we need the proper balance in making iran accountable. as we showed in libya, the best approach is to build a coalition and avoid unilateral action. many people have criticized our sanctions on iran for lacking teeth. just last week it was reported that their nuclear program was doing poorly. even china has recently slowed oil and energy investment in iran to be more compliant with the sanctions program, greatly and during the iranian -- greatly angering the iranians. i hope that we can build a strategy in dealing with iran that is effective and responsible. >> the chair now recognizes the chairman of the subcommittee on

counter-terrorism and intelligence, the gentleman from pennsylvania. >> thank you, mr. chairman, and thank you for to our distinguished panel. since the rodney an assassination plot was revealed to the public two weeks ago, i have been struck by much of the commentary in the media that has underplayed the plot, even suggesting that it would be impossible to pull off and questioning how iran would ever use a mexican drug cartels for a terrorist attack on american soil. but i would note, in the september 11 attacks from the 9/11 commission pointedly stated -- and this was their conclusions across the government, it was imagination, policy, and government -- capabilities and management. we do not believe leaders understand the gravity of the threat to our leaders completely understand the

gravity of the threat? that is the essence of what we are trying to ask today. it appears to me that our government risks the failure of imagination. it may not fully be considering the gravity of the iranian threat. this is a game changer and represent crossing of the red line by iran. for many members of this kiddie-committee is not surprising. witnesses testified that iran, both directly and through it

plot -- its proxy, hezbollah, had its tentacles from the entrenched in latin america, venezuela, and into mexico. one witness testified that hezbollah was sharing underground tunnel technology with the drug cartels along the southern border of the u.s., the same technology used by another iran-supported terrorist group, hamas, along the egyptian and/gaza strip border. i think there is a general consensus among any in the intelligence community iran would not attack the united states, and unless provoked by the u.s., or its -- or an attack by them on israel or their nuclear facilities -- our nuclear facilities. does it now appears that consensus is wrong?

the complaint revealed october 11 has ramifications that are significant for a homeland security in the u.s. the focused but since 9/11 has rightly been on al qaeda and other associated terrorist groups. the capability to strike on american soil has been limited to nuclear -- the nuclear issue. that must change. while the united states and the international community has issued sanctions against iran in some form since 1979, it is obvious in the assassination attempt that iran has not been deterred. some would theorize that it would signal some desperation and dissension within iran, particularly within the relationship between ahmadinejad and the ruling theocracy. what are the implications of that? i do believe, regardless, that

is important for the united states to get serious. sanctioned the central bank, the oil operations, shipping business and others. while assassinating a foreign ambassador in washington d.c. is a significant provocation, it is not a plot considered in isolation. iran is on a plot -- a path to obtaining a nuclear weapon. if we cannot deter their actions now, the thought of them with a nuclear weapon is unimaginable. simply taking him at his word, president ahmadinejad would use nuclear weapons to literally wipe israel off the map. we need to do everything we can as a nation to stop iran from obtaining a nuclear weapon, ensuring both the united states '-- both united states' and israeli security. the united states must do

everything in its power to protect the state of israel from an iranian attack. let me close my comments by saying i would like to call special attention to one of these witnesses, and retired marine, -- retired marine colonel, tim garrity. he was in beirut, lebanon in 1983 when a hezbollah suicide bomber killed 241 servicemen. as we all know, this attack was planned, finance, and ordered by the iranian government. this past sunday was the 20th anniversary of the attacks. i know i speak for all of congress when i say that we have never forgotten their sacrifice. and on this past sunday there was a remembrance ceremony at

arlington national 7-cemetery -- arlington national cemetery where many of the ofgerrity's are today. it tells an important story about the type of enemy iran poses to the u.s. with that, i yield back. >> the chair now recognizes the ranking member, the subcommittee on oversight, the gentleman from this -- from massachusetts, mr. keating.

>> thank you, mr. chairman. i would like to of knowledge chairman meehan and ranking member spear. i am pleased that we have joined together to break -- gain a greater insight on the iranian threat. for over 30 years, the relationship between iran and the united states has been tenuous at best. since 1995, the u.s. has had an embargo with iran. this may seem like a long time, posted in the red sox -- post dating the red sox aversion to the playoffs. as i watched our young men and women returned from the battlefield in iraq and afghanistan, bearing both the physical and psychological wounds of war, what angers me the most is the allegations of their extensive collaboration -- of the extensive collaboration between iran and

some of our enemies like the taliban and al qaeda themselves. for this reason, this should not be a partisan issue. as we focus on their nuclear ambitions, which are incredibly concerning, we cannot turn a blind eye to the revolutionary guard's own ambitions to stretch their tentacles even further across the middle east cannot and perhaps cut -- a across the middle east, and likely the western hemisphere as well. in june of 2010 -- since june of 2010, the iranian regime has at its legitimacy would end their own paranoia has increased. they have called on islamic extremist to increase their violent posture and they have called again for the annihilation of the jewish state.

if this was not enough to worry about, at israel, who is our true democratic ally and trusted friend, iran pose a nuclear ambitions are moving swiftly toward a nuclear reality as the world waits with a bit of apprehension. europe, israel, and the united states must undoubtably prepare for a more dangerous iranian regime in the near future. but nothing is more dangerous than a refusal to face the facts. an examination of a way forward with iran makes sense. whether iran and its relationships pose a threat to the united states, and is a question. what we do know is that they

arrive -- the rhatigan revolutionary koran was involved in a plot to assassinate an ambassador to the united states. the cartel member turned out to be an informant for the u.s. drug officials and help them build a case against the perpetrators, who were subsequently arrested in new york. therefore, the focus of this hearing, rightly belongs on the revolutionary guard corps, an organization that has been designated as a terrorist organization by the u.s., and whether the government of iran had knowledge of this scheme or not.

as i alluded to earlier, the evidence is this, that the irgc is playing a role to undermine iraq, engaging directly in military activity and gathering intelligence. to furthermore, the united states and european union but agreed that the quds force providing equipment to help the syrian regime suppressed result -- revolts in syria. this information alone is a cause for concern. although i believe president obama's dual track of engagement and policy have had a profound affect on iran's capabilities, we must prepare for other measures to prepare for the growing threat of iran. i look forward to this hearing. i look forward to what will be discussed and the ideas coming from our witnesses. i thank our witnesses today and i look forward to hearing their views on how we counter this threat and exactly how long it

will be within our borders. i look forward to the testimony. >> the chair now recognizes chairman jean for an opening statement. >> thank you. this is a vital issue. i think is very appropriate that the two subcommittees came together to hold this hearing. much reference has been made this morning to the recent indictment and to the allegations regarding the plot against the u.s. by iran, or elements within iran. i have seen much of the evidence both in this committee and in the other committee, and the totality of the evidence makes it clear that this was a very real plot. this, to me, as the chairman

said, in game changer. it takes it to a new level. iran has been for many years -- to actually be contemplating what would have been an act of war against the u.s., number one, killing a foreign ambassador on american soil in the nation's capital, but also it was clear from the statements that were made, that there was a willingness to kill hundreds of americans along with that. you have the willingness to kill a foreign ambassador and hundreds of americans. this is an act of war. i do not think we can do business as usual or carry on sanctions as usual. sanctions have been somewhat affected in the past, but because of this red line that was jumped across, further action is needed to make it clear how strongly we feel about this, and also, not just to send a message to iran, but two other nations in the region

to let them know how serious we feel. i think we should dispel -- which expelled their officials. -- we should expel their officials. to send a message. those that were doing reconnaissance on the new york subway system, they should be expelled from the country. it is fairly clear that a number of representatives of the quds forests have been involved in washington and new york. action should be taken out. additionally, i heard congressman keating reference the revolutionary guard corps. i do not believe they have been designated as a foreign

terrorist organization. i think our government should make that official designation, to designate them as a foreign terrorist organization. and as the chairman said, we need to begin sanctions against iran's central bank. this would send -- these things would send clear signals. and nothing should be taken off the table. that will only emboldened iran and it will cause concern among our allies in the region. i do not believe anything should be taken off the table. let me particularly thank general keane for being here. i know of a particular work he did in formulating the surge strategy in iraq at a time everyone thought the policy would not work. he did that work in early 2007. i want to thank you for that today. and i want to thank all of the witnesses for being here.

with that, i yield back. >> the chair now recognizes the ranking member, mr. thompson. >> thank you. we recently made aware of an alleged attempt to assess -- to assassinate the saudi ambassador to the united states in washington d.c. the u.s. government has linked this assassination attempt to high-ranking iranian officials in the air -- in the revolutionary guard force. i look forward to seeing justice served in the case. the united states and iran have a long history. even before uncovering the alleged plot to kill the saudi ambassador, the u.s. designated iran as a terrorist country. reports that iran is vigorously pursuing nuclear weapons and has ties to al qaeda is

additional -- are additional reasons that the u.s. needs to pay close attention to their activities. recent remarks made by my colleagues suggest that the assassination attempt represents the crossing of a red line by a sponsor of terrorism against the united states and israel, and claims that negotiations are not working could inflame an already fragile comment. furthermore, the man awaiting trial is accused of attempting to enlist and mexican drug cartel member to assassinate the saudi arabian ambassador to the u.s. although, some have made the point to capitalize on a possible alliance between the robins and the mexican drug cartel, the facts indicate otherwise. we must be careful to stick to the facts. we must not overstate, nor overreact to the current threat we face from iran.

some have criticized the sanctions we placed on iran as too soft and have suggested taking actions that would lead us on the path of escalation. but iran is a nation that has already isolated itself from the world community. it has now lost even more credibility following its latest round of illegitimate elections and the arabs green -- arab spring that has swept through the release. i thank the witnesses for being here today. i look forward to their testimony. i yield back. >> thank you. let me first say that i recently met with the fbi agents and the agents involved in this case. -- the dea agents involved in this case. i want to congratulate them. this was a true joint operation

that worked the way it is supposed to work. i want to personally thank them on the record. and with that, we have a distinguished panel of witnesses today. general jacking is a four-star general who completed 37 -- general keane is a four-star general who completed 37 years in the service. he also serves as chairman of the institute for the study of war. thank you for being here today. next, we have a market -- mark garrett, a senior fellow with the foundation for the defense of democracy, where he focuses on iran, afghanistan and iraq and terror intelligence. he formerly served at the cia as the director of their operations. then we have matt levitt, the founder of the study of counterintelligence at the washington institute for a mideast policy.

dr. lawrence korb, a senior fellow at the american institute for progress. previously, he was the director of national security studies at the council on foreign relations. he also served as assistant secretary of defense for manpower.

we're very honored here today to have colonel timothy garrity, who entered the marine corps in 1959, following graduation from st. louis university. he commanded a reconnaissance company in vietnam, and while a lieutenant colonel, served on a special assignment with a special operations group. he commanded the 24th marine amphibious unit in beirut in 1983 as part of the multinational peacekeeping force. upon his retirement from the marine corps, he returned to the cia to serve in the counter- terrorism center. colonel gary b., let me personally thank you for your service and your brave actions on that day in beirut. we will never forget the marines that died that day. with that, i'd like to thank general king for his testimony. >> thank you. i appreciate you inviting me to share my views with you. it is probably one of the most unique testimony is i have provided year with bringing these two committees together, and also, the number of chairs and ranking minority members that are here. also, to be on this panel with these distinguished colleagues that will share their views with you as well.

the iranian on gold operation -- bungled operation to use proxies' to assassinate the saudi ambassador in the united states is a stunning rebuke to the obama administration's policy of negotiation and isolation with the iranians. indeed, republican and democratic administrations since 1980 have failed to deal effectively with the harsh reality that iran is our number one strategic enemy in the world. frankly, the iranians stated as much in the 1980's, that the u.s. was the enemy of the islamic revolution, and their intent was to drive the u.s. out of the region. therefore, they have been systematically killing us for over 30 years. as mentioned in 1983, there proxy's come on hezbollah, blew up the american embassy, the marine barracks in lebanon with a total of almost 500 lives lost.

it would not only have no response to this tragedy, but we pulled our troops out of lebanon. in 1983, the iran in-back extremist groups blue of the u.s. embassy in kuwait and attacked raytheon's residential area, killing and wounding over 80. in 1984, the cia station chief william buckley was captured and eventually killed, which was the beginning of an iranian- backed campaign to take a high- profile hostage -- hostages over a 10-year time frame. this led to an ill-fated move by the reagan administration to exchange arms for hostages. a flight in route to rome was forced to land in beirut, which led to the killing of a u.s. navy diver end dumping his body on the tarmac.

in 1996, the u.s. air force tower barracks in saudi arabia was blown up by the iranian- backed hezbollah, killing 19 and wounded almost 400. again, our intelligence identify the culprits as iranian-backed hezbollah. we had no response and eventually shut down a u.s. military bases in saudi arabia. since 2003 in iraq, the iranians have provided rockets, mortars, and enhanced ied's and money to the shiite militia, who were directly involved in the killing of u.s. troops in iraq. moreover, the shiite militia were trained by the quds force, assisted by hezbollah at training bases in iran. white -- while the iranians were defeated politically in 2009,

the president's decision to recently withdraw all troops in iraq puts our position at risk and plays right into the hands of the iranians. the action arm for iran's state sponsorship of terrorism outside their borders is led by general cussing some money, who has been charged -- general kasim soulemanieh, who has been in charge for 15 years. he reports to the supreme leader. surely, the supreme leader must have approved this reason plant and, moreover, expected it.

we appear to have a policy of rhetorical condemnations when the iranians engage in behavior adverse to the interest of the united states, engaged in on- again off-again negotiations, while the iran has continued to pursue nuclear weapons. if we have imposed sanctions on iran and and attempted to isolate them in the world, which as best as we can tell, also has had no impact on their pursuit of nuclear weapons or their sponsorship of terrorism. we also must admit that the iranians are not without their own challenges, having two fledgling democracies on their borders and iraq and afghanistan is a huge ngo- political threat to their own preservation of their regime. the arabs sprint is a repudiation of radical islam. social justice and economic

opportunities are the mainstream of western democracies. certainly, the iranians are attempting to take advantage of the opportunities the social unrest in the our spring provide, but no one has demonstrated on behalf of their flawed values. losing a state-sponsored terrorist blye gaddafi is a setback for them to be sure. that said, it is time to review our strategy for iran against the harsh riyadh the that, despite our rhetoric, tends to negotiate -- a tense negotiations ... -- one must conclude the obvious, that our policy has failed, and failed miserably. what can we do?

we can begin to treat iran as the strategic enemy they are. as such, it developed a competitive framework. the international community cooperation. we must act. it is much like we did with al qaeda. limit their ability to trade by denying their entry to ports around the world. limit the ability for the banks to operate effectively. conduct covert operations led by the cia. provide information and encouragement inside iran to put pressure.

they have a chance to compel a behavior change. this much i do know. if we continue the measures of the past, they will continue to kill us. they will continue to pursue nuclear weapons. the nightmare they are waiting is a round the corner. >> thank you for that excellent analysis. >> we recognize him for his testimony. >> it is a pleasure to be invited by the committee. there were few individuals on

this town who believe that iraq could be turned around. i am going to talk about operations. about half i have read about how i have got back in time -- about how i have gone back in time. a great deal of conversation occurred to after the plot was revealed. they said they could not believe they were responsible. they describe him as being a conscious man. they cannot believe that they were involved because the operation was so lame.

it could not have happened because this was the 80's. i rainy and operations -- iranian operations are always organized. this reminded me of my favorite bombing run in paris in 1986 where they let loose against the french. the french support of iraw. they bombed paris repeatedly. the individual who is responsible for that was a

tunisian muslim who converted to islam. they were a failed seller of vegetables and fruit in the streets of paris. they found him to be an ideal candidates to bomb paris. with less than a fortnight, they have ripped the whole thing apart. it was obvious they had done it. i tracked operations already plays in the 1980's and 1990's. many succeeded. they killed individuals. it did not take very long to put all the pieces together. they really do not hide all that

much. that is the real truth. i might make a slight digression and say that all intelligence services are not as good as you think they are. they make a lot of mistakes. it is important to remember this. these services largely reflected the domestic ethic. it is one of burt force. these are the costs -- brutal force. these are the costs. they do not have one body of folks working outside of the country. just the thugs inside.

it is the burts and thugs in both places. do not buy the argument from those who said it cannot be because of them. this the nature of the game. this is how it is done. we will take your mind back to something that hurt us. it is pause tivoli comical. -- it is positively comical. they were almost able to sink the uss cole. the intelligence game, the prize goes to those that just do. what they do is they persist.

it is important to note that it is better than a 50/50 guest. it is more like a 9-10 guess. it has been approved. he has been a somewhat cautious man. this analysis is overrated. he has turned the theocracy into a dictatorship. he has moved members like they are musical chairs. he is in control of that system.

i guarantee you he will be gone soon. he will most likely be dead soon. what we need to look at in the future, what i think they will do -- the only reason they hvae not it the u.s. in the past is because they fear a response. they have had active operations in the west. they have not engaged in legal operations so far as me know in united states. they have been scared.

they have been scared of the possible outrage coming from the united states. their reaction was silence and fear. it went away. the americans started talking about afghanistan and iraq as a failure. their attitude started to change. they got away with it. it is clear that they had the conception that they could have a terrorist operation. they could get away with it.

the only way i would would argue that you would stop that attitude is that you have to convince them that you will escalate. you do not want to run away from its. you want to run toward it. you are more than willing to have another front. >> i would ask that you wrap this up to give time for questions and answer. >> what i would suggest the committee's look at is that they look at canada. that is where they have had much success. they move them south. >> thank you for your testimony. >> thank you very much.

it is a privilege to testify before you. this is nothing new. they decided to carry out an attack that would have killed many more americans if they did not have any concern about the possibility of killing centers. this is something new. there have been passed plots and many more abroad including targeting a saudi diplomat. iran has been tied to extra

killings. questions have been raised about this plot and professionalism and why they would decide to carry out attacks. i would like to answer some of those questions if there is time. we have to answer this now. i do not think anyone would have said it was unprofessional had the person they turned to not been under cover. this was success of the u.s.. had they not gone to that individual, no one would have dismissed it. this is not dismiss a formal nexus. it would have been an effort to seek reasonable deniability. tensions persist.

iran would sponsor deniable attacks abroad. by reaching out, it is a cutout. they could have been building for themselves some reasonable deniability. [inaudible] i would argue that the fact that they have suffered several recent failure suggests that they may not be quite as blunt as people assume they had been. consider the foiled plot where two hezbollah members were

released. consider reports in turkey. i agree that if the head did something like this without hire authorization, he is in for tough times. in the past, all of these have been tied not only back to iran the high levels of leadership. they assess that iran had been responsible for numerous attacks in the past year. they were probably approved in advance by the president and

other senior leaders. we will find something along those lines. why would they want to carry it out now? they are all kind of reasons. the president came out saying that the saudi king told u.s. officials that we should be doing something against iraq on -- iran. tensions are as high as they were. the radical elements are a distance. it led to increase in taxes. there is a shadow war going on. it could force people defecting members of the nuclear program. all of these may be had in

effect. what should be done? we would not want to do something that libya prejudicial. the country does not have a summit for a major military intervention. what can be done right now? none of these are more than pinpricks. if we do them right now, we could send a message even before the trial is over. i think we have to do something right. we should be working with allies. we should work to get some of the larger indices, especially in south america. members of the government testified before congress that they would do this then.

we have long list of people. we should restrict the movement of iranian diplomats said they cannot go outside capital cities or do anything more than what they came for. they were about to go to this meeting. nothing else. no press. i think the gcc can be brought in here. i do think this is something that should be done. this is a viable target.

this is a time when we in the europeans are facing some serious economic problems. this is something that will have to be answered before i get people there. the membership should be suspended as long as they engage. there is a lot that we are doing. we can be publicizing it. there's more we can be doing. one other thing that can be done is greater customs control. we do have the officers in brussels doing the work on dealing with iran's procurement and customs violation.

upre's pressure for setting a small body that might share information in timely manner. they can highlight their custom violation. a lot more detail in my written testimony. thank you for the opportunity. >> thank you. i have testified over 100 times. i am honored. i would like to begin by pointing out that the success of the law enforcement people here playing a critical role shows that in dealing with the threat that we can work with our law enforcement agencies.

it is undertaking illicit nuclear programs. why it may be emotionally satisfying, it may be the wrong step. if the go back and look at our chairman, everyone agrees that it was an overreaction and created problems that plagued us with the rest of the 20th century. they wanted us to bomb china. in vietnam, people talked about nuclear-weapons. people wanted us to invade cuba. any of the steps would have been disastrous. one example of us overreacting is the mindless, and needless, senseless invasion of iraq.

it underlines our image throughout the world and make people listen more this is a sign of desperation. it shows that the sanctions are working. why we should not take anything off the table, we should use this occasion as an opportunity to assemble the coalition to increase the sanctions and follow the advice of admiral mullen says we have direct relations with the soviet union. we should follow that up. when people talk about the sanctions not working, i am reminded of a man that i served with. they called it the misery index.

it is over 30. this political turmoil you had in the elections. you had the facts that they're trying to undermine the president. there is a reports that they're trying to do away with the presidency. the nuclear program is not working. he is the foremost experts. i think the key to the sanctions has got to be getting international consensus. the sanctions that were adopted since june had approval and all other countries involved. i applaud president obama for freezing the assets. i think we should begin to move toward getting sessions -- sanctions.

everybody talks about horrible iran is. they were the first muslim country to condemn the attacks of 9/11. george bush's ambassador said without the support they would not have been installed. 20 have to put things into perspective and recognize there have been times they work with us. thank you very much. >> thank you. >> last sunday was the 20th anniversary -- 28th anniversary of the beginning of a war. it was on that day through

coordinated suicide bombers killed people under my command as well as 58 french peacekeepers. they led to the withdrawal of u.s. national peacekeeping forces. this has evolved. perhaps the most significant development that came out of the beirut vision was the scent of ir -- the ascent of iran as a major player. in the early 1980's, it deployed through damascus a contingent of the revolutionary guards. that is during the height of the iranian/iraqi war.

they established a training base that remains an act of public activity today. they train to hezbollah. they use those to attack the peacekeepers. we can see that iran's entry was a gamechanger. they raised the statute in popularity and influence throughout the arab world. they have the capability today to cause havoc on several fronts that provides distractions why the nuclear

centrifuges spin. they support al qaeda, hamas, and islamic jihad. they used the force in iraq. some key leaders sewer implementing the policies harkened back to closer scrutiny. the veteran commander of the irgc was named minister of defense in 2005.

in 1983, he was directly responsible for the beirut truck bombing. he is the minister of interior in iran. they have redeployed around the capitals there. while you are not hearing any protests. his disputed re-election reveals another connection. his selection puts down those protests at that time. they imported some hizbollah thugs.

[inaudible] he participated in peacekeeping bombings. he founded the force, serving as first commander. he is on the most wanted list for the bombings of the israeli embassy. haiti was linked in 2008 for the development of nuclear weapon delivery systems while overseeing the research and development of the destruction.

he was the world's leading state sponsor of terrorism. the expanding relationship between iran, the president and hugo chavez requires closer vigilance. this is clear propaganda to provide cover for other activities. plans include venezuela to produce the automatic weapons. beside having major operating basis, they have established

another 1 in venezuela's islands. these are not monitored. it brings back memories of my multinational peacekeeping headquarters in in bay roots. this later involved in in late '80s as a terrorist club. the command has expressed concern on the growing connections between iran and hezbollah. this is happening -- not happening without a purpose. the operations have formed a partnership with major drug cartels. they have been smuggling routes to smuggle people and

contraband into the united states. this should cause a red flags to fly. i know a lot of attention is being paid across the home security communities. we have to presume that these are in the united states and being fortified. it is an invitation to disaster. reports show countries other than mexico were apprehended. it questioned how many we mess.

this involved a key force commander means to the killing of u.s. troops in iraq. it should come again as no surprise. the leader of that group operated with in the iraqi militia. according to a treasury report comment he supplied this with the weaponry. a cousin was arrested. the bizarre plot involving using mexican drug traffickers to bomb the restaurant in washington.

when you stop and realize, that is not a cold, hard call. this provides some insight to the nature of the threat we face. they discussed israeli embassies of in washington. my question is did it involve a truck bombing model used by the u.s. embassy.

are the embassys -- in closing, i believe iran is intent on attacking us in th ehomeland. all one needs to do is review their strategy and attacks. their ideology mixed with patriot makes as a prime target. this has proven to be successful while avoiding any repudiation -- retribution for the carnage they have brought. one of the questions we should

ponder is that if they feel that they could go nuclear with impunity. the commendable work being performed daily is a matter of record. our national unity and vigilance is required now more than ever. thank you. >> thank you. thank you for your service, particularly in tragic day in a rout. -- in beirut. we have had a timid response since 1979. you outline all the attacks on the interest of the united states. in the failure of either partyies to respond to the

threat. now we have an attempted assassination attempt on a foreign official. it was foiled. this goes to the highest levels. it may have directed the plan. this is very bold. it deserves a proper response. he mentions this has failed. we're still facing this threats that continues. we need to treat iran as a strategic enemy. what do you think should be the proper response to deal with iran?

>> step one is to recognize them as are sure to check enemy. i am not suggesting that a first bush should be a military one. let's face it. even the sanctions we use a have never had any major impact on these guys. they are not tough enough. lay down every single interest they have encountered that. we know when they took power they took all the business interests around the world. they have these business interests. there billionaires' because of it. why do tolerate that? there's so many other things they could do. people have outlined those things.

but not wring our hands if they do not want to step up to it. we go without them. if we do not take serious measures and introduce fair to them, they're going to keep killing us until they get a weapon that can surely hurt us. i am suggesting that we get comprehensive reform about what we are doing. i am saying that we put our hands around the throat right now. we have is a bit again cyber capability that no one has. we can do limited cyber attacks. why aren't we doing that? it to have a rather dramatic impact. why are we allowing the leaders

to still walk around? why don't we kill them? we kill other people but are running terrorist organizations. these guys that killed almost 1000 of us. why don't we killed them? -- why don't we kill them? i am not suggesting military action. it has a degree of deniability to it. a partner to the left and as more than i could ever know. >> i only have a minute left. i agree. i do not think anyone wants to go to war with iran. i want to give you the last word. you discussed a connection

between iran and venezuela. hezbollah forces are at in latin america. could you expand upon this? >> it is like a scene i have seen before. it is preventing any larger issue or accommodation between the palestinians and israelis. they have expanded that. they have become a major player and threats. they are moving to lebanon at a time we were there on a peacekeeping mission.

the bomb that we face was not put together by machines. it is the largest non-nuclear explosion ever recorded. it was really predetermined, the destruction of the mission at the same time. i would state that the commander of assassination connection is the fellow i pin as one of the key guys.

he is the one that founded it. just look at the jobs he has had. he is the minister of defense. it lays out a road map. he was expelled from bolivia from the interpol. he is probably the key guy for specific missions. i would think it has that kind of influence. >> i think this would be helpful. these cannot be checked by interpol.

i have lawmakers tell me that you're going to iran. it is time to start stepping up to the plate. >> thank you to all of our witnesses. i do not think we can say often enough the great services you provide to our country. but me start with you. you testified about if you the sanctions. can you describe the u.s. sanctions there designed to restrict the access to the global financial system

>> they followed up the sanctions of their own. the goal is to restrict iran's access to the global system. there perot hichens -- there are provisions that prohibit access but there's reason to believe the services could assist iran. the sanctions have been more powerful than most people expected. they have had tangible effects on the oil industry. that is why i mentioned what president reagan mentioned. >> it may be a sign of the weakness and the expiration. can you expand upon that?

>> if you look at the fact that the government is in chaos, they are concerned about the arab spring which is underlying the an iranian narrative. we know when the president expected some of this, they give nuclear ones that could be used for medicinal purposes. he was undermined. their same that they do not want to have a president anymore.

the fact that they allow this renegade, this was the key. if you look at this was done, this is the country is in disarray. they're becoming desperate. >> of do you have any knowledge of how this money could have been moved so we did not know about it? >> none of us know how it happened. it has not been made public. there are many ways it could have been sent.

it is a combination of both. it probably was sent from iran in some way that is able to be traced. the complete -- you can pretty easily send the funds. crises of the nuclear program is not working. can the elaborate? >> as you mentioned, the government officials and david albright is monitored as closely as saying that as a result of the virus and with the sanctions that are happening that their nuclear program is not or they would like it to be.

they would like to move in the direction that they would like. it is very interesting. they do not have the weapons yet. this shows the international community has made it difficult for them. we talk about russia backed off a deal they made. >> thank you. my time has expired. >> thank you to this panel who has opened our eyes. we will go back to what we would have been through before.

we talked about the failure of imagination. you have identified the concept of red flags. we have worked on this issue. what we begin to study more is the use of these proxies'. it is increasingly closer to our homeland. we heard about the activity inside the margarita islands. we seen the creation of relationships with mexican drug cartels. the significance to me is the reality that this cartel could create the opening of opportunity for terrorists to

get into our country much easier than we had anticipated. there is an eye iranian -- a iranian presence in canada. we have some desperation on the port. we also heard testimony about sloppiness and persistence. it is clear that the game at remarkably changes if iran ever gets a nuclear weapon. this prepares -- appears to be a remarkable opportunity. show be concerned about the

opportunity of iranian- influenced proxies' to use that as leverage against any kind of stands against iran. we have discussed sanctions. we had discussed the capability. what are the implications? what should we be doing next? >> i have nothing against sanctions. i am in favor of most of what we might do. there are a lot of things we can do. the people who rule iran have

killed people. it has become more coercive and not less. they do not respond in the same economic ways that we do. iran would not look like the country this day they were not concerned about the bottom line. you would not get the attention unless you shoot somebody. it is pretty blunt. you should hold them responsible. go get him. either tried to capture or kill them. you have to send a pretty powerful message to those work down the road you are asking for it.

they are not reading it as a person who is strong but as someone who is not. >> there are things that divide that could be said again spirited to have to get to -- there are things that have been said that have been significant. >> you could aggressively put the operations overseas. you have to have a consensus to do that. you'd have to have the approval to do that. it is washington, d.c. he may find out that this type of covert action is much more difficult then to go after him

when he travels. >> i agree. there has to be something clear that is done. they reported that many leaders have broken u.s. resolve. i agree that something like this really is a red flag. the question is how to respond. i do not think we have to put a bullet in someone's head. there should be a significant action program in place to deal with these things.

sometimes they would put the diplomat in different places. this can be very effective. i think the sanctions have been tremendously effective. let's be clear. they will never solve your problem. where they are most effective is in disruption. they have slowed down the program. they have not ended it. if every seam months we think they're going to get a bomb, that is a level of victory. does not get us where we want to be.

all of these have to be done in a way that will send a message that we're serious. right after this plot was revealed, the treasury designated several individuals to reveal more information about the nature of the plot including greek designating him on the terrorism cases. are even designated twice. this was done at the very highest levels.

and not think we're using the tools enough. we are risk averse. there are extremely aggressive. >> we are running over the time frame. >> he did not use his entire five minutes. maybe we can give him a minute. we like to solve problems. if we overreact, this will unite them.

if you were told americans back with president truman came up with it that the cold war could last another 40 years, it cannot have it that long. i think he needs to be patient. the need to keep taking these steps. the more consensus began, the more effective they will be. >> i need to try something. my time is limited. but given commons and asked three different questions. it is my recollection that the presence has not ruled out military action. i have heard his statement. what more can he do? now the three questions.

i was astounded. tell me that they did not believe the united states killed osama bin laden. i asked them how they came to that conclusion. i asked them where they came to that conclusion. they all cited the information and propaganda coming from iran. i think it is pretty effective if they could ever come to that conclusion. i think it has been touched on. it is a common thread that has been mentioned. what are the threads in the

western hemisphere that we should be really be vigilant about? the third thing is an axiom about the enemy is your friend. it is my belief that within iran, there is an internal conflict historically and i think it still exists with the ayatollah and ahmadinejad. as the -- is the u.s., not intentionally, but is the u.s. acting in a way that we are inhibiting that internal conflict from incubating and maybe causing problems with in iran itself? those are the three questions. i will try to open to anyone who wants to answer. the first being propaganda, the second being the western hemisphere, the third is, are we doing things and intentionally to -- unintentionally to not let the

population of their internal conflict grow? >> first of all, on the propaganda, i think we have to recognize that because we invaded iraq under false pretenses, people do not trust a lot of what we say in that part of the world. also, during the 1990's, we cut back on the u.s. agency and i do not think we have it to where it stands now. remember, they had a democracy. but we overthrew it. then there is a shot that began developing nuclear weapons. and basically, after they helped us in afghanistan and got the no. alliance, which were their allies to support the karzai government, president bush put them on the axis of evil. therefore, they went back to

some of their aggressive behavior. >> i'm going to let pass lares of rendition of history and go to the discussion of internal events. i will just say this. when president obama came into office and had a very in court -- aggressive policy of engagement and was writing letters to the khamenei. that did have a profound affect. what did spuck -- it did the opposite of what the president got what happened. khamenei gives a speech shortly after and refers to a speech about satan incarnate. president obama actually said his fear about the united states and the western cultural invasion when the pro-democracy

green movement started shouting in persia, a shortened version of "he is with us," that have a catalytic effect on the people because they thought obama was standing with them in the pro- democracy movement. the president actually was not. he was trying to have a dialogue directly with khamenei and his focus was not on what would come later with the green movement. but the u.s. can have an internal effect. i would suggest and argue that incident should tell you that if the u.s. actually does talk about democracy in iran, if it actually uses its puli pulpit to challenge the regime on its internal oppression, it actually can encourage a change and reinforce the people inside psychologically.

when we do not do that, i think we send signals to the regime that we do not really care. some iranian diplomats who defected have made it crystal clear to folks that when they would write their cables back to tehran, the americans and europeans would see them and talk only about one thing, the nuclear program. what did those diplomats right back home? but they do not care about anything else. that is a mistake. >> the other thing i would add is that we know how to do this propaganda. we have a history of having done it affectively. we did it somewhat effectively and countering soviet union propaganda. but it does take authorities, resources, and perseverance to do it. >> may i suggest it is easier these days because of social networking to be even more effective? >> very much so.

in my statement i said we should be targeting iran with this kind of effort in terms of making an impact on the people. when there were almost 1 million people in the streets of tehran in july, we had no response to that movement. and this is one of the most oppressive regimes that we have and we did not respond. and side with them, much as we have responded to the polish movement, the ukrainian movement, and others around the world when people get into the streets and fraud against a dictatorship. there is much we can do. it should be one of the other things in our bag. >> one final comment and then i will relinquish my time period is over. there are things that we cannot talk about that are classified, obviously.

but many of the things that you suggested that this government should be doing, i would suggest that perhaps we are already doing them and we just cannot talk about them. thank you. >> the chairman recognizes the gentleman from florida. >> thank you for your testimony today. i have a couple of questions. this is regard to -- with regard to the cartels. and this is for the general and the colonel. does it stand to reason that the iranians would not have approached the cartels for the first time with a task as delicate and important as assassinating an ambassador, and does it not suggest a level of trust indicative of a pre- existing relationship? whoever would like to address that. the general or the krul. -- or the colonel. >> after you, general. [laughter] >> the answer is obvious from my perspective. of course, it is indicative to conduct something as vital as

an attack inside the united states, there is got to be a relationship there and there has got to be some trust in the relationship. i want to associate my remarks with ruel and i totally disagree with dr. korb that this is somehow an act of desperation. i totally dismissed that theory. that they would come to the united states -- they came to the united states to do this because they believe it is going to advantage them in their part of the world. and they are trying to get the influence of the united states and the west out of their region. and they firmly believe -- and they're totally right and it would have gotten away with it. when ahman was in africa in 1988, we lost 400 -- when bin laden was in africa in 1988, we lost 400 people dead.

in response, we threw some missiles to a training base in afghanistan. i think bin laden concludes, i just killed 400 of them and they will not even come for us. if i think we can come for them because they are weak. that is why they are here, because we are weak. that is what they believe. they are here because they believe we are weak and we are not going to respond. >> thank you. this question is for mr. gerecht. is it true that some of the car bombs being used by the cartels and mexico are similar to those being used in iraq by ron's terror proxies' their? does this indicate possible collusion? >> i am not a wiring expert. i doubt it.

i think the knowledge of bombs sort of gets around. proliferation not only occurs with high technology. it also occurs with low technology. i am not sure you need to see links in car bombs to suggest you have active engagement. you might. i am not denying it. i'm just saying that this type of knowledge is fairly ubiquitous and it spreads easily. >> anyone else want to comment? >> i will just say generally that we should be wary of jumping too quickly to the conclusion that in order for there to have been this type of cooperation, it has to be into it -- it has to of been institutionalized with loss of trust. the d.a. has found many times that with different types of facilitators, great people that work in a list of industries and many of all types. the same thing happens in

mexico, the same people who will move things will move guns or money or people. sometimes it is just an opportunity. if there was a business in mexico, maybe some illicit business, apparently had a contact with this person he thought was part if a drug cartel and it turns out he was a source of ours, it could have been about. seizing an opportunity to leverage a connections out of the border with someone who might do this just for money. sometimes it might be that simple. it is still telling because there are opportunities to leverage those types of relationships, but it does not necessarily mean that these are institutionalized. >> thank you. >> the chair now recognizes the ranking member, mr. johnson. >> thank you. but let me say from the

beginning that while there might have been some acts perpetrated before the last three years of this administration that might have been characterized from a response standpoint as weak, i am very comfortable that under the obama administration we have taken some very, very bad people out. there's no question about it. the record is clear. this notion that somehow, as a country, we are weak, from my standpoint i want to make sure -- there are some that disagree with that. but that being said, given the situation we are in now with the drawdown in iraq and the situation with iran, i want to

ask unanimous consent, mr. chairman, to enter into the record a statement by the u.s. ambassador susan rice. >> without objection, so ordered. >> and going forward, dr. korb, can you give some of us on the committee how you think diplomacy from the u.s. standpoint going forward would be important? some have talked about expelling any iranian official from this country and going to other levels. but i would like you, and i will ask a couple of the other gentleman also, where does diplomacy fit in this situation where we are today?

>> as i mentioned in my testimony, i support what animal mollen -- admiral mullen, who recently stepped out as chairman of the joint chiefs of staff who says the we are not talking to the iranians and we ought to understand each other. i think we ought to keep the contact open to the extent that you can. and i agree with you that the president basically, reaching out to them, wanting to negotiate, it demonstrates to people in iran that we are not the enemy or completely against them. if you go back and take a look at -- iraq attacked iran. i was in government then. and we supported iraq by giving them photos that said they used chemical weapons on iran. there are things that we have done that i think by reaching

out and talking to them and being willing to negotiate will undermine the narrative of some people in iran that will -- at are just out to harm them and we do not agree with their role in the world. i am all for keeping contacts open and talking to them to the extent that we can. as admiral mullen mentioned, the darkest days of the cold war were not just the sum u.s. interests were involved, but u.s. existence were involved and we kept channels open with the soviet union. >> in general, -- general, given your 37 years of military experience, what role do you see the military having with respect to iran where we are today?

the doctor told -- talked about diplomacy, but i want to talk about the military. >> let me respond to something you already said. what i used the term week, i was using a round's perception of us. if i was not using my perception of my country. just to clarify that. and i believe bin laden, when he believed we were weak, he totally underestimated the united states and the character of our people. i think he found that out, obviously. the royal military place right now with iraq -- the role the military plays right now with iran, primarily is planning. the u.s. military has been asked to put together a plan to conduct war with this country on a different basis. this is not unusual for us. if we have to do that sort of

planning in the event we have strategic surprise for the unpredictable takes place. in this case, we planned for all-out war with them to include a ground war. and we dealt with limited action to deal with money of the straits -- a violation of the mining of the strait of hormuz, or to deal with action against nuclear capability. there is a whole scale of response that the u.s. military house planned and those plans have been briefed all the way to this president of the united states, and they are approved as planned. that is what the u.s. military does, and then it goes out and educates and trains officers and leaders in the military on how to do this and conducts a cast -- exercises. i have kyrgyz updated when i was a division commander and a corps commander simulation exercises concerning iran may be

a dozen times. you would want us to do that. if this event happens that we do not want to do it -- want to happen, and we do with a minimal loss of life. there is push back against the proxy's, the iranian proxies' in iraq. and we pushed it back against the parties that they use with the taliban in providing the taliban with ammunition and resources. we are obviously pushing back against those. but the primary one is what i just stated to you. >> thank you. >> the chair recognizes ms. speer for unanimous request. >> habré like to ask unanimous consent that the gentle lady from texas to be seated to last question. >> without question, so order.

>> i want to thank the general and the colonel for their service in the united states military. i specifically want to thank the, -- the colonel for his role, so to speak, in beirut in 1983. i would like to enter into the record -- a friend of mine from high school, lance corporal tim mcneeley, who played football with my brother and i knew personally, who died in the marine corps barracks there in 1983. it is not lost on a lot of us that have been following this situation that the quds force and the terrorist arm of iran, hezbollah, has been involved with the mexican drug cartel for quite awhile. we have raised awareness, mr. chairman, a number of times

about this in my short 10 months of being in congress. i want to encourage the members of the committee that have not signed on to resolution 429, which mr. higgins and i have sent aid dear colleague letter around on, and that basically urges the administration to include the western hemisphere in the administration's 2012 national strategy for counter- terrorism area of focus. because we are aware of peace -- of the region, we are aware of venezuela and the stronger working relationship between hezbollah and the mexican cartel and the quds force and the drug cartels. i would urge you to appreciate that. knowing our southern border, a colonel, and knowing there is a

working relationship that has been revealed, what could we be doing differently as a sovereign nation on our southern border to keep any infiltration of personnel or weapons into this country? >> i live in arizona. it has gotten better, no question. it through the efforts of a lot of dedicated people. but i have to look back from a historical standpoint at how these things develop and what we can do and what impact they have. they are always hard to measure, particularly in real time. and it is delayed reaction that is usually after an attack. i use as a sample of that from personal history the mission in the report, the blowing up -- in beirut, the blowing up of

our embassy, the attacks on our two embassies in east africa that were talked about earlier and that essentially went by with no response. al qaeda never had the capability for the suicide coordinated attacks that hezbollah pulled off during the beirut mission that killed us. they did not have that expertise, and boat -- bin laden took inspiration from the success of those attacks, and part of that was our non- response. and there was -- until there was a meeting between him and the point man for the shiia who was part of our intelligence later, they had a meeting in sudan in 1996.

coordinated,rst simultaneous suicide bombing, first mission where the two -- were the two u.s. embassies in east africa. and they expanded that same the root model -- beirut model for the coordinated hijackings and coordinated attacks for us here on 9/11. i use that, and with all the activity that is going on -- what we know about, and more importantly, what we do not know about -- as building operational basis in venezuela and south margarita island. and remember, hezbollah has been operating drug-trafficking indeed try border regions for a long time. -- tri-border regions for a long time.

they are familiar with this and i'm sure, have very good contacts with the different ones. they are shopping, probably, in all of this. when they say the this was a bombing attack that should not be taken seriously and all of this, -- bumbling attack that should not be taken seriously and all of this, the cannot ignore that. they know our vulnerabilities and they know how to play this every which way. and i could not agree more that when you have a link to an assassination in this country in our capital of the saudi ambassador, the boldness that they have to try, and just what

that back and who the current minister of defense and what their background and so on, i would take this threat very seriously. again, the whole threat ties into what we do not know as much as what we do know. i know that the fbi and intelligence community, there is a lot of great work and it is one of the reasons we have not been attacked here. but i will guarantee you that the iranians and this current crowd that runs them, they are driven by the ideology and so on. if we are on their target is primarily. -- we are on their target list primarily. they have key targets that are spectacular, coast to coast or whatever, even a mumba style attack and so on, because hate

and humiliation go hand in hand with their view of the best western united states. -- the west and the united states. >> i agree that relationship between hezbollah and the drug cartels is very powerful and very dangerous. >> i want to thank the witnesses for a very enlightening discussion. mr. gerecht, if i understood you to imply or suggest that the government's of iran -- governance of iran is such that you do not necessarily get the

same response that you might get from the use of sanctions with another country, and that maybe there is a distance between the governing bodies and the people to the extent that sanctions may not play the same role that they play in another country? >> yes, i think that sanctions in iran have been effective in many ways, but if you just take the guard corps, for example, they have gotten richer and more powerful as the sanctions have gotten tougher. for them the last five years have been pretty good years. i think you always have to try to see it the way they see it. and the thing about the guard corps, actually, is they have

lots of publications. they have their own world. it is not that hard to read the guard corps. i have met a few guardsmen. in addition, it is not hard to get a grasp of how they see the world because they are fairly forthright in telling you. there have been nuances and variations between individuals at the bottom of the guard corps and those of the top. family history, etc. comes into play. but when a supreme leader tells you he is not scared of sanctions, he is telling you the truth. he is not. that is not to say sanctions have not heard them and that bureaucracy in the business community is not aware of the damage that they have gone to iran, but i think you have to be very careful in believing that the sanctions that would make us stand up and take notice do the same to them. and it is natural that the iranians would gravitate and

not be spooked by any drug cartels because the resort is responsible for the vast majority of the movement of all opiates that come from afghanistan and go to turkey. it is one of the major income producers. they would gravitate toward that. it is natural. it is not something that would be uncomfortable for them. >> thank you very much. recognizing that sanctions have been used as a diplomatic tool for a long time -- i mean, it is a kind of normal reaction, often times, ultimately where we get normal. dr. love it, how do we assess, i mean, how do we make the assessment of how impact will the use of sanctions might be? how do we determine whether it is doing what we want it to do, or whether it is something we

are doing but the value is not there and we are not getting the kind of responses that we might be looking for? >> the pity but most honest answer is -- be pithy but most honest answer is, with care. at the court is, what are you trying to achieve it is -- at its core is where you try to achieve with sanctions? they are very effective. there are ways they can be done better. there are things we should be doing more, but it has been tremendously successful there. do you also think or expect or hope anywhere along that spectrum that you will put enough sanction and economic misery on either the revolutionary regime, or even at some point, the people?

given the most of the sanctions we have our on those in the illicit conduct. do you expect that some combination of sanctions would call for the carcass of this regime and make it the side, for example, that perhaps a nuclear program is on a guarantor of its survival, but an inhibitor, something that might cost their survival? i do not think that is the case. i do not think that we will be able to do that. but we can do enough sanctions that will be increasingly destructive, by us more time, and ultimately do things -- and i think as a designation of the central bank that would have more impact on the country. i agree with you that what we need to do now -- and i think i'm still a minority on this, but i think we sincerely need

to better make a cocktail of sanctions -- mix the cocktail of sanctions.

@@rizona, mr. grijalva, each

will control 30 minutes. the chair recognizes the gentleman from washington. mr. hastings: thank you, mr. chairman. mr. chairman, i yield myself as much time as i may consume. the chair: the gentleman is recognized. mr. hastings: thank you, mr. chairman. mr. chairman, our nation has suffered through 32 consecutive months of over 8% unemployment and people everywhere across our great nation continue to ask, whe are the jobs? congress' top priority right now is job creation and today we

have an opportunity to act on th commitment by passing a bill that would put thousands of americans to work. the southeast arizona land exchange and conservation act sponsored by our colleague from arizona, mr. gosar, is a commonsense measure that will create new american jobs and strengthen our economy through increased u.s. mineral production. the bill authorizes an equal value land exchange between resolution copper, the federal government, the state of arizona and the town of superior, arizona, that will open up the third largest undeveloped copper resource in the world. the bill requires the cost of the land exchange be fully paid for by the mine developer, ensuring fair treatment for taxpayers and for the government. this project will provide substantial benefits to the united states inhe form of job creation, economic growth and increased national security. this mining project will support

nearly 3,700 jobs. these are good paying american wage jobs that will equate to more than $220 million in annual wages. at a time when our economy continues to struggle, this mining project will provide a much-immediated -- much-needed boost through private investments. this mining activity will have over $60 billion in economic impact and will generate $20 billion in total federal, state, county and local tax revenue. so this ll, mr. chairman, is a perfect example of how safely and responsibly harvesting our resource will generate revenue and get our economy back on track. the importance of u.s. copper production cannot be overstated. our nation has become increasingly reliant on foreign counies for our mineral resources. placing our economic competitiveness and national security at risk.

the u.s. currently imports 30% of the copper we need and we will continue to be dependent on foreign countries if we fail to velop our own resources and the vast resources indeed we have in this country. the copper produced from this single project, from this single project, will meet 25% of the united states' entire copper demand. the copper could be used for a variety of projects, ranging from hybrid cars, like the prius, to medical devices, plumbing and computers. without it the microphones and lights that we're using here right now would not be functioning. it's also essential for national security -- defense equipment and technology. it is used in satellites, space and aviation, weapons guidance and communications. the benefits and the reasons to pass this bill, mr. chairman, are plentyful. however, we are likely to hear several accurate clms from those across the aisle who are

opposed to mining in america. i would like to take a moment to set the record straight right from the beginning. first, the bill follows the standard federal land appraisal process, procedures issued by the department of justice which has been used in this country for decades. the appraisal requires full market value to be paid for by both the land and minera within. if by chance there is copper production beyond, beyond, mr. chairman, the appraised value, the mine developer will be required to pay the united states the difference. which would be assessed an annual basis. this is an added guarantee to ensure that taxpayers get a fair return on their copper resources. second, this bill is about creating nearly 3,700 american jobs. it's not about helping foreign mining interests as some have charged. opposing this mine and not producing copper in the u.s. is what truly benefitsoreign nations by sending american jobs

overseas. and making it increasingly reliant on foreign resources of critical minerals. third, the bill requires full compliance with environmental laws and tribal consultation prior to constructing the mine. this billprovides more conservation and protection of culturally sensitive and critical habitat than otherwise would occur. especially in areas to be conveyed currently under private ownership. fourth, the developer has already secured over half the water needed for this project and has committed to having 100% of the water it needs in hand before construction begins. claims that the project will require the same amount of used by the city of tempe is, mr. chairman, a gross exaggeration. finally this bill does not trade away sacred sites. as previously stated, the bill requires tribal concentration and there is a map that will be shown later on today that talks

about the copper triangle in this part of arizona and you'll see that on this map, which will be shown later, this mine is right in the middle of that copper triangle. h.r. 1904 is about creating new american jobs, strengthening our economy and decreasing our dependence on foreign minerals. the bill has broad support both locally and nationally, including arizona governor, the arizona chamber of commerce, the u.s. chamber of commerce, the national association of manufacturing and the national mining association. they all, mr. chairman, recognize the job-creating benefits of this bill. so i urge my colleagues to strongly support h.r. 1904, to put americans back to work on american jobs and utilizing the vast resources in this country that we should be using for economic and for national security reasons. with that, mr. chairn, i

reserve the balance of my time. the chair: the gentlan reserves the balance of his time. the gentleman from arizona. mr. grijalva: thank you, mr. speaker. and i yield myself as much time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. grijalva: thank you -- the chair: the gentleman is recognized. mr. grijalvathank you. h.r. 1904 is a triple threat. it will rob native people of their heritage, it will rob local people of their water and it will rob the american people of their money. this legislation is simply an abdication of our responsibilities as steward of public lands and the public trufert. and it must be rejected. the ngress rounely considers land exchanges. it is our responsibility to weigh the merits of each proposal to determine whether it is in the best interest of the american people. some proposals facilitate public recreation, some help local communities build courthouse and schools and -- courthouses and schools and some serve important environmental goals. the land exchange required by 1904 serves none of those purposes. rather this legislation will take thousands of acres of

healthy, protected, sacred public land and convert it into billions of dollars in corporate profits for two foreign mining companies. h.r. 1904 trades away several sites that are sacred to native people. the hearing record before the natural resources committee includes desperate pleas from apache, white mountain apache, tonto apache, other apaches and the pueblo and others pleading to respect the religious and cultural traditions. instead the bill waives compliance with nepa, the native american protection act and the historic preservation act and all other statutes that might give the tribes voice and respect at the table before this decision is finalized. . the time insult comes when the

bill requires consultation with native people after the land exchange. after that exchange has already occurred. this will not be government to government consultation as required by the treaty trust relationship, rather it continues a pattern of neglect and belittles native people once again. the legislation also threatens to take a drown prone area turning it into a desert. according to testimony received by the committee, a mining opation like the one planned by resolution copper requires an estimated 40,000 acre-feet of water per year. this is roughly the amount of water used by the entire city of mpe arizona. the temperature does not own any water rights, has failed to indicate where the water for the mining operation will come from. historically mining companies have simply sunk their wells deeper than their neighbors and taken water that they need. a federal mining permit process

along with compliance with nepa and other laws might mitigate or at least explore these concerns, but the legislation allows resolution copper to skip these steps leaving the people of southeastern arizona in grave danger of severe water shortages. nepa happens after the land train is nalized. the parent company of resolution copper holds all the cards. compliance with nepa becomes unclear and poses legal issues regarding private property. finally, the legislation will allow the parent company of resolution copper to realize billions in profits without guaranteeing a fair return to the current owners of the land, the american people. the bill contains appraisal and payment provisions, but the language is nonstandard and in some cases totally unique. why are such provisions necessary when a simple straightforward royalty would provide a fair and predictable

return to the taxpayers? at a time when we are told that everybody from college students to the elderly must accept drastic cuts to basic federal programs, it is unconscionable that we would approve a massive transfer much wealth from the american people to a foreign-owned mining company without insisting on a fair return. supportive of this legislation -- supporters claim it would create jobs. job creation has been the excuse used here on the house floor to push legislation dismantling the last century of environmental protection and h.r. 1904 continues that pattern. the job creation claims are based on predictions provided by dustry and the companies which stand to profit from this deal without a mining plan to verify or corroborate any of the information. thus they are all highly suspect. when the proposal was first developed in 2005, the arizona

republic and the tucson citizen reported the mine would create 450 jobs. without explanation these predictions have skyrocketed over the years to 1,200, 3,700 today, and 6,000 jobs as well have been brought up as numbers of jobs that would be created. none of these numbers are supported by facts. the trend in mining over the last several decades is clear, mining compani are producing more and more and using fewer and fewer workers. rio tinto are pioneers in the use of auto mation and the resolution copper project is an opportunity to perfect these technologies. even further, the number of jobs actually created by h.r. 1904 will pale in comparleson to the economic and environmental devastation that it could cause. mr. chairman, this is a special interest legislation that is not in the interest of the amecan people. this legislation asks congress

to be business agentsfor foreign owned corporations and not stewards of the public land or represent the american taxpayer. with that i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from washington is recognized. mr. hastings: i'm very pleased to yield five minutes to the gentleman from arizona, the sponsor of this bill, somebody who has been absolutely tenacious in seeing that this legislation advances to where it is today, so i yield five minutes to the gentleman from arizona. the chair: the gentleman from arizona is recognized for five minutes. >> thank you, i rise today in support of my legislation, h.r. 1904, the southeast arizona land exchange and conservation act. mr. gosar: legislation that will create american jobs, reduce our dependence on foreign sources of energy and minerals, protect high profile conservation lands, and generate revenue for federal and state treasuries.

in this time of serious economic hardship, congress must engage in serious debate over serious issues. what should not guide congress is an endless game of unfounded attacks that leads to trumped up fear amongoring to gain political advantage, particularly in this case the fear of robots. this legislation is a real job creator. i would like to tell a story about chris astore. a curnt employee at the mine site and a member of the an carlos apache tribe. ris grew up attending public schools on the reservation and graduated from high school in nearby globe. in 2010 chris was among those first in the first group of the resolution experience participants, a paid three-week program resolution launched in e summer of 2010 to introduce potential employees to the world of ming. each participant receives a mine and safety health administrative certified training, then is exposed to the various work

disciplines within resolution copper. following this three-week program, many of the program participants are hired by the company or as contractors. among the hired employees was ris astore. chris is one of seven apaches who have been hired by resolution copper or its contractor since the program began in the summer of 2010. chris now works as a core handler, one of the seven-member crew that retrieves drill core samples from the rigs that do the projt. i have had the blessing of doing this in my own life for my dad. under the guidance of geologists, the core handlers log, process, and archive core samples with geologists and mine engineers, helping them to rely and understand the nature of the ore body. i would like to eventually try different jobs, get a broader view, learn, and grow into a supervisory role, chris says. i also want to be trained to work underground. prior to the resolution experience, chris worked at the

pinto valley copper mine an open pit mine a few miles northeast of the project which is owned by b.h.p. however this mine is currently closed. before joining resolution's experience, chris had been out of work for more than a year. chris is now a 31-year-old father of three children, ages 13, 9, and 5. with his stable good paying job including great medical benefits, chris is able to confidently support his family. i can take care of my kids better and provide what they need and sometimes even what they want, he says. life was not always good for chris. he grew up as an only child, raised by his mother and grandparen. he spent most of his childhood on the reservation. he went where my mom could find work, he say he never knew my dad. chris feels fortunate to have a job and to live on the reservation where more than 80% of the residents live in poverty and 7 out of 10 eligible workers

are unemployed. it is true that modern mining technology uses high-tech equipment to accomplish certain tasks. this is done for efficiency sake and the sake of the worker. mining is a potenally hazardous task and certainly difficult one that must be done with precision. chris is not a robot. you can still see there's a need for people to run the mine, to drive the trucks, to feed the workers, to drill the holes, to engineer the dig, build the structures, process the minerals, andyes, build, maintain, and control technology. chris is a real human being operating this technology already aids the site. if we pass this legislation, over 3,700 more success stories like chris' will come to fruition. i urge my colleagues to continue this debate with serious discussions about the facts about this bill not scare tactics. i yield back the balance of my

time. the chair: the gentleman yields back the balance of his time. the gentleman from arizona is recognized. mr. grijalva: i would like to yield as much time as he may consume to the gentleman from arizona, my colleague, mr. pastor. the chair: the gentleman from arizona is recognized. mr. pastor: i want to thank mr. grijalva for the courtesy. mr. chairman, unanimous consent to address the house and revise and exnd. the chair: the gentleman is recognized. mr. pastor: mr. chairman, this is an issue that i have been working on for probablthe last 10 years. and one of the interests that i have on this issue is i was born and grew up in this copper triangle that we are talking about today. it's a beautiful area and at one time copper was the industry for this copper triangle and over the past 20, 25 years obviously many of the mines shut down and the copper production stopped in arizona. and so i have to tell you that

my interest in this land exchange and -- would be the possible economic rise of this area. i traveled through this area because my mom still lives up in miami, arizonawhere i was born and raised. and i traveled regularly at least once a month through these canyons and i cld tell you that it's the most beautiful site, about 85 miles east of phoenix, where you can sti see fine, pristine environment with some of the spectacular rock formation that you'll ever see in this country. so it's very beautiful. but also it's an area that's hit some hard tim. i grew up in a mining town so i know what a mining town is. during the summers while i was attending arizona state

university, i would go work in the mines. so i worked in the leeching plant, the electroplant, the leeching tanks, ball mills, so i have the experience of knowing this type of life. so i know the economic boom that copper mining can bring to a community, but i also have experienced the impact, the adverse impact that copper mining can have not only on the people that work in there, but also on the environment. so i have seen both sides. it's with that interest that have seen the evolution of this debate, at one time even i sponsored a bill that would deal with the economic development of these mining towns, superior, globe miami, etc., and the area we are talking about being exchanged is an area that i know

well. as a kid growing up we used this area for picnic site and in some cases probably the site where we didn't go school, that's where we had our impromptu picnic. so i know this area. i have to tell you that the issue about the jobs as it will be discussed, and i guess the number of jobs is in the eyes of the beholder, mining has changed. and i know that it's a different type of mining than the one i experienced, and so we can debate on the mum of jobs. -- number of jobs. but i will tell you that this will be -- this will bring some economic development to these areas of the copper triangle. that i cannot deny. but the issue for me is at what price? athat price do we bring this

economic development without some protection to the environment, without some protection to the emploe rights, but more, what do we do ensure that the american public who owns this property -- and there is no debate that this ore , deposit is some of the richest ore bodies, copper, gold, silver , and other rare metals will be minehere. it's one of the richest deposits of ore not only in north america but probably in this world. and that's why resolution copper has maintained nine years, 10 years of trying to get this bill done, because they know how rich this is. so at what price do we pay for this economic boom? well, mr. chairman, i would tell you that one of the differences that i have with the sponsor of

this bill, and i have to thank him because representative go czar rched out verierly -- gosar reached out very early and we talked about this particular bill, and he has improved the bill i sponsored, but i feel that he has not gone far enough. so this bill would be highly improved if the amendment offered today that gives an 8% on the extraction of the ore wod be fair to the american public. and so if that amendment is adopted, obviously it will be very difficult to oppose this bill. but if the amendment is not adopted, then, mr. chairman, i would tell you that the american public is paying a high price for the economic development of the copper triangle and the only enrichment will be for those copper companies that are of

foren extraction. so, mr. chairman, i thank you for the time. i yield back the balance of my time. . the chair: the gentleman yields back. the gentleman from washington. mr. hastings: thank you, mr. chairman. i'm pleased to yield 2 1/2 minutes to another gentleman from arizona, mr. quail, 2 1/2 minutes. the chair: the gentleman is recognized for 2 1/2 minutes. mr. quayle: thank you, mr. chairman, and i thank the gentleman for yielding. mr. chairman, i rise today i strong suppo of h.r. 1904. the bill authored by my good friend and fellow arizonan, congressman gosar, that will create thousands of jobs in arizona. i want to commend chairman hastings for thinks work on this and bringing this tthe floor today. what we see right now is a jobs crisis that we have in america. and we need to be able to unleash the ingenuity of our job creators. and we also have to make sure that we're not putting up barriers for people to actually start companies, expand companies and hire new workers.

h.r. 1904 have will have broad economic impacts not only for arizona bu for the country as a whole. because it will create 3,700 jobs equaling nearly $220.5 million in annual wages. these are good, high-paying jobs right here in america. and it will also generate nearly $20 billion in federal, state, county and local tax revenue. this is a win-win. not only is this legislation completely paid for, but it also ensures that mining is done in a responsible manner. because h.r. 1904 requires full compliance with nepa and also requires tribal consultation prior to mine construction. now, mr. chairman, copper is a vital minel that we have in the united states and across the world. it's going to continue to be vital. because it's a critical mineral that was widely used in construction, telecommunications, electricity and transportation. copper's also extremely

condtive. which makes it very important in power generation, in utility transmission. our actual desire and demand for copper is just going to continue to go up. and that's why we've actually started to import close to 30% of our copper from a foreign -- from foreign countries. if we opened up this mine and allowed this land swap to happen, this project alone could provide us with enough copper to meet 25% of current u.s. demand. by taking advantage of the american sources of copper, we can prevent supply disruxes and -- disruptions a decrease our dependence on foreign imports but most importantly, mr. chairman, this bill creates thousands of american jobs in a responble manner at no cost to the taxpayer. i urge my colleagues to support this bill and i yield back the balance of my time. the chair: the gentleman yields back the balance of his time. the gentleman from arizona. mr. grijalva: thank you. there is a cost to the taxpayer, mr. speaker. the fact that this very valuable extraction in mineral is being

extracted without any royalties, without any payment. i would consider that a cost to the american taxpayer. and the issue about nepa is not semantics. neep and other environmental -- nepa and oer environmental profits should occur before the land trade, not after. after the land trade it will be very difficult for compliance to happen, as a consequence now that this land will be in the hands of a foreign-owned company, it will be private property. with that let me yield to -- as much time as he may consume to the ranking member of natural resources committee, the gentleman, mr. markey. the chair: the gentleman from massachusetts is recognized. mr. markey: i thank the gentleman from arizona. mr. chairman, the new deal was a jobs plan. president obama has put forward a jobs plan. h.r. 1904 is not a jobs plan.

h.r.1904 is a massive payout to multinational mining giants wearing a jobs plan as a disguise. and that disguise is slipping. real jobs are about making wise investments in businesses and technologies that put americans to work. this bill just gives billions of dollars in copper to foreign mining companies for free. so let's do the math. estimates vary on the value of the copper. from $2 billion t $7 billion or $8 billion. so let's just split the difference down the middle and say that the copper might be worth $5 billion.

the jobs claims for this bill vary wildly as well from 500 to 5,000 jobs. now, there's a good reason to believehe jobs numbers will be on the very low end, but let's be optimistic and take the highest jobs claim possible, so supporters of this bill are going to giveway $5 billion in hopes of creating 5,000 jobs. well, that's $1 million per job, mr. chairman. $1 million not paid necessarily to the worke themselves, but paid to foreign mining giants. now, is that the kind of wise investment that we need? i do not think so. i think that weeed some new jobs, but they should be real jobs, they should be here. mu of the work thas going to be done in this mining is going

to be done by robots. so there will be full employment for our -- for r-2-d-2 and for the transformers but the total number of jobs here, very speculative and very expensive per job created. that's the real question here. because i think many human beings are just going to remain unemployment -- unemployed under this plan and since it's a multinatnal that gets the benefits, there will be plenty of accountants and lawyers in london and melbourne, all around the world, that will be employed, but in america, not so many. and those that are the, very expensive. especially since the per capita cost is very, very high. now, why do we know that? well, we know it because rio tinto and b.p.h. stand to pocket an enormous amount of money. billions of dollars off of this deal. so if y count the food service

workers and the executive dining rooms of these companies, well, you can see where there will be some jobs that are created. if you're adding it up that way. but, the truth is this is a windfall, a windfall, which is whyi am going to make an amendment to charge a reasonable royalty for the privilege of mining this copper on public lands in the united states. and when the -- when the majority votes no on that, when the republicans say, no, we don't want to -- a royalty paymenthat can actually be collected by the american people, we'll see what the real aim of this is, which is to privatize this resource for multinational corporations without giving the full benefit to the american taxpayer for the copper which is mined and mr. grijalva and mr. garamendi will offer an amendment to require local hiring and local ore

processing and make it in america, make it here, and have americans working here, doing this work. people from arizona itself. that's the real debate that we're going to have. and in conclusion, mr. lujan as well will offer an amendment to protect native american sacred sites from being destroyed by this bill. and when that is defeated as well by the majority it will be painfully clear just how far they are willing to go to enrich these foreign corporations. this should not be a filings basement sale, this should not be a fire sale, giving away american valuable copper resources to multinationals, we should be able to put a price tag on what the american people are getting from this bargain basement sale, this giveaway, without proper compensation

given to the american taxpayer. that's what this bill and the debate is going to be all about. it's whether or not in fact there is corporate profit earring at taxpayer -- profit at taxpayer expense which is at the heart of this bill. history are record that when the public cried out for a jobs plan to put americans back to work, that what was put together was a retimentlan for executives at rio tinto and b.p.h. that did not in fact -- b.h.p. that did not in fact get a return for american taxpayers. i yield back. the chair: the gentleman yields back the balance of his time. the gentleman from washington. mr. hastings: i'm pleased to yield two minutes to another gentleman from arizona, somebody else who has been involved this issue for some time, mr. franks, for two minutes. the chair: the gentleman is recognized for two minutes. mr. franks: i certainly thank the distinguished chairman for yielding. mr. chairman,et me first just congratulate mr. gosar on the introduction and passage of this

legislation. he has done aamazing job in helping this legislation get to where it is now and i have every confidence that he will see it through to the end. mr. chairman, according to united states geological survey reports, the united states currently imports over 30% of the country's copper demand. and in 2010 alone domestic copper production decreased by another 5%. it decreased by another 5%. and just as relying on foreign oil imports threatens national security, relying on foreign copper suppliers also threatens u.s. industry. we must use domestic resources to meet that growing demand and this legislation is a major step in the right direction. producing enough copper to meet as much as 25% of america's current demand. the southeast arizona land exchange and conservation t would open up the third largest undeveloped copper resource in the world, mr. chairman. it would create new american jobs, reduce our dependent on --

dependencen foreign sources of energy and reduce our dependence on foreign sources of minerals and generating tens of billions of dollars in revenue. now, in the midst of a prolonged recession, mr. chairman, that has hit arizona very hard, we really cannot afford not to pass this legislation because it so uniformly benefits our labor force, our state and local governments and conservationists who would benefit from the much of the high value land exchange in opening this ld to mining. i would just encourage my colleagues to vote in favor of this bill. it's time that america begino produce our own energy and our own minerals and to get back on track of being the greatest nation in the history of the world and i would yield back and thank the chairman. the chair: the gentleman yields back the balance of his time. the gentleman from arizona. mr. grijalva: thank you, mr. speaker. the claim is that this legislation's going to boost the u.s. economy tremendously. but the copper will likely benefit china more than the united states. 9% of rio tinto is owned by the

state-controlled aluminum corporation of china. rio tintto has a long established relationship. they refused to disclaim what level of exportation they were going to make to china of this copper-ore. at a time when we should focus on u.s. industry, on suprting that industry, creating jobs here in america, we should not be trading away billions in copper to supply china's needs. this bill doesn't require -- doesn't even require the ore extracted from this mine will be processed here. much less that it will be marketed or sold here. with that let me yield three minutes to the gentleman from california, a member of the resource committee, mr. garamendi. the chair: the gentleman from california is recognizedor two minutes. mr. garamendi: thank you, mr. grijalva, thank you very much. let me just fell you, my family's been in -- tell you, my family's been in mining since the 1860's, gold mining which isn't working t welin california right now and i'm not at all opposed to mining copper in arizona although there are issues local to be dealt with and let that go to another

individual. i was deputy secretary at the department of interior and had the turent to deal with the appraisals and land transfers. this bill as structured is a bad deal for american taxpayers and for americans. it basically is an enormous giveaway of extraordinary value to these two companies. as has been mentioned by our colleagues from arizona who are inupport of the bill, this is one of the biggest deposits of copper and other minerals in the united states and quite possibly among the biggest in the world. what is its value? the mechanisms that's used to determine the value of the trade is called a capitalization appraisal. which has to assume that -- has to assume the cost, has tmake assumptions on the extracti, the cost of extraction, and the value -- and the amount of ore to be obtained. there is no way in the appraisal

process that that can be done with any accuracy at all. and in the language of the bill, there are certain provisions that make it impossible for the united states government to go back and do a reappraisal. so, we're left with a bad financial deal. also the copper mining has to be done properly with environmental reviews and all. that that's not the issue for me. the issue for me is, let's make sure the american public gets the right value out of this and there's only one way to do it. and that is,s the ore is extracted, it then has a known quantity and a known value and a royalty on the ore extracted, that is the material, copper, gold, and other materials is then known and if you simply put a royalty on that, then e americanublic will get its fair share of its property. this property doesn't belong to rio tinto or b.h.p., it belongs to us, americans. may i have another 0 seconds, mr. grijalva?

-- 30 seconds, mr. grijalva? it belongs to us as americans and we oug to be getting our full value. this is not an obscure or new provision. this is the standard procedure, we used it for oil extraction, except in deepwater. it's something that really will give us the value. secondly, and i'll make this very, very short, is that the equipment used ought to be american-made. there are going to be a lot of equipment, a lot of different equipment and materials used, let's make that american-made. that's an amendment that will come later. but right now deal with the royalty issue so that us americans, all of us, 300 million, will get our share of the extraordinary value that this mine will produce. with that i yield back. . the chair: the gentleman from washington. mr. hastings: i am pleased to yield two minutes to a member of the natural resources committee and a gentleman whose district has long mining history, the gentleman from michigan, mr. benishek, for two minutes. the chair: the gentleman from

michigan. mr. benishek: i thank the gentleman for yielding. mr. speaker, i came to the floor to speak in favor of this bill because, frankly, find it hard to believe what i'm hearing from those arguing against it. does anyone honestly believe that passing this bill will create jobs only for an army of robots? are you kidding me? robots? according to one study this bill may create as many as 3,000 real jobs, for humans. mr. speaker, my district in northern michigan is a long way from arizona, we, too, have a long rich history of copr mining. today people need copper in their daily lives. the growing demand means we need more mines. creating more jobs. in arizona and michigan. my own father was a miner. congress needs to demonstrate that the american people -- to

the american people that it supports mining jobs in developing our nation's resources, as this bill does in a way that's both environmentally responsible and culturally respectful. i urge the passage of this bill and yield back the remainder of my time. the chair: the gentleman yields back. the gentleman from arizona. mr. grijalva: could i inquire how much time each side has? the chair: the gentleman has 8 minutes and the gentleman from washington has 13 1/2. mr. grijalva: if i may yield three minutes to the gentleman from minnesota, mr. ellison. the chair: the gentleman from minnota. mr. ellison: mr. speaker, i'm afraid that this bill is another example of the majority having no real jobs agenda. the republicans are claiming that this bill will create jobs in arizona, and of course our whole country wants more jobs anywhere we can get them, but the truth is that no one really knowshe exact economic impact of this mine. the only job numbers that we have to go on are those provided

by rio tinto, a foreign parent company of resolution copper. when this proposal was first developed in 2005, it was propertied that the mine would create about 450 jobs. without anyxplanation, no data, no analysis, very little, the estimates have skyrocketed to over 1,200 jobs or even 6,000 jobs. that sounds enticing, particularly to a country where we have 10%, 9% unemployment. but without any data to support it, it just seems like speculation. you could just say it's going to create a gazillion jobs. why not? anything to get the deal. there's no way to know because the numbers are not supported by a mining plan of operations o an impartial economic documentation of any kind. this bill is an affront to the national environmental policy act under this legislation by the time any environmental review or accurate job figures

are available, the land will already be in private hands. in fact, there is no job requirement in the bill. there is no job requirement in the bill despite the vaunted promises of 6,000, 11 million jobs. this bill doesn't include any local jobs requirement from the mining company. at a time when the whole country is looking to congress to create much needed jobs, and we really are vulnerable to any promises of jobs, our colleagues across the aisle should be really focusing on creating jobs in america not just large vaunted promises that really have no background or substantiation. our colleagues across the aisle are spending the time in this house to create a special interest carve out for a giant multinational corporation. this, by the way, owned by people outside the united states. i yield back the balan of my time.

the chair: the gentleman's time has expired. the gentleman from washington. mr. hastings: thank you very much, mr. chairman. mr. chairman, i'm pleased to yield two minutes to another gentleman who has been a long time supporter of this project, mr. flake. the chair: the gentleman from arizona. mr. flake: i thank the gentleman for yielding. listening to the debate you wonder what bill we are debating here. the opposition seems to be talking about something completely, completely different. we have heard under the rule debate yesterday and some of the debate today that this won't create any jobs in arizona. that somehow these jobs will go to robots. come on, this isn't the jetsons doing this. i have no idea what's being talked about here. let me just give you a couple of examples of those who are employed currently. there are 500 people currently employed by resolution on the mine. 500. 90% of them are arizonans. 90% of the 500 right now. they are estimated 1,400 jobs directly related to the mine or directly in theine, and some 3,700 beyond that.

ancillary jobs that come as a result of it. guzman, a local superior trading contractor, he had several local employees working for him on this project. that's a person, not a robot. jeb doneland, a globe based contractor whose company is doing much of the reclamation work on the project. elizabeth, she's a long-time resident. she was actually born in the hospital that was run by the company on therevious mine that her father worked on. that company hospital now serves as project's headquarters. two of her sons work for a relution contractor. mike alvarez, third generation from superior, works with a map technician. these are all real people. not robots. you didn't hear me say c3po or anybody like that. so the arguments we hear coming out of the opposition on this are just complete, complete nonsense.

about this not creating jobs. talk about royalties. if we want to go in and change the mining act of 1872, let's do it. i'll be there. a lot of us have argued for that, but this is not the place to address the mining act of 1872. let's address that when it should be addressed and let's address the facts at hand. and the facts are these, jobs will be created. this is a great bill. let's pass it. the chair: the gentleman's time has expired. the gentleman from arizona. mr. grijalva: thank you, mr. speaker. i thank my friend, mr. flake. you're right. this isn't the jetsons doing this. i'd probably feel more comfortable if that was the case, but given the time we have left i'll reserve the balance of my time, mr. speaker. the chair: the gentleman reserves. the gentleman from washington. mr. hastings: mr. speaker, mr. chairman, how much time on both sides? the chair: 11 1/2 and six.

mr. hastings: mr. chairman, i have another speaker coming to the floor so i'll yield myself as much time as i may consume. the chair: the gentleman virginia tech. mr. hastings: mr. chairman, we have heard some curious arguments on the other side as my colleagues on this side have pointed out a w times, but let me just talk about a couple of them where there is a charge that this will cost the taxpayers. we measurehat the costs are to the taxpayers of this country by the congressional buet office c.b.o., the congressional budget office in looking at the land exchange aspect of this and the other costs associated, have concluded that the costs to the taxpayer is effectively zero. now, that's official agency that we go by. so when we hear that there are a whole nch of costs associated with that to the taxpayer, that's simply not so. but what is even more ironic,

mr. chairman, when they make that argument, they ignore the fact that jobs that will be created here get paid wages. those wages then will be subjected to tax policies of our federal government. to where the federal government actually gets more revenue. but that is ignored, it seems like, all the time when we hear the other side argue on this issue. let me talk about the issue of nepa because that has been bandied around a few times. the nepa laws of our country are not changed at all. by the passage of thibill. but what we do is we put logic to the process. mr. chairman, as you know very well, our great government was decided -- was designed to have a disperfection of power.

we sit in the legislative branch and we make the policy of this country and the executive branch carries out that policy. it's been that way since our republic was founded. all we are sayinis that when congress directs an action in this case an action of a land exchange, it shall not be subject to nepa because we are exercising our authority in the constitution to direct policy. why should a nepa policy be used to slow down direction that congress has given? so that's the only part of the nepa policy that will we are affecting in this bill. now i want to say this very explicitly. under this bill all nepa laws as to the construction and the carrying on of this mine will be subject to deepa laws and

nothing s changed. nothing has changed. so when people throw out nepa, when people throw around nepa as something -- one reason why we shouldn't adopt this, that is simply a bogus argument. finally i just want to make one more point here about this being a give away. in fact, there are some of my persuasion that may have a bit of heartburn with this because the matter of fact we e giving the federal government more land than we are exchanging for private development of this copper land. mr. chairman, i know you have heard the arguments over there andhe time and i have been here and yet this is something i think is worthy of support because we do want to make sure that those lands are protected in a way. so to suggest that there is a give away here is simply not the case because the exchange is of equal value.

with that, mr. chairman, i reserve my time. the chair: the gentleman reserves. the gentleman from arizona. mr. grijalva: i continue to reserve. the chair: the gentleman from washington. mr. hastings: thank you, mr. chairman. mr. chairman, i am very pleased to yield to a former member of the natural resources committee, the gentleman from new mexico, three minutes. the chair: the gentleman from new mexico. mr. pearce: thank you, mr. chairman. i thank the gentleman from washington for yielding. every day in my district in new mexico people ask what's gone wrong with the american economy? what's gone wrong with the american enomy is that the federal government spends $3.6 trillion a year and it brings in $2.1 trillion a year. so they ask then why are the revenues to the government down? i say because jobs are down. and they want to know why jobs are down and i can point to the resistance of this bill and explain why jobs are down. this is a very commonsense bill. it says we are going to take

land, almost twice asuch land and exchange it to a private company, we'll give them half as much land anlet them have a copper mine there. and the americans are currently importing about 32% of all the copper that we use. this one mine, if the resistence were dropped and were put into operation, would provide 25% of the domestic copper demand for the next 50 years. why would we be contesting this? i have heard my friends on the other side of the aisle say it's because there are robots working in the mine. the mines i go into, and i will guarantee you this mine will be conducted with engineers, with mechans, it's going to be conducted with blue collar laborers down the hole working in the mine. ey've got better machinery than they did 100 years ago. they are not there working with pick and shovel. but these are real jobs, 1,200 to 1,500 jobs long term, 2,000

to 3,000 construction jobs. it's a $4 billion increase in our economy. and we can't get agreement. this town which talks so much about jobs on both sides of the aisle and we hear the president moving around the country, i haven't heard the president once come out and say at least free up these 1,200 jobs. i will sign this jobs package. instead he wants to raise taxes to increase jobs. that his idea. this is a private investment in a private land where they create a lot of long-term jobs. more than this they are lf-sufficient. the price of copper is almost four times what it was 10 years ago. the most recent report is that people are stealing copper bells off of churches and going in and cutting them up and selling them. copper is in that great a demand and we still find resistence from our friends on the other side of the aisle for creating these jobs and no one seems to understand and the american public why.

what is this about? . it's about agenda politics. we are not going to let any resources go in the west. the west had its timber jobs choked off, mining jobs choked off, it had resistance to the oil and gas jobs. they are trying to shut that down. the west is starving for jobs. in fact, we in the western caucus have recently put out a report highlighting all of the many ways we can create jobs now. the jobs frontier, i wou recommend people go to it. this is one of the bills in the jobs frontier. i hardly recommend we pass h.r. 1904 and yield back. the chair: the gentleman yields back. the gentleman from arizona. mr. grijalva: thank you, mr. speaker. as i indicated, much of the opposition coming from indian country to this legislation. all pueblos, including six in

-- all the pueblos in new mexico have opposed this legislation. all the intertribal council of arizona is opposed to this legislation. 26 tribes from across the country, including texas, have opposed this legislation. they see an impact on sacred sites, history, culture that has not been factored into this discussion nor have native people's, particularly thos affected nearby san carlos, apache been allowed to run what is important which is the government-to-government consultation. just to point, the chairman, my friend of the natural resources committee mentioned c.b.o. score for this bill. there are also two ints to make. c.b.o. says this bill could cost the taxpayers up to $5 billion over 10 years. this cost is not offset. c.b.o. says the payments to government could be significant but the bill's provisions don't

allow c.b.o. to score them accurately. a straight royalty for sure would have certainty and would return what we -- was needed and reserve the balance of my time. the chair: the gentleman reserves. the gentleman from washington. mr. hastings: thank you very much, mr. chairman. before i yield to another gentlen from arizona, i just responded, c.b.o. said in their scoring which is so insignificant it's hard to measure. with that, mr. chairman, i am pleased to yield one minute to the gentleman from arizona, mr. schweikert. the chair: the gentleman from arizona. mr. schweikert: mr. chairman, this is where i ranut of the financial services committee because it's important to be an arizonan. i spend a lot of time in this part of the state. much of the communities have devastating unemployment. and they are literally furious with washington, d.c., for destroying their timber jobs and squeezing their mining jobs and then we stand here with

something that for little state like arizona -- for a little state like arizona could be billions and billions of dollars of economic growth. when you think about this one ore deposit could represent 20% of the nation's copper, you know, how can we even be debating this. when you also realize, an average single family home uses about 440 pounds of copper. how about a car? a car uses about 55 pounds of copper. this is where it will come from. and the last thing i want to say, and to my good friend, congressman gosar from northern arizona, and all tee -- mr. hastings: i yield the gentleman 30 seconds. mr. schweikert: he's gigantic here. as a freshman to step into this body to deal with sometimes a can tank russ issue but --

cantankerous issue but those who love arizona, this spornt. this is a lot of jobs. this is a lot of economic growth. and congressman gosar gets a lot of credit for getting it this far. thank you, mr. chairman, i yield back the balance of my time. the chair: the gentleman from arizona, mr. grijalva. mr. grijalva: can i inquire how much time has on each side? the chair: we are at five and three. mr. grijalva: i'm going to be prepared to close, but i'll reserve the balance of my time. the chair: the gentleman from washington. mr. hastings: thank you, mr. chairman. mr. airman, i'm pleased to yid one minute to the sponsor of this legislation, again, somebody who has been absolutely tenacious on this issue, the gentleman fro arizona, mr. gosar. the chair: the gentleman from arizona. mr. gosar: thank you, mr. chairman. my legislation shows you can protect the land and water and have a good economy with jobs. the land exchange that will bring into federal stewardship 5,500 acres of high-prix or the conservation lands in exchange for the largest copper area in the world. i'd like to speak about one.

the 7-b ranch located in pinal county, arizona, is 3,073 acres dedicated as one of the last great places on earth and the forest svice testified that this property was priceless. you get a chance to see some of it. this area is home to a free-flowing arteeshan wetteland populated by leopard frogs, nesting birds and native fish. this par sell is recognized as an important bird area. these are amazing sites. these are priceless. i yield back my time. the chair: the gentleman yields back. the gentleman from arizona, mr. grijalva. mr. grijalva: thank you. let me just talk about the opposition and it is not only with affection for the state that i grew up with and i was born in but it's also for the future of that state and it's

also for the future of important rules and laws that have protected our environment for many years to assure that the jobs we're talking about are not just a panacea and a selling point as opposed to a realit the opposition to this copper land exchange bill is based on many factors but let me just point out two. this is the fourth version of the land exchange. it began with former colleague ramsey. then, mr. pastor, mrs. kirkpatrick and now my friend, mr. gosar from arizona. they are not the same,none of those. and the one major difference that with the exception of the legislation before us, the nepa process, the consultation all occurred before the land

exchange, not after. once we do that process, something comes up that needs compliance and mitigation. it becomes subject to the private property owner, a foreign company that will now have this public land, to deal with that question, as serious compliance issues and legal issues. the other point is the water. the 12 years have already been done of the 20 that the mine needs to be operated. other important areas in the water supply for the region that seems like a significant number. but to bank, to bank water for this project on the outskirts of phoenix does nothing to mitigate the potential usage of water, the potential drain of water in those these aquifers in that region and the effect it would be. nepa would tell us what the

effect is. a full study would tell us. we are not having that done. we are working on supposition. i think that's a mistake. we cannot afford it with this bill. a full and open process. if we would have done it with the ramsey bill almost eight years ago we would be through at process many, many years ago and perhaps be talking about a differently crafted piece of legislation. we aren't doing that. the -- and the last thing is there's something sacred and spiritual about this as well. native people are not just complaining because they want to complain. they are legitimately saying that we need to have consultations. there should be full studies and factored into the decisionmaking must be the historical and cultural and sacred and religious areas that we need protected and ensured it will be protected.

those discussions have not occurred. h.r. -- it's a land giveaway, and the gentleman from new mexico said why our economy is in the bad place, wellthis legislation tells you why. it's a sweetheart deal for a multicultural corporation, foreign owned. >> will the gentleman yield? mr. grijalva: will after i'm done with my sumation if i am time, sir. this is bs for -- it's a touchy term, for my colleagues on the other side of the aisle, but the reality is we attempt to as a pioneer -- they've done it in australia, they have done it other parts of the world. there is no reason to believe that that same pattern is not going to be applied t the mine that they own in the resolution. the sucking sound we will be hearing is the loss of water leve in that area and the effect it will have. and it uses unusual appraisal

procures which will not guarantee that the company is going to pay any fair price for the billions of dollars of copper they stand to receive from the american people. and like i said earlier, something has to be sacred. h.r. 1904 takes away many sites that are sacred to may tif people. we've received plea from indian country over and over and over again and we should deal with those issues before the land exchange, not if this legislation has it after. and add insult to injury, we kept talking about jobs. there is an agenda before this congress to begin to immediatelyreate jobs for the american people. that is stalled, and from what i hear from leadership, permanently derailed. so as american people look for real employment and real opportunity, we present a false hope in this legislation, something that hasn't been

vetted, and i urge opposition to the legislation. and i yield back. the chair: the gentleman's time has expired. the gentleman from washington has two minutes. mr. hastings: mr. chairman, how much time do i have? the chair: two. mr. hastings: i yield myself the balance of the time. mr. chairman, i am -- i just want t make two points in concluding debate before we go into the amendment process and the reference was made to nepa and i responded to that a bitterlyier where i simply said that there is a division powers, and we are making an action with passage of this legislation signed into law by the president, we have said that there will be a land exchange. that's the policy of the country. now, anything that happens on that land after the exchange has happened is subject to nepa review. i have absolutely no problem with that and nothing in this bill changes that process. and the second i'd want to make is on the issue of creation of jobs. honestly, when you hear debate on t floor on this issue,

that's problem emblan attic of the debate going on in this congress since day one. apparently the other side thinks that the only way you can create jobs is raising taxes and expanding the public sector. we believe that the best way to create jobs and grow our economy are based on the principles thahave gotten the united states from where we were when the republic was created until now by relying on the private sector. this is a private sector investment on lands that create a tremendous amount of wealth. this is a b creator, and i think that this bill deserves >> the house approved the arizona federal land swap, passing the bill on to the senate. tomorrow after morning speeches, the house continues work on two bills. one and is the tax withholding

for government contractors. the second changes the income eligibility requirements for certain health care programs. we will have live coverage here on c-span. >> on c-span today, the joint deficit reduction committee considers cuts to discretionary spending. then, "washington journal." that is followed by today's coverage of the u.s. house. >> although this headline proved false, dewey's defeat by harry truman was iconic. it continued to impact political history. on "the contenders," followed the career of thomas dewey. live from the roosevelt hotel in

new york city, friday at 8:00 p.m. eastern on c-span. every weekend, let the c-span network spin your source for public affairs, nonfiction books, and american history. on c-span, it is politics and public affairs events. c-span2 has booktv. american history tv on c-span3. all our programs are available any time at the c-span video library. the c-span network -- it is washington your way. the joint deficit reduction committee, also known as the super committee, held its fourth meeting yesterday to consider cuts to discretionary federal spending. that includes most federal spending outside of social security, medicare, and medicaid. douglas elmendorf testified. budget proposals are due on

november 23. this is one hour and 40 minutes. >> thank you to mike cochair, rep hensarling, my committee members, and douglas elmendorf for joining us today. this committee has been working very hard over the last few weeks to come together around a balanced and bipartisan plan to reduce the deficit and rein in the debt. we infer from our colleagues, the standing house and senate committees, groups around the

country, and close to 185,000 members of the public. we continue our work with a hearing on discretionary outlays, security, and not security. i am glad we are talking about this today. it is important to understand how these policies fit into our overall deficit and debt. non-defense discretionary spending represents less than one-fifth of total federal spending. this may to be debates, you would think this small piece of pipe was a whole lot bigger. i expect we will hear more about that from dr. elmendorf today. congress has left many pieces of the budget essentially untouched, including the law that created this joint committee, which cut roughly $800 billion in discretionary spending. in all the focus on this one

area, it is especially striking given we are spending about the same on non-defense programs in 2011 as we did in 2001. meanwhile, mandatory programs increase. defense spending increased and revenues plummeted. this committee is working to reduce the deficit. we need to keep in mind the cuts that have already been made, the role discretionary spending place in our overall deficit and debt problems, and the impact irresponsible slashing could have across the country. these are not just numbers on a page. they affect real people in real ways. greater challenges for struggling families. when infrastructure investments are shelled, that means fewer jobs and were crumbling bridges and roads. when research, education, as to

the loans are slashed, that means fewer benefits. while we should examine every piece of the budget to see where we can responsibly make cuts, it does not make sense to keep going after one small part of the budget that disproportionately affects middle class families and vulnerable americans. there has to be balanced. dr. elmendorf will be discussing discretionary spending. at this is an area where the stakes for our nation are high. we have to get this right. as many of my colleagues have noted, it is an area that would be hit especially hard at this committee does not come to a deal. i am looking poor to a robust conversation with dr. elmendorf.

at -- forward to a robust conversation with dr. elmendorf. over the last few weeks, this committee as a working very hard to find common ground and a path towards a balanced and bipartisan plan that can pass to this committee, congress, and get signed into law. i am confident that we are making progress and are hopeful that we are moving quickly enough to meet our rapidly approaching deadline. this committee is. to work and i believe that it must. we have to be willing to make tough decisions and real compromises. i am willing to do that and i know many of my colleagues are as well. every day we hear more about the effects of failure on our long-term fiscal health and credit worthiness. it is up to all of us to demonstrate to the american people that we can deliver the kind of results that they

expect and that they deserve. with that, i would like to represent -- recognize my co- chair for his opening statement. >> i thank the co-chair for yielding and i want to thank her for her leadership on this committee. -- on this committee and the spirit of negotiation that she brings. there is no such thing as an unimportant hearing when it comes to dealing with our structural debt crisis. certainly within our discretionary budget, are contained many challenges and many important priorities that have to be debated and negotiated. not the least of which is what many of us view as the number one function of our federal government and that is to protect us from all enemies foreign and domestic, specifically our national defense budget, which continues

to shrink as a percentage of our economy shrinks, as a percentage of our budget as we continue to live in a dangerous world. when i look at the totality of our discretionary budget, i find some common ground with my cochair. although there is no such thing as an unimportant hearing or an important section of the budget, in many respects, and today we may be debating the pennies, nickels, and dimes in a debt crisis that is demanding half dollars and dollar bills. there has been huge run ups in our discretionary spending since the president has come to office. this is not the forum to debate the policies, but i think the numbers speak for themselves. without the stimulus program, the commerce department has increased 102.9%.

without the stimulus, epa has increased 35.7%. subtracting the stimulus, housing and urban development increased 22.2%. the state department without the stimulus, up 132.2%. the list goes on. again, this is not the forum to debate these particular policies, but it is important to know the numbers that when these particular budgets are growing, the family budget, which pays for the federal budget, has contracted. it is the family budget that has to pay for the federal budget. we know that discretionary spending is roughly 40% and shrinking. our entitlement spending is roughly 60% of the budget and growing. outside of interest payments on our national debt, are mandatory spending is principally driven

by our health care and retirement programs that are simultaneously starting to this serve their beneficiaries and driving the nation's growth. unfortunately, our nation is seeing negative economic growth. to put this in a larger context, under the budget control act, we collectively have a goal at of $1.50 trillion in deficit reduction. we have a duty to provide recommendations and legislative language that will significantly improve the short-term and long- term fiscal imbalance of the federal government. thus, the challenge before us remains that we must find a quality of care solutions, quality retirement security solutions for our nation at a cost that does not compromise our national security, does not compromise job growth, and does

not mortgage our children's future. everything else we do, including the discretionary budget, will be helpful. nothing else will solve the structural debt crisis or allow this committee to meet its statutory duty. only these reforms. prudent stewardship of our discretionary budget is going to be helpful. it alone cannot solve the crisis. it continues to be an important matter. i look for to hearing from our witness. i yelled back, madam chair. >> with that, i will turn it over to dr. elmendorf for your opening statement. we appreciate you taking time out to come today and answer our questions. >> thank you, senator murray. i am happy to try to help this committee with this very

challenging task. to all the members of the committee, my comments will focus on four questions that are addressed in the written testimony. first, what does discretionary spending a prize? second, what is the historical trend of in discretionary spending? third, how will discretionary spending evolved over the next decade at under current law? fourth, how might the path of discretionary spending be altered. before digging into the substance, let me briefly clarify some of the terms i will use. when i talk about discretionary funding, i am adding together the budget a party that is appropriated for those programs and the limitations that govern spending per certain transportation programs. those types of funding provide agencies with the authority to spend money. when the funds are disbursed, the become outlays. i will focus on defense and nondefense discretionary

spending rather than security and non security spending. defense spending is a traditional category that includes all spending on military spending plus spending for the department of energy, atomic energy defense activities, and some defense activities of other agencies. non-defense spending is everything else in the discretionary category. the budget control act sets caps on discretionary spending for 2012 and 2013 using different categories -- securities and not securities -- or securities includes defense. in 2014 and beyond, the budget control act specifies a single cap on discretionary spending. there is an entirely different set of caps in the law that will come into play if legislation for this committee does not generate significant deficit

reduction the further cuts that will be required are based on the traditional defense and nondefense categories. to make the situation truly confusing, it also includes security and not security as well we will focus on the familiar defense and nondefense categories. let me turn to the first set of questions, which is what discretionary spending comprises. in 2011, total funding was about $1.30 trillion, of which more than half went to defense and less than half went to non- defense programs. if you turn to the second page of the hand out in front of you, you will see a big doughnut that is labeled "defense discretionary funding for 2011." of total defense funding for 2011, at 43%, the biggest piece on the right of the doughnut,

when to operation and maintenance, which pays for the day-to-day activities of the military, the training of military units, the majority cost of the health care program, and compensation to dod civilian employees. 22% went to compensation a military personnel, including pay, housing, and food allowances. procurement represents 18%. that is the upgrade of weapons systems. appropriations for the wars in afghanistan, iraq, and related activities account for 25% of funding. if you turn to the next page, it shows a comparable picture for non-defense discretionary funding for 2011. seven broad categories accounted for 80% of the total. education, training, employment, and social services

programs claim 16%. transportation programs received 15%. about half of that went to highway programs. income security programs, mostly for housing and nutrition assistance, represented 11%. that does not include unemployment compensation, food stamps, or temporary aid to needy families. those are part of mandatory spending. discretionary appropriations for benefits -- veterans benefits were 10% of total nondefense discretionary funding last year. help was another 10% with about half of that devoted to the national institutes of health. international affairs and the administration of justice were each about 9%. a collection of smaller categories makes up the remaining 20%. looking at non-defense discretionary spending as a whole, about one-third is

dispersed to state and local governments. of those grants, about 8 1/3 are devoted to education and training programs and 1/4 to be training -- transportation programs. the remainder goes to law enforcement, economic development, and other purposes. let me turn to the second question, which is the historical trend in discretionary spending. this is depicted in the next page of the handout. discretionary spending declined noticeably as a share of gdp from the early 1970's until 2000 mostly because defense spending declined relative to gdp from about 8% in 1970 to a low of 3% in 1991. defense spending then climbed again. outlays for non-defense discretionary programs have averaged about 4% of gdp in the past 40 years. -- with considerable variation,

but no evident trend. outlays increased during that time with the size and income of the population. non-defense discretionary outlays were elevated a the past few years because of funding from the 2009 recovery act. altogether discretionary spending amounted to about 9% of gdp, higher than the 6% in 2000, but lower than the 12% of the early 1970's. the third question addresses the testimony on how discretionary spending will evolve over the next decade under the current law. to illustrate, we projected appropriations under several different assumptions, including the three listed on the next page of the handout.

i apologize to those who do not have the handout. i think the members of the committee should have it in front of them. for others, i am looking at the written testimony. nothing i am saying is new and is not in the testimony. the largest number we look at, about $12 trillion over the next decade, will come from extrapolating funding for 2011 adjusted for inflation. that is the way cbo constructed the baseline projection. the next set of numbers i will talk about assumes that funding is equal to the new lot -- about $11.30 trillion over the decade. i will focus in a moment of the scenario under which the caps are met through proportional reductions in defense and nondefense spending. many other accommodations are possible. the written testimony offers a

range of possibilities. the next page of the handout is table 3 from the written testimony and deals with defense spending. i will focus on just the rows of numbers highlighted in blue. i want to emphasize that the cap on defense spending does not restrain appropriations for the war in afghanistan or similar activities. automatic enforcement procedures will not affect funding for such purposes. you are seeing numbers for the base defense budget. the upper of those blue rose shows the opera -- shows defense spending. it has grown with the rate of inflation.

between 2012 and 2021, such reductions will total $445 billion, the number shown at the far right end of the blue bar, or about 7%. the lower rows shows the reductions in defense spending -- defense funding. between 2012 and 2021, the cumulative production will total $882 billion or 14%. in 2021 along the defense funding will be one of the $10 billion or 16% lower than it would be if such appropriations kept pace with inflation. if you skip the next page of the handout, which is a continuation of the table, the figure beyond

that shows defense spending as a share of gdp. the line on the left-hand side shows the history. the middle line on the right shows the projection assuming it cuts in defense and nondefense spending to meet the cap. the lowest line shows that projection as -- if maximum automatic reductions are triggered. under those assumptions, funding for defense represents 2.7% or 2.5% of gdp compared to an average of 3.4% in the past decade. the next page of the handout is a table for from the written testimony and deals with nondefense spending. i will focus on the two rows of numbers highlighted in blue. the upper of the blue rose shows differences in funding

down to the path that would result if the caps were met with proportional reductions on the defense and nondefense side. between 2012 and 2021, such reductions would total $418 billion or 7%. the lower rows shows the larger reductions in non-defense funding moving from the inflation adjusted path to the path of a note savings result from the work of this committee. the cumulative production would total $794 billion. i into the oven 21 alone, non- defense would be 15%, more than it would be of such appropriations get placed -- kept pace with inflation. the next page shows non-defense funding as a share of gdp. at the line on the left side chairs the history of such

funding. non-defense discretionary funding spike upwards in 2009, but fell back sharply in the past couple of years to roughly its average share of gdp during the preceding decade. the upper line on the right shows our projection assumes a proportional cuts in defense and nondefense funding to meet the cap. the lower line shows our projection at the maximum -- if the automatic cuts happen. non-defense funding represented 2.6% of gdp compared to an average of 1.4%. the fourth and last question is how the path of discretionary spending might be altered. i will make two quick points. first, for some programs, reductions may be particularly challenging because funding increases greater than the rate of inflation would be necessary to remain current policies.

the plummeting the administration's plan would require nearly $5.90 billion over the next decade. other examples where it would be inefficient to fund current policies include veterans health care and pell grants for higher education. some observers believe current policies are in an efficient to meet our future needs. many elements believe the current national spending on infrastructure is inadequate to provide roads, bridges, and other capital assets to maintain the current level of services. spending on certain programs is logical. secondly, cbo assumes that baseline projections will be equal to the amounts currently

specified in law for those caps. that means legislation that reduced the funds available for particular discretionary activity or achieve savings would only reduce projected total appropriations if the legislation also lowered the cap. without a reduction in caps, funding would fill the gap. i hope this information is helpful to you and i am have to answer any question that you have. >> thank you for being here today and taking our questions. as you know, this committee is working hard to try and find a balanced plan to reduce our deficit and rein in our debt. it is not an easy task. we all believe is necessary. over the past 10 years, domestic discretionary spending has remained flat after despi the gg

need to have investments to spur job creation and assistance for those who been hit the hardest because of the recession. you mentioned that discretionary outlays during the past decade increased primarily due to the increase in security spending after 9/11. let me start by asking you a few questions about the impact of caps and potential cuts to discretionary spending. would you agree that with negotiations on the 2011 appropriations bills and discretionary spending caps that congress has already made significant efforts to reduce discretionary spending? >> yes, senator. the current path of discretionary spending under existing law is lower than it would have been without action. >> is it not the case that even

if we completely eliminated discretionary funding -- everything from military base construction, secondary education, processing social security checks, all of it -- we would still save -- faced deficits of hundreds of billions of dollars because we have not addressed entitlements and revenue? >> discretionary spending is a shrinking share of federal outlays over time. and thomas programs, mandatory spending, is a growing share of federal outlays. it is growing rather rapidly. without addressing that path, it would be extremely difficult to put the budget on a sustainable path. >> given the cuts congress is already made, can you talk about what the economic impact would be on further efforts to cut discretionary spending both in 2012 and the committee's final

project? >> over time, cuts in discretionary spending reduce in general the services the american public receives -- protection against foreign enemies, services in the highway's they can use or the national parts they can visit, or other sorts of programs. they have a variety of human costs. they can also have economic cost a penny of the nature of the cutbacks. infrastructure spending, for example, many in the country think we should spend more. some progress -- some projects could have a high economic return. others could have a very low economic return. it depends on the particular changes in policy. in the short term, given the large gap in our economy's potential to produce output and the level of goods and services being demanded and produced,

cutbacks in government spending or increases in taxes in the near term would reduce the level of economic activity and employment. i do that as a separate effect on -- separate affect. >> all of us know that we need to address the long-term drivers of our unbalanced federal budget, but i also believe we have to take steps to strengthen the economic recovery and addressed the jobs crisis we are seeing today. according to cbo's role of term -- role of thumb regarding economic growth, cbo states "stronger economic growth improves the budget's bottom line. weaker growth worsens it." cbo projections are weaker for

2011 and 2012. correct? >> that is right. if you were to do a forecast, it would be weaker. >> nearly all economists are telling us that growth continues to suffer from a significant weakness in demand and many are warning against pursuing overly aggressive measures of austerity in the short term. do you agree that a lack of demand is one of the key factors holding back our economic recovery? >> yes. it is a widespread opinion that lack of demand is a key factor holding back the recovery. >> how does the reduction in government spending is generally affect demand of the economy during an economic downturn? >> reductions in government spending will reduce the demand for goods and services. the government is providing lower transfers to individuals to purchase goods. >> do tax increases or spending

cuts have a larger impact in reducing that demand? >> it depends on the specific tax increases or spending cuts you have in mind, senator. certain forms of government spending, we think, have a large bank or the but. others have lower effects. there are kinds of taxes or increases that will restrain demand more than other types of tax increases. >> thank you very much. >> thank you, dr. elmendorf, on behalf of the entire committee. i thank you and your staff. we know you are sorting through a number of homework assignments, if you will, from various of sundry members. we want to think you with the diligence and professionalism you bring to that task.

>> thank you, congressman. >> when i look at the statutory duty as opposed to the statutory goals of this committee, our duty is to, frankly, offer recommendations as statutory language to address both the short-term and long-term imbalances. with respect to the short term and balance, -- imbalance, it is it not true that the stimulus bill with interest amounts to over $1 trillion of spending, which accounts for a large temporary growth in our discretionary budget? >> yes. only a part of the recovery act was about discretionary spending. there were also increases in mandatory spending and reductions in taxes. it did lead to a bulge up in

discretionary funding and then to a attenuated bulge in outlays. >> i do not know if you have at your fingertips numbers with respect to agency growth. i had quoted a few. now that i looked, i hope i am quoting your office correctly. >> if they are numbers from us, you can certainly trust us. [laughter] >> i trust that when you add in the stimulus, the commerce department has grown to 219% from 2008-2010. with the stimulus, epa has grown 130.8%. the energy department has grown 170.7% with the stimulus. education has grown 180.6% at a time when the economy has seen

negative economic growth and family paychecks have shrunk. unfortunately, this is not the forum in which to debate the stimulus, but i think it has to be noted where we are talking about areas of the budget where savings could be had. i want to follow up on a point that my co-chairman was making. i believe i have this right -- correct me if i am wrong -- i in your alternative fiscal scenario, i believe it is at 20- 24 were all federal revenues will be used to fulfill the mandatory portion of the budget. is that correct? >> i am sorry, congressman. the qualitative. you are making is certainly

right. mandatory spending dominates the government budget in an increasing away over time. >> this came up in our earlier hearing with you. under your alterative fiscal scenario, you assume a growing revenue base. do you not assume revenues increasing to their historic level of roughly 19% of gdp? >> yes, that is right. >> did you also assume the tax increases contained within the patient protection and a portable care act? do you recall if those are assumed? >> we do in our extended baseline scenario, we try to follow current law. the current scenario is used to track current policy. what we do for revenues in that scenario is to hold them as a historical average share beyond

2021 without specifying what accommodation of specific tax policies congress might enact to hold revenues at that level. there is no specific answer. we just set revenue at historical average. >> i have a question about the overseas contingency operation. i believe you have recently readjusted your baseline, but we all know the president announced that our military engagement in iraq will end this year and the president plans to completely reverse the surge in afghanistan, i believe, by this time next year, but i still

think you are showing a pretty hefty sum in the overseas contingency operation line item. can you explain to us at the assumptions underlying this number? >> yes, congressman. what cbo does for any part of discretionary spending that is not capped under law is to take the latest funding provided by congress and to extrapolate that over the decade to grow with inflation. when we estimated the effects of the cap under the budget control act at the end of july, early august, we compare those caps, not with the baseline projections we published in march, but with the later level of funding congress had enacted at the end of march. similarly, our biggest baseline projection was published in august. we would focus on estimating any

caps one might impose on overseas contingency operations on the difference between those caps and the latest level appropriated by the congress. that latest level is about $119 billion on an annual basis. if one extrapolates that $119 billion, and we end up with about $1.30 trillion over the coming decade. we do not mate evaluations about how those numbers compared with the likely demand for funds or any particular evaluation of the appropriateness of the spending. is a mechanical extrapolation. if you thought we would spend less than that over time -- >> i am c i am over my time. under your protocols and your rules, the president's recent announcement that this money will not be spent anyway does

not come into your calculations. >> not until congress enacts it. >> thank you. >> thank you very much. how closely as that extrapolation tracked over the last five years? >> written testimony shows as the pattern of funding that congress provided over the past several years. annual funding was in the order of one of the $60 billion. the new level is about $40 billion last. >> thank you. we will now move to each of our committee members for six members -- six minutes. >> dr. elmendorf, thank you for being here and thank you pour the work your helping us do over the last several weeks and over the next several weeks as well one of our major problems is the

drop in revenue we of seen over the last several years. we are trying to tackle the issue over how to best increase those issues. one way to do that is through economic growth. if folks are back to work, the unemployment rate goes down. you are paying less for unemployment benefits, which is an outflow of money. my understanding is that if you increase the level of employment by a certain amount, you'll see a commensurate increase in -- decrease in the level of deficits. can you give us a synopsis of what happens if we put people back to work? >> the more the government collects in revenue and the less it pays out in benefits, the biggest response is on the revenue side. if one is looking for a rule of thumb, people often say that

federal government's effective tax rate on the margin for every dollar earned is about 25 cents of that. that is a very rough rule of thumb. the actual number would depend very much on the way in which the economy improved and who received the end come. >> the more you put the 15 million americans back to work, even if it is only an average american salary, that is thousands of dollars per worker that effect -- that affect -- it would be revenue to the government that would help us decrease these deficits. that is why we invite you to be part of this panel to help us with those answers. let me move on to another question