review this matter. i think it is appropriate for government agencies and the state of nebraska to review this issue. the republicans put a bill forward that they have already put through the house saying we should decide this issue in a shorter time, and decide it favorably for the alaska pipeline. they do not really want to know the truth. they just want the pipeline. my friends to just ask questions on the republican side talked about how there must be a hidden agenda, because it is perfectly safe. we do have onewe have one keyste and it is certainly a much later time than the alaska pipeline because it is a big deal. this last year of operation showed that there were a dozen spills. some of these schools were shut down temporarily. then we go to the question that

bothers me the most, what the impact will be from this pipeline if we see it go forward on the climate problem that we are seeing in this country and all round the world. republicans denied even believe in such a thing. they deny the science. they cannot take another point of view seriously because they are so convinced that they are right all the time. the decision is an important one. you and your neighbors have been fighting for a thorough evaluation of the environmental impacts of this proposed pipeline. do these nebraska loss satisfy your concerns? -- do these nebraska losaws satisfy your concerns? >> we still do not have a steady

on tarfan. we hope that representative kerry would introduce that on behalf of nebraska and spin >> -- of nebraska. >> senator terry was for this pipeline. the alaska pipeline was taking oil through underpopulated areas. this one is different. it will take the dirt is source of oil available and it will -- the dirtiest source of oil available. the original route will not happen now. that is not because of trans

canada, but because of nebraska. >> we have no oil pipelines that we cross the handbills currently. >> that is where the offer is? >> the sandhills have a unique relationship with the offers -- with the i aquifers -- with the aquifers. a landowner in north dakota had to beat their detection system. >> estimates based on a long time, the job estimates, assuming all of this will operate for 100 years, that is a century of oil addiction, locking in 100 years of oil

production. the iea said we will have to make the significant move toward clean energy in five years to avoid an 11 degree increase in global temperature. i think it is a legitimate concern and should not just be dismissed by republicans because they want to wonder whether obama wants to satisfy one interest group or another. i think this requires serious consideration. >> thank you, mr. waxman. this committee passed a pipeline bill. i voted for it.

you are the representative from transcanada pipeline. the company build pipelines, right? if a pipeline was not built, would oil sands from alberta still coming to the united states to be refined? if so, how would it be transported? >> there is some capacity left on existing pipelines that cross the border. and those pipelines can get probably a few hundred thousand barrels incremental oil into the chicago area. the problem is that there are no pipelines that are in place that can take that oil from chicago to where it is needed, which is the gulf coast. the answer is more pipeline capacity is needed. >> is that the safer mode of

transportation as opposed to rail and trucks? >> a lot of people have mentioned the formation in north dakota and montana. it is rapidly growing in production. it is expected to be 800 barrels a day. all of the incremental production is being moved by either truck or rail car. as you heard, some of the other gentleman speak about both of those, not only are they more costly, but there several magnitudes of order more risky. >> does the risk of the keystone pipeline route -- has that been studied? environmental impact studies? >> in august of this year, the

state department completed their close to 40-month environmental impact review. the conclusions of that stick, it was the most comprehensive study of any oil pipeline and in the history of the united states. it came to the conclusion that it would be the safest ever built and operated in the u.s. >> the route was dictated from the environmental study that was done. yes.n >> and your ability to move would be restrained from the fact the that was the safest environmental route? >> the largest challenge we had in nebraska, until the state department came out with their most recent delay, they had come to the conclusion that the preferred route with the lowest environmental impact -- if we had voluntarily moved that route, we would have created

uncertainty as to whether any road would be permitted. >> that is why it was important that the state department be part of that. what is the total investment into the keystone pipeline? >> including the operating? >> lets just do the new proposal, steel and construction costs. >> right now, we are $2 billion into this project. by the end of next year, we will be close to $3 billion. the total project cost would be approximately $7 billion. >> out of the $7 billion, how much of that would be construction-job-related? >> $4.5 billion to $5 billion. >> going toward workers' salaries? >> yes. >> have you estimated how many

man hours your union would dedicate to this pipeline? >> rough estimates were well over 3 million man-hours compared to similar projects. >> i will interrupt because i only have 37 seconds left. do you have an estimate of how many man hours your union would supply totally. >> over 3 million. >> you mentioned that earlier. >> approximately 2.5 million to 3 million man hours. >> mr. burton? >> we are probably on the low side. i tally that the numbers i talked about and we are about 64,000, probably the lowest trade. >> i want to say that i support

the research and development. i hope you were very successful in your operations. i actually have a bill -- two -- to allow biofuels under current laws. grants can only go to gas and oil pipelines. how do you feel about pipelines ferraro made from lg? >> -- about pipelines for oil made from algae? >> -- >> thank you, mr. chairman.

thank you to all the panelists who are here today. i want to encourage my l -- my colleagues on the other side of the child to organize a bipartisan hearing related to jobs for the fastest growing energy sector -- side of the aisle to organize a bipartisan hearing related to jobs for the fastest growing energy sector, green jobs. it is most often not accompanied by the harmful impact to the health in our community, environmental impacts to the water that we drink and rely upon. i think americans are crying out for jobs tied to this growing clean energy sector. in fact, the international energy agency recently reported and confirmed what we are all

feeling and what we know that the fastest-growing sector is in clean energy. energy sector isse providing one fifth of electricity global. this is where commercial policy making should be placed in now. think about the divergent views here on the impacts to this community. when you talk about clean energy as something that brings them both together, it creates jobs in communities that needs those jobs, provides a great arm for utility companies and others, but its safeguards community health. one of the reasons it is important for the keystone pipeline to continue to undergo review is that there are a lot of unanswered questions and there are a lot of serious

concerns. carbon pollution, clean water impacts, and safety concerns. right now, we know that it stranding tar sands and upgrading them to synthetic crude oil has three times greater greenhouse emissions and carbon emissions. can we do something about that? do we need to put all of our emphasis on an energy source that will aggravate the carbon pollution problem in our country and on the globe? water quality, folks are very concerned about the quality of the clean water that they rely on. and the safety concerns are really raising a lot of red flags, mainly because of the risk that have been covered just over the past year. in michigan, 800,000 gallons spilled outside chicago.

250,000 gallons spilled, 1.3 million gallons spilled in alberta. the spill in north dakota was the 11th and most significant spill. so you can see the concern that i think requires the administration to continue an all-out review of the impact. on safety, one of the concerns is transporting it through the middle of the united states. many are concerned that the substance is more corrosive than conventional oil and may pose a greater threat to the pipeline deterioration. when the head of the federal pipeline agency testified, --

the question is whether the tar sands oil is tougher to clean after a blowout. there was a blood at the kalamazoo river in michigan. i believe that the heavy oil rivero the bottom thof the and was more difficult to clean up. you reviewed a lot of these concerns and you raise the issues of safety. can you discuss the safety concerns you have heard throughout the communities in nebraska about the tar sands oil and how those concerns relate to the proposed route. >> yes. i was born in florida. i appreciate you being on this committee and asking that question. our land centers, ranchers, and farmers are concerned about a spill.

the organic certification will go way as soon as there is a tar sand spill on their land. i have personally met families who have been affected by the kalamazoo and tar sands spill. they're not just dealing with minor headaches and bloody noses. people are having seizures and are severely injured. 150 families had to be displaced from their homes because of that oil spill. these are valid concerns. if the tar sands industry in transcanada is confident with product, they will not deny the studies we have to do here in the united states. there are two assumptions. one that tar sands are safe and no. 2 that the oil will be used for the united states consumption. they are not backed up by fact.

that is what we are asking for. landowners, ranchers, moms, we're all asking for that. >> the gentlelady's time is one minute over. mr. burgess for five minutes. >> thank you, mr. chairman. i will not do justice to your name. i apologize if you have answered this question before and i missed it. what is the capacity of the pipeline in question to deliver oil, capacity in barrels per day? >> is around 830,000 barrels per day. >> that is a fairly substantial amount. how does that compare to other delivery systems, other pipelines? >> it is not different from other large-scale oil pipelines in the u.s.. there are lots of pipelines in that range. >> for comparison, what does the

oscar -- does the alaska pipeline order? >> the alaska pipeline is 32 inches and it is significantly over 1 million barrels per day. >> so it is a significant contribution to america's energy needs. >> absolutely. >> i am interested in what can lalgae as of using l petroleum stock. >> we have a place in calhoun, ga.. we are about to open a plant in the augusta, ga. we have plans for michigan, california, and in your home state of texas.

>> give us an idea of how scalable this production is. how many barrels a day can be delivered in one of your plants that is up and running and mature? >> it is scalable based on demand. how our process, without giving away our trade secret, it is an amount that we can increase based on demand. and we have an extraction process where we can extract the oil and deliver as a biofuel, feedstock, for the industry where the omega 3's are available in the product. >> so one of these plans can deliver 100,000 girls per day? >> absolutely. >> where does it go from there? >> normally, you can build the plants on side. where you build a bomb of use plan, you can build an algea

plant. you definitely have to do the studies to make sure that there will not be any adverse impact on communities and on people and in the environment in the transfer of the product. >> is your company a publicly traded company? >> note, not yet. >> so the ability forced to city financial's -- is that possible? >> not as of yet. soon. >> where does your primary financing come from? >> not from the government. it is private financing. >> it is interesting to hear the comment about having hearings on clean energy. we're having a lot of investigations on solar energy. but it is not good news from the solar energy folks. i'm glad that you're doing this

on your own. you have venture capitalists doing this on your own -- on their own who believe in the viability of this product. that is the american story. that is the american way. i'm glad to see that happening. you talked about transporting fuels overland. if you do not have a pipeline, you put it on a truck. there is an inherent risk to overland transport in trucks. >> that is right. the review finds that fatalities or 87 times more like the with a tanker truck as opposed to pipeline. it was also 37 times more likely to cause a fire and/or an explosion than a pipeline. >> my congressional district is

in north texas, at interstate 35 e and 35w. a tanker truck hit a concrete wall and there was a fire and a significant loss of life. it was impressive that there were so many people who work in mobile once they got into that mess. they could not give out. it was extremely disruptive for a number of days. this went on for a long time. so i can see an upside to getting this off our freeways. that is a reasonable approach. i'm glad you came to share that with us today. thank you, mr. chairman. >> the gentleman's time has expired. now we have another gentleman from texas, mr. green. >> i have been number of questions.

the first woman on to ask, i know there is a project labor agreement on the pipeline could does it cover the whole part of the pipeline where it ends in the district i represent and in throughout oklahoma and canada? >> it covers about 90% of the work. there is seven in there that is not part of the labor agreement. we're trying to get that in with transcanada. >> i met with folks from canada and i hope that will be met with. i would sure like my folks to be covered by it. >> absolutely. if we sell it on one end of the pipeline, we need to sell it all the way through. >> i agree. , i appreciate your presence here.

i used to have steel plants, but now they're all refinery workers and chemical plant workers. i know you are on board with the federal wildlife -- with the national wildlife federation. i know some companies in houston are doing some investment analogies in louisiana and other locations. that may be something we can do many years from now. but we have heard testimony today from a number of folks about the safety issue. bernau, like north dakota, they have to trot out all of the crude oil they produced their because there is no pipeline. has the national wildlife federation or the apollo lines done a study about cars on rail or trucking. we understand it is 97 times more likely to have an accident

if you cut it out. i don't know what it is for rail lines. is it so much safer to be in a pipeline than on a road in a truck or on a rail in a train. >> during my time as leaders of these organizations, our primary focus was to consider other alternative energy solutions that a tank truck or a pipeline was not an issue. when you talk about extracting oil from algae, when you talk about growing by a few products, when you talk about electric cars and energy-efficient vehicles, you do not face the possibility of environmental impacts of -- >> i agree, but i'll have five minutes. i was very hopeful with the gm and chevy volt.

but we have problems with that now. i have to would meant that i am prejudiced because i have lots of refineries and chemical plants and we produce that in our district. we also have it downstream. but you do not disagree with the testimony that sending it by truck or rail is much more dangerous than a pipeline. >> i do agree with that. there are challenges. >> i only have a minute and a half now. i do not know if we will get a second round because we keep losing members. my friends in louisiana are used to you. i was disappointed by the decision of the administration, specifically since i represent those refineries. it may be speculative, but i

know there are contracts signed on 2014 deliveries. if we delay it like the president says it 2013, i do not know how you can deliver the contracts in 2014. >> those refineries that are in your district, the reason we signed the contracts is that their traditional sources of heavy crude in venice was the reducing of production. contracts are expiring in 2014. that is the primary reason we signed up with transcanada. we have spoken with all of our shippers. it is fair to say they were deeply disappointed by the decision to delay. >> so you cannot make those contracts for 2014. >> we are working with them in order to have them stay with us. what mr. chairman, i am out of time.

-- i know i am out of time. one contract with venezuela ran out months ago and they are buying it on the open market. down the resisted the river down to corpus to stay -- to corpus christi, texas is where we refine it. >> i am probably one of the few members of this subcommittee that is really in-depth i am hoping to the testimony. on the one hand, i am concerned about the environmental impact. i think mr. waxman made an excellent point. i, for one, opposed the deal in

alaska because i thought it was the wrong thing to do from an environmental point of view. but we can keep saying no to everything. gasoline is $4 per gallon. we are beholden to hugo chavis. i think we need to have a little bit of a balance. i was disappointed in the administration pushing back of this deadline. i think it is time to make a move one way or the other. we all know what the issues are and we can make a decision. i just think delaying it does not benefit anybody. i am for renewals. i think it is important to have clean energy and sustainable energy. but i frankly do not think we can move from step one to step 10 overnight. i do not think it is a matter of moving to sustainable energy, clean energy, and turning off

hydrocarbons at the same time. there has to be a transition. it is one of the reasons i have fought for legislation to have a renewable fuel standard for all cars made in america. i think we should have them built so they can run on ethanol, methanol, and gasoline as is the case in brazil. that is durable with $100 less per car cost to manufacture these cars. i do not think it is a black- and-white situation. that is why i am open-minded to this. my concerns are environmental. i understand the unions want more jobs and i am pro-union and i support their wanting jobs. but i think we need to make sure that the environmental willt is something that not be negative.

would anyone on the panel -- in her testimony, she said we ought to put in the legislation in the oil will be guaranteed to be used in the u.s.. is there anyone on the panel who can tell me why that cannot be done? >> i would be happy to take a shot at that. right off the bat, you have to recognize that the u.s. produces about five million barrels of oil per day. the u.s. is by far the largest consumer of refined products on the planet. it is natural but the vast majority of this product will stay in the region with the highest demand. . would make one point the u.s. has a preponderance of

need for gasoline to move motor vehicles. anytime you take a barrel of oil, it will produce a certain portion of gasoline and a certain proportion of diesel. when you see exports of refined products coming from the u.s., it is largely moving away excess the so-called the u.s. continues to import what they need more of, which is gasoline. if you were to artificially set requirements that would prevent that, you would prevent the most reasonable allocation of that product. >> thank you. you raise some environmental issues, particularly with nebraska. you have an opportunity to review some of the things you have heard. >> the answer is no. transcanada pull this they will not make a commitment that the oil will be used by americans. so we are assuming all of the arrest, right through the heart of our country, and not getting -- we are assuming all of the

risk, right through the heart of our country, and not getting all of the rewards. i do know that refineries have contracts that are retrofitting refineries in order to export that diesel, exactly what he is talking about. this is an export pipeline. this is not about energy security. this is about transcanada heavy oil that they can put on the market. >> thank you. >> at this time, the gentleman from massachusetts is recognized for five minutes. >> you told us repeatedly that the oil coming through this pipeline would enable us to reduce our dependence on imported oil. in fact, transcanada's complications for its permit even states that the proposed pipeline will serve the national interest of the united states by

providing a secure and reliable source of canadian crude to meet the growing demand by refineries and markets in united states. and in your testimony, you pose what you said is the key question -- do americans want secure, stable oil from a friendly neighbor like canada or do they want to continue to import high-priced conflict oil from unfriendly regions like the middle east or venezuela. however, some question the assertions of the energy security benefits. gulf coast refineries will re- export diesel and other refined products have a contract with canada. in other words, if this pipeline is approved, the united states will just become a middleman for shipping products of the dirtiest crude-oil in the

world. nearly all the refineries were the keystone crude would be sent is located in a foreign trade zone in texas. they would not even have to pay u.s. taxes on those exports. so would transcanada support legislation that ensures that the product can only move forward if the diesel or other refined fuels from the pipeline are only sold in the united states so that this country realizes all of the energy security benefits your company and others have promised they will bring to back out that oil from venezuela or the middle

east for the united states of america? will you commit to not having that oil sold outside of the united states? >> as i said earlier, transcanada does not produce 1 barrel of oil. our entire business is transporting that oil. that is a question better put to our shippers who are largely refiners and producers and largely american companies. >> would you agree to put a prohibition on re-export into your contracts with these refineries to ensure that the re-export does not occur? that would make all of us feel a lot better. >> if the concern that we are talking about is energy security for the u.s., if the u.s.

government let's put that kind of vague criteria on the approval of a pipeline, i would argue that would actually reduce the energy security benefits to the u.s.. as i said, the u.s. is by far the world's largest consumer of refined products. >> we're just saying that your willingly contract in to keep the oil here. will you commit to the redundancy of having it put on paper as a condition? if you say that will happen anyway, you are agreeing that that is the way it will happen. do you agree to put on paper what you say will happen in terms of keeping the oil here? >> as i said before, in order to get enough refined products that is needed for the u.s., the refineries produce from time to time in more diesel than they use and they tend to export that

diesel to europe and the import incremental volumes of refined products -- >> would you agree that there would be no net difference, that the total amount of oil transported through the pipeline then has to have an exact corresponding amount that is imported in any other form in order to make sure that the amount stays exactly the same so that our energy security in the united states backing of the soil from the middle east is the cheapest? would you commit to that? >> once again, in many ways, i cannot do that. i am merely the shipper of the oil. >> i wanted to make it a condition of shipping. can you do that? >> i cannot do that. we have already agreed to our shipping arrangements. >> as you can see, i am very skeptical and the american people are skeptical that this

is going to be a conduit for the rest of the planet. meanwhile, all of these environmental concerns have now been overwritten. we just want a little guarantee that we do get the national security benefit from it and a corporation is not allowed, because they're not legally bound, to back out of it. i have serious reservations about this company and its commitment to meeting the national security objectives. >> thank you, gentlemen. your time has expired. there is no one left to ask questions. the pre-arranged agreement is, on a getaway day, we will not have a second round of questions. i want to thank all of you for your time and effort in coming to this hearing. you have been very helpful to this process. that means all of you. thank you.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> on news makers, gene sperling, director of the white house national economic council discusses how the obama administration wants to boost the economy and reduce the deficit. newsmakers, today at 6:00 p.m. eastern on c-span. >> television can be a teacher. if we are going to have a debate on television, in a courtroom, and you to the affirmative side of the debate, you can make a more positive point. >> a subcommittee meets about televising the supreme court. you can hear more of the issue online at c-span.org with our

special web page devoted to cameras and the court. you can also see public opinion polls and what the justices have said. >> on tuesday, another member of the joint deficit-reduction committee, pot thune, said that lowering defense spending should not have been an option during recent budget negotiations. he also said any new negotiations should include corporate and state taxes. these comments are 20 minutes. [applause] >> good afternoon, ladies and gentlemen. i am the president of the heritage foundation. on behalf of all of my colleagues and the board of trustees and the staff of the foundation, it is our great pleasure to welcome you here today. it is a particular pleasure

today for me to welcome back a dear friend, a collaborator in many important efforts over the years, both in his former service in the u.s. house of representatives, in his married roles in the private sector, as leader of the club for growth, as a private business leader back in pennsylvania, and the distinguished junior senator from pennsylvania where i must say you have some very enthusiastic constituents in terms of my son, daughter-in- law, and two granddaughters. pat, we are delighted always to welcome you to the heritage foundation. your role as a principal conservative leader in the u.s. senate is well known to everyone. your role on the super committee has been a critical one. we look forward to your comments today. thank you for being with us. [applause] >> thank you very much.

it is great to be back. as you know, i continue to be a great fan of heritage. you really do continue to play an indispensable role in helping to build intellectual infrastructure for the conservative movement and coming up with the kind of policies that we need for our country. i am grateful to you for that. the topic of the day is to reflect a little bit on the super committee experience. i look forward to your questions when we finish. i want to start off with a little bit of context. i will share with you what i said to my staff. when it was finally over and said, listen, if anything like this ever happens again, i want you to know you can immediately sign me up and then you will be fired.

[laughter] that is not what i said. but it was a tough experience. i think it is worth reflecting how we got here. let's remember this did not happen overnight. what happened that brought about the massive budget deficits and mounting debt that caused this committee to come into being was, of course, fundamentally a spending spree. that is what really has driven this. it has been a sequence of stimulus bill's and bailouts and government takeovers, a huge surge in discretionary spending. i think of it sometimes as the resurrection of john maynard keynes. can that he rest in peace? invoking his memory, this government has gone on an unprecedented spending spree in the misguided notion that somehow we can borrow and spend

our way back to prosperity. by any measure, the spending has gone through the roof. one of the measures that is -- a telling, in 2007, total spending by the federal government is 19.7%. by 2009, it was 24%. that was a fully 25% increase in the size of the federal government as a percentage of our economy in a mere two years. i think that says it all. but let me say one more thing. what we have, what we're facing is not fundamentally a tax problem. as recently as 2007, the very tax rates that we have today, generated 18.5% of gdp. with revenue at 18% of gdp in 2007, we had a deficit that was almost trivial in size.

it was 1.2% of gdp, a size that seems quaint by contemporary standards, right? that is a manageable number. and that is with the current tax rates. and the fact that taxes are not the problem that got us here is this. if you could double of the individual tax revenue that was collected last year -- not that you could without cratering the economy -- you would still run a $400 billion deficit. cbo went through the exercise of calculating where tax rates would have to be if we were going to solve the entire long- term deficit and debt problem through taxes alone. you know what they came up with? they said that the top individuals and corporate tax rates would be 88%. and all the other rates would have to increase in proportion. clearly, no economy could

possibly sustain those kinds of rates. so now we find ourselves, having gone through this spending spree, with a weak economy. it has not had the intended effect. unemployment is still persistently way too high. but of course, we now have a huge debt, about 70% of gdp and growing rapidly. but if you want to consider how unsustainable this situation is, here is a statistic that speaks volumes. if you look at just social security and the mandatory health care programs and interest on our debt, just those three things, by 2021, inside the current budget window,

they are projected to consume 90% of tax revenue, leaving absolutely nothing for all of the other mandatory spending programs, all the welfare programs, nothing whatsoever for discretionary defense spending. none of that is included in those three things. but they will consider 90% of what we can reasonably expect to collect in revenue. it is abundantly obvious to me and to alert you that we are on a completely unsustainable path. at the suit -- at the super committee, the republicans, i am pleased to the 1extent that we were united. it was not unanimous. there were some disagreements. but we wanted to fix the problem. and what was the problem? president obama was helpful in identifying the problem

correctly. the major driver of our long term liability is medicare, medicaid, and our health care spending. nothing comes close. that is from president obama in 2010. that is absolutely right. what we said that to do was redesigned what i think are fundamentally flawed architectures of these state programs, which is the reason there unsustainable, and redesign them in a way to make them work, make them sustainable, get us back on a sustainable path. the house republican budget give us a way to go forward. we never expected that the democrats would warmly embrace that. we were not shocked when they did not, but we were open to a number of any other ways to try to change this problem with the architecture of these big programs. feeling a change in the architecture, we suggested can we at least make some meaningful reforms to things like eligibility and means testing. so that we could make

meaningful curse in the long term growth trajectory of these programs. that is what we set out to try to accomplish. the democrats had a different idea. they want a $1 trillion tax increase. they wanted that in the beginning. the one that in the middle. they wanted that in the end. the gist of it was a massive tax increase with no changes whatsoever to the fundamental design of the programs that are driving the problem. i have maintained from beginning that this $1 trillion tax increase is a complete nonstarter. it does not solve the problem. it is the wrong way to go. but we are at this impasse. and we were there for a number of months. i was wrestling with this question. is there a way that we can put some kind of revenue on the table since the democrats are consistent on it that will help us break this chain.

can we do if consistent with our principles and our party of having pro-birth economic policy? and there were two facts that i thought we ought to take advantage of. one is the fact that we're currently facing the biggest tax increase in american history. we are about 13 months away from massive tax increases across the board. as much as i hope we will be able to prevent that, it is not obvious to me that we will have the political ability to prevent those from occurring. so that is reality number one. we are facing a grave threat to our economy and to taxpayers. secondly, we are currently hobbled by what we all know is an absurdly ridiculous tax code, one is that is terribly unfair, complicated to comply with, and misallocates resources. it struck me that it would be worth something to avoid the

biggest tax increase in american history and do it in a way that would generate pro-growth tax reform. that is how i developed this framework that we proposed to our democratic comrades. it had a tax component and spending component. how can we maximize economic growth? since i believe very strongly that capital formation is one of the biggest drivers of economic growth, let's make sure we preserve the things that allow capital formation. let's insist as one of the features of this proposal that the capital gains dividend rates and the state tax rates that are currently in force become permanent. secondly, let's insist that we have a revenue-neutral corporate tax reform that lowers the top rate to 25% and broad the rate in which taxes are revised.

and a huge repatriation of hundreds of billions of dollars that are overseas. there have been significant bipartisan acknowledgment that we need to do this kind of corporate tax reform. rob portman was a passionate advocate for the. many of us spend time working on the specifics of what this would look like. i thought that this was something we could end really should do with in this committee. thirdly, on individual income tax side, when i suggested is that we lower marginal rates. let's shoot for 20% across the board in all marginal income-tax rates. then offset the loss strategy by limiting the value of deductions. i think we could and should be flexible about the exact mechanics by which we achieve that. i personally feel that the mechanism that marty feldstein developed, lowering the adjustment to gross income is appealing in other ways. in any case, our proposal was to

do it in a way that does not make the tax code less progressive than it is today and onet we maintain that with ver important restriction. that we restrict the of preparation on the top two brackets. in addition to the $250 billion so generated, we propose that we have another $250 billion of revenue that would come from relatively non-controversial sources, like user fees, asset sales, the feedback that comes from higher compliance with a simpler tax code. the total revenue in our proposal is $5 billion. -- $500 billion. and then we could have $750 billion in spending reduction. we have given up on the idea that we would grant medicaid for

or a doctor a model for medicare. we suggested that these spending reductions comprise what had already been vetted by both sides. the combination is 1.2 -- $1.25 trillion in savings. you end up with just onunder $1.50 trillion. what we offer is a very reasonable offer. we offered to generate revenue as the democrats insisted they wanted. we offered to do it through the same mechanism that every bipartisan group has suggested, which is tax reform that broadens the base and lowest rates. we suggested that we do it in a fashion that will make the tax

code even more progressive, which is something that the other side insisted that they have. we offered a combination in which the spending reduction to revenue ratio is more favorable to the democrats than any of the bipartisan commission's had suggested. and we offered a plan that would allow us to modestly exceed the goal that was created for the committee in legislation. nevertheless, the democrats said know. they need a $1 trillion tax raise. we were not interested in doing that kind of damage to our country. in the end, why did fail? i think there were a number of reasons. over time, additional reasons may occur to me. [laughter] but at the moment, one of the fundamental reasons i think is that there wasn't a symmetry of incentives. i can tell you that the republicans had a very powerful

incentive to reach an agreement. six of us wanted to very badly. it grows from the sense that we'll have that the urgency of this crisis -- i really do not think that we have a great deal of time to hope that the markets will continue to lend money to a government that is pursuing an unsustainable fiscal policy. i can tell you that republican conference meetings -- i have been president for almost a year -- every single time we meet, this topic comes up. how will we change the fiscal path we're on? there is a very strong sense of urgency on the part of republicans, members of this committee, and beyond. there is also, let's face it, a very serious concern that the alternative to the super committee's success, the sequestration of funds, hit the defense budget way too hard and there are a lot of republicans were very concerned about that. that created another incentive for us to try to find an agreement. on the other side, i think there

were forces pulling the democrats away from this agreement. let's face it. we have a presidential campaign that is now promised on the idea that the president is running against the do nothing congress. never mind that half of the congress is controlled by democrats. that is the fundamental message of his campaign. and if the select committee had come to a great bipartisan agreement that could pass both houses and signed into law, it would rather model the message that the president is trying to run on. let's face it. many of the democrats have long hopes to dramatically cut the defense budget. that is exactly what happened with the sequestration. so there's a section of the caucus that finds the alternative to success perfectly except oil. finally, i think we have all seen the mood in the country on the part of the far left that productive people need to be punished for the big tax increase. so that voice was present within

the democratic procescaucus as . i think they found it impossible to break from the left wing of their own caucus. going forward, i think it is clear what we need to do. we need to focus on mechanizing -- on maximizing economic growth. i guess i will have to -- >> 4 minutes. >> a lot of time for questions. i think the big questions here about the size of government and the role of government, these are questions that are divided us at some level. they will await another election cycle for further clarity and guidance from the voters. in the meantime, there are some things we need to do. number one, we absolutely need to stick to the $1.20 trillion

in spending cuts that are scheduled. i think it is important that they be reconfigured and not land disproportionately on our defense budget as they're currently scheduled. and we need to make sure that they happen. second thing, we need to accept that, while maybe we cannot persuade our democratic friends to reform the tax code, list to the pieces we can do. this move to a territorial system of the can. let's close some of the egregious loopholes like the ethanol features that we voted successfully on in the senate. on the spending side, likewise, if we could not agree to a grand bargain, let's take the individual items for which there ought to be broad, bipartisan consensus, reducing corporate welfare, agricultural subsidies and asking federal employees to contribute more for their retirement benefits. these are things both sides ought to be able to agree on. if there is a silver lining to the failure of the committee, perhaps it is we discovered or

for some of us, rediscovered there are a great deal of places where we can have very substantial savings for taxpayers. by all means, let's do what we can. thank you very much. [applause] >> let's continue this in the future. we are all governed by somebody else's schedule. thank you very much to being with us and look forward to welcoming you back to continue this dialogue in the very near future. ladies and gentleman, we stand adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> he did not have a lot of romantic ideas about spying. he sought for what it was. dirty business. >> in "the man nobody knew"

documentary film producer carl colby examines his father, a cia spy master, william colby. >> he changed his mind after he was thrown out of the agency. if you watch the film closely and study him, he is a soldier. he took on this -- he took on the toughest, dirtiest assignments given to him from eisenhower art. but when it came time for the president, ford in this case, to ask him to lie and mislead congress, he could not do it. >> carl colby, his father, william colby, tonight at 8:00. >> this week on "prime minister's questions, david cameron discusses the attack on the industry in iran. that's tonight at 9:00 on c- span. >> tomorrow on "washington

journal" the president for the committee of the -- committee of responsible federal government looks at where to go from here. perry anderson talks about the condition of state budgets run the country. walton francis, author of "the check but guide for health care plans for federal employes" discusses operating federal benefit programs. that's light at 7:00 a.m. eastern on c-span. >> next, from the house floor, the majority and minority leaders discuss the upcoming house schedule. mr. speaker, and i yield back. the speaker pro tempore: the gentleman's time has expired. for what reason does the gentleman from maryland rise? mr. hoyer: mr. speaker, i ask unanimous consent to speak out of order for one minute for the purpose of inquiring of the majority leader the schedule for the week to come. the speaker pro tempore: without objection. mr. hoyer: and i yield t my friend, mr. cantor. mr. cantor: i thank the sdratic

whip for yielding. on monday the house will meet at noon to 2:00. no votes. on tuesday and wednesday, 10:00 for morning hour and noon for legislative. on thursday the house will neat at 9:00 for lenl business. we currently expect last votes no later than 3:00 p.m. thursday but members are adviced to keep their plans flexible as we look to adjourning for the first session. members were informed yesterday that we now expect to be in session and voting the week of december 12. the exact voting schedule is not yet known and will depend on the progress of our legislative business. next week, the house wll consider number of bills under suspension of the bills monday and tuesday. for the remainder of the week, the house will consider two bills which were part of the house republicans jobs agenda, h.r. 10, the raines act, sponsored by representative

geoff davis of kentucky, and h.r. 1633, the farm dust regulation prevention act sponsored by christie noem and mr. hurt. we may consider legislation related to expiring existing law. mr. speaker, i thank the gentleman for his time and i yield back. mr. hoyer: i thank the gentleman for his information. if i could clarify, and i understand we are coming up to the end of the year. there is a lot of business which needs to be done in the time we make and so i understand his urging to be flexible. my members have asked me, i'm sure your members have as well, friday the 9th is scheduled on the calendar to be a nonwork day. as a matter of fact, the 8th was the target date. neither side very seldom -- very rarely meets its target.

but can you in your flexibility , clearly we told our members the week, the following week, the week of the 12th, that undoubtedly we're going to be here. but can you give them some sort of confidence level with respect to the 9th or is that not yet possible? i yield. mr. cantor: mr. speaker, as i said earlier, it is our intention to finish legislative business for the week of next thursday at 3:00 p., and, again, to remain flexible while we monitor the progress of all the discussions going on with the gentleman's side of the aisle, both in this chamber and the one across the way. mr. hoyer: reclaiming my time. thank you for that. possibility here, thursday at 3:00, clearly i don't believe we will finish the business we need to finish before we leave. therefore, my presumption is we will be back in the following week.

therefore, friday would not be the last day and therefore we do whatever we have to do on monday, tuesday, wednesday, thursday. we should plan on a five-day week at least for the following week? i yield. mr. cantor: thank you, mr. speaker. i say to the gentleman, the request is for members to leave their schedules flexible as i indicated we do expect to be in session the week of december 12 and the exact voting schedule is unknown at the time and depend up the discussions surrounding the issues that we need to address prior to the christmas holiday. i yield back. mr. hoyer: further, on the schedule just so our members have pretty clear information, the week of the 19th which is the following week, can you give me some thought on what you are advising your membs with respecto the week of the

19th? i yield to my friend. mr. cantor:thank you, mr. speaker. i'd say to the gentleman, i join with the speaker in saying we want to be out of mere by the 16th -- here by the 16th and it will all depend on whether we will get the work done. so it is not our desire to be here the week running up to christmas. and i'd say to the gentleman, it is my hope we can finish our business by the end of the week of the 12th. i yied back. mr. hoyer: i want to tell my friend there is overwhelming bipartisan unanimity on the gentleman's hope, but for purposes of my members, i would say i hope our members would take the flexibily beyond the week ending on the 16th and make sure at least on the 19th and 20th and 21st they're flexible as well. i don't think none of us want to be meeting that week but we have a lot of work to do as the

gentleman knows. the gentleman said we may go to conference next week on the milcon bill that was passed by the house and senate. it's the only bill i think is in that status. i do anticipate other bills being added in that conference and of course we know that there are nine appropriation bills which still remain unpassed, a number of whic have not passed the senate and some of which have not passed the house itself. can the gentleman clarify the situation that may result or may be effective as it relates to such a conference. i yield my friend the time mr. cantor: if the gentleman is asking about the shape or form of an appropriations package and what it is we'll be voting on, as the gentleman knows, the committee on both sides of the aisle is engaging in discussions to try and finish up our work and look forward to

that happening, agn, within the time frame that both of us would like to see happen. i yield back. mr. hoyer: that doesn't arify very much but i understand the gentleman's problem with respect to what's being done. let me ask the gentleman, if we can't get agreement, is the gentleman, in light of his focus on the 16th as the date of adjournment, is the gentleman saying we might consider a c.r. for some period of time, either a -- either the bance of the year, continuing resolution, or a continuing resolution for some of the time? i yield to my friend. mr. cantor: thank you, mr. speaker. our hope is, again, to be able to avoid that so that we can have a full appropriations package to dictate the priorities that we can agree upon for spending the rest of the year. again, as the gentleman knows, we are operating within the

context of the budget control act, thegreement that was put into law at the end of the debt ceiling discussions and begin -- at the beginning of august of this year. as you know, as the gentleman knows, the amount of spend regular duckses is not enough for many of us on our side of theisle and perhaps may not be enough or too much on his side of the aisle but we are operating under the deal that was agreed upon and the hope is to try to finalize all bills and we are working toward that end at this point. i thank the gentleman for the question. mr. hoyer: i thank the gentleman for that information. i am pleased to hear that he is going to be sticking with the level of funding that we agreed upon. i think the gentleman's observation is correct. there are many people on my side who believe that is lower than necessary to meet the responsibilities they would like to see met and on your

side, it's too much in terms of the fiscal situation that confronts us. but i'm pleased to hear th we're going to be consistent with the 1.043 discretionary number set forth in the bget control act. also, i -- my friend knowthat in the budget control act, we also provided for some head room for emergency spending as a result of disasters. the gentleman willnows -- well knows our region and the northeast was hit very hard by a hurricane, we' had an earthquake, we have had tornse and other natural disasters -- tornadoes and other natural disasters. that give $11 billion of head room. will we continue to honor that part of the agreement as well? i yield to my friend. mr. cantor: thank you, mr. speaker. as i said earlier to the gentleman, our -- our intention

is to operate and abide by the terms of the budget control act. i yield back. mr. hoyer: i thank the gentleman for that. i was profoundly disappointed that the so-called super committee orhe special committee on deficit reduction either was unable to reach an agreement on a $4 trillion, at least, agreement to reduce our deficit, or as i had urged individually, to extend its life for a period of time, 60 to 90 days, which would have allowed us further opportunity to reach such a deal. i think that is absolutely essential for our country. i thin it would be an extraordinarily plus for our economy if we were to reach such an agreement. i think it would raise the confidence of the american people and raise the confidence

of the international community. and not inconsequentially, the rating agencies as well. we didn't reach an agreement. we didn't extend the life of that commission. i would like to see us set up another process to give us accelerated consideration of such an agreement. having said that, we now have built to the budget control act disciplinary consequence of that failure and that was the sequester. $1.2 trillion across the board cut divided equally between defense and nondefense discretionary spending. the speaker has said that we are morally bound to accept the defens cuts if the super committee failed. that's a quote. i wonder if you support the speaker in that commment? mr. cantor: i thank the speaker. i say to the gentleman, i don't know the quote from which the

gentleman pulls the speaker's statement. i know i share with the speaker a commitment toward fiscal discipline ad that there will be the requisite cuts to go along th the increase in the debt ceiling that will occur by law at the end of this year. and it is my hope that we can act in a bipartisan way to find a way to implement cuts that can replace the across the board cuts that will do what i believe is irreparable damage to the defense department and our ability to defend this country. if i could, mr. speaker, i quote from secretary panetta, who said, as recently as monday, if congress fails to act over the next year, the department of defense will face devastating automatic across the board cuts that will tear a seam in the nation's defense. he went on to say the half trillion in adecisional cuts demanded by sequester would

lead to a hollow force incapable of sustaining the mission to which it is assigned. furthermore, the pentagon' ability to provide benefits and support u.s. troops an their familiesal would be jeopardized. he ended his statement by saying that our troop december serve better and our nation demands better. i say to the gentleman that it is my hope that we can work in a bipartisan fashion to try to do that which eluded the super committee and the other efforts along the way this year to try and come up with the requisite cuts. again, i hope that we could do so and to make sure that the cuts are there, not to avoid the cuts, but to make se the cuts are there, but not allow them to eviscerate our ability to defend this country. i yield back. mr. hoyer: i thank the gentleman for his comments and i appreciate mr. panetta's

quote and i believe mr. panetta's quote is an accurate quote and i believe substantively correct. let me give the gentleman another quote from the former chairman of the joint chiefs of staff, admiral michael mullen. i know the gentleman knows admiral mullen, who served so ably as the chairman of the joint iefs of staff and he said, quote, the most significant threat to our national security is our debt. period, close quote. and he went on to say, and the reason i say that is because the ability of our country to resource our military and have a pretty good feeling and understanding about what our national security requirements are is going to be directly proportional over time, not next year or year after, but over time, to help our economy. so i would agree with the gentleman that we need to reach a bipartisan agreement. i would hope the gentleman would share my view that we need to reach a bipartisan agreement on a big deal, a

little deal, as the speaker and i have discussed, willimply push off until next year a decision and the year after, just doing it incrementally. that will not give confidence to the marks, it will not give confidence to the business community, it will not help o economy either domestically or internationally. so my concern, i tell my friend, is if we now walk away from the sequester as we have walked away from too many agreements in the past, if we walk away from the sequester, we will again remove the discipline, remove the incentive, remove the imperative, as the gentleman points out, remove the imperative for coming to a bipartisan agreement which as bowles simpson, the fwang of six, as the 100, the 40 republicans and 60 democrats, as the 46 equally divided between republican and

democrats have said, we need to reach a balanced deal. a deal which will restrain and cut spending a deal that will deal with entitlements, sustainability over time and a deal that will provide a revenue stream that will allow us to fund what we believe to be absolutely essential, of which as the gentleman points out, and he and i agree national security is up with. i would hope we would not walk away from that disciplinary incentive to in fact have republicans and democrats come to an agreement. i'glad to yield to my friend. mr. cantor: mr. speaker, no one is talking about walking away from fiscal discipline. i share in the gentleman's desire to try to address the real problem here, which is washington spending. as the gentleman knows, the republican majority in the house is -- has the only plan on the table that actually is a big deal that fixes the

problem. and unfortunately, there's just not an agreement on those very bilge issue -- big issues. as i said and indicated earlier, there have been at least three attempt this is year to chase the so-called big deal and the problem is, there's no agreement. there's no agreement on doing what's necessary to fixhe real problem. so if we have been there and the president himself hs said that there mabe some issues that have to be dispose of or resolved in next year's election. but it doesn't mean we can't make some incremal progress. disagree with the gentleman, mr. speaker that somehow if we make some progress, that that somehow takes away from our ability to solve big problems. we've already demonstrated around here, the bars pretty low when it comes to fixing big problems. that's unfortunate. but it doesn't mean we can't work incrementally togeer. i'm with the gentleman, i know that the response from the markets and otherwise are not

going to be positive if we don't fix the problem through a so-called big deal. but the point of contention is one, the unwillingness to fix the real problem, because as we -- it's we in the majority that have put forward the only fix long-term, as c.b.o. would say, and the other point of contention is we don't believe that now is the time to raise tas on small business men and women. it's not the millionaires and billionaires, that's not the point. we don believe that when you want to grow the economy, when you want to create jobs that we should be putting a higher burden on the small business people in this country, to create the jobs we want. so if we know that there's that divide, we've already seen it play out for eight or nine months, let's try to work incrementally together in a bipartisan way, the way most people do that have differences, come together where you can, set aside the differences. i yield back.

mr. hoyer: i thank the gentleman for his comments. i believe that both sides have shown flexibility in some respects. certainly, a number of republicans and democrs showed flexibility on the bowles-simpson commission. none of the house members on the republican sideshows that flexibility for reasons that i've heard them articulate, i understand they had reasons but unfortunately we didn't get to the 4 votes in a bipartisan -- to the 14 votes in a bipartisan way on the commission. as you know, both i -- i was not on the commission but i supported the commission's report, would have vote for the commission's report, as did mr. durban, the minority whip -- the majority whip in the senate. let me say to the gentleman, with respect to small business, nobody wants to put taxes on small business. as a matter of fact, we want to reduce taxes for small

business. we offered that on the floor in the united states senate yesterday, every democrat but one voted for that yesterd. and unfortunately, it did not pass. your side, as you know, offered an alternative, an alternative that tnt even enjoy the support of the majority of your party, so that we need to get to bipartisan support but i wish the gentleman would, when we talk about trying to ask some of the wealthiesteople in america to try to pay a little more, not a lot more, but a little more, to meet the only fwations so our country is fiscally sound, would not keep putting forth this, what i believe to be a ndmill of small business, we are for small business. this tax cut would reduce substantially taxes on small business, your party, the

majority, voted against it in the united states senate, it hasn't been brought to the floor. we would hope that we would extend the tax cut for middle class, working people, and not restore that tax and that that would affect both individuals and as the gentleman knows, small business. so that we have a tax cut that we're recommending, the president's gone all over the country and talked about, but it hasn't been brought to the floor. we think that is regrettable. we hope you would do that furthermore, frankly, the millionaires tax, the billionaires' tax, is as you know, a net taxable income level. not going to hurt small business at all, not going to hurt job creators at all, and frankly i will tell my friend we are going to follow an an jida, i don't think you could quote an economist that would tell you that your regulatory

bills that we've been spending time on, day after day, week after week, which i know sounds good to your people and we need regulatory reform, we need regulatory simplification, we need to make it in america, one of the ways we need to do so is make it profitable to make it in america, i agree with that 100%, but i don't have any economist who told me that that's going to create jobs and as a matter of fact bruce bartlett, an economist for the reagan administration and bush administration said specifically it will have little, if any, effect. do you have anconomist who said that that's going to grow jobs? i yield to my friend. mr. cantor: thank you, mr. speaker. let me respond to the gentleman about bowles-simpson. it reflects the fact it dn't fix the real problem. it didn't fix the entitlement problem we have in this country given the demographics.

if you raise taxes with the bowles-simpson plan suggested and gave you options to do, it's like thrwing good money out. i think the american people are tired of it. we had to fix the problem. and that's what we want to do. and as far as the sequester's concerned, i want to reiterate that we're not talking about and i'm not suggesting not doing all the cuts because we believe, and this is the change that we put in place here when we became majority, we believe you shouldn't be raising the credit limit of the country without turning things around and stopping the spending. so we're not talking about or not suggesting not doing all of the cuts. what i'm saying is we need to work together to findhe commensurate cuts that aren't those that disproportionately affect the defense of our country. and i think the gentleman agrees with me, a priority is the defense of our country, and

that's why if we can't see our way clear to even finding $1.2 trillion through the joint select committee process, then let's look to see how we can come together in an incremental way. but i think the american people arlooking for some progress here. but i want to tell the gentleman, again, i don't believe that raising taxes is a good thing. and, again, the gentleman continues to talk about balanced deals and that is a euphemism for saying raising taxes. but, look, if we disagree on that, if the gentleman thinks it's good to raise taxes then we have a disagreement. so let's instead focus on areas where we can actually find common ground, and the common ground should be, as the gentleman suggests, on small businesses. now, every economist there is will tell you that uncertainty that add -- that added costs

will cause an impediment to job creation. i'm sure the gentleman visited small business people in his district like i have in mine, and the kind of regulatory measures we brought forward, whether it's regulations being proposed by the e.p.a., those being proposed by the nlrb or any of the other measures, the ones that we passed on the floor today, these are measures to remove the uncertainty of added costs to our businesses, our small business men and women. today's measures and this week's measures went to the fact that we need some common sense put bck into the regulatory process. we want to make sure that agencies take into consideration their actions and the consequences that those actions have on small businesses. we want to make sure that the agencies are going to a cost benefit analysis. that's a balanced and sensible approach and, yes, i think you'll find agreement among

economists, if you got that kind of certainty you will lend it -- lend the process towards a better economy to create jobs, and i yield back. mr. hoyer: i thank the gentleman for his comment. i take from his comment, however, that he doesn't have an economist who has said that these bills are going to grow jobs. i agree with him that economists certainly believe that over the long term certainty is a good thing. we all agree on that. i hope all of us agree on that, and i'd like to accomplish that. that's one of the reasons why i'm for a big deal. but let me give you a quote from ben bernanke as it relates to your saying we want to raise taxes. nobody wants to raise taxes. i will tell my friend, i've been in office now for a long it period of time, some 40-plus years, takes zero courage, zero colonel to spend money and not pay for it. we believe we ought to pay for things. that's the difference. taxes are the money we collect to pay for things.

taxes that we collect to pay for our national security, taxes we collect to pay for researchers at n.i.h., taxes we pay for f.b.i. agents to protect us from terrorists, both domeic and foreign. those are what our taxes are. taxes are to help our kids get a college education so we can be competitive in the international community. it's paying for things that we're for, and i will tell friend i'm glad you come to the point we're going to pay for things because very frankly and the gentleman knows we're collecting revenues at a far lesser rate than your budget asked to spend, that your budget, the ryan budget, which as you well know, did not balance the budget within the next 20 years. did not balance the budget within the next 20 years and was all on the cut side and the gentleman well knows was not a viable document. i'm not sure it would have passed the senate even if the republicans had been in control

of the senate. but notwithstanding that, let me give you a quote from ben bernanke, because i agree with you and you and i talked privately and we are now talking publicly, we ought to come together, we ought to be courageous together. we ought to address this extraordinarily dangerous fiscal crisis that confronts us. ben said this, we need to push our elected leaders to face the long-term fiscal challenges with civility, honesty and a willingness to sacrifice their own re-election. this means not kicking the can any more. that's why if we abandon the sequester that will be kicking the can. if we abandon trying to get a big deal that will be kicking the can. this means, as he said, it means reacng a deal on debt, revenue and spending long before the deadline arrives this fall. well, it came and it went and we failed. it means considering all

options from entitlement programs, and the gentleman knows i've given a number of speeches on having to deal with entiement programs. we need to do that. but we also need to deal with taxes and revenues so we pay for what we buy, a we don't tell the american people, we can't buy that if you don't want to pay for it. now, very frankly, i think in the short term, given the economic -- given the economic crisis, lack of jobs and the struggling economy, raising additional revenues in that time frame has bowles-simpson and domenici and rivlin said is not good policy and would not propose them and has not been proposed, as the gentleman knows. but i will tell my friend that paying for things, and as the gentleman knows, one of the reasons we've gotten into this problem was we didn't pay for things in the last decade. we bought a lot of stuff and we didn't pay for it. we asked our chirp to pay for

it because it's -- children to pay for it because it's a delayed effect. we didn't pay for the wars. we didn't pay for the prescription drug bill, and we didn't pay for the tax cuts. simply giving up revenue, voting for tax cuts and continuing to buy things is frankly i think not only not courageous but it is a disservice to this generation and generations yet to come and i yield to my friend. mr. cantor: i thank the gentleman, and the gentleman asks what regulations that we put forward or bills removing impediments and the regulatory process. i mean, the keystone pipeline, look at that bill. that bill says we'll create 12,000 construction jobs right away if we can remove the necessary government red tape getting in the way of that project. so i don't see that there's any disagreement over that. but somehow we have, your side saying we shouldn't do that. and if the gentleman's so interested in paying for things, because i don't believe

that that's an issue now because we're not saying remove the sequester. what we're saying is finding cuts elsewhere but imposing that discipline. but if we're talking about not paying for things, what about the stimulus? my goodness. that was an $800 billion-plus effect at the end, didn't pay for anything, and ended up imposing all kinds of debt now on us and our children and theirs. so i am with the gentleman, let's be courageous. again, our budget was put out there. in the joint select committee process, our side proposed a plan to come together. and i think that the gentleman knows on his side there were comments made that there was any coalesceans on the part of the democrats as to a way to come to some solution. so i'm for the courage, but seemingly after looking at the three processees that have taken place, the biden talks,

the white house talks and those between the speaker and the president and the leader on the other side of the capitol as well as now the joint select commtee, all of those did not come to a result. so if that's the case, let's then say, well, wait a minute. maybe something's not working here. then, let's try and see what can work and what can work. we really can come together in a bipartisan way and find something to agree on. let's set aside those big differences, and the president even suggested back in the spring those big differences may get in the way. so, fine, let's find a way for us to at least make some progress because some progress is better than none. so incremental progress is better than no progress. that's for sure. i yield back. mr. hoyer: i thank the gentleman for his comment, and i agree with some progress is progress. however you describe it. let me clarify because i want

to make sure in terms of coming together and reaching some progress he mentioned the -- i'm not sure that every republican agreed to it. maybe the gentleman knows. but there was. mr. toomey put a proposal on the table which offered $300 billion in additional revenues. of course that was offset by an $8 billion increase next year in tax cuts or a net reduction of $500 billion in revenues for next year. excuse me, for january, 2013. let me ask the gentleman, in reaching that, the gentleman mentioned entitlements, i agree with him on entitlements, but the gentleman said he's not for any increased revenues. all three of the bipartisan mmissions, the two commissions and the gang of six, all three have said that

revenues must be part of that picture. that's taxes. fancy word for taxes. does the gentleman agree with that because that certainly was the basis for bipartisanship in all three of those? i'd yield. mr. cantor: again, i say to the gentleman, i think our side demonstrated. we put together plans both in the processees ending with the joint select committee and in our budget. i think we come from the perspective, mr. speaker, that let's fix the problem. if you don't fix the problem and then you want to raise taxes, especially on small business people, you are throwing good money after bad and you're aggravating the crisis that is gripping this country right here and now as well which is the jobs crisis. so, again, mr. speaker, i would say, let's agree to work towards common ground. we have laid out very well several times where differences

are, but it's time for us to really work to transcend those differences and work in a bipartisan manner and see where we can come together. we've done it. we've done it in the house, on the trade agreement, we've done it in the house on the 3% withholding bill. we've done it in the house when it comes to the veteran hiring bill. we can do this. yes, it's not everything that all of us want, and i share the gentleman's frustration. the gentleman's been here a lot longer than have, but i will tell you i think the gentleman's career has been built on progress. so let's work towards progress again. that's all. i yield back. mr. hoyer: i thank the gentleman. i didn't get an answer to my question, however. he's gotten an answer to his solve the problem issue. what he means by solving the problem is we have to deal with the sustainability of entitlement programs. . i have adopted that premise myself in speeches i have given on numerous occasions on this floor and in other floors around

the country. what i'm asking him is does he also agree tt proposition was adopted by all three of the four that we have discuss, does he also agree as mr. bernanke points out that revenues or taxes, however you want to call it, resources to pay for what we believe are priorities, for instance the gentleman correctly believes we need to invest in our national security. i feel very strongly about that. for 30 years i have voted on behalf of the national security of this nation. to pay for it and to pursue weapons systems, personnel levels, strategies to assure our national security. so that i have no qualms with saying that is a priority. if it is a priority, if it is important, it is important to pay for it. paying for it is through revenues. now, if we don't pay for it, if we borrow for -- we are going to borrow over $1 trillion to

protect our country. afghanistan, iraq, and other places around the world, but particularly those two, that's important. that's important to do. he and i agree. but i think it's important to pay for it not have my children or grandchildren pay for it who are going to have to pay for their security in their time. and if be-- we leave theonly a legacy of deep debt, they will not be able to do so. that is a immoral policy and fiscally irresponsible. we have to fix the problem. what you are talking about makes sustainable. demographics have changed. costs have changed. we have to make sustainable entitlements. does the gentleman agree that a component of the solution has to be dealing with revenues as well? mr. cantor: i thank the gentleman. we have always said, certainly. there needs to be more revenues. but we need to be focused on how we can have a sustainable growth

in revenue flow and that's from a growing economy. the gentleman asked me before whether we have economists that will endorse our republican jobs creator agenda. and, yes, the speaker as he knows has issued a letter with 132 economists, listed on that letter, and i'm going to send it to the gentleman so he can be reminded yet again, that, yes, there are plenty of economists who embrace the notion that if we tak away the entitlements that washington has put in place, that we can see a growing economy and produce more revenues. ok. now, i would say to the gentleman about his assertio about fixing the problem. he's correct. we need more revenues. we believe we need more revenues. let's first see if we can fix the problem -- first if we can fix the problem because just paying for things without raising taxes -- with raising taxes doesn't fix the problem. we know the demographics of this country. we know 10,000 people every day

turn 65 and become eligible for medicare. we know that medicare is supported by premiums and taxes paid in, and those revenues cover only a little over half the costs of the program. we know that that mes every day come 10,000, you are 50% in the hole. you cannot tax your way out of that. you can't grow your way out of that. you got to fix the problem. back to my original notion, we are the only ones that have put a real fix on the table to that problem. and so what the gentleman says is, no, no, no. we don't want to fix the problem, we want to tax people more until sometimes somewhere we come up with a solution to fix the problem. that's like throwing good money after bad and raising taxes on small businesspeople will get in the way of getting more revenues into washington because you are not going to spur the economy into a growth mode. so, again, mr. speaker, we have been over and over again for months. we know where our differences

lie. let's come together. i would say keystone pipeline, again, the gentleman has a lot of support on his side for the unions in this country. they want to see the keystone pipeline built. 12,000 new jobs right away, almost 13,000 construction jobs. we've got manufacturing jobs, spinoffs that will come from that. why can't we come together on jobs? so, again, we can do th. we really can. it's time for us to begin to work together towards productive end. let's get america back to work. get this economy growing again. and then maybe we can then tackle some of t bigger problems that have eluded us in this quest to try and accomplish it all that has failed this year. i yield back. mr. hor: i thank the gentleman for his comments. we ought to come together on jobs and i would urge the gentleman to bring the president's jobs bill to the floor with such amendments, such changes, such improvements, such

deletions as the gentleman feels necessary. the president put a jobs bill which every economist, every economist has said will grow the economy, will grow jobs, and it has been languishing in this house since september. while people areosing jobs. the good news is we had some improvement in the economy. and by the way the recovery act worked as the gentleman knows. i want to comment on his going into deficits. as a result of the recovery act. as the gentman knows and he voted for, george bush suggested $700 billion in unpaid spending to staunch the financial crisis brought on by the meltdown in wall street in september of 2008 when brush was president. he -- when president bush was president. he offered a bill. we didn't pay pore it. you and i both ved for it

because we thought it was the responsible thing to do to stabilize the financial sector of this country. ve unpopular bill but absolutely essential. so in terms of some eight months later confronted -- actually five months later, confronted with the deepest economic crisis since herber hoover, we -- herbert hoover, we acted. and the recovery act has worked. it was not as bias some asked it to be, but it created some two million jobs over the last 36 months. it has not been as robust because we lost eighmillion jobs. if you add three back, you lose eight, you haven't gotten to where you need to be. but i tell my friend that we ought to come together. we ought to reach agreement and balanced agreement. your side thinks when we talk about balance we talk about

revenues. he's right. but when we ta about balance, we are also talking about fixing the problem. we are talking about a balanced deal. and i would urge my friend in these coming few days, few days that we have left, where we are apparently going to do either a c.r. or an mnibus appropriation bill, we were criticized greatly for not doing every appropriation bill individually. you ve an appropriationill as the gentleman knows hasn't even passed the subcommittee ch less full committee or the floor of the house. but we need to get those bills done because it will give certainty and confidence to the american people that we can work together. i'm hopeful that over the next few months -- few days, excuse me, we don't have a few months, a few days that we can, in fact, do that. i would urge my friend to let us keep the discipline of the see quester in everybody's mind because -- sequester in everybody's mind because we don't want that as an

alternative but we want to have that as an alternative to people so we can give incentives to work together to summons the courage, to summon the judgment to reach an agreement which will get our country on the right track and give our citizens the confidence in their government that we wish they would have but they would only have it, if we do, ashe gentleman suggests, come together and work constructively towards a balanced package not only in terms of a fiscal package, but appropriations. let me say as well on appropriations, this side of the aisle did what your side of the aisle didn't do over the last four years when we were in charge, we made sure those bills passed. your bills at your levels that we agreed on and we congratulate you on sticking with the agreement we reached. and i will tell my friend we will do so again if you do not put in the riders that mr.

boehner and your pledge to america said ought not to be in must-pass bills. you recall i'm sure that mr. boehner said we ought not to have extraneous controversial items which are not germane in bills that must pass. we ought to consider those on their merits. i will tell my friend that if you do that as the whip as i have done on the two c.r.'s we passed or the mini bus we just passed, i will hetch you get those through. we will work together. america will have greater confidence. i'm prepared to yield back. i yield to my friend. . cantor: i thank the gentleman. i look forward to working with him over the next two weeks. i want to clarify no one's talking about removing the sequester. absolutely not. and the gentleman knows where i stand on that. i'm talking about making sure that we come together to find

the cuts commeurate with those aimed at the defense department and in lieu of those cuts putting others in place so we can maintain our priority of the >> back, we talk to reporters about the latest iowa poll results. this is from "washington gerald." >> is all about new gingrich. then it is ron paul and met ronnie slides down to third place. in a tie with michele bachmann

and herman cain -- mitt romney slides down to third place. >> when was the poll done and how many people were talked to? we talk to 401 not likely caucus goers. host: you write that gingrich's report stood at 7% in the most recent poll in october. his rapid rise is as dramatic as herman cain's fall. you said that contain lead in october with 23% support. quite a turnaround. guest: he started falling even before the newest allegations about ginger white. we started pulling the day before that and he was already down to 12% -- we started pulling the day before. his polls are really tanked. host: going with the poll, there

was a notable finding -- gingrich's ascendancy has further potential to grow. tell us more. guest: there is a lot of room in this poll for newt gingrich. the intensity is there. they liked him and pressed him on a number of different aspects. one big finding is he gets more supporters -- without herman cain in the race, he goes up three. . he is like as the most reagan- like and the person who can turn around the economy. there are a number of things they like about him. when you combine first and second choice for newt gingrich, he is actually at 43%. host: take us to the ground in iowa and the air. how do you expect the leading candidates to approach the state

in the remaining weeks of for the caucuses? guest: newt gingrich says he is picking up speed with his campaign donations so it sounds like you will have the money to compete really well here. his organization has been paper stand. he has not been organizing for the last few months which is a danger in iowa. you have to organize well and that is where ron paul is very strong. that will be a formidable opponent for newt gingrich. mitt romney also has an excellent organization here. his staff has worked hard to get him organized and it's going to be interesting race between now and the next month to see who can get those people out by january 3rd. host: we know how important organization is in iowa. how about television? how important is that? guest: newt gingrich has not been on television that much in iowa and yet he shot up 18

points. whereas ron paul has been and has a nice game. but gingrich still has a seven point lead over run ball. mitt romney just started on friday with a fiscal-related message. host: is this the last poll you will do before the caucuses? what are you going to be looking for? guest: more coming. our last poll will be who do we think is going to win the iowa caucuses? host: jennifer jacobs, thank you for the time and update this morning. >> tomorrow on "washington journal" -- the president of the committee for fun and -- for responsible government looks at where we go from here. the deputy director of the national government association talks about the condition of state budgets from the country. and the author of "the checkbook guide to health plans for

federal employees" discusses the cost of operating the federal employee health benefit program. that's "washington journal" live at 7:00 a.m. on c-span. >> it is so convenient to listen to c-span anytime, anywhere, let the free c-span radio app. you get all three networks 24/7 and can listen to our interview programs. c-span -- available wherever you are. find out more and c-span.org /radioapp. >> to senator said they were surprised to learn there are no laws against congressional members engaging in insider trading. and a hearing before the common security and government affairs committee outlined -- the two senators outlined their knowledge on the act which would

prohibit representatives, senators and their staffords' from selling stocks and bonds -- and their staffers from selling stocks and bonds with insider knowledge. >> for some reason, this is the first time in my memory i have arrived earlier than it senator collins. there she is. [laughter] >> right on cue. >> you still hold the record for punctuality. >> a recent book and story on " 60 minutes" have raised questions on whether the senators and representatives have been making money they may not have made if they were members of congress. members of congress to have been

specifically accused have denied the allegations. our purpose here this afternoon is not to determine the guilt or innocence of the individual cases. our purpose is to determine whether existing law is sufficient to prevent and punish congressional insider trading. perceptions are very important in public service. that means if the law seems to allow members of congress to take advantage of their public position for personal gain, the trust that needs to exist between the american people and our government will be further eroded than it already is. so what is the state of law governing insider-trading by members of congress? it will surprise most people to learn that there is no explicit prohibition in our laws against insider trading by anyone, including members of congress.

that is to say that term " insider-trading" is not mentioned or defined in statute. all the investigations and prosecutions of insider-trading over the years by the securities and exchange commission or department of justice have been carried out pursuant to the broad anti-fraud provisions of the securities exchange act of 1934, which makes it in section 10b unlawful to use the employee with the purchase of any security any manipulative or deceptive device or contrivance in contravention of such rules. this sounds like it was written not in 1934, but 1734. regulations as the commission may prescribe as necessary or appropriate in the public interest for the protection of investors. the specific rules making insider-trading illegal are

found in a large body of the sec regulatory activities pursuant to section 10b, the broad anti trust that you digest bread. the rules against insider trading clearly encompassed -- anti-trust statement i just read. it is based on material, nonpublic information retained and used in violation of the duty of trust. i gather some have said congress has exempted itself from these insider trading rules. but that is not true. in fact, and a statement submitted to our committee for this hearing, the director of enforcement at the securities and exchange commission makes clear that the commission has authority to prosecute such wrongful conduct, declaring "

trading buy congressional members or their status is not exempt from a federal securities laws, including the insider- trading prohibitions." this afternoon, we will hear testimony that a member of congress or congressional staffer who buys or sells stock based on inside information they obtained as a result of their job not only violates congressional ethics rules, but violates the securities laws as well. on the other hand, we will hear testimony that the law is not as clear as it needs to be. that congress should specifically prescribe congressional insider trading. i am with the second school of thought. in my opinion, whether or not there is currently clear and conclusive evidence that members of congress or staff members have benefited financially from insider information and whether or not the sec believes it can act against members of congress

for insider-trading under its existing authority, there ought to be a law that explicitly deters such unethical, illegal behavior by members of congress and punishes it when it happens. our goal today is to sort out the facts and determine precisely what the bill reforms are needed to make sure regulators and law enforcers and have the tools they need to bring to justice members of justice members of congress and our staff who defied the public trust by using insider information for personal gain. we will hear from kristin gillibrand and scott brown from massachusetts, a valued member of this committee. both of them have taken the lead in the senate to deal with this problem. that legislation has been referred to our committee, which is why we are having this

hearing today. the point that we are focused on today is narrow. it touches on much broader values and realities. it is the cornerstone around which our democratic republic was built. when that faith ebbs, we must increase our efforts to ensure that the people who gave us the honor of sending us to washington to represent them are confident that our only business is their business. i have been reading a lot about george washington lately. he said something long ago. on the first day of our new government -- it seems relevant to our hearing today. "the foundation of our national

policy will be laid in the pure principles of private morality and the pre-eminence of free government will be exemplified by all the attributes that can lead and the affections of citizens and command the respect of the world." adopting a new law that explicitly makes insider trading by members of congress illegal would strengthen the foundation of our national policy. i hope it will help to repair the bridge that resists -- that exists today between our government and our people. senator collins? >> thank you, mr. chairman. i do not have an eloquent quote to pick up where you left off today. i want to thank you for holding this hearing to examine whether

or not current laws are adequate to prevent members of congress from engaging in insider trading. i appreciate you and biting our two colleagues, senator brown and john c. gillibrand- -- inviting our two colleagues to present the bills that they have introduced. i look forward to learning more about senator gillibrand's bill today. this is an important step in our efforts to ensure that members of congress are not profiting from trading on insider information. recent press reports on "60 minutes" and elsewhere demonstrate why this committee must explore the application of

existing laws to congress and identify which actions need to be taken to close possible polls that undermine the public's confidence in this institution. in elected office is the place for public service, not private gain. as demonstrated by recent press stories, there are questions about whether lawmakers have been exempt, either legally or practically, from the reach of our laws prohibiting insider trading. the recent allegations come at a time when the public's 8 in congress is already extremely low . -- faith in congress is already extremely low. a recent poll shows that the

public has little or no faith in congress. another poll put members of congress at or near the bottom of the list when it comes to perceived honesty and ethical standards. this erosion of public trust is not confined to congress, but taints the public's entire of of our system. if the american public does not believe that the decisions we are making are in their interests rather than our interests, it will be next to impossible to tackle the truly significant problems that we face. we must address the concerns that underpin the public skepticism. we need to insure the american

people that we are putting their interests above our own. several years ago, an economist published a study that shows that the stock portfolios held by u.s. senators in the mid- 1990's outperformed the market by nearly 12% per year. he concluded from his data that senators had "a definite information no advantage over other investors." he was careful to point out that his results should not be used to in far illegal activity. in his words, -- to infer illegal activity. current law does not prohibit members of congress from

purchasing stock. a more recent study shows similar, although less dramatic, investment returns. the stocks were held by members of the house between 1985 and 2001. not all experts who have examined these data share the processor's conclusions or his legal interpretation. -- the professor's conclusions or his legal interpretation. the purpose of this hearing is to analyze the need for further clarity in the insider-trading laws. i am eager to hear the views and recommendations of the witnesses and also to explore whether this is simply a matter of insufficient enforcement under the existing fraud laws.

whatever the problem is, one thing is certain. we should not be shielding congress from laws that apply to other americans. thank you, mr. chairman. >> senator gillibrand, senator brown, you have really seized the moment. you introduced the bills that are here. we took your legislative proposals seriously. it is our intent to move to a marked up as soon as we can. we welcome you here today. it is always a difficult question. when you have two senators, who do you call logperch? senator gillibrand -- when you have two senators, who do you call on purse?

senator gillibrand has more seniority. >> thank you, mr. chairman. grateful for your leadership. ranking member collins, thank you for your leadership. i appreciate you holding this extremely important hearing and inviting me to hold -- to give my testimony this morning. it is a shining example of how important it is to shine light on an issue as important as fundamentals fairness. it can be stored america's faith in our government. i was surprised to learn that insider trading by members of congress and members of their staff is not clearly or expressly prohibited by the law or by the rules of congress. the american people need to know that their elected leaders play by the exact same rules that they play by. they also deserve the right to know that their lawmakers' only

interest is what is best for the country, not what is best for their own financial interests. they should not gain personal profits from information they have access to that middle-class american families don't. i believe this is not right. nobody should be above the rules. i introduced a bipartisan bill in the senate with 15 of my colleagues. we have offered this bill to close the loopholes. this legislation is similar to the legislation first introduced in the house. i want to thank them for their long standing commitment to this issue. i also want to recognize my colleague, senator scott brown, who requested today's hearing.

our bill, which has received the support of seven government groups, covers basic important principles. it says that members of congress, their families and staff should be barred from buying and selling securities on the basis of knowledge gained through their congressional service or from using that knowledge to tip off everyone else. the sec must be empowered to investigate these cases. such acts must also be a violation of congress' own rules. it should be clear that this is inappropriate for members of congress. congressmember's should be required to disclose profits within 90 days. individuals doing political and intelligence work, contacting members of congress or their

staff to gain information and help with investment decisions -- they should have to register as lobbyists to provide additional oversight to this industry. this is common-sense legislation the american people expect. some say this bill is on necessary and is already covered under existing statutes. i have spoken with people who strongly disagree. we must make it unambiguous that this kind of behavior is illegal. others may say the legislation is too week. let me be clear. our mission is to pass a strong bill that will make any and all insider trading clearly illegal and a violation of our congressional rules for all members of congress, their families and their staff. as we move full board, there will be technical changes to

improve the bill and to -- as we move forward, there will be technical changes to improve the bill. my home state newspaper recently noted that the act would ensure that is the people's business being and attended to. -- being attended to. thank you. i am grateful that you held the hearing today. >> thank you. senator brown requested this hearing and asked us to do it as soon as we can. >> thank you, mr. chairman and ranking member comment. until the 60 -- the "60 minutes" peace came out, i had no knowledge of this. -- piece came out, i had no

knowledge of this. it is interesting when you have to hear about things like this that happen in washington. there is clearly something wrong. you referenced id, mr. chairman. there is a breakdown of trust -- you referenced it, mr. chairman. we need to let people know we are subjected to the same laws and rules they are. we should not be passing laws and not have to adhere to them. the trust in congress is at an all-time low. that is disturbing. it is more important than ever to have members of congress affirming that we live by the same laws that we pass. we should be held to the same, and a higher standard, then the members of the general public.

we should not profit from public information. that is why i introduced the stock at the 2011. i greatly appreciate you jumping on it. it does not surprise me that you would jump on something that affects our body in such a profound way. this affects members of congress and executive branch employees from using information for the purpose of investing or making personal financial gain. is something going to happen dramatically when they go in and buy or sell his or her stock for a profit, avoiding losses when the news breaks? the congressman would walk away with a factor investment. for everyone else, that would mean -- the kindest man would walk away with -- congressman

would walk away with a fatter investment. for everyone else, that would mean jail time. there has not been one prosecution. the sec has all of this power. why haven't they used it? we must clarify and define the affirmative duty we have to the american people pertaining to be confidential, non-public information. it has left a gap of uncertainty that invites abuse, intentional and otherwise, that contributes to a breakdown of trust amongst the american people. this legislation is directed at correcting this problem. economists have identified this problem. members of congress' investments may have benefited from information not available to the

general public. members of congress are making a killing in real estate by approving the use of federal funds to projects that will enhance the value of buildings or land that they actually own. that is not right. we know we have access to information the public does not through classified briefings, closed conference reports, conversations with government officials. all of this information can give us non-public information that can have significant value. we create information and policy and we can influence things that way. when we negotiate legislates of language, that language has a real financial -- when we negotiate legislative language, that language has real consequences. we must not portray -- we must not be traded public's trust.

-- betray the public's trust. we will hear from witnesses today who say the existing laws and rules are sufficient. senator gillibrand referenced it. why are we here? why was the piece done? there have been no successful prosecutions of members or their staff. there is an excuse for enforcement officials to avoid the politically difficult task of policing congress, especially when we controlled the purse strings of many of those agencies. members and staff of congress are here to serve their interests.s' best they are good people of

goodwill. they are not here to line their pockets. using non-public information -- the legislation i have introduced is similar to the bipartisan information introduced in the house in the 109th congress. two congress members have continued their efforts in this regard. it is getting more and more support. i want to thank them for their efforts. media attention has brought a good eye to this. the american people are watching what we do. they watch more than ever, especially with all of the media opportunities out there. i am not afraid of acting in the public's interest. this legislation is critically

needed. there is a difference between our two build. it needs 51 votes. it makes it easier to get it through. we can do the senate resolution side by side. i suggest you take the best of both bills and have us join together on a clearly bipartisan, bicameral matter and get this done. the american people deserve it. we can see of politics will play a role in it or not. i look forward to getting on the committee chair and asking some questions. >> thank you for your closing comments about the process. i will note for the record that senator gillibrand was nodding her head affirmatively. there are some differences between your two bills. there are more similarities. i hope the two of you will be able to work with senator collins and me to come up with a

joint bill. we may want to separate them. we might want to have a separate resolution on the senate rules so that it will be separate from the legislature of proposal. i will set a standard that will be hard to meet. if we worked intensely, it would be great if we could bring this before a markup committee in december before we break for the holidays. we have tentatively scheduled a markup for december 14 at our december 15. let's make that a goal and see if we can put this together. thank you both very much. i will now called the second panel. melanie sloan, donna nagy -- i hope i have got that right. donald langevoort.

ms. nagy is a professor of law. professor langevoort is a professor of law at georgetown university. i am having flashbacks to those terrible days in law school. remember, i am the one who asks the questions. and finally, robert walker, former chief counsel and staff director of the senate house ethics committee. thanks to all of you for being here on relatively short notice. you bring a wealth of experience and information. ms. sloan, we will begin with you. your organization has one of the best acronyms in washington.

c.l.u.e. you have advocated legislation to deal with this insider- trading problem. please proceed. >> thank you, chairman lieberman. thank you for inviting me here today to join such a distinguished panel. no disrespect, but america does not trust you. 46% of americans believe congress is correct. stories on "60 minutes" a few weeks ago was bid because it confirmed what people already believe. -- was big because it confirms what people already believed. we have seen legislators abusing their positions to increase the guy you of their personal real estate holdings

-- to increase the value of their personal real estate holdings and trading on insider information. as others have said, at no time nin history has the public's opinion of congress been so dismal. congress has never been richer. 66% of senators and 44% of house members are millionaires. some maintain their assets in blind trusts. there is a widespread perception that members are abusing their systems -- abusing their positions to enhance their personal wealth. congress exempts itself from laws like those governing

whistleblower protection, workplace safety and insider trading that are applied to everybody else. senate confirmations have been required by the senate. the washington post found that between 2004 and 2009, 19 of the 28 senators on the armed services committee held assets with companies that did business with the government. there was an aggressive interpretation of the speech or debate clause that allowed members to go unpunished. they refused to enforce at six

lots. -- they refused to enforce ethics laws. given that there has been no prosecution of a member of congress for insider trading and only one member of the house in 1976 has ever been disciplined for any concept, it is imperative that congress passed the stop act soon. you need to demonstrate to america that you take our concerns about your at six seriously. there are cases where the speech or debate clause may prevent a prosecution, such as where a member traded on confidential information. not only should the stock at provide a role for the sec and the department of justice, but the house and senate should

amend their standing rules to make clear such conduct is prohibited and subject to disciplinary action, perhaps including a financial penalty of three times the amount of a profit obtained or a loss of voided. the 90 days permitted under the bill we have seen it is far too long. it should be cut back dramatically. significant time delays are made unnecessary. members of congress should post information about trade in an electronic searchable database. as with financial disclosure reports, the failure to disclose such information should be punishable under the false statements act. americans are becoming increasingly frustrated with a congress bedewed -- viewed as part of the 1% instead of the

99%. passing the stock act is a step in changing that image. >> chairman leader man, ranking member collins, and members of the committee -- chairman lieberman, ranking member collins, and members of the committee, i have co-authored a treaties on insider trading and i have written many articles on this precise topic. the articles sought to debunk the myth that congress was immune from the existing law that prohibits insider trading. congress has not sought exact -- to exempt itself.

if the sec or d.o.j. successfully proves the facts alleged, i ate knowledge that many distinguished securities law scholars see shades of gray. some believe the court would rule the other way. -- i acknowledge that many distinguished securities law scholars see shades of gray. congress has never enacted a securities statute that strictly prohibited anyone from insider trading. a stock act would only address one manifestation of this much larger malady. the 0 cents of insider trading has -- the offence of insider-

trading has the and apply a-- as a criminal violation and the federal mail and wire fraud statutes. insider trading is illegal only insofar as it can be deemed an act of fraud. because the term for fraud is not defined, determining insider trading has defaulted to the federal courts. in hundreds of cases, courts have imposed liability where the traders were not insiders on the issue of whether stocks were traded. there are outsiders trader cases involving family members who

traded on information entrusted to them by spouses or relatives. other insider cases would include federal and state officials who trade on information involving federal service. one man pled guilty last month and awaits a prison sentence. the liability it linchpin is the securities trader who has breached a fiduciary life duty of trust and confidence by secretly profiting from the use of material, non-public information that rightfully belongs to someone else. the constitution refers repeatedly to public office is being of trust. members also take an oath of office to faithfully discharge their duties. there should be little doubt that members' use of congressional knowledge

constitutes the misappropriation that would be fraud -- defraud the united states and others. the court would have to view non-public information as a part of public office or the member to do with what he or she wishes. this would be against the idea of democracy. a member of congress has not been prosecuted for insider trading based on non-public knowledge. congressional officials have been prosecuted for the defrauding the united states on public property. this constitutes an intangible property. in some congressional insider

trading, it violates the mail and wire statute. my final point relates to one final -- possible consequence of the stock at. i endorse the idea behind the legislation. the stock act could be viewed as the only insider trading law that applies to congress. there are a host of possible insider trading scenarios that will not fall within existing law. thank you very much for giving me this opportunity to share my thoughts. >> thank you. that was helpful. we will come back with some questions. professor langevoort, professor of law at georgetown university. >> thank you.

my testimony today strongly supports the legislative effort to proscribe legislative -- insider trading by members of congress and their staffs. . there is no current exemption from the main thrust of u.s. insider-trading law for either members or staff. many forms of trading are adequately proscribed under existing law. as professor nagy just told you, it is possible that current insider-trading law prescribes all insider trading. i hope they will. there is sufficient doubt, especially in light of how courts have been reading section 10-b. . it requires the showing that the trader was in a fiduciary

relationship with the honor of the information and stole information entrusted to them. this death of someone else's secret does not fit neatly. -- theft of someone else's secret does not fit neatly. congress should act to eliminate any doubts and say that all trading and tipping applies to members and staff. an insider-trading case against the member or a powerful staff person will always be a matter of great political sensitivity likely to be brought only if the case is strong. the pressure to bring such cases will be great when such suspicions are rise -- arise.

this is hardly an encouragement to those matters that deserve to be courageous the investigated and pursuit. it would be extremely unfortunate for the fcc -- the as you see and prosecutors bring a case and have a staff member-- -- sec raise a case and have a staff member -- the legislative language must be carefully crafted to insure that the legislation does not create the problem is 6 to adjust. -- it seeks to adjust. i am more then happy to work with the committee and its staff

to resolve this problem. thank you. >> thank you, professor. let me immediately take your offer of assistance. most of us on the committee have a purpose. this is a field of law with a lot of precedent and a lot of complications. in trying to fix this problem, we do not want to create other problems or other appearances. i look forward to the question and answer period. >> thank you, mr. chairman. i am delightful to be here because i agree with my predecessor, professor langevoort. i will edit out much of what i was going to say in support of

what he said. i believe congress should act, but narrowly. i want to underline the word " narrowly." there are enough ambiguities that you need legislative action. senator brown asked earlier, why hasn't there been enforcement? many would not indict if there is any uncertainty in the law. you do not indict in a case where the law is 50-50. that is point one. the proposed legislation has language that does not quite work. i will say this respectfully. one of the key concepts in both of the proposed bills is that the information you received has to relate to pending oregon

proposed legislation before there is liability. that is not the most common case we are likely to see. i can imagine a department of defense official calling a congressman and saying that bill you have been pushing us to pass to give that it is contracts in your district will be announced tomorrow for $5 billion. there is no legislation there. there is nothing under the existing language that would make that criminal. congress spends much of this time -- is time doing oversight. -- its time doing oversight. the most likely trading you are likely to see would be in options or futures or stock index products. they are issued by finance to dealers in the market. they are not particular companies. if there is a difference between

the t-bills with regard to yourself receiving information, tipping is covered. there are several places where you need to talk a little bit about directly or indirectly. there could be a distance between the congressman and the tippee. these are small points and i will not go into them. doing less is more. rather than attempting to write a detailed code that would codify terms that have to additional meetings of material and non-public, it might be better to write a simple, one sentence statute. it could set, a member of congress is a fiduciary with respect to all material, non- public information that such person acquires in the performance of such a person's duty or as a member of congress. that does it and does not

require you to define terms like material and 9-public. you would say the courts should use the existing meaning of these terms. if you attempt to do more, ambitious as it is, and have a universal, legislative statutes, congress has tried that before and it has proven to be a disaster. 30 years ago and congress to change the penalties. -- congress changed the penalties. if you put in new terms, there will be conflicts in the circuit and no one needs that confusion. every special interest group in the united states will need a safe harbor for what they do. this statute will go from soared to page after page of safe

harbors. -- short to page after page of safe harbors. members of congress will face some ilthe quiddity of such a statute is adopted. -- illiquity if such a statute is adopted. congress cannot adopt a 10-1-5b trading platform. you can adjust if stock prices fall. you could instructed the sec. you can rely on the advice of counsel. if you have an opinion that says

you are not engaged in insider information, no enforcement will be mounted against you. >> we are not accustomed to drafting legislation as brief as you suggest. it is a constructive recommendations. robert walker comes to us with the helpful experience of having been chief counsel and staff director in the senate and house ethics committees. thank you for being with us. >> thank you, members of the committee. thank you for the opportunity to address the issue of insider trading and congressional accountability. i am not here to advocate against our before -- or for the stock act.

acts do insider trading a applied to congress. the law is more than 50-50 on that. there are substantial proof problems in making an insider- trading case in a congressional context. prove that the information traded upon was truly non- public. it would be an obstacle given the continual swirl of information around the capital. at least some insider-trading cases in a congressional context -- the debate clause of the constitution, certain actions and activities cannot be used as proof in legal actions against members brought outside of congress. even the most sweeping conceivable legislation against insider trading could not trump constitutional speech or debate

privilege. within congress, existing standards of conduct provide the basis for sanctioning a congressional individual for profiting from securities trades based on material, 9-public information gained from his or her position. the code of ethics for government service states that a person in federal government service should never use any information coming to him confidentially in the performance of governmental duties as a means for making private profits. insider trading based on confidential trading -- congressional information would be a violation of this provision. the method of reinforcement would be the congressional ethics process. it cannot be said as clearly what information would be considered confidential in congress for purposes of enforcement of this provision. under the rules of the house and

senate, there is no blanket duty of confidentiality a monday -- among the members and staff. each committee and office determines what information before them is confidential. relatively few information the best thing committees for the senate and the house have -- relatively few committees for the senate and the house have definitions for what is continental. use of this provision for pursuing insider trading allegations within congress provides a case by case -- requires a case by case analysis. there is an opportunity for the senate and the house to take a hard look at their rules with respect to the definition, scope, and duties relating to confidential information. apart from their draft 8 of the code of ethics, -- paragraph

the code of ethics, if credible allegations of securities trading on non-public information would come to the senate ethics committee, the house office of congressional ethics and these allegations were more than the insinuation, the allegations would be pursued by the ethics committee as potentially conduct reflecting discredit on the institution. they would be pursued and investigated regardless of if any other law or rule are actionable. that meet return to the issue of whether members of congress can trade on -- let me return to the issue of whether members of congress can trade on information gained from their assignments.

the preferred approach to monitoring and policing potential conflicts in the legislative branch is through public financial disclosure. the provisions of the proposed stock act that would require disclosure of profits from stock within 90 days means that would be a substantial increase of the accessible pool of information based upon which a member's constituents could form their own, conclusive and unappealable judgments as to the appropriateness of the member's financial actions and as to the propriety over all of the member's conduct. thank you. >> thank you. we will go forward with questions. we will have seven minute rounds. based on these research i did

before i came into the hearing today, i reached a tentative conclusion, and formed by the sec opinion -- testimony before the committee today, under existing law, the sec would have the authority to pursue and prosecute members of congress for insider trading. based on the testimony the witnesses have given, now i come to a different kind of conclusion. there is genuine ambiguity in the law. my original feeling was that we should legislate to make clear that members of congress are included in lost about insider trading. the existing state of the law is not mentioned or defined. you have to take a two or 3 step

job to get there. you have convinced me that there is ambiguity that has to be resolved. if i am hearing you, particularly professor langevoort and professor nagy, this goes to fiduciary duty. the supreme court has set the law. it has required the interpretation that the person found to have committed insider trading if the person trades on material, non-public information only if the person is breaching a fiduciary duty. that is to shareholders or the source of the non-public information. the normal reaction -- it does not necessarily prevail in

courts of law. there is a separate our vocabulary. it would be, of course members of congress have a fiduciary duty. we have a duty to our constituents and to the law. your testimony leads me to feel that is ambiguous. members of congress and our staff are in a different relationship to this non-public material information. i want to ask, particularly the weigh in on the nature of the duty that must be established. is it a fiduciary duty? is it a broader duty of trust and confidence, which is the kind of language we would normally use and that we think we have. professor langevoort, why don't

you go first? >> sure. the courts are still working out the answer to that question. in the context of the case involving a partner in a law firm who misappropriated information belonging to the law firm or the farm's client -- client, that is a breach of fiduciary responsibility. as you move away from settings from which there is an employer, a boss, a principle that would be able to take breach of fiduciary duty against the person in question, the ability to make the kind of argument that the misappropriation theory clearly applies, grows

weaker. i hope the court will make that leap. i am not confident. >> professor coffee? >> they ruled that husbands and wives are not fiduciaries to each other. that would really surprise you. the second circuit ruled that to be fiduciary, there has to be a relationship with discretionary authority on one side and dependency on the other. the more it was equal, the less it was a relationship that was fiduciary. that definition that a fiduciary relationship only exist when there is a discretionary they ship on one side and dependency on the other is a high standard. that is why there is this -- there is a discretionary relationship on one side and

dependency on the other is a high standard. >> if i remember your one sentence proposal, it dealt exclusively with this question. am i right? >> if you start defining the legislation with material and non-public, there are going to be efforts by defense counsel saying that was not satisfied in this case. >> it would not be enough if we avoided the issue of fiduciary duty all together and simply declared that members of congress may not trade on the basis of material, 9-public information which they obtained only because they were members of congress? >> you could do it that way. it would not cover the taping problem.

you must -- you would not cover the tipping problem. >> professor nagy, do you want to get in on this? >> the relationship of trust and confidence. in direct response to the case, the securities and exchange commission promulgated a rule. one aspect of that rule creates a rebuttable exemption that family members, parents, siblings, spouses, " duties -- spouses owe duties of trust and confidence to one another. the other point i would have is that if courts work routinely

applying the discredited analysis to insider-trading prosecutions that the securities and exchange commission or the department of justice bring, we would see far fewer settlements. there have been cases involving live in the nation ships where relationships. -- the result was a prison sentence for the boyfriend had misappropriated from the girlfriend. there was a high standard up a fiduciary relationship. trust and confidence is where the securities and exchange commission has put the emphasis on the duty. imagine a situation where a district court is faced with

this type of hypothetical case. if a district court concluded that a member of congress did not owe a duty of trust and confidence to the united states and the american people, i would be shocked. we can all anticipate what the headlines would be the next morning. the judge would likely find the requisite duty of trust and confidence under existing law. thank you. >> very interesting. this is important because we want to get this done. we are not painting on a blank canvas. there is a lot on the can this of the existing law. -- canvas of the existing law. i have understood what the three law professors have said today.

this says i am more prepared to go to law school that i was back then. >> professor coffee, you made an important point that members of congress do more than legislate. we act as advocates for our constituents. we get public funding for them through grants and contracts. we seek expert advice on public policy in order to reach the right decisions. i am thinking of how many of us, during the financial crisis in the fall of 2008, reached out to financial efforts for a bias. -- to financial efforts for advice. when we do at, we cannot have a

chilling impact on the -- when we do act, we cannot have a chilling impact on members of congress. that me suggest a different way of looking at this issue. you started to touch on it in your testimony, professor coffee. instead of trying to put into law a ban that works to prevent what we think is improper and should be illegal behavior, what if we said members of congress cannot trade in individual stocks themselves, but must limit their investments to mutual funds or adopt a echanism approved by the fsec

to allow trading that gave detailed instructions to the person overseeing the investment, but the member does not make the trade? or a blind trust would what if we got at it from that perspective? what would be your opinion of that? >> they might do it as a matter of pure percussion. i think they might find it over- broad to say you cannot trade at all if you are a congressman. i think you realize if you are going to come into in contact

with that kind of information come to be careful. it might be criminal if you created in your own name based on your own decision. the state of things together. you prohibitions and the safe harbor. the opinion of counsel can be obtained quickly. i think you need both of them together. >> does anyone disagree or want to add to that? >> let me add something. you mentioned at the outset of your question the possibility of moving members of congress away from single stocks to other forms of financial instruments. that is difficult. insider trading is possible every form of financial instrument including mutual funds. 10b5-1 is simply a rule. congress would have to face up

to this if it were to say that as long as you execute the instructions at a time when you did not possess non-public information, the fact the trade was executed after you came into possession of the commission does not make you libel. it simply moves the time that we're looking out on when a person knew it and when they knew it. >> i want to get to a different issue. please answer quickly. >> it might be an effective solution. i will leave it at that. >> blind trusts are a mechanism only for people who have substantial assets. there are administrative costs.

they are only blind -- they're not blind as to what you put into the initially. their only blind if you put in cash or if the assets have been sold down to a particular level, you are notified you do not have them anymore. they are not blind as to what you put into them. as too limiting investment opportunities, i would be concerned you would be making it harder to attract the best and brightest or even the pretty good and fairly smart into government service. >> the person with no assets who could never qualify for a blind trust. > professor =, you testified -- professor, you testified that

insider trading is already illegal under existing law. even if you are correct, is there an advantage to congress making it crystal clear a passing such a law? i realize we have to be careful about how we drafted. -- draft it. >> one potential disadvantage could be cured by careful drafting. one risk is that by legislating directly, it would be taken as an indication that the stock law is the only insider-trading law that would apply to members of congress. that can be cured by a statement that says the stock out -- act bill on existing laws so that others would be there and the

would come on top. that could be solved easily. i would be happy to help in that effort. there is another risk we should think through. that comes from public perception. the controversy surrounding the application of the federal securities law to members of congress stems from the back that congress has never enacted and express prohibition of insider-trading for anybody. everybody else has to navigate what has been described as the maze of decisions. the boy from house to discuss -- decide if he can trade on information. that might be hopelessly confusing.

what i could see happening with an express statutory prohibition applying to congress and federal employees is that when all the dust settles, everyday ordinary people asking why you get the express prohibition and they have to suffer through the maze of what it means to defraud in connection with the purchase and sale of securities. that might not be on the table now but potentially could be. >> that is a valid point. a question i wanted to be thinking of is whether we should have a law applies to the executive branch officials explicitly. i think a treasury secretary has access to far more confident to

non-public information than any member of congress. >> we will go to senator brown in order of appearance. >> i appreciate the examples of boyfriends and girlfriends and relationships. we're not talking about that. we're specifically talking about members of congress. if i am in a top-secret meeting and find we're going to drop a weapons system and the companies stock will go down dramatically and say to sell it, that is what we're talking about. we're not talking lacoste's examples you are using. we're talking specifically about real-world situations that have been brought to our attention. i went to law school to. it reminds me of a law school class. i want to do something.

you indicated the courts still have not decided what to do. if not now, when? that is why we are here. that is why the chairman and ranking member asked for this important hearing. i want to go to miss sloan since you have been left out of the phone. do you think it would be a good idea in our ethics disclosures to be more specific as to an update on what stocks we own, when we bought and sold them, exact amount of moneys we purchased and sold them for? that way anybody in the media or government agencies could see

who is on armed services and what military arms stock they bought and when they found out the company contract would be terminated. that would be the initial intimation used to establish to permit the shia -- prime facia case. >> i think disclosure is a great way to go. there would be a lot of repercussions if you have quit disclosure. 90 days is too long. people will be looking at these traits frequently -- trades frequently especially if they're searchable on a database. you gave the example of learning in committee and making a call. that is the kind of behavior that of clause would make difficult to prosecute.

it is something you learned in legislative committee. no prosecutor would be able to use that information to obtain an indictment or at trial. it is tricky. >> that is where we are here. the fiduciary responsibility is to the american people. that is the relationship we have. the supreme court has articulated a severely restrained approach to applying the insider-trading laws saying it is within the power of congress not to expand the rule. if we do nothing, will congress be sending a strong message to the supreme court that we do not want to clearly articulate the rules to hold members of congress liable for trading on non-public information? >> your right. the supreme court admittedly has said repeatedly it is congress'

job to push on the statute to expand it and not the job of the court. that is the language that worries me the most in terms of the court coming out the other way. i think you can accomplish a lot about explicit statement. >> no members of congress have been successfully prosecuted for insider trading. would strengthening the senate ethics rules be a sufficient deterrent? would it help to beat rebelled -- would it help to rebuild confidence? >> i think people have little confidence in the ethics committees in the house and senate. they have done a lousy job. they rarely hold members speak to the fire except in egregious cases with a lot of press attention.

many complaints are filed that never get responses. i do not think that is a solution. i think you need to go to the committee and also have a clear prohibition and the ability of prosecutors to go after you. >> the fcc indicates it has the tools it needs. we've never seen any prosecution for insider trading. -- the sec indicates it has the tools it needs. why would the sec not want a standard that creates a crystal clear framework to prosecute? >> they should want that. we are clearly saying that we agree with you that congress should legislate. we're talking about what the language should be. >> if the existing rules provide a framework for prosecuting

members, why have we not seen any prosecutions? >> there is the study that suggests the practice of insider-trading is endemic in congress. there is another study that says otherwise. it says member portfolios perform below the market, particularly when you look to the average numbers portfolio. they do not exceed or meat market performance. the question of why there have not been prosecutions is based on the premise that this is happening everywhere. another aspect of the answer is that the ethics committee's do not have audit function. they do not go from office to office to investigate what people are doing that has not

been reported through a complaint or through the media. it is not a matter of complaints and allegations coming before the committee is that they're not paying attention to. >> some scholars have suggested clearly defining a duty for members of congress would be an easy solution that could be done through senate resolution. do you agree? >> i think passing a statute along the lines you have suggested would be an effective solution. i meant legislation. the other would be a mother who salute. i do not think it accomplishes much. >> it takes you one false step forward. >> i appreciate your testimony. i appreciate your bringing this board. we will make ourselves available

to meet the deadline. i have to get to the floor for the armed services. >> we look forward to working with you to move this forward quickly. >> i remember the right to ethics code. at the end of the day, akin to the conclusion that you are ethical or not. you can provide all the rules that you want, but if you are going to cheat, you are going to cheat. disclosure, disclosure, disclosure. you can go on my web site and find every disclosure form i have filled out since 1988 in any office or public facility i participated in. i note it is hard pressed to do

simple things. sometimes simpler is better. i like your approach. if i ask a constituent in alaska to get a copy of my disclosure form -- thank god i have online. they would have to have someone come here and get a copy of it from the clerk's office, copy it, and then give it to meet with them in alaska -- give it to me or them and alaska. neither one of the bills requires electronic searchable databases. i agree you can file these things quickly. i have done trades. that is public disclosure. that is why i disclose it. i want your comment on bills or legislation and whether it should be required that any

trade or action should be electronically available to anyone at any time by the internet and searchable. >> in this day and age, other than perhaps a shortage of resources needed to manage it, it is not clear to me why there should not be online -- >> it would cost us more to do ing when people i send in their big disclosure forms. >> there are non-profit outside groups that put this on line already. the question is why not. >> what you proposed is on page 14 of my testimony.

a journalist or constituent could immediately find it on line. >> a lot of people lose office because of ethical issues. >> if you are a high-ranking executive of republic corporation, you have 48 hours to electronically file. that immediately becomes part of the record. parts i and a yes as well -- >> i am a yes as well. >> we collectively are resistant to this for some reason. i am looking to the members that will do the market. this will be an insistence on my part. our disclosure forms have the annual reports of stock trades. if you wanted to search through it now, you cannot.

it is the most ridiculous system i have seen. i am putting it on the record that if we do not do that, we will pass another law that will go off somewhere reforms that will be hand written and sent in. constituent groups will be the searchable databases people. mr. coffee, your idea, i will turn to the rest of them to comment on your idea. i am not an attorney. no disrespect to the folks here, but simple as better. the more detail, the more out- causes people have. let me ask what people think of mr. coffee's idea.

>> if it is the one line that says members have responsibility with respect to what they learned in committee, you need to be careful. you need to think about the potential consequences to what you do as senators beyond financial transactions. the privacy act does not apply to the contras -- congress. you are able to do things you -- with information received from constituents and others. you have more freedom to use information and the executive branch. if you create a blanket fiduciary obligation with respect to congressional information, you want to be concerned about how it could affect your representative

functions, oversight functions, and function of communicating with others beyond the financial transaction area. >> i have not seen his precise language. i think i could do it in two sentences. i think it has to relate specifically to what insider trading is. that is profiting from information. that is without talking about all the other fiduciary ira responsibilities that could be associated with it. >> i would support one sentence. >> i find it amazing lawyers can get down to one or two sentences. i am excited. >> i would encourage avoiding the concept of fiduciary altogether such that the

sentence would be for purposes of misappropriation, a duty of trust and confidence exists whenever a person is a member of congress or a federal employee and has learned the information for government service. one possibility would be that congress could authorize the securities and exchange commission to add that subsection to existing rules. there are now three non- exclusive situations in which an insider is presumed to be in a relationship of trust and confidence. that is the family prong working backwards with a promise to maintain information in confidence. if you authorize them to add a fourth section, i think it would improve the clarity.

going back to my point, it would apply the same law to everybody else. i think that is a very important principle that should come out of any legislative action congress takes in the matter. >> i will defer to the law professors on insider trading. that would not really solve your problem about the future debate clause. that would not allow prosecution. as much as i do not love the ethics committee, sometimes they are the only option left. >> i am a big supporter of the concept of this legislation. disclosure is critical. how easy and accessible is should be is how we create more enforcement. the public and media become the enforcers in a lot of ways. >> i assume senator that you are

on my bill to make sure campaign disclosures are filed electronically. >> i believe i am. if not, i will be. i like it. >> i want to welcome all of the panel members. i appreciate your perceptions and comments. i did not understand everything you said. that is ok. >> i was not under oath. >> it is ironic because through four hours ago mr. coffey was in front of the banking committee. it was not you. it was your brother. you look a lot alike. we appreciate all of your testimony today. what i did as people talk about the stock act is that we need to be careful. there are unintended consequences to whatever we do. those consequences may be something the limits our ability to legislate concrete policy, and do the things we need to do

as senators or house members. i want to approach it from a transparency standpoint. if we made financial disclosures transparent, made our schedules transparent and, required ethics audits of senate and house offices, then i started thinking about unintended consequences. can you think of anything we do where it should not be transparent? i believe in transparency. i think we should do the maximum to let everybody know what we're doing. i believe the forefathers were right when they said we needed to have citizen legislature. i believe all that stuff. >> can you think of many areas where transparency might be

inappropriate? i cannot see any where it would be inappropriate. i think more is required. the ethics committee needs to have the ability to audit members routinely. they get the disclosure forms, but they only make sure they are filled out. they do not compare them with a tax return to see if they are driving -- jiving. if they did that, we might find problems. a member had filled out a disclosure one way and the tax form indicated a far different scenario. that member resigned instead of facing the consequences. >> i cannot think of a downside to transparency that would be specific enough to articulate at this time. i am in favor of transparency. >> i agree. if somebody is bent on acting

unethically, they are going to violate the disclosure rules as well as the substantive rules. insider trading often takes the form of not transacting securities on your own account. it is transparent already. it may be establishing a friendship in a foreign country with a foreign bank account, laundering money, ideas. if that were found out by one of us, we would be noodled, don't you think? >> i have seen clever insider- trading schemes that avoid detection for a long time. if you tried to expand transparency not simply to trade but to the communication of information to others, the route by which profit often comes, you will run into difficulties with respect to the work you do on

the hill. >> i think some law professors smarter than they can probably think of a problem with the way to deal with that is to give the sec exempt of authority. ive authority. >> i do see some concerns with across the board transparency in everything the senate and congress does, if that is what you are asking. there would be many sessions that could not be transparent. there would be many deliberations behind-the-scenes that probably ought not to be transparent. there is even less from today for negotiation and trade-offs

between members of parties than in the past. it would be even less so if everything were transparent and televised. as far as audit function for the ethics committee, i think it is a good idea in principle. it would require a vast increase in resources for the committee. whether that would be possible with tight budgets is a real question. i would be concerned if all congressional communications were to be transparent. i do think there would be a serious chilling effect. all.air points by o i do not think these deal with personal real estate, where a person would increase the value

of their personal real estate by advocating policies that would help them. it seems to me that is much more easier to track down an insider trading. is that a fair statement? i do not deal with insider trading. i have little knowledge of it. i do not buy stock. go ahead. one possible scenario with the insider trading in real estate using material, non-public information in a real property purchase as opposed to a .ecurities purchase >> or enhancing it with things that you pass. >> that could be another problem. it is not the same problem as using non-public information one learns in government service to

actually purchase physical real- estate. that could be prosecuted under the federal mail and wire fraud statute for the same reason insider-trading can. there is president. a precedent where a some cargo politician used information that he came upon in connection with his ealdorman service. he was prosecuted under the federal statute by the department of justice. he used that information to buy an interest in an apartment building. >> what if he advocated to build a highway on it, something that added value to the property? >> there could be a similar situation on the security side were one takes a favorable legislative action or a company

whose stock he owned. that could be a problem. >> this bill would not cover that. >> not but i see. -- not that i see. >> thank you. >> i have more questions but got what i needed. i appreciate the perspective and thoughtfulness. it is very difficult to look at ourselves and say that people think we're crooked when you do not think you are doing anything wrong and there is no intent. that may be dealing with policy and talking to a neighbor that may impact prices of we. it is critically important that we operate in a way that is

totally clean. we should make the policies mandatory transparency is important. the forms we fill out ought to be on line. our schedules should be on line. we should let people know everything they should reasonably no online -- know about on line in a way they can access it. we need to be aware of this. with an 8% -- we have 8% approval rating. this does not help. if somebody in the house or senate does something crooked, it reflects on everybody whether they are honest and not. that is the way it is. we need to address it in a common-sense way that gets to the problem and does not create more problems than it fixes.

>> i apologize. i have been presiding over the senate and was not able to be here. it is important to clarify the law applies to congress. and other arguments that are great in a law school classroom -- i know that there are arguments that are great and in a law school classroom. i think we should make it clear the rules apply to companies apply just as much to members of congress in terms of their ability to have and use information not available to the public. you may have covered this. have you characterized why it might be a challenge to prosecute these cases in

congress? >> i think i talked a fair about -- fair bit about it. you need to make it clear that the ethics committee enforcement -- has enforcement abilities. " we addressed other practical problems as well as with enforcement in the congressional context. >> as a former prosecutor, one thing that makes it easier to prosecute cases in congress is it is much clearer what is a public record and what is not. it is murkier in private companies of what is in the public domain and what is not. we have hearings and the record is available to the public. we pass laws that are available to the public. it is publicly available.

there is a great deal of information that prosecutors could easily see. in some ways these cases might be easier to prosecute. it is hard to have inside information in congress. this place. the open in terms of what it's up to the public. a great deal of our work is publicly done. >> i would not disagree. because so much is open in congress, it does become difficult to -- non-public information would be an obstacle to overcome. if that were alleged in a case,

i think you would find rigorous defenses and attempts that would be successful to prove that the information was public. >> i have five things i have been told we need to do better. some have probably been mentioned. i want to see if there is disagreement on many of them. we need to expand public information. we need to talk about regulatory actions, grants, earmarks, contracts, shorten the time frame for disclosure. that is important. 90 days is way too long. we do have a measure of transparency now allows some things to be written even though some things were inaccurate or wrong.

the fact the purchases were made is available to the public because of rules we currently have. expanding the types of securities covered. explicitly state members' duties. finally, specifically lay out in legislation that members cannot get insider tips. those of the five things i think we need to put in the legislation. we have a significant amount of problems with the public right now. the more quickly we can pass the legislation and demonstrate to the public -- i am not sure i met anyone who has gone into this line of work because they thought they would receive a great deal of money for it. i am not arguing that there may have been some people who have used their positions and appropriate. certainly people have gone to jail in congress. i think all of us want to make

sure the public knows we are not using the position to gain personally from it. the more we can do to reassure them, the better. we need to write the legislation in a way that does that. the last thing i would ask about is earmarks. they are a tricky area. we have a current moratorium on them in co-sponsoring legislation. knowing a member of could have the ability to singlehandedly put public money in a project could lead to the kind of information that would allow someone to benefit from that knowledge. in a. earmarked, nobody has any say as to whether it is good, bad, or

in different other than that member. as anyone discuss how earmarks might lend themselves to this kind of activity that the public would obviously disapprove of. >> it would be a kind of material non-public information. if you know you are going to earmarked resources for a project that will benefit companies and buy the stock, that falls within the category of misusing material, non-public information. a great deal of technology and has worked itself into the marketplace. that is one area we need to make sure we cover. that is the essence of insider information. someone singlehandedly can provide the resources to a company to make the research and

development a reality. >> i would agree with respect to earmarked. has you listed off your five fixes, i would encourage you to think of a 61. that would be a clear statement in any legislation that build on existing law. it should not be read to displace the federal securities law and the mail and wire fraud statutes in connection with government employees, congressional officials, members of congress. >> at the british, these are fraud cases. >> i think that would be -- at the root of it, these are fraud cases. >> it is important that you not try to redefine established terms. they are refined in the legislation. that would raise questions about

whether it is a different kind of information for congress and in ordinary cases. if you were adopting existing case law, i think that gives greater certainty to the courts. but that is a great idea. i will share that with other sponsors. we will look for your input as we get it drafted. we appreciate you being here today to help us. we want to do this right. >> ideally, we will get something drafted before we depart in december. i have a couple more questions. i think we have gone over what

we should do in response to the problem making it clear that congress and staff are covered by insider-trading laws. there are two other responses possible. one deals with senate ethics. first i want to talk about disclosure. this is more in the way of prevention. a person may accelerate discovery of a problem. i want to talk about how you would alter the requirements in the ethics and government act for disclosure. we have talked about and focus on electronic filings. i think that is a good idea. you talked about requiring we

file more than once a year, presumably after transactions. i want to invite you to spend more on time -- more time on how you would have a strange that with regard to filings. >> the personal disclosure firms have broad ranges of assets. i think they could be narrowed substantially. you would not have to change the ethics in government act. you could do it by house and senate rules. the ranges are so wide that it is often impossible to tell what a person's assets really are and how much income they have had from the assets. the forms are filed once a year. they are filed six months after the previous year ended. they are pretty far down

. those forms -- they are pretty far down the line. those forms are not searchable. you cannot search for a specific asset. with the technology available, there is no reason the forms are not put on the web quickly and in a searchable form so it is easily searchable. wrongdoing can be found quickly. the court of public opinion can be helpful. >> one alternative is instead of or in addition to having a sprawling home -- having us file the whole form with the year, there could be amendments filed after stock trades of a certain amount. >> i think he would have something separate for stocks. you do the form once a year and

felt something about the stocks. rather than the 90 days, i would get it down to 10 days. it does not need to be so burdensome. the information comes in an electronic form. a database could be set up so you only have to hit a button to transfer it into the larger data base. it does not need to be burdensome when it is negative set up. i would make it clear that line on those kinds of forms, willfully failing to disclose the information could be a false statement. those false statements are more easily prosecuted than anything else we have talked about. >> the rules would have to be changed by the senate in this regard. do you have any other ideas

about how we might alter the existing senate and house disclosure rules to prevent insider trading or make it more discoverable if it occurs? >> i agree the provisions in the stock act that called for disclosure within a specific amount of time would go a long way to determine -- deterring insider trading where it may be occurring. i am not sure i agree with the 10 days. the lawyer to provide full information. the prosecuted -- failure to provide full information could be prosecuted. 90 days may be too long. i think that kind of frequent disclosure does make sense.

>> let's spend a moment on the ethics rules of the senate. you are concerned about the cause on prosecution of members of congress for insider-trading. how would you change our rules to deal with this problem? >> the debate clause only applies if a member is being prosecuted. it does not have any implications for the ethics committee. that is why it works better in some ways. committee -- while a prosecutor would not be able to easily obtain it, the ethics committee could review the material. that is why it would be so

significant to make sure the ethics committee does have jurisdiction. the ethics rules are not clear enough. the ethics committee two days ago issued guidance. it is imperative to make it crystal clear and lay it out. the other problem we have seen is that the committees are soft on members of congress. if someone will only get a mild reprimand or a letter of admonition, it does not hurt much. there is not a lot of disincentive. if you include some sort of financial penalty of a significant amount, that would be a disincentive. >> you would make it clear in our rules that insider-trading is a violation of the rules. this is as simple as that? >> yes.

that there are certain penalties and rules. >> what do you think of this idea? >> i do think there are rules to address this. a big problem in the senate and house with paragraph 8 is that there are not specific obligations, rules, and policies regarding what information is confidential. getting it at that level is important. there are rules in place. if there were a rule crafted that mentioned insider-trading specifically as part of rule 37, that would not be harmful provided it is crafted in a way that would not have other killing effects -- schilling --

chilling effects. i would want to ask certain members whose careers were ended by receiving letters of admonition whether they think that is a soft option. ethics committees pursue allegations that come before them. they are not criminal enforcement agencies. i think if you chose to strengthen the rules regarding insider trading with in the congress, that would be a reasonable approach. >> a final question to bring this together. two days ago, the house ethics committee released a memo to all house members and staff stating that house rules prohibit members and employees from entering into personal financial transactions to take advantage of any confidential information

obtained through performing their official government duties. i wondered to what extent if any that kind of statement by the house ethics committee establishes the necessary fiduciary duty we have talked about as a condition of a successful insider-trading case. >> i think you will get different responses from the three of us. a fiduciary duty is a property right. it is a relationship between the director and the company. an ethical duty is far more general reaching. the boy scout oath is an ethical duty. i do not think it gives rise to the kind of relationship that can support a criminal prosecution. but i share much of that view.

-- >> i share much of that you. -- i share much of that view. to a judge not inclined, there are always in the world not to do it. >> the disinclined judge would want to see the concept of fiduciary duties spelled out in law. >> i would encourage the use of the term "trust and confidence" instead of fiduciary duty. you do not have to stand in a specific fiduciary relationship to fall under the appropriation. . his response is largely correct. it would put one more brick on the scale in terms of whether there is a duty of trust and confidence.

many prosecutions are based on something where everyday ordinary individuals will be prosecuted. they are not in a specific fiduciary relationship. what is included in the complaint or an indictment is very ethical sound and coats like the boy scouts' code. -- their ethical sounding codes like the boys got codes. this would be another paragraph in a complaint if it came to that. >> thank you. that has been very helpful. >> how do we address sales and purchases within a managed fund in terms of disclosure?

congress has af fund that they buy, do you believe the duty to report would create a new duty for the manager of the fund to have to let this particular member know when they are buying and selling stocks within the fund? with their only be a duty in your mind to report the purchase and sale of the overall fund? -- with their only be a duty in your mind to report the purchase and sale of the overall fund? >> it would be different if you tipped the fund manager. >> there could be no information going from the member of congress to the manager. whatever decision the manager had the legal authority to make

internally that the member had no control over, that would not have to be something reportable every 10 days or 90 days. thank you. >> thank you. you have been an extraordinarily helpful panel. it is like we have been sitting around the table saying we have a problem and how we can best solve it legislatively. i think you have helped the committee substantially in doing that. young also made the mistake of continuing to be available to review the work we do. -- you have also made the mistake of continuing to be available to review the work we do. december 15 is two weeks from today. we can do that. we have to find a balance. this is important and complicated. we have to do as much as we feel

we have right by december 15. if we hold parts of it over until january, that is not terrible either. we will leave the record of the hearing opened for 10 days for additional questions and statements. i thank the witnesses again. with that, the hearing is adjourned. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] what he did not have a lot of romantic ideas about spine. he sought it for what it was, a dirty business. >> the documentary producer examines the life of the spy

master, his father. >> my father changed after he was thrown out of the agency. if you watched the film closely and steady him, he is a soldier. he took on the toughest assignments given to him by the s from eisenhower on where -- onward. when they asked him to lie, he could not do it. >> that is tonight at 8:00 eastern and pacific. >> tomorrow, the president of the committee for responsible federal budget looks at where congressional efforts towards deficit reductions go from here. gary anderson of the national governors' association talks about a condition of state budgets around the country. walton francis discusses the cost of operating the federal

employee health benefit program. "washington journal"is live at 7:00 a.m. eastern on c-span. >> it is so convenient to listen to c-span anytime, anywhere. you get free streaming audio of all networks. you can listen to our interview programs. c-span is available wherever you are. >> joining us on "newsmakers" is gene sperling. thank you for being with us. gene sperling, let's begin with the numbers on friday. is this the start of a trend? >> obviously, you hope things will get bet