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tv   Tonight From Washington  CSPAN  May 6, 2011 6:30pm-11:00pm EDT

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it is essential that the public understands our actions and our strategies. at chairman bernanke's press conference last wednesday, the first ever by a chairman in the history of the fed, it was a major milestone. one of the most important policy questions as to do with inflation. a subject on the minds of americans from all walks of life. as anyone who is paying more than $4 a gallon for gas knows that the price for energy and food and many other commodities have soared. this is important for those with lower incomes and stretched budgets. despite the upturn in inflation, i do not think inflation will remain stubbornly high. this afternoon, i will explain why inflation has risen and why it is expected to recede open the next several months. i will also talk about the prospect of the economic recovery. i will close about some remarks
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on monetary policy. i should start by saying this talk represents my views and not necessarily those of my federal reserve colleagues. i will start with the status report on the economic recovery. it is not nearly duty years since the economy started to grow again. -- it is now near the two year since the economy started to grow again. despite adding 1.5 million jobs over the past 13 months, there are still over 7 million fewer jobs in the united states than we had before the downturn. these recovery has sputtered at times. our progress has been disappointingly slow. that is not to bank surprising -- not too surprising given the type of recession we have gone through. there has been research looking at financial crises in other countries around the globe. this research suggests that
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economic growth following banking and financial crises is often weak and inconsistent. some recent economic data has been lackluster. congress estimated the real domestic product as the broadest measure domestic activity rose 1.8% on an annual basis during the first three months of the year. that is quite a bit slower than the 2.8% growth we saw in 2010. winter weather and a few of the transitory factors held down growth in the first quarter. several more persistent forces have been at work. higher gasoline prices are at the top of the list of factors that have been a drag on the economy and will continue to do so for some time. over the past year, the price of gasoline at the thought has jumped by 1/3. this takes money out of the pockets of consumers, reduces their ability to make other purchases. the jump in energy prices raises
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uncertainty, it saps confidence, and makes consumers and businesses more cautious about spending. consumer confidence as measured by surveys of households remains mired near its recessionary levels despite the improvements in economy. there are other headwinds in addition to the gas prices. the housing market remained severely depressed. the large overhang of unsold homes and the shadow of homes in dealing swishy offered little hope for significant rebound in home prices in the near term. government at all levels are cutting back. it is something we californians know all too well. there was a terrible disaster in japan. it was not just a human tragedy. it created bottlenecks in the global supply chains, especially in the auto and technology sectors. this affected day united states
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as well as japan. -- the united states as well as japan. we expect growth to rebound to over 3% in the current quarter. the pace of the recovery will continue to build further strained for the remainder of this year and next year. in a reversal of the dynamic we saw in the darkest days of the canada crisis, we are enjoying a circle of improving and at the conditions, which support stop spending, leading to more hiring and production, and strong enough financial -- and stronger financial conditions. we saw this virtuous circle being a vicious circle where worsening conditions brought a worsening economy. the positive feedback loop is illustrated by the stock market. stock prices are up 10% over the past year thanks to healthy
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corporate profits and a greater willingness of investors to take on risk. with their investment portfolios growing again, household are more willing to spend. this prompts businesses to hire more employees. there is an improving their -- and improving labor market. it grew by 200,000 jobs per month, a solid pace that should pick up further as the year progresses. based on data we got this morning and predictions by many economists, i think the data to be released on friday will be similar to that for april. we are on solid base for growth and jobs should improve. the good news on that is that these job gains should push down the unemployment rate from its current level of 8.8% to 8.5% by the end of the year and fall further by 2012. we face a long road ahead before we reach blogger levels -- lower
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levels of unemployment. despite some ups and downs, the underlying recovery continues on a moderate pace. growth slowed in the first quarter, but it should pick up during the rest of the year when transitory factors restraining economic fate. i expect real gdp to increase 3.25% this year. this is sufficiently high to bring down the unemployment rate gradually. it will take a long time before we did ourselves out of the people we fall into during the depression. the timing is forging ahead. there is still an enormous amount of -- the economy is forging ahead. there are an enormous amount of problems out there. what is the current inflation situation? what are the underlying forces driving prices? what are the prospects for inflation in the medium term? what is the response of federal
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monetary policy? regarding the first question, we have seen a substantial pickup or prices in food, energy, and industrial commodities. copper prices have risen 26%. crude oil is up 35% and corn 75%. this is cause for serious concern. sharply higher prices for many raw materials are draw -- driving up prices on a range of consumer materials including gas and food. the measure of prices that we at the fed can to watch most closely is the personal consumption spending price index. it increased at 3.8% and will break -- annual rate this year. the most participants in the fed policy-making body with our --
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this brings me to the second question. what is driving inflation so high? rising commodity prices for food and energy have been the primary culprit. the core inflation, which strips out food and energy prices, was only 1.5% in the first quarter of this year. it has averaged only 0.9% in the past four orders. when fed policymakers meet in core inflation, we get criticized. people need to put food on the table and fill the tank of their cars. so do i.. i totally agree. it is the price of the total household consumption basket of goods and services that we care about in terms of our inflation goal. that includes food and energy. we find it useful to look at underlying inflation, which includes four measures of inflation, to help us untangle
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the elements of the inflation picture. measures of underlying inflation such as core inflation have been helpful in reducing overawed inflation. that is the reason we talk about it and analyze it. that brings us back to the question of why commodity prices have risen so much. some commentators have suggested the fed itself has contributed -- has contributed to the run- up. according to this argument, the fed policy of low interest rates is fuelling speculation in commodities. economic theory does teach us that lower interest rates will boost asset prices, including commodity prices. but it is unlikely that this is that can explain more than a small portion of the huge increase in commodity prices we have witnessed. someone at the san francisco that look at how commodity prices reacted when the fed announced new policy action to
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stimulate the economic. if that prices were responsible for the commodity price boom, we should have seen commodity prices job each time the fed announced more monetary stimulus. researchers found that commodity prices fell somewhat after the new policy announcements. it poured in, they were not inspired by news that the fed was doing more monetary stimulus. looking at of the research and evident on commodity prices and monetary policy, i cannot see any convincing evidence that monetary policy play a convincing role in the huge surge in commodity prices lapsing. this is no surprise from an economist. i will say it is surprised the but as it is supply and demand. the rise in commodity prices can be traced to robust growth in emerging market economies. they display a ravenous appetite for raw materials.
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chinese automakers sold 18 million vehicles last year. that is 1/3 more than in 2009. it is more than any other country in history, including the united states. at the same time, as the man is rising, we have seen supplies of some commodities curtailed by weather or political disruptions. another example is in north africa and the middle east. that has been a disruption -- a destruction of the global supply of oil. what do these fast rising commodity prices mean for inflation in this year and beyond? i believe the inflation rate, which i mentioned was elevated in the first quarter, will reach a peak by the middle of this year. it will start going downward. i view this as a top -- as a temporary bulge in inflation. we will return to 1.25 to 1.5%
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annually. commodity prices are not likely to keep increasing indefinitely at a rapid rate. in recent weeks, prices for a number of commodities, including sugar and cotton, have fallen sharply. prices of certain key commodities in the futures market, such as crude oil, indicate traders believe these prices will not keep rising as double digit rates going forward. the numerous supply disruptions have pushed up supplies of food stuff. that is not likely to be repeated. even if commodity prices remain elevated, they will not keep pushing inflation up. the second reason for believing the issue will pete is that higher commodity prices generally represent only a small portion of a finished goods in the u.s. account. corn and sugar make up only a fraction of the cost of a box of crossed the plate. most of the cost comes from the labor in layering and
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distributing the breakfast cereal. in los angeles, the center of entertainment, they pay for the year time of connie the tiger. this typically translates into small and increases in consumer prices. gasoline has small commodity input shares. in today's service income -- service oriented economic, this is the exception and not the rule. inflation will start to ease later this year. it is true that surveys of -- surveys show that consumers expect moderately high inflation of the next year. not surprisingly, they are worried about near-term inflation projects -- near-term inflation prospects. ordinary americans agree we are seeing a transitory rise in
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inflation. survey results reflect the fact that inflation remains low and has stayed steady for several decades. based on that, the public believes the fed is committed to keeping inflation under control. as long as households, businesses, an investor inflation expectations remain stable, it is unlikely we will see an inflation and had become established. his leads directly for to the fourth reason to suggest the inflation pressure will ease. four decades ago, many labor contracts provided for automatic moving adjustments. automatic prices fell into higher wages. today, these clauses are a thing of the past. meanwhile, measures up wages and labor compensation, such as
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employer costs, have increased only 2% annually. when you factor in productivity gains, a unit labor costs have been close to flat. these wage trends reflect the high levels of unemployment in the town. act as a powerful brake on inflation. for all the reasons i have mentioned, i believe risk of high inflation is low. overall inflation will be 2.2 5% this year. as i noted earlier, inflation should return to its underlying level of one. by to 1.7% next year. . .
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and by last year, iflation had fallen to very low levels. that meant we were falling short on both counts of our dual mandate, on employment and
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inflation. so we have kept the main interest rate close to 0 to stimulate the policy but the federal funds rate should actually be several percentage points below zero. you can't send it below zero so to provide monetary stimulus wave had to look to other means. since 2008 we've been actively buying instruments with the goal of pushing down longer term interest rates. careful analysis indicates that interest rates on longer term treasury securities are about a half percentage rate lower than they would be without this program. and loafer interest rates to accept -- to help support the
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recovery and diminish unemployment. we have said we would leave the fed fund rate very low. underlying inflation is subdued, as we have explained but we do expect the pace of growth to pick un. the nature of monitor -- monetary policy is that a considerable time lag must occur are the we have to make our decisions based on where we think the economy will be many months ahead. for that reason we have been preparing a plan to start removing stimulus when economic conditions warrant. this is our so-called exit strategy. now, i won't go into the technical details and it's incredible the number of memos and decalede -- detailed analyses we are doing thn -- on this but the basic elements of
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the exit strategy are draining bank reserves and reduce fering holding of longer term strurments. and the exact timing of the various stages of the plan will be dictated by the recoverive and in particular the paths of unemployment and inflation. and to give the public plenty of advance notice, that important communication i stressed at the beginning of my talk, these steps are likely to be signaled in our regular policy statements. the economy today faces many pitfalls. i don't believe runaway inflation is one of them because fed policy makers like the general public are aware of the cost to society whether prices get out of control. the experience of the 1970's was very traumatic and it's indelibly etched in our minds. during those bad oles days inflation did get out of control and it took a very harsh and painful recession in the 1980's to recover and
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everyone has learned these lessons from the 1970's and is absolutely committed to making sure nothing like that happens again -- again. you can rest assured that the federal reserve is committed to low and stable inflation. i view a sustained period of high inflation is unlikely but if we do see signs of high inflation developing we will act promisely and decisively to ensure price stability. so thank you very much. [applause] >> um, of course, dr. williams will be answering questions. but if you will wait till the microphone is brought to you we'd appreciate it. thank you. >> i heard yesterday that barney frank wants to take the rotational vote away from the
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regional presidents of the federal reserve based on his reasoning that you are beholden to your businessmen boards that elect you to your office and that they have the most to gain by movement in interest rates. how do you feel about that? >> so i -- i -- i disagree. i think that the federal reserve system, which is a quite complicated system and sometimes a byzantine in structure is actually, it has some great strengths too. so let me explain just a little bit how it actually works in terms of the fomc. 12 presidents of the 12 federal reserve banks. if all the positions were filled there would be seven governors on the board of governors. the presidents of the federal reserve banks are individually chose enchly -- by their boosheds directors. the federal reserve is actually
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part of the private sector, not of the go. our board of directors includes members of the banking community and members from other groups representing labor and other parts of u.s. society much the 12 presidents don't all vote at the f.o.m.c. only five vote in any given year, on a rotation, although new york votes every year. san francisco, even though we represent almost a fifth of the economy, only get to vote once every three years. so the last thing i should mention is that the choice of the president by the board of directors of the bank, two important points. one is it has to be approved by the board of governors, and the boards of governors is chosen by the president and confirmed by the senate. the second is that under the dodd-frank act the board of directors who are from the banking industry, who are from banks shall are not allowed to be part of that selection. so really what we're talking about are business people not
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in the banking industry. now, why i think it's a great system, obviously i'm biased on this but why i think it's a great system is it does mean that the federal reserve has broad -- a diverse set of backgrounds and views not only inside the beltway in washington but people from different back grounsgrourneds -- backgrounds whether in business or different backgrounds chosen by different groups of people, you bring all of them together and get the diversity of backgrounds and views and get away from perhaps the inside the beltway groupthink that could happen. i think it's kind of a crazy system at some level in how it's complicated, but i think it's a system that actually works wog -- well and speak for myself and my colleagues all are in there thinking about the national economy, unemployment,
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inflation, we rm value the feedback we get from our business contacts and advisory groups, the groups we go out and see but we're just dedicated to what we can do the best we can do for the u.s. economy so i think that this is a system that i would keep the same. >> yes. i -- on that subject with the emphasis on real estate which is my focus, obviously we're all, the entire world is waiting for stimulus that will get this housing market back up . when as far as i'm concerned i don't know how many people agree with me on this, one of the obvious changes was increasing the requirements in order to get a loan, making it much more difficult and eliminating stated income. have you analyzed this and do
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you have any personal viewpoint about a way that stated income parameters could be vetted -- wedded again within certain [captions copyright national cable satellite corp. 2010] ? and my thought process on it is with regards to the criminal element of fraud if that were in place and identified and if it were very clear what the consequences of flawed -- fraud on a stated income would be, would you alou it or do you have a thought on that? >> i think that this issue of the housing market and the banking sector and the connections between them and the u.s. economy is one of the dument challenges we face. so part of our goal on monetary policy is we want to see the
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economy grow. we want to see people borrowing and lending again, people, we want to see the economy improving. at the same time we have a banking sector that has suffered, you know, severely during the crisis and we want to make sure that we have a sound and safe banking system for the future because without that, you know, obviously our economy isn't going to work. finally we have a third part of this which is the financial stability and the dodd-frank act which are, you know, we need to approach i think the issues of financial institutions, financial stability in -- you know, have we thought or are thinking about that relative to where it was before the crisis? we recognize the crisis revealed a lot of short sps -- shortcomings in our regulatory system. in my view these are just as challenging times. you want the economy to get going better, you want to make sure the banks are safe and
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sound for our economy, at the same time we're learning the lessons from the crisis. i don't think there's any easy answers to any of these issues and i don't have a particular view on the stated income kind of issues. i i do think it's a very difficult problem of how to get these right, you know, to both not have too much regulation and too much of the banking system but at the same time making sure that we've learned appropriately the problems that led to the crisis and that are part of that and that we don't go through that again. so hopefully out of this process we'll get to a good place but it's a difficult set of choices and again it's a challenging environment because we're not starting at a good place. our economy is still weak and we have challenges in the banking system. so. >> questions?
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>> could you please comment on the health of the economy in the western part of the united states, the area that you cover? >> sure. so again as i mentioned we, the 12th district of the federal reserve covers nine western states including hawaii and alaska and guam and the marianas. we got hit very hard by the recession. the housing bubble and crash obviously was more pronounced in the 12th district or in the western states than in the country as a whole. the tech sector was hit very hard during the recession when after the collapse of lehman brothers and those events we saw a complete contracting of business investment due to everybody basically hunkering down. third, global trade collapsed during the pre -- recession and that -- now it's coming back pretty well, but that was another, a third hit.
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so if you look at the western states we got hit harder. unemployment went up more on average than in the country. the difference across the country, california was hit harder, utah was hit less hard. it has still lower unemployment than california. we're kind of like the atlanta fed district which includes florida and atlanta, those areas that got hit hard by these factors. we still have higher unemployment than the rest of the country on average. except for housing, we've seen global trade pickup, especially to emerging market economies. so that's a good thing. high tech is actually the brightest sector in the u.s. economy. high tech investment and spend sg is actually doning with -- very well, has rebounded from the recession and is doing great. theories the positives much the real problem in our economy is that the housing sector, which is a big part of our economy,
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was hit really hard and is basically still deeply depressed, as i said. if you asked me a year ago where was housing going to be right now i would have thought it would still be low but starting to see signs of improvement. what's happened instead of that is we've seen house prices continue to decline further than i think we expected. we've also seen just a reluctant -- reluctance and we hear this from people we talk to and in the data, just a reluctance to get back into housing. people buying homes at small levels and very, very little construction going on. that was a big part of the hit we took in arizona and nevada and california. eventually i see the u.s. economy improving, the recovery gaining momentum and i think california and the western states will share in that but
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it's really, i think, if you look at one factor that separates different parts of the country it's how big the housing bubble and crash were, how important they were for the different parts and those places like here where the housing crash was, bubble and crash was so big and pronounced, this is why, you know, we're still deep in the hole. >> you indicated that i believe that price stability was part of the mission statement and that secondly you felt that higher commodity prices had been driven by global demand. i believe you also indicated that you knit -- think the u.s. is recovering and will pick up the pace a little bit in the next quarter. does that fundamentally mean that you think global demand from other sectors of the world, maybe the emerging markets and countries, will slow down? >> so that would depend on the
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individual country, clearly. china, which has been growing at an incredibly rapid rate, their economy, they are trying to slow, the chinese government and the central bank, are trying to slow that down somewhat. that would be an example of i think a very important country in the rest of the world that is going to be slowing and we'll see some moderation in the demand from that country. i will kind of go back through the history of the last few years of commodity prices a little bit. what we saw in 2007 and 2008 when commodity prices really peaked even as the u.s. economy was going into recession, i think what we saw there was this global demand and supply playing out and pushing commodity prices higher and higher. then we got hit bethe financial crisis and recession, commodity prices plummeted shall since then they've been moving back up and depending on which one you look at they're not mere --
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they're nearly higher or higher than 2008. maybe we're moving back on to that trend. what i don't think you want to do is extrapolate the growth rates we've seen in the last few years to say oh, it's going to grow 10, 20%. i don't think commodities like oil prices are going to come down sharply. not making any predictions but i don't see them based on supply and demand combroge rapidly going forward. i think it's more kind of an adjustment to the huge shocks we saw. the other thing about commodity prices is they are asset prices and people trade on them as such which means that premium blit fact that the global economy has rebounded, things, we got through the crisis. investors are looking forward many years and thinking about what the value of these assets are, the commodities are so that's why you dent -- tend to see greater volatility than you
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do in other prices but -- so looking forward i see the u.s. economy and european economies continuing to improve. i don't see the ever merging countries growing as fast as we've seen very recently but also don't expect some big upward or downward shift in commodity prices. >> thank you. a little closer to home, how far behind the nation's recovery will california lag if we don't find a way to cut our tax rate and pull employee pensions under control. >> so as i -- in terms of the -- you know, i answered the issue of i guess the economics in terms of the different sectors of the economy. in terms of the government and the budget problems today in terms of the pension problems i see that, the pension problems obviously as being part of a longer term problem. i think that for california as many other states and you could seen say the federal
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government, it would be very helpful and productive if we could deal with our longer term problems and come up with solutions about getting our longer term finances in order. i think that would be very beneficial because there's a lot of uncertainty today about what's going to happen at the national level and also at california's level in terms of what policies are going to be and how we're going to deal with them. in the past i think california has been a very dynamic, innovative part of the u.s. economy. i think whether it's technology, entertainment or many aspects of that. i don't think those fundamentals have changed, but i do think that, you know, having good, solutions for longer-term budget problems is an important part of making sure that california and this region remain competitive and reduces uncertainty about the future.
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>> follow-up question? ok. >> all right. yes, just on the subject of commercial real estate stimulus , i've seen very, very little action. do you have any thoughts op -- on what could really stimulate lenders to open up again and loan on smaller residential or commercial investment property loans? >> you know, what i -- when i look at or listen to issues about why aren't people borrowing or lending, you see in the small business world that a lot of businesses don't have collateral. the economy is still weak. their conditions aren't as good. the one positive i do hear in parts of the district is that in the commercial real estate, in apartments and rentals, there are some signs in some
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areas where demand for housing, multi-family housing, has increased. one of the hard things in this environment is there's so much uncertainty. the economy is so weak, unemployment is so high that i think it's hard for people to read through kind of what's the trajectory we're on. this is one area i have heard some positives that the multi-family real estate area is, you know, apartment buildings and things like that were seeing some improvements. the real problem is i think everyone got burned on housing and commercial real estate and there's an aspect of how do you get confidence back? how do you get people back to feeling comfortable with, you know, the projections they have and economic conditions? i don't know if there's policies that can improve that. think -- i think it's part of the healing process and part of
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it is psychological, business people to investors to get back to feeling comfortable, taking good greater risks and investing in longer-term investments. i mean one of the thing we view as a fundamental driver of this recovery is what we just call a healing process. during the financial crisis there was a panic, there was fear in everybody, whether it's a family or businesses or investors, were so afraid to take any risk or take any kind of commitment, longer-term commitment in terms of economic investment or something, that everyone just pulled back at once and that's been improving. the willingness of banks to lend, the willingness of businesses to borrow has been improving but it's just a very gradual process. going back to the experience that the economies have written about going back hundreds of years and looking at many
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countries, it's a common theme. it's very hard to get people to put the past behind them and get back to feeling comfortable and willing to take on risk and get back to business and i think we're seeing that go on. all of owe macroeconomic models tell us that the economy should be growing much faster than it is and i think that's a big part of the story. >> great to hear your confidence in what's happening here in the united states both in terms of broth picking up and also price stability. there's been a fair amount written recently about concern with the value of the dollar dizz -- vis-a-vis some of our international competitors where they may have a healthier fiscal situation, much higher groth rates, and i'm curious what you think the fed's role should be should the dollar come under significant attack due significant concerns about our fiscal woes? >> so this is the easiest
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question i'm going to get because i'm given very clear instructions never to speak about the delarments [laughter] >> the dollar is the purview of the u.s. treasury department and given that this is the first public speech i've given since i became president i'm glad you asked and i can call it a win. so thank you. i hope that didn't end the other questions. >> last week former chairman greenspan commented that he thought it was important that we roll back the bush tax cuts. do you agree >> so unlike our former chairman who obviously i worked for for many years, you know, i'm not going to comment. i now sound like i'm ducking, but i actually feel like i don't want to comment on what fiscal policy in particular should be for the u.s. government. i think that one of the things
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i think the fed has which is really valuable is its independence within the government to make tough monetary policy decisions and, you know, eventually at times unpopular monetary policy decisions in order to achieve our goals. one way may be to keep that independence is for me to stay out of commenting on what bill they should or shouldn't pass or what should be done about tax cuts. but as an economist i will say the general principle that we have an unsustainable fiscal situation at the federal level is a huge problem and we need it one way or another and that's up to, you know, the elected officials. find a way to solve this unsustainable long-term fiscal situation and we need to remove that uncertainty. it's obviously something people have been worried about and we've known about for a long time.
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there are tough decisions out there but at the same time it's important that we have a long-term plan and clarify that so that people understand that. when i was at the council of economy survivors in 1999 and 2000 it was something we worked on the most. back then we had the lock boxes and stuff we talked about but the principle we walked -- talked about was we need to make sure there are long-term budgets and government's situation is sustainable and that we have the right policies for the long term and i thought we had made a lot of progress. a lot of, you know, different views on how to do this but i think that's an important goal and i would like to see that happen. but i'm not going to state about how it should happen. i just think it would be very important that we confront these long-term problems and sooner rather than later. >> given that small business
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still has limited access to capital but historically about half of the jobs have come from small business, how do you see employment increasing in california specifically. will it be able for it to come from small business? and if so how might that look? >> so this distinction between the financial conditions of small business and larger corporations is really striking. u.s. corporate sectors, corporations in the u.s. as a group have access to credit, stock markets doing well, bond markets are doing well, the amount of cash on hand? -- in the u.s. corporate sector is very high. lots of liquidity. so the condition of the corporate sector as a whole is doing well and improving. then if you turn to your question about the small business owner, well, what was their capital?
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for many small business owners the capital was thekitti in their homes and the lick quidity was their credit -- liquidity in their credit card and with the decline in house prices you have lost your credit and the ability to fund through difficult times and of course with the very severe economy which has hit small business very hard, the actual getting through day to day has become much more difficult. so turning to your question of how we are going to get out of this period, i think it's going to continue to be very challenging. i think again they don't have the equity -- there is available credit and i think banks have the funds to lend but again you look at businesses who may have been hit very hard, lost money or had difficult times over the last few years, you know, their financial conditions may not look so good. so i think this is one of the drags on the economy if i could
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just speak in term of the national outlook, this is one of the important reasons i don't think we're getting the strong recovery that you would have expected. the hope is that when the rest of the economy does grorks that people have more money in their pockets, there are more jobs, like i said we've added 1.5 million jobs so far and we expect that to continue to improve that that will give consumers money to go to businesses, start buying the goods and services and that will be part of that healing and improvement cycle but i completely agree with the premise that we basically have these two parts of our economy. one is actually doing quite well and you hear a lot of the headlines about this whether it's chrysler, ford, or many other companies then you have this other main part of the economy, a major part of job growth in recoveries and they're still struggling the
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it's one of the big drags why we're getting 3.25% growth. people often talk about v-shaped recoveries. one like we had in the 1980's, that's 7% growth. that's what a v-shaped growth is. this we're doctor year we're talking about 3.25%. we're maybe optimistically talking about 4% next year but that's, you know, little more than half what we saw in previous recessions. >> last question? >> as an economist are you concerned about the amount of national debt held outside america? >> terms of u.s. debt held by foreign countries? >> exactly. >> i guess i view that as really a conscious decision of other governments that they want to hold by far the most liquid and safe international
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asset out there, which is u.s. treasury securities. if you look at -- i'll go back 15 years to the asian crisis of 1997 and 1998 -- one. lessons from many asian countries was that they didn't want to have to go to the i.m.f. if something went bad. so one way to not have to go to the i.m.f. in a crisis is to have lots of u.s. treasuries on your books so you have this buffer. those southeast asian countries accumulated huge dollar assets because they wanted them in case of another crisis. you look at china's policy of basically managing the exchange rate for their own political and economic goals, the chinese government is making these decisions that this is what they want for their economy, a side effect of that is that the exchange rate would be pushed up and so one way to manage if -- this is for the chinese
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government to buy quite sizeable amounts of u.s. securities. they choose u.s. government securities, that's their choice along with other securities. so i view the fact that these countries are holding these large amounts of u.s. treasury securities as decisions that they've made based on their own economic political concerns and so to -- two points of that. that serves their kind of goals. i don't think those are going to change that much. chinese goals, chinese policies in any -- my view aren't going to suddenly say oh, we don't want to continue doing what we've been doing. they've been successful, been growing very rapidly over the last decade and i don't see them wanting to change that. so i don't see a big risk. you see the questions sometimes, what happened if tomorrow they wanted to sell a billion dollars worth of these securities ar a trillion
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dollars. the problem with is -- that thinking is there is a reason why they've been doing this and those reasons i think will continue. so those things don't bother me that much. i will back up and say we do have an unsustainable situation in terms of the u.s. trade deficit. if you go at it that side, in terms of the huge you deficits, it's a problem for the u.s. economy and something we need to get on a more sustainable path but i view that as different from the fact that foreign governments decide to hold lots of u.s. securities. >> please help me thank john c. williams, federal reserve, san francisco. [applause] >> thank you very much. >> this weekend on espn 3, proffer schwartz on the las
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vegas industrial in the 1950's and 1960's. an examination of the underground railroad. and the reagan presidency and whether it could have happened anywhere else but in the golden state. >> securities and exchange commission chairman mary shapiro gave an update today on implementing regulatory changes . she told investors the reasons for the investment and plans to stabilize the economy. this is 40 minutes. >> ladies and gentlemen, please almost paul stevens.
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>> good morning, everyone. and a warm welcome to you. i hope you were able to join us last night. it was an extraordinary musical offering by the midtown men. the original cast of "the jersey boys." it was terrific. so heading into the final session of our 53rd general membership meeting. it's been really an outstanding meeting thus far but we've saved the very best for last. we have dynamic sessions today followed by a look at pension plans around the world and a lively discussion with the chairmen, erskin bowles and alan simpson. i'm honored to introduce our next speaker, mary shap is iro. she will be taking questions from the audience after her remarks so please write your questions on the blue cards provided and hand them to one
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of our staff who will be circulating throughout the audience. chairman shap ira -- shapiro was appointed by president obama, unanimously confirmed and sworn in january 2009. her swift confirmation was a testament to her proven track record as an effective regulator and a strong investor advocate. in 1988 president ronald reagan appointed mary shapiro commissioner of the s.e.c. she was named acting s.e.c. chairman by president bill clinton and later appointed chairman of the commodities futures trading commission. from their she entered the financial industries' self regulatory instuges. she was chairman of the nasd and in that role oversaw nasd's merger with the member operations of the new york stock exchange.
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she became c.e.o. of the rulingting -- resulting organization, the financial institution regulatory authority or finra. the theme is the way forward with investors. your career commemplifies a lifetime of commitment to prosecute protecting investors. you took the helm at a particularly difficult and challenging time for your agency. all those who invest in and depend on your financial markets, and that means all of us, are greatly in your debt for the strong and able leadership. last year we eagerly anticipated your remarks but something more pressing, known as the flash crash, kept you away. today we are discussing the dodd-frank reform law. chairman shapiro, with all that
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you have before you we are very grateful for your time today. thank you for sharing your views and insights on the challenges and insights facing the commission. ladies and gentlemen, please join me in an especially warm welcome for u.s. securities and exchange commission chairman mary shapiro. [applause] thank you, mary. >> it's a real pleasure to be here. thank you, paul, that was a lovely sfrukes. it's great to be with so many professionals whose job it is to help families reach their financial goals. . of course as we know markets are not always stable and one year ago today we got a reminder of just how unstable they can be.
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2:42 in the afternoon of may 6, 2010, stock prices began to fall with almost unprecedented speed. a dow that had already lost more than 4% on the day plunged almost 600 points in five minutes. that left the nation's most prom inantestock index down nearly 1,000 points from the previous day's close. then just as suddenly the markets reversed themselves recovering almost 600 points in the minutes that tholed. between 3 and 4:00 p.m., 17 million trades were executed. in that time investors suffered steep losses and respected companies saw their values hampled as stock values evaporated almost instantly. and the severe blow to investor
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confidence that this volatility as well. because it lies in the kfs -- confidence that the markets are strullly sound, that the funds you advise have -- could confidently entrust their capital to the world's most sophistated markets. when that confidence declines, the loss to capital with be -- can be great. so within days i summoned the heads of finra to the s.e.c. to address unnecessary volatility. later that month our staff issued jointly with cftc staff proposals and by the following month had a proposal to put in place brakes on market breakers on stocks. it reflected also our effort
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begun months earlier to engage in a comprehensive review of the structure of the u.s. equity markets. today's markets are fast, accessible and inefficient by historical standards. they are in many ways a marvel of capitalism and technology but our markets are extremely complex as well with 15 options exchanges, more than 30 dark dools -- pools, and more than 200 broker kealers -- broker dealers that execute orders internally. this complexity means that when things go wrong, the consequences can be sudden and severe. it is important then that we identify and put in place forces that break down or harm the system. and we need system to prevent
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breakdowns overall in the first instance. in our january 2009 concept release we have established and are executing on a broad structure but addressing the events of may 6 has not surprisingly been the focus of those efforts since that day. on may 6 a combination of algorithmic trading system ans rational behavior drove a broad liquidity crisis. the first domino to fall was the broad index level in the s&p 500 futures product which experienced a sudden liquidity crisis. the impact of that crisis was transmitted almost in assistantly to the securities market through cross market trading strategies. the next phase of the disruption was a liquidity crisis in hundreds of individual securities. at the worst of end of the
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spectrum more than 300 securities suffered declines of more than 60% from 2:40 p.m. prices the. ultimately more than 2,000 trades were broken, many at praises of a penny a share. this liquid -- liquidity shortage and subsequent volatility were exaserpated in the automated trading systems of many temporarily paused in reaction to the sudden price declines. some market participants widened their quoted spreads. a significant number withdrew completely from the markets. all these were rational responses by individual market participants but in theing a regate they were supremely disruptive in a moment when the markets desperately needed liquidity. the movements were
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unprecedented in modern u.s. market history much the s.e.c.'s response launch in the aftermath continues as we worked to bolt -- bolster the markets. the pilot circuit breaker program first applied to stocks in the s&p 500 last june has since been extended. it now applies to all stocks in the russell 1000 index, more than 300 e.t.f.'s and 300 exchange traded products. .
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>> this would allow us to reconstruct trading activity and analyze suspicious trading behavior and unusual market events. we propose the creation of such a system last may and we are considering the many comments we received as the staff prepares its final recommendations to the commission.
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we asked at an advisory committee to consider the mark that disruption and make decisions related to a market disruption issues that may have contributed the ability that day. in april, we proposed a major expansion and enhancement of the pilot circuit breaker program aimed at addressing the extraordinary volatility. this proposal is available on the commission's website. it offers many potentially important changes. first, the proposed plan would expand the pilot circuit breaker live in respects. it would apply circuit breakers during the opening and closing parents of the day. it would add a limit up, limit down mechanism. this would address weaknesses
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in the pilot program that would allow a single erroneous trade. the volatility plan proposes cutting in half the price parameters. this would greatly reduce the scope for sudden price moves. in thinking through our next step, we need to consider several important questions. first, what is excessive short- term volatility. put another way, what level of volatility is appropriate in the continuous trading? at what point should circuit breakers and limit up, limit down take effect? how does volatility affect different market participants including trading, investors, individual securities, and mutual funds. should high-frequency traders who derive significant benefit from their role as market makers have the obligations of market makers as well as other
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responsibilities with respect to the impact of their technology and trading strategies on our market? these questions touch on fundamental public policy objectives for the u.s. market and deserve a robust discussion. in answering them, which must be guided by the objectives of promoting capital formation and protecting the interests of investors. regarding the first question, it is possible to make an argument that occasional instances of extreme volatility are a fact of life in the equity market. news stories, earnings reports, and other events affect market evaluations and should get into the market quickly. demands harm was done that day. rather than resulting from a regular and unavoidable harm, this resulted from a tactical and avoidable problem.
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approximately 2/3 of the into data was reversed within minutes as buyers -- intraday volume was reversed within two minutes as buyers moved to take its vantage of the drop. during the decline, sell orders outpaced buyers' ability to trade. the speed of the decline caused market participants to feel that a cataclysmic event had occurred. this gap between its short-term supply and demand as investors stayed on the sidelines until their fears could be a late. it is difficult to determine the --until their fears could be allayed. this is a critical question and one that demands our attention. the answer to the second question, how of excessive volatility affects different
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entities, is not difficult to discover. the answer point us toward a possible solution. excessive volatility harms a list of companies by increasing perceived risk in investing in its stock. many investors were harmed when they relied on the integrity of the marketplaces -- market prices. on the other hand, many short- term traders enjoy it a highly profitable day. the importance of these trader'' actions can be best understood by comparing their acts to those of their predecessors during the market crash of may 28 of 1962. there are a number of similarities between 1962 and 2010. neither of these severe price moves could be readily explained by a particular news event.
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data systems were overwhelmed by the heavy volume. investor confidence dropped, leading them to question the ability -- disability and integrity of the market. -- leading them to question the stability and integrity of the market. in 1962, there were loads of 6.3% compared to 9.9% on may 6. one security dropped 9.3% in a 12th man. 1 minute period. perhaps the biggest difference is the volume and trading behavior of the professional traders who were expected to be the primary liquidity providers.
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in 1962, the specialists represented 17% of the market volume and were net buyers in the aggregate during the decline. in 2010, today's liquidity providers represented 50% of the market volume. they were net aggressive sellers. high-frequency traders turned what was a down day into a profitable one for themselves by taking the quiddity rather than providing it. their activities today should cause us to examine their role. does this justify the imposition of trading obligations or other responsibilities on high frequency traders.
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we are mindful of the unintended consequences it could impose. imposing significant obligations on some firms and leaving others free to operate without those obligations can create an unfair playing field and do little to promote mock -- to promote market quality. do current regulations reflect their impact on trading? are there algorithms program to operate properly? as we continue to examine the possibility of imposing obligations, we are thinking about protection in the near term. the volatility plan would let volatility training.
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reducing the trigger to buy% is 5% would be a possibility. 98% of the traits and 84% of the securities involved would not have -- 90% of the trades and 84% of the securities and vault would not have been affected on may 6. in a down market, the limit would provide 15 seconds or buyers to stop a cascade of prices. this brings period would allow
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minor acquiting imbalances to be corrected without the need for an old trading pause -- would allow minor liquidity and balances to be corrected without the need for a trading pause. the result would be trading less by momentum seeking out rhythms and more based on fundamentals. setting price parameters is important work as we work with the securities and futures markets to applied research -- to apply the circuit breakers to comment markets. they have never been triggered to their current price parameters. the index circuit breakers need updating to reflect current levels of volatility as well as to work smoothly with the proposed volatility plan. another contributing factor to
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basics was the fragmentation of trading across different been used -- venues. the volume of orders handled by these venues exceeds 30% of the total volume of u.s. liquid equities. during the worst of the destruction on may 6, their share of volume plummeted to 11% as the quality disappeared and sell orders were diverted to the public market. our staff is considering what could be accepted rules applicable to public and dark been used -- venues reflect their stability. we have to look beyond may 6 at other issues that could lead to structural break down. we must insure the technology systems of exchanges and other key market participants are sufficiently robust to handle today's trading practices,
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particularly during ball told. banks-- particularly during volatile periods. market participants must meet standards for capacity, resiliency, and security of their automated system. clearing agencies, depositories and securities animation processors. our response to may 6 was rapid. as a result of our actions, we have reduced the likelihood of a similar event occur again. we need to continue examining the effects of high speed trading on the market and on b uy side and traders.
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the possibility of proposing applications during times of potential turmoil must remain on the table. we must watch out for equally distraught the defense. the stakes are sufficiently high for markets and firms seeking to raise capital and for investors investing in the funds that you manage. high enough that further examination is not only desirable, it is required of conscientious regulators. the events of may 6 remind us that despite the enormous benefits and efficiencies up-to- date's market, there are profound risks. -- efficiencies of today's market, there are profound res isks. we cannot discover every potential imperfection in the system. we must assure the markets operate in as fair and orderly a
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fashion as possible on the days and bad days alike. as we continue to address the structure of financial markets, we will do so in the spirit of the measures we have already taken, measures that are spent in our market structure and making it more resilience, measures that are in line with our vision to protect investors. thank you so much. i am happy to take some questions. [applause] >> chairwoman, let me say first that representing mutual-fund and others that manage about $13 chilean on behalf of 90 million shareholders, we up -- $13 trillion, we applaud your
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efforts. there are money market funds that have assets totaling 2.7 trillion dollars -- $2.70 trillion. you have spent time thinking about the experience in a financial crisis. you are planning a roundtable to consider possible reforms in that area. can you tell us what the objectives are in the round table? >> we get -- we did our reform proposals to look over one year ago. we said at the time that there were some further initiatives we aought the were worth taking look at. the rules have made a difference. at least i am told that by those of you who run money market funds. there were some issues on the table. the president also working group put out a paper suggesting a
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number of different avenues -- the president's working group put out a paper suggesting a number of different avenues. there are an -- there is an opportunity for us to have a wide range of options. we will have in attendance at the route cable industry experts, academics, and other regulators, and representatives of albee fsoc agencies -- and representatives of all of the fsoc agencies. we are excited about the agenda that was set for tuesday. we are looking forward to a good discussion and debate. >> the dodd-frank act is driving much of your great and atari
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activity. there were two particular areas that were called on four studies. one was options for future regulations. one had to do with the regulation or investment advisers and the standards they should be subject to with respect to obligations for their customers. another had to do with regulation up a large number of investment advisers that the commission has jurisdiction over. can you comment on either of those and what we might be looking at in the future? >> these are two of the 20 studies that have direct responsibility coming out of dodd-frank. they are two of the most important. first is the iabb study. is that the to get a good study that recommended that, when
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providing personalized advice to individual investors about purchasing securities, the financial fundamentals -- the financial professional be subject to the same fiduciary standard and that we move forward to harmonize the regulatory requirements are around broker-dealers and investment providers in the context of their providing recommendations and advice. the study was delivered to congress. we continue to seek comment and meet with people who are interested in the study also results to get their views about it. as soon as we can -- are interested in the study's results to get their views about it. we have authority on the dodd- frank to promulgate fiduciary standards. we will put together a team and began to explore the possibilities of rule-making pursuant to that study.
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i act as our economist gather as much economic data as possible to help and form what apple rules we might ultimately propose. those rules go out -- and in form whatever rules we might ultimately propose. one of the important things coming out of the study was a recognition by the sec that we want to protect investors. we do not want to limit their choices. we will be focused on how can we implement across the broker dealer space rules that will not limit the choices investors have now. the second study on investor and pfizer -- investor and fisa
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examination has to do with how to do a better dog at the sec up covering investor adviser -- do a better job at the sec of covering investor adviser investigations. -- and pfizer examinations. this study was geared toward helping us bigger out how we could have better coppers. one of the options is extension of authority to those who are regulated and registered as broker-dealers. the third option is to find a way for the sec to have a dedicated source of funding for investor adviser examination programs. we are continuing to look at all those options. they all require legislation to move lower. that will be something -- that will not be something we can do
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on our own initiative. >> thank you. you mentioned when we were having coffee that you will testify for the 30th time next week in the congress. that is just during your chairmanship of the sec and that during your other opportunities previously. there have been a number of different subjects you have addressed. one that has been of great concern has to do with the adequacy of the resources the commission has to do its job, especially after dodd-frank. you have spent a lot of time and improving the management and utilization of the resources you have. i wonder if you can comment on those the key issues. those two itcheissues. >> i have testified a lot. it is an important opportunity for us to explain to members of congress what we are doing, how
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we are trying to achieve and create the best possible security and exchange commission that is where the of the trust of the american public and how we are implementing dodd-frank, which is an enormous undertaking. it gives us the opportunity to have good discussions with congress as we go forward. we have resource issues at the sec. i do not think that is a secret to anybody. we are taking on significant new responsibilities under dodd- frank with the cftc with respect to over-the-counter derivatives, with respect to hedge funds, that will come under the sec direct jurisdiction, with respect to our credit rating agencies and their oversight and a number of areas. it will be important for us to be funded at a level that allows us to responsibly take on all of
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these new initiatives. at the same time, we are conscious of the fact that we are the stewards of the taxpayers' money. we must use those resources as efficiently as we can. as a result of the dodd-frank directive, we engaged a group to do a study on personnel and technology organizational structures and other issues. it generated a report a month or two ago and gave us recommendations on how we might achieve some additional efficiency on our use of resources. we have a new research -- a new leadership team including our chief operating officer who is working hard to make sure we deploy our research to the highest value purposes that we can, that we are conscious of the money that exists in every organization that is not
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utilize and redeploying it in an effective way. we have this great new leadership team. i expect you have met our new director of management. they are working toward ensuring that we become as agile and efficient a regulator as we can. resources will always be limited. our job is extraordinarily broad and complex. we have got to use those resources effectively. >> no appearance by the chairman of the sec could conclude without this question. there is probably no rule that the commission has spent more time on in our area bad rule 12b-1, which permits funds to be paid for certain services and distribution activities. the commission proposed significant reforms in that area and received a large number
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of comments. >> 2400 comment letters. [laughter] >> not all of them supported. >> we are used to that. >> will you be continuing to look at that? are you looking at adopting the earlier proposals? what can we expect. >> we actually did gets2400 comment -- we actually did get 2400 comment letters. there were disclosure issues and a desire to create competitive pricing in a way that benefits investors. we got a lot of comment letters. a lot of them were not endorsing our approach. i will say that i continue to believe the predatory regime
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surrounded mutual-fund cannot be left to stand. we need to tackle this issue. we will look at these issues in can them with the iabb issues. there is some relationship between the two of them. when we get through this large bulk of the 100 will make things that we have responsibility for under dodd-frank, -- 100 rule- makings, we will turn our attention toward this. >> when the commission does that, it will signal we are back to some degree of normalcy. >> i have a final question for you. you are an inspiration to all of us men in the audience. you have been an inspiration for women hoping to rise in the
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ranks of their profession and their organizations. what advice do you have for them as they try to manage the demands of career and family life? >> i wish i had great advice. i wish i did it better that i paul we do. it would have to ask my how they think i do with the balance. it is a struggle. it is a struggle for men just as much in many ways as it is for women to get career and family life and involvement in community and all those other things in the appropriate balance. my only advice would be that when you are doing one, do it with all your heart. when you are doing the others, do it with all of your heart so that you not -- you are not on your blackberry when your children need to talk to you about the c they got on their history test. yet to find your own way.
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i do not have great words of wisdom. i do think that with respect to the career piece of it, i think becoming an expert in what you do, doing your homework, being all were prepared for everything duality -- every eventuality is the key to success. we try to do that at the sec. common practice is the epitome of that. in the building, we try to cast a wide net. people come to you saying, you have lost your mind and you cannot do that would 12b 1 and take all of those views into consideration. be a great listener and a great colleague. you will need your colleagues at a recent day. if you are not a great colleague to them, they will not be there for you to deal with the most
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difficult issue. >> you did have some words of wisdom. thank you so much. >> thank you. [applause] >> access to our programming any time with the i found application. you can also listen to our signature interview programs each week. it is all available round-the- clock where you are. ballard it freed from the -- download it free from the app store. >> the president speaks to soldiers at fort campbell, ky. after that, the april employment figures. now, president obama's visit to fort campbell, ky. the president met privately with
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the special operations troops involved in the assault that killed osama bin laden. after that, he spoke to service members. this is about 30 minutes. >> ladies and gentlemen, the deputy commanding general of the 101st airborne division, and the vice president of the united states, joe biden. [cheers and applause] >> go screaming eagles! [applause] it is good to be back. i tell you what, i want to thank
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the general for accompanying me out here. i get the honor to introduce the general. i was here on february 11 to welcome home members of the combat brigade. 165 of you got all of that plane in the middle of the night. we watched the families of what you get off. it is an honor to be back here so sen. i know many of you just got back home. welcome home. we know from experience that you're families want to spend time with you. i am always worried about getting away. i remember my son came back call from iraq after a year. i kept saying, "i want to see my kid." [applause] i get it. let me say, it's gratitude the president and i and all
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americans have for you. you guys have been here from the beginning. the rest you have taken, the incredible sacrifices you of may, the comments you have lost -- -- the comments you have lost -- comrades you have lost. you are amazing. [applause] as i said back in february, the families made sacrifices as well. they were and tangible sacrifices. those missed birthdays, those
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missed graduations, those most funerals -- more than anything else, just not having you home. john milton said they stutter to stand and wait. the rest of america owes your family a debt of gratitude. [cheers and applause] i want to say their service is as real as yours and is just as appreciated. you are the most capable warriors. i say this without any fear of contradiction. you are the most capable warriors in the history of the world. there has never, never, never been a fighting force as capable as you are. it is my honor to talk about the
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man i get to work with every day. we just got to spend time with the assaulters who got bin laden. [cheers and applause] by the way, i should not say this -- the president will get mad i am taking so long -- today is grandfather's day. i went to see my granddaughter. she asked me to come back to my classroom. i tell her i could not. i told her i was going to fort campbell. we are going to see the guys who got osama bin laden. she said, "my pop is going out to see the whales." not the seals, the whales.
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if they are that good, they have got to be big. [laughter] you guys are the guerrillas. in what president nixon difficult decisions. they all have to make difficult decisions. -- i watched the president make difficult decisions. they all have to make difficult decisions. we were told the odds were not much greater than 50% that he would be there. we sat around and gave our advice. finally, a look at all of us and said we have faith in the creator and we have faith in these guys. nobody gave any guarantees at all. he decided because he believed
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not only in your skills, he had absolute, total faith in all of you. he made the determination. it was an amazing thing to watch. it was because he had absolute confidence in you. the number one priority was to get osama bin laden. we knew the significant risk, and most importantly, those risking their lives to get there. he did not hesitate. i have no robert gates for a long time. he said it was one of the gutsiest decisions he had seen in a long time. this will go down in history. here to introduce your commander in chief is one of the country's leading warriors himself, the deputy commander general, general jeffrey cole.
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[cheers and applause] >> thank you, sir. i can only try to tell you today how proud of you that this division and its local community are. more importantly, today you're going to get to hear from the commander in chief just tell appreciative he is of all of your service and your sacrifices. please join me in this great privilege of welcoming the president of the united states, barack obama. [cheers and applause] ♪
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>>hello, fort campbell! [cheers and applause] 101st airborne division air assault, hello! general colt, thank you for that great introduction -- it was great because it was brief. [laughter] more importantly, thank you for the extraordinary leadership that you've shown here at one of the largest army bases in america. [cheers and applause] and let me just say, i make a lot of decisions -- one of the earliest and best decisions i made was choosing one of the finest vice presidents in our history -- joe biden, right here.
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[applause] chaplain miller, thank you for the beautiful invocation. i want to thank general colt for welcoming me here today, along with your great command sergeant major, wayne st. louis. [cheers and applause] the quartet and 101st division band. all these troopers behind me -- you look great. you noticed they kind of hesitated. we got a lot of folks in the house. we've got military police and medical personnel. we've got the green berets of the 5th special forces group. i think we've got a few air force here. [laughter] well, we thought we did. there they go -- okay. come on. and, of course, the legendary
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screaming eagles. [cheers and applause] and although they're not in the audience, i want to acknowledge the 160th special operations aviation regiment -- the night stalkers -- for their extraordinary service. [cheers and applause] now, i've got to say, some of you are starting to look a little familiar -- because last december, when we were at bagram, i was out there to thank you for your service, especially during the holidays. and we had a great rally, a big crowd -- it seemed like everybody was there from the 101st. and since then, i know we've had quite a few homecomings. the rakkasans. destiny. strike.
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bastogne. [cheers and applause] and some of the division headquarters -- the gladiators. on behalf of a grateful nation -- welcome home. [cheers and applause] of course, our thoughts and prayers are with general campbell, command sergeant major schroeder, and all of the screaming eagles and troops that are still risking their lives in theater.
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and i'm so pleased that ann campbell and marla schroeder, and some of the inspiring military spouses are here. where are they at? right over there. [cheers and applause] we are grateful to you. god bless you. there they are. thank you so much. this happens to be military spouse appreciation day. [cheers and applause] and we honor your service as well. now, i didn't come here to make a really long speech. i know you're hearing that. [laughter] it's like, yeah, it's hot! what i really wanted to do was come down and shake some hands. i came here for a simple reason -- to say thank you on behalf of america. this has been an historic week in the life of our nation. [applause]
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thanks to the incredible skill and courage of countless individuals -- intelligence, military -- over many years, the terrorist leader who struck our nation on 9/11 will never threaten america again. [cheers and applause] yesterday, i traveled to new york city, and, along with some of our 9/11 families, laid a wreath at ground zero in memory of their loved ones. i met with the first responders -- the firefighters, the police officers, the port authority officers -- who lost so many of their own when they rushed into those burning towers. i promised that our nation will never forget those we lost that dark september day. and today, here at fort
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campbell, i had the privilege of meeting the extraordinary special ops folks who honored that promise. it was a chance for me to say -- on behalf of all americans and people around the world -- "job well done." [cheers and applause] job well done. they're america's "quiet professionals" -- because success demands secrecy. but i will say this -- like all of you, they could have chosen a life of ease, but like you, they volunteered. they chose to serve in a time of war, knowing they could be sent into harm's way. they trained for years. they're battle-hardened. they practiced tirelessly for this mission and when i gave the order, they were ready.
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now, in recent days, the whole world has learned just how ready they were. these americans deserve credit for one of the greatest intelligence military operations in our nation's history. but so does every person who wears america's uniform, the finest military the world has ever known and that includes all of you men and women of 101st. [cheers and applause] you have been on the frontlines of this fight for nearly 10 years. you were there in those early days, driving the taliban from power, pushing al qaeda out of its safe havens. over time, as the insurgency grew, you went back for, in some cases, a second time, a
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third time, a fourth time. when the decision was made to go into iraq, you were there, too, making the longest air assault in history, defeating a vicious insurgency, ultimately giving iraqis the chance to secure their democracy. and you've been at the forefront of our new strategy in afghanistan. sending you -- more of you -- into harm's way is the toughest decision that i've made as commander-in-chief. i don't make it lightly. every time i visit walter reed, every time i visit bethesda, i'm reminded of the wages of war. but i made that decision because i know that this mission was vital to the security of the nation that we all love. and i know it hasn't been easy for you and it hasn't, certainly, been easy for your
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families. since 9/11, no base has deployed more often, and few bases have sacrificed more than you. we see it in our heroic wounded warriors, fighting every day to recover, and who deserve the absolute best care in the world. [cheers and applause] we see it in the mental and emotional toll that's been taken -- in some cases, some good people, good soldiers who've taken their own lives. so we're going to keep saying to anybody who is hurting out there, don't give up. you're not alone. your country needs you. we're here for you to keep you strong. and most of all, we see the price of this war in the 125 soldiers from fort campbell who've made the ultimate
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sacrifice during this deployment to afghanistan. and every memorial ceremony -- every "eagle remembrance" -- is a solemn reminder of the heavy burdens of war, but also the values of loyalty and duty and honor that have defined your lives. mustre's what each of you know. because of your service, because of your sacrifices, we're making progress in afghanistan. in some of the toughest parts of the country, general campbell and the 101st are taking insurgents and their leaders off the battlefield and helping afghans reclaim their communities. across afghanistan, we've broken the taliban's momentum. in key regions, we've seized the momentum, pushing them out of their strongholds. we're building the capacity of afghans, partnering with communities and police and security forces, which are growing stronger. and most of all, we're making
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progress in our major goal, our central goal in pakistan and afghanistan, and that is disrupting and dismantling -- and we are going to ultimately defeat al qaeda. we have cut off their head and we will ultimately defeat them. [cheers and applause] even before this week's operation, we've put al qaeda's leadership under more pressure than at any time since 9/11, on both sides of the border. so the bottom line is this -- our strategy is working, and there's no greater evidence of that than justice finally being delivered to osama bin laden. [cheers and applause] but i don't want to fool you. this continues to be a very tough fight. you know that. but because of this progress, we're moving into a new phase.
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in the coming months, we'll start transferring responsibility for security to afghan forces. starting this summer, we'll begin reducing american forces. as we transition, we'll build a long-term partnership with the afghan people, so that al qaeda can never again threaten america from that country. and, as your commander-in- chief, i'm confident that we're going to succeed in this mission. the reason i'm confident is because in you i see the strength of america's military and because in recent days we've all seen the resilience of the american spirit. now, this week i received a letter from a girl in new jersey named payton wall. she wrote to me on monday after the news that bin laden had been killed, and she explained how she still remembers that
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september morning almost 10 years ago. she was only 4-years old. her father, glen, was trapped inside the world trade center. and so, in those final, frantic moments, knowing he might not make it, he called home. and payton remembers watching her mom sobbing as she spoke to her husband and then passed the phone to payton. and in words that were hard to hear but which she's never forgotten, he said to her, "i love you payton, and i will always be watching over you." so yesterday, payton, her mom, and her sister, avery, joined me at ground zero. and now payton is 14. these past 10 years have been tough for her. in her letter, she said, "ever
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since my father died, i lost a part of me that can never be replaced." and she describes her childhood as a "little girl struggling to shine through all the darkness in her life." but every year, more and more, payton is shining through. she's playing a lot of sports, including lacrosse and track, just like her dad. she's doing well in school. she's mentoring younger students. she's looking ahead to high school in the fall. and so, yesterday she was with us -- a strong, confident young woman -- honoring her father's memory, even as she set her sights on the future. and for her and for all of us, this week has been a reminder of what we're about as a people. it's easy to forget sometimes, especially in times of hardship, times of uncertainty. we're coming out of the worst recession since the great depression, haven't fully
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recovered from that. we've made enormous sacrifices in two wars. but the essence of america -- the values that have defined us for more than 200 years -- they don't just endure -- they are stronger than ever. we're still the america that does the hard things, that does the great things. we're the nation that always dared to dream. we're the nation that's willing to take risks -- revolutionaries breaking free from an empire, pioneers heading west to settle new frontiers, innovators building railways and laying the highways and putting a man on the surface of the moon. we are the nation -- and you're the division -- that parachuted behind enemy lines on d-day, freeing a continent, liberating concentration camps. we're the nation that, all those years ago, sent your division to a high school in arkansas so that nine black students could get an education.
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that was you. because we believed that all men are created equal -- that everyone deserves a chance to realize their god-given potential. we're the nation that has faced tough times before -- tougher times than these. but when our union frayed, when the depression came, when our harbor was bombed, when our country was attacked on that september day, when disaster strikes like that tornado that just ripped through this region, we do not falter. we don't turn back. we pick ourselves up and we get on with the hard task of keeping our country strong and safe. see, there's nothing we can't do together, 101st, when we remember who we are, and that is the united states of america. when we remember that, no problem is too hard and no challenge is too great. and that is why i am so confident that, with your brave service, america's greatest days are still to come. [cheers and applause]
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god bless you. god bless the 101st, and god bless the united states of america. [cheers and applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]
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>> there is a saying in the military -- with the amateurs and do it over over until they get it right, the professionals do it over and over until they cannot get it wrong >. >> dick couch will discuss the
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training for the navy seals on "q&a". >> neck, the april employment figures. after that, the president in indiana talking about the economy. then the cochairs of the committee on fiscal reform discuss deficit reduction. >> tomorrow on washington journal, daniel indiviglio has the latest on the economy and job numbers. eric greitens talks about the seals. teachers from illinois take calls from high-school students taking the advanced placement government exams. washington journal live at 7:00 a.m. eastern on c-span. >> the economic report for april
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has mixed news. unemployment rose to 9%. but private, non-farm payrolls grew by to under 44,000, i higher than expected race. -- 244,000, higher than expected. the bureau of labor statistics testifies on the new unemployment numbers before the joint economic committee on capitol hill. this is just over one hour. [inaudible conversations] >> the committee will come to order. i want to thank everyone for being here, and i have an opening statement i will make him and then returned to our vice chair, congressman brady, and the other members who want to make a statement before introducing commissioner hall for his statement. we are again please have commissioner hall here come his
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team here with us today. and we appreciate your service to the country. we have a lot to report on today, but i wanted, before we get into the numbers for this month, i just wanted to add a few words about some of the trends we have been seeing over the last couple of months. by the labor market is still facing significant challenges, we know that unemployment is too high, and over all employment well below the levels prior to the recession. we have seen some real strengthening in the labor markets since the spring of 2010. and more private sector jobs have been created and the unemployment rate has begun to come down, though it kicked up this month and will get that -- to do in a moment. if we look at the last 14 months, we have now recorded over those 14 months private
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sector job gains, internet time we have added to .1 million private sector jobs. since the beginning of 2000 of the labor market is also shown resilience in the face of rapidly rising oil and gas prices. continued weakness in housing, slowing, export growth in winter blizzards that delayed some investment in hiring. against these challenges the trend has been clear. in eight of the last nine months, the economy has added more than 100,000 private sector jobs during each month. in february, march and now april, we've added more than 200,000 private sector jobs each month. and i think that's a very good seri syed, a very good trend. so we're moving in the right direction. we're benefiting in my judgment on the actions taken in the last two years of 2009 and 2010 in
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dealing with this challenge. these actions that we've taken have put us on the path to growth, and i'm pleased to see some signs of that this month as well. today's economic -- today's employment report i should say, provides further evidence that the labor market is getting healthier as the economy continues to improve and the recovery continues. during april, the economy added 268,000 private sector jobs. due to the loss of government jobs overall, the economy added 244,000 jobs in april. one of the charts behind me clearly shows the trend in employment over the past 18 -- i'm sorry, the past 14 months, a sign that some of the work that we have done in the last 18 months or so has begun to have
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an impact. one sector that has been showing sustained employment growth is the manufacturing sector, a key source of good paying jobs and central to our nation's long-term competitiveness. in april, this sector added 29,000 jobs, and since the end of 2009, manufacturing has added a quarter of a million jobs. in addition, the professional business sector added 51,000 jobs, its ninth consecutive monthly gain. as we know from the news this morning and we'll hear more about this, obviously in hearing, the unemployment rate has aged up to 9.0, from 8.8 in march, while down from its peak of 10.1% in october of 2009. the unemployment rate remains too high. with 13 points 7 million americans looking for work, we can't find it. as chairman of this committee, i
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monitor these unemployment numbers for each demographic group to ensure that its overall employment, the overall employment rate continues to drop. the unemployment rate falls for every group. but enforcement that's not the case that the unemployment rate for this month for workers with a disability just by way of one example, workers with a disability, their unemployment rate was 14.5%, compared to 15.2% a year ago. the high rate of unemployment among people with disabilities underscores the need for legislation that i and others have worked on. i will be created using along with congressman crenshaw of the florida the achieving a better life experience act, the so-called a ble, able actor in the previous congress this legislation had substantial bipartisan support in both chambers. the a.b.l.e. act will give individual with disabilities and
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other families access to new highly flexible tax-free savings accounts that could be used to help cover a variety of essential expenses for people with disabilities, including employment training, and educational expenses. in combination with other support, the a.b.l.e. act can help people with disabilities gain new skills and training and strengthen their employment prospects. additionally, when we look at the cato demographic groups, the unemployment rate for veterans was seven points 7%, which is below the overall 9.0 rate. gulf era veterans meaning those who have served in iraq and afghanistan facing unemployment rate of 10.9%. so obviously higher than both the overall federal rate, higher than the overall unemployment rate. the unemployment rate in the african-american community was 16.1%.
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well above, above its pre-recession level. that number for african-americans was as low as 7.7% in august of '07. hispanic workers, the unemployment rate was 11.8, which is much higher than it was in 2007. so we've got to examine these numbers as well as the overall rate. so in summary, the unemployment rate shows that we are on the right track. the economy is continuing its recovery. the economy is stronger than a year ago. more people are working. fewer unemployed, but we must do more to continue down the path of this recovery. the first quarter, the first quarter of gdp, the data show the recovery is modest and the recent spike in oil and gas prices continued weakness in the housing market present real challenges.
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federal reserve chairman bernanke and others have noted that the weather and other factors contribute to the slow down in the rate of economic growth in the first quarter. while they have said that, it's important that congress tackles issues that will protect american workers and families, now and into the future. i believe we need to stop subsidizing the major oil and gas companies at a time when the price of oil have spiked, and the profits have surged. we have this strange situation where they get our tax money, they are getting record profits, and the gas prices for families go through the roof. i think we must crack down on the unfair trade practices that china engages in on a daily basis, and we need to put our fiscal house in order. cutting spending, reducing waste, fraud, and abuse, and bringing down the deficit and especially long-term debt. so the job before us is to build
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upon the progress of today to creating more jobs and bringing the unemployment rate down, but i look forward to working with members of the committee on these and other challenges to support the economic recoveries come and now i'd like to turn to our vice chair, congressman gr greg. >> thank you, chairman. dr. hall, we welcome you and your colleagues again this one. during april, initial unemployment claims surged from 395,000 for the first week, the 474,000 for the last week in april. the last time that initial claims were this i was october of last year. this development is extremely unsettling as we've been expecting continued improvement in the labor market. while the job growth is welcome, today's employment report coming on the heels of these troubling initial claims data is showing some disconcerting sign. 9% unemployment and a rising number of number of workers who recently lost their jobs are disappointed statistics.
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we need is still faster private sector job creation, or otherwise millions of u.s. workers will language in unemployment, millions more will remain under employed or live in fear of losing their jobs. the economist recently asked question, what's wrong with america's economy. in answering his question, an economist put it to america's public finance in this labor market. moreover, they say the recent decline in the unemployment rate is misleading because it's a result of surprisingly small growth in the workforce as discouraged workers drop a. the labor force participation rate remained at the lowest level in more than a quarter century. it's frustrating beyond words to see the excruciatingly slow progress in employment growth. especially why president obama pursues policies that obstruct economic activity and job
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creation. the energy manufacturing services industry in america is a prime example. under this administration, the energy manufacturing and energy services industry is suffering from the fact of the drilling moratorium on offshore and. threats of actors tax changes that will shift jobs in production overseas. we should be content with pouring over these employment numbers month after month, and bemoaning the slow progress. perhaps we can blame it on the weather or china or on american energy, but we know what is causing this growth problem, so let's fix it. let me sure you again as it did at last month's hearing, the table job performance during and after this recession compared with a during and after the other two major postwar recession. this chart demonstrates how we are underperforming relative to past experience. this is an exceptionally weak recovery. there is no excuse for the dismal job performance.
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you cannot expire placing the financial crisis caused severe recessions, but then failed to encourage private sector growth by every means possible. why doesn't the president have an obsession with raising taxes quick wide as he pursues with his green jobs mantra when the 1% of our energy sector for which wind and solar account clearly cannot revive america's job market. americans are demanding real solutions. jdc republicans released one page from the summer and another from the fall last year that warned treating the bp oil spill as an environmental disaster be a mistake about it on the second paper came out in october the price of crude oil hedges risen to $80 per barrel. these papers explain the importance of continued exploration department in the fastest growth areas for oil production in the country to help counteract future oil price volatility's. in 2010 the united states with the largest source of world
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supply growth outside opec on the strength of offshore production, but they should the energy information administration expects federal gulf of mexico oil production to fall by 240,000 barrels each and every day. energy consulting firm estimates the drop of 375,000 barrels per day in 2011 or the production because new development wells could not be brought online. if those bills are important, how does that help stabilize oil price? how does that help our economy? how does that help our jobseekers? the price of august '01 hundred dollars per barrel, of average price of gasoline nationwide is just shy of $4 per gallon. the private sector is boosting labor productivity their first quarter productivity was up by 1.6%. however, businesses are also sitting on $2 trillion of cash that they won't invest because of regulatory uncertainty and fear of higher taxes and
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inflation. therefore, businesses are not creating new jobs necessary to we employ more people, and increase the nation's output sufficiently to generate enough tax revenue, to support those who are sick, retired or remain unemployed at the annual rate of real gdp growth slowed to 1.8% in the first quarter. president obama's put the federal reserve in a position where he feels compelled to hold the federal funds rate at zero, why hundreds of billions of dollars worth of treasury bonds. the joint economic committee republicans just released a paper on this subject as well titled too loose for too long. the federal reserve is taking great risks with inflation, would not be necessary if the other levels -- levers of the private economy that the government can impact were set to go. dr. hall, i look forward to your testimony. >> thank you. congressman cummings. >> thank you, mr. chairman.
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i want to thank you for calling this a today to enable us to examine the current state of the plug-in or nation that i also think a witness, dr. hall, for appearing before us today, and for following up with my office return my question from last month's hearing. we learn from today's report, mr. chairman, in april the private sector added 268,000 jobs resulting in an increase in nonfarm payrolls of 244,000 jobs. these numbers are heartening because they follow 13 consecutive months of positive job creation. in fact, 1.8 million new jobs have been created since februa february 2010. when contrasted to an earlier period, january 2008 through february 2010, a period during which our economy shed 8.8 million jobs come it is clear that we have averted a
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disaster. nonetheless, other indicators clearly show that we must continue to make job growth our top economic policy priority. we learned yesterday new claims for unemployment unexpectedly rose to an eight-month high of 474,000 applications. there are curly 13.7 million americans who are unemployed. almost a third of these individuals have been unable to find work for more than one year. one out of every 10 americans without a college diploma cannot find work. and one out of every six african-american workers remain unemployed. equally worrisome was the report monday by "the wall street journal" indicating that there are currently 5.5 million long-term unemployed americans who are no longer receiving any
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employment benefits. these are our fellow americans, and they are fighting for survival. on april 18 i held my annual job fair, which, in baltimore, which connects employers with job seekers, and thousands of people attended. i saw firsthand the determination and humility of my constituents who are so basic and opportunity to provide for themselves and for their families. they are resilient but they need a chance to succeed. that is why i commend congressman, democratic colleagues, for earlier this week unveiled a continuation of our make it in america agenda. this agenda consists of numerous bills that will support job creation today, and in the future by encouraging investment and innovation, infrastructure and education, right here at home in america. unfortunately, i fear that my friends across the aisle are sacrificing our future in an
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effort to pay off debts created by tax breaks in two wars. nobel peace -- nobel prize-winning economist joseph stiglitz wrote in politico last month, and i quote, the ballooning of the deficit is understandably move deficit reduction back to the center of the debate. but the best way to reduce the deficit is to put america back to work, and, of course. yes, instead of making these critical investments, the house majorities budget proposed this last updated programs, headstart and pell grants for college students. this week the house majority voted to pass h.r. 1214, which would repeal the section of the affordable care act and funds for construction and improvement of school-based health centers. funded the construction of the centers not only ensures children access to these vital and cost effective services, it creates jobs in one of the hardest hit sectors of the economy, construction.
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the majority proposed cuts with a school-based health centers, or job training programs, are ostensibly defending with the argument that tough times require tough choices and sacrifices. unfortunately, the senseless cuts fail to meaningful reduce the debt and is different hundreds of thousands of jobs and the well being of our fellow americans. this is not the time for symbolism. this is the time for smart choices that will create jobs, and once again, make our nation in the land of opportunity for all americans. i urge the house majority work across the aisle to find solutions that will reduce the deficit, help the middle class and put americans back to work. i thank you for the sharing and i yield back. >> thank you, congressman cummings. dr. burgess? >> thank you, mr. chairman. dr. hall, commissioner hall, always good to see. always good to start the month off with commissioner hall.
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i do want to talk about why the u.s. economy is not recovered in some of the steps we can take to bring the economy back. i'd like to should offer as an example the state with mr. brady lives and where i live, texas, as a good example of the direction where we would like should head to the rate in texas is a .1%, certainly below the national average. certainly much higher than we would like you to be in the state of texas, but nevertheless the texas economy has performed better than any other state because of, why? a job from the radar machine, no state income taxes, and the fact that texas is a right to work state. as of march annual job growth in texas was 3.6% compared with u.s. growth job rate of 2%. the dallas offense has unemployment rate in texas would be even lower except for the fact that texas has had a rabbit
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population increase in the last 10 years, of which we are all aware. we also accounted for 14% of the united states employment growth over the last year or the agreeable weather in texas, better job conditions are attracting people from all over the country, and people are voting with their feet and moving to the lone star state. over 200,000 jobs were created in the last year. other states could achieve this growth by duplicating texas' job from the environ. in spite of the statistics our economy in texas is not perfect. we are concerned about unemployment rates for our young, people just getting out, beginning their earning years. and put rights for minorities are unacceptably high, and the overall unemployment rate is still as i said over 8% and that is-texas. but the statistics cited earlier in the shade compared to the rest of the country something in texas is working, and perhaps washington and other states
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could consider a more job friendly regulatory regime in order to restore those jobs that mr. cummings says we need in order to recover the economy. one sector of the economy which i would like to focus is the housing market, housing prices have continued to drop in demand for homes remains low. the housing market which helps drive our economy is in there that they can create jungle do we need to boost our recovery. i'd like your dr. hall today to discuss the housing market strike on the economy and how that affects our national growth. another a of concern already mentioned by other people is high commodity prices to consumers across the country face higher oil and food prices. if we don't want to economic revival to stall, these prices have to come to. the goodies yesterday is that oil prices tend to come under $100 of their for the first time in a long time. in fact, it was rather a significant draw. what happened yesterday? oh, the house passed a bill. here we are innocent today and i
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would just mention to the senate that our bill yesterday to expedite lease sales in the gulf of mexico, those very places that have been delayed or canceled by the administration in the past year, the fact that we're willing to expedite those leases, lease sales had a profound effect on those people who like to speculate and hedge in the oil market. they saw the republican house was serious about addressing the issue of the subplot of our oil produced within our shores. the administration has harmed offshore exploration of the past year. i don't think there's any question about that. we've seen the effect by the price at the pump. what will not create jobs is the debt, and the federal debt at $14.3 trillion, the number has grown so large that most people simply can't comprehend it. they have given up even trying. canada's debt to put it in perspective is about half a billion dollars, half a trillion
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dollars. the federal government must find ways to operate like a normal family. we'll hear about cuts that need to be me. one of the first things we probably need to do is cut up the government credit card and stop spending. the talk in washington has been about cutting spending, and there are cuts that need to be made but there are other things we could be doing here in congress to cut down on government expenses which are things like waste, which in turn free up resources for congress to reduce the deficit and help those americans who are out of work. let me just comment briefly and i will submit the rest of my comments for the record, but mr. cummings mentioned h.r. 1214 the past history. this was a bill that would take back $100 billion, i believe erroneously included as a forward appropriation, a blank check, if you will, a blank post dated check that was included in the affordable care act. affordable care act is riddled with this type of policy where
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the federal government has written blank checks posted them, put an envelope and all of them are overdrawn the american account. yes, this was about to the small sum of money, $100 million. but here's the do. this money was for the construction of clinics. the money set in stature. the money could not be used to hire a doctor or nurse or anyone else to provide care in that clinic. that's crazy. the american people recognize that's great. even the administration recognize that it was crazy because this is the only one of the so-called cut bills in the affordable care act with the administration has refused to issue a veto threat as a statement of administration policy. even the president was embarrassed by slipping this $100 million into the affordable care act. i assume it was done over here in the senate for some reason as a payoff to someone. i can't identify who or how our why, but that's the way most of these things were. but it was appropriate to bring this money back. we are not against school-based
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clinics. we are against the funding of a clinic with no vision for funding for stepping that clinic. the normal federal qualified health centers statute says we will not build a. you build it, we will help you staff it. this legislation to turn things on its head. as appropriate to reverse that course. i thank the chairman for his indulgent and i will yield back the cost of a time and submit the bows of my statement for the record. >> dr. keith hall is the commissioner of labor statistics for the u.s. department of labor, the bls is an independent national statistical agency that collects, processes, analyzes, disseminates essential statistical data to the american public, the u.s. congress, other federal agencies, state and local governments, business and labor dr. hall as absurd as a chief economist for the white house council of economic advisers for two years under president george w. bush. prior to that he was chief economist for the u.s. department of commerce. dr. hall also spent 10 years at the u.s. international trade
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commission. he received his ba from university of virginia and his ph.d and m.s. degrees from purdue university. doctor, thanks again for being here. we are grateful to have your testimony. >> mr. chairman, and members of the committee, thank you for the opportunity to discuss the employment unemployment data we released this morning. nonfarm payroll employment increased by 244,000 in april, and the output rate edged up to 9.0%. over the last three months payroll employment has risen by an average of 233,000 compared with an average of 104,000 in the prior three months. in april, employment increased in several service providing industries, manufacturing and mining. retail trade added 57,000 jobs in april. this increase followed too much in which retail employment changed a little.
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over the month job gains occurred in electronics and appliance stores, building and garden supply stores, and automobile dealerships. employment increase in general merchandise stores offset a decline of similar size in march. employment in professional business services rose by 51,000 in april. since the low point in september 2009 employment in this industry has increased by 745,000. several component industry continue to add jobs in april including technical consulting services, computer systems and design services. employment in temporary help services was essentially unchanged in april. employment in leisure and hospitality grew by 46,000 over the month. ..
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>> since a recent low in october of 2009, mining employment has risen by 107,000. other goods construction climate was unchanged over the month. it's shown little movement since early 2010 after falling sharply in the prior three years. employment in state and local government continue to turn down in april losing jobs since the second half of 2008. turning now to measures of the survey of households, jobless
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rate edged up in april. the rate was 0.8% lower than in april of last year. there was 13.7 unemployed persons and the number of people unemployed for less than five weeks increased by 142,000 in april. the 27 weeks and over declined by 283,000 to 5.8 million. other households indicators show little to no change over the month. the labor change participation rate is 62.4% since january. the employment to population ratio changed little at 58.4% in april. despite changes in late 2009, the ratio showed little movement. the number of individuals was at 6.8 million.
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enrollment rose by 32,000 in april and edged up to 9%. my colleagues and i would now be glad to answer any questions. >> thank you very much. i wanted to start with the private sector numbers. those inerms fortunately have been going up in the last several months. i wanted to ask you just by way of review. the number for this month, the month of april we're looking at, is an increase of private sector jobs of 265,000? 268,000, i'm sorry. >> yes. >> can you give me the numbers for january, february, and march? >> sure will. the last three months it's averaged 253,000. >> but the average for the first three months of the year? >> the last three months. >> the last three months, okay. >> in the particular months
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before were, total private was 231,000 in march and 261,000 in february. >> okay. and in particular, i was just wondering if you could comment by way of your analysis on just sectors in the private -- the particular sectors within the private sector overall. what are the sectors you seeing recovering most rapidly, and where are there areas still of weakness? >> sure. the sectors showing the quickest recovery are professional and business services. we added 584,000 jobs since the labor market trough. education and health has added a little over half a million jobs. leisure and hospitality added 290,000 jobs, and manufacturing added 244,000 jobs. still struggling, financial activities actually has continued to lose jobs losing
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42,000 jobs since february of 2010 and construction held pretty flat losing 9,000 jobs. the biggest declining industry is not in the private sector, but it's government. >> uh-huh. >> government's actually dropped about 391,000 jobs since june of 2009 since the recession ended. >> june of 2009. all the other numbers refer that same period? >> there was the sense the labor market trough, february 2010. i changed times on you a liability there. >> okay. we know these months, the two surveys, the household and payroll surveys, show numbers that are in conflict. just wanted to have you review that. the payroll survey shows strong growth in just overall job creation about 200,000, but the
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household survey shows that there were 200,000 fewer workers employed. is that typical to kind of have conflicting stories from those two surveys during a recovery? >> yeah, it's certainly not a-typical. we get some slightly mixed signals, and the main reason is they are different surveys. there's some variation between the surveys. i do find that over three months they do tend to become into alignment. month by month they can give a mixed signal. >> give us 30 seconds on the difference of the two surveys? >> sure. when we talk about payroll jobs, we're actually talking about a very large survey where we survey business establishments, how many people are on your payrolls. we take advantage of the unemployment insurance program because they look at the records. that's a very, very large survey, and it in fact
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represents 4 million people. that's 4 million out of 130 million payroll jobs so that's -- that's what makes it that a fairly accurate number, and when we say we gained 244,000 jobs, we're looking at that survey. >> [inaudible] >> with the household survey, that's actually a tornado telephone survey designed to give you unemployment rate, it's not designed to give you a number of employed. for example, when the household survey, you said it showed a drop of 200,000 jobs -- >> right. >> the uncertainty in that is 400,000 jobs. we're talking plus or minus 400,000 jobs when we say minus 200,000. we gain 200,000 or gained 600,000. >> i don't want to create a direct general sigh, but it's
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more like polling in a sense? you got a margin of error there? >> right. it's really designed to give you the focus on the accuracy of the unemployment rate itself. for example, typically the uncertainty in the unemployment rate is two tenths of a percent. it's fairly accurate for that, but not so accurate for the levels. >> okay. just so people clear who are watching, the household survey leads to the percentage unemployment rate that we pay attention to? >> yes, that's correct. >> thank you very much. vice chair brady? >> thank you, chairman dr. hall. every month of new job growth is welcome, but this a weak recovery especially given the trillions of dollars thrown at the economy by the white house and federal reserve, and i always note that here we are after having spent all of that
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federal stimulus money, and we actually have 1.8 million fewer americans working than before when all that money was spent. as for this month, usually a small jump in unemployment rate signals people moving back into the work force that can be a good thing, but the rise in jobless claims and the jump the workers recently laid off are not signs of a healthy economy or healthy recovery. the number of unemployed who lost jobs recently increased by 242,000. this jump comes on the heels of large increases in initial unemployment claims, 474,000 which we have not seen it that high since last summer. shouldn't we be watching these statistics very carefully going forward? >> yeah, i would say
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absolutely. the payroll job growth is, at least the last three months, has been accelerated so that's a good sign, but we have not yet seen things we would like to see in a strengthening recovery. >> the initial jobs claim, that was a big jump. we had four weeks in a row of increasing jobless claims. that's not expected in a healthy recovery, and those who just lost their jobs recently, could these data be pointing to a weakening job market? normally it ought to be going the other direction. >> right. i would say that the number of new unemployment claims is in fact -- is in fact a helpful data, and that is a -- that rise is not a good signal. >> yeah. do you -- what do you think is
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happening here? >> you know, it's hard to say. >> the numbers seem to be all over the map frankly. >> right. yeah, you know, i think while focusing on one month's data is important, you have to look back at the trend and sort of see how the trend goes. sometimes maybe at points like this you need to wait and see how the data looks over the next month or two to see if that signals anything. >> yeah, well, we've been watching over the last two years and seeing recovery much slower than 81 and 82. we have an estimated $2 trillion of capital sitting on the sideline, businesses tell us they just are reluctant to invest it in new jobs, equipment, new structures, new buildings until they see more certainty coming out of washington. i did notice -- i always
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appreciate the data you gave. i did notice there was increases in leisure and hospitality this last month, but that you attributed in your marks, two two-thirds of it were related to drinking places and food service, so is the bar industry doing better these days, and is that -- i'm being facetious, but there is a jump in drinking places? >> yeah, that was responsible for most of the growth in leisure and hospitality. >> i'm teasing. i'm trying to look -- we're all looking for the optimistic signs, and we see some private sector job growth that i think seems to be a good sign, but the longer term recovery which is to get more people into the work force because right now, we are at the lowest number of workers
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participating in the economy in a quarter of a century so even as we look at the unemployment rate, look for hopeful signs, truth is very few people are participating or at least a lot of people are not participating in this work force, again, troubling signs as we go forward. we'll continue to watch month to month, but this really is -- we're seeing disconcerning signs. i yield back. >> dr. burgess? >> thank you. dr. hall, just so i can be sure of it, i'm clear, in your prepared testimony you talked about gains in the mining sector, and that includes oil and gas exploration and extraction? >> yes, it does. >> and does that include both offshore and on shore?
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>> yes. >> now, just looking at the table a14 under the household data, under that line item of mining, coring, gas, and oil and gas extraction, the unemployment rate a year ago 9.4%, april 2011, 3.5% which gives that one of the lowest unemployment rates. in fact, it rivals government workers for its low unemployment right; is that correct? >> yes. >> the -- is there a way -- i guess what's confusing me is on your testimony you said unemployment in mining increase the 11% in april. i'm assuming we're talking about oil and gas exploration and extraction in that 11,000? >> yes, that's part of it, yes.
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>> but, of course, we also know that because of federal policies, we've put a lot of pressure on the actual mining mining like coal mining so have -- do those two things tend to offset each other? >> well, actually this particular month both oil and gas extraction except oil and gas added jobs this month. oil and gas added 2,000 jobs. mining except oil and gas added about 2700. >> let me ask you this, do we know, what is the total universe of people employed in these industries? >> well, mining together is about 720,000 people. >> but that includes offshore
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and on shore exploration? >> oil and gas extraction is 170,000 and mining otherwise is about 210,000. >> on the previous table, 813, construction and extraction occupations are lumped together. this is the employed and unemployed persons occupation not seasonally adjusted. >> yes. >> can we break those out for which -- because obviously construction, i mean, when i look at table a14 the unemployment rate for construction in april of this year is 17.8%, almost 18% so that is the highest unemployment rate in the current jobs report is in the construction industry, and yet on able a13 it's construction and extraction are added together so like the total employed in april 2011 is 7042,
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but we know the greatest unemployment -- the highest unemployment rate is in the construction industry. how might to interpret that, how am i to break that down? sort of like the total universe of people on which these construction numbers and the mining numbers are based. >> sure. well, we don't have it in this release, but we can probably break this out a bit finer for you if you'd like. >> well, i think that's helpful. we, on the policymaking side, you heard some of it referenced this morning where some people are talking about significantly increasing taxes on the oil and gas industry. i don't know, maybe that's true, maybe it's not. we do seem to give a lot a way to the so-called green jobs sector. where are the green jobs on this? >> at the moment, the green --
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well, first of all, depends on how you define green jobs. >> i don't know, i just hear it. that's for you smart people. >> we will at some point be measuring green jobs. we are pulling the green jobs out of the industry because there are industries that specialize in green products that are sort of spread out throughout, and the big challenge for us is separating them from the rest of the industries. >> right. of course, these are industries that receive huge subsidies of the stimulus bill and various other things that we've done, the cash for talkers, and i say we euphemistically, but things congress has done if the last few years. is there any way for us to get a sense on what our return on investment has been for those big -- what people call green jobs and other people call green pork? is there any way to get an idea
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of return on investment there? we're talking about raising the anti on the drilling sector. i don't know, maybe that's a good thing. let's see data on that, but we should be supplied return on investment data for what has happened with the federal plus-up of these other industries. >> yeah, i certainly think with the data as it is now, one might be able to get into that to get a feel for that. that's not something we would normally do, but our data probably would educate you somewhat on that as it is right now. once we get our green job projects, pulling out the green jobs, you can get a better idea of that, but that's a ways off. >> when can we expect that? >> i don't know. we're going to start collecting data next year on it, and so the problem is going to be, of course, once you start collecting data, you don't know the baseline.
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you don't know -- but we'll have some idea starting next year with the number of people employed in these industries. >> the uncertainty principle, the mere fact you are looking at something means you can't be certain? >> well, actually we worked hard on getting a deaf -- definition that makes since. >> very well. that will be helpful on the policy side because we ask big questions and will be great to know what the return has been on the federal investment on this activity. not complaining about it because texas has a great number of wind farms we didn't have 20 years ago, but it would be nice to know what kind of return on investment did we get from those expenditures. thank you, i yield back. >> the treasury department reported the united states is expected to hit its debt ceiling on may 16th. congressional reportly reported
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in anticipation of hitting the debt ceiling, today treasury stops issues state and local governments serious treasure securities that help states and local governments fund infrastructure and other projects. i find this deeply concerning because we already have seen thousands of layoffs taking place at the state and local level. you said there's a significant decrease in government jobs; is that right? >> that's correct. >> dr. hall, can you give us further detail for the committee, the current job situation throughout the state and local governments across the country, and can you offer any predictions regarding the impact of that treasury action may have on the state and local government's employment levels? >> sure. well, i can tell you in terms of government employment, the
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government job loss has been centered primarily in local government jobs, so for example, local government, since the end of the recession continued to lose jobs something at the order of 370,000 jobs, which is a pretty high number, and there's the bulk of the government job loss since the end of the recession losing 791,000 -- 391,000, so that's not a significant number of employers. >> does your research go into whether women are disproportion ally effected with the government jobs? in other words, a high number of women who are employed by government? >> yes, i don't have it in front of me, but i think we should be able to get you an idea of that. i would think especially in the local government. >> the -- you know, i netsed
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that the african-american -- noticed that the african-american workers increaseed; is that right? >> yes, it did. >> what were those figures? >> okay, sure. the african-american unemployment rate went from 15.5% to 16.1% this month, an increase of six tenths of a percent. >> do you consider that significant? >> it's not statistically significant. it's not a really large sample, so statistical significance is somewhere around 1.2 to 1.4 percentage points. >> you were answering congressman brady's question, you said we have to, and you said this in the past, is that we can't take just one snapshot of a month. we have to look at a trend and
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where we are, so how do you see this, this month's numbers fitting into the trend, and did you see -- does anything here cause you to have any significant concerns that we may be going in the wrong direction? >> i would say in terms of trends, let me just say that the the -- what jumps out to me is there's three months of payroll job growth, about a quarter a million a month in private sector. >> is that significant? >> yes, that's significant, and i also think it's important in that you need about over a long time period, you need 130,000 jobs a month to employee new
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people in the job force. we are getting well above the 130,000 per month jobs you need so this last three months looks to be an acceleration of the job growth. >> now, we're about to have many of our young people graduating from college, and how do you see that impacting? in other words, when we have this month of may and june where people are coming out of high school, coming out of college looking for jobs, how does that affect your numbers during that course? in other words, is there a big pump up -- bump up in demands and therefore affects the numbers? there's been the trend i guess i'm asking you. >> you know, i think one of the things most concerning say over the past year has been the labor force not growing much. the labor force has been very flat which means we haven't had
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the normal entry into the labor force on net that we normally get, and -- >> some of those people are, i guess some of the young people are staying in school longer? >> yes, that's right. >> and then we lose people that just stop looking for work? >> that's right. i would consider it to be a another face of the recovery when we start to get an increase in the labor force and people get optimistic enough and start to reenter the labor force and we get growth. it has been concerning we haven't seen much growth in the labor force yet. >> my two questions i always ask you if the president for to ask you, commissioner hall, you know, i mean, where do we go from here? what does it look like? what would you say to the president? >> you know, the good news from the report is what appears to be an acceleration in the job
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payroll growth. i think kind of what i just mentioned. i think the thing that we would look forward to hopefully like we'd like to see going guard is the payroll job growth to continue and maybe accelerate and give us enough confidence that we actually see the labor force start to grow and i think that would be, like i said, i think that's sort of the next phase in the recovery. >> the next question i ask for people watching this and trying to find a job, what advice would you give them based on geography, areas of growth, people maybe trying to go back to school to retrain, i mean, what -- based on what we have here, what would you tell them? >> well, you know, obviously, i wouldn't -- i wouldn't guide myself by monthly report because this changes over time. >> let's talk about trends, the trends you see.
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>> sure. the trends are we continue to see growth in the service provider sector in particular. that sector historically is more recession proof than other sectors. this recession is deep and bad enough that it really has lost jobs, but as a general rule, that sector does better than other sectors, and, you know, within that there's lots of occupations likely to have strong growth over the next 10 years. >> like health? >> health care to financial examiners to computer software engineers, a number of things like that. >> right. thank you very much, mr. chairman. >> moving to a second round, doctor. the chart is up, sorry, i wanted to go through the chart for a second. what's striking about this chart
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is it obviously depicts private payroll starting with the month of january of 2008 and it goes through this report that we're looking at now, april of 2011. what's stunning about that chart obviously is you got over, you got over the course of the last year, the month by month number, last year one administration into the other, but for a long, long period of time you have negative numbers on private sector job growth. obviously starting, and i want to make sure i'm reading this right, my staff can correct me. when we go into positive territory, it's what month? >> i believe it was march. >> march of? >> march of 2010. >> 2010, okay. is there any way that you can -- i don't know if you have the number calculated or if you can get it to us, the total growth -- the total private
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sector job growth of that date from march of 2010 through april 2011 -- >> 2.9 million. >> jobs created since march of 2010 through this month? >> yes. >> okay. i thought that was significant, and i never thought of it in terms of it over that court of time. ..
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$5.8 million is a huge number. i guess i could ask two questions, one is the characteristic, the common denominator in terms of what type of work or what challenges they face. that is the first question. the second question, is there any significance to that decline of $283,000, or is that more of a standard number we have been seeing? >> first of all, the large number of unemployed, the rise has been very broad. almost all industries have had a rise in long-term unemployed, but there is some over- representation in that. for example, for those with a high-school diploma, they are very much over-represented. the unemployment rate is 6.9%, just long term unemployed, those without a high-school diploma.
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neverwho were either married or widowed, divorced, separated, they are over- represented. in industries, construction stands out as having a very large, larger than expected share of the long-term unemployed. unemployed. that never going to a little bit that number going down a little bit is tricky, but if you look at the long-term unemployed by just leaving the labor force or by getting a job, the way it is looking right now, to people leave the labour force for every person who does not have a job of the long-term unemployed. longer. >> one of the most compelling pieces of data you just cited is that that refers to education
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levels. so in other words, if you have a high school diploma or less, i'm just trying to put a number on that. in terms of the likely you being not just unemployed, not being part of the long-term unemploy unemployed. >> you're probably, you are three times more likely to be long-term unemployed than someone with a college degree. >> thank you. dr. burgess, do you have anymore? >> thank you, dr. hall. if i correctly interpreted your answer to mr. cummings questions about geographically and which sector of the economy, if someone was really serious about getting a job right now, they would move to texas and practice medicine, is that right? >> if you have that option, it's not a bad what. >> let me ask another question. we deal with nonfarm payroll, is that correct? but there's going to be in
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effect from what is happening in the central part of this country, kind of gets, kind of get obscured and headlines of all the other news, but there is a huge issue with flying of the farmland in central part of the estate, boarding the mississippi river. do you have an idea how that is going to affect things? as we see missouri, arkansas, memphis, tennessee. they said water is up to the sidewalks. what sort of effect will that have or is that just built into sort of baked in the process, baked into the cake where we can have a tough agricultural year? >> first of all, we don't collect data on farm employment. the department of agriculture does, i believe. they pay a fair amount of attention to data on employment on farm so i'm probably not the right one to ask. >> if those jobs are not there during the growing season, certainly may not be in the fields are underwater, then that will push people into looking for work in other sectors, is that correct?
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there's bound to be a ripple effect, no pun intended? >> what would happen is it would not come probably not shot in our papal jobs numbers, it could well show up in our unemployment numbers. accounts are two different surveys and the coverage is like a different. with the unemployment rate, we are making phone calls and that will catch some of those jobs with a phone calls, but with a payroll jobs, we're only talking talking to nonfarm establishments that pay payroll taxes basically. >> again, it's an enormous tragedy and a story that is sort of not, below the radar screen for most americans. i'm told by people who live there, it's a flood of the proportions of 1927, 1928, when fully 1% of the usable housing stock in the united states of america ended up under water. it's a similar sort of circumstance today. so i can't help but feel that's good to have a profound effect
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on whatever fragile recovery we're experiencing now. this is going to take a toll. do you have a sense as have the actual size of the labor force itself, the behavior of that, during what has been this very prolonged recession, i mean, it seems like the number of the sort of total side of the labor force is smaller today than what we used to talk about. >> that's right. the labor force participation rate literally gives you some idea. and the labor force participation rate is at a very low level. so i think statistics that were up there a minute ago, it's the lowest level since the '80s at some point your so that is a concern. >> we talk about all the trouble having with the deficit and what have you come and need to get people back to the workforce and paying taxes. it's going to be harder to do that, isn't it? >> yes.
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>> thank you, mr. chairman. i will yield back the balance of my time. >> yankee doctor. commissioner, we're going to let you go in imola. one question i want to ask earlier with regard to japan, and, in fact, that that is having on our economy. i know it's not an easy question to answer, but both of the tsunami and earthquake, and whether or not there's an impact, some indication or at least probably speculation is probably a better word, that they could be an impact may be in our manufacturing. i guess told that yesterday's unemployment insurance claims data showed that 1700 employees who filed claims after being laid off from auto manufacturers in ohio. any data that suggests that that could be related to what's happening in japan? and then secondarily, more
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broadly, is any data that indicates a broader impact from what's happened in japan's? >> sure. as i understand it, there have been some very short-term plant closings related to this, like when they are et cetera. and since the workers were employed most of the time, just having one day plant closing doesn't show up as a payroll job loss. it will lower our hours worked a little bit, but not really affect the payroll jobs. yet, my expectation would be if it's going to have an impact on the payroll jobs, in particular, that would likely start next month and we will get, see what we can see in the employment numbers in the automobile plants next month to see if there's maybe and affect happy. >> okay. doctor four, we are grateful to
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have you here again. this hearing is adjourned. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute]
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>> after the labor department announcement that the u.s. economy added to her 44,000 jobs in april, -- 2 under 44,000 jobs
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in april, president obama went to allison transmission plant. he also spoke about his clean energy agenda and u.s. oil prices. allison transmission specializes in hybrid technology. in 2009, the department of energy rewarded them with a $260 million grant. [applause] >> thank you, everybody. good to see you. thank you. thank you so much. thank you, everybody. please have a seat. thank you. it is good to be back in indianapolis.
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hello, hoosiers. sorry about the pacers. [laughter] i am sorry, mr. mayor. give the mayor a big round of applause. he is doing a great job. [applause] we have the secretary of transportation, ray lahood in the house. we have your member of congress, hundred carson, here. and i want to thank larry and everybody here at allison transmission for your extraordinary hospitality. it is wonderful to be here. i just got a chance to see the hybrid systems that you are working on at the plant.
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i love seeing high-tech machinery like this. i stand there, and people explain it to me, and i pretend like i know what they're talking about. [laughter] but it looked outstanding. [laughter] what you are doing here at allison transmission is really important. today, there are more than 3800 buses using hybrid technology all of the world, buses that have already saved 15 million gallons of fuel. pretty soon you will be expanding this technology to trucks as well. that means we'll have even more vehicles using less oil. that means more jobs here at allison. last month, u.s. added 50 jobs at this company, and i hear
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they're planning to add another 200 over the next two years. we're very happy with that. this is where the american economy is rebuilding, where we are regaining our footing. we just went through one of the worst recessions in our history, the worst in our lifetimes, worse than the great depression. but this economic momentum that is taking place here at allison is taking place all across the country. today we found out that we added another 268,000 private-sector jobs in april. i[applause] so that means over the last 14 months, just a little over a year, we have added more than 2
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million jobs in the private sector. we have made this progress at a time when our economy has been facing serious head wind. i don't need to tell you about that. we have gas prices that have been eating away at a paychecks, and that is a head wind that we have to confront. we have the earthquake in japan that has had a net effect on manufacturing here. there will always be ups and downs like these as we come out of recession, and there will undoubtably be other challenges ahead, but the fact is we are still making progress. that proves how resilient the american economy is and how resilient the american worker is and that we can take a hit and keep on going forward. that is exactly what we're doing. [applause] now, despite the good work that
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is being done at allison, obviously here in indiana and all across the country, there are still some folks who are struggling. a lot of people are thinking, where are those new jobs going to come from that pay well and have good benefits and support a family? how do we finally reduce our dependence on oil so we're not hostage to high gas prices all the time? the reason i am here today is because the answers to these questions are right here at allison, right here in these vehicles, right here in these transmissions. this is where the jobs of the future are at. we will have a lot of jobs in the service sector because we are a mature economy, but america's economy will always rely on an outstanding manufacturing, where we make stuff, where we are not just
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buying stuff overseas but making stuff here and selling it to somebody else. that is what alison is all about. -- that is what allison transmission is all about. this is also wear a clean energy economy is being built. this is the kind of company that will make sure that america remains the most prosperous nation in the world. other countries understand this. we are in competition all around the world, and other countries -- germany, china, south korea -- they know that clean energy technology is what is going to help spur job creation and economic growth for years to come. that is why we have to make sure that we win that competition. i don't want new breakthrough technologies in manufacturing taking place in china and india. i want all of those new jobs right here in indiana, right here in the net states of
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america, with american workers, american know-how, american ingenuity. and that is also how we're going to get gas prices on the control. i confess, it has been a while since i have filled up. the secret service does not let me, you know, fill up my motorcade. [laughter] but it has not been that long since i watched those numbers scroll up, and i know how tough it is. if you have to drive to work, you may not be able to afford buying a new car, so you have that old peter that it's 8 miles per gallon. it is tough. it is a huge strain on a lot of people. but if we transition to new technologies, that will make the difference over the long term. that is how we're going to meet
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the goal i have set of reducing the amount of oil that we import by one-third by the middle of the next decade. we can hit that target. we can hit that target. now, short-term, we still need to do everything we can to encourage safe and responsible oil production here at home. in fact, last year, american oil production reached its highest level since 2003. i want everybody to remember that if people ask -- sometimes i get letters, from constituents to say, why are we not just drilling more here? we are actually producing more oil here than ever. but the challenge is we only have about 2%, 3% of the world's oil reserves and we use 25% of the world's oil. we cannot just drill our way out
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of the problem. if we're serious about meeting the energy challenge, we have to do more than just the real, and that is ride -- that is why the real solution is clean, homegrown energy, advanced biofuels, and there is good work being done here in indiana. it means that we have natural gas vehicles. we have a lot of natural gas that can be produced here in the united states of america. it means making our cars and trucks more energy efficient, because if we use less oil, that reduces demand, that brings the price down, and you will see the impact at the pump. that is what will make a difference, and that is what -- that is why what you're doing here is so important. it turns out even though they did not let me go to the gas pump, i do have a lot of cars under my jurisdiction as president. the federal fleet is enormous. we have already doubled the
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number of hybrids in the federal fleet. and i am directing every agency to make sure that one half% of our cars and trucks are fuel- efficient -- that 100% of our cars and trucks are fuel- efficient by 2015. you'll have customers in the united states government because we want to make sure that we're making clean, fuel-efficient cars and trucks. [applause] we have also launched private sector partnerships with companies like fedex, ups, utility companies, a lot of these companies that have trucks and delivery trucks that are used in urban areas with a lot of stops and starts. they're perfect for the technology that you are building. we are forming partnerships to make sure that you have more customers. and to spur the production of fuel efficient cars and trucks across the country, we have reached an historic agreement
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with every major automobile company, thanks to the leadership of ray lahood. they're wrapping up the fuel economies of cars and trucks. that will not only save 1.8 billion barrels of oil, it will save you, the average driver, about $3,000 at the pump as cars increasingly get better gas mileage. this july, we're finalizing new fuel-efficient standards for heavy-duty trucks for the first time in our history, and that could end up saving us -- we were talking about this the other day, it could save us a 500 billion barrels of oil, huge amounts of oil, because heavy trucks use so much. we are also promoting clean energy technologies and other ways. we're investing in hybrid systems like what allison is developing for commercial trucks, to clean burning natural gas, spurring the creation of
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next generation batteries for electric vehicles. if years ago, america only produced two% of the world's advanced batteries. those of the batteries going into these new electric cars. because of the investments that we made it the first two years i was in office, we are on track to produce 40% of the advanced batteries. it will be a huge boon to american manufacturing. that is an example of a big new industry that we can create right here in the united states of america. to make sure we are not only investing in clean energy technology but encouraging people to use these new technologies, i have proposed a $7500 tax rebate for an electric vehicles. if you have an old car and decide that you want to purchase a new car, choosing an electric
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car he could actually get a huge rebate that will save you money at the gas pump and also save money on your tax returns. that will make a big difference. we should reward communities that are making it easier for folks to use electric vehicles and a leading the way when it comes to clean energy. that is the kind of leadership that indianapolis is showing. you are installing natural gas pumps around town and taking other steps to promote clean energy. i hope that cities and towns across this country following your example. these investments in clean energy to cost money. we will need to find a way to pay for them. part of the cost can be made of the -- can be made up by putting an end to the unwarranted subsidies we're giving to oil companies right now and the tax code. [applause]
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i want everybody to listen. oil companies of the last five years, through recession, through ups and downs, the top five oil companies, their profits have ranged between 75 billion and 125 billion. that is with a "b." billions. yet they still have a tax loophole that is costing taxpayers $4 billion every year. if you already paying them at the pump, we don't need to pay them in the tax code. we do not need to do it. [applause] especially at a time when we are scouring every part of the budget to try to figure out how to bring down the deficit and debt. if we are honest with ourselves,
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we will admit even if we end these taxpayer subsidies, we still have more work to do getting control of the deficits and debt. i know in this difficult climate it may be tempting for some people to say let's stop investing in hybrid technology, let's stop investing in basic research, let's stop investing in the infrastructure that is needed to make sure that we can transition to new forms of transportation. that is the temptation. thabut >> if we are going to win the future, we need to cut out the things we need -- we do not meet that invest in the things we do. that is what you do in your home. we go out to a restaurant to eat. you may decide about taking that
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vacation. you are not going to stop fixing the boiler or the hole in the roof. you are not going to stop making sure you have enough money to help. that is like this. you do not eat that. we cannot cut investment in clean energy that will help us and help america win the future. we are not one to stop making investments that allow plants like this one to find the new ways of doing business for the future. i want to make sure the federal government is right here with you as a partner with you as you move forward. we can do it and still the control of our deficit. for nearly 100 years this company has made its way forward.
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. they helped start the indy 500 back in 1909. it is to test new components. this same spirit of innovation and ingenuity is what i see in workers i talked to today. that is why i am so confident in this country and optimistic about our economic future. i believe in all of you. i believe in the american worker and american business. this country is still home to the most industrious and determine people on the planet. there is nothing we cannot do so long as we put our mind to it. as long as we keep our eyes on the prize. i will keep on working with you
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to make sure we do that. thank you. god bless you. god bless the united states of america.
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>> they discuss deficit reduction. the remarks on the economy by the president of the stem francisco real 0 bank. them president obama space to the troops in kentucky. >> this weekend, former ambassador to china delivers the commencement address at the university of south carolina. is the first said the state to hold a presidential primary.
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>> they criticized a r.p. for not acknowledging that changes are needed to keep social security solvent. the former senator also outlined the recommendations to retest -- reduce the federal debt. the commission presented a report to president obama in december with recommendation to doing the nation's challenges. this is about one hour. >> our final session will address the u.s. deficit which is a crystal institute.
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it is sure to affect each of us. there is some profound decisions that need to be made. >> thank you very much. they will have the greatest impact >> they are going to try to restore reason to the fiscal debate.
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the answers at straight talk about the death of the problem and the sacrifices that will be needed to but the finances back on a sustainable course. alan simpson spent nearly two decades in the senate to recognizing the state of wyoming. they have common sense and blunt talk. he said his fellow republicans had rocks forebrains because they refuse to work with democrats. they worked with numbers man on the team. he is a bit more soft-spoken. is equally dedicated to public service. this was his third go at fiscal problems. we hope their time is a charm. bill clinton helped shepherd the 1997 negotiations that led to our last balanced budget.
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he tackled severe economic challenges for that important system. that may put some slides to illustrate the seriousness of the problem. and none of it includes the commission's recommendations. this is the path of the federal deficit under three different scenarios. the top line is the baseline that the cbo uses. according to that line, the deficit will be only $760 billion. the other two are more realistic. they show what happened if we extend the tax rate.
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with those, trillion-dollar annual deficits continue to grow over the next decade. what he's been for the national debt -- the total overhang of public debt. the bar to the left on the next slide is the actual debt for 2010, and the next shows the debt held by the public under the congressional budget office baseline. under that pact, the debt will double could we will accumulate more debt in the next decade than we did in the first 221 years of the republic. that is the most rosy scenario. as you can see, the most realistic ones increase the debt further. under either of those, the debt will exceed the size of the economy. with that as a prologue, let's get straight to the heart of the matter. mr. bowles, you have described the past as $2 in spending cuts for every $1 of tax hikes.
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can you give us the broad outlines of the commission plans to? >> sure, and thank you for having al and me here. i guarantee you will enjoy the color man in a lot more than a numbers guy. these charts are great. if you go back to the previous chart and you look at the enormity of the problem we face, the commission's plan takes the deficit during that time period down to around $279 billion. we cut the deficit in half by 2015, and we cut it to about 3/4 in 2020. we take the deficit-to-gdp ratio -- we cut in half and take it out at 2.3% in 2015 -- take it down to 2.3% in 2015. we take it that to around $16 billion, as opposed to $26 billion, and take it to around 65% of gdp and below 60 by 2023. al and i, when we started working on this, i truly felt we were doing this for our 15
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grandkids. i have in mind, he has six. the more we were doing it, the more we realized we were not doing it for our grandkids, but for our kids, and that the problem was so big that we were doing it for you all, for us. i think we face the most visible in fiscal crisis in the history of the country. i think it is as clear as the nose on my face that the fiscal path we are on is simply not
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sustainable. when i asked to describe the situation we face, to me is like a cancer, and it is a cancer that is truly going to destroy this country from within. let me give you one example of the arithmetic on how compelling the problem is today. if you look at last year's budget, you can see that 100% of the revenue in this country was consumed by mandatory spending and interest on the the debt. mandatory spending is principally medicare, medicaid, social security. that means every single dollar we spend in this country last year on education, infrastructure, high-value- added research, on these two wars, homeland security, every dollar was borrowed, and half of it was borrowed from foreign countries. that is a formula for failure. if we take the do-nothing
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theory and just do nothing over the next decade, we will be paying over $1 trillion a year in annual interest costs. that is $1 trillion by cannot go to build roads, cannot go to build schools, cannot go to create the next big thing in this country. to make matters worse, it is going to some foreign countries to build their roads in their schools and their businesses. as we looked at it, it was easy to see that this was not a simple problem. this is not a problem that we can grow our way out of. we can have a double digit growth over the next two decades and not solve this problem. it is not a problem we can tax our way of solely. all the people who say let's just tax the rich are not paying attention. raising taxes will not do a durn thing to change the demographics of the country. if you want to try to do with
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taxes, you have to raise the corporate rate to 80%, the capital gains and dividends rate to 50%. how many businesses will be it starting with that kind of tax rate? zero. we cannot solely cut our way out of it could all those guys who go on television who say that we will cut our way out of this but let's not do anything about medicare or medicaid or social security, and we cannot cut defense, and of course we have got to pay interest on the dbt -- if you exclude all that, you will have to cut everything else by 75, 80%. but we had to do is do something that was realistic, that was reasonable, that was balanced, and as you said, paul, what we did was cut the budget
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by about $5 trillion, $1 of which comes from revenue, $3 which comes from cutting spending. that results in the deficit reduction that we put forward. we had six basic principles that we will get into it today, but we did not want to do anything that would hurt the fragile economic recovery. we actually get our cuts and spending back to 2008 levels, but we don't do it until 2013, because we did not want to affect the gradual recovery. second, we did not want to do anything that would hurt the truly disadvantaged and you will see a number of ways to try to avoid that. third, we wanted to make sure we state it safe and secure, so we made sure that the cuts we
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make a defense or reasonable. admiral mullen said that the greatest national-security problem is not a terrorist, it is the debt, because it will consume our resources. we wanted to make sure we invest in education and infrastructure, but in a responsible manner. we reform the tax code, simplified the code, use the proceeds to reduce the deficit. and to bring down rates. lastly, what we tried to do was make sure that we really did cut spending, and we cut spending not in just a few places, but in the tax code, we cut spending in defense, non- defense, entitlement programs, wherever we could. >> senator, said that the commission -- senator, you have said that the commission's plans the slaughter's all the sacred cows in the field. you go after defense spending,
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medicare, medicaid, mortgage deduction, you name it. what was the thinking behind that? >> first, let me thank you, and let me say what a delight it is due out this amiable -- to have this amiable, and in throughout this joyous activity. [laughter] it is a thrill, and some the e- mail is so exciting you can hardly believe it. [laughter] phone calls to my home are just monitored -- no. [laughter] let me say that when we sat down with the president, everything is on the table, including your new health care. he said, "that is fair." but it took us three months to establish stability in the commission.
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the first few weeks or "who is the biggest spending president in the united states before this one?" answer, george w. bush. never vetoed a single spending bill in the first 6.5 years until it can to stem cell research. republicans said, well, this guy has outstripped in three-to- one. erskine and i had a great idea, to 28 two-person report, just the two -- to do a two-person report, just the two of us. there are too many conditions that do mush. the fact that we talk in our position, we got more people on board -- we toughened our position, we got more people on board. "god, you are not going to touch this." "yes, we have to." we hit everything. it is not about cutting social
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security. it is not about the cat food commission -- those people are goofier than a peach orchard. [laughter] in the year 2037, you go up to the window and get a check for 22% less. if that isn't stupid, i miss something. -- i have missed something. erskine and i go all over the country, and we say that if you spend more than you earn, you lose, and if you spend a buck -- the american people have this figured out, and that government, democratic and republican, are stupid. you cannot borrow 41 cents for every buck you spend. we had them all. -- hit them all. defense -- how many contractors
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do you fund? it is a range, between 1 million and 10 million. narrow range there. conrad said he tried for 10 years to get an audit from the defense department, and they finally said, "we are unauditable. you cannot audit us because we don't know what is their." all of them are incendiary. here is one -- don't throw anything. i am a veteran. if i stayed in the reserve another few years, i would be a military retiree. 20 years.
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there are 2.2 million of them. 2.2, that is a very small cohort. they have their own health-care plans called try care. -- tricare. not part of the va, takes care of all their dependents, and the premium is $470 a year, no copay, and it cost you any $53 billion a year. -- you and me 53 billion a year. try to touch it? you are cremated. at some point, for heaven's sakes, this is the stuff we have to deal with. why shouldn't it be means tested? many of those military retirees were never in combat. it is guys who could act in the national guard for 15 to 20 -- who could have been at the national guard for 15 to 20
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years did you use in motion, killed, or racism to kill off any -- you use emotion, guilt, racism to kill any reasonable prospect. socials a credit, -- social security, cat food commission, it is unbelievable. try to stop me, i will. [laughter] is a bunch of fakery going on, and it is hard to watch for us. >> one of the great concerns that many americans have is that more and more of our debt is held outside of the united states by foreigners, which means that our nation is in debt it to countries whose interests are not always going to coincide with ours.
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this show where holdings of u.s. treasurys are concentrated. china, hong kong, taiwan, $12.5 billion. how much does it worry you that our growing debt is moving overseas? >> it worries me a lot, and i am sure it worries all of you all. let's take china -- they own something between $1.30 trillion and $1.50 trillion of our dead. -- debt. they are in the process of diversifying their currencies. can you imagine -- don't think about if the dates sell our securities -- if they sell our securities. what if they just stop buying? what would happen to interest rates in the country? how would you like to have the future of your country in somebody else's hand, a country that, by the way, is quickly moving from having an export-
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driven economy to having a consumption economy, a country that just by its nature, will have fewer demands for the u.s. dollar, a country that is not spending time buying our currency by buying hard assets with our currency -- but buying hard assets with our currency. i am very worried. a very big problem that we have to face up to quickly. >> what erskine said a few weeks ago, we have at 8 treaty
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with taiwan to protect them against china. we will protect taiwan and to do that, we will borrow money from china to do that. [laughter] >> we will defend them, we just have to borrow money from them to do it. crazy. >> the overwhelming question from everyone at this juncture is that washington do anything without experiencing eight fiscal train wreck? i think that the type of budget agreement that was put together, the type of budget that would be passed by congress, the only question is, would it be before or after the bond market crisis? there are a lot of people here that no lot about bond markets and don't particularly like that put together with crisis. will it take a crisis to force action? >> i spent 10 years as the
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assistant republican leader under bob dole, a magnificent leader. george mitchell on the other side. it didn't matter what party. we never really respond when you are in congress, we react. we react when the hammer is down. it is always the most disgraceful thing. you don't want to touch, so you wake and you put it off. you go back and you call on the constituents. but this game is pretty well over because it is all different. it is not 10-years ago. we are not ireland, we are not greece, we're not portugal and spain or italy coming up. people that know about that, they've heard about that. the debt limit extension will be the true moment of truth because there are many people and going
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to insist that they will not vote for that under any circumstance unless you cut spending. if you come out with the fact that they're going to cut waste, fraud, and abuse in near marks. the salary who are these people are, and congressional pensions, i will tell you, that may pacify their constituents, but the bond market people will say, we thought that you have the guts to go to medicare, medicaid, solvency of social security, the bloated defense budget, and you didn't. it won't matter how you tell the story back home. when the bond market does come up, they don't have any thoughts about compassion. it is not your favorite uncle henry, it is hammer time. there is the view that it would be -- or what is your view?
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>> i think that we will get something done because of this devastating crisis. we could talk about what might come out of the current negotiations. i think we have congressman ryan out there with a plan that israel. that is serious. it is honest and straightforward. if you ever spent any time with paul, you would describe him as a sincere, honest, straightforward guy. the president has a plan of their doubts. it takes about $2.50 trillion out of the budget. it takes $4 trillion over 12 years, but really, hot comparable basis, only to 25 trillion dollars. the commission has a plan out there that is in between those two. our hope is that this gang of
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six brave senators will be able to get together and come up with a plan that puts our plan in legislative language and improves upon it. if they do, i hope you'll give them great support. i think they are the big hope for this country. >> i think the risk that we run is that nothing happens. you all have spent a good portion of the life in the markets, you know as well as i do when the markets lose confidence, it does happen and it does happen quickly. let's say we don't do anything between now and the election had people say to way to the election. there is some risk. the president is out there talking about having to protect social security and medicare. we can't do anything there. republicans are saying that we
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can't do anything on the revenue side. people say, wait a minute. they are really not going to address the problem. a review will see something quickly. i think that this ceiling presents an opportunity to do something and take a substantial step forward. i think congressman ryan and others are right to that we're not going to solve the whole problem between now and then. but think we can take a big step forward. >> the commission that you lead, it was structured in such a way to rise above the partisan concerns. who have a bipartisan supermajority to vote for the plan you have described here. we are back in washington, in this world. the president and house republicans have come out with a broad framework for deficit reduction. is the bottom line comparing the two.
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president obama, $4 trillion. and congressman ryan, 41 $4 trillion in 10 years. everyone knows that the federal budget is usually constructed a 10-year window. not that we can tell what is actually going to happen 10 years out, but that is the convention that is respected on all sides. how seriously can we take the president's plan if he stretches out to 12 years to achieve his target? are these budgets for governing? are they budgets for campaigning? >> i think it was a mistake. we do visit with the president. there is another joyful part of this. he is called a fake democrats. he is actually a republican. i have and called the
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republican covering obama's fanny. and this is a joyous appellation. ryan did not really touch defense. and the president really didn't cut defense. that is sad. we were there at the speech. ryan was there. we shared with the president that would of been better not to invite brian because he to the hammer blows in the name of about ryan. but as a republican. the greatest mistake that the president made was that he should have waited to announce for reelection after the debt limit extension. everything he does now is tainted because of reelection.
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he can do as he does, talking about getting there, but will help, and he will do a great job. that will be great. you can't go back and read horizon, it is 24-7 news cycle. you said this, mr. president. he is blessed. and then ryan does that and they try to nail kantor. it is a poison the well. and led the president did give his speech, right and left immediately. sperling got out to try to talk to him and ryan said, you poisoned the well. the well was not poisoned. where were working through stuff. and now you have this joe biden.
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there are several people on there that really don't care about doing anything for both parties. >> let me contrast these plans for you. i will arion plan first. his plan is basically what paul riot is, a serious, straightforward, honest plan. it has about $4 trillion in savings. he made a couple pretty big decisions. he decided not to cut the fence. he also made the decision as to reform the tax code, he got rid of some of these tax expenditures that were about $1.10 trillion. he used all the money to reduce rates. he didn't use any of it to reduce the deficit.
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they use about 10% of the proceeds. having made those decisions and wanting to get a four trillion dollars of deficit reduction, that forced him to make her two other big decisions of areas he would cut. he would cut nondefense spending in the other mandatory spending more than we did. and in my opinion, it places a disproportionate burden on the truly disadvantaged. you also on health care made a couple of pretty big decisions. on medicaid, he decided to block grant medicaid under the belief that if you block grant it, the governors will have more flexibility and they will be able to operate more efficiently and more effectively. they'll be able to cover the same number of people. the save $750 billion by doing that.
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he did well lot of your companies have done. when he turned it from a benefit plan to a defined contribution plan. he did that for all people of less than 54-years old. that is principally what his plan does and how he gets to the $4 trillion in savings. the president of the plan, he came out with a budget in february that i think it is fair to say that but it wasn't taken very seriously by anyone. subsequently, he has come out with a better framework that i was referring to a couple of weeks ago. it was basically when compared to congressman ryan's budget is more like an outline. the best part about it, he said the words $4 trillion. that is a substantial step forward. it is over 12 years. when you compare it to the wry and plan into the commission's
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plan does 4 trillion dollars in savings, it is probably more like $2.50 trillion. in the way it is set up, it really doesn't stabilize the that. but that as a% of gdp never gets to primary balance which is about the deficit to gdp ratio. the kind of counteract that by putting in a fail-safe provision which says if the debt doesn't stabilize the downward path, by 2014, he will put in automatic across-the-board cuts that will take the deficit down to 2.8% of gdp. the across-the-board cuts, he excludes all of the income support programs that are
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mandatory spending, food stamps, workers' compensation. he also excludes medicare, medicaid, and social security. from my viewpoint, as we look at what could come out of the budget negotiations, i like having the fail-safe provision with the trigger that makes across the board cuts. i want to see those cuts ratchet down over time. it might start at 2.8% in 2015 and worked her way down to 1.5% by antoine -- 2020. how to have the trigger that forces those cuts to include all spending, above the spending in the tax codes and the entitlements. the democrats would like to cut spending, the republicans don't want to cut tax expenditures, in use the money to reduce the
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debt. by having both of them there, how they can use the scaffold and makes more cuts rather than using the hammer home across the board. >> after the president's speech, after both parties committed themselves to tackling a challenge, they issued their warning of the credit status of america's aaa rating. here is what you had to say after that. in an interview with the financial times. he said the s&p was absolutely right in changing the outlook of the aaa rating adding if anything, but understate the extent of the problem. we are a lot further along than we were a year ago, but what we need now is action. they understood the risk, what you see happening to the united states credit rating in the cost of financial burdens. >> if we do nothing, i think it
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is a catastrophe. i think we face the biggest economic and most predictable economic crisis in history. will make the crisis we just went through that not many of us predicted make it look like child's play. if you think about what happens in a crisis like this, when interest rates rise dramatically and quickly, what happens to inflation and what happens to businesses in the cost of capital and the availability of capital is that you are crowded out of the market. we have the government having a trillion dollar deficits as far as the eye can see. i think it could be unspeakable. that is why i think we need to set up to this problem. the to put politics aside and we need to pull together rather than pull apart to do what this gain of six is doing. senator conrad, coburn, durbin,
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and more. >> horner. virginia. >> they come together into what is right for our country. we can solve this problem today. and america can compete with any country in the world because the balance sheet problems are not nearly what the problems are in other countries, that they face people that don't have the right to vote or don't have democracy. our problems with the financial structure are so deep that if we don't face up to them, we're going to see this problem and we're going to see it really quickly. >> one of the reasons that we are so delighted to have you join us, it appears that part of the difficulty has to do with home the message that surround the whole area. it is clear that the seriousness
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of the budget situation has not registered with many americans. i had an opportunity to meet with conrad, and he emphasized that to me. here is a statement that he made in april of 2011 just last month. the only thing that enjoys majority support in terms of spending cuts is to cut foreign aid. foreign aid is less a 1% of the federal budget. when you borrow 40 cents of every dollar you spend, you're not going to solve the problem cutting foreign aid. how does what waste fraud and abuse is in that same category. everyone is against it. everyone suggests that is the solution to the problem. everyone should know it is not a realistic solution. it is roughly split between mandatory spending, medicare, medicaid discretionary spending that includes defense, foreign
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aid, and hundreds of domestic programs. >> how much of what you have invited the heads of cuts in discretionary spending? and what impact would that have on american's quality of life. >> i think it is 12%, hot with you shop around in the discretionary budget, the forget the biggest part of the discretionary budget is defense. $700 billion. it is huge. hot red as a warrior, and an amazing man. when he has been doing his work, he has been doing this for 20 years. the greatest and best of all is social security, that somebody stole it. $2.50 trillion. his goal is. she, corrupt politicians still $2.50 trillion that was the reserve of social security.
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the greatest myth is this, hang on tight. if i am lying, stop me. social security is not a retirement program, it was never intended as a retirement program, it was set up in 1937 and 1938 to take care of people that were in distress. wage earners, ditchdiggers. it was getting the replacement rate in their wages. the life expectancy was 63, and that is why they set the retirement at 65. it never had anything to do with disability insurance, which was added to it, it is not structurally able to handle that. that will be broke in eight years. disability insurance is being used and over use right out to be broke. guess who will take care of that? it was never intended to take care of children in college.
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it was never built for that. in 1950 was a freshman at university, 16 people were paying into the system and one taking it out. today, their 3.1 people playing, and one taking out. in 10 years, there will be to people paying into the system and one taking out. how long are two people going to sit still to finance somebody regardless of their net worth or their in come? we changed the cost to price index. the law said that if inflation was zero, who would be zero. inflation is very low, and they got to get a cola. when you'd do ha with people who would we tell them the life expectancy today is 78.1, the 63, we say we're going raise the
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retirement age to 60 a. it is 66 thou. it will go to 67 in the year 27, -- 2027. if you can't raise it by 2015, there is no hope. why can't the yourself work unless to figure out how to take your social security at 68. here is the key. we were stunned. the law of social security is so clear that if the schedule of benefits cannot be paid, that is a clear word, they will get only the payable benefits. that may sound like garbage, but that is the rio the renter because that is the one that is void hit in 2037. last may, there is less coming in than going out. how this may. you're going to get payable
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benefits has not schedule of benefits. and you can meld and treated it won't do you a list of good. that is absolutely goofy to me. we went and we said look, we think you ought to help. they are bonded together by a love of airline discounts. and insurance discounts. the magazine has really picked up. sex over 50 is the cover. sex over 60, they are really into viet. the ads are about how to get something and not have to pay for it. medicare will pay for it. adds of sexual dysfunction. if you read the magazine, which is a marketing event. these people are not -- but they patriots in here or just
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marketers? that is a harsh statement that i intended to be exactly that. haven't helped the one bit. they say they have to things they can suggest. he's modest changes will take care of social security through the years. we're still waiting. they hammer us daily in their magazine, but that is a myth. social security is what you say, it is the most noble experiment in the world goes the history. is the boast thing that you pay into with your income. kaufhof if we can say is that that point, that is big time language that nobody understands, but a means that the guys that have the most, we have the more progressive way, which is what everybody asks for. the greatest myth his, you haven't seen anything yet. when this becomes up, they will have to talk about social security.
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whatever they come up with. the savagery and the deception and the disgust that will raid over your head about what we are doing to the poorest segment of society will. we are would give them 125% of poverty pavement. we will give the seniors more than they get. seniors will get a 5% kicked over 80. we have done everything we can in our proposal and if they can't read or write, -- if you can't understand what we did to make this beautiful program solvent, listen to the garbage that comes out of these people that make money. 38 million people paying $12 of dos. 1.5% of the prevailing in the united states.
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[applause] >> it was a social security? . >> you do that. i got that off my chest. >> you did a very good job of it, by the way. >> we cut to the discretionary budget by $1.70 trillion over the next 10 years. we cut it proportionally between defense and non-defense. the good thing is, when people ask us specifically what would you cut, we can tell you exactly
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what we would cut dollar per dollar, of a single program. we also put a fire wall in between defense and non-defense. so that future congresses could not go back and take all of the cuts out of the fence. as i said earlier, we tried to get our spending back to 2008 levels. about 2013. i think the republicans are right, who can get it back quicker. you run the chance of disrupting what i believe is a very potent economic recovery. because here by about $500 billion. because of mandatory spending by to hundred $50 billion. we got the changes there that mattered to about $300 billion.
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>> of the biggest driver in this whole situation in the deficit is mandatory spending. as president obama pointed out, our current course by the year 2025, health care, social security, interest on debt will consume every dollar we are paying in taxes. the item on that list is health care with medicare being the largest components. of the administration plan in the house republican plan tackle medicare, but they do it in different ways. it would convert medicare to premium support to allow seniors to buy private insurance hot like a federal employee health plan. he believes competition and innovation will rein in medical cost inflation. the president also costs on -- counts of big savings from medicare but was going to rely on the board of the exports to constrain payments.
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your commission called for a long-term global budgets. it limits the growth in federal health and in + 1%. it does contemplate a premium support plan as an option. this is probably the thorniest part of the budget debate that we face. how confident are you that this will bring health care spending under control. >> we have got to bring health care spending under control because basically, it is the biggest fiscal crisis, a challenge that we face. if you look at the chip's program, it is about 6% of gdp and will be 10% before you know it. that doesn't even count things like words that most people don't even understand. what it will take to do the got six -- dot fix.
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what the democrats have tried to do, they have this affordable health care plan that they believe have the pilot projects and will slow the rate of growth in health care is the day. we did not buy that. neither did the commission members the voted for our plan. that is why we put it the other $500 billion worth of cuts, specify a specific cuts, some to medicare, her son to other health care programs. our hope was that those cuts -- those cuts would slow spending to gdp. but we had our doubts. we put in this global tag that would contain the rate of growth for health care to gdp plus one. we said, you're going to have to take on some enforcement mechanisms that are going to be kind of tough to swallow. you're going to have to do such
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things like medicare eligibility age to match social security. you're going to have to look at who medicaid. you have to look at a premium support plan. you're going to have to look at a robust public auction or a single player had -- when year plan. these all have to be on the table if these other steps of work. we did try to do some things that would test whether or not some of the things the paul recommended work. has an example, in our plan, we have a test market give of the governors a lot more flexibility in 10 states over the next decade to see if i can really bring down the cost of health care while still covering the disadvantaged. the also decided to test the premium support plan to see if it would help with that group of

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