everyone the nation's mail system was created to serve everyone equally. this must be our only goal as we work to strengthen and preserve the nation's postal service, the finest in the world. mr. chairman and members of the subcommittee, that concludes my statement. again, i want to thank you for your support of legislation that will support rigid reduce our costs. i will be pleased to answer any questions that you have. >> chairman, ranking member mccain, ranking member collins, and other members of the subcommittee, thank you for the opportunity to testify on the plan into crisis facing the united states postal service today. i am honored to be participating

at this hearing. and second-guess shares. this is my first opportunity to speak in front of you myself. all of the commissioners are in general agreement for these matters. there are some differences. i think your comments and those of the postmaster general are fully described -- describing the financial situation that the postal service finds itself in. their revenues are down at least 6 billion so far this year. at the end of the year, they may need additional congressional action in order to meet all of the payment.

ups and fedex had revenue declines of 11% and 21% respectively. this is a difficult time for the industry as a whole. the postal service has responded to the revenue loss with the most aggressive cost-cutting in its history. under the postmaster general, the service has cut costs for several years. they are expecting another 100 my work hours taken out this year. an evaluation of the services, management and labor have worked cordially to streamline this system. we are confident that they are going to be in a responsible for cost control in the future. at the request of the

subcommittee on federal work force, the commission examined the underlying methodologies used by the office of personnel management to determine the postal service's unfunded liability for its retiree health-care benefits. you have received full copies of those reports. they are available online. hopefully our analysis will be helpful to you in this committee consider a long-term measures to address funding to the benefit fund. the commission developed an alternative calculation to those provided by the other agencies utilizing current industries and best practices. this produces a long-term viability the could result in a lower payment per year than the law requires.

the regulatory commission is also in the process of reviewing the postal service request for reduction in post offices. we have initiated a docket to review the matter. amid reports have been inaccurate about the process. let me be very clear. the law gives the post a regulatory commission the authority to review the process the postal service proposes, not to decide on a merit of closing individual facilities. the review does require us to look at the potential impact that such closings would have on communities, the adequacy of financial analysis developed in planning, and participation in the process.

operational changes could affect services nationwide. they must consider that. recognize that congress would have to allow such a change. whether it is a five-day delivery, collection box removal, or closure of facilities, the postal service seems intent on reducing its physical presence. no proposals have been put forward to find new sources of revenue at post offices such as part during with other public agencies -- partnering with other public agencies. how the postal service fits into the framework of american society is now being asked.

the committee is aware of the impact the postal service has on our nation's charities, the political process, and the overall flow of information. voting by mail is increasing exponentially and the country. not long ago, people service demonstrated its ability to bind presidents together when they had to make various locations -- the elections even when people were dislocated during hurricane katrina. 95% of people responded felt the post office was important to them. while cost savings are important, the regulatory commission has a role in determining whether these cost-

saving measures are beneficial in the long term or counterproductive in terms of providing ongoing support for the postal service from the community in the nation as a whole. it's also accountability has provided various things. potential new markets could be developed around hybrid products. standard mail product with a guaranteed data delivery is an example. opportunities to better use the existing facilities have yet to be explored. the american public demands effective, and affordable nationwide service. >> i am going to ask you to wrap it up. >> ok.

the commission stands with the west of the committee in congress to work towards any changes that will be required of us in the future. >> thank you. >> thank you mr. chairman and members of the committee and subcommittee. i appreciate the opportunity to discuss the retiree health-care liability for the postal service. that is currently threatened by new communications technology and the economic downturn. this situation has turned into an immediate crisis because of the diversion of cash to pay for future retiree health-care benefits. the first six months of this year's payments was $2.7 billion. the postal service would have made $400 million instead of losing $2.3 billion in the first

half of 2009. the postal service must make 10 annual payments of money for running this. the size of the $5 billion payments and the current payment method is damaging the financial viability of the postal service even during profitable times. the postal act should not affect the federal budget deficit. the postal service is not part of the federal budget and does not receive an appropriation for operations or make its money from the sales and services. the payment amounts are fixed through 2016 and to not reflect the of earnings estimates.

declining staff size and the ball must in the pharmaceutical and health-care industries -- during the current economic climate to the postal service must abortion certain places. it must borrow to pay a debt that will be incurred in the feature is a controversial practice. beyond the prominence with the payment, it is important to know -- beyond the problems of the payments, it is important to know if the postal service is obligated. the estimates of the liabilities estimate how way the postal service will have a funded its retiree health obligations and the proper funding levels given an adjustment to the assumptions.

health care inflation will average 7% which is higher. that is the inflation rate often used by fortune 500 companies. the payments are aggressive, reducing the postal service's unfunded liability more quickly than the typical pre-funding plans. by the end of 2016, the current payments will have created an accidental annuity. a 5% interest, a $400 billion fund will burn more than $5 billion a year. this is a significant amount of money to recover retiree premiums which is predicted to reach $2 billion this year. it threatens the card crescents

and the postal service solvency. it is forced to borrow during profitable years. it will be strapped during times of need. $26 billion would be unfounded by the year 2016. we want to provide more achievable financial goal. new payments will take into a can't -- account the substantial annual earnings. amos should be reset periodically -- payments in be reset periodically. it would take into account new innovations and rates in the insurance sector. the retiree health benefit obligations should be derived mathematically.

i am aware that there are voices under committee called for the proper payment level to be set at the time the payments will be started. i hope these voices will be heard to adjust this debilitating problem. the postal service can more realistically address the serious challenge and opportunities before it. thank you. >> thank you for that eliminating testimony. but >> i appreciate the invitation to provide the views regarding the funding of the federal employees health benefits for retiring employees of the postal service. we welcome the introduction of the bill which is intended to provide short-term relief to the postal service in meeting its obligation to fund its share of retiree health benefits costs.

in to a dozen 6, congress enacted the postal accountability enhancement act which requires the postal service to pay the employer's share of post retirement premium for its employees in the similar manner to allow federal agencies fund retirement employee cost under the federal employee retirement system. despite the cost of future retirement benefits while individuals are employed. pre-funding retirement benefits insures there is sufficient money set aside to pay benefits without further contributions. in the same way, the purpose of preventing premiums by the postal service is to ensure postal employees will have employer funding available for health insurance after retirement. retirement. the law created a new fund the law created a new