the parts they play it in the transfer of power it is very important. most people think the transfer of power in balls the state department. that is a very important transfer -- power in the state department. without support of the white house staff and their loyalty to their responsibilities in that marvelous house, the transition from the outgoing first family to the incoming could easily be a moving day and night. for me, i just the thought of being first lady can be very challenging. it was a demanding job, but it comes with no job description. i was tentatively very worried that i was going to hate every minute of it. fortunately, i was wrong. it also can be a lot of fun.

in what other job could i have worked so actively on women's rights and gotten such national focus or entertained robert redford at tea? [laughter] we entertained the many heads of state that this address. it seemed that everybody wanted to come to washington to take an official part in our birthday celebration. we entertained and were entertained by heads of state

and governments from spain to japan to egypt to israel. the list goes on and on sometimes it was like a revolving door. with one head of state departing just before a new arrival. this was a very privileged experience for both jerry and me, but it was also a very busy time. in what other job could of i have the opportunity to meet and learn a few basketball treks with the harlem -- a basketball trucks with the harlem globetrotters? i will admit that it was very short lead. someone higher up in the oval office called an emergency cabinet meeting. he became a little testy when are practicing session became too lively to the point of

disrupting his meeting. you'd be surprised how quickly an aide with a message from the president can put an end to a pickup game. even a game where the first lady is supposedly going one on one with meadowlark lemon. [laughter] it was the result of my many years of dance training. while i always treasured my time dedicated to the martha graham dance company, where i lived for 2.5 years in new york, my dance with the wonderful fred astaire is the one i will remember fondly. it proves that plans to not always go smoothly, even if you

are a first lady. fred astaire was a guest at a state dinner. like every other american woman who was ever seen a movie, i was dying to dance with them. as a trained dancer, i knew i could keep up. after dinner, the guests were dancing to the music of the marine corps band. i got up my nerve and i marched and i asked him to join me on the dance floor. he was very charming, and explained that he really wasn't much of a ballroom dancer. he only danced to carefully choreographed numbers. i think he was trying to tell me, i won't dance, don't ask me. i did not take the hand. -- hint.

i coaxed him out on the dance floor and we started, never missing a step. my ego was busting at the seams. .y husband approached grea he explained that our guest of honor was leaving. i know my husband has seen all the same movies that i have. apparently, he did not understand the full impact of the latest do a vote was having none me. reluctantly, i excused myself and my husband left me off for us to say our goodbyes. when i rushed back to claim my partner, fred had been swept up by a member of the press corps. i never got close to him again

that evening, proving that a first lady does not always guarantee everything goes your way. the most rewarding time of my experience and the white house occurred on that wonderful july evening when we entertained her majesty the queen of england. in what other job could diad had the chance to sit down with this very special lady and talk mother to mother about her children. queen elizabeth and prince philip were our guest for the official bicentennial debtor in the white house. -- bicentennial dinner in the white house. at that time, our second son, jack, came home to attend the dinner honoring the queen. in his usual form, he could not

find his dress shirt. he still swears that they were never delivered . at the time, at i know him quite well, i suspected he had just misplaced them. whatever the cause, there was jack raising for the white house with his shirttails flapping. a very disagreeable. after much exasperation on my part, he finally borrowed some stdus from his father. jack quickly slipped my mind as i began concentrating on addressing the queen as your majesty and the prince.

my mind was terribly activated trying to do the right saying. we were riding in the elevator to our private quarters with the royal couple. as it stopped for us to get off, the doors open, and an unbounded jack ford. still trying to put his church together. i will loop -- his shirt together. jack stared in total disbelief and embarrassment. queen elisabeth just looked at me and she smiled and she said, do not worry. i have one just like him at home. [laughter]

immediately, i felt very comfortable with her and then i had up to that point. we got on there -- we got off on the right foot and had a great time talking about our families. i've always felt that somehow, things happen to me that never happened to any other first lady. all of us have had -- i did a few things that no other first lady had done. i had to address each new episode in my life in my own way. i had never planned on such a role. after a few -- they decided they liked my openness. some of you may remember that

just short-lived after we moved into the white house, i entered the hospital for a mastectomy. it was just six days after jerry had been sworn into office. i was terribly frightened about having breast cancer, of course. the only way i could handle it was to be totally open and honest with the public. women did not usually talk about mastectomies or breast cancer at that time. it was kind of behind the closed door. by speaking out about it, it eliminated any speculation about why i was going to be in the hospital for some time, but it had a much greater impact. that benefit was it got hundreds

of thousands of women to their doctors and to clinics for breast exams. suddenly, that there was an awareness and women felt it the first lady can have breast cancer, and anyone of us could. i've always been proud that that the frank discussion helped save the lives of women who received treatment before it was too late. i still work with my daughter susan in the field of trying to inform people about prevention, such as the importance of monthly self exams and mammograms and once a year and physical exams would your own professional position. now i spend even more time where

we have treated more than 30,000 individuals. women have represented at least 50% of our population and that is because of the betty ford center has a woman's name on the door. this october, we will celebrate our 15th anniversary. when i went public about the news of my breast cancer, my addiction to prescription drugs and alcohol. i am glad it had the same miraculous effect on countless individuals and families. it is very gratifying for me and our staff to know that there are many recovering people out there living happier lives, in doing meaningful family relationships. -- enjoying meaningful family relationships. i was an ordinary woman called

on stage at an extraordinary time. i still feel that way. to me, those times were extraordinary. i felt very honored. i loved them all. i want to thank you for being very patient and listening to my memoirs. thank you. [applause] [applause] >> on tomorrows "washington journal," a look at the latest employment figures. we will discuss the british hacking scandal.

also, ian swanson on the pending free-trade agreement with south korea. "washington journal" begins at 7:00. >> this weekend, early american history professor christina snyder on first encounters between native americans, europeans, and africans in the new world. he recalls his childhood in an internment camp and idaho and how is part examines issues of ethnicity, race, and the japanese-american experience. it the complete schedule at c- span.org/history. >> is everything you know about the ok corral wrong? jeff guinn tells a different

story. charles hill looks at the long war of islamism against the international state system. former mexican foreign minister talks about the challenges facing our southern neighbor. look for the complete schedule at booktv.org. >> you are watching c-span. every morning, it is "washington journal." watch live coverage of the u.s. house. supreme court arguments. on the weekends, you can see our signature interview programs. you can also watch our programming any time at c-

span.org. >> david cameron fielded questions from reporters on the government's response to phone hacking by the british newspaper "news of the world." a former aide was arrested today on charges related to the scandal. this news conference is 45 minutes. >> in the morning, everyone, and thank you for coming. over the last few days, the

whole country has been shocked by the revelations of the phone hacking scandal. murder victims, terrorist victims', families that lost loved ones who sometimes defending our country, that these people could have their funds have been two to yield stories for a newspaper is simply disgusting. i cannot think what was going to the minds of the people that did this. that they can get into anyone's phone is disgraceful. but a young girl missing from her parents that was later found to be murdered is truly despicable. this scandal is not just about some journalists or one newspaper. it is not even just about the press. it is also about the police and about how politics works and politicians, too. i want to be very frank about

how, as a country, we should deal with this. people want to know that three things are going to happen. that action will be taken to get to the bottom of these specific revelations and allegations about police investigations and the rest of it. that action will be taken to learn a wider lessons. and people want clarity. rio clarity about how this came to pass. about the responsibilities we all have for the future. that is what this country expect at this time of crisis. i want to make sure that everything that needs to be done will be done. first, we need action to get to the bottom of the specific revelations and allegations that we see. it is clear that there have been some illegal and -- there is a large scale police investigation is it is plainly inadequate.

this is itself requires investigation. the second allegation is that police officers cut payments. with my full support, they brought in the independent commission to overlook this. those investigating the police, who has full independent oversight. police investigations can only get you so far. what people really want to know is what happened, and how is it

allowed to happen? the deputy prime tester and i agree that it is proper to establish a full public inquiry to get to the bottom of what happened. a judge needs to be in charge, so there is no question that it is totally independent. why did the first police investigation fail? what was going on at news of the world and at other newspapers? the bulk of the work can only happen after the police investigation is finished. that doesn't mean we can't do anything now. we will consult on the terms of reference, the powers, and what we can get started, we will get started. i want everyone to be clear. everything that happened is going to be investigated. he witnesses will be questioned by a judge under oath and no stone will be left unturned. we need actions for wider

lessons of the press. this is something we can get on with straightaway. that is why i want to establish a second inquiry to begin at the earliest available opportunity. it should be conducted by credible panel figures that draw from a range of different backgrounds should be truly independent without any motive but to seek the truth and clean up the press. the second inquiry showed the culture of the british press. they should look at how our newspapers are regulated and make recommendations for the future. our press is free. it is essential components. but the press are not above the law. there is much excellent journalism in britain today, but the way the press is regulated is not working.

the press complaints commission has failed. in this case, it was pretty much absent. therefore, we have to conclude that it is ineffective and lacking in record. competing newspapers to judge each other. as a result, it lacks public confidence. i believe we need a new system entirely. lester in prison and is that it should be truly independent of the press so that the public will love the newspapers will no longer be solely responsible for policing themselves and independent of government. how politicians are not going to try to control the press. this new system of regulation must strike a balance between an individual's right to privacy and what is in the public interest.

it should of pull the the proper decent standards. in the days ahead, we meet with the leader of the opposition to discuss exactly how they should be run. if we are going to discuss the way the press is regulated, it would be much better to do this on a cross party basis. people are also talking about their respective bskyb bid. they must follow procedures. his role is to take the advice of the independent regulators and as the department made clear this morning, how this will take some time. there is, as i have said at the outset, it is not an easy one for me to answer.

it is my responsibility to try. how did we get here? as we consider the devastating revelations of the past few days, it is no good to point at that individual journalists or newspaper. the truth is, we have all been in this together. the leaders of all parties, yes, including me. during the last government, the police investigation was undertaken. not enough was done. there were reports from the information commissioner. there were reports, but there was no follow-up. after all of the concern, the government at the time did nothing, and neither did the opposition. it is difficult for politicians to call for regulation of the

media. we are accused of wanting to stifle a free press or free speech. the deeper truth is this. there is a less noble reason. because of party leaders were wanting to win the support of newspapers, which turned a blind eye to the need to get on top of the bad practices and change the way newspapers are regulated. the people in power knew things weren't right, but they did not do enough quickly enough until the full mass of the situation was revealed. the truth is planned for everyone to see. you can downplay its or deny that the problem is the. you can accept the seriousness of the situation and deal with it.

these inquiries give fresh chance for a fresh start and i want to take it. it is healthy that politicians and journalists to speak to each other and know each other. democracy is government by explanation. this is a wake-up call. over the decades, politicians and the press have spent time courting support, and not confronting problems. it is on my watch that the music has stopped. i am saying loud and clear that things have got to change. the relationship needs to be different in the future. theret going to pretend is some nevada in total transparency and technical perfection. that is not real life. we can do a helluva lot better than what we have done so far. it is vital that a free press can tell the truth to power, it is equally important that those in power tell the truth to the press.

let me say this about a couple of the individuals concerned. he worked for four years as director of communications resigned from the news of the world because of the things that happened on his watch. i decided to give him a second chance to and no one has complained about the job he did. he resigned again. i take full responsibility for it. on the case of rebecca brooks, i don't think it is right for the prime minister to start picking and choosing who should run and who should not run media organizations. it has been reported that she offered her resignation over this. before i take your questions, let me say this.

for people watching this scandal unfolded, there is something disturbing about what they see. just think about who they put their trust in. the politicians that represent them, and all of them -- a political system that people think is on their side and a press that is yet free and vigorous and holds those in power to drive them completely mad. we need a free press that is all so clean and trustworthy. that is what people want, that is not what i want. -- and that is what i want.

>> we have asked him many times about your decision to appoint an be as your main communications man. you said that he resigned and paid the price. given that hundreds of people lost their jobs yesterday, given that the editor said that he warned you of what they might have had and you would have known what would have happened under his watch, is and it's time that you not only take responsibility, but you screwed up? >> i made that decision to employ him. he said at the time that he did not know what was happening what was happening on his watch and he paid the price. my decision alone to give him a second chance. he worked for me in opposition, and government, but the second chance did not work. he had to resign all over again for what happened.

i don't think it is particularly meaningful today to try to put a different lost on that or go over it again in a different way. people will judge me for that and i understand that. that is the decision i made and that is what i am going to say about it. people will judge or the they think is right to give someone a second chance, or they don't. people know what these did know or did not know. i don't think any of us knew what they did know or did not know. when you are investigated by the police and the truth is out, it won't be a question of whether not have jobs, it is a question of whether or not they're going to be prosecuted and punished. that is what needs to happen. indeed a police investigation and the public inquiry.

as prime minister, people want to know if i am going to soar this issue out. a proper police investigation, no cover up, and yes, some frankness. the relationship that became too close. we were all wanting the support of newspaper groups and broadcasting organizations. there is a new chance to do it and that's what we are going to do it today. people will decide whether it was right to give someone a second chance. all i can tell you is what i did, what i thought, the questions i asked, the decision i made. but the key thing is this. i do think it's right to try and judge an individual by the work

they did for me. if i had employed someone who has been given a second chance and when they worked for me and did terrible things, then yes i completely understand, women would have a right to say, why on earth did you do that. i took a choice to give someone who screwed up a second chance. he worked for me and worked for me well and he decided that a second chance wouldn't work and he had to resign all over again. and that is what happened and that is the best way to describe it. >> bbc news. at issue here is your judgment, why would you believe a man who resigned over hacking the news of the world and why would you ignore those who warned you about judgments about the future? why do you now say that as leader of the country, you can't say anything about the planned

takeover of one of the country's biggest broadcasters by someone who has be haved appallingly? >> first question, why did i take this decision. i saw someone who paid a price who resigned because what had gone wrong. there was a police investigation. there was a trial, a member of the staff who was sent to prison and andy said he did not know who was happening in terms of hacking and resigned as a result of it and i decided to give him a second chance. that's all i can do to explain what i did what i did. >> all those people said the hacking was widespread. but you hired him when many people were saying that hacking was widespread and many people

believed it was i am plausible for someone who ran a newspaper. >> no one gave me any specific information. obviously i sought assurances and i commissioned the company to do a basic background check. i'm not hiding from the decision i made. there was a police investigation. someone was sent to prison. editor resigned and said he didn't know what was happening. and i thought it was right to give that individual a second chance. people will judge if that was the right thing or wrong thing to do. and i think it is bad to say and you worked with him, people didn't have a complaint about how he did his job. in contrast, other directors of communications who worked in this building who produced dossiers. who is right to try and take

this issue forward and deal with what is a complicated and difficult set of questions, how do we regulate the press and ensure a proper police investigation and how do we get the grips what went wrong the first time around. what i'm saying to you today is that i recognize the mistakes that have been made frankly by all of us, including as a politician wanting to get coverage from good newspaper groups. if you can recknizz the depth of a problem, set out what the solutionsr you have a good chance of taking the country with you for solving this problem and getting to a point where we can say our democracy is in better shape, our police is in better shape. that's what i'm determined to do. >> prime minister, three quick questions, was it right to close the "news of the world"?

do you think there was interaction between you and the murdocks and do you think they are fit and proper people? >> first of all on "news of the world," it's not my decision which newspapers are open, which are closed. it is dangerous if prime ministers make those decisions. it's not the paper but the practices. what needs to change is not the title but the practices that go on and to make sure they are all legal and properly accounted for and properly managed. that's the challenge. so -- it's not for me to say what remain open or closed but it is proper to set up inquiries to make sure we learn the

lessons and these things don't happen again. with hindsight and relationships with murdochs, you want to have a relationship with journalists, editors, broadcasters and propertyors and you do that to have a mission to try and improve our country. you get out and do it and that is what i have done in the last five years. the regret that i have and the problem that we are correctly identifying is because leading politicians feel passionate about wanting to get that across not just with rupert but with every broadcasting organization, we have to ask are they behaving properly.

that is the problem. it's not the nature of the interaction. it's the failure to actually ask the fundamental questions about media regulation, media practices and the rest of it and that just isn't relationships with news international but applies to everybody. and i think that's where we need -- and we have an opportunity, a moment toward politicians and media and journalist groups that there are going to be inquiries and going to be difficult, going to come come out with a new way of regulating the press that ensures press freedom, but also press responsibility. and then the politicians are going to step up to the plate instead of trying to curry favor with the media but regulate properly. this is a huge opportunity if we get it right.

there are proper organizations and procedures for looking at mergers and takeovers in this country. and i know that people have concerns. they have concerns about competition. they have concerns about who is fit and proper and right to own a newspaper or run a broadcasting license. and i think it's very important that this is done in the proper way with advice from the proper bodies. it is not appropriate for a prime minister to say, i like that person to run a newspaper but not that person, that person to win a broadcasting license but not that person. that would take us to a dangerous place. we have proper bodies to look at competition, fitness and they must do all their job and based on the relevant and up to date information and make their views known. >> let's have you. >> andy bell. you say you want everything to change but the fact is after

everything has come crashing down you did have a chance to take a lead as prime minister and didn't do it in trying to change these relationships. are you sorry you didn't do it now? >> on wednesday, i set out clearly that we are going to have not an inquiry but inquiries and i'm putting the flesh on the bones of those inquiries and i have been very frank, not just easy, for politicians to point the finger supporting the practice over there or the police got it wrong over there. what's gone wrong in the relationship and who is responsible for that and to accept part of that response bill. and i think that is a similarity where frankly, you could point to some party having a better record than other pe party. but the fact is that politicians hadn't spoken up about it and this is a wakeup call and are

you doing something about it and have a comprehensive plan and i do. >> there has been questions about -- you said that people will judge you about your decision to hire andy. it's difficult for them to do that until they know what questions you asked of him. you said you asked questions and you referred to a background check you commissioned. can you tell us when you sought assurances? were they assurances in the broad sense whether he might cause you trouble in the future or whether you sat down with him and asked him specific questions about phone hacking? and is it just one conversation before you hired him or was that a conversation you repeated last year before entering downing

street? >> i sought specific assurances and general ones as you would expect. there were a series of conversations and meetings we had after he resigned from the "news of the world". but i think how can people actually know is a good one, because the truth is i asked for assurances and he said he resigned because of what happened but he didn't know that the hacking had taken place. as we stand today with this investigation under way and the police investigation has to be taken under way and we don't know know who knew what about what. people will be able to see not whether people were right to resign from their jobs but whether people are going to be prosecuted and found guilty of something else.

that all has to take place. all i can say is what i did, the decision that i took, the fact that i employed him, he did his job in an extremely respectable way and a good individual to work with. he was liked by the people he worked with and trusted by them and he came into the downing street operation. in the end, he found that the second chance didn't work because of his need to resign the first time. that is the history of what happened. i tried to answer the question as best i can. >> you talked about having the public inquirey and giving us more details. there are lawyers and m.p.'s that say that that inquiry could

start now and could we hear the shredding machines in various places? >> parts of it can start now and some will start now. we can get reference of the paperwork. what you can't do and the lawyers will explain this better, is you can't start a judge-led inquiry questioning witnesses about what happened at the "news of the world," while the witnesses are being questioned by the police. it doesn't work. and the gibson inquiry into detainees is a good example. we set up the inquiry but there is a criminal case under way. as a result, gibson, they are reading some of the paperwork, they can't get started on the meat of the report but have to wait until the end of this criminal case to get going. here, we could have many more

criminal cases. in my view, i want to get this sorted out as soon as possible. i want to get the inquiry the judicial, full public inquiry set up. i want to get these things sorted. this is a black crowd hovering over the press, police and i'm absolutely determined to do it and i have set out a plan of how that needs to be done. >> are you saying that at the time that andy came into downing street, no senior official from your office was warned that he had links to a former private detective that was facing trial for murder? and secondly, can i check with you whether you think that james

murdoch that he authorized payments to cover up i will -- illegal activity? >> on the issue of what i was told, i wasn't given any specific sort of actual information about andy. the decision i took was right from the beginning, that, you know, very bad things happened at the "news of the world." he resigned and he proved himself and it was acceptable for him to come into downing street. that was the decision i took and will be held responsible for and i didn't have any specific information to change my mind. i watched your editor last night. i'm checking that point but i don't recall being given any information because the decision i made, i kept it under review

but felt it was the right decision that he had resigned over what happened. he had proved himself at his job and he should have the second chance that i wanted to give him. that didn't work out. the second chance didn't work and he had to resign all over again. >> any member of your staff was warned? >> i will look into that. on james murdoch, i read the statement yesterday and raised lots of questions that need to be answered and these processes are going to have to answer all of those questions. gary. i'll get to you all. >> channel 4 news. you compared the expenses saga and when that came along you talked about the need for daylight, transparency. i'm not aware of where you are sharing information.

people might say this is the cozy riding, phone contacts, why not tell us that you are recording meetings, phone contacts, giving us clues and about andy, you keep saying you don't want to gloss over things but aren't you in danger? didn't you turn a blind eye as to what every single person knew? you couldn't be an editor of that newspaper without knowing what was going on? >> first, the issue of daylight. it should be looked at what the government has done in terms of transparency, not just data about civil service or public services. it is data about meetings. i publish a regular roster of people who come for meetings here in any form of official capacity. i think there may be room and maybe we can start on more

transparency on meetings and the rest of it. we do that with a lot of our interest groups and lobby groups. very happy to look at that. it is a good agenda. there may be questions if suddenly if every journalist had to publish every meeting. but i think it is worth looking at. on the issue of -- going back to andy, i mean, of course -- he was editor of a newspaper where some very bad things happened. but at the time i made the decision, there had been a police investigation that had been a member of staff prosecuted and imprisoned that had been what i thought at the time what looked on the surface of it a proper investigation had taken place and it seamed to me that because he resigned for what had happened, which he said he didn't know about it, it was reasonable to offer him a second

chance. i can only repeat the thinking i went through and people will judge me on that. the point i point in is that you also have to judge him on the work he did for me because that is important, because on the question of judgment, if as i say, if this person who had -- who is now being accused of doing these things and the police have to check that, then did some terrible things while working for me, that would be a different point. the point about how i felt about it in as many ways i can -- i watched your program last night and that's a good start. >> prime minister, on the subject of certain individuals within your employment, a

hypothetical question, if someone who gave you assurances, especially about criminal activity, criminal behavior, et cetera, then proves to have told you the wrong thing, perhaps lied to you, certainly misled you, would you feel betrayed by that person? >> you have put a series of hypotheticals, but if you are given assurances and they turn out not to be true, you are in a different circumstance. i was given assurances and i employed someone knowingly who had resigned and i took the decision to give that person a second chance. if assurances turn out not to be tru, you are in a different situation. i can only describe it as it is. >> when the guard -- "guardian" first came out in summer of 2009, shouldn't you have called

him in and say, tell me everything. did you do that and when andy resigned this january, did he warn you that more was going to come ut out? did you ask him if more was going to come out? and did he tell you about these emails indicating that he authorized payments to policemen? >> on the last question, no, i didn't know about these emails and we didn't discuss that. on the issue of his leaving, this was something we discussed before christmas. and it wasn't in the light of any specific thing, it was a sense that the second chance wasn't working. he was given a second chance and he was doing a very good job, working hard for the government, country, but finding it impossible because of all the

swirling allegations at the "news of the world." the second chance wasn't working and i have to resign and that was the decision that was made. >> shouldn't you tell us more to come? >> the conversation was that even at that point, he was finding he couldn't do his job because all the allegations that were swirling around. obviously during the period of his employment, of course we discussed this issue, but i never saw any reason to alter the fact the assurances that he had given me and i accepted and the job he was doing for me. the second chance didn't work. he resigned all over again for the same set of things. he is now, as i understand it, under police investigation, as others will be. that police investigation has got to go ahead unhindered without fear or favor, as i

said. i satisfied myself and it's important that people know this, that it is a properly important police investigation and doesn't involve police in the previous investigation. it is a full, proper and one of the largest in the country and needs to go where the evidence leads. it is the absolute priority right now that we get into the inquiries that we should learn the lessons. >> didn't you haul him in and say what was going on here? >> i had conversations with him but never led me to change the fact of the key assurance that he didn't know what was happening at the "news of the world." let's have joe. >> since andy resigned as director of communications, has he be in contact, is he still a friend? >> when you work with someone

for four years, you do build a friendship and i did became friends. he did his job for me and the conservative party and the country. he did it in an effective way. he became a friend and is a friend. i haven't seen him in recent weeks. i have been quite busy. but you make friends with someone when you work with someone for four years. you would be abnormal and be pretty unpleasant if you forget about it. >> prime minister, could the second chance that you gave andy, prove very costly? could this be your equivalent of tony blair's iraq moment and may you need a second chance if it turns out that andy lied to you, lied to the country about not knowing about the hacking practices, illicit practices,

that were going on at the "news of the world"? >> people will judge. i gave the individual a second chance and carried out his job well and wasn't criticized the way he did his job. he resigned all over again. that was the decision he came to. that's the responsibility i have. people will make their judgments. i think it's very different, frankly, from taking money for tobacco advertising or starting a war, it's different. people have to decide. i'm responsible for the decisions i take, the people i employ, the government i run, the buck stops right here and i take full responsibility for everything i do and people have to reach their own conclusions. was it right to give a second chance? people will decide. all i can do is explain why i did what i did and the fact that he is not working here and resigned all over again.

let's have one more question. >> bloomberg. can i take you back to james murdoch, prime minister. in his statement he said, those who worked for him effectively misled parliament he said he and they together approved payments to ask people to stay silent about criminal activities. would you like the police to interview him? and what would he have to do if you feel he wasn't the fit and proper person to lead a media organization? >> i think it's very important that we don't start living in a country where the prime minister starts ordering individuals to be investigated by the police. the police have got the resources, the scale to follow the evidence wherever it leads, to question anyone, no matter how high or low. i have made very clear the

statement made yesterday leaves all sorts of questions to be answered. my responsibility is to make sure in all the ways possible those questions are answered. questions about the police inquiry and why it didn't work the first time around, the questions about what this public inquiry is going to look at and how it's going to uncover the evidence and reform media organizations and the questions that politicians need to ask themselves, the relationship between the politicians and the press. that's what i will do to sort this problem out. that's what i'm determined to do. but the police, they must feel they can go where they need and they shouldn't do it feeling they are going to be directed away from an individual or towards an individual. they must question to get to the bottom of this. why does this matter so much? it is less about celebrities and politicians to being completely

different. some of the families in our country who have suffered the most from losing their children and loved ones are being made to suffer all over again in the most hoff i haveic and hideous way and to watch them on television and relive the agony they wept through when they lost their loved ones, the country feels their pain that this is happening. and that is why it is so vital as a country that we grip this, no matter how difficult it is for newspapers to look in on themselves and ask the questions about what went wrong and the politicians to ask themselves about the relationship not worked out for the benefit of either and for the country and why the police didn't get it right the first time around. these are difficult questions. but the key test for the prime minister and the government is to say are we going to grip this, have we got the right processes to get to the bottom of the problem and take

responsibility for the decisions we have taken? my answer is yes. in spades it will be done and will be done by this prime minister and this government. thank you very much indeed. . [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> the president and congressional leaders discuss the latest unemployment figures and negotiations over the budget. a house hearing examines potential changes to social

security. the british prime minister david cameron told a news briefing to address the phone hacking scandal. tomorrow, we will discuss economic figures with neal irwin. we will discuss the phone hacking scandal. also, the associate editor of " the hill," on the pending free- trade agreement with south korea. >> who really get fired up over nancy pelosi on one hand and john boehner on the other? they are proxy's for the incredibly narrow range of choice that we actually have in elected officials. >> nick gillespie takes on the

problems of today's two-party system and possible libertarian solutions. >> according to the labor department's monthly jobs report released today, the unemployment rate rose to 9.2% and the economy added 80,000 jobs in june. president obama addressed the unemployment numbers and the economy and discussed in negotiations over raising the federal debt limit. >> good afternoon. the debate over recent days has been the debt limit. what matters to me and most

americans is getting our economy on a a more sound footing so that the american people can have the security they deserve. that means getting back to a place where businesses consistently grow and are hiring, where new jobs and new opportunities are within reach, where the middle class families once again no the security and peace of mind that they felt slipping away for years now. today's report confirms what most americans already know, we still have a long way to go and a lot of work to do to get people the security and opportunity that they deserve. we have added more than 2 million new private-sector jobs over the past 16 months. the recession caused more than 8 million. we still have a big hole to fill. each new job is good news for the people who are back at work.

our economy as a whole just is not producing nearly enough jobs for everyone who was looking. we have always known that we have that ups and downs on our way back in this recession. the economy has groups. stuff headwinds -- the problems in greece and in europe along with uncertainty over the debt limit in the u.s. will be raised has also made businesses hesitant to invest more aggressively. the economic challenges that we face or not created overnight and they are not going to be solved overnight. the american people expect us to act on every single good idea

that is out there. i read a letter after letter from people hit hard by this economy. none of them ask for much. some of them for their guts out in these letters. they want me to know that what they're looking for is is that we have done everything we can to make sure that they are rewarded when they are living up to the responsibility, when they are doing right by their committees, when their plane by the rules. that is what they are looking for. they feel like the rules have changed. they fill that leaders on wall street and in washington and believe me, no party is exempt, has let them down. they wonder if their efforts will ever be reciprocated by their leaders. they also make sure to point out how much pride and faith they have in this country and as hard

as things might be today, they are positive that things can get better. i believe that we can make things better. how we respond is up to us. there things that we should do to redouble our efforts. right now, there are over a million construction workers out of work after the housing boom went bust just as a lot of american needs rebuilding. we connected the two by investing in rebuilding our roads and bridges and our railways and our infrastructure and we could put back to work right now some of those construction workers that lost their jobs when the housing market went bust. right now, we can give our entrepreneur is a chance to let their ideas move to market faster by streamlining our

patent process which is pending before congress right now. that should pass. today, congress can advance trade agreements that will help businesses sell more american made goods and services to asia and south america and thousands of jobs here at home. that could be done right now. rain now, there are a lot of middle-class families that could use the security of knowing that the tax cuts that i signed in december to not boost the economy and put $1,000 in pockets of american families that will be around next year. that is a change that we could make right now. there are bills in trade agreements that could get all of these ideas moving. all of them have bipartisan support, all of them could passed immediately. i urge congress not to wait. the american people need us to do everything we can to help

strengthen the economy and make sure we are producing more jobs. also to put our economy on a stronger and sounder footing for the future. we have to rein in our deficits and get the government to live within its means while still making the investments that helped to put people to work right now and make us more competitive in the future. we have had some good meetings. we had a good meeting with both leaders in congress. we agreed to work through the weekend to meet back here on sunday. the sooner we get this done, the sooner that the markets know that the debt limit ceiling will have been raised and that we had a serious plan to deal with our debt and deficit, the sooner that we give our business is the certainty that they will need in order to make additional investments to grow and hire and

will provide more confidence to the rest of the world so that they are committed to investing in america. the american people sent us here to do the right thing not for party but for country. we will work together to get things done on their behalf. that is the least that they should expect a bus. i am ready to roll up my sleeves over the next couple of weeks and months. we will keep you updated on the progress we're making on these debt limit talks over the next several days. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> house republican leaders discussed the economy and unemployment. this press briefing began with john boehner.

>> after hearing this morning stops report, i am sure the american people are still asking the question, where are the jobs? the stimulus spending binge, excessive government regulations, and our overwhelming debt continue to hold back the job creators around the country. tax hikes on families and job creators will only make things worse. the house has passed several bills which would remove government barriers. we will vote on two more bills in the weeks to come and we hope the senate will take those bills up. we also need to stop washington from spending money that it does not have. we need serious reforms to restrain future spending. this will not pass the house. we hope our democratic

counterparts will join us and seize this opportunity to do something big for our economy and for our future and get americans back to work. >> there is a lot of talk about progress that we're having and hope to have a round these negotiations of the white house and i know a lot of questions were asked about why did the talks end. if you look at the jobs report and the results of current policy and where we are in this economy, that is why the talks had to and. this is not make sense for americans to suffer under higher taxes in an economy like this. as the speaker said, there is no way that the house of purpose of this will support a tax increase.

>> good morning. a city of history. a lot of those made unfortunately. today marks a hundred days that the senate even passed the budget. if you look at the numbers today, unacceptable. as a small business owner that started when he was 20, you look at the country today and i wonder if i would have made that same decision today if i was 20 years old. this is the time to change. the policies of this administration have to change. the policies of this senate. you have nine bills that have passed the house estimated more than millions of jobs.

this is time to talk about creating taxes. -- this is a time to talk about modifying taxes. you had the lowest number of start-ups in a decade. i hope the president reads these numbers and looks at what he said in 2009 that he would look to the future of the next three years. time for change. the rhetoric knees to change. >> another month and another disappointing jobs report. 29 straight months of 8 percent plus unemployment when the president told us that we had passed his stimulus plan and we would never have the unemployment above 8%.

the president tells us he inherited a bad situation. i concede the point but he has made it worse. after two and a half years, it is time for him to take responsibility and to answer the question, where are the jobs. the president's stimulus programs, tax increases, and class warfare rhetoric quitted jobs in america, we would be the most highly employed society of civilization. clearly, we are not. the republicans have passed a jobs bill after the jobs bill that would help to create the confidence necessary for a job creators to create jobs and yet they languish in the u.s. senate, a body that is very good at a meeting, a body not so good at acting. the house republicans' plan for america's job creators is all about ending the era of trillion dollar deficits and all about

making the tax codes fair, flat, and simpler and killing off job killing regulations and insuring that we can have the american energy made in america for americans. >> this administration has this economy in an ideological deadlock. the economy is begging for mercy. 9.2% unemployment based on 29 months of consecutive failure is completely unacceptable. what must happen to turn this around is that the white house must reflect on his failure and acknowledge its failure and ultimately say that there has to be a better way forward. the better path way forward is denying the bills that the house has passed. the better way forward is to seriously take up a budget. the better way forward is to end the conversations about raising taxes on american job creators.

>> the numbers that were given this morning. exactly the lack of focus by this administration on truly given america what it needs. when i go home on the weekends and i talked to this job creators, what they are suffering from is this left a focus. if you look at these bills, they are energy bills. in a state like south dakota, energy is extremely important. we have pushed these bills recognizing the fact that job graders need to have affordable energy and they must be able to utilize low-cost in order to put people back to work and they need that the certainties with the liver and provide jobs to americans as we do it. this administration is still defending a failed stimulus package while he talks about raising taxes. if you talk to anyone who has common-sense, anyone who was run

a business that recognize that you cannot raise taxes in a time of uncertainty because it takes more money out of your pocket that you need to go out there and reinvest in our business and put people back to work. our job graders need to know that they have a surgeon to going forward and that we will not raise their taxes, we will give them freedom from some of the burdensome regulations that this administration has given them and give them the ability and the tools to go forward and put people back to work. >> the house continues to build his record of job creation. we passed the jobs and energy permitting act. this was to help unleash energy creation. the purpose of the bill is energy creation and job creation? the 54,000 jobs have been created. the energy and jobs act. 54,000 jobs. as much as 1 billion barrels of they could be accessed.

that is enough to replace our imports from saudi arabia. the senate does nothing. i have held over 36 town meetings since being elected. people continue to talk about it they talk about what is causing businesses and how this economy of stagnation is continuing to prevent them from hiring new people and creating an expansion for the businesses. time that this country start drilling for american energy and

be crippled with unnecessary and red tape and higher costs and provide no additional help or in our mental benefits. these are higher cost people unless the jobs. the epa will be overwhelmed with redundant and duplicate applications on hundreds of thousands of farmers, public health officials, and everyday citizens. the ultimate rate at 9.2% is still going on. we can afford to make a slow permit reprocess. we were sent here to do the people's work and our plan is to restore jobs and restore confidence in the private sector to create those jobs and make those investments. it has been frustrating to me that we have been passed job creating bills, we have more in the pipeline in the center of dissent and. the senate needs to do its work based on that confidence.

>> this is add to the urgency of coming to agreements or does it make it more difficult to get to one board? >> i think the situation we have faced is pretty urgent. i would describe this as dire. we have three really big problems. we have a spending problem, a debt problem, and the jobs problem. that is why i believe it is important for us to fundamentally fix our spending problem and our debt problem and how to get our economy moving again. >> the you anticipate coming back and saying that we have -- and you could present your conference? what is the way forward? >> there is no agreement in private or in public and as the president said yesterday, we are this far apart.

it is not like there is some imminent deal about to happen. there are serious disagreements about how to deal with this very serious problem. >> there has been talk about the ideas of a big deal package at 4 trillion dollars. what do you think the polls should be at this point when you are coming so close to the deadline? >> i have wanted through this process which would finally solved are spending problem and debt problem in the near to the medium-term. we have to have a bill that we can pass through the house and senate. this is a reduced to that we have not quite worked out yet. >> will this back down and only

the fda as you have said. >> i have made it clear to the president and the white house they should move on their own. we expect the house to move four separate bills and i hope that they would heed our advice. >> would you combine this after? >> notices in. >> there is the first move on procreation in taxes in the house. if there is no deal, how about moving forward with a plan b and sending that over to the senate? >> very wise of you, alan. this is an option. >> you have to take some pretty

big hit said benefits and social security and democrats have a real problem with that. what can you offer them that would allow them to vote for something that would make it very difficult -- something that would make it easier. >> we have a serious challenge facing the country. in addition to the three challenges i outlined, we have the debt limit. while some think that we can go past august 2nd, i think that it fits us and puts us in an awful lot of jeopardy and put our economy in jeopardy and risking even more jobs. i believe it is important that we come to an agreement but it has to be an agreement that fund merely changes are spending and our debt situation. >> what to expect will come out

of the meeting? >> i don't know. and honestly, i don't think that things have narrowed. i don't think that this problem has narrowed. . thanks. >> the house minority leader met the president to discuss ongoing debt and budget talks. after the meeting, she spoke to the capital the reporters at her weekly briefing. this is 20 minutes. >> good morning. welcome to our regularly scheduled for thursday morning

meeting. this is day 185 and we have not seen one jobs bill come to the floor. this is obviously reflected in the jobs numbers this morning. we must -- we have put probably 20 job initiatives on the floor and the republicans have rejected every one of them. that is really unfortunate. i am pleased that the president talk about infrastructure this morning. that is something, starting with the recovery packaging to and a half years ago that the democrats have been pushing and now more needs to be done. the present reference some bipartisan legislation to that and. i hope that our republican colleagues will consider that

because people are crying out there, literally crying out there for jobs. i also want to put -- talk about some of the austerity measures real or imagined, that might come from a grand bargain, the debt talks. whatever cuts we need to make, we have to do so in a way that does not harm our economic growth. you see with some of the austerity measures that have already been done in the lane off of public employees across the country. that would only get worse if we continue down the path that is insensitive to the impact of cost shifting to the states in order to reduce the federal budget. so, whether this is authorizing job creation, especially through

infrastructure and infrastructure bank, whether this is how we budget sensitive to job creation or growth, we all agree this is essential to bring in revenue to the treasury. where do we stand on all of this? as you know, we had a meeting at the white house yesterday, a bipartisan and by campbell. we talked about some level of optimism that emerged from that meeting. we would like to enable the scheduled -- the president to schedule a meeting late in the day to see where we are on something that would have the elements of the grand bargain. i wish that we could be thinking about a grand vision but whatever you wanted to call it, how we go forward to not harm the economy and to reduce the deficit to create jobs.

this morning, had the privilege of meeting with the president and vice president on this issue and we had a clear understanding as the president has met with all the leaders and a clear understanding of what our terms of how we go forward and some of this will come forward on sunday evening. the questions i have relate to the baseline, the length of time, the fire wall, some of the technicalities so we're not changing the rules in the middle of the discussion. there is usually a lively discussion in our caucus where our members were very definite. their enthusiasm was such that many of them stayed around after

the votes to participate in this caucus. that is almost unheard of. they did, on friday afternoon. they are as firm as ever on what have been saying which is that we want to of course reduce the deficit as we grow the economy. we will not reduce the deficit or subsidize tax cuts for the rich on the backs of america's seniors and working families. no benefit cuts in medicare and social security and we have serious concerns about what is happening with medicaid as well. talking it through and people understand more about what the possibilities are has been constructive and i'm still optimistic that we can find a

place where we can come together. i don't like to have a situation where we needed the votes he better have this in the bill. this is a big deal. this is not a cent month, bill, we want to work together and to have something that has bipartisanship that has balance consensus and enough democratic votes to put something over the top that most people don't want to vote for. this must be reflective of our values. >> taking it to a higher plane. the opportunity for jobs for our working families, the education

of our children as we reduce the deficit. what are you hearing from your members when you talk about preserving these values with these entitlement programs, but making alterations to than that may be part of a grand bargain? our members drawing a line in the sand and saying that this is a chain? >> no, can the -- cutting benefits is exactly that, cutting benefits. there many initiatives that we try to affect in the affordable health care bill. whether it was the jewel eligibles, not to get too technical about it, but giving the secretary of the ability to negotiate for lower prices for pharmaceuticals. it is a cost-savings. it is a cost-savings to medicare. if that were to be part of a

global grand plan, we want assurances that that money would be poured back into medicare, not to subsidize a tax cut for the wealthiest person in america and to say we are reducing the deficit. it is that kind of thing. i think members can make distinctions, obviously, but by and large, we do not want anybody to think that because we think from lisagor companies got off easily in the health- care bill, that is an opening of the door of weakening medicare. no, it is opening the door of strengthening medicare. >> just to follow on that, how much resistance, say some of your progressives, did you get in the caucus just for us during the words cut to medicare? >> i never uttered those words. [laughter] you forgot the no cuts to

medicare benefits. no, our caucus is diverse in many respects. philosophically, geographically, a generational, gender-wise, and the rest. when i spoke to some of you yesterday, i said that when i went to the table yesterday morning at the white house, i said i come here in a very special way, because i represent a caucus where 100 members are either women or minority. of that 100, over half of those are women. that is more than 50% of our caucus. i know firsthand the impact of changes in any of these initiatives to committees, to individuals, to people who depend on social security and medicare and medicaid. when men come overwhelmingly, depend on social security, and they live longer. when men are also caregivers within their own families and

health providers across the board. so they know the impact of this, and our members are men, women, minority or not, are close to their constituents. we are the retailers of this operation. we are right there on the front line. so when somebody talks about something, we want to know the ramifications of it. they can see it's, and we want to make sure that people making policy decisions understand how that translates. it is a very informed, intellectually and by personal experience, caucus. high tension wires go up when you talk about making changes, unless you can justify what the purpose of this it is. for example, if you talk about the pharmaceutical, if the purpose is to strengthen medicare, let's make sure that money goes to medicare, not to deficit-reduction.

strengthening medicare and social security has a pause of it -- positive impact on the fiscal soundness of our country. but it is not in the accounting of, we've got this pharmaceutical money, so we will use that to offset tax cuts at the high end and say we're reducing the deficit. i have time for just about two more. to make every minute count the train now and 6:00 p.m. on sunday. >> this morning, republicans were out here talking about the nine bills that have passed through the house, sent over to the senate. you talk about these 10 bills that democrats brought forward that have had no action on the floor. today was of the president in the rose garden calling for action on infrastructure, spending middle-class tax cuts, trade agreements, all these different things. i guess people want to know, this idea that you can create jobs immediately, asap, is it gone because there is a broken

promise on the hill or why hasn't the congress sent any of these bills to the president? >> you will have to ask the majority of part that -- the majority party about that because they control the floor and the legislation. but i would say that there are bills we could pass immediately that would give confidence. i have spoken to many captains of industry -- and as the stern still apply? cc's, ok. many have told me it will create jobs when they have customers. if people are buying their product, there will create jobs. so when you fire a policeman, a firefighter, a teacher, and a public employee because of austerity programs, you're not only hurting the city of your neighborhoods, the education of

your children, etc., you are reducing the number of consumers. you are reducing the number of consumers. so we have to understand, again, the impact of all of these actions. and that is why all this slash and burn, take no prisoners, cut, cut, cut in order to reduce the deficit does just the opposite because it lowers revenue coming into the treasury. the president made some suggestions that are good there. i myself would reject the patent bill because i do not think it is about all entrepreneurs, but that is another press conference. i think it was the wrong bill. we're six months into this majority. how many bill signings have you witnessed at the white house? think back two years. how many bill signings,

celebratory bill signings, did you attended the white house? it is something quite different. not that this is not very useful in terms of 6:00 p.m. on sunday, but i have some internal work to do. >> one more question. >> do you believe that having the government move and a changing measures would represent -- [inaudible] second, did you hear anything at the white house yesterday from republicans on the idea of revenues? >> well, the speaker said -- you have told me, the press has told me that the speaker has said that there is a 50/50 chance that something could happen. i only heard that from you. i did not hear that from him. however, enough was said at the

white house to set up another meeting on sunday. that is all i can say. i obviously cannot speak for the republicans, but we're having the next meeting. first question was on cpi? cpi, you know, at our meeting, they spend a lot of time talking about the 14th amendment. i said, you know what, why are we talking about something that is not going to happen? i have no idea if this is going to happen. if it does, if it were to be something that would be put on the table, it would have to be something that would be put on the table, state if it is to address social security, where the money went to social security. cpi money, a change in that money would go to the general fund. this money would have to go to the trust fund. if its purpose is to strengthen social security. use it as the excuse. the gang of six have the best i have no idea what is public about the gang of six or not. is it all public? so you know -- is now. [laughter] i have been told -- [laughter]

] and that is true. is the fact that i have been told that in the gang of six plan, what they consider cpi change, they talk about phase- in and protection for the poor. so those kinds of things, production for the poor, phase- in funds going directly to the social security trust fund, not sitting in the general fund, some things like that. but again, we're discussing things that may or may not happen. let's see what happens on sunday and deal with what emerges there. there is concern in my caucus about what would happen with the cpi, so i think that it is a benefit cut. others do not.

but, again, this falls into both categories -- into the category of hypothetical at the present time. one reason i cannot say any more is at the nano anymore. we have not seen it. the 30 run devil is in the dirty rotten details. we have not seen what that is. when we see it, weakens the better to it. thank you all very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> house democratic caucus -- talks are scheduled to consider on sunday. >> i know that the speaker -- the leader had a press

conference so we just concluded our caucus and suffice it to say that our caucus remains united in its ongoing concern of the preservation of medicare and social security. and was very clear, and we directed our leaders to understand and have carried that message throughout these negotiations. it is our sincere hope, of course, that the leadership on the other side comes to their senses. far too many people back home are concerned about how these ongoing discussions and this flirtation with the debt limit impacts them personally, including their mortgages, their pensions, and there 401k's. and they have seen this story

before. so it is our sincere hope that these meetings over the weekend and on sunday are productive, and there is a resolution that people are able to come to. but we're very clear that that resolution in no shape, manner, or form from the perspective of our caucus is going to impact the benefits of medicare and social security. >> mr. chairman, just to reemphasize, one, it was impressive to see the number of members who did not take the first flight home the way we typically do it to attend this meeting to get the latest word from the leader on where these discussions and stood. it was overwhelming. this support for the position the leader has articulated to

the president and publicly that social security, which has done nothing to contribute one penny to these deficits and a to the national debt, should not be used to pay for reckless spending that led to these massive deficits. medicare, medicaid, same thing. tremendous support for where the leader says she continues to articulate to the present and we should go. i will say this, it does seem now with this latest report on employment, and economy continuing to struggle to create jobs, for closures still running a high pace, and with more and more economists who are on the conservative side of the republican side, say, what are these crazies doing putting the full faith and credit of the united states on the line and

the mortgage interest rates of so many american families on the line by putting at risk a vote that republicans, over the years, including the seventh- time senator george bush, were willing to take so that we would not default on our payments on our debts. it seems now that, more and more, you have to ask the question, are republicans just in in denial? are they not willing to face the facts before us, that even conservative commentators are now coming around to say, you guys were serious that you're willing to go ahead and play russian roulette all the way and pulled the trigger on the economy and the american people. so i am hoping, we're hoping, and clearly, the caucus said to the leader, sent a message to the president that we're hoping that this sunday afternoon or

evening discussions lead to something, because this is becoming a little too scary the way the republicans are willing to bring america down to its knees. >> seven months, we're into the seventh month and not one jobs bill. yet, everybody knows that -- this was pointed out in our caucus today, that we can reduce the deficit by 30% just by having unemployment go from 9% to 7%. we get the politics of this and how someone like to see that number say hi. but, for god's sake, for the sake of the nation, and for the sake of people's 401k's, for their mortgages, for their pensions, this makes no sense at all. it is no longer a matter of playing chicken between democrats and republicans over this policy issue. it is a matter of doing this to the american people, and this is all too familiar azine for americans were they have seen this picture before in 2008 and what happens. with that, we will take a few questions, and that we have to

catch a plane as well. >> thank you. [laughter] >> regarding the jobs numbers today, duty the fact that the economy seems to be selling a bit in the recovery might halt serb democrats perceptions of how many kids are needed? >> that makes absolutely no sense. where all these jobs coming from the private sector? with all this money that the private sector has, we keep hearing from the other side, we're going to cut our way to prosperity how has that helped this economy. how has it helped unemployment? we see what is going on in our states already with people being laid off and cut. how have those jobs numbers increased because of the? the more we have tightened our

belts in a number of areas, where have the jobs come from? you cannot cut your way to prosperity. >> the speaker said he felt this morning there was walking distance between where he is and where the president is. what did the democratic leaders say? i almost called her speaker. >> we think it is ok for you to call her speaker. the leader said she was a very firm about the notion and the commitment of this caucus to medicare and social security. and it may be. in fact, i do not doubt that the speaker boehner, we have long stated, as we have seen this show before, we do not think in our caucus that they are capable of delivering the time of day in a watch factory. we recently saw that on a cr bill. but more instructive is what happened in 2008 with their own

president and with a commitment to deliver votes that never materialized, and it was a far different crowd then, i might add. >> there is an interesting twist developing here on in this play. will republicans be able to do what they are supposed to do in the house of representatives as the majority? that is, deliver the votes to do what they're supposed to do, given that they were given control of the house. and as we continue to proceed down this path, the more it seems that the speaker is telegraphing that he does not have the votes and that he is

going to need the votes of the democrats in the minority to deliver on what he wants to do. that is where i think the leader has been very strong in saying, please do not expect that democrats will deliver votes to the majority so it can to its responsibility of running the house, unless it recognizes the priorities that have been staked out by house democrats, and that is to strengthen social security, medicare, and medicaid, not to cut them because i do not expect that democrats will support balancing a budget on the backs of seniors and children and the disabled. >> there is a level of frustration, and you're talking about a democratic president. why does the democratic caucus insisted the democratic president not lower benefits for social security and medicare beneficiaries? >> i do not think that is necessarily the president's in 10. let's be clear about that. -- i do not think that is the president's intent. not been privy to all the discussions, you have to take these in the context in which they are presented.

in terms of a larger plan, a plan that in no shape or form with intact -- what impact social security or medicare benefits. you know, in a context in which the other side is offering nothing and can not deliver any votes and feels that cutting the red to the bottom or letting the nation default is fine. they have got to hear from their constituents. our caucus always just wants to make it clear to everyone, including our constituents, where we stand with respect to social security and medicare. >> i want to add something here. the president has been very clear. he is willing to put everything on the table.

and i think he is right. everything must be on the table, including vital programs like medicare, social security, medicaid, and the rest. but what we're saying is be transparent and show why you want to give something on the table. the president was clear. you want to do something with social security, it is to strengthen social security, not to use it to cover deficits caused by something other than social security. our message is not so much to the president. it is to republicans who have made it very clear through their vote to end medicare that they want to use medicare to cover the deficits. they have introduced legislation, the republican leadership, therapy sessions -- through pete sessions. and there's the privatisation bill by pete sessions on social security, were there would take the money set up social security and make it more difficult for today's seniors. there have also shown that they want to make deep cuts into medicaid, which two-thirds of the money goes to seniors, by trying to block grant it. the message that we're sending to our colleagues on the republican side is that this is where house democrats have said they stand.

we believe the president is right in saying that everyone has to hang their egos at the door and this is everything at the negotiating table. most of us believe that at the end of the day, we will keep on the table those things that drove these deficits and not put the burden on seniors and disabled and the children in this country to pay for the deficits caused principally by the bush tax cuts and two unpaid for wars in iraq and afghanistan. >> thank you very much. >> coming up tonight on c-span, a house hearing on potential changes to social security. british prime minister david

cameron holds a news briefing to address the news of the world on banking scandal. later, a house hearing on limits to oil and gas exploration on federal lands. >> on tomorrow's "washington journal," a look at the latest employment figures with neil urban. we will discuss the british phone hacking scandal. also, associate editor of the hill, in swanson, on the pending free-trade agreement with south korea. washington journal" begins live at 7:00 a.m. eastern on c-span. now available, a complete guide to the first session of the 112 congress. new and returning house and senate members with contact information, including twitter addresses, district maps, and committee assignments, and information on the white house, supreme court justices, and

congress. >> the house ways and means subcommittee on social security held a hearing today on proposed changes to social security. proposals included raising the current retirement age and increasing social security taxes. witnesses included bill cheever and charles blahaus. this is an hour and 25 minutes. >> we are going to try to crank this hearing up on time so i am going to bring the hearing to order. we heard a few weeks ago from the public trustees, unless congress acts in 2036, social security revenues will only cover 77% of promised benefits. congress needs to act, and the

sooner we do, the sooner we can protect those who are vulnerable. young people deserve peace of mind, too. at our last spring, the subcommittee looked at options to raise payroll taxes to address the challenges and heard that these options.com promote saving or permanently fix the shortfall of social security. with chronic unemployment and so many young people unable to find work, nothing we do should make it harder for americans to find good paying jobs. today we will learn more about social security benefits of proposed changes to benefits and their impact on future beneficiaries, social security's finances, and economic growth. since the beginning of the program, benefits have been based on workers' lifetime

earnings. the formula that determines benefits is designed to replace a higher percentage of carrero earnings for lower earners. benefit our increased almost every year to keep pace with inflation through cost-of-living adjustments. social security first paid monthly benefits in 1940 to of a woman who worked for just three years under social security. harper's monthly check was $22.54. but her check was not indexed for inflation and her lifetime benefits for her and her age group were soon supported by a surge of young workers. during her lifetime, she collected nearly $23,000 in social security benefits. today, 55 million americans receive benefits averaging over $1,000 per month. by 23 by, over 90 million will receive benefits.

benefits are more generous, but the number of beneficiaries will rise much more rapidly than the number of workers now struggling in today's economy will need to support them. the reality is there is simply not enough young workers to support the baby boomers who are returning at the rate of 10,000 today for the next 19 years. social security provides essential income to workers families, spouses, jogger, and survivors are all eligible for benefits. one out of every 13 beneficiaries receive family benefit. many of our witnesses will review how america and social security have changed over the past 76 years. today, people are just living longer. that is nice, isn't it? when social security was created, americans lived on average to 64 and the retirement age was 65. according to the actuaries, had

congress tied it to increases in life expectancy from the beginning instead of being 66, it would be close to 71. however, i know that the life insurance guys tell you you are going to live to be 100 nowadays. no wonder members on both sides of the aisle have expressed support for raising the retirement age. in 1935, social security was born amidst a great economic crisis. the great depression. fdr said that social security can furnish only a base upon which each one of our citizens may build his individual security through his own individual efforts. in other words, social security benefits were intended to provide a modest stake in debt. in the challenging economic times, fdr's statement still rings true. while everyone who pays into social security should receive a benefit, not everyone relies on

social security. whatever solution congress may ultimately consider, we must protect those who depend on social security the most. in the meantime, until congress acts, workers and their families are challenged to plan for their retirement, an important tool in their planning is the social security statement, which includes the worker's earnings history in estimated future benefits. it is the main document that social security uses to communicate with over 150 million workers and their future benefits. today, we will hear from the gao regarding the results of their review which was done earlier this year. americans want, need, and deserve the certainty that social security will be there for them. i am confident of working together we can provide that certainty. i thank all our witnesses for joining us today and look forward to hearing from their advice on ways to move forward

and we are expecting boats around 10:00 this morning so we are going to try to work you all in. i would implore all our members to commit to 5 minutes. you are recognized for five minutes. >> today's hearing illustrate the basic question of right and wrong. >> social security has never contributed a dime in to the nation's debt, not a penny to our federal deficit this year, or in the year of our nation's history, yet some in this town insist we should cut social security benefits for seniors today for these deficits, deficits run over the last 10 years as a consequence of fighting to unpaged four wars and giving unpaid for tax cuts to millionaires.

most americans would say it is immoral and un-american for this country to tax peter to pay paul, to make retirees, disabled workers and children pay for the bush debt. how can that be right? here is the simple truth. today, social security has over 2.6 trillion dollars in its trust fund, generated by work force contributions. social security has ordered 41 $6 trillion and only spend $12 trillion. do the math. as a result, social security has an up incoming reserves to pay full benefits for the next quarter-century at about reports of benefits after that. social security is not broke and it will not go bankrupt. that is because i like the federal operating budget, social security cannot deficit spend, or whatever base its own debt ceiling crisis. our challenge is to address a manageable shortfall in social security after 2036. the size of that shortfall is

about the same size as the cost of keeping in place the bush tax cuts or just the wealthiest 2 percent of american taxpayers. preserving social security is simply a matter of priority, a matter of right and wrong. what is wrong is cutting social security benefits for people who work part of their lives to earn benefits for themselves and their families. it is wrong in cutting social security to pay for tax cuts for millionaires. most seniors have limited incomes. the average benefit for a retiree is $14,000 a year. six out of 10 singers rely on social security for more than half of their income, and nearly a third have virtually nothing else to carry on. as people get older and began to out of their other retirement savings, they began to rely increasingly on their social security pay check. the benefit cuts republicans have put on the table this year

will have devastating consequences for today's seniors and for the 155 million future beneficiaries who are paying into social security today. in our last. we learned that under the social security privatisation bill introduced by congressman pete sessions and others, social security's ability to pay benefits would be severely compromised. if we enacted the republican bill, current seniors might not get the monthly checks that earned through a lifetime of work. in addition, republican paul ryan has a plan to privatize social security to raise the retirement age, and to cut benefits for the middle class. house republicans recently voted to create a special and -- republican committee including majority leader eric cantor has proposed raising the retirement

age at a time when socials record will have $3 trillion in its trust fund. the plan would cut benefits for middle-income workers and could easily cost about $34 a year when they retire. i am grateful that we are holding a hearing on social security benefits. we need to have a comprehensive discussion on all the options available to us to strengthen social security. where you stand on social security and were you fall on the ways to strengthen it will speak volumes about your priorities for our country and for the generation that build the america we so love. with that, i look forward to the testimony of our witnesses. >> $3 trillion is a lot of money. you cannot pay benefits in bonds. social security needs cash, and

i do not know where treasury gets the cash to redeem the bonds. treasury has to roxburgh. -- treasury has to borrow if it. today the u.s. borrows 40 cents for every dollar it spends. much of it from the chinese, and sends the bill to our children and grandchildren. >> may i comment on that? >> this is a piece of paper like the treasury certificate that social security has. it is simply a piece of paper that says $20 on it. it is worth $20 only if the full faith and credit of the united states backs it up. this is a savings bond and treasury certificate my daughter got when she was born. it is supposed to be worth $50 when she cashes it in when she turns 18. it is worth money versus this envelope or this piece of paper, simply because we say we have the full faith and credit of the united states to back it up. whether it is this or this or

the social security treasury certificates or the ones that china has or japan has, we either are going to live up to our obligations and our debts are we are not, but to say that the trust funds $3 trillion are mere paper, that this paper is worth money, and china's paper is worth money, is an egregious way to tell seniors that they paid into a system and to make them believe is not there for them, and for our kids as well. my daughter relies on this $50 savings bond the weight seniors rely on social security. >> i want to remind our witnesses to limit their statements to 5 minutes, and be advised that without objection from this gentleman during your statements in writing, it will be entered into the record.

we have an independent consultant from maryland. thank you for coming to washington. we have a ph.d. and senior fellow at the urban institute's, vice-president for finally economic security, national women's law center, a ph.d. research fellow at the hoover institution, and a ph.d. director for educational work force and income security act the government accountability of this. thank you all for being here. >> good morning, mr. chairman. thank you very much for inviting me here today, members of the subcommittee.

my remarks today will focus on the need to modernize social security's benefit portfolio, to improve the effectiveness with which the program meets one of its long-term specified goals, one of the ones you mentioned in your opening remarks, mr. chairman, the redristributive character of the program. i show how the retirement system has got more costly overtime. an individual return today will have worn payroll taxes relative to lifetime earnings more than six times those of a worker retiring in 1955. in your opening remarks you mentioned getting the first social security benefit. when she retired, she had paid $25 in lifetime taxes into social security. she did fairly well under the

program. today, participants are not doing quite as well. if you add in the supplemental cost of setting for an adequate retirement income, the cost of retirement today has tripled over what it was in 1955. these costs will automatically continued to climb under current law for at least another decade. at in health costs in today's workers are facing claims exceeding one third of their lifetime pay, just to cover retirement and health costs. that is before we address the underfunding of social security and medicare that i know you are all aware of. retirement security is important. we should not lose sight of the need to preserve the prospect of some prosperity game for workers and the pitcher. we cannot address our financing issues by borrowing more cross that workers. some of the four files can be addressed by making social security more consistent with stated goals and modernizing it to correspond with 20th century realities. the benefit formula established in 1935 was intended to provide higher benefits compared to those with higher earnings.

at least a dozen different time since 1935, congress has reaffirmed that commitment. table 2 shows estimates on what is called a systems money's worth. the calculations are for persons born in 1949 and compare the value of their respective lifetime social security benefits at age 65 to the accumulated value payroll tax collection on lifetime earnings. numbers in the table that are greater than one suggests some segment will receive more expected lifetime benefits than the value of their contributions. those numbers less than once a just the opposite. if you look at the values for 100 couples, you can see that they expect to do much better at every earnings level on average than their single

counterparts or married individuals and to order couples. the system provides higher benefits for low earners single workers then couples. in a program that is expected to pay higher benefits for low earners, that is inconsistent with the stated goal. in the third table, i factor in supplemental savings, the tax benefits for employer sponsored savings, and the result carries through the whole system. in a formal statement, i site to studies that have documented that the spousal benefit feature is essentially defeating the redistributed feature embedded in the benefit formula. the reason these results have arisen is because the spousal benefit tends to be concentrated among higher earners. families with low earnings levels often have little choice but to send all members of a couple to work in order to make

ends meet. partly this is so today to a greater extent than in the past because many modern workers have to surrender so much more of their earnings to cover social security and their own retirement savings in health insurance costs that economic circumstances leave them no choice but that both spouses have to work to cover family needs. for most workers today, this also benefit has little or no economic value but renders their treatment unfair relative to those who benefit from it and pay nothing extra for it. either we should quit the pretense that social security is redistributive, or we should make it fit the stated intent. the introduction of a true joint and survivor benefit for married couples. the operation of the spousal benefit partially covers this void now, but by perpetuating its existence in mitigating the need for joint writer benefits,

existing policy propagates another inequity. the longest living spouse today receive little or no benefit in consideration of the deceased spouse's income and participation in social security. this makes an even more glaring problem. the retirement equity act of 1983 record their private employer sponsored pension offer joint and survivor benefits and the only way it can be waived is by boat persons actuating the benefit. it can be financed within the structure of the benefit itself. it does not have to add expense to social security's cost. it would modernize the system and make it more equitable and would be more efficient. >> thank you, sir. >> i am glad to be here this morning. i am here representing the

american academy of actuaries. we have roughly 17,000 members, whose mission is to serve the public on behalf of the u.s. actuarial profession. i want to talk about two things. i want to talk about actuaries and the role of actuaries in assessing the solvency and sustainability of financial systems, and i would like to talk about a position we have advocated, that the social security retirement age be increased. actuaries go about the business of evaluating complex financial systems, and we did that by constructed models. these models are designed to gauge the long-term solvency and sustainability of these financial systems. we go about that by looking at the system from the standpoint of the principles that seem to be functioning within that

system and the assumptions that support that. the reason we do that is because we then turn around and project those principles into the future, based on a certain set of assumptions. as you know, there is talk about actuarial imbalances in the social security system. those calculations are not here and now assessments, because there is a $2.60 trillion trust fund. this is a long-term imbalance that we talk about. it is actuarial principles and assumptions that give transparency into that sort of imbalance, so therefore what we do as actuaries is examined those principles and test those assumptions. one of the key principles that the social security system operates on is that the current cohort of workers will support the current cohort of retirees. that is one of the principles on which the system has been

built. one of the assumptions is that right from the start, that longevity was a relatively fixed notion back in 1937, when longevity was what it was, and for people at birth at that age, life expectancy was 64. for those that reached age 65, their life expectancy is that point was 12 years. fast forward to today, and life expectancy for 65-year-old is roughly 18 years. that brings us to my second point, which is the american academy of actuaries and our position around retirement age. we at the academy had examined and explored all sorts of suggestions, options, and alternatives for closing that imbalance, closing that long-

term, 75-year imbalance. one of the topics that has risen to the top of the list is increasing retirement age. the reason is because we believe it was an assumption that was a fixed assumption back in 1937 that deserves re- evaluation today. every actuarial projection that has been done since then has updated and anticipated increased longevity including those done in the current time frame that takes into account this 15% improvement in longevity. to restore balance to the system and maintain that balance between the working years and the retirement years, the academy believe it is paramount that at the top of any list of reform items, increasing the retirement age has to appear on that list. we are mindful of the fact that

any change to the system has to be done with respect to what objectives we are trying to achieve, the impact on near- term and long-term retirees. we are mindful of the fact there will always be consequences to any change, and those consequences may need to be mitigated. we are well aware of that and we stand ready to help evaluate any sort of proposals that may come forward that appear in any sort of reform package. those are my remarks, mr. chairman. >> thank you very much. >> it is an honor to be before you again today. as was committed by several people, social security was first enacted and since then vast changes have occurred in the economy and life expectancy, health care, and the labor force participation of women. we simply cannot design a system for 28 by what were the

need for society in 1930. at the margin it is not serving us as well as it could. consider the following. if account lifetime benefits and social security, taking into account retirement age issues, social security provides about $555,000 worth of lifetime benefits to the average retiree today. if we count medicare, it is over $1 million. what we are really talking about is the growth to the benefit that we are trying to figure out how to constrain, not cutting back on existing levels. the younger and younger people are essentially getting -- it

has made modest progress in dealing with poverty. it discourages work among older individuals when we need them to be in the labor force. it is a threat to the it denies equal justice in all sorts of ways. it discriminates against single head of household, which is largely women. none of these features derive from any conservative or liberal principle. they are just badly designed features that do not meet the needs of today and are not well targeted. in my testimony i talk about four different types of reforms that are important to what we are considering. one is to figure out ways to restrict the growth in benefits and number of years of benefits. it is not necessarily cutting back on years, but clementine that growth of the system is out of balance. we need to think about ways of increasing labor supply.

we need workers in the economy that brings revenues to income tax. there is discrimination largely in single heads of households, working women or abandoned mothers. i would like to encourage you to think about latching on some private pension reform as part of a broader set of programs for the elderly. i talk about restricting growth in the system is out of balance. if congress would simply put on a rule that says while social security and medicare are out of balance, we will cap the total amount of benefits to $1 million per couple. it is the growth in benefits beyond the package of benefits for couple that is causing the imbalances. another issue of redress is i would just retirement age to

account for the fact that people are living longer and longer. more and more benefits are going to people further and further from debt. it is not concentrated where needs of the greatest. i favor a strong minimum benefit so we provide an even salary base of protection for the bottom third of the income distribution. i mentioned in the testimony that would try to encourage greater labor force participation. that is where increasing the retirement age is important. that includes the early retirement age. it does a lot for income tax revenues. it helps us deal with the demographic issue of going who threw world where we are encouraging one-third of adults to be on social security. i also suggest all sorts of ways of improving the equity and efficiency of the system,

including designing a strong minimum benefit to help lower- income people. i would move towards actuarial neutrality because it is a major cause of the problem of discrimination against single heads of households. i would try to add on some private pension reform on to social security so we get some saving for the broad mass of middle-class people who do not have much savings and retirement. the definition of a pessimist is someone, when he smells the scent of flowers, looks around for a casket. what you are going through politically these days, on social security, taxes, and the debt, is very difficult. you are having to identify who is paying for government. the promises we made in the past cannot be met, but if we take off the straight jacket, we are freeing ourselves and congress to put resources towards those needs that we consider to be the most important in society.

thank you. >> thank you, chairman and members of the subcommittee for giving me the opportunity to testify on behalf of the national women's law center. i am going to shift focus to what social security means to the budget of the americans who rely on social security. two out of three beneficiaries 65 and older get most of their income from social security and for one out of three, it is virtually their only source of income. that is striking when you realize the average social security benefit is just $14,000 a year for older americans and just $12,000 a year for older women. as a result, even with social security at its current levels, economic insecurity among the elderly persists, especially among women, and their incomes are modest.

genet in oregon is a widow, 84 years old, living alone. she worked until late '73, but her only income now, apart from a little help from her children it, is her social security check. her benefit is about $20,000 a year, so it is actually higher than average, but it is tillis trouble for her to make ends meet. forget cable-tv or new clothes. what about food? she explains, i cannot afford meat anymore but every once in awhile if i see a great bargain i will splurge on a piece of meat. how may very thin slices of cheese. in does not cover health care. she told us, a couple of months ago, my dentist tell me i needed a root canal.

i have had to put it off because it is $800 and i cannot take that on now. i am taking a chance with my help, but i don't know what else i can do. not a lot of room to cut their. social security benefits are already scheduled to decline. the retirement age is going up right now. and has increased from 65 to 66 and is rising to 67. every year's increase in the retirement age is an across-the- board benefit cut of about 7% at whatever age people take their benefits. rising medicare premiums will consume a greater portion of retiree's social security income. on top of that, other sources of secure retirement are declining and the recession has made things worse. this adds up to a compelling case for protecting and strengthening social security benefits, yet there are a number of proposals out there that would cut social security benefits, even for current

retirees. i was pleased to hear your statement about the bipartisan support for protecting those people. for example, switching to the change cpi for calculating cost-of-living adjustment in social security would cut benefits for current beneficiaries and produce bigger cuts with every year of benefit receipt. this change would particularly hit women, because they live longer than men, are more reliant on social security, and already it much greater risk of poverty as they age. those who say that cut will not hurt or not trying to live on social security. a cut of $56 a month represents the loss of a week of food every month. the bowles-simpson plan relies

on 4/5 of savings in the 7 digit year. restoring solvency to the social security program by slashing the benefits people need to live is like fixing a stubbed toe by cutting off a foot. some proposals would cut benefits more quickly and more deeply. for example, the republican study committee proposal to speed up the increase in the retirement age and bills that are pending depending on the senate side to accelerate that increase would cut benefits for people currently between the ages of 55 and 60. in addition, the act introduced by representative sessions would simultaneously worsen trust fund's solvency and jeopardize benefits for current retirees, as the chief actuary testified at the last hearing,

and jeopardize not only the retirement benefit for workers to choose accounts, but disability and life protections for their family. i recognize it is important to make adjustments sooner than later, but this committee has the time to make those adjustments right so that people do not get hurt. thank you. >> thank you, mr. chairman and the subcommittee for the honor of testifying today. owing to the time constraints, we will bypass most of the background information and just offer nine suggested rules of thumb for you to consider as to contemplate changes in social security benefits. first is very simple, act soon. the balance of any benefit for tax changes is an important guy you judgment, but whatever is chosen, will be better off with that solution is in acted sooner. the longer you delay action,

the more changes will be concentrated on a small number of courts and that will increase aspects on vulnerable members of those cohorts. to do otherwise means younger generations will face higher social security tax burdens than any previous generation has tolerated. program costs were about 11.5% of worker wages in 2008 before the baby boomers begin to retire. under the current formula, that would rise to over 17% by 2030. we would be trying to pay benefits that are rising dramatically in per-capita terms relative to inflation. today typical retiree gets the benefit of about $18,000 a year at the normal retirement age.

if we just the rate of growth now, benefits and still rise in real terms and do not have to be cut from today's level. believe the current formula in place, we are on the risk of future benefit declined as voters rebel against the hon tax rate required to sustain current tax rates. our population is aging rapidly and we have enacted various increases over the years and established early retirement. people are retiring earlier and getting a higher benefits and living longer. something there has to give. we have to raise both the early and normal retirement ages three years just to get back to the starting point. the fourth rule of thumb, the asean any changes you want to make as rapidly as you can to be effective before 2035.

2035 is when we hit that 27% cost rate and after that, cost or relatively flat. any benefit changes you postponed to occur after 2035 will not do much to address the looming tax burdens facing yogurt workers. the current system is designed to drive seniors out of the work force, which may have been attractive in 1935, but now we have the opposite problem. we have a future economic growth jeopardize what -- it would draw up millions of baby boomers from the work force. we should increase the reward for delay plans an offer a lump-sum option to make their delayed for current credit more attractive. we should redesign the benefit formula. right now, the longer you work and the more your average earnings rise, the lower incremental returns on social

security contributions. we should redesign of formula to deliver proportional benefits for every year worked by seniors. protect the vulnerable by restraint benefit growth. the less is left over for vulnerable populations within a given level of tax revenue. it is inefficient to have higher tax burdens driven by benefit growth beyond inflation for workers. there is an important conceptual distinction between -- 1 requires no new administrative capabilities and does not penalize individuals for the savings they do outside of social security. maintain the link between retirement and disability benefits. the formula is based on the determined formula and that is important. limits gaming of the system and

allows for a smooth transition once a disabled individual reaches retirement age. avoid unnecessary complexity pecan. not every part of the formula can do everything. you'll have goals for targeting benefits, but you cannot ask the retirement age to handle that. my recommendation would be set to return age for the general case that reflects the population aging and did your benefit harding through the basic benefit program. rejiggered benefit targeting through the basic benefit program. >> we can tell people to stop getting older. [laughter] >> thank you for inviting me today. you have heard others speak about ways to stabilize social security's financial future. one of the most important

vehicles for explaining social security programs is the individual must security statement. the statement is the federal government's main document for communicating with more than 150 million workers about their social security benefits. it also serves as a key financial literacy tool to educate the public about social security as mandated by law. it changes take place, the statement would take on added importance as it needs to explain them. my testimony will address the current status of the statement and plans to improve its usefulness. my remarks are based on interviews conducted in the last month with officials, documents that provide, and prior work on the statements understand ability. with regard to status, the statement is not currently being distributed. ssa used to mail a statement to workers annually but the ssa is

instead preparing to make the statement available on line and has begun developing a new web portal for this purpose. both the portal and the online version of the statement are currently in the initial phases of development, and will need to be fully tested. as a result, ssa officials are uncertain when the statement will be available to the public. there are hoping for early next year. in the meantime, copies of the statement are not available and request for star directed to the ssa retirement estimator. although useful, it does not feel the same function as the statement. the focus on getting the statement on line and securing the personal information it contains is important, but these elements should not be the only concern for the agency. ssa woolwich plans in place for the ability of the statement on

line. the have not developed a plan for carrying it out. they will need to consider how best to provide this information to people without internet access. even the relatively few computers available in selected field offices will not necessarily permit access to the online statement itself create in individuals without computers would even note to go there to look for it. agency officials would like to make the statement available in spanish, but the initial version will be available in english only. ssa officials have said they believe the electronic format has advantages for individuals including immediate access when needed and not simply when it arrives in the mail. officials note that with an electronic statement they can provide links to related documents, thereby providing complete information but

minimizing the lindsey description in the statement itself. ssa plans to draw an industry best practices to make the system more user-friendly. although they are planning such changes, the first publicly released version of the statement is set for next year and it will be nearly identical to the current print version. it means sticking with the limited graphics and layout that should have been modernized years ago. officials said they do not plan to change the content of the statement because so much of it is statutory required. we noted in our 2000 report that the statement contains descriptions and concepts that are confusing. this is the same content they plan to roll out online. it's unclear what role was played in the design or content of the on statement thus far.

in conclusion, the ssa decision to suspend mailings this year may negatively affect millions of americans and could openly have a positive result of modernizing delivery of this important inspiration. because this decision was made so abruptly, ssa faces pressure to take quick action to restore the availability of the statement, which means there is little or no time to redesign the statement. that is not our greatest concern. the lack of preparation for providing all american workers, including those without computer resources and those without english proficiency, with an understandable version of the statement risks leaving a significant portion of our population without information about social security at a time when such information is more crucial than ever. we recommend that the commissioner take steps immediately to address these access issues and ensure that the statement remains an important tool for communicating

with all workers. that concludes my statement. >> thank you very much. we are struggling to meet a vote deadline here this morning, so i would like everyone to have a chance to ask questions. i will limit my time to 5 minutes and asked the ranking member to do the same. >> mr. terry, your testimony makes a clear and compelling case for raising the retirement age. everyone ought to be listening carefully to what you and the experts have to say on this issue. we cannot force people to work longer, but we can encourage

them that it makes no sense to attack someone who wants to work and who we as a nation need to have worked. we may not want to tax them as they get past a certain age. why not encourage older workers by freeing them of their social security payroll tax that tax is the very first dollar of income? it must make sense to you because you mentioned it in your remarks. how much would this boost older worker's willingness to work, and do you think it would encourage or we should encourage employers to create jobs for them, and finally, how would this benefit our country? >> i like the way you posed the question because i think you are suggesting that it is not simply a matter of forcing people to do something they do

not want to do, that we may have impediments inadvertently set up to prevent people from working longer. if work is thought of as drudgery from which people must escape and social security is the savior for that escape, then i think that is probably a flawed premise and the premise your questioning is that in fact there may well be removal of disincentives to work that could very well and courage this sort of increase in productivity from the work force that we all could benefit from. the academy does not have a position around the elimination of payroll taxes or the cutting back of payroll taxes for older workers. that should be something that is on the table, and we would be happy to take a look at that and examine it from an actuarial perspective.

we have not done that yet, but we would be pleased to do that. >> the social security statements, one of the few government publications that reaches nearly every working age american, reminds workers how much of their wages they pay in taxes for the promise of future social security benefits and that gives an estimate of what those benefits might be. >> the law says that the social security administration must provide a social security statement to individuals aged 25 and older. how the statement is provided and whether it is mailed, online, is something that social security is considering right now. >> so you do not think they violated the law when they did not send one in the mail?

>> we do not have an opinion on whether they violated the law. we prefer to let the court make those decisions. we do think it is very important that people get the statement, and when the decision was made back in the spring not to mail the statement anymore, to cancel the contract, it was made for budgetary reasons, but it did not consider the fact that there could be a full calendar year in which statements are not going out. >> what does the law require social security to include in that statement? did they do it online? >> we have not seen what they are putting on line yet. they show what you are earning record is, that estimate your future benefits, and talk about the offsets that apply to public employees and some in the railroad industry.

there are many things that social security must include their, and we do not dispute that. we are concerned about how those things are explained. >> thank you very much. >> thank you all for you testimony. i suspect we will be calling on all of you for your ideas in the future because i believe there is an appetite to discuss how we get to a solution on social security, so thank you very much. the story you recounted of the woman in oregon sounds familiar to the story i hear from to many seniors in my congressional district in los angeles, where the costs are probably even higher than the one you mentioned. if you look over the lifetime, if someone lives into their 80's or 90's, that is quite a

few years of collecting about $14,000 on average for year. >> 12,000 for women. >> we do have to address that imbalance for women. when you put medicare in there, is a good chunk of money, but at the same time, we are finding that health care costs are eclipsing any cost of living that seniors are getting. $14,000 is not much to start with. how do you see this going? if we get to the point of trying to deal with making social security stronger into the future, so that my kids and their kids know it will be there the way it is for today's seniors and for me as well, what should we be doing to try to make sure that we can tell the woman in oregon or my constituent in los angeles that social security will be a strong tomorrow as it is today?

>> i think there are two separate problems that need to be looked at separately, although they are often talked about together, social security and medicare and medicaid. health care costs are on a trajectory of increase that is unsustainable. it is not just the federal health programs. health care costs from the federal programs are rising more slowly than health care costs in the private sector. there is a real need to control the growth of health care costs to see where we can find real efficiencies without impeding benefits in the quality of care. i think my expertise is not in health care reform, but clearly that is an area where we do see costs continuing to escalate. if you look at the growth curve for social security benefits, the chairman pointed out in his announcement of this hearing,

they will increase to about 6.2% of gdp in 2035, but after that, that actually declined slightly and stayed stable for the next 75 years. when it comes to social security, we are dealing with the back of an aging population, but it is more that there are not as many young people as there used to be. so how do we deal with that? i think there are solutions on the revenue side. the wage base for social security is very low. we tax a much smaller percentage of wages than we have taxed in the last several decades. a lot of compensation now is outside of social security taxes altogether, and we are taxing only a small portion of gdp. there are revenue solutions and there was testimony about it a couple of weeks ago.

there are other ways of raising revenue for social security. it is striking, and i mentioned some of the public polling that across the political spectrum, including people who support the tea party, support raising revenue to finance social security and close the deficit. they also support revenue increases to strengthen the program. i would suggest that is a place to look. >> mr. chairman, you are a number sky. -- a numbers guy. we have to look at these numbers. you mentioned the $2.60 million trust fund and how we address the long-term ally of social security.

i pulled out the $20 bill, i pulled out the savings bond, and i guess i could have pulled out the treasury certificate that the social security system has. what is your sense of how we deal with this is insisting be existing debt ceiling crisis, and what is the impact on the $20 bill, the savings want my daughter has, or the treasury certificate for social security? >> we actuaries are focused on the social security system itself. our realm of focus is the system itself. we are in the midst of preparing a detailed discussion breed of the very question you asked about the trust funds, is the money real or not real? what are the attributes of it that can inform some of our thinking about the importance

of that $2.60 trillion? we are close to putting the finishing touches on that. >> mr. chairman, thank you. are really do not know where to start. i am extremely frustrated with the rhetoric on this issue. we heard three accusations of republican plans that are going to ruin social security. none of those proposals -- we have a lot of attention today because the president has recognized this is an issue that and should be talked about and debated. everyone i talked to back in north dakota is concerned about social security. it has been used as a political football by different people with different interest all along. i sit here today and hear people say we have $2.6 trillion, nothing to worry about. to redeem that comes from the general fund.

why are we in this debt crisis today? we have $14.30 billion in debt, and we do not have any more money. the money has to come from the general fund. it is crazy to say that we should ignore this problem. i am not here to say we want to use social security to fund our deficit. i did not create this problem, but are frankly, it has got to be fixed. we are spending more in the general fund and we are taking in. i came here to honor that promise to our seniors. i am very frustrated when i sit here and say do not worry, we are good for 25 years, and at the end of 25 years, it is only going to go up 25%. 25% goes from 20,000 to 15,000. i appreciate everyone's perspective.

the point is, they quit doing the statements. why? they are saying for budget reasons. everyone i talk to that has looked at this says there is a problem. my question is pretty simple. i would like each of you to say what is the facts? why should we look at this? give me a fact that is not disputable on why we should spend our time fixing social security or making insolvent long term. >> absolutely. >> the time perspective in which the system will run out of money if we don't do anything is within the life expectancy, roughly, of people who are returned today. so is an issue that is going to affect almost everyone who is stepping into retirement today.

it is also within the life expectancy of everybody who is working, over the -- or the overwhelming majority of people who were working. the trust fund will be depleted under the projection. there will still be tax revenues coming in. the trust funds will run out of money. it is within the people today who are here participating in the program. we ought to fix it before we get to the cliff. you do not put the brakes on at the clef, you put the brakes on as you are coming to the cliff. >> i would echo that, and what i think other panelists have said this morning about the need to address it now rather than later. to suggest there is not an issue is to suggest there is nothing to address right now. the academy believes action should be taken now to address

the long-range deficit. >> there are a lot of features of social security that are badly targeted. a lot of low income women really suffered discrimination in the system. there are fixes like that that we need to make, regardless of imbalance or not. so much money is concentrated so much earlier in life, so typical couple getting benefits now for close to 27 years, going on three decades. that is not a good system. they need more concentration of been a bit later in life. what happened in the trust funds is that while the baby boomers were in the work force, they were paying about $1 for every 90 cents that was being paid out. today, basically for every dollar coming in, $1 is going out. as you move toward the future,

it moves toward $1.25 going out for every dollar coming in. that is the simple math we are dealing with in terms up this pay-as-you-go system. the trust fund is going in the opposite direction. that is what is driving the system, largely because of the decline of the birth rate. the only way to do we did address the decline in the new fisheries is to tax workers more or take something away from the beneficiaries. that is the simple math. >> i will let each of you make a short statement if you desire. >> one of the most popular options for strengthening social security, and i agree that action should be taken, in 1983 congress waited until social security was in of the months of exhausting the trust fund, and that is not an experience anyone wants to repeat.

right now, people pay social security taxes only on their first $106,800 of income. when you explain that to people, the vast majority are shocked. people say people should pay social security taxes on more of their income, and that would go a long way to strengthening the trust fund and making sure we continue to pay benefits that are so important in north dakota. >> apart from anything happening -- there is an imbalance of the social security system picks you get the least fair and outcomes if you wait until later. i would make one final point on this.

if we do wait until we are close to a trust fund depletion, there is no historical precedent for closing a shortfall of that magnitude. in 1983, incumbent outflow were still pretty close together. we are rapidly getting to a point where they will be much further apart. there is no historical precedent for closing a shortfall of the size it will be by the time the trust fund has run down. >> social security touches the lives of nearly every american. it is a crucially important program. yet for 15 years, gao has been talking about the structural imbalance in the system and that it will be really important to act as early as possible to avoid really horrible choices later on that will really hurt people very dramatically. we have been arguing that having this discussion, and i congratulate the subcommittee for having this hearing and for having this hearing and raising some of these issues,