it is my absolute belief that when historians look back through the vista of time, they will say that the chair person of this committee left big tracks in the sands of time and that he made a difference in our lives for all time. i yield back the balance of my time. the chair: the gentleman yields back. the gentleman from new jersey. >> madam chair, i now yield six minutes to the gentleman from texas, who has been probably one of the most outspoken leaders in our committee, trying to end the continuation of taxpayer-funded bailout, the gentleman from texas, six minutes. the chair: the gentleman is recognized. . mr. hensarling: i rise tonight to oppose the permanent wall street bailout and increased job losses through credit rationing act of 2009. if congress had to abide by the truth in advertising laws that they impose on the rest of the nation, surely this would be

the official title of indeed this 1,279-page piece of legislation. madam chair, section 1609-n for those who may have written the legislation and forget it that creates a $200 billion bailout fund. to quote from "a field of dreams," if you build it, they will come. the only reason to create a wall street bailout fund is to bail out wall street permanently. the democrats claim, madam chair, that the bailout fund will not be paid for by taxpayers, but madam chair, these are the very same people who told us that the government-sponsored enterprises would never, ever receive a dime of taxpayer money. and i guess in a sense they

were literally correct. instead it's $1 trillion, $1 trillion of taxpayer money now committed to the failed government-sponsored enterprises. these are the same people that told us, that hey, don't worry about the social security trust fund, it will get paid back. the national federal flood insurance program will never need a tax infusion. they were wrong then and they are wrong now. besides creating a permanent wall street bailout fund, madam chair, this bill represents the fourth piece of the democrats' failing economic agenda. first was the $1 trillion stimulus, next the $600 billion national energy tax. after that, the $1 trillion government takeover of our health care plan. now we all remember the stimulus plan. the president told us if it was

enacted that unemployment would never rise above 8%, yet our unemployment rate is at double digits, the worst in a generation and the legislation before us will cause even more job losses. in section 4301, 4304 and 4308, it will do this by empowering an unelected czar to unilaterally ban and ration consumer credit product and finance itself through hidden taxes on consumer credit and successful american companies. you heard the study alluded to earlier, interest rates paid by consumers would rise 1.5%. new jobs would be reduced by almost 5% in our economy. more jobs would be lost, madam chair, under the bailout authority, which assesses $150 billion of taxes on large

financial firms. now maybe those on the other side of the aisle wish to engage in the myth that somehow that won't be passed on to consumers, that somehow this won't impact credit lines at small businesses, but they are wrong. increased interest rates, increased fees, fewer loans to small businesses. madam chair, once again, more jobs will be lost under the permanent wall street bailout and increased job losses through credit rationing act of 2009. united states chamber of commerce said if this act is passed, quote, it would have a significant adverse effect on businesses by restricting their access to credit. some would lose credit all together. you know, madam chair, i talk to a lot of good community bankers in my part of texas. i heard the chairman allude to the icba and i respect those

who have washington zip codes. i talked to a man who helps build palestine, texas and he said, congressman, if i have more compliance costs in the federal government is going to limit the types of customized products we can offer, we will lose jobs in anderson county texas that i have the privilege of representing in congress. a small businessman in my district, as a small businessman, restrictions on credit may well mean the end of my company, madam chair. why should we pass any legislation that will harm the ability of small businesses to access credit in the midst of a credit contraction? after 3.6 million of our fellow countrymen have lost their jobs since president obama took office, i ask my democratic colleagues, how many more jobs

have to be lost? how many more? and madam chair, next, the government takeover. again after proposing the $600 billion tax on our energy sector, $300 billion of our health care sector, and now the next chapter, takeover of huge portions of our consumer credit and finance markets. they will create a huge new complex, government bureaucracy and grant it sweeping draconian powers. section 1104 will allow it to break up successful companies and allow it to dictate the pay structure all the way down to a bank teller in east texas making $25,000 a year. will the gentleman grant an additional minute? mr. garrett: another two minutes.

mr. hensarling: 4301, which credit cards, which home mortgages and which car loans we are allowed to receive and the list goes on and on and on. madam chair, what this really leads us to is a bailout and job loss bill where the bill get bigger, the small get smaller, the taxpayer gets poor and the economy gets political. what does a political economy look like? we have seen it. we have seen it in the government-sponsored enterprises of freddie mac and fannie mae and give them these monopoly powers. they are allowed to grow these profits, but then they do a deal with congress, but oh, you have to have an affordable housing machine, you need to have this political mission and $1 trillion of taxpayer liability of taxpayer exposure

later, we know what that's about. how about gm and chrysler? when they went bankrupt, allies of the administration, united auto workers, they end up with a sweetheart deal. and chrysler, 29 cents on the dollar but the united auto workers, 43 cents on the dollar and ended up owning the company. how convenient. that is what a political economy looks like. and look at individual members of congress. including the distinguished chairman of this committee from the "wall street journal" dated june 5, 2009, quote, the latest self-appointed czar is barney frank. the warehouse which employs 90 people was slated for closure by the end of the year by gm but mr. frank put in a call to

gm's c.e.o. and secured a new lease on life for the facility. i respect our chairman. i'm not here to suggest -- mr. garrett: i yield the gentleman an additional one minute. mr. hensarling: i know that the distinguished chairman well wishes this and i'm not here to suggest that the activity was illegal, immoral, was even fatening. i'm here to suggest that is what a political economy is all about. i would suggest anyone else besides the chairman of the financial services committee making that telephone call, that facility wouldn't be open today. under this bill, madam chair, americans' job security will depend less on howell you perform your job at home and more upon who you know in

washington. that's what the political economy is all about. this bill represents an assault on the fundamental economic liberties of the american citizen. if you want a home mortgage, you now have to get the approval of the federal government. you want to offer a credit product, the federal government. if you build a successful business, it can be torn down unless you go to the federal government on bended knee. fewer jobs, more bailouts, more government control, less personal freedom, it is time to reject this bill. the chair: the gentleman's time has expired.. frasm massachusetts. mr. frank: i yield four minutes to the the gentleman from illinois, mr. foster. the chair: the gentleman is recognized. fossfoss i rise in support of the bill. as a member of the house financial services committee that drafted this landmark bill, i'm proud of our chairman's work and i want to thank the chairman for his diligent efforts over the last many months in sheparding this

complex piece of legislation to the floor this week. this historic comprehensive legislation has dozens of moving parts designed to prevent future bailouts and restore financial stability to the marketplace. i make no apollings for its complexity. it is the view of financial markets that has brought us to this place. i want to take a moment to highlight a few of the underappreciated aspects of this bill which may prove to be the most beneficial. first, this bill has language authorizing requirements for the conclusion -- inclusion of something called contingent capital into the capital structure of large financial holding companies. contingent capital is a special form of debt, which when a company gets into trouble will convert into equity on previously negotiated terms, thus causing the firm to be recapitalized without requiring a penny from the taxpayer. a requirement for large firms to carry contingent capital

amounts to aquirmente that they carry privately funded bailout insurance. the elegance is that it is a market-based and privately funded scheme. for large financial firms that are poorly run, the market-imposed funds would be more ownerous and while not eliminating the need for a systemic dissolution fund, contingent capital will be the best line of defense against financial contingencies. secondly, this bill significantly reforms the credit rating agencies which played a central role in the crisis last fall by giving inflated ratings to mortgage-backed securities and other inflated instruments. in the wake of enron scandal, congress established a public accounting oversight board. this board dominated by users of accounting reports was designed and effectively regulates the accounting

industry and this bill in addition to mandating that the rating agencies establish internal controls to resolve conflicts of interest and institute better corporate governance has language that creates a committee to oversee the s.e.c. regulation and enforcement of the rating agencies. like the pcaob, this committee will be dominated by end users of credit ratings and will serve as a template for stronger oversight if the s.e.c. oversight proves inadequate. the last issue is the greater investor protection this bill provides. in particular, this bill contains a provision that makes investment adviser fraud like that perp i traited by madoff virtually impossible. the bill requires those who manage large amounts of money on behalf of others either to employ an independent custodian toll hold the assets or independent set of eyes to

verify the accuracy of statements. this requirement should give investors peace of mind that what is on their statements each month actually do exist. i have only touched on a few changes designed to restore market confidence and modernize the rules governing our 21st century economy. i hope my colleagues can support this important bill and i yield back the balance of my time. the chair: the gentleman yields back the balance of his time. the gentleman from texas. mr. hensarling: i would like to yield five minutes to the distinguished ranking member of the capital markets subcommittee and one of the two champions of economic liberty in congress, mr. garrett. the chair: the gentleman is recognized. mr. garrett: i thank the gentleman from texas. the american public has spoken. they are opposed to more taxpayer-funded bailouts. they are oppose todd more loss of jobs in this country and

they are opposed to bigger and larger and more expensive government. american public has spoken, obviously, the majority has failed to listen to them because we come to the floor tonight with a major 1,300-page piece of legislation which goes in the opposite direction that the american public has asked for. the bill before us has in it taxpayer-funded bailouts. the bill before us has in it the loss of additional millions of jobs and of course with the 1,300 pages that we see here before us, the bill before us has an expansive growth of the federal growth and costs that we have never seen the likes of which during our 200-plus history. . at the beginning of this two or three-hour the bait we had here on the floor, the chairman of the committee said, we will be hearing fantasy tonight.

and then he proceeded to give us some of that fantasy. much of what we've heard from the other side of the aisle is fantasy, whether it's describing their legislation that we're about to vote on later tomorrow, or whether it's describing legislation we have offered as an alternative to it. i've heard the chairman say, there's nothing in the republican alternative dealing with 13c and the federal reserve powers. i guess the chairman hasn't looked at the republican substitute. mr. frank: will the gentleman yield? that's the exact opposite of what i said. you're quoting another bill. i said on 13c our bills are similar. it was another member who talked about that. i talked about the similarity of our approach. mr. garrett: i remember in committee we had similarities. but i remember, because i wrote it down, that there was nothing

in our bill with regard to this. mr. frank: another member said that, yes. mr. garrett: i thought i heard it from you, just as i thought i heard from you that there's nothing in our bill regarding executive compensation. i know that we do have language in our bill with regard to executive compensation. i know i heard from the chairman, i thought i heard the chairman say, there was nothing in here with regard to federal powers. regardless of if it's one issue or two, i would just ask the chairman to refer back to my earlier comment the reason we're concerned with the expensive nature and largeness of the bill is because when it gets so large, 1,300 page you side of the aisle is not familiar with what's in your bill and even our bill, which is not as big in size, you

don't know what's in it either. taxpayer funded bailout, i did have to point out to the chairman that in your bill, in the judiciary committee self-executing amendment, there is language that basically perpetuates what's occurred this year that the american people are opposed to, taxpayer funded bailouts. the federal government is able to set up a taxes mechanism on business in this country to the tune of $150 billion or $200 billion. until we establish that, you can -- the treasury secretary can draw draw on the tax i pay -- taxpayer dollar to help fund this mechanism. even after that, thunder provision on page three, the corporation may, as i said before, convert what is call receivership, which is putting the business out of business which is something that the chairman says would occur, but would allow it to proceed to a chapter 7 or chapter 11

bankruptcy. that means that the business is reorganized. what's occurring here is we are allowing the treasury secretary, a political appointee, to make the decision. the life and death decisions of businesses in this couldn't iry and say that this country -- this company is going to survive and this one isn't. and this one is going to survive on the backs of american taxpayers. it's going to survive even though it made bad decisions, risky decisions, but for whatever political purposes or otherwise, the treasury secretary can say, take taxpayer dollars, funnel it into that company for a while under the bridge loans and other acts, what have you, and then convert it back into a reorganization and allow it to flourish once again with the blessing of the treasury secretary and this administration and the american taxpayer as well. may i have another two minutes? mr. hensarling: i yield the

gentleman another two minutes. mr. garrett: the bill does have what the american taxpayer does not want it to have a continuation of bailouts at their expense. what else does the bill have that the american taxpayer is asking not to have, the loss of jobs. i remember being on this floor, standing over there, when the majority leader was standing over here at the beginning of the year, he was predicting, he was promising that if we only passed the $700 billion or $800 billion stimulus package, as the gentleman from texas said earlier, we would see the results immediately, not by the summer, not by the end of the year, not by next year but we would see immediate job growth, we would never see 8 1/2% unemployment and we would see the results immediately that tune changed when unemployment went up to 8%, then 8.5%, then 9%, then 9.5%, then 10%, then 10.2%. now they're saying, we'll see it sometime next year, now

we're saying we'll see job growth sometime next year we need another stimulus package, however many dollars from the american taxpayer pockets that's going to cost. mr. hensarling: what we are seeing immediately is another 3.6 million of our countrymen lost their jobs under this program. i yield back. mr. garrett: we saw two things immediately, the loss of 3.5 million jobs and of course we saw more borrowing from the american taxpayer, actually from overseas, china and elsewhere, to the tune of $700 billion or $800 billion. those are the promises there. what do we see in this bill? the creation of a number of entities a number of pieces in this bill that will result in losses of greater number of jobs, just like we saw, the study showsing that if we ever pass cap and trade, we'll see millions of jobs lost there, just as we saw the documentation coming out with millions of jobs lost because

of that here, too, studies have been looked at the cfpa, and said that provision alone will raise the interest rates for businesses and i ask for another two minutes. mr. hensarling: i yield the gentleman an additional two minutes. mr. garrett: that provision alone will raise interest rates between 1.4% or 1.6%, say 1.5%. that means individuals trying to get loans will see loans go from 6% to 7.5%. that will mean less jobs today and in the future. how many jobs? one study points out, roughly over one million jobs under that provision alone. where else will we be losing jobs? we'll be losing jobs due to the bailout proposal in this bill. if you put a tax on anything, you're taking -- you're meaning those businesses can't spend the money here when they have to send it over to the government to be stored over here for some other purposes. if we're going to ask businesses to spend $150

billion to $200 billion on this new bailout tax, some studies looked at that and said, that will result in higher costs to those businesses, naturally. less ability for them to invest. if they can't invest in new plants, material, and employees, they'll be putting it over here. the number we've seen is around 450,000 or so less jobs because of that provisions. between those two provisions alone, in the over a million range of jobs not being created or lost because of this legislation. i'll leave to later on the last point which is that this bill also obviously creates bigger government, more expansive growth of government, more expansive takeover of the private sector and private individuals' lives as well, their decision-making lives, as ranking bachus made at the beginning comments, all things the american taxpayer has spoken out against. the american taxpayer has spoken out against

taxpayer-funded bailout they said we want less job destruction and less big government. this bill gives us taxpayer funded bailouts, it gives us destruction of more jobs and this bill gives us a bigger government. all things the american public is opposed to. that's why i come to the floor tonight and oppose this piece of legislation. with that, i yield back. the chair: the gentleman yields back. the gentleman from massachusetts. mr. frank: the gentleman from north carolina, a leading member of the committee who has done a great deal on this bill. the chair: the gentleman is recognized. >> madam chair, i have endured the entire debate this evening, which is now approaching three hours, and i've been absolutely fascinated by -- before i came to this body, i practiced law for 22 years, now i've been in this body 17 years, and i was practicing law quite often i

had cases in which the facts and the law were on my side and i would go to court and i would argue the facts and the law and deal with what was before us. sometimes i'd have some cases where neither the facts nor the law were on my side, and i would show up in court, and i would argue everything other than what the case was about. now that's what my friends on the opposite side of the aisle have been doing tonight, because neither the facts nor the law is on their side. this time. so we have heard about health care. i've been making notes. i was here the whole time.

we've heard about socialism. we've heard about supply and demand. we've heard about energy and electricity rates. we've heard that the government intervention caused the economic meltdown. and that the fed ratcheted up the panic and that other government agencies contributed to the panic and that's how we got into this economic mess. we've heard almost every speaker talk about the size of the bill. we've heard something about cockroaches. i have no idea what that had to do with this bill. we've heard a lot about thes,

we've heard about the 2003 to 2007 fannie and freddie purchase of subprime loans and made it sound like somehow that was our fault rather than your president who was out there pushing home ownership when we were trying to get him to push to provide decent housing for people. we've heard about credit and we've had our colleagues just pull figures out of the sky. i have no idea where they came from. this bill is going to increase interest rates by a point and a half. i don't know how anybody would ever be able to know that. it's going to decrease jobs by 5%. i don't know where that figure came from. it's going to break up dell. i didn't know dell was a financial entity at all. it's in the computer business, it's not in the financial

services business. and we've heard our friends say that the don't want taxpayer bailouts, but they also don't want us to set up a fund that's paid for by the industry to take care of the dissolution of the failing companies. so what's the solution here? i don't know what their solution is, to be honest with you. the truth of the matter is, the private market failed and we had an economic meltdown. >> would the gentleman yield? mr. watt: i want to finish my statement. i really have a limited amount of time. y'all have plenty of time over there. and i think we need some reasonable regulation, which is

what this bill does. we need somebody who is going to show up at work every single morning saying, my prime prie mare obligation is to at least think about what is in the interest of consumers. and that's what the consumer financial protection agency's charge and responsibility will be. and that's what this bill does. we need to do something about all these predatory loans that were made that are now being foreclosed and have gotten us into the financial mess that we are in and that's what this bill does. we need to make the derivatives market more transparent and put them on a platform so that the whole world can see what's

going on back there in the derivative room and that's what this bill does. now what do you all want to talk about? you can talk about health care or energy or electricity or cockroaches or whatever you want to talk about. we want to fix this economic system in our financial services industry. that's what this bill does. it is long, it is complex, it is a complex undertaking. our chair has done it admirably. he has led this and what is your proposal? that we just do nothing. and let the market take care of itself. that is not an option, my friends. that is not an option, my friends.

that time has passed for a while. . mr.sen sar ling: -- mr. hensarling: our bill ends bailout, your bill will increase bailouts. it reforms the federal reserve, your bill increases the powers of the federal reserve. this bill protects consumer rights. your bill constricts consumer rights. your bill is -- was stone cold silent with respect to the government-sponsored enterprises, but now you protect them. clearly the g.s.e.'s are too big to fail. our bill goes to the source of the problem. if the gentleman needs to know

what the solution is, i'd be happy to provide him with a copy of h.r. 4173. it is now, madam chair, my privilege to yield five minutes to the gentleman from texas, mr. neugebauer. the chair: the gentleman is recognized. mr. neugebauer: i want to go back to, what really is at stake here. that's choices for the people that borrow money in this country. . borrow money. back in the fall of last year and spring of this year, we were working on legislation that the other side brought forward for credit cards and everybody has a credit card story that they had a bad experience and so we passed this big credit card bill. and when we were talking and debating that bill on this very floor, we told the american people, be careful here because what they're saying is they don't trust you to make your own choices and going to tinker with the credit card industry. we said interest rates are going to go up, credit limits

are going to go down, payments are going to go up. and what happened? rates went up, credit limits went down and payments went up. and who did that affect? it affected families. more importantly, we said it's going to hurt small businesses because the number of small businesses across this country use credit cards to help with their cash flow needs of their company. now, we're here tonight talking about the rest of the credit market. and what's going to happen here, one of the several gentlemen has brought up these predatory lending. let me talk about that. how about this young businessman that needs to buy a truck and tools for his plumbing company and goes to his banker and says, i need an interest-only for 12 months until i get my business up going and i get my new employee generating the revenue and i

want to convert over to another payment plan at the end of 12 months. and the banker says i would love to do that and i have done that for you in the past, but we have this new czar or czar ina, so i can't do that. and so what happens? that plumber can't expand -- can't buy another truck or hire another employee. those are the consequences of this. and where we're headed, is we're going to let the federal government tell you because you're not smart enough according to my colleagues on the other side to determine what kind of mortgage is appropriate for your family that you're not smart enough to determine what kind of car loan or student loan is appropriate for you and your family as you are trying to send your son or daughter to school that the overdraft that your bank has been extending you, you may not be extending those charges or they may go up.

how about that experience who wants to start their own business and needs a specialized financing package to be able to get that business off the ground and initially has a small amount of capital and so the banker is going to take a larger risk so he is going to have to price the cost of that loan higher. he is reluctant to do that because he might be making a predatory loan according to the czar, who is going to determine the financial products the american people get and mr. ackerman: cease to in the future. i still have faith in the american people because this nation wasn't built because of its government but because of its people. people that took risk and chances and worked hard and went out and did different things in different ways and made things happen and they didn't conform to what was the standard. you see, when we start

standardizing everything, we limit the potential for success and limit failure and there's no reward for those who do the extra and do special. that's not what built this nation on. in afghanistan, where our young men and women are doing remarkable things in the name of security, peace and liberty for our country. and you thought they would want to talk about, well, thank you force, the president's commitment to additional troops but this sergeant came up to me as i was to get on a plane and he said, congressman, you know what scares me? it's not these afghani taliban people but what you are doing to our country. every time i turn around, you are spending money we don't have. the government is getting into the car business. the government is buying banks. the government is limiting my choices.

and you're leaving a legacy and i'm here fighting for my country and quite honestly i look back home and i'm not sure that congress is destroying our country by taking away the freedoms and liberties that i'm fighting for. and that's the reason tonight and tomorrow, we need to defeat this so we can preserve freedom and liberty for this country and trust the american people because you know what, american people are smart enough to make their own decisions. the chair: the gentleman's time has expired. the gentleman from massachusetts. mr. frank: i only have one speaker left. the chair: jarts. the gentleman from texas. mr. hensarling: may i inquire how much time remains on both sides? the chair: the gentleman from texas has 10 minutes remaining and the gentleman from

massachusetts has 14 1/2 minutes. mr. hensarling: does the chairman have -- mr. frank: i have one more speaker left. mr. hensarling: i wish to clarify that earlier, i was referring to the substitute. mr. garrett: the gentleman from new jersey is recognized. mr. garrett: i thank the chair and the gentleman from texas. just to go back to the comment. one is the solution, the gentleman from texas said, here is our solution and i leave a copy here in case he hasn't had the opportunity to read it.

it is by size a lot less than what you have before you. the gentleman from north carolina also asked about our studies and where we say it's this will hurt jobs and millions of jobs lors. before we implement this. my question to the gentleman is, before we pass this legislation today and implement it and impose this burden onto the american business sector and the american public in general, can you tell me which study you're referring to that it will not cost a loss of jobs . mr. watt: if the gentleman would yield. i haven't referred to any study because i didn't say it would cost jobs or increase or decrease jobs. mr. garrett: reclaiming my time and there's the point. we have this 1,300-page bill

that i would guess that the vast majority of this body hasn't had the opportunity to nor the inclination nor in fact, did read. when we hear the impact that this will have on our economy, what is their information as to what it would do and it is absent. now, i spoke before about the point that this bill was -- goes contrary to the americans' claim that they don't want any more bailouts. and one section of the bill talks about -- allows switching from receivership into bankruptcy and basically a political decision. on page 408 basically says that the treasury secretary has unlimited authority to borrow unlimited amount of money from the federal treasury, which means from the american taxpayer.

how do we see this? page 408, section three, when assets are less than $150,000, section b, the secretary may lend any amount of funds when added to the amount available in the fund would not exceed $150 billion. what does that mean? that means today as we start this program out, there's zero dollars in the fund. the treasury secretary can go to the treasury and ask for $150 billion from the american public and it could bail out some company, maybe a.i.g. again as this past administration helped to facilitate. after that, there's no money in the fund again, so they go back to treasury and say we need another $150 billion because under the terms of the bill, there's no money in the fund they can borrow up to $150 and then another company goes under or another company, or auto

company and pay it out. how much is in the fund then? zero. which point, the treasury secretary can go back a third time and ask for an additional $150 billion. when does this end? this bill puts no limit on it whatsoever. it could be $150 billion, it could be $1 trillion, it could be $10 trillion. all in the hands of the political appointee, secretary geithner, for him to decide where this money would go and where it goes to and it could be a political decision because he can prop up favored companies and allow them to go into receivership and come back out of it after he has asked the american public to spend $1 trillion to do so. where is the limitation? there is absolutely none. so when the other side of the aisle looks chagrinned, they need to only look at their own

bill, page 408 to see it is a limited drain on the american taxpayer. this bill will allow perpetual bailouts for their favorite companies that they want to prop up until the end of the earth. that is reason one we should be opposed. we should all be voting no. if there is nothing else in this bill, every american listening to this floor tonight should be calling up their member of congress and saying, why are you putting us on the hook to bail out bad businesses and bad business decisions? why are you putting us on the hook to bail out your favorite political companies and why do you want to do so without limitations? the chair: the gentleman's time has expired. the gentleman from massachusetts reserves the

balance of his time. the gentleman from texas. mr. hensarling: again, did i understand that the distinguished chairman has one more speaker, but wishes to reserve? mr. frank: i haven't gained any more since the last time. i only have one. mr. hensarling: may i inquire, is the distinguished chairman the one? in that case, i will close for our side and yield myself the balance of our time. the chair: the gentleman from texas is recognized. mr. hensarling: madam chair, again, what we have before us is the perpetual wall street bailout and increased job losses through credit rationing act of 2009. now, no matter how much our friends on the other side of the aisle wish to deny it, the only reason to create a bailout

fund is to bail someone out. the american people are sick and tired of paying for the bailouts. now my friends on the other side of the aisle say, we aren't going to use this bailout fund. which begs the question why you are creating in the first place. well, it's going to be used in wind-down costs. in bankruptcies, you used the assets of the bankrupt company to do that. where is this $150 billion and $50 billion from the line of credit from the treasury, what is the $200 billion being used for? it's going to be used to bail out the creditors, the shareholders, the counterparties, just like what it's done in a.i.g.. now, again, the distinguished chairman of the financial services committee says our

bailout fund is like a death penalty. well, it may be a death penalty, but the death sentence has been commuted for up to three years. and by the way, if it's commuted, just like in the a.i.g. bailout, well society general can walk away with $16.5 billion like they did in a.i.g. goldman sachs, $14 billion like they did in a.i.g. merrill linch, 6.2. deutsche bank could walk with $8.5 billion. u.b.s., $3.8 billion. these are the counterparties on credit default swaps to a.i.g. and their legislation would replicate it, madam chair. there is nothing in their legislation that would prevent the entire a.i.g. fiasco from repeating itself and if anything, it would triple it,

up to three years, up to three years of bailout authority there. . not only is the death sentence commuted in their bailout fund but not unlike the g.m. or chrysler cases, we could have a lazarus-like resurrection. not unlike old g.m. and old chrysler, you flip a switch and you take care of your political allies, the united auto workers, you got new g.m. and new chrysler and they keep on trucking along. it's an interesting metaphor to call this a death penalty. what it is is a bailout. here we are, madam chair, at a very tough time in our nation's economy, 3.6 million of our fellow citizens have lost their jobs since the president told us if we passed this stimulus plan, his government stimulus

plan, we'd only have 8% unemployment. instead, we have 10% unemployment. and yet here we have a piece of legislation whose ultimate impact, whose ultimate impact is to make credit more expensive, less available, when small businesses are losing jobs by the tens of thousands and thousands. why in the middle of one of the great credit contradictions in our nation's economy would you want to make credit more expensive, less available? it's beyond me, madam chair. it is beyond me. again, my fear is that thunder type of legislation, the big will get bigger, this is again fannie mae and freddie mac, politically favored firms, given a political mission that blows up. now again, maybe the merrill lynches and u.b.s.'s are taken care of, the cool teachers in mesquite, texas are not taken

care of this under this legislation, they end up payering if the bailout. the big will get bigger and be given a political mission. your job will depend not so much on what you do at home but who you know in washington. one of the great free market economists of our time, nobel laureate, milton friedman said, quote, sooner or later, and perhaps sooner than many of us expect, an ever-bigger government would destroy prosperity that we owe to the free market. in the human freedom proclaimed so eloquently in the declaration of independence. unquote. that moment is here and we must vote for freedom and against this bill. the chair: the gentleman from massachusetts. the gentleman has 14 1/2 minutes.

mr. frank: i yield myself such time as i may consume. first i have to deal with some of the misstatements we've heard. there's nothing in here that rations credit. there isn't even anything to refute because there's nothing they could even misinterpret, madam chair, about the rationing of credit. now some are particularly upset because we established a consumer protection agency. in the first place, as far as the banks are concerned, that entity gets no new powers. it takes powers that are already there in the bank regulators that haven't been used very well. if by -- if my friends on the other side want to go to the american people and say, here's one of the differences between the party, we think you consumers have been adequately protected and you don't need to improve that manner of administration, i'll take that debate to the american public. they tell us that this is bad for small business. the independ community bankers

association supports this bill. they will be unhappy if bankruptcy is added, i understand that. but as far as the bill now stands, before we get to the bankruptcy of the judiciary committee amendment, which i'm going to vote for, but insofar as as the idea that it restricts credit. when we did the credit card bill, the republicans said, this is bad for small business and the national federation of independent businesses said, no. what we say here is, and this is a big difference. we do say that we want to prevent the granting of those kinds of mortgages that get people in trouble because it's not just the individual who gets in trouble, the whole economy suffers. we do want to ban the "the practice"tieses in the morning area. it's an expansion of government power. that was a constant debate. for much of the past, oh, 15 years, until recently, many

democrats tried to get restrictions on irresponsible subprime mortgages. the republicans -- republicans resisted them. from 1995 to 2007 my republican friends controlled this house. not a piece of legislation passed to stop mortgages. not a piece of legislation passed to deal with fannie mae and freddie mac. we did in 2007 pass such legislation. the damage had been done. we want to expand the regulatory power to stop the kind of mortgages from being granted that was a major problem in the crisis. one member said, well, we would do nothing to stop the a.i.g. crisis. in, we do many things to stop the a.i.g. crisis. first of all we do not allow, under the legislation we're putting forward, an entity like a.i. gimplet to get so overextended by issuing credit default swaps they can't pay off. they would be restricted because derivatives would be better regulated. they would not be allowed to be

so leveraged. y would give regulate dwhrorse power to hold them in. the notion that it's socialism when you have bank regulation is quite odd. we heard members say this is socialism. there is nothing in here about the only ship of the -- shift of the means of production, there's nothing about the government taking over ongoing institutions. we have bank regulations. that's the deal. these are people who think that regulation is socialism. we are for regulation. we do believe that the absence of regulation over the last 20 years contributed greatly to the problems. i know there are people who say, when you start regulating the innovative aspects of the economy, you get in trouble. they said it about franklin roosevelt and the security exchange commission thism said it about theodore roosevelt and the antitrust. i urge people to go back and read the same arguments. the gentleman from texas, mr. neugebauer, said the federal reserve will decide you're too big to fail and you'll be ok.

rock, wrong, wrong. we the idea that an a financial entity, we heard about dell and american airlines, they are not covered urn this bill. dell and american airlines are total red herrings. what we have here is the ability of a group of existing regulators, not the federal reserve, to decide a particular institution is so big and overleveraged it's a danger. they don't get designated and then carried around. coordinate with that is a restriction on what they do. they are not told, you're too big to fail, go out and make more money. they're told, you're too big to fail, you're is big if you fail -- cut your capital. stop selling credit default swaps. there's a real difference between the bills. their bill is small because it does nothing to retard the kind of activity that got us in

trouble. it does not stop overleverages or unregulated derivative trading. it does not stop credit default swaps without anything to back them up. it does not stop any subprime lending abuses. they're very clear. leave it to the private market. we say, the private market always does bet we are sensible regulation. when roosevelt and wilson put antitrust into place, i think they did a good thing. when franklin roosevelt did the s.e.c. and the investments acts, those were good things. a lack rf regulation did cause these problems. we get to the bailout issue because the judiciary committee, frankly, copied the republican bill by saying you should choose chapter 11. the republican bill talks about chapter 14, the equivalent of chapter 11. here's what the judiciary language is subject to. s is subject to -- we're talking about the fund.

yes. somebody could be put into chapter 11. but none of the money could be spent that's in the fund, raised not by taxpayers but by an assessment on page 399. the fund shall be available to the corporation to use with respect to the dissolution of a covered financial company to recover the costs incurred by the corporation. the fund shall not be used in any manner to benefit any officer or director of such company. it also then says on page 397, here's the fund,s the purpose of the fund. to facilitate and provide for the orderly and complete dissolution of any failed financial company or companies that pose a systemic threat to the market or economy as determined under 1603b. the language about judiciary does in the alter that in any respect. it says the fund can only be used for dissolution. now it is true, they said, what

about a.i.g. when they paid off all these people. this is to repeat the repetition of that that was done, by the way, under section 13-3, it can no longer be done, we changed 13-3, that should not happen again. what they did was to say this was the bush administration, they said we don't have the discretion to pick -- to pick and choose so we're doing exactly the opposite of a.i.g. with the a.i.g., it was the ruling of the bush administration, officials decided, without any congressional input, they had to pay off every creditor because they had no authority to pick and choose. we could put them all into bankruptcy or pay everybody. we give them the authority to avoid that dilemma. by the way, a.i.g. was not being put out of business.

a.i.g. was not put under dissolution. they said it was to be kept going. that could not happen. what we say is, in the future if you think an entity like a.i.g. has gotten too big and owes too many people too much money, you take it over and you spend money only to wind it down and to dissolve it. if there was some notion that it could be kept going, none of these moneys can be used for it. let me read it again. to facilitate and provide for the orderly and complete dissolution of any failed financial company. that's a restriction on the use of the funds. not the taxpayer funds but any other funds. then on page 288, it says, the corporation is authorized to take stabilization action, including the bankruptcy, only if the secretary and the corporation determine that it is necessary for the purpose of financial stability and not for the purpose of preserving the covered financial company and it then says the corporation ensures that any funds from

taxpayers, shall be repaid as part of the resolution process before payments are made to creditors. funds will be repaid if there is a borrowing, funds go to the taxpayer before a nickel goes to the creditors. these are the inaccuracies that we have heard. there's no dell or american airlines in here. there is no -- by the way, there's no permanent bailout fund either because that fund and the borrowing authority the gentleman from new jersey talks about, sunsets in 2013. so pemple innocent is true, you -- so permanent is true if you believe the world is ending on january 1 of 2014. i know the republicans believe the world began on january 21, 2009, and all the bad things that happened didn't happen under bush, they all happened in 2009. again, as my partners said to me, that was also the day of a

terrible, terrible disease outbreak, mass republican amnesia, on january 21, 2009, when they forgot what -- we've heard talk about job losses. isn't it interesting that the gentleman from texas cannot remember that a single job was lost before january 20678 he talks about the job losses since the stimulus bill was passed. in fact this recession, the worst since the depression, began in 2007, in december, and there was enormous job loss under president bush. job loss has diminished recently. so yes, i will acknowledge that the obama recovery from the bush recession has been slower than we would have liked. but every sensible economist understands that the question is not whether any -- were there any job losses at all but whether you have affected the rate. clearly the economic recovery plan has affected the rate. i'll yield to my friend from north carolina. >> i was going to ask whether there was anything in the bill

about cockroachs? mr. frank: i did in the. i did read the whole bill. also, there was some reference to steam roll or not having the opportunity to read it. we have had complaints from the minority about too many markups and too many hearings and people on the staff, there's a magnificent croup of -- group of staffers who have given the american people a great bargain considering the amount of work, this has been thoroughly vetted an discussed and debated, but here's the fundamental difference. . this will sunset in 2013 in terms of borrowing authority. it is used so you just say we are out of business. it is to avoid what secretary paulsen and ben bernanke and george bush told us was a

dilemma of a year and a half ago all or nothing. we have to use these funds to wind it down in an orderly way. but here's the bigger difference. the republican bill doesn't even try to stop the situation from arising. that's the difference. we analyzed -- too much, subprime loans, executive bonuses that encourage people to take too many risks. that bill says no. it is true, every time you try to prevent a bad practice by regulation, you are expanding government power, that's true. an unregulated versus regulated that's government power. telling an institution they can't be overlerged, in terms of breaking up companies, no one is breaking up dell or american airlines. we stop to try an institution

that it becomes overlerged. we do say that regulators are able to step in and restrain them. the federal reserve gets more powers under the systemic risk counseling. we take more away power from the federal reserve than any other agency. we limit section 13-3. we do empower as the agents of the systemic risk council to do what the republicans say they never do, you are getting too big. break them up. a.i.g. should not have allowed to be an insurance company and credit default swap handler. someone could have said, stay in the insurance business but don't put us all at risk. that's the fundamental difference. the republican position is business knows best. do not have any rules, do not

any -- and literally, nothing in their bill would retard any of the irresponsible, reckless overleveraging that happened and led to the crisis and they say let them go bankrupt. we say, let's try to prevent the crisis and step in and slow it down. and if that is socialism then i guess the antitrust laws are socialism. they called franklin roosevelt a socialist because he created the securities and exchange system. they call people socialist when they want to do regulation. the community bankers don't think so and being protected from abuses is not socialism. i look forward to tomorrow when we debate the amendments. the chair: the gentleman's time

has expired. all time for general debate has expired under the rule. the committee rises. the speaker pro tempore: madam chairwoman. the chair: the committee of the whole house on the state of the union having had under consideration h.r. 4173 directs me to report that it has come to no resolution thereon. the speaker pro tempore: the chair of the committee of the whole house on the state of the union reports that the committee has had under consideration h.r. 4173 and has come to no resolution thereon. the chair lays before the house the following personal requests.

the clerk: leaves of absence requested for mr. buyer of indiana for today after 8:00 p.m. and the balance of the week and ms. baldwin of wisconsin for today. the speaker pro tempore: without objection. the requests are granted. for what purpose does the gentleman from new jersey rise. mr. garrett: i ask unanimous consent that today following legislative business and any special orders heretofore entered into that the following members may be permitted to address the house revise and extend their remarks and include extraneous material, mr. smith from new jersey, mr. poe on december 16 for five minutes, mr. jones on december 16 for five minutes, mr. deal on december 16 for five minutes, mr. pitts on december 16 for five minutes and ms. foxx for december 10 for five minutes. the speaker pro tempore: without objection. for what purpose does the gentleman from georgia rise?

>> mr. speaker, i ask unanimous consent that today following legislative business and any special orders entered into, that the following members may be permitted to address the house for five minutes revise and extend their remarks and include therein extraneous material, mr. davis from tennessee for five minutes, ms. woolsey from california for five minutes, mr. langevin of rhode island for five minutes, mr. defazio of oregon for five minutes, ms. kaptur for five minutes, mr. grayson of florida for five minutes and mr. spratt of south carolina for five minutes. the speaker pro tempore: without objection. for what purpose does the gentleman from georgia rise? mr. scott: mr. speaker, i now ask that this house do now adjourn. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye.. those opposed, no. the ayes have it.

the motion is agreed to. accordingly, the house stands >> you can read this sentence health care bill on line and c- span.org and follow live coverage at 10:00 a.m. on c- span2. next on c-span, general david petraeus testifies about the war in afghanistan. later, president obama meets with congressional leaders to discuss job creation. and the senate homeland security committee looks into efforts to keep terrorists out of the

transportation system. now, general petraeus. he testified on capitol hill about obama's plan to send an additional 30,000 troops to afghanistan. he is joined at the senate foreign relations hearing by u.s. ambassador karl eikenberry. but the hearing will come to order. we are delighted to welcome today under secretary jack lu, general petraeus, and ambassador karl eikenberry from afghanistan. we are very pleased that you could take time to be with us today. as we all know, eight days ago the president announced his decision regarding a new phase in our afghan mission, including the important decision to send an additional 30,000 troops. for all of the answers that the president offered, and there were many, certainly explanations of his strategy and reasons for his decision, a lot of questions still have

remained, and are probably being asked by various committees on the hill, and we appreciate the administration's cooperation in making themselves available so those questions could be answered. it is important for the american people to understand the strategy and the stakes. the detailsñi of our civilian strategy particularly, how afghan governments at all levels will improve and above all, how we will strengthen our partnership with pakistan. strategy particularly how afghan governance at all levels will improve and above all, how we will strengthen our partnership with pakistan. as i've said a number of times, i believe that there are just some common sense conditions based on the judgments that we have been hearing from commanders in the field and from

our ambassadors that ought to narrow and guide the deployment, the sort of mission tasking, if you will, of our additional troops, and i think those are, are there reliable afghan partners? are there reliable afghan forces to partner with? because the object of this exercise is to transfer the responsibility to them. second, are there local afghan leaders to work with on the ground, because we want them to be invested, and to come in quickly underneath the clear and hole and third is the civilian capacity in place to make the military gains sustainable? i was very pleased to hear general mcchrystal say yesterday that as we plan new operations we're going to take great care to ensure that the civilian elements are in place to immediately follow our troops. i think that is critical and it

is very reassuring to hear that that judgment will be made. ultimately, our success depends on having a robust civilian effort to build in oun military gains and general petraeus has consistently argued as did when he was general eikenberry now ambassador eikenberry consistently argued that there is no military solution allmyly. so that needs to remain front and center. importantly, each of the challenges i've mentioned demand not only that america improve our past performance, but also our partners, all of them, must improve theirs. and this challenge is especially crucial when it comes to pakistan. i am convinced that what happens in pakistan, particularly near the afghan border, will do more to determine the outcome in afghanistan than any increase in troops or shift in strategy. pakistan is in many ways the

core of our challenge. from the hakani network to other, the interconnected extremist groups that we face don't stop at the afghan border. and so our strategy cannot stop there either. it must extend to pakistan. al qaeda's leaders are there, most likely including osama bin laden. home-grown militants like lashkar itaeba are there and so are others directing the insurgency in afghanistan. pakistan is a sovereign nation and obviously we need to respect that, but we must convince its government to tackle all of the extremist groups threatening regional and international security. for pakistan's sake as well as the regions and all of those who have a stake in the, in this effort.

the pakistani military should be congratulated and it has demonstrated firm resolve with its offensive against the pakistan and division of the northwestern province in south waziristan and its commanders deserve great credit. they have sacrificed. now we're looking for them to take on the afghan network, and al qaeda strongholds. this will be crucial to our success in afghanistan. today we are prepared to provide pakistan with additional equipment, and other military many pakistan is believed that america will once again abandon the region as we did after the fall of the soviet union. one reason why pakistan has often hedged its bets and used the taliban for strategic depth. so let me be clear, and i think i speak for the committee in

this and for the congress, because it would be a mistake for anyone in pakistan or elsewhere to believe that the president's words about crawling down troops from afghanistan somehow mean an end to our involvement or engagement in the region. it does not. our challenge today is to persuade pakistan that it cannot and does not need to hedge its bets. our troop deployments will eventually decrease, but the conditions that will permit them to decrease will be beneficial to pakistan. america remains committed to the people of the region for the long haul, as are $7.5 billion civilian commitment demonstrates. this also reflects a recognition that pakistan civilian's, military, and intelligence leaders face serious challenges. óall of us are engaged in a difficult balancing act between

the tougher measures we believe must be taken and the anti- american blow back that such measures can bring to pakistan does the fragile democratic institutions. measures we believe must be taken and the anti-american blowback that such measures can bring to pakistan's fragile democratic institutions. it should help our efforts that no country has suffered more than pakistan at the hands of al qaeda. the taliban, and affiliated terrorist groups. some 2,600 people have been killed in terrorist attacks in pakistan in the last 2 1/2 year, yet with so many pakistanis view the united states as a problem, we have to admit that we have simply not fought for our reputation enough. we must do more to make sure to make the case that fundamentally america and pakistan are fighting for the same things. we need to make clear to the

people of pakistan we will be full partners in their fight against extremist element it's which is why in 2009 alone, the united states has given about 300 million conflict-affected populations in pakistan. as we know, all nations are threatened by extremism, whether it takes place in new york city or in mumbai or other areas, we must work together in stopping people, throwing bombs and killing innocent people. that is the world's challenge, and it means that afghanistan, pakistan and india must cooperate to reduce the violence and eliminate the tensions. our troops are defending the right of afghanistan to develop its own government. they're risking their lives to chase down international criminals who threaten not just the united states but afghanistan, pakistan and

beyond. there will come an inevitable moment in this fight where our partners in pakistan must take up the fight with an equal vigor so we don't have to take matters into our own hands. i believe we can build a significantly stronger relationship with pakistan and i also believe in the long run pakistan will strengthen its own democracy, institutions and security by engaging in an unfetterrd fight against the extremists with its own borders. here in washington our domestic debate focused a great deal of energy on the question how many troops we will send to afghanistan. i believe other strategic question, civilian capacity, improved governance, standing up afghan security forces and especially greater cooperation with pakistan, greater partnership, if you will, that those are the crucial derman nants of success, not the numbers of troops.

at sentcom commander and the state department official responsible for the management, the members of this panel are all of them well equipped to talk the details of these vital efforts today and i look forward to their testimony. senator lugar? >> mr. chairman, i join you in welcoming secretary loo, ambassador eikenberry and general petraeus. we appreciate that you've come to the foreign relations committee today. this builds on the hearing left week with secretary clinton and admiral mullen and explored not only the prospects for success of the military campaign in afghanistan but also how the president's plan fits into our broader strategic objectives of preventing terrorist attacks and stabilizes the middle east and south asia. much of the debate in congress has focused on the president's stated intention to begin withdrawing some u.s. troops by

july 2011. some members have voiced concerns that such a date undercuts impressions of the u.s. resolve, gives the taliban and al qaeda a target beyond which they can wait us out. other members with a very different view of the war worry that july 2011 date is so flexible it offers no assurance that troops will be withdrawn. this is a legitimate item for debate, but i am doubtful the success or failure hinges on this point nearly as much as it does on the counterinsurgency strategy employed by allied troops, the viability of afghan security forces and most importantly, how the united states engages with pakistan. i have confidence that the addition of tens of thousands of u.s. and allied troops under the direction of general petraeus and mcchrystal will improve the security situation on the ground and in afghanistan.

more uncertain is whether the training mission will succeed sufficiently to allow u.s. forces to disengage from combat duties in a reasonable time period. the most serious question, however, is whether improvements on the ground and in afghanistan will mean much if taliban and al qaeda sanctuaries in pakistan remain or if instability with pakistan intensifies. as hearings in our committee have underscored, potential global impact of instability and a nuclear armed pakistan dwarfs anything that is likely to happen in afghanistan. the future direction of governance in pakistan will have consequences for nonproliferation efforts, for global economic security, for our relationships with india and china, and security in both the middle east and south asia regions among other major issues. last week secretaries clinton, gates and admiral mullen

acknowledged the importance of pakistan's apened president's calculation and underscored that the administration is executing a regional strategy. i'm incurringed by press reports that have described 9 intense diplomatic efforts with the pakistani government aimed at securing much greater cooperation, but we should remain cognizant that the focus of policy tends to follow resources, and by that measure, afghanistan will still be at the core of our regional efforts. the president and his team has justified their plan not only on the basis how it will affect afghanistan but also on how it will impact our efforts to promote a much stronger alliance with pakistan than embracing the objectives. the president has said the united states did not choose this war and he's correct, but with these troop deployments to afghanistan we are choosing the battlefield. what we will concentrate most of our available military resources. the afghanistan battlefield has

been inherent, has inherent disadvantage of sitting astride a border with pakistan that is a portis line for the militants but a strategic obstacle for coalition forces. as long as this border provides the enemy with an avenue of retreat for resupply and sanctuary, our prospects for destroying or incapacitating the insurgency op innegligible. it is strategically less important afghanistan while taliban and al qaeda leaders become increasingly secure in pakistan. if they are able to sit safely across the border directing a hit-and-run war against us in afghanistan, touting catastrophic terrorist attacks abroad and working to destabilize pakistan from with, our strategic goals in the region will be threatened, despite progress on the ground in afghanistan.

some reports indicate that taliban leaders are aware of the threat from u.s.-operated predator drones are moving out of remote areas in the crowded cities, are moving rather out to the remote areas from the crowded cities, including a karachi, for example. if such reports are true, the united states will have even fewer options to pursuing taliban and al qaeda leaders in pakistan absent the active help of pakistani authorities. specifically, will pakistan work with us to eliminate the leadership of osama bin laden and other major al qaeda officials? in addition to improving the cooperation of pakistani authorities, the united states and our allies will have to become more creative is now he engage with the afghan and pakistani peoples. we should understand as a matter of survival, people in dangerous

areas on both sides of the border will tend to side with whoever is seen as having the best chance of winning. we should also recognize that tribal loyalties most notely pashtun loyalties are at odds with the strong central government and with that acquiescence to external military pow. the rand corporation observed recently i quote, the objectives should be to do what afghanistan says most effective historical governments have done. help the pashtun tribe, subtribes and plans providing security and justice in the areas. and help to manage the process. end of quote. meaningful progress in afghanistan is likely to require tolerance or even encouragement. of tribal administration in many years, as well as convincing tribal leaders that opposing the taliban is in their interests. and these circumstances we

should explore, for example, how a cell phone and other communication technologies can be used more effectively. both as an avenue for public diplomacy for the afghan people and as a means for gathering information from them. already 7 million cell phones are in afghanistan. one for every 4 inhabitants, more or less. the taliban is bent on destroying communication towers, understanding the threats posed by these technologies. for example, cell phones could be used by sympathetic afghans to produce realtime intelligence, including photographs of ieds being prepared, or calls alerting coalition troops to movement of the taliban. phones eliminate the need for informants to take the risks of visiting a police station and of conversing openly with u.s.

troops. similarly, expanding the use of credit card transactions could prove revolutionary in problems that lacks an effective banking system. they can provide a way to reduce corruption, improve accounting with the afghan government and security forces, and relieve soldiers from going a.w.o.l. and deliver pay safely to their families. i appreciate the innovation and dead dhags our witnesses displayed in the past, and their willingness to take an extremely difficult mission. i noted last week that the president deserves credit for accepting the responsibility for this difficult problem as we go forward, and that is equally true for our distinguished panel. i look forward to their discussions and i appreciate their service. thank you, mr. chairman. >> thank you very much. we're going to start with the testimony from secretary loo and

we're bratful with you taking on the civilian side of this. thank you. general petraeus will follow and general, about as interesting a set of challenges as any commanding general could have in succession, and we're pleased and delighted to have you here and very respectful of your leadership in all of this. finally, ambassador, eikenberry, let me just thank you. i had occasion to spend about five days with you and i saw what an outstanding team you have there working with you, and what a terrific job you yourself are doing. i want to thank you for that. i wish you would extend to them our gratitude, because the competence overall was extraordinary. i know president karzai and others had have great respect for that team and for the work you're doing. so we're very grateful to you. thank you. secretary? >> thank you, mr. chairman. chairman kerry, senator lugar, members ever the committee i'm honored to be here with 5ebd eikenberry and general petraeus with a deep understanding of afghanistan and appreciation of the challenges we face there,

clear ideas how to move forward. their leadership has been xlemp marry, commitment to truly joint civilian military efforts are absolute. over the past week secretaries clinton and gates and chairman mullen testified on the importance of the president's strategy for our national security pip today i'd like to discuss some of the key civilian components of that strategy. which is the president and secretary clinton emphasized are essential to the success of that mission. our troop increase must be matched by strong civilian deployment and the foreign assistance that reaches the regions and functions targeted by the civilian military plan. we're working with o & b to ensure the programs are fully resourced and look forward to wokking with congress on the funding levels that meet these. the usda and other civilian agencies are working with afghan partners to bolster the civilian effort would continue long after our combat troops began to drawdown, and

their key to our injury he meant to afghanistan, pakistan, and the region. it is key that they take responsibility for their long- term welfare when our troops began to depart. i have seen the challenging working conditions in our embassies, in the field in afghanistan and the conflict. it leaves me with growing appreciation for read -- great men and women who carry out our nation's policy and make extraordinary sacrifices on behalf of our security. as secretary clayton said last week, we really do have the best people in these jobs. this effort is a reason to be helpful, despite the serious situation in afghanistan. they are helping to build capacity at torrential and district levels. t people in these jobs. this is an effort to be hopeful despite the serious situation in

afghanistan. civilian experts helping to build the afghan government capacity in the national ministries and provisional and district levels, providing development assistance in the field and working on scores of other roles. as i will discusses in a few minutes our civilians in pakistan are making similar contributions. their vice strategy will focus resources partnering with local officials and afghan citizens to deliver high impact systems. expanding programs that bolster afghan's alonging a sector, the traditional core of the afghan economy, the agricultural sec r sector. create jobs, reduce the flow of funding for the taliban from poppy cultivation draw insurgents off the battlefield. training capable police we are concentrating on rule of law programs to help the afghan government and local communities develop responsive mechanisms as an alternative to brutal taliban justice and launching

comprehensive communications efforts to empower afghans to challenge threatening narrative that extremists use to assert control. we will support an afghan-led effort to open the door to former taliban who abandon violence and want to reintegrate into society. we understand some who fight with the insurgency do not do so out of conviction but because of economic pressure which is a powerful form of coercion. our efforts will help afghans secure a better future if they do so peacefully, respecting fellow citizens and renounce al qaeda. it is also critically important the afghan government make progress on control and corruption. it is in his inaugural speech last month, president karzai pledged to combat corruption improve government. and the afghan people, and the united states and international community will hold the afghan government accountable for knting to make good on these commitments. we have seen some promising first steps. the t.j. stvpattorney general'ss investigating leaving reasons

names not disclosed until there's a conviction. a major crimes tasks force is expected to be fully operational by the first of the year and the afghan government announced it will establish a national anti-corruption court, even today the afghan high office of oversight is scheduled to hold a press conference to combat corruption and share more details of action underway. i'd like to say a few words on our staffing and training. we're on track to triple the number of civilians in afghanistan by early next year and anticipate we further increase civilian staffing in 2010 by another 20% to 30% concentrating on positions in the field that deliver vital services to the afghan people. it's important to remember the multiplier effect that civilian personnel provide. on average, ten partners ranging from locally employed afghan staff to experts who work with u.s. funded mgms. since it is estoeshl recruit civilians with the right skills we've enhanced both recruiting and training to make sure we get the right people to the right place at the right time.

for example, we conducted a week-long civilian military training xwersz at a camp in indiana for civilians who are about to deploy to field positions from state usaid and other civilian agencies. i visit a few weeks ago and saw firsthand how the training immerses civilians and military in real-life exercises training side-by-side with afghan american whose played role of interlock coutures, plan projects, hold meetings and practice safety and security with military partners. those who recently returned from the prts are contributing to training as subject matter experts and share their real-life experiences to civilians about to go abroad to take their place so they can be safe, more prepared and do their jobs more safely. i want to assure this committee we will do everything we can to make sure that our men and women are well prepared and well supported, both from kabul and washington so they can succeed in their efforts and make our

nation more secure. we're building a core of afghan and pakistan experts who continue to contribute to the mission even after they return. foreign service officers with pakistan and afghanistan experience key positions at the desks here in washington, at the foreign service institute on training, and ambassador holbrooke's office at nato and other posts. secretary clinton when they was in kabul in november she heard from a u.s. army colonel, woo he is thousands of outstanding service, none had 40 years of agriculture law or govern of expertise. but the usda, usaid and state department experts serving alongside his battalion. he told her he was happy to supply whatever support these valuable civilians need and he said we need more of them. the president's strategy with congressional support will make that possible. now, i'd like to take a few moments to address how the recently completed strategic review impacts u.s./pakistan relations. as the president made clear in his speech last week our partnership is linked to our efforts in afghanistan. we're committed to a partnership

with pakistan that is is built on a foundation mutual interest, mutual respect and mutual trust. we're not only strengthening pakistan the capacity to target the groups that threaten our countries but providing substantial resources to support democracy and development in pakistan. the president said going forward the pakistani people must know america will remain a strock supporter of pakistan prosperity and security long after the guns have fallen silent. so the great potential of its people can be unleashed. the united states is xmited to security assistance programs that strengthen pakistan's capacity to target violent extremists that threaten both of our countries fop that end the state department is working closely with our mellie tear partners managing two praems, foreign military financing and the counterinsurgency capability fund. fmf assists pakistan in sustainable development of pakistan's military services building a long-term security relationship and reinforcing the u.s. commitment to a partnership.

pccf provides the military training and equipment necessary to pakistan to wage the immediate battle against insurgence in its border regions. we're deepening our relationship to responsibleary civilian-led government. such a government can be a partner in regional stability and support the u.s. efforts in afghanistan. this committee under the leadership of chairman kerry and senator lugar has taken the lead in passing legislation to dramatically increase help to pakistan authorizing a $7.5 billion over five years of assistance. these funds make it footbapossi support pakistan and education, water, agriculture and governance. we're developing a civilian assistance strategy to reduce poverty and vulnerability to terrorist recruitment that poverty breetsds. a and significant projects. we hear repeatedly from pakistanis who want to be involved and under the

leadership of paterson, we're working closely to develop a program that reflects their needs and work through pakistani institutions develop programs wherever possible with a goal of abling nongovernmental organizations. jus as we need strong local partners for assistance programs to succeed, we need international partners to support pakistan the development and democracy helping pakistan build on its success. we're working closely with pakistan and the international community to meet the needs of the division and military operations early in the year were effective but left considerable need for reconstruction. we're supporting the u.n. special envoy for assistance to pakistan's efforts to coordinate assistance in vulnerable areas and encouraging other countries to follow through ounlder tokyo donor conference plemps. as we strengthen our partnership, we're forging strength and cooperation on a. >> guest: basis that emphasizes institutions not individuals. in addition to the president

prime minister and other ruling party officials, we're reaching out to provincial and local officials and developing strong working relationships with parties and civil society leaders across the spectrum. building on the october trip by secretary of state clinton, diplomacy efforts redefines the u.s. relationship goes beyond security efforts. this expands to people to people contacts and provides alternative to the narrative of fear and hate extreme s rely on and pursuing high-level policy dialogues to encourage the government of pakistan to undertake policy reforms leading to long-term economic growth and development. sustained diplomacy on energy iri issues, for example, and proving the lives of the pakistani people has reinforced pakistan's resolve to implement critical lech trissy pricing reform.

they're essential to meet the demand necessary to support economic growth. our discussions with the president and prime minister finance minister and many others in the pakistani government stressed the importance of moving forward with reforms that will put pakistan on a path to prosperity. creating new opportunities in pakistan and afghanistan is a core component of combating violent extremism. that's why we're continuing to work in congress to create economic opportunities in the region including initiatives such as proposed reconstructive zones a program essential to our national security objectives in the region. providing duty-free treatment to certain goods produced in all afghanistan and parts of pakistan to create much needed employment opportunities. also we're supporting pakistani and afghan negotiations to findize a transit plate agreement allowing you to move quickly between markets through pakistan's ports or across afghanistan's road to central asia. efforts to build a more stable pakistan are in our national

interest and in the interests of pakistan. the most recent series of violent attacks killing hundreds including women and children underscores the importance of counterering the insurgency. there will be ongoing humanitarian needs in pakistan as the government continues to take military action against extremist groups. we're proud of our successful contributions to this humanitarian effort. the responsibilities and interests i've described are shared by governments around the world. our nato allies and other international community partners already made significant contributions of in their own in afghanistan and pakistan. most recently the nato min stairal in brussels, allies pledged to contribute approximately 7,000 difficult troops for fging if and in all 25 countries plemped to do more in terms of troops trainers and trust fund monies. the task we face is as complex as any national security challenge in our lifetime. we will not succeed if this effort is viewed as the responsibility of a single party, agency or country.

we owe it to our troops and civilian whose face these dangers to come together at americans and with allies and parter ins to help them accomplish this critical mission. i thank you for the opportunity to testify today. thank you. >> mr. chairman, senator lugar, members the committee, thank you for the opportunity to discuss this situation in afghanistan together with deputy secretary le wuchlt and eikenberry. i provide my assessment of the situation in iraq as commander of the multi-national force in iraq and i appreciate this opportunity to discuss the way ahead in afghanistan. let me state up front thapt i fully support the policy president obama announced at west point last week. success in afghanistan is necessary and afeign abttainable challenges are greats. the united states and its isep

partners can defeat and set conditions in afghanistan to prevent reestablishment of the sanctuaries that enjoyed there prior to 9/11 and we can degrade the capabilities of the afghan taliban and other extremist elements while building afghan security forces that can increasingly lead the fight against the taliban allowing international forces to redeploy over time, but none of this will be easy. improving the capacity of the afghan government will also be difficult, as ambassador eikenberry forthrightly observed during the deliberations of the president's national security team. nonetheless, while certainly difficult, or different, and in some ways tougher than iraq, afghanistan is no more hopeless than iraq was when i took command there in february 2007. indeed, the level of violence and number of violent civilian deaths in iraq were vastly higher than we've seen in afghanistan, but achieving progress in afghanistan will be

hard, and the progress there likely will be slower in developing than was the progress achieved in iraq. as president obama observed, success in afghanistan is vital for america's security. reversing the taliban's momentum is essential to the effort to degrade and defeat al qaeda. the taliban we are fighting in afghanistan today is the same organization that sheltered and support osama bin laden and al qaeda as they planned the 9/11 attacks. the relationship between these groups remains strong. as sent gates observed last we the afghan taliban are to be sure distinct from the pakistan taliban and their partner groups which also have close relationships with al qaeda. the pakistan the taliban are part of a senate of extremist groups that include the group that carried out the mumbai

attacks. that sent it threatens the stability of pakistan and afghanistan and indeed the entire subcontinent. although most taliban fighters confronted our forces are local afghans, motivated by local circumstances, the afghan taliban leadership is organized, ideologically motivated, and a beacon and symbol for other dangerous extremist elements. as secretary gates noted, defeating al qaeda and enhancing afghan security are mutually reinforcing missions. they cannot be untethered from one another as much as we might wish that to be the case. achieving our objectives in afghanistan and thus will not be easy. the taliban has in recent years been gaining strength and expanding the extent of its control of parts of afghanistan. it is important to remember, nevertheless, that the taliban commanders significantly less

support among pashtuns and extremist groups in iraq had in their communities in 2007. or extremist groups in iraq had in their communities in 2007, and commands virtually no support among afghanistan other ethnic groups. beyond the insurgent challenge, corruption with the afghan government particularly the serious abuse of power by some individual leaders and their associates, has eroded the government's legitimacy. flaws in the recent presidential election further undermine confidence's in the government and, of course, taliban sanctuaries in the afghan/pakistan border area remain a major challenge to security in afghanistan, although we have been making progress in addressing this issue. meanwhile, iran has played a mixed role in afghanistan. helping with the country's

development, but also providing some lethal support to the insurgence, albeit on a more limited scale than it provided to militants in iraq. our armed forces and civilians and those of our nato allies and isep partners will therefore physical tremendous challenges in the months ahead. as in iraq, our troopers and their partners in afghanistan will have to fight their way into enemy strongholds and clear enemy-controlled population centers. as in iraq, the situation is likely to get harder before it gets easy per. violence likely will increase initially, particularly in the spring as the weather improves. moreover, as the afghan government with international encouragement and assistance moves to combat corruption and abuses of power, the result#f#cr

that will begin in july 2011. transitions in reductions that will as the president explained be based upon conditions on the ground. to address the challenges in afghanistan we have already implemented important changes that have improved our prospects for progress, as general mcchrystal works with the 43 member nations in waging a joint campaign. we have fundamentally restructured isaf to create

increased effort. giving him control over the operations of all u.s. and asaf forces in that country. first-ever three-star command freeing up general mcchrystal to focus on strategic and coalition aspects of the war. the critically important training command has moved from being a u.s. effort to one augmented by the new nato training mission in afghanistan, and its new commander, lieutenant general bill caldwell, is setting conditions to accelerate the critically important expansion and improvement of afghan security forces. u.s. combat forces will actively assist in the development of afghan security forces by training and partnering directly with afghan units at all levels.

the concept that has been effective in iraq, but that was only recently implemented in afghanistan. furthermore, we're now working not just to secure the afghan population, but also to mobilize and enable local citizens. engaging them in community defense initiatives so they can help defend themselves against extremist elements trying to establish control in various areas. we have also worked to improve coordination between the military and all other agencies of government. wearing his u.s. hat, general mcchrystal worked with ambassador eikenberry in the u.s. embassy in developing a u.s. civil military campaign plan. further, we have established a joint task. detain the operations and afghan threat finance sale, an information on task force, and a coordination cell to oversee remmen silliation and reintegration efforts and each will partner with embassy, usaid

and other inner agency officials as did similar elements in iraq. u.s. forces have also established partnerships between battle space owners and senior civilian representatives that several echelons and regional commands east and south and launched other initiatives to improve unity of effort in north an west as well. general mcchrystal is also transforming the way our forces operate. he has develop add coherent and focused campaign plan for the entire theater. assisted by general rodriguez and his two-star french deputy. general mcchrystal was issued new counterinsurgency guidance to ensure focus on the critical task of securing the population in order to help facilitate afghan-led reintegration of reconcilables. a core objective of any insurgency aefrt and updated the tactical directive and taken a number of other steps to reduce civilian casualties without kpra

mizing the ability of our services to operate. as we focus on the u.s. civil military effort we also recognize we are not fighting this war alone. in addition to our afghan partners, u.s. forces are part of an international coalition that includes elements from 43 countries. our isep partners recent lit committed some 7,000 additional soldiers and more likely to be pledged in the international conference plan for january in london. allied forces have been fighting skillfully and bravely and taking casualties from iraq to kabul and ma czarry sharif conc some partners have declared end dates for their combat participation, there is hope they will be able to continue to contribute in other roles. one of the most important developments over the past year has been the impressive determination of pakistan's efforts against extremists that threaten the stability of a

pakistani state, and the chairman noted this earlier. pakistani operations have significantly degrated pakistani taliban groups. these are the largest and most successful operations pakistan has conducted against internal extremists. we should acknowledge the losses of pakistani military, frontier corps and police have sustained in the course of these operations. to be sure these operations have not directly engaged the sanction wares of afghan taliban groups and pakistan or those of some of the extremists i described earlier. however, the determination of pakistan's extremist leaders an important step forward and does facilitate our efforts to degrade the groups in the border region and to defeat al qaeda. in short, success in afghanistan

is again of enormous importance, and it is attainable, but achieving our objectives will not be easy. to paraphrase what the great ambassador crocker used to say about everything, everything in afghanistan and it's hard all too time i believe we can make important progress in zefrg tasks. to reverse the taliban momentum, to improve the security of the afghan people. to help improve afghan governing. and to help combat forces in a way that does not jeopardize that the progress that has been achieved. the american military has been

at with war or had forces deployed continuously since saddam hussein invaded kuwait in august of 1990. for the past eight years we have fought terrorists and insurgents in afghanistan and iraq. the forces have been tested during this period as never before. but it has also performed as never before. it is without question the finest fighting force and in particular the fighting counter insurgency force our nation has ever fielded. the determination, skill, initiative and courage of our soldiers, sailers, airmen, marine and coast guardsmen are awe inspiring. so are the sack faces they and their families make every day. it continues to be the greatest of privileges to serve with them and with our civilian and coalition partners in such important important missions we

are taking. i want to thank you and your colleagued for the continuous support you provide for our men and women in uniform and their civilian partners. >> thank you very much, general. >> thank you for the opportunity to present my views on afghanistan today. i would like to ask that my full statement be submitted to the record. >> without objection it will be. >> last week in a speak president obama presented the administration's strategy for afghanistan and pakistan. his decision came after a full review. i'm honored to have been a part of the process. i believe the course the president outlined offers the best path to stabilize afghanistan and to ensure al qaeda cannot regain a foothold to plan new attacks gns us.

i can say that i fully support this approach. i consider myself privileged to serve as ambassador to afghanistan. working with civilian expert who is form the most capable embassy anywhere in the world today. i'm extraordinarily proud of them. i'm also honored to testify against jack lou as well as my old friend, general david petraeus. yes, i also had the honor of testifying with general stan mcchrystal. my professional colleague and friend of many years. general mcchrystal and are united in a joint effort where civilian and military personnel work together every day side-by-side with our afghan partners and allies. we would to the accomplish our objectives without in cooperation. as you know, mr. chairman, the

united states is at a critical juncture in our involvement in afghanistan. on december 1st the president more troops. hastening and improving the training of the afghan national security forces and establishing security in key parts of the country. while improving critical ministries and the economy at the national level. these steps taken together we believe will help remove the insurgents for the battlefield and build support for the afghan government. we will be clear about what we expect from those who receive our assistance. the afghan government does show signs of recognizing the need to deliver better service,

governance and security. we await urgent concrete steps, though, in a number of areas. we would like to briefly discuss the three name pillars of our efforts in afghanistan. security, governance and development. in his testimony yesterday general mcchrystal addressed our plans for improving security and building the afghan national security forces. i've made a point of getting out of kabul to see conditions firsthand. i con cure with general mcchrystal's assessment that the security is critical. it's critical to regaining t additional troops will also permit us to expand our work with the afghan army and the police so that they can take a larger role in providing for the security of their own people. as president obama said, the

transition to afghan responsibility will begin in the summer of 2011 when we expect afghan security forces to assume lead responsibility for defending their country. moving on from security, the second pillar of our comprehensive strategy focuses on governments at the national and sub national levels. our overarching goal is to encourage and improve governance so afghans' see the benefit of supporting the legitimate government and the insurgency loses support. as general mcchrystal has pointed out, one of the major impediments to our strategy is the afghan government's lack of credibility with its own people. to strengthen its legitimacy, our approach at the national level is on improving key ministries by increasing the number of civilian technical lead visors and providing more development assistance directly to these ministries budgets. by focusing on ministries that

deliver essential services and security, we can accelerate the building of the afghan government. . . services and security we can celebrate the building of the afghan government to so social security accountable. we're working jointly with the military. through district development working groups and district support teams which help build afghan capacity, particularlies in the areas of greatest insecurity in southern and eastern afghanistan. underpinning all efforts is the need to combat corruption and promote the rule of law. with our assistance the afghan government is steadily building law enforcement institutions to fight corruption, organized crime e and drug trafficking. in his inaugural address

president karzai encouraged us by his statements. the station of poppy and trafficking of opium also continue o have a very da debilitating effect. effortsly law enforcement agencies and the military to detain traffickers and drug shipments and support for agricultural development. the narcs problem, of course, will never have a solution without economic development. in recent months we've adjusted our approach to focus on building key elements of afghanistan's private economy. increasing the emphasis on agricultural. enhancing collection and improving the coordination of assistance within the united

states government and international community. these steps were taken to improve the lives of ordinary afghans and contribute directly to government and lessen support for tp insurgency. rebuilding the farm sector in particular is essential for the afghan government to reduce the pool of unemployed men who form the recruiting base for extremists groups. we estimate some 80% of the afghan population gets their income directly or indirectly from agriculture. mr. chairman, i want to emphasize, we're concentrating on what is essential and obtainable. the president's strategy is based upon a pragmatic assessment of the security interest of the united states of america. we do need a viable afghan government so our forces can

draw down and the investment of the united states taxpayer dollars can be reduced. in closing i would like to mention two important risks we take in carrying out of strategy. in spite of everything we do afghanistan might take over on a timely basis. the second is our partnership withing pakistan. the effort we're taking in afghanistan likely to fall short of our strategic goals unless there's more progress in eliminating sanction wares used by the afghan, taliban and their associates inside of pakistan. if our afghan partners and their allies do their part, i'm confident we can achieve our objectives. i say this with conviction. for the first time in my three tours of duty in afghanistan. all support for the president

and increasingly of our allies. achieving our goals in afghanistan will not be easy, but i'm optimistic we can succeed tw the support of congress. our mission is now one of the government's highest priorities. we will soon have increased our civilian presence in kabul threefold and in the field six fold just over this past year. we will need more. u.s. assistance ask a fraction of the total spent in afghanistan over the past eight years. mr. chairman, success is not

guaranteed, but it is possible. with the additional t with the resources provided by the united states congress, we will work tirelessly to make sure that al qaeda never again spine's refuge in afghanistan. we look for to your questions. -- never again finds refuge in afghanistan. my kpleegs and the committee, there's there's a balance as everybody knows. i've always tried to give everybody a longer period of time to question because then you can develop sort of a train of thought. but we have a lot of members. everybody wants a chance. we have limited time. i hope everybody is agreeable with that and we'll go with a six-minute round under the circumstances. general, let me thank you for your comments about the troops. every one of us here every time we go over there we are struck by how extraordinary they are

and the contributions they're making. our thoughts are very much with them we're grateful to you and all of the leadership and to all oaf them. it seems for the moment the question of hedging the bet is very much on the table with respect to afghanistan's leadership. i wonder if you could, general, share with us the recent pakistani military offenses, we have yet to see their operations directed after the afghan, taliban or al qaeda strongholds.

the military has continued to work with rival taliban factions, including those led by bahadur, believed to be involved in the afghan surgeonsy and lin. ku could you share with us how to convince them we have a long term commitment to the region, we're not about to leave that, and we need them to focus on these other networks and groups. >> mr. chairman, first of all as we were discussing the development of the last ten months are really quite significant. the pakistani leadership, the civilian populous, the clerics and the military have all united in recognizing the internal

extremists are the most pressing threat to their country. more pressing than the traditional threat to the east. they've taken action in response to that recognition as you noted. did not just clear and leave they're already looking forward to ultimate transition. and as you noted gone after the group held by the late. that operation is now drawing to a close. they have moved furd north to go

after some of those who got away. in these operations they are encountering and conducting some fighting against those that are part of that extremist syndicate that i described that does do fighting in eastern afghanistan. certainly not the afghan taliban. with respect to how do they eventually take those on, i think frankly that the effort to demonstrate a sustained substantial commitment to pakistan. pakistani counter insurgency fund also very important given

the history we have with the country and having left it a couple times before. this is process of building trust. building mutual confidence and building a relationship in which the mutual threats we face are addressed by those on the ground. as i mentioned and as you mentioned we have to recognize the enormous sacrifices that the pakistani military frontier corps and police have made recently. and also the losses their civilians have sustained. but it's about building a partnership that can tran send the issues we have before where we have left after supporting one operation or the other. >> as you answer, could you also tie into it the question of the political reforms?

because as you know in order to sustain stability you have to have reform. fundamentally the pakistani military has been adverse to changing that. they've always historically used the region to promote the perceived interest in afghanistan. and those relate to the perceived interest of india. if you could perhaps share with us about how we establish a long-term relationship there are some linkages to other issues. >> just to pick up where general petraeus ended the relationship between the multiyear commitment, the relationship between maintaining long-term security assistance through the program while we wrap up counter insurgency training is critical. the action the pakistan military is taking.

the question is are we there for the long term relationship? it speaks to the long term in a way that counter insurgency does not. it's critical that we may tanina balance there. it's not just what they do in the military maneuvers that are important. are we there in the post military to help them with the reconstruction? with the rebuilding? that gets to the question you're asking about the local prove provential leadership in the area. there is the capacity to work with local leaders on progress. to do economic development to support local decision making, local institution, and we've been having conversations with the government of pakistan where it's clear we're going to work with the ministries and the

local leadership. i think it's important that we not make it either/or. there's a tendency to hear that we're turning off of this. we're very much working with the national government and the ministries of pakistan. what we vntd done in the past is develop those relationships at >> i wanted to directly address the issue. in recent months, there have been some unprecedented steps taken to extend certain political rights and other rights to those who lived in the federally administered tribal areas, that they have had never had before. i think that is an important step as well. >> i appreciate you saying that. senator lugar. >> ambassador eikenberry, i have a couple of comments.

. as you are organizing the embassy there, the staff, they have observed that there deputy ambassador is working in afghanistan, facing considerable bureaucratic obstacles. maybe from the afghans and maybe from ourselves. i'm hoping to get cognizant of the way that that works. angrily information to you as well as them. and likewise, with the regional command civilian representatives, they need to be responsive to the military commanders. there are some problems, are there not, beyond working out? but these are our problems. i'm sure that you are. i want to take my time by asking more monumental questions.

we've had all sorts of estimates of how much members of the army of afghanistan, how many members of the police force are going to be trained. i ask this because press accounts of the army have gone all the way from 200,000 to 400,000, which is quite a difference. now secondly and general petraeus can maybe give us some insight on this. if you could give us a figure of what our goal is and let's say this is obtainable. there are press accounts from president karzai's visit with gates this morning that president karzai said we're going to need a financial support in afghanistan until 2024. i'm not sure how the president arrives at that time, which is 15 years away. but i am interested in the amount of money.

in other words, we pro mote the army for year to year. maybe part of the response is the police force may not always be under the central government. somehow there has to be resources in afghanistan, either at the central or regional levels to pay for this. or sat some point regardless to whether or not our troops begin to leave, somebody will need to be there. namely the afghans that we have trained. so this is an area i haven't seen out really. will you help us with the numbers and longevity of that?

>> senators, i think in previous testimony in the past week or so what has been identified is we have established goals by years for now for the afghan army and the afghan national police. to give you a sense of the that the a&a right now is roughly 96,000 or so. the goal by october of next year is 134,000. the anp is 94,000. goal by the end of next year is 109,000. along with that you have heard theses s s s aspirational goal. others stated we could envision afghan's security forces numbering as many as 400,000, an army of 240,000 and a police

includes border police and a variety of other elements beyond just local police right now we want to reach our annual goals. there have to be programs that run beyond that without yes. but we want to first confirm that we can in fact meet those goals. to do that, by the way, we have to make significant improvements. not just in recruiting but also in retention. >> the pay to these people. >> the pay had just been increased. there is essentially a benefits package to work out how tow, in fact, recruit and to attain more afghans for those security forces.

beyond that a shift in momentum will be the best recruiting tool of all. you want to be the good guy. when you have doubts about that you will lose your bets. there's no question as president karzai was highlighting that afghanistan will require substantial funding for years to come in a whole host of areas, not the least of which is their security forces. i would submit it's easier to maintain a certain number of afghan forces than it is to maintain the number of u.s. coalition forces required to compensate for their actions. if you get up to the 400,000 range, and again no guarantee that's where we're going. if we end up there that's over $10 billion range per year. that highlights the importance

of helping afghanistan gop and exploit the mineral wealth. there is enormous potential in afghanistan to dramatically increase the national revenue but if and only if it can get the security and the the infrastructure that enables them to extract that mineral wealth and get it out to the market. >> thank you very much, senator chairman. let me welcome all three of you here this morning. i know you've been busy testifying and meeting with members of congress. let me underscore the comment made by chairman kerry, again, general. when you mentioned 1990, it's been that long in time that we've been asking our men and women in uniform to be on 24-hour watch, so to speak, in

that part of the world. it's a long time. all of us are deeply grateful to them. whatever the differences about policy questions, the unfounded respect we have for the men and women in uniform that represent our country all over the world every day needs to be conveyed as possible as we often can. please continue to do that for us all. as i think jack lou pointed out, this is of utmost importance. how we secure the nuclear arsenals in pakistan. maybe i should have mention that had first in terms of priorities. and obviously dealing with violent extremism. all of us here have a lot of questions about this. i respect on one hand the desire to have some sort end date strategy here. almost there's an inherent problem as you look at this massive difficulty.

i'll ask chairman for a full statement of my opening comments for the record. let me, if i can, and i'll raise this with all three of you and you decide which of the three of you is best able to respond to this. again, the pakistan part of this equation is most troubling to me in the short term. obviouslily if we don't secure the nuclear arsenals all of these efforts, of course, would seem to pale by comparison. president has been under increasing pressures from both the members of the military in his own country as well as those opposed to his close relationship with us. give us some sense if you will what you think the current political intentions of

pakistan. whether or not they imperil civilian rule in the country. how serious are those threats? >> if i could let me turn to it to the ambassador of afghanistan. i'm probably not the best to talk about the situation inside of pakistan. >> let me answer briefly and then on the core security question turn to general petraeus. the difficulties are not new. we've been working with the current government to try to help build the institutions, not just the people, so there's the ability to rely on ongoing relationships regardless of the leadership. without addressing the kind of day-to-day risks that they deal

with. there's still a lot of progress that needs to be made. the tension, contentistant tens between the military concerns and public concerns is debated. the support that we've shown over the last year. in terms of mapping out a five-year strategy of supports for civilian leadership is really central to what we've been trying to do. shore up the idea of the need to invest in lasting civilian institutions. >> let me ask the question. i think you've answered this already with some of this. my understanding is the success of this program depends on a willing partner in afghanistan. >> i think we do agree with that. because the actions being taken

are carried out by the military, it might be helpful to have general petraeus comment on the relationships we've had over the last year as well. >> as one who has been in pakistan four or five times in the last six months, i've had a lot of conversations with military leaders and civilian leadership. i don't think the current challenges imperil civilian rule. again, i don't see the prospect or desire for anyone to change civilian rule. we've worked very hard to establish relationships of trust and confidence with the pakistani military and especially the pakistani army.

again -- we're making up for the lost generation. but i think we have have build those relationships patiently and stronger. chairman mullen has done a great deal of that as well with substantially augmenting the number of individuals in the office of defense representative pakistan pakistan. he was promoted to three stars. what we're trying to do is to build these relationships to where they become a partnership in confronting what clearly are shared threats, not just to pakistan and the region but our own country. >> thank you. mr. chairman, thank you. and certainly thank each of you for your service and i'm very much appreciate you coming.

and being with us today. i know this is somewhat painful, and we appreciate it. general petraeus, when you came unand talked with us about the surge in iraq, there was a sense of a really strong commitment that really encompassed the whole country. i know that in march there was an announcement about what we were doing in afghanistan. while it was spoken that it was narrowed, it was actually pretty expanded from the standpoint of how we looked at what we were going to do in afghanistan. if you looked at all the metrics that general jones presented in september it was an all-out effort against the country. secretary gates mentioned he realized this was becoming full out. now it's been narrowed some. so we hear sort of a partial

effort taking place as it relates to the country itself. and our leaving a cou to understand what he's saying -- what you see afghanistan being when we drawdown troops, whenever that is, and the ability to maintain itself successfully. i know we're talking about pulling back away from rural areas and a population centers, but i see a country that candidly is not on like what we're discussing in pakistan, where you have a lot of areas that are not administered orally governed it if you will. so if you could describe fully what you see us having their, what the world would have there, when we began

withdrawing, i think that would be very helpful. and it is been very confusing what we're actually doing there. >> thanks as always for looking after the 101st airborne division. i think it would be worth reviewing the objectives of the policy, because they were sharp and as a result of the deliberations that took place with president obama and the national security team. and they are straightforward. they are to reverse the taliban momentum, to denied that taliban access to and control of population centers and lines of communications, disrupt the taliban and outside the secured areas and prevent al qaeda from regaining sanctuary in afghanistan, degrade the taliban to levels manageable by the afghan security force levels, decreased -- increase the levels of the security forces and other forces that

began transitioning security responsibility to the government within 18 months, and selectively build cassidy of the afghan government in key ministries. -- build capacity of the afghan government in key ministries. that's tying it as those conditions began to appear in different areas, we contend that our forces. -- we can then fanned out our forces. vietnam, it's not a lot of other places. it's afghanistan. it has plenty of its own challenges, but we have to look at that. but the fact is the way we thinned out in iraq as we were able to get iraqi security

forces and iraqi officials capable of taking over local responsibilities is somewhat similar to what it is that we want to do in afghanistan. and you keep certain capables there longer than others, again, as in iraq. what we're doing in iraq right now, for example, is working to enable the forces. so they can keep the heat on al qaeda and reduce the frequency of the kind of horrific attacks that we yesterday. the month of november, for example, saw the lowest level of security incidents and the lowest number of violent deaths in iraq since we got good data post liberation. so that would be the concept. i think that's sort of the vision of how this would go. >> i know we have a briefing

later today in a security setting. i know we'll talk through a lot of that at that time. and i know our time is very short today. none of us like being where we are. i know this is all complex. we're glad that we have people of your caliber doing what you're doing. as we look at this whole issue right now and consistents of a brand of type of activity occurring around the world when people are unhappy with what's happening in the country. that's a concern that you've expressed. i know that's been expressed at the state department. i think the difficulty that we have is envisioning that in each of the countries is have these issues we end up with an all out building of a country.

because it's easy to pay somebody to take up weaponry against the government. looking into the future efforts always developing different type of strategy that don't end up being nation billing. >> i think it would be accurate to say we are developing strategies that are appropriate. amounts of nation building depending on the problems that afflict those countries. i think you've raised an important point. that is trying to figure out how we can without, again, conducting complete all-out nation building levels of assistance, keep countries from becoming failed states. central command has a couple of

candidates for that. as you know, within the area of responsible. >> thank you, mr. chairman. thank you. thank you for all being here today. and for your selfless service to our nation. there is a danger in sending additional troops to afghanistan could push militants into pakistan and further destabilize that nuclear armed nation. do you agree that there's a risk that sending more troops could just push militants over the border? >> there is indeed a risk that our operations could lead some of these elements to seek

sanctuary. that is why we're working very hard to coordinate our operations more effectively with our pakistani partners so they know what our cam plain plan is and can anticipate and be there with a catcher's mitt or an anvil, what are the it may be, to create these individuals. we have actually conducted some operations of medium scale in the regional command east where that kind of coordination was conducted. and before we launched the operations, the marines, we also briefed our pakistani partners. we have in fact gun just recently, literally in the last several weeks an effort to lay out in real detail our operational campaign plan and then to coordinate that with the actions of the pakistani

elements. >> i appreciate your description of what we're doing and what we're laying out to the pakistanis. isn't it the case that they're going to have to move against all the militants in that area if this is really going to work? >> well, they're going to have to move against enough of them so that obviously their capabilities sufficiently degraded. i don't see any of these kinds of efforts as unconditional surrender, planting the flag on the hill top and going home to a victory parade. we need to beat them down to a level where they don't threaten. that was the point of degrading the taliban to levels manageable by the afghan security forces. i understand that. they do move gns the different pockets that exist. >> over time, no question. they have to again deal with

these. they present an internal extremist threat. now because we are going to be pushing now. so they need to be able to do this now. >> as they -- as we conduct operations, senator again we have to coordinate what we're going to do with them. i should note we need to also be realistic that there's a limit. they'll say you can only stick so many short sticks into so many hornets nests at one time. they have a very impressive military. but there are limits on their capacity. that's why the insurgency capability fund that you provided for us and the foreign military financing has been so important to help them with

that. >> there's a myth the pakistanis fear we will abandon them. however, the pakistanis do not support military escalation as expressed concern that it will further destabilize the situation on both sides of the border. if we were to reduce our troop levels in afghanistan, by maintaining an ability to counter terrorism operations in the region while providing the pakistan niece robust financial support, wouldn't that communicate our commitment to pakistan and be more responsive to their concerns about the instability caused by our massive military presence in afghanistan? >> senator, i'm not the ambassador, but i will comment on this. with the reduction of u.s. military support at this juncture, inside afghanistan, the security situation in afghanistan would decline. i think it would decline over time with a lack of u.s. commitment dramatically in the security in afghanistan will

breed insecurity within pakistan. >> general, there's no doubt that al qaeda has found safe haven among militants in the region. is it fair to say there are continuing differences between the afghan taliban and al qaeda over their strategic goals that provoke tensions between the two groups? >> there are indeed periodic tensions. then there are tin deed periodic reconciliations, if you will. again as secretary gates explained quite effectively in his testimony, there is a relationship between really all of these groups sometimes the taliban are up and al qaeda is not quite as much in the forefront. other times it's reversed. >> i understand that. but the description is surprising to me. general mcchrystal in his nomination process told the senate armed services committee

that continuing differences over strategic goals could persist and promote tensions between the two groups. it strikes me that it may not really be at a level of symbiosis, but i thank you all. >> thank you mr. chairman. best of holiday season to you. we hope to enjoy it with the families. i'll let you do that, mr. chairman. we'll get there. ambassador, with a twinkle in your eye, acknowledge that we were encouraged by president karzai's statement about improving the government, reducing corruption, et cetera. but you also said in your nonprinted remarks i think that you were very impressed all elements of the national power was deployed you followed that

with a statement we should work to improve the ministries and confidence of the afghan people. are we impressed but not yet certain that his words of corruption, reduction and things like that were a statement and he's committed to it, or do we have to work around karzai to improve the ministries of the government? >> we work in partnership with the government of afghanistan. president karzai is the dual elected legitimate president of the country. he is our partner. we have four areas, senator, that we need to concentrate with the afghans. the first is in the area of law enforcement. we were making progress in that area. secondly, it's going to be essential to improve the accountability. working with confident ministries. we have a good program that's been under way for over a year

now. taking the essential ministries of afghanistan, working with them to improve their procedures, in which they reach a level of -- more effort in trg to train civil administration understandably after the three decades of conflict. low literalsy rates and a disrupted society. with away don't have it. we did not in 2002 begin with a strong base. we're making progress in that area. ae and fourth in the way we deliver our programs. 80% of aid funds don't go through afghanistan. the united states government is the leading element right now in trying to change that. so it really acquires an

approach. behind all of that, though, senator, as you're asking in your question, leadership at the top and commitment is absolutely vital. we are encouraged by president karzai's inaugural address. what he has said will be his plan of action. >> you mentioned the high office of oversight. is that an office set up by president karzai? >> it have set up one year ago to deal with corruption. there is, my understanding, that there is a press conference today in kabul. i know their intent is to try to give the high office of >> their legislative branch created that, not president karzai? >> i will have to go back for the record, but the high office

of the oversight, at least demanding comes from the executive branch. -- the manning comes from the executive branch. if president karzai puts more emphasis on that, we are prepared to work in partnership and offer support. >> from everything i've seen in afghanistan as well as what might georgia soldiers who had been deployed and come back, if we reverse the taliban and disrupt them and degrade them, but if we do not improve the government and the image of the government within the people, we will not be successful. is that not right? >> that is absolutely correct. we of articulating what some of those programs are -- more comprehensive. but the linchpin will be at the district level, at the local level where we're working closely with our military and closely with the government of afghanistan to innovate and try

to figure out the best foundation of delivery of the very basic government -- security, justice, and those essential services like health and education -- in rural areas, where right now our troops are occupying -- are in the south and east in order to achieve that end that you have articulated, the need for governance falling behind that operation. in. >> the success of iraq and the example set by maliki and the government to be able to take over responsibilities once the insurgency was reversed is evidence of the same thing we have to accomplish in afghanistan. although in a much different way because of the history and nature of that country. and i commend you all on what your effort is. >> it was established by presidential decree. it doesn't have a legislative

basis. >> thank you. particularly, general petraeus, i'm one of those who understand that never have so few been asked to bear so much of the sacrifice. we have defined our national security as having stability and security in afghanistan in our own national interest. is that correct? >> our overriding objectedive is to ensure they don't reestablish a sanction ware in afghanistan,

such as 9/11. >> we want safety and security there. >> the way to ensure the overriding interest is to have a country that is not a failed state and allows that to happen. so if that is the case, then what follows is that why we are aspirational as to whether president karzai will meet the starve standards of eliminating corruption. i know you wrote sections of his commitment. we will still be in the same national security paradigm. if he fails to have the good governance we want. if he fails to support the

creation of afghan level of troops and police and the quality of them to carry out missions, we'll still be in the position that it will be our national security interest security and stable in afghanistan because we don't want another al qaeda. is that fair to say? >> yes. it is. >> so the problem is that part of the question is that dictates that we have a long-term obligation to afghanistan because we hope karzai will do everything that's right we may prod and poke and maybe try to direct money in different ways. at the end of the day, it depends upon an afghan government that can sustain itself.

let me ask you then, do we agree with the comments made by president karzai that it may be as much as five years before his troops can take on insurgents in 2024, before the afghans will be able to pay for their own schurt? is his statement a fair one? >> it's not a light switch. >> is that a reasonable time frame? >> i can't talk about the long term time frame. that depends on how rapidly, obviously, they can generate much greater revenue and depends on security and infrastructure and so forth. certain it will be years before they can allow the bulk of our troopers to redeploy. our goal is of course to get that process going to create the

situations with the capabilities they have of the taliban in those particular areas. >> if i factor out your previous answer assuming that the afghan got to certain levels of both police and troop strength? afterr and if it's true it will be 2024 before they can handle the bill themselves we're talking $150 billion just on the security side before we get to the development side. so at some point we need to get the price tag here so we understand what we're spending in the security context. that brings me to the questions of secretary, i think we've spent $13 million today. is that correct? >> roughly. >> roughly. okay.

but all the testimony i hear leads me to believe after $13 billion we are basically starting from scratch. as it relates to development efforts. which is pretty alarming. i want to get a sense of how we are going to go from right now a clearly overwhelmingly military context to all of the statements that we need a government that can sustain itself and and then $13 million later without virtually any with virtually no success and think about you're going to triple, you say, your civilian core which to 900 some odd which means we have 300 some odd and i'm looking at all of this and the time frame and the money that has been spent and we haven't quantified what we're going to be looking on the civilian side. and, you know, i get rather

anxious. >> senator, first, i think it is not correct to say that there is nothing to show for the past development program. >> tell me what we show. >> i think that before the development assistance that you're describing there was virtually no access to health care in afghanistan. there is very substantial access to health care in afghanistan, in the 80% range. there were virtually no girls enrolled in schools. there are now a lot of girls enrolled in school and more every day, every week, every month. i think it is fair to say we have an awful lot of work ahead of us, that the institution building, particularly at the governmental level and outside of kabul at the subnational level is a substantial challenge. i don't think it is quite the same as starting from scratch. if you look at the government that president karzai has, with all the problems that we spend a lot of time discussing, there are a lot of ministries and ministers who have been doing quite a good job. if you look at their agricultural program and where we're coming into to support

their agricultural program, there is an agriculture minister who has a five-year plan that is a good plan. he's relight on the international community and usaid to be supporting their plan. that's not to say that it is easy. but the work is building on a foundation that is an afghan-driven agriculture plan, that's true in other ministries as well. not true in every ministry. in terms of the level of u.s. civilian presence, when we started at the beginning of the year, there were roughly 320 civilians on the ground. by the end of january, we're going to be close to 1,000. that's a very big difference in terms of the amount of programming that we have going on, not just in kabul, but in all of the provincial areas, the district areas, where we'll be teaming up on a day to day basis. i think that you're going to see very substantial change in the progress made and it is all tightly coordinated in a civilian-military plan where the civilians are going in right when the military is created the

space for them to work. >> senator wicker? >> thank you very much. gentlemen, senator isakson was pursuing a line of questioning with regard to corruption. let me follow along. president karzai was expected yesterday to release his list of 25 cabinet members. i understand now that decision has been postponed until saturday. this issue has a lot to do with corruption. the president is under pressure to exclude corrupt ministers from his government. at the same time, it is reported that some powerful afghans who feel that they were instrumental in bringing about a tainted election victory feel they should participate in this government and other members of parliament see this list as karzai's first step, first test to clean up his government.

in other news reports i hear that with regard to some afghans, heavy-handed though the taliban may be, and violent and repressive as they may be, some afghans prefer to see their form of order and certainty and decision-making over the endless process of having to grease the palms of official afghan governmental bureaucrats. general petraeus, do your people in the field see this? and mr. ambassador, would you comment about this? we have reports of afghan mines minister receiving a $30 million bribe from the chinese for making decisions favorable to the chinese. mr. ambassador, would you comment as to the credence of

that as part of your answer and then, of course, we know the allegations about the first vice president-elect, mohammad fahim, reportedly being involved in the afghan narcotics trade. i view the corruption issue as a major factor in determining whether the afghan people are going to come around to supporting the government and getting rid of a regime, a taliban regime which admittedly has every reason to be unpopular on the surface. so mr. ambassador and then general, if you'd like to follow up. >> thanks, senator. the report about the naming of the cabinet, yes, we had anticipated it was going to be announced on tuesday and now we understand it has been postponed several days. i've heard that president karzai is working with the parliament to make a decision whether or not the entire package of minister should be named in

one -- in one setting or should part be named and then the parliament will go on recess and the rest will be named afterwards. they do need parliamentary confirmation. i emphasize following on what secretary lew had said, the quality of the afghan ministries and the leadership of the ministries, indeed, senator, it is very impressive in many areas. the minister of education, health, agriculture, rural reconstruction, and development, commerce, finance, interior, defense, the director of the national security director of intelligence is -- these are world class ministers who can do well in europe or north america. they're challenged within their ministries as of course they would be after three decades of war. such low literacy rates in the country, the absolute destruction of bureaucracy and organizations over the course of three decades. these are difficult tasks to try to run these ministries.

but i have confidence that the national level, i don't want to prejudge what ministers will be named, but i think in the main we'll see reinforcement of what is a pretty good list, improvements have to be made, though. second point, about taliban justice, you're absolutely correct. in areas where there is absolute corruption, in the countryside, there is no legitimate government of afghanistan. taliban can deliver a very predictable justice. that is not a brand of justice that the afghan people aspire to see a return to their country. every poll that has been taken still since 2002, when afghanistan was liberated by united states forces and our allies, showed the taliban to be deeply unpopular. but when you reach a point in parts of af