the point of insurance. you get a huge pool of people together, the bigger the debtor. so when they get sick, they are not told that they do not cover this. it to me, there are these sham policies out there. sick, thaton't get they never -- they say, i love my insurance but they never get sick. maybe they get a scratch. maybe they go once a year. these stories, as we heard from mr. melville, they are running rampant through the countryside. if you are saying the hospital- only plans might be a problem,

what i think we need to do in the interim, mr. chairman, is to make >> they are just figuring most people will not get sick and they will never know. the fact that mr. mal delaware -- melville will get a letter saying we think you had a precondition -- pre-existing letter and did not tell us, it adds an extra dimension to the tragedy he is facing. a man losing his dignity thinking he has a policy that caps at $20,000 and then getting a letter saying we think you deceive us. i wanted to thank the chairman. we passed an important bill. we are going to revisit it and

revise it. this is important. we have to keep shining a light on what is happening to the american people. i want to thank you. this has been a terrific panel. >> thank you, senator. i returned to senator hutcheson. you can ask a question. you can talk about nasa. [laughter] you can do whatever you want. >> we did that in this room all morning. so did senator hutchison. this is our day in this beautiful hearing room. i would like to make a statement. i think you for having us here. what this is exposing, since i

have the privilege of sitting with you in the finance committee as we have crafted this legislation of trying to have reform of health care in america and health insurance -- i think what we are seeing today is another reason why -- why should there be a country as advanced as ours, that of the 300 million people, 45 million people do not have health insurance but still get health insurance when they are sick. everybody else pays for them because when they get sick, they get health care. they just go to the most expensive place, which is the emergency room, at the most expensive time since they did not have preventive health care.

when the samples turned into pneumonia, you have to treat the -- sniffles turn into pneumonia, you have to treat the emergency. if you are a mom and a dad, and you have a modest income, maybe you can get your children in short by virtue of the fact that senator rockefeller increased the level of the children's health-insurance plan. for the mother and father, the only thing you can afford is the high deductible medical plan. what does the -- what do the mother and father do? $5,000ay it is a

deductible or $18,000 deductible. what they do is they do not go to the doctor. they do not want to pay out-of- pocket cost. or they cannot afford it. so a system that we have exposed today is one of the reasons why we need comprehensive health insurance overhaul to make insurance companies give 85 cents of every premium dollar that will actually go into health care, and for smaller group policies, a lower percentage. nevertheless, an increase over what it is now. we need to make health insurance available and affordable to people otherwise we have this bifurcated system where the haves have health insurance and

get health care and the have- nots do not unless you qualify for medicaid. in a country that values the golden rule, "and do unto others as you would have been due on to you," in a country that is a moral country, we have an obligation to try to help people. here is another example of why we needed health reform. a lot of these things do not take effect until 2014. there is a part that would effect -- affect these people, that is imposing annual limits. that does not take effect until 2014. it is good that you get this

out into the system for discussion. i thank you. >> thank you, senator nelson. i would like to ask a question of mr. smith. we have the principle of health insurance. some people are going to be sick and some people will not be sick. no one knows what the measurement will be. the american health insurance people, ahip, published a consumer's guide to health insurance. they were the people who fought the hardest to defeat the health reform bill. they spent more money, more

time, more advertising than anyone else trying to defeat it. they represent the health- insurance industry. on this committee, that is no surprise. we have had many hearings on the health insurance industry and the way they get away with anything -- to get away with things and the use of fine print and smiling faces. they know a lot of people do not have the time and they are afraid and they will not look into it carefully. however, these people who tried to do everything to defeat the health bill, the reform bill, the first question answered in the guy is, why do you need health insurance? -- the guide is, why do you beat health-insurance? this is not me talking. the purpose of health insurance is to protect you and your family from a serious illness or

injury that could be expensive. this reaks with hypocrisy based on what they try to do and what we have uncovered here on this committee in previous hearings and from health-insurance practices. i am wondering is mr. floersch does not have the comfort in knowing that when the 10% have their problems like mr. melville, that mr. floersch knows that the american taxpayer is going to pay for what he does not? they will be going into emergency rooms and any place they can. that takes him off the hook. that is why we passed health

reform, so people would not have to do that, so they would not have to go to the emergency room. it might have to go, but they have health insurance. the other taxpayers who are not mr. melville or anyone else in this room to not have to pay for his health insurance because the health reform bill will do that. i am actually wondering if the 10% factor, 10% of the time the brakes do not work does not weigh heavily because they know that the taxpayers will make up for what they refused to do because they do not want to spend a lot of money on temporary employees. >> i think you are right,

senator. there is a powerful and probably unintentional consequence. there is a burden transferred from the company to the public system and to taxpayers. from my vantage point, the fundamental question is, do we think mini-meds are adequate insurance? do we think it is the best we can do for and $8 per hour low wage worker? if we were all around the table and any american ask themselves, most would say that a to thousand dollar annual benefits -- $2,000 annual benefit cap is not going to act with. i do not think we should accept that. the affordable care act sets up a system that is going to fix

that problem with the status quo. it will provide an affordable and more comprehensive option for adults. there is a transition period. there is one thing i want to hear from employers is, what are you going to do, as senator boxer said, to improve the quality of your plan before 2014? how can we work together to make a bigger contribution or to figure out ways to make the plans more country -- plant more comprehensive? -- plans more comprehensive? >> you could be working at mcdonald's yourself. >> absolutely. >> you could be doing that. i have to look at you as the 10%. number one, young people tend to think they are not going to get

sick. they do not know that today are the largest users of emergency rooms of any age group in the country and have been for years. they do not know that 10% of them have depression/mental illness problems, as is the question -- the case of across america. they do not know that because young people are not meant to be that way except when we read it in newspapers. they do not know that they have chronic illnesses. and those are debilitated and expensive. they do not want to be bothered with the health-care system. i started out by public life, my ofasonable life, as a vista

volunteer in southern virginia where nobody had health insurance. the school bus did not even come there because they said we were too far away. the county board of health was willing to send a van for papp smears. that was all they were willing to stand, but they did do that. i worked hard to get people to show up. i was not good at it. the first time the van came, nobody showed up. i worked a month or so and it came again and nobody showed up. the third time, two people came, but no one went in. what did i learn? there is so much bad news in people's lives as there was then

and is now. young people, all people. they do not want to go in and take a test that might show them that they have what mr. melville has. they do not want to know that. it is busy, keep that away from me" factor. public policy has to come aggressively to the rescue to encourage people. that is why all of the prevention in the health-care reform bill is all free for seniors or anybody else. it is three, wellness, all kinds of things. -- free, wellness, all kinds of things. people of your age will have hundreds of millions of dollars of financial help. maybe you see something that you want, but you cannot afford it.

everything will be in print. it is all in the brochure. i was not of that opinion when i read it. that will surely be the case, transparency, a full knowledge. i just think that you cannot say that 10% of the people do not count. i do not think that is right. i want to end the hearing on that, but i would like to hear things that people want to say. i will start with you. >> there was an important point that was touched on, but not emphasized. we do not have health care providers at the table here today. story illustrates that when the health insurance runs out, it is the help provided that takes care of you. much of the cost is passed on to

employers. they bear the cost of paying for uncompensated care. we have few hamburgers provided by low-wage workers with little help insurance. we paid for other goods and services because employers to provide those goods and services are providing comprehensive health insurance that is paying providers or $43 billion in uncompensated care. the affordable care act in the inefficient system of cross subsided asian. -- subsidization. there will be tax credits available for middle-class and low-income people need health insurance. that will be paid for more directly rather than passing subsidies around under the table.

as senator nelson said, people will get health care when they need it and it will be less expensive in the long run. this is a positive step we are taking. it is unfortunate we have to wait another four years or three years before it is fully employed. >> that is correct. it was teddy roosevelt who tried to reform the health-care system. we are almost there. i do not care about 2014 is is just three years away. it will take that kind of time to get the state exchanges working. that will be the folks who handle all of this. >> just a couple of comments. i appreciate the dialogue you had. i want to point out that a long beach &, there is a high percentage of -- want to point

out that in that 10%, there is a high percentage of cancer patients. we have had a lot of discussion today about transparency. that is critical. the insurance system we have had until now is dysfunctional. one of the main reasons is the lack of transparency. consumers do not have information. they do not know what they are buying. they are only buying from price. we have seen stories of cancer patients who get into treatment only then to discover what the limits of their plans are. that is one of the reasons we are supportive of the affordable care act. we need to move away from that system. we need more transparency and accountability. we need and accessibility package because we need to provide equitable health care. we need to provide services to treat a serious medical condition like cancer.

we also have to recognize the economic competitive pressure on services today that result in employers and ensures using mini-meds. it begins to provide an alternative mechanism in providing insurance. we need to find adequate health care for the first time. we are providing subsidies that are necessary to help people like mr. melville who do not have the means to pay for what is needed. that is important to us as a society. we want to continue to grow and be productive. we have some of the finest medical facilities and fine scientists in the world. we do a terrible job of translating that care to all

americans like the mr. -- lik,e melville. thank you. >> mr. smith, i just wanted to add one thing. i do a lot of talking in west virginia to youth groups. at universities, colleges, etc.. i always ask them what they least like about health care reform. we say it is mandatory. that people have health insurance. if he did not do it, we are going to fine you. that goes against the spirit of everything. having said that, there is an enormously powerful reason for that.

if young people and people who do not have health insurance, just as people who buy automobiles pay automobile insurance and never complained, health insurance is had and they never complain about it. we do that so we can enlarge the risk pool so that more people are paying into the health- insurance market and premiums for individuals who do have insurance will not go up to the extent -- forget medical-loss ratio -- it would not go up because many more people are paying for health insurance. they will not go to the emergency room. young people more so than others tend to understand that. they tend to understand sickness

and liability is not there. -- sickness and viability is not there. they think they will not get into real trouble. >> you are right. young people supported the mandate more than any other age group. one thing i would add is that the problems that young people have in the health-care system are pervasive. i was uninsured when i graduated from college. so many young people are. when you talk about the challenges you face in an economy when it is hard to find a job and hard to find a job with benefits, it is easy for young people to understand that moving to a system where i might have to buy insurance, but i might have more options, i will

have subsidies to buy insurance, i will have an expanded medicaid program and an exchange. i think it is a good sell and young people get it. >> thank you. anybody else? final thoughts. yes, sir? >> part of what we also see is that a couple of decades of health care inflation at high levels of 6% and 10% -- we have seen it at mcdonald as well. i hope is that with the health care reform, there will be as much attention to bringing down some of the costs. when they come down, it will flatten out. some of these affordability issues and access issues will work hand in hand. >> i thank you all for coming.

i have not look at the clock. the witnesses have been interesting and compelling. this is an american kind of hearing where you have differences of you. mr. melville, get well. >> thank you, senator. i appreciate you holding this hearing and i really like washington, d.c. [laughter] >> do not stay too long. this hearing is adjourned. thank you. >> you did great. [random conversations]

[no audio] host: 12 welcome damian paletta, who covers washington politics. thank you for being with us. what is your reaction to the 9.8% drop #yesterday?

guest: the stock market had gone up. the last couple of months, the unemployment data had been positive. yesterday, there was a reality check for people. we are not out of the woods by any stretch of the imagination. we are inching up to 10%. this is the one that catches the nation's attention, the unemployment rate. it is the one that can drive the polls and the one that the politicians pay attention to. it was not good news. it will probably take a while for us to understand how bad the news was. host: our guest tomorrow morning is the president of the federal reserve. here is an excerpt from the program that includes the latest unemployment numbers and the fed action on the economy. guest: it was a weaker report that we would have liked. it is just one number, but it is

disappointing. hopefully, we will get better jobs numbers going forward. the jobs report was a little bit out of context from the other numbers we have seen on the economy, which seemed to indicate a little more strength. in particular, the holiday season so far, is shaping up to be reasonably good. we will just have to see. it is a disappointing jobs report. host: damian paletta of "the wall street journal," your reaction. guest: this could be a shot in the arm on capitol hill regarding the tax cuts. in that sense, i think it has gotten attention. i think if the unemployment rate

stays around this level, you are going to see the administration and the fed keep trying and pulled more things off of the shelf to try to get the economy going. host: the entire in the view with the st. louis fed chairman tomorrow. let's go to the story this morning in the weekend edition of "the wall street journal." the commission did not reach an important number. what is the significance? guest: president obama created this commission in february. there are two problems in this country. we have this immediate economic problem. in the medium and longer term, there is this incredible debt. it is expected to get worse. the baby boomer generation starts collecting more from

medicare and social security. president obama created this deficit commission in february. it has 18 members. no one thought they could reach this level. if they had 14 of the 18 people, it would get a vote in the house. they got more than they thought they would get. they got 11, but they did not get 18. it shows a different spectrum of the political environment. senator dick durbin, he is the noble to democrat in the senate. you have senator tom coburn, who is also powerful. they agreed that they did not like every part of the plan, but something had to be done to address the debt. some administration officials said they would try some of the parts of the plant in the

budget in 2011. they will pick and choose. one thing we learned from the procedure is that they are taking it seriously. they have learned from what is going on in europe and the fuss -- and the fiscal crisis there. this is showing the tough medicine that the family -- that the country will have to swallow. host: joe lieberman issued a statement following the vote yesterday. guest: a lot of people are hearing from their districts that something has to be done. a lot of the campaign commercials that brought the republicans into power was that they promised to come here and cut spending. a lot of people think the government has grown too big and is spending too much money. when you have these lawmakers on the commission writing a letter saying we support this and we need to keep going, it sends a

signal to the other lawmakers. these are complicated things. they are trying to conquer things like social security, medicare, medicaid, defense spending. in one of these things could take 10 years to fix. we do not have 10 years. we need to get this done quickly because we saw the speed of the spine and to crises and how they spread through europe. they do not want this to happen here. we have seen leadership in both party stepping up and saying they want to do it. host: if you are an independent called the independent line. we welcome our listeners on c- span radio. we also welcome your e-mails.

let me get down to the basics of the debt and the deficit. can you just cut spending? is it a spending cut and a tax decrease as the only way to cut the deficit? guest: some of the democrats that opposed the plan say we should do more to bring more revenue. some of the revenue -- some of the republicans say we should focus on spending cuts. the people in the middle say you have to have both on the table. the way the plan works out is bad they pushed the debt down by $4 trillion over 10 years. $4 trillion comes from spending cuts and rebuilding the tax code. you have to have both on the table to get it done.

that is going to be the flashpoint. do we focus on spending or do it through taxes? the debate we're having about the bush tax cuts -- there are a lot of people saying we cannot afford to raise taxes on anybody because of the time. although they are trying to do this and not have anything kick in immediately, if you cut taxes, you are touching a third rail. there are republicans who do not want any high taxes. they say we have to talk about changing the tax code. host: we got three items from the report yesterday. they talked about a tax holiday. what is that? guest: there are a couple of proposals. the idea is that in 2011, people would not pay social security taxes. to keep the social security fund solvent, that money would be brought over from the federal

treasury. instead of people paid it, the treasury would put it in. it would be a shot in the arm to the business community because they would not have to pay those taxes for their employees. theoretically, people postal paychecks would be higher because they would not have to pay those -- people's paychecks would be higher because they would not have to pay those taxes. it is one solution to get the money back into the economy. host: i remember changing be retirement age for social security. senator dick durbin says he supports this. that surprised a lot of liberals. guest: if the retirement age goes up to 67 in 20 or 30 years -- by 2075, it goes up to 79.

it would not affect anyone on social security right now. it is a way to cut costs over the long term. they say the live expecting the index goes up, so social security has to change with it. host: it is not the third rail of politics, but it is a tough issue. the tax deductions that you get for your mortgage. guest: i get more feedback on that than anything else we write about. >> what is the proposal? >> there are a couple of proposals. guest: there are $1.10 trillion in tax breaks each year. if he did not have to pay taxes on your mortgage, that is a tax expenditure. what they want to do is gut all

of that or most of it so that there is more money coming into the treasury. people do not get to hold onto that. one of the proposals that gained the most momentum is to bring down the mortgage interest deductions so that you would only deduct up to a $500,000 mortgage. you could not get a $1 billion mortgage from the bank. -- $1 million loan from the bank. they wanted the housing markets -- they say the housing market is still struggling because they are not getting this tax deduction the arts can bulls said we have to make some unpopular -- erskine bowles said they have to make some are unpopular decisions.

host: our conversation damian paletta with of "the wall street journal." we want to hear from you. michael is joining us from cleveland on the republican line. good morning. caller: good morning. i have a comment i want to say about the unemployment rate. first of all, i worked for a biomedical facility. they dealt with biomedical equipment. i have been unemployed for about one year now. what happens to the label, "made in the usa"? by the unemployment rate be what it is now, especially during the holiday season, you have a

lot of families out here who depend on that money. they should try to give for christmas and put money back into the economy. the stores are making more money. the grocery stores are making more money. the senate needs to pass this because the country has total chaos out here. people are trying to get and cannot get. it is going to cause a lot of domestic problems because of the husbands and the children and they cannot get coach, butch, and hats for the winter time. -- coats, boots, hats for the winter time. what is going to happen? guest: what are we doing to focus on our economy? we should put up more barriers. we saw this plan out at the g-20

in korea. there is a lot of pressure on china to change its currency. there was the south korean trade pact yesterday. it when it is worked out, it's still has to pass congress. we will hear more next year about what we are doing with other countries to make sure they are not able to benefit when our country is struggling with different things in the time. host: on the issue which raising the retirement age, christopher has this comment -- guest: there is some sort of hardship provision. i am not sure how they qualify. if you do manual labor and you cannot work past 62 because of

the job you have had for your life, you would have an exemption and you could collect social security at an earlier age. host: our guests who joined us yesterday announced that she was a no vote on the commission's recommendations. here is why. guest: too much is taken from the middle-class to bring down the debt. people who have made the sacrifice our mail -- for many years have been lower and middle income people. many of the bush tax cuts went to upper income people. with the wars, they had nothing to do with creating the deficit. right now, with mortgage foreclosures, there is a loss of their savings with wall street recklessness.

while i believe we need to address our deficit and long- term debt problem, i offered a plan that does not take it out of the hide of middle income people, low-income people, our senior citizens. guest: she speaks for a lot of democrats. she is one of the reasons why this is going to be an interesting debate next year. a lot of democrats feel like why should we be cutting spending what a lot of the benefits go to the middle class. she is really vocal. she represents a big constituency of different groups. she is going to be a voice we will hear a lot from next year. host: you included a lot of these voices in thursday's "the wall street journal." . i want to read one of the quote.

the question is can this congress and the next congress sees -- seize the opportunity. guest: a lot of these problems were seen as coming from a business perspective. one commission member said we do not have a lot of time. in the debt that we issue, we are going to have a huge problem on our hands.

that is probably one reason why a they got 11 votes on friday. host: we are talking with damian paletta of "the wall street journal." caller: i moved in 1978. my city had one of the lowest unemployment rate in the nation. since then, i have watched men factoring -- manufacturing fizzle to the point where everything is made overseas. one of the companies stock part of the economic stimulus. they got millions of dollars. they were going around trying to get the cheapest stuff. they were not try to help us, who were tried to help them.

we were giving them low bids and they were tried to lowball us. and they just laid off 200 people. they got $300 million in economic stimulus. that is not the way. we have never been able to spend our way to moving forward. the government does not create jobs. they need to lower the taxes. they need to make incentives to get manufacturing back into this country. that was the only way we got out of the depression, because of all of the machines we were building for world war ii. now, if that happens, it will be made in china. guest: there will be a debate over whether to raise the debt ceiling next year. congress can only raise the debt

to a rate indicated by congress. there is going to have to be a vote in the first half of next year to raise it. a lot of the congress people are coming in saying they cannot want to raise it. we are probably going to see some measures from the deficit commission put into play. i think that is something we will see played out. host: here are some of the headlines. --

guest: that is right. each of those things on its own could be a huge fight in congress. anything that has to do with guest: get that debt and deficit under control. host: on our twitter page -- guest: absolutely. he was very interesting to watch. some of the things in the document they put out had his

fingerprints on it. he said at the end of the day the proposal did not do enough to tackle the health-care overhaul that democrats put in place in the last year. he said there were parts of it that he was supportive of and did plan to put in his budget propos for next year. host: this is the president's commission but we have not heard any details from the white house. guest: that is what we were listening for yesterday. obviously, president obama was traveling yesterday, but secretary tim geithner is following this closely. i think we will wait to see the budget right after t state of the union address. we will get to see which of these items he plans to incorporate. the president has already endorsed this idea of freezing the salaries of federal workers

for two years. so, obviously, some of these things are on the white house is a radar screen, but how many of these things will they put into place? host: from a white house chief of staff, the cochairs of the commission, they m yesterday and the final vote was 11 to 7. if you want to watch all the proceedings, they are available on our website, as a part of our .ideo library for th rich is joining us. good morning. caller: thank you for taking my call. to me, it is simple. we have a situation where our tax structure is so far different from what it wasack in the 1950's and the 1960's.

the income-tax structure is also very much different. it is used to go up all the way to 90%. you have to realize that the very wealthiest people in this country are not paying income tax. they pay capital gains and dividend taxes. they pay 15%. the rest of us are paying higher rates. the country is not going to get out of the recession by cutting taxes on the wealthiest people in the country. and they he not invested in our country. they are going to other countries now. we are watching our nation become a third world country where it before our eyes. book,n read huffington's "third world america." you can readnother one by robert scheer called "the great

american stickup." any of those three books will give you an excellent idea about what is going on in our world. hosguest: one interesting thing watching this commission was how difficult it is to deal with tax policy. the tax code in this policy is a patchwork of all these different things and should be replaced by something more simple, but doing that is so hard because everything to change has a big impact on different people are different businesses and tt is going to be a tough thing to tackle. i think we did see republicans and democrats say any effort to tackle the debt is going to have to include a major overhaul to the tax code. host: paul ryan wasinteresting and engaging."

guest: have a lot of people have opinions about congressman ryan. he is going to be the chairman of the house budget committee and a central figure in this. so the administration is going to have to try to work with and if they want to get some of the budget in place. host: senator dick durbin of voting for the measure. also on thursday, two senators saying they will support the measure. one explained why he supports the proposal. >> i have a lot of heartburn with things that are in this plan. i have greater heartburn with inaction. the time for iction has passed. if we don't take some very bold action, we are going to see our

nation face fiscal difficulties that are much more painful than anything included in this plan. host: your response? guest: one thing wheard a lot yesterday was an old washington phrase. the ceo of honeywell said it as well. i think it was because of this recognition that we could squabble for years about the details of this thing, but every day we wait things are going to get worse. the debt is going to keep rising and is going to be harder and harder to make these changes. i think there is going to be a fight. i think there is going to be a fight over the details on how to address social security or medicare or defense spending. they were trying to get that point across that we have to stay committed to the cause. everybody is going to have to

give and little bit. you can see the storefront coming. a lot of foreign investors are finally paying attention. maybe the u.s. is taking this seriously and they have to watch what we do on this. that is how the debate is going to play out. this could have some big consequences. host: , one ofur viers want to put you on the spot. dithe stimulus work? guest: i don't know. does that count? it is hard to tell. i feel bad that i cannot give a straight answer. if you are one of the 9.8% unemployed, i am sure you feel like the stimulus did not work for you. there is no dou that they did throw a lot of money at the economy. maybe for some businesses and people that were able to keep

their jobs, it did work. i think it dends on the circumstances. host: so imide of help for construction workers building roads and bridges but not as much for others in other sectors of the economy. guest: that is right. they can't do it again obviously. water they going to have to do to give the economy a shot in the arm? host: social security had nothing to do with the deficit -- guest: that is something we heard a lot during this process,

and we will hear a lot especially if they try to go at social security. i think the commission tried to make social security solvent. what they did was put in place a plan to make social security solvent. they felt like that meant taking more revenues and raising the retirement age. that is something that people watched very closely. they don't like the government messing with social security benefits. host: mike posing one of two questions i want you to address -- guest: those are excellent questions. what the commission did it was a factor into the ms that we are going to be spending less on defense as we draw down in iraq and in afghanistan.

i don't know about the near-term impact of those withdrawals, but i do know that they were talking about cutting a pretty sizable amount of money out of the .efense budget prediction secretary gates said the proposals would have a catastrophic impact on national security, so expect the defense department to push back on any potential cuts. host: a quick reaction from a viewer -- michael is joining us from anne arundel county, maryland. good morning. caller: good morning. hoare you guys doing? i had heard your compositions about unemployment.

and i have been unemployed for a little over 2.5 years. i moved out to texas to be near family for two of those years and i have consistently watch the job market declined hopping. i moved back up here to a anne arundel county which reported the has had the lowest unemployment rate in the nation, yet his darkly it is the highest on a platter rate for the past 30 years. rking in a restaurant, under employed, part-time. i would rather take the chance. i am a consultant of a warehouse manager. host: you are living in a van? caller: yes, sir. i have been living in a van for the past year and a half now. you take what you can in life. i am very disappointed.

i can plan this administration or the president for the this going on. i do take exception to the public having smoke blown at them as far as the reality of the numbers when you are not taking into account people that have not bothered to claim unemployment, figuring they could find employment, or the students and youngsters who are having so much competition. it is very disheartening and disappointing that we are not being told straight across the board of the things i am certain that politicians and government are aware of. host: michael, thank you for yo call. guest: he raises a good point. we look at this number of unemployment, but the under employment is pretty staggering. those are folks who went from

jobs with really good compensation and now they are looked earning much less money. those are people who have mortgages and are going to have a hard time to find the disposable income to pump back into the economy to get the economy going again. it is affecting all income levels, and it is something that -- in stimulus past, i think a lot of people were against it. that patience has worn off. the administration is scrambling to try to figure out what they can do. the lawmakers we saw, a big political reckoning of the stulus in the november elections these numbers here are not good. they come every month, so maybe they will get better, but people are very worried right now. host: according to david stockton --

guest: one of the things we heard president obama say is whether we are headed to this thing called the new normal. maybe the unemployment is going to be high for this country. it may be employers will get used to this situation. we will bstocked in this rut for years. that is something that has a lot of people concerned, that may be the easy way out of this is not an easy way out. maybe it is going to be a new economic reality for this country to be in a higher unemployment type situation. st: on our twitter page -- sydney is joining us on the republican line from bronx, new

york. good morning. caller: good morning. i am a republican but i am really disgusted with what is going on in congress. republicans do not put the interest of the american people first. the republicans idea of a smaller government is takg government jobs and privatizing them and then it tossing 10 times more than the government was doing the job for it. i used to work for the post office. and they have been trying to privatize that forever. they said they want to take the post office, and the congressman willo by the post office and make profits. everything is about profits. they don't care about the people. guest: this document has many different proposals and it, but one of them is to cut the

federal work force by 10%. they say that is necessary to make the federal government more lean, but that is 200,000 jobs. with the on a plumber rate, it is hard to imagine them acting pretty quickly on it. host: did the stimulus work? she say no. did anyone think it would? no. guest: of the stimulus is something -- the stimulus was something the administration first did. that was january or februy in 2009. we bottomed out as far as the stock market in march or april. that is when things were really bad. he did get this stimulus through. the impact of it might take years for us to really know, but

it surely was not the impact they thought it would be in the near term. that is what we are talking abouthe disappointing job numbers. host: this fiscal commission is working with its own recommendation about cutting spending. john mccain and -- this headline -- guest: it is an amazing juggling act that they have to accomplish. they have to convince foreign investors that we are serious about tackling debt and we are not going to allow this country to become grease or portugal. at the same time they have to come up with policies, tax cuts, infrastructure spending that is

going to make it get worse in the near term. there are argunts about whether tax cuts are going to end up getting the economy going which will pump more money into the tax base. it is a difficult juggling act they have to deal with. host: we have a couple more minutes with our guest, damian paletta. also, the latest unemployment numbers, 9.8%. the overall economy and debate here in washington, including today on those tax cuts. the senate is already in session. jackie is joining us from california. good morning. caller: i have just retired. i had an injury so i could not continue to work.

i was forced into retirement a little earlier than i wanted. i have been listening to what has been going on for the past few months, and the amount of money in the tax bracket in which i am which is probably $40,000 a year, $35,000, i am not getting a substantial break that i am aware o. i am under the impression that it is around $500 a year perhaps. the top of the top is getting millions of dollars. i would gladly give my when thousand dollars if they are going to get $2 million. i have never heard anybody say this so far, watching all of the programs. i would rather pay so they have to pay. take the tax cuts from all of

us. guest: it is a really interesting point. i have not seen those income groups, but i note secretary geithner has said if nothing is done and all of the tax rates go back to where they were, it will average out to about $2,000 per family of extra taxes for 2011. that number would have a big impact on the economy because a lot of folks cannot afford to hundred dollars. a $2,000 impact would take a lot of money out of the economy. they have been pushing to keep the tax rates low for 98% of americans. it is a difficult situation. this debate has been this class warfare type of thing. what do we need to get the econom goingnd what will the impact be if tax rates go up

with higher income people and small businesses? this is the thing we are hearing a lot from readers and others. host: we have a lot o viewers and listeners on our twitter page. guest: like a said before, and the fight over the debt ceiling is going toe very interesting. john boehner is going to have this interesting dynamic where he has to kind of the satisfy all of these new republicans that are coming in who will be hesitant to vote on any new spending. they are going to want a lot of spending cuts but they are going to have to govern and get things through congress. a lot of republicans are probably excited about the opportunity to show americans how they can govern the house. host: carl is joining us from

west virginia on our line for independents. caller: hello. my question is about the t breaks for binesses to move overseas, mexico, south america, what ever. guest: i don't know the answer to that. it is very controversial. this commission did address it somewhat, but i am not actually -- i am not up to speed on th specifics of the propol. host: from "the new york times. --

guest: one of the things we saw a play out with this deficit commission was the republin party splintering. we had the three house republicans voting against the proposal. then the three senate republicans voted for it. so there is going to be this really interesting debate within the republican party i think in the next six to 12 months over which direction they should take credit should they be aggressive and try to push a republican agenda? should it try to work with the democrats? that is dinitely going to play out in the near term. host: "a new start in washington, " she starts out by saying --

this is noime to raise taxes. it is that simple. guest: one of the complaints we have heard for the past four years from the business community is the uncertainty out of washington is having an impact on their business decisions going back to the financial crisis. the financial crisis staed with this ad hoc response from the government. ever since then, we have heard a lot of complaints from all over the country saying they cannot hire or invest until they know what washington is going to do. that is something the president obama said, that he wantso work harder on this. host: the last thing i want to bring up, on thursday in the

debate is going to need to move beyond -- guest: that is right. one thing we thought -- centered gergen called it an historic document. they got 11 people to vote on some pretty controversial proposals. so what happens now? congress is going to cut the tas or not. they are going to go into recess. is it going to be a part of the president's budget? is it going to be t on the shelf? the s specifics of this are hard to dea

>> the chairman of the federal reserve of st. louis will talk about the jobs report. >> there was an era when the recession would end and labor markets would bounce back. that hasn't happened for 25 years. i expect thshis to continue. unemployment to fall slowly. and we will see faster economic growth in 2011. there are many businesses in a fairly good position that a lot of cash on the sidelines. invest andable to hire workers.

>> you can see this entire interview with james bullard on "newsmakers." this is also available on line at c-span.org. >> earlier today, obama spoke about a free trade agreement with south korea that would create 70,000 american jobs and increase exports by $11 million. he also spoke about the boat on the tax extensions from the bush era tax cuts. this is about 30 minutes. >> good afternoon. i want to speak briefly about a couple of issues that matter most to me, and the american people. creating jobs and economic growth on which the prosperity of the country is the pending.

despite 11 consecutive months of private sector job growth, creating 1 million private- sector jobs this year, this is not enough and we will have to do more to accelerate the economic recovery and create jobs for the millions of americans who are looking for work. central to this effort is opening new markets across the world, with products made in america. we not want to consume other people's goods. we will be exporting the goods that create jobs. that keeps the united states competitive in the 21st century. i am very pleased to have the united states and south korea reaching an agreement on a landmark trade deal between these countries. i am joined by my u.s. trade representative, as well as one

of our lead negotiators. i did not agree to this at that time because of a very important reason. this was not good for the american economy or for american workers. i am not interested in signing trade agreements for the sake of signing trade agreements. i am wanting to increase jobs and exports for the american people, and also help the partners grow their economy. i told them to take the time to get this right into the best deal for america. and this is what they have done. this agreement achieves what these deals must do. this is a victory for the american workers. for the farmers and ranchers,

will increase exports of american agricultural products. from aerospace to electronics, and the manufacturing exports -- exports to south korea. in particular, manufacturers, of american cars and trucks will have much better access to the market of south korea. we have cars and the technology in the united states and we will continue to have a level playing field for the american automakers at home. at short, the reductions in this agreement alone will be boosting the exports of american goods by $11 billion. this includes the opening of the caribbean services market, that will support 70,000 american jobs. -- korean services market that

will support 70,000 american jobs. this will increase american economic output by more than the last nine free trade agreements combined. this is also a victory for the allies in south korea. they will gain greater access and make american products more affordable. this is for the councils and businesses, with more jobs for americans. and i would also say that there is a strong alliance between the united states and south korea. we have made certain that the security has maintained its stability, and that this continues. and this will allow south korea to have the extraordinary rise from poverty to prosperity. there is increasing tension

after the attack on the south korean people by the north. we are showing an alliance is stronger than ever. i am pleased that this includes the workers' rights, for the environment. this is the kind of fair trade agreement but i will continue to work for in asia and around the world. this also shows that the united states of america will compete in the global economy. we will stand up for american companies and american workers, the most innovative in the world. and we will compete in the markets of the 21st century. it was not easy to reach this agreement but i want to thank my partner for his involvement in this outcome.

i want to thank everyone for their outstanding work, and there -- and the tireless efforts. we will continue to work with the partners in south korea, to build progress, to provide a united. -- to provide u.s. beef to the south korean market. but there is one the democrats and republicans should be able to agree on, this is creating jobs and opportunities. earlier today, there was a vote on the provisions for the middle-class. is a very disappointed that the senate did not pass legislation that had passed the house of representatives, to make the middle class tax cut permanent. those provisions should have passed.

you should not hold these tax cuts hostage to higher income tax cuts. especially with these cost $700 billion that we do not have. with so much at that -- so much at stake, this is not the end of this discussion. we make certain that this does not go up until january 1. i will look forward to speaking with the republican leadership as well. we have to increase the efforts in the next few days. we have to get the american people the peace of mind, that this will not go up on january 1. i believe that we will be able

to get this done. as we were to this issue, 2 million americans who lost their jobs saw their unemployment benefits expire. it is simply wrong for us to consider, giving permanent tax cuts to wealthy americans and the nine relief to those who desperately need this because they have lost their jobs through no fault of their own. i am going to be rolling up my sleeves, with the leaders of both parties in congress. we have to get this resolved and i believe that we could do this. >> will you be excepting a temporary tax cut?

-- accepting a temporary tax cut. >> now, democratic reation. first is chuck schumer. this is 25 minutes. mr. schumer: okay. then i will speak for a few minutes. the presiding officer:he senator fr new york. mr. schumer: this debate is very simple, and that is, do we believe -- everyone here believes, in all good faith, that we oht to extend permanently tax breaks for the middle class. the question that is on the floor today is: do we want to extend those tax breaks for millionaires and billionaires at a time of huge deficit? mr. schumer: i would argue vociferously, no. i would argue most economists agree that shouldn't happen. i would argue that the american people by 26% to 74% are against giving new tax breaks to millionaires. why? it's very sime. it's not that we are against

millionaires. god bless them. most of them made their money the hard way. they worked hard, they made the american dream. every one of us would like to have done that, or most of us. so this is not aimed at being critical of them. but it, rather, says we have two economic realities. one, we have an economy that, under the bush tax cuts right now -- my colleague mentioned unemployment went up to 9.8%. th's under these tax cuts. when the rates were a little higher under president clinton, we never had unemployment that high. but we would argue, so the middle class needs to continue that break for two rsons. one, it stimulates the economy. and, number two, middle-class incomes he declined over the last decade. first decade under the bush tax cuts, middle-class incomes declined. first decade since world war ii.

under the clinton rates, middle-class incomes increased rather significantly. and, second, we would say this. but at the same time -- and this is the conundrum we have economically here -- we have a large deficit. and the question is, how do you reduce the deficit? again, i think both of us agree we should reduce the deficit. it seems to me that about the best way to reduce the deficit is not to give $300 billion of tax breaks the 315,000 americans whose income is over a million dollars. by the way, i would remind my colleague, there are 160 million people. my colleague from alaska has reminded me. 160 million people file tax rerns. only 315,000 -- by quick math, that's about .03% -- have an

income over a million dollars. but over the last decade under the bush tax cuts, those people have garnered all the increase in wealth, all the increase in income, or just about, a huge proportion of it. so if you're looking for deficit reduction, should you hurt the middle cla? no. should you stop building roads? in my opinion, no. should you take money out of social security? my opinion, no. where are you going to get it? don't do unemployment benefits? which stimulate the economy and means so much to middle-class people who've been out of work fo so long under this regime of bush tax cuts? no. the best place to get that mon money -- it's not that we want to punish wealthy people. we want to praise them.

but they're doing fine and they're not going to spend the money and stimulate the economy. and for some reason, 42 members of this senate, all on the other side of the aisle, somehow 9 linchpin of their entire -- somehow the linchpin of their entire economic policy is tax breaks and further tax breaks r those who are vy, very wealthy. let me remind my colleague, every person whose income is $100 million -- there aren't many of them, but they have a lot of the income -- would get a $3.8 million tax break a year. the average middle-class person under our plan would get about a $2,000 tax break a year. is that equivalent certainly the person making $3.8 million isn't going to rush to j.c. penney and buy that warm winter coat they've been waiting for?

huh-uh. so i say to my colleague, it is a bit ctradictory to say pay for unemployment benefits but don't pay for tax cuts to the rich. it's also a bit contradictory to say you care about deficit reduction but not when it comes to tax breaksor the wealthiest people. and i'm going to be here for the next year, next two years to remind my colleagues every time they talk about deficit reduction and don't spend money on this and don't spend money on that, that they were willing to increase the deficit $300 billion to give tax breaks to people who have over a million dollars. with that, i'd yield the floor and turn it over. i see my colleague from utah's here and i kept him waiting yesterday. i'm not going to do that today. so i yield the floor. mr. hatch: i appreciate my

colleague. mr. president? the presiding officer: the senator from utah. mr. hatch: this is a first for him to yield to me and appreciate me. that's not quite accurate because we're good friends. my friend, the senior senator from new york, has come forward with an amendment. now, the essence of the amendment is a marginal tax rate hike on taxpayers earning more than $1 million. it's been dubbed the -- quote -- "millionaire's tax." folks on the other side must know two things. one, this may be well-designed from the other side's political viewpoint. supporting the tax regisrs well with some of the democratic polling ma mavens. by the same token, those polling mavens might be indicating to their patron patrons that this lame-duck session vote might supply some good campaign material. as the debate ensued this past week, you could almost see my

friends on the other side giddily rubbing their hands today. maybe they view this vote as the uivalent of a hanukkah gift or a christmas present. but their holiday political joy stands in sharp contrast to the dreary situation facing america's unemployed. two years of wall-to-wall democratic rule has only made the situation worse. there is a second thing our friends on the other side must know. they know that senator schumer's amendment will surely fail. does anybody doubt that? 33 days ago, the american people sent a message -- work together, take care of the people's business. nothing is more fundamental to the people's business than how much they are taxed. and in this weak economy, they said keep taxes low. keep taxes low. we should not meddle with the great sovereign power of taxation. it is especially true in this harsh economic debate. on april 19, 1774, sir edmund

burke tried to persuade the british parliament to repeal the last of several controversial colonial taxes. his wisdom was instructive for today's vote. i quote -- -- and remember, ths sir edmund burke arguing for the colonists in america. quote -- "could anything be a subject to more just alarm of amera than to see you go out of the plain highroad ofinance and give up your most certain revenues and your clearest interests merely for the sake of insulting yr colonies." burke's point was the parliament was acting unwising by mainining a tea tax primarily despitprimarilyto spite the col. four years from day, we will support tax day 2011. it will impose a punitive tax hike on virtually every american taxpayer. that day of reckoning has been clear since my friends took power almost four years ago in both houses of congress. my friends on the other side, with all due respect, your

actions this morning amount to meddling. you possess parof the sovereign power to change the tax law to prevent this tax increase. instead you have forced this body into a political showdown. the proponents of the so-called millionaires tax say the reason to do is -- quote -- "fiscal discipline." this proposal preserves less than half of the revenue of the related pvisions in the reid-baucus substitute. if that's the case and revenue is the goal of the proponents of the millionaires tax, they ought to stick with the reid-baucus substitute. but let's set aside the moment the fact that the revenue raised is a fraction that the broader tax hike on the reid-baucus substitute. does anyone take seriously the -- that the revenue raised will go to deficit reduction? does anybody really believe that? you know they're going to spend every dime of it if there were any revenues. where is the mechanism in the amendment to assure taxpayers of

that? more importantly what is the record of my friends on the other side on this point? you need to only look at the fine print. in the revenue and spending of the president's budget. as an asi the president's budget is the most transparent presentation of the fiscal features of the agenda of my friend on the other side. hiking marginal tax rates on singles making more than $200,000 and on families making over $250,000 translate to about .6% of 1% of gross domestic product, g.d.p., per year over 10 years. the new above baseline spending initiaves in the president's budget translate to .7500 of 1% of g.d.p. per year over 10 years. what does that mean? the revenue raised by theax hike in the reid-baucus substitute is less than the new spending in the president's

budget. it doesn't take a rocket scientist to figure this out. and as i've stated earlier the revenue raised from my friend from new york he's amendment is less than half of the reid-baucus substitute. does anybody really believe that lesser amount of revenue is less likely to be spent? so much for the fiscal discipline argument. there's some very disturbing points to ponder in this so-called millionaires tax. i'm going to alert my friends on the other side to them. the first point is that capital is the leblood of business. put more capital into business and it will respond. the business will gain economic energy. curtail the flow of capital to a business and it will -- and it will respo. the business will lose economic energy. and that's what's happening in america. according to the latest internal revenue service statistics of inkol data a lot of capital gain income is earned by the taxpayers targeted by senator

schumer's amendment. s.o.i., in other words, statistics of income data, states that 56.6% of the net long-term capital gain from traditional capital assets is reported by taxpayers with $1 million or more dollars in income. more importantly if capital gains from transactions involving partnerships and other flow-through entities are a concern, that percentage rises to 64.7%. there can be little doubt that we are talking about a large pool of capital. if my friends on t other side were to prevail it would a game changer for the tax treatment of a large pool of capital of in -- of income from capital. the change in the capital gain would surely be a negative one. i have chart that illustrates the change in the playing field for capital transactions. it shows where w are today. that's 15% capital gains re.

if my friends on the other side are successful in a little over 27 days from now the marginal rate will rise to 20%. the health care reform bill has banked in another 3.9% rate hike and that kicks in a little over two years from now and that's this one right here, 23.9%. at does this chart show? it shows that the marginal rate on nearly two-thirds of taxable long-term capital gains transactions could be affected. it means investors who supply that capital, lifeblood of business, will see the marginal tax rate on capital gains rise by nearly 60% in a little over two years. everything else being equal, a rise in the marginal tax rate means a decline in the after-tax rate of return. the nonpartisan joint committee on taxation always cautions us about this effect in their revenue estimates.

here's what joint tax says and i quote -- "we anticipate that taxpayers would respond to the increased marginal rate by utilizing tax planning and tax avoid ant strategies that will decrease the amount of income subject to taxation." unquote. my gosh, what more do you need to understand economics? capital is the lifeblood of business. raise the marginal rate on capital gains transactions, the result will be a decrease in the after-tax rate of return on capital investments. what will happen? capital will go out of taxable activities in many cases. capital, the lifeblood of business, will be constricted. with capital constricted, does anybody see business activity affected in any way that is positive? it would be hard to imagine that outcome. when most folks hear about a so-called millionaires tax, they probably think it would have minimal impact on the business

environment. that they -- the data i discussed shows the op sivment it also shows that any revenue raised will likely be spent. anybody who believes that by raising revenues, that we're going to pay off the national debt hasn't live in this country for the last 34 years that i've been in the sate. our friends on the other side will aays spend that money. that's how they keep themselves in power. does it make sense to send a tax policy signal to investors to move their capital out of taxable business aivity? in the worst economic environment in many years, now 9.8% unemployment, shouldn't we be going in the opposite direction? instead of finding way to kill jobs when our unemployment rate continues to stagnate at 10%, let's find a bipartisan solution protect all americans, especially our job creators, from cruing tax hikes.

it's time to put a stop to this nonsensical political theater and get down to the people's business. just one last thought. over the last summer president obama said, and i would -- quote -- "the last -- this is president obama now, and he said it just over the last summer -- quote -- "the last thing you want to do is to raise taxes in the middle of a recession because that would just suck up, take more demand out of the economy and put businesses in a further hole." unquote. i think the president was right. and i think the economists think it was right in making that statement. and it shod be the last thing we do is raising taxes in the middle of this downturn that now is even more down because the 9.8% unemployment rate. and, really, that only tells part of the story. if you really talk aut the underemployment rate, those who don't have jobs, can't find

jobs, et cetera, are dependent on the federal government and those who have stopped looking for jobs, and there are a lot of people like that, you're talking 18% or better. we've got to wise up here. what -- the last thing on earth we need to do is increase taxes at this late date. mr. president, this is an important debate, but the democrats have had four years to change this where ty controlled the houses of congress and in the last two years not only controlled both houses and the presidency, and now at this last minute to come in and say we've got to do something, it just shows a lack of -- well, you name it.owing mo speak. senator grassley, senator baucus, i appreciate this. i guess the first observation i would make is that we're here on a saturday morning and this is democracy in many ways i think at its best. people understand the two votes are going to fail but it's good for americans to have genuine differences to be able to discuss what makes us tick, why

we want to go one way versus the other. so the fact that america is divided on a lot of big issues is -- is just the result of living in a free country. now, what was the lessons of the last election? they are what you would like them to be but here's my observation, for what it's worth. our democratic friends really took a beating. as republicans, we have been there. in 2006 and 2008, we took a beating. 2006, the iraq war was going very badly and americans were very frustrated. president bush's popularity plummeted. in 2008, we had an economic meltdown that i thought was related to housing, that we lent money to people who couldn't afford to pay their mortgages, the mortgages were repackaged and sold as all kind of exotic instruments throughout the world and it brought the whole world economy down. and we've been trying to struggle ever since. we can talk about how much fannie mae and freddie mac were the cause of this problem, how

much loose practices when it came to lending, but i think most people understand that our economic crisis was created by the -- the mortgage -- the housing market being overextended and people getting into that market in exotic ways without a whole lot of regulation. now, here we are a couple years later. i think the last election was a message to our democratic friends, for the last two years, you've been going down the wrong road. the health care bill, which about 80% of americans, if it ever becomes law, will become -- will be under government-controlled health care, was an overreach. the stimulus package was $780 billion-something that wass never done what it was billed to do. the democratic party has been engaged in what is way above what every american charged them to do. this election was not pro-republicans but to our democratic colleagues, stop. and the way you get stopped

around here is you get replaced. so the house had a dramatic election. we picked up seats in the senate and some of us thought maybe we could have picked up two or three more and made some pretty poor choices when it came to the candidates. but that's now behind us. and what i would like to tell my colleagues, that when i look at america, i don't see an undertaxed nation. i think our tax code is far too complicated. 35% is the rate now. how much is enough? is it 39.6%? is that the difference between, you know, a -- a social justice country and -- and a land of the rich? i mean, if -- are we going to increase taxes for the upper incomes by 10% when we can't create enough jobs for americans who are unemployed? i do believe this idea that upper-income americans are the ones who create most jobs for the middle class and people looking for work. that's just a fact. here's how our tax code works today. 40% of americans pay no federal income tax.

so 40% of us really don't pay any income tax at all. of those who do, 50% of those who pay federal income tax pay 3%. the other 50% pays 97%. the top 10% of wage earners in this country pays 70% of the taxes. now, i'm for a progressive tax system but that's just not right. that seems to me to be taking the country in the wrong direction. there's 750,000 small businesses will get a tax increase if we do not extend the bush tax cuts for everybody. i'll make a prediction. there's a lot of unsolved mysteries in this world, a lot of things that we'd like to know, we don't know the answer to. this is not one of them. what will happen, hopefully next week, is that all bush-era tax cuts will be extended because we have high unemployment and now is not the time to pass on to business or upper-income americans more taxes. and i hope we can extend some of the obama tax cuts.

i don't want to raise taxes on anyone. if you don't pay taxes, then you shouldn't be getting a tax cut because you have no tax liability. but if you're in the eitc range where you have some tax liability, the obama tax cuts in the stimulus helped you, i'm one who considers that to be something we should be looking at, that no one's taxes should go up. bush-era tax cuts or obama tax cuts. when it comes to the unemployed and unemployment insurance, we're going to extend that but we have to have a package that makes sense. so once we get this vote hyped us and democrats on the other side will join with republicans on this side to say no to the class warfare approach here. now, one of my good friends from new jersey said something that got everybody stirred up, that negotiating with republicans is like negotiating with terrorists. well, i know bob menendez, he's a fine man, but these are heated times and we say things that sometimes maybe sound good to our base but upon reflection we

shouldn't say. and i would argue that nobody over here should be considered in that light. to our democratic friends, we have a genuine disagreement. that's all it is, a genuine disagreement. the one thing we have in common, when the terrorists, the real terrorists do come to visit america, they could care less how much money you make. they will kill the janitor and the business owner just as quick because they don't see any difference based on income. the one thing that america has in common is that we do believe in free speech, open debate, religious diversity, and that's not something that you believe in based on your income. that's something you believe in based on just being an american. so i would ask my colleagues on both sides to understand that not only are we in this war on terror together, we're in this economy together, and a lot of americans are suffering, some more than others. and the ones that are struggling in the middle class and lower

incomes are trying to do one thing that everybody agrees on: get a job. and ladies and gentlemen, i believe the best way for struggling americans to get a job is not to raise taxes but keep them low in a weak economy, and that's what i genuinely believe. i have not come from a rich family. i'm the first person in my family to ever go to college. my mom and dad owned a liquor store and a restaurant. they worked long and hard to make sure that my sister and myself could go to college. when my parents died, i was 22, and my sister was 13. if it were not for social security survivor benefits, we would not have made it. she received pell grants to go to school when her college days were there and i was in the air force and helped where i could. so i get it. people are struggling. there is a role for the government, but this is not the time for our government to raise

taxes on anybody because all of us are struggling to try to find a way out of this economic mess. and there are some stuff days ahead economically. there are some tough days ahead in the war on terror. let's have these votes, come back next week and see if we can solve some problems that all americans are dying for their congress to solve. get us back on sound economic footing, deal with debt, and to senator durbin, senator crapo, to senator coburn, hats off to your vote on the debt commission. you did some very hard thing, and that product is going to serve the country well. we're all in this together, and i wish everyone good holidays and maybe a time to reflect, that we do have more in comomomm the presiding officer: the senator from montana. mr. baucus: madam predent, i think it's important just to lay a few facts on the table.

the senator from oregon did a good job of making this point clear, but i think, frankly, very few people in the country understand this point, this debate. to be honest, i think there are a good number of members of the senate who do not understand this point. the point being that under my amendment, which makes the -- those who receive $200,000 and less in income, their tax is permanent. under that amendment, it's important to remind all of us that every individual will get a tax break. every, regardless of his income. that is every individual who has more than $200,000 of taxable income would receive a cut of at least $5,400. if you're above $200,000, you still get a tax cut. you get a tax cut as an individual about $5,400. if you're a couple, is probably close to double that. the same is probably true under

the schumer amendment. under the schumer amendment, for those who make $1 million, their tax cut's going to be about $40,000. even though the cutoff is $1 million, those who earn more than $1 million will get a tax cut under our amendment. they'll get a tax cut under my amendment, a tax cut under the schumer amendment. under mine, about $5,400. under the schumer amendment, if you earn more than $1 million, you're going to get a tax cut of about $40,000. if you're a couple,t's almost close to double that, most likely. after that, in my amendment, and continuing's also in the schumer -- and i think it's also in the schumer amendment, dividend rates are lower. those folks who rely on dividends are going to get an additional tax break. the point i'm making very clearly is that everybody gets a tax cut under our amendments. it's not fair for the other side to characterize only some people

get a tax cut. it is true those under 200 will get a bigger break on a percentage basis, but dollar terms they're going to get less of a break than those who earn $200,000 and above or under the schumer amendment, $1 million or above. the second point i want to make is we have to make choices, madam president. we often hear the expression, there's no free lunch, nothing is free. life is choices. we make choices here in the senate. sometimes the choices we made are quite difficult, but they're also significant. i'm a lite bit bemused -- i was bemused and still am bemused when i heard the senator from south carolina praise the president's deficit commission report which recommended cutting the national deficit throu various mechanisms, revenue increases and spending cuts.

the senator was praising that. and i say bemused because the basic view of the senators on the other side is to increase the national debt by about $4 trillion. that is the amendment offeredy the senator from kentucky will raise revenue in the next ten years by $4 trillion. that's adding $4 trillion to the deficit. not subtracting $4 trillion from the deficit, but adding $4 trillion to the deficit for a swing of about $8 trillion over eight, nine, ten years. that i think is fairly important. it's important because many commentators are concerned about the debt that we have as a country. they point out the problem that greece has, ireland, portugal and spain, and even articles that maybe countries should break in europe away from the

euro and he a separate currency. the main disappoint we live in somewhat precarious times and we have to not add to the deficit. the amendment i offered does add to the deficit, i might say, in all candor. it adds about $2 trillion over ten years, because we cut taxes in a manner which i explained. the schumer amendment cuts a little more -- that is adds a little bit more to the deficit. that's only about $2 trillion, $2.3 trillion, $2.4 trillion, whereas the other side would like to add $4 trillion. i'm just saying everybody gets a tax cut under the amendment that i'm offering. and those who make more than $200,000 get more in dollar terms than do people at $200,000 or below. that'sust a statistical fact, a mathematical fact. it's about $5,400 for those who receive $200,000 and above.

under schumer it's about $40,000 for those who receive $1 million and above. whereas those belowill also get a tax cut as well. just to remin everybody that we do have to make choices. we have to keep an eye on the debt. we should not increase the debt more. these various provisions do a bit to not increase the debt more than we have to. i might add to that too, it's something i think we should be concerned with. in the last quarter-century, the top 5% of wealthy americans received an after-tax break of about 150%. that is, their after-tax income of the top 5% american people the last quarter century fell by 150%. compare that with middle-income is americans.

the last quarter century the after-tax break changed 20%. a huge difference. our policy caused the most wealthy to have much greater after-tax benefits than do -- than is in effect for middle-income americans. all together i think it makes sense. we balance, have to make choices. everybody get a tax cut under our two amendments. d i strongly urge my colleagues to support the two amendments. i think it's not perfect but it's good, what's the final vote was 53-bit 7. the amendment needed 67 to go on. mitch mcconnell of kentucky would take the floor. with unemployment over 9% for more than -- more scekive months

than at any time since world war 2, the voters are looking for a different approach here in washington. two years of out-of-control spending and big-government policies have led to record deficits and debt, chronic unemployment and deep your honor certainty about our nation's fiscal future, meaningful show votes and antibusiness rhetoric won't do anything to make the situation better. this saturday's session is a total waste of the american people's time. one of the votes wheeled today was opposed by every single republican and many democrats. and the other vote we held was a poll-tested plan opposed by every single republican and the president of the united states. and as you can see, nothing wees did today stopped the tax hikes that are now less than a month away. as the majority leader said this morning, these thee attribution need to end. this is a strong, bipartisan -- there is strong bipartisan opposition to these attempts to raise taxes on small business across the country. americans don't want political

posturing. they want jobs. today's votes were the clearest signal yet that the democrats in congress do not take our nation's job crisis seriously. mr. president, i yield the floor. a senator: will the majority leader yield for a a question? the presiding officer: will the majority leader yield? mr. baucus: he is not the majority leader, i might add. ms. landrieu: i'm sorry. would the minority leader yield for a question? the presiding officer: the republican leader? ms. landrieu: i guess that's a "no." mr. baucus: mr. president? mr. president? the presiding officer: the senator from montana. mr. baucus: mr. president, i ask unanimous consent that the senate proceed to a period of morning business with senators permitted to speak for up to ten minutes each. the presiding officer: without objection. mr. baucus: mr. president? ms. landrieu:? butmr. baucus: mr. president? the presiding officer: the senator from montana. mr. baucus: there are several senators prepared to speak this morning, who were unable to because of limited time.

in order to accommodate them, i ask consent that the order of speakers on the democratic side be the following: senator dorgan, 20 minutes; senator boxer, 10 minutes; senator mccaskill, 10 minutes; and senator casey, 10 minutes. further, if there are republicans seeking recognition on the floor, they would alternate back and forth between the two sides. the presiding officer: is there objection? ms. landrieu: mr. president, may i ask consent of the first member on that list to speak for 30 seconds? thank you. the presiding officer: is there objection? without objection, so ordered. ms. landrieu: thank you. mr. president, i was going to ask the minority leader, mitch mcconnell, who just insulted many of us by saying that we don't care about small business or the economy and as the chair of the small business committee, i was going to ask him this: since president obama has been in such good faith in the last couple of days negotiating with

him this package, my question was, does he regret saying on national television that his number-one primary goal is to unseat the president? i was going to ask him how he felt about that. that's a tough place to start a negotiation, which is why some of us are interested in how these negotiations might be going with that as a startingpoint. but he ran off the floor and didn't answer that question. i will going to i am going to continue to ask it. thank you. let me just add, i don't agree with every policy with the president. anymore a major fight over offshore oil and gas. but it is very interesting to some of us who have been in negotiations, how you start by saying my goal is to defeat you but here is the packages we want you to accept. some of us are >> now, democratic reaction.

this is about 25 minutes. speaking first, sen. charles schumer. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> i think we vote today showed america where both sides are. the republicans are holding hostage middle-class tax cut so that they can get a tax cut for the wealthy. middle-class americans be a tax cut. their incomes have declined over the last decade.

the higher income people's dollars should go to deficit- reduction. that is how we feel. the party feels that tax cuts for millionaires and billionaires is the most important thing this nation can do. we are going to continue this fight until we achieve our goal, a permanent tax cuts for the middle class. no tax cuts or millionaires and billionaires. we did not have anything against them. they have made a lot of money. that is great. they do not stimulate the economy. only 30 cents on every dollar to the highest income people is spent. $1.62 is spent on unemployment benefits. we find it unemployment -- i it impossible to understand how our colleagues on the other side of the aisle say we can give tax cuts to the highest income people and not decrease the deficit but we cannot do that

for the unemployed. we have others here depending on who has to lead. >> thanks for my mark of distinction. i have to leave. you, chuck. >> when we finished with this, we will get down to serious business. i look at what is going on, the tax relief for people who are fundamentally rich, i have a good business career. i would be entitled to a tax cut going to those over the $1 million mark. i do not want it. i do not need it. what i am looking at today is a great american travesty. think about it. while america is fighting wars

and 150,000 of our people are in a rock or afghanistan, fathers, mothers, sisters, sons and daughters, face losing their lives, their limbs, and their families because there is no context. we have a fiscal crisis. republicans are fighting to make sure we provide tax relief to the richest among us. a recent york times " " article showed -- "the new york times" article showed that people made $2.40 billion per year. they want to give tax relief to those people. it is an outrage. we are looking at the per capita income in our country at $60,000.

we have over 15 million people without jobs. now we hear from the republicans, "too bad." the richest among us need tax relief." when does content really enter into the equation? when do we say that the extra money i get will not make a difference, but whether or not our country is strong enough to provide a brighter future for those who need an education, jobs, some security? when will they say, "to hell with extra dollars on our tax report"? when will we stand up for our country. they say stand down, and it is too bad. >> there is a clear difference

between democrats and republicans on the tax issue. by 53 votes, democrats have shown that the majority of our caucus and the majority of the united states senate say that in these tough economic times, we need to make sure tax relief is continued for middle income families. the republicans, in a unified voice said, "we are prepared to filibuster the tax rates remaining the same for middle income families to protect the wealthiest in america." i think that is a sad day for the republican party. it is critically important that tax relief is given to middle income families. >> a colleague of mine on monday -- i was presiding -- he said we have to do everything possible that we can to prevent the

deficit from increasing. today he voted to increase the deficit by $700 billion. that is an oppressive reversal in one week. i just heard the republican leaders say we have not learned they lesson from the election. nowhere on the ballot -- any ballot that i saw -- was, do you want to extend the tax cut on income above $250,000? know where was it, do you want to extend tax cuts to income over $1 million? exit polls from the organization, edison research, that was doing it for all the networks, says that 60% of the

american people leaving the polls did not want to extend these tax cuts, these bush tax cut, or people making over 250,000 dollars. we campaigned on that. we took the first vote and lost. 250,000 dollars is where i would draw the line. we said we would compromise. $1 million. they are saying if you make $1 million -- i do not know how you define a millionaire. it is probably someone who has $1 million in assets. i know farmers in minnesota who own firms that are worth $4 million. i do not know how to measure it. but they do not make $1 million

in one year. $1 million. i have heard colleagues over and over again saying we have to make hard choices -- our colleagues on the other side. this is not a hard choice. we have two wars. we are headed for a real, real crisis in terms of our long-term deficit. this is a chance to address it. i want to return to what senator schumer was saying about the unemployment insurance benefits. a couple of months ago, i was in minnesota. i met a man at a building trade union hall. he was a man who worked all his life. now there is essentially a depression in that industry.

i met a carpenter there, a big guy, cow's hands. he had tears in his eyes. he had barely worked in the last 18 months. he told me that if it were not for his unemployment insurance -- he said he does not like taking it -- he said if it were not for that, he would not be in his house. what are we doing? they are saying that we have to pay for that unemployment insurance benefits, but we do not have to pay for tax cuts for people who make over $1 million. what are we doing. where are our values. ? we are going to go back at some point soon, not so soon, to have

christmas holidays with our families. we have got jobs. it is a great job. i would job is to improve the lives of americans. we know what has created jobs. what we see today is an economic philosophy that was tried during the bush administration and created 1 million jobs as opposed to an economic philosophy that created 22.7 million jobs during the clinton administration. we want people working. i do not know what we are doing here. thank you. >> we have had 10 years of experience with the bush tax cuts. today, we have seen the worst job creation performance in the last 10 years in the post-war

area. -- postwar era. we have seen job growth decline. as a matter of policy, create a growing economy that produces jobs for our citizens, these tax policies have not worked. we have the evidence. it is all around us unfortunately. there is a need at this point to continue to give relief to middle income families, to give them some relief as they struggled through this difficult market. in those terms, extending the middle income tax and -- income tax cuts makes sense. it makes no sense to extend the income tax cuts to the wealthiest americans. in terms of producing jobs, growing jobs, growing middle- class -- if you turn around to the unemployment compensation issue, that is an necessity --

a necessity at this point. we have two unfunded wars. we see people desperately looking for work. senator al franken's story can be seen in every place in this country. people have come to be terrible realization that they may never get back to where they work. that is not just a financial blow. that is a blow to their sense of self and their sense of family and what this country is all about. republicans say not only are we not going to approve the middle income tax cuts unless you cut taxes for the wealthy, we are going to force you to pay for unemployment compensation benefits. we have never done that before. republican demonstrations -- republican administrations,

democratic administrations, we have also passed -- we have always pass it when the unemployment rate is 7%. the and plummet rate is almost 10%. how are they going to do it? is it the border patrol stations? we have to make some difficult choices. the obvious choice is to exploit middle income americans, extend benefits to them, help them with some of the other provisions. that choice was rejected by the republicans. that is unfortunate. >> tuesday night at midnight, 85,000 ohio residents, more than 2 million americans, saw their unemployment benefits and. think about what that means to a mother tells her teenage

daughter they are going to lose their home and they will have to move and they do not know which school district will have to move to. i went to columbus and akron last week. every food pantry i have visited i have had people tell me that people used to give food to the pantry and now they are coming to get food from the pantry. because of republican opposition, 85,000 ohio residents, more than 2 million americans, saw their unemployment and its stock. i have stood on the floor. republicans have objected. my colleagues have gone to the floor. senator read has -- senator jack reed has got to the floor. this is like health insurance and fire insurance. you want to have it if he

needed, but you never want to use it. it is there if you need it. when people criticize congress, it is often because we do not listen enough. we did what the american public wanted. the american public wants us to extend tax cuts to the middle- class, but we should let the tax cuts expired for millionaires and billionaires. the republicans chose to side with millionaires and billionaires against low income workers and every other tax benefit we want to give. 10 years ago, in 2001 and 2003, the hallmark of the bush economic plan was to cut tax cut for the wealthiest in this country. we have had 18 year experiment. it ends on december 31, 2010. that experiment has not worked. during the a years of george

bush, there was a net increase of 1 million private-sector jobs in this country contrast it with 22 million jobs during the bill clinton administration. the whole idea of trickle-down economics does not work for americans. what republicans want to do as they hold unemployment extension hostage is borrow $700 billion from china, put it in our in hand's credit card that money to millionaires and billionaires. it is bad for our country and it is bad economic policy. it is bad for our future. >> yesterday, i was home in rhode island. i went to the princeton senior enter's annual -- cranston

senior center's annual christmas party. there were a couple hundred people there. a nice elderly lady signaled me aside and said she wanted to speak to meet publicly -- speak to me privately. she said her son had worked for 28 years. she had raised seven children and they were all working. 28 years, the son had been working. he is now out of work. for the first time in his life, he had taken a minimum-wage job. people in rhode island and across the country wants to work. they will work. she said her son feels the about this big. she put her fingers about this far apart. but she said he would take the job because people want to work. the theory we have heard that you cannot extend unemployment

insurance benefits because it contributes to lazy people who do not want to pick up the jobs are out there is wrong. we have 65,000 people in rhode island without work. there are not 65,000 jobs no matter how you divide them up. unemployment insurance is important to continue. as senator jack reed said, we have never done this before with an unemployment rate like this, to cut off unemployment insurance benefits. yet that is what they have done. if you put two things side-by- side, one of the families, through no fault of their all, have lost their income and is down to their last money and that is about to be cut off. they are going to go to zero. that is ok with republicans. what is ok if someone making over $1 million to get $100,000

in additional tax relief. it is economically wrong. it is nonsense. from a human perspective, it is an unbelievably brutal theory. it is bad for america in two significant respects. at the 250,000 dollops -- $ 250,000 dollar level, it drops further the divide that we have between whether -- between regular working americans and others. this is a gap between regular americans and the super wealthy that has not been matched since the 1920's. we are headed in the wrong direction. our protection of these additional tax benefits for our wealthy people -- wealthiest

people drive us even further into that direction. it is bad for america to have that continue. >> in my two years here, they have been interesting. i did not come from the house or from a governor's office or the state legislature. i came as a small business person. i thought it interesting and ironic when i hear the debate on the impact that it will have on small business from the other side. many of them have never run one or have the experience of struggling or making it through the economy or point to the bank and asking for a loan to expand your business. -- going to a bank and asking for a loan to expand your business. sometimes when the press looks at us, they see us as senators

were in the political life. there are many places we come from. i talked to my wife every single day, as you can imagine. she listens to what we do here. she owns four small businesses. we started at $$250 million -- $two $1,000. they built it up to $1 million. let me put that into perspective of " this is all about. it is not about how long these extensions are. there are what is 60 million tax filers in this country. 315,000 of them are above $1 million. that is what this debate is about.

after this debate, it could be one year-long or 10 years long. the debate is who would benefit from the policies we sat here. that is what it is about. and then they say small business this and that. let me tell you as a small business person. they use the phrases llc, partnership, the use all of those. that money flows into your return. 96% of the businesses in this country gross $1 million or less. when you think of their taxes, it is less than $200,000. the compromise touches almost every american. it touches almost every small business in this country. their arguments are falls on

that side. it boils down to some fiscal responsibility. there is one thing we heard in the election. create a better fiscal responsibility in the senate. make sure you take care of the middle-class and the small business community. we are doing all three. small business people are taken care of. the community at large is taken care of. we are not going to give millionaires and billionaires another $700 billion bonus check with their $2 trillion that they already have in the bank. we are going to do something about the deficit because the american people said do something about the deficit. it is the right approach. on the other side, it is the same business as usual. it did not work so well. the economy crashed. we think it is the right approach to help small business, 96%. they will benefit from what we

put forward. 315,000 tax filers. they still get some of the benefits. they all get the million-dollar level. we're not going to go over $1 million. we're going to save the money and make sure it goes to the deficit. i hear all of the theories on the other side. but this is reality. i believe it. i have seen it. the policies we put forth on the right approach. >> questions. >> senator schumer, you said you are going to continue to fight

for tax cuts or the middle class and not tax cuts for the wealthiest. does that mean that a deal that would include a short-term extension for everyone is off the table? >> the bottom line is that our position has been the annunciated clearly. a majority of democrats voted for both amendments. there were 53 votes on each. we are going to keep fighting for that. we think this is right substantively. we think it is right politically. it is point to be one of the major issues as we go forward. we are not giving up in three days, one week, two months, six months. this is going to be a major issue over the next two years in this congress. i would get into what will happen next. i do not know what will happen next. we have a united but in both wings of our party for tax cuts

or the middle-class and not for millionaires. >> we think pressure will continue to build on republican senators who voted no on extending unemployment benefits and voted no on a host of other popular tax cut for working families. when 42 republicans signed a letter saying we are not going to do the starched reaping -- start treaty, the republican recognizes that. -- the american people recognize that. it did not want to be on the wrong side of history on this. >> the president announced a korean trade deal today. have you had a chance to review it? are you in favor of it?

>> i have not. i talked to ron kirk yesterday period is a major deal on automobiles. it is not strong enough in terms of non-tariff barriers. i am concerned about cars coming from china into korea. that is a back door into our u.s. market. i am concerned that the model of this agreement is not too different from the nafta model. this is the largest bilateral trade agreement since nafta. i do not believe it works for the american public. it does not work for middle- class families. our trade policy is better under president obama. but this does not make it.

>> the president has made clear that he does not want the tax cuts to expire in a few weeks. are democrats willing to tell the white house, "let's let it expire. we are not going to do this extension"? >> as i said, i would not get into what is going to happen in the next several days. speaking for myself, i will keep at this. i think this is correct substantively. it is high ground politically. in the past, when we have had these kind of cases, the democrats have thrown up their hands. i cannot speak for my colleagues. we do not know what kind of agreement the president is going to reach or if he is going to reach one at all. i am not going to speculate on that. the point we are making today is that we think it is wrong for tax breaks to go to millionaires. we think it is correct for them to go to the middle class. that will be one of our

watchwords. that is something we will continue to work on next year. >> do any of you senators have the appetite to extend this into january? >> there are lots of people in our caucus who have that appetite. there are those who do not. we will have to see what happens. thank you, everybody. >> senate republicans also spoke to quarters. senator -- spoke to reporters. senator mitch mcconnell. this is about 10 minutes. >> you are excited to be here on saturday, right? i can tell.

there is a lot of good football today for any of you have the affliction for college football. it is either an affliction or and affection. where are we? let me just say that we did not need the show votes today to make any progress on trying to resolve this cygnet issue of whether or not we are going to -- significant issue on what we are going to raise taxes. some democrats agree that this is not the time to be raising taxes on anybody. in the meantime, discussions continue. i hope we will be able to resolve this. i am, and a bad the end of this

process will lead us to a sensible decision not to raise taxes on anybody in the middle of a recession. we will still discuss the length of that decision not to raise taxes. i think that is the way. i am not admonishing all of you. i find it tiresome that everybody keeps talking about tax cuts. the tax cut decision was made one decade ago. we are not giving people anything they already have. this is a debate about tax increases, about whether it is a good idea to raise taxes on anybody in the middle of a recession. 100% of the republicans think that is a bad idea. a reasonable number of democrats think that is a bad idea. i want to call on my colleague

for any observations he wants to make. >> the recent news is that the unemployment rate is up from 9.6% to 9.8%. at times like this, we need the job-creating sector of our country and our economy to have the proper incentive to create doubts and make the investments. what they need is certainty. -- to create jobs and make investments. we should not raise taxes on any one during these economic times. >> democrats are increasingly tying an extension of unemployment benefits to any deal to continue the tax cuts. what is your reaction to it? >> as you know, there are discussions under way. i have designated senator kyl about how to package all of this.

i do not think no action on a collection of issues is a likely outcome. i cannot tell you what this point to come out of the pack. kage. i had many faults. lack of discipline is not one of them. i will not negotiate this deal with you guys this morning. >> the newest democratic message on this issue is that republicans are holding hostage the tax cuts to the middle- class. what i am asking is that this new offensive message, is it going to have any traction should they think that they can get anywhere by allowing this thing to expire? >> i would remind our friends and the other side of the aisle that the election was one month

ago. we are passed the spending states. the american people would like us to do the things that need to be done. as we indicated the -- in the letter signed by 42 republicans, what need to be done is to decide how we are going to fund the government. once you get that out of the way, if there is any time left and senator -- indicate what he will do, he indicated on the floor that he will to a cloture vote. it is time for began to stop and progress to be made. christmas is around the corner. it is time to wrap up the things that must be done and should be done for the american people. >> would you expect all senate republicans to both bent

against --vote against the middle class tax cut? is a possible for the unemployment benefits not to be all right at all? >> i do not want to be rude, but next question? >> or you referring to the talks going on between you and the white house? >> there is a healthy sign that there has been more compensation between the senate house republicans in the last two weeks than in the last two years. there is a growing awareness that the powers in the process are shifting. we have to communicate with each other and deal with each other more often. >> when do you feel that a deal

has to be reached? >> i do not think we should go into the beginning of the year with the americans scratching their heads wondering if their taxes will go up. they think we should sit down as adults and resolve it. i think that will happen. >> there is a new democratic theme that we tried tax cuts for 10 years and it was 18 year experiment that failed. the trickle-down theory did not come through. we heard one senator saying michigan is still waiting for trickle-down. >> all i can say to that is 100% of senate republicans and 4 or 5 senate democrats think we should continue with the current tax rate. there is bipartisan opposition to raising taxes.

i think that speaks for itself. i would also remind you that they chose not to have this debate back in september. you thought -- you remember when they thought this would be a great time to have the debate. what happened to that ebay? there is a bipartisan feeling that the current tax rates are appropriate for the foreseeable future, particularly with the kind of economic times we have right now. >> the it think there is time to get the s.t.a.r.t. treaty done? >> we need to decide how we're going to fund the government. whatever time is left, there is an array of things the majority leader would like to do. he has to decide when he wants to do next. >> can you say what the hold up

is right now? >> reaching agreement requires a lot of communication and a lot of communication is going on. >> what outcome are you looking to see? >> it will be up to be majority. the house is going to send over a continuing resolution. one of the things we will want to do is look at it. is it riddled with anomalies? it is riddled with executive branch earmarks? is it clean? we are going to want to look at that. then the majority leader has indicated he will try to substitute for that an omnibus, which i intend to oppose.

either way, it is going to be a large bill and he's to be scrutinized thoroughly. what comes -- and needs to be scrutinized the early. -- scrutinized thoroughly. >> they fail to move this weekend on extending the bush- era tax cuts. what happened in the session? >> the senate rejected two proposals, democratic tax proposals. one would have continued the bush-era tax cut for individuals making less than $200,000. , and married couples making less than $250,000.

this is a democratic effort to draw a line in the sand on what they are calling the middle- class and the wealthy and trying to figure out and stake their ground on who should have their tax cuts continue. >> why did the majority leader was to -- leader wants to go forward with the vote? >> he knew they were going to fail. there was no surprise. he wanted to paint republicans as doing the bidding of the wealthiest among us. senator harry reid wanted to make sure that they vote was out there so people could see who voted for extending tax cuts for the wealthiest. >> mitch mcconnell has a tax proposal that he was to be considered.

when did you think they will consider those? >> the idea was to do it on friday. but there was a republican objection to going forward. it is unclear as to what did the republican proposals will get on the floor. you might be able to do something like that next week. the next date is moving forward with negotiations. the last week in the house was cathartic for democrats to stick their ground. now everyone is going to move forward and get to the serious parts of the negotiations. >> what does it mean for negotiations with the white house? >> this is where it gets a little dicey. there seems to be some frustration among the democrats that the white house is talking with republicans and talking with congressional leaders.

they have made it clear that they are willing to go through 250,000 dollars and extend the highest tax brackets for another two years. this means that that will continue to play out this week. you are going to hear the rhetoric from both parties. that will continue and intensify. you will still have the white house negotiations. >> steven sloan is a reporter with congressional quarterly. >> president obama flew back from his visit to afghanistan. vice president biden delivered the weekly address and called for extending tax cuts or the middle-class and unemployment democrats. -- unemployment benefits. the republican response criticized three -- criticized

democrats for rejecting a ban on your mark spending. >> this is joe biden. i am filling in for president obama this weekend because he is on his way back from afghanistan. he was spending time with the men and women of our armed forces did it is tough being far away from home during the holidays, especially in a war zone. he wanted to be there in person to thank the troops on behalf of the american people or the service and sacrifice each one of them are making. here at home, the first lady and my wife has made -- have made supporting military families a priority. these families are also making sacrifices for our country. they deserve our admiration and gratitude. our service members and our families are always on our mind even as the president and i are working on other issues that are critically important to the american people, issues that the

american people are deeply concerned about, accelerating the recovery, strengthening our middle class, getting our friends and neighbors back to work. in recent months, we have seen encouraging signs on that front. after shrinking or demonstrate porters, our economy has grown five straight quarters. after nearly two years of job losses, our economy has created 1 million private-sector jobs this year. after teetering on the brink of liquidation, our automobile industry is posting healthy gains. assembly lines are running again. american manufacturing is getting up and fighting its way back. friday's job report was a sobering reminder of that. we saw another month of job growth in november. it just was not enough. it underscores why it is so important to get going without delay on the two things that will impact our economy.

the first is that we have got to extend the tax cuts for the middle class that are set to expire at the end of this month. if we do not extend the tax cuts with the middle class, millions of people and families will see a big bite out of their paychecks in january. that is the last thing we should let happen after a decade in which the middle class lost ground. families cannot afford a tax increase. our economy cannot afford the hit it would take it middle- class families have less money to spend. the second thing we have to do is we have to extend unemployment insurance for americans who have lost their jobs in a tough economic. without an employment benefits, families cannot spend on basic necessities that are grown, made, and sold by other americans. the economic hit called -- it cost by raising taxes on the middle class will cost us hundreds of thousands of jobs.

that is not smart. in the collecting unemployment insurance, that is not right. it would mean telling our neighbors who are out of work through no fault of their own that they are on their own. that is the message to send in this season of hope. we all know someone who had hit -- who has been hit hard. in america, we help them get back up on their feet. that is the american way. i do not agree with the people who say we cannot afford a lifeline for americans who have lost their jobs during the worst recession in generations but we can afford to borrow hundreds of billions of dollars to extend tax cuts for the wealthiest 2% of americans. that is bad economic policy and it is simply wrong. congress must extend the unemployment benefits before it goes home next year. -- goes home this year. . i am glad that the house of

representatives wanted -- representatives voted to do that. these are rough times, but we are fighting on our way back. we are going to keep fighting to grow the economy, to strengthen the american middle-class, and to restore the american dream. that is my place to you. one last thing, since the present will be back to record this message next week, as we take this chance to say from my family to u.s., barry christmas, happy hanukkah, have a great holiday season and enjoy the weekend. >> a lot. i am senator mark kirk of illinois. last month, the american people sent a clear message to washington. spend less, tax less, and put america back to work. a force in, too many want to continue the reckless tax and spend policies of the past. they ignore the warning sign of

war dead and inflation. they embrace with all governments spending and pork barrel your marks. they think a massive tax hike on the u.s. economy is exactly what the american people need. the current leaders of congress should not move forward with plans that were rejected by the american people. these leaders did not raise taxes and risk another recession. instead, congress should reduce spending and prevent another tax hike on american taxpayers. americans already pay some of the highest taxes in the world. by raising taxes to fuel higher spending, which threatened to restart the recession, pushing millions of americans out of work. right now, families and small business owners are scratching their heads asking one simple question, what will my tax rate be next month? taxpayers do not know what their personal income tax rate will

become january 1. family business employers do not death tax willdet be. they did not know what the capital gains tax will be. their uncertainty kirstie economic it is unfair and shortsighted. congress should prevent a massive tax hike scheduled to hit our economy and generate first. meanwhile, our mounting debt poses a clear and present danger to our future. it is time to cast aside our partisan differences to work across the aisle to solve this problem. , which is set an example by ending pork barrel earmarks and cutting its own budget. this week, senate democrats rejected a proposal to end wasteful earmarked spending. their decision was disappointing and disappointed -- and disconnected from the

american people. republicans and democrats should enact a bipartisan solution to cut barrels spending, like a presidential line item veto. a new procedure to insure spending reductions actually happen. a bipartisan commission set the standard for a serious oversight to identify federal spending that would add little to our nation's growth and much to its debt. a commission with authority to submit a proposal to congress would lead to actual spending reductions. this proposal is in my first senate bill, the spending control act. a harvard economic historian said the client -- said the decline of a great power is clear when the country pays more to its money lenders and its army.

interest payments on our debt tops our defense budget as soon as 2016. it is clear that we need to cut spending to avoid a bankrupt future for our kids and our country. i believe that america's best days still lie ahead of us. if we correct our economic policy by focusing on growth and spending discipline, the sky will once again be the limit for young americans. spend less, borrow less, and tax less. put america back to work. that is what we have heard from the american people. that is what we should expect from our leaders today. may god bless you and your family during this holiday season and may god bless the united states of america. >> sunday on "newsmakers ,"

james bullard monday november dodge report. in 2000 is, president bush signed a bill that expanded the size of the consumer product safety commission. net, testimony on how the law has been implemented over the next -- over the last few years. this is what our 45 minutes. -- one hour, 45 minutes. >> we are going to called the hearing to ward. this is a hearing of the aviation subcommittee, the committee on science and transportation. i am senator door again. -- senator dorgan. that may provide a brief opening statement and then provide -- and then call on my

colleagues, since the rockefeller. -- senator rockefeller. these efforts are alternately going to make the skies safer for the traveling public. there is much work left to do. the largest piece of legislation, the reauthorization bill, is still on awaiting a final vote after many months of negotiation. it is a great disappointment to me that we have not yet seen that completed by the senate, completed by this committee. we have not yet had completion of a conference report so that we can get it to the president for signature. i hope my colleagues in the senate -- i know i speak for senator rockefeller -- will join us to try at this late date to get the faa reauthorization bill

completed. it deals with issues that are important. i still remain hopeful that there might be some crevice, some narrow crevice that we can get that legislation passed at long last. we have had 16 it stages of the faa reauthorization bill. that is failure. the work we have done is excellent work. the country would be well served if we can get the bill to the president for signature. with that, the hearing that we have today is something we have been talking about a law. particularly since the last christmas. when a man got on an airplane in a former land and attempted to bring down an aircraft loaded with passengers with a bomb sewn in his underwear.

he was the christmas bomber. that bomb did not detonate even though the passenger attempted to detonate. we know that that plot and others over the past year -- aviation screens are important at our airports and every airport in the world. we also know that every nation is expected to meet aviation security protocols that have been set out by the civil aviation organization. the method by which many countries meet these protocols is at the discretion of these countries. we know that over the past year, the department of homeland security and the transportation security agency has worked with international partners to try to update existing aviation security protocols. i applaud and appreciate the work the agencies have done.

clear standards at all airports in this world should meet a christmas day incident i have just referenced is one which the supper -- the subject departed from nigeria. a person with a bomb in their underwear supported the airplane. he could carry easily have brought the plane down and killed all the passengers. the bombing suspect was able to get through with explosives on his body because those standards and that scanner cannot pick up those explosives. this has led some nations, including our country, to use advanced imaging technology. those machines have generated a great deal of discussion and news stories in recent weeks. those machines are at commercial

airports in this country. other countries continue to use other methods to screen passengers. i know that these machines are designed to detect types of this process -- types of explosives that are difficult to detect. in the technology would have the human figure at a stick figure detecting only that which would be on the stick in your that would -- on the stick figure that would represent a threat. we are working hard on advanced technology. companies and the agency is working together while respecting the civil-rights of passengers. a couple of more point. the significant threats to the u.s. aviation systems are forming a base.

i say that not suggesting there are not internal threats. there are. but if we take a look at what we have confronted, the shoe bomber, the underwear bomber, the cartridge toners, the liquids and bottles, all of those are foreign-based plots that were trying to put explosives on airplanes that would fly over our territory. it is critically important that we work closely with other countries and corporations to improve this system. it is in the best interest of commercial air carriers, of our manufacturers, and homeland security representatives to come together on security solutions to push for consistency in their applications. that is the purpose of this hearing today, to determine not just what is happening at our airports, we have read about that in recent weeks, not what is happening at our airports to

keep some of of a commercial airplane that might have a bomb on their person, but what is happening at every airport in the world in which passengers might come to this country or will be traveling elsewhere for boarding and air plane that may be unsafe because the treating the-screen technology is not meeting standards that we would expect. this is an important, controversial, and complicated subject. the members of this committee appreciate the of the work that has been done by the gsa, by homeland security, and by so many others and private companies that are working on new technology. let me call on the chairman of the full committee, senator rockefeller, for a full statement. >> thank you. before we began, i want to say that after 25 years of public service in congress, this is the

last hearing that senator dorgan will chair. to me, that is worthy of comment. he has been absolutely superb. he is not going to he can be on three different television stations at the same time. talking passionately about jobs going overseas and having tax incentives for that to happen, he cares so deeply about manufacturing, if north dakota

and west virginia are not similar, one is flat and one is not, but we are very similar in our people and our work ethic. byron dorgan makes me incredibly proud to serve with him. he never stops moving. he has already spoken on the floor twice this morning. he always has his thoughts in order. he is always right. i cannot think of a single time when he and i have disagreed, i am sure it has happened, but it does not come to mind. i think it will be a weaker committee and a weaker senate without byron dorgan. and i mourn that, because what we need in this place or people with passion and people who are not ripped by politics, first of all, or theology first of all,

but ripped by issues and particularly putting people to work, fair trade, not exporting jobs but creating more jobs, somebody who is just totally working middle-class oriented, and he is that. i am so proud to serve with him, and i am so sorry that i will not be able to anymore. and so i would like to put that into the record. he cares about these things, good wages, good benefits. he wrote a book about it. i haven't read it yet, but it is "take this job and ship it."

he has a great sense of humor, but you have to know him well. he is a fighter. that is what this place should be about, someone who runs public policy, and that is him. >> your time has expired. sex no, it hasn't. my thoughts about you have expired, but i have to say -- >> no, it hasn't. >> i am very generous, but i am also very honest, in a good way. >> we are here to talk about the aviation in security matters. as byron said, there been a lot of steps taken. we are dealing with everything that is global now, everything

is in an international environment. i look forward to this hearing and i look forward to hearing your witnesses, and i thank the chairman. >> mr. chairman, let me just offer a word also. i want to say to the chairman dorgan how much i have appreciated the opportunity to be in the senate with you the last two years. as former secretary of agriculture who interfaced with you a lot when i was in the cabinets, i always knew that when i had a meeting with you, i had better darn well be prepared, because i knew you were going to be prepared. even though there were probably many times where we were on opposite sides of issues, i want you to know that you are one of

the members, when you pop up on the tv screen and i am in my office going to paper work or whatever, i tend to listen to what you are saying because you are so articulate and you have so much experience that you bring to bear. so i joined with what chairman rockefeller has said. you have brought a lot to this body and you will be missed. i also wanted to offer just a word or two if i could about the subject of our hearing. the first thing i wanted to say, and i really feel i speak for everybody when i say this, and that is to just recognize how important airline security is. we all watched in horror on 9/11 as those planes were flown into the towers and into the ground and into the pentagon.

we certainly do not want to ever, ever see that again. we want to do everything possible. i fly a lot, like every member i have flown a lot internationally because of various jobs i have had their required me to do that. my experience with the travelling public has been good. i think if we explain to them the need for the security and what we are doing and why we are doing it, the public has been more than willing to go along. it has been an evolutionary process, as we all know. i think we can all remember the days when you could arrive at the airport 20 minutes ahead of the flight, make a mad dash for the ticket counter and make a mad dash for the gate, and run on the airplane. well, those days are over. the public has been under standing, and as security has

evolved as we have explained the need for security, the public has evolved. if i were to just offer one thought, whether it is international flights or domestic flights, i think if we can communicate to the public this is why this is needed, this is why we are taking this step, it will go along way to, and the concerns of people -- it will go a long way to calming the concerns of people. what are we doing about baggage? can we be assured that that bag that is put into that airplane is safe, that it has been checked? that piece of the security puzzle is dealt with. we can ask our travelers to go through a lot, whether it is

advanced screening, whether it is a pat-downs, or whatever it is, but if we are not getting the job done on cargo, then very simply, we've got a problem. i will be anxious to hear about that, but i will wrap up and just say, i just believe this is so terribly important that we get this right, that we communicate with the public, and that we continue to let them know why these measures are important. >> i came here 30 years ago at a time when you could rush to the airport, rushed to the ticket counter, and russia on the airplane, and then sit back and have a cigarette. not that i smoked at the time, but things have changed very dramatically. people were using guns on airplanes to hijack the airplane, mostly to fly to cuba but in some cases to fly

elsewhere. if you could simply separate a potential passenger from a gun, you had the security needed. things have changed so dramatically since then with very sophisticated threats like the issue bomber and the underwear bomber. this is with airports all around the world. i really pleased to date to welcome the hon. david heymann, the assistant secretary for policy at the u.s. department of homeland security, and mr. steven lord, the director homeland security at the government accountability office. mr. heyman, thank you for being with us. >> thank you, chairman, and

distinguished members for having us here today. let me thank you and join in taking you for your service in support for the department over the years and for economic security even longer. the topic today continues to be one of great importance. as you know, the attempts over the past year to attack the united states make the international dimensions of the aviation system quite clear. in both cases, terrorist look to strike at america by using the international aviation system. the structures and operations across multiple countries and international airports to attack us here at home. the key lesson in both of these incidents is that if you have access to one part of the system, you have access to the entire system. these attempted attacks highlight the fact that the terrorist threat is a global challenge in insuring aviation security is a shared responsibility. consequently, efforts to protect americans at home must extend

beyond our shores to include industry and governments abroad. america's security relies in part on a robust system comprised of many layers operated by many partners across many continents. the system of collecting security in part relies upon competency and capability of each individual partner, as such maintain effective standards and best practices is critical. i commend you on this hearing and shedding light on this important topic. we will talk today about our response to the october 28 cargo plot, the work we have done over the last year, and we have submitted a full statement for the record. the october cargo plot represent the evolution of the threat beyond passenger planes to cargo. our enemies continue to try to penetrate our security. as you said, we separated the

guns from the passengers and we try to separate the bombs from the passengers, and now the bombs are going elsewhere. partners need to continue to adapt and innovate as well in terms of addressing these threats. is that ability to adjust and anticipate strategies that will allow us to prevail. the department as a matter of response to these failed attacks and as part of our larger strategy already underway has undertaken a number measures to increase aviation security. we have added existing protocols for screening inbound cargo. with constant communication and coordination with the private sector and international governments aren't as we are able to support a larger effort by the u.s. government to disrupt the plot on october 28 before it did any harm. dhs has issued additional directed to the airline industry on extra screening of

high-risk packages on passenger and all cargo flights. those directives are in effect today. in terms are broader efforts since the attempt of detonating at -- on a flight, there is a focus on four key priorities. developing and deploying new security technologies and measures, enhancing information gathering and sharing, and coordinating international technical assistance. immediately following the events of 12-25, we initiated a broad international campaign to strengthen against the evolving threats posed by terrorism. the deputy secretary and i consulted with nearly a dozen countries, touching on every continent and region. the secretary but dissipated and five regional summits engaging nearly 90 countries in

discussions. that effort culminated in a declaration on aviation security that was signed on to buy 190 nations. the council updated it standards and recommended practice is for security to include updates on cargo security. this is a major accomplishment. in terms of developing and deploying new technologies, more than a dozen nations have joined the u.s. and strengthen their aviation systems including advanced imaging technology and the expansion of federal air marshals and screening of air cargo. this week as part of a secure flight initiative we have taken over the responsibility for vetting 100% of passengers bound for the united states on watch list. a number of other technology and

information sharing initiatives and coordination on technical assistance that my colleague will touch upon in her opening statement. we put forth a strategic document this year that was released in february. we set forth the vision of a safe, secure, and resilience homeland where american way of life can thrive. that is our vision. we articulate a clear mission, goals, objectives to accomplish this mission. we concluded wryly that this nation can protect itself -- we concluded rightly that this nation can protect itself. i look forward to the discussion today. thank you. >> mr. heyman, thank you very much for your testimony.

>> thank you all very much for the opportunity to testify before you today on the topic of efforts to improve aviation security standards. the transportation security administration is charged with protecting the nation's transportation systems. in addition to travel within and from the united states, tsa insurance the robust security applied to all airlines, regardless of where they are flying. with the daily network of thousands of flights link across the globe, the security and performance of individual operations are only as strong as those of our international partners. ogs works with international partners to ensure that security is established and maintained. ogs conducts these efforts 33

primary missions. the first one is compliance, of which i am a director. we conduct our reach an engagements -- outreach and engagements. we look at the threat, vulnerability, and consequences in place for each of the flights and airports that provide the service we evaluate. my group identifies it evaluates the risk in place, the threat and vulnerability at each of the airports that we have been charged to evaluate. we look at all the airports from which u.s. air carriers operate, those from which foreign carriers operate to the u.s., and those that we have been informed to do so by the secretary of homeland security. ogs has five regional operation centers and approximately 65 inspectors to perform this work. the 300 airports are visited on a one to three year interval.

devaluations are based on international civil organization -- standards. these are the international cards for the airport assessments. ogs conducts inspections of every air carrier that flies to the u.s. and every u.s. operation around the world, regardless of where they are flying. those evaluations are based on tsa regulations. those regulations are codified in security directives an emergency minutes. these are the mechanisms through which tsa is able to regulate and direct activities to be taken at foreign countries and foreign airports. through our outreach and engagement efforts, will work with international counterparts the global and regional levels. the global level work closely with the international civil

aviation organization and our focus is on enhancing baseline international security standards. at the regional and bilateral levels, we deploy tsa representatives at locations throughout the world to work on developing effective transportation security measures, shared best practices, and coordinate the program responses when new and emerging threats arise. we ensure that necessary security measures are implemented and that airlines are alerted to threats as best we can. capacity development is the third leg of our school at tsa. we help partners bill sustainable security practices. we have a team of instructors

and inspectors who are able to go to various countries and various airports and evaluate and identify areas where they need additional help, and then we work with state department organizations and other findings sources to get the mechanisms to be able to pay for extended support to various locations. two such locations are st. lucia and liberia, and we have been working extensively with yemen. we have a team that has been there for two weeks early in november and we have a program that will be starting up in the very near future that will be an 18-month program with yemen. in the past 11 months, we have taken a number of initiatives on that have enabled us to make gains in compliance in out reach an engagement. for example, we have deployed personnel to the winter games in

vancouver, but to the fifa world cup, and to haiti following the earthquake. we have signed agreements for additional -- we have exchange liaison officers with foreign governments. we have concluded the efforts in st. lucia and are about to conclude the efforts in liberia. >> thank you very much for your testimony. next we will hear from mr. steven lord represents the government accountability office. >> i am honored to appear before it the last hearing chaired, and we also want to thank you for your years of service. today i would like to discuss u.s. efforts to harmonize aviation security standards with those of other nations.

the december 25 terrorist incident in detroit and the recent air cargo incident in yemen underscored the importance of undertaking efforts to harmonize the standards. today would like to do essentially two things. of what to discuss standardizing practices as well as discuss the relating challenges we encounter in doing so. one of the key messages i wanted to convey today is tsa and dhs have taken several important steps over the last few weeks and months. at the same time it is important to point out that harmonization is not a new concept. efforts have been ongoing for many years and progress has been incremental and delivered. for example, the first amendment to the index on aviation security was adopted in 1976. the latest amendment, a minute 12, was approved last month

after three years of patient negotiation. in terms of progress, and as noted by mr. heyman, the secretary of homeland security has participated in five regional summit since the beginning of the year. the security principles espoused during these regional summits form the basis for the september declaration on aviation security. this is a very significant achievement. in this declaration, all participants agreed to undertake efforts to strengthen security screening procedures, utilize modern technologies to better detect explosives and dangerous items, as well as provide technical assistance to those in need. tsa plays a very important role in these harmonization efforts. tsa has been at the forefront of efforts to encourage other countries to adopt advanced imaging technologies, the so- called body scanners.

at least 13 other nations are now testing or deploying these scanners or have committed to deploying them in the near future. agency's work closely with foreign governments in drafting the latest amendments. the major focus of recent negotiations is air cargo. harmonizing air cargo standards is extremely difficult because of the global nature of air cargo supply chains as well as other regulatory and logistical challenges and the number of players involved. as the tsa administrator noted in a recent hearing, the tsa will need several more years before it can effectively ensure that all in downed air cargo -- inbound air cargo is fully screened in accordance with 9/11 requirements. i would like to give miss

reeder a nod. for the program she manages, it helps identify where a country might need additional security training and technical assistance. we think that is a useful expenditure of tsa resources. we'll have more to say about this program next year. we are doing a comprehensive audit and expects to report on this probably in the middle of next year. at the same time, i would like to also highlighted a number of challenges that dhs and tsa face in their effort to harmonize. harmonization depends on the voluntary participation of foreign countries, which a sovereign nation cannot be compelled to implement specific security measures. many developing countries do not have the financial resources or

human capital to enhance the security programs in a manner consistent with our expectations. third, legal and cultural factors sometimes inhibit carbonization efforts. a great example -- harmonization efforts. some have expressed concerns related to privacy in held regarding the body scanners. the recent air cargo plot demonstrates that enhancing aviation security is a shared responsibility among u.s., foreign, an industry stakeholders. the harmonization efforts we are discussing today should be considered part of our nation strategy for deterring future threats. other elements include timely intelligence, effective technology, well trained and capable staff, and regular oversight conducted by this committee. mr. chairman, that concludes my statement and i look forward to your questions. >> mr. lord, thank you very much

and thank you for the work the gao routinely does. we have a second panel of only one presenter and i would like to ask your cooperation if i might ask that presenter to come forward to the end of the table and make his presentation. he is the president of the airport council international. we could have his testimony on the record, and then when i call on members of the committee we can ask questions of all of them. so thank you for your cooperation in allowing that to happen. you are the president of the airports council international and your full statement will be made part of the record. >> thank you very much. let me begin as well by adding my appreciation for a career

well served and for all you have done for the country, the senate, the aviation industry, and as my colleagues here have said, i am honored to be part of your last hearing, so thank you very much. on behalf of the members of airports council international in north america, thank you for allowing me to testify here this afternoon. it is important that industry and government work together to find solutions to secure our aviation system and passengers. close coordination yield positive results. after discovering a bomb threat in 2006, tsa coordinated closely with airports and airlines to ban liquids, aerosols, and gels. airports were instrumental in reaching out to their communities to explain the new checkpoint procedures to help mitigate confusion at airport security checkpoints. in the aftermath of the attempted attack on christmas day 2009, tsa impose new security requirements which

require passengers boarding flights to the u.s. to be subject to additional screening and enhance searches of carry-on luggage. the new procedures call significant weight times at security checkpoints and in many cases, flights to the u.s. were delayed or canceled. toronto airport had no choice but to work with the airlines to cancel 25% of all its u.s. bound flights due to delays caused by the increased screen requirements. these new mandates were particularly cumbersome for european airports, which unlike the u.s. are actually responsible for screening passengers and baggage. unfortunately what the department of homeland security and tsa work closely with the airlines on december 25, they did not coordinate with airports. we press for a meeting with secretary napolitano which he graciously gave us. we offered to assist dhs with working with airports domestically and internationally to develop sustainable security measures.

since then we have begun to better coordinate with foreign governments to strengthen aviation security standards. in addition, we routinely encourage canada and the european union to develop mutually recognized standards for security screening technology. having similar standards will allow passengers, baggage, and cargo to be screened once, which will enhance the efficiency and effectiveness of the security process. as a result of the christmas day bombing incident, tsa announced plans to install it advanced imaging technology units to replace current metal detectors. although supportive, we stressed the need to consider the thruputs of screening versus metal detectors and the space available at airports. we remain concerned that future

installation will pose significant challenges at airports where major facility modifications may be necessary to accommodate the equipment. along with installing ait, tsa has implemented enhanced pat- downs. we strongly urge tsa to conduct a public awareness campaign to educate travelers on the rationale and necessity for the new procedures. tsa losses public awareness campaign only after a public backlash, unfortunately. it is critically important for airports to receive timely intelligence information from dhs and tsa. as the christmas day bombing incident shows, this is not always the case, you are receiving this intelligence allows airports to make informed decisions to help mitigate threats by effectively using their limited resources to ensure the security of their facilities and passengers. finally, tsa's use of security

directives for airports has become increasingly challenging. we understand tsa must be able to issue security directives in response to intelligence involving an imminent threat as with the liquid four years ago. we are pleased with tsa is willingness to examine some outdated security initiatives 3 in the security task force and initiated to allow an open discussion about sustainable security measures. we commend tsa for this coordination with the airport industry. aci north america and its member airport stand ready to part with tsa to help maintain a secure aviation system. you might be interested to know that yesterday representatives from key commercial aviation stakeholders got together in our

offices to discuss all this and the best ways to move forward. we are prepared to work with you come with colleagues in congress, with dhs and tsa and others in continuing improvements to the system. we are optimistic that dhs and tsa will more closely coordinate with the airport industry and the international community on future aviation security measures. allen forward to taking your questions. >> thank you very much for your perspective on these issues. i have a good number of questions, but i think will defer questions until others have been able to ask their questions. i will call on senator rockefeller. >> i will just take a couple of minutes because we are called back to something else. we have a very good team at homeland security and tsa, and i thank them for their work, but i

particularly did not want to miss a moment to say that we are going to miss you, mr. chairman. we have shared together for a great number of years. i left for a couple of years, and i am hoping you will have a chance to think about that and maybe we will see you again. it has been an honor and privilege to work with byron dorgan. also, articulate, loves his job, and he gave it his best. you will be missed, and we wish you and your family all good things in the future. don't be afraid to give us advice. you haven't been until now, so why should you stop at this point? i will put my questions to them in writing. >> thank you very much, you are all too generous.

>> i are for the observation in my opening statement, as you know, that if passengers can be kind of forewarned about what is coming, it is possible -- it just seems to work better. give us your perspective on that. as we think about the next generation of security and what might be required, what is the best way to roll these things out, if you will? >> the point you made cannot be overstated. it is critical. in 2006 we had a liquid plot. many of us in this room or on conference calls late that night and nobody knew anything as it was going to be rolled out the

next morning. there was absolutely no lead time to educate the public on what was going on. there was an awful lot of people who went to bed that night thinking they would show up to the airport and everything would be fine. they got there and it was much different. because of the efforts of all three players, the government, the airport, and the airlines, when people got to the airport, there are folks they are giving him pieces of paper telling them what was going on, explaining why. there's a lot of excellent work done with the press to make sure that when people woke up, the story was out. it is worth looking back on that particular case and seeing how in a situation with no lead time at all, it really worked very well. it was a lot of a frustrating about the pat downs and so forth -- john pistol has already

indicated that he wishes he could have this one back. passengers want information, and whether they or delay on the tarmac or in the security line or whatever, they want the information and they want to know that you have their best interests at heart. i think if we can do that, all working together, that is really the model for the way forward. >> i appreciate those thoughts. i don't know which witness would be best equipped, but i would like just a little education here. in my foreign travels, my observation has been that, for example, if you fly from, let's say a third world country, and you fly from the interior of that country, the security is quite honestly, kind of so-so.

it seems like in foreign operations, they have a hub system where you fly into a more major airport city, whatever it is, security really ramps up at that point. it looks more like u.s. security when you come over the ocean, where ever you are coming from. is that correct observation? what is the key element in terms of bringing security to that system, if you will? >> i will take the first part. the observation is possibly correct. the difference you may be observing is that in 250 or so countries or places around the world, they represent a last

point of departure for your coming from another country to the united states. those points of departure we have programs with, security programs and security directives to ensure that standards are adhered to it that are critical for our own domestic interests. those are regulated through the 9/11 act and are overseen by my colleagues in terms of auditing them and ensuring they maintain those standards. so you will see -- you may see that type of difference. part of the reason we have gone through this last year's efforts to increase standards globally is so that we can actually raise the bar across all points of departure. >> to provide a little background, the program i manage

now actually began with the twa flight back in 1985 were the navy diver was taken off and assassinated by the terrorist. that was the genesis of the foreign airport assessment program, which has gained momentum over the years. the challenge we face is that it focuses on international airports. countries are encouraged to apply the same standards to their internal airports, but not obligated to do so. if you are taking off from a small airport in poland and you go to warsaw, that is all within the eu, and unfortunately that is -- and fortunately that is subject to pretty strict standards. the same set -- the same situation in canada is not apply. if you take off from kenya and go to nairobi, those airports

that have direct service to the united states, as mr. heyman explain, they are monitored by my inspectors. we go there at least once a year to look at the air carrier inspection activities and we go into an airport assessment at least every one to three years to ensure that they are fully complying with the standards. when they are not fully comply, we take actions with the government or even as the airport to provide additional training. >> senator rockefeller. >> i agree with the center on the public's adjusting to more security. there really is not any choice, and the pat-downs, which actually affect only about 3% of the people who go onto airplanes, and they have to fail another test to get that, it is sensationalized and it makes everybody nervous.

fact, it is necessary, and others have learned how to live with this, and i think we can, too. i agree that tsa is doing a terrific job at it, and on most trips i will find a tsa person, particularly in rural areas where they are dealing with a family that does not speak the english language all that well, but they handle a very nicely. i try to write a letter to the supervisor of those people and say they are doing a great job. it is part of the responsibility of the media -- of the media and the american people themselves. i was very interested in what you said about canada and 25% of their flights being canceled. that raises a question that really affects all of you. not knowing what their security procedures are, i would assume that would be pretty rigorous.

then i would potentially falsely going to assume that once it took off from canada and landed in the united states and more than departing from that airport to some other destinations, that they would be allowed to go without special attention because they had been through the canadian one. but what you say is really stunning if they canceled 25% to this country because of long lines of waiting. doesn't make sense to me, because i only travel from the busiest airports in the country, and they don't take that much time. so several questions. do we have those kinds of arrangements, all of you, with other countries that if they do have good security, that they

can not get a pass or whatever the proper word is within america as a change to another destination? the very fine line you have talked about, the line on a third world country where you say the rural airport is not so good but the main airport is good, that is very tricky. it is hard to get a third world country to upgrade. it is expensive. they don't have experience of the mentality and the resources that we do in the west. how do you judge in your audits of these countries how much they need to do to be satisfactory in order for us to trust them? had you make those judgments?

-- how do you make those judgments? >> going to the canada question first, there are 13 airports around the world that are pre clearance airports. there are eight in canada, for in end ireland and the caribbean, and there are customs and border protection officers to do the customs, immigration, and agricultural screening of all the passengers. we have entered into agreements with those countries where in the conduct screenings equivalent to what is done in the united states. they do pat-downs the same way we do. they do everything, perhaps not identical, but certainly very comparable to what is done in the united states at u.s. airports. this is a very complicated legal matter.

it took several years to go through the development of the standard operating procedures to ensure that the line and was there that passengers were all being screened physically upon departure the same way they would be screened at the united states. as a result, upon arrival, those passengers do not have to go back through -- they don't enter the federal inspection station by us. they do not have to go back through tsa screening because we have already verified and we regularly inspecting to ensure they are complying with tsa. there are 24 airports in canada that provide service to the u.s. 16 are not pre clearance, and they comply with transport canada's requirements, not with tsa requirements. so persons that apart from those other 16 airports -- >> this is actually very interesting. >> toronto is a pre clearance

airport, so it may have been that there were issues with them understanding the complexities that we had been working on. there are not always the very first in the line of sop's that get generated. the agreement we have reached with different countries, with ireland, aruba, bahamas, bermuda, and canada, their roles and responsibilities are fulfilled at those forward locations rather than being fulfilled at the u.s. locations. we ensure that the passengers and their accessible property are screened exactly the same way that they would be here. there are 10 islands in the bahamas that have clearance to the united states. those measures are not the same as what is done in freeport and

nassau. it is not as rigorous as screening is what retire -- require from those preclearance at airports. we require a certain percentage of passengers they get randomly selectively screened. that is where the difference lies from the passenger experience perspective. the aviation and transportation security act requires that specific things be done by tsa for all flights and departures from the united states, weather and an internal, domestic flight or an outbound flight, there are specific rule permits. that is where we get into the challenges with baggage that arrived from canada and from other preclearance locations. that baggage is not being screened using the same kind of equipment that we require for screening here in the united

states. so we continue to have those discussions. >> my time is up, and i will continue in the next round. >> as to the third world countries, i have a cadre of 65 inspectors at any given time who are very skilled and have a lot of knowledge and expertise. >> they are doing the audits? >> they are going to the foreign airports and looking at them. they will look at an airport the size of this room, for example, and look at it weather the doors are locked. it is not as arduous perhaps as dfw, but there are a limited number of doors and keys and they have good key controls. they may not have a fence, but

they have a lake full of crocodiles. there are different ways they ensure that they have access control. it is not like you have to have a 10 foot wall with a triple concertina wire at the top. there are different ways of accomplishing this. we ensure that the inspectors are familiar with the best practices to meet these requirements without having to have all the bells and whistles that we may have a u.s. airport. >> on the canadian issue, just a quick perspective. i would be delighted to bring in the airport director from toronto the next time he is in town or we can fly him down to give you some further perspective on this. toronto has more departures to u.s. cities that -- there are a

couple of hundred departures each day. even the busiest european gateway's do not have that kind of traffic, so on the extra requirements, when you multiplies situation like that, and they had some constitutional questions with taking people whose passports had been stamped at one of those 14 countries and treating them differently, so they had to treat everybody the same. they could not screen everything at the gate because they had to screen all the carry-on is by opening them up. i want to give tsa some credit here. we work very closely with tsa and the folks in toronto to help alleviate some of this and find some solutions to it. from the get go, when these requirements were first put in,

the airports in canada have so many more departures, especially from toronto and montreal and calgary and vancouver, so it just sort of multiplied out. >> let me ask a couple of questions. the question that was asked earlier about the hub and spoke system in other countries or other continents, for that matter. that hub and spoke system is very much like ours, and a circumstance in which terrorists i assume would look for the weakest link to enter the system. once in the system, you will not be screened and reece green, generally speaking. ned and rescreened. m.r.i. that the terrorist would

try to find the weakest link to get into the system, and how are we responding to that? >> there are very limited number of airports and africa that provide direct service to the united states, but from every airport, everyone has to be read screened. it is not as though if a person gets on an aircraft and you ghana and flies to send all that ugandan threat is as great. places like yemen and pakistan, there are other areas where refocus attention as well, because we want to ensure that because there are so many flights coming from this location, or because there is an

incident that has occurred, we want to ensure that at the very beginning that security is being implemented. so we will do that at the direction of the secretary. >> of freehold and his hearing at the exit airport for the christmas bomber -- if we were holding this hearing, what kind of security we find that airport at this moment? >> he departed from amsterdam direct to the united states. at that time, amsterdam did have full body emitters'. they have since placed ait at of the departure points for the u.s.. the security in place at amsterdam, and can provide a briefing on exactly what it is. that would not be an area of concern for me. >> dimension to -- you mentioned a universe of 300

airports and then you also mentioned a universe of 60 or 65 inspectors. go over again what those 300 airports represent. >> about 270 of them have direct service to the united states. another 30 or so have all cargo service to the united states but not passenger service. recognizing that we do have limited resources, we have gone through in done a comprehensive evaluation of the threat, how much terrorist activity has been documented, how many terrorist screening database matches go through those airports, etc. we look at the size and number of the aircraft that apart from those locations. if we are looking at an airport that has two flights a week to the united states and there has never been a terrorist training

match, that is not very high on the list. those are the ways we look at where we should send people and ensure that we get to all of these locations in a reasonable amount of time to ensure that the security posture at those locations continues to meet the standards we have identified. >> you represent airports in the united states, correct? we understand that we have standards here that we expect to be implemented across the country in a similar fashion. it is also the case with respect to aviation safety or environmental standards that you can have what and standard you want on paper. the question is, how are they implemented and enforced? can you give me your assessment,

based on the meetings you have held with international airports and partners abroad? what is the notion of the enforcement of standards, as you see it? what should we believe exists out there with respect to the enforcement of standards? >> in talking to airport leaders all over the world, there is not a single one of them who wants an insecure airport. they all want the best security they can possibly have. in many cases, they lack the resources or maybe the training in some cases to do that. so they are certainly looking for that. there are plenty of places around the world in europe and elsewhere where the standards are as good as what we have here. i think the main thing, the main

point i want to make about this is that this part of homeland security's impulse to harmonize and work with other countries is exactly the right way to go. early on when we were responding in the middle of the decade to liquids and gels, people were just frustrated, and now they are part of it. there is a genuine desire around the world to meet the high standards they can possibly meet. you have boeing and airbus building planes that can now go point to point to lots of different places we did not have before. people cannot get in on that unless they are part of the solution. i am very pleased that the u.s. government is working so hard with our international partners to try to develop the standards and take them on board so we can have a more uniform approach

throughout the world. >> mr. lord, what progress has tsa made from your perspective in establishing a system to screen 100% of the inbound air cargo on passenger aircraft? >> we should report in june of this year on that very subject. while we gave tsa good marks for establishing a system to meet the 9/11 act requirements on domestic air cargo carried on passenger flights, we pointed out that did not meet 9/11 act inbound airs on in baro cargo and passenger flights. you are essentially working with the number of foreign governments to help harmonize standards and ensure they have systems in place, but it is an incredibly complex proposition and the tsa administrator indicated that it will probably

take until 2013 to come up with a system. i don't think they will ever have identical screening systems. i think the operative word is commensurate with. it is going to take some time to do that. it is an evaluative process. they have to collect informations and it is difficult. >> senator. >> thank you. thank you for calling the hearing. i want to express my appreciation to the panel of witnesses who have joined us here to discuss a very serious matter that is on the mind of more and more americans. the increase in travel always happens at this time of year. whether it was the threat in detroit last december or the recent plot regarding suspicious

packages, there is no question that al-qaeda and other groups continue to explore weaknesses in our air transportation system. maybe this has been asked. if it has, i apologize, but with all of the use of advanced imaging technology -- and i will direct this to be -- to whomever would like to respond to liit -- did you test the technology in other countries? > in the testing uppeof

technologies, up we -- and testing the technologies, our concern remains the number of false positives and what is required to resolve the false positives. we continue to work with the other countries to encourage them to procure machines similar to what we have already procured since we have been doing so much of the testing. we are cooperating with them in identifying what the methods are. we hosted a conference last november, well, three weeks ago, where numerous countries were represented. we had 85 people from all over the world who attended to ensure that they understood fully what the benefits are. that helped to ameliorate some of the concerns about some of

the drawbacks. >> as of today, i believe that tsa has deployed about 375 units in 30 airports. 13 other countries are either testing or deploying these. the number of machines we're actually deploying is rather small. tsa claims to have 500 machines deployed by the end of this year, 1000 by the end of next year, and 1800 the year after that. i think it is important to understand the scale of the deployment in our country vastly exceeds what other countries are currently considering. >> i will just add one other things in terms of groups, one of the things we do in an exceptional way is the privacy considerations we have put in

place. to begin with, all images are viewed in a walled off area by somebody who is not where the screenings are taking place. the officer cannot view the images. the images cannot be stored or printed. the officer cannot go on to the next image until the previous image is deleted. they are not allowed to bring a camera into the room. they will be fired if they do. the images are blurred inappropriate ways. there are enough privacy protections that we put in place to ensure that the traveling public understands that we take them seriously. >> from an airport point of view, we are very interested in the development of technology that looks like the character comedy -- the character gumby.

if we can get that technology over the finish line, we do not need to have the person in the room mccann see you, me and everybody else. we can -- who can see you, me and everybody else, but we can put them in another place doing something more important. i just want to talk about the fact that they included stakeholders. it is really important that airliners and airports are involved in these solutions. >> this is some sort of software application. is it a cost issue or is it just not developed yet? >> it is not a cost issue. it would be an addition to the existing hardware, but the technology has not evolved that

far yet. >> could someone explain it to me add a third grade level? we want to get machines that are at least as good as the human looking at the image. we want to get beyond that point, and that really wrangle with me. g home with me. >> the programming and the technology would be usable on the existing frame. are you going to have to buy all new machines? the answer is no. >> it will be like a new card we can put on our computers. to get to that goal of having 1000 machines by the end of 2011, and again i would address this to the assistant secretary,

could you give the committee a sense of the percentage of these machines -- that the machines would cover bursa's existing walk through -- vs. existing walk-through? >> we cannot. that is not something? >> if you require 1800 machines, it is still not going to be enough to ensure 100% coverage. tsa wants to apply these machines to the highest in volume airports. >> when it comes to separating the machine from the actual tsa screener, can you tell the committee how much training is required when it comes to operating those machines? >> it does require training. each of the officers is required

to go through mandatory training and updates. they are also overseen by supervisors to receive the same training -- who receive the same training and continue to ensure the integrity of the program. >> thank you. >> senator rockefeller. >> final question from my point of view. we talk about information and machinery. the information is about passengers. the european parliament discontinued the passenger name recognition id. that can be as important as the machinery itself. it can reveal things that the machinery never could, things

such as content. i think machinery is the final passage, and ought to be, but the sharing of information about passengers surely has to be extremely common -- extremely controversial. why did they turn it down, and who sets the standard on information? do we have the best way in the united states of delineating this information? i would think it would be the case that germany, england, amsterdam, etc., in many cases might feel more threatened because of their population. can you enlighten me on that? >> the european parliament did not vote down the agreement. we have a bilateral agreement for sharing passenger name records.

these are the records that travelers provide to their travel agents when they purchase a ticket. they are forwarded through a number of discrete fields. >> so, it is not security. >> it is for security. the purpose of that we get that', information and it is sent to the airport 72 hours in advance of the flight. that allows us to check against our watch list and do the kind of screening that we need to do to make sure that people are either not on the flight of who should not be on the flight if they are in known or suspected terrorist, or that we need to take a second look and do some additional screening. the pnr is extremely important. it has helped us on a number of to doions to identifyin,

analysis that allows us to find co-travelers, florida is example -- for example, and to identify individuals who may be tracked through customs. every nation sharing is critical. parliament has not rejected that agreement. they have questions about it. they want to strengthen the privacy protections in it and a number of other elements. they said they are going to withhold their voting until the commission negotiate a new agreement with the united states. so, that -- the commission received today their mandate to negotiate with the united states. that will be an upcoming negotiations starting very soon. >> so what information needs to be there? >> you asked about standards. united states has 19 different

types of data that we require, and the requirement is different from country to country. other countries do not have the same standards as the united states. you mentioned germany and the europeans. europeans do not have a passenger name recognition system at this point. a number of countries want to have it. >> is that because of the european union factor? >> the european commission has not at this point taken back on. a number of countries are waiting to get the equivalent of a mandate to have a uniform system. at this point, that does not exist, so they do not have that tool. >> of a pink depth -- i would think that in the european union, everyone having the same

kind of passport would actually be a risk when it comes to airline travel. >> there are risks that have been discussed in the public in europe. passengers have all of this. we have a need to have all the tools to avert that threat. it is critical. >> is the passenger name recognition system the same for all members of the european union? is it not satisfactory or compatible with our own? >> that is to be determined. member states seek to have their own system and the european commission wanted one for all member states. >> that sounds like two decades worth of work. what is the problem here? >> i will defer those questions to the european commission. look, they have their own

process by which they go through to develop the tools. just this week, the counterterrorism coordinator for the european commission stated quite emphatically that more investment needs to go into terrorist -- counter-terrorism programs, in particular transportation security, and that europe needs to include better coordination and understanding the threat. they are having discussions now. >> finally, if they do not come up to the standards we think they should have, if they are ever going to agree on anything, surely they should, but europe is europe, what if they do not come up to our standards? what do we do? >> we have an agreement with the europeans today. we have taken place a highly effective