kind of growth in the economy that you had back then so it's hard to make those comparisons. it's true what warren buffet said that when you get down to it, the wealthiest people in america are not necessarily paying the 35% income tax rate. you're often looking at the 15% capital gains tax rate because people who are at that level are taking in a lot of it through investments, through partnerships that are set up, through special investment vehicles that allow them to draw at the lower capital gains rates rather than the higher rates and so that's part of the discussion that the deficit commission started in some small way but i don't think they've done enough of that looking at that looking at the disparity between what should be the progressive tax rate in what has been designed and what we're vooeg right now.

>> do you see any indication that there is the political will within the congress to have a rational discussion about tax reform? >> there is the will to have a discussion, whether it's rational is another issue. there is i think a recognition from everybody on both sides that the current approach is not sustainable. once you at least get to that recognition you can start discussing the solutions but i think in every circumstance we've seen from the government when you have a problem you've known about for a very long time it usually takes a crisis before it is somehow dealt with. the crisis whether it's security or financial markets or in this case the debt is usually something that everyone will talk about until the crisis comes and having the discussion now from the deficit commission and from all these other

commissions at least presents some bit of a playbook that you can use when the crisis comes. it's possible that there could be some miraculous coming together from democrats and republicans where they decide to deal with the problem. this was done in prior governments, through a government shutdown. maybe that will be the avenue to do it. for all sorts of political implications there. the government shutdown isn't seen -- is seen as more of a political exercise by financial markets than the more serious scenario, a default on the government debt and that means the fall on the government debt just to be clear, treasury secretary timothy geithner sent his letter to congress last week warning about this because there's been a lot more discussion from a lot of the tea party members coming in saying that they will, they're fine with the default on the government debt if that's what it takes to deal with the debt and to bring down government

spending and so the treasury secretary laid out in this letter that it's between the -- the u.s. will basically hit the debt ceiling sometime between the end of march and the middle of may. and the reason, he says, that he offers this kind of a loose timeline, one you don't know how much tax revenue is going to be coming in over that period and that could extend the moment of not being able to go and issue more debt. but once you actually hit that ceiling, the treasury is legally in theory prohibited from going out and issuing new debt to be able to pay back existing debt holders, issuing new debt to fund the government, and that's when investors truly get worried. there is going to be some point before that happens when the warning signs go off on wall street where people say that the politics are actually affecting the underlying problem here and there's not going to be a

near-term decision to raise the debt ceiling. so the reason there is so much latitude is because there is a huge number of government funds that the treasury secretary can tap to deal with keeping the government open. you can actually hit the debt ceiling and not be able to go and issue new debt but then the treasury department has money on the books of the federal reserve so it can actually tap down an account that it has at the fed and use some of that money. there is a retirement fund with $90 billion. you can pull that out. the exchange fund, $20 billion in that. something called the federal financing bank with $15 billion. so you can start drawing from all of these accounts just to keep the government operating and avoid that meltdown moment.

everyone in financial markets knows that even when you get past that normal point where you think the debt ceiling is going to be hit you have some bit of latitude, probably a matter of weeks and even during that period there are other things you can do to deal with the problem and at some point the debt ceiling has to be raised in the next five or six months and if that is the moment that leads to some kind of negotiation, whether the $100 billion in cuts that republicans, incoming republicans have been asking for, or something more long term, then that's the opportunity here. as the fed chairman has said and a lot of other people have said it's not the short-term borrowing that is the issue here. it's the long-term borrowing and even if you were to continue at trillion dollar deficits for a year or two that is actual noit seen as a big problem by

investors who are looking at u.s. government debt. it is still the safe haven and still the reserve currency and if you don't deal with the problem of three or five or ten years down the line, then that's when if there is no long-term plan to deal with it then that's where the real crisis is. >> one of the suggestions in terms of raising revenue and it's a perennial question is addressing the mortgage interest reduction that's been brought up again this year. what is your sense, given the still fragile state of the housing market with the proposals not to do away with it all together but proposals to lower the cap on it and tinker with it in other ways? do you think that has any chance at all of getting anywhere? >> well, the notion of lowering the cap on the mortgage interest deductions actually one that i think has some potential for

traction. instead of allowing somebody to deduct all of their mortgage interest, up to whatever their highest tax rate is 35% maybe doing that at 28%, that is really the equivalent of the discussion of whether to raise taxes on middle class families or the highest income families and the housing, people in the housing market say that getting rid of the interest, mortgage interest tax deduction would be devastating to the market and if you were to do it right now it probably would be. one of the problems and their point is correct that people who have bought into the market have bought in with the assumption that this deduction would exist and so in some ways, people who are buying a house think it's like -- it's a great benefit but that's in large part been built into the cost of housing. so people who are going -- most realtors are sitting down with you at the table and saying here is your bottom line cost after considering the interest deduction. that's probably not going to

affect people who are buying houses at a million dollars. there is some discussion about maybe putting the cap at mortgages at $500,000 so that would create some problems for people in california, new york, d.c., some of the high cost housing markets but it's not going to really block out that many people in the middle class. so that is probably going to be accompanied by some other discussion about the extension of the bush era tax cuts. but until you start with this idea of zero based budgeting we started to hear from the deficit commission, really starting with the blank slate and saying we're not going to include any deductions then you can get to the point of having tax brackets from 8% at the low end up to 22, 25% at the high end if you remove all of those deductions that affect everyone. the same thing is going on in the debate about corporate tax rates. you can reduce the corporate tax rate from 35% down to something

else. maybe 25% by removing all the deductions but you already have disparities built in because of the existing deductions and a manufacturer may be paying 10% or 15% in taxes because of their deductions whether it's for investments or equipment into something else and a financial company is probably going to be paying 35% so a lot of this benefit would end up going to financial companies and there is a whole other set of politics involved in that. >> there is obviously a lot of talk during the stimulus about how i think most economists seem to agree the stimulus helped prop up the economy for a long time but now that there is this political consensus formed around the need to cut spending is there any role for short-term spending in the future from this point on to continue helping to prop up the economy?

the only short-term spending would be tax cuts disguised as short-term spending and that is what we're seeing now with the tax cut extension and the reduction in social security payroll taxes. that's, when we talked about stimulus in the past decade or so in 2001 to 2003 and then in '08, people were getting checks from the government and that was just -- that was stimulus. republicans liked it because it was also a form of a tax cut and for whatever reason it doesn't make sense in terms of arithmetic but put something as a tax cut you don't consider the debt implications of that and we've seen in the '80s and the beginning of this past decade what happens when you don't actually account for tax cuts in the budget and you end up building larger and larger debts. there is some potential to offer additional stimulus in terms of sending money to certain segments of the population

through what can be called the tax cut but you're not going to see any big spending programs coming up. >> since january of 2007, what have been the biggest factors in driving up the debt and the deficit? what exactly has the increase -- i'm picking that four-year period because there is so much political dispute over the past few years on whether the deficit increase is due to the -- some people blame the stimulus exclusively and some people -- that's why i'm thinking january, 2007, to today. that is a good question because we can actually look at -- we were running a deficit going into 2007 and so you could see, though, that the debt was at what, roughly $10 trillion when

at the end of the bush presidency and we've added $4 trillion since then. the key factors in that huge difference are primarily the fact that the economy has been very weak which means lower tax revenue. that started, you can see the point where the recession started, this gray shaded area is the recession and when that started in 2007, december of '07, tax revenue started weakening and you could see the accumulated debt taking off. how we got from $6 trillion up to $9 trillion is the effect of two wars and tax cuts that weren't offset by spending cuts and spending programs like the medicare/prescription drug act. that wasn't paid for. and people knew at the time that

it wasn't paid for but there was some expectation just like in the '80s that it would lead to a much stronger economy and you did have a stronger economy in the '80s. i don't know if it's as a result but accompanying this and so at least you had a recovery back then and you had pretty decent economic growth after some of the tax cuts in the beginning of this past decade but it wasn't great by any means. the average growth in the economy in the 2003-2007 period was about 3% a year which actually is considered average on par just to keep enough of the economy growing strongly enough to keep people coming into the labor force and keep unemployment steady. but unemployment was low out of the last recession. it was about under 8% and so getting unemployment down to 5% wasn't that much of a problem. [ question inaudible ]

>> the weakening economy is the primary reason because if you actually look at the total cost of the stimulus, just the stimulus, the january, 2009, february, 2009 package, that was less than a trillion dollars. so you're talking depending on how you account for it somewhere around $900 billion and we're looking at an increase into the debt of about $4 trillion over that past few years here. so the bailout actually is probably going to turn out to be a profit for the u.s. government. we heard a lot about $700 billion being spent and at the time even the bush administration was accounting for maybe $250 billion out of that $750 billion being expended and that was what their baseline calculation and certainly been coming down as that money has been paid back by the banks, all the big banks have paid it back and most of the smaller banks are now on the way to paying it

back now. and the outstanding program of course is general motors and that stock needs to be sold off and aig, which surprising most of us, looking like it's going to be able to turn a profit for the government once all of that stock is sold off. >> would you comment on the impact of the tax structure and the mobilization or rather the moving of american industry overseas, moving actually corporate headquarters and manufacturing plants? >> well, the impact of moving manufacturing plants overseas is obviously a jobs issue and if you are removing those jobs, steady jobs in the u.s., then all of the tax revenue from those workers and the steady jobs is going to be lost and the revenue from those businesses. companies moving their operations overseas to avoid

u.s. taxes, that's a much different issue. and there is a figure for this from the irs and the jao and a lot of people have looked at it. i don't know the exact figure. but it's not something that is the underlying, a huge issue in the trillion dollar deficit that we're looking at but it is certainly billions of dollars, tens of billions of dollars that could be had. but you're also seeing right now a much different argument about the variations in corporate tax rates abroad versus in the u.s., canada, the uk, number of other countries are lowering their corporate tax rates and this is becoming a competitiveness issue and now we're starting the debate in the u.s. it's probably not going to be resolved in the next two years but a debate about whether the u.s. and corporate tax rate needs to be brought down to deal with that issue as well. but the point is certainly

correct that some of this money is being held offshore and there have been -- it's kind of complicated how the proposal would work right now but there are some efforts to bring some of that money back to the u.s. that's been sitting in accounts abroad and tax it or avoid taxes on it just so the money can come back in and perhaps be used as capital to create jobs here in the u.s. >> could i ask a question? when they get to the point on the hill when they're staring the crisis in the face, and have to do something, is there any out that is going to resemble what the british model has been which is sort of a fixed formula for cuts and revenue enhancements? have you heard that talked about? is that something that might happen here? >> i've not heard any specific discussion here about how they'd actually go about doing it.

only that if you were to come to the point of a crisis, and we actually -- the interesting thing about this moment is we have at least several months if not years of preparation for what you would actually cut and there is some understanding that you have to do further cuts in the defense budget and secretary gates is already working on that and announced some of that last week so you have more of the frame work here rather than looking at a model like that. it's hard to draw a comparison like that. you can almost look at the states individually and see the individual states and what they would have to cut to make those comparisons to what's being cut abroad -- pension funds, retirement benefits, for public workers. those are the things states will have to do and make a decision on obviouslyobviously, because it's harder for states to borrow money in perpetuity but i

haven't seen any discussion on the hill about what to do on the crisis moment. and when you look at the september 2008 moment, nobody really knew what to do and when you hear chairman bernanke talk about how they came up with the $700 billion it wasn't quite out of thin air but the original plan was to buy mortgage assets and they were looking at a housing market in terms of total assets of maybe about $14 trillion and that's the size of the economy and they thought maybe 5% would be enough to do it. but i remember in the days leading up to that moment somewhere between september 15th when aig failed and the end of the week when lehman brothers and the end of the week people going to the hill, we had figures of maybe $250 billion, $300 billion is what you would need to stabilize the financial system and nobody really knew.

secretary paulson when trying to deal with fannie mae and freddie mac asked for what's popularly mocked as the bazooka to say give me a blank check to deal with them and if i have the ability to use it, then financial markets won't expect me to have to use it but that turned out to not be the case and so i don't think there's anymore blank checks in that sense. >> how significant is the decision to raise the debt ceiling? i mean, just because the congress decides it's okay for the government to be completely overleveraged doesn't really make it okay for the government to be completely overledveraged and that u.s. investors will have confidence in the economy. so, how -- just because congress says, okay, you can raise the debt ceiling, that averts the crisis? how does that work?

>> i guess you're looking at short term and long term crisis here. if you don't raise the debt kreeling that's a short term immediate crisis an all of the affects you would see from a long-term crisis happen right now because if the government can't borrow then -- legally can't borrow then you ur just stuck and then if the government can borrow then but that's a warning to investors that maybe the u.s. can't sort out the political problems in dealing with this just like other countries in europe have dealt with this politically and managed to do it though obviously with a lot of trouble and difficulty in the uk and greece and spain and it lain ireland and all these places, and if there is a signal to investors that maybe the u.s. won't be able to deal with this then the cost of borrowing almost immediately goes up. and so, then you not only have as a result of that default by the united states, not only a higher cost of borrowing but compounded the problem because you will be paying more to

borrow just to service the existing debt even to raise the debt ceiling. i think the latest discussion is somewhere around $16 trillion so that you can at least get through the next 2 years and whoever wins in 2012 can deal with the problem next. but even if you get to that point, and you have gone through either a default event or something close to a default event you have to do more cuts because you're just paying more interest to whoever bought the debt and probably countries like surpluses like china and sending more money abroad in that sense. so your question is more if you get passed that moment and do raise the debt ceiling then you get back to the discussion we're having -- we've been having all along about how do you deal with an unsustainable budget deficit? somehow you then have to either raise taxes or cut spending to deal with that problem. because otherwise you'll just

end up in another event. and the risk is that nobody really knows what the point is where investors and financial markets decide the u.s. should not be seen as an outlier in terms of borrowing. advanced countries can develop more than developing countries at 100%. right now, there's actually a distinction if you were to look at the debt held by the public, that $9 trillion figure, and the overall total debt at $14 trillion. the debt held by the public is the one that the congressional budget office actually uses for accounting purposes on the deficit. and we're right now i guess at roughly 60% of gdp so we're not that bad off. if you're doing a global comparison you'll probably use the broader $14 trillion figure and puts us at 100% of gdp just

somewhere between 95% and 100%. and that's where in other countries you have seen weakening economies as a result of it. but the u.s. gets -- because it's the reserve currency, because it's the strongest country in the world and the largest economy, it's given some latitude to be able to go and borrow more for a longer period because of the expectation it will come around. >> this is a topic of great debate, but what is the risk of t china holding so much of our foreign debt? >> that's a very good question. there are i suppose economic implications and then political implications of this. the political implications are being tied to one country, certainly, a large country with a big force in the world. that's something that you just have to assess how's that affecting diplomacy?

how's that affecting all the decisions of the government outside of economics? and it's never a perfect pa parallel but if you look at the u.s. dependency on oil and you can see how the u.s. dependency on saudi arabia and on middle east countries may have affected foreign policy over the past four decades and that's certainly played a part. you can debate how much the u.s. would have gotten involvemented in iraq but you wouldn't have had a global coalition in 1990 and 1991 if there weren't all that oil there and the dependency for u.s. consumers and in the same way the u.s. is highly dependent on china both for the products and for buying the debt and if china weren't buying all that debt you could reason that possibly other people would make up for it and buy that debt but by having such a buyer in the market it's certainly keeping the borrowing costs down. you don't see very much likelihood of the big holders

trying to depend -- uk, anybody using it as a weapon because it's -- it becomes almost like a grenade on themselves. if you were to try to weaken the u.s. economically by using that as a weapon, then you're -- the value of your own holdings go down, as well. so that's a hit to yourself but i suppose there's some theoretical point where you could get to that doesn't matter if you hurt your own holdings but there's very clear mutual interests involved in having that trillion dollars on china's books. >> given that we basically have two choices, increase revenue or cut expenses and on the cutting expenses side of the equation, i forget the exact statistic but the mandatory programs i think you said was about 70% of the budget or so. so, we're left with the 30% or so that are discretionary and those discretionary programs we

count on for education, housing, health care for all the people who are coming out of the recession. can you address the likely impact on states across the country that are already having problems when the aide for the most vulnerable residents is perhaps cut if that's what's to happen? >> we are already seeing that to some extent. the federal government has been able to borrow for two years. the stimulus money was designed specifically to go to states and that's -- i don't remember the exact figure but if you look at maybe $100 billion, $200 billion of money going directly to states through various programs, and that was used to fill the gap in those state budgets, you are actually starting to see the very early stages of recovery in state budgets from after hitting their bottoms. you're seeing to some extent sales tax revenue go back up and property values in some areas

are starting to rise. at least stopped falling so a stabilization is important there and dealing with the gap of the federal go cut the spending and that down every budget cycle in the state. you've seen that $20 billion in california and texas needs to be cut. those are large programs and that's probably going to some extent push more people. the weakness in the economy is already pushing more people onto medicaid for instance and that's creating another problem for the longer term. term piece of it, whatever figure it is, 60%, 70% of the budget. and so, any lawmaker when you're going out and doing interviews says we need to cut the department of education or we need to cut x part of the budget, you really have to turn around and ask them, how much are they talking about and ask them for specifics because until

you get to social security and medica medicaid, you are not dealing with the underlying issue. social security you can deal with on its own adjusting the retirement age and the level of benefits based on income but medicare is -- there's some hope that what happened in the health care law will change the cost structure of health care but we have no evidence and we have plenty of people here who can talk about this better than i do but until you actually see some improvement in that sense, you have to go back and say, what are you going to cut in the real meat of the budget when you get into medicare, social security and defense to deal with that. but there are other implications and all of that feeds back in if you're weakening expenditures at the state level, there are federal programs for people to apply for whether it's food stamps or any other kind of welfare program that we have. and that raises the cost of the government so it's a shifting sof soof some cost in that sense.

>> on this shifting the age of retirement, that's probably a typical one where people like us can certainly imagine working to 70s but the guys that built this building probably couldn't. i haven't seen any discussion of a two-tiered approach for this, for instance, manual labor retiring in the 60s and the rest of us who wear suits can carry on until our 70s or whenever we want. has there been any discussion of that that you're aware of and how would that fix the problem? >> i have seen only some sideline discussion of it. not really in circles on congress. the deficit commission did try to design an approach to raise the retirement age for looking maybe 50 years down the line, and so, not necessarily doing it for any one immediately and so, unfortunately, because the manufacturing base declining and construction base and all of the

people who have been working those hard jobs you're talking about are in diminishing numbers in the workforce then you're -- if you were to postpone a decision to raise the retirement age you would affect fewer and fewer of those people but that's something i have heard but i haven't actually seen any meaningful discussion about how to include that in policy beyond an income test or something like that. i wanted to run through a couple of things on the federal reserve, the people here who are paul miller fellows for the national press foundation going to the fed this afternoon. you'll hear a lot about the fed and its ability to expand its balance sheet and one of the things that you're hearing a bit about right now given rand paul is kind of the leader of the anti-fed movement in congress and he has a new role on a subcommittee of the house financial services committee

that is pushing this measure to audit the fed, to add new oversight to the fed, to do a lot of things for the fed and the reason for this is in large part because of the fed acting what some people call as a fourth branch of government. central bank has a number of roles. it was actually first designed out of crisis 1913 to deal with -- to serve as a lender of last resort for the economy and for banks so that you don't have runs on banks, you can have stability in currencies. we have had -- this is the fed now is in its third it ration as the central bank of the u.s., the first ration and the central bank were so contentious in terms of federal power centralized in one place they were eliminated and wasn't until woodrow wilson in 1913 that you had the fed created and there is certainly a movement now among

conservatives in congress to try to what they say is rein in the fed but i wanted to talk for a minute about some of the things the fed does beyond just the normal sense. monetary policy is the first one we hear about a lot, moving interest rates to influence the economy. the fed brought interest rates down to zero in december of 2008. and what happened after that is, i think, the greatest source of contention about the fed, whether it should have been given all of the power to do what it does. what the fed normally has the ability to do is to go out and buy treasuries and it's got as the keeper of the u.s. currency and the value of the currency, it can adjust the amount of actual money in circulation and what it did at the end of the

2008, once it had conducted monetary policy, brought rates down, is looked for unconventional tools to improve the performance of the economy given that we were basically falling into a deep dive. and so, late '08, early '09 you saw some big announcements and these are on the chart of the federal reserve balance sheet a little under $900 billion before the crisis and then you see it go up to over $2 trillion now. and that is money that you hear about the printing press. this isn't money that's actually being created but the fed has the authority, it is given by congress, the authority to go and create money electronically to buy assets and what it's done is buy treasuries on the open market and buy mortgage-backed securities and the purpose of doing these things is to lower interest rates. everything the fed does in monetary policy is to usually affect the interest rate channel

of the economy by lowering rates or somehow improving demand in some form and so buying mortgage securities, lowered the interest rates on the securities and that's part of the reason why you had mortgage rates come down to 4.15% or 4.16% as the recent low and buying treasuries does the same affect and what the fed has done is gone from buying short-term treasuries, just basic government debt, that it does in the normal process, to buying longer term treasuries, all the way out to structured in the five to seven-year period and going all the way well past ten years so the idea is to when you hear about quantitative easing is to remove treasuries, super safe government debt from the market and force investors do go into other things like the stock market and a number of

things and we have seen that, the performance of the stock market since the fed started discussing the latest round of quantitative easing has been pretty significant. the other end of it in terms of improving other parts of the economy like employment, you haven't necessarily seen. so i just wanted to run through this. you can actually see various -- i don't think this graph goes back any further, but the fed getting above $2 trillion and the fed balance sheet is probably going to peak as we go through, they're still buying treasuries for about six more months. obviously it will go above $2.5 trillion, closer to $3 trillion. and people talk about monetizing the debt and that's what we get into. i want to tie this to the issue of the debt because the big fear is that if the government

doesn't do something about the deficits, then the fed bought up the debt from the government and as you have more money and the -- as you have more money in -- sitting around in the economy the fed balance sheet up to $2 trillion creating money and putting it out in the economy. the problem is the economy's so slow that money isn't really moving around and it hasn't generated that much economic activity. once it does start to generate economic activity in the form of loans from banks, then you have the classic problem of inflation, too much money following too few goods and at some point whether it's three years down the line or ten years down the line all of that money can lead to serious inflation and that's why you've heard about how does the fed pull this back? and somehow over the next whatever it takes decade or so, once the economy has fully normalized they have to get the $2 trillion down to a more

normal level of maybe a trillion or less and that's the challenge they'll be facing how do you support the economy in the short term as it needs it by putting whatever you can out there but also withdraw it in the long term and that's why we actually seeing so much more discussion about the fed balance sheet because interest rates at zero taking the front seat in terms of how fed the influencing the economy in a more normal period, say, back in the 2001 recession and the aftermath, the fed brought rates down. you can bring them down from 6% down to 2%, and then leave them there for a while and then as the economy recovered, they brought them back up. back up to 5.25%, i believe. and the fed has a number of other roles that you will -- those of you going over today will hear about. it has supervision, bank supervision, overseeing the

banking system, and also, in payment systems. it's responsible for making sure money moves around the country properly and that's why you have the 12 regional federal reserve banks working with the board of governors in washington. there are probably a lot of questions that you can come up with for the fed so if we have a couple minutes if there's any pressing ones that you want to ask feel free and i'll try to answer them. anyone? anyone love hearing about the fed so much that you want to -- >> i got -- >> and this may be a very bad question but i feel like in the last couple of weeks so i heard some discussion of getting the fed out of the business of keeping unemployment rate low, and i don't fully understand what the discussion is or what the practical application would be. do you have any thoughts? >> yeah. so the fed coming to monetary policy given a dual mandate in

the late '70s and that's because instead of just -- a normal central bank, so if you look at the european central bank covering -- created in '99, covers all of europe, they have a single mandate to keep prices stable, so the federal reserve is normally looking for and the central bank normally looking far inflation of about 2%. sock where between 1.5% and 2% and that's an ideal rate. you might wonder why don't you want prices to be stable near he ze ro and then no inflation and you run the risk of deflation and if people aren't expecting any inflation in the economy then you have less of an incentive to go out and invest and less of incentive -- more of an incentive to hold on to your money because there's a chance that prices could start dropping and you want to actually -- to save your money and once people start saving their money with the expectations of deflation, consumer spending goes down, the

economy ends up being weak and you run into the trap that japan is in right now where you just can't restart an economy and get it growing again. and so, there's been so much economic research on this issue that something around 2% is seen as the ideal level of inflation. and inflation is used in so many central banks as the single mandate because it affects both -- employment is almost like a secondary factor here. if you were to have stable growth in the economy with inflation at 2%, that means you are not overheating, you are growing at a good pace, you've been able to -- and the whole point of a central bank to provide some kind of stability to the growth in the economy. otherwise, you'd have market forces throwing things up and down pretty rapidly and more severe bubbles than you before so the fed has been charged with not only inflation but also with employment because there's some fear that if you only focus on

inflation then you're only dealing with a kind of a mechanical issue of just looking at the economy and bringing the interest rates up and down just to deal with inflation and there's a time when you might actually leave monetary policy looser, interest rates lower to try to spur more activity in the economy and consider what really matters to people are jobs. and the course of the labor market. and so, the movement now is created i think in part out of fear that a balance sheet of this size is going to lead to hyper inflation. we only really have the history of germany to know how hyper inflation works in a clear sense like that. hyper inflation can work. zimbabwe is an example of an economy that has been growing, was growing and the government basically took over the central bank and started printing more

money to the point where i think you had 278 million percent because the government creating money for its own needs and that's drawn as a parallel to the risk to the u.s., so obviously they're completely, completely different situations we're facing now. so the movement to remove employment from the advocates of that, whether it's paul ryan or ron paul, ron paul actually wants to remove the fed entirely but he supports the single mandate idea, is to really make the fed focus on just one thing that those people think the public should care about is keeping a stable value of the dollar and very low inflation and the counter argument usually from more liberal members and democratic members is that you want some focus on employment, as well. interestingly, on friday, the fed chairman basically pointed out that there wouldn't be that

much difference if you were to focus only on inflation because the fed right now trying to fight a deflation threat and keeping interest rates low and trying to stimulate the economy to prevent deflation and so price stability is being attacked in that sense. so very long answer to a complicated problem that they're running through right now, but for the near term i don't think it would have any practical affect to go to the single mandate for the u.s. fed. >> i apologize to people who have remaining questions. we have to draw things to a close. i suspect we can address those questions individually. i want to thank you very much today. we have a small token of appreciation from the national press foundation which is the >> on today's "washington

journal" -- >> the national commission on the b.p. deep water horizon oil spill will issue its final report today. we'll have live coverage at 10:00 a.m. eastern. and later in the morning, patrick leahy of vermont. live coverage from the museum begins at 11:00 eastern. >> thank you very much mr. president, mr. vice president. you have on overed me and my family by giving me an opportunity to serve you and to

serve our nation. >> with more than 80 appearances by william daily and gene sperling, you can use the c-span library to learn about the newest additions to the. it's washington your way. >> now, remarks from arizona governor jan breweron the tucson shootings that killed six and wounded 13, including representative gabery yel gifferts. this is about 10 minutes. [cheers and applause]

>> thank you, thank you all. and good afternoon.

speaker adams, president pierce, honorable senators and representatives of the legislator, chief justice and justices of the supreme court, constitutional officers, tribal leaders, honored guests, and my fellow arizonaans. i had intended to deliver a state of the state address to you all today. remarks that outline an exciting and solid plan for job creation, education and tax reform. and i will deliver that plan to you. but not now. not today. tragedy and terror sometime comes from the shadows and steal our joy, and take away our peace. that happened on saturday. when a gunman took away people

we love, innocent people, and outstanding publicer is vents like united states district judge john m. roll. judge roll had just come from the light of a catholic mass and confronted the darkness of a madman. the gunman gravely wounded others. people we love and respect. like gabby giffords, my good friend. this past weekend's events have caused me, caused all of us to reflect on many things. including how we respond to those terrible events. first, our response to this tragedy must be led by prayer and comfort for the victims and their families. so, please join me in a moment of silence as we pray for all of those we've lost.

for the injured and for those who are suffering. >> thank you. and with our >> thank you. with our faith and our courage fightly in place, we will step forward from this chamber dedicated to do the lord's work. continue our service to the public. one year ago from this very place i told you i would serve beside you. proud to serve the people of arizona. i said then that public service is acting not in self-interest but on behalf of others. and i ask people to join me in

the field. gabby giffords did join me in the field. and we worked together knowing that when our public service ended we would be judged less by what we achieved than what we overcame. in addition to judge roll, arizona also lost dorothy morris, doreen stoddard, fillies schneck and gabrielle zimmerman. let me take a moment to recognize the act of extraordinary arizonans who responded with professionalism and saved lives. law enforcement, emergency responders, the tucson medical community, and the staff at the university medical center.

daniel hernandez, a university of arizona jr. showed no fear in the face of gunfire. his quick action in going to gabby giffords aid likely saved her life. daniel is here today and i'm going to ask him to stand and receive the thanks of a very grateful state. daniel. [cheers and applause]

>> it was a sunny >> it was a sunny saturday at the supermarket in northwest tucson. it was a picture of what our country is all about. publicer is vents doing their duty. citizens old and young coming to hear, coming to participate in our government in action. we lost someone else on saturday. 9-year-old christina green who was just elected to her student council. she was hoping to be a positive part of the future of america. and we has become just that. she loved baseball, she was the only girl on her little league baseball team. she loved to wear red, white and blue. i should tell you christina was

born on september 11, 2001. she thought of her birthday as a day of hope. a time to find goodness in america. as her mother said, her light shines on all of us today. saturday's events were not just an attack on those individuals we loved and lost. but an assault on our constitutional republic, on our democracy. on all we treasure and all hold dear as citizens and publicer is vents. arizona is in pain, yes. our grief is profound. we are yet in the first hours of our sorrow. but we have not been brought

down. we will never be brought down. [cheers and applause] >> in fact, we have been lifted up by america's thoughts and >> nanth, we've been lifted up by america's thoughts and prayers and we're deeply grateful for them. arizona, like all of america, has been through difficult times before.

but those times have united us, made us more enduring. let those of us who serve our state and country do so in a way that honors those we have lost. our meetings on sunny days will not end. like the words from isaiah, i believe arizona will rise on wings like eagles. we will run and not get we'rey. we will walk and not grow weak. so, i ask for your help and your continued prayers as we step from here and guide this great state with courage and devotion. may god bless all the victims and their families, and those suffering from saturday's tragedy. may god bless those who serve us

in the cause of freedom and justice. may he bless you and your families and the great state of arizona. and may god always bless and protect the united states of america. thank you. [cheers and applause]

>> members of the joint committee will please escort the governor, the honor janis kay brewer from the house chamber. [applause]

>> find a full video archive of each member. part of c-span's video library. it's washington your way. .