profits went through the ceiling. under the new bill that we passed, we will rein in the costs of treatment and will also ensure that no longer kids in america discriminated against because they have asthma condition. finally, on the health care issue, we saw the choices they made. they put a budget on the floor of the house last year that would cut medicare by 75%. . .

voters have a right to know.

as we find out, becoming clearer and clearer that it is the special interests that were served by the economic interest of the past eight years. that is the kind of choices our members made it and those of the kind of choices that were made by the other side. we hope that as the american people look at those records, they will see the choices that were made on both sides and the choices ahead of us. >> i thank you all for being here today. we would be pleased to take any questions you may have. >> madam speaker, there are some

choices that your caucus was unable to make this week -- unable to make this year. there was no budget. there was no decision on what to do about extending tax cuts. what can you say about republican chargers -- charges that he ran out of gas? >> do any of my colleagues want to take that before i do? [laughter] >> we passed the budget enforcement resolution. as all of your note, it is upper level spending. we passed that. the budget beyond that is subject to committee allocations. we are going to follow up on that budget. the second part of your question, we will make sure that no american has eight additional

tax on their income up to $250,000. what better% of americans -- 100% of americans will not see any tax increase. we are going to make sure there is no increase in their taxes. >> on the same note, there is more than one but until election day. the members are paid by the taxpayers. the you think it is strange that taxpayers are funding your members campaign for the next month? >> our members are called representatives. their job description entitle or wind in the same -- rep.

the job is not just what happens in washington, d.c. it is almost two jobs. it is our job to come here and legislate and to vote. i will work very hard for their constituents to make that judgment. >> madam speaker, john boehner is now giving a speech about reforming congress. he is talking about the house you are running out. he says it is in a state of emergency. i want to know what you think about his message and his arguments. >> would you like to speak to that? >> certainly.

i think everybody is very aware of the fact that john boehner, the republican leader, was part of a republican party in the house that engaged in a number of efforts that i think were not held in very high regard by the american people, beginning with a project by others to have this fusion between special interests and be a legislative agenda of the republican party -- and the legislative agenda of the republican party. what we are finding out is that fusion remains, to this day.

that was behind closed doors. i guess it is no surprise and now that it is a major part of their agenda of if they were again to return. the measures that were taken by the speaker in this house represented dramatic change from before. number one, when it came to making sure that we held our members accountable, we set up an outside group to review all the cases and all the allegations made against members so that an independent body could make recommendations. republicans opposed that. you mightre reforms -- -- earmarked reforms -- you might remember that there is a moratorium. of what you to look at their 47-

page document and i challenge anyone to find anything in there about earmark reforms. we report to the process. we dramatically reduced the number of air earmarks. as a result of the actions we have taken, the process is transparent. the numbers are coming way down. we no longer provide any funding in that form to for- profit corporations and interests because we believe that corrupts the market. it is very clear that the republicans would return to that. they did not mention it in their document. when i came to the process of all the members accountable, with their members got in

trouble, they changed the rules retroactively to protect them. so it is very interesting to see. they fired the chairman of the ethics committee to brought serious charges against some of their members. i think it will take a great leap of faith for the american people to believe that the people who were the architects of all those republican policies arnelle some allen boyd to reform them when, in fact, they're all documents shows the continued relationship between the policies they expressed and the lobby itself. >> the republican strategy has

been and continues to this day to create, corrupt, and failure. that is their strategy in the house and the senate. what is the result? they failed. this has been called the most productive congress in recent history. it is the most productive congress in which i have served. they gave the impression to the american people that we could not work together because that was their political strategy. they have now made a pledge to the american people and they can't point it out, not by me, not by the speaker, not by democrats -- george bush's speech writer when he said speaking of this new document, "a pledge to do nothing."

the american people what performance. this congress is moving america ahead. i have to leave now, but this congress has been extraordinarily productive. i have claimed some degree of responsibility to working in a bipartisan fashion. we worked on the help america of the act, we helped america have a better democracy, and we worked on the security and welfare of our nation. unfortunately, the party of no adopted a political strategy of obstructive is visible and now claims that -- obstructed isn't

-- obstructivism and now claims that this congress did nothing. >> willie stark about bipartisanship and cooperation, it was the democrats in the house of representatives that took the lead in working with president bush to pull us out of the financial crisis. we asked. on september 2008, we were told that if we did not act immediately it would be no economy on monday. that was a thursday night. there would be no economy on monday. this is how far down the road into financial crisis at the bush administration has taken us. we have to do some reforms. we did it. we did it in a way that was

different from what the bush administration proposed. that was a very big a level of cooperation with the republicans that not even the republicans in the house of representatives gave to their president of the united states. it is no wonder that we want to talk about process. they have no substantive issues to take to the american people. they want to talk about process, we could talk to them about that. but we would rather be talking about progress rather than process. progress is what the president says will be our measure of success. >> tomorrow at the president is expected to pick someone to replace rahm emanuel emmannuel as chief of staff. can you tell us what you know about him?

has a great reputation and affection among his former colleagues. he can do anything he sets his mind to. i extended those greetings to him when i saw him this morning. the only issue that matters is that the chief of staff has the confidence of the president of the united states. congress knows this contributions to our country. >> would you endorse robb emmannuel -- rahm emmanuel?

thank you. >> in a few moments, a news conference with the republican candidate for governor in california, meg whitman. in 45 minutes, a discussion of new rules to protect consumers from debt settlement companies. after that, then bernanke holds a town hall meeting with teachers. later, a hearing of the economy and immigration with testimony from new york mayor michael bloomberg and media owner rupert murdoch. all in "washington journal" jamie court on his book. joseph henchman looks at how raising taxes as affected state budgets.

sydney freedberg and his book on the return from deployments in afghanistan. the republican candidate for governor in california, meg whitman, spoke with reporters thursday about allegations she knowingly employed an undocumented worker. this is 45 minutes. >> hello, how are you? this is my husband. i think many of you met him. we are about to release a statement, so thought i would walk you through the statement, and then we will take questions. i am going to take as many questions as you have.

this is truly a political smear on me and my family. our state is in a fiscal crisis. v.f. 2.3 million people without a job. -- we have 2.3 million people without a job. we are talking about things that are not on points. as i said, when the key was our housekeeper from 2000 until 2009. she was a great employee.

when she confessed she had falsified her record, we were surised and shocked. she had broken the law. she wrote a statement, criticizing my ignore what i was told by nicky and break the law? i am interested in what jerry brown would have done in a

similar situation. i think he should be ashamed of what his allies have tried to do here. perhaps jerry brown has been in politics too long to never any other way to do politics. this is a baseless smear attack. he should be ashamed of himself. i feel really badly for nicky. she is being used by cynical people with their own agenda. i am truly sorry she has been put in this position. her plight is why we need a verification system to help employees -- to help employers. in my view, it is time to look for. i am confident that the voters in california will look at this episode for what it is -- politics at its worst. they rejected it we will move forward building a new california together. i would be delighted to take

your questions. forward to taking your questions. >> i want to know what you have to say about what they are doing in regards to making her work extra hours and not reimbursing the money, and especially you kind of say you have to find somebody to replace her. what do you have to say? >> it is completely untrue. niki came to work for us 15 hours a week. after a bit of time, she said, i would like to take when they off to deal with my youngest child. -- to take wednesday off to be with my youngest child. sometimes she worked 10 hours. sometimes she worked eight.

we said, get the job done, and then you can go home. with regards to mileage, she ner asked us for mileage. she ran a few of errands, but she never asked for mileage, and on her maternity leave, she said, i am pregnant with my serve child, and i have a friend who would like to work in my place, and if that is all right with you, that would be great for me, and when i am ready to come back, my friend will go back to her job, and i will come back to work for you. i said, that sounds great. >> [inaudible]

the information they believe it is providing to you puree get >> absolutely not true. neither my husband nor i received a letter, and if there is a letter, i did not know how they got it. it is not in our house. we never saw the letter, and as i understand, normally if that was to happen, ty would have sent a letter refers to the employees and then to the employer, and i think there is a question of whether employers with less than 10 employees got a letter, so we have never seen ch a letter. you will go next. >> when she confessed she was undocumented, why didn't you turn hernto law enforcement? >> i was very fond of her and did not want to make an example of her.

it is not an obligationf the employer to turn in illegal employees. i said, i amot going to make an example of her. i encouraged her to do the right thing. what is the right thing to do? figure out how to come here legally, but i did not think it was the right thing to turn her aunt. >> you said it was difficult to let her go. if you are trying to be the chief executive of the state of california, as difficult as it would have been, shouldn't you have not informed law enforcement that you knew of crime being committed? i understood it would be difficult. isn't somebody who is supposed

to lead a state supposed to make those difficult decisions? >> the law did not require employers to turn individuals in. i thought i didhat was the right thing to do. everyone makes a decision. i felt like it was the right thing to do to terminate niki. it broke our hearts. we had to let her go. she came to our house to tell us, and she never came back to our house to work >> [inaudible] >> i think every employer needs to make a decision. you are not legally allowed to hire undocumented workers. as soon as i found out, we made the decion to comply with the law.

>> one more queion. >> you are not supposed to get three. >> she is going to produce a letter that may have your name on it. are you suggesting she may have intercepted a letter? >> it is very possible. we never saw the letter. if she had gotten a letter alerng her to the problem and saying we are going to alert the employer, she may have been on full lookout for tt letter. it pains me to say that. the niki i knew was not the one i saw of fat press conference. reading from that prepared statement, those were not her words. it would pay me to believe that is what she has done, but i have

no other explanation. >> each of them including the woman -- [inaudible] >> we have one housekeeper who is documented to work there. we have a landscaping service, a company that provides landscaping, and we ask them to make sure all the workers are documented, and we have a pool service that comes to clean the pool, and that is a service as well. >> [inaudible] >> i do not remember. we play by the rules. we were very explicit with the agen's we used to find niki and other household help we have

hired over the year. we need someone who is 100% documented to be here. we are going to withhold taxes, which we did with her and every other employee we have. we have been very specific. you are next. we have plenty of time. >> she said she could not travel to mexico. did you ever asked her directly whether she was illegal worker? >> no, we ask the agency, and we got a copy of her driver's license. we got a copy of the form.

we looked at the documentation, so when we hired her, i think she was legal because i had that documentation in front of me. >> there is no signature from an employer? >> i do not know if there is a requirement to sign those documents. i do t know whether we sign it or not. we got a package from the agency when she was hired that had the document. you are next. >> you could call and get a copy of it because you are directly involved. did you contact them to see if

they ever did send you a letter? >> i have not. >> would you made the region would you make that public if they sent it to you? -- would you make that public if they send it to you? >> how did her employment work? was she your employee? >> she was. we gave her a check every friday and left it on the counter for her. >> [inaudible] >> we did not. after she told us what happened, i called her back to say there was not anything we could do, and we had to terminate her employment. i have not tald to her since. >> she says there was a phone call. >> when she left our house, we

talk to our lawyer, and he said there is nothing that could be done. i said that on saturday. i think there is nothing that n be done. i think we have to let you go. >> you said its -- you knew it was going to cause trouble? >> not true. false allegation. >> were they in cahoots with jerry brown? >> this is what californians and americans hate about politics. here we are in a classic case

of smear politics. this is how career politicians operate. i heard this morng they knew exactly what was going on there is clear evidence. >> they came to you with the problem, but there was no recourse. there is no pathway to citizenship. would you change your opinion in that regard? >> i have said it is important to have a temporary guest worker program so people can be on a temporary basis and you can actually work here, but until we prove we can get our arms around this illegal immigration problem, which is a serious

problem, then i think we have to focus on getting the problem solved. weave to secure the borders. i voluntarily let niki go, but many employers need to make sure we do. we need to eliminate sanctuary cities. i think my first solution is a temporary guest worker program. once we prove we can stop the flow of illegal iigration into this country, we can have another discussion, but i do not think people are willing to have that discussion. >> can you verify -- did this change your views? >> before i started, i had

begun the verify system and talk to people about the accuracy of the system, and they admitted it was not as accurate as it should be. i did not want to make an example of nicky. she was a part of our family for many years, and i knew if i talked about that, i would have to bringer to the floor. i think the tragedy is the niki is being manipulated. i think she did not understand what she had got herself into a. this is the sort of thing gloria does in every election. i feel badly for nicky? -- i feel badly for nicky. >> [inaudible] >> we knew about this. we knew what was going on.

people have said, did you know about this? if i was worried about this and running for governor, you will recall a first announced on february 9, 2009. this did not happen until june, so if i was going to let nike go for political expediency, i probably would have announced before i ran for governor. the truth is, we have no idea. i like the man in candidate thing. >> you wanted to hire a nanny, and as she's bonded with the family -- this is almost a decade now. there were instances she would not go back to mexico to visit family because she and could not go back, and you needed plausible deniability.

you did not ask the question because you did not want to know. the scenario is your husband suspected that, which is why you claim you made the comment that you knew it was going to be a problem. you said you did not seek it out. >> that is so untrue. that is absolutely false. we got her documentation. we never talked about her going to mexico. we talked about her children. of we talked about her husband's job. we talk about lots of different things, but your insinuation that i turned a bnd eye on this is absolutely false. it is not true. >> can you tell us the employment agency. >> it is town and country resources.

who has not had a chance? >> do you own the key money, and if so, will you pay her? >> we do not over money. she worked 15 hours a week. never as far as i know, did she work more than that. if she worked 10 hours a week, weid not pay her $23 times 10 hours. we paid her 15 hours for every week she worked. often for vacations, we paid her even though sh only work a couple days that we because we were out of town. >> she says you do homer -- you do or her money. >> that is simply not true. >> if she was such a close member of the family, w didn't you help her get legal?

why did you help her get an attorney. >> when i talk to my lawyer, she said there is nothing you can do here. there is no legal stance for her, and its probably not going to be helpful, so i decided, you have to make a decision about what you have to do. you have to go home. i did not feel it was the right thing to go out and work with an immigration lawyer. >> i heard about consulting the lawyer. >> i sent her, i think we are going to have to let you go. i have to talk to my lawyer, but i am probably going to have to let you go, then i called her back and said, we have to let you go >> why did you wait until then to make the smear campaign?

why not when you knew this would come in the final bit of the election. we the electors want to believe not in somebody that would withhold information but somebody that would go out in the open. >> i did everything comporting with the law. when she came to me, we'll let her go. if i was going to talk about this on the campaign trail, it would have put niki of there as an example. i think the consequences may be severe. i do not know who is paying a gloria. i did not know what was niki's decision. did someone say, we know you are here illegally, and we are going to expose you unless you do this? i was not going to make an example of niki, so that is why

i did not. >> [inaudible] >> i think it has nothing to do with my character. what i did was absolutely the right thing to do. it is what all employers should do in california. it is illegal to hire illegal immigran, and if you find out that you have hired someone who turned out to be here illegally, your obligation is to let them go. that is what i did. i think it speaks volumes about my character that once i understood, i made a tough call, but it was the right call. >> the use of for her being deported? >> i am going to leave that to the immigration authorities.

i support a guest worker program. but as one reason i am running for governor. i want the state to get back on track. we have spent a long time talking about this issue, and there are 2.3 million californians without a job. there is an illegal immigration problem. r k through 12 education is the bottom of the barrel, and this is a distraction on what i think californians really care about. immigration is a federal issue, but i think there is lots we can do, so i would like to get a guest worker program. >> had you feel about it? >> i feel badly about it. she has three children her youngest son is six or seven years old. i feel terrible about it, but the law is the law. ice is going to have to decide what is the right thing to do here.

>> i had a telephone conversation with you when you said there was nothing you could do. she claims you said, i do not know you and you do not know may. >> absolutely false. she knows it is not true, and it is not. >> one of the key issues to this letter, this puts you in a tough position. clear things up about the question. would you take a polygraph test? >> absoluty. we were stunned when nikki told us she was illegal. this woman had worked for me for nine years. we have seen the documentation.

we went through an agency. that is what agencies are going to do. the woman comported with the requirements of the agency, so i was stunned. we looked at each other and said, while. who knew? -- and said, wow. food new? >> would you take a polygraph test? >> absolutely, because we were stunned. has anyone not had a chance? >> what kind of example would this make? what is the message coupled with the fact that you chose not to make an example out of her? some might look down on the fact. >> i think thexample i am

setting is i work as hard as i could. my husband and i did everything we could to hire someone who was documented to work here. we were misled. many employers are misled, which is why we need a system mentioned earlier. . >> it is employees who knowingly hire illegal workers.

we have to have an electronic system that does a better job matching social security numbers, names, and driver's licenses. we have three things that we are working with here. we have a california issued a driver's license which are not supposed to be issued to illegal immigrants. we have a social security card and we had and i9. we did everything that we could. for example, had the agency been able to punch a button, match our name and her social security number, maybe it would have come up. the system does not work that well. there is a 50% false positives and false negative rating of the system. it is not universally used. it is an important thing. we have to get it into place. the federal government has to play a role in this. the anchor is the social security data.

social security. >> they have to enforce it. >> if we agree that illegal immigration is a countrproblem,n we have to enforce the law and allocate the resources. there is no point if you do not allocate the resources. >> one of the great thing sicily in force are a lot. you have to feel safe in your home and place of business. you are next.

be>> we have done spanish langue media. it is translated into spanish. i have been into latino communities. i have worked hard to win the vote. i think we are nervous about it. they are wary. they took latino americans for granted. i do not. i want every boat. they are worried about that. another eployee union is funding jerry brown's campaign.

if you want someone to go to sacramento who is independent, who is not beholden to special interests, and i in your governor. jerry brown is tied to this that you never be able to make change. i will go to sacramento. i will not show anyone anything. it does not surprise me. i think we will see more funneling into this campaign $300 million has been poured into politics by the union. this is not a surprise. >> they say strong things about you. i think they are very smart. if they see it for what it is. it is a smear campaign for .

i've got lots of feedback from my supporters. every single one of them says it is totally predictable. we know what is going on. we see it is fitting manipulated and used. i think could backfire. it held me with the latino community. >> did to collar a friend? shoes around re for nine years.

you make decisions about what the right thing to do is prepare she misled us for nine years the . my view was that you have to solve this issue.

it is very hard to know. i felt terrible for her. she is being manipulated. i can think she is into something that she probably cannot see what is about to happen here. >> what were her duties at your house? >> she was the housekeeper. she claimed, made beds, did laundry -- the normal things that the housekeeper does. she occasionally did errands for us. she would occasionally get to the grocery store or pick up dry cleaning. once or twice she drove the boys

to school if they did not get there the way they normally were supposed to get there. just normal housekeeper duties. she was not responsible for the children. she was a housekeeper. onsible for the children. >> i do not know the answer to that burd. the dmv said was a legitimate and driver's license. >> is there anything else? >> not that i know of. not that i know of. i have to tell you. not that i know of. i have to tell you it surprises

me in some ways. " we found out that she was here, we let her go. i've only been in politicsfor two years. i'm getting used to these mere politics. [inaudible] >> you understood the situation. >> i do not remember. i do not think we did. could i be faulted for that? absolutely.

we could have a maternity leave. is that all right with you? bifurcati have to look back ande oper. >> we remember so much. >> we will get back to you. >> where would you picof the mail? >> she would pick it up from the mailbox. she would bring it into our island in the kitchen and lay it out there and soared into jet mail, bills, and other things. -- and sort it into emailed , bills, and other things.

i did not find out the issue is not legal to work here until june 2009 when she came here. i announced i was running for governor february 9, 2009. >> you said it never came a. do you think this is an issue that should o been brought to the forefront? why now? >> the brown campaign is doing a massive smear campaign on me and my family. that is what we are talking about. this is what i'm going to do.

we are gathered after the fact. if you feel a sense and may be wanting to go back? >> youake decisions at the time that you feel of the right decisions. we found out the issue is illegal. we terminated her employment. it broke my heart to do it. we said you cannot be here. you cannot work for us for th. i feel it is the right thing to do. i do not feel i would do anything differently.

>> we have a new kind of mailbox. you have to have a key to open. i get my own mail parent. we've had other houehold help in california. all of them were documented. >> would you be illing to provide documents? >> maybe. it is important that old and we get back to the issues that californians care most about. that is jobs and the economy and getting government spending under control. here we are in a crisis. if the budget is over 100 days overdue. the legislature is no closer

than they were a couple of weeks ago. we were about to miss the payment. we are about to go neius to pay california s. this is paymeaclassic smear pol. we have answered just about every question there is for the . we will answer a few more and then i'll go back to trying to solve the problems for californians. there is high unemployment. there is failing public schools. that is what i will turn the campaign back to. but a couple of more questions. -- i will take a couple more questions. >> tey got this letter that came to your house ahea.

did they cross a line? >> i guess it depends on your definition of ethics. i do not know the full story. clearly, i think she had a gun to her head. i think this was very challenging for her. i think she has been manipulated by a very sophisticated attorney that has done this for a living for 20 years. i absolutely believe this is linked to the brown campaign, 100%. ok? >> could you go back to the statement of illegal workers? >> i do not think it is the agency's fault. they do what they are supposed to do, too. they have a copy of a driver's license and social security card. they have a copy of an i-9. they have done good work for me.

i thought niki was a great employee. i thought they tried to do what was the right thing to do. >> they said that she felt "exploited, disrespect, and financially abused powell how the respond? >> that is not true. her children came over to our house. her son often brought in -- offer a broader sense to work. they played soccer and are back yard. -- often brought her son to work. they played soccer in our backyard. her little boys did come over and play with our dog.

i have to tell you. i was hurt and stunned what i think she was made to read in that statement. it is simply not true. she knows it is not true. she is listening now. i feel terrible for what he must be going through. she knows that is not the way it was. we will do one must question. >> [inaudible] a rethinking for ways to protect those employees? >> i do not think abused her. we pater $23 an hour. i think that is a very fair wage for why she did. she is very good at her job.

we gave her tremendous work flexibility. it is what any working mother with love in an employer. if your cha has a cold or the flu, we said not to come in that day. if she had a parent teacher conference, she left work early. that is what all employers should do. if there are employers out there that are taking advantage, that is wrong. we should not allow it. >> [inaudible] >> it is challenging. they are here illegally. by trying to go to the authorities, they jeopardize themselves. think there are organizations that fight for the rights of workers. that is the right thing to do. we do have to get our arms around a very challenging

immigration question. we have to secure the borders and told them accountable. we've got to get a temporary guest worker program some people can work here illegally. i'm going to have to run. this is longer than i thought it would be. i had to retreat interviews with telemundo and other folks coming up. thank you for coming. i appreciate it. let's move on to solving the problems are really matter for california. thank you very much. [captioning performed by national captioning institute] [cahost: i want to introduce you

to a staff writer with "the washington post." she is here today to talk to us about that settlement companies and some of the new rules those companies are facing. first of all, what are debt settlement companies? guest: they are very particular part of the debt relief industry. they promised to reduce the amount of debt that you owe it to your creditors. a lot of other firms and nonprofits offer to reduce short interest rates or the amount of payments. they promise to reduce the amount of debt that you owe. that has become under a lot of scrutiny in the past couple of months. they tend to be for-profit companies. some of the companies involved in this actually provide other services as well, but that settlement is a for-profit

business, and that has what caught the attention of many of the regulators. >> if you have credit card debt, please listen. a program has been introduced that could reduce your debt, decrease the amount you owe, and allow you to make one low payment per month. you may qualify for an assistance program that can have you get free. we offer the successful alternative to a bankruptcy, a credit counseling or taking on new loans. thousands of americans have qualified for this new program. call for a free evaluation now. it is confidential. it just takes a few minutes to see if you can join the problem. -- it just takes a few minutes to see if you can join the program. call for free consultation. it relieved and become debt free.

-- get relief and become debt free. host: how big of a business is this? guest: it is a very big business. custodies estimate they settled between $2 billion of consumer debt. -- companies estimate they settled between 2 billion of consumer debt. there are roughly 1000 companies that handle this kind of problem. host: do they all do the same thing basically? guest: the way it works is you call the company into your saddled with credit card debt. they promised to reduce the amount of debt and the way they do that is typically charge you a sign that be to enroll in the program. they also charge you a portion of years total debt that is zero. somewhere between 20% of the amount you owe. on top of the debt. a lot of time the service fees

are taken before one that has been settldebt has been settled. host: what is the advantage of consumers going into these groups? guest: there were changes five years ago that really made it tough for people that were under a crushing amounts of debt to file for bankruptcy. they're really looking for another avenue to take care of personal finances. that is when this type of industry began to blossom. they're looking at it as a possible way out. if i can negotiate to get 50% of the debt reduced, and it is a good deal for me at the end of the day. host: had many of these are sponsored by the credit-card companies? guest: they are typically independently financed and independently run. there were some issues of few years ago with the relationship between credit counseling firms and credit-card companies.

these are businesses that are looking to do this on their own, and in some cases, according to regulators, taking advantage of consumers. host: what are some of the new rules that just took effect this week? guest: this week that sec has said they must let you know, it's the entire program is expected to cost, and a good idea of how long will take you to look through the program. sometimes they will promise to as little as three years, but the reality as it can stretch out congress than that. they have to be more transparent in their practices. next month it will begin the inning and vance peace in the industry. -- banning advanced fees in the industry. host: have to the companies make money if they're not charging a fee? guest: that this argument of the

industry. they say taking on the customer typically is very difficult and expensive for them. it can cost up to $1,000 for them just to get someone to sign up any and all that person through the process. if they need the advance fees to six that -- they say they need the advance copies to survive we may see companies go out of business. host: how many companies are there in the u.s.? , and the clients are they certain? guest: the number of clients are difficult to say, but the industry groups estimate there are 1000 companies that are operating in this arena and has settled roughly $2 billion worth of consumer debt. host: there must be a lot of money to be made. guest: that is one thing they're hoping to do. that is another reason why

regulators began to look at them. there were some companies that were operating as legitimate firms, but this is an arena that is ripe for fraud. there are several cases with lawsuits against them. host: we are talking about the debt settlement companies and new rules that go to affect this week. ylan mui is our desk. -- is our guest. we have set aside a fourth line this morning. if you have been or are a debt settlement client, we would like to hear your story. we're going to begin with the democrats and houston, texas. go ahead. caller: good morning. and i want to know about the

reverse mortgage. for the people that when they go to -- are these government programs or pride that companies? -- or are they private programs? guest: that it's hard to say without knowing your situation. one idea that regulators are trying to crack down is some companies are trying to align themselves with government subsidies and government stimulus packages. that is something to be very careful about. in fact, for the debt settlement industry, that is one area that the ftc has been done before is insinuating they are involved with government programs when they're really not. this is something i would be

very careful about. host: these are not government programs? guest: these are not. there was a government report about some of them claimed there were part of government programs. this is not anything that is funded by the federal government at all. host: the next question comes from zero weatherford, texas. go ahead. caller: i think what you fail to tell the callers as some of these companies to have to have over $10,000 in debt before they even take you on as a client. then they fail to tell you that -- i will not give the companies i have talked to -- you can call the creditors yourself and can negotiate.

i owed $140,000 in medical expenses. i negotiated myself 6 cents on the dollar. they stopped the interest. i am still paying on it now, but a lot of the companies will not accept you because they will not make a profit unless you have $10,000 worth of debt or more. guest: that is a very good point. these programs are designed for people with very excessive debt. this is not something if you only have 3000 or $4,000 worth of debt. you can do this yourself. a lot of times you can pick up the phone, call your credit card company and tell them you are in a tough situation and may be able to work out a deal. what the industry will say is that a lot of people in this situation do not have the capacity, the knowledge for had to negotiate and how to handle finances. that is where these companies are stepping in to help them

out. host: joining us on the phone is the executive director of settlement companies. these new regulations we have been talking about that are going into effect, what is your view of these? guest: we recognize a good deal of these. we have require the types of disclosures and standards that the ftc is recommended. the one aspect we do not agree with is the advanced fee band. this is where we cannot collect any fees until we settle a debt. of course we cannot settle the debt for a consumer until they have enough money saved up so that we can actually negotiate with the trader and get the money over to the creditor. it puts us in a position where we are providing services month after month for consumers but

not receiving any payment for it. host: do you have any questions or david dukefor david leuthold? guest: there are some that operate with out an advanced fee. how do you feel about these companies and can the industry survive under that model? guest: there have been a few models like that, but frankly everyone i know that says that is only providing that feed program to a limited number of clients. -- that fee program to a limited number of clients. most of the company's that have

been providing some sort of fee based on how much they save the clients have also been charging a monthly fee along the way. this is one thing we would really love to be allowed to be able to do. again, the companies i know of that are now operating on that basis are only doing so on a partial basis. we will all have to do that starting at the end of october. it will be really interesting to see how many companies are able to effectively manage that process affectively. already we have seen a good number of companies that have decided and realize they cannot afford to continue on that basis and have gone out of business. host: what about the rules that you tell customers upfront, this is what it will cost? do you think that is only fair? guest: totally. that is one of the reasons i

helped co-found this company back in 2005. and right from the very beginning we have required that exact disclosure to be made to every client that has signed up for one of our programs. host: finally, what is the advantage of going to one of your company's it rather than calling the credit card companies yourself? guest: some people may be able to do it on their own, maybe with one creditor or two. most people that come to the program has six or seven creditors. even the national consumer law centeoss center looked at the question as can the consumer settle debts themselves? what they find is they cannot. they did find that some consumers would have a creditor and say i will settle your

$5,000 debt for $3,000, but what we want is $1,500 today at $1,500.30 days. what they find is the repayment terms were pretty impractical. host: do these companies sell in bulk like mortgages are sold? guest: no, most of the settlements we make with credit- card companies are on an individual basis. there are some companies we deal with we are able to maybe deal with 100 accounts at a time, but even those accounts have to be then be handled on an individual basis by the settlement companies. host: are any of your company's sponsored by the credit card companies? guest: not at all. we are the only true independent

industry that just represents the consumer 100%. we are funded totally by the fees that the consumer pays to us. host: david leuthold, thank you for being on the phone with us. the next call comes from philadelphia. edward. caller: good morning. i do not know how the credit card companies can survive. the company it -- the country is full of drug addicts, no matter what agreement unit with them, they will not pay anyhow. guest: there has been an issue for the credit-card companies are the past few years. the charge-offs rates, the rates of people that was no longer pay their debts have increased dramatically. at some point they were up to 12%. that has cost the credit card companies a lot of money, and

they're not very happy about it. it has also forced them to restrict the amount of credit they give out, particularly people in more risky situations. host: what amount go into debt or default? guest: in terms of going into the charge-offs for it is clear you not get any money out of the person, that is about 6% or 7%. the amount has increased. that is why there has been a lot of attention to these kinds of programs, because we really are in a time when consumers are realizing that the spending boom they enjoyed in the earlier part of this decade is really coming to an end, and now they're facing the bills and raising the debt they have accumulated in realizing they cannot pay it off. host: the charge-offs percentage has increased during this

economic time, during the last couple of years? guest: definitely. that has been one major reason credit card companies say they have lost money, and also the amount of credit america has outstanding has fallen by $100 billion. host: the next call comes from fort myers, florida. go ahead. caller: i have been on the debt management program for a few months now. i am with part of the united way. they did not reduce my balances, but they took a lot of my interests. it went from 20% down to 1%. i am sitting on a lot of interest. i am very happy with it. you have to close out all of your credit cards. i make one payment to them and they charge me a $30 per month peak. host: are you dealing with a

non-profit? guecaller: i believe it is non- card fit because it is part of the united way. -- non-profit because it is part of the united way. what they do is negotiate with each credit card company and set up payment program or they have less interest. guest: i am so glad he is making progress on his debts. the important thing he said is that he was able to work with a non-profit to negotiate down his interest rate. that is a different type of business. that is typically called debt management. what the debt settlement companies is reduce the amount that as of. there is a very fine line and difficult to understand. they are very different businesses. host: is a different than the

commercials that when you travel with irs -- when you have trouble with irs? guest: the commercials are typically ambiguous and you're not clear what they are offering. frequently felt devildebt settlt companies, and others to advertise on the radio and tv. host: if you go to a debt settlement company, how does that affect your credit rating? guest: the industry would say it could help your credit rating because if you pay off your debt will be in better shape than you were before. one concern that has come up is that during the process, some settlement companies have instructed their consumers not to pay creditors during this process, to wait and save up enough money and make a one-time payment. that has also cause controversy

as well because any time you stop paying your bills, that can hurt your credit score. host: next call is from houston. we will move on to san francisco. go ahead. caller: good morning. i am one of the few people that have made it through the mortgage modification process and i have been in a debt solution process since november 2008. i put $94,000 worth of unsecured debt and to that program. as of now i have paid down to 48,000. guest: that is great. caller: it was expensive. obviously i owed money and wanted to make it right. i am still wondering about that, because some of the lawyer

companies get ahold of the fruit that nobody will negotiate on, and they start suing you. that is where i start running into the problem is i am not equipped to deal with that kind of venue. and i am not a lawyer and do not know how to go in and represent myself. that has presented a bit of a challenge. i have been very happy, with the debt solutions. they have helped me reduce the load almost by half. host: when you say it is unsecured debt. is that mostly credit card debt? caller: i have a successful companies i have been doing for 30 years. there was a local weather company. the sellers were native american. it was all american. i realize as ized they were thrg money at me. i thought we're doing a great thing.

americans, sari, you do not want to buy american. -- sorry, you do not want to buy american. i had to let it go and try to save myself. host: did you consider bankruptcy? how has this affected your credit rating quests calle? caller: -780 is long gone. i am not alone. and they will have to figure out how to scalfigure this out on a bigger scale. i am not alone. host: thank you for sharing your experience. guest: what this caller demonstrates is that the bigger question and the debate over debt settlement, any of the alternative financial firms is a question of access.

many people look at these companies and say should they even exist? why do people have all of the debt? but some people are in a really tough situation, and what other services that will be available to them to help them in their position? what some companies would say is they are in a long continuum of services for people that are in a tough spot. if the companies go away, who will help them? host: the new fcc rules that are in place include they must disclose how long it will take to see some results, how much it will cost consumers, potential negative effects of using debt-relief services, and key information about accounts must be disclosed. linda sherry is on the phone. are you supportive of the new rules? calleguest: i am extremely

supportive of the new rules. my organization has been working in concert with other consumer groups for many years to try to get rules such as this past to protect consumers. host: when it comes to advanced fees, are you opposed to those? guest: yes, they are system in which the companies take their money upfront. based on information from industry association from the industry itself, nearly two- thirds of enrolled consumers who paid in advance dropped out of the programs within the first three years and did not see any benefits from the program. the industry's own figures are joined this kind of thing, and we feel it is a program that does not help family finances, in the rose family finances. -- it erodes family finances.

guest: what would you say to consumers who find themselves in this tough spot? guest: i would say that that debt settlement avenue has not been available to them before the ftc past these rules because it has been a sham and as a paralegal at many consumers. -- fernández not really help that many consumers. -- and does not really help that many consumers. they can go into a credit counseling agency, and they will find they have budgeting services so they can take a look at their overall financial picture and see what is really happening and what is the next step. if necessary, they can then enter a debt management plan with these agencies. the sefees are very low and

usually on a sliding scale relative to income. host: are you satisfied with how the ftc has pursued settlement against debt settlement companies or would you like to see its stronger? guest: i think they have done a great job. i think they really understand that many of the companies are skirting a very fine line between hurting folks and certainly not helping them as the industry claims. there are clear aspects to the mission here, and that they are often used deceptive advertisement. and i think the ftc has recognized this and targeted the industry justifiably so. host: linda sherry, thank you for spending a few minutes with us. tom in annapolis.

ancaller: i started with $30,000 in debt. two years ago i tried debt management. i tried counseling. i eventually settled with every one of my creditors to shut down the accounts, drastically reduced interest rates and that have been plodding along. i am still in a situation where i may have to deal with the pay off. the one thing you have not mentioned is the fact that when you take a debt settlement reduction through one of these companies or negotiated on your own, that reduction in your debt is counted on your taxes, so then you have to pay taxes on that. i have had friends do this, and they did not realize that up front. what about putting this money in escrow when you make your monthly payments instead of -- every time i did this with an

institution, they told me i would not be eligible for the program until i was delinquent. why not put that in an escrow so the company does not get an upfront fee but it is still there when it is time for the consumer to pay down? guest: one thing i want to address first is the tax issue. that is something that has been talk about. and there has been some folks talking about potential legislation around whether you have to pay taxes on any amount of debt you do not pay. that is an open question. the other idea is the idea of an escrow account. when you work with the debt settlement from their required to typically to set up an escrow account under which you deposit money where you save up to pay off creditors. one of the concerns about the escrow accounts is that typically the debt settlement firm may have access to that

account, and may be able to take out their fees before you are able to save up enough money to pay off your creditors. the third-party account has been something that has cost many consumer advocates a restless night sleep. host: new york city, co-head. -- go ahead. caller: in your field, it do you deal with -- there is that freedom tax release. does that fall under the same settlement company that the tax relief company comes from do they all fall under the same regulation? guest: it is hard to know, but

if they're promising to reduce the consumers' debt, reduce the amount of money they owe, they could very easily fall under the same program as well. host: next call talking about debt settlement companies and new rules that are facing. this comes from colorado. caller: i would like to say that i am glad i was able to get through. i just got through working with the debt settlement company. host: what was your experience? caller: one of the things i wanted to mention is that i guess when you're dealing with several credit-card companies, i think they are on their own separate schedule on terms of how they are managing your credit card debt. i have noticed that some of the

companies are starting to send out settlement offers for which you receive four or 57 offers in the mail, which was one of the reasons i got into the debt settlement program. host: did you respond to the debt settlement offers? or did you say no? caller: i was under the impression that that was something that the debt settlement companies would do. host: what has been your experience now that you have been working with the debt settlement companies? caller: well, the company i worked with, the way it were set up is as long as you get money in their accounts, they cannot actually settle until you have

reached a certain amount of money in your account for the call at the credit-card company. guest: this is very standard. this is the third-party escrow accounts. the way that that works is there is a separate account that is set up, and what the debt settlement companies say is you need to save up this amount of money before we can even go to your creditors with a reasonable offer. the question is how difficult is it for consumers to save up that extra amount of money and how much of that money will go towards fees and how much will go to the credit-card company? the other side is while you're sitting at money, frequently credit card companies will not agree to negotiate with you if you pay your bills on time. there is some strange and disincentives to not pay your bills, which is something that can get you into trouble down

the line. a lot of times they're not willing to help you unless you are in trouble. host: have the credit card companies ever spoken publicly about these companies? guest: not that i am aware of, but it will stick to work with customers on an individual basis to at times were bad debt and payments. so that avenue is available to you if you have the financial literacy to negotiate with them. host: the next call comes from tampa. mary republican. caller: i would like to hear your comment on my situation, please. i am not employed and had not been able to find a job to do a debt settlement. i have been offered many settlements, they want big payments within two months. not having a job, i am actually

in foreclosure. wednesday i applied for a temporary job and there were going to hire me for the holiday season, minimum-wage, friday, saturday, sunday, four hours each day, 10 $120 each week. they called me yesterday and said they were not able to high year me because my credit was bad. this is the eighth time where the employer was willing to give me a job and said they cannot hire me because my credit is bad. i have tried to contact my legislators here in the state of florida. i do not know what to do. guest: she is in luck. there is legislation that is out there that i believe is passed. it is about this very issue, about how our credit reports impacting people's abilities to

get jobs and whether an employer is considering that during the hiring process. clearly that has impacted our ability to get a job. that is something that congress has looked at. host: virginia beach, curtis, a democrat. caller: i want to know about local banks, credit unions and if they have credit counseling. and if a bank that you hold a card with, is it a conflict for them to counsel you on your credit debt when they hold a credit card? guest: i would tell you that it is important to call up your creditor when you start to get in trouble. that would be my very first that. and i am obviously not a financial adviser, but i would say that is the first thing you should do is to call up your

credit card company and say i am having a problem, what can we do? that is where i would start before we go down some of the other rows. host: have a lot of the debt settlement companies been born to in the past few years because of the economic crisis we have had? guest: yes. when the association of credit- card companies formed, there were only 300 companies in the space. that has increased to 1000 companies. there has been a lot of growth in recent years. and really as the business began to increase after changes to the bankruptcy law that made it more difficult for people to go into bankruptcy, and then the fed into a crisis added on to that as well. -- and then the financial crisis added on to that as well. host: where are these companies based? guest: we have two large

companies in washington. they are really all over the country. they may have been offering some other type of financial service previously, it may be offering credit counseling, some of the other plants we were talking about, and then added debt settlement to their array of services more recently. host: st. petersburg, jeff. caller: good morning. i would like to find out more information or advice to young people or young family members that find themselves in debt. you have to pay your debt off, at the same time it seems like the banks have a lot of predatory lending practices towards the young people. you try to get them to pay it off or they will eventually fall

so far behind their stuck between a rock and a hard place. guest: that is a very hard question. one of them that is targeting done people as around student credit cards that limited the marketing students that credit card companies could do on college campuses, ltd. the way that credit card companies and college campuses could interact. there are things that are happening on a national scale to help protect some of the most honorable consumers out there. host: country in stereo.

>> hello, everyone. in thank you for joining us here in washington d.c. for a conversation with other reserve chairman, ben bernanke as he takes questions from teachers about the federal reserve and the economy. my name is rose cannot sew and i work at the board of governors

and i look forward to moderating today's session. here the border by the federal reserve, we are pleased to host a group of 80 educators to teach economics and personal finance to young people. we are also joined via video conference by education from all over the country were participating in local events in 34 regional reserve bank in ranch officers as well as many who are viewing this via webcast. through this session, federal reserve system seeks to give you insight into our poll tonight today so we can support the work that you do a student as they strive to teach them how the decisions made by the central bank affect them, their family and the economy. today we are honored to bring to your federal reserve chairman, ben bernanke, who wants like he was an educator. before coming to the board of governors in 2002, chairman kornacki worked at the level of

economics and public affairs at princeton university. he also chairs the department of economics from the 1996 to 2002. chairman bernanke served as governor of the federal reserve system from 2002 to 2005. and in 2005 he became the chair of the president's council of economic advisers. he returned to the federal reserve to the chairman of the board of governors in 2006. chairman bernanke gervin dillon, south carolina and received a ba in economics from harvard university and a phd in economics from the massachusetts institute of technology. and i might add that chairman bernanke's wife anna is also a teacher. the thank you for joining us today, mr. chairman. >> thank you. rose forgot to mention i served two terms have been my camera rose school board. last night so i have some direct exposure to public education as well as to university education.

i do want to both you and all shirts today as educators are critical to the nation, to our economy. while students make for a productive universe and democracy. the economist got offered marshall once that economics is the study of people in the ordinary business of life. and i can't think of anything more fundamental than that. but in economics obstinance understand the decisions of million of people about what to produce and what to consume to determine what adam smith called the wealth of nations, our living standards. in particular, economics obstinance understand both the strengths and weaknesses of our free market systems. i'm sure your students have been major to understand the economic financial event from the next couple of years. the recent financial crisis was was among the most profound

crisis to financial stability since the great depression and its causes and ultimate remedies have been looking to need to be widely debated. the study of economics will light your students to join the debate in a responsible and informed way. one of the key lessons of the recent financial crisis is the importance of personal financial literacy. miniview teacher-student the skills necessary for their decisions. your efforts are of paramount importance in helping students understand how to save for the future and how to invest domenici make it grow. in retrospect, some of the people who are the most in the financial crisis bradman initiative by road, were signed financial crisis they shouldn't sign. today, students needed solid understanding of the benefits and the risks of borrowing money to buy a car or to buy a home into the affected too much credit card debt can have it their personal finances.

besides improving the personal financial decision-making, teaching her students economic as the bulls will help them as citizens understand and make choices about many critical issues that today confront our nation. the federal reserve works hard to advance financial literacy and economic education, both current programs and through our work with other organizations. our financial education website provides easy access to free education of materials, a resource search engine for teachers and scans for students of various ages and not flinch levels. some of the 12 reserve banks around the country for economic and financial economic education workshops for teachers. in other reserve banks periodically provide lessons and arsenal financed to middle and high school students. a number of the reserve banks run academic competitions for the middle-school, high school and college students such as the fed challenge, econ bull and other essay contest. i've had the opportunity and to act occasions to judge the fed

challenge which is an opportunity for kids to learn what the fed does, learn about the economy. it's a great experience and i've seen some really impressive performances from high school kids. also some reserve banks have open learning senator museum center lobbies that feature interactive exhibits and related educational programs. figure in the reserve bank february principi, which their 24 branches as well as 12 reserve banks, please inquire to see what kinds of exhibits i have. teachers hosted in the summer founders have provided the students with valuable learning experiences. i just wanted to thank you for accepting our invitation to join in this conversation. i appreciate your taking time away from your personal and professional claimants to be with us. as a central banker, economist and educator and as a parent, i do want to thank you all for your work. it's absolute essential to our economy, central to our

democracy, that we have well-educated, well-trained students. and i also applaud the ongoing partnerships between regional reserve banks and their educators. as i could express off my appreciation for reserve bank staff who were involved in court meeting this meeting today. so again, welcome to the federal reserve, those of you want simulcast, welcome to this meeting. and i'm happy to take some questions. >> thank you. >> our first teacher with us today in the boardroom, would you please introduce yourself and ask your question? >> robert handy from dort high school in county maryland. what has been the greatest success as well as the greatest failure of the federal reserve in the last 100 years? and if you are teaching a u.s. high school history class today, what is the most important aspect of the federal reserve's role in history you would want students to understand?

>> well, i hope that your students become and learned about the federal reserve as a very important institution i meant by the huge impact -- back to 100 year university, but to celebrate our centennial. the federal reserve was founded in 1913. and it's been as they say a tremendous part of u.s. economic history. i would say the greatest failure to start their is no doubt the great depression of the 1930's, which the federal reserve made unfortunately an important contribution. the fed was very slow to expand the money supply during the great depression. as a result, it countenanced as safir deflation or falling prices during the early 1930's. the fed was also insufficiently proactive in trying to stabilize the financial system as you probably know about a third of all the banks in the united

states failed during the 1930's, a tremendous collapse of our banking system. in those two things together are very important in making a good impression as deep and as long as it was. by the way, as we dealt with the financial crisis in 2008 in 2009, we try to take those lessons to heart. we try to make sure monetary policy was aggressive trufant deflation of a try to take whatever steps were necessary to keep our banking system from collapsing. so at least we try to history. i take one of the most are probably the most success of the federal reserve in the past century was probably after the period of the 70's when we had a lot of inflation. the federal reserve under chairman paul volcker by contemplation, conquered inflation and we now have very, very low-inflation, very stable prices. in that process in the 80's and 90's, a cheat quite a bit of prosperity and economic in the

united states in a lot of important contribution to that. going forward, i think students should understand those two elements of what the fed has done and has been done. in the first is financial stability. it's very important for the fed to contribute to keeping our financial system stable and dave. and secondly, price stability. over the central bank can affect inflation and keep inflation low and stable is good for economy and it's very important responsibility for the fed. >> thank you. next will go toward miami office office for a question. >> thank you. my name is nancy and i teach math at thomas jefferson middle-school in miami beach, florida. chairman bernanke, our fight to rescue what are the greatest challenges that the federal reserve system faces over the

medium and long-term? >> well, we certainly have in the near term and the medium term we have some very difficult challenges. first and perhaps for a mouse, even though our economy has stabilized and growing, clearly it's still a very, very difficult time for many americans. the unemployment rate is still almost 10%. inflation is quite low in the federal reserve has the responsibility they were certainly not only policymakers that can affect the state of the economy i.e. any means, but we need to do our part to help the economy recover and help make sure the jobs come back to the united states. we have another beer important responsibility in the short term, which is the implementation of the new financial regulatory reform legislation, the so-called dog frank act was passed and signed by the president in july and it

is essentially the most ambitious overhaul of our system of financial regulation since the 1930's. and a great deal of that has to be accomplished, put in place by the financial regulators, including federal reserve and also including other regulators like the federal deposit insurance corporation, securities and exchange commission and others. but the site has a very important role in putting that -- putting them in place. so those two very important challenges in the near term. long-term is hard to know. it's hard to know where economy be and what the fed's role will be. based on what i've seen a few moments ago, they think we want to be sure to maintain price stability. we want to learn as much as we can about our economy so we can be even more effective in keeping stability in our economy. and i say one other thing, which is that it's very important that

the federal reserve remain independent, that he remained able to make decisions for the economy based on our views of what the economy needs and not based on short-term political considerations. so maintaining our independence, maintaining our nonpartisan nature, which is focused on what is the best for the economy and not what is politically expedient. i think that's a really critical thing for us to maintain going forward. >> thank you, mr. chairman. now let's move to boston fed. the >> can't hear you. >> austin, i'm sorry. please and mute your. >> i'm sorry, boston, we can't hear you. we'll go to the next and come back to you.

[laughter] let's go to san francisco. we'll come back to you, boston. let's go to san francisco and then go work out the details of the mike. san francisco, can you please go? >> san francisco. >> san francisco, go ahead. [inaudible] is >> okay, tell them to hold on. >> fantasist go, i'm sorry, we can't hear you. >> isn't technology great? [laughter]

the >> the lady in miami was clear. we'll put you on hold until we get our audio fixed at pier. >> isn't an issue here? on me -- okay. >> anybody else got a question? [laughter] >> dr. bernanke, it you have spoken one point about the crisis of the media, not so much the media, but the domino effect

effect -- i should have been prepared. the crisis of conflict and how the whole media plays in that it ours becomes a domino effect. and as we look at our session, as reports come out of this session, what kind of role does the media play? >> so the question is about confidence and what role does the media play and confidence? first of all of you say the confidence is important. consumer confidence we follow very closely. people are more confident than they're willing to spend. they're more willing to invest and so that's an important period and business confidence is also very important firms in order to hire, in order to expand their operations than it should be confident about the economy. now the media is no doubt they're important, but i hope your students understand to be a little bit skeptical about the media because there's nothing more exciting than when things are going well and nothing more

devastating when things are going badly according to the media, right? so people can develop -- a student skimmer to develop an important skepticism for themselves about where the economy isn't what's happening, we'll avoid a think some of that echo chamber that can make the good times seem too hot and the bad times seem too cold. so again, education is getting kids to think for themselves, getting them to listen to a wide variety of sources, not just on television and how they might think -- when it's not. if you look from american history, if you look at the last 234 years or so of american history, the united states has always prospered. it's come through tremendous challenges. it will come to these challenges. people have that perspective, but our confidence will be stronger. how are we doing? >> other questions.

yes, ma'am, and the yellow. idea back [inaudible] >> go ahead. [inaudible] >> so, you first have to say that the federal reserve is nonpartisan, so be very careful not to take one side or the other in terms of one fiscal issue or another. before i try to jump into that in one moment, let me just make sure that just to say how important it is that their kids understand the difference between fiscal and monetary policy. i think that distinction is often not clear. fiscal policy of course has to do with the federal government spending and tax plans and of course the federal reserve has nothing to do with that. we do is manage the money supply which affects short-term interest rates and therefore

inflation and also affects growth. but their are two very different sets of policies and i think sometimes people don't distinguish those too. and again, the policymakers are very different because fiscal policy is made by the administration. we try to buy someone we can, but of course they're responsible. where is the federal reserve independently makes monetary policy. and fiscal policy, with a very difficult situation because in the short run we have an economy which even know were in the is still far from all employment. until then that sense, there was a lot of desire to provide additional support to the economy. at least not to cut spending or raise taxes would be bad for recovery. we had very long-term budget problems as you know. as you know, our society is aging and if medical costs keep

going up, the obligations to pay medicare, medicaid and social security long-term situation. so we're kind of caught in the desired in the short run to be more expansive and in the long run to be more frugal and that's a hard combination. and i think is possible -- i think of biting those two in that way is the right way to go. in other words, whatever we can do to persuade the public that we -- and i say we as a country talking about congress, that we are serious about tackling a longer-term budget issues, work which take the steps necessary to reduce their long-term debt. that in turn would give us more space, more flexibility to be more expansionary in the short term. so that's the challenge, is to find ways to credibly commit to reducing our long-term debt. and in doing so, would give us

additional flexibility for you decide to use it to help support recovery today. >> already, were going to go back to boston to see if we can bring boston. boston, are you there? >> hi, can you hear me? >> yes, we can. >> hey, okay. good afternoon chairman bernanke. thank you are rejoining that the academy again. i name is bob walker and an associate professor of business and economics at middlesex trinity college, the crown jewel is committed to college here in massachusetts. my question for you as a follow-on to the question you just answered. the combination of monetary and fiscal policies have helped to move the economy and the right protection and direction, get growth has remained stubbornly sluggish. what do you see is the major contributing reasons for this? >> loafers, let me say one thing, which is i want to commend you for your work in the

community college. trinity college -- junior colleges technical schools. one of the great strengths of our educational system is that we have so many diverse ways for people to educate themselves and i think it's a real strength of our economy and our system. for those of you who aren't alternatives -- either a junior colleges for alternatives to the standard four year college. i think those are very important. in terms of whether recovery is slow, that's obviously something that we're very interested in and spending a lot of time investigating. it's not at all uncommon for a recovery that follows the financial crisis to be relatively slow. we've seen that historically in many other countries as well as in the united states. the reasons for that are

several. one is that the financial system is so important to our economy that if the banks, for example, have not recovered fully to health or the financial markets and i get functioning at the normal level, that is itself a drag on growth. likewise, if you look at household finances, one of the things that happened during the boom that preceded our financial crisis was that people took on a lot of debt. house prices for now. mortgage borrowing to buy up to loan-to-value ratios were very high and download down payments. so a lot of people find themselves on the one hand worried about job security. and on the other hand, finding they have a lot of debt, a lot of interest payments to make. and so they're cutting back. and what we're seeing is consumer saving rates are going up, which is not a bad unit cells.

but in the point of view of economy as a whole consumer spending is not there to drive economic growth way it normally would be. so that combined with the fact that our labor market is not yet really begun to take off, although it is expanding that there is still an air of caution and the economy, both on the part of households and on the part of businesses that is keeping from venus wrapped as a bug. that being said, the national bureau of economic research at the no declared the recession over in june 2009. now what that means, just to make sure everybody understands, means as a gymnast or the economy stopped contract team and since then has been growing. now it doesn't mean we are as normal. doesn't mean unemployment is way too high. does that mean a lot of people are suffering. it does mean we are growing and the economy is moving at least

perhaps not as quickly as we like, but in the right direction. and we want to make sure that that progress continues. >> thank you. let's go to san francisco again. >> hello, my name is luna hatfield and i teach economics at pleasantville high school in california. my question is, what is the most important lessons the student can take away from the recent financial crisis? >> host important lesson from the financial crisis? i think we need to address this for students, if i may, the macro level and the micro level. as a macro level and the point of human history and economics, with this crisis shows us is how damaging financial instability can be for the economy as a whole. i mean, people coming in now, you're soon as they think of

wall street has been pretty far away and pretty irrelevant to their lives. but we found out that if our financial system is unstable or breaks down or severely damaged, but it's kind of like the nervous system in the body of operating properly and you can get very, very bad effects on the economy as we've seen. so, from an historical point of view or an economic point of view at the role of the financial system, the importance of financial stability if it are very, very important to understand that helps us think about the night to 30 some other important episodes as well. there's also sort of a micro level, which is more of a personal or family level set of lessons that can be learned from the crisis. and i think one of the things that we all talk about that maybe didn't pay enough attention to is the financial literacy and financial education. a lot of people who were in trouble today made bad decisions.

that part too much or they purchased a home they couldn't afford. may borrow too much on their credit card. your efforts as teachers to help students understand the importance of financial responsibility, to help them understand what are the basics to basics of saving and budgeting? those are really critical. and student need to understand that for themselves as individuals and for the country, good sound practices, good sound behavior and in financial dealings is really important. and i guess i would say on the personal side were learning a lot of lessons about the labor market here. young people often is the case of the least experienced, least experienced labor market are among the worst hit by the high level of unemployment, particularly minority young

people. what does that tell us? will among other things, it tells us we need to have kids who are well-trained, well educated, who understand the wide variety of basic skills in terms of thinking, writing, math, et cetera, so they can adapt and change and deal with what could be a very unstable situation. it's always possible, you know what can we hope our economy will recover, but the world is changing quickly. and the more the kids are prepared, the better they'll be able to take advantage of technological change. and changes in our economy, rather than be left behind. >> thank you. now let's move to philadelphia. philadelphia, can you answer your question, please? >> hello, chairman bernanke. i name is holly juran i teach financial and new jersey.

my question to you, is what you like to see personal finance economic course departed for graduation requirements for high school? an interview, what is an important issue that could be mitigated with financial education? >> well first of all, when new jersey into another, -- well, this relates back to the question i was just talking about. we don't know as much as we would like about how to teach financial literacy. we had a number of programs here at the federal reserve where we have monitored different at times, different approaches to teaching kids about financial literacy. and some are better than others. but we haven't really found a magic wallet. and what i think is needed is two things. one is we really need to do a better job of integrating

financial education, financial literacy interpreter program. for example, when you're teaching math instead of just teaching abstract calculation, why not put it in terms of working out an interest payment or a budget? or we could integrated into history or civics or economics. so there's lots of ways to do that and i think, you know, i think god the more effect if way to do it. another way to make this more effect give is to tie it directly to kids on experience in their own lives. we know that people are much more prone to understand and want to learn about seo mortgage financing when they're actually in the process of buying a house. so if kids are involved, for example in opening a saving account or doing other things,

saving for college, then those things mean a lot more to them and the training was even hopeful. but again, to go back to before, this is so important for people at the individual level and for the economy as a financial system as a whole, when i was in school and when you're in school we had horses called home economics and didn't have much to do with economics. it had to do with and other very valuable skills. well, home at the time that is about knowing how to budget and how to save. that's very important, too. i think we need to put them into the curriculum so kids will have to lay schools. even going into college, because we see a lot of kids get into trouble even in the college years of excessive credit card debt and not been able to pay tuition and so on. so to go back to your question,

one of the main lessons of the crisis is that we as citizens need to be responsible for a financial dealings. we can put everything on the government. we can put everything on wall street. part of it is our responsibility and you teachers, you educators working with the kids, i hope the chill night that part of your curriculum because it is one of the most important things that kids can learn. >> thank you. now let's go to the st. louis district. st. louis, please ask your question. >> my name is george bowling. i teach economics at st. charles community college in st. charles, missouri. mr. chairman, my question is according to what i've been reading were some way, there's a conflict related to a thing should be and economic downturn.

some people say the bank should be raising capital in order to make them stronger. others say they should spur the economy to take on more risk and living more to small business and households. what should be the goal? >> so the question is about, is there a conflict between banks building up their capital, becoming more stable on the one hand versus health of the economy by making loans to small businesses and consumers of the one on the other hand arid it's our view of the federal reserve that there is not a conflict between those two object is. and the reason is that what banks do is make loans to good borrowers. that's how they make good money. it's about maintaining relationship to the bars, making loans to good borrowers, that's how they build their profit and their capital. so we think it's good business. we think for banks to lend, we think it's good for the economy to banks to lend.

and so from our perspective, you know, as you know the federal reserve is not only the monetary policy agency, we also have very substantial role in regulating the banking system. so we tell our bank examiners to look at the books of the banks of the site take a balanced approach. and what i mean by that is we don't want to tell banks no, no, you can't take any risks. don't make any bones. just curl up sorted into a little ball and ignore the rest of the world. we don't want that. nor do we want them to make risky loans. we don't want laws that are not going to be paid back. that's certainly not what either. what want is an appropriate balance. what banks to make a positive powers that includes lots of small businesses who have been through a lot through this recession and they're still there and we made them to grow. we need them to hire as part of our recovery. so again, there's probably a conflict in our policies and will we tell her examiners than what we tell the banks desert

just got to get the right balance. you know, we don't want to be excessively risky. we don't want to lose money. we don't want to lead to people who can't pay back, voted to make up most people can be effective in reply to small businesses, a lot of households that it showed the responsible and that they're able to prepay what they borrow. and again, that's not just important for those individuals, but it's also important to get our economy going because certainly one of the reasons that growth has been sluggish going back to the question -- the earlier question, is that small business in particular not been able to get as much credit as they would like are not being the engine for job creation that they typically are in the recovery. and that is one of the things that's holding us back. >> thank you. and now let's go to our omaha bridge. omaha, are you there? >> my name is shauna coburn and

i teach business at arlington high school in arlington, nebraska. [inaudible] however, the overexpansion credit could reduce the financial situation we're in. how do you propose educating consumers on maintaining the balance? saving and spending? and while this balance slow the recovery of our economy? >> that's a great question. in this the boom in the crisis came about because people took too much and consume too much of our too much. to get out of that want people to consume more, barmore has been more. what kind of sense does that make? it does but it takes an economist to understand it. when we get a moment to clarify. so first of all at a micro level, at the level of the individual family or high school

, we want people to be responsible as i've said several times already. we want them to make good choices. we want them to save enough. what make sure they don't take on excessive debt and that means i have to be frugal in their spending. that's simply the bottom line. so we're not encouraging people to be irresponsible. we think everyone should live within their means and to manage their finances as well as we can. so that's a given. let's take that as a difference. now that being said, through the economy as a whole, there has to be some sort of demand will put our fact reconfirms back to work. there's got to be some demand for the output production of our economy and we need that for recovery. so it's a bit of a conflict, a contradiction between those two things. there's a couple ways to resolve the contradiction. one is to understand that there are components of demands for

goods and services in our economy, which are not just consumer spending. that includes for example capital formation if firms are adding to their -- their high-tech information technology, for example. or if the government is spending on purchase. there's lots of different sources for demand decided consumers. every important demand is ex-swords and folks outside the country. so there are sources of demand decided consumers and we want to , as much as we can, when those to help our economy recover. but the other thing i would say to reconcile that micro and macro contradiction is that people can spend responsibly if they have the income. and monitoring me so would like to see if the labor market recovery. the labor market has been

growing. it's been recovering, but too slowly. unemployment is still too high. so to the extent of economic policies or decisions being made across the country while prolabor market grow and jobs be created. that's going to create incomes that will allow people to spend more, create more demand for products, create more growth in our economy. without being a responsible part of individuals because they'll have more income coming from jobs. so there's really two keys to growth that are consistent with responsible spending. one is to find other sources of demand, like investment spending, like exports. in the second is to give people the income they need to spend responsibly. and that means basically jobs. >> thank you. and now let's go to the dallas fed. >> mr. chairman, my name is barry johnston. i teach at the colony high

school in the colony, texas. and first and unpaid plug, but the other question about having state laws or federal laws with regard to teaching personal finance. the state of texas does have such a lot and i can tell you that the building was program that the fed provides has been a big help to all of us. now, my question as, what do you believe would or could have happened if the fed in collaboration with the government had not taken the very aggressive steps it took during the financial crisis? >> this is a very common for important question and i thank you for asking that. and this is one of the very difficult areas. to put it quite lovely, a lot of your students, a lot of people in the country say well, they build out wall street. once i got to do with me?

.. that is what happened in the 1930s and that is what has happened in many other episodes. for example in the case of japan, japan had a major financial crisis in the 1980s which was the combination of the stock market crash in the land market crash which cause their banks to suffer severely, and that severely hampered their growth for more than a decade.

so, we know that a financial crisis can be very very damaging to the real economy. in september and october of 2008, we came extraordinarily close to a complete collapse of the global financial system, not just the united states at the whole global financial system. we had a meeting here in washington in october of the g-20, the 20-- 20 of the largest countries in the world and we talk about what we were going to do and we developed coordinating plans whereby in each country around the world we took strong steps to try to prevent the financial system from melting down essentially. now we didn't succeed entirely obviously. we had at least one major firm collapse. we had other firms that required government bailouts. those things as they said were very distasteful to us.

but, even though we succeeded in avoiding a much worse collapse we still had a tremendously sharp global recession and i would say as bad as the recession was in the united states in 2008 in 2009 we were kind of in the middle of a pack. a lot of the countries around the world had worst downturns than we did and all of this happened following basically successful attempts to stabilize the global financial system. i can only say that if global financial system had really melted down and many firms had failed, if the ability to make loans had essentially dried up, if people had lost most of their investments, their savings accounts in their retirement accounts, we would not be today if leased on a recovery path. we would still be in a much deeper hole, something much closer to the great depression of the 1930s. so i do hope that, while clearly

students understand that not everything the government did during the recession and the crisis was right, that's stepping into prevent the collapse of the noble financial system was something that was necessary and it affected every single american in a very important way. i guess the final thing i would say is, i hope it will help people understand while there was a lot of money made available to address the problems of the financial system at this point it looks like we are going to get it all back, pretty much all of it. from the financial rescues. most of these banks have paid us back with interest. again not a great situation, not something we would ever want to do it again, but we are getting our money back so i would have to say that this was a successful policy, not a popular one but a successful one, and

again, as an economic historian, somebody who has spent much of their career looking at economic history both in the united states and other countries i firmly believe that we really had to stop that collapse of the financial system or else the consequences for everybody here, for all of your students would have been much more severe than what we did in fact see. >> thank you. now let's go to chicago. >> good afternoon mr. chairman. my name is phil. i teach english at st. joseph's high school in south bend, indiana. i would like to personally thank you for your continued diligence during these tough economic times. my question, can you discuss what you see going forward as the strength and potential shortcomings of the dog frank legislation and what texas safeguards have been put in place to prevent a future credit crisis?

>> thank you. that is a very good question. the dodd-frank legislation, i spent the morning at the senate banking committee talking about the implementation of the dodd-frank acts. this was the omnibus financial reform that was passed again in july of this year and it is very very comprehensive. it is certainly by far the most comprehensive regulatory reform since the 1930s. and it makes a lot of fundamental changes in our financial system. to name just a few of them, it creates a financial stability oversight council which the first meeting is tomorrow by the way, which brings together the heads of all the regulatory agencies and says let's all work together to see if we can identify any risks that might be arising in our financial system. so one of the problems that happened before the recent crisis was that everybody has

their own little responsibilities but there wasn't really anybody in charge of looking at the system as a whole and what the, what this legislation does is greatly strengthens the provisions to require regulators not just to look at their individual-- but to look at the whole financial system and try to identify risks that might be rising as the economy changes in the financial system changes so that i itself is a major change. in addition, the dodd-frank acts closes a lot of gaps that existed. we were just talking about the louts. aig, which took important steps today to begin to pay back the government was essentially not regulated anybody. nobody was paying attention to what was going on there. the investment banks like lehman brothers had very limited regulation. there was not any legal requirement for them to be

regulated. there were many gaps in up regulation of exotic financial instruments like derivatives so there were many gaps in many of those gaps came back in for a very serious contributions to the crisis, so that dodd-frank act closes a lot of those gaps in creates new oversight responsibilities for the fed in and for the other agencies. let me mention two other things it does. what is it is going to create a consumer protection agency and we have been talking today a lot about financial literacy, about people who got into trouble in their mortgages or their credit cards. some of that is the fault of the borrower putssome of that of course is bad or bad practices on the parts of the financial institutions. the federal reserve has been working hard on consumer protection under my chairmanship and this new bureau which will be within the fed, but independent, will also be

responsible for trying to provide those protections. the last element i wanted to mention which is new and important, is that fair or provisions now in the law that will make bailouts, both unnecessary and illegal. that is, should we ever come to a situation where big financial firm is about to collapse and that poses dangers to the u.s. economy we now have a set of rules that would allow the federal federal deposit insurance corporation to come in and sees that institution and wind it down in a safe way that will not cost the taxpayers any money and it will not, at the same time will not create chaos in the financial system. if we had that three years ago or two years ago we could have avoided a lot of what what happens all so all of those things are very important contribution stamp will help

address financial risk, financial crises going for it. now, this is not a panacea. it is not complete. there is a lot to be done. as their hearing talks about this morning, passing the law is only the first that. the regulators have to implement these laws which means we have to devise a whole set of rules and regulations that will make specific concrete financial firms and other regulated entities what those laws mean specifically. we have to enforce those laws. that means we have to strengthen our supervisory arm and make sure we have all the resources and talents we need to enforce those rules. that is a lot to be done and there are still things that even congress has to address. for example one of the major problems that arose was the collapse of june and freddie which were the two large housing agencies which had implicit government guarantees but turned

out to be, had to be taken over by the government because of the losses in the sub prime and mortgages and other lending so that fannie and freddie reform is something that needs to be done and is not part of the bill that was passed in july. that is an example of something that needs to be done going forward. i guess one last thing, one of the things that made this crisis so difficult is that it was absolutely mobile crisis. it was all over the world particularly in the europe and that required a great deal of coordination and speaking for myself i worked very closely with central bank governors around the world to be coordinated on lots of different measures that we took and that is going to be necessary also as we all go ahead and impose new rules in the financial marketplace. we don't have to have-- want to have one set of rules and u.s. and another set of rules and friends because what we need to

do is make sure that we are as coordinated as possible and in fact we are very much involved in international meetings. i just came back two weeks ago from basel switzerland which is where many of the largest countries get together to talk about coordinating and making consistent our bank regulatory standards. so the international part of this is very big. it is going going to take a while for us to not only get a good system in the u.s. but to make sure it is consistent and coherent with the financial regulatory systems of other countries so there are a lot of challenges ahead. we are not home free by any means but i do think this legislation which is, as i said, by far the most sweeping since the 1930s will give us a fighting chance to set up a system that will prevent what happened in 2008 and 2009 from happening again.

>> thank you and now let's go to cleveland. >> i am phil peters. i take-- teach economics. i am here at cleveland with 100 of my fellow teachers and there are classes we encourage our students to follow the current economic events and their students read diversions and politicized new stories. chairman bernanke does the federal open market committee hold divergent views and what would you recommend to students on how to reconcile the differences leading to their own import and opinions? >> that is a good question. so first of all as i am sure you know but just to provide some context the federal market committee is a group of people who sit around this very table here at the board room eight times a year to decide what we should do about monetary policy and it consists of seven governors here in washington, plus the 12 reserve than

presidents from around the country, five of them get to vote at any given meeting. so as i said that is called the federal market committee. it was established in the 1930s and it is a committee that again makes monetary policy. there is plenty of disagreement on the federal market committee. people have different views. that is iced the case. it may be more the case today because we have such a complex situation. we have had an economy again which is not recovered from the deep recession. we have had a lot of unusual and aggressive actions on the policy front, some of which people had different views about. so there certainly is different views and disagreements. my attitude about that is fed to people who agree on everything all the time, one of them is redundant. so it is good to have different views. that is why do you want to have the committee. one of my ex-colleagues at

winston wrote some very nice paper showing that the committee for certain kinds of complex decisions can actually do a better job than a single person and we can all talk to each other to try to make sure we are all comfortable with what our strategy is going to be so there is to sit remit. what ultimately the committee finds is as we work together to figure out what the right thing is for the country and we tried to do that in a way that is independent of any legal considerations. now for your students broadly, let me just be frank here. i think the one thing that is unfortunate is that people are becoming more and more listening only to the side of the argument that they are to believe in, so there is not enough-- you know if you are conservative you listen to only conservative media and if you are liberal you listen to only the promedia. i think it is important and i'm sure you all agree that we hear

both sides of the story and listen to all different points of view that we use critical thinking to try to figure out what they believe in what is right. we investigate, we do research and we get the facts. that is the way forward. just taking extreme positions and shouting at each other is not going to get us anywhere. what we need to do is have students and u.s. teachers or one of their primary sources for this who are open-minded, critical and willing to think think about a variety of perspectives. so disagreement is a good thing. it creates a new idea and it forces people to look at all the sides of the question. but, your students should-- they should not be overly influenced by a single media or other source. they should learn to think for themselves and that is one of the most challenging things. while i know what is really

important to get good test scores and all that kind of thing, thinking for yourself, that is something people will have for your whole life if you can help the kids get there. >> thank you. now let's go to new york. >> my name is john, and i teach in raleigh, new jersey. i teach u.s. government and contemporary market issues. my question is what role will education play in the future of our economy and how can we better prepare our students for financial success? >> the question is what is the role of education in the future of our economy and i would say it is probably the most important element of both our national future success and individual success. just think about how the world is changing. first of all technology is changing radically. one of the key explanations that economists give for the

increasing inequality of income in the united states and in the world has to do with technology. people who are capable of using sophisticated technologies earn high incomes, kern high salaries, are productive. people who do not have that education in those skills did not do nearly so well and that is part of the reason why income inequality has increased in america. what other trends are there? new industries. new forms of energy, new forms of climate related industries. again, technology, creativity, scientific and other engineering training, all those things that will be critical for economic success and for personal success. and the third trend, globalization. you know we all compete globally now. companies will move to the country where they find the best

trained workers, where they have the most advantageous tax loss etc.. so if we want america to remain in a place where the best jobs are, we have to make the best workers. that is the only way to do and it and that requires interned skills and training. as i said before, i will repeat a couple of things before. one is although there are some weakness in the american educational system we have some important strengths. one of our strong university system but another as they already mentioned is that we have such a diversity of ways for people to get skills and training. in the current economy there are people of course who have been out of work for a period of time. a be the job had is never going to come back. there are ways in america to get new skills.

we talk to community college folks before. they have lots of programs for people who are not 18 years old or older than that, and so that diversity of ways of getting training in skills is really a strength of our economy and our country. and the other is again another theme that has been throughout this hour, if you want to be successful, having the skills to get a good job or to launch a business are important but you also need to manage your money well and that is where financial literacy and financial education comes in and again i do, am pleased to hear the gentleman from texas say that that was a state requirement. i think that is actually becoming the case in more places around the country but i do hope if it is not your class that you will push your school, pusher district to make sure the kids have at least the basics of financial literacy before they graduate.

>> thank you and now we have one last question and we will go to minneapolis for that. >> good afternoon and mr. chairman. my name is donna. i am the business education teacher at clear lake high school in clear lake, wisconsin and recently i had a banker as a guest speaker in my classroom. he stated that there are two areas that he would not lend to and they are manufacturing and agribusiness because those interesting-- industries are leading the u.s.. do you agree? >> the question is about to industries, agribusiness and manufacturing. now agriculture always has ups and downs in parts of the country doing well and maybe other parts doing poorly but generally speaking agriculture is one of the most productive sectors of the united states economy. as you well know there was a time when half the population

was involved in growing food. now does two or 3%. they not only feed the whole country but they have enough left over to b. major exporters to people around the world so again the economics of agriculture goes up and down and there are a lot of government programs and it is complicated but basically this is an area where the united states has been very competitive for a long time. the other question was about manufacturing. dare i think the popular perception may be a little too pessimistic. the united states remains the world's strongest manufacturing country. manufacturing plays a very important in our economy. productivity in manufacturing has been growing in a very rapid rate, faster than the rest of the economy. the united states leads the world that many sophisticated high-tech types of manufacturing, so it remains a very strong sector in the united

states and a very important source of exports to other countries. another observation to make is that in this recovery that we are watching unfold, manufacturing has been a big heart of that. many sectors, service sectors and the like have been growing very slowly, and manufacturing has quite in part because it is people to-- so the story of manufacturing is better than i think is often portrayed. now that being said there is one dimension which is important which is that because manufacturing has been so productive that is they become more and more efficient at producing using robots and other kinds of sophisticated machinery, the number of workers that manufacturing jobs has gone down even as the output of the manufacturing sector has gone up.

so there are far fewer manufacturing jobs than there used to be and there are particularly fewer sort of low skilled manufacturing jobs than there used to be. so, to the extent that there used to be a lot of people who were on production lines and making automobiles for example, those kinds of jobs clearly are reduced considerably and from that perspective manufacturing isn't as big a part of our economy but i would say going back to our discussion of education, you talk to manufactures and they say well, it is true we had to lay off some low skilled workers that we are still trying to find machine machinists, welders people with high skill. can't find them so that people with high skills, there are plenty of jobs in manufacturing and in the economy in general so that is one more example of why education is so critical. manufacturing in the united

states is a growing industry. it is an important part of our economy. it is not as big and an employer is it used to be but it does play a very important part, important role in our recovery and another international trade. >> thank you. that is it. >> 3:30 on the dot, that is really impressive. everybody, can i just want to say as rose mentioned my wife is a teacher and she has been a teacher for a long time. she recently started her own school and there is nothing more important than what you do because you affect the individual lives and careers in the aspirations and the abilities of our kids and that is just really critical. and i thank you for taking the time to come talk to me and to visit the fed and they just want to wish you the best and what you do and keep up the good work thank you. [applause]n the subcommitte

immigration and citizenship refugees, border security and international law will come to order while we appreciate the press taking pictures of our witnesses, we would ask if they could recede a bit so that we may actually see them. thank you very much how my photographers. i would like to welcome our witnesses, members of the immigration subcommittee and others to join today for the subcommittee hearing on the role of immigration in strengthening america's economy. often lost among the passionate debate on immigration are the

facts on immigrant entrepreneurs that generate billions of dollars to the u.s. economy and thousands of new american jobs. immigrants are nearly 30% more likely to start a business than nonimmigrants. in california alone, immigrants generate war than one quarter of all business income, nearly $20 billion. they represent 30% of all business owners in california, one for the business owners in new york and once it's in new jersey, florida and hawaii. in new york, florida and new jersey, immigrants demonstrate one fifth the total business income. immigrants are not only bring in more income to the economy, their businesses are cleaning their jobs. businesses started by immigrants have a higher rate of creating jobs and the average for all businesses created by immigrants and nonimmigrants combined. 21% versus 18%. as a resident of california, has long been familiar with the rules immigrants play in creating the economy jobs for americans. over half, 52.4%, silicon valley

startups have more immigrants as a key founder. statewide, 39% of startups had one or more immigrants of the key founder. for the engineering and technology company started in the united states from 1995 to 2005, 25% had at least one key foreign-born founder. nationwide these immigrants on a technology companies produce $52 billion in sales and employed 450,000 workers since the year 2005. contributions of immigrants to the technology industry is only just the beginning. immigrants are more than 150 businesses in the arts, entertainment and recreation industry nationwide. they have more than 10% of business and education health and social services come up rational services, retail and trade construction. overall to 12.5% of all businesses in the united states. other businesses with $100,000 or more in sales, immigrants over 11% of such businesses and 10.8% of all businesses with

employees. if they're important for congress to review the facts on immigrant hunt for newer their contribution to growing the american economy and creating american jobs. this will help congress to appropriately determine how best to structure immigration not to continue improving our nation's economy. i welcome today's witnesses who have unique perspectives on immigrant participation in the american economy and i look forward to hearing on them today. and i would now like to recognize our distinguished ranking minority member, congressman speaking for his opening statement. >> i want to thank the witnesses for. or today. i know y'all have business lies an important things to attend to and yet perhaps i've sat through enough of these and i wonder what were holding the phone. the outcome of starting a foregone conclusion. the title is the role of immigration in strengthening america's economy. i would point out to that day span, i believe, a concert in a

willful effort to conflate the terms of immigration and illegal immigration to right now america in normal conversation doesn't know which were talking about if there is a distinction in their minds at all. but it's my understanding the hearings are held -- the hearings are held in order to get informational help us determine policy. so i'll chalk up the name overzealousness listen to the witnesses. i know that two of the witnesses here on record determining that immigrants help the economy and therefore we must legalize the entire illegal immigrant population in the u.s. again i draw that distinction between legal and illegal. not everyone agrees. their experts including one who will testify today that research of some low skilled immigrants are actually drain on the u.s. economy and amnesty is not a good idea. one of these experts who is not here today is robert rector come to senior research fellow at the heritage foundation. one of mr. misters rectors definitive studies was on the cost of illegal immigrants to americans and legal immigrants.

elected households that were headed by those government grants and found that the average household by a post of immigrant receives 30,000, $160 per year in government benefits and not an average of course. they pay an average of $10,573 in taxes. so the net cost to taxpayers $19,588 a year. overall, the net cost to taxpayers than overall is 89 billion a year. i think that makes a strong case that america has become now a welfare state and it's not the america that we think of 100 some years ago when people came there on their merit and had to provide their input into the economy and find a way to take care of themselves. so after that, he went on to find that amnesty would have another staggering fiscal impact. the reason was illegal immigrants became citizens to have the to sponsor there. for permanent residence is no merely numerical limitation. the experience could themselves become u.s. citizens may be

eligible for two very expensive federal programs, supplemental security income and medicaid. rector estimates apparent participation in just these two programs about 30 billion a year in cost to the federal government and he goes on to estimate should illegal immigrants receive amnesty the governmental outlay in retirement costs including social security, medicaid, medicare and supplemental security income alone would you at least 2.6 trillion. so over the years, this committee and the full committee have examined effects of immigration on states and localities on a number of occasions. in san diego, the full committee explore the impacts that the senate passed reid kennedy amnesty bill would have on american enemies of the state and local level. we are testified los angeles county has been. with the health care education criminal justice another cost associated with political immigration. we also heard from the wetness from the university of arizona medical center at tucson and i've been to visit the center on

this immigration issues, who said that providing care to the uninsured, uncompensated, poor and foreign nationals cost the hospital $30 million in 2006 and 27 million in 2005 at the also related to me on a visit that the hospital has been told that the maid had to lifelike the residents of tucson to phoenix because there was a room in the hospital because it was full of illegals. more than a decade ago at a hearing on the same topic, michael six of the urban institute told the judiciary committee that and i quote, there is a broad consensus in the research that the fiscal impacts of illegal immigrants, that is their impacts on local state and federal taxpayers aren't negative, generating a net of the same for the aggregated across all levels of government. despite the evidence out of collected by the subcommittee, the majority has decided it's time to look at this issue again. unfortunately for them, the real expert on the panel today concludes the opposite of what the majority asserts.

and i would lay another piece of this out and that is that as much as we might talk about the contribution to the economy and the growth in our growth domestic product, and they agree that any workouts to productive work adds to that gdp, there's also a cost to sustain his citizens in that society. and we have to balance those two things and take a look at our culture evolves and what we are like as a people and future generations. that's been part of the consideration in previous immigration debate is countryside and the sentiment foundation of the policy that is the merchant existed this day. so i would ask this, whatever the analysis of the economics, we have also the rule of law, that to me is priceless. and so i will stand on the rule of law and not take a consideration to the economic comments that are sure today and see if there's a balance to the two. i'm certainly not going to sacrifice the rule of for and economic interests because i think that is more important to this country. thank you, madam chair. i look forward to the testimony

of the witness then i got back the time. >> the reagan member of the full committee mr. smith has an opening statement and is recognized for five minutes. >> thank you i'm a madam chair. america has a wonderful tradition and of welcoming newcomers. we admit her than 1 million illegal immigrants each year, which is almost as much as every other nation in the world combined. and it's no surprise that many people want to come here. where are the freest and most prosperous nation in the world. immigrants have benefited america in many ways. they are laborers, inventors and ceos and include one of our witnesses here today. our country is a better place because we have been able to attract so many highly skilled immigrants. we should continue to invite that will best and brightest to come to america and contribute to our economic prosperity. however, there is a right way in the wrong way to come into our country. legal immigrants played by the world, which are turned and are

invited. others cut in front of the line, break our laws and enter illegally. some people say that we need to pass a comprehensive immigration reform bill that includes amnesty for millions of legal immigrants in the u.s. but citizenship is the greatest honor our country can bestow. it shouldn't be sold to lawbreakers for the price of a fine. amnesty will enable illegal workers to depress wages and take jobs away from american citizens and legal immigrants. in new york, for example, their 800,000 unemployed individuals and 475,000 illegal immigrants in the workforce. and in texas, legal immigrants in the workforce actually outnumber unemployed individuals. there were 1,000,500 -- excuse me, 1,000,550 in the workforce than 1 million unemployed individuals. so we could free up hundreds of thousands of jobs for american

workers than just those two states if we enforce our immigration laws. also, the center for immigration studies estimates both skilled immigration has reduced the wages of the average native workers in the low skilled occupation at 12% a year or almost $2000. why would we want to put the interest of foreign workers ahead of the economic well-being of american workers? there's another cost to illegal immigration besides lower wages and lost jobs. taxpayers foot the bills for their education, health care and government benefits. overcrowded classrooms, long waits in hospital emergency rooms and cost the government services were only become worse if millions of illegal immigrants are legalized. and amnesty, which further bankrupt the already strained social security system, the social security administration calculates that a typical unmarried illegal immigrant will

receive between $15,020,000 more in retirement benefits than they pay into the system. a married a legal immigrant couple, in which one spouse works can expect $52,000 more than they pay into the system. paying social security benefits to legal immigrants who receive amnesty could cost hundreds of billions of dollars and bankrupt the system. some say that the taxes illegal immigrants pay off for the cost of providing an education, health care and benefits. but at their low wages, most illegal immigrants don't even pay income taxes. and even when they do, their taxes don't cover other government services like maintaining highways, providing for national defense and taking care of the needy and the elderly. every object is an unbiased study has come to this conclusion. those who support amnesty are clearly on the wrong side of the

american people. a recent poll found when given the choice of immigration reform moving quote in the direction of integrating illegal immigrants into american society or in the direction of strict enforcement of laws against illegal immigration and, and code, 68% of those polled support stricter enforcement. the u.s. immigration policy should reward those who come here legally, not those who disrespect the rule of law. u.s. citizens and legal immigrants should benefit from our immigration policies. illegal immigration are to hurt american workers and american taxpayers. amnesty farmlands of illegal immigrants may be good for foreign countries, but it is not good for america. thank you, madam chair and i yield back. >> thank you, mr. smith. and mr. conyers has not yet arrived, so i think we will reserve his opening statement for his attendance.

as is our custom, we invite a member of congress whose constituents are witnesses to introduce them. and so, i would like to turn to our colleague, mr. to introduce mayor bloomberg and mr. murdoch and i of course will introduce the others. ..

that is never afraid to innovate, to think outside the box and one who is unconstrained by traditional party politics. he is taking on this issue, consistent with his efforts to dissuade congress to invest more in infrastructure, to persuade congress to take stronger steps infighting terrorism and crime in big cities and i very much welcome him here to die. we're also joined by rupert murdoch, executive officer of news corporation, one of the largest diversified media companies in the world and he's a large employer in my home city and we're grateful for that. i am told he also is behind the fox broadcasting company although i only watch that one item on it, and also the new york post and many other publications. mr. marra is also in addition to taking on this issue is someone

who has been willing to spare his expertise with members of congress and a considerable experience in economies of other countries and we very much welcome them here. i think we will find madam chair is as much heat as generated by the issue of immigration reform, xiaoning television shows in congress, in fact, there is a remarkable consensus on people who create jobs about the relatively easy steps that we can take to improve our immigration system for the benefit of our economy and the benefits of the people who are in that system, those that have documentation now and those who seek its and i always think and talk about this that if you have 10 regular americans around the table and hear the imperatives and want to create jobs and have a system that works and don't want anyone to jump over someone else we can solve the immigration challenge is relatively easy. if you leave the demagoguery at the door, tell the people on one

side who want to provide amnesty for everyone we won't do that and the people on the other side who want to say let's hire several hundred thousand immigration officers and round up people we will do that. there is a broad swath represented by the two people i introduced to understand these problems are solvable if we put our sleeves and metaphorically and the early and get to work but i want to think these two gentlemen and we welcome their testimony. >> thank you mr. wiener for introducing the witnesses and i will introduce the remaining witnesses. mr. moseley is chief executive officer of the greater houston partnership, serving in the primary business advocate for the 10 county houston area dedicated to securing regional economic prosperity and prior to joining the greater houston partnership mr. moseley served as ceo of the office of the governor for economic development and tourism and is executive director of the texas

department of economic development. he was also elected to three terms as a denton county judge and he has served with the greater houston partnership as president, ceo since 2005. out like to introduce mr. camarota, the director of research as center for immigration studies in washington d.c. and has been of the center since 1996 and has focused economics and demographics. mr. camarota holds a ph.d. from the university of virginia and public policy analysis and a master's degree in political science from the university of pennsylvania. he testified for congress several times in his written many articles on the subject of immigration for the center. mindful of our time, other members of the committee are invited to submit written statements for the record in. we will also submit the written statements of age witness for the record and would ask that their oral testimony consume

about five minutes. when the little machines on the desk turn yellow and it means you have consumed four minutes and when it turns red it means you're five minutes are up but we will not cut you off in the middle of a sentence and ask that you tried in conclusion summarize at that point so first we will turn to mayor bloomberg, thank you for being here. >> [inaudible] >> you need your microphone on, their. >> chairwoman lofgren and ranking member king and sneath and the congressman wiener, congratulations on your recent marriage. i am sure is an act of congress to say congratulations. i do want to thank representative, all of the new york delegation, one republican in the new york city area and mostly democrats but all of them to understand the needs of our city. our system of immigration i think is fair to say is broken, it's undermining our economy, is

slowing our recovery and really is hurting millions of americans and we just have to fix it. i do believe this is an issue for republicans and democrats can come together and independence to find common ground. that's been our experience in performing what we call the partnership for new american academy, that we have started, businesspeople and mayors around this country. and we have members of every political background. we believe immigration reform becomes a top priority and reverse both parties to help us shift the debate away from emotions and toward economics because the economics couldn't be any clearer. many studies analyze the economic impact of immigration and i will briefly say on key areas that come out of that -- 9096 cities of the largest increase in immigrant workers had the fastest economic growth and york is a per for example. immigrants have been essential two our economic growth in every single industry, they are the reason why new york city has was

as a national recession much better than the country as a whole. this year we account for one out of every 10 private-sector jobs created throughout the entire nation, just to york city alone. a second immigrants pay more in taxes than the use of benefits. immigrants come to america to work often leaving their families behind and by working they are paying social security taxes, supporting our seniors and they tend to be under and have a lot less need for social services. one wonders for this research comes from, it doesn't jive with what we see. the immigrants create new companies that produce jobs instead is joe immigrants are twice as likely as native-born americans to start companies and from 1980 to the year 2005 nearly all net job creation in the u.s. occurred in companies less than five years old and many of these new companies had defined the 21st century economy such as google and yahoo! in the bank, founded by immigrants. they also create small

businesses and in new york city we desperately need them to create the jobs that will put new york city people back to work and this isn't a new story. history shows and every immigrant generation in the u.s. has to the economic engine that makes the u.s. congress economy in the world. fourth, more and more countries are competing toward attracting entrepreneurs and how skilled workers. chile is offering american entrepreneurs $40,000 to send the country in china recruited thousands of entrepreneurs, engineers to return enjoy the surging economies of shanghai and beijing dead in america we are turning them away by the thousands are making the visa process so torturous that no one wants to endure a. fifth the more difficult to make it for foreign workers and students to stay here the more likely companies will move their jobs to other nations. just look what happened in silicon valley's with many not able to get workers in the country and forced to move their jobs to vancouver canada and

just as troubling more and more foreign students are reporting plans to return home because of visa problems. we educate them here and then in effect tell them to take that knowledge and start jobs and other countries, it makes no sense. i describe this as national suicide. we know our businesses need more high and low skill work labor and we're letting into this country right now and there are the ones that provide the high skill jobs the employees that we have to fill and allowing companies to form more easily fill the jobs with the best economic stimulus package congress could create. at the same time many other companies seeking to fill low-wage jobs americans just will not take from food packers to groundskeepers and custodians. finally creating a path to citizenship for illegal immigrants will strengthen our economy. both the canada institute and center for american progress found that it will battle billions to the chip p so the

economic case for immigration could be stronger an apprenticeship for new american economy has adopted principles of free help guide the members of the committee by drawing up legislation. i don't think there is doubt we need to secure our borders and its essential america be able to decide who comes here, if we want and don't but it's impossible to secure the borders without overall package of reforms that reduces demand and hold companies accountable to verify workers' rights no matter how many border people we send, if you take away the incentive to come here it will make that easy. then we have to build and give visas to create the jobs and keep our economy growing to keep america competitive in the global marketplace. we have to recognize our economy has changed and our immigration policy is to change with it. >> thank you very much. mr. murdoch, will be pleased to hear from you. >> thank you chairwoman lofgren, ranking member keying and

members of the house judiciary immigration subcommittee. i appreciate the average tuesday to appear before you this morning to discuss the the role of immigration. strengthening america's economy. as an immigrant i choose to live in america because one of the freest and most vibrant nations of the world and as an immigrant i feel an obligation to speak up for emigration that will keep america the most economically robust creative and freedom loving nation in the world. over the past four decades i have enjoyed all the benefits of living, working and building a business in america. i've had the privilege to pursue my dreams come to secure the best opportunities for my children and to participate in the open dialogue and that is essential to a free society. today america is deeply divided over immigration policy. many of people worried that immigrants will take their jobs,

change in their culture or their communities. others want to punish those who fled poverty or oppression in their native countries and came to the u.s. outside of the legal system. i joined mayor bloomberg in organizing the furnish a for new american economy because i believe all americans should have a vital interest in fixing are broken immigration system. so we continue to compete in the 21st century global economy. while supporting complete and proper closure of all our borders to future illegal immigrants, our partnership efforts is reform that gives power to citizenship for responsible law-abiding immigrants in the u.s. today without proper authority. it's not just talk of a spelling 11 or 12 million people. not only is it impractical, it is prohibitive.

in mass deportation and tunic 85 billion over five years. there are better ways to spend that money. we need to do more to secure our borders. we can and should add more people, technology and resources to ensure that we have control over who comes to this country. but i worry it will not stop the flow available of immigrants. the u.s. has increased border security funding almost every year since 1992. while at the same time the estimated population of illegal immigrants has more than triple. that number started to decline we had to recession with your job so our border security must be matched with aphis to make sure employers can't hire illegal immigrants. the full past is the legalization requiring an authorized mcginnis to register a security check, pay taxes and learn english would bring these

immigrants out of the shadow economy and add to our tax base. according to one study but past the legalization will be shifted to an estimated $1.5 trillion to the gross domestic product over 10 years. we are desperately in need of improving our country's human capital. we want to bring an end to the armature immigration and visa quota is that make impossible to build a labor and skilled needs of our country. we hope to return to in america that is a magnet for many of the best young brains in the world. american is two keep the door open to those who come here to get in advance a great. and then allow them to join the ranks of our most productive scientist. it entrepreneurs, innovators and educators. today we track some of the world's finest people to our shores, even the best american higher education can offer and then put them on plans.

>> two their own countries. that is self defeating and has to stop. we need to make it easier for them to say so they can make their contributions to america. these are young people who are inventing the next generation of big ideas. in fact, a full 25 percent of all technology and engineering businesses launched in america between 95 and 2,000 had an immigrant founder. and these businesses have. hundreds of thousands of new american jobs. the america's baby boomers, the emigrants are helping to keep our workforce young and growing. today more than 40 percent of our immigrant population is aged 25 to 44. these are consumers to generate considerable spending on goods and services and housing. to some america's future

prosperity and security depends on getting our immigration policy right and doing it quickly. from all across the country the public and private sectors and from every political persuasion, our partnership brings leaders together for one purpose, to ensure that america's doors remain open to the economy remaining strong. i appreciate the opportunity to share my views to you today and i thank you. >> thank you mr. murdoch. we would be pleased to hear from mr. moseley. >> [inaudible] >> we need your microphone on. >> morning madam chair, and our good friend from texas, the ranking member sneath, members of the committee, thank you for your leadership and for your commitment to reforming america's immigration laws. as the chair introduce me by name is jeff moseley and service president of the greater houston partnership and i want to say thank you for allowing me to be

part of this testing yours panel and a pleasure to be with mayor bloomberg and mr. murdoch as mr. camarota. i've submitted a written testimony of these, giving, it's a quick summary of the reinstatement and loli to of us cannot agree on specifics, we certainly appreciate the fact that there is a conversation with the american people. a conversation that focuses on the role of immigration, a conversation on strengthening america's economy, and a conversation about fixing a broken immigration law. the greater houston partnership is a business association, we have 3,000 members and these represent companies that do more than 1.6 trillion in annual revenues. the partnership seeks to bring a grassroots voice for the business community and for industry and to this american dialogue. a voice that we recognize has quite frankly been missing from

the debate. during the last several years we have witnessed several failed attempts to pass immigration reform. and admittedly madam chair the business community bear some responsibility for standing by the sidelines. so we are here today to commit to stand up and make sure the business voice is it part of this reform process. as you heard already from our distinguished witnesses, we are certainly all of the immigrant stock, and we recognize that america's immigration system today is just not working. the best solution toward reforming our laws require bipartisan action of congress. but this national debate really goes back to our earliest days as a nation. i don't know if you are a history teacher that taught in this, minded and but apparently in the 17 fifties while america was still a colony and part of that britain empire pennsylvania was seeing a tremendous number

of german immigrants and they were arriving in droves. and guess what? and they were opening their own schools and their own houses of worship, they have their own printing presses which produced german language newspapers, and this was too much for americans to tolerate. someone even as moderate as the reasonable benjamin franklin was positively undone over these german newcomers. in fact, he called them palatine boars and he warned that of english-speaking pennsylvanians didn't take drastic steps to preserve their language and culture they would find themselves submerged and the teutonic tied and franklin said, why should pennsylvania founded by the english become a colony of aliens who will surely be so numerous as to germanize us and instead of us anglifying them? and will never adopt language, or our customs any more than they can acquire our complexion.

sounds familiar, doesn't it? it sounds as though franklin could be one of the news entertainers that take this very complex issue of immigration reform and takeout and sensationalize the dialogue purell but we are here mr. king to talk about how we can be a positive force in fixing this broken on. and we think that a law that doesn't recognize market forces or labor demands really is doomed from the beginning. in fact, in 1986 the intent of the immigration control and reform act wants to make employers responsible for verifying the legality of the workforce. however, the current system by which employers are asked to determine if a worker is, in fact, authorized is no better than the social security card. madam chair and members this card was produced in the 1930's, this is what employers are asked to use to verify if a worker is

authorized to work in the nation. and as many will tell you the forgeries are better than what the u.s. government are producing so it puts the employer and a very difficult position. we must try to balance between securing our borders and safeguard our prosperity. the greater houston partnership recognizes the need to secure our borders, make no mistake, we strongly support that but we also supports an immigration law that will allow employers through inefficient temporary worker program to recruit both the skilled and unskilled immigrant workers or there is a shortage of domestic workers. we further believe employers should be responsible for verifying the legal status of those that say higher and believe it or not we believe that there should be penalties and fines for businesses that willfully and knowingly hire undocumented workers. two this end result for the creation of it fast reliable

employment verification system. we oppose laws that would increase civil and criminal penalties on employers that don't provide a viable legal options for hiring the skilled semi skilled workers. our partnership has 134 board members and we unanimously approved a resolution that has involved our involvement and the americans for immigration reform is a part of that creation. i know my time is expired madam chair so i will withhold further comments. >> thank you very much. mr. camarota, we'd be happy to hear from a. >> first allied to say and think the subcommittee for inviting me to testify today on this important issue. i have to say i'm getting over a bad case of pneumonia so if i cough a lot you'll have to understand, maybe i will do it instamatic fashion and add to the seriousness of my testimony. my primary goal today is to clear up some of the confusion that often surrounds the issue

of the immigration and the economy. in particular i will try to explain the difference between increasing the overall size of the u.s. economy and increasing the actual per-capita gdp of the u.s.. i'm also touched and on a separate related issue of taxes paid vs services used and the impact on tax. if we wish to know the benefit of emigration to the existing population then, of course, the key measure is the per capita gdp of the u.s.. or i should say the per-capita gdp particularly of the existing population if that's what we want to know. not how much bigger immigration makes the u.s. economy which it clearly does to. we can see the importance of per-capita gdp does by remembering that mexico and canada have a very roughly the same cup size economy but they are now roughly equally rich because mexico has three times as many people and as per capita

income is much lower. there's actually a very standard way in economics to calculate the benefit from emigration that goes to the existing population of people, it is a native-born or the immigrants already here when you began your analysis. it's based on a noncontroversial formula laid out by harvard economist george for cost, the method used by the national academy of scientists and its 97 steny, used by the president's council of economic advisor is in the 2007 stabbing -- is very much agreed on by economists. although the economy is much larger because of immigration, the formula shows that only a tiny fraction of that increased economic activity goes to the native-born population. based on 2009 data, the simple calculation shows that the net benefit to natives from immigration should be about one-fourth of 1 percent of gdp

or about $33 billion. thus a net benefit of emigration to the existing population is very small relative to the size of the economy. second and this is very important -- the benefit is entirely dependent on the size of the wage losses suffered by the existing population of workers. if there is no reduction in wages for the native born there is no benefit. the wage losses suffered by american workers based on the same formula is about $375 billion, about 12 times bigger than the benefits but was important to understand the wages don't disappear into thin air. now they are retained either by employers in the form of higher profits or they get passed onto consumers or more skilled workers who aren't in competition with immigrants may benefit as well so the way it works out is wages for those in competition with immigrants are reduced by 375 billion even the

size of the immigrant population today, but the people who gain the business owners and so forth gain about 408 billion, for the $33 billion net benefit. now sometimes people say i don't think americans and immigrants can compete for jobs but the fact is that's not what the research shows, there are 4605 occupations in the u.s., based on the department of congress classification and only for a majority immigrants, the vast majority of nannies, maids, busboys and so forth, meatpackers, construction, laborers in the u.s. are u.s.-born and unfortunately there's been a very troubling long-term decline in wages for less educated people who do this kind of work. this is exactly what we expect to see as a result of immigration, it increases, wages of the bottom end of the labor market generally fallen which is certainly indication we don't have a shortage of that work.

now there's also the fiscal impact. they found that the fiscal impact was enough to eat up the entire economic gain so if you put the economic gain with a fiscal impact you get no benefit at all. and now the problem is you've also made the low-income population of poor in the united states. they absorber lot of that 375 billion in wage losses. in conclusion if we are concerned about low-skilled workers and has only one thing to think about than reducing the level of emigration would make sense particularly unskilled immigration. certainly we can do so secured in the knowledge it won't harm the u.s. economy. at the very least of those who support the current high level of emigration to understand that the american worker's harmed by that policy they favor are already the force -- most vulnerable. thank you. >> thank you very much and

thanks to all of the witnesses for your testimony. now is the time when members of the subcommittee have an opportunity to pose questions to our witnesses and i would turn a first to the ranking member of the subcommittee, mr. king, for five minutes of whenever questions you may have. >> thank you madam chair. interesting testimony. i was was in the witnesses as they listen, i would first ask mayor bloomberg what did you think of the mr. camarota testimony and how would you respond to the presentation he made? >> [inaudible] >> turn your microphone on. >> and not an expert on the country but i tell you about new york, i run a city of 8.4 million people, 40 percent born outside of the u.s.. and 500,000 away think are undocumented. number one, mr. camarota must have a different cohort that he is setting. you take a look at this country, we have 11 or 12 million

undocumented, it is because there are jobs that are going on spilled here. we did have immigration reform in '86 with no teeth. >> i'm sorry, my talk is clicking, but i see that is in your testimony, the same as you made and references to studies but that doesn't say which studies would be rebuttals to mr. camarota. do you know which studies your reference? >> yes, this is what goes on every day in new york city. rupert and i employ about 75,000 people so we know a little about job creation and he's an immigrant. i am an immigrant from boston, i don't know of that makes me a real immigrant or not but i tell you in new york city the issue is not the undocumented, the issue is how we create jobs with the people in new york unemployed and cannot find jobs. >> when you use the term immigrants in your testimony doesn't include illegal immigrants?

>> it does and the reason we have illegal immigrants here is because of congress's inability and unwillingness to pass laws where employers can figure out who is documented and who isn't and it is just duplicitous for congress to sit there and say they shouldn't do it and then not give them the tools. all of us have the problem of trying to figure out whether or not that social security card and was bought for $50 or issued by the federal government. >> is used to be universal among the witnesses about closing in securing the borders. i see that in your testimony, mr. murdoch and mr. moseley, i don't know the mr. camarota address that. here's where the tension is in that. ..

you are the people who make the laws in this country and it is not up to me as a private citizen. i support when you do it of course. it is up to you to keep the promise.

i have been in the business now and then closing out my eighth year into embarrassing the administration. if congress cannot enforce the law, we can only appropriate and seek to embarrass the administration. it has gotten worse. i appreciate your point. here's and i ask the question this way. we have a net cost of 19,000 and a half cost, low skilled immigrant costs of dr. rector's testimony of his study. and you have your economic analysis here that makes sense to me. and i've said often that we need to be in the business of increasing the average annual productivity of our people. now, the question that comes

back how many is too many. how can this country sustain. no one seems to be asking the question of when have we opened our borders too much so that we get the overburden that this economy can't recover from that. do you have any analysis of it. if we let a billion people in america this year it would bury us we would not be able to sustain us and not sustain the culture. where is your line and do you have any analysis that addresses that seven >> well, like most people i just think that we should have an immigration policy that seeks to benefit the existing population of the legal immigrants and the natives here and we should try as much as possible avoid hurting the people at the bottom. if about 24 million people with no education beyond high school, these are working high school people who are currently not working in the united states, their situation has gotten worse and worse. and to keep flooding the unskilled labor market with immigrant workers doesn't make sense from that point of view. >> if you. -- thank you. >> with all the witnesses and

madam chairman, i yield back. >> the gentleman's time has expired and i would recognize the gentlelady from california, ms. waters, for five minutes for questions unless she would like to defer. >> well, no. thank you very much, madam chair, for holding this hearing. i thank our witnesses here today. mayor bloomberg and mr. rupert murdoch, moseley and camerota. i think that the outline of your proposed immigration reform approach is a good one. and it really mirrors pretty much what many of us have been discussing here in congress. i don't see any great difference in what appears to be evolving here. but i'm curious. about one thing.

mr. murdoch, both you and mr. bloomberg have the possibility of doing a lot of education. you're very powerful with your media networks and you're able to disseminate a lot of information and to frame issues. and for mr. murdoch, it does not appear that what your talking to us about today and the way that you're discussing it is the way it's discussed on fox, for example. why are you here with a basically decent proposal talking about the advantage of immigrants to our economy, but i don't see that being promoted on fox. as a matter of fact, i'm oftentimes stunned by what i hear on fox particularly when

you have hosts talking about anchor babies and all of that. what's the difference in your being here and what you do not do with your media networks? [inaudible] >> i can't hear you. >> could you turn your microphone on, please. thank you. >> i'm sorry. >> yeah. >> all views on fox -- if you state these views we would love on fox news. >> no i don't want to be on fox news. that's not what i'm talking about. >> we don't censor that. and we are not anti-immigrant on fox news. >> what do you do to promote the same views that you're here talking about? >> we do it in the "wall street journal" every day. >> not really. not really. >> let me also say that rupert is one of the founders of our coalition of mayors and business

people to encourage congress to give us comprehensive immigration reform so that we can get the people that we need to create the jobs -- >> mr. mayor, i appreciate that and that's why i started out by saying i'm very grateful that you guys are here and what you're saying but i'm trying to point out the contradiction between mr. murdoch being here, saying these wonderful things about immigration reform and the contribution that immigrants make to our economy and our society and i don't see you promoting that in any way with all of the power and ability that you have to do that. and i'm trying to find out what is the difference? what is the contradiction? why don't you use your power to help us to promote what you're talking about? >> well, i would say that we do. we certainly employ a lot of immigrants on fox. and in all arms of fox.

you're talking about fox news we have many immigrants there. and we do not take any consistent anti-immigrant line. we have certainly debates about it from both sides. >> so let me just be clear about what you're saying. you're saying that the position that you have with this coalition that you guys are leading is a position that you're an advocate for and you would support daily or -- with your ability to disseminate news and information? you think you're doing that? >> if the witness can answer and the gentlelady's time has expired. >> i have no trouble in supporting what i've been saying here today on fox news. nor would a great number of the commentors on fox news. >> thank you, madam chair.

mr. murdoch, i would suggest that you do that. thank you very much. >> the gentleman from texas, the ranking member of the full committee is recognized for five minutes. >> thank you, madam chair. mayor bloomberg, you and i agree that highly skilled immigrants do create businesses, do create jobs and we need to welcome more of them. you had this statement -- this sentence in your statement. there are 1 million high skilled jobs that companies cannot fill because they cannot find the workers. to my knowledge, we've only had 39,000 applications for the highly skilled h1b visas and i just wondered what the source of your figure was of 1 million? >> we've done a survey of high tech companies of what the needs are for doctors in this country. >> if you can, share that survey with us because -- >> we'll be happy -- >> you assume if they had the need they would be applying for these visas and that doesn't seem to be the case. >> one of the problems we're having, i can just tell you with my company, is that when we try

to get overseas workers to come here, a lot of them say, i don't need the aggravation of going through the american bureaucratic process at the border. >> for good or bad -- for good or for bad we do need to have individuals who want to come to this country, fill out forms. we just can't let everybody in -- >> nobody isn't suggesting that we should do that. >> given the study that seems to conflict by the high tech companies if you would, mr. murdoch, and i have a study that is going to be delivered in just a minute. because there was an independent study done that actually showed that fox was the most fair of all the television news programs. if you're coming from a liberal perspective it might seem conservative but to the objective observer fox actually has both sides more often than the three networks. and i'll put that in the record in just a minute. my question, mr. murdoch, is this and let me preface by saying i know you're familiar with the everify program that is used by businesses to make sure

that they hire legal workers. the federal government uses it, 13 states uses it, over 2 handicap,000 businesses voluntarily -- 2,000 businesses use it. and i hope you use the everify program which is 95% accurate the 5% are either people in the country illegally or fraudulent social security cards. but you don't have have to answer if you don't want but i encourage to have your businesses use -- [inaudible] >> i'm sorry. >> could you turn your microphone on, please, mr. murdoch. >> i think i can guarantee you that we have absolutely no illegal immigrants on our payroll. >> okay. and is that because of the everify program or -- >> or my personal payroll or anything. >> how do you know that to be the case? do you screen them out using the everify program. >> certainly. >> great, good to use. mr. moseley, your testimony remind me not only of the influence of immigrants and

their contributions but of the fact that in san antonio, my hometown, in the early 1900s, there were street signs in three languages. the first language was german, the second language was spanish and the third language was english and so we can all appreciate our heritage in that respect. mr. camerota let me ask you two questions. first of all, who is hurt by our current immigration policies? and who might be hurt if we were to suddenly legalize, say, 12 million people. so two separate questions there. >> immigration has a much larger effect on the bottom end of the u.s. labor market. for example, 5% of attorneys in the united states are foreign-born and less than 1% are illegal. maybe 8% of journalists in the united states are foreign-born so they don't face much job competition. but it looks like around 40% of maids and housekeepers are foreign-born.

and similar statistics for, you know, taxi drivers. 25% of janitors are. so the is on they are the people who are hurt, nannies, maids, busboys. these are mostly people who have a high school degree or they are people who didn't graduate from high school and their situation looks terrible over the last three decades. in terms of real wages, in terms of benefits, and in terms of the shareholding a job which is exactly we would expect if immigration was adversely affecting them. >> you say in your testimony that $375 billion in wage losses are suffered by american workers because of immigration. how do you reach that figure? >> well, it's a pretty straightforward formula and like i said it's with the national academy of science uses. it's a proportional approach. it's pretty straightforward. you have to estimate what you think the impact is on wages then you have to know what fraction of the economy are workers that is wages and then you can estimate the overall size of that impact.

and then you could also explain what are the games that come from that impact but the important point, if you're interested in the losers is that a lot of that lost wages is absorbed by people at the bottom end of the labor market and a lot of the winners are the most educated. they are people with a college degree. they're like journalists and lawyers. they're owners of capital and that's something we should be thinking about. immigration is primarily a redistributive policy from people at the bottom sort of to everybody else. and it depends on how you feel about that. but that's a big question that needs to be answered. >> thank you, mr. camerota. >> the gentleman's time has expired. i would turn now to the gentleman from chicago, mr. gutierrez for five minutes. >> thank you very much. first i want to thank you all for taking time. i want to give a special thanks to mayor bloomberg for visiting with me on martin luther king's birthday in chicago. it was a wonderful meeting. it was a quiet meeting but it was a productive meeting and you told me then that you were going

to engage mayors and others in a campaign to bring about comprehensive immigration reform to fix our system and you know something? you have done it and i congratulate you and i tell you i wish you godspeed in all of your endeavors. and to the men sitting immediately to the left of you. to mr. rupert murdoch, i thank you for being here this morning. and for joining with mayor bloomberg in this effort. i think it's an important effort from the business community to talk about how it is we transform america and make it a vital, energetic economic engine of the future. mr. moseley, i look forward to coming back and visiting with you. back in houston. you have a wonderful group of people. again, who do we have here this morning? businessmen, men who create jobs of commerce and industry. and that should be the focus, i think, that brought a lot of debate around immigration.

now, let me just say -- look, the good thing about the three proponents of comprehensive is that we don't deny the fact that the undocumented workers do reduce the wages of american workers. nobody is going to deny that fact. so how do we fix it? well, when we legalize all the workers the salaries of all of the workers rise at the same time. and you have fairness and parity. as long as you have an underclass of people who are exploited, unscrupulous employers and the wages go down. i like the fact the businessmen have come here, one of the few times, businessmen have come here to say i figured out a way to increase wages for american workers 'cause that's essentially what they have said here today. so we don't disagree with that. but they come with a fundamental, i think, fairness in saying we're going to secure -- i heard mr. murdoch say, we're going to secure our

borders and that is critical and essential to any comprehensive immigration bill. i heard them say we're going to have a verification system that punishes corporations and companies. that's what they said. i've got businessmen coming here telling me i want a law to punish businessmen who don't -- who hire undocumented workers here in the united states of america. i think this is -- i think this is -- that's what's wrong with the debate. we don't listen to one another. and we don't listen and find that common ground which does exist in our debate. and lastly, i heard people who come here who are sensible because here's one thing, everify, madam chairwoman, we had a hearing here. we spent millions of dollars and here's what we found about everify. in half of the instances, it had a false reading. that means you're just as likely to hire an