to get going on the market and get through that process as quickly as possible so the housing market can be normalized. it is very much in their interest to do that and we would encourage them to do that. if anyone has more information on this, i would be happy to receive it. yes, sir? >> good morning, mr. chairman. i have known several marines and soldiers here and throughout with one of the republican candidates in particular who suggest that your job should not exist. i would like to invite you to address that suggestion and talk about what the consequences would be, or what it world without the federal reserve with apply. >> well, it is not a very realistic proposal.

every country in the world has a central bank, which is responsible for managing monetary policy, to try to control inflation, and to support growth, and to try to help the financial system's stay stable. the only exception, the only alternative -- i'm sure people have discussed the gold standard. if you look back in history you will see the gold standard did not create the stability in the long run. it effectively created a big increase in the money supply and there was a lot of inflation in the u.s. secondly, the gold standard did not prevent financial crises, which were quite common in the 19th century, and in particular, the gold standard -- most historians, and i put myself there, believe the gold

standard played a great role in making the depression as bad as it was in the 1930's because it transferred monetary shocks from one country to another, because there were all connected on the gold standard. and also because, given the constraints of the gold standard, the central bank, which did exist, including the fed, was restricted in stabilizing the banking system. it was dissatisfaction with the gold standard at first, and with the system that created the federal reserve in 1914. there have been a major panic in 1907. there was another one in 1914. the fed was created to address those problems. likewise, after the debacle of the 1930's, the great depression, the gold standard really disappeared, essentially, and has been replaced with other systems. and one that now appears to be dominant around the world, not

just the u.s., is a system that involves floating exchange rates, an independent central bank, which controls money supply and tries to manage price inflation so that it remains low. and around the world, the performance both in terms of inflation and in terms of financial stability has been quite good in the postwar time frame. i think the record is good. the alternatives have not been shown to be successful. they have not been used since the 1920's and is very doubtful they would work today. i am the first to admit the federal reserve is not perfect. people can make mistakes. institutions can be improved. but at this point if you look around the world, you see no alternative. there is no country that has anything other than the independent central bank, or some kind of central bank managing its monetary policy. the lady over here in the red.

>> good morning, chairman. my name is veronica johnson. i am a disabled veteran. i am an army spouse and i work for the unemployed. i have heard it said that work -- war can be good for the economy. it is good for creating jobs, in particular. -- mine in particular. also for products and spending. with the war in iraq drawing down and having troops coming back from afghanistan, what is the forecast that you are predicting as far as those jobs and the economy in regards to the products that will not be needed anymore? >> well, wars can be good for the economy in a very narrow sense, which is of course, you have gone -- got to supply the army, soldiers and so on.

but that is hardly a balanced against the waste of a war. obviously, wars are necessary in some circumstances, but even though they create some jobs and they create some industries, against that, you have to account for the fact that all of that is essentially blown up, wasted, destroyed. it does not go to help people at home with their living standards, number one. and number two, it leaves us with an enormous debt. i do not advocate military operations as an economic solution. it is sometimes necessary for other reasons. in local areas like el paso, whether or not military operations are expanding or contracting is obviously relevant to what is happening with the job situation.

because of the expansion of fort bliss, the downturn is much less in job creation and housing and so on than it otherwise would have been. but if you are going to be expanding government resources, why not expand them on roads and bridges and schools and things that can produce a long term benefits for the public? that would be my answer. if war is necessary, then it is. but it is not, you are better off using your resources in other ways. in terms of jobs, again, i think there are short run and long run problems. in the short run when unemployment is too high, we have just not recovered. and we got knocked down and we have not gotten all the way back up yet. we have a while to go before our unemployment rate is back to normal. in order to try to help the process -- obviously, the fed

is not the only organization that has an affect on that by any means. but we are trying to create stimulus by trying to create jobs and lower unemployment. in the long run, it is going to come down to our skills and training. we have a globalize world now and it is a world in which there are hundreds of millions of people without a very high levels of skill. the kinds of jobs that involve very little skill, certain kinds of manufacturing or assembly line jobs that did not require a lot of skill or education, for example, they did not -- they are more efficiently done by low-skilled workers in other places. how can america compete? we have to compete with higher technology, more sophisticated projects.

that is why it is so critical for all of you to make every opportunity that you have either in the fourth or after you leave to build your skill level -- in the force or after you leave to build your skill level and be as highly trained as you can. that is the way you will be able to have a job and a good wage at the same time. and again, for our society as a whole, for our ability to compete globally and to produce high-paying jobs, there are many factors, obviously. but the single most important is to make sure that our work force has the necessary skills. the military is a positive contributor to that, both in terms of training the force, and also afterwards with things like the gi bill and other benefits to help you get additional training. i encourage everyone here to make the most uof what you can o increase your training and skills because that is what will make the difference in the long run. thank you very much.

[applause] >> german bernanke, but i do not know about you all, -- chairman bernanke, i do not know about you all, but i feel pretty comfortable with the leadership that we have. the complex issues that we have overall with a global economy, but i think we are in pretty safe hands. thank you for coming to talk to our service members. i do not know if you know, but we are in the middle of a desert. a fort bliss is the largest trading area in the army, 1.2 million acres. part of that is in the chihuahua desert. at one of the things we are trying to do is to become self sustaining in but energy, waste,

and also water. -- in energy, waste, and water. we're born to do that one rock, one stone at a time. we are going to turn this oasis -- this desert into an oasis. this rock came from the to what one desert. it says chairman bernanke, thank you for your service to our nation. >> thank you very much. [applause] thank you. and thank you all for coming today. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> fed chair ben bernanke encouraging veterans this afternoon, discussing financial literacy and the economy. the labor department reports a -- and unemployment rate of 12.1%, up from 10.6% a year ago it is well above the average of 9.1%. this as we celebrate the nation's veterans tomorrow. coming up, author eliot cohen discusses his book about the battles fought on the 200 mile corridor between albany and montreal since the 1600's. he talks about how those battles shape the way we wait -- wage war today. that is today at 6:00 p.m. eastern. and the ninth annual first amendment event in concord, new hampshire with vice president

joe biden. that will be live today at 7:10 p.m. eastern. every week, the people and events that document the american story. this weekend, a collaborator, conspirator or innocent boarding homeowner? mary sarratt on charges that she was involved in lincoln's assassination. jeff magruder on working with the committee to reelect. and from lectures in history, thomas whalen on the presidency and cold war. but for the entire schedule at c-span.org/americanhistory. >> see more videos of the candidates at c-span's website for campaign 2012. read the latest comments from the candidates and political reporters, social media sites, and a link to c-span's media partners in the early and

primary caucus states, iowa, new hampshire, and south carolina, all at c-span.org/campaign2012. >> assistant secretary of state for near eastern affairs, jeffrey feldman, says he thinks bashar al-sadr's ruling days are coming to an end. -- bashar balad sod's ruling days are coming to an end. this hearing last about an hour- and-a-half. >> thank you all for coming. the senate foreign relations committee meets today and our

subcommittee on near eastern and south and central asian affairs meet to discuss syria. we know that syrian men, women, and children have courageously -- and that is an understatement -- courageously engaged in demonstrations for more than six months in their country. they seek democratic reforms and protection for human rights, but the assad regime in syria has responded with a terrible and unspeakable violence. the united nations estimates that more than 3500 people have been killed since the unrest began in march of this year. over the past week, syria's third largest city has been involved in the worst riots we have seen in syria this year. in just a week, more than 100 people have been killed, all of

this coming during the moslem holiday of ead al adda and all of this coming after months and months of violence. and perhaps most important, this violence comes one week after the assad regime agreed to an arab league deal for reform. in direct violation of this agreement, assad's forces have not remove their tanks and armored vehicles from streets in towns across the country. violence against demonstrators has not stopped, or even slow. political prisoners, and there are reportedly tens of thousands of them, have not been released. neither national -- international journalists ignore human rights monitors have been admitted into syria. assad made it clear to the world that he has no interest, nor intention to, pursue democratic

reform. in fact, he has proven to the world of democratic reform is now not possible while he remains in power. for months, i and others have spoken about this grave situation in syria. i have shared accounts of a regime whose brutality affects 22 million syrians, as well as my constituents in pennsylvania. i have told the story of dr. hassam halek, who was visited by his brother earlier this year. he is a doctor, as well as his brother. his brother was not engaged in any politics of any kind. he was tortured and killed by assad's forces just for having visited the united states of america. there are accounts of school

children being arrested, parents disappearing and been murdered. in august, in a "washington post" of ed, i wrote that mr. assad must step down from power. we who recognize the horror in syria have a responsibility to bear witness to the truth, the truth of this slaughter and to work against it. ambassador -- the ambassador has taken on this task and has been recognized with honor and distinction, and i might add, with courage. and we must continue to take specific and visible actions for democratic reform. first, we must make it clear to the regime's supporters that their behavior will not be tolerated and they will be held accountable, just as the regime

will be held accountable. the administration working with our european allies should sanction more individuals within the regime who are complicitous in the airport -- the repression of protests. today, 17 individuals and 18 entities have been sanctioned. the world needs to know their names and they need to decide whether they, those who are implicit, whether they will continue to aid and abet a regime that has killed thousands. this week, i will send a letter to the treasury department to urge the administration to expand the list of individuals to be sanctioned by the u.s. the administration can do this by executive order, and should do so as soon as possible. that is first. second, the u.s. must play a constructive role in continuing

to isolate to the assad regime. in october, i called for the establishment of the friends of the syrian people contact group. this contact group can serve as a means of democratic appointment for the syrian people. the arab league and others could form the core of such a group, which would send a clear message of international solidarity in support of democratic change in syria. i hope that this suggestion would be considered seriously by the arab league when it needs to discuss syria this saturday. the u.s. should continue to support these regional efforts to pressure the regime. in its agreement with the asadsd government, the arab league has

agreed to send monitors. those monitors are needed now, not days or weeks from now, but now. the arab league should send them today. if the assad government blocks these monitors, the arab league should suspend their membership in the organization. the u.s. should also make another push to pursue a resolution condemning the assad regime at the united nations. strong international opposition and commitment to isolating the assad regime is the key to bring about democratic reform. the u.s. senate as well should also support these efforts to isolate the regime. but through our regular interaction with embassies here in washington, individual senators can express concern about the ongoing violence and show support for the democratic change in syria. third, the courageous syrian

political opposition must work to communicate a unified vision for the future of syria. this opposition faces many disadvantages that other protesters from across the region did not face. syrians do not have a terrier square in which to gather in large members -- of tahrir square in which to gather in large numbers. they do not have the full attention of the international media, which has been barred from the country. despite these challenges, i believe the syrian opposition will be involved directly in the country's future. it is imperative that the syrian national council answer questions about its composition and its intend. -- its intent. in more the members of the syria national council? what is their role in stopping the violence and instituting democratic reform?

and most importantly, how will minorities be treated in a post- assad syria? we have yet to hear answers to these questions. the syria national council must be committed to protecting all of their ethnic groups, including christians and out awards. they must speak with one voice and make it clear that they will advocate for minority rights in the new government in hopes to create. the syrian people deserve answers to these key questions, which will in large part determine the degree of support the opposition has inside and outside the country. secretary of statery clinton said monday that assad, "cannot and i the demands of his people indefinitely. he must step down and until then, america and the international community will continue to increase pressure on him and his parole regime."

so said secretary clinton. my question today is how we can and will increase pressure on his regime. i look forward to hearing from our witnesses. first, what can regional powers, including the arab league and turkey, due to play a more constructive role in the democratic reform process in syria? second, what is the impact of current u.s. sanctions on the assad regime? third, how is the u.s. working unilaterally and with the european union to strengthen sanctions on syria? another question is, how does the u.s. assets the current state of the syria national council? what are the criteria on which its movement should be judged in order to gain international legitimacy? and finally, what are the assessment of our witnesses of growing sectarianism in syria and whether it could lead to a

civil war? we are fortunate today to have with us two witnesses that could speak about u.s. policy in syria the hon. jeffrey feldman, assistant secretary of state for near eastern affairs at the department of state. we are grateful you are here. aunt lou brawnnen deputy assistant secretary. i look forward to your insights as to why our policy has not produced the desired results and what more we can do. we're grateful for their witness today. their testimony today. and we are grateful for their service. and i would say in conclusion, this is a matter, i think, of basic justice for the people of syria. a long time ago, st. a guston

said without justice what are kingdoms but great bands of robbers? the people of syria for a long time, but over these last rickman especially, have been robbed of their dignity, robbed of their lives. we have to speak out with one voice for justice for this country. i know that a lot of americans are deeply concerned about this issue. we are grateful that we have so many people here to listen to this testimony and to listen to the questions of our witnesses. i am grateful for colleagues being here. i will ask the ranking member if he has any opening comments. >> thank you very much, senator. welcome to all of you. we have many issues that are important and under the purview of this committee as it deals with the near east and north

africa. the questions and the issues surrounding syria are certainly at the top of that list. all of us that have watched -- not only us in this committee, all of america has watched as things have unfolded in the middle east and in the arab world this spring. we have watched them play out and now, everything seems to be focused on syria. that seems to be where the unresolved -- the current unresolved issues are. there is a huge difference between syria and what happened in libya. the opposition in syria as essentially unharmed. as a result, they do not -- is essentially unharmed. as a result, they do not have -- is essentially unarmed. as a result, they do not have the tools that the libyan people

had to defend themselves. and we will do everything we can to cut off the sources of assad's finances, and also, the flow of weapons, and we will do everything we can to isolate this regime. mr. ford, i agree with senator casey, mr. ford is the right person. i disagree with appointing an ambassador because assad had been sober with his people. having said that, i agree with -- had been so brutal with his people. having said that, i agree with the president that mr. ford is the right person for the job. in the interest of the civil rights -- uof the civilized world, it is in our best interest to isolate this regime. i am interested in the answers we can get from the panel and your about the efforts we are making in that regard and what all of us can do to move forward to do our best to isolate the

regime, which hopefully will reach the results of all of us want to see. >> we will start with opening statements and then go to questions. i spoke to both of our witnesses and they have agreed to try to keep this within five minutes, if they can. both of your full statements will be made a part of the record of this hearing. we will start with secretary feldman. >> chairman casey, thank you. thank you for inviting us to appear before you today to discuss our goals with regard to syrian strategy that we are implementing to achieve those goals. bashar al-assad is destroying syria secretary clinton said two days ago that the greatest source of instability in the region is not the man for change, but the refusal to change. -- the demand for change, but the refusal to change.

we seek to support our goals of democracy and human rights, continued to contribute to stability in the region and undermine assad's influence. our message is clear, step aside and allow your people to transition to the marci. the would like to see this transition -- to democracy. though we would like to see this transition happen as quickly as possible, we have to be prepared for the possibility that it will be long and difficult. a large and growing number of syrians have concluded that assad must go. protests have started in a remote village and now take place in nearly every city and major town in the country. and for the regime to retain power, the syrian army has had to occupy its own country. but the regime's overwhelming use of force has not been able to suppress courageous the

street protesters demanding universal rights. and internationally, syria is increasingly isolated as the international community loses patience with assad's brutality and broken promises. nearly all of serious neighbors -- syria's neighbors recognized the damage of is being done. and the arabs wanted assad to stop destroying syria. the council has described the regime as "a killing machine." the turkish prime minister said those who repress the people of syria will not survive. totalitarian regimes will not survive. the role of the people is coming. assad has become a pariah in the

arab world. almost all of the foreign ministers i have talked to say the same thing, assad's rule is coming to an end. it is inevitable. some of these arabs have even begun to offer assad safe haven to encourage him to leave quickly. we welcome a stop to violence, but the regime must be judged by its actions, not its words. the killing, as you said mr. chairman, has killick -- has continued unabated. we must continue international pressure, including at the u.n. economically, tough sanctions and financial mismanagement by the syrian regime are changing the calculations of the syrian daily. oil revenue is now almost nonexistent. syria is cut off from most of the international financial system.

as cash starts to dry up, more syrians see that the regime is not sustainable. complementing our international efforts, ambassador ford as you mentioned, both of you mentioned that his team is doing courageous work. thank you for recommending him. he is currently on leave, but will return to post soon. we do not want to see the situation to send further into violence. the best way forward is to continue support for the non- right opposition, while working with international partners to further isolate -- non-violent opposition, while working with international partners to further isolate the regime. you mention the syrian national council. we welcome the establishment of the syria national council, a broad coalition of groups within and without syria.

what the opposition has already achieved is truly a remarkable. the u.s. has not endorsed any particular opposition group. the syrian people alone will decide who will represent them. the opposition must continue to consolidate its based in syria by convincing more serious of the virgin messi of its transition -- more syrians of its transitioncy of plan. violence is counterproductive. it will play in to the regime's hands. it will divide the opposition and undermine international consensus. to create better conditions for civilians in the near term, we are recommending civil rights activists and journalists.

we will continue our pressure .ntil assad's regime is gone he may through his brutality be able to delay or impede this transition, but he cannot stop it. we look forward to working with the syrian people as they chart a new and democratic future. >> thanks very much. mr. braman? >> chairman, ranking member, distinguished members of the committee, thank you for the opportunity to appear before you today. we have a great partnership with the state department and the syrian team. i would like to review the role of financial sanctions in our strategy. since the syrian uprising began in march, 2011, president obama has issued three executive orders. the first, signed in april, targets those responsible for human rights abuses in syria.

the second, signed in may, directly sanctions president assad and senior members of his regime. and the third, signed in august, proposes a full blocking program, prohibiting all transactions with the government of syria, freezing regime assets, banning the export of services to an investment in syria, and banning dealings in petroleum. there is authority to designate additional entities and we have made full use of that target regime insiders to deny them of the resources it needs to sustain its repression. since the uprising began we have designated more than three dozen entities and individuals. we have imposed sanctions on the

largest mobile phone operator in syria. we have designated syrian intelligence, the steering national security bureau, and syrian military enforcement, all deeply complicity in the violence against protesters. we used pre-existing authority to target the commercial bank of syria for providing financial services to syrian and north korean entities that facilitates weapons of mass destruction construction. we have targeted the quds force and iran posing law enforcement forces for assisting the syrian regime in their brutality.

iran pose a real policy is playing, to export to syria the same tactics employed by the iranian government employed by -- on its own people. as we have steadily increased pressure on the assad regime, we have done so in close coordination with the others around the world. we have provided new investment in the syrian energy sector, frozen the assets of the commercial bank of syria, and most significantly, if implemented a ban on the importation of syrian oil and gas to europe. the impact of these coordinated multilateral measures has been profound. today, the government of syria finds it increasingly difficult to access the international financial system. its ability to conduct trade in dollars has been constrained and it has been deprived of its most significant source of revenue.

the you previously accounted for more than 90% of -- of the european union previously accounted for more than 90% of the oil exported. at present, there appear to be few willing buyers. iran itself is under pressure from wide-ranging international sanctions. in short, working in concert with our allies, we have used our sanctions tools to send assad and his regime a clear message. in your represent -- reprehensible actions have consequences -- your recreant elections have consequences and this only deepen our action. and we will expose, target, and disrupt the regime's sources of revenue and support, and will

continue to engage our partners are on the world, urging them to block syria's access to oil markets, asking the private sector to join us in imposing the comprehensive and aggressive measures against the aassad regime. i am happy to answer any questions you have. >> thank you. we will start with one round of questioning. mr. feldman, i want to ask you, first of all, about the region, and in particular, maybe we can review a couple of countries in the region that can and will, and maybe should play a role in this. let me start with turkey. in your full statement you mentioned some a ulfa parts of the statements -- some of the parts of the statements the prime minister erdowan has made and he has said he believes the

efforts will be successful in the crackdown. it is helpful when you have a neighbor saying that. i would ask you a couple -- may be a broad question, and then more specifically, number one, on this idea of a contact group, is there any effort to be undertaken by the administration to move that ford on a contact group? the second question is, what about the role that turkey has played and can play, and what can we do to move them from being somewhat constructive so far to be even more helpful to put the pressure on the regime?

does that make sense? i know that question may not be as specific as you may want. >> we welcome your proposal for contact with the steering groups. i have a senior colleague that is working on coordination with our european allies pretty much full time, fred half. i am in touch with the arabs. what we would like to do is to get the arabs themselves to play a leadership role in this. one of our propaganda tools is, and -- one of his propaganda tools is, oh, this is just an outside plot. we are exploring and retake the ideas as a very positive one. >> i think the fact that the arab league has now made an attempt that he seems to be thumbing his nose at, for lack

of a better description, i realized a couple of weeks ago there might have been a sequencing problem, but i would hope that would set the table for broader action. >> we agree with you, senator. the committee dealing with this is meeting on friday, a day before the arab league is meeting on saturday to discuss this. the committee on friday will discuss a number of options to discuss at the meeting on saturday. we very much hope that given assad'[s clear rejection of their proposal that -- we agree

with you that the arab league is playing an important role and out is time to take some action. on turkey, it is worth mentioning that first the father, then the sun, were able to have a relationship with turkey moving forward. if you look at the turkey-syrian relationship a few years ago, there were close. there was a very positive relationship from the syrian perspective. that is now in tatters. turkey has played a role in a couple of ways.

turkey is hosting between 70 508,000 refugees -- between 7500 and 8000 refugees. second, turkey is providing for the opposition to talk to themselves. they clearly have no rights for peaceful protests, no rights for free speech. turkey is providing some space for the opposition forces to discuss to try to lay out a vision. and turkey has, in essence, put on a defacto arms embargo to make sure that he is not using them against his own people. if we think turkey is playing

an important role here. in the past, there was a lot of trade between the two countries. a lot of turkish merchant going across the border. that is all dressed up because of the instability in syria. but we are working with turkey on these issues. >> would you hope to be able to do next couple of weeks to be constructive? >> first of all, continue what they are doing because it is having real impact. the opposition's ability to come together because of turkish facilitation is a tremendous compliment.

also, we would like to encourage them to join us, join canada and others. >> thank you. >> i guess i hit in your comments was that we need to buckle up and get ready for the long haul here. is that a result of the people being unharmed? >> i have learned not to predict things based on what has happened in the arab world. just based on my own awareness, predictions in the arab world do not always panned out. apart is the protests that you

mentioned. incredibly courageous -- courageous the opposition is doing every day. they are facing incredible brutality from basically a family-led mafia that has hijacked the state, but they come out every day, day in and day out. there are more demonstrations now than at the beginning of this. they are in every town across syria. but what -- that is basically a family-led mafia that has hijacked the state. if they come out every day, day in and day out. they're more demonstrations now than in the beginning of this. they are in every town, every city across syria. but what assad is trying to do is turn this peaceful movement into an insurgency. what confounds him is this phenomenon of protesters yelling "peaceful" and shopkeepers closing their shops in solidarity with the protesters. despite the tremendous obstacles they're facing, the key to the principles that they subscribe. -- they keep to the principles

that they subscribe to. we think it would frighten the minority if it becomes a large movement. it would lead them to believe that the chaos after assad would come true. it would probably divide the community. none of us question the desire by the syrians to exercise in self defense against the kind of retaliation they are facing. but right now, their strength is in the peaceful protest. that they deny bashar the ability to claim that he is facing opposition, because he is

not. he is facing people who are demanding their legitimate right to great courage. >> how long can they hold up? >> i do not know. it is one of the reasons why i think that the arab leaders have started taking such an active role because they do not want them to see him destroy syria. he cannot last when you have the kind of isolation that was described. when you see the pariah he has become. but he can certainly cause more deaths and cause a lot more damage. the best thing for him to do would be to exit the scene and that is what we're trying to find a way to do. >> how would you compare the sanctions we have in place on syria to the sanctions we have in place on iran on a scale of one to 10 so we can get a feel of how they match each other? >> in both cases, we have

imposed comprehensive, broad measures to isolate the regime. i would say there comparable. >> how about comparing those to what we did in libya when the chaos started there. is it comparable to what we did there? >> also comparable period in -- .lso comparable perio in libya, an important distinction is that the -- also comparable. the action in libya was accompanied by action globally, which magnified the impact in libya greatly. in syria and iran, we're trying to create a broad and comprehensive coalition. >> i am not asking for anything classified, but what can you tell us about your expectations? year after year, we have all seen sanctions on iran, for instance. the regime seems to be able to

withstand a whole lot of pain in order to hang onto power. how do you assess where we are headed in syria as far as the regime's ability to survive just as iran is? >> i would hesitate to speculate on a specific time line, but i would say that there are clear indications that their financial resources are strained. they are in dire straits. their revenues have been dramatically -- not only because of the action against their energy sector, but the impact of tourism industry in syria as a result of the violence. they have seen a dramatic drop in revenue. it is clear that they're having to draw down their foreign- exchange reserves much more rapidly than they would like. >> thank you. >> senator boxer. >> thank you.

thank you for holding this important hearing. it really is a moment in time that we need to be heard. i hope that some of our voices will still be heard by the people of syria who are risking their lives every single day to just keep on keeping non, this battle that they are in. in a show of its two colors, president assad has responded with a vicious force rather than respecting the voices of the syrian people. the un estimates that more than 3500 people have already lost their lives and thousands more injured and imprisoned and forced to flee. the syrian government has ordered syrian troops to fire on their own communities, orchestrated the torture of prisoners, some only children. in august, president obama rightfully said that, for the sake of the syrian people, the

time has come for president decides to step aside. -- president assad to step aside. that was an extraordinarily clear message from our president. i had teamed up with senator demint to call for these sanctions, preventing all transactions between america and the government to syria and banning the importation of syrian petroleum. and banning new investments in syria. then the eu band the import of petroleum. since they buy 90% of all syrian oil, that is a big deal. unfortunately, other members of the international community have failed to stand up against president assad's abuses. it is my understanding that despite vigorous measures, there have been unable -- according to the news reports,

russia led the opposition. susan rice found -- i guess my question is did you speak to russia's opposition to any condemnation of the assad regime? is it that they want to sell weapons? is there something more we can do? what is your take on it? >> thank you for the question. i will have to defer to my european -- the bureau of european affairs. assistant secretary phil gordon for a better information because

it is of my area. what i can say, talking about serious, what the russians say -- about syria, what the russians say is that they want a peaceful solution. fine. we want a peaceful solution. the russians said that they want the rest -- the violence to stop. fine, we wanted to stop. -- want it to stop. i would say that, for the purpose of this argument, let's take the russians at their word, but they are sincere. therefore, they should join us in allowing monitors, allowing media into the country. if they still pretend to believe assad's lies of that he is fighting bandits and terrorists, let the monitors in. the monitors can report that and tell the world what is actually happening if they are bandits and terrorists, the media will show that. i do not believe the russians will be able to sustain their opposition to the syrian people indefinitely. >> i hear you. let me just say -- this is key. i would hope that we could all

work together to craft some kind of message to the russians. this is critical. they are taking the lead on blocking any type of resolution. i have the second point i want to make. according to an amnesty international report, the syrian authorities "have turned hospitals and medical staff into instruments of repression in the course of their efforts to crush the unprecedented mass protests and demonstrations. people wounded in protests or other incidents related to the uprising have been verbally abuse, physically assaulted in a state run hospitals. including by medical staff and in some cases denied medical care. the report cites expenses from a -- experiences at from a number of wounded protesters, including one shooting victim

who said that a doctor at a state-run hospital told him, "i will not clean your wound. i am waiting for your foot to rot so we can cut it off." that is supposedly a quote from a doctor. this is what it doctor said to a young protester. "i remember hearing shrieks of pain," said the doctor, "so i walked to the voice and i saw a nurse soaring at a boy and his -- swearing at a boy and hitting his injury as he poured antiseptic on the injury that was intended to add additional pain." what can you tell us about the denial of care to the injured protesters? in light of this, why have we not been able to use this to turn around the policies of russia and china?

>> senator, it is mixed. because the media is not allowed, because there are restrictions on diplomats, we get a lot of information, but it could be very detailed in one area and very sketchy and other details. it is a very mixed picture. but it does provide enough of a vision of what is happening in syria to confirm some of these terrific stories that you -- horrific stories that you describe. i am sure that amnesty was able to get eyewitness reports. the information is getting out, despite the syrian best efforts to operate in doctors' -- operate in darkness, to operate in the shadows.

icrc has had excess in syria -- access in syria. how affective they are able to be in the medical sides, i do not know. they work very quietly and that is thinner goal. -- that is their role. how is it that the syrians can be so courageous? day after day, they go out and protests appeared in a white family, friends, neighbors who have faced this kind of retaliation and they do not want to face it anymore. they are facing a regime that has hijacked the country with the sole purpose of just protecting the elite of that regime. >> thank you very much. again, i will not ask you to answer the last point, but i hope we will take this to the russians and the chinese. >> thank you. senator lugar. >> i would like to focus on some of the comments you made on the international aspects of this, specifically with the

international aspects with the neighbors. turkey now harbors a group of resistants. but the lebanese appeared to be very worried about an upset of their domestic situation spilling over. they fear a regime if they are not able to hang on. in addition, there seems to be a problem that is faced by israel, police as the israelis expressed themselves. they feel that syria was never a friend, but a stable antagonist that was not bound to bring about attack and that under pressure but it might decide to

attack israel in the hope of gaining some adherents from other anti-israeli elements in the middle east. that is creating an unstable situation on another front for israel to give and the arab spring difficulties with egypt and others. in the midst of all of this, the united states, understandably, is concentrating upon human rights the laws of individuals who want their rights in the country. it has been noted by some of our staff members in the largest cities there have been very few demonstrations. this leaves once again to feelings about this sectarianism of the situation in iraq.

somehow, if the sunnis come out on top, this is trouble for iraq giving their own difficulties as we withdraw. what i am wondering, as you formulate policy, surely these things are on your mind. on one hand you have each of us wanting to do something to say people that are in the streets indicating they would like to have better rights. we sympathize with that. on the other hand, it could very well be that as we demand the departure of president assad, we tipped the scales in this and we could say we did not mean to do that after all of this syrian

problems. given the air of spring and other also situations it has all sorts of complications. under those circumstances what is the policy that we should adopt that tries to bring a degree of stability to the situation, even as we promote human rights, continued to espouse those things we believe our most important? are we going to be the tipping force of demanding action by the u.n., or demanding action by sanctions of various sorts? already the economy of syria appears, not to be drying up, but it does lost oil and much of the revenue. we have already had an effect. if we were successful, and president assad left, what would they be left with. at that point what happens to the surrounding territories?

>> you are right. these play into all of our thinking into policies all the time. a couple of basic assumptions we have is that what worries a lebanese is instability next door. what is causing the instability right now that they fear is what is being done to his own people. the president has been clear as the chairman was earlier as well that it is time for bouchard to step aside. -- bashir to step aside. he has gone past the tipping point. he is past the point of no return. the neighbors no longer look at him as the devil you now. they are recognizing with

increasing the eminence that he is the cause of instability that most worries them. >> let's say he does go tomorrow, who steps in and what do they do? >> that is one of the real challenges. the opposition is still divided. we think more unites them than divides them because the more they talk about the need for president assad to go, the more need for a democratic, secular future where syrians have equal rights under the law, but there are sticking to the -- still big divisions over opposition people. it is one of the things in our discussions when we meet with opposition figures, beat the inside or outside, you have to be able to articulate a credible plan, a credible vision that is practical, that shows people that are worried about what happens afterwards that you have

a plan that is practical, positive, based on a rule of law where the government governs with the consent of those government. i think they're starting to do this. there have been some vision papers put out. they still have a long way to go. >> during this long way to go, life goes on. what i am interested in is the potential for chaos, the lack of people that have not formulated, what the new plans are, and they are right to be -- with the new plans are? >> you are right to be concerned. right now, the impending test is happening because of what is being done to his own people. there needs to be a end to the violence and an opposition that is inclusive, able to articulate

practical, positive plan going forward. >> thank you. thank you, senator lugar. >> thank you for holding the hearing. i wanted to begin by commenting on your points about ambassador ford and a great work that he has done in syria, and commend him for that. i know all of us very much appreciate his courage and working with opposition figures and certainly hope he will be back there very soon. can you talk about the current relationship between iran and syria? how they are playing into what is going on there right now? are they supporting president assad, and to what extent? how does the violence in syria effect their view of what is

going on? >> it is an interesting topic. the short answer is yes, iran is definitely helping, giving the tools to repress. they are providing expertise or technical assistance to do bad things. they are providing equipment. that is one of the reasons why my colleague mentioned it was sinking in one of the three executive orders that the president has announced this year. at the same time, they are embarrassed. you start to see iranian leaders who talk about the need to end violence in syria and the need for reform. this is cynical on their part because they do just as bad of things to their own peoplebut it

suggests to us that the iranian leadership recognizes that they want credibility across the arab world because of their support for this brutal dictator and that he might not survive and they have to start positioning themselves for the day after bushar. iran is in an interesting bond right now. they want to support him without losing their credibility in the arab world also tried to signal to the syrian people that, while we know he will lots of drive and we know that -- he will not survive and we know that he shouldn't be doing this to you. >> do we know about -- is there information how the iranian people feel about their government support for assad and what is happening there? >> i am not really sure. i have not seen polling on that. but i will use your question the pullout something else that is interesting, error of polling. the has been enough over the years -- arab polling. there has been enough over the

years to see. they were asked who is the arab leader outside your own country who you most admire? bushar had overwhelmingly come out on top. now that poll comes out and his numbers are rock-bottom. in morocco, 15% think he might survive. in egypt, it is 14%. everywhere else, it is single digits. this is insolence the arab leadership. they have woken up to having to temper their public opinion. they are playing a much stronger role on syria than they would have a year ago.

>> that does make sense. given the arab league effort to try to reduce the violence in syria, is there any belief that, if the violence continues that the arab league will take any action? will they sanction assad and the regime? is there any further effort that they think they might undertake? >> i mentioned this in my opening statement. syria is considered to be an important part in the arab world for political reasons and historic reasons. it is a heavyweight in the arab world. arab leaders are trying to show that they can deal with a problem in their own backyard.

they can deal with this rather than have to turn to the outside world to solve everything. it would be an embarrassment for them to do something to protect the syrian people at this point. when i spoke with the arab foreign ministers, there are a lot of ideas pig we're talking about perhaps they could asked -- a lot of ideas. they are talking about perhaps they could ask the united nations. perhaps the leader of syria has lied to them. his days are numbered. i look at the contrast to a year ago where he was lent an airplane to fly around the world and now cotter is heading of the committee that is trying to find ways to take action in light of bushar's refusal to commiserate with the arab -- the arab league has a lot of

divisions inside it. i do not know what they can produce. in n.m. -- in a very important way, their own population is now on the line. >> to follow along with respect to turkey, in about 40 seconds that i have left, turkey obviously has made some strong statements condemning assad and the actions and violence in syria. are they prepared to undertake any sanctions against assad? economic or others? >> i think it is hard to overstate turkeys break with syria. -- turkey's break with syria. we have seen remarks suggesting

that they are considering additional measures, possibly including financial sanctions. we would welcome any such measures. also, we will engage with them to encourage them to do so. >> are we already engaging with turkey to encourage them? >> yes. >> thank you. >> senator rubio. >> clearly their ambitions are known and they are -- de are counter to our international interests and the safety of the world. i do not think that stevens needs to be made any further. but you can elaborate a little since it is to iran,

economically and to their military aspirations and the land bridge to the region. >> syria is essential to the extremely negative role that iran has been able to play in the region. take hezbollah. the transit routes for hezbollah is via syria. they use it to undermine the state of lebanon and destabilize the region. it comes via syria. syria is basically iran's only friend. iran is syria's best friend. in fact, it is one of serious -- it is serious only remaining friend. i do nothing -- it is syria's only remaining friend. there attended be a few misguided lebanese politicians. what is happening on the ground

in syria is important. our embassy reports that demonstrations on syria have, among other demands, an anti- hezbollah and anti-iran flavor to them. they know who is providing the assistance to their government to kill them, arrest them, and torture them. they know that it is from iran and hezbollah. that means that a change that comes about with the consent of the people will not be the asset for iran that syria is today. it is not in their strategic interest to see that this change takes quickly.

there has been mixed press reports for what the iraqis think and what is happening in syria and they are concerned by the instability. but iraq suffered grievously from what this regime did to them. the syrian regime facilitated, allowed syrian territory and airport for terrorists to get into iraq and blowup thousands of iraqis and our servicemen. it would help iraq to have a difference syria next door. >> the goal of limiting and containing an defeating iranian ambitions for the region in the world, the loss of the assad regime would be a devastating blow. would that be accurate? >> yes.

people talk about there could be another sort of assad in a palace coup inside. the government that comes in with the consent of the people would not be a friend to iran. >> is the regime were to fall, they would be left with another form of radical government or religious minorities -- is their concern about that? what progress, whether it is the syrian national council or others, what is the potential for that to be lessened? >> it is a concern of everyone, including the opposition themselves.

syria is one people. they're trying to show in practice that they recognize that the syrian national identity is composed of many diverse ethnic groups, etc. you do see al whites -- aloites, christians, muslims. the country is still heavily sunni. but it needs to continue to articulate why is that bushar's predictions of what happens after he leaves is wrong. they will have a proper role to play. the burden is on the syrian

opposition. based on our own conversations with the minority groups, i do not think there are any illusions about bushar. they have seen him as a source of stability and they now believe that he is driving the country to ruin. >> i read the many sections we have placed around the world. -- sanctions. but there has been a flight from damascus to damascus -- to to time. evading any of these sanctions? >> i cannot speak to any specific examples of financial

support. clearly, the assad regime is looking for alternatives around the world. they have not found much success to date. >> as of now, we have not found any willing open participants in efforts to undermine our efforts for the nation's efforts to aid than iran. >> i cannot speak directly to any specific forms of financial support. with respect to finding markets that might replace what they lost when they lost the european oil market, that is correct. they have not found anything

what they have lost. >> thank you. >> senator durbin to request that you for allowing me to-- senator durbin. attend this subcommittee. i may not be a formal member. i had a meeting with a large group of muslim americans in chicago of syrian descent. naturally, they're following this very closely and are very concerned about it. they asked several questions that i will ask. they want to know whether or not the sanctions we imposed have gone far enough? several things that they asked about and i said i would follow through is, one of which is whether we are targeting lebanese banks involved in syria and whether or not we have expanded our sanctions regime where we are currently targeting oil exports to include other elements of the oil and energy sector of the expiration, production, and transport?

>> to the question of lebanese financial sector, we have designated one lebanese financial institution. commercial bank. we're really engaged with our counterparts in lebanon to stress the importance of remaining vigilant and not to be exploited by the regime or the regime insiders. after an action that we took over this year, making a 311 finding against a lebanese canadian banking group, we continue to engage barry regularly with lebanese counterpart. -- very regularly. sanctions pursuant to the suggestion to go beyond oil

exports into other aspects of the oil energy sector? >> our sections currently already do prohibit any new -- any investment in the syrian oil sector. they prohibit all transactions between u.s. persons and the government of syria and the europeans have taken a similar action as well. >> that is good to know. why are we not pursuing that the -- at the un security council for the referral of assad to the international criminal court? can you tell me? >> ambassador rice and her team in new yorker actively looking to see how we can use the un system in the best way to first of all raise attention to what is actually happening in syria and try to find ways to stop the violence.

we are looking for support with russia and china to see if we can get a security council resolution on syria. we're also working with european and other partners to call for the types of human rights monitors that would give some protection to the syrian people. there have been special sessions where we have helped the u.n. human rights council. we are looking at all the ways that the un system could help us achieve that goal of stopping violence and moving toward a democratic transition. >> i applaud what the administration has done through ambassador rice. the vote in october at least forced nations to stand up and vote. even though it failed. the question i am asking, since the arab league has intervened

and that effort has clearly sailed, why are we not following up again with the un security council, directly with the efforts of the international criminal court toward mr. assad. >> since we are not members, i would look to the lead of others. but this is an option we're pursuing. in the security council. we are looking for the right time. we hope that something will come out of the arab league on saturday with those on the security council who did not let the security -- but the resolution passed the last time. this is a matter that the u.n. security council should be dealing with. we would hope that russia and china, in looking at how the assad clique has refused all attempts of mediation for mothers would now realize that -- from others. it is time for the security

council to act >> i follow through a little bit on this effort -- on the question of the u.s. security council. one can certainly come up with a rationale for the russians that may have something to do with arms sales, a rationale for the chinese position which is fairly consistent with their foreign policy. but i really struggled with brazil, india, and south africa. i asked the ambassador to come in my office and talk about the indian position on this. and she said to me when i think others have said and i would like to comment on it. she believes there is evidence, which she told me that there is evidence, that the opposition in syria is armed and violent. i have not heard that, not from any credible source. have you? >> there are increasing incidence of the opposition using arms, purely as self- defense as anyone can understand. but the large portion of the movement is still peaceful.

but the push a forssa -- but the push for assad is to have the protesters seen as highly violence so he can justify himself to the rest of the world. thank you for meeting with the indian ambassador. that is a welcome initiative. we have been talking with them as well. what the arab league is trying to do, what the u.n. human rights council is trying to do is to get monitors in the country. if there are terrorists in the country, they will either stop attacking so they do not reveal their actions or they will be revealed by these monitors. we think it would also put a check on the brutality of the assad and click on his own people. they can use their own arguments to get themselves to the point of supporting security

council resolutions. told you, if she truly believes that, she should not be frightened to have monitors their. >> i think that is a constructive suggestion. i hope that my colleagues on the committee can join me in inviting the investors from -- ambassadors from stymieing the efforts of the national sick -- the international security council. they are hysterically friends. -- many of these are historical our friends like south africa and india. it would seem to me to be valuable to note that we see their opposition and would like some explanation. thank you. >> we will go for a second round. i want to raise at least two or three more points. i wanted to raise with you the question about an article in "the wall street journal" dated october 29 of this year. the title of the article is

"u.s. firm enologist syria -- "u.s. firm acknowledges syria using -- a u.s. company making blocking gear recognizes syria using something there. >> you can see the rest of this hearing at c-span.org c- span.org. the house is about to gamble in for a pro forma whort session. the speaker pro tempore: the

house will be in order. the chair lays before the house a communication from the speaker. the clerk: the speaker's rooms, washington, d.c. november 10, 2011. i hereby appoint the honorable andy harris to act as speaker pro tempore on this day. signed, john a. boehner, speaker of the house of representatives. the speaker pro tempore: the prayer will be offered by the guest chaplain, reverend dr. alan cyran, office of the senate chaplain, washington, d.c. the chaplain: let us pray, father god, as we look forward to veterans day, we are humbled to realize that so many of our nation's men and women have served in our armed forces in peace and war. we are humbled as well to realize that peace comes at a high cost. we pray for all veterans serving on capitol hill and their family members. we also pray for those who have suffered wounds and disabilities as a result of

their military service. but most of all, lord god, we honor those who have given the last full measure of devotion on behalf of our great nation and their loved ones. god bless all servants of liberty, and god bless america. amen. the speaker pro tempore: the chair has examined the journal of the last day's proceedings and announces to the house his approval thereof. pursuant to clause 1 of rule 1, the journal stands approved. the chair will lead the house in the pledge of allegiance. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the chair lays before the house a communication. the clerk: the honorable the speaker, house of representatives. sir, pursuant to the permission

granted in clause 2-h of rule 2 of the rules of the u.s. house of representatives, the clerk received the following message from the secretary of the senate on november 10, 2011, at 11:23 a.m. that the senate passed without amendment h.r. 2447. with best wishes i am, signed, sincerely, karen l. haas. the speaker pro tempore: the chair lays before the house a communication. the clerk: the honorable the speaker, house of representatives. sir, pursuant to the permission granted in clause 2-h of rule 2 of the rules of the u.s. house of representatives, i have the honor to transmit a sealed envelope received from the white house on november 9, 2011, at 12:54 p.m., and said to contain a message from the president whereby he transmits a notice concerning the national emergency with respect to weapons of mass destruction. with best wishes i am, signed

sincerely, karen l. haas, clerk of the house. the speaker pro tempore: the clerk will read the message. the clerk: to the congress of the united states, section 202-d of the national emergencies act provides for the automatic termination of a national emergency unless prior to the anniversary date of its declaration, the president publishes in the federal register and transmits to the congress a notice stating that the emergency is to continue in effect beyond the anniversary date, in accordance with this provision i have sent to the federal register for publication the enclosed notice. stating that the national emergency with respect to the proliferation of weapons of mass destruction that was declared in executive order 12938 as amended is to continue in effect for one year beyond november 14, 2011. signed, barack obama, the white house. the speaker pro tempore: referred to the committee on foreign affairs and ordered printed. the chair lays before the house

a communication. the clerk: the honorable the speaker, house of representatives. sir, pursuant to the permission granted in clause 2-h of rule 2 of the rules of the u.s. house of representatives, i have the honor to transmit a sealed envelope received from the white house on november 7, 2011, at 3:50 p.m. and said to contain a message from the president whereby he smits a copy of a notice filed earlier withle federal register continuing the emergency with iran first declared in executive order 12170 of november 14, 1979. with best wishes i am, signed, sincerely, karen l. haas, clerk of the house. the speaker pro tempore: the clerk will read the message. the clerk: to the congress of the united states, section 202-d of the national emergencies act provides for the automatic termination of a national emergency unless prior to the anniversary date of its declaration the president publishes in the federal register and transmits to the

congress a notice stating that the emergency is to continue in effect beyond the anniversary date. in accordance with this provision, i have sent to the federal register for publication the enclosed notice stating that the national emergency with respect to iran that was declared in executive order 12170 of november 14, 1979, is to continue in effect beyond november 14, 2011. our relations with iran have not yet returned to normal and the process of implementing the agreements with iran dated january 19, 1981, is still under way. for these reasons i have determined that it is necessary to continue the national emergency declared on november 14, 1979, with respect to iran beyond november 14, 2011. signed, barack obama, the white house. the speaker pro tempore: referred to the committee on foreign affairs and ordered printed. the chair lays before the house an enrolled bill.

the clerk: h.r. 2447, an act to grant the congressional gold medal to the monfort point marines. the speaker pro tempore: without objection, the house stands adjourned until 2:00 p.m. on >> on veterans day tomorrow, our entire "washington journal" program will be devoted to military issues.

this morning, debbie cenziper was on the program talking about the department of housing and urban development low-income housing program. host: miss diane swonk, let's start with congress, since it is in our backyard here. [laughter] >> as a chief economist for a financial advisor reform, have you been following with the deficit reduction committee is doing, and is it important to you and your work? guest: it is extremely important i was coming into

washington last spring. high was one of the few business people willing to stand up and be present because politics have gotten so poisoning in this country. i have colleagues said said they could not go up there. i said they are trying to come together. we want to encourage them. we need to agree. we need to bring our fiscal house in order but we need to do it thoughtfully. there are ways to do it without a blunt instrument we need more than $4 trillion in cuts. balance it here. there also needs to be a change in our tax code i have talked to many manufacturers who were willing to pay more not in texas with a lower tax rate and -- instead of hiring someone like my husband to figure out which

it figures out the loopholes. they want to strategizing and bring more manufacturing to the united states. there really are more thoughtful ways of doing this. a% of medicare funding goes to children. i am on the board of children's memorial. 20% of the dollars goes to children. we give people older in life and asked them if they want more chemotherapy or if they would like a choice. most of them choose the dignity to die and not be tortured with medical treatments that doctors are billing them for. that reduces medicare -- medicaid costs and dramatically. in chicago, we do not turn you away. no matter who you are. we will teach you, but we are not getting on those costs anymore. these are things we need to think about. i spent two terms on the device re-panel. most people do not understand

deficit and in this country we do have some time, but if we do not have a package will we know where there are, we need to plan? i think that is very important, too. host: if the deficit committee does not come together, $1.20 trillion or so in the cuts will happen. what is the reaction of the business community? guest: what is scary it is they will rewrite those rules. what it is doing is adding insult to injury. we saw in august with the debt ceiling debate that the uncertainty froze our economy and validated why we have over $2 trillion still courted on corporate balance sheets recorded on corporate balance sheets. host: just to get a few topics

on the board, the front page of "the financial times" -- it talks about the italian bond market. about right hand side, "eurozone concerns spark u.s. equity selloffs." could you explain what this means? guest: we are not an island. two thousand eight taught us that you cannot do anything when place in the world and not have ripple effects elsewhere. one of the problems europe had is they're coming from the fact that europe did things wrong in 2008. that said, if europe goes down, it is a banking crisis in europe. many market funds are exposed to short-term thinking dead in europe. that is contagion. in august, when we sought a scare, it hit our banks. we cannot escape it.

we do not need another financial crisis that puts into jeopardy all on financial system. i understand that occupy wall street did the like the bailouts, but if we have no financial system we have no liquidity. it is not working right now, but it could be worse. you did not want to go down that road. host: there was a republican debate last night. mitt romney talking about the crisis in europe. >> europe is able to take care of their own problems. we do not want to bail out their banks and governments. they have the capacity to deal with that themselves. there will be cries if italy does default, and banks that hold the italian debt will face a crisis, and there will need to be an effort to uphold their financial system.

there'll be some who say that banks in the u.s. with the italian dead -- debt, we should help them as well. my view is no. we do not need to step in in europe or hear. guest: the reality is we are not an island. i agree that europe needs to shore up funds, but i will tell you where they're going to get their money from. they are working with the g-20, and china, and they're willing to give away concessions that we were not willing to do. and that will fundamentally shift political balance of power in the world. we have to be cognizant of all of these things that will come back to us in some way. the chinese are starting to say we do not care where you guys do tend we're not going to change our currency. that will have ripple effects on the u.s. market as well.

china is going to get everything they can get out of europe. i think we need to think more globally. you cannot say we're not going to bail out the blanks -- their banks, of course not, but are we involved? absolutely. if defense our economy. we have to deal with it. host: diane swonk is a graduate of the university of michigan where she also got her master's degree, and she got her mba at the university of chicago. she is the chief economist at mesirow financial. what is the they do for a living, and what is mesirow financial? guest: i am many economists, and most of my job has been sitting down with clients.

mesirow financial manages about $57 million in different funds. we manage a lot of union pension funds in the u.s.. we trade debt. we do so many things. we give the insurance for small businesses that cannot afford to get it. a family-run company, and it is not publicly traded. we do not get any debt. we spirit ourselves. it is an amazing thing. i lost my chairman to stomach cancer last year unfortunately. norm mesirow from the company in 1937. jim was only 53 years old.

i made midwest and a parent i was told by someone -- midwesterner. host: where are you from? guest: i grew up in detroit. host: hard to get interested in economics? guest: growing up in detroit is a crash course in economics. my best friend, her father was a union president and my father was an executive ed gm -- at gm. she went into poverty. i have to bring her extra money to help her pay for lunch. i would always wanted to our house and small bread because that was the house state -- the brad pitt could afford -- the bread they could afford, the bread baked.

i was the only child. we talked about it at the dinner table. we were having adult conversation about the world. i went to the university of michigan and by pure serendipity -- i have a terrible professor parrot he was a marxist -- professor. he was a marxist. i took economics and it was the easiest thing i have ever done. it turns out -- [unintelligible] i make foot numbers a little bit. what is the difference between 0.09, but i cannot dial a phone number. it really was the easiest thing i could do. calculus i to do in my head. adding, subtracting, multiplying, not so good at it. host: diane swonk is our guest. bethlehem, pennsylvania.

bill, your first up. caller: i'm glad we have an executive that the leaves in the balance. perhaps we should be taxing multi-millionaire republicans like joe paternal -- joe paterno. thank you for your positive attitude. host: let's address one of those turned one of the political issues is taxation for high income people. what are your thoughts? guest: there is no reason to subsidize million-dollar homes and all secretion lower the tax rate and broaden the base. we sound like michele bachmann. i did not like her at all. i hope you do not know my personal politics.

i am in economics. i really think that the tax code is dysfunctional. the only thing -- the only reason the rich are paying more is because they make more. incoming qualities are pretty clear. we know what has happened. educational attainment reached a peak in the 1970's. wages started to stagnate for the bulk of america, the bottom 50%, in the 1980's, and topped 90th percentile accelerated. i was in college in the 1980's, which balances my political and economic thoughts. the reality is this is 40 years in the making, and one of the biggest changes happened in 1996 -- 1986 when they tried to clean up the tax code under ronald reagan you have to stop

with these behavior-distorting interruptions. most americans, if you want to deduct your mortgage, i have some issues with that. why should we subsidize that when we are not selling those homes anyway right now? if you want to buy a multi- million dollar home, my guess is you should have a lot of money to -- by it. host: michele bachmann was also talking about economics and the tax code. >> president obama is the one that is wrong because his plan for job creation has an absolutely nothing to do with the two people that know how to create jobs. he should be going to job creators. instead, he continues to go to david axelrod in chicago to look for his orders and how to deal with the economy. that will not work. we know what needs to be done. we have a real problem.

if we have 53% of americans paying federal income taxes. you have 47% of americans came notes federal income taxes. you have a real problem. that is why in my tax plan i have everyone paying something because everyone benefits by this magnificent country. even if it means paying the price of two happy meals a year, $10, everyone can afford to pay at least that and it creates a mentality that freedom is free, but freedom is not free. we all benefit. we all need to sacrifice. everyone is to be a part of the tax code. host: diane swonk? guest: adam smith believed in a graduated tax cuts. i do not agree with michele bachmann and many things, but i think it is important to understand some people need to

pay more taxes, and i am probably one of them. medicis life for me. i survived in the 1990's. -- that is life for me. i survived it in the 1990's. poor people pay taxes every day on anything that is sales taxes. to say they do not pay taxes is a little bit of a long renditions. we have the federal tax system and the state and local tax system. the state and local governments are raising taxes because they need the money, and they're making draconian cuts in some of their budgets. you have to think of a holistic of what is really going on. one of the issues is we always call wealthy people job creators. job creators are innovators. small businesses. natchez existing small

businesses. -- not just existing small businesses. the story of facebook. they started out in a house and ended up in a big building. that is where the job creation came from. they got rich, but did not start rich. they got rich with innovative ideas. that is how this economy works. it is not just about taxing the rich or the rich being rich, it is about to innovation. that is a different issue. host: next call for diane swonk comes from tulsa, okla., brenda, and the republican line. caller: this is america. why don't we pay our bills first, and then what is left over we find our programs, then we send money overseas? it seems like we send money overseas first, then do our programs, then pay our bills. if i did that i would have no

electricity, no place to live. there is a pair of boots that i want better $70, but guess what? bills, christmas coming up with my children -- i pay my bills. what is going on with our government is not paying our bills. guest: i agree that we should, but we have not been doing it for a long time. the minute we moved into a surplus we did not use it to pay off the debt. i agree with you. another component of this is that as another spin doctor. it is < 0.03% of the budget. the foreign aid situation is not at the top of anyone's list. the top of the list is intended spending. -- entitlement spending. you did not say whether you are

retired or have social security. that is where the bills are the largest. that is not to say you do not deserve some of those benefits, but maybe some of us do not need all of them. if i make enough money i think i should support my own retirement. i do not think i should get social security. that is my feeling on it. i'm fine doing that. i think we need to rein in the spending and deal with our revenue and expense situation. revenue is only 14% of gdp. spending is over 25%. however we felt, we are having the same conversation because we agree there has been a shift to understanding we need to put our fiscal house in order. that i commend. main street needs to get that this is where we need to move in this country. host: bob is an independent.

fort payne, alabama. caller: good morning. i have quick questions i usually see diane swonk on "top box." the issues -- medicaid, social security -- do we not need to have an immigration policy first? every child coming into the united states who was born in the united states is immediately entitled to medicaid. number two, should we not put a lock box on social security because over the past 20 years they have spent the excess social security funds for what ever trivia they want to do. that is one reason both of those programs are in some difficulty. guest: the medicaid situation is not the children's situation.

i understand your feeling. children are 80% of the recipients, but only account for 20% of the dollars. the real problem is in the last year of life. there is a little bit of a problem with the spin on that. and the other side we have a pay-as-you-go system with social security. i think there was a president that ran on a lock box. you are right. it was not saved. it was spent. your social security is being paid for by the people working today, and the only group in the united states because of social security and medicare that did not increase their poverty rate during the recession are the over 65 year olds because they have social security, medicare, medicaid.

if the problem is the people paying for it are getting a little angry. we're not talking about class war. we're talking about youth and adult warfare. fixing social security is not hard to do. raise the retirement age of little bit. grandfather people in that are currently close to it and you means test it. take people that are -- that have a lot of money and do not give it to them. you could fix it relatively easily even with our current system which i would argue is not ideal. it would be nice to start out that way. one surge. was started date basted off a sixth -- when the social security started they based it off a 65 year retirement age. alan greenspan used to joke. he said we could fix social

security for 99% of americans in 10 minutes and the first five minutes we would be first -- we would just be saying hello to each other in their room. host: said vernon gill, california. -- san bernadine know, california. tina, a democrat. caller: i want america to when you have the right wing come out and said that there want to decrease the corporate tax, we are the base. that means that most of our people will be picking up that tax and pay more of their taxes to cover the deductions for the mortgage -- i mean, for the corporations who are not paying. second, we know that there was a problem with the mortgages and we know on wall street the there are winners and there are losers. we know who the losers are, but

american never found out who the winners are. that is what people are in the streets and we have a problem. we do not know who the winners are. it is like the money to lead evaporated. i am 48 years old. i have been working since i was 16 years old. i cannot see increasing my age two more years and i have been paying into the system. it is unfair to ask me, based on 30 years of work, to work an extra couple of years. i know you keep talking about 55 and older, but i think it is really unfair. thank you for taking my call. most companies pay no tax

rate because of tax loopholes. it is an increase in taxes for corporations. that is what i am proposing is cleaner pin it means companies that operate off shore will be brought back on shore because we will have a competitive tax rate. they will be sitting around looking for all of those loopholes. i am not at all advocating that we lower taxes in general on corporations. i am talking about cleaning up the tax code soared is more economically and fundamentally a clean tax code. it will also raise revenues. we're not talking about lowering the overall tax burden that companies carry. it is making it cleaner. and the mortgage issue, winners and losers, there were a lot of winners and losers. there were many who live beyond their means. when a working credit cards when i was in banking, people said that the best way to die others

to live beyond your means your whole life. we have the infrastructure for it. that is the problem. in subprime, they were giving credit to people who could not pay their bills. that was not good. and a lot of people lost. countrywide is no longer around. i wonder why some of these people did not go to jail, but they did not. and some of the winners, wall street made a lot of money and there are a lot of people who made a lot of money off of these things that i wish they didn't on how complicated they made them. they walked away. they got away with it. and i'm sorry about that. i am an economist. i know people who are in their 80s. they did not stop working. i've understand. i will not stop. i work 24-7. i work hard. and i will work longer. i am sorry that you do not want to and i understand your tired.

we're all tired. that is part of the economy. if that is a way to save it, i am all for saving this economy. host: a couple of follow-up twitter commons. guest: when you're means testing on multi millionaires, i will let sit on retirement, i think it works out that way. it means you will not have the extra money to pay for your 100 club. it just bothers me. i do not think the people should be in social security and subsidize things like that. i believe in social security. a lot of people worked hard and deserve social security in this country. >> "washington journal" airs live every morning at 7:00 a.m. we take you live to the pentagon.

>> good afternoon. this is general dempsey's first press meeting with the secretary. i welcome him to this press briefing. i would inform him that there is a tradition that he gets all the tough questions. [laughter] get him used to this job. also by wishing a very heavy burden to the united states marine corps. i will be attending a ball this saturday and a look for to that event. as you know, general dempsey and i have been working with the entire senior leadership of the department, including the service secretaries, the combatant commanders, and the

undersecretary of defense to employment the more than $450 billion in savings that we have been required to do over 10 years. that translates into around two hundred 60 billion -- around $260 billion that will be submitted in february. i never heard this from the beginning -- this has to be driven by strategy. it also has to be a team effort. my hope is that, as we work through this, that we will put the entire leadership of the department, both military and civilian, in the same place so that we can finalize this effort within the coming weeks. as we move ahead with this process within the department, all of us are obviously watching

closely what happens on capitol hill and with the congressional super committee. and we watch it obvious to with great concern. as we know, if the super committee fails to reach an agreement with regards to additional budget savings, the .enalty for that is sequestere this approach would double the size of the cuts that we face here at the defense department. it would also force to cut across the board all of these cuts that would occur when this takes effect in january of 2013. obviously, we would have a year were sequestered hang as a shadow over this department. that by cutting

20% in every area, sequester will lead to a holocaust. let me explain exactly what we're -- to a hollow force. let me explain what we're talking about. a hollow force is a shell that lacks a core. a hollow military has an organizational structure that lacks the people, the training, and the equipment it needs to actually get the job done. it is a ship with the sailors. it is a brigade without bullets. it is an air wing without enough trained pilots. it is a paper tiger. barracks, buildings without trained soldiers able to complete the mission.

it suffers low morale, readiness, and is unable to keep up with potential adversaries. in effect, it invites aggression. a hollow military does not happen by accident. it comes from poor stewardship and poor leadership. i guess my message to the congress is that it must show the necessary leadership by doing the job they have been asked to do. that means identifying savings in the two-thirds of the federal budget that still has yet to be considered for deficit reduction along my view of additional revenues. in my conversations with members of congress and with members of the committee, i have told them that if this nation has brave

young men and women who are willing to die, to put their lives online in order to sacrifice for this country, it really should be not too much to last of our leaders to sacrifice just a little to provide the leadership essential to solving the problems that face this country. this is a fundamental responsibility we have. it is also an obligation that we owe to our service members and their families and one that the entire country should reflect on tomorrow as we observe veterans day. on monday, i traveled to new york to meet with leaders in the business arena and to meet with those in government and the non- profit sector and talk about how important it is to help our returning veterans find jobs in these very difficult economic times. i shall also mention, as we move into these next few years, as we

begin a drawdown process, we will be adding to that burden. these are men and women with extraordinary skill and proven leadership. yet the unemployment rate for veterans who have served since 9/11 now stands at 9.12%. that is unacceptable. we can do better as a country and we are making it a priority here at the department to ensure that our departing service members are given the support they need to pursue higher education, to find a job, and to start a business. these profound obligations to service members continue at every stage, to include ensuring the recovery and dignified return of our fallen heroes. this is one of the department's most sacred responsibilities.

that is why all americans, including myself, are justifiably disturbed by reports of mismanagement at dover port mortuary that came to light this week. when i came to this office in july entered the first meetings that i had as secretary of defense, i was briefed by secretary donnelly and general shorts on their investigation into dover. they were forthcoming with me. it was clear that they took these allegations seriously and that they were committed to strengthening the department's handling of this most sacred task. still, none of us will be satisfied until we have proven to the families of our fallen heroes that we have taken every step possible to protect the honor and dignity that their loved ones richly deserved.

that is why i directed, at the request of the year forced, an independent review of -- request of the air force, an independent review of dover port and of the changes that must be implemented. mona alongd carr mon with a distinguished panel will conduct the review. the office of special counsel developed their own report on this matter. in light of the concerns that were raised in that report, i have asked the secretary of the air force, mike diamond, to make sure that the disciplinary action taken was appropriate and to provide me with the results of that review.

in addition, as confirmed in the report, it is conducting an additional investigation to determine whether there are management reprisals that have been taken at dover against the whistle-blowers. this is a serious issue. as someone who voted for the whistle blower legislation, i directed secretary donnelly to report back to me once the policy investigation is complete -- once the osc investigation is complete. this department has to be fully accountable in what we intend to deliver on this matter. we have to be fully accountable on how we treat its service members. full accountability is have -- is what we intend to deliver.

having been to dover, i consider this a sacred place with a sacred responsibility. and it is a place that must meet the highest standards for caring of the remains of our fallen heroes. we can do no less. >> thank you, mr. secretary. i was also like to begin by wishing the marine corps a happy 200 service sixth -- a happy 236th birhtday. i could not be prouder of their service. as some of you know, we are involved in a strategy review. we are looking out to 2020 to determine what is our joint force, for the military of the

united states needs to be, making sure that it has the capabilities it needs to provide our senior leaders options. part of the averment we anticipate is some resource constraints as a part of the environment we anticipate is a resource constraints. we are well on our way to answer some of those questions. i will just and buy a coin with the secretary said about the events at the dover. -- buy it echoing -- by echoing what the secretary said about the events at dover.

with that, i will turn it back to you. >> mr. secretary, you said that you thought the air force investigation was thorough and you supported their disciplinary actions. today you're saying to them to take another look at that. what changed? not ase airport's upfront with you about the general counsel criticisms -- was the air force not as upfront with you about the general counsel criticisms? general dempsey, there has been discussion about possibly increasing troop strength in kuwait. can you talk about how important you think that maybe for security in the region and would possibly would be the missions and the capabilities that you think would be necessary there? >> in the first part of the question, i think they did do a thorough report. it was about 213 pages and some

additional supplements added by the secretary of the air force. that was forwarded to the office of the special counsel. as a result of that report, they have taken a number of significant steps to correct the procedures at the dover to ensure that what happened never happens again. at the same time, the office of special council issued its report. i reviewed that and they raised additional questions which i think ought to be looked at. for that reason, i want to make sure that we have taken every step possible to bring peace of mind to the family members of our fallen heroes. for that reason, this review commission will look at the processes and the procedures there and make sure that we are implementing the highest standards in handling the remains of our fallen heroes. in addition to that, i want to

make certain that we have taken all appropriate disciplinary action here. for that reason, i asked the secretary to review that. >> on kuwait, we have cooperative agreements with most nations in the gulf cooperative council. and in other parts of that region. we continue to review them. we have gone through a process to review posture. we are reviewing it both in terms of the merging -- of an emerging threats, opportunities, resurgence, and what we will end up in kuwait is something that will help us meet our interests and there's. -- and theirs. >> they are wondering aloud why nobody has been fired at dover. up on the hill today, the chief of staff of the air force,

said that thereop, were some inappropriate actions and that whether it means wrongdoing is another matter. should there be a higher standard of conduct and accountability in dealing with america's war dead and wounded? >> that is exactly why i have asked for this review to make sure that appropriate actions were taken. the disciplinary action was taken with regards to the commander there and two civilians that were involved. it obviously, for them and their careers, has a serious impact. nevertheless, based on the seriousness of what took place, it is my view that we ought to look at not only that, but the reprisal issue to determine whether or not all of the

appropriate and tough steps were taken for disciplinary action. we need to send a clear signal to the american people that these kinds of actions that took place there cannot happen again. >> in terms of discipline, is this a clear black-and-white legal issue or is there a higher moral standard that should be applied here? >> i think it is a command decision. they review these facts. obviously, it involves the nature of the violation, is there a violation, how serious is it, and when it comes to dover, in my mind, it involves a moral standard that means we have to pay the greatest respect and reverence to the remains of our fallen heroes. that is what i think ought to be considered in this situation. >> i want to follow-up on this. i still do not understand why it is credible to you to have the air force and best to get themselves on this matter given

how critical the special counsel report was of the air force? why have them investigate themselves? and why should the american people, after this, after walter reed, after arlington, why should they believe that the military is handling the wounded and the war did remains with appropriate respect? >> the independent review will be done by richard carmona that will include fred franks, a member of the board here, ruth stone, who is involved in the mission there, congressman dick snyder, a former democratic u.s. senator who led a committee that reviewed this, philip hewey,

an m bombing expert who served -- an embalming expert and more who will be involved in the review. aside from the secretary reviewing it, he is at the top of the chain of command when it comes to the air force. i want him to review it because he has that responsibility. i trust mike donovan. i believe he tried to do with this matter, to go after the issues involved here, to correct them and do whatever is necessary to do with them. and i trust you will try to do this and. i tell him to look and make sure that disciplinary action was taken here. i trust you will do that appeared >>. >> did you know that military remains were being put in landfills? >> i did not know that.

>> you said you read in the special counsel report. their office told the airforce back in march whether they informed the family or not. the air force inform the families of those whose remains were mishandled just this last weekend. should they have told them earlier? >> my impression was that the families were alerted to that earlier. let me check that out. the families should have been alerted earlier. >> the air force does not acknowledge culpability for this. do you think that is right? >> journal schwartz -- general schwartz has said that he takes full responsibility for this. >> for the families for whose

remains were mishandled, is this something that the department should apologize to the families for? >> absolutely, we should apologize if we have not had a close remains properly. we do all of the -- we do all those families an apology. >> you have indicated that they have not been apologized to. thatelling you for a fact there were apologies rendered with that notification. and the expressions of regret, as there should be. but back to the landfill issue, as you know, it does go back pre-2008. that procedure has changed. that procedure is not uncommon elsewhere in the medical community outside of the military. the disposition of human

remains that are separated from the principal portion -- if you're looking into how it is handled in civilian life, there are procedures exactly that way. we just took a decision in 2008 to do it at sea. >> do you believe that was wrong to put the military remains in a landfill prior to 2008? >> i do not know what right looks like in that regard now that this has manifest itself. i think that the review that the secretary has requested will help us know a lot more than we knew before. >> on the issue of iran, there has been a lot of chatter about bombing iranian nuclear facilities. can you go over the complexities and effectiveness issue of this kind of campaign? secretary gates and admiral mullen have said in the last couple of years that they have said that their program by three

years at most. what are the anticipated effects of something like that? >> i certainly share the views of secretary gates and general mauullen. you have to be careful with unintended consequences here. those consequences could involve not only not really the turning around from what they really want to do, -- not really detering iran from what they really want to do, but also the effect on u.s. forces. all of these things have to be considered. israel and the united states share a common concern to with regards to iran. that concern is reflected in the iaea report that was issued this week. for that reason, it is

important for us to make sure we apply the toughest sanctions, economic, diplomatic pressures on iran to change their behavior. and we are in discussions with our allies with regards to additional sanctions that ought to be placed on iran. when it comes to action against iran, i think it was the prime minister netanyahu who said that ought to be a less resort and we agree with that. >> if the bombing would derail the program for two years at most, is that still the current assessment? >> we have seen no change in the assessments. >> if the sanctions do not reach positive results, do you think

the united states or israel can work with a nuclear iran? >> we have made very clear that is unacceptable for iran to develop a nuclear capability. we have made that point time and time again. and we have taken steps to implement its sanctions to make that clear to iran. iran is a signatory to the non- proliferation treaty. they have to abide by that appeared to have to abide by international rules. -- the have to abide by that. they have to abide by international rules. for that reason, it is important that the world come together to apply sanctions against iran and make very clear to them that they will pay a heavy price if they continue along this track. as to what happens down the road, i think our hope is that we do not reach that point and that iran decides that it

should join the international family. >> estimates say that the program had halted at least in 2003. the iaea is now pursuing a pace and that iran is no closer than ever. you you -- do you share that perspective that they're closer than ever now? the sanctions have not yet worked. is it not time to say that that strategy has not worked into place a new strategy? >> is perfectly in line with the intelligence assessments. have always made the point that they continue to try to develop threshold capability with regards to their new overcapacity. at the same time, there continue

to be divisions within iran over whether or not to build a bomb itself. in many ways, the iaea report pretty much indicates that they continue work on that capability. that is pretty much reflected in our intelligence assessment. nevertheless, the fact that a respected international organization like i a has come to this determination raises serious concerns that iran continues to flaunt international rules and standards and as a result additional sanctions must be applied. >> there was a hearing where the general dempsey expressed his opposition. president obama expressed opposition.

where do you stand? >> ask this guy. [laughter] on this one, i think the chairman and the joint chiefs have indicated that that individual is of the table. at the same time, that person really does not have a budget, does not really have the kind of authority is that the service chiefs have. look, nevertheless, the national guard is important. the reserves are important. it is important to hear their views. but in terms of being a member of the joint chiefs of staff, that is something that ought to be reserved to those who have direct command and direct budgets that a deal with our military. >> i do not know. i was asked to give my own best personal military advice. that is exactly what i promised to do. and i give my advice today in a

very lengthy hearing and you are welcome to look at the transcript. >> i have not talked with the president about this issue, but i think he would seriously take into consideration the recommendations of the chairman of the joint chiefs. >> a different but related issue on the budget cuts, in october, dod on contracting fraud, the report conclusions are that the penalties for contractors repeatedly involved in fraud, some of the big guys as well, that have not clear their remedies and more and more needs to be done and they need to increase the size and capability of the acquisition work force to ensure that the interest of the taxpayers and our war fighters are protected. do you believe that the remedies currently in place are sufficient to make sure -- to enter those interests?

particularly at this time when 20% across the board, particularly now more needs to be done to protect taxpayers and make sure the soldiers and sailors are getting what they paid for. >> something i have made clear during this process is that everything has to be on the table. this is something we have to look at. this is an area we have to look at very closely to make sure that does not happen. not only does it impact all the taxpayer funds that are provided, but more importantly, it impacts on the very weapons and technology that these contractors are involved in all of that concerns me. that is part and parcel of the areas we're looking at as we make the budget decisions for

the future. >> there is a deal of concern that budget cuts will impact military assistance to mexico. do you have any interviews scheduled with your counterpart in mexico? >> i am looking forward to doing that. i will go up to canada next week. but my hope is to be able to do the same with mexico in the near future as well. with regards to the kinds of assistance that we provide mexico at the present time in order to deal with the drug cartels and tried to assist them with the serious problems that mexico is confronting, we certainly have to be careful of any cutbacks in that area because the assistance is extremely important, not only in protecting the security of

mexico, but protecting the security of ourselves as well. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> secretary panetta says that he has asked for an independent review for what happened at dover air force base. all six members of the joint chiefs of staff, including general dempsey, were on capitol hill talking about adding a seat to the panel. during the hearing, a member of the committee talked about the practice at the dover mortuary, of disposing the portion of troops remains by cremating them and putting them into a landfill. >> i want to for a minute go to the situation at the dover. i do not want to dwell on how hard this must be for you and the leadership at the air force.

no one needs to convince me that you want to get this right at dover. those who understand what the office of special council is, it is the prosecution-oriented agency whose primary occupation is to protect whistle-blowers. what i am concerned about is their investigation into what the ear force did in response to the whistle-blowers. specifically, the fact that the ig of the air force failed to admit wrongdoing in their report. while i and stand people have been moved around as a result -- while i understand people have been moved around as a result of the mishandling of the sacred

remains, i am not sure that they have been held as accountable as what we saw happen at arlington in connection with that heartbreaking incompetence. there is an independent investigation as to whether ig shaded it a little bit because everyone was feeling protective of the institution for all the right reasons. of the vast majority of people who serve at dover and do this great work do it with a great heart and a passion for getting it right. but want to make sure that the inspector generals are not so busy looking after the institution that they fail to point out wrongdoing which was never acknowledged and that there is accountability of people involved. i want you to address the special counsel's report as it relates to the air force investigation.

>> senator mccaskill, there clearly were unacceptable mistakes made. whether they constitute wrongdoing is another matter entirely. and when you look at a situation like this, you look at the facts of the case, as an attorney might say. you look at the context in which the event or the mistakes occurred. and you also consider the demands that are placed on individuals and organizations. with respect to accountability, we also have an obligation to ensure that the statutory requirements for due process were followed. we did that precisely.

i can only speak for the case of the uniformed officer. the uniformed officer received a letter of reprimand. we established an unfair verbal information file. we removed him from the command list and his anticipated job as a group commander at shot dead air force base -- at shia air force base was redlined. this was not a trivial sanction. >> i've understand that is not a trivial sanction. i worried that there is a conclusion that there was not an obligation to notify the families in these instances. obviously, this deals with more than uniformed personnel and the secretary of the air force was copied on the letter that i sent today calling for this investigation. what happened at arlington, no

one was intentionally miss marking graves. they were mistakes, too. i just want to make sure that they have really clear eyes while they have full hearts about the right aggressive need for investigations by inspector general's in circumstances like this. thank you for being here today. >> the pentagon briefing, along with the entire senate armed services committee have a proposal that would make the chief national guard the seventh member of the joint chiefs. it will air tonight at prime time starting at 8:00 p.m. eastern on c-span. also, on booktv.org, the corridor between albany and montreal. it begins at 6:00 p.m. eastern.

vice-president joe biden delivers remarks this evening in concord, new hampshire. we will have live coverage at 7:10 p.m. eastern >> extremism in the defense of liberty is no bias. and let me remind you also that moderation in the pursuit of justice is no virtue. >> he lost the 1964 presidential election to lyndon johnson, but barry goldwater's ideas galvanized the conservative movement. the five-term senator from arizona is featured this week on "the contenders." live and friday at 8:00 p.m. eastern. this weekend on booktv, on afterwards, a discussion of the

history of conservatism from henry burke to sarah palin. condoleezza rice recalls heard years as secretary of state. and former president clinton talks about his plan for recovery. sign of four bookstv alerts, weekend schedules in your in box. >> james murdock, some of rupert murdoch, testified for a second time before a british committee over the phone hacking allegations. new evidence has come out contradicting his former statements. he reiterated that he was not told and had no knowledge of widespread phone hacking at "news of the world." you will recall that we spend

some length about the decisions your father made that borden tape that should receive a substantial settlement -- that gordon tabek should receive a substantial settlement. you were not made aware of that meeting on why that salomon should be reached and -- on why that settlement should be reached and were not aware of the existence of the e-mail. would you like to further assert that you have no knowledge of the e-mail? >> yes. the meeting that occurred on the 10th of june, 2008, was for the purpose of gaining the authorization for mr. cronin and

mr. miler to increase the settlement that they had already made on a number of occasions to mr. taylor and his lawyers. the meeting, which i remember quite well, was a short meeting. i was given at that meeting sufficient information to authorize the increase of the settlement offer that had been made and authorize them to negotiate that settlement. but i was given no more than that. certainly, evidence was described to me that indicated that the company would lose the case if litigated. but the nature of the e-mail, as far as it was described, which it was not, any wider spread or evidence or suspicion no for wider spread wrongdoing, none of these things were mentioned to me, including the detail and substance of the council's opinion that had been sought by

them and received by them earlier. it was only sufficient information to increase the settlement offer that they had already made. >> were you made aware of an e- mail that contained [unintelligible] >> yes. i think this is an important point to be very clear on. the e-mail was important for two reasons. on the one hand, it was a transcript, voice mail that was intercepted by "news of the world" and that was seen as evidence and sufficient to conclude that the company would lose the case. another part of that e-mail that was important, it named another journalist in that e-mail.

that importance was not described to me in any detail or at all. e-was not described as the mail. no documents were shown to me are given to me or prior. >> id is now your position that you were made aware of the existence of an e-mail and that it would be damaging to your defense. >> yes. i testified earlier in the summer that i was aware that a transcript existed and it was on behalf of "the news of the world." it was perhaps the beginning of suspicion that other individuals were involved and it was not describe to me and the e-mail is not shown to me either. >> you did not see a copy of the e-mail? >> no, i did not. >> were you aware of the legal

counsel's opinion? >> i was aware that leading counsel had been obtained, but the opinion was described to me had to do with damages and the estimate of damages were the case to be litigated and lost. it was not shown to me, the leading counsel's opinion, nor was it is described media the things that were provided to you that or not to do with damages. >> we have since learned that there was a previous meeting that you had at the end of may. do you remember that meeting? to athink you're referring note describing a conversation that he had had with mr. cronyn. i have now seen this note as well, but i had not seen it

before. in that note, mr. miler says to mr. pike that he spoke with james murdoch. he did not say there was a meeting. he refers to a conversation he had or that he allegedly had with me. neither do mr. miler or i recall that meeting or a conversation or phone call. as i testified, the only substantial meeting that i recall our conversation that i recall about the matter was the june 10 meeting. although i cannot rule out whether or not he called me or call me in a hallway for a brief conversation. >> my colleagues will ask questions in more detail. but but if -- >> but i think sheridan would like to before that. >> in 2007, [unintelligible]

>> in december 2007, i returned to news corp. as regional chairman for all of our european and asian operations, which included news international along with five other large entities in the area, just for clarity. in the absence of a full-time ceo, i had more direct responsibilities for a period of time for news international. at the time, mr. hanson did not discuss with me any of the matters around mr. goodman and the entire employment of mr. demint and arrest and -- of mr. goodman and arrest and conviction all predated my presence in the company. i had no discussion with him about it.

>> did you ask? >> did i ask about the good winslet in particular? >> yes. >> no, i did not. >> [unintelligible] >> it was some time before i joined the matters affecting mr. goodman. the arrest and the convictions were well over a year before. there's no reason at the time to believe that there was anything other than a settled matter that was in the past. >> there was a significant amount of money for future discrepancies. you do not think it is proper to make sure that did not happen again? >> at the time, certainly, the company relied on assertions

that internal investigations had occurred and that two people had been successfully prosecuted and went to jail and so on and so forth. i think it was seen as a matter that was in the past and that accountability had been delivered and the police had successfully prosecuted and closed the case. so there was no prompt or reason to revisit any particular settlement matter that was well within mr. henson's authority as chief executive earlier to make a judgment on. >> we are told is your father was very concerned about the goodman case. why was he concerned? >> again, this is before my time in the business. when a journalist is arrested at one of the newspapers in the group, it should have been a matter of concern for the chief executive. >> why were you concerned about

the goodman case? >> i was not at the company -- >> [unintelligible] >> i do not think we discussed the "news of the world" matter -- >> so you did not find it necessary to ask father, why are you concerned? >> he did not raise it with me. it simply did not come up between us. >> your father expressed the view that he has been humbled by the whole event. do you feel the same way? >> i have had some time to reflect on all of these events. it certainly is appropriate to reflect and i think the whole

company is humble. what we're trying to do and what i'm trying to do is learn from the events of the last number of years, tried to understand why the company could not come to grips with some of the issues in a faster way as i would have liked the company would have liked. so yes, i think we are all humbled by it and trying to improve the bill does, improve the structures and leadership across -- improve the laleadersp across the board. >> [unintelligible] >> how do you mean? >> any technical advice to make sure that this does not happen again? >> i think the telephone companies -- i do not know the

technical details of what a telephone company might do. we do not advise telephone companies on the matter of voice mail. >> have you had time to consider the phrase and tell the committee what you think it means? >> i think you described to me at the time what it meant. what i reflected on was really where in this process were there places where the company could have heard the alarm bells, if you will, more clearly. and to reflect on them dispassionately. if there was a mistake or a shift that we need to focus on, it was the tendency for a time

to react to criticism or allegations as hall style or unmotivated commercially or politically or whatnot. almost all the din and clamor around a large business like this around the world to try to be able to pick out those things that we could react to differently. at no point do i think the company suffered from willful blindness. >> to you think that the evidence of phone hacking was kept from you? >> it is clear to me that coming in 2008, for example, the information that i received was incomplete. and it is also clear to me that, in 2009, upon allegations arising in a newspaper about the

taylor case, that the full extent of the knowledge with in the business or the evidence with in the business as well as with the metropolitan police was not made clear to me. and that is something that i am very sorry for. >> who should have told you? >> it is important to remember that, after the resignation of mr. colson in 2007, mr. hanson brought mr. miler in as an outside person who had the responsibility to both clean up the issue, investigate the issue, and move the company forward and the newspaper ford in a way that made sure that these things could not happen again. if he had known that there was wider spread criminality, that there was evidence or suspicions of that, he should have notified me. >> there was an aggressive

denial of the allegations. >> in 2009, it was the summer 2009 and a year after the taylor matter. as i said to you and testified to this committee, i think the company did push back to hard. within 24 hours of those allegations emerging and the e- mail was a document that the police had possession of. the chief of police issued a statement saying that that same matter had been a matter of careful and extended investigation by detectives and there was no evidence to warrant further investigation. we relied on the repeated assertions from the company around the breadth of the internal investigations that had been done in 2006 and 2007 and repeated assertions and

reassurances by the police publicly that there was no new evidence in the matter as well as a third-party endorsement of the company's actions in the aftermath by the pc. we relied on those things too long? i think it is clear that the company did. if i knew then when i know today, with respect to the relevant leading counsel's opinion and the details and the import of the evil document, the company would have reacted differently and something similar to that which we have reacted in the last year to move aggressively and determinedly as we can to make sure we put it right. >> there were people in the company who knew what was going on and were not reporting it to you. who should have reported these things to you? >> as i answered the question earlier, where evidence force

officials -- where evidence or sufficient suspicion was there, this was the job of the new editor who had come in to clean this up to make me aware of those things. on the contrary, i was not shown those things in 2008. in 2009, i receive the same assertions around the quality of that is something that is a matter of regret. >> i do not actress expect you to know what was going on. it begs the question, which do you think was worse, knowing what was going on and being willfully blind to it or not knowing what is going on? >> it is important to put the "news of the world" in the

context of the business and what the company deals with and what i deal with on a daily basis. it is in the operating company, news international that works within the european and asian business. this is a company of over 50,000 employees globally. appropriately so, a senior management, myself included, rely on executives in low levels of the business in a certain way. we have to rely on those people and we have to trust them to get the job done that we need them to do. otherwise, it is impossible to manage every single detail of the company of this scale. >> this committee, a committee of parliament produced a report in 2009 where we found it

inconceivable that one person was involved. that was based on the evidence of 2009. your papers describe this committee and the members of this committee as a disgrace to parliament. should there be another internal investigation rather than ravishing the committee? >> at various times during this process, the company moved into an aggressive defense too quickly. it was too easy for the company to do that with all the noise and clamor around the business. a more forensic look at the specific evidence that had been given to this committee in 2009

which have been something that we could have done. i could have directed the management of the company to do differently. at that time, i had stepped away from day-to-day management duties. today, i look back at the reaction to the committee report. that is one turning point that the company had taken. >> you made a mistake in not taking that more seriously? >> what i would say is that the company at the highest levels should have had a good look at the evidence that was given to it in retrospect in a 2009 and had a proper look in 2010 and followed wherever that trail lead. >> after the arrest of brooks, we were given a legal response

to going down a certain route without question. you are not currently on bail. so can you answer the questions i put to you? >> i have not been arrested and i am not currently on bail. to the extended questions related to matters of criminal investigation or related to individuals that are currently arrested or on belts that certain things would be inappropriate. >> you just said that you have now read the committee's emissions -- committee some missions. >> i would like to esterase series of questions about those documents. give me a yes or no answer. did she prepare a detailed memorandum concerning the case which sees said was minor? >> he prepared a memorandum, but

it was substantially narrower and did not raise certain things in that memorandum that council raised. that is a critical point. >> that is a yes? >> i would question your characterization of the detail. i think it was on the 24th of may. >> the memorandum was prepared in advance of this meeting. >> i do not know that. i assume that was the case. some of the things were discussed with me on the 10th of june. >> that is a yes. this memorandum acknowledges the documents and evidence of widespread criminality of "news of the world" and that your

position was perilous. >> he did use the words. at no point in that memorandum was it mentioned, white spread criminality with respect to phone hacking and those crucial details from the lead counsel house bill left out from the 24th. >> yes. >> you are trying to put words into my mouth. the memorandum was prepared. it did not discuss those crucial elements of widespread criminality. it did not mention those individuals involved. >> did you say you met on the 27th of may to discuss the case? >> bayh answer the chairman's question early on. i did not have a conversation early on. we do not recall that conversation. a conversation or telephone call

could have happened. i have no recollection of it. the most substantive meeting occurred on june 10. >> he believed that there was a conversation and that he relayed the message that you would take a view of the external qc. you said that document exists? >> i do not think it says what you are characterizing it as saying. this is an important point. it was not me who told that two leading counsel. they had already done that. >> the note is very clear. he thinks that you wanted him to

instruct him. >> he spoke to james murdoch, bought no options, wait for qc's opinion. it does not say that i told him to seek qc's opinion. eyes have seen that opinion. >> they have stated that there is overwhelming evidence for the involvement of a number of news groups and journalists into the legal requirement into the names. and but what was surrounding the material around attempts to obtain information illegally. in light of these facts, there is a powerful case that there is a culture of legal information used at ngn for information.

>> he did provide an opinion that was not shown at the time. he did not discuss the terms. includes -- it concludes that there is sufficient evidence that there was more widespread activity. you would meet to discuss the gordon taylor case. >> as i testified to this committee in the past and have written to this committee, the only substantial meeting i have had on the 10th of june was the case. it was to discuss the case. it was in order for them to

increase the settlement offers that they had made. that seems to be what is in the documents provided to you. >> did you have a conversation with him on the 10th of june? jm said that he wanted to think through the options. >> i have seen that note. i recall leaving that meeting with an understanding that they would increase their offer. i do not recall that part of the conversation. >> do you accept that they have not had access to their office file since they have left the company? >> that is my understanding. >> on november 5, at 2011, they said that you had a knowledge of the widespread criminality and subsequently confirmed and still

believes the opinion of june 3, 2008. you have evidence from at least may 27, 2008 when you met to discuss the memorandum. >> i do not discuss that at all. i authorized the increase of settlement offers that they had already made. neither him nor i remember a conversation on the 27th of may. mr. silverman's opinion was not discussed in that contest -- context. no further investigation was shown to me at that time. that is what i testified to consistently to this committee in person and in writing. >> you failed to inform him on the 27th of may meeting. we have a recollection of it.

is it not inconceivable that to route this two-week. that you would discuss with the memorandum or through email given that these were these three documents, they claim that you were previously defending? >> i think that they testified and myler testified to this was like given to me at the june meeting. we do not recall an alleged conversation. we might have had a telephone call. it was not some stances. otherwise, one may have remembered it. that is what happened.

the period between those days and on the 10th of june meeting and i was in india. then i was in hong kong. i returned on the test from other stuff in the u.k. and not related to news international. >> did you mislead this committee in your original testimony? >> i did not. >> if you did not, to did? >> i have said publicly, i believe this committee will get the evidence by individuals either without sole possession of the facts or now it appears in the process of my own discovery in trying to understand as best i can what ever happened here, it was economical. my own testimony has been

consistent. i testified to this committee with as much clarity and transparency as i can. where i have not had direct knowledge in the past, i have gone and try to seek answers to try to figure out what happened and what evidence there is. >> a respected lawyer for many years did what? mislead this committee? >> i issued a public statement in it something that gave to you in 2011. it was something that was inconsistent and not right. >> and do you think that mr. myler mislead us as well? >> i do not have a reason to believe that, nor will i have

direct evidence. >> you said that the critical new facts as the company saw them emerged from the trial at the end of 2010. we know that this statement was completely untrue. we know that the critical new facts were received in 2008. it was only in 2010 that the company became aware. >> i became aware of those critical facts in 2010 after the process of the civil trial had uncovered some of the police evidence. >> who told you? >> previously, i had received assertions from mr. myler that there was no new evidence. this was 2009 and later.

>> you said that it was not a matter of real regret that the facts could not emerge and cannot be done faster. you now know that was not true. >> it is a matter of concern. what i was trying to discuss earlier with respect to how i think about what we can do differently and how we can improve on what happened to, the amount of transparency between what was known by certain individuals and seen by them. if that had been more transparent to me, that would be more important and more helpful. >> the facts emerged in 2008, the committee was misled? >> certain individuals were aware. none of those things were made

available to discuss with me. i was not aware of those things. even in 2009 when the newspaper made allegations about those things, i testified to this fact and have written to you. the company has relied for too long on repeated assurances as to the quality and rigor of the internal investigations that have been carried out previously. and we also relied on the assertions and reassertion is made publicly by the police that had all of the relevant information. within 24 hours of the 2009 allegations. i>> did he mention it or could e have discussed that with you when he have that conversation on the 27th of may? >> we did not have any recollection of the conversation

on the 27th of may. >> you agreed with myler to wait for damages. this opinion was being prepared so that you could decide what to do about the claim. >> with respect to damages. >> it contained the words that i just read to you. spread around horrible allegations, the horrible process. do not believe culture in the newsroom. james would say, get rid of them co, cut out cancer. >> that is a good thing to focus

on. >> what cancer did you think he was referring to? >> what i can see in that note was the conversation where mr. myler referred to the investigations. with respect to the allegations in his dismissal claims, he does not believe the problem was in the news room. he showed that perhaps he was worried about raising these issues with me because i would have said get rid of them all. i would have said, cut out the cancer. that is the way he would approach it. that is the way i would approach it. i think that speaks volumes. that is also why i was given a narrower set of facts and i

would have liked. >> it does suggest that there was a discussion about a culture of packing. >> what you are referring to is a transcript of mr. myler as i understand it. >> when you said you had read that, i do not believe the culture in the newsroom. that is a completely different interpretation. >> that is a different interpretation. that would be a punctuation issue. in the transcript, it is hard to come across. none of it was discussed with me. >> you suggest that there was no mention of the e-mail, despite

being central to your discussions with colin myler? >> i want to be very clear. that was not referred to as the e-mail. it was mentioned to me as evidence that was greece -- important. it proved it was on behalf of "news of the world." it was not shown to me or discussed with me. it might indicate widespread knowledge or wider spread activities of phone hacking. it was important for two reasons. it was evidence that was important to the case. in conjunction with leading counsel's opinion and what i would have liked in retrospect to have had and moving forward on a different footing.

>> there was no mention that news group newspapers have actively made use of a larger group as was mentioned in the memo. >> it was only mentioned that there were voicemail transcripts there. those documents that you are referring to. >> there is no mention of the number of journalists. who were obtaining access to information. umass with myler on the 10th of june, this time with crone. >> i did not receive mr. silverly's opinion. i do not know what they discussed. >> there was no discuss some about the culture of the illegal

activity during that meeting? >> absolutely not. they did not mention it. >> information going to the heart of the problem, they've met for a settlement. >> they gave me sufficient and permission to authorize the increase of the settlement offer they had already made. they had commenced making before without my knowledge. they left that meeting with the authority to continue negotiating. they did not discuss them with me in the terms that you described. they did not describe wider spread phone hacking allegations. they did not discuss the wider views contained in leading counsel's opinion.

>> you did not bother to ask about his contacts. opinion waserly's discussed with me in context of damages. the relevant information for mr. myler and mr. crone to increase their settlement offers. i think if all of those other details had been discussed, it would have been a lot longer meeting. >> you authorize a fairly large payment. you did not ask why the large payment was necessary. >> it was made very clear to me that the case would be lost. there was evidence in the case that linked the voice mail interceptions to "news of the

world." an company's own cost, estimate was made. it was somewhere between 500,000 pounds and a million pounds. this would be required to settle the case. it was a reasonable decision to go with the very strong legal advice we had received. >> why do you think he would immediately question your previous testimony to this committee? >> i cannot speculate as to why they did that. >> their advice was that a case could be lost. in the absence of any new evidence, i was not made aware of any new evidence. criminal trials before i was there. it was a matter in the past.

do you accept that this was not an accurate assessment? that the committee was misled? >> it could i'd just be clear. i think you refer -- you were referring to my testimony. that was my understanding at the time. that was precisely how i understood it at the time and why it was reasonable to make the decision that was made. with respect to the leading council's decision, it would have been better if the whole nature of that opinion and the issues contained would have been fair to me. none of those things were discussed with me at the june 10 meeting or the other meetings at all. the only meeting was the june 10 meeting. the only things that were

discussed were the things that they deemed sufficient for them to authorize the increase of the settlement offers they were already engaged in making. >> mr. murdoch, it is clear that you are not going to answer any of my detailed questions. i was not going to do this. i need to tell you that i met him. i do not -- it was in confidence. i believe it is important to reveal what he said to me. he said to me, did you discuss what your strategy would be with mr. murdoch with anyone else? he discussed the strategy with me at one point. what he did was this. just before he went to see murdoch and said that we have to settle, he spoke with me what

the transcripts were all about. we have got a problem because of this. what is this all about? this is neville talking to tom crone. >> i never look back at it. i do not know. somebody must have asked x to do this. x was asked to do so many of these by people on the news desk at this time. tom comes to me. this had nothing to do with me. we discussed this. this shows that this had gone through the office. it has gone through x. news international is culpable and we do not have to settle. i am going to have to show this to james burdock.

the reason i remember this is because i said, please, do i have to show this? he is going to think it was me. is there any way to get around this? i am sorry, but i am going to have to show him this. it is the only reason we are going to have to settle. i am going to lose my job. not necessarily. not necessarily. would that be a true and accurate recollection. >> i have no idea of the conversations that they had. i can tell you that at no point did they discuss suspicion of water spread hacking during the meeting of june 10 in relation to increasing the offer of settlement to the attorneys.

>> he said, this is not some vague memory. i was absolutely on a knife's edge. you have to show this to james murdoch. tom took it to him. i said, did you show him the e- mail? he said, yes, i did. he did show it to him. he said yeah. fine.d, yeah, yes, it's we are settling. my understanding now is the crown -- the e-mail is subject to a confidentiality agreement with mr. taylor's attorneys and

police. mr. myler was part of that, but it was not shown to me at all. i have only recently seen the emailed itself, which is as described. here is the transcript for and then there are large blocks. i saw it recently. it was not shown in here before. i am answering your questions as clearly as i can. >> we published in 2010. you did not see it then? >> yes, i did. with the reductions, yes. >> so you look at our report? >> i did. mr. watson, i cannot say what mr. cochran and mr. philbeck may have discussed. my recollection is very clear. all i can testify to you about

is what i knew at the time and what i was not told of the time. >> you are too familiar with the word mafia -- you are familiar with the word mafia? bmi yes, i am. -- >> yes, i am. >> do you agree it is a group of people found in secrecy, with no regard the law? >> again, i do not know enough of the term. >> would you agree with me that this is an accurate the scripture and an accurate description of news international in the u.k.? >> that is not true. >> their allegations of computer hacking, perjury facing this company, and all this happen without your knowledge? >> as i said to you on a number

of occasions, it is a matter of great regret that things went wrong at "news of the world" in 2006. the company did not come to grips with those issues fast enough. we recognized that. i have acknowledged that evidence to this committee was given without full possession of the facts in the past, and that is something i am very sorry for. what i can tell you is when evidence came to light and when we finally achieved transparency that is appropriate, we have acted and the company has acted with great zeal and diligence to get the to the bottom of issues, make sure this is not happen again, and to make sure our corporation with the police, this committee, and the like are such that we can bring any wrongdoers if they're proven to be sold to account. >> you must be the first mafia boss in history who did not know he was running a criminal

enterprise. >> mr. watson, please, i think that is inappropriate. >> i would like to ask you questions about the decision to settle the taylor case, because you have rightly said that the information you had on june 10, 2008, was about understanding what level of settlement should be paid, and in fact mr. silverly is clear, not whether we should subtle or not, but how much should we be prepared to pay. when was the decision -- when did you take the decision that this case had to be settled? >> i did not take the decision. mr. cronin and mr. myler had already started to pursue that path. it is clear in the documents provided to you after news international waived privilege.

it was my understanding that mr. crone was the person who started the sediment some weeks beforehand. the number had a margin of eight was: to draw my attention to it. they had already sought to settle in a variety of levels before. >> you said when you gave evidence in july, he said he were not made aware of any new evidence, but simply a matter related to events that can to light in 2007? >> that is what i was understanding at the time. >> you are saying you are aware of the transcripts. it was all the internal discussion that we have seen, that it was regarded as evidence? >> it was a new disclosure. i cannot remember how exactly it was described. it was described as evidence,

here it is. they said it is a transcript of voice mail interceptions that have proven it is on behalf of "news of the world." to be clear, it was an instance of voice mail interception that had already been part of the trial before hand. it was mr. taylor, his voice mail being intercepted. that was one of that counts that the individual was tried on. >> the taylor case was one that would noted it was so weak that it would be struck out when it was followed up in 2007, but less than a year later you are authorizing to settle at at 500,000 pounds?

>> it was brought to me as a case that would be lost. it was described briefly that there was evidence of the voice mail interception transcript that proved it was for or on behalf of "news of the world," and that it was important to settle because litigation would be costly and would be seen as a matter of the can pass. ec it more as the end of something that had been going on before as opposed to the beginning of something new. >> [unintelligible] >> i was told the number, and the number that six out in my mind was 400,000-something pounds. >> he gives a clear idea as to

what the next step should be? >> yes, his opinion, which i did not see at the time, was to have a 50,000, possibly more, plus costs. >> he was recommending 150,000. by the time you met in june that had increased to 350,000. you were being asked to sign off on a payment that was doubled of what was originally recommended to the company. >> the escalation of those offers is something that has only come to light recently and it was described to me that an offer had been made, i cannot remember the exact numbers talked about at the time, that it had been rejected, and mr. myler suggested it would be nearer 500,000 pounds. they thought that was reasonable. they gave me strong advice that

it was commercially reasonable to settle. >> when you have this meeting on june 10, you had no idea what this was about? >> the first i had heard of what? >> the first time you have heard about a set amount of money? but it was the only discussion that happened. >> what does that mean, stand ubstantive? >> it was the only time -- as we discussed earlier, there is a discussion of whether or not there was a conversation or a telephone call on the 27 of may. neither of us rolled out the possibility. >> in the notes that mr. crone

prepared, the other two for the existence of a contract for him to obtain information. also information that came to the company as a result from the police, which was information that the commissioners -- was examples of other journalists that were being involved in illegal activities. this was unique. was any mention made of this to you at all? >> no, and it is a poor to reiterated -- and it is important to reiterate that the memorandum was not made available to me. what was discussed was sufficient information to get authorization to increase the level of settlement, and that was what was discussed. none of those other things were

discussed with me. >> you made your decision to increase -- to negotiate two half a million pounds. [unintelligible] >> and there was a vice when you add the cost to both sides, and i followed advice. they had strong advice to settle, and i consented. the senior legal manager for many years and the editor of "news of the world," who i had reason at the time to believe had nothing but the best interest of the company at heart. >> what the recommendation was, the advice you were waiting for, you would have known that they were asking to settle at a very high level, which might be unreasonable that another court

might award. >> that was not the case. >> mr. silverly suggested that was the case. >> you can get to a higher number. have to add in both sides of the scouts, -- of those costs, which can be more than half a million pounds. from the standpoint of the amount that was agreed, they described to me that they had received opinion that this would be appropriate, they thought it was the right thing to settle. they gave strong advice it was the right thing to settle, and i followed that advice. >> one final thing on that in terms of the advice you got. did you ever -- this is already part of a trial, that is what they told us.

what is the risk of the case is already known about. no one else involved, nothing new, what are the risks? >> there was clear evidence that the company would lose the case and it did not seen it there would be a purpose in taking it the court. there were an amount of damages that were possible, and rather go through that, it was reasonable to avoid that expense. >> the key discuss risks to the company that might come out of a case like this? >> i never recall, but it was seen as dragging up matters of the past and was not seen as a -- it would have been desirable not have these things drag it out. as i testified, i was not aware at the time that there was any confidentiality or anything out

of the ordinary in terms of the confidentiality, but i think i wrote to you in august saying confidentiality was discussed and that was something that became clear to me after the fact. >> discussion of reputational risk is a normal type of conversation in a company. many companies pay out because they did not want stuff to the raked up. were you concerned that other things might be brought up? >> it did seem pointless to take it the court, given the fact it would be high profile, and the company was certain at the time it would lose the case, and it was a question of assessing what the cost of going through that process is and if there was a way to remove that cost earlier

and avoid all of that. >> this is the way people settle this in your business. you just say, ok? >> reasons were given to me around the evidence, that was in the case, not with relation to a wider spread phone hacking, but with respect to this case, and it a strong advice that the company would lose. >> you did not challenge why a high amount was recommended? he took mr. crone and mr. myler's word for it? you would have understood why -- it is impossible now to look at the silverly document and ignored the level of sediment he recommends, because the overwhelming evidence -- you

knew none of that and he did not ask anyone about it. you let them get on with it. ge where itven a ran ea might settle. the estimates plus costs for both sides with land within this range, and i was given strong advice to settle. i went along with that advice. >> this does not sound like a tax would example of how he would settle. >> to put it in context, while it is a large amount of money, we can say more transparency around the leading counsel possible opinion and other -- opinion, more

transparency would have been desirable, but in the context of the overall european business, news international business, this was within the business of the managers of the newspapers. they described sufficient information to get the authorization they were seeking. it was left of them the manage the issue. >> you never considered any other option other than settling the case at the level that tom crone recommended? >> the only options were to settle the case. i recall leaving that meeting with a clear sense that they would go and do that, and that is what they left that meeting with as well as the testified to you. >> philip davis.

>> to clarify on some of the points i am unsure about to the answers yet given to tom watson and mr. collins, you're not aware that a meeting took place on the 27th of may. i get that. do you recall at some point same to mr. myler lets wait for the -- view, which is what was in the note to julian pike. he said to him, let's wait for the -- view. >> i do not recall that. there's no record or assertion of a meeting. there is a reference to a conversation that neither mr. ur myler -- mr. myler or i recall. >> when you wanted the opinion before you a great authorize --

>> if they had not had a -- view, i would have asked with a leading council thought, but they did, and they came to me with a recommendation that the leading counsel would provide information. >> you seem to be indicating that when you were not aware of a figure that michael silverly quoted, he said if i remember rightly that you were aware of the exact numbers that mr. silverly gave? >> i was not provided with the documents at all, it was described to me as a range, and this was a reasonable range. >> you were here before last time, you were precise about what the opinion was, because when you are asked about it last

time, your answer was that the damages could be to under 50,000 pounds, which was absolutely spot wrong. >> which is what i just answer to mr. watson's question. >> you knew the number plus the costs -- usually people come a seventh time and are more on the ball the second time. using to be more vague this time. >> that is not my intent. the recollection i have specifically -- and there were a lot of numbers going around. we have the for the 25,000, that was settled for all to monthly. i am aware that mr. silverly said it could be to have a 50,000 pounds or more, plus

damages. >> when you came last time you describe this brief meeting on the 10th of june with mr. myler 50 minutes mass mind. today you subscribe to as a a substantive meeting. can you explain the discrepancy between a 15-minute meeting and a substantive meeting? >> at first i said it was 15 or 30 minutes. the diary said it was 30 minutes. mr. crone it was 15 minutes. i refer to it as substandard because it was the only meeting where this material, the question of this thing was discussed in detail, and as i have said to you exactly what was presented to be at that time, which was sufficient of

rise, to give them the authority to go and increase the offer, but no more. >> the sufficient information and referred to in my thinking is, we are going to lose the case, if we lose the case, the cost is going to be 250,000 pus costs. >> also the existence of evidence that linked a particular voice mail interceptions to "news of the world," and that is important, and the leading counsel's opinion is that company would lose the case and a certain amount was our range -- a range that was agreed upon. >> what was your rationale for offering a level up to 500,000?

>> the range given to me is that it be between 500,001 million plus damages and costs. they had a strong recommendation that that should be pursued. >> when i asked julian pike if they were prepared to settle at any price or if there was a cap, where they would say we have been generous enough, we would see you in court, he said that the 425,000 was getting close to the cat. that was beyond mr. crone's authorization. it must be you that it would go up to 500,000 pounds because pike was clear that was the amount he was authorized subtle.

crone's ieve mr. k authorization was much, much lower. it is important to try to be clear. mr. cronin and mr. myler had attempted to settle this case before they came to me at a variety of levels, some of which appear to be above their party. rone.0 pounds, mr. coron >> and he gave the authorization? >> certainly in the documents i have seen recently and you have seen, it appears mr. crone took upon himself to authorized a settlement of 50,100 50,000. that was not at my

authorization, and nor do i have any records to have evidence of authorizations, other executives who could have done so, and there is no record of any of that. >> tom crone has the authority to settle at 10,000, and unilaterally he instructs york lawyers to settle the case for 150,000, 250,00, without any authority from anybody else. >> presumably he and mr. myler and mr. pike discuss those things, but they did not come to me until the 10th of june. >> i come back to the same question, what basis did you get the authority to settle? who gave the 500,000 pounds cap to julian pike? >> at the june 10 meeting, a

range was discussed, and i agreed with them that within a range, as we discussed, something about 500,000 pounds that would include costs, that they had the authority to try to settle it, which is their advice that they had given. >> had you given them a cap? >> it was a cap. the point here is the damages numbers, plus the costs to litigate it. i cannot recall the discussions of a cap on damages, but it would then normal to say go and have a go at this number. i do not recall that. >> if you give a cap or not? >> they gave me a range and

within that range i said they can go and pursue the settlement. >> did they come back to seek your authorization? did they come back to you and ask you for you to say let's go with that? >> there or not they came back with some confirmation of what had happened, there were no subsequent meetings with the two of them, but they may have called me to have a confirmation discussion. >> the problem i have it is it seems very cavalier to me. a very cavalier with money, given that your organization is so successful, i cannot believe you have been so successful with money to pay off an employee who has been to present, to give them a quarter of a million pounds.

you agree to settle cases with no real cap put in place, but a ball park figure for people to go along with. you think the company should opinion, buts cannot ask to see the pinon when it comes. you characterize your defense for this sort of cavalier approach is this is "news of the world," a tiny part of our business. i used to work for another company. i do not know how big they are to newscorp. it is fair to say walmart is bigger than newscorp. i know the chief operating officer of the company, which may be a small part of walmart, or left of the small part of walmart, i guarantee that if

somebody had gone to him and said we have a problem, a legal case is going to cost us in the region of half a million pounds, northeast chief operating officer i've ever dealt with would say for god's sake let me have a look at that. i find it incredible, absolutely incredible, that you did not say how much? let me have a look at. i cannot even begin to believe that that is a course of action that any self-respecting chief executive, chief operating officer, could possibly take with so much of the company lost money and reputation at stake. >> i think it is important, and i have testified and i have tried to describe this to you in some detail, the situation that we had here was one where assurances were given, very clearly,