other members to do so as well. i'd be happy to yield. >> i appreciate the chairman yielding and would join him in his opposition to the amendment. i would make a general observation. mr. visclosky: the gentleman's amendment would cut $10 million from the office of science. when you look at a $4 billion budget your first impression might be it is a little -- it is of little consequence as far as the overall scientific research in this country. but i would point out that in fiscal year 2010 the account was for $4,904,000,000. in fiscal year 2011 it was reduced to $4,842,000,000. for 2012 it's reduced another $43 million. the gentleman's amendment would essentially increase that reduction by almost 25% for the coming fiscal year and i do think it is time to say no and

let us apply ourselves to serious scientific research. i oppose the gentleman's amendment and appreciate the chairman yielding. . the chair: the gentleman yields back the balance of his time. the gentleman from jea. mr. broun: oy was listening to my colleague. i did a town hall meeting in thompson, georgia, just recently and a lady said $1 billion is a lot of money. we talk about that as if it isn't a lots of money. we cannot continue down this road of borrowing 40 cents on every dollar that the federal government spends. it has created uncertainty in

the economic world and it -- this debt is crushing to us. cutting $10 million for a project, it might be -- i'm a physician, i have a science back ground and there are a lot of things that would be interesting to research and interesting things to do, but just like a business when it gets overextended, what does it do? it lowers the borrowing limit and tries to work out the debt. then it starts looking at every expense it has, every corner of their expenses and tries to cut expenses. besides that, they start looking at revenue. our democratic colleagues want to raise taxes and that is a tax that will drive away jobs. i have businesses that tell me

that the tax burden, today is so high that they aren't hiring new people. and increaseing taxes on businesses is going to drive away jobs from this country. so cutting $10 million may not sound like a lot to members of congress, but i'm go being go to support this amendment and i yield to mr. royce. mr. royce: i'll only take a minute here to close, but i'm i'm for research and science and scientific research where we can drive progress in the united states, but as i shared with you earlier, i'm a former capital projects manager and one of the things you learn is to identify those projects which have some ability to have a return on

investment. when you run into a project which is not only on the face of it, uneconomical, but one which is hazardous and on top of that, you see a listing of all the ways in which you would extract energy at much less cost than you would ever get to this and it would be the very last resort on the list, you would not keep that on your list of capital projects to entertain. i can tell you this. if you were constricted in your budget, especially if you are borrowing 40% on your dollar in your budget, would you take this off the list of capital projects you would commit to. i would commit to you, it is only logical that we pass this amendment and we incrementally at least make progress where we

know where we can, reduce the borrowing and send a vote of confidence to the market that when we see an opportunity are going to shave back opportunities in areas where there cannot possibly a return on investment for the taxpayers of the united states. i yield back my time. mr. broun: i want to say members of congress should do what i'm doing. i have supported over $5 billion worth of cuts in the appropriations bills we have seen so far. we are in an economic emergency. we are trying to put our country back into economic success. it is absolutely critical. even though this may sound this may soupped like a meager

amount, $10 million is a lot of money and i support the amendment and i applaud mr. royce for bringing it and i yield back. the chair: the question is on the amendment offered by the gentleman from california. those in favor say aye. those opposed, no. in the opinion of the chair, the noes have it. the amendment is not agreed to. the gentleman from california. mr. royce: i ask for a recorded vote. the chair: further proceedings on the amendment offered by the gentleman from california will be postponed. for what purpose does the gentleman from georgia rise? mr. broun: i have an amendment at the desk. the clerk: amendment number 43 printed in the congressional record offered by mr. broun of georgia for five minutes. mr. broun: my department is transferring $420 million to the

spending reduction account. contained within this reduction is some of the most egregious examples of government waste imaginable, such as $47 million for undetermined upgrades. $20 million for the energy hub for batteries. $4 million for initiate efficient materials and $9 for competitive research. i ask unanimous consent that i revise and extend my remarks and in those -- the chair: without objection. mr. broun: i list a whole lot of other examples that this amendment will cut. this is some of the many examples of wasteful programs within the department of energy's office of science that are funded by taxpayer dollars

that will be cut. while i believe the federal government does have a role in basic science research, i do not believe the government should be spending taxpayer dollars on every type of research imaginable or suggested here in congress. much of the research that should be done should be done in the private sector. tough fiscal decisions have to be made and have to be made right now and we have put off bringing this to the process far too long. we need to look far and wide to every single nook, cranny and corner of the federal expenditures and cut wasteful spending and this is just an amendment that will cut over $820 million of those kinds of projects. we can't afford them. i urge my colleagues to support

my amendment and i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from new jersey. mr. frelinghuysen: i move to strike the last word. i rise to oppose the gentleman's amendment. the energy and water bill makes available a very limited amount of funding for activities which are responsible for basic resevere, science and development. this is work that the private sector has no profit incentive to invest in. it cuts research that will be the foundation of technology in future decades. this science research leads to innovation that will make our nation's energy sector self- sufficient and keep america competitive as the world leader of science innovation. this is why we work so hard to sustain funding for this program.

cutting it will not only cut jobs around the country but put at risk our nation's competitive edge and intellectual property and set back our country's energy future. i must oppose the amendment and yield back. the chair: the gentleman yields back the balance of his time. the gentleman from indiana. mr. visclosky: i rise in strong opposition. we should be taking full advantage of facilities and not cut this account to the point where we are not able to use the capital, fixed assets that we have for this significant request in a reduction in funding. i would point out to my colleagues in 2006, president bush made a commitment to double the budget for the office of science over a decade. the commitment to double funding for research and development by

president bush in science and technology was in response to stark warnings from a group of business leaders that warned in their reports known in the report, rising above the economic storm. and this is at a time when many other nations are gathering strength. i would certainly share the gentleman's concern about some of the programs and to ensure that they do communicate with one another. he mentioned the hubs. i have been critical of the hubs in my past comments. he has talked about management. i have been critical of the department of energy as far as their project management but i would point out that a relative term that i believe the office of science, particularly given the leadership under president bush at the university of texas, has done a very good job of

getting a handle on the department, improving management skills and trying to do their very best as far as the expenditure of those funds. i strongly oppose the gentleman's amendment and would yield back. the chair: the gentleman yields back the balance of his time. the question is on the amendment offered by the gentleman from georgia. those in favor say aye. those opposed, no. in the opinion of the chair, the noes have it. the gentleman from georgia. mr. broun: i rerequest a recorded vote. the chair: further proceedings on the amendment offered by the gentleman from georgia will be postponed. for what purpose does the gentleman from nevada rise? >> i have an amendment at the desk. the chair: the clerk submit his

amendment to the house? the chair: clerk will read. the clerk: amendment offered by mr. heck of nevada, page 28, amend line 16 -- page 28, line 15, nuclear waste disposal, $25 million. the chair: for what purpose does the gentleman from nevada rise? mr. heck: i have an amendment at the desk. the clerk: amendment offered by mr. heck of nevada, page 28, amend line 16 through 18 to read as follows. carry out the purpose of the

nuclear waste policy act of 1982, public law 97-425, including the acquisition of real property or facility construction or expansion, $25 million to remain available until expended and be redifed from the nuclear waste fund providing that it shall be provided to the state of nevada to conduct appropriate activities pusht pursuant to that act as $2 million shall be provided to local government. to conduct appropriate activities pursuant to the act. the distribution of the funds shall follow the current formula used by local government, provided further that $20 million shall be provided for the purpose of research and development in accelerator transmutation technology.

the chair: for what purpose does the gentleman from new jersey rise. mr. frelinghuysen: i rise in a point of order. mr. heck: thomas jefferson said laws and institutions must go hand in hand with the progress of the human mind. as that becomes more developed, more enlightened as new discoveries are made, new truths are discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. almost 30 years have elapsed since this congress passed the nuclear waste act. and since that time, technology has evolved and new discoveries made and opinions changed. but for some reason congress clings to technology to address today's nuclear waste issues.

sticking the waste in the ground is a 20th century solution. instead we should encourage the use of a 21st century technology. my amendment redirects money from the nuclear waste fund and designated for yucca mountain waste storage into the development of a 21st century solution, a fuel recycling and accelerated program. this program would significantly reduce the toxicity of nuclear waste and retrieve additional energy from the material through radio chemistry and subcritical transmutation using accelerator technology. perhaps more importantly for nevada, the site of yucca mountain and the state with the highest unemployment rate in the country, is the fact that this 21st century solution has the potential to create in a single generation no less than 10,000 new direct research and development jobs utilizing existing regional technology

capabilities. my amendment also provides continued oversight funding for the state of nevada and the affected units of local government as they have received resources to oversee the yucca program since its inception. even during the most recent continuing resolution passed by this body only a few short months ago, funding through the department of energy continued to provide these resources. the u.s. continues falling behind developed and developing countries in fully funding and implementing these types of projects, 21st century solutions that are critical to maintaining our nation's economic and technological superiority. i urge my colleagues to embrace the future of nuclear waste disposal and support this amendment so that this institution may go hand in hand with the progress of the human mind and with the change of circumstances this institution also advances to keep pace with the times. and i yield back the balance of my time.

the chair: the gentleman yields back the balance of his time. the gentleman from new jersey. mr. frelinghuysen: mr. chairman, i continue to reserve but i move to strike the last word. the chair: five minutes. mr. frelinghuysen: mr. chairman. i oppose the amendment but certainly i recognize dr. heck's leadership on this issue and i know of what he speaks and how proud he is of the state and how he's determine -- how determined he is relative to the yucca mountain project and i want to you know, having been to that site at one point in time and seeing the substantial investment there, of course from many other people's perspectives including mine that substantial investment at some point ought to be realized, so understandably we appreciate and understand where you're coming from and we respect your dedication to your own state's welfare. mr. chairman, i do rise to oppose the amendment. this amendment attempts to secure additional funding for the state of nevada, it also

attempts to stipulate policies for research and development, for the back end of the fuel cycle which should properly be authorized before they're funded from this account. this committee and many members have taken the strong position against the administration's yucca mountain policy, that's well known. the future of our nuclear waste policy of course deserves more consideration than this amendment and perhaps this evening would afford so i must insist on my point of order. the chair: the gentleman yields back? mr. frelinghuysen: i insist on my point of order. the chair: the chair -- the gentleman makes his point of order. mr. frelinghuysen: yes, mr. chairman, i make a point of order against the amendment because it proposes to change existing law and constitute legislation on an appropriations bill, therefore it violates clause 2 of rule 21, the rule

states in pertinent part, an amendment to a general appropriation bill should not be in order if changing existing law. the amendment gives affirmative direction, in effect i ask for a ruling from the chair. the chair: does any other member wishen to heard -- to be heard on the point of order? >> i would request that during your deliberation of the point of order that you consider the fact that in the second session of the 111th congress, a similar provision was passed by this body in h.r. 5866 and i yield back. the chair: the chair is prepared to rule. the chair finds that this amendment includes language imparting direction, the amendment -- the amendment thereof constitutes legislation in violation of the rule and the amendment is not in order. the clerk will read. the clerk: line 20, advanced research projects agency energy,

$100 million. the chair: for what purpose does the gentleman from california rise? >> mr. chairman, i have an amendment at the desk. the chair: the clerk will designate the amendment. the clerk will report the amendment. the clerk: amendment offered by mr. schiff of california. page 28, line 23, after the dollar amount insert, increased by $79,640,000. schiffshy i request consent that the reading of the amendment be -- mr. schiff: i request consent that the reading of the amendment be waived. the chair: without objection, so ordered. the gentleman is recognized for five minutes. mr. schiff: thank you, mr. chairman. my amendment is offered by my colleagues representative bass and representative fudge, it would simply restore the funding to the f.y. 2011 level of $1 the.6 million. arpa-e was created in 2009 to bring the kind of innovative thinking that is well known at darpa, the defense advanced research projects agency, to the

energy sector. that includes the focus on high risk, high reward r&d. and a quick-moving culture made up of experts who stay for just a few years to ensure that new ideas are continually being brought forward. unlike some government agencies its philosophy, much like a tech startup, is to hire the best technical staff and then hire the managers in leadership that can get the best out of them. this reinvention of the way that government does business is something we should be encouraging. a leaner approach adopted from the private sector with a more agile leadership and the mandate to cut underperforming research avenues is exactly what the department of energy needs. the american energy innovation council made up of the c.e.o.'s and chairmen of some of america's biggest companies including bill gates, norm augustine and jeff imilt, have proposed spending $1 billion a year on arpa-e, seeing it as a vital part of our energy future. this bill provides just $100

million. so they endorsed a version of the of this amendment in the appropriations committee. i recognize we have a serious deficit problem, as a member of the blue dog coalition, and we need to deal with it. but as we make the difficult choices to do that, i don't believe that we should emerge -- as we emerge from a recession that we should cut the innovative research that makes america great and has fueled our economic growth for generations. energy is not just an economic issue, of course, it is also a national security issue. some of arpa -- arpa-e's research may help us cut down on fuel in afghanistan and every bit of energy independence protects us from higher energy prices by instability in the east or skyrocketing demand in china. more than 50 universities, venture capital firms and professional societies, the association of american universities, the association of public and land grant universities have signed a letter in support of increasing arpa-e funding. they and i hope that we will

provide the funds that arpa-e needs to continue to do the research that will change our world, not today but tomorrow and for decaded to -- decades to come. this amendment offsets the increase with a cut to the department administration account, as many people have noted, the department of energy has a serious management problem, perhaps cutting this account will send a message that a new approach is needed. but this invests in our future. energy is a national security issue, it's an economic imperative, it's a health issue, it's an environmental issue and to invest in this kind of cutting-edge research, in a reinvention of government kind of agency is exactly the direction we should go. it's a proven approach that's been proven in the defense department with darpa, it can work here in energy, it's off to a very promising start developing new battery technologies where we can lead the development of new batteries for electric vehicles for

another generation. i was very moved by a speech from a c.e.o. of google about a year ago and he talked about how the revolution in energy that is just beginning will dwarf the revolution we have just come through in telecommunications because energy is a far bigger sector of our economy. we want to leave that -- lead that energy revolution. if we do the benefits to our economic development will be enormous. just as they were in terms of the telecommunications revolution. we don't want to see this leadership to -- we don't want to cede this leadership to china or any other nation but if we're serious about it we need to invest in cutting edge research. that's exactly what arpa-e does. and i urge this congress not to cut back on the nation's future but to support the innovative work being done by arpa-e and i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from new jersey. mr. frelinghuysen: i move to strike the last word. the chair: the gentleman is recognized for five minutes. mr. frelinghuysen: mr. chairman, i rise to oppose the amendment.

my colleague's amendment would add funding to arpa-e which receives $100 million in our bill. our bill which reduces funding to nearly 2006 levels, may i repeat, 2006 level, fulfills our top responsibility of reducing government spending while focusing funding on a small set of top priorities. in addition to national defense and water infrastructure, our top priorities include research to keep america competitive in science, innovation and the development of intellectual property. arpa-e is a relatively new program. today we're discussing only its second regular fiscal year appropriation that offers industry, university and laboratory grants for high risk energy innovations. arpa-e is getting positive early reviews for its strong management and ability to execute on its mission to drive innovation and to keep american companies competitive. however i share many of my colleagues' concerns about this

program. arpa-e must not intervene where capital private markets are already acting and it must not be redundant with other programs at the department. in fact, arpa-e is still a young program and it is prudent to provide a lower level of funding whether it is still maturing as a program, demonstrating its ability to address congressional concerns, especially when the bill has so many important priorities competing for scarce funding. this prudent approach is especially warranted when the bill has so many important priorities competing. while i support the goals of this new program, i cannot support any additional funding at this time. further this amendment makes an unrealistic cut to the department's salaries and expenses. we cannot cut department oversight by 35% and expect the efficient use of taxpayer dollars and more oversight and more management

responsibilities. for these reasons and many more, i must oppose the gentleman's amendment and yield back. the chair: the gentleman yields back the balance of his time. the gentleman from -- new hampshire. for what reason do you rise? >> i rise in support of the bill and move to strike the last word or amendment and move to strike the last word. the chair: the gentleman is recognized for five minutes. >> mr. chairman, a minute or two ago i was in the cloakroom and i drew up the website for arpa-e, it says at the top, quote, disruptive and innovative approaches to technology. what a wonderful thought, that a government agency can be disruptive and innovative at the same time. billions of dollars have been spent on coal, on oil research, on wind and solar, on biomass and conservation, the freedom car. i got involved in the alternative energy business way back in the late 1970's when i was a staffer, when erta was

created. we had a real energy crisis in this nation as we do today. and yet we're really not anywhere nearly as far along this path as we need to be. now someone in the congress, in the department of energy, had the good idea of taking all these ideas for research and creating an entity that would be devoted to giving individuals, inventors, people with good ideas that little spark that they need to turn those ideas into reality. the first time they went out for solicitations they got some 3,500 to 4,000 short seven-page letters describing ideas. this is a program that leverages a relatively small amount of research dollars into an enormous potential benefit not

only to america but to the world . but within our boundaries here we have the objective of lessening our dependence on foreign energy, of cleaning up our environment, of creating jobs in new economies for americans. and given the fact that we have spent literally billions on the research and development in traditional energy resources, all we are asking to do in this amendment is to get the level up to last year, $71 billion over the suggested appropriation of $100 million. $71 million. . all that provides a fresh look, flexible, efficient way to solve problems that are serious in america. i hope that the congress will support mr. schiff's amendment

to keep this program strong, active, moving forward, because i think that has the potential to do more than any other research program. i urge support of this amendment, mr. chairman. and i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from indiana. mr. visclosky: move to strike the last word. the chair: the gentleman is recognized for five minutes. mr. visclosky: i rise in opposition to the amendment. i have spoken on a number of occasions about the need to invest in research in this instance. there is a school of school of thought that i would not argue that arpa-e has shown some promise as a new organizational model at the department of energy. but as i have stated, debate debating this point in the past, i'm troubled that the vigor at the department that has led to

arpa in this new idea, sing did you lar, has largely been absent when it comes to addressing the communication problems in other existing applied programs. the department had a great idea that i support in creating energy research centers that began in 2009 and we now have 46 energy frontier research centers doing good work. we now have energy innovation hubs. we have a hub for energy efficient building systems. we have a hub for fuels from sunlight hub. we have a hub for modeling and simulation. there is a request approved in this bill for batteries and storage, a hub for critical materials.

the department of energy in 2007 had an idea that we should have a bioenergy research center and we have three. we have the joint bioenergy institute in california, bioresearch center in madison, wisconsin, bioenergy science center in oak ridge, tennessee. 1997, the department of energy had an idea to have a gee o'noem and we have been told we have the intellectual power in the various rabt laboratories that i haven't enumerated in my remarks. given the allocation we have, we have cuts in the science and

eere that provide funding for these research centers. before we proceed the lines established in this amendment, we need to make sure that the department understands what their allocations of resources are for what they have and what they have had to make sure there is good communication and to make sure that the promise of arpa is met as we proceed down this road before again we start making significant investments. i do appreciate what the gentleman wants to do here. i do support this research to create this knowledge, but it is time to ensure that the department is managing properly and having proper communication between all of these other centers first. for that reason, i object to the gentleman's amendment and yield back. the chair: the gentleman yields

back the balance of his time. the question is on the amendment offered by the gentleman from california. those in favor say aye. those opposed, no. in the opinion of the chair, the noes have it. >> i request a recorded vote. commarmente the gentleman from california requests a rodded vote. pursuant to clause 6, rule 18s further proceedings on the amendment offered by the gentleman from california will be postponed. clerk will read. the clerk: page 29, line 1, title 17, innovative technology loan guarantee program $160 million. advanced technology vehicles, $6 million. the chair: does the gentleman from georgia seek recognition? mr. broun: i have an amendment at the desk. the clerk: amendment number 48

printed in the congressional record offered by mr. broun of georgia. the chair: the gentleman is recognized for five minutes. mr. broun: my amendment eliminates funding for the loan program, transferring $6 million to the spending reduction account. mr. chairman, i'm 100% supportive of the automobile industry producing more fuel-efficient automobiles, but there is no good reason that the federal government should be subsidizing billion dollar companies at a time when our nation is broke. over the past few years, we have seen the automobile industry receive an amount of government assistance. we have seen an industry bail yoit, marketing distorting cash for clunkers program and subsidies all done with little regard with taxpayers' money. it's time we begin to reverse this disturbing trend and let

the automobile industry succeed or fail. we have to stop these kinds of subsidies particularly in these hard times where our nation is in an economic emergency. i urge support of this amendment. and i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from new jersey. mr. frelinghuysen: move to strike the last word. i rise to oppose this amendment. i'm strongly in favor of a thriving domestic auto industry, but i have been critical of the slow pace which the department has implemented this program. in the homeland security program we trimmed out $1.5 billion for this program which has been sitting unused since 2009. we put it towards flood assistance where there was a true emergency purpose, but we left applications that are already in the pipeline.

cutting those off midstream thousands of jobs and investment. but understandably, i know where the gentleman is coming from but i urge opposition to his amendment and i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from indiana. mr. visclosky: i rise in opposition to the gentleman's amendment. the advanced technology vehicles manufacturing program supports the development of advanced technologies that create energy jobs and reduce our nation's dependence on oil. i do believe this is an energy issue as far as reducing our dependency on foreign oil. if the amendment is adopt, it would ensure we have no oversight over loans that the department has already issued ensuring that the congress and administration would give up

their responsibility to make sure they were used in a manner they were intended. for those reasons and reasons talked out by my chairman, i would oppose the amendment. the chair: the question is on the amendment offered by the gentleman from jea. those in favor say aye. those opposed, no. in the opinion of the chair, the amendment is not agreed to. the gentleman from georgia requests a rodded vote. pursuant to clause 6, rule 18, further proceedings on the amendment offered by the gentleman from georgia will be postponed. the gentleman from georgia seeks recognition? clerk will read. the clerk: page 1, line 22,

departmental administration, $22,514,000. the chair: the gentleman from georgia. mr. broun: i have an amendment at the desk. the chair: the clerk will designate the amendment. the gentleman has two pre-printed amendments. could you tell us which one you are discussing first? mr. broun: numbed 64. the clerk: amendment number 64, printed in the congressional record offered by mr. broun of georgia. the chair: the gentleman is recognized for five minutes. mr. broun: thank you, mr. charne. my amendment would reduce the operating budget of the office of energy secretary by 50% transferring 2.5 million to the

spending reduction account. i have spent a considerable amount of time on the floor during the appropriations process working to find spending cuts across every level of government and across every agency. i understand the challenges of the secretary of energy faces and the enormity of the department that he is tasked with overseeing. the department of energy must do its part to reduce the deficit. wife to cut wherever we can. the future of our nature depends upon it. our future of our children and grand children depends on it. we are broke as a nation. we have to look into every nook and cranny and find wherever we can reduce expenditures. i urge support of my amendment. and i yield back. the chair: the gentleman yields back the balance of his time.

the gentleman from new jersey. mr. frelinghuysen: i move to strike the last word. the chair: the gentleman is recognized for five minutes. mr. frelinghuysen: if dr. broun is insistent and i want to thank him for his amendment and i'm willing to accept it. i yield back. the chair: the question is on the amendment offered by the gentleman from georgia. those in favor say aye. those opposed, no. in the opinion of the chair, the ayes have it. the amendment is agreed to. the chair: the gentleman from nebraska, for what reason do you rise?

mr. fortenberry: i have an amendment at the desk. the clerk: amendment offered by mr. fortenberry of nebraska, page 32, line 4, after the dollar amount, reduce by $35 million. after the dollar amount, insert increase by $35 million. mr. fortenberry: this amendment would reduce the department of energy administration account by $35 million and increase the global threat reduction initiative by $35 million. as co-founder as the caucus together with my colleague, mr. schiff, i'm concerned about the potential nuclear security threat and vulnerabilities and would like to secure fissile materials and prevent nuclear materials here and around the world. i want to thank representative sanchez for her commitment to this important issue as well.

nuclear threats is so serious and we shrink from even contemplating it. but ignoring the problem is not an option. there is relatively straightforward steps we can to reduce our vulnerabilities. to date, this important program has converted or verified the shutdown of 76 out of 200 highly enriched uranium reactors to be shut down by the year 2022. the program has removed 3,855 uranium and plutonium from 42 countries. the program has eliminated uranium from 19 countries and plans on eliminating all of it from additional nine countries by december of 2013. these countries, the 19 it was removed from include, bra dill,,

bulgaria, spain, thailand and greece, the fill opinions, libya, turkey, taiwan. and the program has seen the removal of 960 kilograms and this is since 2008 -- 2009. it is vital we work together to transend any differences in this body to prevent our world from sleepwalking to utter disaster. we are at a crossroads. the differences that have en abled cooperation for progress has benefited individuals and groups bound by ideologies that threaten the very foundation of civil society and government. i consider it our collective mission to ensure that we succeed in controlling nuclear technology and materials to

leave a stable global environment nor generation its. i urge my colleagues to join me and representative sanchez in supporting this important amendment and i yield back. the chair: for what purpose does the gentleman from new jersey rise? mr. frelinghuysen: i move to strike the last word. mr. frelinghuysen: i rise in support of the amendment and salute the gentleman on his knowledge and we can't argue against the statistics he has proposed. i should state for the record it supports our nuclear strategy and fully funds to lockdown nuclear materials around the world and enforcing export controls and promoting nuclear safeguards and with that, i yield to the ranking member. mr. visclosky: i appreciate the chairman yielding and i appreciate the gentleman offering this amendment and it is very, very important.

certainly, the serious threat confronting this nation is of nuclear terrorism and i appreciate the gentleman's work on the issue offering the amendment as well as those who support it. i rise in support of it and i thank the chairman for yielding to me. . mr. frelinghuysen: i yield back. the chair: the question is on the amendment offered by the gentleman from nebraska. those in favor say aye. those opposed, no. in the opinion of the chair, the ayes have it. the amendment is agreed to. the gentleman from illinois, for what reason do you rise? >> i have an amendment at the desk. the clerk: the -- the chair: the clerk will report the amendment. the clerk: amendment offered by mr. shimcuffs illinois. after the dollar amount insert, reduce by $10 million. page 54, line 20, after the second dollar amount insert, increased by $10 million. page 54, line 25, after the dollar amount insert, increase

by $10 million. the chair: the gentleman from illinois, you're recognized for five minutes. mr. shimkus: thank you, mr. chairman. first of all i want to thank my colleague notice appropriations committee, i don't come down to the floor often. this is a special occasion, a special time to bring focus on yucca mountain. what this money, as the investigation continues into the shutdown of yucca mountain, we have heard over and over again that the licensing application should move forward and let the science speak for itself. the $10 million provided in the bill is a start but too low for the nuclear regulatory commission to do anything functional toward reviewing the licensing application. in fact, just a few years ago they were receiving nearly $60 million for these efforts. in addition the shimkus-inslee didn't officially get recorded that way, but that was our

intent, that jay inslee, my friend from washington state would join me. the amendment adds $10 million to continue the yucca mountain license application. there is $10 million in the bill and my amendment would take it to $20 million. our amendment is budget-neutral and fully offset by taking funds from the d.o.e.'s department administration account. we are asking d.o.e. to do more with less by making modest cuts to an account for salries and expenses and i again want to thank the appropriations committee for helping us find a way to move in this direction. again, i want to thank my colleague, mr. inslee, for supporting this amendment. i've had a lot of my colleagues on both sides of the aisle talk to me about when are we going to have a vote on the floor to show our support for what we have done historically. in 1982 the nuclear waste policy act was passed, 0 years -- 30 years, countless different administrations on both sides of the aisle, different control of

the chamber here, both parties, this has been our consistent policy for 30 years. now with japan and fukushima and part of the problem being high level nuclear waste stored in pools, we have to have a centralized location and this amendment says, let the science -- let us finish the science to get to the final permit and let that science be the judge. it's provided the money. but i will tell you that we have high level nuclear waste, all over this country, and we need it in one centralized location. it's been our policy that that would be yucca mountain, an isolated area in nevada, in the desert, 90 miles from las vegas, underneath a mountain in the desert in one of the most ar i had places in this country. if we -- arid places in this country. if we can't store it there we really can't store it anywhere. as you'll hear from my

colleagues who have already this evening -- there are historic locations where we should not have it. again, i really want to thank the appropriations committee for helping me through this process. we need a vote, i'll call for a vote and with that i yield back the balance of my time. the chair: the gentleman yields back. the gentleman from washington seek recognition? mr. inslee: address the house for -- strike the last word. the chair: the gentleman is recognized for five minutes. mr. inslee: thank you. i want to thank mr. shimkus for this effort. there's a couple reasons for this amendment. one is there is a national interest here. we have 75,000 metric tons of nuclear waste at 80 sites in 45 states. this is a national interest, a national bill, an appropriation we need to get done. in my state it's particularly acute at the handford site, a place where we fought world wore ii and the cold war and now we are preparing nuclear waste to go to yucca mountain that essentially would be all dressed up with no place to go if we don't finish this project.

thanks very small step forward, but i do think -- this is a very small step forward but i do think it's important not only for the $10 million that will help us move forward in the scientific assessment of this, but it will be another statement by this house of why we need to move forward. we need that statement -- we made that thank statement in 19 47, we made that statement in 2002, we made it here in 2007. this is a way to do it in the appropriations system, it is an important statement to make. we got to continue to push on this ball uphill until this job gets done. with that, thank you, mr. shimkus, and thank you to the committee helping us find a solution to this problem and i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from georgia seek recognition? mr. broun: yes, mr. chairman, i move to strike the last word. i rise in support of mr. shimkus' amendment and mr. inslee's and i congratulate them on bringing this very important amendment to the floor in this appropriations bill. just across the savannah river

in from high district is the savannah river site. i've been over there many times. i'm very concerned about the storage of nuclear materials that avail on the site. and that's happening all over this country. we hear people talk about this as nuclear waste and i don't view it that way. in fact, there's a tremendous amount of energy in the fuel rods and nuclear material that's been stored at facilities all over this country. we just don't know how to utilize it and we're just beginning that process, some of these fast reactors, small modular reactors would burn up a lot of this nuclear material and provide energy that's drastically needed. but, mr. chairman, one man from rhode island and his staffer who left from being a staffer in the u.s. senate and went to the administration has, what i consider to be illegally closed up this administration's illegally closed up yucca

mountain. this facility's been studied at great lention. i'm on the science, space and technology committee. subcommittee chairman for investigations and oversight. and we wanted this. we've had hearings, in fact, i just recently had a group of people from our local area in the augusta area, in north augusta, in the south carolina area, from akin county where s.o.s. is, come to testify about what's going on and about yucca mountain. it's critical that we as a congress do what the law requires. we need a central depository. someplace where we can store this material, a repository so this material can be set in a safe, scientifically studied area that won't harm anybody and yucca fits all those categories,

it's the only place in this country that does. we can store this material until we can utilize it. we need to be energy independent as a nation. nuclear energy is going to be one of the keys of an all-of-the-above energy policy and we've on our side been fighting for that and i know some democrats are very supportive of nuclear energy as i am. i'm an ardent supporter of nuclear energy, i think it's absolutely critical for us to go forward. but yucca mountain has to be a part of that formula. and we cannot close it up. we've spent billions of taxpayer dollars on this facility, one man, because he doesn't want it in his backyard, has promoted this administration to close it up and we've got to open it up and so i congratulate mr. inslee and particularly my dear friend, john shimkus from illinois, for bringing this amendment to the floor. we need to support it, we need to have a vote on it so we can

show how important this is to members of congress. and i congratulate them and i wholeheartedly support it and hope other members of congress will support it too and i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from new jersey, for what reason do you rise? mr. frelinghuysen: i move to strike the last word. the chair: the gentleman is recognized. mr. frelinghuysen: i strongly support, mr. chairman, the shimkus-inslee amendment. this administration's yucca mountain policy has been at best irresponsible with the taxpayers' time and treasure. most members of this room had voted many times in support of this project. for years we supported it, it's the law of the land, and assured that the scientific review process continued so we could understand how good the site was . yet despite more than the $15 billion already spent on the site or the more than $16 billion in potential fines that the taxpayer is facing because the administration is not

fulfilled its responsibility to take spent fuel off the hands of so many utilities, this administration has persisted in a backroom political deal to shut down the project. yet despite the administration's best efforts to hide from the public inconvenient facts we now know that the science does support the yucca mountain as a long-term geological repository. the n.r.c.'s review which was virtually complete when the administration pulled the plug apparently shows that the site can safely store the fuel for thousands and thousands of years if that were necessary. even the face of in the administration hasn't changed its position. we can only keep the pressure on and trust that good policy and good science will eventually overcome bad politics. we need to finish the yucca mountain license application so that we as a nation can take

into account all of the facts as we determine the future of nuclear energy in this country. i want to thank the gentleman, both mr. inslee and mr. shimkus, members of the authorizing committee and may i say i had an opportunity to attend mr. shimkus' subcommittee as an observer and i may say i was impressed by how you questioned the n.r.c. commissioners and particularly the chairman on some of the very questions you and other members have raised and i want to commend you for your vigor and for your astuteness and for coming to the floor with this very important committee and i'd be happy to yield unless he cares to have his own time to the ranking member, mr. visclosky. mr. visclosky: i appreciate the chairman yielding. i would add two brief comments in support of the amendment and the chairman's remarks. the administration's attempt to shut this activity down without, i believe, or without scientific

merit and are contrary to existing law and congressional direction, i believe that the federal government has a responsibility to demonstrate its capability, to meet its contractual obligation ore by addressing the spent fuel and other high level nuclear waste permanently shutdown reactors. i would join in support of the amendment and appreciate the chairman yielding time. mr. frelinghuysen: i thank the gentleman and we're going to keep yucca mountain open, mr. chairman. i yield back. the chair: the gentleman yields back the balance of his time. the question is on the amendment offered by the gentleman from illinois. those in favor say aye. those opposed, no. in the opinion of the chair, the ayes have it. smimshim mr. chairman, i ask for the yeas and nays -- mr. shimkus: mr. chairman, i ask for the yeas and nays. the chair: does the gentleman ask for a recorded vote. mr. shimkus: i'd like a recorded vote. the chair: pursuant to clause 6 of rule 18, further proceedings on the amendment offered by the gentleman from illinois will be

postponed. clerk will read. the clerk: page 33, line 1, office of the inspector general, $41,774,000. atomic energy defense activities, national nuclear security administration, weapons activities, $7,131,993,000. naval reactors, $1,030,630,000. office of the administrator, $420 million. environmental and other defense activities, defense environmental cleanup,

$4,937,619,000. other defense activities, $814 million. power marketing administration, bonneville power administration fund, during fiscal year 2012, no new direct loan obligations may be made from such fund. operation and maintenance, southeastern power administration. $,428,000. -- $8,428,000. operation and maintenance, southwestern power administration, $45,400,000. operation and maintenance, western area power administration, $285,900,000. falcon and am stad operating and maintenance fund. $4,169,000. federal energy regulatory commission salaries and expenses, $304,604,000.

general provisions, department of energy, section 301, no appropriation for the department of energy shall be used to initiate any program if the program has not been funded by congress. section 302, none of the funds may be used to augment the funds for severance payments urn section 4604 of the atomic energy defense act. section 303, unexpended balances may be available for such activities established pursuant to this title. section 304, none of the funds may be used to enter into any agreement to perform energy efficiency services outside the legally defined bonneville service territory. section 305, when the department of energy makes a user facility available to university the department shall ensure broad public notice of such availability. section 306. funds appropriated for

intelligence activities are deemed to be specifically authorized for purposes of section 504 of the national security act of 1947. section 307. in any fiscal year in which the secretary determines that additional funds are kneed to reimburse the costs of defined benefit pension plans, the secretary may transfer not more than 1% of an appropriation made available. section 30 , none of the funds shall be used for the construction of facilities classified as high hazard nuclear facilities under 10-cfr part 830. section 309, plant projects for which amounts are made available with an estimated cost of less than $10,000 are considered for purposes of section 4703 of the atomic energy defense act. section 310. none of the funds may be used to approve critical decision 2 or critical decision 3 under department of energy order

4013.3-b for construction projects where the total project cost exceeds $100 million. section 311, none of the funds may be used to make a grant allocation totaling in excess of $1 million. section 312, none of the funds may be used to make final or conditional loan guarantee award unless the secretary provides notification to the committees on appropriations. section 313, none of the funds shall be made available to initiate any significant regulatory action as defined by executive order 12866. title 4, independent agencies, appalachian reeg region -- regency commission, $64,000. defense nuclear facilities safety board salaries and

expenses, $29,130,000. delta regional authority, salaries and expenses, $11,700,000. degnaw lee commission, $10,700,000. denali commission, $10,700,000. northern border commission, $ 150,000. southeast crescent regional commission, $250,000. the chair: for what purpose does the gentleman from georgia rise? >> i have an amendment at the desk. the clerk: clerk will -- the chair: the clerk will designate the amendment. the clerk: amendment number 47, printed in the congressional record, offered by mr. broun of georgia. the chair: the gentleman is recognized for five minutes. mr. broun: thank you, mr. chairman. the southeast crescent reeg that will commission is a federal-state partnership intended to address the

economic needs of the southeastern united states and the lord really knows we have some economic needs in that area. in fact in my district, we have counties that unemployment approaches or exceeds 25%. the containment in f.y. 2012 energy appropriations bill is a $250,000 in funding for this commission. my amendment eliminating funding for the southeast crescent regional commission, transfering the $250,000 to the spend regular ducks account. many of you may ask, why go after such a small amount as $250,000? mr. chairman, here we see a federal commission conducting work that would be better managed by state agency. this agency is so small it's hard to even find information on how the commission spends hard-earned taxpayers' dollars. in fact, we can't even find a website for the commission. we need to look for spending

cuts across every level of the federal government, even if that means finding cuts in the smallest of federal bureaucracies. for generations, americans have been told by members across the -- -- for generations members have been told by those across the aisle that more government, more bureaucracy and more federal spending are the answers to all their problems. we're losing our liberty because of that kind of philosophy. this line of thinking is -- has removed many of the liberties our founders intended for us to have. congress must make every effort to roll back the big government mentality in washington. and allow states to manage their own affairs. zeroing out funding for this commission will be a good step in sending government powers back to the states and people. i urge support of my amendment and yield back the balance of my time.

the chair: the gentleman yields back. the gentleman from indiana, for what purpose do you rise? >> strike the last word. the chair: the gentleman is recognized for five minutes. mr. visclosky: i rise in strong opposition to the gentleman's amendment. the southeast crescent commission includes counties from north carolina, south carolina, georgia, alabama, mississippi an florida that are not already served by the a.r.c. or the d.r.a. though relativity new this regional commission is intended to address planning and coordination on reeg that will investments and targeting resources to those communities with the greatest needs. many of these areas covered by this commission suffer from high unemployment. 10% in south carolina, one of the highest in the nation. marion county in south carolina has 19% unemployment. the county sshas seen both

textile and manufacturing jobs disappear and this economic predicament is similar in much of the area covered by the commission. as we have seen with a.r.c. investments, investment in regional commissions can go toward area development and technical assistance goals such as increasing job opportunities, improving employability, and strengthening basic infrastructure. the conventional wisdom among economists has long been that regional approaches can be valuable in addressing developmental situations that can't be addressed simply through local policies. for example, to help people in one jurisdiction to find jobs, one may have to create et jobs for them in a neighboring growth center. in recent years, regional approaches have seen greater support, hence the relative newness of the southeast crescent regional commission. in part because of increased

global competition, the rural communities face. when people think of the first congressional district i represent, because we produce more steel in one congressional district than any state in the united states of america, they also miss the fact that one of the counties i have the privilege of representing has 9,000 people in it. another has 14,000 people. another has 23,000. very rural areas that are also economically stressed and do not have the centers of gravity and need that type of attention to try to generate some new economic opportunity and jobs, which is why just from my practical experience with the rural counties i have, i do believe it is important to continue the work of the commission and that is why i do rise in opposition to the gentleman's amendment. >> would the gentleman yield? mr. visclosky: i would be happy to. mr. broun: thank the gentleman for yielding. tell me what this commission

does. we can't find a website for them, can't find anything for them. this is my district, what we're talking about. i represent the northeast corner of the state of georgia and in fact we worked strongly, my staff and i, with the appalachian regional commission, the a.r.c., that the gentleman just mentioned but we can't find even a website for this commission. just having a commission for the sake of a commission, even though this is to be considered a small am of money, $250,000 to me is a large amount of money. if we add little bits of money, after a while, then we get into bigger and bigger funds. so i think we need to start looking at getting rid of duplicative commissions, duplicative if you thinks of the federal government and this is just one because my staff and i looked to try to find what this commission does. what this $250,000 is expended on. we couldn't find it. i'm for economic development.

in those counties in northeast georgia that i represent, we do have a tremendous unemployment rate. in some of those counties, we have 20%, 25%, maybe higher underemployment and unemployment rates. so i'm extremely kgny sant of the need for -- extremely cognizant of the need for development for jobs for these areas. but i'm also cognizant that we are in an economic emergency as a nation and wherever we can save money, i would like to do so. so i -- i don't know what this commission does. i can't find anything about it. if the gentleman would please tell me. mr. visclosky: if i could reclaim my time, relative to the gentleman's district, i can't say, the commission is relatively new, the dollar amounts relative to the federal budget are modest. and we're talking about seven states. perhaps the real value here is that they are spread a bit

thin. and obviously do not have at this point in time a program in this gentleman's district. but i don't think that would warrant, given the breadth of their responsibles over seven states to argue against their demise. again, i would respectfully oppose the gentleman's amendment and would yield back my time. mr. broun: i thank the gentleman. the chair: the question is on the amendment offered by the gentleman from georgia. ayes ayes. -- those in favor say aye. those opposed, no. in the opinion of the chair, the ayes visit. the gentleman from indiana. mr. visclosky: i request a recorded vote on that. the chair: the gentleman requests a recorded vote. pursuant to clause 6 of rule 18, further businessen of the amendment offered by the gentleman from georgia will be post-poped. the clerk will read. the clerk: page 54, line 14, nuclear regulatory commission,

salaries and expenses, $1,247,000, office of inspector general, $10, 60,000. nuclear waste technical review board, salaries and expences, $3,400,000 dollars. office of the federal coordinator for alaska natural gas transportation projects, $4,032,000. general provision independent agencies. section 401. none of the funds for nuclear regulatory commission salaries and expenses shall be available through a reprogramming of funds that create or initiate a new program, project, or activity. title 5, supplemental funding for delaster relief. section 501. unobligated plans of funds in excess of $1,028,484,400 made available for department of transportation, federal

railroad administration, capital assistance for high speed rail corridors and intercity passenger rail service is hereby rescinded. title 6. general provisions. section 601. none of the funds may be used in any way to influence congressional action on any legislation or appropriation matters pending before congress. section 602, none of the funds may be transfered to any department of the united states government. section 603, none of the funds may be obligated by any covered executive agency in contravention of the certification requirement of section 6-b of the iran sanctions act of 1996. . section 604, none of the funds to support activities with the yucca mountain with the license application. section 605, none of the funds

may be expended for any new hire by any federal agency. section 606, none of the funds may be used to enter into a contract with a corporation that has been convicted of a felony violation under any federal law within the preceding 24 months. section 607, none of the funds may be used to enter a contract with any corporation that any unpaid federal tax liability is not being paid pursuant to an agreement. spending reduction account, section 608, the amount by which the applicable allocation of new budget authority made by the committee on appropriations is zero dollars. the chair: the gentleman from georgia, for what reason do you rise? the gentleman from new jersey, what reason do you rise? mr. frelinghuysen: i move that the committee do now rise.

the chair: the question is on the committee now rising. those in favor say aye. those opposed, no. the motion is adopted. accordingly, the committee rises. the speaker pro tempore: mr. chairman. the chair: the committee on the whole house having had under consideration drebts me to report it has come to no resolution thereon. the speaker pro tempore: the committee reports that the committee has had under consideration h.r. 2354 and has come to no resolution thereon. mr. frelinghuysen: i ask unanimous consent that all members may have five legislative days in which to revise and extend their remarks and include extraneous material

on h.r. 2354. the speaker pro tempore: without objection. so ordered. the chair lays before the house the following personal requests. the clerk: leaves of absence requested for ellison of minnesota for today. works the request is -- the speaker pro tempore: without objection. the request is granted.

the speaker pro tempore: the gentleman from missouri. >> i move the house do now

adjourn. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it. the motion is adopted. accordingly the house stands

bernanke said that, if the u.s. defaults on its debt obligations, the impact could be similar to the economic crisis experienced at the end of 2008. mr. bernanke also described how the fed would respond to continued slow economic growth. he also restated his opinion that spending cuts and a deficit-reduction bill should be structured so they do not hurt the economy in the short term. this hearing of the house financial services committee is just under three hours.

>> this hearing will come to order. we meet today to receive the semiannual report to congress about the chairman of the board of governors of the state of the economy. without objection, all members written statements will be made part of the record. for purposes of opening statements, i recognize myself for five minutes. chairman bernanke, welcome back to the committee.

i want to commend you for your service to the country during these challenging economic times. america is confronted with many challenges, not least of which is a crisis of confidence. for the first time in the history of our country, the majority of americans no longer believe that their children will be better off than they are. one great challenges preserved -- the american spirit of individual initiative and responsibility. what was once called the american can-do spirit. i briefly looked over your testimony this morning and you mentioned confidence on several occasions in your speech. confidence is critical. it is critical for us to believe in ourselves, to be the better future, to believe that it will get better. the uncertainty and lack of confidence are at the center of

the failure of our economy to achieve a robust recovery with job creation which will be necessary to support a continued improvement in our citizens' lives that we have come to expect as americans. the origin of this crisis of confidence is debatable. the great recession and its legacy and job losses and home foreclosures is a contributing factor. those are things we will have to work through. and as your testimony said, it will be a long process. in my opinion, the seeds of this lack of confidence were first sown in well-intention programs and in the lyndon johnson's great society. i commend you -- i commend to you and to my colleagues here on article by thomas darling in

"barons" on june 25. in that article, he describes the historical underpinnings of the entitlement philosophy that has brought our budget to what you have called an unsustainable path. let me quote from that article. lyndon johnson recorded all his conversations and they're there for us to see. in speaking in march of 1965, with his press secretary bill morris, this motivation for medicare -- this is woody said. >> i have never seen one have too much health benefits. when they come to me and say that we have to have 400 million more so we can take care of some doctor bills, i am

for it. i'll always sent my mother $100 when she asked. i listed because i thought she was entitled to it. that is what we have been doing with medicare. when wilbur mills called president johnson to tell him that medicare had passed, that conversation was recorded, too. here's what wilbur mills said to president johnson. "i think we got you something that we will not only run on in 1960, but will run on from here after." it seems like the congressmen and the administration have been running on entitlement programs ever since. and now the money has run out.

president johnson, as i said, he was quoted as saying that people were entitled to an unlimited amount of co -- of medical benefits. you have said that the federal entitlement programs and the deficit spending because -- if they're not put on a sustainable path, things will come apart. i feel we're at that point. things are coming apart. i want to give two other quotes. my time is running out. but let me just say this. the buck stops with this congress and the federal reserve can address this -- cannot address this problem. we have to. we have to confront our

entitlement problems and take your device. if we do not, we will not restore conferencconference. if we do not, we will love restore the future for our children and grandchildren. >> i thank you, mr. chairman for your private carters and restraint. franklin roosevelt, and lyndon johnson, you left them off the books and i think that was an act of generosity. the notion that the problems we are facing are a problem of with the efforts begun by fdr and continued under lbj and some others, that is because of the current problem, that is a very hard one for me to understand. apparently, these terrible efforts by roosevelt and johnson, who put a set of

policies in place that helped middle class people as they got old took a very long time to take affect. this did not begin to blow up until fairly recently. the chairman said. the great recession was a contributing factor. here is where we differ in our analysis. we did very well in the 90s, even though this congress raised the marginal tax rate on the wealthiest people in the country. we had some of the best economic years that we had. raising the marginal rate from 36%-39% had no negative economic effect. they continue their economic productivity. the problem is that he was here

as an appointee of president bush. he came to the congress, he was there all along side henry paulson and said that we were on the verge of a total economic collapse. we suffered from 2008-2009 that serious economic collapse. a total lack of economic activity caused by the financial crisis. qusai that terrible set of events, the worst since the great depression, that that is a contributing factor, but it is really lyndon johnson's fault seems a very odd history at dusk. when president obama came to office, he inherited the burst economy in 75 years. we have made progress.

that has not been good enough. we have had policies that have had a retarded progress. unemployment is too high. we have added about a million jobs this year in the private sector. we have been simultaneously losing state and local jobs. firefighters, police officers, because of the policies of my republican counterparts. while unemployment is not what i would like it to be, beginning in 2009, we have lost half a million jobs. unemployment will peak 0.4% malloy -- lower if we had not lost state and local jobs. it is the difference between the need to do long-term deficit reduction and the counter productive activity of forcing

state and local governments to fire people in the short term and then complaining about unemployment. the chairman thinks that it is lyndon johnson's fault. i do not think that medicare is a terrible thing. i do not think it has caused the same problem. to have a decent middle-class and social security and medicare is something we should be proud of as a country. medicare costs us a lot of money. almost as much, perhaps the same order of magnitude as the pentagon, $700 billion will go to the military. members of this house and voted to continue to spend money in the camps for structure programs in afghanistan when there are people that continue to be arguing the notion that they would go beyond george bush and keep troops in iraq this year when you -- we are in such a terrible financial situation is

a difficult thing for me to understand. the majority of this house and voted to give the pentagon and $17 billion increase. money spent in afghanistan end iraq. i do not believe that members who are willing to spend almost without limit should be telling older people to feel embarrassed about getting adequate medical care. >> i now recognize the subcommittee chair, mr. paul and also to acknowledge that he has announced that at the end of this term he will be leaving congress. i am sure that came as quite a disappointment to the federal reserve. >> mr. paul and i have worked on opposition on some issues and together on some others. he has spent an extraordinarily

valuable member. i will miss him. he presided costs you have the privilege ofvithe presiding over a committee with three presidential candidates. >> somebody had told me that announcement will put a smile on chairman bernanke's face. and his staff. they are all smiling. i thank the chairman for yielding. the country today has become very much aware of how serious our problems are. everybody understands that it is very, very serious. it is critical.

from my viewpoint, the country is literally bankrupt and we are not willing to admit that. these are overwhelming problems that we do face. from my viewpoint, i think we have more going on on who to blame for the problems and who is going to benefit by blaming. i see it a little bit different way. i see it as a failed policy. a policy of central economic planning. this has not been the going on with just as congress and this president, that has been going on for decades. the congress appropriates the money and is to blame. the special interests have tremendous influence and they are to blame. we have citizens groups that all was once a special handouts and benefits. they have to blame as well. the wars that continue to go

on, the undeclared war, nobody can tell us how many wars we are in today or when it is going to stop. i see the fed as a problem because i see so much of this other spending would not have gotten out of hand if we did not have a monetary system for the system provides the funds. we do not have to be responsible because we can always say it is up to the fed. if we did not have the fed lining up fire that, the interest rates would rise. it will put pressure on us in the congress to do something about this. i see the federal reserve and the monetary system as an enablers for all of the special interests. we are not getting away with it anymore. we have run out of steam, we have run out of jobs, our tax code is out of whack, our

entitlements are out of control, are good jobs are going overseas. we chase capital away. we have a deliberate policy of weak currency. unfortunately, we are still looking at who to blame for this. you cannot find one individual or administration. you have to find the policy. central planning, whether of the soviet style or the interventionists, where we have central banking, the central economic system is always flawed because it is never as smart as the market. i object to the idea that we are knowledgeable enough to set interest rates and know what the money supply should be. that is information that should come from the market. when it does not come from the market, it is a failed policy.

>> i sent to the subcommittee chair. i would like to recognize the ranking member of the subcommittee on monetary policy, mr. clay, for three minutes. >> i too want to say that i will miss my colleague dr. pau l. perhaps he will remain in this town in some capacity. thank you, chairman bernanke, for appearing before us. the balance and growth act of 1978 set four benchmarks for the economy. full employment, growth and reduction, price stability, and the balance of trade and budget. to monitor progress towards these goals, the act mandated that the federal reserve must

present semi annual reports to congress on the state of the economy and the nation's financial outlook. it also charges the federal reserve with a pool man day. maintaining stable prices and promoting full employment. according to the department of labor, the unemployment rate was 9.2%. over 14 million americans are looking for work. another 5 million are underemployed at jobs that pay much less than they previously earned an offer few benefits. in urban areas like the district i represent in st. louis, the unemployment rate among african- americans and other minorities is over 16%. the majority party has spent in power in the house for over 190

days and we have not seen on jobs bill. america is waiting. i would like to hear what steps america is taking to free up the flow of credit and encourage banks to invest in the recovery instead of sitting on the sidelines with trillions of dollars that could be creating millions of new jobs. i look forward to chairman bernanke's inouye comments on what steps congress could take to spur private-sector job growth and restore confidence in our economic future. with that, i yield back. >> thank you very much. i appreciate that opening statement. i would like to remind the members of the committee that traditionally the chairman is here until 12:30. we will adhere to that today.

to accommodate as many members as possible, i am going to strictly enforce the five-minute rule. the opening statements were all given within that time limit. without objection, chairman bernanke, your written statement will be made part of the record. >> thank you. chairman and other members of the committee, i am pleased to present the semiannual monetary report to the congress. i will begin with the discussion of current economic conditions and then turn to monetary policy. the u.s. economy has continued to recover but the pace of expansion has been modest. after increasing at an annual rate of 2.75% in the 2010, it rose by about a quarter of a percent in the first quarter.

member suggest that it remain soft in the spring. the only -- the unemployment rate has moved back above 9%. this appears to be the result of several factors that are likely to be temporary. the run up in prices of energy, especially gasoline and food, has reduced consumer purchasing power. the disaster that in suit following the earthquake in japan caused american producers to curtail assembly. the stabilization of oil and other commodities should ease the pressure on household budgets. they are making significant progress in overcoming be part shortages. the most recent projections by members of the federal reserve board and presidents of the federal reserve banks at the

meeting in late june is that the economic recovery will pick up in the coming quarters. they anticipate an increase to gdp for 2011, inclusive of the weak first half. that will constitute a normally better performance than what we have seen so far this year. we will continue to see the economic recovery strengthening. this is picking up to 4.2% in 2013. the central tendency in 2011 and 2012 were marked down nearly 0.5%. this suggests that participants sought at least some part of the first half slow down as

persisting for a while. there was slow growth in consumer spending, even after accounting for the effects of high energy prices, the housing sector, limited access to credit for some households and small businesses and fiscal tightening. participants and expected that over time the jobless rate will decline, albeit slowly, toward its long-term the level. forecasts for the unemployment rate were to 8.9% for this year. 7.8% of the end of two dozen 12. the most recent data attests to the and weaken data of the labour market. gains in payroll employment were below expectations for a second month. of the more than 8.5 million

jobs lost in the recession, 1.7 5 million have been reading. many workers will like key to work full-time, but can only obtain part-time work. only half of those currently unemployed have been out of work for over six months. long-term unemployment impose a severe economic hardships. could lead to any erosion of skills. that impairs the lifetime employment prospects and reduces the potential of our economy as a whole. much of the slowdown has been centered in the household sector. real disposable income over the first five months of 2011 was boosted by payroll taxes. those gains were offset by higher prices for gasoline and

other commodities. households report that they have little confidence -- about their own income prospects. the weakness of home values it is weighing on consumer sentiment. on the positive side, household debt burdens are declining. auto loans are down. the number of homeowners missing their mortgage payment for the first time it is decreasing. significant pickups in job creation should bolster households in tom and confidence in the medium run. residential construction activity remains settled a low level. demand for homes has been held down by many factors. this includes pork consumer sentiment. mortgage interest rates are near record lows. access to mortgage credit

continues to be restrained. many home buyers continued to be concerned about buying into a weekend market. a higher proportion of distress sales are keeping downward pressure on house prices. two bright spots have been business equipment and software. demand for capital goods for domestic car -- domestic firms have helped the recovery thus far. equipment and software outlays increased in the first quarter data suggests that the trend will continue in recent months. corporate profits have been strong. those with access to capital markets have been able to refinance existing debt. borrowing conditions have genuinely continued to ease. credit continues to remain limited for some small firms. inflation has picked up so far

this year. the price index rose at an annual rate of more than 4% over the first five months of 2011 and 4.5% on a 12-month basis. in addition, prices of motor vehicles increased sharply when these were curtailed by a shortages in japan. most of the rise in inflation appears to be transitory. the rates at or below the level of 2%. the central tendency of participants forecast was 2.3%- 2.5% for 2011 as a whole which would indicate a significant slowing of inflation.

in 2013, it was 1.0%-2.0%. this includes the stabilization in oil and other commodities which is already showing. that has made it difficult for workers to obtain wage gains. the stability of long-term inflation expectations is weighed on household and the forecast for private-sector economists and financial sector indicators. the judgments of members and the pace of the economic recovery will likely remain moderate. the unemployment rate will go down gradually. that policy currently consists of two parts. the target range remains at

zero%-1.4%. economic conditions are likely to warrant the exceptionally low rates for an extended period. the second component has been to increase federal reserve holdings. the target for the federal funds rate could not be lowered. the federal reserve acquisition of long-term treasury securities posted the acquisition of securities and cause long-term treasury yields to be lower than they would have been otherwise. purchases made private investors to buy other assets. such as corporate bonds and mortgage-backed securities. the fed's asset purchase program could increase the prices of other assets as well. the net result is lower

borrowing costs appear throughout the economy. we know for many decades of experience of monetary policy that when the economy is operating below its potential, these conditions could promote lower economic growth. estimates state that many studies suggest that all else being equal, the second round of asset purchases probably lower interest rates 30 basis points. our analysis further indicates that this would be roughly equivalent in terms of the economy to a 120-basis point reduction. we completed the purchase of the treasury securities initiated in november while continuing to reinvest the proceeds. although we are no longer expanding our securities holdings, our evidence suggests

that this is determined primarily by the quantity and mix that the federal reserve holds a letter sent by the pace of new purchases. maintaining our holdings of the securities and should continue to put downward pressure on market interest rates m. foster financial conditions that would not otherwise be the case. our program involves purchases of securities, the government spending, as i will discuss later. in the meantime, the interest on the securities is remitted to the u.s. treasury. when we began this program, we did not expect it to be a panacea for the country's economic problems. most components of are dual mandate provided that his additional policy was needed. at the rest of the deflation

that had emerged and the required to boost to economic activity. the program have the intended effect of reducing the risk of inflation and shoring up economic activity. in the months of investing maturities and redeem securities, we were considering more securities, compensation grew to more normal level suggesting that the perceived risk of deflation had receded remarkably. the japanese experience shows that the long dated deflation can be costly. this could boost employment by 700,000 jobs by more than two years or by 30,000 jobs a month. even with the disappointing

readings from may and june, private payroll gains have averaged 160,000 per month in the first half of 2011. not all of the step up in hiring is because of the asset purchase program. we will be monitoring developments in the labour market closely. once the temporary shocks that are holding -- holding down economic activity will pass, this will be reflecting in job creation. given the ratio of uncertainty and the prospects for a deflation in the medium term, an adjustment to the monetary policy would be appropriate. the possibility remains that the recent economic weakness may prove more persistent than expected and the deflationary

rest might emerge. even with the rate fund rate close to 0, we could go further. one would be to provide explicit guidance. another approach for be to initiate more securities purchases or increase the average maturity of our holdings. we could also reduce the 25 basis points of interest, thereby putting downward pressure on rates generally. our experience with these policies remains generally limited. prudent planning requires that we investigate this and other alternatives for deploying additional stimulus. on the other hand, the economy could evolve in a way that would involve a move towards less accommodating policy. the committee has been giving

consideration to that? the strategy. the sequence of steps that it expects to follow when normalization becomes appropriate. when economic conditions warrant, the committee will begin the normalization process by ceasing at the investment -- we will allow the balance sheet to begin shrinking. subsequent steps would include the initiation of temporary reserve training operations and when conditions warrant, increasing the federal funds charges. increasing the federal funds rate target will be our primary means for adjusting the monetary policy in response to economic developments. sometime after this, the committee expects to recommend sales from the portfolio with the timing of sales clearly

communicated to the public in advance. that could be adjusted up or down in response to material changes in the economic outlook. the securities portfolio and bank reserves are expected to be reduced to the minimum levels associated with the consistent implementation of monetary policy. conditions can change. we would carefully consider both parts of are dual mandate. thank you. i am pleased to take questions. >> thank you, chairman bernanke. i mentioned our entitlement programs are in my opening statement. and what i consider the genesis of our entitlement philosophy in this country. i did quote president johnson,

his quote is that people are entitled to an unlimited amount of medical benefits. it is an admirable statement but it has proven to be unaffordable. on many occasions, you have warned the budget committee and our committee that an unsustainable budget passedi knt line yesterday in as this morning have said you will remain flexible and accommodating, and i know you have been criticized for accommodative monetary policy and for maintaining interest rates at such levels, but i want to commend you of the one in

five jobs we have recovered. we would not have recovered had we had higher interest rates, and that is pretty much a given, and inflation appears to be transitional. we do not know, but i will say, you have a warrant if we do not give our budget in order, we will have higher inflation, higher taxes, and a weak economy. this is what i mean when i say unsustainable. that is social security and medicaid and to medicare. but basically tells you the is when i say it is unsustainable. before the when i mentioned the

new deal, our i agricultural subsidies, which are no received -- which i know received criticism. we are talking about revenue. it is a cost of revenue, and that started with aaa, where we paid farmers not to raise crops, and i believe that is part of the solution as is this idea of fighting three wars. i agree with the chairman. if we do not solve the entitlements, it makes it harder. the figure on the right is the

and g.d.p., of the economy. the left and right are the growth of medicare and medicaid, so those prices are going up three times what other prices are going up, and that is bankrupting the federal government. it is also the second figure. the state of washington has a democratic governor and a democratic legislature. they said, give us medicaid. let us administer medicaid. they say if you do not, you are going to bankrupt in washington state. washington state is one of the more helices states, so i would like you to -- of our more healthy states, so i would like you to give your ideas on a more sustainable and budget, how they

affect your job and the economy and what the result will be in. >> we have an aging society. health care costs are rising more quickly than g.d.p., and ultimately, maintaining tax rates at the level they currently are will be inconsistent with maintaining those levels of benefits. you show a roughly and not long time frame, but in the next 10 or 15 years, we could be paying interest, and that would be its unless we raise taxes, so this imbalance is very worrisome. we cannot continue on an unsustainable path. if we were to do so, clearly, we would have more borrowing, slower growth in the economy, but i think we would risk worse

if we were to lose the confidence and have a threat to our fiscal and financial stability, so i think it is important to address a long term issues. i would emphasize these are long-term issues. it does not have to be solved today or tomorrow, but we need to take important steps to restore sustainability to our fiscal outlook. >> what i have advocated is simply turning these things in to reprogram the were the premiums paid for the cost, turn an entitlement into an insurance program, which is what f.b.r. proposed with social security. premiums and will pay the cost. they do not see day. >> i recognize the chair as ranking member. >> thank you. i want to join your first

remarks with regard to interest rates. i'd appreciate your speaking out in support of this. i think that has been of great success. your prophecies of gloom and doom have been proven incorrect. there will be references to this coming out, but i want to talk about the topics, and i welcome in the first part of the testimony, you noted the weaker than expected economic performance appeared to be the result of several things that are temporary, gasoline, food, supply chain disruption. i think that the uncertainty that came from the problem with grease and other european countries, and those are all external to us. the libya situation, the greek situation, the japanese

situation, so people who want to blame the administration, they are external, and we hope to deal with them. if we were able to fully bill, wet last year's unti could have a positive affect, but i want to talk about job creation. you say these are temporary and you expect it to get better, but there are headwinds, and there is one headwind in particular i want to talk about. fiscal tightening at all levels of government. we have gained 1 million jobs in the private sector. that is good but not good enough, but that has been offset by loss of jobs in the public sector. there is a multiplier effect in

terms of the ability to help generate other spending, and i was very pleased to hear you make a distinction between the urgency of dealing with the deficit problem and the time horizon in which you can do it, and i would take it together and say, do i infer correctly but further fiscal tightening over the next six months is problematic, and if we were to engage in fiscal tightening over the next few months, we increase the headwinds. yeah, we have spent some money. we would have had one trillion dollars to spend. having voted against the bush tax we are not about my limits.

people who act like they do us a favor puzzle me, but to get by to the question, we can debate about the long-term thing. i would rather and the war in afghanistan and to cut medicare, but i would ask not what are the implications here, -- i would ask what are the implications here? what is the balance the needs to be achieved? what about the timing of this? what about the interrelationships of the policy and the danger of increasing the headwind if you cut too much too soon? >> there appears to be a contradiction about the need to maintain support in the short

term and the need to address fiscal issues in the long term, but if we can take a long term stance, as the chairman pointed out, the increases in entitlement seriously takes place over a long time, so we should be addressing that, but it is a long term proposition. we should also look at how spending affect some long term growth. we need to reform our tax code. we need to make sure we are investing wisely, but i say we need to take some care that we do not hamper what is already a very slow recovery that would be bad for the unemployed but would also be bad for the federal

budget because when you slow federal growth you affect taxes as. >> people have talked about confidence. at this point the greatest threat is the threat that we would raise the debt limit. >> i think that is a concern along with european issues and others, but as i have argued, we need both an increase in the debt limit, which will prevent us from devolving on obligations which have already occurred and which will create problems for our financial system and our economy, but we also need to take a serious attack for our fiscal system. those can be accomplished. >> thank you. this time i recognize the subcommittee chair for five

minutes. good >> we year we are going to have a better economy, and everyone hopes so, but it is hard for me to believe, because i look at the last three years, and we have literally injected about 5.3 trillion dollars, and i do not think we got very much from it. the national debt when top. i do not think we have got an awful lot. unemployment has not recovered. we still have 7 million people who have become unemployed, and one statistic that is very glaring is how all along people are unemployed. the average time used to be 17 weeks. now leave is 40 weeks, so nothing reassures me. also, when we talk about

prices, and we are reassured is not inflation, and we are told they might start calculating differently. there is still a free market group that calculates c.p.i. the old-fashioned way, and they come up with a figure that the prices have gone up 35% every year, and i think if you just talked to the average housewife, she would believe it is 9% rather than 2%, so what we have been doing is not very reassuring with all this money expenditure, but my question is related to the overall policy. spending all this money has not helped, yet any allies who have endorsed what has been going on, they recognize consumer spending is very important, and

they concentrate on that, but the 5.1 trillion dollars did not go to consumers. it went to buying and add assets. it went to buying out fake companies. now the consumers did not end up getting this. they lost their jobs and their houses and mortgages, but my question is if you took the 5.1 trillion dollars and said consumer spending was good, you could have given every person in this country $17,000. why it is it a program to direct the money to people who have been making a lot of money instead of if you argue the consumer needs to spend the money, i did not advocate this, but maybe it could have worked better. what is the reason we directed to the banks and corporations to big to fail and we do not pay

much attention to consumers. i do not know if you agree that consumer spending is an important issue. >> you are mistaken if you say the federal reserve has spent any money. we have lent money. we have purchased securities. that is not anticipating the money. we have got all the money back. the fed has been a major profit center. we have turned over profits of $125 billion, so we are not causing any money in terms of budget deficits. in terms of what we were trying to do, the reason the federal reserve was founded was to try to address problems of financial panics. we provide liquidity and short term loans to help financial

systems stabilize. >> i hate to interrupt, but i would like to suggest you say it is not spending money. if you have assets, they are diminishing in value when you buy of bad assets, but if you could answer another question, and the price of gold is $1,580. the dollar was devalued almost 80%. when you wake up in the morning, and you care about the price of gold? >> i pay attention to the price of gold, but i think it reflects uncertainty. people hold onto gold because of bad outcomes. to the extent people were worried about a major crisis, they have gold as a protection. >> the use think gold is money? >> -- do you think gold is

money? >> no, it is not money. >> people eliminated about law. >> it is an asset. do you say treasury bills are money and? i do not think they are either. >> why don't they hold simon's? >> it is a tradition. ?- why don't they hold diamonds >> it is a tradition. >> i yield back my time. >> chairman bernanke, as the federal reserve analyzed the impact on the economy if the debt ceiling is not lifted by august 2? yesterday's president obama stated the va benefits may not get to recipients and some social security checks may not get nailed to american seniors.

has the federal reserve examine what may happen on another level on august 3 if we do not lift the debt ceiling? >> yes, we have looked at it and thought about making preparations and so on. the arithmetic is very simple. the revenue we get from taxes is a regular and much less than the current level of spending. immediately there would have to be a 40% cut. the assumption is the as long as possible the treasury would want to make payments on the principal interest of the government debt. failure to do that would turn the system into an enormous disarray and would have major impacts on the global economy, so this is a matter of

arithmetic. there would have to be significant cuts in social security and medicare or some combination to avoid a borrowing more money it. if we ended up defaulting on debt, or even if we did not, it is possible that the faulting for our citizens might be enough to create a downgrade and higher interest rates for us, which would be counterproductive. clearly, it would be a major crisis because the security is viewed as the safest in the world and the foundation for much of our financial system, and the notion it would become somewhat unreliable would throw a shock wave to the entire global system. >> higher interest rates would also impacts the individual

consumer. is that correct? >> absolutely. car loan rates and all kinds of consumer rates. >> thank you for the response. in the area of unemployment, our unemployment rate in june isn't 9.2% -- is 9.2%. what can congress do to put americans back to work? any suggestions? >> it is a difficult problem. i would like to make it clear that we have two crises. i think the job situation is another crisis. what is bad about it is so many people have been out of work for so long that is going to be hard to get them that to anything

like the jobs they had, so it is a major problem. the federal reserve is doing quite a bit. we have lower interest rates of almost zero. we have several trillion dollars of securities. they are prepared to take other steps as needed. they are trying to help promote lending to small businesses and other things that can potentially health. we are very focused on jobs. that is an important part of the crisis and our mandate. for congress, i need to be careful not to endorse specific programs, but one thing to take into account is to try to avoid

sharp retractions in the near term that might weaken the recovery. i think there are areas attention might be paid, and one would be to try to address unemployment through training or other things to help workers get into the job market. a second thing is a housing market. that is an area that needs attention, because that is one reason the economy is growing slowly, and many colleagues would agree the tax code needs to try to approve -- improve its efficiency, so there are a number of areas where congress would be looking, and i hope he will keep in mind there are two sides to the crisis. there is also a fiscal set of issues as well. >> thank you for your response. my time is up.

>> the senior member of the committee, you are recognized for five minutes. >> i think one of the realities is one we looked at these numbers and the deficits, you are borrowing at a historic low cost. if those go of it over the last 20 years, you are suddenly more than doubling the cost of borrowing, so the deficit we are talking about as projected are going to get a lot worse, and if we could go back to the chart which shows the climb in entitlement costs, this is one of the concerns we have. if we go back to the 1970's an argument about having both guns and butter, the vietnam war and welfare spending. we tried to do both, and the

federal reserve was a party to trying to assist with that. this is one of the arguments of your colleagues main when they look at policies at the time. they say the fed tried to accommodate. the solution could not be paid for at the time, so one thing they did was they put in place monetary policy that helped eventually create what was called the great inflation of the 1970's. i think you might concur that as we move forward, we are sort of in the same position. as we draw down the troops from iraq and afghanistan, that is one thing we have to face, reducing the cost of the military budget, but we are also going to have to face this entitlement question. some of these were some of on the premise that it was an

insurance program where people will pay in, and they morph into a situation where they gobble up such a huge percentage of the budget that it has to been and now face as well. otherwise, we put you in the position of perhaps doing what was done in the late 1960's and the early 1970's caused by the fed, which might end up with a great inflation. i would like you to speak about this and the steps that are taken for entitlements. >> you are right about interest rates problems. we are seeing that in europe. we have a vicious cycle. on entitlements, you are correct they are not true insurance programs. i think people think the money is somewhere in takes some

plays. that is not quite right. the younger generations are paying for older generation benefits, and that works ok as long as the population was shaped like a pyramid instead of like a rectangle. on monetary policies, we have learned a lesson in the 1970 potts. we are in much better and -- in 1970 profits. we are in much better shape now. >> what if congress does not do its part? what if we do not tackle entitlement spending, and what if this chart that we have of in terms of what drives our debt, what if that continues unabated, and what then?

>> there are different views on this, and we can get deep into the discussion, but i believe if the fed refuses to pay for this extra spending, but we can maintain control of inflation, but what will still happen is much higher interest reaps -- rates. >> so it is imperative that we tackle it, and would you say a small solution will take care of the problem, or do we need to reach for the overarching true reform of entitlements that take care of the long haul of what is going to happen? >> i recognize these are complicated matters and that may not be able to done -- to be done in a few weeks. i have been very excited by the

idea that of a program might be feasible and that we might do something that could stabilize our debt over the next decade. i think that would be a tremendous accomplishment. >> i think if you can articulate the consequences if we do not, it might help the goal of getting entitlement reforms done. thank you. >> thank you. mr. green for five minutes. >> it was an awful bailout, but it paid. this is the style of an article. they contend deaths the bailout, which was accorded after we had two votes in the house. the first one i remember.

they contend that it paid they contend that the 3%, which was tarp, gets 97% of the attention. my question is, is he right? he says it will rise again. is this the opportunity to tell the truth about tarp and what it did? there are people who say it did not benefit us.

can it rise again? >> i hope so. it seemed very unfair to have money go to financials and institutions. we know the collapse of the financial system will bring down we saw the damage even a partial collapse brought about furioso we are trying to stabilize the economy and trying to protect the average american citizen. that is point number one. point number two, we did stabilize the system. we avoided a massive collapse, and it was a global effort. we work together to avoid a meltdown of the financial system. the third fact i would like people to understand is it is often expensive to stabilize financial systems.

the country of ireland is having fiscal problems right now because of the money it puts into its banking system and did not get back. in the united states, essentially all the investments made by tarp and by the fed are being paid with interested and dividends, and as far as the direct cost to taxpayers, there is none. good evening -- there is none. it will be relating to these activities >> i had an experience i would like to share the calls were overwhelmingly opposed to this.

i did not vote for it. i saw what happened, and the next day i got calls. and what is wrong with you? memories seem so short. they do not seem to recall we were on the edge of a disaster, and i am honored you would take the time to clear the record so wewill truly know thuat believed in him. i think history will be kind to you. i think you have had a tough time, and i believe history will

be kind to you. >> thank you. this time i welcome the chairman of the agricultural committee. >> my goal is to make sure. i represent the state of oklahoma, a place where unemployment rate science and run less than the rest of the country. and we have a commodity-driven economy. i am a little sensitive about maintaining investment in these industries. the view of many of my constituents and the level of economic activity we have compared with the rest of the country is that we did not make

this message. ebner -- this mess. three new expand on these comments and what my constituents would expect with some grand understanding and dealing with this. what does it do not just zero the treasury bond rate here in new york city. what impact as the house in a place like the great faith -- what impact does that have in a place like the great state of oklahoma? >> zacarias is that interest rates will begin to rise -- the risk is that interest rates will continue to rise.

interest rates on treasury debt also feed into all other interest rates in our economy, including capital for oil or natural gas exploration and including consumer loans of all time, so it would weaken our economy. it would make the deficit worse , and it would be negative, so i am very much in favor of trying to address the problem in a big way, taking a long-term perspective and understanding is is this it is a big problem, but there would be benefits to your constituents as well as to all americans. >> it is fair to say if there is not an agreement.

they would also see the interest rates that affect the area. the statement sir? >> we do not know the exact timing, but ultimately, that would be the case. >> it is also fair to say that in some point the markets would begin to conclude maybe we do not have the capacity to make those decisions and they will begin to adopt a defensive posture. is that correct? then we would be able to see what is right around the corner. >> correct. >> i always like following mr.

lucas, because we agree on a lot of things, so it would be dealing with our budget, and i would like to take a look at a couple of your charts. i want to start with a chart 22. federal expenditures from 1991 until 2011, and i think one of the places where we might have a difference is how we deal with this plan we have to have going forward to show people we really need business to show people the fiscal strength of the economy. receives exceeded net expenditures, and then we have tax cuts, so i would focus on

the revenue side of any plan, and i noticed you were very careful in the choice of words you used, and you said, based on the current revenue stream, those are unsustainable. back in 2001 until 2002, we had a series of tax cuts that dropped the revenue stream. is that right? >> yes. >> has the federal reserve figured out how much of a reduction that has been to the country? >> they have fairly significant numbers. >> a couple trillion dollars as i understand, so as part of this bold plan, which i agree i think this country must overtake, it has to have our

revenue side as well as concerns about entitlement. would you agree? >> i hope you understand i am not going to take sides on this issue. i want to see the numbers add up. it is your job, and that is why you get the big bucks. >> mr. green was asking about william cullen bryant and whether history was kind to him. giamatti wasul they mon kind to you? >> i have not seen it. >> his beard was like yours. let me turn to the fiscal restrictions that have come into

play. it looks like there was a huge surge in federal spending. and my reading about rights? >> it looks like 2009. >> i see what you are saying. yes, sir. >> there was a big expenditure, but in the first quarter of this year, a substantial drop. am i reading that right? >> yes. >> in my law practice i did a lot of chapter 11 bankruptcy work, and i do not think this country is near bankruptcy. we have fiscal management and we have to undertake, but you do not pay every bill overnight, because that puts you back into

the troubles you are already in. i believe this country is going to keep going. how would you explain the cuts that keep happening in this quarter. is that how you would like to see fiscal policy? >> sorry not to be to direct. i will not get into the details here. i think the big spike in 2008, the tarp was counted as an expenditure, and then it was treated as a receipt when the money came back, so that obscures a little bit of what happened. part of what happened here is that the stimulus in the spring of 2009 ramp up spending for a while, and about spending is beginning to come down, and you are seeing a drop in total spending. this is what i said in my

remarks. in termsa net the drago of total demand in the economy, and this is why i urge some attention and caution to the timing of your work on the fiscal sustainability issues so you do not necessarily weekend and what is still not a very strong recovery. >> good morning, mr. chairman. we i believe have seen the greatest fiscal and monetary stimulus thrown at our economy in the history of our country, perhaps the history of the world, regardless of where we are in 2008. we now are at 29 consecutive

months of unemployment being at 8% when the president told us if we pass the stimulus though, it would not exceed 8%. we know we have had three months were unemployment has been above 9%. since the president has taken office, there has been a 40% increase in the number of americans who received food stamps. the average number of weeks it takes to find and job is 39.9 weeks. that is the longest in recorded history, and there has been entrepreneur at a 17-year low. good if i have my numbers right,

and public companies are sitting on a two trillion dollars of public liquidity. thanks are sitting on reserves. good you mentioned and lack of consumer confidence, but nowhere did i hear a lack of business confidence. what i am seeing is not that they are suffering from lack of capital but a lack of confidence. i was curious why it was not part of your testimony. >> the business picture i think is more mixed. it has been quite strong which suggests firms are not hunkering down completely. some of the recent surveys have

been positive, but the small business confidence has been weak, and i think that would be consistent with what you have been saying. >> having spoken with a number of investment fund managers, the people who are most important to me, small business people in east texas, i can tell you the and it settled -- the anecdotal evidence is overwhelming that people lack confidence. what i am hearing is fear and uncertainty around the health care bill, major portions of the dodd-frank legislation, the tax snapback already in law, regulatory overkill from the epa, and certainly at the national debt that looms before us, so perhaps we are speaking

to different people. speaking of the national debt, and the nation is somewhat focused on the debt ceiling, although the nation is also focused on the euro zone. i believe august 2 is a serious and date, but i want to separate fact from fiction. when people speak of debt, -- brother of the fault, i see that different from who -- speak of default, i see that as different. as this administration lacked the authority to keep bondholders her rent? >> let me say there is a lot of uncertainty in the economy and also about the sustainability of the recovery, so i'd agree with you on that. on the ability to pay debtors, i think there are some operational concerns, but i think for a

while the administration will do what it tends to pay the debt. the question arises as if we stopped paying other obligations. >> the question was specifically on the fault of sovereign debt. my time is about to run out, but the president said know what i have tried to explain is if you looked at the numbers, medicare will run out of money, and we will not be able to sustain the program no matter how much taxes go up. my time is up, but perhaps you could respond to the extent whether you agree and to what extent. >> we have allowed people to give three frisson -- to give a brief response. >> in dealing with the long term structural debt -- >> as you know, medicare is not

a fully funded program. the premiums only cover a portion of the cost. there is a trigger when the reserves get to a certain point, but i think from a fundamental economic point of view, it is clear that the increase in health costs and aging population means it is going to be difficult to find the revenues to finance its in its current form. >> thank you. good >> at this time, mr. cleaver for five minutes. >> thank you, mr. chairman. i am a native texan. i was born not far from where he lives, so there is a town in taxes called a cut and shoot. i grew up in public housing, so

i learned the term, cut and run, so now we're having a new version put up, and i am wondering if the israel -- if that is real, if we can cut spending dramatically and the economy grows, if that is an accurate description. can you help me understand that? >> i think you have to look at it on several different dimensions. we have a fiscal sustainability problem over the long term, so we need to take a long-term perspective on that, but we do have a problem, and we need to address that. in terms of long-term growth, we want to look at what we are

cutting and how we are cutting. we want to make sure we are doing things to help the economy grow. in terms of the short term, i think you need to be a little bit cautious about sharp cuts in the near term, because of the impact on the recovery. that does not at all preclude and i think it is consistent with the long term program that would bring our budget into a stable position during good >> -- a stable position. good >> is cutting taxes creates jobs and we cut taxes over the last 10 years and fell into a recession, is it then logical that if we continue to cut

taxes, all of a sudden we will grow because we support a tax cut dain tax-cutting and it will somehow create jobs? >> -- all of sudden we will grow and it will somehow create jobs? >> there were many causes, regulatory, private sector, and so on, so that was something that was not directly related much to tax policy except very indirectly, so i would not draw the connection. i think taxes should be viewed as having to rules. one is like the payroll for example. they give them more income to help provide demand for the economy.

in the long term, you want a tax code that promotes good economic decisions, saving, investment, savings, and so on, so you do not want to conflate those. depending on the state of the economy, and those are somewhat different. >> if we paid 1.3 trillion dollars in wars that should not be continued, we took a $250 billion out of the economy ithat we just gave the american public without paying for it, i am convinced all of it put together with the tax cuts and some other factors you just mentioned creates a problem. we are not able to create jobs right now, so here is what is happening in my district in missouri.

someone lays off 10 mineworkers, and then they decider they are going to hire again, and this time they hired a two or three workers in tech jobs, which means the most of the people who are laid off are never going to be able to get their jobs back. is this the time and we probably should have some work force and retraining in order to make sure we have of work force that can actually compete with foreign companies for productivity? >> as i mentioned earlier, i sing one of the big problems we have that is going to last beyond this recovery is the fact we have millions of people who have been out of work for three months or more. we have millions of people who are sufficiently trained to work with new technology and compete on of global basis.

let me be clear. it is not necessarily a government training program to help get people up to speed through technical schools or a variety of programs, but i do think one of the things we need to do for working people is to make sure they have the skills they need to get decent work, and those requirements are only going to go up over time. and mr. miller. >> thank you. it is good to have you here. i enjoyed your testimony. i agree the instability will have a tremendous impact on the recovery. historic lay everything has been led by the housing industry, and i think you are correct, but there is a lack of confidence in a housing market today. your mortgage prices continued to decrease. in my state, california, it has

recently had a positive impact, yet we are going to increase those high costs, which is going to have a hugely negative impact on the markets, and the loans continue to be some of the best producing loans they are making. fannie and freddie have to go away, but there has to be a viable replacement for them. to say we are just going to get rid of them without an alternative is on realistic, but at the same time, the housing action needs to be taken place at this time. a need for a viable secondary marketplace has to be established. we must allow the private sector to stand up. you believe now was the time for major reforms to the housing

market is? >> this was the main piece of unfinished business in financial reform. treasury has put forth some propositions. a number of members of congress have put out plans. i think it would be helpful if we couldn't begin to get some clarity about that. it would increase confidence to know they would be able to find secondary markets for their mortgages. >> lack of clarity is killing the marketplace. nobody knows what to expect. many are pulling back because they did not know what to expect, so you see the potential for private capital playing a strong role? >> certainly. most plans involves private capital. one example is the so-called

covered bonds were based sell bonds back to buy mortgages to private investors. does it involve any government funding at all? or we could have some system were securitization function performed by fannie and freddie is done by private financial institutions, so i think it is entirely positive. it is fair to note that fannie and freddie were effectively subsidized and there for a private market system is probably going to increase the cost of mortgages of little bit, but about is the consequence of taking away a subsidy that proved to be costly to our economy. >> the problem with a hybrid concept was the tax payers were at risk and the private sector made all the profits. >> that is unacceptable. >> what you consider annex of

the bogus to be? >> currently there is not much memory did and what you consider acceptable to be? >> currently there are concerns about high default rates. when the housing market begins to show signs of life, there will be expanded interest. another reason is that the regulatory structure under which securitization and will be taking place has not been tied down yet, so there are a lot of things to happen, but i do not see where the private sector cannot play a big role in going forward. >> they introduced a bill last week but we believe those five. it is a function of the facility -- nas last week that does that. the government must have some continuing role, and it must be

protected, and sound principles must be in place to protect the taxpayers, but the problem is the most investors doubt the confidence of many in the private sector. they do not have confidence they will be paid their investment dark. it seems to me there needs to be a facility available but prioritizes soundness but provides liquidity from the private sector. we think it has to be done. the longer fannie and freddie is, the more the loss. >> welcome. good to see you. most of us ran for office most of us ran for office seeking the