most c- span viewers are reliable voters. it should not have been surprising that there was a drop-off. i think it's hard to say that the voters that did not show up did not make their preferences known. their preference was that they either did not care or they did not want to vote for anybody. that is a preference. host: richard, a democratic caller. go ahead. caller: thank you, c-span, for being there for us. i appreciate that. my oldest brothers all served in world war ii. i lost one there. when we went to war with japan, when the war was over with -- our jobs and everything are either going to japan or china. what happened to the american

workers? what happened in detroit? some of the car industries are starting to pick up again. my main thing is, i'm scared about my social security benefits. i've been retired for about one year. now they're talking about cutting social security benefits. i do not want to sound like a crybaby, but i'm scared to death. host: we are going to leave it there. the house is about to come in with its morning session. i want to talk about what happened in 1995 and 1996 with social security checks. guest: they are going to go out. nobody that is talking about reforming social security are talking about doing it to the folks that are already retired. social security benefits for people already in the system, there should be no change. if the government shuts down, you will still get your check. host: jonathan allen, thank you. the house is coming in for their money -- for their morning our

speeches. the senate will vote this morning at 11:00 a.m. eastern time. check out our coverage on c- span2. thank you for watching today. . each member is other than the minority and majority leaders and majority whip limited to five minutes each. under no circumstances will the debate continue beyond 11:00 a.m. the chair recognizes the gentlewoman from california, ms. woolsey for five minutes. ms. woolsey: in a speech this past weekend to religious broadcasters, the speaker of the house called the federal debt a moral threat to our nation. it's an interesting choice of words from the leader of the house majority that has been a cheerleader for the nation's most morally objectionable policy of all, the disastrous, despicable war in afghanistan. for some reason, the moral

sensibilities are not offended by a military conflict that has cost us hundreds of billions of dollars and 1,500 of our bravest, bravest people. without advancing homeland security objectives or diminishing the terrorist threat at the same time. how are my colleagues on the other side of the aisle resolving their moral dilemma? by asking corporate entities to give up handouts and tax breaks? by asking the wealthiest americans to give more back to america that's given them so much opportunity? nope. by their moral calculations, the answer is to demand sacrifice from the very americans who are bearing the brunt of this recession from people and communities who depend upon public investment. their moral compass tells them to cut vital programs to the

bone or eliminate them all together, food safety, family planning, health research, public housing, transportation infrastructure, college aid and on and on. there was an article in my home newspaper over the weekend about how local health clinics could be devastated by these cuts. california alone stands to lose nearly $13 million in homeland security grants needed to train and equip first responders. the republican budget cuts also, according to one study, would destroy 700,000 jobs. but that's not keeping the speaker up at night. he sees americans out of work and instead of saying this is a moral threat, he says so be it. in what moral universe, i ask you, mr. speaker, does it make sense to destroy jobs at home but send more americans to die in a senseless war abroad?

programs like cops and head start, with which -- which the majority wants slashed, save lives. the war in afghanistan, which isn't even on the table in this budget debate, has ended nearly 1,500 american lives. our surviving service men and women, all coming home with devastating physical and psychological wounds. yes, the majority party, so enthusiastic in its support for afghanistan spending, wants to eliminate a homeless veterans initiative. that's their version of morality. send young americans halfway around the world to be chewed up and traumatized, then pull the plug on the support they need when they get home. that's what they call supporting the troops. the majority could kill the proverbial two birds with one stone if they wanted. they can just about solve the tet crisis by bringing our

troops home and ending the moral stain on our nation that is the afghanistan war. somehow i'm not holding my breath until the speaker and my republican colleagues are prepared to show moral courage on afghanistan. i refuse to take their moral outrage about the deficit seriously. i yield back. the speaker pro tempore: the gentlewoman yields back. the chair recognizes the gentleman from georgia, mr. westmoreland, for five minutes. mr. westmoreland: in october of 1890, four women linked by common lineage to heros of the american revolution, joined 18 others to start the daughters of the american revolution. they started a campaign to serve the cupry through preservation of american history. since its founding, they have expanded to nearly 3,000

chapters and over 850,000 members around the world. in the middle of the era rife with inequality for women, this organization flourished on a strong sense of pride for the men and women who fought to gain american independence. theirs is a rich history, filled with patriotism, self-sacrifice and dedication to education. for decades, the daughters of the american revolution have sponsored scholarships and supported schools for the underprivileged. their support has aided the preservation of dozens of historic locations around the country. their scholarships have provided thousands with the opportunity to attend institutes of higher education. their outreach programs recognize and encourage service to the country and to their communities. on march 15, the john housen chapter of the duferse the american revolution will

observe its 100th -- 100th anniversary in the city of thomasson, georgia. i come to celebrate with them 100 years of service to the great state of georgia. for a group devoted to the promotion of american history, it is with great pleasure that i am able to honor the careers of education, historic preservation, patriotism and service that the daughters of the american revolution have selfish given to this great country. they trace their her tack badge to the -- trace their heritage back to the men and women who fought tyranny. each member must prove blood relation to the patriot and vast amounts of history have been compiled and preserved for our children to appreciate. this nonprofit, nonpolitically

aligned organization has positively impacted hundreds of thousands of lives. i'm very proud to represent several national society of daughters of the american revolution chatchters in the third congressional district of georgia and i know thomasson, georgia, is especially chapter for the chapt -- especially grateful for the chapter's presence in their community and so am i. i yield back. the speaker pro tempore: the chair recognizes the gentleman from illinois, mr. gutierrez, for five minutes. mr. gutierrez: thank you, mr. speaker. two weeks ago, i spoke about a serious problem in puerto rico. the problem is the systematic effort by the ruling party to deny the right of the people to speak freely, to criticize their government openly and to make their voices heard. i talked about student protests

that have been met with violent resistance by the police. i was not the first to speak about it and i could have said much more. this report, entitled human rights crisis in puerto rico, first amendment under siege, is sering. it details the complaints of students, legislators and the press who were beaten and pepper sprayed by police. female students treated with gross disrespect. the government's overreaction to demonstrations at the university and capital over budget cuts and layoffs. this next picture, this is the capitol in san juan, puerto rico, surrounded by riot police as people attempted to gain entrance to the same assembly as this one here today and this is how they were met by the police.

this is how the police dealt with protesters. the images of police tactics and behavior in these photos explain why our department of justice is investigating the puerto rican police for excessive force and unconstitutional searches today. i was hardly the first to speak out about the matters and i probably won't be the last. here it is, the "daily sun" in puerto rico, sticks vs. speech. it is more than my right it is my obligation to speak out when fundamental freedoms are attacked. what was the response to my free speech to be heard, it was to challenge my right to be heard here. the resident commissioner of puerto rico said in this body he is the only one authorized to speak about puerto rico at any time. this week, the puerto rican legislator, the -- debated a resolution ofsen sure, yes,sen

sure, condemning me for speaking out against the very abuses, a leading member of the ruling party said gutierrez wasn't born in puerto rico, his kids weren't born in puerto rico, he doesn't plan to die and be buried in puerto rico so he doesn't have the right to speak out about puerto rico. if you see injustice anywhere, it is not only your right but your duty to speak about it. we don't speak about injustice or apartheid or human rights abuses or the denial of rights of women around the world because we ourselveses were born there. that would be silly. where we see injustice we speak out because it is the right thing to do ironically, by questioning my right to speak out on maff of free speech they have made my point crystal clear. by challenging my free speech they have amplified the words of my five minute speech more than if i had spoken for five hours. it is their right, my critics have the right of free speech even as they have toe -- they

have denied the same right to others but i want them to understand, your effort to silence me and your efforts to silence so many people in puerto rico who disagree will fail just as every effort to blockade progress only makes the march toward justice more powerful and swift. i may not be puerto rican enough for some people but i know this. nowhere on earth will you find people harder to silence than puerto ricans. you won't locate my love for puerto rico on my birth certificate or my driver's license or on my children's birth certificates or any other piece of paper. my love for puerto rico is right here in hi heart, a heart that beats with our history and language and our heroes. a place where when i moved to as a teenager people talked and argued and debate because we care about our island and its future that freedom is still beating in the hearts of college students, labor union

leaders and everyone who values free speech you will not silence them and will not silence me. abraham lincoln said, those who deny freedom to others deserve it not for themselves. it's good advice. i hop the leaders of puerto rico take it. -- i hope the leaders of puerto rico take it. i ask unanimous consent that the aclu report titled "human rights crisis in puerto rico: first amendment under siege" be entered into the record and i further ask unanimous con sent that the essay exposing the shadows of civil rights in puerto rico be also entered into the record without objection. the speaker pro tempore: without objection, so ordered. the chair recognizes the gentlewoman from washington, mrs. mcmorris rodgers, for five minutes. mrs. mcmorris rodgers: i rise this morning to recognize can

karma, who was the principal lecturer in business and finance at the university of washington foster school of business. she was a faculty director of the pacific rim bankers program and the ebert mccabe faculty fellow. she was also my professor when i earned my m.b.a. last monday, she passed away after a lengthy illness. as a student, i wanted to acknowledge her accomplishments over the course of an extraordinary life. . born in 1944 in utica, new york, karma was educated at nearby elmira college and earned masters and doctorate degrees at the university of rochester. she joined the faculty at the university of washington in 170. initially the department of economics and then at the foster school of business. the turning point in her creesh was a two-year stint as visiting economist at the federal reserve board from 1980 to 1982.

in her worked work with the banking sector of the research and statistics, she developed the ability to provide penetrating analysis that paints an accurate assessment of the current economic situation. in other words, she learned to find meaning in the disparate data. car men's time at the fed led her to realize teaching was her true calling. she returned to the university of washington with a new insiders expertise of the inner workings of the federal reserve system and monetary policy and she spent the next three years applying her economic knowledge with wonderful results. she won more than 45 major teaching awards at the foster school, including the first award for excellence in teaching, the school's highest faculty honor. her twice annual economic forecast lectures became a standing room overwhelm tradition, and her 1995 textbook, contemporary money,

banking, and financial markets, theory and practice co-authored with her husband became an influential classic. former students universally spoke of them selves as privileged and blessed to have had the opportunity to study under her. they told of her ability to decipher data with real life examples, to make macroeconomics fascinating, even fun. they spoke of her profound impact on their lives. as one of her students, class of 2002, i wanted to add my own testimony to her impact. when i was a student learning under her experience and dedicated expertise, it was one of the best parts of the university of washington's emba program. in all of her classes she went above and beyond the call of duty, not just to present the course material, but to make herself available to us outside of the classroom, to answer our questions, and ensure our understanding and application of

the course work. she challenged my study of economics and how to craft successful public policies in a free market economy. quite simply, they don't come any better. i ask my colleagues to join me today in recognizing car ma -- karma for her four decades of excellent teaching communicating knowledge with absolute generosity, balanced energy, and work. her impact on thousands of students will endure for decades and ways we'll never completely know. she'll always have a special place in my heart. the speaker pro tempore: the gentlewoman yields back. the chair now recognizes the gentleman from california, mr. miller, for five minutes. mr. miller: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: the gentleman is recognized. mr. miller: mr. speaker, i rise today to highlight a very serious and dangerous attack on middle class americans being waged by the republicans in the congress and in state houses across the country. the wisconsin governor's assault

on public employees is getting most of the media attention, but it is just one of the fronts of the extreme right-wing and anti-worker agenda trying to be carried out in this country. in fact, there is a well financed and coordinated national attack against working families in the unions they may belong to. the goal of which is to take away power from the middle class and give it to the wealthy special interests that have backed republicans in their elections. here's how it's playing out. the republicans are taking a real problem, a serious problem, that of the budget deficits and long-term debt in this country, and they are signing it to a fake cause. under the guise of cutting deficits, they say the working people's union rights and workplace protections must be eliminated. in fact, this attack against working people is designed to remove the vital check on special interest corporate power from overrunning our democracy. this is an extreme agenda that they have always pursued, but they are now using their newfound political power to relaunch the attacks. to attack the guarantee to a

decent wage, to attack the rights to ensure a safe workplace so when the workers leave home in the morning, they know they will return safely at night. they attack the rights have access to affordable health care and secure retirement. and, yes, they are even attacking the rights of working people to join together and to bargain for a better life and better conditions in the workplace. so at the same time that the governors of wisconsin, ohio, indiana, and new jersey are demanding more and public-private union employee sacrifices, the republicans in washington are using the budget fight to roll back the rights and protections of american workers. their spending priorities and so-called continuing resolution of last week showed their hand. they voted to take away the workers' ability to repeal unjust and unfair and illegal actions in the workplace by getting rid of the national labor relations board. they voted to undermine the wages of construction workers.

they voted to rollback workplace and safety protections guarantee by federal law. all of this while protecting the corporate interest they have sought to cut education funding and critical support for workers and the need for job training, and, yes, even kids in head start. these rights and services help to build and sustain our nation's middle class in the last century. making the united states the greatest economic power in the history of the world. we have the greatest workers in the world because of these rights, but now the rights and economic strength of america's middle class is at risk. it's under systematic assault in the statehouse is controlled by republican legislatures and republican governors and in this house of representatives controlled by the republicans. a systematic assault that goes beyond after the unions, after the workers, have agreed to give back furlough days, to give back health care benefits, pension benefits, they want more. they want their union, they want

their rights in the workplace to be terminated. it's un-american. there's a reason, there's a reason we have collective bargaining in this country because we know that workers have a right -- should have a right to bond together to improve the workplace, to improve the working conditions, and when they do, those rights flow to the rest of middle class working families in this country and even the nonunion workplaces, those rights are there. that's how we achieved an eight-hour day. that's how we achieved vacation time. that's how we achieved health care. that's how we achieved overtime whether in the union or not. now they want to take away the rights of unions to organize in the workplace, the rights of workers to organize. but the republicans have asked for no sacrifices in all these kits. they have asked for no sacrifices of the well off and the well connected. in fact, these cuts are being made in the name of the well off and the well connected so that they'll be able to push for lower wages, for lower benefits, for lower health care for our

workers, for lower take-home pay. what does it do for our economy? it makes america poor. how do you build a strong middle class community on the back of lower-wage workers? you can't do it. many yearsing a america decided we want add strong, vibrant middle class and we did that by forming the union and giving people the right to have a say at work. study after study where workers have a say in the workplace, they work harder, more productive, more open to new ideas. but what do we say to workers with the governors of wisconsin and ohio and indiana? do what we tell you to do, do it for less pay, do it for less benefit, and do it because we told you so. that doesn't sound like america to me. it doesn't sound like a powerful country that has the best and most productive workers in the history of the world. that sounds like something that we are not familiar with in this country. that sounds like an autocratic system that just demands and

takes but never gives. the speaker pro tempore: the chair recognizes the gentleman from texas, mr. poe, for five minutes. mr. poe: mr. speaker, houfers were shut tight -- houses were shut tight, and cloth wedged around doors and windows, but the dust came in so thinly it could not be seen in the air and it settled like pollen on the chairs, tables, and dishes. ma and pa did everything they could to save their farm from slipping away into the dust bowl. but ultimately they lost to a force far greater than any effort they could muster. mr. speaker, though this is just one line writ from the pages "the grains of wrath" farmers and ranchers today are facing a modern day dust storm. the wrath of the e.p.a. just when you think you have heard it all, bureaucrats in washington, d.c., come up with some hair brained idea that leaves you scratching your head in wonderment. the environmental protection

agency has apparently run out of things to regulate and tax, so they are considering new guidelines for regulating particulate matter emissions, more commonly known to you and me as dust. now, i know what you are thinking. this just cannot be true. what kind of crazy scheme is this? well, the e.p.a. dust police, which specifically regulate farm dust. farmers would be required to have dust collectors on their harvesters, planters, combine, and haying commiment. my personal favorite is the crackdown on dust created from diving a pickup truck down a dirt or gravel road. i'm not making this up. the federal government is considering farm dust regulations that are caused from driving on a dirt road. so i thought, well, maybe this is just some backdoor attempt to rid america of our majestic four wheel drive pickups that liberals loathe so much and find some way to force these battery operated cars on the rest of us.

the new proposals doesn't just apply to dust created from driving. they are fair and balanced in their overreaching authority. farmers and ranchers are going to have to somehow limit the dust created by livestock on their property as well. so, say bessie the cow kicks up too much dust running over to your pickup truck at feeding time. the e.p.a. will fine you for bessie's misconduct. you need to move your cattle to another pasture during the daytime, well, don't do it on a dry day. because they may kick up too much dust. the dust police solution is to manage dusty dirt roads with water or get this, pave them with asphalt. now, this is another can of worms. every farmer and ranchers will have the water police raining down on them by the time the first drop hits the dirt. i would think the e.p.a. would be aware of the fact that we already have a shortage of water on ranches and farmers in our country. but make no matter to them, they

still want you to control it. what about this paving the asphalt over these roads? really? they can't be serious. aside from the shear magnitude of this undertaking, the idea is completely unfeasible and cost prohibited. the absurdity of these types of federal regulations is what makes normal americans all across our country frustrated with washington, d.c. i will say there is a little good news on the horizon, we are not all out of touch here in congress. my colleague, representative kristi noem from kkkk -- south dakota, filed an amendment to eliminate funding to the e.p.a. to enforce the dust regulation. i'm proud to say that this passed the house of representatives and it's now down the hallway with the senate. let's see what they do. this type of federal meddling is exactly what causes businesses to go out of business, lay off workers, and in many cases fail. these types of expensive regulations will finally shut the barn door on the american ranchers and farmer for good.

i understand that dust may seem like a serious threat to someone who has never been outside the e.p.a.'s marble potomac palaces or elite castles of the academia. but let's use some common sense here. farmers and ranchers are the best environmentalists in our country. no one respects the land or animals more than those who actually live on it and depend on it for a living. instead of burying us in ridiculous regulation that do nothing to improve the quality of life and environment, the government should look for incentives to encourage farmers and ranchers to do more not less. we don't need the e.p.a. inflicted dust bowl to devastate the american heartland. the e.p.a. should head on down the road and leave this regulation in the dust. that's just the way it is. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the chair now recognizes the gentleman from texas, mr. green, for five minutes. mr. green: thank you, mr.

speaker. i ask unanimous consent to revise and extend my remarks. today, march 2, 2011, marks texas independence day. 175 years ago the texas declaration of independence was ratified by the convention of 1836 on washington on the brass in texas. this important date for texas and patriotic texans observe this occasion with great pride. in 1824 a military dictatorship took over mexico, abolishing the mexican constitution. the new military dictatorship refused to provide trial by jury, freedom of religion, public education for their citizens, and allowed for the confiscation of firearms. this last one particularly intolerable for texans. the texas declaration of independence states the texas government had been forcibly changed without their consent from a prestricted federal republic composed of sovereign states with consolidated despotism. because of the injustice of santa ana's government, texans

were severing their connection with the mexican nation declaring them selves a free and sovereign independence republic. fully invested with all the rights and attributes that belong to independent nations and a declaration they seriously and confidentially committed their decision to the destinies of nations. the texans declaration of independence was needed because this dictatorship had ceased to protect their lives bs liberty, and property of the people of texas. failure to provide these basic rights violated the sacred contract between the government and the people. and texans did not want still today texans did at that time and want to still today stand up for their rights. in response to mexican army marched to texas waging a war on the land and the people. enforcing the decrees of the military dictatorship with brute force and without any democratic legitimacy. today, 175 years later, texas

president and previous governor of texas, sam houston, and owl delegates signed the texas declaration of independence. general santa ana's army besieged the forces at thal mow. four days after the signing of this independence, the declaration, thal mow fell with the commander lieutenant colonel travis and former tennessee congressman davey crockett and approximately 200 other texas defenders. . all these men were killed in action in a historic sacrifice for freedom. weeks later, santa ana's army massacred 300 unarmed texans at goliad on march 7 of 1836. in a dramatic turn around, texans achieved independence three weeks later when 900 texans overpowered a much larger mexican army at san

jacinto. this battle is memorialized by a monument bigger than the washington monument. sam houston high school received a texas historical marker about three weeks ago. today we give recognition to many texans who sacrificed for freedom. god bless texas and god bless america. i yield back. the speaker pro tempore: the gentleman yields back. pursuant to clause 12a of rule

>> information, 21,000 transactions and these have been reviewed substantially. there have been no problems identified and indeed the evidence seems to be that these programs were not only well run but they were also successful in helping to stabilize financial markets. a recent example of that is a study by the flooris independent i.g. in addition we continue to work closely with the g.a.o., sit

tarp, and the congressional oversight panel, congress, and private sector auditors all of who are looking at our books, making sure that everything is as it should be. and we are supporting and cooperating with that effort. we'll continue to seek ways to enhance our transparency because we believe, again, that transparency and accountability are the flip side of the independence the fed needs to make good, long-term policy decisions. so thank you for allowing me to speak, mr. chairman. i will be happy to take your questions. >> thank you, mr. chairman. before we start with our questioning, the federal reserve chairman has informed us that he will need to leave at 1:00 p.m. today in order to accommodate other appointments. that's actually a generous allocation of his time. and anyone who doesn't have an opportunity to question him

orally, your written statements will be made a part of the record if you didn't get an opportunity to make a statement today. >> let me say on our side, we will go through the seniority, where we stop is where we will start when mr. bernanke returns for his second visit this year. we'll go through in seniority and when we -- when he returns we'll pick up where -- as members come here as we left off. >> thank you. at this time i yield myself five minutes for questions. i don't have so much a question, this time i norm lei -- normally have short questions, but chairman bernanke, i really want to speak to the members on both sides. the chairman has consistently told members of congress that reducing the deficit will have both long-term and short-term benefits for the economy. while acknowledging that a

credible deficit reduction plan will require difficult choices, chairman bernanke has stated unequivocally that congress must act to take government spending off an unsustainable path. a year ago in his testimony before this committee which was on february 24, he said it is very, very important for congress and the administration to come to some kind of program, some kind of plan that will credibly show how the united states government is going to bring itself back to a sustainable position. it would be very helpful, even to current recovery, to market confidence if there were a sustainable, credible path to the extent that we can achieve credible plans to reduce medium and long-term deficits, will actually have more flexibility in the short term if we want to take other kinds of actions. that was -- that was in response

to a question i asked him. this year earlier, one month ago today, he told the house budget committee that acting now to develop a credible program to reduce future deficits would not only enhance economic growth and sustainability in the long run, it would yield substantial near-term benefits in terms of lower long-term interest rates and increased consumer and business confidence. obviously that would lead to more jobs. and he also said one month ago to the house, by definition the unsustainable trajectories of deficits and debt that the c.b.o. outlines cannot actually happen because creditors will never be willing to lend to a government with debt relative to national income that is rising without limit. so normally i would ask him what do we do? but he's told us time and time and time again that we need to

get our fiscal house in order. so my question would normally be that. but obviously my question is going to change a little bit and i'm going to ask you, you are in charge of -- the federal reserve is in charge of monetary policy, as i understand it. i think that's true. the congress and the executive brarn is in charge of fiscal policy. and you can -- is in charge of fiscal policy. you can advise us but not take charge of that polcy. our failure to address fiscal policy in a responsible manner, how does that make your job as fed president and the federal reserve's charged to manage monetary policy harder and more difficult, and what effect has it had on what you are doing? >> well, thank you for quoting me from earlier testimonies. i stand by those statements.

the concern is if the federal deficit remains on an unsustainable path that we could see at some point a the chair recognizes the gentleman from increase in interest rates, which would be both bad for recovery and bad for financial stability. it would obviously go against the efforts of the fed to keep interest rates low so we can have recovery. so again while i understand these are difficult decisions and we certainly can't solve it all in the current fiscal year, i do think we need to look forward and i know the house budget committee and others will be setting up a 10-year proposal, it's very important and would be very constructive for congress to lay out a plan that would be credible that will help bring us to sustainability over the next few years. in particular one rule of thumb

is cugget enough that the ratio -- is cutting enough that the ratio to g.d.p. quit rising. if we could stabilize that i think that would do a lot to increase confidence in our government and in our fiscal policies. >> thank you, chairman bernanke. let me say to the members we mentioned qufment e-2 today. i -- qe-2 today. i think the federal reserve whether you criticize that decision, our lack of responsibility here qe-2 has given us some opportunity to act on our debt and deficit and we have not taken advantage of that. it makes the options look bad, it limits those options. the criticism directed at the chairman, you need to also point that finger back at yourself.

ranking member frank. >> mr. chairman, i thank you for that very thoughtful statement at the end. i appreciate your stressing the -- you have to appreciate the federal reserve chairman has to operate within this particular context. i want to echo the point that we need a long-term deficit reduction plan. i did notice when you quoted from mr. bernanke he said medium and long term. it does seem to me clear, if we are able to do a medium and long-term plan we get more flexibility in the short term. that's clearly what we said. at the time the private sector has been growing jobs although not at a fast pace, the state and local government have been shedding jobs, that's one of the constraints. i i do agree a a medium and long term plan are important. we will not achieve a credible medium and long-term plan reducing the deficit if we continue to exempt the military from any significant reductions.

military spending was about $300 billion at the end of the clinton administration. it's now over $700 billion. it is not just a large percentage increase, but huge dollar increase. i must say i share the need to reduce the deficit. but when people who voted for the war in iraq, that enormously costly, terrible mistake made by the united states, which continues to cost us tens of billions of dollars when we have those noncombat troops over there refereeing iraqi disputes, they lecture me why i have to sut policemen from the city i represent, i am not impressed. yes, i do think we need to do this. some of my colleagues argue somewhat inconsistently the federal government is a job killer except when it comes to military spending. i have been struck by the number of my colleagues who will get to the floor and talk about how military spending creates jobs. we have a form of militarized changism. in which only the military does

job creation. i agree there are areas i would like to see expanded. they cannot be. i was also struck, of course, that the house recently voted to continue to send $150 million per year to brazilian cotton farmers so we can preserve our legal right to subsidize american cotton farmers. that $150 million could have been double, we could have saved $300 million if we cut americans by the same as our brazilian friends. there are inconsistencies and hypocrisies in the spending cuts. if they are done seriously across the board, i will be supportive. mr. chairman, i want to ask you, we have heard people speculate that the whole problem of too big to fail with which you were engage add few years ago, that's no different than it was when you confronted it in 2008. you confronted it as we have made, with very limited set of choices. it's not a question of criticism then. what is your reaction to the notion there were no bet -- no better off as a government in

trying to deal with too big to fail and those consequences than we were during 2008? >> i have to first say the d.o.d.-frank act is not fully im-- dodd-frank act is not fully im-- implemented. we do have a significant number of tools to address too big to fail. they include tougher capital and liquidity and other requirements for significant systemically significant firms. they include tougher supervision, including supervision by the fed. living wills. the ability to break up firms if they are viewed as posing systemic risk. and very importantly, something that you and i talked about during the crisis, wouldn't it be nice if we had an alternate bankruptcy mechanism that -- alternative bankruptcy mechanism that would allow the government to wind down a failing financial firm without cost to taxpayers, but also without creating a highly disruptive situation in the financial markets.

now, again those things are in the process of development. i wouldn't say that we are -- worked all these things out completely. we may come back to congress -- mr. frank: your view in what you just described, that the -- it does give you the basic building blocks for doing that? >> yes. >> last question. we talked about you wound down most of these things. even including the a.i.d. intervention, you acknowledged we could not do again. you wouldn't want to do again in that form. what's been the net cost to the united states taxpayer from your interventions over the time, including qe-2? >> it's been highly profitable. the financial stabilization policies, including interventions in a.i.g. and the like, assuming for example that the treasury can sell its shares in a.i.g. something close to its current market price, the entire

program involving tarp and financial market interventions will be a net profit positive. in addition the fed's monetary policies and financial stability, liquidity facilities have also been profitable. we turned over to the u.s. government $125 billion in the last two years of profits. of course i want to emphasize that was not the purpose of the interventions. >> we'll not do it again. >> we are not doing it again. but we have i think managed at least well enough that the taxpayer can feel that they have gotten at least in this respect they have gotten their money back. >> thank you. ranking member. mr. paul. chairman of the monetary policy subcommittee. >> thank you, mr. chairman. let me just say a word about the deficit. the spending and deficit was a concern of mine in the early 1970's because i foresaw that after the breakdown of the

branton woods we would have endless spending, deficits, financial bubbles and we have had that. as to whether or not we have military cane seism -- keynesianism, we do. i reject that as well as domestic moln -- domestic monetary canes yism. -- keynesianism. congress is at fault. they spend too much money. congress at times will say the fed's at fault. the congress and the fed are symbiotic, they have a symbiotic relationship because the congress spends and they know there's a morrall -- moral hazard involved here because they know if interest rates goes up, the fed accommodates them. so the fed really facilitates this spending. until we realize this, i think the fed is involved with our deficit and encouraged us as

well congress. congress' initial responsibility should be to cut the spending because this deficit is exploding. inflation is exploding. interest rates are going to go up. we are going to have one heck of a problem here in the near future. but i want to ask a question dealing with monetary policy, because it used to be that was the key to this hearing today. it's economic management. central economic planning. and everything's up for grabs. the monetary policy, of course it was stated that the job of the fed is to give a stable price and full employment. if you look at three or four decades, there's nothing stable about it. unemployment today, if we were honest with ourselves, when we look at all the people who no longer look for work, it's over 20%. to pretend it's going down and everything is rosy, i think we are dereceivering -- deceiving ourselves. i would say it's a total failure. one of the reasons i want -- the reason i'd like to suggest and get your comments on is how can

you manage monetary policy which means to manage the dollar if we don't have a definition of a dollar? i can't find in the code to find what a dollar is or federal reserve note, everybody knows the federal reserve note is a dollar, you create a note which is a promise to pay. the more debt you have the more dollars you have. but i'd like to know if you know where there's a definition of dollar and when it became known a dollar was a federal reserve note. i want a definition of money. that seems to be the real job. we want a measurement of value. this is the reason i believe that we made a big mistake by declaring paper money would be our measurement of value. there's no way to maintain -- a true measurement of this. if you look at what the stock market, if you bought the stock market in the year 2000, the index, it would have taken 44 ounces of gold, in 1908 it would

have taken 1.5 ounces of gold. today it's back down to eight ounces. in true value the stock market's in a crash. you say, oh, no. gold is not money. you and i will have a disagreement on it whether gold is money or not. the fed holds gold. the treasury holds gold. central banks hold gold. my opinion doesn't matter, either. it's history. it's the marketplace. gold is the true long-term measurement of value. how can you run your operation and -- without a definition of the dollar? what is your definition of a dollar? >> you raise some important points, congressman. our mandate is maximum employment and price stability. my definition of the dollar is what it can buy -- consumers don't want to buy gold, they want to buy food and gasoline and clothes and the other things in the consumer basket. it's the bigse power of the dollar in terms of those goods

and services that is what is important. that's what i call price stability. the fact is that after the 1970's were you are correct, there was a lot of instability and inflation was high. since chairman volcker in the early 1980's, i know you have talked about your relationship with him, brought inflation down, that inflation in the united states has been low and stable around 2% for some time. in fact it's been 2% over the last five years, that's why everything else has been going on. moreover, the -- in terms of the unemployment part of the mandate, it's certainly true unemployment is unsatisfactory now, my own view that's largely due to the financial crisis which in turn had a lot to do with problems in both the private markets and in the supervisory and regulatory regime. putting that aside, over the period of the last 25 years or so, the stability of unemployment has been much greater than it was in previous decades. there has been improvement.

>> thank you. appreciate that. at this time ms. waters is recognized for five minutes. >> thank you very much. i'd like to thank you, mr. bernanke, for coming in one more time to talk with us about the economy and help us to understand exactly what you are doing. first, i want to clear up something. you were in the senate and there was some discussion about whether or not the $60 billion budget cut would be a major drain on the economy over the coming year and i think you basically said no, not major. but it would have some impact, negative impact. and i wanted to try and get a sense of that. i think the studies show that 650,000 government jobs would be lost. overall 700,000 jobs would be lost. you differ but some jobs would be lost. could you explain to us what you

meant when you said it would have a small impact? what are you talking about in real numbers? >> so we have tried to analyze this, to try to get the answer to your question. i should say that this issue was raised by some other analyses in the private sector. and i am not intimately familiar with those analyses and i'm not sure we are making the same assumptions or anything like that. but our sense is that $60 billion cut spread out in the normal way, of course the reduction of an authorization doesn't mean an immediate reduction in the spending. it usually takes a little time to actually see it through. it would reduce growth. but we think given the size it's more couple .1, .2 in the first year, another tenth in the next year, and that would translate

into a couple hundred thousand jobs. it's not trivial but i think those numbers are high. >> i think that explains it. about a couple hundred thousands jobs rather than 700 or 650,000. but in a sluggish economy that's important even if it's less than we thought. let me get to an interview you had in december of 2010. you noted that rising economic inequality was creating two societies within america. generally a bad phenomenon for this country. this issue is extremely important to me as you know. in fact i have been very focused on a recent study out of brandeis university which demonstrated that the wealth gap between white and african-american families increased more than four times since 1984, between 1984 and 2007. the study pointed to our nation's tax policies as a main cull prit, for the rising

inequality. i talked with you many times about a lack of access to capital. for some of our small banks, which i know you don't regulate, but also a lack of access to capital for small and minority businesses. i'm concerned that those institutions you do regulate, kind ever too big to fail, seem to be ghrush with cash based on the generosity of the american taxpayer, we don't see that money coming back into communities. also i'm concerned that minorities were targeted in this subprime meltdown and our homes was basically the most wealth that many of us had and i want to know can you elaborate on why income inequality is bad for america? do you think that the tax cut deal from the end of last year reduced or exacerbated income inequality in this country?

>> i think it's part of the american ideal that everyone has opportunities to advance themselves economically and to participate fully in our society. so i take it asself evident that highly un-- as self-evident that highly unequal is not -- opportunity is not as broadly spread as it should be and many people will suffer poverty and depravation. i would hope that we could move forwards a more equal society in at least in terms of opportunities. my own view, frankly, is that education has a lot to do with it. we can see this looking at public and private schools across the country that there's a great deal of variation in the quality of education and the amount of time that students spend in school. given the highly technological globalized society we live in, that's inevitably going to lead to increasing differences in

wages and wealth. tax policy can help to some extent progressive taxes and some extent help close those gaps, but i think fundamentally you need to have opportunity which in turn requires people to have the education and the skills they need to take advantage of those opportunities. >> thank you, chairman bernanky. vice chairman hensarling. >> thank you, mr. chairman. good morning, chairman bernanke. i want to follow up on a line of questioning of our chairman dealing with the long-term structural debt of the u.s. certainly when i talk to c.e.o.'s, frankly small businesspeople in east texas i represent in congress, this is a great concern, one i believe is impeding economic growth. in fact i woke up today while i was putting on my tie and watching television, mike jackson, the chairman and c.e.o. of auto nation, stated that his

number one concern was the national debt. a year soog you said it would be very helpful to put the nation on a credible plan for fiscal exit. and most recently you used the term critical threat. my question for you is, with the passage of one year, do you have a greater concern about the nation's fiscal trajectory? do you hear what i hear from job creators in our economy that this is becoming a greater impediment to economic growth today? >> it remains a very significant risk for the same reasons that i described before. it affects confidence, it affects expectations of the future. on the margin may affect interest rates either now or in the future. so it remains a very serious problem. in terms of progress, clearly it's become a more central issue

in the congressional debate, but so far, we have seen also the results of the various commissions and the like, obviously so far we have not really seen any concrete measures to address the longer term concerns that still leave us on certainly a sustainable path going forward. >> let me ask you a question about qe-2, you and i have had the opportunity to discuss, i'm not particularly a fan of it because i am i very fundamentally view september of 2008 differently than march of 2011, given i believe in statistical evidence. i also believe in anecdotal evidence. folks i talk to having greater concern over the fiscal trajectory of the nation. a greater uncertainty about tax polcy. they have a greater uncertainty about the regulatory burden of obamacare, of dodd-frank, that's what i'm hearing. i believe there are limits to what monetary policy can achieve, particularly if i have

observed correctly the last data i have seen out of the fed is public companies are sitting on roughly $2 trillion of excess capital. banks about $1 trillion excess. we appear to be awash in liquidity, and we are in an environment of negative to zero real interest rates. clearly a number of respected economists and as you well know more than one ever your regional federal reserve presidents have indicated concern as well. my question really is the timing. as i look at your testimony, i'm not sure you directly address the timing of the end of qe-2, besides its natural termination in june. . are there any situations that you can anticipate qe-3? >> that has to be the decision of the committee and it depends on the mandate. what we'd like to see is a sustainable recovery.

we don't want to see the economy falling back into a double dip or stallout and obviously looking very closely at inflation, in terms of too low or too high. i want to be sure you understand that i'm very attentive to inflation and risks for inflation and that will be a major consideration as we determine how to manage this policy. >> as you well know, a number of people and economists are concerned that the fed is monetizing the debt. you and i have had an opportunity to discuss this. i understand the arguments on both sides. let's put reality aside for a moment and talk about perception. there is, as you well know, particularly in international markets where we have seen commodity prices spike, a number of these are dollar-denominated transactions. we know there is movement within

the gmbing-20, i think within the i.m.f. to make moves where the world reserve currency would no longer be the dollar. i don't know if you saw it, there was a piece in the "journal" this morning entitled, "why the dollar's reign is near an end," did you happen to see that piece? >> i didn't read it carefully. >> i know my time is running out but by his calculations because of the perception that the u.s. is monetizing its debt, he believes that the dollar will fall roughly 20% and that our u.s. living standards will be reduced by 1.5% of g.d.p. so the real question, regardless of the retail of your actions, if the perception causes the dollar to no longer be the world's reserve currency, what are the implications of it? >> first, i don't see any evidence that that's happening. let's be clear about that. the dollar was no longer reserve

currency, they would on the margin probably mean we had to pay higher interest rates to finance the federal debt and that would be a negative, obviously. on the other hand, we might not suffer some of the capital inflows that contributed to the boom and bust in the recent crisis. but again, i know there was also a countervailing argument in the journal this morning as well and i just don't see at this point that there is a major shift from the dollar. i would add also on the commodity prices that first, that the fears of some foreign governments that we were, quote, manipulating the currency, meaning we reduce the value of the dollar, have not come true. the that are hasn't moved much at all and commodities have moved just about as much in other curnries -- currencies as

the dollar. while i take those price increases seriously, i don't think they're primarily a dollar phenomenon. >> thank you, mr. chairman. thank you, mr. bernanke, for being here. mr. bernanke, under the humphrey-hawkins full employment act, the federal reserve has four benchmarks for the economy. one of the four is price stability. currently, economic statistics show an increase in energy prices. what are -- what can or will the feds do -- fed do to try to stabilize the prices in the energy sector. is there anything that can be done? >> you have to distinguish between the prices of individual goods and services like gasoline, for example, and the

overall price level, what people pay for all the goods and services that they buy. again, i recognize that the increases in gas prices are very troubling for a lot of people and very difficult but they are not inflation per se. inflation is increase in the overall price level which is very low. the inflation rate right now is 1% for all goods and services. the main risk from a price stability point of view would be if higher gas prices, for example, would get people -- would start feeding into the broader basket. that is, because people came to expect higher inflation, can't demand higher wage increases, or those costs were being regularly passed on by producers, that overall inflation would begin to rise. that would be the point at which we would become very concerned and make sure that we would take monetary policy actions to avoid

any significant increase in overall inflation. the relative price of oil, again, is primarily due to global supply and demand. i think it's important to note that the united states is consuming less oil today, importing less oil and produce manager oil than it did before the crisis, that all the increase and demand is coming from outside the united states, particularly in emerging markets, so the limited amount of what the fed can do about oil prices a alone, again we want to be sure it doesn't feed into overall inflation. >> and from an environmental standpoint, less con sums is better. >> if you're worried about carbon emissions, absolutely. >> one of the other benchmarks is full employment and currently, unemployment is high even though the economy growing. currently, congress is proposing

additional cuts in the federal budget. are you concerned that these cuts might undermine the fed's efforts to ensure a reduction in the unemployment rate or do you see any correlation? >> taken on their own, the short-term cuts as i mentioned to congressman frank would probably and also to ms. waters, would probably lead to some reduced growth in employment in the short run. i would -- my preference is to see whatever changes are made to the budget in the short run coupled with a longer term plan a credible plan, that will persuade markets last going to be real progress made against the deficit over the next five or 10 years. i think that would have a lot of benefits to the current recovery without the short run job

effecting -- affecting impact of near-term changes in spending. i don't object to, you know, beginning the process of reducing the deficit now but i think it will be much more effective if there's a longer term plan underlying those cuts. >> and longer term you mean a more comprehensive approach to reducing the deficit through possibly increased revenues coming into the treasury as well as reductions in budgets throughout the federal government? >> it's up to congress how exactly to do it. it's going to be hard demanding in any case but we do need to make sure that the deficit doesn't continue to spiral upward. it would be very destabilizing if it did. >> thank you for your responses, mr. chairman, i yield back. >> thank you.

mr. neugebauer. >> thank you, mr. chairman. mr. chairman, are you familiar with the term debt saturation? >> no, but i can guess what it means. >> well there's a -- a formula basically dividing the g.d.p. by the change in debt. if you look back at, according to u.s. treasury, you see one flow, it said back in 1960, $1 in debt basically equated to $1 in increase in productivity in this country. from 1960 until the present this economy at every level, both government, individuals and companies have been leveraging theirselves. where we are today is that we're to the point where we've reached debt saturation and basically for every new dollar in debt,

there is in some cases a negative increase in g.d.p. that results because a lot of companies, even though they would like to borrow money they don't have the capacity to borrow because new borrowing creates new debt service and many of them don't have the income necessary to service that debt. in fact, if you look at the united states of america, for example, our revenues are a little over $2 trillion and our debt service is increasing to, i think, about half a trillion dollars and headed up. when you look at our monetary policy and fiscal policy in this country right now, it's all about borrowing and spending. we're wondering why this isn't working. one of the reasons it's not working is because quite honestly there's not capacity for a lot of folks to take on new debt. when you look at a lot of companies that i talk to, they're building cash on their balance sheets. when you look quantitative

easing that you've done that money didn't go out to the economy, a lot of those folks are holding those moneys in reserve in your bank. so i guess the question i have is, you're beginning to see families and businesses delevranl because they understand that they reached that debt saturation point. yet the fed and the united states government has not -- deleverage because they understand that they reached that debt saturation point. yet the fed and united states government has not -- i was confused by that last unemployment number going from 9.4% to 9%, when you look at the real unemployment number that number went up. if the money is not going out, why would we continue a policy of the fed borrowing more money and trying to put more money in the system when the system seems to be pretty leveraged up and i

don't see the benefits of that? >> congressman, you're right, the economy got over leveraged during the crisis. households borrowed too much, some firms borrowed too much. one of the reasons the recovery is slow is that the deleveraging process is going on, people are building up their savings and wealth again, firms are trying to get rid of debt. that is part of the same process. with respect to the federal reserve, what the fed is doing, first of all, we're buying securities on the open market which we will subsequently sell back to the market, we're not making permanent change to our balance sheet and the effect of this, in my view, is not felt primarily through the reserves and banking sector, it's felt by, as we buy securities in the open market, we lower term premiums in the open market and push investors into other kinds of investments like the stock

market or corporate bonds and the like and the improved flow of money into those securities has indeed and the results do show that bond yields have lowered relative to treasuries, those things do affect people's behavior and help contribute to a growing economy. it's not the same thing, what the fed is doing is not the same as government spending. we are buying securities, which are assets which pay interest and when the appropriate time we will sell those back into the marketplace and return to our previous balance sheet. >> i disagree a little bit on that the monetary policy you have right now is to keep interest rate, you've got them at zero you can't take them any lower, if you can, i might want to borrow money, where they pay you to borrow money. we're trying to encourage people to borrow because we've got interest rates at a low rate but it isn't working.

that's a reason that the economy, even if your own testimony you said we're not quite sure if we can attribute the things we're doing to the little bump in the economy here. i would submit to you what's going on in the economy, the bump we're getting is the fact that some portions of our economy do understand what was going on, they're taking actions to correct their balance sheets, families are lowering their credit card debt. but the policies that we have, both at the fed and this congress of borrowing and spending don't work and in fact, are going to have a negative impact that the more we borrow now from this point forward in this economy, i believe, particularly at the government level, that begins to diminish our g.d.p., not increase our g.d.p. i thank the chairman for his comments. >> thank you, mr. neugebauer. mrs. maloney. >> thank you, mr. chairman. mr. bernanke, would you compare and contrast the recovery that's

under way in germany with ours? are there any lessons there? are there any steps we should be taking to emulate or in essence achieve germany's results? >> that's a tough question. germany did not have quite as -- i was going to say not as deep, they didn't have as much job loss as we did, that was because of policies they had to subsidize firms to keep workers on even when they weren't fully utilized. i think the recovery in germany has brought them about back to where they were before the crisis, which is comparable to what's happened in the united states. germany has benefited, unlike the u.s., germany has benefited substantially from the rebound in global economic activity because they are very much atrade oriented, export oriented

economy and they worked a long time to develop those markets. so i guess if i would draw a lesson, it wouldn't be so much for macropolicy, the lesson i would draw would be that we need to do what we can to increase our competitiveness, increase our efficiency and improve our ability to compete in the global markets. i think that would be good for jobs, good for growth in the longer term. but you don't want to overstate the difference. i think that -- jong germany overall has had a stronger recovery than the united states from the cycle. >> speaking about the international economy, it does appear that the e.u. is not going to adopt the volcker rule, that's what i seem to be reading, and it doesn't appear, or it's unclear whether or not they will adopt the standard of transparency for derivatives and are you concerned about the

regulatory arbitrage between europe and the united states in terms of competitiveness? >> so we are, particularly cftc, is talking to europe about making standards as close as possible for derivatives and clearing-houses and the like. you're right, i think, i don't think to the best of my knowledge that europe is planning to adopt a volcker rule. that will create some competitive disadvantage. i don't know how great. congress made that choice because you believed that taking those proprietary trading activities out of banks would increase the safety and stability of the banks and that's a tradeoff that congress decided to make. but i don't know, you know, in the past there have also been other differences, for example,

our banking system is operate -- has operated with a leverage ratio for a long time, whereas europeans didn't have one. now a leverage ratio will be extended to europe and u.s. banks. but you're right, there will be a difference in capacity. >> and mr. bernanke, there's a possibility that the capital requirements may be tougher here in the u.s. under our regulatory dodd-frank requirements than the 7% in that. would that not give us a competitive disadvantage? >> i don't think there's going to be that much difference in capital requirements. the collins amendment only requires the capital be greater than it was as of last summer. >> that's good news. your most sobering comment was, until we see a sustained period

of stronger job creation, we cannot consider the recovery to be truly established. i'd like you to comment on how do we reconcile the reality of a jobless recovery, as you pointed out in your testimony, with persistent, stagnant wages for 90% of workers over the past 20 years, with the statement that the recession is over? in a sense, with such high unemployment and sustained stagnant wages it appears for 90% of our population. >> the recession is overall only in a technical sense, we're no longer falling, we're now rising. we've been in seven quarters of expangs. that doesn't mean we're back to normal by any means. growth has been, as i mentioned in my testimony, has only been about enough to accommodate the new entrants to the labor force and therefore the effects on the unemployment rate has been moderate and since the demand for labor is weak, wages are

weak as well. >> mr. garrett? >> mr. chairman, it's reported in the "american banker" yesterday, the fed helped broke aerodeal with regard to dodd-frank with regard to where the fdic is with regard to the q.r.m. and the issue of servicing agreements. you're familiar with that? >> we have been working, i don't know the exact status but we've been working with the fdic and o.c.c. to come up with an agreement. >> and the rub in that, i guess, i was in one meeting where they got together, didn't reach an agreement was the servicing language. do you know what the legal authority for them to require servicing requirements in the q.r.m. which will be included in the time deal which has been brokered with the help of your agency?

>> the law gives banking agencies the ability to define a qualified residential mortgage as a mortgage of a certain quality. so to avoid the need for retained risk. >> is there anything in there really that goes to the language of servicing? i don't think that was in dodd-frank an that's where the o.c.c. comes from and they would say there is no legal authority. >> i would have to get back to you on that. again, i think the servicing is part of the contract, part of the mortgage contract. what rights does the borrower have and in particular a mortgage which can be restructured efficiently is a better mortgage than one that can't be restructured. >> all things afleed but if you could get back to me on that point. back to the issue of the mortgage market, you issued a report with regard to risk

retention issues, some thing is totally agree with. risk retention is not a panacea as far as dealing with this and reform should be tailored by asset classes, and it could impact on credit availability if not done correctly. as i understand it, there's going to be a phase in of this as it goes through a multiyear opportunity to phase them in. does it make sense when we realize we're dealing with asset classes and it could impact credit availability that really the regulators in this area go slow and maybe see how the different security markets evolve before they, i'll use the adjective precipitously, make rules on this? >> we want to get it right but the study took into account current practices, how the markets operated. there's usually good reasons for

why markets evolved the way they have. our proposals try not to radically change the current practices in those markets. >> but there is a phase in for one year for the rnbs, two years for the cnbs, so on, doesn't that give us, and the regulators, to see how they evolve in that period instead of saying, we're going to treat it one size fits all for all asset classes regardless of how it phases in later on? >> yes, we recommend being sensitive to the particular type of asset classes. >> going back to the other issue of the day, the qe-2 monetary policy and some have intimated that the qe-2, $600 billion, some would say is pulled out of thin air in the creation of it. but the reason that the fed has done this, of course, is because inflation is running under 1% right now. should we feel confident, should the markets feel confident if that in a week or month or

several months down the road inflation starts running higher, runs about 3%, that at that point in time the fed will be ready to sell off to unwind the $600 of qe-2. >> inflation can vary considerably in the short run. inflation went, i think, up to about 5% in the summer of 2008, then that was unwound and we had a period of negative inflation for a while as commodity prices went up and down. >> so there's a short period to look forward before the unwinding occurs? >> the unwinding occurred after the crisis in the full of 2008. during the sum over 2008 we had the big spike in oil prices and later in the year we saw negative inflation as commodity prices collapsed. so our objective is to get low, stable inflation in the immediate yalm term -- medium

term, to the extent we have fluctuations not being fed into the broader inflation basket, we have to look through those to some extent but we're going to be looking at inflation expectations and making sure that people remain confident that inflation will stay low. we'll address that. i want to reassure you that we have learned the lesson, as central bankers, learned the lessons of the 1970's, we won't allow inflation to get above low and stable levels. >> my question is, for how long it takes, but before you -- how long the inflation stays at that level before you need to see -- >> well, it depends a lot on, again, whether inflation expectations remain anchored and what's happening to the broader basket. again, a single oil prices alone with nothing el moving would probably not be enough to make us respond. >> thank you. >> chairman bernanke, the

federal reseven stated that steady, low inflation levels at .7 to 2% would be helpful to assist in the monetary recovery. what role should federal spending play over the next year to help maintain inflation at these levels? >> well, the inflation rate, i think, ultimately is mostly the responsibility of the federal reserve and we take responsibility for that because monetary policy determines inflation in the medium to long term. i think that the congress in looking at fiscal policy needs to consider two issues, one is the very short term, making sure not to do anything that will derail the current recovery, but at the same time, taking over a medium to long-term period, taking the necessary hard steps to cut the deficit to restore sustainability and restore confidence in the markets that

our fiscal policy will be sound. so i would focus not on inflation, i would focus on the prospects, medium term prospects for the fiscal trajectory and with attention to the current recovery as well. >> thank you. mr. chairman, a common refrain among critics of the dodd-frank wall treat reform act is that it has contributed to the credit crunch for small businesses. but as early as july of 2008, two years before the bill was enacted, your testimony before this committee took note of the growing credit crisis, especially for small businesses. do you believe that financial regulatory reforms containing the dodd-frank act are imparting the availability of credit for small businesss? do you have any evidence of that?

>> well, as you say, we've had significant problems with credit availability for a couple of years now and although i know that many community bankers have concerns, whether legitimate or not, about the regulatory impact of dodd-frank, so far, almost nothing has actually happened. cfpb is not operating, capital requirements have not chamed. so that's a very difficult problem, the availability of credit, the fed has been working hard and the other banking agencies with the banks, with our examiners, trying to make sure good loans get made. i think the main problems at this point are, on the one hand, caution on the part of the banks and on the part of the borrowers in many cases financial problems that make them less qualified for credit. >> but we do know that the federal reserve survey of senior loan officers, the latest one that was released right after

the dodd-frank, shows that lending standards are easing for small businesses. >> as i said in my testimony, things are looking a little better and we expect credit to improve in 2011. >> federal reserve stated at its last open markets meeting that it would continue with the status quo of a near zero federal funds rate for the foreseeable future. is there any concern that continuing to communicate an expectation that the federal funds rate will remain at an exceptionally low level for an extended period could increase inflationary risks? >> well the language, the communication, is one way that we use to provide additional policy support to the economy, which in our judgment is -- it still needs. you know, the economy's recovery is not firmly established and we

think monetary policy needs to be supportive. clearly, if we leave policy to accommodate it for too long that would lead to inflation and that's why we need to unwind the language, the asset purchases, the interest rate policy, those things have to be unwound at the appropriate time. so i think at this point, it's not creating inflation but it would if we didn't unwind it at the appropriate time. >> thank you. >> mr. pierce. >> thank you, mr. chairman. i appreciate you being here today. and they've kind of worked the inflation question over but i would just make a comment, roswell, new mexico, is in my district and there are more people who believe the aliens land in rosswell than believe that inflation is 1. 6%, they're paying higher prices for gas and food, i don't know what they buy

that's not inflating. we got a report that drill pipe and heavy construction metal for the oil field is not available because people worry about what the future prices are going to be that they're holding on to supplies. people are being affected whether or not inflation shows on the books to be increasing. i'm interested in your comment on page three that mortgages are difficult to obtain. do you have any speculation why that might be? >> well, the -- partly because the fannie and freddie have tightened up their standards and more generally because lenders are quite uncertain about where house prices are going to go. they're still being cautious after the debacle, mortgage debacle of the crisis and so what we're seeing is that lenders are requiring unusually

high down payments, high fico scores and so people with -- without those qualify cages are just not able to get mortgages. >> i was recently talking to a young couple, both just graduated from college, both have pretty good jobs and can't get financing, exactly the circumstance here. we talked to bankers and had a conference call with new mexico bankers and they said that the safety and soundness reviews were not problematic if the compliance -- it's the compliance reviews and things that used to get written up as exceptions now have $50,000 fine. they said why would we loan for houses if there's a typo or a

failure about the floodplain, in new mexico, flood insurance is not a big deal, but if you make a mistake on it, it's a $50,000 fine. you might tell the regulators these things are -- the compliance reports are scaring the daylights out of people. looking forwarding our ability to respond to crises, i'd like to look backward at the way we responded to the crisis. who was actually in the, kind of the pilot's seat in this trouble in 2008? was that the treasury or the fed? >> we cooperated. we qupted. we both were -- >> so you're familiar with the decisions? who made the decision, keep in mind we bailed out fannie and freddie, bailed out bear stearns, let lehman fail and two

or three days later bailed a.i.g. who made the decision to let lehman fail? >> well, i was not personally in that meeting, i was in washington while theefs discussions were taking place in new york. my belief is it was not a decision, it was nevittability. we couldn't find any way to avoid the failure. if we could have, it would have. >> it was inevitable for bear stearns to fail too. we had nevittability facing us. statements in that time indicated fannie and freddie were sound and in fact it was the ad hoc nature of these things that caused great instability in the market on wall street. the price ofing to bes began to fall as people said, we can't trust that the government is going to be predictable in this and we better be bailing out and i look at that time as a period

of overreaction, underreaction and questionable judgments, false statements were made and i believe that it severely impacted the length and depth of what was going on. have you got any comments? >> my comment is that if we had -- we did everything we could given the limited tools we had to prevent any collapses. we did find a way to solve the bear stearns problem. what i think he moon -- lehman demonstrated is if we had allowed other firms to fail as well the entire financial system could have collapsed and we would have seen a far worse recession than the one we had. >> thank you, mr. chairman. >> the time of the gentleman has expired. the chair recognizes the gentleman from north carolina, mr. watt, for five minutes. mr. watt: thank you, mr. chairman. thank you, mr. bernanke, for being here. chairman bernanke, you know and i'm sure the folks at the fed

know that as chair of the monetary policy subcommittee for the last couple of years, i gained a healthy respect for the work that you all were doing and think that you all did a great job to get us to where we are today. and i want to applaud the work of your staff on that front. my questions today really want to go outside the box a little bit. i think i have some concerns about things that are further down the road that i think could really be difficult economic, fiscal, social impacts to our

economy and my question is, to what extent are you all doing things in these areas, studying or looking down the road to anticipate some of these issues. there are two of them that i want to talk about. one is climate change which from all indications is going to result in dramatic weather extreme -- swings at the extremes that will have devastating impacts economically that make new orleans look small potatoes. on the coast in the west, in the

gulf, in florida, in places where just a two or three-point temperature change has dramatic impacts on weather conditions. the sec is on the growing gap between well-off in this country and people who are not well-off in this country, the gap is growing, i think we are about to experience a greater growth because this whole fannie and freddie discussion and the way it has been shaped now will result in fewer and fewer people of modest wealth and incomes

being able to be homeowners and the great bulk of low income and moderate income people's wealth is in home equity. not in stocks, not in companies, entrepreneurship and all that. now i know neither one of those things, climate change or the gap, is is specifically in the rubric of inflation control monetary policy and jobs. my question is, what work or research, if any, are you all, is the fed doing to anticipate or -- the impacts of either one of those things?

>> congressman, on the climate change, there's been good economic work done on this by people like bill nordhous and others and i'm sure we have staff that are familiar with that work but we haven't really -- this big scientific element, we haven't had the capacity to do a great deal of work on this at the federal reserve. the story is somewhat different with the inequality issue because -- within the sphere of our duties, we are looking at things like access to banks and access to credit, wealth creation, education and labor skill development, all those things fall within our financial regulatory and labor market responsibilities and we have quite a few people looking at those issues. i don't know whether we have anyone looking at the really long-term consequences for the inequality but the components

relating to labor markets and financial market, we have people looking at those issues. >> the time of the gentleman has expired. the chair recognizes the gentleman from north carolina, mr. mchenry for five minutes. >> thank you, mr. chairman. and chairman bernanke, thank you for your service to your country. you've done so at extraordinary times and we appreciate that. >> thank you. >> much less having to endure a number of these hearings. it's certainly a challenge. but i wanted to ask you today about the municipal bond market. it's been a concern of a number of us here on the hill, a number of policy proposals have been put forward trying to bring transparency to that marketplace in terms of state indebt ness, municipal indebtedness. i'm not asking you to comment about wisconsin or any of that, but do you believe that the municipal bond market could pose a systemic risk to our nation's

recovery? >> it could in principle. i should just be clear. i understand that municipalities are facing very difficult budget situations both in the short-term because of the recession but also because of long-term obligations for health -- for health and pensions, recently tax revenues have been coming up with some recovery in the economy a lot of painful cuts have been made in many states and municipalities, so i think that the states and localities are making progress addressing those issues. that being said, i would applaud any efforts to improve transparency and clarity. it would help investors certainly and it would force the states and municipalities themselves to address these problems more head on, i think. >> ok. so transparency would be helpful. is this, in terms of the

municipal bond market is this something that's actively sees, reviews what's happening and the impact it could have on treasuries and our lending at the federal level? or borrowing at the federal level? >> we review every major financial market and this is one of them, there are people paying close attention to developments there. i think recently the tone has improved a bit lately in part because of the better economy and because of progress being made on the budget. >> i want to shift a little bit, this is something that at our last hearing on the implementation of derivative regulations, i know mrs. maloney touched on this, but international harr monoization, when we look at derivatives and the derivatives regulation, the regulators implementing the

derivatives piece of the dodd-frank bill, we see that other major markets aren't coming along as fast as we are. you can see europe is maybe a year mind us. is that a concern? is that something that you're trying to bring other stall banks around to this? >> i think in many cases, they're taking the lead in trying to harr monoize -- harmonize recordkeeping rules and exchanging and the like. there are some differences which i don't think will be reconciled. europe is not, for example, following the lincoln amendment approach, the push out of derivatives, so that will create dimps in the come -- create differences in the competitive

distribution of american and other banks, i think. it's difficult to assess at this point how significant that will be. >> in terms of ensuring that there is some armnyization of where our -- harmonization of where our market is moving, are we having those conferrings? >> we aring are those. there are international committees, like the basel committees, which look at these issues and try to establish global standards. we are all, as we set rules, for example, for financial market utilities, we take into account these global standards. there's an attempt there to try to create armnyization. -- harmonization. >> the chair recognizes the

gentleman from california, mr. sherman. >> i know not all my cleags agree but the economy is a patient in critical condition and the traditional medicine ises are not available. fiscal policy is is politically over and i don't think you can lower short-term interest rates. so the fact is, you have come up with a new and inventive medicine at a time when the easy thing to do for you would have been to walk away from the patient and say, well, everything that can't be -- that can be done has been done by the feds. you've shown courage, you've shown innovation and i hope this new experimental medicine of yours works. my colleague asked about municipal bonds, i want to focus on state borrowing. the rule is, states can't go bankrupt. people invest in state bonds with that as the rule, the assumption and there's some

politicians talking about allowing states to go bankrupt and the states don't want the bondholders to lose money, it's just they hate the public employee unions so much they've lost sight of the reason we don't let states to go bankrupt, to encourage people to lend money to states. what effect would it have if there was real, serious discussion and we were close to passing a bill allowing states to go bankrupt, what effect would it is have if a state went bankrupt on the ability of all 50 states to borrow at the present time and in coming years? >> that's really hard to judge. i think even though states can't go bankrupt, they can default. that has happened 160 years ago, so bond, municipal bondholders do try to assess the risk that there will be a default. the bankruptcy idea is a very complex one because of states'

rights issues, could -- you have to raise the question, could a bankruptcy judge tell a state to raise taxes, for example? i think there are some thorny legal questions at the beginning of that debate. again, i'm sorry i can't really judge what impact the creation of bankruptcy code would have on those risks. i think the bondholders fundamentally look at the condition of the state and the rules like what is the precedence of interest payments and those sorts of things. >> i point out the state treasurers around the country do not want us to give the states the ability to go bankrupt. right now, fannie and freddie are paying 10% dividend, the tarp banks paid a 5% dividend or annual payment. i'm not sure that on a net basis you're going to collect anything from fannie and freddie.

why do you -- why should we have a 10% payment that we're receiving from fannie and freddie? >> well, as with the capital injection programs and the like, it was set up to be paid back. via giving the government preferred stock and by having a dividend. of course, as you know, fannie and freddie have been requiring injections of money and they have not made any significant progress in paying it back. as to my colleague saying that -- >> as to my colleague saying they believe there is higher inflation, that's because if you go to the market lettuce is $1.59 a head you notice that. if onions are down to 59 cents a

pound, you buy a few more and don't worry about it. it's been suggested that the c.p.i. overstates the inflation rate by .75 or a point or even more. do you think that's correct or does the c.p.i. best reflect inflation given quality imprumets in a lot of our products? >> you're correct that the professional economists who have, including the ones at the bue roar of labor and statistics who look at price measurement do con claud that the c.p.i. probably doesover state actual inflation though they have made progress in addressing some issues that were identified a decade ago. that being said, you know, we understand the visibility of gas prices and food prices and we want to be sure that people's expectations aren't adversely affected. i think it's important to note that according to, for example, to the michigan survey of

consumers that long-term inflation expectations have been basically flat. they haven't moved, notwithstanding ups and downs in gas prices, for example. >> gas prices are there but flat screen tvs are in the other direction. and i yield back. >> the chair recognizes the gentleman from california, mr. campbell. >> thank you, mr. chairman. thank you, chairman bernanke. rather than ask you about the consequences of the actions you in the federal reserve are taking, i'll ask about the consequences of the inaction that we, congress are doing relative to -- relative to our fiscal problem. the chairman, vice chairman all alluded to some of your prior comments relative to our fiscal trajectory. what if we don't act? what if we don't set any long-term sustainable policy or projection? and that we run up a $1.5

trillion deficit, $1 ppt 6 trillion next year, as estimated by the president, so somewhere close to $5 trillion in deficit in the next 36 months, what impact does that have on jobs, the economy, on interest rates, on everything? >> well, it's hard to know exactly what the timing would be. what we do know is that eventually lenders would decide that the united states wasn't a good credit risk and interest rates would spike and that would slow the recovery or slow the economy. it would create financial stress for not only holders of treasuries but holders of other fixed income assets. it would have effects on confidence, it would cause people to have higher taxes in the future. it's hard to say exactly when the confidence gets lost.

but we've seen in other countries, just recently we've seen examples where, you know, on tuesday everything was ok but on wednesday there was a fear that maybe the process was breaking down and there was not going to be sufficient progress and you saw sharp increases in interest rates and loss of confidence in the country's economy and fiscal policy. >> so, i mean, over the next three years, it could happen, right? if we're running up that sort of, toward $5 trillion, it could happen at some point that no one knows exactly when the markets might react that way but it isn't necessarily something that's 10 years away, is it? >> no, it's not necessarily 10 years away. the way i think about it, the markets are less looking at our economy, because we have the capacity to address these problems, they're looking more at the political will and decision making and an extended

period of congress and i hate to put this on you, i know these are hard problems, but an extended period of congress ignoring or not making progress on these issues would be the kind of thing that would create disruption in the bond market. >> as you say, the -- people stop buying bonds, interest rates go up, we get into a spiral, don't we? the interest rates going up increases interest on our debt, which increases the deficit, which increases the interest rates which -- i mean, we potentially get into a spiral from which it becomes difficult to recover without significant economic damage, is that right? >> economists have a sterile term, they call it debt dynamics which is what you described, the interest rates get higher, the debt gets higher, which makes interest rates higher and debt gets higher, and it spirals out of control.

>> if we continue as we have been to not deal with the problem at all in any long-term or sustainable manner, then it could have a very bad fiscal result in not too long a time. >> i've said that a number of times and i agree with that risk, though again, we don't know exactly when. >> mr. chairman, i appreciate your comments and i appreciate your candor on this. it seems to me that members of congress, politicians in general, are generally risk averse and that as we saw in 2008, when that -- when we were in the midst of that crisis, we seemed to not be willing to act to solve the problem until the consequences of that problem exceed what we perceive to be the political consequences of inaction. right now, unfortunately, it seems to me that in this town

the political consequences of action seem -- are seen to be greater than those of inaction. but i think as we get back in -- as we did back in 2008, eventually we make people aware that the prospects for a -- for the problem were very strong and very imminent and we increased the level of rhetoric we used in order to emphasize the severity of the problem and we need to do that to get this place to act. i yield back. >> the time of the gentleman has expired. the chair recognizes the gentleman from new york for five minutes. >> good morning, mr. chairman. let me -- i've got a series of questions on different topics i want to ask but before i get there, my concern is as we look at this and talk about, we all have, weir in deficit so is we've got to fix it, we talk about cutting, we've got to make

sure that everybody feels some of the pain. and as we're dealing with the current c.r., etc., of course because of some of the deals we've made prior, the only way we're talking about balancing this budget right now is on the cutting side and generally, you know, you also have cutting and you have revenue. some kind of way when you have both it helps eliminate the deficit because you're cutting and you've got more coming in also and then that kind of levels out the playing field to a degree, also, so that everybody feels it. if we're going to create a situation where all americans feel better about the current situation it seems to me that everybody has to feel some pain. part of the problem that we have here is, some people are feeling pain and others will say, as in my city, in new york, the others are getting huge bonuses.

yet nobody is lending money but somebody else is making money. and we're really not having the kind of balance that is needed so that there's pain felt on all the sides so that we can move and then have the kind of agreement we need to have so that we can move forward. we still have individuals who are losing their homes. it's hard to talk to those individuals about them losing more when they've lost everything they've already had. and some -- it appears to them that others on the other side are not losing them. in fact, they're back to where they were. they're making more money than they've ever made. that then causes the kisms in politics so that we're not doing what we -- the schisms in politics so is that we're not doing what we should be doing

and we have the left side and right side is and we need to having down thed myle to move us forward. that mings me to my first question to you, i want to get something clarified, i guess this was yesterday, in your statement on the impact of the c.r., for example, on the economy, and i was wondering whether or not it was based on your in depth analysis of the specific cuts to various programs or -- there's a discrepancy is, goldman sachs came out with an opinion and you said it would be less than what goldman sachs did, i was wondering, what was your statement based upon? how did you arrive at that? >> it was base odden a rough and ready metric analysis useding models, of course, but based on a total dollar amount of $60 billion this year and $40 billion next year. without any real attention to the composition of that.

we didn't get into the -- >> as we leave testimony from fed chair ben bernanke and congressman meeks, we want to let you know we're carrying this on our website, c-span.org. the u.s. house is about to gavel in for legislative work, two bills, one to continue federal highway and mass transit projects through september, funds will stop friday unless congress passes the measure. also chains to small business reporting requirements in the new health care law. now to live coverage of the u.s. house. the speaker pro tempore: the house will be in order. the prayer will be offered by our chaplain, father coughlin. chaplain coughlin: lord, god of the university, our hope in times of testing, our consolation and strength always.

while this chamber goes about its work to establish security and good order for the nation, breathe forth a new spirit of creativity and learning in the hearts of your people. and guide the course of world events. by drawing closer to your holy will and revealed word, may the hidden treasures of lasting freedom empower your people to seek the truth and do what is right in conscience so we may witness to your presence in our midst both now and forever, amen. the speaker pro tempore: the chair has examined the journal of the last day's proceedings and announces to the house his approval thereof. pursuant to clause 1 of rule 1, the journal stands approved. the pledge of allegiance will be led by the gentleman from missouri, mr. carnahan.

mr. carnahan: i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation, under god, indivisible, with liberty and justice for all. the speaker pro tempore: the chair will receive a message. the messenger: mr. speaker, a message from the senate. the secretary: mr. speaker. the speaker pro tempore: madam secretary. the secretary: i have been directed by the senate to inform the house that the senate has agreed without amendment to h.j.res. 44, making further continuing appropriations for fiscal year 2011 and for other purposes. the speaker pro tempore: the chair will entertain up to 15 requests for one-minute speeches on each side of the aisle. for what purpose does the gentleman from ohio wish to be recognized? >> request unanimous consent to address the house for one minute, revise and extend my remarks. the speaker pro tempore: without objection, the gentleman is recognized for one minute.

>> mr. speaker, yesterday the government accountability office released a report detailing billions of dollars of waste in the federal government. redundant and infective -- ineffective programs infect the government like a plague. for too long congress has punted on its responsibility to rein in wasteful spending. when i read this report, i had the same feeling as my constituents did, i hated it. according to the report there are 15 agencies implementing federal laws on food safety, there are 80 different programs and numerous agencies that work on economic development. 24 federal agencies for information technology. and 82 programs dealing with teacher quality across multiple agencies. what is this costing us? billions. who's paying for it? you guessed it, the american taxpayer. the american taxpayers' dollars are being wasted by keeping these are you dun dant programs

on the books. we should immediately begin looking at ways to eliminate redundancy, stop wasting billions of tax dollars and allow hardworking americans to keep more of what they earn. mr. speaker, i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentlelady from pennsylvania wish to be recognized? without objection, you're recognized for one minute. ms. schwartz: over 300 economists believe the republican bill to cut $61 billion in midyear could eliminate 700,000 american jobs and shrink economic growth by 2% just this year. these are short-sighted cuts that could threaten our economy and our economic competitiveness. our goals should be job creation, not just destruction. our republican colleagues only care about cutting. without with regard to where -- wrout regard to where the cuts from, or how dert mental they could be for our economy.

this is not governing. spending cuts should not be politically motivated or economically harmful. we do need to cut spending to reduce our deficit, but these cuts must be targeted and they must be responsible. they shouldn't cut into our core obligations to our seniors, to our safety or to our future. our nation's economy and economic growth are all critical to private sector competitiveness. spending cuts with sound investments is the only way to ensure job growth and new jobs. it's time for republicans to move beyond political rhetoric to actions that really work to grow our economy. the speaker pro tempore: the gentlewoman's time has expired. for what purpose does the gentleman from pennsylvania wish to be recognized? without objection, you're recognized for one minute. >> mr. speaker, in the coming years the commonwealth of pennsylvania will have to find $2 billion additional to pay for obamacare's mandated medicaid increases. there is little flexibility in

state budgets this year and pennsylvania, like many states, will have to make up a significant budget gap this year. the entire state budget is only $29 billion. adding $2 billion more means significant cuts in services or significant tax increases. pennsylvania's not alone. according to a new report released yesterday, this expansion will cost states $118 billion additional. that is twice what was just recently estimated by c.b.o. we want to provide good health care, but we also want to educate our children, keep citizens safe and maintain our rails and roads. our state governments must be more than just health care providers. we must provide governors with the flexibility to determine the needs of their states. under obamacare medicaid is more rigid and more expensive and even greater burden on states struggling to balance their budgets. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the

gentleman from missouri wish to be recognized? >> to address the house for one minute, revise and extend my remarks. the speaker pro tempore: without objection, the gentleman is recognized for one minute. mr. carnahan: thank you, mr. speaker. yesterday i voted for a two-week compromise to keep our government's most vital programs running while we negotiate an agreement to cut the deficit without hurting our fragile economic recovery. why? because a government shutdown would hurlt all americans and we need time to work together to avoid that. 15 years ago a hyperpartisan congress shut down our national government for ideological reasons and fur lowed over 8,500 jobs in my hometown of st. louis. just this morning st. louis has reported that a shutdown could put as many as 38,000 people out of work in our region. let's have a serious and spirited debate about cutting red tape and duplication and finding commonsense solutions. let's focus on the priorities of the american people, creating jobs and cutting the deficit. we should do so by looking at three principles. will it create jobs?

will it help the middle class and working americans and our retirees? and finally, will it lower the deficit? i hope my colleagues will join me in passing a funding resolution that meets these essential goals, our constituents deserve no less. i yield back. the speaker pro tempore: the gentleman's time has expired. for what purpose does the gentleman from new york wish to be recognized? >> i ask unanimous consent to address the house for one minute. the speaker pro tempore: without objection, the gentleman from new york is recognized for one minute. >> thank you, mr. speaker. i rise today to fight for the job creators in my district. small businesses and family farms in upstate new york are always struggling to survive in these tough economic times. we in the congress can help by attacking the impediments to their profitability. high taxes, onerous regulations and spiraling health care and energy costs. today i rise in support of the repeal of the 1099 reporting requirement that was included in the government health care bill passed last year. this new government mandate is set to require our small

businesses to issue detailed tax information for each vendor with whom they do business beyond $600. some of our small business owners have hundreds of these venders and this new onerous requirement is absolutely unnecessary and would add more burden to an already stressed bottom line. i look forward to standing with the small business and farms in my district tomorrow by casting a vote to repeal the 1099 provision. mr. gibson: i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentlelady from texas wish to be recognized? >> to address the house for one minute. the speaker pro tempore: without objection, the gentlelady is recognized for one minute. ms. jackson lee: mr. speaker, this one-minute is from the heart and it disturbs me and baffles me for a country that i love. i don't believe there's anything more precious than for members to stand up and pledge allegiance to this great nation. and then to be taught as children about the american dream. that's why democrats have focused their life's journey on creating jobs for americans.

that's why we don't want to engage in frivolous budgeting that causes us to lose jobs. but why governor of wisconsin, governor of ohio, gomber daniels demonizing workers, teachers and transit workerers and police and fire fighters? does anybody know that wisconsin public workers offered $100 million last year to be able to help the state and have already committed to helping them this year? but no. union busting is not union busting. it is quashing the american dream. making it a crime to organize workers. what is america? i beg of them to stand against this kind of dastardly act and democrats are fighting for jobs. where is the american dream? i yield back. the speaker pro tempore: the gentlewoman's time has expired. for what purpose does the gentleman from mississippi wish to be recognized?

without objection, the gentleman is recognized for one minute. >> thank you, mr. speaker. i'm thrilled today to welcome over 125 advocates from 40 states with the national fragile foundation. today the fragile x community will visit their members of congress to promote awareness, improved research and more efficient treatments for fragile x associated disorders. this disorder is linked to the x chromosome is the most commonly inherited form of disabilities. this is a very personal and emotional issue for my family as my 21-year-old son has fragile x syndrome. i'm honored to have livingston with me today in washington to help me share our family's story about this condition. while we understand the challenges facing congress, we ask you to continue to support federal investments in fragile x specific research, discovery and public health priorities. thank you and i yield back the balance of my time.

the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentleman from new jersey wish to be recognized? >> to address the house for one minute. the speaker pro tempore: without objection, the gentleman is recognized for one minute. mr. sires: mr. speaker, republicans have been in charge for eight weeks. and this chamber has taken 154 votes. yet we still see no signs of job creation or a jobs plan. with 14 million americans still looking for work, i ask my colleagues on the other side, where are the jobs? where is the plan? in this house we have talked about repealing health care reform and instructing committees, but nothing about a jobs plan. and now as we approach the deadline for government funding and looming threat --, a looming threat of crippling government shutdown, house republicans are focusing on irresponsible budget plans that actually threaten job creation. in fact, the republicans proposed long-term c.r. not only fails to create jobs or spur the economy, it would actually cause more job losses and depress economic growth.

economists have discovered that their plan would destroy around 700,000 jobs in 2012. mr. speaker, as the impending deadline approaches, my republican colleagues should negotiate in good faith and fund the government to support job creation and economic growth, not cause more damage. the speaker pro tempore: the gentleman yields back the balance of his time. his time has expired. for what purpose does the gentleman from florida wish to be recognized? without objection, the gentleman is recognized for one minute. >> thank you, mr. speaker. mr. bilirakis: mr. speaker, i'm here to talk today about red tape. specifically the 1099 form. it's a relatively short, seemingly harmless form. yet when we require every business in this country to file a 10 the 9 form, for every -- 1099 form for every business transaction over $600, it is far from harmfulless -- harmless. this takes time, energy, resources away from the growing their businesses. the 1099 provision is one of the

many backbreaking regulations, including the democratics' health care overhaul that i opposed when it passed the house in 2010. repealing this requirement would be a victory for america's small businesses, families and individuals. florida's businesses deserve economic solutions that will let them keep more of what they earn so they can innovate and grow. i urge my colleagues to support h.r. 4 and repeal this 1099 provision. thank you, mr. speaker, i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentleman from washington wish to be recognized? without objection, the gentleman is recognized for one minute. mr. inslee: mr. speaker, one thing we share on a bipartisan basis is we like to -- republicans and democrats -- breathe clean air. we don't want to see our kids be exposed to aggravated asthma problems. that's why it's very disappointing that the republicans are trying to

threaten a government shutdown if they don't get to pass their dirty air act. now, their dirty air act is a bill they want to pass, and i'm not making this up, they want to pass a bill that would make it illegal for the environment protection agency to enforce the provisions of the clean air act that will reduce air pollution. this is amazing to me, you want to shut down government if you don't shut down government in enforcing pollution. i've always thought the american people thought that was a really bad idea. so i want to share with my colleagues proof of this. in polls done in 19 congressional districts recently, including the speaker's own district in ohio, 68% of americans said that we should move forward with the e.p.a. in this, six out of 10 said the republicans' dirty air act is a really bad idea. we need to keep the government to keep clean air. reject the republicans' threat of a government shutdown.

the speaker pro tempore: the gentleman's time has expired. for what purpose does the gentleman from rhode island wish to be recognized? >> ask unanimous consent to be recognized for one minute. the speaker pro tempore: without objection. . >> i rise to commend the meadows. they provide individual living with enhanced social services and high quality care to approximately 100 rhode island seniors. mr. cicilline: it was built using a smart bination of federal, state, local, private funding. it has a green design which includes geothermal heating, energy star appliances and energy efficient lighting. for the commitment to providing our seniors a quality standard of living, i congratulate them. i honor them as a community of quality for our seniors for exemplary development. thank you for your work. congratulations for your achievement. and thank you for your commitment to rhode island seniors. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the

balance of his time. for what purpose does the gentleman from new york wish to be recognized? without objection, the gentleman is recognized for one minute. mr. crowley: mr. speaker, in 2010 the republicans promised smaller government and fewer taxes. they even signed a pledge, a pledge not to raise taxes. yet here we are 56 days after assuming control of the congress , republicans are proposing to do exactly that. tax hikes for working middle class americans. their bill, h.r. 4, would repeal the onerous reporting provisions on small businesses, but on the backs of hardworking middle class american families. those watching the debate are probably thinking, say it ain't so, joe. but despite republicans' claims, it isn't a tax increase, it is a tax increase. if it isn't, why did the joint committee on taxation say it is? if it isn't, why did did republicans vote on my amendment that would prohibit any such --

section in h.r. 4 from kicking in if it did raise taxes on middle class families? it took only 56 days to break their pledge. republicans are raising taxes on working people. say it ain't so, g.o.p., say it ain't so. the speaker pro tempore: the gentleman's time has expired. for what purpose does the gentlewoman from california wish to be recognized? without objection, the gentlewoman is recognized for one minute. mrs. davis: thank you. mr. speaker, it's hard not to get angry when washington news or reading the newspaper about wisconsin. we are trying to recover from the biggest financial crisis since the depression and who is getting the blame for our nation's fiscal problems? teachers. teachers certainly are the people who caused the great recession. it was a group of wall street executives who brought about the financial crisis which led to the budget shortfalls in the

state. blaming teachers or cutting their pay is wrong. working to strip them of the basic american right to collectively bargain because some greedy wall street executive makes huge mistakes and went too far? that's absolutely also wrong. of course wall street executives have gone back to collecting big bonuses, while teachers and public workers are collecting the ridicule. it's time to put blaming hardworking and dedicated teachers and let them get back to focusing on their students. the speaker pro tempore: the gentlelady's time has expired. for what purpose does the gentleman from california wish to be recognized? mr. kosta: unanimous consent to address the house for one minute. the speaker pro tempore: without objection, the gentleman is recognized for one minute. mr. kosta: thank you very much, mr. speaker. our national debt as we all know is approaching $14 trillion with a capital t. it's clear that we can no longer afford to continue the partisan bickering and short-term

thinking that too long has consumed our nation's capital. mr. costa: kicking this can down the road may have been in vogue at some time can no longer be afforded by our nation. the staggering debt was not created in day and we can't dig ourselves out of this hole overnight with you we must stop digging. we must cut spending, agree to a stable source of revenue, and hold these commitments over the long-term over a bipartisan basis. partisan rhetoric will not get the job done. the congress now has to deal with the reality of the budget mess. the long-term continuing resolution the house passed two weeks ago, though, won't grow our economy and won't create jobs in the san joaquin valley. two reports by respected economists it will provide careless cuts and mean hundreds of thousands ever jobs lost throughout the nation. we can't cut spending. we can grow our economy but it will require shared sacrifice by

democrats and republicans coming together. our nation's fiscal house depends on it. the speaker pro tempore: for what purpose does the gentleman from colorado wish to be recognized? mr. polis: permission to address the house for one minute. the speaker pro tempore: without objection, the gentleman is recognized for one minute. mr. polis: one of the most critical issues to my constituents and americans across the country is crying out for congress to take action with regard to illegal immigration. this nation has over 15 million people who are here illegally and yet i don't hear one word about comprehensive impration -- immigration reform. that has strong majority support in polls from republican voters, independent voters, and democratic voters. comprehensive immigration reform would finally establish real border security, real employment verification, and require the people that are here illegally register, pay a fine, and get right with the law. it's common sense for america and it's time for congress to take action on this critical issue. lately i have heard the people we might be discussing mandatory e verify. that would make the problem worse. it encourages the black market in social security numbers.

we need real employment verification with fingerprints or eye i.d.'s so we can identify who is there and don't simply contribute to a black market in social security numbers which we can be bought and sold only increasing crime in this country. my constituents are calling on congress to take action on comprehensive immigration reform. and i urge my colleagues to bring this important issue forward. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentleman from south carolina rise? mr. scott: by direction of the committee on rules, i call up house resolution 129 and ask for its immediate consideration. the speaker pro tempore: the clerk will report the resolution. the clerk: house calendar number 13, house resolution 129, resolved, that upon adoption of this resolution it shall be in order to consider in the house the bill h.r. 4, to repeal the expansion of information reporting requirements for payments of $600 or more.

all points of order against consideration of the bill are waived. an amendment in the nature of a substitute consisting of the text of the amendment recommended by the committee on ways and means now printed in h.r. 705 shall be considered as adopted. the bill as amended shall be considered as read. all points of order against provisions in bill as amendrd waived. the previous question shall be considered as ordered on the bill as amended to final passage without intervening motion except one, two hours and 30 minutes of debate equally divided and controlled by the chair and ranking minority member of the committee on ways and means. and two, one motion to recommit with or without instructions. the speaker pro tempore: the gentleman from south carolina is recognized for one hour. mr. scott: thank you, mr. speaker. for the purpose of debate only, i yield the customary 30 minutes to the gentleman from colorado, mr. polis, pending which i yield myself such time as i may consume. during consideration of this resolution all time yielded is for the purpose of debate only.

mr. speaker, i ask unanimous consent that all members may have five legislative days to revise and extend their remarks. the speaker pro tempore: without objection. mr. scott: mr. speaker, house resolution 129 provides consideration of h.r. 4, the small business paperwork mandate elimination act of 2011. if you are looking for a prime example of government regulation which first is an unnecessary intrusion on small businesses, second, enlarges government bureaucracy at the expense of taxpayers and entrepreneurs, finally creates a mountain of mind numbing paperwork which has a net effect of killing jobs, then look no further. section 9006 of the health care reform bill does all that by requiring businesses to report every expense that they incur over $600. not just in wages for their employees, but even for payments to other businesses and

merchandise. imagine, if you will, a small business that picks up a couple of dozen doughnuts from crispy cream on a weekly basis, at the end of the year they must send a 1099 to krispykream. think about the small business owner who buys stamps from the post office and now you have to send a 1099 to the u.s. post office. what about you buy a printer for your office, blinds for your office, here comes more, another mountain of new paperwork. so now you are spending tax time preparing 1099's for a krispy kream, wal-mart, cost could he, starbuck's, the list goes on and on. it's one thing for a large corporation with an in-house tax department. it's another thing completely for a small business which spends an average of $74 an hour

, that's $74 an hour on tax compliance. the most expensive paperwork, paperwork burden that the federal government imposes on all small businesses. then take matters -- make matters worse, the last year the president signed the small business jobs act which expanded this onerous 1099 requirement to anyone who rents out property. how does this happen? well, we are learning that after the bill's been passed we are learning more about it. we had a congress that passed a bill through backroom deals, shielded from the public view, without reading them. the american people have seen what's in this bill and they don't like it. they don't like it one wit. -- bit. that's why they sent all of us to congress to repeal, to defund, and to dismantle the health care reform. my republican colleagues voted to repeal this bill, 245-189

with a 49-vote greater margin than originally passed. that is also why two federal judges have already ruled that national health care reform is unconstitutional. i am proud to be handling this rule on the house floor. h.r. 4 will remove an unnecessary burden from small businesses so that instead of creating 1099's with their expenditures, they can create w-4's when they hire new employees. i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from colorado. mr. polis: mr. speaker, today the republicans are breaking a promise that they made to the american people. a promise not to raise taxes. the new majority came in promising a growth agenda. instead, under the guise of giving administrative relief to small businesses, relief that we all agree is necessary, the majority of this body last session voted to provide with a different way of paying for it, the republicans are now increasing taxes on middle class americans and punishing workers.

mr. speaker, my colleagues have also broken their promise toed this body, the people's house was promised an open legislative process. over and over the leadership has told the american people they want to create an open process, create jobs, lower taxes. here we are debating the second closed rule of the week on a bill that calls out for new and better ideas. a bill in its current form will increase taxes and punish employees. we all agree the 1099 reporting provision of the affordable care act neto fixed. just last congress we brought a bill to the floor to do that, h.r. 5982 would have repealed the 1099 requirements but the measure failed because our republican friends did not believe defending companies to outsource jobs overseas, which is how we paid for it, would protect americans jobs and wouldn't raise taxes on individuals. they didn't believe that was the correct way to offset the legislation. instead, in this congress they are seeking a tax increase on

middle class families, somehow preferable as a way of paying for something we all agree is important than ending incentives to ship american jobs overseas. now, we won't get into an argument about semantics. there are those who somehow argue this is not a tax increase. well, if it looks and smells like a tax increase, it is a tax increase. a tax increase by any other name would smell as bitter. indeed, under this bill hundreds of thousands of american families will receive an extra bill from the i.r.s. to the tune of $3,000, $5,000, particularly middle class families, families earning $80,000 a year, $90,000 a year, the heart of what makes up the american middle class face the largest tax increases under this bill. this bill would raise taxes, harming workers that should be protecting. as a joint committee on taxation points out, the republican proposal would increase taxes for a family of four by an average of $3,000 a year and,

yes, that's a bill from the i.r.s. that is taxes,-t-a--x-e-s. another real life example, one of the issues we want to direct with regard to the 101099 bill and work with the people our colleagues on the other side of the aisle to find a good way to pay for is that currently people with rental property will be classified as being in the business of renting property and being subject to additional paperwork under the 1099 provision. this could be a family of four, maybe they earn 60,000 a year in salary, they earn another 25,000 from a rental property, they work hard, they keep up that property, maybe with a family home. maybe they saved up over 10 or 15 years to buy it. and with the 1099 paperwork problem, we are saying, hey, you put a new refrigerator for 600 bucks in that rental home, you fill out additional government paperwork that makes you responsible for taxes on that,

ok. that's what we want to save people from. republicans and democrats. we are saying, you know what, we don't want to burden that family. you make $60,000 a year, $20,000 in rental property, don't jump through hoops to put a new refrigerator in your property. . but for that family, if it's between that paper wisconsin and paying a $5,000 bill to the i.r.s., i'll do the darn paperwork. i'll do the darn paperwork. who are we trying to help here? if they don't want the help and this is hallerful, who are we talking about helping? house republicans wish to decimate what remains of the safe harbor that protects individuals and families from substantial tax penalties. the affordable care act provides built-in flexibilities to consumers and protects them by capping the tax penalty. so again, how can unexpected or

unplanned for income or status family change? it could be a bonus, a raise at work, it could be a divorce, it could be a marriage. there's nam of way these things change and put people in a higher category with the i.r.s. will be sending them, because of this bill, $3,000 to pay, $5,000 to pay. that's what american families are going to be on the line for. these provisions of the affordable care act recognize that forcing middle income individuals to repay the entire amount would dampen their willingness to sign up for insurance in the first place, would penalize them if they found a new job or penalize them if they received a raise. this process of reconciling actual income versus tax credits is often crawled a true-up. last december as part of our bill to prevent the s.g.r. payment cuts from going into effect, we changed the policy for the better. we converted it to a graduate dated income approach, to protect those with middle income levels and enable us to ease away from the cliff that people face when they reach the 400% level. let's talk briefly about health care reform. i know there's a lot in health

care reform that my colleagues on the other side of the aisle don't agree with but i'd like to think there's some they do agree with as well. one of the most important provisions of health care reform from a market per sfective, from a market perspective, is the incentive it gave middle class families to work and get off of government health care. let me explain. before this house and the country took up health care reform there were many families that were right at the cutoff point for medicaid. let's say they're earning $10 an hour. if they got a raise to $10.50 they might lose thousands of dollars in government benefits. i've met constituents who have said this. i'm earning $9.50 an hour, i can't take a raise at my job, i can't work another $20 -- 20 hours a week at a side job because i lose money. the government was telling them they couldn't work harder, the government was telling them, we're going to trap you under a cycle of dependency, the government was telling them, if you earn any more money we're cutting off your health care. we replace that in the affordable care wact something i like to think has support from both sides of the aisle and that is a sliding scare scale of

reduction. there's an actual incentive to get off of government health care, to get off of medicaid, to better your self, to take that auto-cent raise, realizing you might not get to keep all 50 cents, you might lose a little bit, but you'll keep 30 cents of that and 20 cents will go to government benefits. you're weaning yourself off government aid and being able to support health care. it's not that people want to receive med cailed or government health care. what they want is to be able to afford, to earn enough money to have private insurance. that's the goal here. the affordable care act helps them get there. this would strip that provision back and provide a disincentive for families making $75,000, $80,000 a year to pay for them to work harder. america was built on a strong work ethic. we all on both sides of the aisle have strong awareness of the market-based system we live in and the power of incentives. we should provide an incentive for middle class families to

earn more, not earn less. why do we penalize those who succeed? why are the republicans seeking to raise taxes on middle class families who are seeking to do a little bit better? we should encourage them to get that second home and make some rental income. to work another 10 or 20 hours a week to send their kids to a good college. that's what this body should be discussing and instead we are about to present to the middle class in this country an enormous tax hike. now to fund something we all agree and that's why if this was an open process as republican leadership has repeatedly promised, we could come together around better ways to pay for it. ok. you didn't like the way democrats proposed paying for it last year and a lot of those pay fors d wound up in statute anyway, but let's work together to do that. consistent with the cut-go proposal. let's makes cuts in government expenditures somewhere to pay for closing this 1099 loophole. let's not put it on the backs of the middle class families earning $80,000, thsdz 90,000 a

year, those who are least able to pay for a tax increase. you know, i was proud to support the continuation for two years of the bush tax cuts at the end of last year. let me tell you why. i think it would be unthinkable to raise taxes on families making under $250,000 a year. now, i supported letting them expire for families making over $250,000 a year, you don't take pleasure in that but it was because i felt we needed to do that to close the deficit. but i felt it was so important to make sure that families making $80,000, $90,000, $100,000 a year didn't get a tax increase that i was willing to support that tax increase for millionaires as part of the package. and yet here we are in the third month of the republican congress with enormous tax increase on those americans who can least afford it. the very families who are making $80,000, $90,000 a year, who form the backbone of the american middle class, facing a tax increase because of the way the republican majority has chosen to pay for what we all agree is a worthy cause,

reducing paperwork for small businesses and home renters. with that i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from south carolina. >> thank you, mr. speaker. i yield two minutes to the gentleman from florida, mr. nugent. the speaker pro tempore: the gentleman from florida is recognized for two minutes. mr. nugent: thank you to the gentleman from south carolina, thank you, mr. speaker. i rise today in support of house res. 129 and the underlying legislation, h.r. 4. last year's health law was rammed through without the opportunity for the american public to let their voice be heard. at time then speaker pelosi said congress had to pass the bill to know what was in it. now we know. even democrats are realizing how many problems there are in this bill. one such example is the 1099 reporting requirement. this requirement forces business to report nearly all expenses exceeding $600 to the i.r.s. this result is new, onerous

burden on small businesses. the requirement means 10 times to 20 times more paperwork for small businesses and the u.s. business administration estimates that 1099 compliance will cost small businesses $800 more per employee annually. small businesses are the economic backbone and the 1099 requirement is breaking their back. my colleagues on the other side of the aisle will tell you h.r. 4 is republican tax increase on middle america. that couldn't be further from the truth. the offset we're using here today prevents individuals from receiving health care subsidies that they aren't entitled to. we're preventing people from defrauding the federal government. we're taking money away from people, we are protecting taxpayer dollars by ensuring they're being used the way

they're meant to be used. moreover the subsidies we're talking about today don't even take place until 2014. which gives taxpayers ample time to know the facts. the 1099 requirement is affecting small businesses today . anybody who calls this an day tack on the middle class isn't telling you the truth, mr. speaker. we're here today because the republican majority is committed to jobs and protecting and creating jobs for the american people. the speaker pro tempore: the gentleman's time has expired. >> i yield the gentleman another 30 seconds. the speaker pro tempore: the gentleman is recognized. mr. nugent: thank you. the democratic passed 1099 reporting requirement is a job killer. we want to make sure that small businesses can use their hard-earned profits to expand their businesses, open new store fronts and bring new employees, not spend their time reporting to the i.r.s. if we're going to create jobs we need to create an environment

where small business can succeed, h.r. 4 is an important step in fostering that environment. with that, mr. speaker, i encourage my colleagues to support this rule, support h.r. 4 and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the chair lays before the house the following enrolled resolution. the clerk: house joint resolution 44, joint resolution making further continuing appropriations for fiscal year 2011 and for other purposes. the speaker pro tempore: the gentleman from colorado is recognized. mr. polis: i yield myself 30 seconds to respond. this is not, my colleague from florida indicated, about fraud. the law has strong penalties for fraud already. now, there's agreement to close this extra paperwork on the 1099. what we are supporting is an open process that allows the majority to work with the minority to find a way to pay

for solving this increased administrative overhead without raising taxes on american families. with that i'd like to yield three minutes to the gentleman from new jersey, mr. pallone. the speaker pro tempore: the gentleman from new jersey is recognized for three minutes. mr. pallone: thank you, mr. speaker. my colleague from florida who just spoke said that the democrats were going to tax this proposal as a pay for d for this proposal by saying it's an assault on the middle class and that's what i intend to say. unless i misunderstood my colleague from florida, he seemed to suggest that the health care subsidies that people who are in this $80,000 or $90,000 income bracket was something that they were not entitled to. i suppose because he thinks that somehow they're too rich. well, let me tell you, if you have a family of four and you're making $80,000 to $90,000 a year, something like that, certainly in my state of new jersey, but in a lot of parts of the country, it's very difficult for you with a family of four to

be able to buy a health insurance and pay your premium without some help. that's exactly what we're talking about when we're talking about people who ro middle class. people who are middle class could be mistaking $25,000 a year, $100,000 a year. it's not easy to be able to afford your health premiums if you have a family of four and you're in that income bracket. now, i regret what's happening here today because the bottom line is that it was bipartisan agreement on the main goal of repealing this 1099 reporting. doing away with it is something that the democrats actually put on the house floor and voted on last session. but what we had during the 111th congress is a repeal bill that basically was paid for by closing tax loopholes for companies that ship jobs overseas and we weren't able to get that passed because it was on suspension and only two republicans joined with us, it

was actually endorsed, the pay-for in the bill, by the national federation of independent businesses, but the republicans wouldn't support it. there's no question here that we want to repeal the 1099 reporting requirement. but we don't want to pay for it on the backs of the middle class. we should pay for it by closing these loopholes for taxes for companies that take jobs overseas so that we can create more jobs here at home. i just can't believe what the republicans are saying, they have this offset that would essentially eliminate protections for middle class families, cost them about $6,000 or more in payments to the i.r.s., so the average middle class family is either going to have to pay more to the i.r.s. in order to get some kind of benefit on the premium or just decide to go uninsured. the whole point of the affordable care act was to try to deal with those middle class families that can't afford health insurance. if you're very poor now you get medicaid. if you're over 65 you get medicare. but if you're a working person

you can't afford your health insurance a lot of times because what happens is you have to go and buy it on the individual market or your -- because your employer doesn't provide it. and that's these middle class people that we're trying to help with the affordable care act. those that need a little help so that they can afford their premium. and these are the very ones that you're saying, no, it's too bad now, we're not going to help you. the speaker pro tempore: the gentleman's time has expired. the gentleman from south carolina. >> thank you, mr. speaker. i yield three minutes to the gentleman from california, mr. lungren. the speaker pro tempore: the gentleman from california is recognized for three minutes. mr. lungren: thank you very much, mr. speaker. i appreciate the time. mr. speaker, i'm pleased that we are bringing h.r. 4 to the floor. this is a bill that i introduced in its original form last april 26, when we looked at the health care bill that had passed and saw that this, which has absolutely nothing to do with health care, this new burden on

businesses, this double-edged sword against small business, was put in that bill supposedly to pay for part of the health care bill. now, we have our democratic friends talking about the pay-for here. i happen to think that we don't even need a pay-for because i think there is a game that is played in this place which is, we will put something in the health care bill that virtually nobody knows is in there, i'll bet you 99% of the members of the house and the senate who voted on that bill didn't even know this provision was in there, we then have it scored as somehow gaining $19 billion for the federal government over the next 10 years, which i happen to think is made out of whole cloth because you have to assume that everybody cheats in order for to you come to that conclusion, and then if we say we now want to get rid of this unnecessary burden, which by the way, when i introduced this last april i

couldn't get a single democrat to join me on, i was told by democrats that the leadership had said, don't get on that bill, don't dare do anything like that because that will be the first repeal of the health care bill, after a while i finally got some to join me and now there are 38 members, i believe, on the other side that have joined so we now have a total of 278 members, i believe, that have co-sponsored my bill, h.r. 4. but the point is, we bring this new obligation in, this new paperwork obligation, we claim it's going to gain us $19 billion and then what's the joke on the american people? if we dare repeal it, we're responsible for somehow coming up with $19 billion in additional taxes. . i understand the justification for it. but frankly the rules are such that they are gamed against the average american citizen. you come up out of whole cloth to create this new obligationing

in your bill, then--obligation in your bill, then once you do and see what the implication is, and small business said this is a job killer, ok, we'll allow you to bring it to the floor but only if you pay for it with new taxes in some way. well, our side has looked at it and said, instead of that, why not say those things that are not to be given to folks under this bill ought not to be given to folks under this bill. that is overpayments are not to be allowed. as secretary sebelius said when your side brought up a similar provision last year, she said basically this is a way to recapture funds. mr. scott: i yield another minute. the speaker pro tempore: the gentleman is recognized. mr. lungren: i would like to get away from the confusion that is being displayed on the floor today and just get back to the essence of this bill. it is to repeal a provision that

was put in the health care bill that virtually no one knew about. that is a job killer. that is recognized as being a job killer. that the other side with the majority could have at any time last year gotten rid of. which timely the president recognizes in the state of the union address is an excess in this health care bill. and let's not make it a political football now and say it's a tax or now it's this or now it's that. frankly it is an attempt to try to repeal a section of the health care bill that never should have been there in the first place. that erroneous premises on which it was developed, a suggestion that somehow most americans involved in business cheat. that's the only way you can justify $19 billion coming back to the federal treasury. if you believe that the average american businessman and businesswoman, particularly small business men and women are sheeters. i won't accept that -- are

cheaters. i won't accept that. the speaker pro tempore: the gentleman's time has expired. the gentleman from colorado. mr. polis: i yield myself a minute to respond to my good friend, the gentleman from california. i agree with much of what you said. particularly when you said we don't need a pay-for. i agree with you to a certain extent the games are illusory. yes, the games are pay-for, it's a shem game. there's times you and i agree, might both disagree with the c.b.o. for instance. this might be one of those. but the answer, and i hope my friend from california agrees, is not instead of doing no pay-for or perhaps allowing an amendment under this rule that would allow us to eliminate the pay-for, the answer is not to raise taxes on the middle class. with that i yield five minutes to the gentleman from new york, mr. crowley. mr. crowley: i thank the gentleman from colorado. the speaker pro tempore: gentleman from new york is recognized for five minutes. mr. crowley: i rise in strong opposition to this rule because hidden deep in this bill is language that indeed will

increase income taxes on middle class american families by thousands of dollars a year. my republican colleagues claim the bill is not a tax increase on the middle class. they argue grover norquist says it's not a tax increase. they say democrats have, and i quote, decided to dance the washington two-step, unquote, claiming this bill contains a new income tax on working families. well, hearing all that i have one simple question. if the republican plan is not a massive new income tax increase, then why did the republican majority refuse to allow a vote on my amendment which i offered? my amendment simply said that no section of this bill would take effect if it raised taxes on any american family of four earning less than $110,250 a year. that's all it said. it just makes it clear you can't

raise taxes on the middle class. that's all it said. it is a straightforward and simple amendment. if republicans actually believe their own rhetoric of cutting taxes, they would have accepted my amendment and allowed a vote on the amendment on the floor. let me say we took joe crowley's amendment and accepted it because we believe this bill will not raise taxes on the middle class. that's what my colleagues could have said. the republicans refuse to allow a vote on my amendment. they refuse to debate it. they refuse to even discuss it. why? because they know their bill raises taxes on the middle class by thousands of dollars. it's not just me saying it. the committee on joint tax states that this bill will raise $25 billion in new revenue. which is short-hand for taxes.

it doesn't come out of the sky, it just can't take that $25 billion out of the year -- air, somebody, someone has to pay that. that entity is the middle class of our country. even grovor norquist, and americans for tax reform, has written, and i quote, americans for tax reform has always followed the committee on joint tax methodology. so if joint tax says it's a tax, grovor norquist has to agree it is a tax. but the best example is a real life example how this bill will raise taxes on middle class families. by the middle class i mean families with children earning no more than $110,250 a year. not the millionaires, the republicans are trying to protect when they held these same taxpayers hostage in

december to demand tax cuts for the richest 1% of americans. those earning over $1 million a year. here's how this bill will raise taxes on middle class families. if you are a family of four earning $88,000 a year, which is approximately 398% of the federal poverty line, the democratic health care law caps the amount of health care premiums you'll be forced to pay annually at no more than 9.5% of one's income. in this example that is $8,360 a year on a typical family policy valued at $13,000. so the family seesk private health care insurance -- seeking private health care insurance would pay $8,360 in annual premiums and the federal government would provide a tax credit valued at $4,640. with these funds going directly

to the insurance carrier from treasury to the insurance carrier, no go-through to the family, the family doesn't touch it. the husband and wife. they don't touch that money. goes right to treasury. this family got a $250 bonus at the end of the year, say in december. boss asked the husband or wife, one of the bread earner in the family, maybe it's both, to come in, said, you know what, you are doing such a great job, we think you have management potential. we want to give you a bonus. they're thinking a bonus? we're going to give you a $250 bonus. go out and buy the family a little dinner for the holidays. that $250 bonus will bounce up that family to 401% of the federal poverty level. under the republican bill being

debated now -- the speaker pro tempore: the gentleman is recognized. mr. crowley: this family would require the family to refund the government the entire $4,640. talk about making work pay. talking about getting a bonus. for doing hard work. and making work pay. here's $250, please give us $4,460 back. let's remember, the $4,640 in tax credits never actually goes to the family. the treasury cuts a check to the insurance company. so the insurance company's fine. they keep the money. it's the poor schlep, the middle class man and woman who has to pay that money back. so in essence this bill h.r. 4 is charging families, families who played by the rules, not tax cheats, not people trying to scam the system, pay by the rules, thousands of dollars in new taxes. these are not families getting

so-called overpayment checks or cash from the government. these are honest, hardworking families who are just trying to get ahead. the speaker pro tempore: the gentleman's time has expired. mr. crowley: would stop the republican tax increase on middle class families. it would still allow for the repeal of the onerous 1099 reporting requirements on owners of small businesses. democrats want to enact repeal of 1099 reporting requirements. we passed the bill in july of 2010 that didn't raise taxes on anyone. it closed loopholes that allowed for exporting of jobs overseas. guess what happened to that bill? your side blocked it. that wasn't the only time the democrats did that responsibly. recently the senate passed a bipartisan deficit neutral repeal of the onerous 1099 business reporting requirement. let me make it clear democrats are ready to repeal the requirements but we will not do it on the backs of hardworking middle class americans. the speaker pro tempore: the gentleman's time has expired. the gentleman from south

carolina. mr. scott: mr. speaker, i yield one minute to the gentleman from new hampshire. the speaker pro tempore: the gentleman is recognized. mr. guinta: i thank the gentleman from south carolina for yielding his time. mr. speaker, i rise to add my voice to those calling for the repeal of the 1099 provision. h.r. 4 very simply put, mr. speaker, is about protecting small business owners, job creators in new hampshire and across our nation, from onerous paperwork burdens. simple as that. nothing more, nothing less. currently this piece of legislation component of the health care legislation requires those small business owners to comply with the federal government every time they spend $600 with an individual vendor over the course of a calendar year. i have taugeed to -- talked to many small business owners in my home state of new hampshire who have told me specifically how this would hurt their small business. we should be here to encourage small business owners to innovate, to expand, to make

sure that we give them the predictibility of this house and public policy that will allow them to create jobs. the heart of new hampshire's economy is the small business owner. 80% of our economy is reliant on the small business owner. i ask that my colleagues join me in repealing the 1099 provision. i yield back the balance of my time. the speaker pro tempore: the gentleman yields. the gentleman yields back the balance of his time. the gentleman from colorado. mr. polis: i would like to yield two minutes to the gentleman from rhode island, mr. langevin. the speaker pro tempore: the gentleman from rhode island is recognized for two minutes. mr. langevin: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: without objection. mr. langevin: i thank the gentleman for yielding. mr. speaker, i have always looked for opportunities, ways to support our nation's small businesses. we all know that they are the real job creators in our country. today i strongly support repealing the enhanced 1099 tax reporting requirement established under the affordable care act. businesses across my home state of rhode island and the country

have made it crystal clear this is a highly problematic requirement that will result in serious, logistical and financial burdens if not addressed for next year's implementation. we passed the affordable care act in part to ease the burden of health care costs on small businesses not replace them with onerous tax provisions. this is an opportunity for lawmakers regardless of party affiliation to come together and fix a problem in the health care reform act that will protect businesses of all sizes. now, i was proud to vote for this -- repeal of this provision last year, it was equally disappointed the house or senate. it's my sincere hope democrats and republicans will take this opportunity to setaside the differences and agree to repeal this provision in both the fiscally and socially responsible way. as currently drafted this repeal would be paid for by raising taxes on middle class families and make it harder for them to afford private health insurance when the affordable care