taerp -- tarp recipients in this e-mail. we were requested to do so. we testified before the financial services committee in may of 2010. all small-business lending funded banks, whether they receive a tarp or not, must continue to loan to small businesses to keep their rates low. if they do not, they will be paying treasury back at higher interest rates. despite tarp repayment provisions, we will see more lending to small businesses. the process took too long to get loans out of the door. the treasury did not have a road map sitting on the shelf to take down and stare. it took time to develop. as bernanke said, a community banks are stubborn and resilience. it is the type of people we

need. i am pleased that they came together to pass these ideas. i am pleased to report the funds we could increase. while we did not release as much as we hoped, we had success. i intend to take the testimony today to begin to develop a small business lines. i believe this committee has an obligation to get capital into the hands of the only people that can bring this recession to an aunt -- and end. i of the former to hearing about these programs we created.

i thank you for your time. i would like to turn it over to ranking members know. -- snowe. >> thank you for calling this hearing. certainly because it is a time of economic crisis. welcome. it is here to explore the issues to job creation. the there's nothing more than creating jobs for the american people.

carnation has been played for three years. the unemployment rate for 2010 was 9.6%. 27 of the last 32 months, the unemployment rate has been at 9% or higher. about 45% have been out of 446 months. ever more so for those who are unemployed. this is not a new issue. it is but out here for three years. this is not -- this did not happen overnight. i was describing to you the scenario. what i was hearing you said my

view was dark and pessimistic. i fink listening is a key ingredient of leadership and understanding what is in peril. people depend on these jaws for hard-working americans. america has already promised the americans the dignity of a job. millions of americans right now are missing up on that opportunity. in february it is about nine%. today it is about 9.1%. the number of long-term unemployed rose to 6.2 million.

the first time since world war two that no new ones were created since august. they took office in january 2009. it is a decline of 2.2 million jobs. i think that is what it is all about it. it is looking at the numbers and who represents the numbers. in order to restore any economy, we go back to the pre- recession levels. it did require more jobs to be treated every month for five consecutive years. in a recent column in the wall street journal, had the u.s. economy recovered the way it

bounced back from the other 10 recessions, are gdp would be $3,553 higher than it is today. 11.9 million more americans would be employees. they have been unemployed since the longest since we kept record in 1948. we are facing the worst post session recovery in the history. it requires a sense of urgency. we've looked at the recovery during the reagan years. we would have had approximately almost 60 million jobs created. when they failed to solve the crisis that has mushroomed, it is long past time for alarm bells to sound. one has to dig deeper to and are

the causes. it is a fair to deal with the engine of economic growth. if you listen to these businesses, as i do and my main they will tells, you there are the two main issues of tax reform and regulation. this is what is driving this. there is no reflection of that urgency or the impetus to move in a direction to reform my tax code. you said recently the idea that they're regulating them without

foundation. they cited the regulatory impasse. with that 50,000 since 1996. they have caused more. we depend on these businesses. they have to evan past economic recoveries. they're asking the government to make it conducive enough to expand the private sector. therein lies the problem. job said been created. the lending funds is the case in point. the act was discussed more than a year ago.

the massive funds of $30 billion was a program that so closely resembled it. it is an extension of time. they did not share this view. they did not heed the warnings. they claim it to be immensely popular to command to lenders across the nation. they spent an entire nine months on this program. only 4 billion will be utilized. 137 banks are using 2.2 billion to refinance their outstanding

tax obligation. the wall street journal pointed out that day -- the program failed on october 6. ever once the we had to have it. here they are dealing with less than $1.8 billion. a full 51% had already increase small-business lending to qualify for low interest rates. the baseline for increase lending to not sit so well in the legislation.

the banks are great deal. it has the lending fund. is that an opprobrious a taxpayer dollar? -- is that inappropriate use of taxpayer dollars? wish to track this to the other initiatives that were extended. there are reducing them temporarily. it will reach an all-time high of 30 billion. i am deeply concerned.

something has gone terribly wrong. there is an attempt. if you are imposing more tax incentives, there are only for a year. we said temporary solutions. these are not going to be sufficient to extricate herself from the worst post-recession recovery in the history of this country. that is why we need the reform. so they have stability. there is small businesses. this is the point. when a fundamental reform.

they need is to join this. >> thank you for your chance to allow me to come talk to you about how we can best address this. the biggest challenge facing small business today is the demand for the goods and services they produce is not growing fast enough. the most important thing we can do is strengthen the overall rate of economic growth. we have proposed a very strong investment to increase economic growth. it would increase it by between one% and user. -- 1% and 2%.

if congress does not act, taxes will go up. it is basically for all working americans. unemployment rates will rise and not fall. there be fewer jobs for veterans. the house a marker -- the housing market will be weaker. city and state have to cut back further. enacting this will not solve all the problems we face. they performed at lower rates. it improves incentives for investing on the united states. we need our education system.

we need to get our deficit back down to earth as the economy recovers to make sure we're living within our means. we need to get the economy growing more rapidly. when the congress to act. that means democrats and republicans working together. we cannot pass tax cuts and a critical help to save local governments without the help of republicans and democrats. i have stated this with the full range. the tax burden is lower than when the present office. they made it possible for businesses to fully write off investments and capital

equipment. we cut to zero gains rate. the cost of credit is lower. credit terms have eased for businesses. small banks unable to raise capital have been able to take investments to increase lending to small businesses. we provided $15.5 billion of in capital. we are very large economy. there are substantial number of banks assisted through these programs. they held banks get the capital they needed to extend credit. they have been able to get the treasury to expand lending.

they put them in a range of innovative service programs. these programs have been among the most cost-effective programs we have available to us. they work alongside the private sector. they not estimate the investment we made in banks will produce billions of dollars of games for the american taxpayer. it is essential for economic. they were not large enough to insulate small businesses.

they made a major difference. they are a good model of how to involve tax incentives. i appreciate the support of many of the year. i hope we can continue to work together on new steps. >> thank you. i would like you to reiterate the initiatives they have taken in reducing the tax burden. i think that is important. i do agree with senator snowe. giving some long-term stability is important. we do not have jurisdiction. that is a finance issue.

we have given ideas along the lines. reiterate some of the accomplishments of lowering tax rates to businesses and what you continue to do. >> i agree. the tax system may have today is the basic tax system. it is riddled with special preferences. it is a system that needs reform. it is very important is to help getting the economy growing more rapidly. we need a little more clarity and certainty about the basic environments and businesses -- the basic environments for

businesses. going to do fundamental tax reform in two months. as we start to lay the foundation for a consensus that lowers the corporate rate and broadens the base, we need to be doing some things not to help get the economy growing more rapidly. i listed the full array of this. they are very powerful set of tax incenses. the zero capital gains for businesses has had broad bipartisan support. we did other things to make it more generous. that helped pull for capital investment. it makes it more likely to meet

the demand that will come later. this is the broadest and creative mix of tax incentives they have ever considered. and wanted to emphasize that we should think about this. this is a bridge to fundamental long-term tax reform. cracks but me ask about regulatory relief. the hearing is really focused on the jurisdiction of our committee. since it has been raised, i hear a lot of criticism about overregulation. could you comment on the actions you are taking with other members of the administration to review that? >> they've run this effort.

they announced a series of changes to regulation. designed to reduce the burden. i am supportive back. i am sure there is work we can do in that area. it is absolutely true that because of health care reform, changes we're making we are changing the basic protections that americans depend on. this is something people have to adjust to. if you look at the evidence, i was quoting bruce bartlett who concluded that is very hard to find evidence across the economy today that regulation is having a material affect. this is worth looking at. the look at employment and

profitability in the sectors where there has been the most reform, there is no evidence that the profitability is lower. the level of profitability across the business sector is at historically high levels. it is important we put in much greater burden on all of us to make sure that as they're changing the rules we do so in ways that are sensible, that we get details. the biggest problem facing the economy is every day. they did not say enough growth in demand. they list these. if you look at broad surveys, it. regulations at a meaningful

challenge relative. i'm very sympathetic to the argument. there is good evidence in support of this. this is what is causing the economy to grow more slowly. >> one final question. one of the criticisms of the program, despite the fact we will get between $4,000,000,000.410066361 dollars is that it was to tar -- $4 billion and $9 billion was that it was too t.a.r.p. like. >> to have to look at the independent assessments. the conclusions they reach is what they support. they will earn a positive return.

the current ones are over. this is not the most important benefit they had. the most import benefit they had four banks was they helped take an economy that was falling off the cliff. they held the president's including -- the president, including the banks. we did not face the clout to sell in the depression. east capital programs are one of the most efficient uses of taxpayer money we have. every dollar of capital to make available is worth somewhere

between eight and $10 of lending capacity. you have to cut lending to business customers. him more capacity to expand its. there are very successful programs. i want to get your concerns. where they have been slower to get off the ground is because we have been careful. >> many of the recipients would have made those investments and lending anyway. the >> it is all recognize at

the time. it was identified as a major issue. this is what it was. they increased their lending. that was a minimum level of lending. >> what we tried to do is to try to combine in vestments and banks from the design the odds. the cannot force banks to lend. -- you cannot force banks to lend. they morhad more capacity than they would have.

this is a very good case. this is not enough. we need ways to make sure they have access to capital. not all banks deserve capital. 10% of banks had a good economic case for giving them an investment return to the tax payer. >> these are the facts. 51% of the recipients were going to increase their lending. >> can i respond? >> of congress authorizes $30 billion of a program. banks applied for only 1/3 of the capital. we cannot force banks to come.

only half for eligible. why? we had to be careful to make sure that they would go to banks that were viable. we're not going to take too much risk. we are going to take some. thanks only applied for 1/3 of the 30. only 1/3 were eligible. >> you should have known that to begin with. they did not even get responses. >> i do not know if you are aware of this. we cannot force banks to come. >> he should have known in advance how this would have worked. we had an urgent unemployment issue. we predicate of putting our eggs in that basket. you are forewarned about that.

they scored this as making money. the idea that we put them at risk -- >> i'm talking about jobs creation. there is a whole issue as to whether not they would do this. even the special inspector general indicated that. >> we do not disagree. banks were allowed by congress to refinance the money. that was congress's and sens. there is no mystery that is what happened. the capital they got on this program comes with a better incentive. congress in newark that people would say you should not go out and refinance. >> it said that some of the top

banks would replace the amount of funds. >> you are right. >> there is no insight. >> 1.8 billion out of 30. you're referring to your testimony. it would extend and the landing. people cannot wait. there have been too many faulty assumptions and miscalculations. the burden of which has now been borne by so many people. i would suggest that they go down in main street. what is it you are not hearing? i would love to take you on a

street tour. i am by ggbr4. you need to listen to the average american. when you talk about all those tax provisions, it is temporary. the one-year tax policy will not make a major difference. some are worth while. the mixed message is on the policy. they do not dare. i'm hearing from everybody. i'm not making it up. get then trying to administration to concentrate on the jobs. i do not know who you are talking to. you need to talk to the average person. is wehey're talking about do not dare make a move it.

after one year, and then what the? -- after one year, then what the? he said the final priority is improving collaboration between government and business. decades of over lot increased burdens. the point is that is what is happening. i was on a tax reform back in february 2009. i talked about it. we said we needed it. it cannot be congress. i was here when president reagan

was elected. we were facing some very severe circumstances. guess what? we work hand in glove to get it done for the american people. rome is burning. of our the decimation communities. we want help. they're not getting any different from the a ministration. talking bought policies, we had three years of virtually the same unemployment notices. that is the point. it is nothing new. we needed to get ahead of the curve to make a predictable changes. everybodyg this from

to companies of three. they need certainty. uncertainty has a huge price tag. this is what we have to correct. i'm not here to assign blame. >> wear on your side on tax reform. i would encourage you to not lose sight of the imperative. realistically, we have to focus on things that have traction right now. i agree with the about the tax reform. i hope we have time given the parliamentary procedural advantages. >> i know that everybody has strong feelings about this and

the secretary has been wonderful to give us this time. are hearing is about the program and credits. a committee does not have jurisdiction. i know these are very important. >> thank you very much. thank you for calling this hearing in for your extraordinary leadership. it took your determination to get its past. it was almost a year long. now i hear complaints that it is not been implemented fast enough. a filibuster against this bill? this was so desperately need it. it is still supported strongly by main street bankers.

when i talk to community bankers and small-business is, they talk about the lack of demand and the economic situation and about the availability of credit. did this bill is aimed at providing credits. it was a filibuster by the republicans for a year. one part is not being implemented ifast enough. the chamber of commerce tells us that lack of demand, the economic situation is the number one problem for businesses. the u.s. debt come second appea. taxes are not at the top.

small-business taxes have gone down. what we're trying to do is provide support for small businesses. and what to focus on this. this is the state's small- business credit initiative. in number have made use of this initiative. i do not know whether every committee has made use. they have used the small business initiative. it is a way of giving support to the collateral which small businesses provide. the problem with the recession is probably more than anything,

the lack of availability. the value of the collateral had gone down. our homes are worth less. the same is true with assets and small business. the same thing is true with inventory valued and equipment valued. they have gone down. with small businesses go to take out a loan, the value is less. about more than any other complaints. we get from small businesses this collateral support problem. community banks that have given loans now cannot give them loans because the requirements of the regulator is that the collateral

be certain percentage. if the value of the collateral went down, it is more difficult to pick out a loan. these are main street bankers. these a committee bankers that came here. it supports a bill to help them lend to small businesses. we have to overcome a filibuster for a year. we have to get it done. it isall frustrated that not moving more quickly. we understand it. to suggest that this is a failure because part of it is being implemented too slowly, if the republicans have their way would not be there at all. that is not ironic. that is counterintuitive.

i want to talk about the small business credit initiative. and want to ask the secretary to questions. -- two questions. is it a fact that it is producing the affect? this is something we are using. michigan led the way. ,e're using the state funds offering them support some that almost all of ours stories are taking advantage of. this is a success. >> i thought we would work with state programs across the country. i thought we would be quicker if we work through the states. we thought it was a better fuel. 54 states cemented this.

47 summit of applications. 43 have been approved for 1.3 $5 billion in funds. getting that money out of the door. >> i would suggest that to test the value of this bill, and they talked to two people. they talk to their states. they talk to their states to see whether and not they have applied. they all have if so, why? talk to your economic development people. test the value of that part of this bill. the other test would be talk to your community banks. they would say they either got support, but where they did not

comment they would have liked it. they wish we would take a look to see if we cannot modify them. it was implemented in a very conservative way to detect attacks pair. we wish you could have more banks get the benefit of this program. this is what we all ought to focus some. cried thank you. >> we're going to submit the timing on this bill. we received it from the house and early june. we cannot overcome a filibuster. it is sure the republican members and not support the bill in the senate.

there is a lot of resistance to bringing this with the lending program. >> i want to correct my statement. >> we will get it in the record. it was some time it took us to pass this. >> they came to the floor in july. >> they saw to overcome a filibuster. >> we needed 65. >> i stand corrected. >> it is not a matter of months. >> it is a matter of 60 votes. >> will go back and look at the record. we will get it in the record. >> thank you for being here.

i want to focus on the small- business lending fund. every bank that receive that money had more capital and was in a better position to lend. if they traded out the money dollar for dollar for t.a.r.p. money, they did not have more capital. >> the point. it was designed to the capital they got is structured in a way that makes it more likely that they will use the capital. that was the purpose. we cannot force them to get capital. we will try to make it more competitive. >> over half of all the money that went out was used to repay t.a.r.p. money. that amounted not increase. >> that is roughly what we

expected. there is a surprise an apparent cracks it is a more effective and viable form of capital for the purpose of the act. >> one of the folks said the chief operating officer mentioned it as being it as part of a shell game. they to 81.7 million and use every penny to repaid t.a.r.p. money. do you disagree? >> they intended it to be available. we expected roughly that

engulfed every financing. this was the intent of the bill. there is no surprise. it is a very cost-effective way to mitigate some of the pressures. >> it has very limited impact when the majority of the money is used to repay t.a.r.p.. another one is at the chamber. they supported it. it was basically a bailout from 100 banks. >> of the associations of businesses reported this including the chamber. they supported this provision. >> i am sure they did. >> a guess you could ask it this way. why are you concerned about this?

this is going to look very good against almost any one. to say itu're going will return. nothing is certain in life. som not sure why you're concerned. they designed this a part of it could be used to refinance t.a.r.p. >> let me go to that. first of all, let me point out a lot of folks have noted that they were all for this provision. of course they will. i do not know if that proves.

and not know that it has an impact in the small business sector. but good to your comment about taxpayer return. when this is used dollar for dollar to repay t.a.r.p. on the accounting side, is that accounted for in a different way than the banks repaying out of their t.a.r.p. money? >> of course. >> we have taken into consideration the net effects. we do not double counted. >> this is not accounted as repayment. >> we tried to show them the numbers. >> all the programs we call

them have overrunning positive return. it is dark today $10 billion. >> when you talk about a total number of tarp repayments -- >> we show both. we account for it. we show a separate number. you will see will make your next. it is counted. >> this program just closed. we know how many banks came what they did with it. you will see that the overall return was overwhelming positive to a substantial degree. >> thank you. >> we're going to get this clear. you have a quote that.

on the wall street journal. i have a letter saying the same thing. to this hearing is to get the truth on the record. i am instructing them to call this gentleman and asked if he wants to go by this letter. i would give you a copy of the matter which is supported. i want the record to reflect what the truth is. it is not a dollar for dollar swap. it was once lost three of the banes refinancing. it was designed by those of us to support did this program. it should be of no shock. t.a.r.p. was not to help small banks lend but to bail big bangs out of bad investments. it was designed differently. it seems to have worked for the banks that stepped up. >> thank you.

thank you for holding this. could you comment on what you think about occupy wall street? >> thank you. i've been asked that a lot. if you look at challenges they face today, there's very high unemployment. there is an alarming rise in poverty and a deep sense of economic insecurity. a loss of confidence. there's a huge amount of concern across the country about the challenges we face. that is why we're trying to work so hard. we're working with the congress to get more things in place to make the economy stronger.

we have a lot more work to do. >> and think a lot of people are frustrated that they came the big banks that access to capital in about 10 seconds. it has taken nearly 10 months for the small businesses to get access their community banks. in my state, and the banks that got access have proven that they have to increase lending to small businesses. it was a success. people are frustrated still the main ship cannot get access to capital. are you for reinstating this? >> i am a big supporter. we have been constantly refining them. we're trying to improve them.

i'm completely willing to work with you on ways to do this going forward. >> you would provide some level of transparency about why they were signed by treasury and the banking regulators and why certain ones were denied access to capital. there were not given a reason for that. >> why did this take so long tax of want to answer this. we designed a system that required the bank supervisors to make a judgment to us that they were viable and eligible. it did them a long time to do that. in the laws of the land, we have legal protections with criminal sanctions.

we were prohibited under those lolls for sharing information. we have worked out an arrangement. banks are now getting concrete communications approved by the regulators about reasons why they did not meet the standards. the reason it took so long was because we were careful. there were the criminal sanctions in place. i think we fixed that now. >> i do not even now that he could capture the level of frustration that america feels. big banks to not jump in the third those hoops -- did not jump through any of those hopes. many have been frustrated with not knowing answers, and not

having their questions about the program out there. he stated the reason they are changing this. he spoke of goods and services. it do you think there are small businesses out there today that have demands? >> the economy now is growing. mustang gruffly -- most think roughly 2%. some businesses are growing much faster than that. growth is still very weak for you. these are the averages. >> i would beg to differ with you.

there is demand out there by some small businesses. it may not be as a luminous as resources given to the large banks. they can create jobs. they need access to capital. >> i agree. >> i hope we also have to give capital to main street were demand has been seen. >> thank you. >> you mentioned that lowering marginal tax rates is good for economic growth. i cannot agree more. >> unemployment seems to be

rising under the current administration's policies. your statement saying that lowering rates would encourage economic growth seems to conflict with the policy of your administration and the majority party in the senate. the budget would have increased. the democrat jobs plan would also have increase marginal tax rates. and do not know of yet had a job to read the republican jobs plan. on the broad strategy, we're going to disagree on fundamental pieces. it this is what will guide our

basic strategy. >> it is part of our plan. but offices open. it is part of the republican plan. get rid of loopholes. >> what you think caused the housing crisis? what you think caused the housing bubble? >> this caused a huge over investments. >> maybe the new york fed.

i was president for a five-year time. >> i hate to interrupt you. and they're really short time. this should fluctuate somewhat on the money. the governmentas the economy hee price of the money goes up, and you get a slowing down of the economy. if interest rates are not allowed to draw it -- to rise, it is an allusion. that is bad policy, and that is what we are in today. we want to spur growth out of nothing. the allusion is gone.

>> the yuan the rates to be higher? >> the soviet union failed because they could not determine the price of brent. we should not have individual central bankers determining the price of money, because they make mistakes. people think they are smart and not. >> the fed does not have the ability to affect the economy they affect the short-term interest rates, so they cannot affect the long rate. they cannot do what you fear they are trying to do.

>> why do you think it was so low? >> this would take a long time, but most economists would say that because in 2001 and in 2002 we had a recession, and you had a huge set of global forces that cause a huge investment, and that keeps interest rates down, but as i said, the reason we have done boom is because we have a low terms of rates. we had an erosion of underwriting standards across the nation. those were very damaging. >> i want to thank you for coming. congratulate you for inadvertently or certainly supporting part of the republican jobs plan. >> i agree that tax reform is coming.

>> that is what we are all about. it is in the republican jobs plan. if you can agree to some of our plan and we can agree to some of your plan. >> you cannot balance the budget, it cannot get the budget under control unless you are willing to see some modest increase in revenue. we may disagree on that and who should bear that burden. we think the most fortunate americans can forced to bear that burden. >> we have lower rates with less loopholes and tax credits. >> time has expired. >> thank you. i do appreciate you holding this hearing. thank you for participating. i know we are here to talk about the small business lending fund. in north carolina, i know that eight banks have received $855 million in capital to lend to small business. there is no doubt that is helpful and positive.

i think the hope for this program was much, much higher. while those banks that were approved to participate were pleased with the program, they have started lending, more also frustrated with the communications from the department. i heard from community banks that said that after they applied to the program, they did not hear back four weeks. i have also heard back from others that there was little explanation as to why they were not approved. if you could comment on that. was there a standardized process for how the department responded to applicants? was there any formal way for the banks to appeal or seek summer you -- seek some review of the decision? i think the timing of it was late in the process. there has been an incredible amount of frustration.

>> i share that frustration. why did it take so long to approve applications? we put into place, to protect resources, a system on where we relied on supervisors to make a judgment for us about whether banks were viable to benefit from the program. that took some time. that took more time than they estimated. >> nine months? >> it took nine months to legislate the bill. we did not get the first applications -- approvals until early june. the time frame between when we started getting approvals from the regulators -- it was short. i would have loved to accelerate that process.

we cannot design a program to judge how to look at applications. we had to rely on the primary supervisors to do that. the second frustration was why did you not tell us why we were not eligible? as i said earlier, we have legal protections with criminal penalties on sharing of confidential information. there are a lot of good reasons. to protect the system as a whole. we were not in a position to tell banks why. it has taken us four weeks to work out with the bank supervises a system whereby we can let them know. that is happening right now, as we speak. we have approved a way, consistent with the law, to let them understand why they did not meet the requirements of the program. i wish it could have been different. we are being careful with the taxpayer resources. we cannot force banks to come and apply for credit. we cannot lower the eligibility standards to the point where we

risk putting taxpayer money exposed to risk. we are taking a risk as it is. we want to make sure it has the maximum possible effect. we want to enjoy it has the capacity to look for ways to support the programs in the future. if we had got in that balance wrong in this program, we would have undermined these programs in the future. >> there is no opportunity to appeal? >> that is not quite true. you apply. the decree gives your application to the primary supervisor. -- we give you an application to the primary supervisor. it would be the federal reserve. they provide an assessment of that application to a committee of supervisors. we wanted checks and balances so an individual supervisor was being too tough, there was some checks and balances.

that allows for a pretty careful review. where supervises had new information, they were able to reflect that. i do not know how we could design a process where they could appeal to somebody besides me. if you were in my shoes, i do not think he would want to be in a position to judge, not just for a supervisor, but for a committee of the appears to make sure the wind up being too tough or too soft -- of their peers to make sure it they were not being too tough or too soft. it took us this long. once we started getting assessments from the regular it is, we moved very quickly. >> is there any opportunity -- only $4 billion was allocated -- to apply for more? >> that is in the hands of congress. >> the timing is the way it is now. it is a catch-22.

>> banks had a long time, as you can tell, to get exposure to this program and decide whether they wanted to apply. it is possible, if you were to do this again, you might see a few more. there was a huge national effort by the congress and administration to get the word out. i do not think it was a secret. >> the people who did not receive the funding. >> again, roughly half of the banks who applied did not meet the standards. it is understandable they are frustrated and concerned. it is not a surprise because they have relationships with the supervisors. it was the supervises judgment. i do not know if more time would have increased the number that

was approved. >> thank you. what senator brown -- senator brown. >> thank you for holding this hearing. i want to thank you also for correcting this information. i appreciate you correcting the information that it was weeks not a year to push this through. i remember this clearly. there was guidance sang, $30 billion is the number, 7000 banks coming forward, and her 30 applied only a fraction were approved. -- and nine but 30 applied, only a fraction were approved. why is he concerned? the banks that all but were able to refinance their t.a.r.p. debt.

very little of it went out to main street. four big banks, it was a slam dunk. they got the money. they are ok. with the smaller banks, and ultimately, the main street are aware,-- borrower, it is nothing. >> $15.50 billion capital total since the fall of 2000 it went out to community banks across the country. more than 700 banks. you are mistaken in your numbers. this was designed to be up to $30 billion. we cannot force banks to apply. >> one reason they did not apply was because there was a tremendous amount of red tape. the red tape in applying and

then the process, not having any idea why. i know you have addressed that. >> if you were in my shoes, you would want to be very careful that we are using the taxpayer'' money carefully in this context. judging the help of a bank is complicated. we are not in the position to do that. we had to rely on the supervisors. you would have done the same. the fact that not all banks are eligible is not a surprise. we have a tough economy, coming out of the worst financial crisis since the great depression. a lot of those things are under pressure. they are not going to meet the test of eligibility. the reason we had a smaller yield than we expected, the reason this took some time is because we are careful to protect the taxpayers' resources. >> you said that, thank you. with all due respect, i do not think you can guess what i would do. as i travel around my stick and the country, the number one thing that i find, -- my state and the country, the number one thing i find, it is the uncertainty. this wet blanket over their efforts to create jobs.

in the last year, we had a four hundred -- 488 regulations deemed significant. a cost of $80.70 billion imposed by new rules. we had 64,000 pages of new regulation. 8.9 million hours of annual paperwork. the number one thing i hear, not only from banks, but from individuals and businesses is the lack of certainty and stability. they do not know what is next and they are very scared. they do not want to go in and take advantage of these programs. the people who are borrowing do not want to go borrow because of the strings attached to it. there is a disconnect between getting the money out the door

in a quick and effective and timely matter. >> can i offer two contrary explanations? i think if you look at the evidence, i will cite a couple of things, if you look at the body of regulations proposed by this administration compared to the average in the bush administration, it is roughly in line. there is no increase in the rules proposed. it is unfair to suggest there has been dramatic, sweeping changes that can account for weaker growth across the country. i know businesses always complain about regulation. they want less of it. >> they want regulations they can understand. but usually they want less, too. -- >> usually they want less, too. >> they want to know what the game plan is. they want to know they can walk in, get a sheet of paper -- understand what the process is. i only have time for one more question.

it has been bugging me and many of the people, businesses in massachusetts. the 3% withholding tax issue. you have extended the deadline. it costs more to implement than we are going to get back. why don't you get rid of it so we can move on to something more important and not at that this is -- that uncertainty, lack of predictability. we are not going to hire because we have to pay 3 percent cut withholding. >> we are willing to work with you and any of your colleagues on any idea. happy to take any ideas. we have a substantial body of proposals before the senate today. they are a powerful set. if there are other ideas we are open. >> there are plenty of ideas. we have all made to them. there is no republican or democrat bill that is going to pass. it needs to be a bipartisan

bill. to have you going around the country sank, pass this bill, it is not going to pass unless we work together to get it done. i appreciate you saying that earlier. we have to take the best of both bills. the repatriation issue, whether you are talking about the 3% issue, the employer tax deductions for employers, employees. those are things we all agree on. why cannot we get them done with your leadership and the president talking about those things? >> you cannot legislate without republicans and democrats. you have to find bipartisan consensus. i see that as a challenge in a divided country. the proposals we put before the senate, on the tax side, on the infrastructure side, have had overwhelming bipartisan support in the past. it is not the answer to all our problems. >> thank you.

i want to remind this committee, i know everyone is far stated frustrated about regulatory reform. we do not have oversight. i think it secretary for his patient. i think senator brown for expressing his views. >> thank you for holding the hearing and secretary geithner for being here. like my colleagues on this committee, and you have expressed this, i share the frustration for how long it has taken to get small business lending up and running. the disappointment with the number of banks in new hampshire that have participated. having said that, i support the program.

i think means -- there is $9 billion out there to lend that would not have been there before. i think it has helped the situation. i continue to hear from small businesses in new hampshire, not so much that banks do not have money to lend, but it is more that they have been reluctant to take risk. when i talk to some of my friends in the banking community, their response is they are reluctant to take those risks because what they are hearing from the regulators. i wonder if you could comment on that and the challenge that presents as we are trying to get this lending going? >> i think you are exactly right. if you talk to banks across the

country, let's talk about the small banks, but they still say is that they feel under tremendous pressure to tighten lending standards more than they think necessary. if you look at lending standards, they are much looser than they were six months ago, 12 months ago, 18 months ago, two years ago. banks still say they think their examiners are being too tough. it is hard to know whether that is justified. they say that. they cite that more than the banks do than the concerns with the forthcoming reforms. most of the reforms in a dodd- frank do not touch community banks. they touch the big banks. the fed and the chairman had been looking at ways -- they put out a series of guidance to examiners to temper that risk of excess caution. there is more to do. what always happens in the aftermath of a big credit boom is a standards were too loose and then they over correct. the market can of a correct and sometimes supervises can reinforce that.

-- the market can over-correct and sometimes supervisors can reinforce that. >> the other issue, this is a little off topic, i think it is so important to the underlying concern that we all have, which is how we get this economy moving again. we still have a housing market that is not functioning. the number one at constituent concern that i have had since i got elected has been hearing from people in new hampshire who are facing foreclosure. the difficulty, not without community banks, but with the big banks that are still not willing in any real way to engage with homeowners on modifications and looking at we can at how we can keep people in their homes. there are a lot of people who are able to do that. when we have gotten involved, we can get some of those big banks's attention.

they are willing to look at the mortgages and make modifications. it should not take calling your congressmen or senators office to do that. i wonder if the administration has any other efforts or initiatives that you expect to take to help address this situation? we need to get somebody's attention to this. >> i completely agree. it is still terrible out there. there is no other way to say it. having built this mortgage business, they are still doing an unacceptably bad job at making these new customers. if you look at the total number of modifications that have happened over the last two and a half years, it is between 3,000,004 million.

it is a reasonable number of people that are getting -- 3 million and 4 million. it is a reasonable number of people. there are millions of americans who are at risk of losing their homes if, given a chance, they can keep their house for a period of time. we want to do as much as we can to reach as many people as we can. as you have been reading and as the president said, we are in the process of working with the fhfa, the oversight body of a fannie mae and freddie mac, to put in place a program to allow americans to refinance and take advantage of lower interest rates. our hope is that in the coming days we are going to be able to get the details of a program to make that possible. that is one thing that would help too.

if you can lower your interest rate, you can lower your monthly payment, make your house more affordable. that is a good complement to these modification programs that have been disappointing. it has reached a t 3 milliono 4 million americans. >> good morning, mr. secretary. thank you for being here. all these issues we are talking about, what of the housing crisis, lack of revenue to local state and federal government, at the root of all of this is jobs. >> and weak economic growth. >> none of the people are working. if someone does not have a job it is hard for them to make a mortgage payment. i think he would agree, if you went out and ask people, what is the number-one issue, they would say the lack of jobs. jobs that do not pay what they used to. the employment issues are at the root of everything we are facing. >> the 90% of americans who have a job is that they fear they'll lose their job.

if you do not have a job, your main concern is will he get a job soon enough. >> the issue of jobs -- let me ask you, it is going to be difficult, impossible, to turn around the joblessness issue, the 9.2% rate, without significant and sustained private-sector growth. >> absolutely. >> any job plan, whether it is this bill or the one the president is proposing, any bill that purports to be a job plan has to be judged by what affect it will have on private- sector behavior and job creation. >> i agree with that. there is a good case as a complement to that. for public investments -- to rebuild american infrastructure and reduce some of the pressure on cities across the country to reduce first responders and teachers for the. with that exception, growth is going to come from the private

sector. >> all of it is designed as what government can do to create jobs. as you are aware, both plans call for a surtax on millionaires, to generate a revenue. obviously, you are aware that that answer talks would hit about 30% of small business income. >> let me put it differently. under the tax proposals we have suggested, it is true we have suggested to allow the tax rate from the top 2% of americans. it affects the top 3% of businesses to revert to the level they were before the bush administration. we have proposed to raise the burden further on the most fortunate americans. if you look the growth affect of that, they are likely to be very, very small. we are all trying to back it very difficult -- to balance very difficult pressures.

we want to maintain fiscal responsibilities. >> the rates are going to go up in 2013. the top rate. you are going to add, under the plan, 5.6% surtax. that would put the top rate at 45.2%. >> for a small fraction of american. >> you add to that, the health- care lot -- let's say the top rate will be 45%. you think the top marginal rate being at 45% would have no impact on job creation? >> economists do not agree on anything. if you ask economist, it tends on where they sit on the political spectrum. if you look at cbo's judgment, those tax proposals would have

a very small. you have to look at the alternatives. if you look -- leave the economy with unsustainable fiscal deficit, where if you are cutting spending for there to support those low-tech rates for upper-income americans, that would be more damaging. >> what about the people that greeted jobs. the national the ration of independent businesses say the surtax is a job killer. are they wrong? >> yes. what they are suggesting -- we have a physical choices. we have to govern. >> the manufacturers say the same thing. they say it is a job killer. >> any business that faces a proposal from congress to raise taxes will oppose the proposal and say it will kill jobs. that is their job. >> this is a quote from the president, "the last thing you want to do is raise taxes in the middle of recession. that would take more demand out

of -- the economy." but that is a reason why this act is so important. -- >> that is why this act is so important. if you do not act, they will go up in 2011. >> raising taxes in the middle of a recession. what has changed since he said that? >> good question. the proposal before the contest today -- congress today would lower taxes on all americans who have a job and all businesses across the country. if you do not enact the proposals, taxes will be higher in the beginning of 2012. the proposal we made to raise taxes will only take effect at the end of 2012. it would only apply to a small fraction of americans. we are open other ways to think about how we can pay for things the government does. we are not going to dig our way out of the deficit without

thinking about tax changes. >> i am overtime. the statement the president made was in the context of an interview bragging about the fact we were not raising taxes on anybody. >> we have lowered taxes for everybody. >> he made that in the context of we are not raising taxes for anybody. what has changed? when he said that, the unemployment rate was at 9.7%. now it has not -- it is at 9.1%. >> i would not differ from how hard it is a commie is. the difference is, what should we do about it? the president has always proposed that at the end of 2012 we allow a modest changes that apply to a fraction of americans to go into effect. without that, you are going to ask us to go out and borrow $8 million over 10 years. i cannot do that. >> the surcharge will have no

negative impact on job creation? what you have to look at it relative to the ultimate. if you do not figure out ways to get modest amount of additional revenue to the most fortunate america there are going to be deficit for a long period of time or you are going to ask us to cut spending. that is our judgment. >> line of questioning -- i have been very liberal and given a lot of latitude. this hearing is about the small business lending program. this is all important. as a supporter of raising the surcharge, i want to get one thing straight. i do not, and the members of the senate that are supporting raising taxes on families or individuals making over $1 million, is not the same as raising taxes on millionaires. millionaires are people who have $1 million worth of assets. many people have a million dollar worth of assets.

their income is only $100,000. it is not millionaires, it is individuals and families that have income over $1 million. i want to get that straight for the record. i think it is important not to confuse the two. many americans are millionaires. many of them have made their own million. they have not inherited it. we represent a lot of people who through hard work have assets over $1 million. the proposal -- one of the proposals is to raise taxes on income over $1 million. the marginal rate at 45%, you could argue that. it is a portion over the first million. the first million, they pay a certain rate, over the million, it would pay a second rate. >> a millionaire's tax is not my terminology. it is what i have heard the president said. >> the president has a

different view. for those of us supporting the tax, it is not a tax on millionaires. it is a tax on income over $1 million. i wanted to get that straight. >> can i add one thing? >> i have one more senator. go ahead. >> can i offer one of the way to think about this. if you want to keep those tax rates low, where they are today, for the most fortunate americans, then you have to ask me to go out and borrow one trillion dollars over 10 years to finance it, which i cannot do, or you have to figure out a way to find one trillion dollars in savings from medicare, medicaid, to do it. unless you want to assume peace breaks up around the world. -- out of around the world. you have to make tourists.

we do not relish the concept of letting those expire. we are looking at choices about how to restore fiscal sustainability and silver -- still sustain core functions of the government. >> i am not arguing. i do not want to support anything that will hurt job creation. it is not about protecting anybody. it is about not doing anything that will hurt job creation. >> thank you so much. >> thank you, mr. secretary. i want to follow up. senator had been addressed what i wanted to address -- hagan addressed what i wanted to address. in visiting with our bankers, they were told by the regulators, their primary regular theaters -- regulators

that they qualified, then when the denial occurred, you were the one delivering the denial. they could not get any answers from the folks who told them that they were going to receive these funds. my understanding, as of this morning, the pressure department has notified of those who were rejected to have an opportunity to sit down and have a conversation with a person to explain the denial. i suppose the other complicating factor is that at the stage at which the denial occurred, so close to the end of the program, there was no effective way to appeal, even if you could have sat down to talk to your regulator and say what did i do wrong? let me tell you what we did differently. at this point, it is too late because it is at the conclusion of the program. am i missing something? >> kyiv that it basically right. we are performing under a caboshed you got it basically right. -- you got it basically right. we did not rely just on the judgment of the primary supervisor, the bank supervisor.

we rely on the attachment of a committee of their peers. we wanted to protect banks from the risks that individual supervisors were too tough or too soft. the balance is not perfect. we were trying to be careful. i think we got the balance. >> i have a couple of other questions, semi-related to the topic. i will not wander as far as my other colleagues have gone. the president said something about the consumer financial protection. that was troublesome to me. if the cfpb was in existence, the bank of america would not have been able to raise charges on customers as has been prevalent in the news. is there something in the consumer protection financial bureau that allows a regulator to make a determination in terms of the fees charged by a bank?

>> the cfpb made statements about that issue. let me tell you what our objectives are. we want to take a system where there was terrible protection for the consumers, poorly enforced, people -- and make sure they have a better understanding of what they are paying. that requires more transparency and complicity in their basic fees. we are making progress in that direction. we have a ways to go. we are trying to give consumers a better capacity to choose and encourage banks to be more explicit and clear and simple about the charges that a company, mortgage loan, credit card loan come automobile loan, or a check in account or a debt account.

>> do they have the ability to turn what a reasonable fee is? >> i do not think so. that was not the intent of the law. i would be happy to ask my lawyers. >> part of that statement bother me because it seems like a threat to banks. it did not do what it wanted -- what you wanted it to do. it also bothered me because we greeted another opportunity for a regulatory agency to be fixing with a relationship between a bank and its customer. i have worked at opening markets to cuba since the year of 2000, food, medicine. the result of those efforts has been the passage of tesra. the department has the ability to develop regulations. we have had some success in

those markets. this is related to job creation in the sense that it goes back to the administration's support for trade agreements with south korea, panama, colombia. the more we export the more opportunity for job creation. i thought we always had a silly policy with cuba. if we are the only one implementing dissension, they're going to buy from someone else. -- implementing the sanction, they're going to buy from someone else. we got the law changed. there was a retrenchment. 20% of the sales occurred to cuba after that. it was sales for cash up front. we were successful and adding to the financial services in

general -- and a general government. an amendment that allows for direct payments. cash up front, to get rid of the letters of credit that current regulations require. the challenge now is -- the politics of this issue is always challenging. the administration has a staff in regard to this bill, including objections to this amendment as written. all i am looking for you, this morning, we are working closely in trying to modify the language that will be satisfactory. i want to highlight this issue and ask for your continued commitment to work with me to find the right technical terminology that maybe something the administration would not include in their opposition. >> i'm happy to give you that commitment. >> thank you very much. but when you secretary geithner

-- >> thank you secretary geithner for your work. we are all frustrated that the program did not generate more interest i think -- interest. i think senator levin's point on the delay makes sense. we should have moved in a faster manner. we are also concerned that we had anticipated a much larger interest. in reality, there was not the interest we thought even though, i agree, the need is out there. it is a matter of trying to generate jobs. we need to anticipate the

realities of the banking system in this country. it is interesting that we put out less money from state programs. i can speak for maryland, i cannot speak for the rest of the country, those funds were put up wicker and leveraged very well -- put out quicker and leveraged very well and have greeted results. i was pleased we included that and the administration supported those funds being used for state programs. we can be proud in the manner that was used. i really do applaud the manner in which maryland stepped up. there was another suggestion that did not receive it semitism from the administration. that was the right lung. -- received the same enthusiasm from the administration. that was direct loans. there has been some capacity by the federal government to make some direct loans. there was concern as to whether you can gear up for that. i mention that because, the results on the $30 billion program were less than we had

anticipated. should we be reconsidering the use of direct loans as a way in which we can generate the type of activity that we want, recognizing full well that the evaluation of loan guarantees give you the same risk factors as if we made direct loans? but we have had a chance to talk about this in private. -- >> we have had a chance to talk about this in private. i think you know my views. i would be concerned about the capacity of the federal government to design a national program for rep lending -- for direct lending, both because of the time it would take and the risk that government officials are not the best people to make judgments about credit risk. i understand the merits of that. of going around banks in this context. i think there are special cases in which it makes sense to do that. i would be happy to talk to you

more detail about this. based on the experience across lot of other countries, i think there is a risk that in those programs, you get less good results and it's much harder to get the balance for the taxpayer alike with the amount of risky what the government to take. >> i expected that reply. let me urge us to rethink this. based upon the experience we had with the bank participation program. based upon the facts that we currently about with loans for risk -- the value it loaned for risk, causing the government to guarantee 90% of the loan. the competition factor of having this source available might intrigue the banks to get more aggressively involved in the basic program itself. i would urge us to rethink this. it might help us do what senator snowe and landrieu want done.

>> i'm always happy to take another book at these things. >> thank you. >> thank you for your leadership on this issue. the final questions will go to senator snowe. >> thank you for holding this important hearing. i would comment on this during discussion. it is well within the realm. it ranged on a number of issues because it all but small business bottom line. all of these issues enter into the fray in terms of how we are going to reconcile major impediments to job creation. the whole issue of job creation, that is what it is all about, and being precise. we have a focus like a laser but

we have to get it right. we are 24 months into a recovery. we have spent $800 billion in stimulus. we have had a $700 billion in the t.a.r.p. quantitative easing was $600 billion. we have had the maximum when you think of all the stimulus and monetary policy. here we are, when you think about it, and calculations that i have read, that 40 months since the start of the recession. generally, you get an average of 7.6%. this is the case of four of the greatest recession since world war ii. we are at 0.1%. the trial and error have to be over now. we are in this new norm that we cannot accept, that is the 9% unemployment rate. if you look at the track record, it is disturbing. that is the message i want to impart.

if there is one message i can give to you. it is not working. people are hurting. we hear the same things over and over again. i wish we could tackle tax reform and regulatory reform. you mentioned the small business lending fund, i do not how you mentioned-measure the success. how do we know? do we know how many jobs have been treated? you also mentioned the present -- have been created? you also mentioned job created. where does that number come from? >> we have not given our own estimates about what the job of that would be of the jobs act. what we try to do is give congress a range of independent estimates. can i respond to your central point? i want to offer two things.

the economy is much weaker than any of us would like. it is lower today than it was in the early quarters of the recovery because of the following reasons. it is important to understand the reasons. it is lower because we had a damaging slump of oil prices. we had a disaster in japan. we have a crisis in europe that is having a huge negative impact. and we have an economy still healing from a long period where we took on too much debt, built too many homes, and there was too much risk-taking and leverage in the financial sector. those factors give us a weaker economy growing more slowly than we would like. the question is, what can we do about it? i think what i would offer back is, apart from tax reform, i share your views. we should not be living with this much uncertainty. it makes no sense for us as a country.

what can you join us in supporting, because those things alone. while we can agree and regulatory reform, they're not going to be fast enough, and that is why we are focused on long-term infrastructure, and that is where we are focused on the set of temporary taxes. things to help make sure in 15 months or so the average american has lowered taxes, and

without that, the economy will be weaker. i am not sure how much we can do, but that is not going to be announced. >> there is a package for temporary incentives for one year, and you have tax increases but will affect small businesses. they're putting the cart before the horse. why can we do tax reform right now. >> if we do not do these things now -- >> we need to reach the private sector. one year is not going to create certainty. that is the problem. you can do some of these things, but you need the larger picture now.

a lot of people i have talked to across a range of the private sector, we need to be growing the private sector. they are not going to take those risks. it is not getting better. their members are going to add more employees next year. it is down from 19% in july, so it is going in the wrong direction. you could make a fundamental change if we work together on the key issues. if everybody is talking about it, and we could shift the conversation. the is what counts now. you got to work with them because they are the ones we depend on, and if it is taxes and regulations, let's do it now. you kept saying we are going to

get it on the floor. we have not done anything. >> i would ask you to think about the following thing. the reason we need to extend temporary tax measures is because if we do not the economy would be weaker. i agree there are some fundamental long-term things we need to get right. we are happy to move as quickly as possible why can we do that now at the committee. why doesn't the president work with congress to get this done? >> i am happy to do that, but we have to get the near-term stuff done, too.

>> thank you for holding this hearing. i appreciate your focus on this. i just have a few questions. thank you for hanging around and taking our questions. first, i have a letter from liberty bank shares in arkansas. it's as liberty bank provides for small and medium-sized businesses. we are experiencing an increase businesses. he says, we complement the u.s. treasury on its handling of the application and, approval, and confirmation process awhile. the process was completed with a minimal difficulties, which we view as quite an achievement, given that the program is being

initiated for the first term, some people are happy with some of what you are doing a curator -- know what you are doing. i have of bill. basically what it allows people to do is set aside their own money tax-free where they can set it aside tax-free, and to me it seems that is a good approach because people are using their own money. do you have any comments on that legislation? as i am happy to look at that. i am happy to work with you on both of those things. i think there is a very good

case to look get the things we can do in this contest. we are open to and new ideas. >> that is a 25% tax credit for angel investors common and and that could get us over the hump. i would love to continue to work on. this is a great financial institution. they are doing well, even boehner they still continue to be strong. they say there is a lack of demand for small-business loans. the banks are not lending to them, so it seems when i talked to both of them they say the regulators have made it more difficult. would you tell us how that is working and what we can do to get our economy out of neutral?

>> lending demand fell a lot during the recession. growth was relatively slow, and many people are too much. overall demand for loans was very weak early in the recovery and has been slow to take out. they are dramatically improved, and lending terms come back to an normal in this context, but some of them have trouble getting credit because they depend on breaks -- banks, and

it has hurt him in this context. you might find it hard tune find a new bank. there is obviously is some risk that examiners are being pretty tough, and maybe for some, i think the best thing we can do to mitigate that is what we are doing, we choose to make sure they have access to capital. there is a whole range of things we can do, and i will continue to work on it. >> one last thing.

this is from homeland security. one of the cases i have been working on has been turned over to the irs, so a of we call to have a meeting. my only request is that we talked to the right person. we would love to do that this week. gerd thank you. >> thank you. you have been very patient, but you are a popular witness. >> i do not think popular is the

word you are looking for. >> i want to thank you all on republican as the democratic side. i would like for you and your staff as we consider what our next step might be to tell us the recommendations for improvements if we were to go on. i have a few suggestions myself, and i have learned a lot today. i want to underscore the points made about thanks reassessing collateral against small- business loans, because if we do not come up with a way to address that, we may go through another round of the devaluation and a softening of lending, and

you know the extent of that, and we're going to submit some ideas, and finally, given that we have discussed trade with cuba, tax reform relief, regulatory reform, and the price of bread, we now have all the argument we need to rise for more money and the staff to cover these issues. gone plus -- god bless you so much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

the presiding officer: without objection. mr. mccain: i thank the president. mr. president, today we come to the floor to talk about the importance of the defense authorization bill. for 50 years, five zero, 50

years, the congress of the united states has enacted a defense authorization bill, enacted it do law and had it signed by the president of the united states. now, there have been times when this legislation has been very contentious. days during the vietnam war, days during operation desert storm, operation iraqi freedom, bosnia, companies owe voe, all -- kosovo, all of those times the defense authorization bill has been a vehicle for debate and votes on the floor of the senate concerning transcend ant issues of national security. and for 50 years we have cared for the men and women who have served and provided them with the equipment, the pay, the benefits that the men and women of this country deserve, with hundreds of hours of deliberation, thousands of hours of written testimony and testimony before the committee, full committee, and

subcommittee, such as the chairmanship of the senator from the state of georgia. and now because of a part of the legislation the majority leader has decided that we will not take this bill to the floor of the senate. that, my friends, is a betrayal of the men and women who are serving this nation. now, i understand that there are differences on the issue of a detainee treatment. i understand it's an emotional issue. but should it be a reason for the united states senate to carry out its 50-year tradition and debate and discuss and amend and vote and come out with a package that provides for the needs, the training, the equipment, the benefits of the men and women who are serving? i quote from a letter from the -- from the distinguished majority leader who says, and i

quote, the letter to be senator levin and to me, he says "however, as you know, i do not intend to bring this bill to the floor until concerns regarding the bill's detainee provisions are resolved." is that the way the senate works? that we don't bring bills to the floor unless objectionable -- that are disagreed with by one side or the other are not resolved? i always believed the way these issues are resolved is through debate, through amendments, through votes, through allowing the american people also to see and hear our deliberations, our discussions, and our debate. so now it appears -- and obviously the fiscal year has expired, and so this bill is obviously long overdue. so now we are in a position that apparently the majority leader wants to take up the president's

job bill one by one, apparently, in complete disregard of the needs and the requirements of the men and women who are serving in our national security. part of that bill also is the intelligence parts of the bill from the intelligence committee. the senator from georgia, who i -- and by the way, i note the presence of the senator from south carolina who knows more about detainees than any member of this body without question. he continually travels to iraq and afghanistan, he has visited the prisons, he understands the issues better than anyone. and i'd be willing to ask him how he feels about the detainee provisions after the senator from georgia makes a comment about the importance of the intelligence portion of the defense authorization bill. mr. chambliss: i thank the senator from he arizona. this is the ninth defense

authorization bill that i've been involved in since i've been a member of the senate, and i must say that the refusal to bring this defense authorization bill to the floor by the majority leader is truly disheartening. it's critically important that we address the issues not only of what's going on in iraq and afghanistan, but the day-to-day operations of our military from the standpoint of pay raises, quality of life, purchase of weapons systems for future use, any number of issues that are included today and the refusal of the majority leader to bring this to the floor because of his objection to a very critical aspect of this bill truly is disheartening. during committee consideration of the bill, committee considered and adopted by a vote of 25-1 a comprehensive bipartisan bill -- provision relating to detainees. we have no detainee policy in

this country today. if we had captured bin laden, what would we have done with him? if we had captured anwar awlaki, what would we have done with him. certainly we could have gained actionable intelligence from either one of those individuals, but we have no detainee policy in this country today. we have nowhere to take them to that we can hold these individuals and ensure that they don't get lawyered up quickly and that we're unable to get the type of information that we need to get from -- from individuals like that. over the past several years there's been an ongoing debate about the importance of being able to fully and lawfulfully intergate suspected terrorists. one thing is clear after all these years that our nation still lacks this clear and effective policy. this bipartisan detainee compromise goes a long way toward ensuring we can get timely and actionable intelligence from newly captured

detainees connected to al qaeda and other terrorist organizations. the compromise also provides for a permanent process for transferring guantanamo detainees to other countries. and we're in the midst right now of review within the intelligence committee of the thought process that went into the transferring of the detainees by both the bush administration and the current administration, and i will tell you that there are real flaws in that policy. those flaws have resulted, according to the d. niemplet, general clapper, of a recidivism rate of guantanamo detainees of 27%. that means 27% of the individuals that we have released from guantanamo and sent to other countries who have been willing to take them under various agreements, 27% of them have returned to the battlefield and are killing -- seeking to kill americans.

so the policy is not only about detainees, but policies with regard to what we do with guantanamo detainees is extremely important. there were a number of us that were involved in those -- the amendments that went into the authorization bill in committee. senator graham from south carolina, senator ayotte from new hampshire was integrally involved. and let me just turn to senator ayotte, and from the perspective of the people of new hampshire, where do you think we are with respect to a detainee policy in this country today? ms. ayotte: thank you, senator chambliss. i would say this, you highlighted the importance, number one, as did senator mccain of passing the defense authorization. i have been to the floor twice on this issue because i think it's so important for our country. the notion that it's been half a century since we have failed to

pass this authorization, what is at stake for our troops and for the troops and the message that it sends to them. we still are at war, in two wars. there are threats that face our country every day, and our military men and women, we owe it to them that they know that we're going to pass this authorization to address issues like pay increases and issues like weapons that they need, and all of the fundamental day-to-day issues to make sure that they know that we're behind them. but this issue of the detainee policy of this country, i would summarize over the last few months in the armed services committee, military leader after military leader has come before our committee, and we have asked them about this issue of how do we treat detainees. and i questioned general carter himm, the commander of the africa command about what we would do if we captured a member of the al qaeda in africa. he said he would -- quote -- need some lawyerly help to

answer that one. is that what we have come to? our commanders need lawyerly help in order to know how to deal with captured terrorists and how to treat them within our system to make sure that we have a secure place to gather intelligence from them and to ensure that the american people and our allies are protected? this detainee compromise that the majority leader is holding up the entire authorization bill for was an overwhelmingly bipartisan compromise. this provision in the committee was voted 25-1 in support of this because there is such a need to address how we treat detainees. and as senator chambliss already highlighted, we have a 27% recidivism rate from those who have been released from guantanamo. just a couple of examples of what those individuals are doing right now, against us, our troops and our allies.

for example, the number two in al qaeda in the arabian peninsula was someone released from guantanamo. another top commander of the taliban in the kadasura is out planning attacks, someone we released from guantanamo. that's why this issue cries out for a detention policy for our country. this is a very important issue to be brought to the floor along with the entire authorization, and i see my colleague from south carolina here, senator graham, who i know has worked very closely on these detention issues as a j.a.g. attorney and someone who has visited afghanistan just in office. i would ask him, have you ever seen, first of all, in your time in the senate us acting like this with respect to the defense authorization, the senate in this way? and second, how important do you think it is that we address this detainee issue?

mr. mccain: could i just say i thank the senator from new hampshire and the enormous contribution she has made in putting together this legislation. and i would also like both of you and my friend from south carolina in the letter to address this issue, in the letter that senator reid, the majority leader, i would ask my colleague, sent to senator levin and me, he used as the rationale for not bringing the bill to the floor, he says i do not intend to bring this bill to the floor until concerns regarding the bill's detainee provisions are resolved. it goes on and on. and then he says, as deputy national security advisor john brennan stated in a recent speech, he said, in sum, he said this approach -- talking about the approach that we have taken in the bill, i believe the vote was 25-1, he said this approach would impose unprecedented restrictions on the ability of

experienced professionals to combat terrorism, injecting legal and operational uncertainty into what is already enormously complicated work. i wonder if the senator from south carolina -- does mr. brennan understand what's in the legislation? mr. graham: well, i thank the senator from arizona and all of my colleagues for working on what is a very difficult subject matter, but when 25-1 becomes the outcome, that's pretty good. and i don't know what the -- this is not -- quite frankly, i like senator reid. this goes back to the white house. this is president obama's team. this is not harry reid. this is not the senate holding up this bill. it's the white house holding up this bill because they have an irrational view of what we need to be doing with the detainees. they have lost the argument, and i tried to help, to close guantanamo bay. it's not going to close. we're not going to move those prisoners inside the united states. the congress has said no.

the american people have said no. and the reason we have lost that argument is after working with the white house for about a year and a half to try to find a national security-centric detainee policy that would ensure the american people that we're not going to let these people roam around the world and treat them as common criminals, they could never pull the trigger on the hard stuff. we're here because the white house cannot tell the aclu no. there are 48 people at guantanamo bay being held under the law of war who will never see a courtroom, military or civilian courtroom, and that's part of military law. you don't have to let an enemy prisoner go. most enemy prisoners are never prosecuted. and they are being held down at guantanamo bay under the law of war in executive order issued by the obama administration gives them an annual review. we have been trying to work with the obama administration for a couple of years now to create a statutory scheme to deal with every class of detainee that we may run into in this war that

will go well beyond my lifetime. and the reason that mr. brennan objects is because there is a decision made by the congress to say that if a detainee is captured and interrogated by the high value interrogation team which i like, which is an interagency combination of the c.i.a., the f.b.i., military and other law enforcement agencies to make sure we get the best intelligence possible, that we create a presumption for military custody. and the reason we're doing that is because the obama administration has been hellbent on criminalizing this war. sheikh mohammed, the mastermind of 9/11, had charges against him during the bush administration and he was ready to go to trial, literally ready to plead guilty. the obama administration withdraws those charges and was going to put him in norkd, giving khalid sheikh mohammed the same constitutional rights as an american citizen, take that show on the road from

guantanamo bay and have a trial in the heart of new york city that would cost $300 million alone for security. that blew up in their face. you just don't get it. most americans don't see these people as some guy that robbed a car -- stole a car or robbed a liquor store. most americans see the detainees that we're capturing on the battlefield throughout the whole world as a genuine threat to this country. and i applaud the obama administration for taking the fight to the terrorists, for going after bin laden, for using predator drones on the battlefield all over afghanistan and pakistan. what i fought them with is that we have no way of capturing someone and acquiring good intelligence because you have locked the system down. and this detainee legislation that we have before the senate will allow a way to go forward. what happens if you capture someone tomorrow, where do we put them, what jail do we have as a nation to put a captured terrorist in? we don't have a jail because they won't use guantanamo bay. they captured a terrorist and

put him on a ship for 60 days. the navy is not in the detention business. we don't build ships to make them jails. we build ships to fight wars. so this aversion to using guantanamo bay is going to bite us as a nation. so this legislation allows us to move forward. if you capture someone, you can gather good intelligence. there is a presumption that they are going to be held as an enemy combatant, but there is a waiver provision there. what i don't want to do is start reading rights to everybody we capture in the united states as part of a terrorist organization's plot. we're not fighting a crime. we're fighting a war, and under the rules of war, you can hold an enemy combatant and interrogate them as long as necessary to find out what the enemy is up to. that's what this legislation does to my colleagues. you have written a very balanced approach. and this idea of never using guantanamo bay again is dangerous. the idea that the c.i.a. cannot interrogate enemy parissers in

as a policy is dangerous. by give order, the president of the united states, president obama, within a week of taking office took off the table enhanced interrogation techniques under the detainee treatment act that were classified, that were not waterboarding within our values, but they were techniques available to our intelligence community, senator chambliss overseas, that will allow them over time to acquire good intelligence. one of the reasons we captured -- killed bin laden is because of the intelligence picture we acquired over ten years. but this president within a week said by executive order the only interrogation tool available to the united states of america is the army field manual which is online, you can go read it for yourself. mr. mccain: i ask my colleague, it's a fact, as the senator from new hampshire pointed out, that 27% of the detainees that have been released from guantanamo bay have returned to the fight. not only have they returned to the fight.

the fact that they were in guantanamo gives them an automatic kind of charisma and aura and leadership in al qaeda and other terrorist organizations. and is that -- do you think the american people find that acceptable, that one out of every four that we have released from guantanamo bay have re-entered the fight and clearly are responsible for the deaths of -- at least of some brave young americans and may be responsible for the deaths in the future of americans? mr. graham: not only i think are most americans upset by that, but they are worried about what comes down the road. that's what i'm worried about. the senate legislation is trying to create a pathway forward for the future. what do you do with these people we have at guantanamo bay that may never go on trial? what do you do with these people at guantanamo bay who come from countries if you return them to that country, they would be back in the fight by the end of the day? mr. mccain: as has happened in yemen. mr. graham: so we have a

bipartisan proposal thatl house is holding it up, and there is -- there is provisions in this bill that affect the day-to-day lives of the men and women in our military, and the white house is saying detainee policy driven by the aclu is more important to them than a bill that would allow the c.i.a., the authorization they need to go fight this war, that would provide wounded warrior assistance at a time when wounded warriors need it the most. you talk about perverse view of things. you talk about having it wrong in terms of what's most important. allowing the detainee issue to deny the c.i.a. the authorization they need to protect us all is dangerous. to put the men and women's needs in uniform in terms of their health care, their pay, their ability to take care of their families, secondary to detainee policies that make no sense driven by the far left in this country is what this debate is

about. well, to the white house, we're not going to change this bill. mr. mcconnell: would the senator yield for a question? mr. graham: yes. mr. mcconnell: then am i correct, i would say to my friends from south carolina and new hampshire and arizona, that because of the administration's opposition to a detainee treatment provision that was, i gather, approved overwhelmingly in the armed services committee, we will for the first time deny everybody in the senate an opportunity to offer any amendments on any subject to the d.o.d. authorization bill and in fact will not consider it on the floor of the senate for the first time in four decades? mr. graham: the minority leader is absolutely right, but i would just add to my good friend from kentucky, even more -- it's not just about us. what we're denying is general petraeus, the new c.i.a. director, authorization language he desperately needs to fight the war.

what we're denying is men and women in uniform pay raises, health care benefits that they desperately need because of detention policy driven by, i think, the most liberal people in this country and 25 out of 26 senators blessed this package. so senator mcconnell, you are absolutely right. not only does the senate not have a say about what would be the way forward on detainees, the men and women in uniform and our c.i.a. operatives out there taking the fight to the enemy do not have the tools they need because of one area of this legislation, and it would be a national tragedy if we could not pass this bill which is sound to its core in all areas because the aclu doesn't like what we have done on detention. mr. chambliss: senator, if the minority leader would yield for a question? as you well know, the intelligence community depends upon the defense authorization bill for the authorization to

operate in the intelligence community. whether it's the budget or whether it's policy. all of that is compromiseed in the majority leader's refusal to bring this bill to the floor. and without the authorities and the respective intelligence bills that are passed by the house and by the senate, then our intelligence committee is handicapped and hamstrung in policies that are needed as we move forward in this ever-changing war on terrorism. by ask the senator from kentucky if he has ever in his long experience in the senate, ever seen any bill of this nature held up and not allowed to come to the floor because of any single senator's refusal to accept the provisions that are in the bill by an overwhelming vote like this. mr. mcconnell: mr. president, i'm not sure who has the floor but i would say in response to

my friend from georgia -- mr. mccain: i would say we have unanimous consent for a colloquy. mr. mcconnell: there may have been examples but i'm hard pressed to think of one recently. and the tradition of the passing the defense authorization bill is there for a good reason. the national defense of the united states is the most important thing the federal government does, and the committee upon which the senator from georgia and the senator from arizona and the senator from new hampshire serve are the experts on this the matter and i find this truly astonishing. it's consistent, however, i must say with the pattern around here in recent times. no amendments, fill up the tree, deny the majority and the minority in this case, both the majority and the minority, the opportunity to have any input on a piece of legislation that determines what we do in the federal government's most important responsibility. i think this is another example

of the way the senate has deteriorated into operating like the house. and it's extremely bad direction for this institution and for the american people. ms. ayotte: i would just like to add as well this detainee compromise as senator mccain and i have talked -- have talked about before is actually the group of individuals that we're talking about here are military custody for members of al qaeda or affiliated groups who are planning an attack against the united states or its coalition partners, and you think about that category of individuals, the most dangerous category of individuals that we have to address, is why we came to the compromise in committee that the default would be military custody for those individuals and it's

inconsistent with the administration's position. if you think about it, they are rightly so and i agree with them, undertaking -- taking out members of al qaeda around the world that fall under that category that are out there killing americans and plotting against americans and our allies. yet they're objecting to a provision, a detainee provision that would give guidance to our military and intelligence leaders that those individuals should be treated in the first instance with military custody seems to me very inconsistent with what they have been doing in other contexts and obviously this is a category of individuals on a bipartisan basis we agreed to in committee were the most dangerous category of individuals who should be held in the first instance in military custody. and i wanted to add that mr. brennan, whom the majority leader has cited on behalf of the administration as objecting to this provision, he doesn't seem to in his speech to harvard that he gave recently to

appreciate who this provision applies to and that there is actually a national security waiver in the provision. so i would ask the administration and mr. brennan again to read the provisions that were passed on a bipartisan basis by the committee because this is such a key issue to move forward to give guidance to our military, but i'm concerned that the administration's objections to this are misguided and they haven't read the actual legislation we are working on here. so it is my hope as the majority leader -- excuse me, as our leader, the minority leader has said, that we will move forward with passing the critical pieces for our troops because our troops deserve nothing less than for us to bring this forward to the floor because of the pay raises in there, the weapons systems that they deserve to have, everything that is in that bill. but also i would ask the administration to revisit its position because it seems inconsistent with its own policies and they don't seem to

have actually read the compromise that was overwhelmingly passed out of the armed services committee. mr. mccain: i thank the senator from new hampshire. i know that we have addressed this issue in some depth but by remind my colleagues, this is the defense authorization bill. this is the product of thousands of hours of work, of staff work, hundreds of hours of testimony and hearings, a week-long markup with the full committee putting this package together. the thoughts, the ideas, the recommendations of the administration, people in and out of the administration, the knowledge and expertise of thousands of individuals goes into this most important piece of legislation. that for 50 years has been taken up, debated, amended, passed and signed into law by the president of the united states.

now because of one small provision of this bill, the majority leader of the senate at the behest of the white house has decided that we won't take up the defense authorization bill for the first time in 50 years. i think that the distinguished republican leader and i, who have been around here for quite a while, have seen this process now deteriorate to the point where we now cannot debate, amend, and pass legislation that is so vital to our nation's security and the men and women who take part in preserving it. kind of a sad day for this member. mr. mcconnell: i would just finally, i'd ask both the senator from arizona who has been our leader on national defense issues and the senator from new hampshire, the basis of this, if the administration wants to establish the precedent that they can capture enemy

noncombatants anywhere in the world and send them straight into the united states into and article 3 court, is that the crutch of this, by ask my friends? ms. ayotte: i would say to our distinguished republican leader, i think that is at the heart of this, they want to treat these individuals in the context of our civilian court system. otherwise why would you object to a provision on military custody for those who are members of al qaeda who are planning an attack against the united states or have attacked the united states? because in -- and also by point out there is a national security waiver in this provision. so the only thing i can take from it is they do want to treat this war as really people who are enemy -- we're at war with as civilians as opposed to who they are, which are enemies of our country. mr. mcconnell: could i ask the senator from new hampshire, a former attorney general, a

further question. does this not lead inevitably in the direction of a mindset that would say on the battlefield you capture an enemy combatant, and that enemy combatant is inevitably on the way to an article 3 court, could it lead to the feeling that that enemy combatant should be read his miranda rights on the battlefield? if he is viewed as an individual who is on the way to a u.s. court, under u.s. law, where does it end, i ask my friend from new hampshire. ms. ayotte: i would say that's an absolute concern here because this would be the first war in the history of our country where we would be treating those we capture on the battlefield, giving them the rights to our civilian court system. and that is where do we draw the line?

it would be outrageous to require members of our military and intelligence officials to immediately ask do i have to give miranda rights, do i have to give the same -- do i have to worry about some of the speedy trial and presentment issues that come from a civilian court system. and that's why in the guidance of the committee on a bipartisan basis was that this category of individuals, the presumption should be military custody because these are individuals who are enemy combatants that we are at war at and that's fundamentally at issue here and it does seem inconsistent with what the administration is doing in treating these individuals in terms of rightly going after them around the world and killing them in certain instances, that we wouldn't provide them military custody in the first instance. mr. mccain: could i also point out to my friend and my colleagues, that as is the case quite often with even though the

vote was 25-1 on this provision in the senate armed services committee, we did provide at the request of the administration a waiver for national security. so we included a waiver that says the secretary of defense may in consultation with the secretary of state, the director of national intelligence, waive the requirements of the paragraph 1, that's the detainee issue, if the secretary submits to congress a certification in writing that such a waiver is in the national security interests of the united states. so there is a national security waiver. we've given the president of the united states a way that he could waive every provision of this legislation. something that i wasn't particularly happy about, but in the spirit of compromise, we gave a waiver. and could i say also, i'm sure i see the majority leader on the floor, yes, there have been contentious times. there was contention last year about the "don't ask, don't tell" act, last year there was

contention about the fact they added the hate crime bill which had nothing to do with national security on to the bill. but at least we ought to go ahead and take up and debate and amend and have the senate act as the american people expect us to, and that is is consideration, voting, and the president if it is that objectionable, obviously could veto the bill. but to just say because of these few pages, these pages right here, of the bill, that therefore we won't even take up the bill for the 50 -- for the first time in 50 years, in my view is a great disservice to the men and women who are serving. i thank my friends, the senator from new hampshire and the minority leader. i yield the floor.j;j;ç9y9u9@?h9

between auto industry and this white house, it offends me. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] that collusion offends me under republicans as well. people look at the money goes into washington, they look at lobbying and campaign donations and all the rest, and they say what we have to have is more government regulation, more government oversight, more government control of these businesses, more government involvement. and then they are shocked when businesses give money go washington. the way you solve these problems is create a what -- a high wall of separation between business and government. you cannot simply say businesses giving money to politicians. you have to have politicians need to get out of the business of running business. until that happens, if a corporation has as its bottom line depends entirely on what washington does rather than what the market or the consumer

wants, then that change is to deal with washington rather than the consumer or the market. it is the essence of liberal mainstream politics, not necessarily marxist or leninist, although that caller is completely wrong when he says there is absolutely no marxist leninist stuff going on down there. he should read what people are actually saying and what speakers are saying when they address the crowd. they are advocating source alyssum for marxism, but -- socialism or marxism, but regardless, get the government out of the business of running business. until you do that, it is inevitable that business will get involved in government. host: if your answer to from hearing from the protesters, we had one group involved on our show this past saturday. go to c-span.org in our video library, you can listen to that interview.

eric is an independent in sunnyvale, california. go ahead. caller: i really appreciate what the last caller had to say. the gentleman you have on right now is obviously very intelligent and well spoken, but he speaks a lot of double talk. the facts are, there may be some things that can be learned from government. i don't know marxism are leninism, but we need a national health-care policy. we need of affordable health care. i find it difficult to deal with an electronics company, he has 14 times the national wage parity seen mobil oil making $400 million in the year that oil prices those of $100 a

barrel, and you have a tipping point for an economic collapse in 2008. host: what are you calling for? caller: this is what the people are complaining about. it is lopsided. host: so economic justice. caller: is out of whack. guest: it is perfectly legitimate to say that things are out of whack. the culture of wall street and ceo's, taking it to peer groups and not pay. -- not based on performance. that is nonsense. when we switched from giving ceo salaries, because everyone was offended by how high they were, to the stock option plans which blew up their compensation even more, those are all legitimate grievances. i am not a fan of the culture of high finance and the ceo culture. but because i do not like

something does not mean that i think that government meddling will pick said rather than make it worse. -- will fix it rather than make it worse. high oil prices, every few years they get really high. we have conservatives in the free market saying we need to drill for oil and get more supply, and liberals and leftists say that we cannot do that, it will be 10 years before this becomes available. 10 years of but -- opt-in years later, we are having the same argument. maybe prices would be lower. host: pittsburgh, pennsylvania. caller: mr. goldberg, i watch a lot. what if we propose to and holding tax where everyone over $10 million, counting everything that they have including trust funds, paid 40%

of it. one but it has $32 billion, bill gates -- george soros is the same. russell simmons, that is $40 million. host: let us get his take. guest: i would have to look more at the actual proposal. i do not go into discussions of tax reform. figuring out how we can slice of ever greater portions of millionaires and billionaires, the whole idea that only billionaires' and millionaires pay their fair share and all the rest, it does not hold water for me to begin with. i am not in the business of how -- one buffett annoys me today, but i'm not looking to punish warren buffett.

host: from twitter. guest: again, i think they are justifiably angry. what do you want to do with your anger? and during its own right is either good or bad. do you can kick in and or dig a well -- kick a kid in or did it well? to the extent that the occupy wall street guys are the yeoman, rugged individualist, building their own water reclamation systems, biodegradable yerts or whatever, that is great. but when they demand sweeping government intrusion into the free market and all the rest, or when they start violating private property or exhorting violence, that is where i draw a line. host: what do you make of the

"usa today" paul this morning? -- poll this morning? more blame washington over wall street. guest: that gets to what i was talking about. a lot of people intuitively understand -- and i think this is true of occupy wall street as much as the tea party, and you cannot talk about wall street excess in the states without talking about government. you cannot talk about government without talking about what is going on with the private sector. they are in deter -- they are interrelated and i want to pull them apart rather than push them together. caller: excuse me? host: you are on the air. what is your question or comment? caller: i respect his points but i am asking him to be open- minded on what the movement is about or should be about. they need to take the money out of politics in general.

ok? washington is basically corrupt. big money puts these people into office and they get the lobbyists and special interest groups to approve their agenda. now we have the economic collapse, ok, a lot of people lost their jobs, their 401(k)'s, their homes, and now republicans and democrats what to want -- what to do combined is say, we need to cut spending. do not cut it at a person's expense that is on disability, that gets left -- it's less than $1,000 a month with a huge medical problems. go to the people that got these bailouts, that that trillions sitting in the bank's, offshore in the cayman islands.

guest: i feel for the caller. he has reason to be met. -- to be mad. this idea about money in politics, that the money gets into the politics because there is profit in it, and it is also because people want politicians to support their views and the rest. it is not all nefarious and evil. the idea that there are billions behind-the-scenes is one of the great mental pickups in these debates. -- mental hiccups in these debates. the other thing is if you ask 10 people what is really about, you get 11 different answers. if you ask occupy wall street, you would get a bunch of answers that if i repeated them on there, people would say that i was slandering the occupy wall street movement.

33% at the actual wall street protests in doors of violence or something like it. -- endorse violence or something like it. they are a bunch of typical central casting campus left wingers whoever found an interesting marketing angle. a lot of people who are sympathetic with the movement, they are projecting a on the occupy wall street movement something that the people actually in the park do not believe in. they want to make it into a mainstream thing by projecting their hopes and dreams upon it, rather than looking what the actual people believe and say. host: you also wrote in your article about this movement, many are open about what they claim to be their motivation. why?

guest: democrats, eugene robinson and these guys, they had been looking at that tea party past success. a mass movement, to centralized, grass-roots movements, and yesterday koch brothers came and twirling their mustaches later and all the rest. but they have been watching all of that and nothing -- moping like a dog whose water bolas been moved. -- whose food bowl has been moved. outrageous. that we have a politics of mass protest that isn't coming from the left. but obama and the democrats had been hurt to some extent by the quiet of the hard left in this country. they basically supported obama

rather than playing the usual game of complaining about how liberal presidents are not liberal enough. one of the benefits is that when you are extreme fringe makes you, it makes you seem reasonable and mainstream. because they got quiet, it allowed obama to seem more left-wing than they wanted -- than is healthy for a president seeking re-election. host: here is an e-mail from a viewer. i am curious if you have gone to the source. guest: i have about five colleagues who have spent days upon days down there. i do not just watch these left- wing ones. i don't watch the ones put out by recent tv -- reason tv, but also the ones put out on youtube as well. i like to get down there at some

point. at just have not had a chance. hollen also like to see a kangaroo. i am sure that they exist in australia even though i have not seen them myself. caller: i want to confirm what you were just saying. i went to school and at this they did this -- and i decided to go by, and there are thousands and thousands of people, and nassau maybe 40 that -- i saw maybe 40 that 50 people, absolutely disheveled, and no one i would associate with. i suspect, i cannot prove it, but i suspect that this movement is funded by left-wing and they are being supplied water and tents.

it would've gone away weeks ago if they had not been supported. i cannot prove it. i agree with what you're saying is that the irony is that these movements, these people are not coming to grips with the fact that government caused a lot of these issues. if you go on youtube and look at the arguments of barney frank's about how the republicans are trying to investigate fannie mae and they are saying, no, everything is fine, and housing market is the most durable market that we have. all people have to do is go on youtube and look at the congressional debates. they are right there. if you give the baby a cookie jar, they will go in and take the cookies. that is what the banks did. most of our problems today.

guest: i basically agreed with the caller. if people want to read at the size breakdown of the narrative of where we got into the financial breakdown, peter walliston from the "wall street journal," google him. host: jonah goldberg is our guest. john on independent line, go ahead. caller: i want to know, why does mr. goldberg get all of this plea on c-span? -- all this play on c-span? who does he know? he does not have the experience to state his opinion about nothing. he is a kid born with a silver spoon in his mouth. host: how you know that? caller: because of his name.

host: we will leave it there. ron, democratic caller, go ahead. caller: you're really talking about public campaign financing when you talk about getting money out of politics. there is no other solution, making sure that people have skin in the game. host: let's take that point. guest: i am against it and not because i am outraged by it, although i am outraged by some of the things it would necessitate. i do not think it would work. before you get invoking the principle, it simply would not work. the reason why corporations get involved in politics is because washington arranges the economy in such a way to such a way that it is in their interest. walmart had no lobbyists until congress started going after walmart.

microsoft had won lobbyists until republicans and democrats started going after microsoft. now it is all due to the fact that washington got involved in their bottom line. a fantastic book that explains this in a very easy way is tim kearney's "the big rip-off." the problem with campaign finance and deliver to arias -- and the dollar torras delet -- the bad impact, it would find a way to express themselves and politics for the note -- the more you try to bring that out of politics, the more creative they will get. all these high-29, and stealth -- 529's and stealth campaigns,

and all the rest. these are all the result of honest and decent people who for a mixture of principled reasons are economic self- interest felt a burning desire to express their view and politics. that is going to happen the more the government gets involved in people's lives. it's also social issues, abortion, gay issues, all the rest. the more government gets involved in people's lives, people are going to express themselves. host: new york. caller: you want to get the government out of business with too much regulation of business. you know something? if businesses were angels, they would not need regulation. nothing happened in 2009 when the banks burst. it at least disaster and people lost jobs and massive amounts of money.

" we need is more regulation. remember that triangle shirtwaist factory, it took that to bring about regulation of businesses and industry and to bring about labor laws that protected women from the kind of abuses that were suffering. host: i am going to add to your comments from the tweet. guest: this is a certain a lot. -- asserted a lot. i am not an anarchist libertarian. i am all for protective laws that resulted from the triangle shirtwaist factory in all the rest. but there is a problem when you say that some is good and beneficial, therefore it all is.

in 2009, the caller says, nothing happened. you had the obama administration and democrats running washington. it is not like the turnaround of bailouts. we got laws like sarbanes-oxley. >> you mean dodd-frank? >> i mean dodd-frank. one of the ironies of the occupy wall street movement is that all of these people are protesting problems that barack obama and nancy pelosi and harry reid claimed to have solved and responded to years ago. i am in favor of smart regulations. more regulations is not a solution. smart's regulations are a solution to the problems they are a solution to. caller: alike to argue with the

-- i would like to argue with the gentleman that this argument -- this movement has nothing to do with the left-wing movement. [unintelligible] it is very hard to take this ferry peaceful crowd as a left- wing group. that is completely wrong. guest: i am sorry that you feel that way. i think if you are completely wrong. but to the people who speak to this movement. and about leninist from new york university, you get francis fox pitt and, if you have the communist party speaking at the chicago 1, look at the oakland 1, look at what they actually say in the free library that they had, the literature that they are handing out. one of my friends was down there for days. the vast majority of literature they are handing out is all hard-core left wing stuff.

you might say that the 51% of americans that are sympathetic to the movement are all hard wind -- hard-core leftwingers. but they have legitimate grievances and gripes and all the rest. part of the problem is that this incredible double standard in the media, or the media went nuts looking for handful of racist and crazies at tea party rallies, and meanwhile the media is going crazy not covering the crazies and the anti-semites in the wall street thing. this is an example of projection. people want this to be a mass movement. they wanted to be mainstream. so they are willing to protect the planet or a search acts that -- assert facts that are not in evidence. -- so they are able to -- so they are willing to assert acts that are not in evidence. caller: i want to agree with mr. goldberg read the idea is to

be getting the government away from regulating business. it's silly for people to think bureaucrats can distribute largess without someone being on the short end of this stick. i think most of the problem can be traced back to government. guest: thank you. a very interesting mix where republicans are coming at me like fabian socialist and the democrats are agreeing with me. caller: i am so glad that i got through because i have a lot to say. one of the first thing is that i want to say that my son got arrested in boston. i am a republican. how was an original member of the ron paul revolution that started that tea party.

they find it's so ironic that the hypocrisy is not being shown, because of the george soros, just like and jonah is saying, it is being coopted by at least one-third of them down there. the racism down there, one black woman calling the anti- semite stuff, you will not see that on the mainstream news and it goes on and on. i agree that the corruption and greed is taking over, and that is what the whole thing stems back to pre the honest, true people down there, they want to get the corruption and the corporatism and all that out of politics. host: john and kohlberg, final finalnah goldberg, g thoughts. guest: i agree with a caller. i would be very frustrated down amidst all that.

to try to be in again niter, not a divider, -- a uniter, not a divider, it is what you want to do with the anger. the solutions that i have seen, to the extent that there are any solution, they seem to be meticulous about having no demands. one sign saying that they want unspecified sweeping change right now. specify the change and then we can have a discussion. if all we are going to do is hold hands and sing kumbayah about how angry we are, that will achieve nothing. host: thank you for being here. coming up, we will turn our focus to the economy and talk with richard trumka of the afl- cio. >> on today's "washington journal", a discussion on state and federal education funding. the president of the american

federation of teachers and joins us. then we will talk with tucker carlson about the republican presidential race. then we will look at the help of the nation's largest bank. yalman onaran is our guest. "washington journal" each morning on c-span. later, janet napolitano will testify about homeland security oversight. live coverage from the senate judiciary committee begins at 10:00 a.m. eastern. after that, natalie cole will be at the national press club talking about hepatitis c. the singer was diagnosed with the disease in 2008. that gets underway at 1:00 p.m. eastern. in one of the activists behind egypt's arab spring is giving advice to the occupy wall street

protesters. then vincente fox discusses mexico's violence and advocates for legalizing durgs. rugs. topics on "washington journal" include education spending, last night to convey, and regulating banks. >> during this period, my working relationship with judge thomas was positive. i had a good deal of responsibility and independence. i thought he respected my work and that he trusted my judgment. q>> it has been 20 years since anita hill testified on capitol hill. this past weekend, as she spoke about what that testimony meant and the lasting effect it had on our culture. >> when you are returned from a testimony that has become this event that you really had no

idea what's going to be what it was, and then you -- i said i would walk out on the street and everybody did polling. immediately after the hearing, and it showed that 70% of the population thought i had perjured myself. so in addition to the pressures i was having on the job, the threats to me personally, bomb threats at the law school, i had to go to the grocery store and realize that every -- 7 out of the 10 people it would encounter thought i had perjured myself in my testimony. >> what to remarks as well as the complete 1991 judiciary hearing on line at the c-span video library, archived and searchable.

>> now, one of the leaders of egypt'ss political demonstrations that led to the fall of hosni mubarak's government talks about his nation's political transition. ahmed maher is the co-founder of a group that began as a group of facebook. >> welcome to the arab-american institute. we are nonprofit organization committed to this civic the empowerment of arab-americans. we recommend -- represent the interests of our community to the united states in campaigns and elections and policy formation and research on domestic and foreign policy front. in the aftermath of the arab spring, americans looked at the arab world with newfound

admiration. as a.i. president noted, the change we need is here at home. the revolutions is our approach and how we deal with the middle east. people without the arab world are demanding increased freedoms, including the freedom to express the political will. they do not need our help in doing that. the egyptian and tunisian people demonstrated that clearly. what they need from us is a better approach to our own policy. that is what our work has been about in the past few months, and that is what is in forming our strategy going into 2012. in the aftermath of what arab spring, there has been a welcome addition to the debate -- arab people. their concerns, their aspirations. they are now part of the conversation. we are privileged to have with us one of those voices. ahmed maher is co-founder of egypt's april 6 movement, a

movement that began as a facebook group supporting workers in an industrial city. with more than 100,000 members they called for a successful national strike on april 6. together with another facebook page, they are credited with organizing the demonstrations that sparked a revolution and egypt. at 30, ahmed maher is considered one of the elders of the popular movement in egypt and a member of the coalition's revolutionary youth said to be responsible for the main protest. when the rest of the world was debating whether this was a facebook revolution, it was ahmed maher and his colleagues that had to explain to us that their use of social media was one part of the movement they lead. weather was a telling supporters to where black, or calling for certain strikes, or handing out fliers for turnouts in the streets, they move people from

their computers to the streets and they reach people who did not have computers. ahmed maher was instrumental in taking this approach. he continues as a keycorp. -- a key player. we will hear directly from ahmed maher. then we will do a question and answer. please join me in welcoming ahmed maher. [applause] >> i am very happy to be here. i am thinking the arab-american institute for the invitation. it is a good chance to talk with you. informal meetings. so i want to share our ideas with you. and discussing about the future

of egypt, of retribution, and -- after the revoluation, and american rules and. the admiration between our nations of youth. the american youth, our brothers. we started as a group after establishing a movement towards the modern movement in egypt. towards the beginning of the struggle of the mubarak regime, we were a group of the people. the majority -- about 3000 or 4000. after the parliament elections, we continued our activities in egypt.

they banned any activities in egypt in the street at that time. we started to use social media, the internet. at that time, there was no facebook. we tried to reach more people, to organize our group, to spread our ideas. the main aim of our speech or our message was how to connect to the people in the streets, not the internet, because the majority of people did not have any internet, any cable television. we had to find a way in which people could reach us, so we got the idea in 2008.

we got the idea of a strike in 2008. we started the experience of -- we studied the experience of many countries, of poland, romania, ga., we have training in serbia to destroy egypt and things like that. we started to study these countries to develop our behavior and bring structure to our movement. using twitter, social media, and finding new ways for people to escape from security.

to send our message to the people in the street. flash mobs, we kept thinking of new tools over the years. we have connections with the new political and youth movements. in 2010, there was a campaign. they use to groups at that time. in 2010, there was a facebook page committing to organize many of beds at that time. -- many events at that time. after the elections in 2010 and many events, awareness in the streets increase every day. we love to have a link between political demands and social and economic events. then we started to organize in

december of 2010. in tunisia, the people know what is the solution. what is the solution? how can we do this? the moments we can start to make a decision with mubarak, to -- demonstration in the street to mubarak, to encourage people that the solution is like tunisia. the message, the solution is tunisia. we depended on our experience to organize demonstrations. we succeeded at that time. also, the 20th of january, at that time.

but we stay in tahrir square, in 18 days. of course, there were many problems after a revolution. we have started the experience of europe after a revolution, the experience in poland, ukraine, georgia, serbia. after a revolution, any time, there are many problems. economic and social problems. there is another problem -- we are not governing egypt. now those governing egypt have another project.

they want to keep the power and make a new regime, not like we want. depending on security, the same behavior of the regime, they want to make a little changed not a big change like we want. now we are negotiating, organizing demonstrations against the government. i am optimistic. we may spend five, six, seven years but after this parliament and the next president, we will gain the demands of the revolution. we will get a better life. so i am optimistic at all conditions.

because there is a people, the youth in egypt, they can achieve freedom of speech, social justice, equality. those are our main demons. now we are running for the elections. many journalists are asking about what is the rule in this experience? do you want to transform to bring it to a party? are you running for election? we said yes. it is really important if we haven't used politicians and parliament members -- to have youth politicians and parliament members.

we are not finished yet. we have another mission, to be sure. we want to keep pressure on the next government, the latest government. pressure on the next president. maybe we will transform into a party after many years, but now that is not our mission. we want to create a watchdog group or movement in egypt. and we will try to do the best and try to send our message to those in the streets and change the mentality of the people. it is more important to change the mentality in the streets. i am very happy to be here.

and i can accept any questions. >> we will open it up for questions now. please identify yourself and ask your question. we will start here. >> can you elaborate more on the watchdog -- the new organization that you're going to create? it is important to change the mentality, the mindset of the people in the street. i know it is very short before elections. in the long run, maybe you will have more of a chance to do something. >> as i said, it is very important that we have a youth political party. young politicians. there must be a group to supervise the government.

it will help the people in the streets. it will help insurance and -- health insurance and social justice. it will supervise any inequality -- authority in the government or any president. we are planning for supervising the parliament and making pressure on the next government. that is our rule. that is our next job. the battle of the revolution is not finished yet, so we will continue our pressure to be free from that regime. >> i am with "democracy for egypt." i think you for all that you --

i thank you for all that you have done with your colleagues and friends. what have you done regarding the accusations that you have betrayed egypt? what have you done with all these political problems so far? if you could help us understand, thank you. >> we have our first meeting with the new government. 15 of february. they said they're pretty happy with our rules. they consider us like children. and they will help us to build a new country. we had many meetings after that in march, april, may, june. the last meeting was on the 27th of june. we sent to the many projects, a map, a schedule for decrees.

and they said, ok. they took our planning and said, ok, we are going to be discussed in -- discussing it. we organized citizens in tahrir square and we refused to finish until we have real change in the government, in the system, in the regime. we need changes in the names of the ministry's, change in these meetings. we found a sentiment from the united states and serbia.

we found a national tv and being in the newspaper to use pictures of guys with fake weapons, plastic weapons, that we are planning in serbia it to use against the regime. we start talking with the government, but they ignore us and send this to the military. they also ignored -- of course, we will have the program in the streets. we said, ok, you can approve that. if we take any money or have the full agenda.

but there is no answer now. but we will talk to the people in the streets and discussing about agendas, funding. there are many members in the streets joining our movement. i think they will try to keep the mubarak regime. there will be many changes, but they're keeping the same. >> why don't we come back? >> do you think there is any situation that you could see leading up to the elections or maybe afterward where the elections are not conducted in the way that you envision? that they are not there? -- they are not fair? that that might practice of it -- that might precipitate

another gathering? if it is not fair, is there a chance you might see and arab spring 2.0 or something like that? >> the next election is very important. it will lead to the next stage of revolution. that is my opinion. if we think about the stage in terms of seniority, it was after the confusion in chechnya, and -- the explosion in alexandria, and now is the same conditions. problems with christian operations and running for elections. the system of mixing individuals will keep the same

persons of the mubarak regime. if you watched what happened from the candidates, the opening day for candidates, you will see differences between the mubarak regime and the other party that is running for election. maybe good elections in cairo and the main cities. there might be differences in other cities, but in egypt and many cities, it will depend on money. not free elections. we will have not homogeneous parliaments. that is maybe 35%, maybe 30% or more from the people. it will be not homogeneous parliament.

there will be suffering because we do not have a solution. the next parliament will be very important. i think it will lead to the second stage of revolution. >> thank you. >> i do not want to debate your intentions. since you mentioned that this is not really intending to hand over power to the civilians, i think that there is a timetable and there are elections in people campaigning. as you said, these elections are important. this strong pressure -- there is a push towards democracy for several political parties in the political sphere.

i think it is much more promising, at least this is my point of view triet regarding -- but regarding your new ways of acting right now, are you considering that some things have changed in this environment? >> yes, of course. we have a civil country and a president next year. there will leave authority as soon as possible. but many have questions. like why we did not apply the lazlo, why they are keeping the same persons in the media?

it is a revolution. every day you have a program against revolution. why is the national tv calling for defending or protecting our army. these are clashes between muslims and christians. why do they insist on a system that refuses a united list? there are many questions about that. regarding the budget or the army, the authority of the army, i think -- and our rules of the future, to be a pressure group, of course it is some

change in freedom of speech. we are now more free to talk with the people in the streets. we are more free to make sure the people -- spreading our fliers to different places. we are seeing more change. in places like upper egypt, the delta. we were using conditions to make pressure. and point the people to the solution. >> i'm going to take the liberty before we move on. you gave an account of meetings to the fall of the government

and after. they sounded quite cooperative. good conversations. at a certain point, it broke. more recently, you had the kind of violence your all witnessing. more of a concern, obviously. what the thing has changed since that period? with the way the movement has engaged with the military? and what you think has imposed the most recent violence? >> after many meetings with the government and staff, they found us not flexible like they were. we refused to leave tahrir square and the majority of political groups. there are no more political parties. -- there are now more political parties. the key pressures, many reasons

between their groups and the end of july. no meetings between these groups -- there is only a.m. meeting -- only a meeting between the government and the political parties. we want to have a meeting with them. >> i asked a local expert at georgetown university who is very knowledgeable about egypt, i said, what you make of the composition of the group that breached the israeli embassy in cairo?

he told me that he had met some of the people in the actual group and that his assessment was that consisted of frustrated revolutionary youth. do you find the level of frustration in your group growing for the reasons you said? is that leading to difficulties in managing growth? >> and they do not want any war any place, with any country. there is also behavior of total support to his trial. -- to israel. all of the arab youth are angry in our generation. in front of the embassy, they started in june.

there are no problems with the israeli embassy. but the killing of our soldiers on the border in sinai, we want a statement from israel about what happened on the borders. also we want the camp david agreement, we want to take our land from any unknown groups. there is no problem with that. we tried to organize a demonstration on the night of september. -- the ninth of september. at that time, i was traveling

through poland. i found a statement in many national newspapers talking about the order to destroy many places and escape to poland. what is that? so i sent a message to my friends in egypt. you must start a demonstration at 6:00 p.m.. if they organize something else, you will say no. we have finished our day and we are done. we stop our demonstration. our main goal -- we found that groups had hammers and try to attack the embassy. the first thing that's, if

anyone tried to breach that, they will shoot them. if anyone tries to attack the embassy, they would shoot them. at the time, there were no soldiers in the place. i think it is a message from someone saying, democracy the case. -- democracy >> i'm from the public affairs council. i want to tear off into the more cultural. i know that the main point of this youth movement is to put pur