eliminating the tax break at high oil prices but then reinstate it at low oil prices. but i'm speaking as a person from a big oil company, not an independent. host: the former president of the shell oil company from 2005-2008. also, the author of why we hate oil companies. thank you for your time. guest: thank you. host: tomorrow on the program we will have a political roundtable featuring kevin madden and steve mcmachine. they are republican strategist and democratic strategist respectively. lauren houston will talk about the state of the housing market from the national association of realtors. and steven fairly with the "new york times," the baghdad correspondent. he was one of the four that were captured by pro-gaddafi forces and held captive for a week. he will tell his story tomorrow on "washington journal."

we'll see you then. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> in a minute, republicans on the house ways and means committee question the aarp's tax exempt status. then a look at march unemployment rates. and later, house debate on the so-called government shutdown prevention bill followed by a news conference with house speaker john boehner. >> follow c-span on twitter. it's the fastest way to get schedule updates as well as links we've covered. you can also join in the conversation and tweet questions directly. join the viewers who already

follow our twitter feeds. get started at twitter.com/c-span. >> at this house ways and means committee hearing, republicans question the aarp's tax exempt status. they cited a new report alleging a conflict of interest between the retirement group's advocacy for seniors and its health insurance business. democrats accuse the majority of conducting a political witch hunt. witnesses include the c.e.o. barry rand. this is an hour and 20 minutes.

>> the subcommittee will come to order. when percy founded in 1988 medicare did not exist. understood access to health insurance and found a solution. what began as an organization that field the need not yet met by society has grown and evolved over the last 50 years into aarp eink and the affiliated entities. with the astana showman of medicare in 1965, health insurance became widely accessible

however as we would discuss today the former congresswoman ginny brown-waite and i took a closer look into aarp over the last 18 months, reviewing every publicly document and the facts suggest that aarp has strayed from the core mission. the facts show that aarp no longer operates a seniors advocacy organization. instead, it is more closely resembles a for-profit insurance company. in 2009, aarp raised 46% of its revenue from royalty payments

versus just17% from the membership dues. while the questions have indeed been raised in the past about aarp's reliance on royalties the amount of these payments has tripled over the pastdecade. aarp asserts that the policy positions are making all the volunteer board of directors which is separate from its business interests. the facts show otherwise. in 2010, the entire oard of aarp insurance plan was collected and processed $6.8 billion in insurance premiums in 2009 also served on the board of directors of aarp which makes policy decisions. the aarp insurance plan funneled

millions of dollars to aarp's incorporated in 2009. the facts show aarp is dependent on the hundreds of millions of dollars that it receives primarily from insurance companies and could not continue to operate in its current fashion without this revenue. aarp's revenue from membership dues totaled $246 million in 2009 just barely enough to cover its employee compensation and legal and accounting fees. aarp's decision to endorse more than one-half trillion dollars of medicare cuts to pay for the new entitlement program seemed to directly contradict its mission. this became more disconcerting

when medicare officials warned that the medicare cuts were so severe that seniors access to care could be jeopardized. medicare officials also revealed that the health care law will result in a migration from medicare advantage to medigap plans that could force as many as 7 million seniors to give up a plan they know and like. it turns out on a close examination of aarp's medicare insurance business the facts show that aarp had a unique financial incentive that was a transparent for seniors with congress during the health care reform debate. as a result of the unique

contractual relationship between aarp and the united health corporation, aarp stands to earn $1 billion over the next ten years as a result of the democrats' health care overhaul on top of hundreds of millio of dollars of insurance royalties that they currently collect. this is just one of a number of shocking details contained in a report earlier this year by mr. reichert and me many of which will be discussed today i would now like to recognize mr. reichert who's been a driving force in this investigation to make a brief opening statement. >> thank you mr. chairman allowing me the time to say a few words. first i want to take a moment

just to thank all of the volunteers that a volunteer with aarp and the wonderful work that you will do. i know there's some here in the hearing room today and some that may be listening across the nation. thank you for volunteering to be engaged in helping our seniors across this country and i know that mr. rand and hammond and others are representing aarp. your heart is in the right place but sometimes we can sort of find yourself misguided and going down the wrong path is to make sure as representatives of the people and across this country. and that aarp is on the right path. the mission statement is to make sure we help seniors and that's really wht we want to do, too. we want to help seniors and make sure they get the best health care coverage they can get, this insurance coverage so they can have the best retirement that we

know they all deserve as they worked so hard during their lives. but i sort of became very concerned and is back in 2007 when it first cut was mentioned to medicare advantage and was a 200 billi-dollar cut associated with an schip vote and i was very puzzled to be honest with you, very, very puzzled as to why medicare or aarp would spport the 200 million-dollar cut in medicare advantage. >> eventually that happened is they didn't support the cut and schip found other ways to support their financial needs. and then along came the health care bill and 523 billion-dollar cuts of medicare was announced

as one of the mechanisms to pay for the health care bill. close to hundred billion dollars of cuts again to medicare advantage for mentioned as the part of the solution to finding finances to find t healthcare bill. so again, to myself and mr. herger and ginny brown-waite began to ask questionand i began to be honest with everyone in the room and people watching today we don't get forthright answers. we are just looking for some very simple answers simple questions as to where money is going and why aarp supported and have a trillion dollars to medicare which we just wanted to know on behalf of the seniors with the truth was and we couldn't get it. so now we find ourselves today

after 18 months of interviews and changing letters and here we are today at this hearing. i wish we could have been more forthright and you could have been more forthright with your answers. hopefully today he will be and we will be able to get to the bottom of this and make sure to get there that our seniors are cared for roperly and that they enjoy their retirement at the desert so i appreciate your presence her today and look forward to asking you some questions and getti some straight answers. thank you. >> i thank mr. reichert and for your dedication for being involved in this process. before recognizing the ranking members start for the purposes of an opening statement, i ask unanimous consent all members writtestatements be included

in the record without objection so order. i now recognize ranking member stark for his opening statements. >> chairman, i want to thank you both for holding this hearing. and there are questions to ask about aarp. of course we could ask the same questions of the chamber of commerce which outras aarp as the top spender of lobbying the last 12 years ending three-quarters of a trillion dollars lobbying over that period. we are going to ask the questions of american crossroads, which was founded by carvel growth and spent millions with its sister organization trying to defeat democratic candidates in the last election. but republicans don't seem to want to ask those questions today and it's easy to understand why.

those groups oppose the affordable care act and aarp supported it. so this amounts to nothing more than a political witch hunt to the organization that spoken in favor of health reform. any organization that could stand in the way of a goal to privatize social security and medicare turned senior citizens over to the mercy of private health insurance would be suspect. i have to admit in the past i've raised questions about aarp. it's true that in addition to the work they do at the keating for us elderly they make a tremendous amount of money off the businesses the market to us. and it's no surprise to america's seniors that their products make them probably the biggest player lighting can i get from medicare the advantage,

part de drug plans, and it's obvious to us when you are shopping the market the plans are well priced and have good features. so it's not exactly they are hiding under the veil as the repuicans would suggest. but many aarp members have looked forward to joining for the discounts and other deals the gets. they've investigated the aarp for a year and now it's time that all the republicans have found is publicly available information which here it is. is is all publicly available. i must admit its large and

heavy. it's a complex organization all of which is legal. ..

>> my colleagues across the aisle know that us seniors trust aarp, and that's why the republicans applauded the endorsement the medicare prescription drug bill in 2003, which i thought was wrong and a bad thing for aarp to do, but the republicans loved it. now, eight years later, they are trng to break the trust the american seniors have in aarp, and before they announce their budget that will devastate medicare, social security, medicaid, the republican plans to privatetize social security and kind ofsilence aarp, and that's why we're hear today. we should see this for what it is, a waste of governmentime, an abuse of government resources that have been an indicative attempt to settle a political score and silence a voice that

represents the use. i give back my time, and i look forward to hearing the others. >> i thank you the chair, mr. stark, and now i welcome chairman of the committee on oversight. >> thank you as chairman herger said that aarp was created with a noble goal promoting independence, dignity, and enhancing the quality of life for older americans, and as a physician before i came to congress, and now as a member of congress, i interacted with many volunteers in my home state of louisiana who have done excellent work. under 501c4 this means promoting social welfare in the common good enjoys exemption from federal income taxes. today, 50 years after its founding as a small nonprofit,

aarp has changed into what appears to be an insurance in advertising power house. according to the most recent data we have, aarp incorporated in for-profit organizations annually processed billions of dollars in insurance premiums and earned nearly $700 million in insurance revenues and advertising revenues. only a fifth of the revenue comes from membership dues and contributions. since 2002, aarp's revenue for membership dues increased modestly, and over that same period by partnering with others to sell insurance, aarp has gains in its royalty income that any private sector business would envy. revenues tripled growing from $650 million in 2009. yet as its grown, the funding

for charitable work flat lined. contributions to the aarp foundation between 2002 and 2009 grew by only 11% or $3.1 million. funding for the elderly decreased by about 9%. the parts of aarp that fulfill its original purpose seem not to be sharing in the bownty that's come to aarp from its insurance-related activities. another concern regarding aarp is whether they provide accessive exe compensation for the executives. in the case of aa, it far exceeds at one thinks appropriate for a tax exempt organization. they compare the compensation of charities and nonprofits with expenditures exceeding $500 million. in looking at the numbers,

compensation it a consistent outlier reaching as high as $1.6 million in 2009. in addition, aarp has maintained travel policieshat exceed what are considered best practice recommendations developed by an oversight group when aarp's then ceo was involved in. the differences in revue vennuated and money spent promoting social welfare and the common good suggest that aarp may have strayed from its original mission and brings into question whether it's appropriate for it to continue to operate as a 501c4 tax exempt organization. this is primarily a question f the internal revenue service, and we'll be asking them to conduc a review. let me end by saying as chairman of the ways and means committee on oversigs, i take this committee's responsibilities -- its responsibilities in oversight very, very seriously, and i intend to take a closer look at the irs's administration

of the tax exempt sector and whether the irs oversaw the practices of tax exem organizations. thank you, mr. chairman. i yield back. >> thank you. i now like to recognize representative john louis, ranking member of the subcommittee on oversighted for the purposes of making an opening statement. >> thank you, mr. chairman. for holding a hearing on tax exempt organizations. however, i do not think we should single out just one organization. while i agree that organization that enjoy a special type status should justify the reason for their exemption. i know that there are about 140,000 othe organizations that share the same tax status. mr. chairman, for it is our duty to provide oversight of the non-profit sector. i'm saddened that you have chosen to forfeit your duty in

the manner displayed today. you and i both know tha this hearing is politically motivated and driven by aarp's suppt of the affordable care act. your report admits that all the implementations in it came from the document filed in accordance with the law. there's nothing new here today, nothing that is not already published, nothing except aarp apart, nothing unvailing that i can see. i'm mindful that the majority want to cut social security, but cut medicare. they want to cut programs that help the poor. i can only so mize that the true intent of the hearing is to harm the reputation of aarp, t stifle the voice as we move closer to this debate.

if there was a plan to provide real oversight today, we would have a force of an organization who shattered fame type status as aarp, like 60-plus. we would have more organizations, american cross roads gps. they all share the same tax status as aarp. they play a major role in the election. if there was a real plan today, would have before us, we would have a $2.2 billion a year raise and a casino operating in iowa under the same type of status as the aarp. i find this unreal. it is unbelievable. if oversight was a true goal, we would look at the compensation paid by other tax exempt

organizations including those that oppose health care reform like the chamber of commerce and nfib, all paid and more than aarp. based on all of this, i believe that this is no plan for oversight today. we have a single witness, a bias report and to use the committee resources to sell a score. there's nothing other than -- this is nothing other than a political witch hunt. the ways and means committee is vowed in this. i ask my colleague who is next? who next is on your list? my college? your church? this is a dangerous game to play. in closing, i'm pleased to have

before us today a nationally recognized expert in the law of tax exempt organizations, professor hill who wrote one the leading treaties in this era, and i look forward to her testimony. thank you, mr. chairman. and i yield back my time. thank you, mr. chairman lewis. i want to turn to the subcommittee's first panel. we are joined by jerry rand accompanieded by larry hammond. mr. rand, thank you for agreeing to testify tread. you will have five minutes to present your testimony, your entire written statement will be made part of the record. you're now recognized for five minutes. >> thank you, mr. chairman. good morning. i am bair rand, ceo of aarp, and

joining me is the president of aarp, a member of the aarp board of director the. we, like all 22 members of the board, is an unpaid volunteer. aarp isroud of our record. throughout our more than 50 years of service, we have worked tirelessly to promote nonpartisan solutions to improve the market place, to enhance the public good, especially for those 50 and older, and we will continue to do so in the future. we are strictly nonpartisan organization. weo our work in a very public way. sense its founding, aarp has made information about its finances, mission, and government available to the public. we post on our website our annual reports, financial statements, irs form 990 tax returns and details break downs of our rev revenues and

expenditures, and this is why we're surprised and disappointed both by the title and substance of the report a few members released this week. behind the veil, the aarp america doesn't know. there is no veil. quite frankly, we disagree with each of the conclusions drawn on this one-sided report. first, we reject the obligation that our public policy positions are influenced by our revenues. our policy positions are set by our own volunteer board of directors based on the needs of the 50-plus population. th are determined totally independent from revenue considerations. we have long maintained that we would forego revenue in exchange for a lifetime health and financial security for all older americans. the revenues we earn from royalties allow us to keep membership dues low.

currently, $16 a year while providing outstanding benefits to members and all americans age 50 and older. we also reject the conclusion that we are not good stewards of our non-profit status. the revenue that aarp receives from lending its name to products and services goes directly to fulfilling our mission and serving people 50-plus. our mission includes three major areas. we work to make sure people have acce to affordable quality health care. we work to make sure people have the opportunity to achieve lifelong financial secury, and we help and empower people 50-plus to live their best lives. these are the prince. s aarp was founded upon. dr. ethel, percy andrews was

appalled to discover a retired teacher living in an old chicken coop. she got a group going to create the first group health insurance plan for people 65 and older in the country, a decade before medicare. in 1958, she created aarp for seniors across the country who needed health insurance for themselves. through aarp, she envisioned a better life for seniors that includes health, economic security, and opportunities to remain active and productive members of society. when we look at what she di it is truly remarkable. she came up with a creative marketplace solution to what was then considered to be an unsolvable problem providing access to health care for seniors. she changed the market by bringing seniors together who

shared those needs. we are going to follow her lead every sense. lee, our other volunteer leaders and staff are the guardians of that legacy today. we are leading efforts to improve life for all generations by worng to provide access to ality affordable health care including lower prescription drug costs, improve and protect financial security including social security, and fighting age discrimination, and advocate for consumers. for example, aarp has supported bipartisan regulation iluding the lifetime income disclosure act providing consumers with tter information about their 401k plans. we are also proud to endorse medicare antifraud act. this bill sponsored by thehair and ranking member of the health subcommitteempowers the government to reduce mecare

fraud. aarp also provides direct assistanceo americans. for example, as we sit here today, more than 30,000 aarp tax aid volunteers are helping 2.6 million taxpayers prepare their taxes. in 2010, 193,000 people with low incomes received the total of $233 million in earned income tax credits. last year, aarp volunteered to help more than 526,000 people stay safe on the roads through our driver safety program. also in 2010, our advocacy efforts helped consumers save more than $3 billion in lower utility costs. last year, more than half a million people visited our great for good website and connected

with more than 260,000 volunteer opportunities in their communities. today, aarp and the aarp foundation in partnership with nascar's jeff gordon and hendricks motor sport are leading the drive to end you thinker and help more than 6 million seniors and another 6 million in their families who face the horror of going hungry every day. that's aarp. working to make sure that the american dream lives on for all generations. thank you. >> mr. rapid, i thank you -- mr. rand, i thank you for your testimony. i'd like t call to your attention, the monitors in a chart detailing aarp's sources of revenues. according to aarp's consolidated financial statement, aarp's royalty revenue which comes

primarily from insurance companies was $240 million in 2002 and grew to $657 million in 2009, an increase of nearly 2%%. -- 200%. during that same period, aarp's revenues from membership dues advertising and federal and other grants have remained relatively flat. it is safe to say that aarp could not operate or function as it does today without the money it makesrom its insurance business which certainly raises suspicion about where aarp's motives e. if aarp did not have the nearly one quarter of a billion dollars in royalty payments coming in,

most of which are from insurance companies, what sort of changes would aarp need to make? >> quite frankly, aarp is very proud of the fact that its membership dues are kept low. we work at keeping them low. in fact, the director from the board is at that we want to keep membership dues low. we don't expect to extract incremental dollars from our membership. we invest in it, so we're proud of that particular fact. w, royalties. royalties from health insurance companies, royalties from financial products, royalties from other products, lifestyle products, we believe that part of the solution to meet the unmet needs of the 50-plus population. >> mr. rand, if you could answer

my question. if you did not have the huge profits from the insurance company, what would you do? what would that do to your -- >> it would decrease our ability to serve 100,00050-plus, and 173,000 members. all of our revenue, all of our revenue goes towards o mission. >> so, in other words, this is very important, the revenues that you're bringing in from the profits that are made, the royalties # that are made from your insurance companies, is that not correct? >> it's very important to our members, and it's very important to the 100,000 50-plus. let me give you an idea -- >> therefore, you have a great interest in those revenues, those royalties being high as we've seen the huge increases that have taken place in a

relatively short period of time. >> as you know, royalties are tax exempt, but let me tell you what we do with the money. >> but just answer my question. >> well -- >> you have a great intert in that those royalties be high because they basically -i mean, your dues would be higher if they weren't, is that correct? >> would you like me to tell you where our interts lie? >> just yes or no; is that correct? >> obviously it would -- >> answer the question, please. >> well, answer is we have an interest in meeting the unmet wants and needs of our population. that's what our interest is. this is not something that we devise. all of these insurance products come from our members and the 100 of the 50-plus population

who say we have these needs. they give us those needs and wants, and if they're in the insurance area, we convey those to providers of insurance. that's what we do. >> i understand. i appreciate if you keep to answering my question if you would. i thank you for that. you stated in your testimony that quote -- "under the democraticealth care overhaul, the aarp's branded insurance plans for 50-64-year-olds will become obsolete and aarp will no longer receive revenues from those plans." can we take from that statement that aarp will not endorse or sell insurance in government-run agencies and aarp wi not accept commission payments or licensing fees from any insurance plan operating in the

exchange, and will you make that commitment today? >> we don't sell insurance, mr. chairman. >> you do receive real royalties which ranks you as the 6th largest health insurance company in the united states; is that not correct? >> the answer is we're not an insurance company. we do not sell or underwrite insurance. >> don't you receive royalties from insurance companies. >> excuse me, could you just repeat it? >> do you not -- aarp, does not aarp in royalties receive the 6th highest profits of any insurance, health insurance company in the united states, is that not correct statement? >> it'sot correct. we don't receive profits, sir. >> royalties. >> i don't know what the -- >> you receive royalties that would rank you, again, this is public information.

>> absolutely. >> that would rank you as a 6th largest for-profit, were you a for-profit, which the irs does not rank you as, and that's one of the purposes of this hearing, would rate you as you were an insurance. anyway, your public information -- >> yes. >> would, would indicate that. finally, i'd like to highlight the recent comment from an aarp's spokesman that aarp is committed to transparency and the hearing will provide us yet another opportunity to answer any questions. i found this quote somewhat refleshing given aarp's repeated refusal for 18 months to provide members of this committee with financial documents relating to the aarp insurance plan.

aarp's services and details about aarp's medicare and insurance contras. given your new commitment to transparency, i have a few questions i'd like you to answer or to commit to answering on the record. in 2007, aarp retained 4% of every medigap insurance premium it received. in 2009, aarp retained 4.95% of premiums paid for every aarp medigap policy. could you tell us how you decided on 4.95%, and what went into that conclusion? what percentage of aarp's

medigap premiums will aarp keep in each year from 2011 until the current contract expires in 2017? >> may i address your premise? >> i'd like you to address my question. >> well, that's what i think i'm trying to do. >> well, premise and question are two different things. if you could address my question, what went into your decision for aarp to increase this royalties from 4% to 4.95% first of all, and what percentage do you an anticipate those aarp will keep from each year from 2011 to 2017, so if you could address my questi, please. >> number one, the royalties have nothing to do with the premiums of the beneficiaries,

nothing to do with the premiums. the premiums -- >> that's not my question. i asked you what went into your decision that it would be 4% and what went into your decision to increase it from 4 to 4.95. that's the first question. >> that's a renegotiation between united and aarp. >> okay. what could you tell us, what percentage aarp medigap premiums, what you will keep in each of the years, the year we're in, 2011, through 2017 ich is what you're contract runs for. will it go up again? will it remain at 4.95? >> i can't answer the futur we have not talked about that. >> okay. how much money did aarp earn on

investing seniors insurance premiums money before kicking a portion of the premiums back to united in 2008, 2009, and 2010? >> the premiums from the beneficiaries since 1958 hav gone into a trust, a legal trust. it has been the collecting portion of these checks and beneficiaries. >> now, again, if you could answer my question. that's public information what you're stating. >> yeah. >> we all know that. what we don't know, and what you would not answer us when we requested from you, and what my question is is what portion of the premiums did you give back to united money before kicking in a portion? >> all of the mey that we took

in -- >> how much did you earn in investment before giving it back? that's my question which is not public record. >> first -- do you mind if i answer in two parts. >> if you answer it, yeah. >> okay. first part, any interest we have goes back to the mission which is means it goes back to the 50-plus. >> that's not answering my question. you stated that already. >> okay. >> can you be precise in answering my question which you're avoiding and which you would not answer for 18 months. >> mr. chairn? mr. chairman? >> i'm not certain what's going on here, but to some degree, the witness' entitled to an opportunity to respond. if the chairman or tness does not agree that's responsive, then we are entitle to as members to extract a best answer, but at this stage, you're preventing the witness to answer or responding.

>> the yesman has not been cognized. i will take that to be that you refuse to answer my question. >> no, i'm not. >> okay, then either answer the question or move on to the next one. you are not answering the questions i'm asking you. >> all the money that we have that comes from the trust goes to the mission. none of the mne is taken out of th premiums. >> mr. rand, let me say for the third or fourth time, that is not the question i asked. i asked what is that amount? i will take that to be you're refusing to answer my question, and i'll move on. >> now that i understand the specifity your question, over the years interest earned from the trust which is aarp's trust is -- would vary anywhere from

60 million to 90 million depending on the years. >> okay. thank you. if you could, i'd like you to answer that in writing if you n't have that to our committee. how much does aarp receive annually for the use of aarp's brand for aarp micare advantage insurance plans in aarp medicare prescription drug insurance plans each year over the course of the current contract? >> i can give you accumulative answerf that suffices because i don't have it by the individual insurance products. it is roughly 420-430 million from royalties from united health care for their ability to use our brand on their products. >> okay. i believe that's already publicly known. could i request you to respond in writing to that? >> we can -- we can respond in

writing, yes. >> with the answer? >> yes. >> all right. thank you. i thank you, mr. rand. i now rognize the ranking member, mr. stark, for five minutes. >> the report from my colleagues across the aisle raises some objections to the aarp sponsoring of nascar driving jeff gordon. this race is qution -- this raises questio according to their report about whether scarce taxpayer dollars are being used to sponsor a nascar team. you do sponsor a nascar team?

>> we sponsor what we call the -- the answer is yes, and as the drive to end hunger car. >> well, i guess if it's bad for aarp to do that with taxpayers' dollars, it's okay for the pentagon to do it. i'd like to insert in the record the role callote, february 18th of this year, an amendment offered up by ms. mccollum from minnesota that we eliminate $700 million in funding used by the department of defense to sponsor a nascar vehicle, and i'd also know that my colleagues and most of the republicans on this committee voted against that amendment.

and if you did vote with us in eliminating these fundings, thank you, but it seems to me that there's a difference here that it's okay to spend taxpayer funds on nascar by the department of defense, maybe it helps them learn how to fly those airplanes or whatever they e doing, but then to insinew ate that you all, aarp, are doing something sinister, that just doesn't seem quite right to me, and i wonder if, mr. rand, can you explain why aarp makes this investment in nascar, and why you think it is valuable? >> well, number one, we don't make the investment in nays -- nascar. we make the investment in a coalition of both awareness and partners to end what is an

insidious issue in america which is 51 million people who suffer from hunger who go to bed every night struggling to figure out how they are getting their meal. >> you make money. >> we don't make money on this. >> i mean, there's revenue coming out of the nascar thing? >> no. we take our revenue, and we invest in this issue. >> which is to help? >> >> end hunger, lp us with hunger, to figure out how we can have a national network -- >> okay. >> that helps with the infrastructure, access to food, delivery of food, awareness of the issue. we believe at we have six, over 6 million seniors who suffer, yet another 6 million including their family, that's 12 million that are focused on -- >> sounds like a great -- now, can you explain what the department of defense does with the money they make on their

nascar involvement? >> i can't, sir. >> i suppose they bomb yemen or any ideas what they might do with it? >> no, sir. >> okay. i don't either. i mean, it seems to me if it's all right for our people in uniform then it's all right for us old folks who wore uniforms for years. does that make sense to you? >> it makes sense to me. >> all right, good. thank you, thank you, mr. chairman? there's a new chairman, thank you. >> that's me. >> i yield back. >> thank you, mr. stark. mr. rand, i want to put a crt up on the screen. i know you can't see the tv screens, but i believe you have it. i think our committee provided it. it's chart number seven, and if

you could put the chart on the screen for the viewing audience, i would appreciate that. i want to call attention to this chart. it must be operated exclusively on social welfare and promote common good. this chart's derived from the consolidated financial statements. the red line shows royalty revenue, and i'll get back to the definition of royalty in a moment, but royalty revenue including payments from insurance companies with a 2 00% increase from 2002 to 2009, last figure in 2009 was $657 million. dun at the bottom, those lines that are not as easily seen are dollars transferred from aarp incorporated to aarp's legal counsel which was actually showing a decrease of $300,000

over that time period, and dollars in the blue, i'm sorry, in the gold is dollars -- i'm sorry, blue, dollars transferred from aarp to the aarp foundation which was $3.1 million, so in looking at this, you know, the for-private entities that brought in these royalty revenues and your charitable mission, the groh has not kept pace, and so this calls into question in my mind, are we really meeting that obligation as a 501c4 which are charitable contributions. how does that comport with aarp's exempt status, sir? >> all of our money does go to the mission. there may be a particular program that has not kept pace

with investment, but i will tell you that with e -- >> whenou say mission, are you referring to your -- >> our social good mission. >> that leaves $414 million on the table here if you just do some simple math that -- i'm just wanting an explanation of the discrepancy here. it seems to me that those bottom lines would not be flat or showing a decrease over that time period. >> mr. chairman, may i add information here? >> yes, sir. >> i think part of the problem comes in looking at the difference between a c4 and a c3. >> no, i understand that. >> i know you understand it, sir, but the requirements and definitions are considerably different. >> okay. i'll get to that in moment, but thank you. >> okay. >> let's move on to something else. i want to follow-up on some of the inquiry that mr. herger was

working on. in looking at the medigap policies, i understand that you have licensing agreements with insurance companies; is that correct, sir? >> we have a arrangement where we have our brand that is lent to them assuming that -- >> this is the licensing agreement. >> you can call it a license agreement. we call it a royalty. >> royalty. okay. i'll get to theefinition of royalty in a moment, and under the medigap arrangement, only due-paying members, aarp members are allowed to participate in the medicare policies, is that correct, sir? >> sir, again, if i could? >> well, mr. rand runs the organization. mr. rand, can you answer that question?

>> y -- >> is it only due-paying members allowed to participate in the aarp medigap arrangement with the insurance companies? >> i believe we have some products that you don't have to be -- >> i'm talking specifically about medigap. >> when you start out, the answer is yes. some leave the program and stay with the insurance, and we are happy that they stay with the insurance. >> okay, okay, fair enough, and you receive in this arrangement at leastbased on the information we gathered from public records and so forth and your consolidated statement, you receive the premiums that are collected from these beneficiaries in the medigap policies; is that correct, sir? yo collect the premiums? >> there -- they arecollected in the trust fund. >> part of aarp. >> that's right, since 1958. >> that's right, and you retain

4.95% of those premiums as royalty? >> no, sir, that's incorrect. we don't retain any of the premiums. those premium dollars are written to the specific insurer. >> i understand they are written to the insurer, but there's an arrangement by which you retain a royalty -- >> no, sir. >> what is this 4.95%? >> it does not come out of the premiums. the premiums go into the trust fund, sir. >> okay. >> they are then matched -- >> so is this a separate royalty payment by the insurance company? >> no, sir. >> where does the money come from? >> if i could just complete one statement. >> go ahead, sir. >> perhaps i could be clearer. >> go ahead, sir. >> the trust fund is a

collection in which the beneficiaries send their check. there are 2-2.5 million checks and wires that come in. they get collected, and they are given to the appropriate insurer and that's part of the administration that the trust has. >> okay. so this is an administrative fee you're saying? i have a document here from rhode island, state of rhode island that shows total member contributions, lives covered, breaks it all down, and it says royalty to aarp percent of member contribution, 4.95%. >> that's the royalty, sir. >> that's what i asked you in the first place. >> i know, but royalty has nothing to do -- royalty has nothing to do with the trust fund. it has -- the trust fund just takes the beneficiary's payment

to united or jenworth, or any other insurance provider, collecting the dollars and transfers it to the appropriate insurer. that's all it does. >> so the 4.95% is not -- >> it's the royalty fee associated with our contract or a contract that talks about we're going to lend you our aarp logo if you do certain things associated with improving insurance products to our members and people 50-plus. >> so there's a 4.95% go to the grant or trust or aarp? >> it goes to us in revenue. >> i know, but what entity? >> aarp. >> but, okay. well, let's leave that there for a moment. royalty income, which is excluded from unrelated business income under section 512b of the

tax code, often raises a number of questions, and there's been litigation, and while royalty income that's excluded under the code is an issue that is difficult, you know, a lot of times it relates to intangible property. it's my understanding that putting aside the 4.95% issue which you classified as royalty earlier, you also retain these premiums. it's an unspecified period of time. i'm not certain what that period of time is. can you tell us how long they hold on to the collected premiums in medip? >> there's two processes. the first ocess is the collection process. there may be 2-2.5 million either in electronics, the rest is mail. those are sorted through for the

various accounts, ie united, so that's an administrative process. that administrative process can take anywhere from a week to two weeks or three weeks depending on how these checks come in. during that period of time, that trust, financial prudence is also in an interest bearing account. >> is there someone beside an interest bearing account? >> as the money comes in, it's in an interest bearing account. there's no other money in there. interestearing the. >> okay. >> so that week or two days or three weeks, we earn a small interest as any interest bearing account, as your own checking account that you may have. >> i understand. >> that's one issue, and i think that's the one you're trying to get to. that interest has nothing to do

with insurance companies. it does not affect any of the payments associated with the beneficiary. >> you pay tax on that interest? >> i believe we do, but i don't know. >> okay. >> i mean, i'll find out for you. weal get you -- we'll get you that information. >> and get us some idea of how much you earn with that, i mean, what kind of interest ernings do you get on that and the tax paid on it would be helpful. >> we'll get you all that information. >> thank you, sir. you mentioned the's another aspect to this, and -- well, let me back up a moment. this is all set by con contract arrangement? >> since 1958. >> i understand that, but the -- you have a separate contract with united, for instance or genworth for the handlingf these premium dollars?

which specifies how long you might hold on to it? >> no. >> there are no contracts? >> well, we have a contract to do the administration for them. >> can you provide us with those contracts? provide the committee? >> yes, we can. >> thank you, sir. the -- you said earlier the terest goes back to the mission. that was kind of a broad statement. i'm just following up on a quote you gave in questioning to mr. herger and that the royaies have nothing to do with the premiums. can you elaborate more on that? >> premiums are what the insurance companies charge the beneficiaries. >> right. >> separate issue. we have nothing to do with

that. royalties come from an agreement when we go through a process that says who can meet the wants and needs of our membership and 50-plus populations. we understand clearly what the unmet needs are. we take those unmet needs, a during the process we invite, in this case, insurance comny then, and say who can do the best job in changing the marketplace to meet the unmet needs of our seniors? who can have the quality that our seniors expect? >> well, i understand that. >> we then -- >> okay, go ahead. >> we then sect. when we select, we then give them permission to use our brand, the aarp brand. with that permission to use our

brand, we have royalties and payments for that. >> okay. now, does aarp services have any role whatsoever in setting the premiums? you know, the premium rates? >> the answer is no. >> okay. thank you. that's all i have. >> i thank the gentleman. ranking member of the oversight committee, mr. lewis, is recognized for five minutes. >> mr. rand, mr. hammond. i want to thk youor being here, thank you for your great service to the nation, and for all of your great and good work. now, the republican report state that aarp charitable contribution only increased by 11% from 2004 to 2008. now, aarp is a social welfare organization. american cross road, gps aarp

medigap soci welfare organization, the tea party is a social welfare organization. both want to repeal health care reform. i'm not aware of any charitable activity or contribution by either of the these organizations. mr. hammond, are you aware of any social welfare organizations engaged in charitable activities? can you please describe forhe committee a few of the charitable efforts of aarp? >> thank you for the opportunity, mr. lewis. that's one of the things i was trying to talk to others about. a c4 social impact organization is simply that. we established a charitable arm to c3 to deal with vulnerable populations who are in need of

assistance in the very essence of their lives to try and state together. the c4 is working on a broader basis on our social mission. we're looking to help people in need, and certainly we do, but we help them in different ways. we help 53,000 job seekers through our 2010 job fairs. we're helping with the drive to end hunger which we are financing. folks say, well, you know, why don't you just throw that money at hunger? why don't you just feed people with that money? well, that would be fine, and it would feed a lot of people, but the focus suspect that. the foe sus is on -- focus is dfeating hunger in this country and putting a stoplight on hunger and make people understand what a big problem it is.

we raised money for relief in haiti, raising money for relief in japan. as mr. rand stated earlier, we've through advocacy efforts saved members money on utility costs. we represented tens of thousands of people at no fee in cases where age discrimination is involved. we've supported efforts through our add volunteers advocacy which is oughts perfectly legal part of the c4 to do the kinds of things our peoplesay they need having done. we're looking at 1 million americans who are age 50-plus, about 37 plus or minus are members, but we're not doing it just f our members, but we're doing it for everyone. >> thank you, mr. hammond. mr. rand, do you want to respond?

>> i want to add clarity. this is what i was trying to explain when we were asking the questions about where does our -- where do our dollars go in terms of a social good organization. roughly 25% of our revenue,25% of our expenditures, excuse me, go to benefits such as tax aid, driver safety, other programs, 25% of our expenditures. member services, 240 million, about 24%. advocacy and research, 10%. communications operations, 8%, and that's really focused on education where there are great magazines. those are some examples on a higher percentage basis well beyond the two programs that there seems to be a chart that says they went down, but this

tells ewe -- you in a broad sense that the vast, vast majority that all of our money really goes to our soci welfare mission. >> thank you. mr. rand and mr. hammond, i find it so strange and out of the ordinary that if our republican colleagues of mine are attacks aarp today as retribution for health rorm, it will be more than happy as mr. stark suggested to stand with you when they created the medicare drug benefit. i want unanimous consent to insert in the record a list of quotes from my republican colleagues when mma was passed. mr. rand, i don't believe you were at aarp at that time, but mr. hammond -- >> without objection, the gentleman's time --

>> mr. mr. chairman, you took more than 50 minutes. i went to vote, and when i came back, you still were asking questions. you took at least 15 minutes. >> the gentleman's time expired. mr. johnson is recognized for five minutes. >> thank you, mr. chairman. >> thank you all for being here. >> the health care bill cuts medicare advantage by $206 billion. those cuts are going to result in millions of seniors no longer selecting medicare advantage coverage either because the plans are no longer available to seniors or because they are too expensive and offer fewer benefits. i want to know if you were aware of these cutshen aarp endorsed that legislation? >> mr. johnson, if i might answer? >> sure. >> yes, we were certainly aware of those cuts. that's been aarp's position

since medicare advantage was first instituted. we do not believe that access payments should go to programs that are paid for by the other 75% of the taxpayers who are involved in regular medicare. that's been our position and our public policy for at least 10 years. >> so you don't believe that people ought to be able to choose their own health re program? >> we absolutely believe they should choose their on programs. we don't think they should be subsidized into programs. >> okay. the for-profit aarp's insurance plan collects medigap premiums, invests money, earns interest on it, and then keeps 5% of the premium amount and th interest earned off the cloak. the rest of the premium is sent to united health group.

the 501c4 receives royalty payments directly from united health group for aarp's medicare advantage and medicare prescription drug plans. why does aarp handle insurance profits differently depending on whether it's medicaid advantage or medigap? you want to answer that too in >> yeah, i'll give it a shot and mr. rand can fill in with anything he has to say. >> number one, medicare advantage is a program that is sponsored under medicare, not through private insurance. >> that's right. >> it follows all the government regulations. therefore, the way that that royalty payment is done is under federal regulation. >> okay. so you didn't really tell me about medigap though. medigap, i think first of all, i'd like to make a slight

correction in what you indicated. all of the premiums for those issues go into the insurance trust, the grant or trust that the chairman was talking about. that is a legal entity set up in 1958 to receive those and to hold the group policy and to receive the premiums, hold the premiums, invest that, and, yes, we do receive interest income for that float which is perfectly legal. we do take royalty payments from that money that comes in, and then as requested by the insurance companies to cover their products, we return the balance of that money to them. >> does aarp receive more in royalty payments for aarp branded medigap than medicare

advantage plans? >> i'm sorry, sir, repeat that. >> do you get more from medigap than you do medicare advantage, plans that yall have started. >> talking about royalties, sir? >> yes. >> yes, we do. >> you do? >> yes. .. >> aarp could see a windfall as a result of the health care law. how do you and explain that to the seniors who are supposedly

advocating for, while it looks like you are ranking in the cash well they're losing benefits and pay in more for coverage? >> may make a comment before mr. rand answers that question? one of the priorities we set is that no traditional benefits under medicare would be lost. medicare would be strengthened. i want to make that clear in terms of benefit cuts. >> the gentleman's time has expired. >> my time has expired. thank you, mr. chairman. >> the gentleman from washington, dr. mcdermott is recognized for five minutes. >> i think you gentlemen understand what you are being made part of today. it is a re-enactment of a play by arthur miller called "a crucible." it was a play about witches in

salem, and the evidence had to be found that these women were all controlled by the devil. your sin, as you may know, is that you back the affordable care act. now, i am sure the chairman has a long list of other groups that will be brought in here. a am sure of that the pharmaceutical industry will be brought in here because they got a deal that we cannot negotiate pharmaceutical prices -- secretary kathleen sebelius -- kathleen sebelius has prohibited from negotiating to better prices for seniors. the pharmaceutical industry, i think they must have caught a pretty good deal on that. that was put in one they put in the drug benefit a few years ago, and they said you could not

negotiate better prices for seniors. you could do it for veterans, say quite a bit for them, maybe 30%, 40%, 50%, but you could not do it for seniors at the pharmaceutical companies caught quite a benefit in there, and they supported it. i am sure we will have them in here to go over their finances and how their money is spent, where they get it, how they use it for lobbying, and how they get tax deductions. then, we will probably have the medical devices people appeared. i can get those things from the scooter store, and they will be paid for by medicare. my goodness, they got a good old deal. down the list we are going to go. the question really is are we going to go after every organization that is a 501-c4 or

c3? this is an oversight committee. we really ought to be going after them. we're going to have churches in here. the question that comes to mind is how did you make the decision to back the affordable care act? i do not think you just got one morning and said let's back this thing. tell us about the process that you went through because i want to understand why you committed the sin. i think if you would confess your sins, maybe we could end this hearing and you could go home. but, if you will not confess as to how you came to this terrible decision, i like to hear you talk about it. >> thank you very much for the opportunity to talk about it. first of all, as many of you know, this is a vital part of

our mission to have affordable, accessible health care for all americans. it is health security. this has been our mission for over 50 years, over 50 years. when we talk to our members they ask us what it was the needed the most. we took down a list of what they said they needed. one was no pre-existing conditions because they couldn't get insurance yet they were still getting sick and was their leading cost of bankruptcy in homes and so we advocated for no pre-existing conditions. and in fact, there were many portions of the insurance industry pushing against the age reading because they were getting older and we are paying

ten sometimes more depending on the state than a young person as we have less out of pocket to pay. we don't want age discrimination to continue so we advocated for taking the ten x they were paying and the bill has the maximum 3x. we don't get enough money to send our kids to college and at e same time try to figure out how to pay fr their separate insurance so we would love to be able to have them on our insurance policy. so we can do both, helped give them a the american dream, closing the oughnut hole. >> the time is expired. if you could close up quickly, please. >> because a was 40% of the out of pocket cost we closed the door mudhole completely following the community care

options for those people who don't want to to nursing homes -- >> the gentleman's time is expired. i recognize the gentleman from washington, mr. reichert for five minutes. >> thank you, mr. chairman for being here this morning. first of all, the contions listed i think most members of the panel, democrats and republicans would agree with, i do. we take issue with some of the comments as far of the witch hunt. we can demonize this about really what it boils down to is representative in floda who represents a lot of seniors who have some questions. it's his responsibility to have

those questions answered. and then as far as my part in this, just an old cop. and so i hope you can understand you know and understand why you're here today. we just want to find the answers, and so i just want to go through a couple things. first of all, look, we exchanged some letters coming and the responses we got back were we met them all in response to the questions that we asked, and in fact this transparency issue is referred to earlier by the chairman where one of the comments made is no public or confidential propriety or information, some information is not public or confidential and proprietary to only the aarp and its member benefit providers. there is a transparency issu after the letters were sent and the responses were really not adequate we had a face-to-face meeting with your cfo tom

nelson, and others couldn't answer theuestions that i posed to them. the one out of four seniors will lose medicare advantage. what happens to those coming you have act were real scientists working in your organization, is that correct, just yes or no cause my time is limited. >> yes. >> i would assme -- i don't believe we factorial because we are not in the insurance business -- >> you must have actuaries who can now about your future for u, right? you're a large organization you have to have actuaries. i would think -- >> if we do i will give you -- >> thank you. the actuaries have to look out forward and say we can predict what's going to happen to these one out of every four seniors how much insurance they may los its benefits are for aarp, united way, with the impacting

affect will be, but we finally had to end up calling in health and from the irs. this report as people refer to it as the republican report is a report formed with the health debate to help with the irs personnel who assisted the staff in going through this information. this is sent me the information. this is accurate, satistical information gathered through a very serious analysis of the money that you are making in revenue birse the covers is the money that you're disturbing in your 501c3. one of the answers, nelson gave me is that this whole thing is for protecting the greater good, which kind of goes to your, one of your mission statements and enhance the public good but what about protecting the american seniors we don't want others

shouldering the burden of paying these traditional premiums to allow others to have insurance. the whole health care bill is built on that. am i not correct? yes or no, please. the whole health careill is built on others for helping to prove for others isn't that true? so -- >> yes -- >> thank you. so why would you be against another program that is helping seniors and others shouldering the burden? that doesn't make sense to me. the fact that you support these cuts is just amazing to me. protecting aarp's members -- aren't you concerned about that? aarp come your not suggesting i hope that the half trillion dollars of medicare cuts the would jeopardize the seniors access to health care is good for seniors.

are you? >> no, and i'm ready when you would like me to respond. >> do you -- you keep records, metiulous records, right? i would just like to say if you can provide me with a list of times you visited the white house i would be interested in that. thank you. >> the gentleman's time has expired. mr. thompson is recognized for five minutes. >> i just want to state for the cord i believe that it's totally appropriatethat we look at the tax status. i think it's a very important thing to do, and this kennedy certainly has the jurisdiction responsibility to review this issue. i think our taking it on is very appropriate. al, however, i want to state that review i believe must be fair and impartial, and it shouldn't be done to carry out some sort of political vendetta.

after aarp support of the medicare part de measure this support i might add was counted by then-president bush and a speaker hastert, chairman thomas, of this committee and the chairman of the other committee with jurisdiction. aarp's financial interest i think was probably more clear than in than it is after the support of the health care measure, and therewas no question as to ether or not their tax status should be looked at, there was no oversight ofarp at that particular time, and i just find it curious that we are loking at this particular time, and i think we have to ask the question is this political payback or will this committee be receiving the tax status of other nonprofit organizations

that didn't involved in the political process such as 60 plus, the republican leaning grp that claims that it is the alternative, the conservative alternative to the aarp. i'm a little mystified as to wy they aren't here, or american crossroads othe teaarty for that matter or churches or even corporations, multibillion-dollar corporations who show multi-billion a was of profits and then we read in the papers they don't pay one single dime of corporate taxes. i think it is a very slippery slope where we are going today, and i just want make sure that everybody recognizes that and i'd like to see this committee get back on its regular order course of business. i wantedo give mr. rand and opportunity to finish his comments.

to finish. will he be coming back or -- >> he will be coming back if you would like to freeze the question if it's appropriate with the chairman i would be glad to try to give you an answer. >> why don't you go ahead and finish up where he had left off. do you want to rephrase? >> yes. my question really was the process by which you arrived at the decision to back the affordable care act and he was describing the things the members had talked about and wanted but never got to how that decision was made. >> the decision was made by the board after it would seem like torturous hours of discussion and as stated the decision was made based on the principles we wanted to see included in any

health care reform act. these are the principles of the things our members told us they wanted to see in the act and as mr. reichert indicated, there are things almost all members of the committee agreed with. we would love to have seen that done on a bipartisan basis because that is what we would try to operate. but we felt that we had to support that act because of those principles and the benefits that would give to seniors. >> mr. lewis, you were cut off during your questioning. would you like to take the remainder of my time to finish asking your question? >> i appreciate i think it made the point that i planned to meet. >> thank you. i yield back. >> the gentleman yields back. i request unanimous consent that the investigative report behind

the veil of the aarp america doesn't know to be entered into the record without objectn. >> reserving the right to object. >> the right to object has been recognized. >> reserving the right to object i haven't objected because there is a question as to whether this is an official document who prepared it as a political document and the ways and means document, this is a ngressional document. i see your name on it and my fellow colleagues, but i have been waiting to see where this came from and so if you put it in the record how would you idenfy it as to what we ld look forward to in reading it? if you would help me i'm certainly anxious to withdraw an objection at all, who paid for it, where did it come from, is a campaign document, did it come from the republican

congressional campaign committee, or is it a ways and means document without a seal, dak knows i know what the seals mean. >> the gentleman i might mention that the whole purpose object of this hearing is on this report. the committee on a regular basis submits and are accepted by unanimous consent documents that are not involved in this hearing. if the gentleman who doesn't remove his objection we will call for a vote. >> i don't have to remove my -- the one question who pays for this report, where did it come from, why is there no identification, is it a federal report? that's all i'm asking for. i don't want a roll call vote, i'm ready to roll over and accept it, but i just want to know why it is only to members names on it and why is the source of this information not

put on the compass so when i do read it i woud no who paid to have this done. if the government paid for it, i would think -- >> again, the gentleman has on the report who has asked for it, so it's my name and congressman reichert's name on it, so it is indicated here again if the gentleman -- would the gentleman like a vote? >> i want to withdraw my objection. all i'm asking is who paid for the report and where does it come from? i don't want to make a sheet out of this to you and your colleagues before this? >> the gentleman looked at the report but it's obvious -- >> it's not obvious and you could direct my attention to what i'm missing. >> with the chairman yield? >> it's my recollection mr. stark issued a similar report ithe context -- >> he mayhave been wrong in

ing that. [laughter] -- since you're admitting that -- >> as to what the committee should be doing. >> my friend from new york. it was prepared by two members of the committee. >> you did it, you paid for it so that answers my question. i reserve my objection. estimate the right to object has been reserved. >> mr. chairman, i'm not interested in rolling over. i'd like to know are we saying that this is a report that was produced by just two particular members of this committee? and if it was produced by just to protect otheremrs i'm interested in understanding what does the committee generated report, and if so, at wat point was it shared with the other members of the committee? >> again it's on the report as was mentioned to the gentleman from new york.

there's actually three members, former congresswoman ginny brown-waite was also involved and again i think it's very clear -- >> so committee resources used to generate this report or was it done through members account monies or through some private account money squawks >> this has been done through the same account through committees, through the member's account as would be done if you had asked for the gentleman from california had asked from a report from anyone else. >> of the coittee or of my staff? i'm trying to determine whether this is a -- >> with the gentleman like a vote or what he removed his -- >> i'm reserving the right to object and i'm hoping to get responses to the question because the report doesn't identify other than investigative report prepared by dave reichert. does that mean this was prepared mr. chairman by you as a member and mr. reichert as a member or

by you as the chairman using the resources of the ways and means committee. speed is the gentleman objecting or not objecting? >> reserve the right to object. >> the gentleman is recognized. >> there is no debate on this report and if we were supposed to consume at so we could respond today we certainly were not given much time. are you telling us, mr. chairman in the very simple question this is like any other report this committee asks for and the people who worked on it would pay their usual salaries, nothing more, nothing less, there was no external force used -- >> the gentleman -- we need to move on with this hearing. >> we don't need to move on unless -- >> we aren't moving until we get

an answer. >> what is so complicated? spec i remove my unanimous consent. >> reserving t right to object. i removed my unanimous consent request and. >> your staff prepared the to prepare the report and you have an understanding that we are not clear who prepared the report and that's all we're asking today. >> the gentleman from illinois is recognized for five minutes. >> back to you in the booth. a couple of questions earlier in your testimony and written testimony on the first page down at the bottom use it and interesting thing to sentences of your testimony and let me make a couple of inquiries in light of some of your responses to mr. mcdermott and mr. lewis.

we've long maintained the we for revenue in exchange foa lifetime health and financial security for all older americans. as an example of this, it's very likely under the affordable care at the aarp branded insurance plan for 50 to 64-year-olds will become obsolete and will no longer receive revenue rom those plans. is it your intention to fore future revenues or royalties or sources of income as the affordable care act rules and and are you committing today that you're not going to be earning any of those revenues or royalties or sources of income from areas that are in the exchange? >> we really haven't had a conversation about the exchange and the strategy about the

exchange. >> but that's what you're in pulling in the sentences, aren't you? >> notte. >> okay but when you say that we would forego revenues if this had and come and as an example of that we are for doing revenues that is a reasonable implication of the sentences together isn't it? >> if it's reasonable for you i wouldn't say no. you are putting the two sentences together and perhaps it was my lack of clarity. and so therefore -- >> and i read them together in context. >> would you like me to clarify them, let me put it in context. >> yes, sir. >> you gave us a desciption of some of the elements of the affordable care act that he found attractive and i understand those. i need a note. no preexisting conditions. you reference to the age changing from 10x3x, the baby boomers keeping children on

their coverage, closing the doughnut hole, the community care options and there were other things you got cut off based on time that were attractive to me. what are the weaknesses of the affordable care act that compel you to keep an option open that would suggest if the affordable care act isn't successful that you may have to continue in the revenue royalty or income element of this in order to preserve your ission, what are the weaknesses of the affordable care act that compel you to keep the option open. >> let me explain the intent of my statement. we have lonbeen accused by some elements of being in this for money, for revenue. >> hold that thought that we come back to it. let me highlight some of the folks that have accused you of that, because it's interesting. our panel members really don't

disappoint, do we. the gentleman from california, mr. stark, said that aarp members know that they're being sold out by an organization you, from past conduct, not your action in the affordable care act. the gentleman from new york mr. rangel said that aarp has forgotten where they come from because once you get in the business of making money with the devil you forget your mission and the former speaker mrs. pelosi said she complained at you were in the pocket of publicans at that time and suggested that you had a financial conflict of interest so you're point is you receive a lot of criticism from a lot of circles, but go ahead. >> that was not my point, that was you're point. [laughter] >> the issue at stake here is that our mission started n the 50's. i was 14-years-old when the

mission was stated and that is that every american should have access to affordable health care and therefore health care security for life. the question becomes one of many. one is affordable. right now we are having conversations about medicare that medicare is the problem. medicare is a recipient of the expenses of many industries. >> understand that. so, the question is -- >> affordability is the answer. >> and the affordability care act doesn't satisfy you. it's going to maintain affordability and therefore you need to keep the option open to sell and be involved in these products in the future, is that really it? on of remic the gentleman's time is expired. the gentleman from new jersey mr. pascrell was recognized for five minutes.

>> mr. rand, you are a tax-exempt corporation from a private association commodus sir. >> i have a couple of questions for you mr. chairman. d like to know whether or not we think or you think that there are specific laws that have been broken here with regard to this tax xm organization. is that one of the reasons or the reason why we are having this hearing? >> that's an and proper parliamentary inquiry. >> oh it is? >> my question is what laws do you think have been broken since we look at policy and we are not looking at corporate policy here, we are looking at national policy. that is the responsibility.

>> i thank the gentleman. again that was outlined in the report, that's why we are requesting of the irs to look into this and let them decide whether or not they properly should be paying taxes on the large amounts of money that they seem to be benefiting from legislation the was passed. >> i think there are legitimate questions that followed the question whether there's a violation of the for-profit nonprofit statusnd legitimate questions about what is taxable income versus non-taxable income. >> can i have my ty please?

>> none of us are saying this i hope to make aarp policy, if the majority actlly looked at the broader question here that we are supposedly discussing on taxes and section 501c for, that is a very specific code as you know that the sixth largest social welfare organization that has a 501c4 classification is a tax-exempt racetrack and casino which operates in iowa and it pulls in $2.2 billion a year can you blame us for asking questions about why now? it's hard for me, it's really

hard for me and i'm sure you will help me understand why a racetrack and a casino is more deserving of this classification than -- because that's when you're getting at, your estion in the classification of aarp. you didn't do it eight years ago but you did it now. this classification is that aarp, very clear here the majority will lead the aarp is working investigative team more so than this racetrack. i find that hard to accept. i know for a fact that aarp does great work. i've disagreed with some of your philosophies, so what. can you share with us how aarp directly helps americans and are in all of the districts of the country? >> yes, i will. let me just give you some snippets in the job category that helped 53 million job-seekers through 2010, 53,000

again we talked about ponder and about 2.6 million finalists pre-tax returns support of schools, provide more than 20,000 supplies and 43 states. the wolverines a bus, we have a tour that we completed 2 million free health screenings, 359,000 people participated, aarp litigation represents tens of thousands of people at no fee and for 160 cases and in 2010 alone again we saved utility in over 18 costs and over 18 states state $3 billion from the consumers in the state's expanding the services for home and community-based care. >> thank you, mr. rand. you could go on and on. i'm sure our grat chairman

would agree with all of those activities in the field. he woun't want to end any of those activities because he knows to the citizens which he represents and i represent. thank you mr. chairman from your operation. >> i ask unanimous consent to valente the record a letter from the chief operating officer tom nelson which states that less than $31 million out of the $650 million in aarp insurance revenue went to the aarp foundio in 2008. >> reserving the right to object has that document been provided to the members of this committee? >> this is a letter that was posted on the aarp web site. >> and understand that, ad i have no rason to disbelieve the chairman and what he's saying

that the letter detect that none of us have seen this and you're asking to be part of the official record of the hearing and typically what happens is the chairman will make available to everymember any document that's going to be part of the record and i like this report was never provided to members to be for the media by would want to make sure members are provided with the information the will be part of this -- i might mention the minority and heard all ready to letters unanimous consent that have wracked the company entered but not distributed. >> that's fine. we appreciate the indulgence of the members the didn't object but this is proceeding in an irregular fashion when it comes to this report and so i would be interested in making sure i know what is being put into the record as part of this hearing. i am responsible to my constituents and anyone in america for what this does and that i w engaging in any form of witchhunt and so interested in knowing which way to be part of this hearing.

>> as the gentleman continuing to object? >> unless i can see the document that the chairman saying he wishes to submit to the record i will continue to reserve the right to object. >> i've been handed what is --. >> i would remove my reservation >> does the gentleman review his resignation? >> ticket to demint to review the document. >> the gentleman's objection has been removed so without objection it will be submitted for the record. now the gentleman from georgia mr. price, dr. price will be recognized for five minutes. >> thank you mr. chairman i want to commend the author of the report because if it brings into

question what mr. pascrell talked about as a legitimate question as to whether or not the tax-exempt status of the aarp is warranted and that is a legitimate question and i want to open by simply saying there are a lot of folks in my district who are members of aarp and a lot of folks who volunteer a lot of time and put their heart and soul into efforts to try to help seniors in our community and i want to thank them for the work they do and they are giving such volunteer time to is functioning in an appropriate and legal manner. >> i do want to follow-up on very briefly on the issue of the support for the health care act. that is part and parcel of the of rejection of the other side. and there was such a huge disconnect between the seniors in my district about their lack of support for the health care

act and medicare's aarp's support for it and i think that's what caused the folks to say scratch their heads and say at's going on here, is aarp really -- do they have my senior's best interest or do they hae other reasons to act the way the do? and dimension and number of things you flt were apppriate in the health care bill and that's why you supported it because it ended a pre-existing allegedly in the like. it builds the seniorsdamantly opposed and so you don't believe the seniors support the rationing of care, do you? >> we don't support it and i'm sure seniors of -- >> exactly so there is that in the inconsistency you don't believe seniors want it more difficult for them to find a position to care for them, do you?

>> we have been supportive of the dhaka six. >> but i get seniors all the time in my district to say i can't find a medical doctor, i can't find a medical doctor because the rules put in place and that's right increase and i know you don't support that. you don't support decrease in innovation and the health care system, do you? seniors don't come today? >> i don't think anyone supports -- >> exactly. >> the lack of innovation. believe there's some aspects of the legislation but is there to help innovation, and there's a difference of opinion, isn't there? so there's a difference of opinion among seniors just like a difference of opinion among the regular population out there which again is why so many of us scratch our head and said well what is aarp doing? there's a huge difference of opinion. the marity of seniors right now believe the bill will in fact a decrease their ability to

get the kind of care to desire and that is why we say what was going on a want to shift to this issue of the tax-exempt status because it's increbly important. it is an appropriate question for this committee to ask, is it not? whether or not an entity as large as the aarp out there is following the appropriate tools to maintain the tax-exempt status. is that an appropriate function of this committee? >> i believe the committee has wide powers and if you want to do that than -- >> i have here a number of questions that i understd that members of the staff of the folks they put together this report were unable to get from the aarp in spite of the suggestion by aarp that they are open and transparent and want to share the information so i wonder if i might be will to ask to be able to supply these

things for the committee's availability. how many millions of dollars still aarp received from its medicare insurance business? that ought to be something relatively simple, shouldn't it? >> we will provide any of your ads that we have sold control over. there are confidential contracts which we can make decisions about bye ourselves. >> i look forward to seeing those, the benefit the in the aarp members received after the aarp revenues increas the members didn't receive in prior years, those things we ought to be a will to get the information on should we not? >> steny to get that in writing is appealing understand that request degette >> i appreciate that. will we will do is submit these questions to you in aneffort to be transparent and open and provide them the public with the greatest amount of information look forward to those responses

or why they can't be answered. >> the time has expired. >> the gentleman from new york restaurant was recognized for five minutes. >> thank youmr. chairman. i ask unanimous consent of that this document called behind the veil, the aarp doesn't know, the place into the record i cherish the privileges that we have on congressional -- >> reserve the right to object? >> the right to object as been recognized. >> the report that my colleague and friend mr. rent was asking be put into the record has this been pure review by anyone? >> come any organizations?

>> this is mr. trinkle's request. >> i understand but it's your report. has this been peer reviewed or -- >> this report has been -- we requested it has been prepared and has been submitted. >> but has itbeen peer reviewed. >> it's before all of you right now, not any more than other reports are. >> might i add the report has 246 footnotes documenting everything thoroughly in the report. >> a reason why you don't want us to know who prepared it and who paid for it and why it's not official. i just want to protect the privileges of the members of congress not to be chllenged when they want to put ings into the record i truly believe we have a responsibility to protect that record and to know what we are by unanimous consent putting into the record so i'm

asking unanimous consent notwithstanding the many unanswered questions that it be placed into the record and that we can foresee to make certain that my motion is not abused by other people who just want to stoppeople from expressing themselves. so i ask that it be placed in the record by unanimous nsent. >> mr. chairman, i withdraw my right to reserve on mr. rangel's motion to place this on reviewed report into the record. >> reserving the right to object. >> this isn't taking out of my five minutes i hope. [laughter] >> you're five minutes is taking away, yes. >> this is a procedural matter. it has nothing to do with the time -- >> reserving the right to object mr. chairman. >> by will, again, raised the

concern i have that this report -- this document indicates that it's a report prepared by individual represetatives. -- >> this gentleman, this will not be -- we are subjecting it to the record now there is objection. we want to move on to this hearing. i'm reserving the right to object but i believe i have an opportunity to explain my reservation for the question i havenswered to see if i will remove my reservation. >> the gentleman from louisiana. >> i believe i have the floor and i made a reservation to the unanimous consent request. >> to remove or withdraw and i have a reservation on that

unanimous consent request. >> it's mr. trinkle's time -- >> no it's not, time. >> will the gentleman yield? >> this report was prepared by the two members on the cover. >> mr. chairman does that mean they use their staff, no ways and means committee staff? >> onerous consultant. >> is it the stuff used pittard report? >> and chairman levin approved it, he was in the loop and approved. >> the use of committee staff? >> yes, and the irs detailed it. >> does the gentleman withdraw? >> the chairman is representing the ways and means committee staff helped prepare this report and the use of the committee staff was approved by then airman levin -- >> yes.

>> i'm being told that is not accurate. islamic my understanding is chairman levin, when he was chairman, approved the detail the from the irs. >>he time is expired from new york. >> the gentle lady from kansas -- spec there is unanimous consent request on the floor -- >> i want to thank -- >> the gentle lady from kansas -- >> i said parliamentary inquiry, mr. chairman. >> parliamentary inquiry. now under what provision is the chair denying me an opportunity to question te witness? i made a motion that had nothing to do with asking the witness any questions, and if you were telling me now that because i made a procedural motion that i as a member of the committee --

>> we will start over again with five minutes. >> thank you so much for your consideration. [laughter] now mr. rand, since i don't know where this report came from, can you tell me where you think it came from? >> mr. chairman, parliamentary -- >> the gentleman is recognized for parliamentary. >> i hope this doesn't come out of my five minutes. >> the ploch will be stopped. >> mr. chairman, there was a unanimous consent request that was offered by the chairman from new york as far as i know, tat request hasn't been disclosed. i don't se how we can proceed forward with regular order until we dispose of this procedural request for unanimous consent and i would ask for regular order to be restored and observed and let us dispose of

this unanimous consent request. >> with the gentleman like a vote on that? is their objection? >> my question hadn't been answered. chairman tristani tried to answer but the information i m receiving on this side of the list that chairman when when he was the chairman of the committee didn't approve of committee staff been used to prepare this report that he approved the use of a detail the from the irs sign chongging to find out mr. term and a very simple, in answer to aimple question, was the committee staff used to prepare this report? >> they did work to prepare this report. >> and given that this report was never provided to the members of the committee or the report or the committee staff how to prepare it. >> it's not a ommittee report.

>> the resources are used. >> mr. chairman, you may call it a member report but when the committee resources are used it is members of this committee who have an opportunity and a right to review these reports before they are submitted for a broadcast publication and used by the media i would hope otherwise how are we to be prepared to question witnesses on a reporthat we are hearing rumor and speculation from all of the place. so if the case is that this is a report that is being requested to be included in the record, and was prepared by the committee staff unbeknownst to the members of tis committee for it to be considered into the record as any kind of official documents i would object to that if the chairman which is to portray this report as a report by two individual members who i believe they have misused the committee resources -- >> that is what it is. >> members of the committee to be misused resources to prepare the report on that basis -

>> ginny brown-waite. >> so those individual members used without authorization committee staff resources with the approval s tomb of the ranking republican at the time resources of this committee to prepare a report which members of this committee didn't have an opportunity to review with that understanding i will remove my reservation and allow this report whicis it an official report and prepared under the normal course that this committee is accustomed to preparing reports to beallowed into the record. cynically again recognize the gentleman from new york. >> would you indicate that my -- >> i have four minutes and 45 seconds. >> i was saying that he never said permission is granted to put in the record. >> the permission is granted. >> did you have an opportunity to see this report from the aarp america, does it know?

>> i saw the report, the staff went through and that's the reason why. >> did anyone ask you questions in connections with the preparation of this report? from the ommittee? >> from the office -- i have no idea why the committee would be asking you questions. do you know who prepared this other than what you've heard this morning? do you know who prepared it? >> that was my understanding as you were going through the conversation and reiterated that there were -- >> did anyone representing office of this committee, any increase? >> no, the answer is no. an outside organization of a plot to discredit your organization as it relates to

your position on of the affordable care act. is their anything i'm saying that is inconsistent with that? >> we are in the position to speculate -- >> is their anything in this report would indicate that the united states congress was involved in the investigating this or did anyone hold themselves out to be staffed of the united tates congress and making this report? >> it simply went through the names that you've identified. >> and so useful to members names but they were not identified as members of this committee. >> as a matter of fact. >> they were not in cannot identify as members of the united states congress. were they?

>> not in the report, not in the cover of the report. do you have counsel but tigard normally when accusations are being raisedagainst your organization to be? how could you possibly defend if you don't even know who made them. >> we do the council in the normal pcedure. >> i hope he makes an increase as to why would anyone put o a report and not identify who they are as to where they come from because wally and representative david reichert could be ripped from the various states that have what reps? but there's nothing o this report that indicates thatthe converse is involved in the inquiry that certainly is not complementary to the work that your organization has been doing for half a century. is that correct cracks. >> i hope your counselor share verney so it is impossible for

me to get any information it wi be in the record. i would hope that they would find out exactly what was the motivation bind the report because e motivation is just to refer you to the irs anyone can do that without a report, and i would hope that they would ask a question or get answers for as to what was the resources that were used in order to prepare the report, the identification with the united states government, the united states congress, the ways and means committee, the subcommittee of oversight and the subcommittee on health and the reason i wanted it in the record is so that it doesn't disappear. i want iin the record to be able to use this in the record and i want to make certain that the ability that we have to put whatever we think is helpful to an inquiry, helpful to a hearing that no member be denied for

partisan reasons the opportunity to put it in so let me thank you for this opportunity. i yield the balance of my time and i think you for your answers and i look forward to working with you to see that america continues to receive the best possible health care we can provide. the gentleman yields back. and again, this is the report, it says right on the report investigative report to prepared by representative wally herger of california and david reichert of washington inside with recognition of former representative ginny brown-waite who represents that district of florida throughout it indicates

congressional inquiries. so i think it's very clear i think it's important that we not have this as an divertinour attention from the purpose, the very real purpose -- >> what are you reading, mr. chairman of? >> with that, the gentle lady from kansas, ms. jenkins is recognized for five minutes. >> thank you, mr. chair, and thank you for being here to answer the question as representative ross noted earlier representative nancy pelo the democratic minority leader is on record as having complained that aarp is in the pocket of republicans and she suggested tha because you sell insurance to your members, there is a conflict of interest i'm just curious if you believe

leader pelosi is wrong and in the interest of time with the bells ringing just a simple yes or no, mr. rand. >> we don't believe anybody who says we are in the pockets of anybody. >> representative pete stak, democrat from california is quoted as saying aarp members know they are being sold out by an organization that is happily using members' ues and premiums to promote a medicare bill that does more harm than good. do you agree with representatives dark cracks >> we do not. >> representative rangel from new york is quoted as sying aarp has forgotten where they've come from because once you get into the business of making money with a devil you forget your mission is representative rangel wrong? >> we've not forgotten our

mission. >> representative john larson, a democrat from connecticut is quoted as saying why does the national aarp leadership support the bill that meets almost none of their clearly stated needs and conditions as representative larsen writes to question this lot check? >> we have said in the testimony there's a number of items -- >> yes or no. >> is he right in questioning this? >> i don't believe he's right in questioning it. >> former representative rahm emanuel, a democrat from illinois is quoted as saying aarp's latest step forward into the insurance realm gives him some pause. when there are principles about the medicare drug prices and the importation run into their business practices, which goes? business practices or principles? why would just like you to answer the question which goes, business practices or

principles? >> first with principles and policies. .. the misguided decision to sacrifice the future of medicare must go unchallenged. i am curious if you know any of those 85 members were true to their word and have continued to boycott the aarp? >> i do not know. >> could you find out for us? >> we will. >> thank you. the point is that we have run across something that democrats and washington -- and republicans in washington can agree on.

perhaps that is that the aarp leadership does not necessarily protect the best interest of the american senior citizens that it pledged to represent. i simply beg of you as representing the leadership of a european -- aarp to please not to mislead our seniors who send us to this body to represent them. please do not use them as pawns to line your pockets on their backs. with that, i yield back >> can i comment darks -- can i comment? >> the gentle lady has yielded back. i think it is very important that we not allow the purpose of this hearing to be taken and in a different direction. the seniors of this nation deserve the right to know how

money is being spent and whether it is being spent in their best interest. with that, i yield five minutes to the gentleman from oregon. from oregon, mr. blumenauer. >> thank you, mr. chairman. i actually agree with the notion about the senior citizens. i would first of all like to thank aarp because i have not always agreed on some issues, but i respect the work that is done. the folks back home provides lots of energy and activity. i for 1:00 a.m. sorry that you are subject to do something of that nature because they truly think reading through a 25 a half page with 2432 dresser that an authoritative in scholarly misses the mark. i find it fascinating on page

17. you are taken to task because somehow you are undermining your long-term business interests because you have underwriting standards that are more flexible in the to the needs of people who are 52 mike 60 that caused potentially money. and you're taken to task for that. you supported the affordable care act, which now requires every american to have these protections, which you undertook that perhaps some financial disadvantage to their motto because you thought it was the right thing. i remember that when some members of congress who used to support p and seniors with end-of-life care, when the big lie about death penalty and they retreate aarp was part of 400 individuals

and groups that came forward to tell the chairs. not just because someone like my friend from georgia thinks something is than that though doesn't put it in the bill. and i vitiate your zeroing in. this route port takes you to task because aarp had the audacity -- the audacity to support the children health program expansion. assuming you did not only for some sort of convoluted financial benefit, ignoring the fact that your members have children and grandchildren and great-grandchildren and we all want intergenerational cooperation. mr. chairman, i have read it. i think it's a little bit goofy.

with all due respect, the notion somehow that they focus on medicare advantage that is rocky and his nature conan cut. medicare advantage means that 75% of your members who are senior citizens have see first papers pay $90 a year more. so may ting to reform medicare and kitsch speaks to the 75% of your members and 75% of american seniors who are paying more because the system got out of hand. >> you've expressed her rationale. >> i just think i'm glad it's in the record. i hope pple look at it. witchhunt is such a nasty turn. i look forward to bringing before s. people who have really crossed the line, people that call mingle fun and push the

limits are crossed over them in terms of irs regulatns. but i think any fair reading is that your work on preexisting conditions, children's health, end-of-life, medicare reform speaks to what we need to be doing as a country and as a congress. sadly, this morning's exercise moves us no further along towards the implementation that the things that you came out for back in the day used to be bipartisan support in. and sunday, they will again. i appreciate your effort. again, i apologize for being a part of this, but i do hope people understandthis but it is no indictment of aarp.

does say something about this committee's operation. thank you and i yield back. >> shunning yields back. i think it is important to note that aarp and it written in formal testimony did not refute any specific conclusions or findings in this report. neither ranking member refuted any specific conclions or findings in this report in their opening statements. so all of this talk about which congressional staffer was involved with the report or who the committee will investigate next is simply a stunt to draw away from the finding of the report, specifically that aarp students to gain an additional $1 billion over the next 10 years as a result of the democrat health care law.

with that,yield five minutes. with that i yield five minutes. i yield five minutes to the lady from tennessee, ms black. >> thank you, mr. chairman. i want to begin by saying how disappointed i am that this has been turned into a witchhunt. it is the role and responsibility when there are things that seem to be outside of what should be happening that we should investigate. but have concerns about other operations may not be operated or they have questions that they bring that before this committee. just a personal ax. and prior to coming progress and i was the executive director of a 501(c)(3) health care

foundation. we were careful because we were providing funds for the half ago, for which we were the foundation about co-mingling members of our boards. one of the things that concerned me a favor this report report was the fact that you e aarp ain't, the 50 -- 501(c)(4) organization is run by 22 board members, but you also have seven board members from your for-profit and all seven of those board members also served by your other board. and so i am concerned about the co-mingling of word members from your for-profit and private not-for-profit. if you could speak about that, i would appreciate it. >> i'd be glad to if i could. i'm not sure what for-profit you are talking about the seven members. we check in at the grantor trust? the insurance trust? >> now you have -- explain to me how many different boards do

have. >> thank you. i appreciate the question because it needs to be clarified. there are basically three different boards that are involved in the aarp organization. one is the aarp board. there's 22 members. there is another board, which is the board for psi, are tax paying affiliate, which has on it to aarp board members. there is a third board, which is the aarp foundation board, which has four board members on it. there are seven too. but for aarp board members are in the board. the purpose of having the aarp board members on this interlocking boards is to make sure that the mission of aarp is

the first priority of each of the boards and that everything at goes through those present concert with her aarp policy and their mission. >> so which of those brd sets your re? the premium rate? >> premium rates are set at the state insurance. >> you have a contract with united? who oversees those contracts? which one of the boards oversee those contracts? >> contracts are not overseen by the board. there overseen by asi. they manage and oversee the contracts. >> you have members from your for-profit or not-for-profit, correct? you said you have to numbers -- >> two board members from aarp -- >> or nonprofit? >> nonprofit on the seven-member board of the asi.

>> and so with these three different boards, are they all in the same office? >> no. >> no, they ve three different offices with three different managers? so, three different managers -- >> there is the president foundation, president of asi. >> as far as miniatures cocom your administrative staff federal three separate are three separate administrative staffs? >> it's been a few occasions where they may be co-mingled come at the time is that, but there are only a few of those occasions. most of the work is done by the staffs of the individual entities. >> mr. brand, are you th overseer of all of these? >> no cop on the aarp, the c-4. >> nonprofit c-4. >> to use it as an ex officio on any of these motherboards? >> i said on the the board of

asis a nonvoting member. >> i am concerned about the intermingling of these board members have veto power and decisions that are being made by each one of these groups then these members being co-mingled. i am concerd about that and i will be interested to see what the irs looks at the way in which you manage your organization by the co-mingling of what they had to say because i know how sensitive of a situation that was as i've served as the executive or of a nonprofit ad for-profit. >> the young lady's time has expired. with akamai we have a series of votes, so we will recess and reconvene immediately after the vote and we will continue with this panel. i apologize it will probably about an hour, but a appreciator indulgence. with that i

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] [inaudible conversations] [inaudible conversations] >> he can watch the house ways and means subcommittee on the aarp tax exempt status sought in its entirety by logging on to c- span.org. >> in a minute, and look at march unemployment note rates. later, debate on the so-called house shut down a bill with speaker john boehner. the unemployment rate fell to 8.8% according to the labor department's report.

the private sector accounted for all of the new jobs. the unemployment rate for african-americans rose to 15.5%, the highest since the 1980's. now, remarks from the bureau of the labor statistics commissioner testifying on the latest unemployment rates. and is chaired by pennsylvania senator bob casey. is about one hour 20 minutes. >> the joint economic committee hearing will come to order. we have a number of members of the house and will be joining us, but they are voting this morning. we will welcome them as they arise. i appreciate this opportunity to review the inclement situation across the country -- the employment situation. we are happy that we have some good news to report, which we will review in a moment. i want to thank the committee for their work in preparing for

this hearing and for our witness, dr. hall. also the opportunity we will have on this committee to examine not just the employment data but ways we can focus on to create jobs come strategies to create jobs, and focus on important sectors in our economy like manufacturing and other indicators of our economic strength as we are recovering. i do want to thank vice chairman and brady, from taxes, who is -- civice chairman brady, from texas. we do have some good news to report and i know that commissioner hall will highlight them. the report today shows that the economy added 230,000 private-

sector jobs making march the 13th straight month that we have gotten employment gains in the private sector. 216,000 jobs added overall despite the loss of many government jobs. i wanted to point to 1 charts on my left, thank you. the chart behind me, or on my left, shows the cupboard trend in unemployment over the last 13 months. during the last 13 months, the economy has added 1.8 million private-sector jobs. that is good news, but it is not good enough. we have to continue to focus on ways to create jobs at a faster pace every month, not just one or two months in a row. we need to continue to move in the right direction. the overall unemployment rate

dropped to 8.8%, so it has come down. that is down from the peak in october 2009 of 10.1%. as i said before, the unemployment rate is still too high and we have to focus intensively and especially on particular demographic groups whether it is veterans who have lost their jobs, a very high numbers still for african- americans, four hispanic americans, and workers with disabilities. we went to focus on those as well. i also know that when members appear today, some that may not have a chance to do an opening statement, but i want to make sure that vice-chairman brady does. we will get right to our witness. i want to introduce someone who has appeared before this

committee a number of times. he does not necessarily need an introduction, but i want to make sure that those who may not remember his background and are not familiar write his biography to give you just a brief sketch. dr. keith hall is the chairman of the bls, a statistical agency, that collects, processes, and analyzes statistical data and to the american public, the united states congress, and to other federal agencies, state and local governments, businesses, and labor. dr. hall has served as the chief economist for the white house council of economic advisers for two years under president george w. bush. prior to that, he was the chief economist for the department of commerce. he spent 10 years at the united

states international trade commission. dr. hall received his bachelor's from the university of virginia. his m.s. and ph.d. from purdue. just one brief interlude. one congressman has just arrived, and i was just saying that some have do an opportunity for an opening statement, but if you have any opening comments, which offered that opportunity. >> not really. i am anxious to hear what is about to be said because we're dealing with a critically important issue for the future of this country and for the political operations in both the house and senate. i deeply appreciate the opportunity to be here with you. thank you very much for setting up this very unborn procedural -- very important procedural meeting. i am anxious to hear everything that you were going to say. >> thank you, congressman.

dr. hall? >> thank you, congressman. dr. hall? >> thank you, mr. chairman. thank you for the opportunity to discuss the employment and unemployment data we released this morning. in march, non-farm payrolls rose by 216,000. the unemployment rate was little changed at 8.8%. the rate has declined by one percentage point since november of 2010. since the recent low point, non- farm payroll employment has risen by 1.5 million. private sector employment rose by 1.8 million over the same time, an average of 138,000 of month. in march, job growth occurred in professional and business services, health care, leisure and hospitality, and mining. manufacturing employment trended up over the month.

business services employment rose by 78,000 in march. this industry added 692,000 jobs since september of 2009. in march, employment in temporary help services rose by 29,000. did the very health services have added half a million jobs since august 2009. employment in health care continue to rise in march. the increase was spread among several components including ambulatory health care services, hospitals, and residential care facilities. since september 2007, health care employment has risen by 902,000 while unemployment has declined by 7.2 million. the leisure and hospitality entry added 37,000 jobs in march. within goods producing industry, mining employment rose by 14,000 in march due to support activities in mining.

since the recent low in october 2009, mining employment has risen by 96,000. employment in manufacturing continue to trend up in march. factory jobs continue to be concentrated in durable goods with over the month increases in fabricated metal products and machinery. construction employment changed little over the month. employment in local government continued to trend down over the month. this sector has lost 416,000 jobs since september 2008. measures in surveys of household -- the unemployment rate was little changed. the jobless rate has declined since one percentage point since november 2010. over that time, unemployment declined by nearly 1.59% and employment rose by 1.4 million leaving the labor force nearly unchanged. in march, the labor force

participation rate held at 4.2%. the employment to population ratio to 58.5% was little changed. the number of long-term unemployed remain high at 6.1 million or 45.5% of unemployment. over the month, the number of individuals working part time was 8.4 million, down from 9 million a year earlier. in summary, non-farm payroll employment rose by 216,000 in march and the unemployment rate was little changed at 8.8%. my colleagues and i would be glad to answer your questions. >> thank you very much. i wanted to ask you, first of all, the sectors of our economy that we should be most positive about based upon the data. i wanted to get your perspective. first of all, on manufacturing,

which is so essential to the strength of our economy. how do you compare this month's numbers not just with last month, but what you have seen over the last six months. >> this month, manufacturing grew by about 17,000 jobs, which has continued a recent trend. we have had job growth in manufacturing. we have added about 205,000 jobs in manufacturing since february 2010, which is the employment trough. >> do you have a -- i guess it is not in the nature of an opinion, but when you compare how we are doing over all with job growth does not -- about 216,000 -- the private sector job growth it about 222,000 last

month. are there any trends or any insights that you can provide as it relates to the significance of those private sector in numbers, at least of the last two months? >> sure. for more than two months, we have had steady job growth. it has been around 140,000 a month. late in the last two months, it looks like we may get an acceleration in job growth, which would be a good thing. >> would you tell us, based upon your experience, how many months when you see a number of months consecutive with paul the did job numbers, especially -- consecutive with the job numbers, how many months like

that in a row would you like to see as evidence that we are growing and recovering at a pace in which we can fully recovered? do you understand my question? do we need three months of positive job growth at number or six months -- had the allies that? >> even one month or two months of that job growth as positive. i tend to look at the data about three months. i think steady growth of three months puts you into -- tissue a real picture of where you are -- gives you a real picture of where you are. we continue to have job growth. three months is a good rule of thumb that i used.

>> how about the total number? when you look at 200,000 in each of these months, that is a good number. i am trying to get a sense of a historical comparison between this two or three months period versus another period when we had recovery. we would prefer to run and 50,000 a month. is there any way to analogize or compare where we are now compared to a another three months. that you can recall or have data for? >> the last expansion after the 2001 recession was not a strong expansion. at its peak, that was somewhere over 200,000.

that is growth that was not as strong as it had been. in the 1990 expansion, we frequently had job growth over 300,000, 400,000 at times. 200,000 plus is solid growth. we could see more. >> my time is up, but i will come back to you about some of the demographic groups. >> thank you for everything you are doing. thank you very much for everything you were saying. we are very delighted to see the economic circumstances changing because of the fact that we had been experiencing an economic situation which was very similar to the economic depression in many ways. in the context of that, we sell

a loss of more than 2 million jobs -- something in the neighborhood of 2.3 million jobs. now the situation is improving and that changing. i know that you are analyzing the situation, but do you have any inclination to see what the main objectives have been, or, rather, what the main purposes have been to establish this change from a recession to economic growth? >> one of the things we did over the course of the previous two years was the passage of a major stimulus bill, which had the injection of significant amounts of funding and give the economy. the economy had not seen that kind of injection in a long time. i would be interested in hearing what you think are the main elements of the promotion of this economic activity now and

the growing of these jobs. >> with -- this recession has been remarkable in how broad the job loss was. just about every industry with maybe the exception of healthcare lost a significant number of jobs during the recession. the job growth now has also been pretty broad. industries like professional business services, education and health, leisure and hoppers -- major and hospitality, if even manufacturing has been growing since the trough. financial activities are still struggling. they are not doing very much. government is really the only sector that is losing jobs right now. it is primarily in local government. >> ok. anything else? >> that is about it. the job growth has been relatively broad. the biggest driver of the job

market has been construction and manufacturing. it has been nice to see manufacturing job growth start up, but construction remains pretty flat. >> what you said i in your opening remarks was that there were significant improvements in the economy in the context of health care, education, and things of that nature. what would you say about the prospects of cutting the funding for operations like health care and education by this government? >> i would not want to comment on policy things like that. i want to stay away from that. >> i understand that. i will try to see if there might be something you might say about that. in any case, this is something we need to be deeply concerned about. it would be a mistake to reduce the funding for those important elements like education, health care, things of that nature, as well as activity that

stimulates the deep necessities internally within this economy like transportation issues, things of that nature. in any case, thank you so much. let me ask you one or two other things at this time. the recession hurt certain demographics more than others, as we know. for instance, as of february individuals without a high- school diploma have an unemployment rate of 13.9% while those with a college degree have an unemployment rate of 4.3%. which sectors of our economy hire individuals without a high- school diploma? what has happened to those sectors during this recession? >> first, let me confirm your picture of job loss by education. for those with less than a high- school diploma, the unemployment remains at 13.7% this month.

those with a bachelor's degree or higher are at 4.4%. this is been a typical recession in the sense that the group with lower education have been hit with high unemployment rates and they have gone up by more than those with higher education. as far as the industry breakout, i am probably will have to get back with you on that. -- i probably will have to get back with you on that. i do not have the data handy. i can give you some idea of where the folks without a high- school diploma are employed in. >> thank you very much. >> thank you, congressman. as i mentioned before, the house was voting. vice-chairman brady is here now. i do not know how he could have voted and run that fast, but he is here. all like to offer him an opening statement if he would like and questions as well.

>> first, i would like to congratulate chairman j.c.. 3 -- chairman casey. i look forward to insightful hearings as we move forward in the new congress. i would also like to welcome dr. hall and his staff that. you have dogged this committee for many unemployment reports in the past. we appreciate the day that you provide. we are seeing some positive signs. everyone wants the economy to move, particularly in the labour market. we are glad for the increases in jobs we are seeing. looking at it closely, while there are job gains, the rate has not accelerated in not to keep up with the population growth and to encourage all the people who lost their jobs to find work again. it has been 21 months since the recession ended. we are still down non-farm payroll jobs from when it work. and employment rate of 8.8% remains unacceptably high, but

is also not telling the whole story. there has been fundamental disagreements about the proper role of government in facilitating an economic recovery between republicans and democrats. that disagreement continues even now. democrats in congress, unfortunately, do not want to change course. the federal spending spree has not been stopped. the debt is so large the focus of business managers, international institutions, and the public at large is help the administration can meet its financial obligation. how high will taxes rise? is there a chance we will default on our obligations? these questions, incredible as it may seem, are being asked of the united states government. it is a big reason why a private investment has not resurfaced after similarly severe recessions.

i want to show you a chart of payroll jobs. as you can say, we have not moved far from the bottom since the recession officially ended. the trajectory of job growth is weaker than in past recoveries. i want to show you a chart of the u.s. labor force participation rate. this chart shows the percentage of the population of labor force -- of labor force. the percentage has struck. businesses fear the cost of and interested government and are reluctant to expand to create enough job openings. many people have simply left the labour force. the labor force is smaller than 39 months ago despite the fact that the working age population has been increasing. this is happening in what used to be called the land of opportunity. republicans want to cut federal

spending to relieve the pressure on the private economy. we must reassure the nation that the united states will bring its deficit and its debt under control and will not burden the economy. increasing taxes to find the government depresses the growth prospects for the longer term. that has a chilling effect on businesses and consumers right now. increased government spending, this aggregate demand, and spending reductions hurt the economy falls apart completely when investors, businesses, and consumers focus on the increased future size of government, the part of a larger share of resources it will claim, and the myriad ways in which it will hamper economic growth. this should convince everyone that high levels of federal spending is not what the economy needs. we must cut federal spending, not try to lock it in or raise

taxes. expected after-tax rate of return drives business investment and hiring decisions. if we want businesses to offer hundreds of thousands of additional jobs month after month for years to come, this is what it will take to return the unemployment rate to normal levels. we must not burdened with expected returns of higher taxes, inflation, interest rates, a regulation. as the private economy goes, there will be more -- grows, there will be more money for the government to stand for -- more money for the government to spend. i yield back. >> we can proceed with questions. vice chairman brady, the what to do questions about were moved to congress by beckett? >> can we talk about the partition -- participation rate quickly? >> it is good to see the unemployment rate go down, at least in general appearances. there is more to that story.

there is no reason to celebrate a lower unemployment rate caused by americans leading the labor force. a smaller work force means millions of discouraged workers, or output, and a weak recovery. those are not healthy signs. what can you tell us about the number of discouraged workers? when can we expect to see labor participation rates begin to get back up? -- to go back up? >> the number of discouraged workers is just a little under 1 million right now. workers or marginally attached, which includes discouraged workers, is about 2.5 million people. those numbers are still fairly high. our broadest measure of labor underutilization, that includes

both marginally attached and people working part-time, remains high at 16.7%, although it did go down to test the% this month. labor force participation remains at a low level. it is still 64.2%. we have not seen big movement in the labor force. it has been fairly flat. what i would expect is that if we start to get strong job growth and a little more confidence, we probably should start to see the labor force participation rate go up. >> is the labor force perdition rate critical -- labor force participation rate critical for the recovery? >> yes. >> internally, had you done any work of what we might see when people start to re-enter the work force? >> we are looking for signs that

they are rather than projecting. we really do not think that way so much. >> i understand. construction -- we loss of jobs last month. we have about 30,000 additional in manufacturing and construction. manufacturing did update -- 17,000 new jobs. any reasons for that in the data? >> construction has remained pretty flat. just historic plea, what you probably -- just historical ly, we need to see new housing sales picked up before we see a significant change in construction employment. >> which manufacturing what do you see? >> we are seeing growth. 17,000 is not a lot, but there as a -- there has been a trend of growth in manufacturing. it does not really strong, but

it is positive growth. we did not see any growth in manufacturing out of the last recession at all. that is why this recovery is different than the last recession. >> i understand. we are pleased to be joined by one of our new members from wisconsin, congressman duffy. >> thank you very much. and welcome. >> i appreciate it. i have to figure out where the top button is. commissioner paul, good morning. i just have a few questions. as i am looking at historical data in regards to downturns and then recoveries, usually there is symmetry or a correlation between the depth of the decline

and the strength of the recovery, whether it is a v- shaped recline or a v-shaped recovery. if you look at what has happened in this recession, we have seen a pretty significant decline, but then a flat line i get regards of recovery which is not consistent with prior recoveries. do you have any idea what that is taking place? >> i really do not. i can say that there have been two schools of thought going into this recovery. one is that folks have -- folks have observed that deeper recessions have had a stronger recovery -- more of the v-shape. those people are optimistic that we will get a strong recovery. there are those who pointed out that the last two recessions have very mild recovery is.

the last two recessions were mild recessions as well. it is one of the essences where nobody knows whether we have now recoveries from recession. that is the way the labor markets change, or whether we go back to the v-shape. >> maybe i can throw some ideas out there. i am from a district in central and northern wisconsin. as i talk to job creators in our area, i hear them talk about uncertainty in the marketplace. if you look at what's happened in washington in recent years, we have done things we have traditionally not done. if you are an employer, the new health care bill creates uncertainty in the marketplace. if you have a $14 trillion debt and are expected to borrow $1.60 trillion -- if you look at the president's budget budget, we are expected to borrow $1

trillion a year on average. if you are a small businessman and are looking at growing a business, what i keep seeing is that this leads to much higher taxes, much less growth, and unwillingness to invest. as a resort, if you are eight larger business, you can look anywhere in the world to invest. if you look at these masses that charts in america, these have serious economic consequences in america. this is what i am hearing from our job creators in central and north wisconsin. >> i would probably stay away from cause and effect. we are a fact oriented place. i will lead off on discussing why i think things are happening or why they are happening. >> are you aware of any economic

studies that show a correlation between excessive deficits and large debt and long-term unemployment conditions? are there correlations between those two that you have seen in your studies? >> i am not really familiar. i do not know if there is a consensus on any of that. it is not something i have studied in the past. >> ok. i yield back. >> thank you, congressman. >> thank you, mr. chairman. i apologize for being late. we just voted on -- anyway. i apologize for missing your testimony. if these questions have been asked previously, please let me know and we'll back my time. i wonder if you are aware of what the unemployment regime looks like during these three recessions set forth on this

board, specifically 1981-82, 1973-'75. do you recall? >> i do not. what would it be fair to say it was somewhere between 36 and 39 weeks? >> that sounds reasonable. i really do not know. >> is it fair to say that unemployment in 1981-82 did not extend for 99 weeks nor did they in 1973-'75. the nine in nine weeks we are coming to now is unprecedented in our nation's history. >> the long-term unemployed is unprecedented right now. >> correct. but also the benefits we have extended our unprecedented. you are getting my point. i recognize you are not in the business of cause and effect looking for. i am interested in the possible

correlation looking back in hindsight. i am asking if you see any correlation between the link the benefits that we offer and the length of time that people actually stay unemployed. >> i am not an expert in that area. there has been some research that correlates when people returned to work and unemployment benefits. there tends to be a pickup in reemployment at the end of benefits. >> it shows an increase in the reentrance to employment. people do come back once benefits back to their ordinary life. thank you, mr. commissioner. i look forward to your testimony in the future. >> thank you, congressman. welcome. thank you for taking the time to be with us. commissioner, i want to add some follow-up questions on the demographic breakdown.

even as we are happy about the fact that we are to ended 16 -- we are 216,000 -- there are some demographic numbers which are pretty disturbing. i was looking at the number, for example, for veterans. i am -- am i correct in saying that unemployment among veterans is 9%? i want to make sure i had the right number. >> i believe that is true. yes, it is 9%. >> just for context, 8.8% unemployment over all, but 9% for veterans. >> yes. >> when i be correct to say that gulf war ii veterans face an unemployment rate of 10.9%? >> that is right. >> that is substantially higher than veterans over all.

i think we have got to pay particular attention to those veterans coming back from overseas. that is intolerable heat to high -- 10.9%. -- intolerably too high -- 10.9%. i was also looking at african- americans. 15.5%. is that right? >> that is correct. >> that number is almost double -- more than double, i should say, from the african american unemployment rate in august of 2007 -- 7.7%. that is the no. i have. >> yes. that is not right. it was 6.5% at the beginning of the recession. >> 15.5% for african-americans.

for hispanic workers at the rate is 11.3%. is that correct? >> yes. >> for workers with a disability, 15.6%. is that correct? >> you have the right so far. >> of what to make sure we get the record right. in particular, is there anything you can tell us based upon your knowledge of the labor market and trends you have been able to identify and analyze over the years, is there anything you can tell us about those predicted -- particular demographic categories, why they are that high, or whether these numbers are typical for a recession and recovery, or maybe there is no conclusion you can reach based upon the numbers only? >> sure. it is absolutely true that the

unemployment rates for these groups start out higher than other groups. in recessions, they go up by more. this recession has been no exception. they have gone up quite a bit. as you mentioned, african- americans going from 6.5% to 15.5% is a very large increase. i do not have great insight as to why that happens. but it does happen. it is a similar pattern, i think, as some other groups. >> if you have any data that compares, for example, if we just take two or three numbers -- the african american number is 15.5%. the hispanic worker number is 11.3%. is there any way to compare those two numbers in particular to a call for role time, say in the 99 -- in particular to a

comparable time, say in the 1999? >> right. we do not have a time series for that group that goes back that far, at least with us. we can probably follow up on that. 15.5% is a very high rate. we can follow up. >> that would be great for the committee if you could do kind of a comparison. anyone can tell that it is very high. i am just very curious about the historical data. >> we have a table i did not realize that we had. this is a higher unemployment recession or last

the 1991 recession. the last time it was this high for african americans was in the early '80s. this is a very high unemployment rate. >> i am overtime. vice chairman brady? >> thank you, chairman. we talk about the unemployment rate going down, but fewer people are in the work force. we have an honest disagreement in congress about what the role of spending is in our economy and its recovery. i know that after we spent some $800 billion, we have 2 million fewer workers today than when the stimulus began. the unemployment rate was predicted to be 6.8% this month. we are off by a mile. economists were saying do not reduce any spending in washington today. they are the same ones to

predicted that by the end of 2010 we would see 4 million new jobs. we i sleep at 3.3 million fewer. he was off by 7 million jobs. someone took a look at the relationship between federal spending and job creation in the private sector. this chart identifies this. the black line is federal spending. the darker blue line is private payroll employment -- non- government jobs. what you can see is if there is no correlation between the two. ashley, i am wrong. there is a negative correlation. jobs along main street actually stronger. the next chart shows a different story. for the last 40 years, we tracked an indicator along with work force indicators.

private investment, business investment -- companies buying new software and new equipment. as you can tell, there is a very high correlation when businesses, large and small, by buildings, like equipment, and by software. jobs on main street growth. as we look forward from here in looking at the date that you have, what indicators are you falling that indicate where and at what speed private business investment is restoring, is picking up, is still fairly flat -- where is it in america today? >> i do not know -- i do not spend a lot of time looking at leading indicators. we are not try to forecast. i will say that such things like hours worked and things like that give us some idea of

future job growth and future investment levels. things like temporary help tend to come back quicker than other types of jobs. those are the sort of things that tend to be leading indicators of investment and job growth. >> are there any sectors that reflect -- obviously you buildings. we are looking at construction, new equipment -- you'll be looking at the more durable goods, correct? new software -- within those sectors, or other signs we need to be falling? >> i think the equipment and software investment out of the gdp numbers does track pretty well with payroll jobs. if that chance to get ahead of payroll jobs, it shows up in productivity gains.

there are also signals of future job growth. we are down about 7.3 million jobs. >> how large will monthly job gains need to be over the next 18 months for employment to return to that level -- to pre recession levels? >> i think we are looking at -- i am during my math -- i guess we are looking at 400,000? does that sound about right? >> it would need to be higher than that. >> is higher than that? >> if we continue around 200,000 or so job gains per month, how long will that take? my guess was about five years at that level.

your thoughts? >> i have not done the calculations, but if you are talking something like 2.5 million a year -- i have not calculated it out. >> what monthly job gains -- we sort of have an indicator -- how much job gains from what is needed to keep up with population growth? we are often asked that question. but that seems to vary over time. -- that seems to vary over time. in the order of 130,000, one under 40,000 just to maintain with population growth. >> thank you, mr. chairman. >> thank you, very much. we know what the situation is and how bad it has been. how much employment has declined and now how is it is showing

indications of improving. this chart is very illustrative. it shows a deep drop in employment and then increase in unemployment as a result of the activities that took place over the course of the previous two years. i want to talk about manufacturing employment, which increased for the fourth straight month as employers added 33,000 jobs in february. the number of manufacturing jobs has increased by 186,000 sense january -- since january 2010. can't you tell us, what is the future of the manufacturing -- can you tell us what the future of the manufacturing sector is? >> these are two areas i try to

avoid. one is forecasting. [laughter] i will say that the last recession we lost 3 million manufacturing jobs and gained none of them back. this recession we lost 2 million manufacturing jobs and we are starting to gain some of them back. we are not mere 2 million back, but we are getting them back. that has not happened for a couple of recessions. >> yes. what you anticipate will be most influential policy that will affect the manufacturing sector? what do you think that some of the things we are trying to do now will have a positive or negative effect? >> i do not think i would want to comment on that. >> ok. over 44% of the unemployed are considered long-term unemployed,

meaning they have been out of work for 27 weeks or more. nearly 73% of the long-term unemployed have been unemployed for a year or more. what do you think is the reasoning behind why so many of our unemployed had been unemployed for a year or more? do you think we are facing a skills mismatch where workers do not have the skills of a changing economy, where things are being required because of alterations in the economic circumstances, that they had not been prepared for? >> in terms of what the date it shows, -- what the data shows, the number of long-term unemployed during the most recent expansion after the 2001 recession -- it never went down that much. the expansion after 2001 was not a strong expansion. normally the long-term unemployed goes down a lot more

than it did during this expansion. the first contributor to this is that the number of long-term was already high when this recession started. the second thing is this was a very deep and very long recession. it added to that. these two things put the numbers and an unprecedented level. they are extremely high. i do not know. i do not know what sort of issue there is with job mismatching. it is something that will be of great interest as this expansion goes forward as to help the long-term unemployed get reemployed and whether there is a job -- there is an issue with job matching or not. >> based on your experience, do you come to the exclusion -- the conclusion that economic investment by the government of america has a positive effects on the economy? >> i think i will not comment on

that one. >> mr. rose? any indications of anything on any of the questions we have asked? >> i think you'll be hard- pressed to find someone from the statistical community willing to comment on policy. i think it is in every one's interest that the reality and the perception is that the federal statistical community is separate from the policy issues. i think mr. hall space for all of us -- speaks for all of us. >> i appreciate that. we have done this on a number of occasions in the past. i appreciate that you separate the logic on helpings can be approved -- improved and based on your findings of what the

facts are, not how they arrive at what we might do to make them better. nevertheless, we continue to keep asking questions like that to see if there might be something you could provide the could be insightful. in any case, i appreciate the responses you gave to these questions. >> commissioner, if you're not so disciplined you could make big news today. congressman, thomas -- congressman thomas? >> thank you, mr. chairman. dr. hall, the government is providing unemployment insurance for 99 weeks. what effect does long-term unemployment havel worker's future employment prospects? >> that is one of those areas where the economic research is pretty clear. the longer somebody is unemployed, the hotter it is for

them to become reemployed -- the harder it is for them to become reemployed. >> the important things to what's coming out of this recession is what happens to the long-term unemployed. it is that a very high level. >> when unemployment benefits run out, what happens to the unemployment rate? >> i am not sure that i see a big impact on the unemployment rate went those numbers work out. people are more likely to stay in the labor force when they are receiving benefits. there may be some issue where people stop looking -- start plucking when the benefits run out. that may have an impact on the labour force. >> been arguing for stimulus, the president's economic adviser issued a report that projected

the unemployment rate would be about 6.8% today and about 8.2% if the stimulus was not passed. what is the unemployment rate today? >> it is 8.8%. >> president's advisers said total payroll would be about one of the $38 million with stimulus. what is the level of an employment at the end of 2010? >> how about if i tell you january? i had that one handy. it is 130 million -- 260,000. >> that is lower than the president of the estimates? >> yes. >> massive increases in federal government spending has been aimed at increasing employment.

can you reconcile the job numbers? >> i would not speculate on that. >> or other indications that private employers are wary of hiring new workers given the uncertainty surrounding the new health care entitlement and the looming fiscal crisis? >> i do not have any view as to why hiring may be slow. >> if you cannot speculate? is it possible that the huge amount of spending and the country's indebtedness has been counterproductive to job creation? >> i just would not want to comment on that. >> the recession has been characterized by a large exit of workers from the labor force. the labor force partition -- participation rate has dropped by 2%. is the absolute number of workers in the labor force smaller now than before the recession and by how much? >> in terms of payroll jobs, we

are down by 7.3 million payroll jobs. >> why have workers left the labour force? >> i am sorry. the question with the labor force question? >> yes. >> i guess there are various regions -- reasons. this is what happens during recessions. the unemployment rate goes up. to some degree, that does not tell you everything that is going on in the labour market. what the people are dropping out of the labor force. it does not show up in the standard unemployment rate. the labor force level is about 500,000 below before the recession started. that is despite the population increase. >> what can you tell us about workers re-entering the labour force? >> we will pull up some data.

ok. the levels are still low. people are coming from unemployed to employed -- as still has not picked up much. that is still at a fairly low level. it is well below before the recession. >> my time has expired. i yield back. >> thank you, congressman. congressman duffy? >> i am think a lot of people are pleased that we have a report of 260,000 jobs this

month. you indicated that labor force participation rates happen in all recessions. i would agree with you. we also see a decline. we are this far into the recession and this far into job growth -- do we not see greater participation? do we not see these rights actually rise in the recovery? >> i expect we would see those stocks to rise. it happens every recovery. >> is this not a sign that this is -- that there is a great deal of weakness in the marketplace in regards to jobs? more people are not coming back into the marketplace to seek employment. does -- is this a leading indicator of the strength of the market? >> i would say the same people start to re-enter the labour force would be a sign of growing confidence that job growth is going to pick up.

we dutifully see that during recoveries. >> we are not seeing that right now. >> not yet. >> that does all this a concern right now. is that right? quite certainly, we would like to see that. >> in regards to long-term unemployed -- there is a concern about that. if you are out of the work force for several years, you potentially lose skills. is that right? it is hard to get those who are long-term unemployed back into the workforce. >> a lot of that probably depends on what people have been unemployed for long term time periods. some of them are people whose skills are no longer consistent with industries that have strong job growth. this number is so high, i would expect a large number of the long-term unemployed

>> i think all of us would like if you lose your job, we want to help people out. i think we all agreed in an american safety net, but when you look at extending unemployment benefits for great length of time, would it be your position that that cannot encourage people to stay out of the job market until those benefits run out? are we really doing a service to those who are trying to help, or are we doing a disservice with the link the extension of unemployment benefits? >> i would not want to comment on the impact. i just don't know. >> but it is fair to say that with regard to long-term unemployment benefits, people will stay unemployed until

there benefits are about running out, and then they will get back in the job market. is that a fair assumption of what happens? >> in the past, statistically that has shown up in research. there has been questions about why that is, but that has shown up in research in the past. >> there is a correlation that the longer you stay out of the marketplace, the harder it is to find a job that is equivalent to the one you had before you left the marketplace is it fair to say there is a correlation between long-term unemployment benefits, people staying unemployed for a long period of time, and the difficulty of getting back into the marketplace? >> i am not sure i would draw that connection. >> i yield back. >> you are really staying on your job here. we talked earlier about some of

the difficult numbers here for large segments of the american people. i mentioned before still high numbers for african americans, for veterans, and for hispanic workers. we want to balance the positive aspects of these numbers overall with the difficulties many people are still having. i did want to turn to another chart, the gdp chart. just to kind of walk through some of these numbers. what this chart depicts, and just so some of the source, i wanted to read -- this was prepared by the joint economic committee staff based upon data from bureau of economic analysis. i may have a question that gets to the commissioners' work and his team, but just to review what it depicts, it is gdp

growth for six consecutive quarters. percent change in real gdp, fourth quarter of 2007 to fourth quarter of 2010. obviously at the end of -- or i should say on the left-hand side you have-four 0.0 in the third quarter of 2008, -6.8 in the fourth quarter of 2008. so the last two quarters of 2008, you have negative growth. then you move to the first quarter of 2009, which is when you get into the blue color there, the 4.9% in early 2009. i would note for the record, a lot of references by our colleagues to the recovery act and other strategies put in place by the administration and

a lot of votes by democrats, i might add, that as president bush was leaving office at the early part of 2009, president obama was coming into office. you had basically two quarters which are-at the end of 2008 and the first quarter of 2009. then you see a much improved number, -0.7 in the second quarter of 2009, the third quarter 1.6 positive. so basically took all of those quarters to get into positive territory. basically you had to go from the second quarter of 2008 to the third quarter of 2009 to get back into positive territory. the fourth quarter, 5.0 on the plus side, and every quarter since then, in 2010 was in positive territory. when people see this set of

data, naysay your getting growth, positive gdp growth quarter after quarter, which is good news, but they say where or the job numbers to reflect that? one theory, and i know you can not endorse or speculate on theories, but one theory is that one of the basic reasons you are not seeing nearly enough job growth even though you are getting positive gdp growth is because workers and businesses are becoming both more efficient -- one or the other, either more efficient or more productive, which may go hand-in-hand. anything you can say about average hours per week now, this month or the most recent quarter, versus another time in 2008 or 2007. the nikkei average hours per week -- then you can add average

hours worked per week. >> i can talk about the gdp and payroll jobs if you like a little bit more broadly. it is typically the case that gdp starts to grow out of a recession in advance of job growth. >> good point. >> that is typical. this recession it was about an eight-month lag between the end of the recession and when we started to get job growth. that is faster than the last couple of recessions. >> let me just interject for a second. just so we have a point of reference, technically, and we know not that many people feel this, but technically the recession ended when? >> in june of 2009. we have not seen a lot of movement in the hours worked,

hours weekly employed. that has been flat for quite a while. we have not seen a big pickup at all since the recession started. >> so that has been flat. typically we do see a correlation between that number, average hours worked per week going up and a further increase in jobs? >> typically, you would. typically that would give you some indication that the labor market is starting to tighten up and you will see job growth. it is a little bit interesting that we are seeing the job growth occur without having the hours go up. >> mr. hall, i appreciate your discipline for someone who has only been here a couple of months. is refreshing to see someone just want to answer questions as opposed to sitting up here and letting us testify.

i am going to ask you questions that i don't know the answers to in advance. the you break these things down by different segments? i am particularly interested in the job growth or lack of it within small businesses. d have any information you can provide on that? >> actually, we do. it is not part of this data released, but we did have a couple of different surveys and where we do look at job growth by firm size, recognizing that you don't have it immediately available to you. what can you tell us about job growth within the realm of small business? >> one of the ways this recession has stood out compared to other recessions is the job loss has been very broad across all sized firms. the last recession in 2001, the job loss there was focused on large firms. this recession has been much more even.

in terms of the recovery so far, i think there has been a little stronger recovery in the larger firms, but we are still not seeing a lot of job growth in some of the smaller firms. >> to what would you attribute that? i am not asking for policy, just based on the previous recoveries you have seen. why would you think that small business -- let me tell you what i asked the question. historically having been involved in primarily small businesses, that small businesses are able to react a little more quickly, especially in an upturn. they are a little bit more nimble from an organizational standpoint. am i wrong about that? why are we seeing a situation where small businesses are slower to return to job creation than larger businesses? >> i would say what i think is one of the most important characteristics of this recession compared to other

recessions. i would say that we were in a mild recession until the credit market lockout, until the financial markets locked up credit markets. that coincided with a real drop- off in new firm creation, which is in large part small firms, and establishment debts, firms going out of business. that is one of the most notable thing, the credit market has been really involved in this recession. that is consistent with the idea that the smaller firms have been harder hit, and perhaps -- i am not sure why they are slower to recover. i don't really follow the credit market. >> it actually makes sense. what i can divined from that is that small businesses rely more heavily on the overall credit markets. it is harder for them to raise credit. the credit markets remain tight, it might be possible for a larger business to get access to the credit market, but harder

for small businesses. that might explain why they are slower to create jobs in the recovery. >> we hear a lot about green jobs and the green economy. do you break it down by that as well? >> we have not in the past, but we are in the process of doing that. we have a new initiative where we have done a fair amount of research into finding green jobs and we will start collecting data on that later this year. next year we will start producing some of this same data we are seeing now, but broken down by industries that are primarily producing green products. >> thank you, mr. chairman. >> it is always good to see you, and particularly good to see you when you bring good news. i want to just pick on where my -- pick up on where my colleague

left off a moment ago. a lot of people seem not to fully appreciate the law of the credit market and how it does affect small business is big time. in my district, a few months ago we had small businesses of all kinds come together and talk about the reserve. what they said was, we have opportunities, but we cannot get lines of credit. they have been torn down and we don't have them. that is very, very significant. i think the more we can open up those lines of credit, the better off folks will be. without -- i ran a small business for 15 years. without a lot of credit, and it could be only for $50,000, but it would make a big difference. the see the unemployment rate continuing to decrease in the near term? >> i would not want to speculate. we have been on a nice trend

here where the unemployment rate has dropped and now that drop has held. obviously i don't know going forward. >> let me ask you this. what factors in your opinion or the biggest drivers of job creation? looking at your status, i know you look at trends and that kind of thing. >> we are getting job growth that is reasonably broad. more than half of the industries are now adding that jobs rather than losing jobs. it is fairly broad. it just has not -- we have not had it in every industry. construction and financial and activities have been kind of flat, but everything else has essentially had job growth throughout. >> despite the positive economic indicators, other indicators present a worrisome picture. for example, our recent survey

shows a 10% drop in consumer confidence last month, the 10th largest drop on record. an editorial explains that this drug is attributable to a number of factors, including rising food and fuel prices as well as expectations of fewer jobs and lower wages in the months ahead. their radically, interconnectedness of consumer confidence and employment levels can lead to a somewhat self fulfilling prophecy if consumers are unwilling to spend money. the economy slows, leading to fewer jobs, thereby further depressing consumer confidence. however, is consumer anxiety about fewer jobs and lower wages appropriate? and are they right to feel anxious? i know you don't like to give opinions, but help me.

>> i don't know if they are right or not. >> looking at the data, if it review, would you feel anxious, based upon the data that you collect? >> i would say we are down a lot of jobs standstill since the recession started. there is plenty to worry about. >> what effect do you think the drop in consumer confidence will have on job creation in the months ahead? >> the real question is will consumer confidence lead to lower consumer spending? consumer confidence can fluctuate. the real issue would be, does that lower spending, which would slow down the economy. that is the link between buying and confidence. >> to what extent is the housing market influencing job creation and the employment outlook?

>> housing has not contributed for a while. construction has been flat throughout the recovery so far. >> i always ask you two questions that i like to hear your answer to. one, if you were talking to the president right now, the president called you up and said all, what is the situation? where are we right now, and what do you see for the future? what would you say. the other one is, as people look at this on c-span and they are looking at you as the guru of these numbers, and they say i wonder what kind of field or should go into, what training should i do, where should i go in the country to find a job? what would you say? >> the first question, i would characterize it as i did in my statement. it is a positive thing that the

unemployment rate, after having fallen for a percentage point -- will not had any big movement in the labor force. the fall has been from a reduction in the number of unemployed and an increase in the number of employed. job growth at 216,000 is job growth, and that is a bit faster than has been in prior months. on the whole, this is a positive report. we have growth in a number of industries. going forward, in terms of job growth, two things come to mind. the one place where we do forecast is 10-year forecasts on occupations, where we try to give people an idea of exactly the answer to your question, were the jobs going to be in the next 10 years, etc. the thing that jumps out is a lot of the service sector jobs,

along with health care, and jump out as likely areas where we will have growth. a lot of it will depend on the demographics. one of the things that people underestimate is that we have a certain number of jobs that are replacement jobs. as people retire, jobs will open up behind them. that is an important thing. it is not just a did a fine sectors where the number of jobs are growing, but also where you have the demographic where people are retiring and you have replacements in there. but very broadly, services and health care jump out at you, especially health care with respect to some of the demographics i am talking about. if you like, i can get you some more detail on our forecast. next time i can bring some of those numbers with me. >> one thing you left out is

geography. they are sitting there in a state where things are just really bad, where were they be looking, based upon -- where my they want to look in other areas of the country? >> that is a good question. to be honest, i don't recall the regional aspect >> >> i know we are ready to wrap up, unless my colleagues have not questions. one quick one about the split by gender, men versus women in job growth. there is some sense that women make up a greater share of state and local government jobs, but since february 2010, we have created 1.5 million jobs. i wonder if you have the number

of men versus women on that. i know men were way down in his recent report. i forgot to ask that earlier. >> we had about 1.2 million jobs for men and about 200,000 jobs for women, so it was pretty male oriented in terms of job growth. >> since february 2010? >> that's right. that also reflected in job loss as well. >> thanks very much. unless there are any other questions, i think we are adjourned. >> commissioner, thank you very much for being here. we are adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> coming up, house debate on the so-called government shutdown prevention bill followed by a news conference by house speaker john boehner. and later a discussion on the first 100 days of the 112th congress. >> now, house debate on the so-called government shutdown prevention act. the bill states that the fiscal year 2011 spending bill passed by the house in mid february would become law if the senate does not pass a spending by by next wednesday, april 6. this is an hour and 30 minutes. >> as we debate the future course of government spending, we need to be honest with the people of this country about the current fiscal state of affairs. of affairs. america averages now trillion-dollar deficits. we borr nearly 40 cents of every dollar we spend. given the fiscal clout that hangs er our country, it is

reckless to assume we can live pain-free forever. sooner or later something has to give. to give families and business confidence that their future won't be plagued by inflation, higher taxes and higher interest rates, our majority vowed to move forcefully to cut spending. mr. speaker, the house is noin order. the speaker prtempore: the gentleman is correct. the gentleman may proceed. mr. cantor: we made clear that only by putting federal spending on a sustainable trajectory could we create the conditions necessary for growth and job creation. during our three -- three months in the majority, we have delivered on our promise. six weeks ago after 47 hours of debate, we passed h.r. 1, to fund the government for the remainder of the fiscal year and save taxpayers $61 billion relative to current spending.

in a more open process than the house had seen in four years we allowed the other party to offer countless amendments and over the past month we passed two continuing resolutions that have cut $10 billion in spending. all along, mr. speaker, we practical particularly begged president obama and senate democrats to get serious and come to the table with a legitimate proposal. but we got nothing in return. no legislation, no credible plan to cut spending. mr. speaker, i want to underline the fact that we do not want a government shutdown. yet as senate democrats refuse to pass a bill, that unsettling prospect now looms ever larger which is why they must act. today we are bringing a bill to the floor that makes clear that continued inaction on the part

of senate democratic majority is simply unacceptable. finally this bill also ensures that going forward, should there ever be a government shutdown, that members of congress and the president will not get paid. if we can't do our job, why should we get paid? mr. speaker, funding the government at the levels passed by house republicans might not be what senator reid wants, but surely even he would agree that it's a better alternative than shutting down the government. i urge my colleagues to support this bill and i yield back. the speaker pro tempore: the gentleman's time has exped. the gentleman from south carolina. mr. clyburn: thank you, mr. speaker. mr. speaker, to begin this debate i yield four minutes to the distinguished democratic leader. democratic whip. mr. hoyer: i thank the gentleman for yielding. april fool's, america.

this is a joke, america. this is not real, america. as a matter of fact, mr. woodal of georgia says it's not real, it's not going to pass the senate. he made that very clear. the majority leader just said if the senate won't take what we give them we're going to shut down the government. that's what he just said. and that's what i believe to be the case. the last time the government shut down was not when we had a republican president and a democratic congress. but when we had a democratic president and a republican congress. they shut down the government in 1995 and 1996. they shut down the government over christmas, as a matter of fact. the griverage who stole the government's operations for almost three weeks. we're about to do it again. mr. woodall who has been here now a few months was 10 years old when i came to the congress of the united states.

he mentioned something about the debt. this $14 trillion of debt. i've only been here, i tell my friend, 30 years, but during the course of those 30 years republican presidents have signed bills spending $4.8 trillion in deficit spending. during the course of the clinton admistration we had a surplus, as the gentleman probably knows. now he will say presumably because we had a republican congress. but of course the republicans not only took the congress but they took the presidency. in 2001. and they ran up $2.5 trillion of deficit and increased the national debt by 150% notwithstanding the fact that they inherited a prog -- projected $5.6 trillion surplus. and now they've passed this april fool's joke on america.

the gtleman, who is one of the co-sponsors says won't pass the senate, we know it won't pass the senate. but they pretend in their language what is clearly contrary to the constitution. because they say, if it doesn't pass, the provisions of h.r. 1, the bill they've sent to the senate, passed by the house on february 19, 2011, are hereby enacted into law. in other words, we're going to deem it bassed. let me tell what you eric cantor said about deeming it passed. malfees ant manner. discharge -- to not discharge the duties of their office. and then speaker boehner said this about these deeming pieces of legislation which this is. he said it was a scheme and plot. that set a precedent that was, quote, one of the most outrageous things that he seen since he had been in congress and erroneously claimed that it

never happened in american history. it had happened before. this has never happened, where the house of representatives took t position if you don't pass what we wan ours goes into law anyway. i'm sure our tea party friends are shocked because they will find nowhere in the constitution, my friends, does that provide for. furthermore, mike pence said the procedure like ts, he said, denounced deem and pass and, quote, trampling on the traditional rules of the house and the senate and even on the constitution of the united states of america. . michelle bachmann, apparently may be a candidate for president said this, the deem deem and pass, quote, ignored the constitution and warranted the impeachment of the house speaker. quote, there should be people that are calling for impeachment off of somethiik