steps to correct the problems identified. they were required to conduct a thorough review of actions that were pending through december 30 to identify borrowers that have been financially harmed by practices. i understand retention of these firms in the process was required to be spelled out in engagement letters that they have to approve. what is the status of these engagement letters? have all of the banks maintained their firms? have they spelled ups the manner? how you respond to the criticize -- criticism is that they

were overly vague and allow them to develop their own plans? >> what is the methodology that each servicer will use to ensure that every single borrower in district is identified going forward? i know this is a lot. you get the drift. >> the engagement letters are being developed. they will be carefully reviewed. >> do you have a timeline? people are losing their homes. cracks the letters are being reviewed. the process is already under way.

they are already reaching out to find people. there's something this morning about that. they have already made progress in improving their operations and addressing the worst abuses. we are well advanced in getting the formal agreement. >> i want to note >> thank you.

>> in a few moments, like chris christie says he will not run for president. in about an hour, haley barbour on the gop economic agenda. them president obama urges congress to pass the jobs bill. he was in texas today. later we will reach their ben bernanke's testimony about the economy. >> tomorrow morning we will talk about the future of energy programs with the ranking member of the energy subcommittee on oversight. he will take your questions to combat narcotics traveling.

he will be done by the executive editor of scientific america . chris christie announced that he will not run for the republican presidential nomination. he spoke with reporters for a little less than an hour. >> i have said that i would not run for president. no.for months, i've been adamant about the fact that i would not run for president. my language was clear, and direct, no matter how many times i was asked the question.

for me, the answer was never anything but no. my job here in new jersey is my passion. i've always meant it when i've said i felt like the luckiest guy in the world to have this job. i'm doing a job that i love in the state i grew up in on behalf of some of the toughest and greatest people in this country. it wasn't until recently that i paused to really reflect on my decision. when you have serious people from across the spectrum, not to mention from all across the country, passionately calling on you to do something as consequential as running for president of the united states, i felt an obligation to earnestly consider their advice. together with mary pat and our children i believe i had an obligation to seriously consider what people were asking me to do. i will always be grateful for

their confidence in me. over the last few weeks i've thought long and hard about this decision. i've explored the options. i've listened to so many people and considered whether this was something that i needed to take on. but in the end what i've always felt was the right decision remains the right decision today. now is not my time. i have a commitment to new jersey that i simply will not abandon. that's the promise i made to the people of this state when i took office twenty months ago, to fix a broken new jersey, and when i look at what we've accomplished so far, i'm proud, but i know we're not nearly done. i've made this commitment to my state first and foremost. the people sent me to trenton to get a job done, and i'm just not prepared to walk away. i know not everyone agrees with my decision, but my loyalty to

this state is what it is. abraham lincoln said, "i'd like to see a man proud of the place in which he lives; i'd like to see a man live so that his place will be proud of him." that's how i feel in my heart about new jersey. i'm proud of this state and its people, and i know there's still much more we need to do together to insure the future we want for all of our children. so this is not the time to leave unfinished business for me. the stakes are too high and the consequences are too real. so new jersey, whether you like it or not, you're stuck with me. let me say this. i'm grateful, i'm grateful to the many people both in new jersey and around the country who have spoken to me over these last weeks and months. i'm grateful for their confidence in me. i'm grateful for the faith that they place in me. it's been unbelievably humbling and inspiring. i can only hope that i'm able to live up to this confidence and to make it count doing the job i need to do here at home.

questions. >> you have never close the doors on presidential ambitions. are you doing that now? to you have some interest in the future? >> i have some interest in in being employed in in future. what the -- i have some interest in being employed in future. >> [inaudible] >> i did not want to. when you have as many serious people come to you and tell you that you really needed to reconsider and then all kinds of regular folks.

we got a fedex over the weekend from a farmer in nebraska, asking my children to sit me down and tell me it was ok for me to miss their games and concerts because the country needed me more. and that they would be remembered in in history books. -- remember in history books. we had dozens of letters like that at home to our home address from people all over the country. as this started to accumulate over the past couple of months, we decided we'd better really rethink this. we did. in the end, my commitment to the state is what overrode everything. i thought hard for did i fought hard to get this job. -- i fought hard to get this job. it never felt right for me to leave now. i rethought it because serious people were coming earnestly. you have an obligation. we did. we came out in same spot.

>> [inaudible] >> no. [laughter] euskera around and now you are out. -- you screwed around and now you are out. >> [inaudible] >> and none of them were a factor. i have a great political team. i have complete confidence in them. the deciding factor was that it did not feel right to me in got to leave now when the job here is not finished.

i never get by that. i could never get by that. that is why i made the decision i did. >> is there one particular person [inaudible] >> obviously, they were not that good. i would not single anybody out. there were a lot of extraordinarily accomplished people and really great regular americans who wrote and called and tweeted, all kinds of stuff. there's not any one particular person. in and, this is my decision and not anybody else's. no one could convince me of it. it has to be your decision. it is my decision.

>> how much is based on your commitment to family as opposed to a commitment to the people? >> there has been some wild reporting about this. my wife in the children were behind me if it is what i wanted to do. three weeks ago, mary pat will clean up at 6:00 in morning and said if you want to run, go for it. do not worry about me and the kids. it has not been an issue at all. nor my children. i talked to all of them about it. we spoke as a family.

they said it that is what you want to do, it'll be fun. my son said it will be a great adventure for us if you decide to do it. it was not a family decision. they laid it all on me. >> are you worried about ruining your chances of running for president? >> listen, what i care most about is the country. the country will be better by making sure that president obama is a one-termer. i do not worry about that at all. i do not believe you can. i have a great job. we made great progress. whatever the future holds, the future holds. it probably did not speak this two years later. life takes you in a bunch of different directions.

>> [inaudible] >> you cannot make these decisions with any regret. how could i the regretful being the governor of new jersey. i have a great job. i love doing it. i have a lot of great things to accomplish. i do not feel any sense of regret at all. i felt like it was my obligation given the amount to people who ask the -- were asking me to reconsider. i thought a lot about this. i came back to the same place i was in the whole last year. i do not want to leave this job. i made a commitment to the people of new jersey to do this

job. it never felt right to me to leave a. i did not. >> [inaudible] >> any advice i have for the people who are running i will give directly to them. i know you like to use me as a conduit. the president has failed. if you want to know why it is so important, read the speech i gave last night. this is an example of somebody who has failed the leadership test. more than anything else, what i have learned is there is no substitute for knowing how to read. -- lead. everything else you can learn. no one can teach you how to leave it -- to lead.

he has failed the american people. he failed the litmus test to be president. >> [inaudible] >> nothing has changed. you just have all showed up today. nothing has changed. education reform is still my number one priority. it to be the top priority for the next session of the legislature. all the things i have talked about, nothing has changed. it is a really interesting time for me. i failed on issues that matter for the country. you ask if there is any regrets. to the only regret i have is

that i have given such television exposure to reporters. he will have -- who will have cats on tv? no one. that is my only regret. >> [inaudible] >> i'm not prepared to make any endorsement today. i am not a half way kind of guy. i want a guy who gives us the best chance to defeat the president. i will endorse that person. i'm not a position. >> in the past few months, it has gotten loud. -- lourder.

-- louder. >> why have the drumbeat gotten louder? i have no idea. as far as mrs. reagan, i had a great time with her. it was one of the great honors of my life to be invited by her and speak there. we have a great dinner together. all the reporting about this has been a little precarious. i know who was at the table last night. it may be some of them over heard things. what ever occurred there is between me and mrs. reagan. >> [inaudible] did that ever factor and in your decision and?

>> that is not even a relevant question any more. i made the decision not to run because i believed in my heart this is where i belong. i made a commitment here to the people of this state. i had a whole bunch of people come up to me and say i really hope you run for president but that is what you want to do, but i will really miss you here. that is a lot to reinforce without is doing my cell. -- what i was doing myself. >> we have an election coming up. to what degree is it an opportunity for you to address your agenda?

>> i do not see it as a referendum. these things are district by district races. i do not see it as a referendum on me. i see it as a referendum of the candidates on the ballot. on the other hand, we will see. >> [inaudible]

>> as i said, i listened to a lot of people. i made the final decision last night. >> [inaudible] >> in either. there's not a lot of artists here. what they see is what they get. it is based on that. >> what does it say on the subject of jobs? >> on the first part of that, i do not think it says anything particular about the field. i would like to think it is something about me.

there are folks who feel like what we have done here in new jersey and bringing people together and getting things done is something they would like to see in country. i think that is really what it was all about. it was hardly my good looks. it may people excited that may be divided government can work. it is a bold and direct way to forge compromise. that is what it is all about. i do not think there's anyone in america who in their sicily -- who think my personality is going to be no. 2. >> [inaudible] that was not a no. >> sure it was.

it is a no until it is a yes. what i said is that i would reconsider my no. my no never changed. you can tell it by today. it is the same kind of answer. listen. i know it is your job to answer me this question a dozen different ways. i will answer it. it infuriates my staff. >> can you shed light on the reaction to the speech at the reagan library? >> we will in the middle of a reconsideration when we went. it did not make a difference. those were things i have felt

for some time. i thought it would be the appropriate forum. their reaction to the speech did not have any effect. it was great to be there. i enjoyed the evening immensely. i thought i had some important things to say. in the end, it did not have any affect on my decision. >> how do we know 6 months from now you will not change when people are asking you to reconsider? >> because i said no. i have spoken to a lot of people. a lot of people have encouraged me.

this was was it. i felt an obligation for both the seriousness and the amount of people that are asking me to reconsider. i feel what i'm doing is right. that is to stay in new jersey. that is to do the job that the people of the state gave me. if you're looking for someone else, it did not feel right to me to leave before the job was done. it is the same thing. you have to let me answer first. you apparently do not know the rules. the fact is it is about what we accomplished here in state. they came right to one target.

it was me. it is because of what we accomplished. i am proud of that. there is a lot more to do here. we are making great progress. that is what it is about. >> [inaudible] >> i found in the advice i got from other people who ran for president was that it did not matter if they won or lost. the one that lost said it was a nightmare. to the one that won it said it was a horrible. no one endorsed the joy of running for president in my experience.

everyone talked about a sense of duty and obligation and honor and excitement about it. nobody said this would be a really good thing to do if you have nothing else to do. it was never characterize that way. >> [inaudible] >> i think of -- a bunch of the people who are candidates would not have said that. i think they would want me to speak highly of them. no one said it to me.

people who look at this saw this as something that i kept trying to push off. it became more than i could push off without giving those folks a serious reconsideration. that is what i did. i have made the judgment. that is that. >> [inaudible] >> look at the reagan speech. that is my statement on the state of the country at home and around the world. i thought long and hard about that speech. it is how i feel about where our country is in the challenges we face. i will continue to speak out. i will continue to speak out on issues that really matter to me. it will continue to play a role. i will be working for republican gubernatorial candidates. it to be a lot for me to do. if there are other things people want me to do, i will

consider them as long as they do not affect my job hear. >> if you look ahead, do you think you run the risk of losing the primary and momentum back here? >> you worry a lot more than i do. you really do.

we need to the use some help. you are overwrought. it is nice that charlie is so worried about me and my future. >> [inaudible] >> i did not market down at in diary. you know a lot of different contacts that i had. i cannot think of a particular moment. at one point, we had a conversation. we said we should start really thinking about whether we need to reconsider this. i cannot pinpoint a particular time. >> [inaudible]

>> that is such a shock to people of new jersey. i do not know how to address that. it is crazy. it really is. that is when i knew that i could actually win. when all these people started shooting at me before i even got in the race. that is when you really know you've got something special is when they start shooting at you before you get in. i said i am a conservative. i also said, as ronald reagan did, you have to compromise some to get things done. that is not mean compromising your principles. it means not getting everything you want. to some folks, liberal being

compromising, you are dead wrong. look at ronald reagan's record. he had a record that was replete with compromises in order to move our country forward. if someone was to accuse me of that, they can compare me to ronald reagan. >> are you going to stay neutral and try not to endorse any candidates? are your party members [inaudible] >> that is all stuff to be seen in in future. i think it is very important for the republican party of new jersey to play a role in determining who the nominees in party will be.

i will continue to give advice to folks in party about how we should conduct ourselves the in presidential process. hopefully, my advice will be followed. we will see how it goes. >> [inaudible] >> i cannot say that. have not begun to think about that. there will come a time when i have to make that decision. one of the things i have learned is that you do not make any decision until you absolutely have to. i'm not going to make that decision. >> they sent out a wave of statements. [inaudible]

>> listen, i think you know this. i am not self-conscious about this. this is not a news flash to me that i am overweight. i saw that on a top-10 list. i thought it was really funny. i saw that. i saw some of the stuff that some of the other folks did. you have to know who you are in life. their job is to be funny. if one did the things they want to make fun of it is my weight, it is fair game. i'm a public figure. all i care about is that they are actually funny so at least i can laugh about what they are mocking me. letterman said some funny stuff here. there were a lot of good spot. an answer would come to me and say have you seen this one?

he has been -- one in turn would come to me and say "have you seen this one?" he has been grounded. i am not self-conscious about it. i'm self aware. it is what it is. awfully they will continue to be -- hopefully, they will continue to be funny. just make sure you laugh in process. >> have you put together a scenario of how you will win the nomination? in the last couple of days, have you said no i will not do it? >> i made this decision last night. i told them i wanted to announce it this afternoon. i went to bed last night for the first time in few days knowing exactly what i wanted to do. then i called everybody this morning. i let them know.

that was it. as for the politics, they were considerations. it was about me getting to the point where i believed it was ok for me to leave. i never got there. i never could justify the thought of leaving the state's early. the rest of it is irrelevant. >> what other nominee would you consider? >> listing, i told you i do not have the personality to be asked. he would probably want to get a boost taster. i do not see it. it is not relevant. i do not see it happening. i am not looking for that job. this is the job i want.

this is the job i want to do. i can do it over the course of time the people want me to do so. >> how could i have gotten in? >> i have to point out to you that lisa is getting very good. she anticipated by answer. she has now lost the moment for us. and no other answer. i have run lots that campaigns before. if you wanted to get in, you get in.

i have never seen a pro and con list put together. >> i am wondering, with the republican party rejuvenated [inaudible] >> i have confidence. this is about my commitment to the people of the state when they elected me. it is not about any lack of confidence i have in me. i made this commitment. i campaigned for the job. i asked for it.

that is what it was all about. it is my commitment to them. it is about my commitment to the folks who voted for me and elected for me. they now have me as governor. it was my commitment to them. >> [inaudible] >> i'm not a political analyst. most of ice is to get on the phone and talk with him directly and not in front of the cameras. if i have observations, i will give it to them directly. i will not give it to them here. >> should a person be elected if they away certain point? taking you out of the equation. -- weigh a certain amount?

taking you out of the equation. is that a fair question? >> no. since you're asking about the comedians, they have been great. the people who pretend to be serious commentators who have written about this are among the most ignorant people i've heard about my life. to say because you are overweight you're under discipline, it people clue are under disciplined and not achieve great positions.

at least the comedians and not try to be serious. the comedians are making jokes. these are the people who they should really look down upon. the comedians get paid to do that. >> people are looking for something for you. i still think that the debate has to get on some really important issues. i think the public to an extent is really hungry for that. to get to the issues we all know are the really important issues. how do we do with the short-term deficit and long-term debt? how do we reform the tax code that is putting a wet blanket on our economy? how do we improve american stance in world?

how do we intend to do that? i do not hear a lot about that. a lot of the reasons i gave the speech i gave at the reagan library was to try to spur more that discussions. they try to spur a discussion on the subject. this is why we will continue. it is what is in the best interest of our country. that is my first obligation as a citizen, to speak out. this is where i sit on that one. it is up to the candidates themselves to decide. they get to decide what they want to convey. in my view, they should be communicating on the really important issues. >> [inaudible] >> not really. it was really about these jobs. it is about this place. you could argue any side of any of that stuff. whether you are right to wrong

about the decisions. believe me. i've had people tell me i was right on one point in wrong on another. that is not the issue. the issue was i made a commitment to this state. i could not get by the idea that i will be here 20 months into my term. i cannot get by that. i felt like i owe the people of new jersey more of that. despite the fact that i am incredibly inspired by all of these people who have said all of these amazing things to me. i meant to them. i cannot get by the idea that works so hard to get this job and asked for it.

and then to walk away from it after 20 months. that was the only factor in and. i cannot get by it. anything else could be dealt with. there was no reason to have any further discussion. >> people were speaking of the unemployment rate being high and immigration. how much would that have played? >> and none. none.

new jersey's unemployment is significantly lower than when i got here. my position on all these other issues has been a clear to people over time. they're looking for something else. everything in mind could be dealt with. i could get by the idea that i was leaving the job. i cannot make myself feel right. if i cannot feel right about that, that is the way i felt a year ago. that is the way i felt for most of the time in between. you're looking for other factors, that is it. they cannot get by it. in the end, it was stuff that could have been dealt with. the issue was, can i look it and justify it if i left this job after 20 months. i cannot.

>> [inaudible] >> anyone would be troubled by the use of that word. i do not know enough about the story. have not ruled anyone in or out. i'm not here to make commentary on the other candidates.

i want to make clear what my position is on running for president. i do not think i would have resigned from governor. on a practical matter, i would have been gone a lot. it and i give you a lot of time to physically be able to do the job.

i mean two things. walking away from is physically and i would never get into a race i did not think i would win. my expectation would be if i got in i would win. i cannot hold both jobs. i never gave any thought to resigning in order to run at up here -- run at all. >> i do not feel a whole lot different. i did not find it to be emotionally trying. it is a tough decision. i'm used to making tough decisions. i dealt with it in a way i deal. i tried to get all the

information i can. we have the kind of graviton us to make the opinion matter. i played devil's advocate with people who are making the arguments. i tell them to leave me alone. that is where we were this weekend. i told my folks do not bother me. do not ask for of date. just leave me alone. they were great about that. we were trying to absorb everything. my hope is that we could do it

by monday. i find it emotionally draining. i never saw it as a burden. as solid as an extraordinary reduce i saw it as an extraordinary accomplishment. -- i saw it as an extraordinary accomplishment. i never saw it as a burden. this is a job is an extraordinary opportunity. i tell people that i get up every morning and have no trouble getting out of bed. i know every day at a chance to do something great. i do not do something great every day. every day i have a chance. that is an enormous blessing. any of the decisions i had to make over the course of the last few weeks about this was another blessing. think about it. i have. to just be a regular guy from

new jersey where people wanted to be considered, that is an enormous get. it is a blessing. and never saw it as a burden. it was a serious decision that i gave consideration to. at the end of the day, you decide. as soon as you are ready to decide, you do not dawdle. you do not linger. that is what i did not could this case. and do not have a second thought about it. i tell folks we make decisions and we believe we are doing the right thing.

tear up the rearview mirror. no reason to be looking back. i look ahead to the challenges i had as governor and the opportunities you have. i will play a meaningful role. known can look at this country right now and not know that we are hurting or that our people are scared. they want leadership. for the extent i can play any role in that, i will do so. no one would view that as a burden. that is a great gift, to have the opportunity to play a role in that. i have said to do this afternoon. i have a job to do here. i appreciate all of you coming today. i appreciate what you have given to me to try to make this decision. it is an important thing for all of us to understand. we all have jobs to do. i appreciate this. thank you very much. [captioning performed by

national captioning institute] [captions copyright national cable satellite corp. 2011] >> watch more video of the candidates. see what reporters are saying and check the latest political landscape. all at c-span.org/campaign2012. >> in a few minutes, the economic agenda and the 2012 election.

>> in about an hour, president obama urges congress to pass this jobs bill. u.s. and taxes on tuesday. after that ben bernanke is testimony on capitol hill about the economy. >> several live events to tell you about some are beginning with david cameron speaking at his conservative party's conference. the other live events are on c- span3. witnesses include representatives of the federal aviation administration and the air transport association. ron paul is speaking at the national press club at 1:00 p.m. eastern. been steven briar testifies before the senate judiciary

committee on the role of judges on the constitution. >> haley barbour says the next presidential election will be " close, contentious, and-." haley barbour was present. >> good afternoon. welcome to the award winning programming conversation. today's program is being broadcast by c-span. on to express my appreciation for joining us today and for john harris are moderating today's discussion. a lot has happened since we met at the museum in july on the economic front.

the stock market has just turned in the worst quarter since the financial quarter in 2008. the latest poll shows the president's approval rating at 43%. this is behind every american presidents with the exception of jimmy carter who went on to a landslide defeat. congress's approval rating is lower. most think america is on the right track. consumer confidence plummeted to the lowest level since 1980. it has remained relatively unchanged. unemployment is at 9.1 since. the american embassy has been attacked twice in the last month. the former president was assassinated.

they announced negotiating with the telegram was futile. the dialogue with pakistan has become even more course. we have the presidential elections. in a new poll, 37 some of americans expect president obama to win reelection. republicans believe their standard will be the president. a dwindling majority expect the president to prevail. winning the iowa straw poll we have witnessed the governor of texas go from noncandidate to front runner status and liz half

of his support. they seem on a race to the low single digits. herman cain seems to be gaining traction and just won the florida straw poll. an announcement is expected during this program. it is not implausible that they could take the senate enlist the house. it is again suspect drop that we have are with us today. i would beg to welcome governor barbara >> he is really trying to help me. he is taking my speech. >> thank you.

thank you for coming. i looked around and see so many people i have seen. it makes me think that to my lessons in politics that i have learned. i was the state director of the senses, a great lesson for working for the government. you find out of the government is a crummy communicator. it is also a sense is about culture and business. we were in the jackson office one day, looking through some business forms, nine and 9.9 and% of businesses are like one page. and these folks from mom-and- pop organization, if you could tell that they were hard trying,

america-loving good citizens,, because they struggled with the questionnaire. they got down to no. 8 and the question was number of employees a broken down by sex. they said that they did have two with a drinking problem. government needed to improve their gut -- communication technique. hopefully i will be successful in doing that myself while we're here. i will talk about that 2000 election. i think everyone knows that this in many ways will be the most pivotal election for president in our lifetime. be theoices are likely to th biggest. the policy changes from one side winning or the other side winning, the most important. it is going to be close -- or should be, contentious, and in

my opinion,-. it will be bigger than 1980 in terms of changing the direction of the country. obama at the outset has summit senses -- have some advantages that do not get talked about. it is hard to beat incumbents. in fact, you have to go back to 1896 and go forward, only one time as a political party won the white house away from the other party, and then turn around and lost it in four years. jimmy carter. that is the only time it one time president faltered for his own party. -- every other one-term president followed a president of his own party. lyndon johnson, herbert hoover, william howard taft. the rest of them followed a president of their own party. if obama loses, he will have to do something virtually

unprecedented in american history. at second, he's going to have to have enough money to burn a wet , and that is a very large -- a wet mule, and that is a large supply of money. they talk about obama hopes to raise a billion dollars. they spend more than a billion dollars last time because people do not include on top of the $750 million that the campaign raised, the $400 million raised by the labor unions. and this time, i think it is fair to say that the labor unions will spend a lot more because that was before bowing, boeing, that was before the national labor relations board. i think obama's second biggest challenges about money. third, there is a wide open gop election. that is important to his strategy. all of the republican candidates are less well-known than any republican elected

president in our lifetime. even mitt romney, who has run before for president, is less well known than anyone we elected in our lifetime. and we will see in a minute that fits in obama's strategy. and of course, there are economic issues, but let's face it, that is always the case. anyone who is running for president not very well known when it started, has some issues. obama has another big advantage, and no primary. one of the precursors of an incumbent president losing is a serious challenge in the primary. to look at lyndon johnson in 1968, jimmy carter in 1980, george bush in 1919 to, -- 1992, the last three presidents who either got defeated or did not run for reelection, i was

because they had party trouble -- it was because they have party trouble, internal challenge. so obama have some cards to play. i do not care if his job approval is 42%. if only half the democrats think he will win. he still has some cards to play. republican advantages today, i pretty well all went through them. they are conditions, the condition in which the country and the voters find themselves. 9.1% unemployment. a weak economy that is perceived by the public as probably weaker than it probably is because most think we are in a recession right now. and they are pessimistic and do not have confidence. this is usually accelerated for the republicans by obama's policies, because obama's policies in the minds of many, many people, are making conditions worse.

talking about huge tax increases on employers when the biggest problem in the country is not enough jobs. how do you tell employers now you're going to take a trillion dollars out way from them and expect them to hire more people? obama care, unpopular in its own right, but also when the fundamental issues about the a stronger economy and job creation. how do you expect employers to go out and hire people when you do not know what their obligations or costs are going to be for the employees' health care? energy policy, you know, do not forget the price of gasoline was $1.83 when president obama was inaugurated. and i think most americans agree with me that it looks like his policies have driven up energy policy so that americans use less of it. that is environmental policy. but it has a huge effect on the economy.

i think all of these domestic issues, taxes, spending, the deficit to my dad, health care, reddick -- the deficit, daetz, health care, regulatory regime, all of these things make people think that obama's policies are hurting, and at best, not helping. foreign policy cuts both ways. i think obama will get some votes by drawing down or pulling out of afghanistan and iraq. but as we saw in new york, his israeli policy is fraught with danger for him because a lot of american jews in support of israel think he has not been a good supporter of israel. all of these things show up in the polls. below job approval, right -- approval, right track/run track -- right track/wrong track approval levels. americans still want to repeal

obama care. some of you old people here, my age, know that when historically, legislation has been passed, it immediately becomes more popular and that has not been the case. one of the things that you might not have noticed, the last three presidential elections have generally followed the outcome of the preceding congressional election. republicans vwon a little bit -- republicans won a little bit of a victory in 1998 and a little bit bigger one in 2000. republicans did better in 2002, bush won by a bigger margin in 2004. democrats won it in 2006. obama was elected president in 2006. 2010, is it going to follow the pattern that republicans won

the election by a big margin? are they going to win in 2012? obama's plan is to change the model back to what it was in 1994, a big republican victory, then 1996, bill clinton reelection. all those things are going for the republicans, but i have to remind you of something pretty important. the 2010 republican victory was not a great embrace of the republicans. it was not some overwhelming statement that we love the republicans and we need to get them back. it was that they already did not like the democrats and they did not have anybody else to vote for. the republicans came in with some people hopeful, but nobody strongly loyal and sold that the republicans are going to do the right thing. it was more the "kick the bums out." that brings us to 2012.

the election will be one in the middle. -- won in the middle. in 2004, hardly anybody in the country was undecided or change d their mind, when from voting for john kerry to george bush or george bush to john kerry. and the election was primarily about who could get their people to the polls. it was a great turnout election and the mechanics and operations work usually rewarded. -- were hugely rewarded. very few people change their minds. i think this year will be very different. i think the pool of undecided to will be very large and i think it will be very low -- it will add an flow. -- ebb and flow. if somebody writes something bad about rick perry, or something bad about mitt romney, people will move definitely against

obama, to maybe i will give them a chance. people will move definitely from being against obama to maybe giving him a chance. independence and soft republicans, that is where this vote will be decided. and i believe that 20% or more will be subject to changing their mind -- changing their minds of with a vote for. -- who they vote for. a couple of your remember -- are old enough to remember ed sullivan. remember the "ed sullivan show" on sunday nights? in 1957, he had conrad hilton on the show. you know, business icon, kind of the bill gates of his day. he invented a new business, the luxury hotel chain. as soon as conrad hilton walked up, ed sullivan said, if you could only tell the american people one thing, what would you tell them? he never slowed down or flinch or hesitated. he said, put the shower curtain inside the tub. [laughter]

quite frankly, the republican strategy is that simple. it gets down to one thing, make the 2012 presidential election and referendum on barack obama's policies and the results of those policies, his record. because he cannot run on his record. and the republicans have to know that. his record is not approved by critical groups, seniors. independents look in pulling out very much like republicans because they disapproved of obama's policies and the results he has gotten. obama, on the other hand, wants this election to be anything but a referendum on him. he wants to run against george bush is what he wants to do. we will see. typically, elections of incumbents are a referendum on

the incumbent. but the democrats will do whatever it takes to keep that from happening, and the best way for them to win is to try to make the republican unacceptable. try to make the republican somebody who is disqualified, and they are aided by a couple of things. again, we already talked about one. the republican is going to -- at the outside, at least -- is going to be less well-known than any other republican candidates before. the republicans are helping to get -- the democrats by chewing on each other, which is part of it. -- the republicans are helping the democrats are chewing on each other, which is part of it. the democrats want to make the republican unacceptable to the center, because that is where the election is going to be.

obama has a tremendous amount of money and no opponent. when the republican wins the nomination, or when we know who our nominee is going to be -- and that will typically be in early march. with florida's decision to move up the primary, it could actually be in february. we will know who our nominee is going to be. our nominee will be broke. the republican national committee may not have the resources to defend the nominee during that time from when we know who it is to the convention. the period i call the interregnum. during the time, obama and the labor unions and democrats will corporate from whoever the -- will carpet bomb whoever they republican nominee is. that means spending $300 million to $500 million to try to disqualify the republican candidates.

it will hit him so hard his grandmother would not recognize him, or vote for him -- [laughter] after doing this. it will be a five month, six month in and that will be the defining time for the republicans. how do the republicans to survive that? this is what bill clinton did to bob dole. member in 1995, 1996, about $115 million of dnc labor union money attacking bob dole. bob dole never let a poults -- never led in a poll during the 1996 election. the closest he ever got was three points behind during the convention of san diego in all of 1996. and that is why, because they disqualify him before he was actually the general election candidates. the democrats will try to do that next year. and today, you can already see it.

it happened with gov. martin o'malley. the governor of maryland. he got asked a question about chris christie. he had a litany of all the things wrong with chris christie. he came with his list of here is what i am supposed to say bad about chris christie. and i guarantee you, such a list exists for every other republican. the liberal media elite can be implicit in this. [laughter] not every day. [laughter] not every day, but most days. at the one thing obama is doing -- is not doing that clinton did, he is not moving to the center. we do not hear him saying that the government is over. -- the era of big government is over. we do not see him triangulating. president clinton signed rope -- welfare reform. and we have the first balanced budget in a generation because he made the decision, ok,

people spoke and i will make the most of it. ronald reagan did the same thing. he never had a republican house, but he passed the reagan plan with a democrat house. the '86 tax reform bill, immigration reform, all without a republican majority in both houses. a similar situation. if you are waiting to see obama triangulate, it looks like you are going to have a pretty long wait. in his most recent opportunity, the jobs bill, the jobs bill was more of the same, a smaller version. i do not know why -- it may be that they think they have to unite the democrats, that they are worried about their base. i do not know that. but you do have to make sure your base stays in line, even when the election is going to be one in the senate.

-- won in the senate. a couple more thoughts. one of the last great hopes is that the tea party will cause a fracturing in the republican party, and hopefully in their mind, a third party. president obama's fondest hope for reelection is somehow to split the anti-obama vote. which is a majority right now. 80 party movement into a third party would do that. i think -- a tea party moved to a third party would do that. i think that is unlikely because nothing unites republicans like getting rid of obama. there are very conservative republicans that would vote for romney in a minute and there are very moderate republicans that would vote for rick perry in a minute and all sorts of flavors in between. in fact, republicans are so single-minded that when we go to convention in tampa, is going to let conjugal visit day at the state penitentiary. [laughter] everybody is going to have one thing on their mind, and that

is, get rid of obama. that is where we are. in the fall race, i think you should expect harsh,-, hopefully not personal -- harsh, negative, hopefully not personal. the republicans are best served if the campaign is about policy, not personality. president obama's policies are unpopular. he is not personally unpopular. but they need to make the election about what obama is done and let the people decide if he has helped or hurt. that is the best policy for us. the democrats will say that obama has done as well as possible with the situation he has inherited, problems caused by bush's policies. and then they will say, which are, of course, the policies of which ever one the republicans nominate, you know, the unqualified, unacceptable, lousy, phony, a liar, and that

case -- and a nut case. or words to that effect. seriously, that will be their defense. but their offense, as i said, will be making our guy unacceptable. a lot of people make the mistake of assuming that even if obama wins a republican house -- i do not think you can assume that. 61 in districts of that obama carried, 15 represent districts that he carried by more than 10 points. very hard for a freshman to survive that kind of wave in their district. is it likely that republicans will keep the house? it is. the majority is not huge, but it is solid. it is not for certain. that is going to be a lot more raese than people think. -- a lot more race than people

think. as far as the senate is concerned, a lot are assuming that the republicans will take over the senate. 23 democrats eat up. republicans only have to pick up four. i am not so sure. a bunch of the democratic seats are a pretty safe place. you know, like rhode island. only when teddy kennedy's seat once-in-a-lifetime. we will not be picking up road -- rhode island in the senate. and a bunch of people will be performing well at the ballot box, like ben nelson, like the other senator nelson. there is a likelihood the republicans will win the senate. and particularly if we win the white house, but it is not for sure. and if there is nothing else to prove things are not for sure, today's governor race in west virginia will show you how unpredictable this is. a few weeks ago, the democrats were ahead 33 points. in a democratic polling firm poll released yesterday, taken

friday through sunday, the democrat was ahead one point. 47-46. interestingly, the democrat has never moved outside the margin of error. he sat right where he was. and the republican has little by little caught up. i would doubt seriously we will save republican governor elected in west virginia today. but if we do, it will fit right in there with new york 9 as a gigantic statement about democrats' repudiation of their own president. because a lot -- because governors do not get elected -- republicans do not get elected governor of west virginia must -- on less a -- unless a whole lot of democrats vote for of them. we will see what happens. what do we know about 2012? remember, in politics, you do

not know until the election is over. but here is what we think we know and have reason to believe. tough, contentious campaign. it looks today like it will be very close. but a lot can change and a lot will change. about three minutes ago, chris christie started a news conference in which he laments he is not running for president. that changes a lot of math that has been going on for the last few days, or few weeks. who would help, who it hurts, i am not able to predict. but as a reminder of a lot of what we see speculated about and written about in the news media is not fact. and not saying they claim it as fact, but the hard facts are few at this stage, and the opinions and conversations and speculations are immense.

maybe the media wants you to think that would ever happen in the last 24 hours can be extrapolated to tell you what it's going to happen in the next 24 weeks. well, that is just not the case. there are some things we know about politics. the good get better, and that gets worse. -- good gets better, and the bad gets worse. you're going to keep going down until some point stop ship. maybe you bounce. the corollary to that is things in politics are never as good as they see men they are never as bad as they seem. it is hard to get that out of the news media sometimes. it is why we used to say, today's headlines are tomorrow's fizz rappers -- fish rappers. only politico and "wall street

journal" selwyn of papers to understand what that means. -- sell enough papers to understand what that means. we do not sell enough of the actual papers to understand what that means, but we do not know what is or drop the next week, much less next year. 90% of what is going on -- 90% of what matters for the republican nomination has not happened yet. it is a little different for obama. three years of record, of conditions, of seeing him -- a lot of people have made up their minds. that is why that republicans will try to make this a referendum on obama and his policies. and that is why obama will try to convince people that whoever the republicans nominate is unacceptable. that is the main thing for each one. as my old friend fred smith says, the main thing is to keep the main thing the main thing. [laughter] and do not take your eye off the ball.

i expect you will see both campaigns are riveted on the main thing that matters to them. that will make a close, interesting, and hopefully fun, election. thanks, y'all. [applause] >> governor, that was fascinating. i was thinking as you were speaking that there's this trend in politics of people who used to be political operatives and then end up getting into elected office themselves and making this transformation from a political hack to a statement. -- to statesman. i covered virginia politics -- to a statesman. i covered virginia politics and then went on to become -- and then mark warner ban on to become governor. the problem with mark warner is i thought he was much more fun

as a political hack than as a statement. -- and as a statesman. the reason your fund is that you have the political operative it still in you. -- the reason you are fund is that you have the political operatives still in your. i hope that we are not to statements like here. -- that we are not too like here.- my first question concerns codger bowl -- conjugal the division rights in mississippi prisons. -- conjugal rights and mississippi prisons. did you actually have those things? [laughter] >> sure. >> i will start out with some questions. let's play off of the news. gov. christie, there was this great christie fever, overheated speculation, as you suggested, and the press.

-- in the press. and most of us have a sense he was probably going to come down on the side of not running. you've gone to a similar experience. give us your best guess as to what he was thinking, what was going through his head. it is not very often in life where you have people, influential people, literally begging you to run, which was the case with gov. christie. there were people prepared to raise money and saying, this is your moment. an opportunity only knocks once. barack obama have that situation and said, i'm going to do it. governor crist he apparently made a different calculation tell me -- gov. christie apparently made a different calculation. tell us what you think was in his head? >> i do not think it was calculated. if he were calculating, he would say, this may be the best chance i ever have to become president, i will take it. but he and his wife made the decision earlier in the last few months that he was not ready, that he was not going to

run. he had been governor a year, maybe a year-and-a-half. and he was not ready. he had made that decision. as things developed -- i will just tell you that i think chris would have supported me for president if i have run, and maybe some other thing that would have thought well of it. fewer people got into the race. i think mitch daniels had a lot of supporters that were encouraging chris to run. i know a lot of my supporters, particularly in the east, were encouraging him to run. i think he felt like he owed it to them not to just blow them off. he is the governor of new jersey and a lot of these people are from new york. they deal with each other. they have investments in his state. i think he said, i owe them at least the courtesy to seriously rethink this.

and i think he rethought it and came to the same conclusion, which i think is a very positive statement about why people would want chris christie to run for president. he is true to himself. he is not going to be halfway candidates. i had a very similar experience. either you have to be all in or not in at all. this is the most consuming job on the face of the earth. nobody in history has ever gotten to be president that did not make it their job to the exclusion of all else. good president, that presidents -- maybe william howard taft. nobody in our lifetime has done this without it consuming their life. you have to be ready. chris knew that. and i knew that, and that is the principal reason i did not run. i suspect it is the same with him. >> you are suggesting that this is more of a personal decision than a political decision. but a says the politics, if he had run, how wide -- assessed the politics.

if he had run, how wide open with the door be? there are many people who run, but when they actually get in -- as senator mccain said over the weekend -- the water is not always as warm as they thought. >> he has always had the advantage of being from the biggest place in the world, new york. he is far more known as national governor, far more so than rick perry. he had been a very successful good governor of a state considerably larger than new jersey. he is considered the launcher of new jersey. he has gone up in a tough environment. he has made some hard decisions and make them stick. you look at what they have had to deal with, particularly on the fiscal side and on the dealings with the state unions and that sort of stuff. chris christie has made tough decisions and importantly, the

democratic legislature has supported him enough to where he has gotten to where he is. my first seven years as governor, i never had a republican majority in either house. we did tort reform, reform of medicaid, a lot of things, particularly with spending cuts, with both houses being democrats. that is harder than when both houses are republican. and chris christie has done the same thing. and he has done it in full view of the country because the new york media market gets spread out everywhere that there is. >> help us make sense of the republican field. it seems in some ways very fluid. rick perry rides up on the polls, and as mark suggested to my themes he may be writing down. the -- riding domn. there was a time in august when the public seemed captivated by

michelle bachmann. she does not seem to have as much hope. on the other hand, mitt romney kind of jogs along. he does not seem to go up or down. why is that? >> this is my 12th presidential race. this time, our field does not really have a front runner. people are not really well known, but have something to recommend them. they have very good records doing what they did. as i said, not a single one of the people in our field is well known -- is as well known as the least well-known republican presidential candidate in our lifetime. secondly, there is an intense desire among republicans to have a new president.

there are a lot of republicans who would normally say, i'm going to be for this one or that one. they are saying, i'm going to be for the one that has the best chance to beat obama. they are sitting back and waiting to decide who that is. that takes away some of the initial energy from a candidate. you talk about michelle bachmann, first of all, i think she has performed better than i expected. i have seen her speech a couple of times and she is very compelling. she has a great story. but we forget, she was born in iowa. when she wins the straw poll at ames, iowa, it is kind of like me winning the straw poll in mississippi. i mean, she is from there. i thought that was pretty predictable once she got in the race. but there is not a lot in this race that is predictable. but again, do not read much into it. remember, september of a four

years ago, first in the republican nomination was rudy guiliani and second in the polls, fred thompson. john mccain was way back in the back. >> i think it was yogi berra was said, predictions are really hard, especially about the future. >> amen. as usual, he got that right. [laughter] >> talk about the republican group on the american side, american crossroads. some have estimated they will raise enough money to burn a wet mule. . >> it is a good figure. but how much money does it take to burn a what -- wet mule? ? and how much support will you -- to burn a wet mule? and how much support would you give them? >> first of all, burning a wet -- wert mule comes from a prewar

20th century. the river would get out almost every year. people farmed with mules and they were always around -- there was drowned in the floods. we did not have much health department's back then, but many people knew that if you just let them rot in the sun there were a health hazard. the government made to burn them. it takes a lot of fuel to burn away the old, and it is expensive -- to burn a wet mule, and it is expensive. of course, you all knew that. [laughter] >> now you need a permit? >> today, you could not burn one before it rotted. american crossroads is a 527 committee, like the republican governors association. the republican governors association is not covered by

campaign laws because we are not covered under the campaign rolls. american crossroads is not covered because of other reasons. they are independent. just as hundreds of millions of dollars were spent to help elect obama last time, somebody needs to do that to even playing field, or level playing field for our candidates, particularly during the time frame i talked about in my remarks. it is the greatest interim of vulnerability. the republican national committee is covered by the federal campaign act, so they can only take smaller contributions and they will not have the money to defend our nominee and his record during the spring and summer and then turn around and do all they have to do in the fall.

somebody has to do it to help them in the same way that the labor unions and the george soros group's and all these others do. >> do you have any problem in concept with groups like american crossroads or groups like george soros has funded, is this something the public needs to be concerned about? do they do it to stay competitive? or do you think they do fine on around? >> there is a reason we have them, and that is mccain-fine gold, and every previous attempt to change the federal campaign laws. because what we ought to do is have unlimited contributions to both parties and let them report them on that day. we actually report them on that day. and if you decide, well, haley barbour gave a bunch of money to somebody and i do not like

kailey barber, therefore, i'm going to vote against whoever he gave money to, well then you know it. but what we have done -- what congress has done, they have pushed the party away from the campaign so that outside groups spend more money on the campaign than the campaign spent. and that mean that literally. because the campaign in some states is allowed to take portions of no more than $500. it what we ought to do is have an unlimited contributions to the parties, and then let the parties do this. there is a far, far smaller chance of something being awry and it also gives the public what it wants and needs, disclosure. they will have full, immediate

disclosure, and none of the public decide. if george sorus gives me $5 million, you can decide if you like that or if you do not care. but what we have done is made the money harder to find, harder to trace. and no offense, but a lot of the newspapers have been complacent in this. they say we should limit the amount of money and too much money is spent in my own opinion because they want to have more control of the message that is heard by the american people. i think speech is not only protected in the constitution, but money and political campaigns is speech. it is how the campaign speaks to 300 million americans. and some in the american newspaper business would rather pay only get their news from the "new york times" or the politico.com. [laughter] >> i will ask a question in

minute that i want to hear from haley barbour, the elder statesman. but first, i want to hear an answer from political strategists. just like a lawyer should not defend a client he does not agree with you should be able to size up and get a you do not agree with. president obama has got himself in a real jam, although he has some assets that you have also described. what does he need to do now to win? not they were referring -- rooting for him, but what should he do? >> move to the center. i was surprised that he did not do what clinton did. >> didn't he try, though? and every time he tried the case got more and more disaffected. >> you guys act like he tried. >> that was the guys at the "new york times." we did not but -- buy it at the politico. >> some acted like his moves

were a concession. it was not a concession. he could not get the votes. i thought when he did his budget and when he made the state of the union address, in each case, he just reiterated everything the american people have voted against. he wanted another $1 trillion in tax increases on employers, all of the government spending became government investments, but it was the same same. and when his budget came out, the spending went up, deficit without. and this is supposed to be in response to the 2010 election? and then we have just done this

new jobs bill, which he said to the american people, i want a jobs bill half as big as my stimulus package, which failed. this will only fail half as bad. [laughter] >> at some point, to the fundamentals of his circumstances become baked in? obviously, events can and will happen right up to the election, but it seems to me that in 1996, which you referenced, by january, i was pretty clear the country was ready to give bill clinton a second term and it would be uphill for bob dole. it seems to me if you go back to january, 1980, it was by no means certain ronald reagan would be the next president, but it was pretty clear the country was eager and ready for alternative to jimmy carter. how long does barack obama have to get people to think of him in a fundamentally different light? >> after three years, people

have pretty well made up their minds. >> it is already too late to fundamentally change the prism through which we view him. >> particularly with what he has done this year. he does seem to try to play to his base when it seems to be unnecessary to do so. i think if he has any risk with his base, they will just not vote. not that they will vote for the republicans. but he has alienated the center. if you look at polling, independent voters looked almost the same as republicans. he has given up about 30 points of job approval among independent voters, about 30 points of drug approval among seniors, about 30 points of jabr approval -- of job approval among white, middle- class voters. hillary one them in the primary and he won them in the general election. that is what it is going to be

about, white, working-class democrats saying, i want to send him a message. just like there were huge numbers of jewish democrats in new york 9, a seat the democrats had held 90 years. they had only one into 40 -- won it 45 times in a row, which is why the b. wasserman said it is a tougher district 4 democrats. [laughter] but a lot of democrats sent obama a message. there is a lot about obama can do to help himself, but he does not seem to like that. he likes to be combative. he wants to have class warfare. and he does not want to move to the center. >> i would like to get the

audience in. please, raise your hand. a quick question. i have * to be the political operative. now i will ask you to take the long view of an elder statesman. for a long time, there are a lot of people who think there is something fundamentally broken in our politics right now. the country's deeply pessimistic. washington seems to be ever more of an acrimonious place. people are disaffected with the system. do you think that something is fundamentally broken in our politics, or do we face difficult to come states is with the poor economy and some policies that have been very controversial -- and difficult circumstances with the poor economy and some policy that have been very controversial? >> some of both. congressional districts have become more and more one-sided.

it's safe republican seats and a safe democrat seat. usually, the most liberal democrat wins the democratic primary and the most conservative republican wins the republican primary. in most of those districts, the most risk -- the most conservative republican is almost an automatic winner because it is so heavily republican and the most liberal democrat is automatically the winner because it is so heavily democrat. but that is only part of it. the fact that they don't live here is part of it. they do not know each other. jim eastland was a senator from my state for about four years, and it's very conservative. -- and very conservative. and teddy kennedy and chris dodd, roman marissa, paul

curtis -- two of the most pride wing republicans, two of the most liberal democrats were all having a drink. they all like each other. you do not see much of that anymore. but the problems are hard. i will tell you, ronald reagan with a divided congress had just as heart of problems. bill clinton with a divided congress did have as tough of problems and made real progress on the issues. somebody at some point has got to provide some leadership. that is what people are looking for. who is that going to be? i do not think they have decided. but he can still win by making [unintelligible] -- by making his opponent unacceptable. >> the incumbents seem to be making race more and more of an

issue. how do you see that playing out? >> when i was running for president, it became publicly known that we were going to have a 50th anniversary celebration of some miners that came to -- of the freedom riders that came to mississippi in 1951 and they were thrown in prison for integrating the bus station. when i was thinking about running for president, the news media said i was doing that because i was the about running for president. frankly, we had started planning it two years before. in 2007 to my proposed we build -- in 2007, i propose we build a civil rights museum. in 2009, it was because i was running for president. but the fact of the matter is, neither one of those things is true. race has an attraction for the liberal media elite,

particularly if you have an accent like mine or rick perry's or anybody that is a southern, a conservative, republican christian. get ready for some of that. you have just got to get on your big board bridges and not let it bother you. -- big boy britches and not let it bother you. hear is break perry, of one in the first black -- here is rick perry, appointing one of the first blackthe chief justice for the supreme court has scads of hispanic appointees through his administration, and black appointees, too. at today's "washington post" on the front page has a headline that has two words "perry" and "race," because that is what they want to make the elections about, presumably because barack obama is the first african-american president. the fact is, there were a lot of people that voted for him

because he is an african- american and felt it was real progress for our country. i thought the race deal was hard to stomach, partially because i had to go through it myself. but your right, that is one of the flavors that some people want to inject in this campaign that i think ultimately, has no place in the campaign and it will be shown to have no place. >> we have to go quickly and get a couple of questions before our time runs out. >> governor, could you comment with respect to the role of the so-called reagan democrats? you said the race will be decided in the middle. a lot of people in the middle could be more modern day reagan democrats. could you comment on their role and how the republicans will appeal to them, and forget organized labor in washington. i'm talking about the reagan democrats outside. >> two groups of reagan

democrats. if you look back 30 years, one, mostly southern and republican today. the others are mostly midwestern, a lot of union labor, a lot of them catholics, and they are still democrats, but much more conservative than the democratic party. periodically, they will vote very heavily republican. of course, that is what the republicans hope for and is what the democrats will try to prevent by trying to make the republican candidates unacceptable. the >> we have our last question here. >> a great talker, first of all. the main thing -- if the main thing for republicans is to beat obama, and independent voters are key to that, why is there not more excitement around candidates like mitt romney, who might end up being the default kennedy, but does not seem to be a very inspiring

choice -- the default candidates, but does not seem to be very inspiring choice for most republicans? >> he is not a very inspiring joyce foremost republican -- choice for republican voters and most republican voters were member reagan. they do not see that as the best path to victory. that's what happened in the 1980's, that reagan was seen as too conservative. i was told that they pop corks when he won the nomination. i doubt they had champagne at the white house. [laughter] but there are a lot of soft republicans, independent voters who vote republican a lot who want a more moderate candidates. that is just part of the process they have to work through. it is not unusual, but there was a time, really, all the way to 1980 when there were

essentially two wings of the republican party. whether it was the taft-do we, or the roosevelt-taft, or the reagan-ford, reagan rockefeller -- but that does not exist anymore. the republican party has been pretty unified. there have been some moderate republicans that are uncomfortable with that. but my opinion is they will vote for whomever the republican candidates is to beat obama. they think it would be easier to vote for mitt romney than for rick perry. but frankly, they have a lot of getting to know to do. but politics does not work anymore or you get in a small room and you pick the guy with the best chance. because for better or worse, the voters get to pick, and they

are usually not driven by that. frankly, i think there is more of it this year than there typically is, of just saying i want to be for whoever candido,. -- whoever can beat obama. a very good question. >> i would like to come by again, thank governor haley barbour. i suspect there are more than a few years that might have wished he was on the debating stage in the last couple of months. he is one of the smartest governors, one of the most acute political strategists, and i -- i can tell you that we are looking forward to working with you in " -- in 2012. and i also want to thank john harris, one of the most thoughtful journalists in the country, and a lot with his colleagues, have built a real powerhouse in political media here in washington.

we are very proud to work with john as well. i would like to wrap up with thanking our sponsors, citibank, smart brief, see you of day, and the lauenburg political report. without their support, this would not be possible. i would like to thank our studio audience today, as well as those listening on c-span. our next program will be at the u.s. chamber on november 3 with charlie cook and stu rothenberg. and on november 14 we have a special treat. we have ambassador karl eikenberry, who has just returned from afghanistan. the venue will be determined and announced. again, thank you all for joining. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> in a few moments, president obama urges congress to pass his jobs bill in texas on tuesday. in a little more than a half- hour, more about the president's jobs bill from senate leaders harry reid and mitch mcconnell berry then federal reserve chairman ben bernanke's testimony on capitol hill about the economy. later, chris christie announces that he will not run for the republican nomination for president.

>> on "washington journal" this morning, we will talk about the future of energy loan programs with representative diana degette, ranking member of the oversight committee. connie mack is chairman of the subcommittee on the western hemisphere. he will talk about combating narcotics. four weekly spotlight on magazine, we are joined by an fred guterl, editor of "scientific american. "washington journal" is allied every morning at 7:00 a.m. eastern. >> watch more video of the candidates, see what political reporters are saying, and track the latest campaign contributions with c-span's website for campaign 2012. easy to use, it helps you navigate the political landscape with twitter feeds and facebook updates from the campaigns. candidate bios and the latest polling data, plus links to c- span media partners in the early primary and caucus states, all

at -- c-span.org/campaign2012. >> president obama was in mesquite, texas tuesday encouraging congress to pass his bill designed to create jobs. this is a little more than a half-hour. >> good afternoon. i know you are expecting the president and he will be here shortly. my name is kimberly russell. in may of this year, i was laid off of my job as a social security -- social studies teacher in dallas. the reason for my release was my position was being paid for by federal stimulus funding and the funding was exhausted. like many other educators, have a family. i am a single mother of a 10- year-old son and pride myself as being a homeowner.

now that i am unemployed, i am struggling to keep that dream of homeownership alive. it is important that the job market for all americans improve immediately. [applause] i am hoping that congress will pass the americas job back to help teachers like me and others get back to work soon. . . [applause] i miss my students and my classroom. now it is my privilege -- [cheers] to present to you the president of the united states of america,

barack obama. [cheers and applause] >> hello, dallas. thank you so much. thank you, everybody. plea have a seat, have a seat. thank you. it's good to be back in texas. it is good to be back in texas. i am thrilled to have the opportunity to be with all of you. i want to thank a couple of people. first of all, the mayor of

mesquite, john monaco is here. and the mayor of dallas, mike rawlings is in the house. and i want to thank the former mayor of dallas, who i stole fr you to be one of the best trade representatives this country has ever had -- my dear friend ron kirk is in the house. i also want to thank -- i want to thank the folks over at the children's lab school, who gave me a tour, and i want to especially thank kim russell for sharing her story. thank you, kim. now, teachers like kim are why i came here today.

teachers like kim and her former students. that's why i've been traveling all across this country for the last few weeks. these are the toughest times we've been through since the great depression. and because the problems that led to theecession weren't caused overnight, they won't be solved overnight. that's the hard truth. it took us a decade to see the culmination of some of the bad ideas that had been put into place -- the lack of regulation on wall street, middle-class folks struggling. so we're not going to solve all those problems overnight. but that doesn't mean we have to sit back and do nothing about

this economy. there are steps we can take right now to put people back to work. there are steps we can take right now to put money in the pockets of working americans. there are things we can do right now to restore some of the security and fairness that has always defined this great country of ours. and that's what will happen if this congress will finally get its act together and pass the american jobs act. it has now been three weeks since i sent this bill to congress. it's a detailed plan to get this economy moving. it's the kind of proposals that, in the past, democrats and republicans have supported. there's nothing radical in this proposal. these are the kinds of things that in the past we've had bipartisan support for it's fully paid for.

and that's why i need you to help me convince the people you sent to washington that it's time to pass this jobs bill and get america working again. now, you just heard kim's story. there are teachers and educators like kim all over the country. i met a first-grade teacher from minnesota at the white house who was laid off after having been named the teacher of the year in her school district. her peers, students, determined she was the best teacher in her school district -- she got laid off. there's a teacher over in gra prairie, texas, who actually chose to resign in order to protect the job of a single mom who also taught at the school.

ink about that. here in dallas, all across the state of texas, you've seen too many teachers lose their jobs because of budget cuts. and thousands more could be at risk in the coming year. now, understand, this doesn't just hurt these teachers. it doesn't just hurt them and their families. it hurts our children. it undermines our future as a nation. if you've got kim, an ap teacher, not in the classroom, those kids aren't going to have the same opportunities. and i want everybody t

understand that what is at stake is nothing less than our ability to compete in this 21st century economy. i told the story -- a while back i was visiting south korea and had lunch with the president there. and i asked the president, i said, what's your biggest challenge right now? he said, well, my biggest challenge is our parents are way too demanding. he said, they want their kid to learn english when they're in first grade. so in addition to all the science anall the math classes, i'm now having to ship in teachers from outside the country just to teach our kids english, starting in elementary school. this is what the president of south korea said. they can't hire teachers fast enough. they call them "nation builder"" -- that's what they call teachers in korea, "nation builders," bause they know that educating their children is the best way to make sure their economy is growing, make sure that good jobs are locating

there, making sure they've got the scientists and the engineers and the technicians who can build things and ship them all around the world. that's what he understands. and the whole country supports him. here in america, we're laying off teachers in droves. it makes no sense. it has to stop. it has to stop. now, this bill will prevent up to 280,000 teachers from losing their jobs. this bill ll support almost 40,000 jobs right here in the great state of texas. so here's what i need you too: tell congress to pass this bill and put teachers back in the classroom where they belong. it's not just teachers.

tell congress to pass the american jobs act, and there also will be funding to save the jobs of firefighters and police officers and first sponders who risk their lives to keep us safe. that's what happens if they pass this bill. pass this jobs bill, and hundreds of thousands of unemployed construction workers will get back onhe j rebuilding our schools, rebuilding our roads, rebuilding our bridges, rebuilding our ports, rebuilding our airports. the other day i visited a busy bridge in ohio -- actually it's between ohio and kentucky. speaker boehner, he's from ohio, republican leader mcconnell is from kentucky. i thought it would be a good place to have an event.

this bridge is classified as functionally obsolete. that's a fancy w of saying it old and needs to be fixed. there's a public transit project in houston that would help clear up one of the worst areas of traffic in the country. there are schools all over this country that are literally falling apart -- roof crumbling, rain dripping in, too hot in the summer, too cold in the winter, science labs all worn out, got a couple of beakers and that's it, built back in the '50s before the internet was invented. that's an outrage. understand, america became an economic superpower in part because we had the best infrastructure. we built the transcontinental

railroad, the interstate highway system, the hoover dam, grand central station. how can we sit back and now we're seeing china build better airports than us, europe build better railroads than us, korea more broadband accs than us -- at a time when millions of unemployed construction workers could be building all that stuff right here in the united states of america. my question to congress is, what are you waiting for?

the work is there to be done. there are workers ready to do it. contractors, they're begging for work. they'll come in on time, under budget. interest rates have never been lower. it is time for us to put those folks back to work. it's time for them to pass the american jobs act. pass this bill. if congress passes this jobs bill, new companies will get new tax credits for hiring america's veterans. think about it. we ask these men and women to leave their families, disrupt their careers, risk their lives for our nation.

the last thing they should have to do is to fight for a job when they come home. tell congress pass this bill so we can help the people who create most of the new jobs in this country: america's small businesses. folks in the other party, they like to talk a good game about helping america's job creators"" let's help america's job creators." okay, let's do that. this jobs bill provides tax cuts for nearly every small business in erica.

if you hire new employees, or raise your workers' wages, you get an extra tax cut. so my message to congress is, don't just talk about helping job creators, actually help some job creators by passing this bill. here's another reason why they need to pass this bill. on january 1st, if nothing is done, everybody here is going to get a tax hike. >> booo. >> that's right. see, back in december, i got an agreement with the republicans to lower the payroll tax so that there would be more money in folks' pockets and we could protect ourselves against recession. now, since that time, we've had a tsunami in japan, we've had the arab spring, which shot up gas prices. we've had problems in europe. and so the economy has gotten weaker. that tax cut is scheduled to expire by the d of this year. but if the american jobs act passes, the typical working family in texas will have an extra $1,400 in their pockets. now, if the bill doesn't pass, virtually every worker in america will see their taxes go up -- at the worst possible time.

so i'm not about to let that happen, texas. look, republicans say they're the party of tax cuts. tell them to prove it. tell them to fight just as hard for tax cuts for working americans as they do for the wealthiest americans. pass this bill. now, what you'll hear from some of these folks is, well, we're not going to support any new spending that's not paid for.

all right, i agree with that. i think that's important. so i laid out a plan to pay for the american jobs act, and then some -- a plan that not only pays for the bill to put folks back to work to raise our growth rate, but to also pay down more of our debt over time. it builds on the $1 trillion in spending cuts that i already signed this summer, making it one of the biggest spending cuts in history. so, look, i believe we've got to make cuts in programs that don't work and things that aren't helping theconomy grow so we can pay for the things that are. right? we all believe that a government needs to live within its means. we all agree with that. but we also believe that how you

bring down the deficit is important. if we want tactually close the deficit -- not just talk about closing the deficit, not just using ifor a campaign slogan, not just playing politics -- if we want to actually close the deficit, then you've got to combine the tough cuts with a strategy to ask the wealthiest amens and the biggest corporations to do their part, to pay their fair share. look, i'm not telling you anything you don't know. do you really think the tax code is written for you? >> no. >> you think the tax code -- maybe you've got a bunch of lobbyists in washington. maybe you've got a bunch of special interests in there in the back rooms trying to carve something out -- i don't know. but most folks don't.

so the tax code, the way it's structured, is not fair. and so what we've said is, let's reform our tax code based on a very simple principle, and it willai more money without hurting working families. here's the principle: middle- class families, working families, should not pay higher

tax rates than millionaires or billionaires. i don't know how y argue against that, seems pretty straightforward to me. warren buffett's secretary shouldn't pay a higher tax rate than warren buffett. now, when i point this out -- it seems very logical to me, but when i point this out, some of the republicans in congress, they say, oh, you're engaging in class warfare. class warfare? let me tell you something. years ago, a great american had a different view. all right? i'm going to get the quote just you know i'm not making this up. great american, said that he thought it was "crazy" that certain tax loopholes made it poible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary. all right? you know who this guy was? wasn't a democrat. wasn't some crazy cialist. was ronald reagan. it was ronald reagan.

last time i checked, republicans all thought reagan made some sense. so the next time you hear one of those republicans in congress accusing you of class warfare, you just tell them, i'm with ronald reagan. i agree with ronald reagan that it's crazy that a bus driver pays a higher tax rate than a millionaire because of some loophole in the tax code. and by the way, i don't mind being called a warrior for the working class. you guys need somebody fighting for you. the only warfare i've been seeing is the war against middle-class families and their ability to get ahead in this economy.

and let me make one last point, because you'll hear this argunt made: this is not about trying to punish success. this is the land of opportunity. and what's great about our country is our belief that anybody can succeed.

you've got a good idea? go out there and start a new business. you've got a great product? you invented something? i hope you make millions of dollars. we want to see more steve jobs and more bill gates -- creating value, creating jobs. that's great. your current mayor did great work in the private sector creating jobs, creating value. that's important. but remember, nobody got there on their own. i'm standing here toda michelle is standing here today -- or michelle's not standing here today but i know you wish she was. i'm standing here today, michelle -- we always remind ourselves, the reason we've had this extraordinary opportunity is because somewhere along the line, some teacher helped us. somewhere along the line, we got a student loan. we lived in a country that could move products and services everywhere. we lived in a country where if there's a fire, somebody comes and puts out the fire. if you're burglarized, somebody is coming to try to solve the crime. i'm sure the mayor of dallas feels the same way. we're here because somebody laid the foundation for success. so the question is, are we going to maintain that foundation and strengthen that foundation for the next generation?

and this is all about priorities.

this is about choices. if we want to actually lower the deficit and put people back to work -- if we want to invest in our future, if we want to have the best science, the best technology, the best research, we want to continue to be inventing new drugs to solve cancer and making sure that the new cars of the future that are running on electricity are made here in america -- if we want to do all those things, then the money has got to come from somewhere. i wish i could do it all for free. i wish i could say to all of you, you don't have to pay any taxes and companies can keep all their stuff and rich people don't have to do anything, and somehow it all works out. but you know what, we tried it and it didn't work. so now you've got a choice. would you rather keep tax loopholes for big corporations that don't need it? or would you rather put construction workers back to work rebuilding our schools and our roads and our bridges? would you rather i keep a tax break that i don't need and

wasn't looking for, didn't ask for and if i don't have it, i won't miss it? or do you want to put teachers like kim back to work and help small businesses and cut taxes for middle-class families? this is a choice that we've got to make. and i believe, and i think you believe, it's time we build an economy that creates good, solid, middle-class jobs in this country. it's time to build an economy

that vals the -- that honors the values of hard work and responsibility. it's time for us to build an economy that lasts, that's n just based on speculation and financial shenanigans, but rather is based on us making stuff and selling things to other people around the world instead of just importing from all around the world. that's the america i believe in. that's the america you believe in. and, dallas, that starts now. that starts with your help. yesterday, the republican majority leader in congress, eric cantor, said that right now he won't even let this jobs bill have a vote in the house of representatives. >> booo. >> this is what he said. won't even let it be debated. won't even give it a chance to be debated on the floor of the house of representatives. think about that. i mean, what's the problem? do they not have the time? they just had a week off. is it inconvenient? look, i'd like mr.cantor to come down here to dallas and explain what exactly in this jobs bill does he not believe in. what exactly is he opposed to?

does he not believe in rebuilding america's roads and bridges? does he not believe in tax breaks for small businesses, or efforts to help our veterans? mr.cantor should come down to dallas and look kim russell in the eye and tell her why she doesn't deserve to be back in the classroom doing what she loves, helping our kids. come tell her students why they don't deserve to have their teacher back. come tell dallas construction workers why they should be sitting idle instead of out there on the job. tell small business owners and workers in this community why you'd rather defend tax breaks for folks who don't need them -- for millionaires -- rather than tax cuts for middle-class families. and if you won't do that, at least put this jobs ll up for

a vote so that the entire country knows exactly where members of congress stand. put your cards on the table. i realize that some republicans in washington are resistant, partly because i proposed it. i mean, they- if i took their party platform and proposed it, they'd suddenly be against it. we've had folks in congress who have said ey shouldn't pass this bill because it would give me a win. so they're thinking about the next election. they're not thinking about folks who are hurting right now. they're thinking, well, how is that going to play in the next

election? give me a win? give me a break. that's why folks are fed up with washington. this isn't about giving me a win. this isn't about giving democrats or republicans a win. this is about giving people who are hurting a win. this is about giving small business owners a win, and entrepreneurs a win, and students a win, and working families a win. this is about ving america a win. dallas, the next election is 13 months away. the american people don't have the luxury of waiting 13 months. a lot of folks are living week to week, some are living paycheck to paycheck, some folks are living day to day. they need action on jobs, and they need it now. they wt congress to do what they were elected to do. they want congress to do their

job. do your job, congress. i need you alto lift your voice not just here in dallas, but anyone watching, anyone listening, everybody following online. i ne you to call and tweet and fax and visit and email your congressperson and tell them the time for gridlock and games is over. the time for action is now. tell them that if you want to create jobs -- pass this bill. if you want to put teachers back in the classroom -- pass this bill. if you want construction workers back on the b -- pass this bill. if you want tax cuts for the middle class and small business owners -- pass this ll. you want to help some veterans? pass this bill. now is the time to act. we are not people who sit back in tough times. we step up in tough times. we make things happen in tough times. we've been through tougher times

before, and we got through them. we're going to get through these to a brighter day, but we're going to have to act. god helps those who help themselves. we need to help ourselves right now. let's get together. let's get to work. let's get busy. let's pass this bill. let's make sure that we are shaping a destiny for our ildren that we are proud of, and let's remind the entire world why the united states of america is the greatest nation on the planet. god bless you. god bless the united states of america.

bad >> mitch mcconnell tried to bring the president's one to china's currency. harry reid blocked his proposal. this is 20 minutes. >> president obama has been traveling across the country, asking him to pass the jobs bill. this is what he will say he is not bill up for a vote so the entire country knows exactly where every member of congress stands. well, mr. president, i agree with the president.

i think he's entitled to a vote on his jobs bill. the suggestion that senate republicans are not interested in voting on his jobs bill is not true. i think he's entitled to a vote. it won't surprise anyone to know i don't think it's good approach, a way that's likely to create jobs, but he's asked for a vote. and i think we ought to accommodate the president of the united states on a matter that he has been speaking about frequently over the last few weeks and give him his vote. in fact, they've been calling for this vote with great repetition. his press secretary said it on october 3, david pluf, the senior -- david plouff said the same thing september 27. david axlerod, his top

strategist called for us to have this vote on september 13. and the president himself, let me count the number of times, one, two, three, four, five, six, secretary of, eight, ne, ten, 11, 12 times the president of the united states over the last few weeksas called on us to have this vote as he put it, i want congress to pass this jobs bill right away. well, i hope that it will not pass because i don't think it's the right direction for the country to take to begin to deal with the joblessness issue but i do think the president makes an important point that he is entitled to a vote. so if i were to be given an opportunity by my good friend, the majority leader, by offer the president's jobs bill, which we think would be more accurately described as stimulus 2, sort of a redux ofhe approach and the bill that we

approved back in 20 after which we've lost 1.7 million jobs. so therefore, i would ask consent to set aside the pending motion and amendments in order to offer the amendment which i have just described and hold in my hand at this moment. the presiding officer: the marity leader. mr. reid: reserving the right to object. i'm not going to do a long dissertation on stimulus 1, the jobs bill, that we did, to in effect do so much good for our country. i can't talk about the other 49 states but i can talk about what the recovery act did for the state of nevada. it basically saved the state of nevada from going into bankruptcy. hundreds of millions of dollars to help state government stop

massive layoffs of teachers and create tens of thousands of jobs in areas like renewable energy. that's enough on the american recovery act. i thought it was extremely important for nevada. other senators can come and talk about what their own states, how it benefited. mr. president, right awa is a relative term. the president has been calling for a vote on his jobs bill and rightfully so. why did he start calling for a vote not his jobs bill? because there was, again, one of the long obstructions that took place in the senate and in the house on an issue that was fairly simple. what was that? funding the federal emergency management agency. these devastating floods, tornadoes, hurricanes and fires had created a situation where fema was about to go broke. you would thinke could move on and quickly pass that but no,

we couldn't. because something we agreed on in late july that we would fund the govnment the rest of the year was again brought to the forefront and because the republicans were threatening to close down the government again. so of course the president was calling for his jobs bill, recognizing that what was going on here in the senate and in the house was a waste of time. that is, why were we spending time unnecessarily on funding one of the essentials of government, that isaking care of people who have been devastated by these terrible storms and other calamities. mr. president, we have moved very quickly after we got through that slog caused by the republicans to get fema funded, and to get the c.r. extended for six weeks. we're now on something that is long, long overdue, china currency. china has been manipulating their currency for a long time. the last ten years we've lost two million jobs because of this. if there were ever a jobs bill,

it's this that we're doing on the floor right now. now, i sponsored the president's bill. i'm the one that brought it to the floor. i have announced in a number of speeches i've given out here that i believe that we should move to this jobs bill. i'm sorry, i was handed something that threw my thought process off a little bit here. so we need to move to this right away. there is no question about that. but to tack this onto the china currency manipulation legislation is nothing more than a political stunt. we all know that. if we don't, we should know, i'm telling everyone. i've said that i'll bring the american jobs act to the floor this boarkd, this work period. we have two more weeks left in this work period.

so my suggestion would be this: obviously the republican leader, my friend, the senator from kentucky, wants to do something about the jobs bill. i'm glad that he does. he wants us to move this forward. so my suggestion would be to modify my friend's unanimous consent request and suggest that we have the permission, for lack of a better word, of the republicans here in the senate to immediately move -- the motion to proceed would be unnecessary, we could move to that as soon as we finished, you have two choices, either as soon as we finished the china currency legislation or we finish the trade legislation senator mcconnell and i have talked about finishing that next week. so i would move to modify his consen agreement, my friend,

the republican leader's consent agreement, that we move immediately to the legislation i've introduced on behalf of the president, either after we finish the china currency legislation or after the trade bill, whatever myriend would rather do. mr. mcconnell: mr. predent. the presiding officer: the pending request is a request from the republican leader. mr. reid: which is -- i've asked that it be modified. the presiding officer: does the republican leader so modify his -- mr. mcconnell: mr. president, reserving the right to object. i listened carefully to what my good friend the majority leader had to say and he was talking about other matters debated at other times, the first stimulus bill which we've i think probably have a basic disagreement on, i think it was almost total failure, he also

talked about the debate we had with regard to the continuing resolution which was finally worked out on a bipartisan basis but those are things that occurred in the past. what i'm trying to do here today bisuggesting that we vote on the president's jobs bill but my good friend the majority leader has previously introduced and i gather by way of introduction supports, that we honor the request of the president of the united states to vote on it now. he has been asking us repeatedly over the last few weeks to vote on it now. now, if my friend the majority leader is saying he doesn't want to honor the president's request and vote on it now, but would like to consider voting on it later, that's something he and i can discuss as we decide how to move forward with senate business. but i think the president of the united states, his policies i generally speaking do not support although i'm happy to support his initiatives on trade, be it ever so late, is

entitled to know where the senate stands on his proposal that he's been out talking about over and over and over again the last few weeks, suggesting that we are unwilling to vote on it. and what i'm saying is, we don't agree that ities right policy, but we're -- it's the right policy, but we're more than willing to vote on it. what i hear the majority leader saying, even though he supports it, he want to vote on it some other time. the president is saying he doesn't want to us vote on it some other time, he wants to us vote on it now. i'd be happy if my friend is saying we're not going to vote on it now i'd be happy to reach an understanding to vote on it later, but my feeling here is that the least we can do for the president is give him a chance to have a vote on his proposal now as he has requested on numerous occasions.

so i will object to the modification, understanding full well the majority leader and i off the floor will have further discussions about when we might move to the president's bill and give him the vote that he's been requesting. mr. reid: mr. president, further reserving my right to object. 14 million people in this country are out of work. what a charade we have going on here. we're in the midst of some of the most important legislation we've done this entire year. china currency manipulation. and we now have a proposal that is ridiculous on its face. that is, we vote with no debate on the president's jobs bill. this is senseless, it's unfair bring this up in this form, and we're going to get to this and we're going to do it either as soon as we finish this china currency or after we finish the trade bills, whatever i can work out with my republican colleagues so that i can move to it. it takes 60 votes to get to this

legislation, 60 votes to get to it. and so the american people i'm sure can see through this very clearly that this is nothing more than a political stunt. it's clear that we need a full debate on this. we don't need a filibuster, and that time will come very, very soon. so i object. the presiding officer: the objectn is heard. mr. mcconnell: mr. president. the presiding officer: the republican leader. mr. mcconnell: mr. president, if i may elaborate further. we've had a request from the president on multiple occasions to vote on wt he calls his jobs bill, and to vote on it now. i just to count up again, one, two, three, four, five, six, seven, eight, nine, ten, 11, 12 times the president has asked us over the last few weeks to vote on what he calls his jobs bill now.

i don't think the president is saying here he wants an extensive debate about it. i think he's saying he wants a vote on it. and i wanted to disabuse him of the notion that somehow we're unwilling to vote on his proposal. we are more than happy to vote on it. i understand why my friend the majority leader may have some reservations about going forward on this. i've read a number of critiques of this legislation by democratic senators, one part of it or another. but look, even though there is bipartisan opposition to the president's jobs proposal, bipartisan opposition to it, i think he's entitled to a vote. and so i'm sorry that it appears we will not be able to achieve this vote that the president has repetitiously asked for over the st few weeks. i'd like to give him that vote. and we'll be talking to the majority leader about when we might have an opportunity to vote on his proposal, the

president's proposal, which the majority leader introduced, which he has been requesting us to vote on. the presiding officer: the leader. mr. reid: the president introduced his jobs bill. immediately the republicans continue their obstruction on issues very simple, butaintain the floor. there are things going on here, you just can't automatically move to things. we know the senate procedure. it takes 60 votes to get on a piece of legislation. the president was calling upon congress, and especially the republicans in congress, to allow his jobs bill to move forward. as i indicated, we were hung up here on issues that had very little to do with the jobs bill. in fact we shouldn't have been doing it. all the time, i repeat, hung up on fema funding, on the continuing resolution, which should have been approved quickly, because we already agreed to that last july, but they reneged on that even.

d threatened shutting down the government unless fema was paid for the way they wanted it. and we were able ultimately to win that debate, but it took a long time. so when the president said he wants to notify his legislation right away, he was absolutely candid and forthright. yes, he did want it -- he want to clear the unimportant thing on the floor, the stalling tactics on the floor and move to his bill. that's what we're going to do. what i would be willing to do, mr. president, if my friend would be agreeable, would the republican leader agree to a vote on the motioto proceed to the jobs bill? we could do that. we could interrupt this legislation right here. we could interrupt therade bills. we could vote on a motion to proceed to the jobs bill. mr. mcconnell: is my friend propounding a consent agreement or simply asking a question?

mr. reid: well, if you're interested, i could put it in proper form, but you get the point. the bill is on the floor, to get it on the floor, i need 60 votes. i would be happy to, if the republican leader would agree to a vote on the motioto proceed to the js bill. mr. mcconnell: mr. president, let me just say to my good friend, i'm prepared to vote on the president's proposal today. if the majority leader wants to vote on it some other day, we can talk about that, about how to move forward with it. but the president has been repeatedly asking us to take it up and vote on it now. and i'm prepared to do that. with regard to taking it up some other time and voting on it some other day, we'll be happy to talk about that off the floor, as we do frequently on every issue that we deal with. mr. reid: mr. president, i'm sure that in the immediate future, right away, the american people will see once again the

republicans are filibustering things they shouldn't be filistering, this time a jobs bill. mr. mcconnell: i would just add in close, mr. president, i think my good friend's problem here -- and i sympathize with him -- is there's bipartisan opposition to the president's proposal. mr. reid: mr. president, i didn't want to hear my friend say that. i didn't want to get into a long dissertation about bipartisan opposition. there's 53 of us. a majority of democrats will support the president's jobs bill. mr. mcconnell: the majority leader just confirmed what i was saying, which is that there is bipartisan opposition to this, and we'll discuss at what point the majority leader is comfortable with going forward with this proposal. my only reason for offering it today was to respond to the question -- to the president's request that we vote on it, and we're prepared to do that.

if we can't do it today, we'll be happy to discuss, as we always do, the agenda of the senate and when it would be appropriate to vote on it some other time. mrreid: mr. president, i know that i only have in my head the math i learned from mrs. picker, at the searchlight elementary school. i know when i've told everybody here that we'll get a majority of the senate, that's not really very bipartisan opposition to this bill. mr. mcconnell: mr. president, i can only quote my good friend, the majority leader, who repeatedly has said, and most recently in early 2007, that in the senate it's always been the case you need 60 votes. this is my good friend, the majority leader, when he was the leader of the majority in march of 2007. aand said it both when he was

the leader of the majority or leader of the minority that it requires 60 votes. so it is not at all unusual that the president's proposal that we raise taxes, that we spend a half a trillion on a second stimulus bill would have to achieve 60 votes. that's the way virtually all business is done in the senate, certainly not extraordinary or unusual. mr reid: the american people >> the hearing will come to

order. hearing will come to >> come morning. i look forward to his report on the state of the economy, and his perspective on recent actions taken by the federal reserve. there are long term challenges. my hope for today's hearing is to move beyond the partisan politics that sometimes colors discussions about the federal reserve and what it should or should not do. instead, we should focus on the economic challenges and the potential solutions to the problems.

we share a belief that congress is to share action to bolster the economy and help americans . growing fast enough or adding enough jobs to make significant progress. just by way of example, 40 million americans are unemployed. 6 million are jobless. 43 certification have been out of work for six months or more. private sector job creation, which had been well above 200,000 a month fell to less than 20,000 in august. they are reeling as they lay off workers to meet balance the

budget requirements. payrolls have been slashed. the unemployment rate after declining to 7.4% in may has claimed that -- climbed back. economic indicators have been weakening. contagion is spreading to other parts of the world. it is a significant risk to the global economic outlook. the fed has used a variety to change policy. we needed to use all available tools to support our economy in short run. we need to take the actions that will get our fiscal house in order. they reinforce each other. getting our economy growing is

critical to sustained deficit reduction. as chairman bernanke observed, "there's ample room for debate about the role and size for government in long term. a substantial fiscal consolidation in short-term could add to the head winds facing economic growth and hiring. the act created the system and established two id debt is, maximum employment and stable growth. this is commonly referred to as the dual mandate. the federal reserve's recent announcement that it will ease policy further if consistent with that dual mandate.

they said it approaches $400 billion of long term treasurys and pay for them by selling an equal amount of short-term debt. the fed is not expanding the portfolio but shifting the compositions of the average maturity is longer. the goal is to bring down long- term interest rates further. but sparks additional activity and boosts employment. they confirmed it will pay attention to inflation expectations. some have called on the fed to reassess further extraordinary intervention. it could further harm the u.s. economy. i disagree.

with gdp growth having sloan -- slowend, additional actions are needed. let me say a word. currency as a relates to china. this has had substantial and harmful impact on the u.s. economy and american jobs. a recent report finds that the trade deficit caused by the under evaluation has cost our economy 2.8 million jobs over the past decade. he noted that most economists agree that the chinese currency is undervalued and has been used

to promote a more export- oriented economy. they said it would be good for the chinese to allow more flexibility and in exchange rate. and that we should continue to press for a more flexible exchange rate. i agree with the statements. they have the opportunity to take action. we will crack down on china's currency manipulation. the senate passed the first procedural decision. two years after it began, our economy remains very vulnerable. unemployment is stuck above 9 cents. long-term unemployment remained

at record lows. we need to use every weapon to support a stronger economic recovery. thank you for being here. thank you for your testimony. i look forward to working with you to make sure we can focus on the economy and putting american back to work. >> thank you. anonymous clout are gathering. we have 618 fewer today. recoveries from financial crisis these are weak and may trigger double-dip recessions. republican members of congress recognized this. we are critical to president's

at the expense of economic policies because not only have they failed to spur job growth and restore business and consumer confidence, but also as we feared, they left american susceptible to a double-dip recession. we face a growing risk from the european debt crisis. we are major trading partners. i'm very concerned about the effects of contagion from the bureau of crisis on american financial institutions and markets as well as the broader economy. i am anxious to hear your testimony about the euro crisis and the steps we may take a quarantine in the contagion. in response to the financial panic, the federal reserve took extraordinary action to stabilize u.s. financial institutions and markets during the fall of 2008. many of these actions were both necessary and proper. instead of rehashing the past, all like to initiate a discussion on the framework for monetary policy in the future. nobel laureate economist said

that you have to use the right policy lever. too many washington policy makers are ignoring this wisdom. monetary policy affects pricing. in contrast, budget, tax, and regulatory policies affect real output and jobs. while the great contraction from august 1929-march 1933 proves that bad monetary policy can shrink production and destroy jobs, good monetary policy cannot accelerate economic growth or foster job creation except in the very short term. washington, congress, a fax this to its regulatory policy. but the prospects for a swelling of federal debt, higher taxes, and the additional cost of the health care plan, as well as burdensome regulations deter economic investment and hiring

new workers, there is little the federal reserve can do to overcome this dragged. until 1978, it provided an elastic currency during that year of the full employment and balanced growth act known informally as they -- as the humphrey-hawkins act was enacted. it imposed a dual mandate on the federal reserve that gives equal weight to both price stability and full employment. since 1978, many countries have examined what a central bank should do have opted for a single mandate, long-term price stability. by law, 17 member states of the european monetary union and 13 other development -- developed and developing countries have maintained -- mandated price stability with the subordination of the other goes to the central bank. others have adopted a single mandate. the time has come for congress to reconsider the federal

reserve's mandate. in my view, the dual mandate should be replaced with a single mandate for long-term price stability. i will introduce legislation to make this change in the near future. also mistakenly claimed that a single mandate means of maximizing unemployment is unimportant, history proves that the best way to maximize on employment is to achieve long- term price stability. under the single mandate, the federal man -- the federal reserve would retain full operational independence to achieve that inflation target. while i may criticize certain actions, i want to be clear -- for our economy say, the federal reserve must remain independent and free from any undue political pressure in the implementing of monetary policy. congress should also reconsider if the lender of last resort policy. i remain deeply concerned about

the precedents set in 2008 regarding clearly insolvent financial institutions, including aig, care stearns, and fannie mae and freddie mac. for the federal reserve is never articulated as the lender of last resort. the absence of a lender last resort policy has three enforcement consequences prefers, uncertainty increases. no one knows what we have done very troubled firms have a stronger incentive to seek a political solution today as congress or the administration for support or to pressure the federal reserve or other agencies to save them of our favorite third, repeated rescue's encourage banks to take greater risk and decrease leverage produces a well-known moral hazard problem. if the federal reserve were to promulgate a star -- a clear statement about lender of last resort policy, it would go far

to reduce uncertainty, reduce the likelihood of a political intervention. congress gave the responsibility for exchange rate policy to the secretary of the treasury. this is a vestige of a long defunct system. swings in exchange rates influence domestic pricing, it does the responsibility for exchange rate policy should be moved from the secretary of the treasury to the federal reserve appeared chairman bernanke, a look forward to your testimony and the questions that follow. i yelled back. >> if thank you, mr. vice chair. i will provide a brief introduction. dr. bernanke began a second term on february 1, 2010. dr. bernanke also serves as chairman of the federal open market committee, the system's principal monetary policy-making

body. he originally took office as chairman on february 1, 2006. he also began a 14-year term as a member of the board. dr. bernanke was chairman of the president's council of economic advisers from june 2005 to january 2006. prior to beginning public service, dr. bernanke was a chaired professor at princeton university. he has been a professor of economics and public affairs at princeton since 1985. dr. bernanke, it is good to have you here. >> thank you. chairman casey, vice chairman brady, and other members of the committee, i appreciate this opportunity to discuss the economic gallican recent monetary policy actions. it has been three years since the beginning of the most intense phase of the financial crisis in the late summer and fall of 2008, and more than two years since the economic recovery began in june 2009. there have been some positive

developments -- the functioning of financial markets and the banking system in the united states has improved significantly. manufacturing production in the united states has risen nearly 15% since its trough, driven substantially by growth in exports. indeed, the u.s. trade deficit has been notably lower recently than it was before the crisis, reflecting in part the improved competitiveness of u.s. goods and services. productivity gains in some industries have been impressive. nevertheless, it is clear that overall the recovery from the crisis has been much less robust than we had hoped. recent revisions of government economic data shows that the recession was even deeper and the recovery even weaker than previously estimated. indeed, by the second quarter of this year, the latest quarter for which official estimates are available, aggregate output in the united states still had not returned to the level that it had attained before the crisis.

slow economic growth has in turn led to slow rates of increase in jobs and household incomes. the pattern of sluggish growth was particularly evident in the first half of this year, with a real gdp estimated to have increased at an average annual rate of less than 1%. some of this weakness can be achieved if it did to every factors. notably, earlier this year, political unrest in the middle east and north africa, strong growth in emerging market economies, and other developments contributed to significant increases in the prices of oil and other commodities which damped compute -- consumer purchasing power and spending. the disaster in japan disrupted global supply chains and production, particularly in the automobile industry. with commodity prices having come off their highs and manufacturers' problems with supply chains well along toward resolution, growth in the second half of the year seems likely to be more rapid than in the first half. however, the incoming data

suggest that other, more persistent factors also continue to restrain the pace of recovery. consequently, the federal open market committee now expects a somewhat slower pace of economic growth over coming quarters than it did at the time of the june meeting, when committee participants most recently submitted their economic forecasts. consumer behavior has both reflected and contributed to the slow pace of recovery. households have been very cautious in their spending decisions, as declines in house prices and in the value of financial assets has reduced household wealth, and many families continue to struggle with high debt burdens or reduced asset to crack -- access to credit. probably the most significant factor depressing consumer confidence has been the poor performance of the job market. over the summer, private payrolls rose by only 100,000 jobs per month on average, half the rate posted earlier this year. meanwhile, state and local

governments have continued to shed jobs, as they have been doing now for more than two years. with these weak gains in employment -- in employment, the unemployed rate has held close to 9% since early this year. recent indicators, including new claims for unemployment insurance and surveys of hiring plans, point to the likelihood of more sluggish job growth in the period head. other sectors of the economy are also contributing to the slower than expected rate of expansion. the housing sector has been a significant driver of recovery from a success -- from most recessions in the united states since world war ii. this time, however, a number of factors including the overhang of distressed and foreclosed properties, tight credit conditions for builders and potential homebuyers, and a large number of underwater mortgages have let didn't rate a new home construction at only about 32% of its average level in recent decades. in the financial sphere, banking and financial conditions in the

united states have improved significantly since the depths of the crisis. nonetheless, a financial stresses persist. greta remains tight for many households, small businesses, and residential and commercial builders, in part because weaker balance sheets and income prospects have increased the perceived credit risk of many potential borrowers. we've also seen recently bouts of el -- elevated volatility and risk aversion and financial markets, partly in reaction to fiscal concerns both here and abroad. domestically, the controversy during the summer regarding the raising of the federal debt ceiling and the downgrade of the u.s. long-term credit ratings of one of the major rating agencies contributed financial turbulence that occurred around that time. outside the united states, concerns about sovereign debt in greece and other eurozone countries, as well as the sovereign debt exposures to the european banking system, have been a significant source of stress in global financial markets. european leaders strongly

committed to addressing these issues, but the need to obtain agreement among a large number of countries to put in place the necessary backstops and to address the sources of a fiscal problems has slowed the process of finding solutions. it is difficult to judge how much these financial strains have affected u.s. economic activities thus far, but it seems little doubt that they have hurt household and business confidence, and that they pose ongoing risks to growth. another factor likely to weigh in the u.s. recovery is the increasing drag being exerted by the government sector. notably, state and local governments continue to tighten their belts by cutting spending and employment in the face of ongoing budgetary pressures, while the future course of the federal fiscal policies remains quite uncertain. to be sure, fiscal policymakers face a complex situation. i'll submit that in setting tax and spending policies for now and the future, policymakers should consider at least four key objectives.

one crucial objective is to achieve long run fiscal sustainability. the federal budget is clearly not on a sustainable path at present. the joint select committee on deficit reduction, formed as a part of the budget control act, is charged with achieving $1.5 trillion in addition note that the reduction over the next 10 years on top of the spending caps enacted this summer. accomplishing that goal would be a substantial step. however, more will be needed to achieve fiscal sustainability. a second important objective is to avoid fiscal actions that could impede the ongoing economic recovery. these first two objectives are certainly not incompatible, as putting in place a credible plan for reducing future deficits over the longer term does not preclude attending to the implication of fiscal choices for the recovery in the near term. third, fiscal policy should aim to promote long-term growth and economic opportunity. as a nation, we need to think carefully about how federal

spending priorities and the design of the tax code affect the productivity and vitality of our economy in the long term. fourth, there is evident need to improve the process for making long-term budget decisions, to create greater predictability and clarity, while avoiding disruptions to the financial markets and the economy. in sum, the nation faces difficult and fundamental fiscal choices, which cannot be safely or responsibly postponed. returning to the discussion of the economic outlook, let me turn now to the prospects for inflation. prices of many commodities, notably oil, increased sharply earlier this year, and as i noted, leading to higher retail gasoline and food prices. in addition, producers of other goods and services were able to pass through some of these higher input costs to their consumers. separately, the global supply disruptions associated with the disaster in japan put upward pressure on prices of motor vehicles. as a result of these influences,

inflation picked up during the first half of this year. over that period, the price index for personal expansion -- personal consumption expenditures rose at an annual rate of 3.5%, compared with an average of less than 1.5% over the preceding two years. as the fomc anticipated, inflation has begun to moderate as these transitory influences wane. the prices of oil and many other commodities have either leveled off or come down from their highs, and the step up in automobile production has started to reduce pressures on the prices of cars and light trucks. import like a higher rate of inflation experienced so far this year does not appear to have become ingrained in our economy. longer-term inflation expectations have remained stable according to surveys of households and economic forecasters, and the by-year- forward measure of inflation compensation derived from yields on nominal and inflation- protected treasury securities suggests that inflation

expectations among investors may have moved lower recently. in addition to the stability of longer-term inflation expectations, the substantial amount of resource slack in u.s. labor and product markets should continue to restrain -- restrain inflationary pressures. in view of the deterioration in the economic outlook over the summer and the subdued inflation picture over the medium run, the fomc has taken several steps recently to provide additional policy accommodation. the august meeting, the committee provided greater clarity by noting that the economic conditions were likely to warrant exceptionally low levels for the federal funds rate at least through mid-2033 and at our meeting in september, the committee announced that it intends to increase the average maturity of the securities in the federal reserve's portfolio. it intends to purchase by the end of june 2012, for under billion dollars of treasury securities with remaining maturities of six years to 30 years and to sell an equal

amount of treasury securities with remaining rich -- remaining maturities of three years or less, leasing -- leaving the size of our balance sheet approximately unchanged. they should put downward pressure on longer-term interest rates and help make broader financial conditions more supportive of economic growth than they otherwise would have been. the committee also announced in september that will begin reinvesting -- that it will begin reinvesting principal payments on its holdings of agency debt and agency mortgage- backed securities in agency mortgage-backed securities rather than in longer-term treasury securities offered by helping to support mortgage markets, this action should catch a request from economic recovery. if we're prepared to take further action as appropriate to promote a stronger economic recovery in the context of price stability. what's your policy can be a powerful tool, but it is not a panacea for the problems currently facing the u.s. economy. fostering a healthy job growth

and job -- economic growth and job creation is a shared responsibility of all economic policymakers, in close cooperation with the private sector. this policy is of critical importance, as i noted today, but a wide range of other policies pertaining to labor markets, housing, trade, taxation, and regulation, also have important roles to play. for our part, with the federal reserve will continue to work to help create an environment that provides the greatest possible economic opportunity for all americans. thank you and i would be have to take your questions. >> mr. chairman, thank you very much. i wanted to note for the record that members' statements will be made part of the record and i would ask unanimous consent that they all be made part of the record. without objection. mr. chairman, on want to start with close to where you left off with regard to the maturity extension program. i'm looking at the top of page 6 of your testimony when you say

that the fed intends to "purchase by the end of june 2012 $400 billion of treasury securities with remaining maturities of six years to 30 years, and then to sell an equal amount of treasury securities with remaining maturities of three years or less, leaving the size of our balance sheet approximately unchanged." that is described as the maturity extension program. pat two questions on that. number one is, as a result of that implementation of that policy, how much of a decline in long-term interest rates would you expect? >> well, we would expect something on the order of 20 basis points, approximately. we see something like that 50 basis cut in the federal funds rate, but not a game changer in

some sense. >> if in terms of the economic boost from that, what is your sense of that? how can you assess that? >> we think this is a meaningful but not enormous support to the economy. it should provide additional monetary policy accommodation and helps somewhat on job creation and growth. it is particularly important now that the economy is close -- the recovery is close to offering. we need to make sure that it continues and does not drop back and that the unemployment rate continues to fall downward. i do not have a precise number, but i would put that as a moderate support, not something to radically change the picture but should be helpful, both in keeping prices near the price stability level but also providing some support for root. >> i wanted to -- i may have some fallout, but i wanted to move to the question of currency. it just happens to be a major

issue and a front burner issue for us this week. i want to read you a statement that you made going back into 2006. this is the speech -- part of a speech he made to the chinese academy of social sciences in december 2006. and i am quoting. greater scope for market forces to determine the value of the r&d rmb would reduce distortion in the chinese economy, namely the subsidy that undervalued currency the focus on exporting rather than producing for the domestic market. a decrease in this effective subsidy would induce more firms to your production toward the home market, benefiting domestic consumers and firms."

i read that to you just by way of reminder of things you have said about currency. when i talk to people in pennsylvania and beyond, but especially back home, there is a unanimity about this issue that is pretty rare across regional, party lines, in terms of the realities for people's lives. the adverse impact china currency policies have had on our jobs. and our communities. and i guess, one question i want to ask and if you could answer the first one, and the other two may be more difficult to answer, but has the fed attempted to quantify the magnitude of the impact of this subsidy on the u.s. economy or the u.s. jobs? has there ever been a recent attempt to do that? >> no, i do not think so.

but mostly followed work by the imf and other international agencies which define -- and also by think tanks, like the institute for international economics, which is found that the chinese currency is undervalued by a significant amount, which varies according to estimates. >> do you have any sense of the aggregate number of jobs lost that you could attribute to this policy? >> i do not have a number. it is difficult to estimate, because there many direct as indirect effects. it is working through a third- party, other trading nations and so on. i think right now, a concern is that the chinese currency policy is blocking what might be of more normal recovery process in the global economy. in particular, we have it two- speed recovery, for advanced

industrial countries like in this is in europe are growing very slowly, while emerging economies are growing quite quickly become more balanced recovery would have more demand shifted away from the emerging markets. the chinese currency policy is blocking the process. it is to some extent hurting the recovery process. so it is certainly i-. i do not have an exact number. >> vice chairman brady. >> thank you, chairman. it is not often that a nation undergo such a severe and nec -- economic crisis has been added states did, and fall into a double-dip recession two or three years afterward. given that our economy is not flying as strong as steady but low and slow today, and given u.s. exposures to banks, money market accounts in europe, do you have any concern that the

turbulence from a financial crisis in europe could trigger a double dip recession here at home? >> i do have concerns about the european situation. i should say first that we of look very carefully at banks' exposures, both the foreign sovereigns and to foreign banks. in particular, the exposure of u.s. banks to the most troubled sovereigns, portugal, ireland, and greece, it is quite minimal. the direct exposure is there are not large. somewhat larger exposures in the money market -- money market mutual funds, but they have mostly moved away from porch again, -- portugal, ireland, and christie european countries like france and germany. it is not so much to direct exposure is that concern me. rather that as we have seen the last few days, market uncertainty about the resolution of the greek situation and the broader resolution of both sovereign debt issues and the european banking issues has

created an enormous amount of uncertainty and volatility in financial markets, and is to the volatility and indirect effects, we are being affected now. one of the reasons that our recovery has been slower this year than it was last year is that we have faced a lot of financial volatility and some of that is coming from the european situation. >> if there is a liquidity run and european banks or financial crisis in the euro , if what tools are you considering to mitigate the adverse economic effect on the united states? >> first, in europe, there are substantial facilities to provide liquidity to european banks. the european central bank has enormous capacity to provide liquidity to the european banks. as you know, we have conducted a swap line with the european central bank whereby they give as heroes and we give them dollars, and on their own responsibility in credit risk, they relent dollars as necessary

to european banks that need dollars. we're doing what we can to cooperate with european center bank and other central banks to provide dollar funding for global dollar money markets. that is the first thing very domestically, i think our main line of defense would be to make sure that there is first adequate supervision of our minds, which we are very much engaged in during our have to say that the good news here is that u.s. space have substantially increase their capital bases since three years ago. we would make sure that we would stand ready to provide as much liquidity against collateral as needed, as the lender of last resort, for our banking system. congressman, you mentioned earlier it the lender last resort policy regarding aig and other individual firms. i basically agree with you and just note that dodd-frank is made that illegal. we cannot do that again. we're not allowed to do any

lending to individual firms or insolvent firms. what we could do is provide with the permission of the secretary of the treasury a base lending program to try to address a run on the financial system, which we do not anticipate, but we would certainly be prepared to respond to eventually during >> the question is raised again because of europe and the financial crisis, and it is difficult to ascertain the difference between liquidity and solvency. without a clear lender of last resort policy in advance, it lends us here jilin's itself to that uncertainty. can i ask you, are there any other tools you are considering other than the swap line, creating liquidity with europeans in france, and any other tools that you're looking at, should the crisis occur? >> if our basic tools other than those are our supervision and oversight and monitoring of our own financial system. we're looking at the broader

financial system, not just the banks, as part of our macro provincial responsibilities under the new regulations. standing ready as central banks always have in the financial crisis to provide that sharp liquidity if necessary. >> i have a short time left. but you have been reading the papers and i have, there's concern that the swap lines with european central-bank create in effect a backdoor bailouts for the european banks. it leaves exposure for u.s. taxpayers. with at swap lines in the past. my understanding is that this lending his to the ecb, not to the banks themselves. but can you address the potential exposure that might occur? kidding us said it exactly right, congressman burr the authority is given to the federal open market committee by the congress and it has been used many times in the past. no question about the authority. but in terms of the exposure, it

is not alone, it is a swap. we are swapping dollars for euros. we have a contract with european central bank that they will return to us the full amount of dollars past -- plus interest that we give them. so we do not have any exchange rate risk for interest rate risk. moreover, they make the loans to their own banks by which they have the appropriate information, supervisory affirmation, and the likes. and that they have losses, they are responsible, not as prince of the taxpayers are under no risk whatsoever -- and if they have losses, they are responsible, not the taxpayers. thereunder no risk whatsoever. >> thank you very much for being here, mr. bernanke. a question coming from a slightly different direction. i think most americans perceive

today that the middle collapses -- the middle class is collapsing, our poverty is increasing, real unemployment is about 16%, 25 million people without jobs or underemployed, and yet the same time, we have growing inequality, and commonwealth, the top 1% earning more income than the bottom 50%. the wealthiest 400 people own more wealth and the bottom 150 million americans and that gap is the greatest of any major country on earth. to you believe that these economy will recover -- do you believe that this economy will recover as we -- as long as we have is growing gap between the very rich and everyone else, where some many have so little? >> i am concerned and i have spoken on this issue. it is not a recent development. it has been happening since the late 1970's that the inequality has been increasing and at the

top in particular, there has income. increase in com it would help to have broader based purchasing power throughout the economy but i certainly agree that it is a real concern. it is something that we should try to address as a society. >> in a similar vein, let me ask you this. today we have on wall street the sixth largest financial institutions with assets equal to more than 60% of gdp. are you concerned that after we went through the disaster of too big to fail of years ago, the with that type of concentration of honor should, or three out of the four largest financial destitution is today are better than before we went for the bailout, are you concerned that we will be in that position again will congress will have to bail out these financial institutions who have not change

their ways, who are still into highly speculative activities, and are you concerned when you have so much concentration of ownership in these talks institutions, that this does not create any way, shape, all from a competitive dynamic economy? >> senator, we very much supported the reforms in the dodd-frank act which are intended to eliminate or substantially reduce the too big to fail problem. as i was saying to the congressman brady, we no longer have the a party at the federal reserve to bail out anybody -- the authority at the federal reserve to bella anybody. we're now putting resolution authority, more capital, and so on. >> i'm not so confident. but here's my question. when you have six financial institutions with that much economic power, why should we not break them up? do you believe that an

institution is too big to fail, it should be allowed to continue? why do we not break them up and provide more competitive access backs to the economy crush margins and the authority is there if we determine that -- to provide more competitive elements to the economy? >> authority is therefore determine that. i will look to see how the markets were care. there are benefits to size. the 50% of gdp that you have mentioned is much smaller than other countries that have banks larger than their basic -- larger than their gdp. the right response is to put extra cost an extra supervision on these firms that will give them an incentive to eliminate unnecessary size, to eliminate unnecessary activities, and reduce their risk taking. that is what dodd-frank attempts to do. >> my last question is this. i secured a provision in dodd- frank that you're not too

enthusiastic about, in order to audit the fed in the financial crisis spurred we learn that you provided some $16 trillion in low-interest loans to every financial institution in this country, many of the central banks around the world, many large corporations in america, very wealthy individuals. my question is this. at a time when large banks have parked over $1 trillion at the fed, why are we not during the same, providing small businesses loans that they can create jobs? if during the financial crisis, you provided $60 trillion to banks all over this world, why are you not providing the kind of money the small businesses now desperately needs a that they can expand and create jobs? >> as you pointed out, this is revolving. many of these loans were overnight. the federal reserve was created

in 1913 to address financial panics. but also to raise around the world for 300 years, the way that we do that is provide a backstop liquidity during panics when financial institutions lose their funding. it is very much in the interest of the broader economy and the average person that we prevent the collapse of the financial system. it is not our role and we do not have the authority to make general loans to the general public. >> but you do have the authority, and some argue with you should have it, to do with unemployment. why are you not doing for small businesses what you did to the large financial institutions chris forward >> we are discussing unemployment and then discuss the steps to ease monetary policy, which is our main tool. to get to provide low-interest loans the way that you provided to large institutions around the world? >> i do not think that that is our role and i'm sure we do not have the authority to do that. >> representative campbell. >> thank you, mr. chairman.

all like to follow on what vice- chairman ready was talking about on the europeans a jerk -- is chairman brady was talking about on the european situation. one of the frustrations is that we do not have any control over europe past decisions relative to their current problems and crises, but that can affect us here. to what extent with a default in greece or in some of the other countries, or that sovereign debt has lost, is our financial system sufficiently protected from that, that that defaults increase or another country over there would not impact our financial system at least? >> well, first, it would depend

on the conditions of the fall. it was done in a way -- all the defaults. if it was done in an orderly and controlled way, that would be one thing if it was disorderly, on plan, and disruptive, that would be a very different matter. as i said the congressman brady, the direct exposure of our banks to greece are minimal. but if there was a disorderly default, which led to for example, runs or defaults of other sovereigns, or stresses on european banks, it would create a huge amount of economic fallout talbott -- economic volatility global they would have an impact on our economy. so it is a serious risk. if they were having, and that is why it is extremely important that your continue along the lines they have, to address that situation. >> i understand that it affects

their economy and demand is reduced, that obviously affects the global economy, and there is not that much of a perceived and disagree with. obviously you're taking all the steps to believe that you can and are prudent in order to create a fire wall around our financial sector. is there anything we should be doing in that regard, meaning congress? >> on fortunately, as you pointed out in the beginning, we are innocent bystanders cheered. -- we are innocent bystanders here. the federal reserve and the treasury and others have been consulting with and have been kept informed by our european colleagues. i am persuaded that they are very much aware of the risks associated with the situation very they're very much committed to try to address it. the problems are not really economic but political. but they are trying to do is

find solutions that will be acceptable to 17 different countries, which as you imagine, can be very difficult. added that -- that do not have any other suggestions other than push them to move aggressively to put this behind us. even the currency to question of just ongoing uncertainty has been a negative for our economy. >> switching gears, and you mentioned housing. i agree that as one of the primary elements of the economy, that we cannot grow without housing, not robustly without housing be a part of that, and what can endorse should we be doing at this point in order to aid that sector of the economy specifically? should we be looking at a new system of housing finance past fannie and freddie, to replace them as they currently exist? should we look at the

foreclosures situation? >> this is a very important issue as you point out. i would urge congress to look carefully of what might be done. there are a lot of possibilities. one issue is the treatment of real-estate loans. one of the problems is such a big over hong -- overhang of distressed properties. it could be converted to renta on somehow. some way to deal with that of henry the second issue is refinancing. including the fact that people who are under water have a great deal of difficulty refinancing. it would be possible to help that have entered you mention fannie and freddie. for the near term, -- it would be possible to help that. you mentioned fannie and freddie. they are now in the basic source of all securitization in the mortgage market. to the extent that congress can lay it out a clear framework for path to a new housing finance

system, that would create some certainty and will allow some of the private sector securitization activity to resume. i think there are things that could be done and other things could be done. i know you have a special interest in this area. i would urge you to think about what congress could do. >> thank you, mr. chairman. >> senator kuehl bashar. klobachar. >> your recently in my state and saw our driver and business committee. it works together well. it is one of the reasons we have a unemployment rate that is 2% better than the national average. you can imagine the frustration at our business community has felt by some of the game's going on in washington recently. i was thinking back to last year that you testified in your talking about a year ago that the markets were signaling a lot of positives and our political

system should deliver a sustainable fiscal trajectory. what do you think about the talks about the debt limit was handled, and there is an editorial about each one of these confrontations as a high- cost, eating up by all -- by of all legislative bandwidth, the contribute to a cynicism and lack of confidence in the political system that damages everyone -- i like your opinion on things have been handled in the last six months and how that has been inconsistent or consistent with the goals you have laid out today? >> let me first say that i strongly support efforts to put our fiscal policy by a long-term sustainable path. i in no way put down that very important objective. that being said, unfortunately,

the brinkmanship of the summer and at least a perception in the mind of some investors that the united states might actually considered defaulting on its debt, and moreover, the possibility that it might be recurring periodically, i think, was a negative for the financial markets. it was the reason that the downgrade occurred, that the s and p cited the political process more than the amount of debt outstanding. there is no way -- this is no way to run a railroad, if i might say so. i very much support the continued strong bipartisan efforts to bring our long-term fiscal situation under control, but i do honestly submit to you and sincerely submit to you that doing it in a way their raises the risk of default on our debt is going to be counterproductive. eventually it will lead to higher interest rates which will make deficits work which goes

against the purpose of the exercise. >> i was one of those, one of 37 senators and said that we need to reach that $4 trillion in debt reduction. i think we need to do that with a balanced approach, a mix of spending cuts, very important that you pointed out, but also closing loopholes which would enable us to bring down the corporate tax rate, leading to one of the other goals of the sustainable growth, as well as looking at some of these fairness issues that senator sanders has address. you think it is possible to move forward with this for dollar trillion debt as a reduction in a balanced way? >> it is up to congress exactly how you would like to do it. i've laid out some goals. one is to achieve the sustainability that can be done with a larger size government or smaller size, depending on what you want the government to do. but if you think about -- let me put it this way.

as you think about reducing the deficits and putting us on a sustainable path, critically important, it is also important think about how good our tax system is, how efficient and equitable it is. how effective as our government spending? is it producing the results that we want? is a supporting growth and recovery? -- is it supporting growth and recovery for some are -- and recovery? >> this need to focus on our competitiveness, 46% of our businesses cannot find workers to serve in certain jobs. architects schools have 90% placement rates, and their training students run computer systems that are running the assembly lines that are running our nation's paper mills, or are making our medical devices carried out wonder if you could briefly talk about exports being

so important, retooling our work force, and not pretend that this is something on the side. it to be a major piece of our competitive agenda. >> this is where many of our exports are now, either in specialized high-tech capital goods, or professional services, for example. so developing both the human capital, the expertise and skills, and making sure that we retain our global leadership in research and development, i think these are incredibly important for productivity and living standards going forward. >> i appreciate your being here. >> representative purchase. burgess. >> picking up on what she said, a brief commercial. the food and drug administration is going to reauthorization process. it is absolutely critical on our ability for the improvement -- the approval of new medical

devices. we are driving that business overseas. at the same time, we're going to be taxing that segment of our intellectual capital. i think it is unconscionable way we have behaved. we get -- we hear a lot of talk about the trends of dollars sitting on the sidelines that corporations have, waiting to see what will happen to is that accurate. >> i think it is more like $2 trillion. >> what are they waiting to see? >> partly it is liquidity preference from the crisis. they want to make sure that they have enough cash on hand in case there are more financial issues, but more generally of -- >> are those requirements that you have imposed? >> i am talking about corporations. uncertain about the

strength of the recovery. at this point, they are able to meet demand with their existing capital and work force, and they're looking to sell a stronger recovery, and greater clarity before they deploys some of those funds gary >> is that greater clarity from the legislative branch or from the federal reserve for the executive branch? >> if comes from many areas. first and foremost, will the recovery be strong or will it falter? certainly policy uncertainty is an important issue. as far as the federal reserve is concerned, we're doing our best to move as quickly as possible to provide clarity about the regulatory framework that we are responsible for parry >> if you think tax policy is responsible?

>> it is possible. the more clarity that we can provide to firms and households, the more likely they are to make commitments. >> time is limited. t think that the actions that have been taken over the last three years have prevented a recurrence of the event that we saw in september 2008? have we prevented the next meltdown? >> we made a substantial improvement. >> have we prevented -- yes or no? >> if we not taken those actions, we would have a collapse. >> people talk about moral hazard. do we need to draw that bright line again? >> i did not think last stegall would avoid the crisis. many commercial banks they were not combined had significant problems. we have made a lot of steps to address those issues. not everyone agrees on all of

them but i think we made a lot of progress in getting our financial system back on a stable footing. >> in your testimony, said that the last paragraph, you said the committee will continue to monitor economic developments and is prepared to take further action. do you have other errors in your quiver this point? haven't most of them already been used? is the only aero you have left is the printing press? >> the basic tool that the federal reserve has its operations in the open market that may or may not increase the money supply. it tends to reduce interest rates and to create more financial accommodation, we do have tools, but obviously one want to evaluate the cost and benefits of any decision set we make it we want to make sure that the economy is getting the proper amount of stimulus. >> said the answer to that is that the printing press may be the only one?

>> that is an unfair characterization. it is not literally involve. what we're doing right now is selling short-term securities and buying long-term securities. we're not changing the size of the balance sheet or the money supply. >> my time is running out. use of protest on the right and left. most of the protests are getting headlines on the left. what are you hearing from that activity in new york right now? >> very generally, i think that people are quite unhappy with the state of the economy and with what is happening. they blame with some justification the problems in the financial sector for getting us into this mess. they are dissatisfied with policy response here in washington. on some level, i cannot blame them bird circling 9%

unemployment and very slow growth is not a very good situation. that is what they are protesting. >> are you and according to incorporating that and to the remedies you propose? >> i am looking of the growth rate and the unemployment rate, and not the protests specifically. but like everyone else, i am dissatisfied with what the economy is doing right now. >> thank you very much. [inaudible] banks for all the responsibilities that you are engaged in. a couple of simple questions to s. the distribution of wealth, we of a serious issue with distribution of wealth in this country. there really needs to be taken care of and addressed and straightened out. the top 1% of americans all 33%

of the total wealth in this country. the top 5% hold nearly 60 percent of the total wealth. the bottom 50% of americans hold only 3% of the total wealth. all that is a similarly rich is a similarity to the deep collapse which our country suffered back in the 1930's. that needs to be overcome. can you tell me candidly what accounts for the significant concentration of wealth in this country, and in your opinion, what is the most effective initiative that congress can do to increase household wealth among the working and middle class? the working and middle class or the drivers of the economy in this country. -- were the drivers of the

economy in this country. that is what we have to concentrate on, working people, building them up, making the more successful. >> in the shorter term, clearly it is people with the middle class but also the working class that take the brunt of high unemployment. the federal reserve is taking strong action to try to restore economic growth and trying to bring down the unemployment rate. that would be a very important step to take. and a longer-term, there are a number of reasons which this is not a new phenomenon, it has been growing for four years. all of this has to do with divergent educational and skill levels. we have more diversity in terms of high quality and low quality education than almost any other industrial country. we need to have stronger, more consistent training and education for everybody. we need to make sure that people have technical skills, because

technological change is a place where people are getting left behind. we need to have people learn how to save and to budget. financial literacy is an important issue. people have talked about trade, and senator casey mentioned the chinese currency issue. i think we need to have an open and fair trade that would be helpful. there are a variety of things that can be done to try to do them. many do not happen overnight. but broadly speaking, we agree we want agreed as much opportunity in this society as possible. when their people that do not have access to good education, they are shut out from the beginning. >> some of the things that you could recommend to this operation here so that we could do the positive things. the concentration of wealth was handled very specifically back in 1977, 1978, with dramatic cuts for the taxes for wealthy

people. that in and of itself has to be dealt with and a whole host of other things. it can be dealt with effectively by this operation to upgrade the quality of middle-class people. let me ask about the bowl or rolde. volker rule. it limits the base abilities to engage in proprietary trading. this rule of polls the spirits of the import glass-steagal act. that needs to be corrected. recently, his reports of indicated that draft final rule will include a significant loophole allowing banks to continue to make risky bets with their own capital to hedge against portfolio risk. there is one indication here about a specific banks that have

allocated specific rules of $2.7 billion. this new exceptions significantly diminishes the impact of voker role. how can we expect to see a change in bank behavior if we continue to allow proprietary trading for a watered-down rule? >> let me say that we are about to put out a proposed rule. within a couple of weeks, we should have something out that the public can let that and give us comments on. it is a complicated rule and we want to make sure that it is workable. but we certainly want but follow the spirit of the statute. there are provisions that allow banks to hedged positions, something you want them to do. that reduces risks. i am not sure i know what you're referring to, but i assure you

that we will look very carefully and respond to any comments you might have about the actual role when it comes up. >> there been a lot of provisions that will really affected. they have been run down. now the question is, are we going to continue to allow it to be run down or are we going to do something to preempt that and make it more effective? >> i do not know what you mean by rundown. the rule is not been put out. if you will tell us what your objections and concerns are, you can tell us your response. if you referring to current activities by the financial volker rules, the folk is not enough to get. he was the chairman of the federal reserve and i looked at his picture every day. we will certainly try to make sure that the spirit of the rule

is enforced. >> thank you very much. >> senator thank you mr. chairm. thank you for your service. both sides of the financial houses, the congress and the fed bang, face a significant challenge. we are both on the hot seat. i do not think it is a prepared for one to blame another. you have not done that. it seems sometimes too much attention is focused on what the fed bank should do and it is not within the fed bang possibility of doing. we are deflecting the blame over to you. nevertheless, you indicate in your opening statement here, i quote "the future of federal fiscal policies remains uncertain."

that uncertainty is something we all here as we go back to our states and talk to businesses and others. it is pervasive threat industry, business, households. how can we, together, work to eliminate some of that uncertainty? to restore confidence, not only in the investment market, but in the consumer market? clearly, that would have a positive impact in terms of our going forward. you outline four key objectives in that regard in your statement. one of which is, as you described, putting together long-term, sustainable, credible plan. you state that what is before the congress, in terms of what has been done in august and what the goals are for the super committee that is going to report in november, are far short of what we have to do. that is reinforced by the

ratings agencies, by the president, by various economists and analysts, saying generally, anything short of $4 trillion of spending -- of viable spending cuts over 10 years is going to be inadequate to regain that confidence and achieved the goal of a fiscally sustainable plan. my question is, as others have suggested, you cannot get theire through spending cuts. you need reform in the system. one of which is entitlement reform, another is a comprehensive tax reform. my question is, how important is it that part of a package that can be deemed long term, fiscally sustainable and credible? do you have some comments and

thoughts? >> yes. first, it would be a major achievement to have a credible plan that delivered stability and sustainability over the next decade. the numbers you gave a numbers others have given as well. as i was indicating to the senator, the quality of the product also matters, not just the numbers. in terms of both economic efficiency and growth and in terms of certainty, reforming the tax code for example, would be very useful and valuable. everyone agrees it is complex right now. likewise, about which in the quality of our programs is able to deliver health care to senior citizens at the same level and quality for less cost. those are some of the issues we need to address. i agree, the bottom line number

is critical, so is whether we have some improvement in the tax and spending programs. >> some say this is -- put in a comprehensive package together by the end of this year, congress voted on that and pushing it forward, is not attainable, particularly in regards to the complexity of entitlement and tax reform. many suggest these are elements -- these are issues that are being started up in 2013. can we wait until then? >> you are a better judge of i am of how quickly this can be done in congress. clearly, the sooner the better. 2013 is a ways away. at least giving us some indication of the direction you are going and the broad ideas you would be incorporated would be helpful. >> you said in your comments that these difficult and fundamental choices cannot be safely or irresponsibly

postponed. i assume you stand by that? >> yes, sir. >> 2013, would you describe that as something that is safely and responsibly done? >> i would like to see -- i think we would all like to see, as much progress as possible. what that involves now is a blend of some plans to begin the discussion. that would be very useful. >> my own belief is some strong indication is necessary in that package now to ensure the investment and consumer world we are on the right path and have the affect of improving confidence and helping move forward with some sustainable -- >> thank you, senator. rep. >> thank you, mr. chairman, mr. bernanke. as difficult as it is for two senators to talk about anything

in five minutes, i will do my best to speak faster and be more blunt. you came to our budget committee in the springtime and game the same presentation and it encouraged us to get our fiscal house in order. we have talked about that several times here today. in my opinion, we have underperformed in that area. we are continuing to make some of the mistakes you brought to our attention. we have not come up with a way to close the deficit. i would suggest to you that the fed is part of the difficulty with that. i would encourage you to consider that with all the steps you have taken, to keep interest rates low, to encourage lending, you are also encouraging of borrowing. you are encouraging the federal government to continue to do what we do. you have made a more borrowing rate the lowest it has ever been. there are no consequences to our

actions to borrow money. i suggest that you do consider that when you go forward on the open market committee. one of the consequences of doing what you are doing is making it easier for us to continue doing what we are doing. you make it more difficult for us to drive home the downside of incurring all of this significant debt. with that, i move on to my question which deals with inflation. i think we have seen that inflation has been flat or up in the last 13 months. it is up each month this year industrial capacity is still low. unemployment is still high. wages are flat. factory orders were down last month. i recognize your comments about energy having some influence on inflation. more inflation excludes raw energy costs. i think it is reasonable to

suggest that monetary policy is having some inflationary pressures. when you reported last spring, i ask if you were comfortable with your ability to turn off the flow of money. since then you have announced two significant new plans. the program to reinvest mortgage-backed securities instead of allowing the balance sheet to frank, and the operation twist of extending structure on that. if you believe those two policies have impaired your ability to deal with inflation? >> i need to respond to the first point. i do not think that is valid. we keep interest rates down. that does not stop congress from taking its own action. putting that aside, looking at europe, the european central bank is behind the debt of greece. the interest rate increase is

40%. investors lose confidence in the u.s. fiscal situation -- the fed's actions are not going to have any affect. >> you are not the only thing the press in our interest rates. -- depressing our interest rates. you are a big part of where we go to get the money. until you start saying no, you cannot borrow, we are going to continue what we have done for the last 30 years. >> we need to keep rates low to provide support for the economy. on inflation, the impact of energy and food prices, which rose for a large number of reasons or early in the year, is now proceeding. inflation expectations in the financial market, some forecasters are quite low and stable. i do not expect inflation to be a problem going forward as far as the din our policies. we laid out an exit strategy.

we have all the tools we need to reverse our policies at any time. i am quite confident about that. when the time comes, we will do what is necessary to maintain price stability. right now, frankly, we are further away from full employment and price stability. >> we are operating in an environment where inflation is above your target rate. unemployment is above everybody's target rate. dealing with those two situations, some would say it required two different things. it would take one thing to solve an inflation -- inflation and make unemployment worse. my question is this -- utah about clarity, i agree with that, -- you talk about clarity, i agree with that. would you be better positioned to give clarity and stability if we were to remove one of your two mandates? >> i cannot answer it quickly.

we do have some ability to improve the employment situation. i think the dual mandate has worked pretty well on average over time. i would also point out that central banks that have inflation as their primary or only mandate to pay attention to economic conditions because it affects inflation expectations. i think our dual mandate is workable. i agree that in the long run, the only thing the fed can control is inflation. low inflation is the best thing we can do for growth. i agree with that. i think we can make the dual mandate work. it is up to congress. if you want to change to its single-minded, we will do whatever you assign us to do. >> thank you -- to a single mandate, we will do whatever you assign us to do. >> thank you for coming in, mr. chairman. i appreciate your testimony.

quickly, i talked to a lot of folks who are studying what happened in greece. many will say it is a foregone conclusion that greece is going to default. i know you are not going to say that. as we look here, i think your testimony today is saying we do not have primary exposure to greece or italy but we do have secondary exposure through the banking system. how great is that exposure? >> again, our banks have a minimal exposure to the sovereign debt of portugal, ireland, and greece. they have moderate exposure to the sovereign debt of italy and spain. they have much more substantial exposure to the banking systems of italy, spain, france, and of course, substantial exposure to the economy.

the direct exposure to greece are quite small. indirectly, to the continent, and more generally, through the stability of the financial market overall, we have significant exposure. >> you have indicated that it is pretty clear what the europeans have to do to stave off this crisis. it is not an issue of do they know what to do, it is, do they have the political will to do what is necessary? do you think they are doing enough? >> i think they appreciate how much is at stake. it is not just short-term stability. it is the continuation of their common european project. it is the continuation of their common currency. it is a strong desire and will to achieve success here. again, the process has been slowed by the political complexities. >> it is analogous to what we see here. we have a situation in this

country where we look into the future and say, look, we are going to have some serious issues with our debt. we will sit around these tables, we have bipartisan discussions. there is not a political will to get it done. when we have our own conversations today about our debt, at $14.50 trillion. it is hard to get a political consensus to deal with it. do you think it gets more easier to deal with the debt when it is 10 years down the road and $25 trillion? the more that we wrap up the more politically difficult tickets. >> -- it gets. >> these are difficult problems. they involve fundamental questions about the government. i understand there is an enormous amount of disagreement and i hope we will be able to find a common ground. looking -- >> looking at greece, aren't the

alarms bells going off? >> there are two sides to that. on the one side, we have equality coming in to u.s. debt. it is people saying all kinds of problems, they are buying u.s. debt and driving yields too low levels. that being said, i think everybody appreciates, you cannot run a large deficit forever. we are saying that in other countries. in fact, spend it downgraded the s&p. treasury's -- downgraded the u.s. treasuries. >> i want to go to operation twist. you are selling short-term trees and going to purchase long-term treasuries. are you doing market of you to market fell you or are you going market value to par value?

>> it is going part to part. >> is this going to be a minor qe #. 3. >> the security holdings may change, but it is going to be small. >> the last time we checked it, you had indicated he were considering qe3. is that still on the table? >> we never take anything off the table. we do not know where the economy is going to go. we cannot forecast the future. we have no immediate plans to do anything like that. >> i yield back. >> thank you, rep. senator. >> thank you, chairman. i do not want to make a lengthy statement. i am more interested in your testimony. i do want to share a couple of my own thoughts about our economy and share some of my

reserves above the federal reserve. in 1977, congress gave the federal reserve the dual mandate referred to to promote both maximum employment and stable prices. since that time, and more recently, in the last few years, we have had anything but maximum employment and stable prices. most americans believed that prices of products and services they buy on a daily basis, and gasoline, electricity, health care services, have increased significantly and have grown more all tile. at the same time, we have unemployment -- vella tile. at the same time, we have unemployment above 9%. americans are struggling in this difficult economy. the result of that, in my view, the federal reserve may be said to be failing in its congressional mandate -- two-

fold mandate that we have described. i wonder whether some action ought to be taken to remedy that or to bring demand it into line with reality. i would add that i am troubled by the federal reserve's role suring up banks. some would say bailing out, or engaging in swaps. regardless, they are creating an asset bubble through policies that lead to artificially low interest rates and the veil of secrecy is also a concern to me. with some of those concerns in mind, i want to ask you a couple of questions. given that many americans are retirees, including the baby boom denigration getting ready to retire, savings for retirement often invest in

fixed-income products, including treasuries and securities. are you concerned about the implications of these low income rates on retirees and those saving for retirement? >> could i reply to your earlier statement? on inflation? inflation has come down over the last 30 years. it has been about 2% which is price stability. i think the record on price stability has been very, very good, according to statistics. on unemployment, i would blame the current crisis on the financial crisis. obviously, the fed had some responsibility, but it is not coming from the dual mandate. it came from financial oversight issues. without -- we are not bailing anybody out. all central banks have a responsibility to provide a backstop liquidity to solvent institutions. fully collateralized, we do not lose any money, we do not take

any risk. this is what central banks do, we try to reduce financial stress and help the economy. we are very poorly audited at this point. i would refer everyone to our website. is the fed audited? we are audited by the inspector general, by outside, private accountants. we produce regular financial statement. all our emergency landing has been audited. that is an urban legend. thank you for letting me respond to that. on the savings issue, it is a difficult question. i guess one consolation for freeholders is they had a lot of capital gains as interest rates have gone down. more seriously than that, i understand that fixed income favors to suffer from low interest rates. it is something we think about.

if you are going to be investing in the u.s. economy, you need a strong economy. the low interest rates, over a period of time, help the economy recover, help have a stronger economy going forward. that is better opportunities for investment for bugs \ all. the short-term low rates are necessary to give the economy need to get returns in terry >> what do you inspect -- expect interest rates to do over the next few years? maybe i should address it towards treasury yield rates. where do you expect those to go in the next five years or six years? >> it depends on how the economy evolves. if the economy recovers quietly, over time, treasury rates will go up. >> thank you, senator.

>> thank you, mr. chairman. thank you for your service to our country. i appreciate your call miss through the storm here. over the past -- calmness through the storm here. over the past three years, the federal reserve has engaged in unprecedented action. recently, as a lender of last resort. we were in crisis. the fed has continued to expand its balance sheet, multiple rounds of quantitative easing, operation twist, an exponential increase in monetary supply relative to the growth of the economy. you have become a major player in the private sector economy, much beyond banking, a major economic player. my question is, if you had a single mandate of just

protecting the value of the dollar itself, how much of the actions you have taken in the last three years would change if you did not have the mandate of protecting employment? this may be the way we want it to be, but it does seem that when you combine congressional and executive policies with what the fed has done in the markets, it is getting to where the private sector players do not know what to expect from government. how much of that would change if you did not have a mandate to increase employment? >> well, at certain times there would be a difference in policy, certainly. in this case, as i have mentioned, our forecast for inflation is that it will be somewhere between 2% next year. that is close to what most central banks, even those that

have a single mandate, the fine as price stability. our second round of quantitative easing last august in 2010 was in response to an inflation rate that was below 1%. we were concerned about deflation. the effort is to keep inflation close to the 2% target. the fact is close to 2% now suggest we would have to do what we have done to keep inflation there. the evidence is all of the things we have done has not driven inflation above the price stability level. >> are you concerned we are setting the stakes for that to happen? it does seem the dollar is ok for now because the bureau is in such bad shape. as you said before, -- the euro is in such bad shape. as you said before, as the economy grows you are going to have to withdraw monetary supply. is this something we can control

at this point? as the monetary supply continues to increase dramatically, the federal reserve has bought, through intermediaries, a significant amount of our debt. is this something we can come back and control? is that much control a good thing? >> the monetary base which is the reserves the banks hold with the fed has grown tremendously reflecting our balance sheet. the money supply that most americans think about, currency in circulation, has not grown annually. secondly, as we have discussed on a number of occasions, i have given speeches and we have provided this exit strategy, we have a number of tools for exiting. we are confident that on a technical level we can do so. we will be paying careful attention to inflation as we make that determination. i assure you, we are quite confident we can reverse our

policy when necessary. >> thank you, mr. chairman. >> thank you, senator. we will move to the second round of questioning now. it will be something approaching a lightning round, three minutes. i will start and then i will turn to our vice chair. i do not want to let too much time go by without reemphasize in some of the good news in the early part of your testimony. it is good to have a list of good news items. looking at page one, by my count there are at least four, maybe five, depending on how you pick them up. the functioning of financial markets improved significantly. that is one you mentioned. manufacturing production has risen 15%. the trade deficit is noticeably lower. -- notably lower, i should say. business investment in equipment and software has continued to

expand. productivity gains in some industries have been impressive. that is good news. when you get to the point where you have the four objectives, which i think are helpful for us, number 1, long term fiscal sustainability. the boat to come up avoiding actions that impede our recovered -- number 2, avoiding actions that impede our recovery. number 4, improving the process of how we do things. i want to focus on the first two or three. to focus on the long-term fiscal sustainability. that has been your focus, appropriately. you also say that we need short- term strategies as well. one of the strategies put into place back in december, 2010, was the payroll tax cut for employees. now there is a bit -- is debate

about the next step to take. other than a strategy like that or maybe even extending unemployment benefits, that is on the table as well. not that you want to have a recitation of a long menu, any other short-term strategies that you think would be helpful? >> excuse me, i made reference to housing as an area where there might be steps that could be taken to make the market work better. in terms of growth, considering investments in capital, whether it is public or support in private capital formation. -- or supporting private capital formation. the unemployed is a major area of concern. perhaps assistant can be provided. on the tax side, a couple of

people have mentioned perhaps reform. that is something we can look at to provide more certainty and a more effective and efficient tax system going forward. those are some ideas. obviously, i am not endorsing specific policies. i have no concerns about the creativity of your colleagues in finding strategies to work on. >> thank you. >> i am pleased to get a second round. we will do a lightning round, if that is okay. transparency is a major issue with the fed. my experience is you have been an advocate for transparency in meeting the fear -- in meetings here and face to face. the lag time between meetings

should not be reduced from five years to two years? is there any reason we cannot see that sooner? >> there is no logistical reason. two years is within a tightening or easing cycle. but unnoticed, when the transcripts are released, -- what we noticed come up with the transcripts were released, there was much less give and take. with that flag, you are going to inhibit discussion. we provide a great deal of information in our minutes, and now testimonies and speeches. i am happy to meet with you and discuss issues you might have i think no other central bank -- have. i think no other central bank has as little lag. i think this is transparent. >> noting that the u.s. devalued

its currency by 15% over two years, the driver behind the currency legislation seems to be our trade deficit, what i hear from our businesses is well currency is an issue, especially for select industries, there are a number of trade barriers we face in china from theft of intellectual property rights, subsidy, closed capital account, restrictions on export materials, on and on. if congress is to tackle our trade deficit with china, is it not more important that we look at the whole range of trade barriers that restrict our sails into that growing market? >> the dollar is at the same place it was in the summer of 2008. it has gone up and down, but has

not been on a trend. on your question, absolutely. i have been involved in the economic dialogue since its inception. we talk every time with the chinese about this issue. continued pressured discussion with them about the trade barriers and these related issues is very important, very constructive. >> thank you, chairman. >> thank you, mr. chairman. as you know, there are people demonstrating against wall street in new york city and other cities around the country. the perception on the part of these demonstrators and millions of americans is as a result of the greed, recklessness, and behavior on wall street, we were plunged into this recession. do you agree with that? did wall street's greek cause this recession that led to so many people losing their jobs? >> walz it had a lot to do with

it and so did -- wall street had a lot to do with it. >> do you believe we have made any significant progress since the collapse of wall street to suggest we will not once again see a collapse? >> we are making substantial progress. i will point out that many of the rules we are implementing are not yet enforced or fully implemented. i believe, as this process goes forward, we will have made a substantial improvement. >> i would disagree. i get calls and my vermont office every week from people who are paying 25% to 30% interest rates on their credit cards. some would argue that is usury, and yet that is the policy of the largest financial

institutions in this country. do you believe that if a bank is charging 30% interest rates that constitutes usury and should be prohibited? >> i have to know more information. the congress just passed a whole set of rules requiring banks to be much clearer about the information to disclose on credit cards. but the bottom line is, there are people in america who are being charged 0.5% interest rates. congress has passed legislation that has been in affect for many years limiting the rates credit unions can charge to 50%. can you give us any reason why congress -- 15%. can you give us any reason why congress should not do the same with large financial institutions? >> as long as there is complete clarity about the conditions of the card, and the people

understand what the provisions are, i am not quite sure what the bases would be. >> what the bases would be is that when people are in bad economic shape they have to borrow, they have no alternative. with bank of america and city charging 30%. that seems to be up ridges. it seems to be usurious and wrong. i would urge your support to make sure those are done away with. by last point is picking up on a point i made earlier. i disagree with those who think the fed should not continue to focus on unemployment. section 13.3 does allow you to provide emergency loans to any individual, partnership, or corporation in unusual circumstances.

i would argue that unemployment today, those are unusual circumstances. you do have the authority to provide emergency loans to small businesses. would you give consideration to doing that? >> again, there are other provisions -- they include that the loans be fully secured. you could not give a loan without collateral, for example. another problem is the banks and financial institutions, we supervise them. we know what their financial system is. we are not banks. we do not have capacity to a budget a small business. why would congress not consider its own provision? >> congress mike. -- might. during the financial crisis you

acted boldly. i would urge you to try to do the same with the same line of thought for the unemployment crisis right now. thank you. >> thank you, mr. chairman. i will stay on the same two topics i was on before. during 2008 we talked about too big to fail and too interconnected to fail. getting back to european contagion, the risk to us is through the end connectivity -- interconnectivity. is it international interconnectivity that put us at risk, and if so, should we be thinking about that in the future? it frustrates you and it's frustrating appear that here is this thing going on over which we have no control but which could have a major impact on us.

>> there are provisions in the financial reform that penalize interconnectivity and try to force more transparency. beyond that, we are seeing in the markets recently, just a general pulling-back, general risk aversion. in 2008, we saw an enormous impact on the emerging market economies that have little connection to what was happening in the u.s. and the financial markets. just the general fear and the general risk-aversion would be a big affect, even between institutions that were not interconnected in the sense you were talking about. >> interconnection it is almost more psychological than it is purely economic? >> it is psychological but when there are losses occurring -- in a panic, people will not know

what is a. the general reaction is to pull back from everything. >> switching back to housing, and he mentioned about people being able to finance or refinance who are currently under water in their houses. one of the issues with that is the regulatory system that financial institutions have to deal with. do you have any thoughts or suggestions along that line of how you could do that and still maintain compliance with the international regulatory system? >> that could be done. i would be happy to look at it. the key here is if you are refinancing your own loan, one that he made, -- you made, the credit risk is already yours. the fact that it is a loan, the refinance my make it more likely to pay off because the payments would be reduced. maybe it can be combined with some kind of equity for business

-- some kind of principle for business that could be worked off. -- forgiveness that could be worked off. i am not aware of any reason why a bank could not do that on its own loan. >> thank you. we are joined by rep cummings. we are going to extend or another two minutes. >> i am sorry i could not be here. chairman bernanke, i want to thank you for appearing before us. i think you for your service. whether we agree or disagree with the policies of the federal reserve, we can all agree that you have been tireless and steadfast in your effort to use the fed's tools to address the extraordinary economic situation.

housing is ground zero for the economy's problems. high unemployment and lost jobs. a recent editorial declared that housing is to the united states what greece is to the eurozone. just as the eurozone will let prosper and to increase its its act to get a, united states en route recovery will not gain traction until housing is fixed. from the federal reserve, the lower interest rates to unlock the credit market. as one observer recently stated, regarding your most recent round of bond buying, i quote, "the fed is trying to pump air into a balloon that has a big hole in it, that the loan is called housing." -- balloon is called housing." how critical is the

stabilization of the housing market to our economic recovery? do you believe we are doing enough to stabilize the housing market and end this foreclosure crisis? >> as i discussed, housing is central to the situation we have now. housing is usually a big part of the recovery process. it is not doing anything. many people are under water. that is affecting them financially. their loss of equity baines they are poor, they are less willing to spend. addressing the house institution is very important. indeed, as you pointed out, the fed has done a lot to bring market rates down. it is not effective if people cannot get a mortgage loan. a lot can be done. i mentioned a few things earlier. to reiterate, looking at the

management of real estate owned by banks to make sure they are maintained, converted to rentals as appropriate, converted to rent-to-own. avoiding the sterilization of neighborhoods from foreclosed houses. healthy people who are under water to refinance. removing unnecessary barriers to market access. -- mortgage access. there are a whole range of things of getting futures clarified so people can plan the private sector can come back in. there is a whole range of things and i am sure you and your colleagues have other ideas. i do think that relatively speaking, what would seem like small measures could have a very positive affect in housing and for the whole economy. >> would you agree it is almost impossible to resolve our

economic situation when you have people losing their houses at the rate they are losing them? would you agree with that? >> i would agree with that, yes. >> let me ask you one other thing chairman, you agree with directorate that there is no contradiction between their implementing policies that would boost growth in the short term and those that would greet fiscal restraint several years from now? >> i do agree with that. i mentioned that in my testimony. we should be looking at long- term consolidation and at the same time, trying to think about what actions we should take up a request finally, do you believe that given the -- take now. >> finally, do you believe that,

it takes whatever actions are necessary. i'm not endorsing system but once. >> let me ask a follow-up. who even prosecute someone for those failings? >> it provided a report.

>> it was pretty ineffective. arguably, a lot of people wanted to see. and we came up on that, there is some concern as to whether it to be extended. but did you have any contingency plans? >> we did have contingency plans. the fed is the fiscal agent. we are responsible for getting the payment done. we were working on how we would address the situation if government had to cut back on what it was paying. we were dealing with that set of issues. we were looking at what we might do to reduce the impact on

financial markets. we were quite concerned >> is there any way could have merited the crisis? >> >> if there had been a default, it is possible that you would have had something in the same magnitude. >> did you have tools to deal with that? >> we would had some. we cannot have prevented a very serious crisis. we're all focusing on the debt commission. your predecessor in question came up about medicare.

the chairman said it was thought the time. congress shall make the necessary adjustments. is there more that you required? that was a pretty powerful statement. it is one that has concerned me. one of the rescissions will be in the medicare system not sit effect beneficiaries but on providers. it will ultimately affect them. deal have any concerns about it? >> there is one that hospitals do not have to take medicare patients. you have to pay enough to induce them to do so.

it makes me think that the fundamental issue is getting health care costs down. in terms of our entire economy. >> since the way to do that? >> there are different ways to address health care. >> thank you very much for everything you're doing here. i want to mention about unemployment and trade deficit. the u.s. economy has not been able to regain the putting since the wall street collapse that came about in 2008. it is initiative for a number of years. the unemployment remains stubbornly high. there's still a cigna began foreclosure crisis.

can you respond to how much of a current situation is due to the large trade imbalance the country has with china and other countries that also with the effect of the trade deficits that were put into place 2007. >> i do not have a number on terms of jobs. i do think the currency policy besides creating problems for them as a result of the currency policy has been preventing global adjustments.

we have a to speed recovery where they have been growing very quickly. some of the more balanced growth plans can be achieved if there are greater currencies. it affects that only u.s.-china relations but their party currency policies as well. you ask about europe. i would take actions to address that problem. i know they're working hard to try to address it. even now we're seeing a lot of volatility in financial markets. is no doubt in negative influence. unless the european situation is brought under control it could

be a much more serious situation. >> the impact of the reduction in taxes for the movement in manufacturing is also having a negative affect. is there anything you are interested in tax lot of us voted against that. it went into effect. pat has an impact on more jobs leaving this country. correct i am not quite sure what specific issue you are referring to. >> be interested in maintaining the jobs here private and exporting them outside? by changing that reduction, eliminating it for the exportation of jobs?

>> we want to maintain policies that create jobs. >> thank you very much. you said the committee will continue to closely monitor economic development and is prepared to take further action to promote a further economic recovery. we have already announced the decision to unwind that. you announced operation twist. what is left? what tools are you contemplating? >> i talked about some in the testimony. there are a variety of things about under what conditions we would hold it low.

it provides more stimulus. we continue to buy it. the open market would be a way. a third step would be to reduce would pay on the freezers. these are the main direction that i could cite. >> got you. i want to make clear that i'm not blaming the fed for our inability to work out our fiscal situation. as dysfunctional as this body is, the law of economics still applies to us. if you participate in a process that allows us to borrow it at less than 2%, we will do it. .'ve heard those discussions there are other moral hazards of their.

there is one as it applies to this institution as well. with the government is facing is a teacher rate. there is a very strong impetus here to put up the tough decisions for another day. the government was paying five for six%. with having a longer and more serious conversation about what to do. i in no way meant to imply that the fed was responsible. but that the yield back. >> thank you. >> i want to refer back to something that i understood you to have said earlier. congress not engage in deep spending cutting activities. that if we're saying

engage in to much deeper at st. in near future that it might warts any recovery. did i understand you correctly? >> i said you could do both. the fed take actions which are supportive. it would involve not doing near- term cuts. other things might be helpful. at the same time that you provide quality and a strong and credible plan for achieving fiscal sustainability. they are not incompatible. >> is that imply a -- implies spending cut stacks? >> i am in favor of the law of