part of our frustration is how we view our relationship with pakistan. we view it as a traditional alliance between two willing partners working towards the same goal. he encouraged me to view it almost as a contractual relationship. we put forth a set aid packagest some bad guys and not others and lawless -- follows the opportunity to supply archers. it was a transactional fein more than a traditional alliance and the diplomatic sense. your impression on that view of the relationship? >> i think that that is fair. if you are they have a discussion with the pakistani military, they would pay that in

the direction of saying, you say we are strategically important. and this is the key to the region and what you want to do in afghanistan, but in terms of the quantity of military aid that we have received, helicopters, and the instruments that they feel they are in short supply of that we have not done much. so they take the numbers that we think are relatively significant, roughly $4 billion package, and it is worth a lot more than that and many that kind of help. we cannot fight the insurgents if we do not have the means or the mobility to transport our troops and to move our troops around rapidly. and we do not have it. we provided them with 29 helicopters, double digits, i

think 28 or so, 30. but that is about it. and from their standpoint, given some of our support packages that we give to other countries are around the world, they do not think that that measures up to a strategic imperative that we attach to the relationship. so there may be a way to get through that, but it is a stumbling point. they obviously chafed at being held to certain conditions for financial aid, and they wrap themselves around the cloak of sovereignty. does the things that we're going to just have to work through. but it is too important not to give it a real good shot. >> in your perception of it, and you're well informed, is are some credibility to the idea

that there is a price for leetch -- each level of assistance -- if we give them this much, they will give us this much, and if we give more, they will give more? is there some credibility to a bargaining view of it? it and there might be, but one of the problems of dealing with pakistan is that the american people want to know correctly that that money is going to the right and that. -- the right end. and there are problems of making sure does not get diverted to other means. for example, if we give them military aid and some of the military aid shows up on the indian-pakistan border, that hicksites india. -- excites india. and we have to figure out how that happened because it was

supposed to go to the west side of the country. in the next few weeks, what happens or the next couple of months, in terms of redefining the relationship and having a clear ride transactional the last to use your term -- discussion as to what it is we need to do to get this relationship back on track if we can, and why it is in pakistan's long-term benefit to do so. >> and to be clear, i am not suggesting that we just give them more money in exchange for more help. i just want to understand the relationship better. the other question i had, because in a lot of commentary you have noted that frustration. and it is tough to explain to people -- i talk to people yesterday and i want to know why we are spending so much money and so forth. and then on the other hand, the pragmatic reality of what is happening on the ground. i think the answer will be no because nothing is simple around here. but is there any simple way to

understand why it is they help us with some things and not helpless with others? and the simple way to understand the decision-making matrix of how one day they are best friend on some issue in the next day it is like we have to fight them as well? in the simple way to understand that? -- the answer is no, but the answer i have heard coming from them to that very question that i oppose several times -- that i posed several times is that they will cite history as the example. they are fearful of, they say, the fact that we will once again leave and their relations with india will be whatever they are, but they also have their afghan border and the taliban problem and a growing problem in their own country to have to deal with.

and so for whatever reason, we have not made the case with them that they believe that we are a long-term strategic partners. and in their capitals, when we advance 2014 as the date for our transition in afghanistan, they click on that and say this is the day that the united states is going to leave and now we have to deal with everything ourselves. it is really that simple. to convince them that a long- term strategic partnership means what it is, and it goes beyond 2014 in the country next door. but whatever it is that we have to do to get through to that psychological block for them to accept that is really the challenge. >> you're saying some of these debates that we're having, and rightfully so, in this country what our goals are, how committed we are to achieving

the whatever that goal might be -- that concern about america's commitment seeing the afghanistan commitment for to some level complicates the relationship with them? >> according to them, i do not think they buy into the idea that by a long-term strategic relationship, we are interested in anything beyond 2014. >> this is my last question. so it is your opinion that if the united states were to somehow able to convince them and the world that we're fully committed to the idea of a stable afghan government and we are willing to see that through, even though it could take a significant amount of time and it already has taken lives an american treasure, that would substantially improving -- improve our bargaining hand with regard to the afghan relationship crozier margin i think we have exhausted the vocabulary in the last few years to make that point. it does not mean that we should not keep trying.

i actually thought a couple of years ago that with this type of dialogue, much more beans,ensive than bullets, and bandages for the military, but a much more comprehensive dialogue, but so far they have not done so. >> thank you, senator rubio. senator menendez. >> thank you, general jones, for your service and for being here today. i have very deep concern and have voiced this concern well for the bin laden incident in terms of what the pakistanis know and do not joke. i join with senator corker to seek benchmarks along the way to make sure that we are getting

the response is based upon the significant commitments we are making to pakistan and assistance. and in just the last five years, the united states has dramatically increased security assistance and reimbursements to pakistan. third largest country now in terms of recipient after afghanistan and israel. increasing by 140% since 2007 to $2.7 billion in fiscal year 2010. those numbers are pretty staggering. my concern -- and a time when we're contemplating cutbacks of foreign assistance program, scrutinizing domestic programs to ensure maximum effectiveness, isn't in congruent to provide enormous sums to the pakistani military unless we are certain it is

meeting its commitment to dismantle terrorist threats and side is borders? i think the answer to that probably is yes, but then the question is, do you believe that the pakistani military is committed, not just in words, but in deeds as well as with his intelligence entities, to cease supporting extremists terrorist groups and taking it to al qaeda and the taliban? >> yes, i think it has sentence herself to be a selective engagement. they almost waited too long a few years ago in the swat valley and south waziristan. had they not interfered or intervene the way that they did, they could be having problems in islamabad right now. so there is a lot of internal

difficulties in that country, political and otherwise that causes them to pick and choose their engagement. which frustrates us -- it as as surveys their problem with india it exacerbates our problems with afghanistan, and we like clarity and precision and knowing exactly where they are in relation to our common goals. you can have a discussion with them and they will say, of course we reject terrorism, we completely reject terrorism. well, and in the next question, what are you doing about it? we're doing the best we can within our limitations and means in capability and if you would help us more with mobility and things like that, we could do more. so i think those kinds of discussions will probably been much more pointed in the next few weeks and as we try to sort

out the future path of this relationship, and i hope that we can make the case that our initial offers two years ago are still viable, that it is going to take a demonstration on their part that there really are the was that they really see things the way that we do. >> selective engagement makes me think about selective assistance. i do not buy into selective engagement, because then it is about picking and choosing as you think your interests -- >> exactly. >> unless we are in it together and in common cause together and agreed on the goals and the methods to achieve those goals, then i do not know as a fiduciary to the u.s. taxpayer as well as our national security interests, nearly $3

billion of assistance, can it be given on the basis of selected choices? should we not have some sort of benchmark or something that we can ultimately get a sense that we are in concrete ways, you meet this goal, a sum much of the pocket gets up and, you meet the next level, so much more of its open? it seems to me that there are many more tangible ways that we ultimately -- >> it is not a precise science in the sense that you give them x, they will do wide. but we know what they're doing and what they are not doing in terms of combating safe havens and moving against terrorist organizations. we have had a very -- i think generally productive relationship at certain levels against certain organizations

and targets. the problem has been that there are certain things that they're willing things that and certain things they are not willing to do. but i think some clarity and a restated, miss since the -- an agreement between us as to what we're talking about is probably in order and probably what the administration is working on right now to figure out how do we get to that level of understanding and comprehension in the shortest time possible. >> are we in a position to really press the pakistanis in no way they would pursue our national security interest when they are our supply route into afghanistan pressure margin the best -- well, we all have leverage points. this is certainly one. if the pakistanis wanted to

conclude that we can squeeze the united states in afghanistan by cutting off the supply routes where 50% of our logistics still flow, i would argue that that would be a very short term, maybe feel-good tactic, but in the long term it would be to the great disadvantage of pakistan's national security. pakistan will benefit by having as stable a country next to them in afghanistan as we can deliver. and it is in there is stress, it seems to me, to do whatever they can between now and then to demonstrate that they are in fact a capable allies willing to do those things that they can do, understanding they cannot do everything. an incremental demonstration that they are willing to do these things that would help us immeasurably will be very clear.

and it might generate more good will over here in different parts of the world, and we would then be more willing to do the of the things that they need in terms of making a better life for the pakistani people in the future. >> thank you very much. senator led. senator lee. >> i would appreciate hearing senator kerry's briefing. thank you, general jones, both for your service to this country and for your testimony here in front of this hearing. on then's influence fight against terrorism, its role in the region general, its nuclear capabilities, and various other factors make it an important and volatile factor in

u.s. national security. i've gone on record to request that the administration provide us with additional witnesses and information as we hold this series of hearings on afghanistan and pakistan. i realize that few months ago you retired as the national security adviser, but i appreciate your deep insights into the situation in pakistan. i desperately want to believe that that pakistani government is genuine in its desire to be an ally of the united states, and it seems that within that government, we do not know what we do not know about pakistan's commitment to fighting terrorism and fully engaging with our allies. it seems somewhat implausible that no one within the pakistani government knew anything about obama was -- osama's presence within their borders.

pakistan is certainly among the world's leading recipients in usa. -- u.s. aid. by the in the fiscal year 2010, over the last decade, it is obtained about $20.7 billion, and i want to be clear about how i calculate that number, that includes both overt assistance and military reimbursements between 2001 and the in the fiscal year 2010. -- the end of fiscal year 2010. is that a performance-based in any way? in the performance conditions? >> well the carry-lugar-berman package did have performance metrics in relation to the

disbursement of money, as senator lugar alluded to earlier. so, yes, there are some aspects of it that our performance- based. >> in what ways do you think pakistan has used that aid to do things that have enhanced u.s. national security? >> we have had a steady working relationship with -- and dialogue with both civilian and military side of their governments. we have benefit from intelligence exchanges that has enabled them to make some arrests of people in their country, that has enabled us to pull out some operational successes they were in our national interest.

>> and they would not occurred without that aid chris amar'e >> exactly. the-without that aid? >> exactly. we have post on different parts of the border between afghanistan and pakistan where high-technology surveillance in real time can be derived with both afghans, pakistanis, and u.s. sitting side by side. that would be another illustration of productive use of our aid. and we have tried to help them with some of their logistical problems in supporting the army with some ability assets that helped them be able to move

their treasure and as they need to come the best their troops around as they need to. >> let me ask a hypothetical question. oft would be an effectiv hypothetically temporarily withholding money for pakistan. could the administration put a 30-day hold on monday to pakistan while we saw that their commitment to u.s. national security interests? >> i am not sure that it would be -- and i don't think anything positive would come from that. it may happen, i suppose, as a consequence. but before we decide how to -- what to do in the immediate future of the then to take -- other than to take a decision

that would have pretty clear consequences in terms of bilateral action, that it would be better to go through the process that i think we're going to go through, trying to see what this relation is and what it is that needs to be addressed -- adjusted in order to better communicate the long term potential that exists here for the benefit -- for our benefit in the biggest hit of pakistan. i would counsel against the less for our benefit and the benefit of pakistan. -- that exist for our benefit in the benefit of pakistan. >> are some recurring themes in this discussion. china is apparently planning to build two new civilian reactors in pakistan. this type of investment by china trouble you from a

national security standpoint? >> i think the growing bilateral a relationship that we have with china and other countries can be put to good use in terms of helping countries like pakistan and other countries, and i believe it is a characteristic of our 21st century that we will have to do more along those lines of working with the wealthier nations to help the developing nations transition to better economies, better governments, or adherence to the rule of law, and the security package, security assistance were that is required. so i think that flows with the nature of our new world, such as big, the 21st century world.

-- so to speak, the 21st century world. i think that if china and continues to demonstrate that it is in fact more with this in these types of issues, then i think that is a good thing. >> that you very much. thank you, chairman. >> thank you, senator lee. i might say to you and to others that are not here now. this is a very important conversation that we are having and i am going to make a transcript of this hearing available to pakistani officials because i think they really need to understand further -- i just been long days going through every single one of these very same questions and laying out the realities. it is not simple.

50% of the aid -- wrong word, 50% of the supplies they go to our efforts in afghanistan go through pakistan. that route belongs to them. general jones will confirm with me that the most significant debilitation of the al qaeda has occurred really in the last few years, and it has occurred because of some of the things we have been permitted to do in the western part of the country at their sufferance, i might add, because they have taken real political hits for allowing us to do it. that is not exaggerated, is it not? >> that is correct. >> in addition to that, they have invaded swat valley, they have gone out into bejawah, and

have probably killed 1000 al qaeda folks in that effort. are we getting them to do everything we want? no, it is not a perfect situation at all. and that is exactly the conversation that we engaged in. but from their point of view, they have asked for some helicopters, they have asked for a dismal eighth, they have asked for additional capacity -- for additional aid, they have asked for additional capacity. their politics gets complicated and so we have to look get this thing in its totality. should we expect more? absolutely. is a tolerable that some of these entities are sitting there on the ground and there is not up fulness of measure of effort against them was martineau, it is not. that is exactly the conversation we are engaged in now. i expect the administration in

the next few days to press the details of that, building on what we created a as an outline in the last few days, and i think we can get somewhere. the proof is in the pudding. i have made that very clear. this is the longer a time for a joint statement issued and -- this is no longer the time for a joint statement is un four weeks of delay, we cannot afford that. but they cannot afford it either, and i think that is the understanding that everyone has arrived at. the important thing here, and i think that general would agree with me here, is to get deeply engaged in this current moment of dialogue with great precision and intensity and see where we come out, and then we have to make some judgments. but i think, in general, you would agree with me -- let's say the relationship of pakistan

goes to in a handbasket completely and totally. there is not any cooperation. we have to find other ways of moving the goods. united states and america will be able to be peru -- -- the united states of america will be able to protect its interest. we would be allotted to -- we would be able to do that. but would there not be greater risks of increase terrorists in the basis of their region and in greater colleted -- greater volatility with respect to india, and a greater cost to the united states in terms of strategic interests that we then need to protect in other ways? >> absolutely. >> and there would be a lot more expensive for us. >> if absolutely. >> so will have to come through this carefully. but i am hopeful in the next days, a lot of this can get appropriately adjudicated in the

negotiating process. senator lugar, anything more you don't do? s general, any wrap up? >> a pleasure to be with you. >> now that you're not -- you did not have to testify when you're at nsc. but now you are liberated from that. executive privilege. in a pleasure to be here, mr. chairman. >> of pleasure to welcome me back. i think you for the work you are continuing to do and the many relationships you have the benefit us enormously. thank you. and we stand adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> on tomorrow's "washington journal," we will talk with national rifle association president davis keene about the organization's commitment for the 2012 election. then tom udall will discuss u.s.-pakistan relationships. later, we discussion -- we continue our discussion on homeland security. roberts stephan joins us. each morning at 7:00 a.m. eastern here on c-span. >> today i couple of a senate

appropriations subcommittees on 2012 federal spending to tell you about. the army budget request for next year live beginning at 10:30 a.m. eastern. later in the day, steven chu is on capitol hill to talk about his department's budget priorities for 2012. that is from the senate subcommittee on energy appropriation act to 30 p.m. eastern. that is also live here on c- span. >> history as you know is much more than just politics and soldiers. social issues, it is also medicine and science and art and music and theater and poetry and ideas, and we should not want things into categories. it is all part of the same thing. >> samuel morse,. beecher stowe, thomas edison, henry adams, sunday night on

q&a, part one of two weeks with david mccullough on the americans to make a greater germany, to 19th century paris. at 8:00 on c-span. >> next, treasury secretary geithner talks about the need to reduce the federal debt in order to spur long-term economic growth. his remarks at the harvard club in new york were sponsored by the center on the press and public policy part of harvard university. [applause] policy. >> good afternoon. i'm alex jones, johns center on the press, politics, and public paucity. -- a public policy. i welcome you to this special event.

it is special not only because we have the secretary with us, but it is a memorial. he endowed the center as a memorial to his daughter. a superb journalist who died of cancer before her time. walter wanted her life to be honored by something as a meaningful and dynamic as the life she had lived. i am proud to say that the center will celebrate its 25th anniversary this year. walter was also a great citizen.

he cared deeply about his country, and it was his lifelong custom to look over the horizon and seek solutions. he was especially attuned to its financial affairs and had strong views about how to safeguard the nation economically. were you with us today, the crisis of would have been at the top of this list of his concerns. the family joined with us inviting secretary of the treasury to address those concerns today. please join me in recognizing him and the members of the families who are present. [applause] i would be remiss if i did not

publicly thank the staff of the center. the superb work in putting this together on very short notice. [applause] for two years, three months, and 22 days, tim geithner has been at the center of a fiscal maelstrom. if he did not have a thick skin when he started, and he now resembles a crocodile by now. before becoming secretary of the treasury, he was chief executive officer of the federal reserve bank of new york. as a journalist, he believed in correcting journalistic errors -- as a journalist, i would like to stress that we have never -- he is a graduate of dartmouth

college and johns hopkins school of the dance international studies. he has studied japanese and chinese and lived both places. something that grows ever more important in navigating the world economy. how has he done his job so far? two years and five months ago, he was being lambasted by both the right and left for his fiscal rescue plan. yesterday, the headline said tim geithner emerges as obama's indispensable man. it is not to say? -- it is my pleasure and honor to welcome the secretary of the united states treasury, tim geithner. [applause] >> thank you.

that was gracious. nice to see you. i admire so much what walter did. when my uncle was the director, i was studying at dartmouth college. my parents were still living overseas than. i remember sitting on the floor of this office for many hours, sometimes standing, waiting for him to give me a ride down. what a great cause you are engaged in, which is trying to increase -- improved deep debate on policy questions of our time. i want to talk about the question of how we deal with our fiscal challenges to explain why this is so important. what should be done? the politics and economics and a credible solution. i choose this subject because -- not because it is the only challenge that we face.

with unemployment still around 9%, millions of americans still uncertain about their economic future, we face very a formidable economic challenges, but our ability to deal with those challenges will be determined by our ability to restore fiscal stability. we spent the last decade piling on debt to pay for expensive tax cuts, a large prescription drug benefit, and the two wars. on top of that legacy, we had to clean up the worst financial crisis since the great depression. we face unsustainable a future deficits caused by the dramatic rise in the number of american civil turn 65 in the next decade. combined with the fact that we now live longer and the cost of medical treatment is so much more expensive. today, we have to find a way to

return to living within our means. our fiscal problems are so pressing that they threaten to undermine the foundations of our future economic strength, our ability to protect our national security interest, and our capacity to sustain the commitments made by 13 president over 75 years to provide economic security to support -- economic security to the core and the elderly. our total federal debt burden will be almost as large as the entire output of the american economy within the next decade. we do not have the option of leaving this problem to another day, another congress, or another president. it is true that we were able to fund these deficits at very low interest rates. these rates are a reflection of confidence that we will act, not

a justification for inaction. they are unusually low today because of the relative lack of all other investment alternatives in a world still recovering from crisis. there is no way of knowing how long the financial markets will give the american political system to get ahead of this problem. it makes no sense for us to wait until the force action upon us. as we salt in the 20081 confidence turns, it can turn with the brutal force and with a momentum that is very difficult to arrest. this is a threats we should preempt. if we do not, the economic damage will be much greater. confidence is much more expensive to restore that is to keep. it's really are dead problems

unaddressed, those that lend us the resources will eventually demand higher interest rates. higher borrowing costs for american household and businesses will discourage future private investment. a dollar we cannot spend on more productive investments, like education. for all these reasons, the choice we face is not whether to get our fiscal house in order, but how we do it. to provide some context, consider the following facts. in the united states of america today, 40% of children born each year are covered by medicaid. if you were born today in hard-

pressed communities, like detroit, st. louis, or baltimore, you are more likely to die before your first birthday than if you were born in the tree line up for belarus. in education, we're losing ground. only about half the kids graduate from high school. over the next 25 years, the number of americans eligible for medicare will double. the number of working age americans will increase only by about 10%, putting new burdens on working americans. we still live in a dangerous world with a young men and women fighting and dying to protect our freedom. we spent $700 billion a year on national security and this is only about two-thirds of what we spent during the cold war. the effect of income tax rates for the wealthiest americans is

at its lowest level in 60 years. the effect of tax rates before the bidder rich has declined much further. now it is around about 21%. we have some say -- we have some tough choices to make. to put us on a path, we have to bring these deficits down, gradually and dramatically. we need to cut our annual deficit to the point where the overall debt burden begins to fall as a share of the economy. this requires that we achieve and maintain what economists call primary surplus, which means that we cut what we spend on everything except interest payments to less than we raise in revenues. for the united states, this means a deficit below 3% of gdp.

achieving this goal is the essential test of fiscal sustainability. we cannot do this too quickly, though. it has to be a multi-year process. it does not put at risk and economy coming out of crisis. with interest rates now very low, we cannot count on the federal reserve to be able to offset the contraction their effect on economic growth. if we put our deficit on a path to get them down below 3% of gdp, and we hold them there, which performs that politicians, but to sustain to leave in place, the federal debt held by the public will peak in the range of about 70 or 80% of gdp and then start to fall. the economic and political question is not whether, but how

to achieve. the debate we now confronted is how to cut these deficits while strengthening our ability to grow and compete in the future, protecting our national security interests, and preserving health care and retirement security for the elderly and those with disabilities. but we describe how the president proposes to do this. the president proposes to reduce spending across the government. the president has proposed cutting spending on government functions outside the national security, the social security, by more than one trillion dollars over the next 12 years. these cuts would bring non security discretionary spending to its lowest levels since eisenhower. this will require savings in mandatory programs that have a lot of political support, like agricultural subsidies.

on top of this, the president proposes to cut $400 billion in securities while making sure we preserve the essential capacity to meet our national security responsibilities. the president is putting cut on government spending at the same time preserving the same -- to finance productive investments in things like education, infrastructure, clean energy, things that are critical. these investments in those areas, education, research and innovation, infrastructure, clean energy, they meet to keep tests. they have very high returns in terms of future economic growth and the private markets will not finance these investments at an adequate level without a catalyst of government. the president proposes to remake the corporate tax system so that it does a better job of

promoting business investment in the united states. together, this list of reforms perplex the fundamental realities that the composition of spending cuts is consequential to whether deficit reduction hurts or helps beecher economic growth. -- helps future economic growth the president proposes substantial savings from medicare and medicaid. together, these programs are responsible for about one-fifth of our budget and because of the aging of the population, at the increase in life expectancy, they are the main source, the main drivers of our long-term deficit. for medicaid, the president proposes at least $100 billion in savings over the next decade. he proposes for medicare, an additional $200 billion in savings over the next decade by

harnessing the purchasing power of medicare to control spending. he would build on the fundamental reforms in the affordable care act. requiring the independent payment advisory board to target cost growth and medicare to dp. a very tough standard for controlling cost growth. while social security is not the cause of our current deficit, the president said that republicans and democrats should come together to make changes to the program now that will put it on a solid footing into the future. the president proposes changes to the individual tax cut that will reduce the deficit while moving toward a more fair and simple system. by restoring the tax rates on individuals earning more than to under $50,000 a year, to the level that prevailed during the

clinton administration, returning the estate tax to 2009 rates and by scaling back tax expenditures, the plan would generate additional revenue without putting at risk future incentives for economic growth. the reforms in must adopt have to be grounded in realistic assumptions about the path of future policies, the impact of legislation, and economic changes. neither congress or the administration should be able to use on realistic assumptions about future growth or political corrector other forms of magical thinking to minimize the magnitude of the reforms that are necessary. these changes will be difficult, but in a balanced remarks like this, with the burden of adjustment shared broadly, and phased in over an appropriate period of time, the overall economic impact would manageable. to make this spring were

credible, we need a mechanism that forces reform. the president has proposed that congress imposed on itself a debt cap that would lock in the necessary reductions and deficits over the next several years. as a fail-safe, it would require all the cuts in spending if the targets are not met. this is very important. it is the fiscal policy equivalent of trying to take politics out of monetary policy. by making central banks independent with a mandate to keep inflation low. we need a debt cap so that politicians cannot choose to live with unsustainable deficits. it reduces the legitimate area for political debate to how to achieve a sustainable fiscal position, not whether to achieve a sustainable fiscal position. you can tell from the debate in washington that there are big

differences among republicans and democrats. the divisions are very substantial, most pronounced in three areas, how best to promote economic growth, how to reform the tax code, and how to protect health care. given these differences, we believe the most realistic approach is to design a framework that force is necessary political agreements on reforms. to do this, we are trying to negotiate a multi-year plan mark of dead cats and targets with a substantial down payment -- cut of a dent caps and targets but substantial down payment. this down payment has to be substantial relative to the total amount of deficit reduction we need over the next decade. all of the fiscal plans on the table shows that there is broad

agreement on the ultimate goal and timeframe. the components of the down payment have to touch all parts of the federal budget. from defense to medicare and medicaid and they should be balanced by changes in revenue. it should include a mix of specific savings for mandatary programs and commitment to lower future discretionary spending. the more specific the reforms, the more believable and credible will be the framework. these savings would be complemented by an overall cap on future debt and deficits. a strong enforcement mechanism to force action that would deliver the remaining savings. at the beginning of 2013, and every year after that, we will assess the magnitude of

additional deficit reduction requiring necessary to bring down the debts over the following five years. congress would have roughly nine months to enact legislation that would meet that target. if congress cannot agree, automatic cuts in spending would go into effect for the following year. but put us on a path to a meeting that fiscal target. the size would depend significantly on the future of the bush tax cuts. but they will expire at the end of 2012. the president has proposed to extend the tax cuts to benefit the middle class. aladdin is tax cuts to expire -- allowed in that tax cut to expire would reduce the deficit by $1 trillion.

taken together, our view is that this is a reasonable plan. it is a balance of short-term savings and long-term reforms that we do not just pushed all the tough decisions into the future. it is an achievable plant and it needs -- and it meets the critical test. it is better than the alternatives. a few points on the alternative strategies. some have suggested that we set a global cap in spending as a share of the economy at a level that prevailed in the decade before the crisis. the dominant suggestion suggest the target of spending at either 20.6% of gdp or something like 18%. these targets have obvious appeal, but they have no practical value. we cannot talk or reverse the aging of the population.

as the baby boom generation retires, the number of americans turning 65 will increase dramatically as a result, it to cap spending at historical levels, he would be forced to make exceptionally deep cuts in benefits to seniors and the poor. spending caps did not provide the government with a flexibility you need to respond to future national security threats or future recessions. spending caps would not be sufficient to achieve this goal sustainability. spending measures alone would enable future congresses and presidents to try to live with higher deficits by cutting tax rates. we spend as much in special tax

preferences in the tax code as they collect in federal income tax revenue. the house republicans have proposed a plan that has deep spending devotion -- reductions, it devotes savings to keep tax rates low at exceptionally low levels for the wealthy, not just for the middle class. this approach will not pass the congress now or in the future. this alternative proposal would require deep cuts and benefits for the elderly and the poor. it will reduce government spending to what it was before the modern era. more typical of a developing nation. the fundamental reality of our fiscal situation is that we will need to generate more revenue and we will need to reduce the

rate of growth in spending on health care and retirement security. both are necessary, and either alone can carry the full burden. the essential value in the house budget is to show that if you try to deliver fiscal stability, with no contribution from tax reform, you have to make dramatic drastic cuts to these critical government functions. according to the congressional budget office, these cuts would by 2020 to raise costs for an average medicare beneficiary by $6,500 a year. it would eventually reduce the total amount the government spends interest in social security. americans can do better. at one to make it clear that it is the president's plan on this country as a condition for raising the debt limit. they will own the responsibility

for the first default in american history. yes today we reached the debt limit. we were forced to deploy a series of extraordinary measures. they will give us until august 2 before we can no longer be able to meet our obligations securely. as i have said before, congress needs to meet its responsibility to place a. it relates only to commitments we had in the past. it is whether we should pay our passed bills. rather than designing schemes. they are designed to allow us to make interest payments by breaking our commitments to seniors and veterans. we should be working together to

narrow our differences on how to solve the causes of our future deficits. i want to say that if the fiscal agreement is not reached, the debt limit must be increased. it is not an option for congress to obey the basic responsibilities to protect creditworthiness. our responsibility is to seize this moment. when they agree that deficits matter. living within our means is not an option but a necessity. putting this office no longer possible. our objective is to build a bipartisan consensus. this will help restore confidence that washington is up to the many challenges we face. it still helps give businesses and investors what they need.

it'll help preserve a strong economic foundation necessary for protecting our national security and give us the room we need to invest in the future. thank you. i will be happy to take your questions. [applause] >> you have outlined an ambitious and optimistic scenario. you have been able to craete ,-- create confidence in the financial situation and to

perfect -- personally. this will have to be sold to a very difficult audience. are you going to be taking the lead in this effort? and i know this is something that you have stepped out forcefully and as an individual. but it is not just the debt ceiling. it is the economic future. this is something he will be taking a lead in? >> it is central to my role. this is the president's conviction. he has but the vice-president of the united states in charge of negotiating the solution. he has been leading the negotiations. i think they are the most talented team of people.

they were the central architects of the best president we had. i will tell you why we are optimistic this was a massively complicated endeavor. this is not as hard as that. it feels politically more difficult. it is not nearly as hard as that. if you listen to what american people say, they are much more confident. they put it near the top. you see republicans and democrats to join and embrace this.

this is the critical moment. i'm confident about the economy. we need to get ahead of this. we want to take this opportunity to do it. >> are there any secretaries of the treasury stock we look to as models? that you admire for the job they do? quite so many of them. i will read you a quote since

you asked me. >> this is not stage. i promise. >> this is about the debt limit. i am going to read you to paribas. "i should stress that defaulting on already outstanding, that'll hasot obligations greater effects when spending authority. such as when there is a delay in action. a failure to pay what is already do will cause serious harm to our credit. it is not remotely similar to a glassman authority to encourage new obligations. i cannot over emphasize the damage that would be dumb. it is unprecedented.

market chaos in interest rates in the uncertainty would produce a global economic and financial calamity. the chill generations have to pay dearly for the 200 year old trust. >> do you think the rhetoric is [unintelligible] isn't baloney? is it real?

>> they made it clear that they will get this done. they will not take it too long. they will not play politics with it. the real challenge is how to build a political consensus on the way to bring gravity. it is a moment. it is making progress. our expectation is that we can get something serious done. we have decade of the ideological divide. we have a lot of overlap and objectives. -- in objectives. >> do you intend to continue at least as long as president obama -- >> family server long-term fiscal problems? >> yes. -- can we serve our long-term

fiscal problems? >> yes. we have a lot of challenges left. it has been a great privilege for me to work with that group of people. >> is that a yes or a maybe? >> that is an excellent and thoughtful question. i am figuring out a lot of these days. >> do you expect that the legacy of timothy geithner and secretary of the treasury? >> we will be debating for a long amount of time. >> the reality of it will be that when you announced your plan right after you became secretary of treasury you were hammered by practically everyone. that tune has changed dramatically. i think this is the way he presented it. >> i in the same person.

>> i think that one of the questions has all along been is the obama administration able to make its case that is compelling but is not very effectively made? >> can we do better with that? >> i'm not a political person. i did not spend my money -- i can make any simple problem sound complicated. i'm not the right person to ask that question too. >> i admire so much the legacy of walter. a huge part of making economic decisions is being able to explain why the options we

proposed are better than the alternatives. my colleagues accuse me of saying that a plan to beat no plan. -- a plan beats no plan. the hardest thing to do is explain what the alternative does not work. it offers no promise and practice. the big challenge that i can say is to find a way to explain the choices we have to make so that people understand that you have to judge something by the alternative. what is clear is that it is easy to say to people that this is something we have to do.

that is just the beginning. we have to invest in the difficulties. i think this is the challenge. >> one thing they have been criticized for is by bill it too willing to compromise. do you have a sense of how far is too far? >> i tried to save this. i think there are things we cannot do. there things we will not sacrifice. " we cannot do -- what we cannot

do is set up a dynamic. but we try to legislate a agenda. what is at stake is if you think about the challenges we face. there is unacceptable damage. it is our capacity to invest in our future and invest in things to make it stronger. it is not possible to offer people the choice. it is not irresponsible alternative. we have to defend the necessary functions. we have to make sure we

preserve that. that is why you need a more balanced by more. >> >> i like to invite those of you that are here to address a question to the secretary. i would ask if you wanted to do that. identify yourself. >> hello. thank you very much. that is very interesting. you say you are not a political person. assuming a deal is reached on midnight august 1, give me a copy. >> if you leave people with any doubt, and we have to act in a way that protect them from the possibility that we do not act. that has the same basic dynamics.

you cannot wait until then. >> what would you predicted the deal will look like? >> it to have a basic framework that locks in a declining one. it is across the core government. it is a trigger. >> the bill one to lead to much of the plan on the target. >> given the short term, they

are talking of detailed spending. we are going through. >> i think they are pretty realistic. not all of them are realistic. at think the leadership is realistic. >> identify yourself. >> she supported your plan is part of the revenue. >> i did not say i was optimistic.

he pretends he used the revenue, then you are forced to live with cuts that are completely unacceptable. that is why you are not optimistic. it is going to have to,. >> you did say that the republican leadership shows this. we will get this done. >> he was here recently. he made no bones about it. he said new revenue is up the table. how're you going to deal with it? >> it is a challenge. it is better for business confidence. it is better for them to know the precise shape. it would give them a plan to adjust. we cannot do for resolution without a comprehensive approach.

we are going to be able to do less of from. what you have to do is lock in as much as you can. you have to leave open where they are going to come from. they will come from a mix of defense cuts. the mix of that is that cannot be resolved right now. it has to be forced by careful design of a trigger. i think that is the realistic framework. you cannot put the ball on process limits. it has to the things that people can feel and see for it to be believable and credible. that is the difficult balance. you are going to need it. >> how concerned are you about

the leadership with the imf? do you know him personally? whether your thoughts? >> she is not in the position to run it. >> they were formally put in place. a very capables person. >> you know him personally? >> i think it is important. there is a lot going on in the world. >> there have been other policy

attempts to try to impose some kind of trigger? i would argue that the debt ceiling is one such tight policy. >> it has never proved a valuable device? >> you are right to say they do not substitute political will. they undermined them in the past. in play here is a valuable role. just look at the pay-as-you-go rules. look at what happened when they were abandoned. if you do not have the money, and you have to find ways to spend more. you cannot cut taxes without finding a way to raise more

revenue. it is a perfectly feasible discipline. >> it seems like there have been other attempts to tie themselves to the mess paren >> politicians always seemingly find a way to either and do it for -- >> that is the rest. >> thereby a bunch of temporary factors. they are very high. it is different. there is more recognition across the political spectrum. you cannot pull all the burden

on their parents he had to do as much up front to make it believable. we are forced to figure out how it to stillrace th allow was to restore it to the fiscal position. that is why we are debating this. they can help constrain the loss of a virtue. >> hello.

if the debt ceiling is not raised by august 2, what is the immediate consequence? >> i cannot prove on that. i've written carefully about what i think would be the likely consequences. we are not going to experiment with it. we are not going to take that risk. you have to be kidding. coming out of this crisis? not a chance. >> bloomberg radio. nice to see you again. regarding corporate tax reform, what is going to be the basic driver for us? i have been speaking to someone at a big oil company. he is talking about energy policy.

>> the central russian now should be to lower the rate. they make it possible by dialing-introducing a range of tax expenditures that litters the corporate tax code. that is the sensible thing to do. it'll change the tax rates. it is the essential thing to do. why should we want to live with a tax code where every year people do not know what is good to be the tax preference for certain activities? why you want to live with a tax code that determines a key part of the economic steer business? it makes no sense? we argue that this is worth

trying to do. we make it difficult to do. we do not like we are going to do. it is the sensible thing to do. we are going to be divided on some big political issues. we want to find things that they can do together that are not inherently partisan. we have to find ways that we can do that. this is one of them. >> is anything they have like a flat tax? >> i do not think so. >> >> i have questions on corporate tax reform. are you going to seek out an agreement on corporate tax reform as part of the platform?

>> not in this next two months. weird when she tried to get this process moving. realistically, -- we are going to try to get this process moving. realistically, i think this is going to dominate for the next couple of months we get through it. we have been doing a lot of work on how to figure out a sensible design. we would like to move forward. >> i think we would like to take a run at doing this. that means we have to start. we also need to get this fiscal stephanie better trajectory. -- fiscal stuff in a better trajectory. >> i want to talk about the administration. i get asked about this. i have no answer. during the primary season,

barack obama took a lot of people from hillary clinton for saying that he admired the way ronald reagan managed to change the discourse. i think this was unfair. yet, he has not really tried to do that. he is not try to move the yard line down the field so that the debate on economics would be conducted on democratic grounds. he has left itself vulnerable to republicans and conservative arguments. this is what he came into. i am wondering if there is a decision not to use the pulpit to try to move the discussion. >> i think i'm the wrong person to ask the question. >> you know where i am. i'm not a politician.

>> if you look at what the president accomplish, there is in a normal political cross. in makes the most dramatic changes, they care about. it has been attempted and achieved by the time. >> i am driven not by what he astride to achieve -- she has tried to achieve but the magnitude of the reforms. just remember how the spiels. -- this feels. everything was at risk. he did not sit there and say let's have a debate about what to be interesting to do.

there has some political cover. he chose to do the tough things. he betrayed enormous political coverage compared to one of his predecessors. that was the necessary and decisive thing to do. there is no progress of cause that would have been possible without the progress he has been putting out. we can have some capacity support things that democrats care about. i'm not giving him a political question. >> i know we discussed historical perspectives. since you live in the far east,

i wanted to know if you have any models for adoption. if so, which ones? >> the cannot win elections on the claims that it could have been worse. it is very hard for most people to understand how perilous the moment was. even with the history of the great depression, that was incredible reality in that moment. even harder is why growth cannot be faster now. why does it look like we will be growing? that is because of course that this is a crisis born bill we are living beyond our means.

people have taken on much more debt than they could then they can live. it takes people time to bring down this and bring down the balance sheet and work off the investment. this confines year along with the limits. it is a tragic fate. this confines you to a slow rate of growth. the disappointment people have today is just a tragic consequence about what caused

this basic crisis. it'll take years for us to work through this. i still believe that the basic strategy we embrace will be judged as the most affected financial strategy in modern history. it compares favorable to any experience by developed or developing necountry. look at europe today relative to us and the consequences of developing and adopting a dramatically changing strategy. at the peak of this and ensure rescue, we had 2.8 trillion dollars of investment at risk in the system. we are likely to be well under

$100 billion, a fraction of the gdp and a fraction of the cost. we are bringing private capital in as quickly as we could. recapitalize it much more aggressively and quickly. we do much more brutal restructuring. it is stronger than you have seen in many other economies. there are previous recoveries that were quicker. these are recoveries with a different kind of crisis. we do not have the option of trying to engineer something dramatically stronger than that basic path. that is a tragic consequence. >> this is behind. >> my question is about

dodd/frank and if it will actually be implemented and how much crumbling is going on. >> we like to say that there are people even in this city who are working hard to slow it down and reduced the scope and power. the only tools they have are to start funding. if they choose to do that comment taking a slow things down a little bit. we are at the early stages of writing the rules in laying them out for comment. we have a long way to do. the core part of the reform will

survive these efforts. i think people will not put up with a system that is this vulnerable. >> there are bad public opinions about this. >> that cannot speak to those things specifically. we have a long way to go to earn back the basic confidence of the american's parent it requires a sustained response. i think we should have a lot of confidence in the basic confidence of our capacity. there are going to want to see the reforms take hold. it will provide better transparency for consumers.

i think this is something that will come with time. it'll take time for them to judge. >> we are seeing the instance where the dollar is rising. >> i am very careful not to comment on the markets beyond our careful standard phrase. that is a good practice. we want to remind people that this is an important thing we want to preserve and protect. at the worst moments of the crisis, and people started to get worried, we saw peacepeople

want money for this. we need to reserve it. it has the capacity to act. we want to act to bring back confidence over time. >> thank you v

. .

[captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] i think, the number one lesson from the gulf oil spill, you can't assume that drilling operations have adequate safety measures in place. can you also if you can't get it done in 60 days, i guess instead of being approved, you just say no. it is probably also a bad idea. can you talk about the possible impacts about the ability to

ensure safety of offshore drilling operations? >> i think what it would do is basically pull out the rug from what it is we are trying to do here and that is to have safe development of oil and gas in america's oceans and you can't do that when you are essentially in a position where you are forced to approve in a 60-daytime frame. i think it would be good for the director to talk about the permit process so we understand the 60-day period and how that would work. >> i think it's a bad idea to have arbitrary time limit to approve time limits or they'd be deemed approved. an operator, i'm not saying there are many of these or even any of these then they could submit a permit that they knew was deficient that didn't meet all the new enhanced safety requirements that we put in place and i think significantly raised the bar on safety and they could run out the clock and have their permit application deemed approved.

so it would be a substandard application, it would not satisfy various other requirements that we nut place and we'd all be at greater risk if we had that kind of system. >> and the purpose of the measure is supposedly to expe date your permitting process but we have the numbers. you have issued 56 deepwater permits since the moratorium was lifted in october of 2010. what in your mind are better options to streamline and expedite permit approval process without compromising due diligence on safety? >> we can do several things and are doing several things, we are looking at the permitting process to see whether there are improve y89s in clarity, transparency and clarity. a lot of operators feel they don't know where their permit

fits, so we need to communicate with them where the permit sits, we're looking to develop templates and checklists so operators know exactly what's expected of them in advance so we eliminate the questions up front and we're working on templates and forums to expedite that process. i think those are the ways that we can do that. one of our historical problems has been a lack of resources which includes not only lack of adequate resources -- work force to do inspections but lack of a work force to do permits. we just last month got additional money which we're allocating to bring on board more personnel, some of those will be permitting personnel, i hope that will expedite the process as well. >> thank you. one of the most concerning findings in the national oil spill commission's report was

that some oil well operators would "shop around" for someone within the superior department who would eventually approve a permit for the project. i know most people here agree that the mineral management service was in dire need of reform and we're glad to see the reforms that the administration has taken in response to the oil spill. the new bureau of ocean energy smgget in charge of leasing activities. in evaluating lease applications, how will they balance these two competing authorities versus keeping costs down. >> we focused on other reviews and studies as well which identified a failure to take environmental concerns adequately into account. so now we've focused on it and we are working on some specific

structural steps to make sure that there is balance between the development of the resource and environmental considerations. one of the specific things we are doing is we're creating the position of chief environmental officer in the resource development agency to make sure that the voices of environmental personnel are heard and factors into the balance of leasing decisions and planning decisions. >> thank you. my time is up, thank you, mr. chairman. >> thank you, mr. chairman. secretary, good to have you back before the committee again. you were last here, i think it was march 2, a couple of months ago, we talked about the same issues and at that time i had a concern that these claims were out there, that rigs were leaving the gulf, had left the gulf, and -- to go to other

countries and other offshore drilling. at the time you said you did not believe that had happened and you would provide information about it. we have since followed up with your office twice and have yet to receive that data. i would like to reiterate my request that you provide us the data on the rigs, i think it's important to have it historically now. see what the impact was to have moratorium. in your testimony today you state that america -- where are these increases in oil production, were they on shore, offshore, what data do you have to tell us about where this has occurred since 2003? >> senator, thank you for your question.

i will direct my department to get that to you on the number of rigs. on the question of where we are in terms of increased production in the last two years, just from the outer continental shelf, the increase has been from 446 million barrels to over 600 million barrels, that's an increase of about a third on the outer continental shelf. on the offshore, where we have 41 million acres under lease, the increase has been 5% in the same time period. >> so it's mostly outer continental shelf, i think senator landrieux indicated that shallow drilling is off by about 50% since the moratorium and i think she even said there's not a deepwater permit currently producing. you indicated you have approved

some permits now. i know we'll hear more from her on that. but i guess what you're hearing today both from senator hutchinson and senator begich and others is that we do need to work on this process and we need to look back and see what the impacts were to avoid some steps backwards. i think the president made some good comments over the weekend. i was somewhat encouraged by what he said about extending leases in the gulf he also called for annual lease sales in the national petroleum reserve in alaska and i would hope that we'll continue to see some of these expedited processes to get moving on the outer continental shelf. i will say to senator franken's question, there's frustration with bureaucracy being given an

appropriate amount of time but at that point, that the companies who submitted legitimate applications need to know one way or the other. the burden should be on the government to say why aren't we moving forward? i know that the begich and the hutchison bill would help in transparency that you're talking about. senator bingaman has a bill that would help. i hope that you would work with us on that. let me switch if i could for a second to another comment you made in the opening statement, you indicated there were three buckets the administration was looking at, oil, gas, renewables and alternative energy and efficiency as you may know, last week, legislation was introduced by senator shaheen and myself, energy savings and industrial competitives act, s. 1000 and it

leverages deployment of energy technologies. also with regard to the federal government. we would love to get your input on that legislation and we hope to get your support on it. do you have any thoughts on that legislation today? >> i have not reviewed the legislation but i would be happy to do it along with my colleague secretary chu and the administration. it is a huge part of that bucket to get us to that energy future. in fact, part of the reason that we are using -- importing less than 50% of our oil from foreign countries is because of the fact that we are becoming much more fuel efficient. and so the energy first quarter si obviously goes beyond cars. it goes to appliances and those kinds of things.

those are addressed in the energy blueprint. >> we're working on it and given your interest in this area, the relationship it has to your responsibilities, we would love to get your input. >> my time is up but i appreciate getting back to it. the gulf issues we had from the last hearing and also on s-1,000. >> thank you. >> senator landrieu? >> let me begin by commending you and the president for getting back to where we were before the deep water horizon spill in terms of at least having a vision for opening up more domestic drilling and i really appreciate that and it was right step to take. now it is just the details of how we actually accomplish what the president laid out and i can only say that using words, actions speak louder than words. so that is where we are right

now. it is not just about saying we want to expand drilling, but actually doing it. i want to just clarify a couple of things i think are very important for this hearing as we try push a bill through or several bills to actually accomplish opening up drilling. i want it clear for the record that a message from the e.i.a. short-term energy outlook, this is not mary landrieu's chart, it is not a democrat chart, it is not a republican chart. it says today production of oil is at the highest level it has been but you can clearly say on the trajectory that we're on that it is going down. if we don't start issuing permits more quickly for new drilling, if we don't start exploring in areas that really deserve to be explored, this is not going to be reversed. even if we made those changes

today i'm not sure that we can reverse this chart. i want the record to be clear. we may be at high levels today but we're not going up. we're going down. number two, mr. bromwich, i need to clarify for the record, you said that you have 14 deep water wells. are any of those new or are all of those revised? >> i believe all of them have been previously permitted. >> that is correct. soy i just want to say for the record these 14 deep water wells that have received permits are not new wells. they are revised. they had been drilling prior to the deep water horizon and i understand that not all 14 of these are actually drilling. some of them are water injection wells. do you know how many? >> that's not correct. >> ok. they are all drilling? but they are all revised permits? there is not a new deep water permit. is that correct?

>> that is my understanding. >> ok. let's get this clear because there might be a lot of noise around washington but it is necessary for this to be clear. in order for us to move forward. so while your staff is getting that because it is my understanding based on a chart i got from your website, it is this is not my website, it has zero, zero, zero, zero, zero for deep water in 2011. it doesn't say one. it doesn't say two. it doesn't say 14. it says zero from your website. this is new wells amoved from 2009, 2010 and 2011. so mr. chairman and ranking members, the facts are despite our efforts, the moratorium has been lifted. there is not a deep water -- >> there is one. >> ok. there is one. we have one -- out of 14. let me ask you this. my information is that there are 100 exploreation plans pending

at boem. is that your understanding? before you can get a drilling permit, you need to have your exploreation plans approved. how many do you think are pending now? is it 100 sflr no, it is far less than that. >> can staff tell us how much it is? >> my understanding is that it is 36 deep water plans. >> the others may be shallow water. i would like you to submit that before the committee. >> happy do it. >> we need to understand how many plans both deep and shallow are pending. how many permits then for drilling are pending. but the bottom line is we need to step it up, or these numbers are going to get worse, not batter. -- better. number two -- >> frankly at the end of the day, i'll call these shots within my -- secretary of interior. what i will say is that with respect to your chart, the fact

is that we are doing a lot to try move forward with deep water oil and gas production as well as shallow water and you lived through nightmare just like i lived through nightmare to have deep water horizon. i will remind members to have committee that we have 38 million acres in the outer continental shells and only 6 350eu7b million acres are producing. we want to figure out a way of moving forward with the production of oil and gas in these areas. we talked about 14 deep water wells. those are rig where is you actually have people who are out there on those rigs working. i was actually on one of those rigs. visiting them as they started moving forward. you 14 rigs now working under permits that have been approved. >> but they were working before they got shut down, mr. secretary. i know my time is expired but it

is very important for us to recognize unless we get some new exploration plans approved, so u.k. understand the reaction by some of us when you're asking to expand the time for review and the time for 30 days as i understand could be 50 days mr. chairman and under the new proposal could be up to 270 days under the technical review of the proposal on the table. so again, and i just want to conclude if you'll bear with me with one chart and then i'll close because i have 100 other questions and comments. mr. secretary, this is what the gulf of mexico looks like. i wish yule could see what i saw yesterday. when g-8 back from morgan city. floodwaters lapping up at these communities. this is what the gulf of mexico looks like. these are pipelines. this is what our state does to support this industry. you can see texas, louisiana,

the coast of mississippi and alabama. we do not today get one single solitary penney from a lease, a bonus, or severance from any of these wells except three miles off of our shell, no matter what law we pass, this senator will not vote for anything unless there is some recognition of the platform that our state, you know, serves for this industry or nobody would be getting any money, any energy, any oil, any gas. i'm going to end there but i have 100 other questions and comments i'll submit for the record, mr. chairman . >> if i may make a comment. >> go right ahead. >> i think for the last 2 1/2 years and you have known me well, senator landrieu from my time in the u.s. senate working on this committee and working on so many issues. there has -- i have a jurisdiction that takes me from see sea to shining sea over to

alaska and many places. i have probably been to louisiana and the gulf of mexico more than any single other state. our efforts need to focus on the restoration over the gulf coast and i know there are bills that you're working on trying get that done. annoy you were pleased with the billion dollar early restoration on the rescue that we are moving ahead with. it will be at least 200, probably more. but here is what i wanted to say. because i think you raised a very legitimate question and that is that we extract all of this oil and gas from the gulf of mexico, about 1/3 of the nation's supply and yet, because of the hand of man over the last 100 years, you have what is one of the most degraded ecosystems and the mississippi delta which you and i went over many times.

i think this is a very important issue that i hope we can find some way of moving forward to restoring the gulf of mexico. >> we have two senator who is have not asked questions yet. senator mansion and senator shaheen. senator mansion? >> thank you. thank you secretary and your staff for being here. the thing i want to ask, you can tell the frustration. i'm sure you're hearing it loud and clear. the timing, we're going to be voting on a bill 3789 did i hear you saying it should be 90 days? not 60 days? >> can i clarify, we're talking about two different things. people are a little confused. there are permits and there are plans. plans are broader authority that an operator seeks to do a variety of things. a number of individual permits turned plans. right now there is a statutory

30-day limit on the time within whch my agency has to review an exploration plan. there is currently no time limit with respect to reviewing individual permit applications. >> the permit is what you're wanting -- >> i don't know if you were here. that is the question that senator franken asked, even if an operator submitted a permit application that totally failed to comply with safety requirements and failed to show the ability to contain a blowout, the statute would require that we would approve that permit. >> basically you the right to approve it or disaprover it. but you have to act on it. the frustration is that it is not getting acted on. not just in gas and oil. it is no coal. every permit we do natural resources, people are so frustrated because the time limit is so long. they have no certainty whatsoever and they can't plan

anything. just a yea or a nay would help. what timetable do you believe it would take to evaluate that and give an up or down? >> with respect a permit? >> somebody can say could be six months, could be 12 months. >> the fact is our people have absolutely no incentive to slow down the process of permits. most of the people who review and approve permits are residents of louisiana so it is their neighbors whose livelihoods are at stake. i think giving us adequate resources so that we have the personnel to do it, being transparent and therefore how long it is taking, i think those are major steps forward but i'm worried that a legislative solution and i know the house version would deem an

application approved aa certain period of time. >> coal coming from a coal state and gas in way of everything, i know the secretary understands that. what we're asking is the development that we have using coal plants for quite sometime, i know some people have different opinion s of that. it is the most reliable of our fuels. with that being said, the co 2, we know the technology is there trr for carbon capture and storage. what is your opinion as far as where you are on the pipeline. a natural co 2 pipeline that could help the enhancement and development of oil. we know it is probably one of the best uses that we have right now other than just storing it. to make us less dependent on foreign oil. >> we have always been supporters of carbon capture and se quest ration and particularly

using the templates that have been developed and used for many decades. in my old state of colorado, frankly we drilled wells, extract co 2 that is piped into the oil fields. i think those efforts are a way we can move forward to a kind orp clean energy technology that we want to have. we support having clean coal technologies and i think those kinds of -- are ones that we all need to -- >> but i'm saying now they are telling me that there is not -- we don't have the infrastructure to deliver the co 2 to the drilling areas that would enhance the oil production. i don't think any private concern is going to be able to do that without a quasi public private. are you all looking at that seriously or have you looked at it? >> i have not per se looked at it but i think it is very well

worth exploring. >> we have the ability to retro fit the existing plant to take the extra carbon off. there has to be delivery. >> we will look at it, the concept. >> again, i -- frustration is -- landrieu had that basically we're concerned about our dependence on foreign oil. the high price is killing all of us. in west virginia not a day goes by that i don't have phone calls and letters. it was $4.19 an average where i was in the state this past weekend. something has to be done. we need to be certain at what we can do in this country and less dependent on the foreign oil holding us hostage. we're asking for help as much as humanly possible. thank you.

>> i recognize the issue of the day in terms of the concern that the american public has with the pain at the pump. i think it is a president has said we can look back at history from the price spikes that started in the late 1940's through the 1970's and 1980's and 1990's and there is no quick fix to the high price of gas. because over the facts on the global market and countries like china using much more oil and gas than they ever have in the past so it is important for us to have the long view in mind as we move forward to develop the energy policy of this country and this committee obviously has tremendous expertise with the senators and its staff to help us make sure that we can find those places in which the future can be secured. >> i just think -- i'll finish with that. as you said, it has been going on for quite sometime, in my

lifetime it basically came to a head in the 1970's with the oil embargo. we learned nothing. we have nod energy policies. we have grown under dependent and we don't seem to have learned from our mistakes. in we have a policy that can produce more energy for this nation, we're going to continue to go down this for the next 30 or 40 years. we're hoping to break that cycle, sir. >> thank you, mr. chairman . thank you for calling the hearing today on what is obviously a very hot topic that people feel strongly about. thank you secretary salazar for being here and for your patience in responding to all of the questions and concerns that we're raising. i actually have a little bit different question i think than the ones i've heard anyway. as we're looking at legislation

to address concerns about permitting and drilling, one concern i have is that we nee not repeat the mistakes of the past. know that i was quite surprised as i think many of us were last year during the b.p. oil spill a to find out that the technology is for cleaning up that oil hasn't changed much over the decades proceeding and that while after the exxon valdez spill there was supposedly a process and someone -- people put in place to try and address oil spill, that it really had not been effective and that the funding had not been there. my concern is that as we go forward and look at how we improve the processes for

permitting and look at our drilling in the future, that we are able to develop the technology to make sure that if there are deep water spills that we have technology to clean those up. i know that the president and his 2012 budget include an increase in funds. but it is not at all clear to me that we have yet in place a process for how we raise those funds on a regular basis and how they are going to be spent and who is going to enterprise that. supervise that. >> thank you very much, senator shaheen for that question. the fact of the matter i think

is when one looks back at the exxon valdez report, the national crisis and environment a.m. catastrophe which caused so much dam was not one that caused much change in this country. much continued the same way without those lessons being learned. the president and his administration are committed to make sure those mistakes are not made again. that's why there has been the robustness of the effort to try to move forward with the best standards and organization to oversee drilling in america's oceans and actually to help develop same kinds of protocols around the world. in terms over the funding question and what we're doing with respect to oil spill response, we do need funding to be able to have an agency conduct responsibly the important missions that have been assigned to the bureau of

energy management and regulation. additional resources so direct the agency to move forward in that direction. they are not sufficient. frankly, there are more resources that are needed for the director to be able to hire the kind of personnel that will have the expertise, petroleum and have the ability to do the kind of inspections and oversight that are necessary. he can speak more about this but just in the last several weeks, he has spent a great deal of his time looking at the control centers, the remote data centers that industry has in all the big companies that are able to monitor what is happening in the production and drilling activities. we need to have our agency move forward to having some of those same capabilities. this is not going to happen unless resources are there and that comes back to if question which many members of the committee are asking, how can

you make sure you're moving forward? part of the answer is they need to have the personnel onboard to be able to do the work. >> senator, the -- i share your concern about there being insufficient advances in oil spill. i think we have not progressed very much in the last 20 years. the truth is i don't see much going on right now that would improve things. i completely agree with the secretary that we need more governmental involvement and research in development. we need more private sector voment in developing the technology. one of the conclusions they come to this the development of deep water horizon, there is sufficient r.m.d. by the private sector to r & d in safety and containment and certainly with respect to oil spill and oil

spill technology. that was true then and unfortunately it remains the case today. >> thank you, thank you mr. chairman . >> thank you. secretary, thank you very much for your generous time. we do have some additional questions that will be submitted for the record but we appreciate your being here. did you have something final you would like to say? go ahead. >> very quickly. we have been working on this energy safety advisory committee which is really doing some great work. to answer many of the questions that were asked here but we also have a proposal in front of the u.s. senate of this committee for the creation of an ocean safety institute and i would like you to allow us to give a two-minute summary. >> why don't you go ahead? >> i'll be quick, mr. chairman, thank you. this is in response the senator shaheen's question.

the ocean energy safety advisory committee chaired by dr. hunter, former director of the national lab has a task ahead of it of trying to do a survey of what r & d is going on in the areas of well controlled containment and spill response, but there is no -- at the center of excellence that they can turn to help the secretary and director bromwich then implement or indeed it is needed but also to have the regulatory agency keep up to speed what is going on in terms of advances in all of these areas. that is the genesis of the proposal that we have an ocean energy safety institute that can respond. what secretary chu has suggested is in order to be a good regulator, our folks at the interior department need to have the same expertise at the top.

>> very good to see you again. we welcome you back to the committee. we of course will include your full statement in the record as if read but we would like you to make any points you think we particularly need to understand. so go right ahead. i'm going focus on a couple of areas that i think are relative to my experience. specifically i would like to talk this morning about the regulation of mobile offshore drilling unitses. the drilling systems and the certification and regulation of those. some of theas that was alluded to this the prior testimony. i would also like at this time to talk about some of the entities and i think that is a

geeky term but we had a science team and solutions group and a technical group. some of that relates to what secretary salazar and secretary hayes were talking about. we need to figure out how the institutionalize in the ongoing process and just a couple of comments about the oil spill on trust fund and liable issues. this is a very large, complex problem. i testified before the committee almost a year ago to the day on these issues and took excerpts from this testimony and included them. if you put too much into one bill as the senator said you're going to have trouble moving forward on these safety issues. i would be glad to go into any questions you might have for me, sir? >> let me just ask one question, obviously on these offshore drilling units, these mobile offshore drilling units, what is

the main point there, lack of requirements that we have for third party review of the key drilling equipment involved with those, is that the issue? >> yes, sir, let me take both of those statements apart if i could. first of all, mobile drilling units. the deep water horizon was registered in the islands. it is foreign flag that doesn't touch u.s. soil. the jones act. -- the coast guard issues what is called a certificate of compliance. that means they are in compliance with u.s. code or international code or the code of that country. compliance with international code. in other words there was aer isification process that their country is adhering to international standards. we need to take a look at both of those in response in relation to mobile drilling unitses. the first one is how we treat

cruise ships. they carry a large number of u.s. passengers. they don't go port to port but go in and out of a single port. there is such a high concern about the safety of life. to actually inspect these vessels while they are being constructed. we call them control verification exams. i think that is instructive of how we need to deal with it. the second is what we call state control programs. these are foreign flags, ships carrying commodities, cargo or oil. they call on this port in this the united states. we developed a matrix based on the performance to have vessel, the owner over the classification society and the flag they fly. base ond that matrix, if we think there is enough risk we can hold them offshore and make sure they conform with international safety standards and we can deny them entry if not. how they relate to the

certification of mobile drilling units in this country. those conversations going on inside the coast guard now. my recommendation would be to take a look at those two frameworks. the second issue is on the drilling systems themselves. you talked earlier about a.p.i. in consensus, specifications, pretty much accepted as a way to move that equipment in operation. i think we're all in agreement that an independent third party technical entity would inspect those against a set of standards promulgated by legislation pursuant that you would pass. >> thank you very much. senator murkowski? >> thank you. it is good to see you. a couple of questions for you this morning. first of all i would like to focus on the issue of disperseants. do you recall about this time last year, there was a great deal of back and forth about the use of disperse --ants of what

was a safe level, we know how it works. better understanding at the surface but when we are making application subsurface, it is different. it seemed like there was a lot of just back and forth and just some internal issues with regard to the decisions that were being made with the use of disperseants coming from the e.p.a. working with coast guard. the question to you today is does legislation before us raise some of the concerns in interprets of when we are -- how to apply dispersants and is it really good to require them to

prove access to dispersants? just raising questions about dispersants. >> certainly. it relates to senator shaheen's question. we have not done any further r & d, disperseant use, the impacts, what their impact is, putting them on a national schedule which oil spill response can use to source those if preapproved protocols are met. when we got into the spill, that was one of the tools that was authorized under a schedule approved by e.p.a. we started using such large quantities that we moved into an area we had never been before. the well became extremely effective in mixing the dispersants. we ventured into two areas where we had never been before. by extending a regulation that had been issued after the oil

occlusion act of 1990. i think we have to moving forward, given concerns raised on the amount of dispersants and the application that the well had, put a focus on the interactions of the dispersants with the oil, the implications for toxicity in the water and we'll learn more about what that means. everything was in conformance with existing law and regular layings so nothing was done that was legally wrong. it behooves us as the american public to take a closer look a at this. if we think we need more research, we need to take a second look at how these chemicals are tested. >> let's take a look up north then to the arctic. it is my understanding that in alaska, the use of dispersants has not be preauthorized. is that correct?

>> yes, ma'am. i'm going to go on memory here because i have not been in the service for a while now. there was a discussion as i was departing the service about preapproval locally. the way the law is set up, you can use dispersants if certain conditions are met and you can have preapproval to do that if the local team that the federal team that is working on this has gained the consensus and approves it. most places in the country, those preapprovals exist. that did not exist in alaska. i believe there were oxes by the fish and wildlife -- objections by the fish and wildlife service. >> as we are trying to advance oil and gas exploration offshore and we look to the proposals in the plans that are out there, i think this is one of the areas that we need to know and understand how dispersants work in the colder waters. this is not a first.

norway is -- an arctic nation has been operating successfully offshore for decades and looking to move further north from the southern areas. how do we -- how to we make sure that we have appropriately and adequately done the research, don the testing that we need -- done the testing that we need for oil spill cleanup in the event that we need it. we don't want to be sitting -- if something horrible happens, we don't want to be sitting in a situation where we are held off from using a tool in the toolbox because we haven't done the background or the research that we need on this. >> let me talk about dispersants first. i think in relation to dispersants, we need to know that the existing schedule, the disperseant used in the gulf remains approved. nothing has changed. a very public affirmation would be in order so we can move on in

places like alaska and form a collective consensus. beyond that it gets back to senator shaheen's call for r & d and goes well bond looking at controlled systems. we need to look at biodegradables. there are things that we need to look at. the worst time to do r & d is during an oil spill. we had thousands and thousands of offers and requests. there was an ininner agency on r & d set up in 1990. i helped establish that inside the coast guard. the funding tailed off in the first two or three years. you can't do much with a couple 100,000 a year.

priorities shared by e.p.a. and the other agencies that have a stake in this and then a robust schedule and they go out and actually raise the questions, do the research and come up with a policy decision on how the move forward. >> i would certainly concur. one of the great disappointments following exxon valdez tragedy is a lot of lessons learned there and in fact we really haven't made much progress in term turnovers technology and advancements when it comes to cleanup in water from the time of the exxon valdez 20 years ago to what we saw with macondo. again, it is one these wakeup calls. who was doing the research. we cannot be in a situation where the technology for cleanup has just been at a standstill

while the technologies that allow us to produce in different places under different conditions, they are allowing us to leapfrog forward. good for us. what also has to leap fwrog that are the technologies and the advancements that give us that protection. if you will, or that insurance that in the vents of a disaster, that we are prepared and i would like to think when it comes to the use of dispersants or other spill containment measures we are spending the same amount of time and energy to introduce them and keep them current as we are facilitating the technologies to access the resource. >> complete agreement, ma'am. i would support any legislation that does that. >> senator shaheen. >> i want to get back to the r & d question that senator murkowski has raised. i want to clarify what i think

you said. when you were talking about mobile flag drilling units, do i understand from your comments that right now we do not inspect those foreign flag drilling mobile units? >> we do but included in that is paperwork that demonstrates compliance with international standards or with the code that we would use for a u.s. flag vessel. it does not include in my view a more robust inspection. the regime for tankers and cargo ships and the control for cruise ships. i think mobile units have moved into a risk area that requires due dill jans. -- diligence. >> thank you for that clarification. i want to go back to the r & d question because i think we all now agreed that something important to do and we're not doing it enough or well enough and we don't have the private sector involved. last year following the oil

spill, chairman bingaman, senator call the and i -- udahl worked to fund activities because one of the issues that we discovered as you point out is that turned oil pollution act, while there was funding several years after the act was passed, that that funding trailed off pretty dramatically. so -- in your experience, is a dedicated funding source one of the requirements for ensuring that we get adequate r & d done? >> ma'am, as an old budget director for the coast guard, you don't make policy until you spend money. but i would say this. there is a mechanism created under the oil spill liability trust fund which is funded

through tax on crude oil coming into this country. i don't think a new source of funds has to be sought. i think there is probably statutory authority now to use the trust fund to fund a modest amount of r & d every year. $25 million is a modest amount given research and development completely dwarfed by the you aren't effort. >> one of the things that amazed me when i questioned the c.e.o.s who were part of the oil spill last year, at the hearing about this issue, was that none of their companies who were doing any research at all around oil spills r & d, do you have any thoughts about how we could encourage those companies who are doing the drilling as senator murkowski said spend the same amount of money researching how to clean up as they are on

effective drilling practices. >> thrnk there are two drivers of behaviors for for the company. we may have an opportunity to go back and look at plan review, which is something we need to do and have the coast guard involved because they are responsible for directing the cleanup in planned review for the oil platforms. but how you create the requirement for the response plans and what you tell them they have to have available can drive them and create resources. if you want an incentive, take a look at how you want to structure the plans, it would create incentive for them to go out and do research and development to get more involved in that moving forward. i think that would be one way to do it. >> ok. one -- that's a helpful suggestion. one of the other things we heard looking at how the oil pollution

act had worked is that the inner agency committee that was set up to direct the oil spill r & d plan had not been as effective as it might have been. suggestions to us were that the challenge was that it wasn't clear who was in charge and that created a real issue around getting things done. do you have a perspective on that? >> i do. there is an existing standing body called the national response team. part of the national contingency plan. it is the ultimate body that we would go during an actual spill. they exist. they are in panel. they represent the principles of the department. agencies have involved. sthy body as a perfect mechanism to be in the oversight responsibility for the r & d committee. when you have this, -- they are not going to be a very robust

committee to begin with. >> who tchares committee? >> i think it rotates. i can check and answer for the record. i would take a guess it might be the coast guard n.p.a. >> admiral, thank you very much for your excellent testimony. we will try to take your suggestions to heart. thank you for your service to the country last year. we greatly appreciate it. tim geithner said yesterday that the nation's deficit threatens to undermine the economy and called for a legally binding cap on national debt. his remarks are next on c-span. topics on "washington journal" include the 2012 election, pakistan and national security.

>> next, treasury secretary tim geithner talks about the need to reduce the federal debt in order to help spur long-term economic growth. his remarks at the harvard club in new york were sponsored by the shorenstein foundation, part of harvard university. [applause] >> good afternoon. i'm alex jones, director of the jones shorenstien and i welcome you to the event with secretary of the treasury tim geithner. it is special not only because we have the secretary with us, but a because it is also a memorial

he endowed the center as a memorial to his daughter. a superb journalist whoied of cancer before her time. walter wanted her life to be honored by something as a meaningful and dynamic as the life she had lived. i am proud to say that the center will celebrate its 25th anniversary this year. walter was also a great citizen. he cared deeply abo his country, and it was his lifelong custom to loo over the horizon and seek solutions. he was especially attuned to its

financial affairs and had strg views about how to safeguard the nation economically. re you with us today, the crisis of would have been at the top of this list of his concerns. the family joined with us inviting secretary of the treasury to address those concerns today. please join me in recognizing him and the members of the families who are present. [applause] i would be remiss if i did not publicly thank the staff of the center. the superb work in putting this together on very short notice. [applause]

for two years, three months, and 22 days, tim geithner has been at the center of a fiscal maelstrom. if he did not have a thick skin when he started, and he now resembles a crocodile by now. before becoming secretary of the treasury, he was chief executive officer of the federal reserve bank of new york. as a journalist, he believed in correcting journalistic errors -- as a journalist, i would like to stress that we have never -- he is a graduate of dartmouth college and johns hopkins school of the dance international studies. he has studied japanese and chinese and lived both places. something that grows ever more important in navigating the

world economy. how has he done his job so far? two years and five months ago, he was being lambasted by both the right and left for his fial rescue plan. yesterday, the headline said tim geithner emerges as obama's indispensable man. it is not to say? -- it is my pleasure and honor to welcome the secretary of the united states treasury, tim geithner. [applause] >> thank you. that was gracious. nice to see you. i admire so much what walter did. when my uncle was the director, i was studying at dartmouth

college. my parents were still living overseas than. i remember sitting on the floor of this office for many hours, sometimes standing, waiting for him to give me a ride down. what a great cause you are engaged in, which is trying to increase -- improved deep debate on policy questions of our time. i want to talk about the question of how we deal with our fiscal challenges to explain why this is so important. what suld be done? the politics and economics and a credible solution. i choose this subject because -- not because it is the only challenge that we face. with unemployment still around 9%, millions of americans still uncertain about their economic future, we face