and republicans y we can't do that either and can't look at cuts in the defense budget, because that would be much too hard on the defense contractors. we say how about the oil industry? how about the $40 billion in tax breaks they are going to get, i mean, does anyone in america really believe that they need tax breaks in order to have an incentive to go out and drill for oil when people are paying $3:50, $4 .00. we can't do that. and self-serve gasoline for grandma and grandpa at the pump. what do they instead? they put an oil rig on top of the medicare card so that the

oil industry can drill into grandma's medicare. and pull out it out in order to provide tax breaks for big oil, for warren buffet, for the prescription drug industry, for the wars in iraq and afghanistan. she's the one responsibleor all of the wasteful spending in the united states. it's all grandma's fault. let's cut medicare. she didn't do enough for our country through the 1930's, 1940's, 1950's and 1960's. it's all on grandma. this drill rig they are building into the pocket books of grandma in order to find that funding, that's what their plan is all about. it's an oil pipeline into the pocketbooks of the seniors. they want to cut checkups for grandma while they cut checks for the oil companies. they want to cut health care and give wealth care to big oil

companies d billionaires and prescription drug companies. their plan is big tax breaks for big oil and tough breaks for grandma and for the seniors in our country. and the c.e.o. of chevron, he said it's un-american to think about increasing taxes on the oil companies. i say it's unbelievable you could make that argument and even more unbelievable that the republican party would accept that argument and cut medicare for grandma, to privatize it and hand it over to the insurance industry, increase the costs by $6,000 per year even if they say to warren buffet, oil compies, big drug companies, the arms contractors, don't worry, we are going to protect your programs. it's just grandma on the cutting block. ladies and gentlemen, this is a debate of historical dimension and until the republicans come forward with a plan which they

don't have in order to make medicare solvent by raising the revenues out of these other areas from millionaires, you know, from the oil industry and from others, do not expect us to say to grandma, it's your fault. it's not her fault. she built this country. she deserves this benefit and we should not be cutting it. this republican plan to end medicare is just a plan to turn it over to the insurance company. vote no. the chair: the gentleman's time has expired. the gentleman from new york -- oh, the gentleman from connecticut. mr. courtney: i move t strike the last word. i rise in opposition to the underlying bill, which is a bill that would repeal the provision of the affordable care act which was aimed to strengthen the frime mare infrastructure of this country, which is a huge challenge for the medicare program but for se reason, medicare just seems to be the

target. i think it's important for people to remember that in 1965, when medicare was passed and signed into law on harry truman's front porch, only half of america's seniors had health insunce. part of it was because of the cost but part oit was because health insurance industry wouldn't insure that demographic. it was too high a risk to write insurance policies for people who, again, because of nature, carried the highest degree of risk in terms of illness and disease. . to fund it through medicare part b premiums said that we coulraise the dignity and quality of life fopeople over age 65 and extend life expectency but the republican party has been targeting this program over and over again.

in the 1990's they came out with medicare part c, medicare plus choice which is, again, giving insurance companies a set payment who promise to provide a more efficient lower cost product for seniors. and what happened? insurance companies enrolled millions of seniors in medicare plus choice products and realizing in a short space of time that they did not in fact have the funds to create a sustainable product. they canceled coverage for seniors all across the country. i was at hearings in connecticuin 1998 where seniors who signed up for these programs finally got notification that the insurance companies changed their mind and dropped them like a hot potato, some seniors in the middle of cancer treatments and chronic disease treatments were left high and dry without coverage so that program failed. later we had medicare advantage. medicare advantage was sold on the, again, the premise it

would provide savings for seniors. what happened? the department of health and human services had to offer insurance companies 120% of the baseline cost for medicare in order to entice insurance companies to participate in the medicare advantage program. a ridiculous overpayment treating unfairly seniors who were on traditional medicare and paying for supplemental insurance. last year we did something about that unfairness by equalizing payments on traditional medicare and medicare advantage. and today what we have the ryan republican plan which says you get an $8,000 voucher if you're under age 5 a and good luck in trying to -- 55 and good luck in trying to find coverage in a market that's going to be very, very careful aboutot extending actual coverage because of the risk that's attached to it. now, they rank unfairness of saying that they're going to create a two-tier system for

people over the age of 55 and people under the age of 55 -- it's obvious in my own family. i'm 58 years old. my wife, a pediatric practitioners, she gets stuck with the loser version of medicare upped this program. again, the unfairness of it is open. it's why the american people are turning against the republican jearned. we ask, what's your alternative? look at the report that came out last week. look at it. at it said is the affordable care act in fact extended solvency for the medicare program by eight years. we did suffer some -- some reductions but that was because of the economy. read the trussees language. smart efficiencies which were introduced in the medicare program through the affordable care act in fact made the medicare program healthier. if you look at the ryan republican budget plan, they

took every nickel of those savings from the affordable care act even though that caucus demagogued all across the country, campaigning about so-called medicare cuts in the affordable care act, well, the ryan republican plan incorporated all those changes in theffordable care act but at the same time took away the advantages in the affordable care act including prescription drugs, smoking cessation, all the smart changes the affordable care act made to provide for a smarter benefit for seniors. the fact of the matter is th democrats do have an alternative. we have a program which we passed last year which for the first time in decades extended the solvency of the program. let's preserve it. let's reject the ryan republican micare plan. the chr: the gentleman's time has expired.

the gentleman from washington. the gentleman from washington. >> i move to strike the last word. the chair: the gentleman is recognized for five minutes. mr. mcdermott: madam chairman, i rise in opposition to this underlying bill. it reminds me, as i listen to this debate, of debates surrounding the vietnam war. i remember a villaged that was bombed by a military unit and the officer who had him do it said -- asked why he did it. he said, well, i destroyed it to save it. now, that's the argument we're hearing today on medicare. we have to destroy it to save it. now, ask yourself -- and there are a lot of people watching, madam speaker -- if i were sitting at home trying to figure what thess all about --

why would representative ryan ggest that a voucher system is a way to save medicare? because of the rising cost. everyone knows that the cost to medicare and medication and health care in this nation is totally out of control. now, president obama came up with a plan which he brought out here. it wasn't like he created something that nobody had ever thought about before in the whole united states. he looked at the state of massachusetts. it's been a place where a lot of great this have come from. and he saw what governor romney, a republican, a republican thought to have a universal plan for massachusetts. so they passed the law and they covered everybody in massachusetts. now, then came the question -- once you got access for

everybody, how do you control the costs? well, then the problems developed. and the problem was they found in massachusetts they didn't have eugh primary care physicians. now, what does that have to do with it? that's what this bill is about. this bill is about the training of primary care physicians. what everybody in this country needs is a physician that knows them and h a medical home. when they get sick they go to that person, the doctor knows them. if they need some preventive care, the doctor takes care of it. the doctor does it in the very cost efficient way before the catastrophes. now, for many people in this country who don't have a primary care physician, they sit at home and say, well, i got to wait until i'm really, really sick and then they go to the emergency room. now, if you have your blood pressure monitored and you take

medication, you can live a long life. but if you don't, you are very likely to wind up with a stroke. now, we spend millions of dollars on stroke victims that could have been prevented by good primary care. and we say to ourselves, well, why don't we have more primary care physicians? well, because the health care system is designed to take care of people after the big event, after they got the cancer we'll spend millions of dollars on cancer treatment. we'll spend millions of dollars on heart problems, on all these things where prevention could have prevented it all and cost less. that's what every industrialized country in the world has done. it's why the swiss are able to provide universal coverage to everybody in switzerland for a

little over one half of what we spend in the united states. because they provide good preventive care in the form of general practice, general medicine. that's true in england, in norway, in canada, in every other country except the united states where we are dominated by specialists. now, in this country if you get sick or you have a pain, if you don't have a primary care physician, a doctor who knows you, you call up your friends and say, i got a pain in my leg? what -- pain in my leg, what should i do? well, i saw an orthopedic surgeon and his name is such. you go to a specialist and that person looks at your leg. he doesn't look at the rest of you. he doesn't know your whole history. when i started in medical school, the -- we were taught at the very begiing was, listen to the patient. he's telling you wt's the matter with him.

and everybody knows that doctors are running on a convair belt today running after conveyer belt today because we have not invested in primary care physicians. now, the average kid going to medical school would like to take care of people -- comes out they are $250,000 in debt. the chair: the gentleman's time has expired. mr. mcdermott: this bill is making that problem worse. therefore, it's bad for grandma and everybody else. the chair: the gentleman's time has expired. the gentleman from georgia. mr. gingre i move to strike the last word. the chair: the gentleman is recognized for five minutes. mr. gingrey: i thank the chairwoman. sitting in my office listening to this debate, i can't help

but feel like this is a bunch of demagoguery on the part of our colleagues on the democratic side of the aisle. i take this opportunity to oppose an amendment, but more importantly to ask my colleagues to stop this demagoguery in regard to throwing grandma under thbus in reference to the medicare program and what our side of the aisle has proposed in the republican budget. you know, the average age of this body is 58 years old. almost all of us are grandma and grandpa, and you're running these ads all across the nation, i guess particularly in new york 26, showing a reasonable facsimile of our fantastic chairman of the budget committee pushing grandma in a wheelchair off the

cliff. look, new york 26 is over. you don't need any more votes. stomach all this demagoguery. you've done -- stop all this demagoguery. you've done nothing to the medicare program. what is in the 2012 budget, the obama budget, that has done anything to trying to solve the medicare program which wl be bankrupt in 2024 if nothing is done? that is the total irresponsibility and the hypocrisy of this side of the aisle, madam chairman, and the responsible side of the aisle is the republican side of the aisle which says, look, let's save this program for our children andur grandchildren, guarantee, protect and strengthen it for grandma, grandpa, our current seniors. and not only the current seniors who are 65 and already disabled and already on the

medicare program, but anybody who will come into the medicare program within the next 10 years. and, you know, madam chairman, at that point in 2022, you'll have about 65 million programs -- million people on the medicare program as we know it. traditional medicare. they'll be on that program until their natural death. and many of them, because of our great health care systemn our country, will live to be 90 years old. so this idea of killing medire is an absolute misinterpretation, and you know it. you're misleading the american people. this program that we are proposing -- and it's a proposal. it's something we can work together on both sides of the aisle. we can negotiate. you know, it's not set in stone. but what we say, what speaker boehner says, what chairman ryan says is, look, let's try

this program in 2022 where people coming into medicare at age 65, many of whom are working and in excellent health, we will simply give them a premium support but not a voucher in their hands but to send to the insurance compan of their choice. let them get their medical care where members of congress get their medical care. let th get the same options to choose from, madam chairman. this is what this is about. if it's $8,000 it will be adjusted every year for inflation and that average $8,000 will be higher for an individual who comes into the medicare program at age 65 that's already sick, that already has heart disease or diabetes or is on dialysis. it's somebody as they get older, that premium support will increase. this is the way we save the

medicare program. and oh, yes, by the way, folks like us, like members of congress, our premium support will be significantly less because we're not warren buffett but we can afford to pay more and we should pay more. if it's $4,000 more, so be it. we save the program for those who need it the most, the who are middle and low-income seniors, and that is the compassionate thing to do. so colleagues, stop this demagoguery. let's get together. let's work together and solve this problem once and for all. i yield back. the chair: the gentleman yields back. members are reminded to address their comments to the chair. the gentlewoman from illinois. >> yes, i move to strike the last word. the chair: the gentlewoman is recognized for five minutes. >> i'm getting a kick out of this debate. i really a ms. schakowsky: we hear the

republican colleagues coming up saying, end the demagoguery, end the tv ads. i want to remind you, that the 2010 elections, the republican people went on televisionnd, yes, how about demagogued the issue of medicare saying democrats wanted to cut $500 billion from medicare. well, let's talk about the truth. . here is our plan to save medicare. and that was to say in the affordle care act, yes, we are going to cut subsidies to the insurance companies that were bill beinging the government and the taxpayers and we were having to overpay them and yes, we are going to cut waste and fraud

from the medicare program and we will save $500 billion and not only would we not only cut a single penny from benefits, but we were able to increase benefits while trimming medicare. you scared the heck of seniors, but never mentioned, of course, at the same time we reduce the cost of medicare. we improve medicare by adding to its solvency. we closed the doughnut hole, making prescription drugs more affordable and provided a wellss exam every year at no cost and we provided preventative services with no cost sharing. but nevertheless, on television, those ads warning against those democrats who didn't cut one thing from medicare and improved it. and now you're saying, well, we

aren't going to do anything to people 55 and under. to me that sounds like, 55 and under, you better look out. now, the ads in new york are working because people ve their medicare and what they don't want to see, you know all but four republicans voted to literally end medicare. you can call it something else, but you can't call it medicare, because those guaranteed benefits are gone. it makes huge cuts in medicare benefits. seniors that fall under the new plan, would have to pay $6,000 more a year. that's what the congressional budget office says. $6,000 more a year out of pocket for their health care and would put insurance company bureaucrats in charge of seniorso health care, letting insurers decide what tests and what treatments th seniors

get, throwing seniors back into the arms of the insurance companies who have shown no love to them. and so let's look at what the american people think about medicare. well, if you are 65 years and older, 93% of americans say the medicare program as it is right now is very important or sowhat important to them, actually 83%, very important. 55 to 64, 91% say medicare is very important. that's 74% or somewhat important. an if you are 40 to 54, we have 789% of americans -- 79% of americans who say it is very or somewhat important and 18 to 39, 75%. people get i medicare works. medicare is efficient.

medicare is good for our country, for people with disabilities and for the seniors. and if we're looking to save medicare, we do have a plan. we know how to make that more efficient. we have done it in the affordable care act. and we are willing to sit down and talk about how we make medicare more efficient, but not by ruining and destroying and getting rid of medicare to the point that you got to find another name. it won't be medicare anymore. so they have admted, it em to me, that people 55 and younger, you better look out, because that program that will allow our seniors to live perhaps to 90 years old, people who are going to be eligible for medicare as it is right now will no longer be in place. and we aren't talking about rich people. we're talking about poor

seniors, middle-class people. don't support this plan. the chair: the gentlewoman's time is expired. members are reminded not to traffic the well while another member is under recognition. the gentleman from. the gentleman from is recognized for five minutes. >> thank you, madam chair. i was sitting backn my office and saw the debate break out on the floor of the house, medicare proposal, the proposal to rese medicare from certain -- i wonder because i sit on the rules committee and it has the great pleasures of deciding what comes to the floor and i knew that this wasn't medicare reform day. this was the amendment by ms. fo to protect life and an amendment to a bill brought to the floor by my colleague, mr.

gutry which restores congressional oversight, those things i ran for congress to do. mr. woodall: and i'm in support of the underlying bill, but when i hear this talk about medicare and all the games and what has happened in the past, i have to say i have only been here, this is month number five for me. i'm still brand newnd optimistic to believe at it doesn't have to be about sound bites, that itan be about solutions and i want to say to my colleagues on the democratic side of the aisle, when you say you came up with a proposal in the president's health care bill last year to deal with medicare, i believe you. i take you at your word. i saw that medicare advantage was removed as an option for seniors. that distressed me. i saw new benefitsad been added, madam char, added to a program that's already going bankrupt. i saw that that is one direction

that you can take the medicare program. now i'm a proud member of the house budget committee. the house budget committee that worked hard and long to produce the medicare reform proposal that we're talking about, oddly enough, here today. and it's a program that saves medicare for everybody 55 years of age and under and provides them withhoice. i just want to ll a personal story. i don't consume a lot of health care. i have been very blessed in that regard, but had to go in for a chest ct the oth day. i have a medical savings account so i'm responsible for the first couple thousand dollars of my bill. i got on the internet and started shopping around and turns out the difference between the cheapest ct and most expensive chest ct in my home state ofeorgia, four times.

i spent my $4 a gallon of gas to go to the cheap one. the most expensive one was right next door. folks, when we talk about how, we the united states congress, , the u.s. house of representatives voted to save medicare in the 2012 budget proposal, we talked about saving it by providing choice. my colleagues are exactly right, we did that in 1997. and can we save it by providing more choice. we added medicare advantage but didn't get much further than that. this is that next step, because we know that choice matters. we know that choice matters. the gentleman who held my seat and been retired used to tell the story of his mother in upstate minnesota and every tuesday she would go to the doctor with a group of friends to make sure everything was ok. just to get checked out.

one day, a terrible snowstorm, wind was blowing and snow was piling up and they got together on tuesday and edna wasn't there. and they called around and asked around and turned out she wasn't feeling well and couldn't be there that day. you make different choices when you are not responsible for the bills. this isn't just a micare issue, but a philosophical difference between these two sides of the aisle about what kind of america we are going to live in going forward, are we going to live in one where we he you along and make fundamental choices for you. it's clear to me why my constituents sent me to washington as a first-time elected official. this year, it's clear to me with the 2012 budget proposal takes this house and takes this country. i implore my colleagues, we can absolutely argue about your plan

as it was iroduced in the president's health care bill and our plan as it was introduced in the fiscal year 2012 budget proposal. but let's not make it anything other than what it is. it is a difference in two visions. your saves medicare for six years, our saves medicare for a lifetime. and we owe the voters no less. i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from colorado. mr. perlmutter: move to strike the last word. the chair: the gentleman is recognized for five minutes. mr. perlmutter: and i just say to my friend from georgia, who really is my friend, and this isn't out demagogry, sir, and what i would say, madam chair, the issue before us is what got our country into a financial pickle. the republicans want to pick on medicare. but americans know -- i had a

government in a grocery this weekend and an older came up to me and said, why is there such a focus on medicare, something that has been working for 50 years? it's helping having seniors longer and happier lives. 10 years ago this country was running a surplus. running a surplus. revenues exceeded expenses. under bill clinton, revenues were exceeding expens and then there was a decision under the bush administration to cut taxes. ok, revenues exceeding expenses, ok, that cost us $1 trillion over the next 10 years. then the decision to prosecute two wars, says to me, that cost about $1 trillion, didn't it, mr. congressman? i said yeah. medicare, 10 years ago, we're fine, revenues exceed expenses

and now we've got tax cu for millionaires and billionaires, $1 trillion, two wars and then this big crash on wall street. well, we lost revenues and we lost -- and had bigger expenses, that was a couple trillion dollars, wasn't it, sir? i said that's about right. he said that turned our budget upside down and why e we focusing on medicare, why blame medicare for $4 trillion of losses to the united states? it wasn't medicare that is harming the financial success of this country. so why all the blame when this program really has been working for seniors for so long? so i would say to my friends on the republican side of the aisle, this is a program that my friends haven't liked since its inception -- in a second iill yield to my friend from virginia

georgia. but this is a program that republicans haven't liked from its inception. so to turn the target into medicare and not have tax cuts for billionaires and millionaires and should be part of the equation of balancing our budget or taking away the incentives and tax benefits to oil industries but say no we are going to focus on medicare, in minimum, that's just wrong. yield to my friend from georgia. mr. gingrey: i would ask him maybe he would want to answer, how much of the windfall profit taxes, if you will, against big oil, big farm or big anything are you going to put back into the medicare program? and by the way, how much of the medicare advantage cuts that came from obamacare arectually going back into the medicare program as we know it?

mr. perlmuer: taking my time back, if those tax benefits are taken away at $100 a barrel, we can put them into medicare and balance the budget. my other friend from georgia said this is what's causing the bankruptcy. that's just not true. you know, this country was running a surplus, for goodness sakes, and americans understand that. ey know what got us into trouble financially andt wasn't medicare. so now to take it out of medicare and take it out of our senior citizens where a program is actually working, the goal of that program is so americans could live longer, healthier lives in their senior years. it's working, but, no, let's blame that, instead of the tax cuts for millionair and billionaires, let's forget about those wars and the cost to the country and the crash on wall street. my friends on the republican side of the aisle say, this is a

perfect time to go after medicare. we haven't liked it beforewe still don't like it. let's get it. i yield back. the chair: for what purpose does the gentleman from new york rise? mr. weiner: i'm waiting to be recognized. now it sounds like you're proceeding to shut down debate. i say that it is in violation of the order of the house as decided by the rules committee to permit members to speak for five minutes on this matter. it's early in the evening, many membs are waiting to speak. the chair: pursuant to clause 6 of rule 18, the chair may resume proceedings on a postponed question at any time. mr. weiner: point of parliamentary inquiry. the chair: the gentleman may state his parliamentary inquiry. mr. weiner: so the chair is deciding, even though a member is standing here, not to mention

members are here seeking to be recognized, i believe of both parties, the chair is choosing at this moment that this is the moment to cut off debate early in the evening when we have plenty of work to do and members seek to speak and offer amendments, is this the deciding arbitrarily or is she given guidance by the republican leadership who don't want to hear any more critique? the chair: the chair is exercising h prerogative to resume proceedings at any time. >> work continues tomorrow. the house also to cut defense programs. -- took up defense programs. here is a portion from the house debate. the whole house on the state of the union for consideration of h.r. 1540, which the clerk will report by

title. the clerk: a bill to authorize appropriations for fiscal year 2012 for military activities of the department of defense and for military construction, to prescribe military personnel strengths for 2012 and for other purposes. the chair: pursuant to the rule, the bill is considered read the first time. the gentleman from california, mr. mckeon, the gentleman from washington, mr. smith, each will control 30 minutes. the chair recognizes the gentleman from california. mr. mckeon: mr. chairman, i yield myself such time as i may consume. the chair: the gentleman is recognized. mr. mckeon: i rise in support of h.r. 1540, the national defense authorization act for fiscal year 2012, which overwhelmingly passed the committee on armed services on a vote of 60 to 1. in keeping with the committee's bipartisanship, ranking member smith and i worked collectively to input members opinions and

provide the proper care and logistical support for our fighting forces and help us meet the challenges of the 21st century. it authorizes $553 billion for the department of defense base budget consistent with the president's budget request and the allocation provided by the house budget committee. it also authorizes $18 billion for the development of energy's defense programs and $118.9 billion for overseas contingency operations. the legislation we will consider today makes good on my promise when i was selected to lead this committee that this committee would scrutinize the department of defense's budget and identify inefficiencies to invest those savings in the higher national security priorities. we examined every aspect of the defense enterprise, not as a

target for arbitrary funding reductions as the current administration has proposed but to find ways we can accomplish the mission for providing for the common defense more effectively. the national defense authorization act for fiscal year 2012 achieves these goals by working to ensure our troops deployed in afghanistan, iraq and around the world have the equipment, resources, authorities, training and time they need to successfully complete their missions and return home safely. provide our war fighters and families with the resources and support they need, deserve and have earned. invest in the capabilities and force structure needed to protect the united states from current and future threats. mandate physical responsibility, transparency and accountability within the department of defense and incentivize competition for every taxpayer dollar associated with funding department of defense requirements.

mr. chairman, i know there have been many questions raised by the aclu and others relating to a provision in our bill dealing with the 2001 authorization for use of military force. i would like to address some of those concerns now. section 103-4 affirms that the president is authorized to use all necessary and appropriate force against nations, organizations and persons who are part of or are substantially supporting al qaeda, the taliban and associated forces. it also explicitly affirms the president's authority to detain certain individuals who qualify under this standard i just described, which congress has never explicitly stated. it's important to note that the u.s. supreme court has accepted the president's authority to detain individuals as within the powers granted. the language in section 1034 is

similar to the obama administration's interpretation of the authorities provided pursuant to the amuf, in particular, march 13, 2009 filing filed in the united states district court for the district of columbia. while they have accepted the administration's interpretation of the amuf, it is under constant attack and litigation relating to petitions filed by guantanamo detainees. because of these ongoing challenges, the administration's interpretation may receive less favorable treatment over time if congress refuses to affirm it. section 1034 is not intend todd alter the president's existing authority pursuant to the aumf in any way. it's intended to only reinforce it. i believe there are men and women in uniform deserve to be on solid legal footing as they risk their lives in defense of the united states.

finally, some have suggested section 1034 was in included in the dark of night. i note this language was included in the detainee security act of 2011 and discussed during a committee hearing on march 17. we have sought input from the administration as well as ranking member smith, his staff and numerous outside experts. the process used to craft this legislation is historic in its transparency. in fact, a copy of my mark was distributed to committee members' offices five days before our markup. the legislation including the funding tables, was posted online nearly 48 hours in advance of our markup. it is noteworthy that there are no earmarks in the national defense authorization act for fiscal year 2012. every member request to fund a defense capability was voted on

and includes language requiring merit-based or competitive selection procedures. to those who are concerned that members may undual influence the department of defense to direct funds to a particular entity, i can only recall the words of the former chairman of the committee, congressman skelton, who would say, read the amendment. what does it say? if d.o.d. chooses to violate the law in a text of the provision requiring merit-based selection, the armed services committee will take them to task. i thank the chairman and ranking member of the rules committee, for working with us to bring this measure to the floor. i urge all my colleagues to support passage of this bill. in partnership with you, we look forward to passing the 50th consecutive national defense authorization act and i reserve the balance of my time. the chair: the gentleman reserves the balance of his

time. the gentleman from washington. mr. smith: i yield myself such time as i may consume. i rise in support of this bill, 2012 national defense authorization act and i begin by thanking the chairman and staffs inputting together this bill. i think mr. mckeon has more than risen to the level of the bipartisan tradition of our committee and upheld the tradition held by our predecessors that this committee should work together, republicans and dem cats and be an open and transparent process and we feel good about the open process we have had. we do not agree on everything that is in the bill but where there were disagreements, we had open and honest dialogue and votes in the committee and now votes on the floor and the chairman, members of both parties and staffs have put together a very strong bill that will protect our national defense and meet the primary duty of this congress and that is to provide for the national dens and national security of our country. i thank the chairman and his staff for that work and i look

forward to continue to work with him throughout this process. i want to note one of our members who was not able to be there during the course of our markup, but nonetheless, contributed greatly to the process. we all miss congresswoman giffords presence on the committee but worked with her staff on issues and priorities that have been important to her during her time on the committee and she and her staff are contributing to this process. i thank them and we look forward to gabby coming back to this body and putting this work. there are five main priorities we should focus on. whenever we have troops out in the battlefield as they are in afghanistan and iraq and also spread out in a whole lot of other countries, priority number one has to be make sure that we give them the support, the equipment and means necessary to carry out the mission we have given them. this bill prioritizes them both within the base bill and the overseas contingency operations

funding to make sure our troops have the equipment they need to carry out the mission we have given them. second, the counterterrorism and the fight against al qaeda must be a top priority of this committee and i believe we strongly support that once again. we all learned as a nation and the world with the killing of osama bin laden, how effective our special operations command can be. we need to be mindful that the job is not done and we need to continue to fund those priorities and i want to commend the folks at special operations command. i have the great privilege of chairing the subcommittee that has jurisdiction over the special operations command for three years and they do a fantastic job for our nation and everybody saw that in the case of getting bin laden and do it every day in many ways that many people do not know or recognize. so i thank them for their outstanding work. we have a huge challenge with the budget. finding efficiencies in the defense budget is going to be

critical. as we have heard over and over again, we have a massive deficit. we have a deficit that is over 33% of what we spend. the defense budget is 20% of the overall budget. you cannot take 20% of the overall budget off the table and effectively deal with the deficit of that size. we are going to have to look carefully of where we spend our money in defense just like everywhere else, to make sure we are getting the most for our dollar. we have done that effectively in this bill. but i believe in going forward, that task is going to get harder, not easier. we must find ways to find ways to save money. our policy in afghanistan is going to be critical. we fund our troops in the effort that they are performing right now in afghanistan, but going forward, we are going to need to begin those troops home to complete that mission. we will have some amendments that address that issue during the course of this bill. i look forward to that bill.

this congress needs to play a strong role in concluding our role in afghanistan. and lastly, one thing that is very important is detainee policy and aumf. the chairman identified this as a clear priority and congress' voice should be heard on these very, very important issues and we have worked closely on that and we have some areas of disagreement. the biggest one, we will have an amendment on this, is the idea whether article 3 courts should continue to be available for guantanamo bay detainees and those who would be captured in similar situations in the future. i believe we should and always have them in article 3 courts. military commissions has its place. but article 3 courts have served this country for over 200 years. we have tried and convicted over 400 terrorists in article 3 federal courts. right now in the united states of america, we have over 300 of

them safely locked up. we can do it. it's an option we should not take away from the president. i thank the chairman for a very open process. bipartisanship is the tradition of this committee and he has upheld this very well and i look forward to working with him as we go forward in this process and i reserve the balance of my time. >> i yield three minutes to the chairman of the subcommittee on tactical error and land forces, the gentleman from maryland, mr. bartlett. the chair: the gentleman from maryland voiced for three minutes. mr. barton: thank you. i rise in support of h.r. -- mr. bartlett: thank you. i rise in support of the national defense authorization act of 2012. our jurisdiction includes approximately $78 billion of selected programs within the army, navy, marine corps, air force and office of the secretary of defense procurement

and research and development accounts. i first want to thank the subcommittee's ranking member for his support this year in putting the bill together. ours is a truly bipartisan effort as it is for the full committee under the leadership of chairman mckeon and ranking member smith. the committee's focus is on supporting the men and women of the armed forces and their families, providing them the equipment they need and the support they deserve. our first priority, of course, is in providing the equipment to support our military personnel serving in iraq and afghanistan. the bill adds no additional funding for the department of defense programs within the subcommittee's jurisdiction. the bill however reallocates approximately $1.5 billion from canceled, delayed or otherwise lower priority programs to higher priority requirements. first an additional $425 million is provided for modernization of tanks and badly fighting vehicles.

the army budget request would result in a costly redux rate for these two -- reduction rate for these two programs which could last from one to three years. these production lines cannot be turned on and off like a light switch. the unique skills of the work force cannot be put on the shelf. for the apron production alone, there are almost 900 suppliers. 75% of these suppliers are small businesses. based on the information we have received today, it is more efficient to keep these lines warm than it would be to shut them down and start them up again. second, an additional $325 million is provided for the national guard and reserve equipment account for equipment shortfalls. thirdly, the bill increases funding at army and air force ranges by $209 million. the pentagon has recently acknowledged that its appropriated large fiscal year 2012 reductions in the army and fair force -- air force could lead to unintended consequences and acknowledge the need to

readdress this issue especially in regards to complying with the acquisition reform act. finally, acquisition and sustainment of the engine for the f-35 arke over its lifetime is estimated to cost well over $100 billion. the armed forces committee has believed and -- delete and continues to delete the acquisition and sustainment should be done on a competitive basis. that is why on a bipartisan basis the committee has strongly supported the final development phase of the f-35 competitive engine program since it began nearly six years ago. although the committee's bill provides no additional funding for the f-35 aircraft competitive engine program, the bill takes strong bipartisan action that was spossed -- supported by a recent vote of 55-5 by the committee to enable the competitive engine contractor to continue development of the competitive engine at no expense to the government or the taxpayer. we strongly urge all of our colleagues on both sides of the aisle to support this bill's innovative approach to continuing the f-35 competitive

engine development program. mr. chairman, i want to thank a truly sue per lative staff and thank the people for the assistance on a really good bill. thank you. the chair: the gentleman's time has expired. the gentleman from washington. mr. smith: thank you. i yield three minutes to the gentleman from texas, the ranking member on the air, land subcommittee, mr. rase. the chair: the gentleman from texas voiced for three minutes. raserase thank you and i'd like to thank the gentleman from -- mr. reyes: thank you and i'd like to thank the gentleman for yielding and compliment both the chairman and ranking member for setting the tone to work on a bipartisan basis as has been mentioned by all three of my colleagues that have spoken here this evening. mr. chairman, each year the technical air and land forces subcommittee is charged with conducting oversight of hundreds of thousands of dollars in department of defense programs that total more than $135 billion. all the members of the subcommittee take this task very seriously because the troops in the field depend on congress to provide them with what they

need. conducting this oversight is a challenge because the budget as we get it from the department of defense is often far from perfect. it is the subcommittee's responsibility, therefore, to identify any wasteful spending, very critical at a time when the budget is understressed, find unexecutable funding and also find redundant programs. in addition the subcommittee must also consider pressing d.o.d. needs that are not addressed in the budget. that's the role of congress. during all of that, while making sure equipment continues to flow to the troops in the field, therefore it is sometimes no easy task. despite these challenges i am pleased to report again this year under the leadership of our chairman, chairman bartlett, the subcommittee has put together a very well-balanced product that cuts waste, reallocates funding for more critical -- excuse me, priorities, and ensures that our troops will continue to have the

very best equipment available. i am also pleased with how the bill supports the army and marine corps' -- marine corps in tick. these two armed services have borne the heaviest burdens over the past 10 years of war and this mark does an excellent job, i believe, of helping them to rebuild combat power and prepare for the future. h.r. 1540 fully supports and funds the army's number one development program, the ground combat vehicle. this bill provides ancrease of $425 million for additional m-1 abram's tanks and bradley fighting vehicles and keeps the production line open. the budget request assumed that a three-year shut down of both the aprons and the bradley production lines that would cost the taxpayer $1 billion and eliminate thousands of jobs and diminish the united states' defense industrial base was the way to go. we changed that.

so rather than spending money to lose american jobs, this bill provides funding that will protect those american jobs while it also provides the army with better and more modern equipment. well, this issue will not be fully dealt with in one budget year, i do believe that this bill lays down a better, a smarter and a way that will maintain the army's ground combat vehicle critical to the needs of both the army and the marine corps. finally, the bill fully funds the marine corps' $2.6 billion request for procurement of ground combat vehicle and support equipment. for those reasons and many more, mr. chairman, i urge all members to support h.r. 1540 and it's >> monday at a joint meeting of

congress, benjamin netanyahu said that his country was being provoked toward painful compromise but would not agree with any deal that affected israel security. that is next on c-span. president obama continues his european trip. earlier he and first lady michelle obama visited buckingham palace. that is later. >> commencement addresses from across the country. leaders from politics, business, and entertainment all offering advice and insight to the graduating craft rigid class of 2011. memorial day weekend on c-span. >> mr. speaker, the prime minister of israel. next, binyamin netanyahu addresses a joint member -- meeting of congress.

the speaker: members of congress, i have the high privilege and the distinct honor of presenting to you his excellency, binyamin netanyahu, prime minister of israel.

>> thank you. thank you very much. thank you. vice president biden, speaker boehner, distinguished senators, members of the house, honored guests i'm deeply moved by this warm welcome. an i'm deeply honored that you have given me the opportunity to address congress a second time. mr. vice president, do you remember the time that we were

the new kids in town? and i do see a lot of old friends here. and i see a lot of new friends here as well. democrats and republicans alike. israel has no better friend than america and america has no better friend than israel.

we stand together to defend democracy. we stand together to advance peace. we stand together to fight terrorism. congratulations, america. congratulations, mr. president, you got bin laden. good riddance. in an unstable middle east, israel is the one anchor of stability.

in a region of shifting alliances, israel is america's unwavering ally. israel has always been pro-american, israel will always be pro-american. my friends, you don't have to -- you don't need to do nation building in israel. we are already built. you don't need to export democracy to israel, we've already got it. and you don't need to send american troops to israel, we defend ourselves.

you have been very generous in giving us tools to do the job of defending israel on our own. thank you all and thank you, president obama, for your steadfast commitment to israel's security. i know economic times are tough. i deeply appreciate this. some of you have been telling me that your belief has been reaffirmed in recent months that support for israel's security is a wise investment in our common future. for an epic battle is now under way in the middle east between tyranny and freedom.

a great convulsion is shaking the earth from the ky bert pass to the straits of gibraltar. they have toppled governments. and we can all see that the ground is still shifting. this historic moment holds the promise of a new dawn of freedom and opportunity. there are millions of young people out there who are determined to change their future. we all look at them. they risk their lives. they demand dignity. they desire liberty. these extraordinary citizens in twonies and cairo -- tunis and cairo, those of berlin and

prague in 1989, yet as we share their hopes -- >> you know, i take it as a badge of honor and so should you that in our free societies you can now protest. you can't have these protests in the parliaments in tehran or in tripoli. this is real democracy.

so as we share the hopes of these young people throughout the middle east and iran that they will be able to do what that young woman just did -- i think she's young. i couldn't see quite that far. we must also remember that those hopes would be snuffed out as they were in tehran in 1979. you remember what happened then. the brief democratic spring in tehran was cut short by a

ferocious and unforgiving tyranny and it's this same tyranny that smothered the democratic seasoned and inflicted on that nation hezbollah. so today the middle east stands in a fateful crossroads and like all of you i pray that the peoples of the region choose the path less traveled, the path of liberty. no one knows what this path consists of better than you. nobody. this path of liberty is not

paved by elections alone. it's paved when government permit protests in town squares, when limits are placed on the powers of rulers, when judges are beholden to laws and not men and when human rights cannot be crushed by tribal loyalties or mob rule. israel has always embraced this path in the middle east that's long rejected it, in a region where women are stoned, gays are hanged, christians are persecuted. israel stands out. it is different. and this was seen -- there was

a great english writer in the 19th century, george elliott, it's a sheep -- that was a sued nim in those days. george elliott predicted over a century ago that once established the jewish state -- here's what he said -- the jewish state will shine like a bright star of freedom amid the despotisms of the east. well, that's right. we have a free press, independent courts, an open economy, rambuncto -- rambunctious parliament. don't laugh. you think this is hard.

go there for a day. be my guest. courageous arab protestors are now struggling to secure these very same rights for their peoples, for their societies. we're proud in israel that over one million arab citizens of israel have been enjoying these rights for decades. of the 300 million arabs in the middle east and north africa, only israel's arab citizens enjoy real democratic rights. now, i want you to stop for a second and think about that.

of those 300 million arabs, less than one half of one percent are truly free, and they're all citizens of israel. this sad fact reveals the basic truth. israel is not what is wrong about the middle east. israel is what is right about the middle east. israel fully supports the desire of arab peoples in our region to live freely. we long for the day when israel will be one of many real

democracies in the middle east. 15 years ago i stood at this very podium -- by the way, it hasn't changed. i stood here and i said that democracy must start to take root in the arab world. well, it's begun to take root, and this beginning holds the promise of a brilliant future of peace and prosperity because i believe that a middle east that is genuinely democratic will be a middle east truly at peace. but while we hope for the best and while we work for the best, we must also recognize that powerful forces oppose this future. they oppose democracy.

they oppose peace. far most is iran. they brutalize its own people. they support attacks against american troops in afghanistan and iraq. it subjects lebanon and gaza. it sponsors terror worldwide. when i last stood here i spoke of the consequences of iran developing nuclear weapons. now, time is running out. the hinge of history may soon turn. for the greatest daunger of all could soon be upon us. a militant islamic regime armed with nuclear weapons. militant islam threatens the world. it threatens islam. now, i have no doubt and

absolutely convinced that it will ultimately be defeated. i believe it will eventually succumb to the forces of freedom and progress. it depends on cloistering young minds for a given amount of years and the process of opening up information will ultimately defeat this movement. but like other fanaticisms that were doomed to fail, militant islam could have its eventually demise. a nuclear armed iran would ignite a nuclear arms race in the middle east. it would give terrorists a nuclear umbrella. it would mike the nightmare of nuclear terrorism a clear and present danger throughout the world. i want you to understand what this means because if we don't

stop it, it's coming. they could put a bomb anywhere. they could put it in a missile. they're working on missiles that could reach this city. they could put it on a ship inside a container to reach every port. they could eventually put it in a suitcase or in a subway. now, the threat to my country cannot be overstated. those that dismiss it are sticking their heads in the sand. in less than seven decades after six million jews were murdered, iran's leaders deny the holocaust of the jewish people while calling for the annihilation of the jewish state. leaders who spew such venom should be banned from every respectable forum on the

planet. but there's something that makes the outrage even greater. you know what that is? it's the lack of outrage because in much of the international community the calls for our destruction are met with utter silence. it's even worse because there are many who rush to condemn israel for defending itself against iran's terror proxies.

not you. not america. you acted differently, you've condemned the iran regime and passed tough sanctions against iran. history will salute you, america. president obama has said that the united states is determined to prevent iran from developing nuclear weapons. the president successfully led the security council at the u.n. to adopt sanctions against iran. you in congress passed even tougher sanctions. now, these words are vitally

important, yet the ayatollah regime briefly suspended its nuclear weapons program only once, in 2003, when it feared the possibility of military action. in that same year, muammar gaddafi gave up his nuclear program and for the same reason. the more iran believes that all options are on the table the less the chance of confrontation. and this is why i ask you to

continue to send an unequivocal message that america will never permit iran to develop nuclear weapons. now, as for israel, if history has taught the jewish people anything it is that we must take calls for our destruction seriously. we are a nation that rose from the ashes of the holocaust. when we say never again we mean never again. israel always returns.

israel always reserves the right to defend itself. my friends, while israel will be ever vigilant in its defense we'll never give up our quest for peace. i guess we'll give it up when we achieve it. because we want peace, because we need peace. now, we've achieved historic peace agreement with egypt and jordan and these have held up for decades. i remember what it was like before we had peace. i was nearly killed in a firefight inside the -- i mean that literally -- inside the

suez canal. i was going to the bottom with a 40-pound ammunition pack and somebody reached out to grab me and they're still looking for a guy that would do such a stupid thing. i was nearly killed there. and i remember battling terrorists along both banks of the jordan. too many israelis have lost loved ones. i know their grief. i lost my brother. so no one in israel wants a return to those terrible days. the peace with egypt and jordan has long served as an anchor of stability and peace -- and with -- this peace should be

bolstered by economic and political support to all those who remain committed to peace. the peace agreements between israel and egypt and israel and jordan are vital, but they are not enough. we must also find a way to forge a lasting peace with the palestinians. two years ago i publicly committed to a solution of two states for two peoples, a palestinian state alongside a jewish state. i am willing to make painful

compromises to achieve this historic peace, as the leader of israel, it's my responsibility to lead my people to peace. this is not easy for me. not easy. because i recognize that in a genuine peace we'll be required to give up parts of the ancestral jewish homeland. and you have to understand this, in judea and sue marea, the jewish people are not foreign occupiers. we are not the british and india, we are not the belgiums

in the congo. this is the land of our forefathers. the land of israel. to which abraham brought the idea of one god, where david set out to confront goliath, and where isiah saw vision of eternal peace. no distortion of history, boy, am i reading a lot of distortions of history lately, old and new, no distortion of history can deny the 4,000 -year-old bond between the jewish people and the jewish land. but there is another truth, the palestinians share this small land with us. we seek a peace in which they'll be neither israel's subjects nor

its citizens. they should enjoy a national life of dignity as a free, viable, and independent people living in their own state. they should enjoy a prosperous economy where their creativity and initiative can flourish. we have already seen the beginnings of what is possible. in the last few years the palestinians have begun to build a better life for themselves. by the way, prime minister phi yad has led this effort on their farther and i wish him a speedy recovery from his recent operation.

we have helped on our side, we have helped the palestinian economic growth by removing hundreds of barriers and roadblocks to the free flow of goods and people. and the results have been nothing short of remarkable. the palestinian economy is booming. it's grown by more than 10% a year. and palestinian cities, they look very different today than what they looked just a few years ago. they have shopping malls. movie theaters. restaurants, banks, they even have e-businesses but you can't see that when you visit them. that's what they have. it's a great change. and all of this is happening without peace. so imagine what could happen with peace.

peace would herald a new day for both our peoples, and it could also make the dream of a broader arab-israeli peace a realistic possibility. so now here's the question. you've got to ask it. if the benefits of peace with the palestinians are so clear, why has peace eluded us? because all six israeli prime ministers since the signing of the oslo accords, agreed to establish a palestinian state. myself included. so why is peace -- has peace not been achieved? because so far the palestinians have been unwilling to accept a palestinian state if it meant

accepting a jewish state alongside it. you see, our conflict has never been about the establishment of a palestinian state. it's always been about the existence of the jewish state. this is what this conflict is about. in 1947 the u.n. voted to partition the land into a jewish state and an arab state. the jews said yes. the palestinians said no. in recent years the palestinians twice refused generous offers by israeli prime ministers to establish a palestinian state on

virtually all the territory won by israel in the six-day war. they were simply unwilling to end the conflict. and i regret to say this, they continue to educate their children to hate. they continue to name public squares after terrorists. and worst of all they continue to perpetuate the fantasy that israel will one day be flooded by the desendants of palestinian refugees. my friends, this must come to an end. president obama abbas must do --

president abbas must do what i have done. i stood before my people, and i told you it wasn't easy for me, i stood before my people and said i will accept a palestinian state. it's time for president abbas to stand before his people and say, i will accept a jewish state. those six words will change history. now, make it clear to the palestinians that this conflict must come to an end. that they are not building a palestinian state to continue the conflict with israel, but to end it. those six words will convince the people of israel that they

have a true partner for peace. with such a partner, the palestinian -- rather the israeli people will be prepared to make a far-reaching compromise. i will be prepared to make a far-reaching compromise. this compromise must reflect the dramatic demographic changes that have occurred since 1967. the vast majority of the 650,000 israelis who live beyond the 1967 lines reside in neighborhoods and suburbs of jerusalem and greater tel aviv. now, these areas are densely

populated, but they are geographically quite small. and under any realistic peace agreement, these areas as well as other places of critical strategic and national importance will be incorporatedl . the status of the settlements will be decided only in negotiations, but we must also be honest. so i'm saying today something that should be said publicly, by all those who are serious about peace, in any real peace agreement, in any peace agreement that ends the conflict , some settlements will end up beyond israel's borders.

now the precise delineation of those borders must be negotiated. we'll be generous about the size of the future palestinian states. but as president obama said, the border will be different than the one that existed on june 4, 1967. israel will not return to the boundaries of 1967. >> i want to be very clear on this point, israel will be generous on the signs of the palestinian state but will be very firm on where we put the border with it.

this is an important principle, it shouldn't be lost. we recognize a palestinian state must be big enough to be viable, to be independent, to be prosperous. all of you, and the president, too, have referred to israel as the homeland of the jewish people. just as you have been talking about a future palestinian state, is the homeland of the palestinian people. jews from around the world have a right to immigrate to the one and only jewish state. and palestinians from around the world should have a right to immigrate if they so choose to a palestinian state. here's what this means. it means that the palestinian refugee problem will be resolved outside the borders of israel.

everybody knows this, it's time to say it, it's important. and as for jerusalem, only a democratic israel has protected the freedom of worship for all faiths in the city. throughout the millennial history of the jewish capital, the only time that jews, christians, and muslims could worship freely, could have unfettered access to their holy sites, has been during israel's sovereignty over jerusalem.

jerusalem must never again be divided. jerusalem must remain the united capital of israel. . i know this is a difficult issue for palestinians, but i believe that with creativity and with good will, a solution can be found. sos the peace i plan to forge with a palestinian partner committed to peace. but you know very well that in the middle east, the only peace that will hold is a peace you can defend. so peace must be anchored in security. [applause]

in recent years, israel withdrew from south lebanon and fwa sa. we thought we'd get peace. that's not what we got. we got 12,000 rockets fired from those areas on our cities, on our children by hezbollah and hamas. the u.n. peace keepers in lebanon failed to prevent the smuggling of this weaponry. the european observers in fwa sa, they evaporated overnight. so if israel simply walked out of the territories, the flow of weapons into a future palestinian state would be unchecked and missiles fired from it could reach virtually every home in israel in less than a minute. i want you to think about that, too. imagine there's a siren going

on and we have less than 60 seconds to find shelter from an incoming rocket. would you live that way? do you think anybody can live that way in we're not going to live that way either. the truth is that israel needs unique security arrangements because of its unique size. it's one of the smallest countries in the world. mr. vice president, i'll grant you this, it's bigger than delaware. it's even bigger than rhode island. but that's about it.

israel on the 1967 lines would be half the width of the washington beltway. here's a bit of nostalgia. i came to washington 30 years ago as a young diplomat, it took me a while, but i finally figured it out. there is an america beyond the beltway. but israel on the 1967 lines would be only nine miles wide. so much for strategic depth. so it's therefore vital, absolutely vital that a palestinian state be fully demilitarized and it's vital, absolutely vital, that israel maintain a long-term military presence along the jordan river.

solid security arrangements on the ground are necessary not only to protect the peace, they're necessary to protect israel in case the peace unvalve -- unravels. because in our unstable region, no one can guarantee that our peace partners today will be there tomorrow. and my friends, when i say tomorrow, i don't mean someties tant time in the future. i mean tomorrow. peace can only be achieved around the negotiating table.

the attempt to make a settlement through the united nations will mot make peace. it should be forcefully opposed by all those who want to see this conflict end. i appreciate the president's clear position on this issue. peace cannot be imposed. it must be negotiated. but peace can only be negotiated with partners committed to peace and hamas is not a partner for peace. hamas remains committed to israel's destruction. and to terrorism. they have a charter. that charter not only calls for

the obliteration of israel, it says, kill the jews. everywhere you find them. hamas' leader condemned the killing of osama bin laden and praised him as a holy warrior. again, i want to make this clear. israel is prepared to sit down today and negotiate peace with the palestinian authority. i believe we can fashion a brilliant future for our children. but israel will not negotiate with a palestinian government backed by the palestinian version of al qaeda. that we will not do. so i say to president abbas,

tear up your pact with hamas. sit down and negotiate. make peace with the jewish state. and if you do, i promise you this, israel will not be the last country to welcome a palestinian state as a new member of the united nations. it will be the first to do so. my friends, the momentous trials of the last semplery and the unfolding events of this century attest to the decisive role of the united states in defending peace and advancing

freedom. providence and trust of the united states to be the guardian of liberty. all people who cherish freedom owe a profound debt of gratitude to your great nation. among the most grateful nations is my nation. the people of israel. who have fought for their liberty and survival against impossible odds in ancient and modern times alike. i speak on behalf of the jewish people and the jewish state when i say to you, representives of america, thank you -- representatives of america, thank you. thank you for your unwavering support for israel. thank you for ensuring that the flame of freedom burns bright throughout the world. may god bless all of you and may god forever bless the united states of america.

thank you. thank you very much. thank you.

we are required to do cost- benefit analyses. we are corp. acquired --

required to consult with other banking regulators before we issued the rules. i think it is fair to say that our charter is written very much in mind with the notion that we are there to be cooperative with the other banking regulators, at least work with them. i'm trying to think. we have a research function that is somewhat different from the other regulators. can yo>> can you tell me why ths a necessity for a five-year fixed term, when i don't think any one else has had that period of time? >> congressman, i think many terms are five years or six. it is my understanding that they had at the office the comptroller of the currency finished his five-year term last august?

>> but those entities, i think, at the discretion of congress. there is an oversight process through appropriations. you are excluded from that. >> no, but that is not the rule with the office with the office of control of the concert -- of the currency. all banking regulators are funded independently, and indeed all of the other banking regulators, not the consumer agency, but all of the other banking regulators are able to set their own funding levels. for example, if the office of the comptroller of the currency decide they need more money to run exams or they need more money to engage in their other activities, they up the assessments on banks and raise more money. there is no oversight from congress.

>> do you know what your budget will be? >> that cap on our budget is set at just under $600 million. the actual budget, i actually brought with me because i know you wanted to do this. oversight on this. our estimates for fiscal year 200011 are $143 million. and our estimate for fiscal year 2012 is 3 million -- $329 million. so at least as best we can suggest in the next two years, we will be substantially under the caps set on congress and the dodd-frank act. >> and of the seven separate agencies that you will assume authority overcome if you plan to hire from those agencies? >> congressman, we have already begun the process of hiring some people. i believe it is the case from

each, i think it is the case from each of the federal agencies. we have certainly been in talks with all seven agencies. >> the gentleman's time is expired. place finish your answer. >> we have had many from each of those federal agencies, and help us in the stand-up process. and we have gone to an interview process. i would be glad to describe in more detail but i understand i am past time. >> i would stay to the chairman, the reason i am asking that question is that earlier the witness had stated that if this entity had existed, we would not have the financial meltdown the we had. i wonder why we would hire people from those other agencies who were doing this oversight in the first place? >> thank you. i represent -- the recognize ms. maloney from new york for five minutes. >> thank you, thank you very much.

i truly believe the title of this hearing today, and really the effort in general, should be "let's pretend the financial ."isis never happen pick we forget that many lost household wealth in this america. that our financial community was brought to its knees and had to be bailed out by the american taxpayer. and in response to this crisis, the overwhelming support from the american people, we created this cfpb. it is carefully constructed, but urgently needed, and should be allowed to go into operation as planned by the bill that was signed into law by president obama. the cfpb fills a gaping hole in our regulatory framework. this is a body that will focus completely and totally on

consumer financial protection. too often consumer protections was a second thought, a third thought, or not even thought about at all. so you came out with an abusive and anti-competitive practices in credit cards, subprime loans that had a degree of probability of throwing american families out on the street and hurting our financial system. so this was put into place to help our overall economy and to help consumers. and all the effort so far have been to dismantle, disrupt, delay, and not allow the agency to go into effect. there is an astonishing abuse of power, the confirmation power in the senate. 44 senators that said we will not allow this agency to go into effect or for you to confirm a

director unless you pass bills that will destroy yet, they will make it meaningless, that will make it ineffective. that is not what the confirmation process is supposed to be. it is literally told bridget holding the entire government hostage to the our demands on dismantling this program. and i would say that there is a lot of fun founded concern about lack of oversight on this agency. i would argue that the oversight and balance of power over this agency is greater than any other agency in the entire federal government. with audits and requirements and the unprecedented ability of another agency, the financial stability oversight council, to overrule the decisions made by the cfpb. i do not believe any other government agency has that

ability, to overrule another agency. would you comment on that, dr. warren? >> yes, congresswoman, as far as i now, there is no agency anywhere in the federal government whose rulings once they arrived at the the full process, through hearings, through fact finding, all the way through, could actually be overruled by a group of other agencies. it is unprecedented. >> how many other banking regulators could be overruled? and baking overdue -- making regulators be overruled with a faulty mortgage product? >> no, congresswoman, right now there is no banking regulator to be overruled. >> and did you go through an outline some of the oversights and really constraints -- no other agency has their budget

cap, i do not believe. >> i appreciate your bringing of the budget because it is so important. since the middle of the 1800's, when they made the decision in the establishment of the first bank regulator, been made that funding for their regulator outside the appropriations and political process. we knew that we wanted banking regulators that at a minimum or not glancing over their shoulders as they walked in to a trillion dollar financial institution to do supervision or enforcement. they are not glancing over their shoulder wondering if something they do, something they say will create problems and increase lobbying efforts against that agency next time around in the political process. this agency -- and as a result, all of the banking regulators were set up so that they

determine their own funding. it is not that they are just out of the political process. they decide the number of dollars that they get. the consumer agency is capped. if we need more money for supervision and enforcement, our only option is to come to congress. but we are capped, and there is only a certain amount of money that comes to this agency to carry out its functions before we would be forced to go into the political process. >> i want to thank you for your testimony and your hard work. my time has expired, but i would say those who want to cut this agency, who want to lead consumers prey to mortgage efforts and credit-card abuses, i believe that they need to support and allow it to go forward. thank you. >> mescal the of south carolina is recognized. >> the first time -- the first question i'm going to ask you is

it constituent of mine in the business of providing financial services. what steps would you take to ensure the complaints received by the bureau are legitimate ones and not merely post- contractual rights? >> i'm glad you asked about this. it is one of the most significant features of the new consumer agency. but we are planning to do with this is instead of having a general complaint, we are trying to develop more effective complete resolution in the consumer agencies on a product by product basis. perhaps there have been violations of law and want to get in touch with the new consumer agency. >> will the complaints be made

public? i think you will agree with me that are unfounded, unsubstantiated complaints have a deleterious effect on the accused. >> what we will be doing, and i really want to give a shout out here to the largest credit-card companies in the country's who are working with us right now on a way that as soon as we receive a complaint, that complaint can go directly to the credit card company. they can help us understand what the the complaint has merit. they can have the opportunity to resolve it with the customer. keeping us in the loop. >> is that just credit card companies a result financial service providers? >> this is what i want to make clear. >> not only got five minutes. there are other things i like to ask. >> i'm trying to get you a pigeon. >> of the complaints public? yes or no. >> i am trying to describe the process for one product.

we are trying to get this product like and we have had a lot of cooperation. >> i am not asking my question very artfully. are the complaints public, yes or no? >> there is no single answer for all products in the same way. >> are any of the complaints public? >> we do not have any complaints yet. we are trying to build a system to deal with it this. >> you do have the discretion to keep the complaints not public if you like. >> we are trying to work with the industry to find a complaints system that works for american families and works for those who are providing them services. we are in the middle of that process. this is part of a stand-up. and we are glad to hear from your constituents and to hear from everyone else about this process. we are an open door on this. >> i would encourage them to put dissipate. i want to ask you about some of the definitions. i saw a definition for abuses.

materially in a daring with the ability of a consumer to understand a term of condition of a consumer financial product or service. that suggests to me that some interference is are immaterial. is that what you meant by that question argent congressmen, i think the language you're quoting is out of the dodd- frank act. it is congress' intention. i am not but as i do not have the equipment. >> if are you not in charge of enforcing that? >> this is that god is that congress has given. >> are some of interference is immaterial? >> congressman, we would go to the process of interpreting the language that congress has given us. >> i do not mean for that to be a trick question. are some interference is immaterial? because material modifies interference. >> i want to be clear about this. it is statutory language that you are asking.

there is a process in place at the consumer bureau. you don't want me standing here shooting from the hip about how i might want to interpret individual language. >> and me ask you about the second. unreasonable advantage, or taking an unreasonable advantage of the consumers lack of understanding. are there some instances where taking advantage of a consumers lack of understanding are reasonable? >> congressman, this is the language that congress has adopted in the dodd-frank act. ultimately, it will fall to this bureau, through a lengthy process, to interpret this on a case by case basis. i believe it would be irresponsible for me to stand here and pop off about how i would interpret the particular words. >> do you believe there is a duty to educate or to learn on behalf of the consumer? >> i believe that consumers want to learn. they want to find out -- and i

did not ask if they wanted to. do you believe there is a duty to do it says the law itself says that consumers in ability to protect his own interests, do you believe that there is a duty to educate yourself? >> congressman, we have as part of our responsibility in the consumer financial protection bureau loss undertaking consumer financial education. and i embrace this. i think it is exactly what it should be. >> is that a yes chris marjah and we're going to help consumers by giving them products where prices are clear, where risks are clear, where they can make comparisons. >> is there a duty to educate yourself? yes or no? >> i believe that it empowered consumer is a consumer who cannot only protect himself or herself, off the one who can change the market. >> mr. chairman, i give up. >> thank you. we have two votes on the house floor. we have two additional members

and not enough time for them to ask questions. we will recess until the second vote is cast. we will come over here quickly as possible. we will have our final members ask their questions and the committee is in recess until we return. [unintelligible] >> it is my understanding. >> that was never the pledge. >> we have two additional members with question. originally this hearing was at 2:00. are you not able to stay? >> congressmen, when you ask to change the time four times in the last 12 hours, including waking people up at home last night to change the time again -- >> i never made a single phone call about this. so be very clear about what you're saying. we have two additional members. we have eight minutes remaining on the floor to vote. if you will not stay around for

the questions, then we're going to stay around and we will finish this out. i never heard for you to leave that 2:15. >> you might want to have a conversation with your staff. when they asked us to move this hearing, which said the only way we could do that is if i could leave here at 2:15 for a meeting that would be -- not to and we're going for question. you're recognized for five minutes. >> thank you, mr. chairman frank for the record, i apologize to the witness, dr. warren, for the rude and disrespectful behavior of the chair. snarky comments about a senate race in the questioning of your veracity about you being totally truthful means to me that this is about impugning you because people are afraid of you and your ability to communicate in very clear terms the threat to our consumers, the threat to our

constituents, and possibly very effective ways to combat them. i think in one respect, i congratulate you for installing such fear in the committee on the majority side, and in some spots aspects of that business community, because they understand how effective you are in getting the message out to the american people that there are better ways to do this. that being said, one of the major questions being asked here is whether there is a need for your agency and the agency did in the light that there are seven agencies with authority in this area. they have been around for some time. during the time of the seven agencies, have financial products with disclosure statements on gotten easier to understand? has that type, and bigger? or have they gotten much more

incomprehensible? >> during the time these agencies have been around, i believe that financial products have become more complicated and much more heavily laden with fine friend that effectively make it impossible for consumers to compare risks and costs. >> with respect to the question that ms. buerkle asked with compared of salaries, and would you speculate on what the average salary of the people who are writing financial agreements, mortgages, and credit card agreements for the major corporations compared to what the consumer financial protection bureau would be paying? >> congressmen, i could not begin to speculate on the difference between the salaries of government officials who will be hired into the new consumer agency to try to oversee this market, and the salaries of those who are writing the

financial products, particularly for the wall street companies. i suspect, though, sir, there is a large differential. >> i suspect that you are right. i will yield back the balance of my time in a second so that we can get out of here. i want to say that the question of accountability. didn't i will say this. mr. issa what the vote. mr. walsh went to vote. he will be back for questions. >> does the title of the hearing and of accountability for your agency? talk about what accountability that there has been in terms of the credit card companies, mortgage bankers, and so forth over the last decade or so was marred seems to me that that is where the real accountability issue has been, that the consumers have no way to hold those companies accountable for their products? >> we have seen very little

accountability among the largest financial service providers. and among the largely unregulated financial services provided. both before the crash of 2008 and after the crash of 2008. i just want to point out, that has been really hard on american families. it has been hard on them directly when they have gotten their feet tangled and credit card agreements and payday loans that were deceptive. it has been hard on them when they thought they were doing sensible things on mortgages only to learn that they would lose their homes. but it has been hard on other segments of the economy, many who lost their jobs. you see the companies, the small businesses there working for, their markets have dried up. and it has also been hard on community banks, and credit unions who work so hard day in and day out, to work with their customers, to be the relationship lenders, to be there over the long haul. and who are getting crushed in a

financial turnaround that was not their fault. the problems have gone everywhere. the problem of lack of accountability is one that is squarely on industry. and this consumer agency is going to do its best to help turn that around. and i congratulate you and your work in service. it would the gentleman yield? i understand that your staff met agreement with professor warren about her appearance today that she would be available to this committee for one hour. pursuant to that agreement, one request at 9:00 p.m. last night that ship. an earlier time than previously scheduled to that you allow her to leave one hour after that act 2:15 in keeping with the agreement. it is 2:15 now. she has kept her side of the bargain. it is time for you to keep yours. mr. chairman, out of respect to her schedule and the flexibility she's used to accommodate your should dismiss

this witness. we were here. >> i certainly appreciate it. in reaction to u.s. the ranking member, the original agreement was that we would have a 2:00 p.m. hearing in order to accommodate votes which we expected to hit at 1:30 p.m. knowing that the professor is very busy, we do not want to keep witnesses here while we adjourn to go recess and vote. so we change the time in anticipation of the vote we are about half. rather than gavel in and have opening statements in the to vote in come back 30 minutes later and have an hour of questions, rather than do that, we try to work with the witness, and the exchanging of e-mails, your staffer, your government of their staffer talk to another staffer and ask for confirmation on this, he called you up, the government relations, he did not respond, he said he would do your best to

get you out of there. but we need to accommodate people's questions. that is where we are today. mr. cummings, i understand and i certainly appreciate. >> you sound like you have are decided. but one real quick thing, peter change the time a few times. they bent over backwards and move things around and agreed to 1:15, at 2:15, and she needed to get at. 2:15. that is in constant. >> peter holler? >> i just wanted to make it clear. i know you have to do what you have to do. but she is trying to protect our constituents, yours and mine. >> and i would respond to the ranking member that that date of this hearing was chosen by ms. warren. we worked with her and her staff diligently and gave them a

number of options. they came back with different options. we accommodated those options. we are here because of an unveiling of a picture. this is an accommodating her schedule. and we are skipping this vote that have this debate rather than simply allow for a few additional minutes. >> i have already got my vote in. the only thing i am saying is that at the rate we are going, hillis like she will be here until about 20 of atlas. >> i anticipate that the two members will have five minutes apiece. i kept us to the five-minute time frame. i'm not trying to cause you problems, but we're trying to accommodate votes. if you wanted to stick around, we will have two members with

questions and then we will see you all. >> congressman, you are causing problems. we had an agreement for a later hearing. your staff asked us to move around so that we had to change everything on my schedule to try to accommodate. >> i certainly appreciate that. the original was at 2:00. >> there are other things now scheduled at 2:30 p.m. >> that was a request. we move the hearing said that you get the questions in. >> congressman, you told us one thing. >> you did not tell us anything. >> we have no one here to ask questions. >> i have other obligations i committed to based on the representations' of years after accommodate you and we rearrange their schedule to accommodate you. >> this one, it was a simple request. we were trying to accommodate you. we will try to get you at your

and 10 minutes. >> congressman, we had an agreement. >> you had no agreement. you are making this up. this is not the case. this is not the case. >> mr. chairman, you just did something that i am trying to be cordial. , but you just accused this lady of line. >> she is accusing me of make an agreement that i never made. >> i think you need to check with your staff. >> i have. >> yet change this many times and she has to go to another hearing. >> not another hearing, another meeting. i would be glad to answer questions for the record. i would be glad to do that if you would send this questions. it would be a matter public record. >> i certainly appreciate that and i have tried to accommodate you. i want to make clear that this is on the record. there was no agreement about

departure time. i want to make sure to the ranking members that i did not make those representations. i conferred with my staff before this started. the reason why we moved the time so that she would not have to wait for a vote in the middle of the hearing. i understand, i understand your frustration. i would ask you to see my side of this thing as well. we thought we had you for more time. i thought we had you for more time. if the gentleman well, i would just say -- >> i am cold. i want to make sure that she is treated fairly. >> we have had more debate than the questions they were remaining. miss horne, i appreciate your service to our government. i do. just trying to get on the record a few of these things that we have encountered with my questions of you back in march of this year. and it is informative,

instructive for this committee on the construct of this enormous bureau that you are constructing. and that is why congress wants to have this oversight. i think you for your testimony and i would dismiss you now and i will ask the two members not being given the opportunity to ask questions to submit theirs for the record. and i would ask you to turn around those questions as quickly as you possibly could. >> thank you very much. >> we will recess for votes and come back for the second panel. his [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> dr. david evans is the chairman of a global economics group and lecture is university chicago law school. mr. adam j. levitin is this as a professor of law at georgetown university law center.

mr. andrew pincus is a partner at mayer brown rowe and maw. and pursuant to committee rules, all witnesses are sworn before they testified. if you will stand and raise your right hand? the solomons where or affirm that the testimony you're about to give will be the trick of a culture, and nothing but the truth? all right. have a seat. the record will reflect that all witness answered in the affirmative. in order to facilitate discussion, your written statements will be admissible to the record. you can simply sub--- summarize. we would love to hear your testimony. mr. zywicki, we will start with you. >> it is a pleasure to be here today. i want to say at the outset that

i was in favor and remains strongly in favor of regulatory reform dealing with consumer financial protection and that sort of thing. i think we have been much in need of regulatory reform, streamlining, coherence, that sort of thing. this day i remain disappointed with the cfpb. we have squandered a golden opportunity to create new useful safeguards for consumers that would promote competition, consumer choice, and consumer protection simultaneously. i think that we have instead created a monster of an agency that is going to reduce access to credit, increase the cost of credit, and ironically had the unintended consequence of probably exposing more consumers to fraud and abuse when it comes to lending products. truth in lending act was three pages long.

now it has gone that thousands and thousands of pages. we have seen duplicative regulatory enactments over time. in particular, its use of class- action litigation, heavy-handed regulation, legislation have larded up this current system with a lot of counter productive relations less regulation and this is not one to change this. this time -- this bureau is simultaneously the most powerful and unaccountable agency i've ever been aware of. it is an independent agency within another independent agency within the federal reserve, and maybe the most powerful considered to be constitutional. it has of power to reach every credit card and pay a loan in america. yet an agency with this kind of power has presided over by one person, with no effective external oversight, a and realln

them except for the check history tells us what happens when we give bureaucrats this much unaccountable power to regulate -- massive swaps in the economy. this super-regulator is something we have not seen since the nixon administration and there is a good reason why. we know what happens when we give this sort of unaccountable power to a bureaucrat to make decisions for consumers as to what kind of products they are allowed have and what the terms of those products are going to be. it is as i mentioned a one- person commission. it seems obvious that they should be a commission rather than a one-person thing. i also agree with the proposal to reduce the two-thirds supermajority oversight to a simple majority rule for oversight. in addition to that, i think

there should be a formal -- they should be formally required to undergo some kind of external review by oira or something like that. and a solid happen when we give this kind of unaccountable power to bureaucrats. we sought a generation of economic stagnation, stifle innovation, declining american competitiveness and the like. and it is completely predictable this is what happens to bureaucracy when they lack the feedback in the accountability from outside. you get tunnel vision, mission creep, and you get the patch hobbyhorses of whoever it is to happens to be running the organization who sets the priorities. and what we learn from that experience and the harm it does to the american economy is that we need accountability, oversight, and transparency in our process. why does that matter? overregulation by this body

could inflict huge harm on the american economy. if it will raise costs and reduce access to credit, and i'm not familiar with any. this is increasing the cost of a business that possibly cause prices to go down. it will increase the cost and reduce access to credit. we have learned that you simply cannot wish away this. if someone needs $500 to repair their transmission to get the work on monday, they need $500 to get to work on monday. what can be done, i lay out in my statement, which is, the model here is the federal trade commission. a multi-member commission with internal checks and balances. one reason that independent agencies are not subject to oira review is because there are commissions with internal delivered process. this agency will not be subject of budget oversight. it is not a multimember commission. it is not subject to an external review by oira or anybody else.

and i think this is to be fundamentally reviewed. >> thank you for your testimony, mr. zywicki. dr. evans, you have five minutes. >> chairman mechanic, members of the subcommittee, thank you for asking me to testify on the cfpb very shortly after the treasury department proposed the cfpb act, we started studying the legislation and the rationale being put forward for it. early last year, we published a study on the proposed agency. based on our research, i am quite concerned that the cfpb could make it harder for consumers to borrow money and for small businesses who rely on credit cards and other lending costs. just because someone puts the word consumer protection in the title of the agency does not mean that is what it is going to do. there are two reasons to believe that the cfpb could become an anti-landing and borrowing

bureau that get hurt consumers and small businesses. the first is that there is an anti-borrowing by as built into the cfpb. professor warren co-authored a article that laid out the rationale for the new agency and its agenda in some detail. she claimed that consumers are not rational when it comes to borrowing money, they make lots of mistakes, and they end up borrowing too much. other professors wrote an article that proposed regulation for financial services. it include requiring lenders to offer certain products as a default. these professors were just up. into directorships at the cfpb. we have reviewed the intellectual foundations of the cfpb based on the writings of the people behind its creation.

the view that people do not know what they are doing when they borrow money in that you need to protect consumers from themselves has really become part of the genetic code of the cfpb. unfortunately, at least from the ridings that provided the foundation for the new agency, there is little recognition of the fact that consumer lending has really improved the lives of millions of people and spur job growth in this country. the cfpb has the tools the but the highly interventionist agenda described in this foundational papers into effect. that is as it reason i'm concerned. few agencies can ban abusive lending products. pretty much what those are are left up to the cfpb. bacon also steer financial- services companies toward offering develop products designed by the cfpb, by banning products that do not conform to their view or by making it legally risky for lenders to deviate too far from the product that the cfpb wants.

plain vanilla was excised in the language, but there is still of possibility of them doing it. disclosure requirements and fines, the cfpb has the means to place a heavy, on consumer lending products that consumers and small businesses would consume in the financial services companies would willingly offer. some lenders act very badly. we need consumer protection. the proponents of the cfpb had made some real contribution to our understanding of some of the problems and possible solutions. i have a lot of respect for their passion and intellect. but regulation needs to be based on a balanced view of the benefits as well as the cost of lending and borrowing. most consumers of small businesses are responsible. over the last several decades, the fraction of consumer loan debts that banks have had the -- they are nowagg

coming back to that low level. most lenders provide products that people want and that people benefit from. they're serious risk to the economy of restricting consumer choice. let me focus on one of them. between 1992 and 2005, a brand new small businesses generated an average of 3 million jobs a year. absinthe consumer credit, that the break those of japan years. many use personal credit cards for financing. google, for example, at the max out their credit cards to stay afloat in the early days. over time, a heavy regulatory, could therefore pose a significant drag on employment and economic growth. in closing, i would counsel the subcommittee to ensure that the cfpb has leadership that is balanced and recognizes the great baggage that lending products provide for consumers and small businesses as well as the occasional problems. i would also suggest that congress keep watch over the cfpb to ensure that it does that

become the anti-lanending organization that could hurt the consumers it was put in place to protect. >> you are recognized for five minutes. >> mr. chairman, ranking member, members of this subcommittee, i'm adam levitin. i'm a professor of law at georgetown university. my research focuses on consumer finance and financial regulation. i'm not representing any financial interest or banks or traders. i am here is an expert on consumer finance as a scholar whose work is deeply concerned with financial security of american families. i am happy to discuss the cfpb's regulatory structure. i do so in detail in my written testimony. i am happy to address unfounded concerned that the cfpb will hurt the ability of sustainable credit. i would note that the cfpb is required by statute to do a cost-benefit analysis on prohibitions a financial products.

am also happy to make the case is that to my written testimony that the cfpb is more accountable than any federal regulator, period. this hearing is not about improving the cfpb or ensuring sufficient oversight. those are laudable goals. the cfpb has not even got up and running yet. by all accounts, the transition team led by professor warren is doing an upstanding job. there's nothing to suggest that there is an oversight problem that needs to be addressed. this hearing is part of an attempt hobble the cfpb because there are not enough votes to kill off our right. this is about politics, not oversight. and there's no clearer approved in the written testimony mr. pincus on my left on behalf the chamber commerce. it expresses concern is that the cfpb's structure leads its honorable to regulatory capture. that is a phenomenon of a regulatory agency acting in the interest of the interest -- the industry regulator.

a typical store is the oil industry capturing the minerals management service for it or wall street capturing the fed. as it was put, washington and regulators are there to serve the banks. who is the chamber fear will captured the cfpb? is a middle-class citizens, military families, seniors? i am quite perplexed by it. and i find it very strange for the chamber of all entities to express concerns about captured regulatory capture is the chamber's singular mode of operation. perhaps it is worried that it will not be able to capture the cfpb and it will not be the lapdog of wall street but will be a real financial watchdog. the chamber it sounding the alarm about regulatory capture. it reveals for what it really is. they're trying to render this

ineffective because they are not enough votes to kill it outright. if you do not have the votes to kill an agency, you can start it to death by playing hostage with the federal budget. let's be frank about what this hearing is about, this is about banks versus families. this is where there congress cares more about increasing the profits of banks are protecting the financial security of american families. which is more important, banks were families? turning to the so-called reform proposals, you would replace one director with a five-person council. by people to do one person's job. that is called government waste. by having five people to one person's job, accountability is diminished and leadership becomes less effective. policy gets set up by horsetrading among commissioners rather than exacting analysis of the issues and hand. if a single director is good enough for the otc, it is good

for the cftc. it is good enough for an agency that protects large banks, that it is good enough for an agency debt protection american families. it would require veto of the cfpb was inconsistent with bank safety and soundness. bank safety and soundness is a technical term. it means profitability. let me repeat that. bank safety and soundness means profitability. it's axiomatic that a bank can only be safe and sound if it is profitable. consumer protection is often at loggerheads with bank profits. the only reason to engage in predatory lending is because it is profitable. it is not done out of spite or malice. any cfpb rulemaking that affected bank profitability would be inconsistent with safety and soundness and would be subject to a veto. dodd-frank could not be

implemented because it would affect bank profitability and be inconsistent with bank safety and soundness. this was to protect bank -- american families, not protect bank profits. this let the cfpb have a chance. >> mr. pincus, you have five minutes. >> thank you for the opportunity to testify before the subcommittee on behalf of the chamber of commerce and hundreds of thousands of businesses at the chamber let the at the outset correct the misperception about what the chamber's long- held position has been on the issue. for the debate over dodd-frank, the chamber maker that it strongly supported sound consumer protection at the federal level. that chamber's businesses have a strong interest in the marketplace that is free of fraud and free of other deceptive and exploitative

practices so that legitimate businesses can compete on a level playing go. business is just like consumers do not like predatory practices. they hurt consumers. at the same time, what is essential is to ensure that regulation does not impose duplicative and unjustified burdens that have ill effects. first of all, they unjustifiably divert resources that essential to fueling economic growth to complying with rules that are not necessary. and in this context, as mr. zywicki has mentioned, they prevent small businesses from obtaining the credit they need to expand and creating the jobs that this economy needs. small business credit is often consumer credit. misguided regulation of consumer credit that shrinks its availability will shrink new credit that is the lifeblood of small businesses in this country. so the chamber actually looks forward to working with the consumer financial protection bureau once it is up running to

meet these goals and has already had several productive meetings with some of the people designated to take roles at the bureau. but the chamber is concerned that the bureau's structure will make it impossible to achieve the goals that have been set out for it. first of all, i think it is important to make clear at the house said, given some of the earlier testimony, that the dodd-frank plain fact is-sets up for the bureau an unprecedented structure it that consolidates more power in the directorate than in the head of any other agency that regulates private individuals and entities. our repeat that again. it concentrates more power in a single person any other federal agency head of an agency that regulates private individuals and entities. let me talk a little bit about why that is so, and compare and address some of the comparisons that were put on the table earlier. first of all, we are all

familiar with the basic model of a federal agency, like a federal department, headed by a single individual, a secretary, or the head of the fda. one individual, but there are -- >> -- two important characteristics. the president has total power to fire that person if he or she disagrees with the president's policy views, and for all those executive agencies, the appropriations process is there and congress can use their appropriations power. we do have an independent agencies. the structure for independent agencies, virtually uniformly throughout the coming, there is a bipartisan commission whose members serve four terms. it is true that the president does not have the unfettered power to fire a member of the ftc or the others, but neither does one of those people have all the power to run the agency. you need a majority. there is a built-in check on the

power of any one of those individuals who has protection against the president's discretionary firing. second of all, throughout most of those agencies, there is an appropriation process oversight to ensure that there is a second check on what they're doing for the people's elected representatives in the house and in the senate. the bureau, of course, is headed by a single director who serves for six terms, and with respect to him, the president is limited in his ability to fire for acceptable cause, and there is no appropriation oversight. is this those three things coming together, a single person, limitation on the president's power to fire except for cause, and no appropriations oversight that makes this different than any other agency. i want to address the occ comparison because that was floated in the hearing. occ comptroller is someone who is subject to firing at the

discretion of the president. again, a critical difference in the checks and balances that exist with respect to that agency and the agency here. and as i detail and a secretary -- but that testimony, the secretary of the treasury exercises oversight of a comptroller. first of all, the question of the fsoc review and whether that is in new. i served in the branch. the oira -- i am running over a little bit. the oira process bring all the executive agencies around the table to reach a compromise of about what that executive- branch agency regulation should be. seconal, i would like to be talking about the regulatory capture. bank that mr. leveson said. but suffice it to say that the banks are not the only special interest in this debate. there are a lot of special interest. how we create a structure to make sure that the resulting

rules are in the public interest and not the product of one special interest or another? thank you, mr. chairman. >> i think all of you for waiting in being here. understanding that a congressional schedule tends to lengthen things. mr. levitin, you mentioned in your testimony occ as an apt comparison to this cfpb. in ms. warren's testimony, she also mentioned that as an appropriate comparison. why do you believe that to be the case? >> one of the primary reasons that we separated -- that congress separate consumer finance from bank safety and soundness was it found that those two did not work well together. safety and soundness are a form of imposition. consumer protection ended up

being subordinated. >> you're talking about the previous congress. what in particular, why is occ the appropriate comparison? >> occ is the strongest of the federal bank regulators. if you want to have a bank regulator able to act efficiently and decisively to protect american fellas, we want a structure there were slightocc. it has been very effective in furthering the bank's interest. we want that in the family's interests. >> why is the commission structure not ideal? >> you end up having horsetrading among the commissioners. they have their pet issues has professor zywicki pointed out. sometimes commission decisions and of being based on political trade-offs rather than what is really the right resolution of

the issue. >> if you are saying this is a congress. >> congress has a different structure. >> i did not mean to interrupt. >> it is an important distinction. congress is a political distinction. we do not want our regulatory agencies acting that way. and the second point, when you're dealing but as the traditional model of a five- member agency, no more than three can be from a party. when you applied that partisan division to consumer financial protection, it does not work. consumer financial protection should not fall on partisan lines. >> ok, thank you. it is interesting because when you're talking access to credit, there is a division there. mr. zywicki, and you mentioned in your testimony that

comparison to the ftc is the preferable one. compare that to the occ. i like to understand the difference here. >> that is exactly right. the federal trade commission is the obvious analogy here. i worked at the federal trade commission, for a long time, and it has had at authority over some pockets of consumer protection. what we see is that the ftc is the model of how this should be done. it has an internal delivered a process, where it can discussed the policy tradeoffs. to much consumer protection can be harmful to consumers. >> why is that? >> we can make the foreclosure rate 0% if we did not let you have a mortgage. >> people would be able to keep their homes. what would the impact of that be? >> they would not be able to buy a home. they would have to save cash

before they could buy a home. there is a trade-off. there is a trade-off between two good things, consumer protection and consumer choice, competition, and lower prices. if you raise prices. >> are there tradeoffs, just as mr. zywicki all line? mr. evans cushman >> yes. >> yes. >> yes. >> the redhead. >> what we see is the ftc for the deliver to process comes away with doing this. there is an internal check of competition, consumer choice on one side of the agency, consumer protection on the other side of the agency. when i think about this, in the

ftc, no one ever said that the ftc is in confident because they have an agency -- i never saw horse trading with respect to these things. i saw it delivered a process that has internal checks and balances weighed all the considerations. i think that i was at the ftc, a lot of people that were there, and that if people had said that consumers would be better off if we took the consumer protection bureau of the ftc and spun it off and added to what everyone to come any regulations, without any consideration about other sort of thing, people would think that you have lost your mind. but that is the model, that is the model for the consumer financial protection bureau, that would be a disaster. that would be a disaster.