economy, a deeply flawed society. sanctions will have no effect. i also believe it is not the right thing for israel or for anyone else to launch an attack right now. we have made that position very clear. right now, car -- we communicated very clearly. we understand the concerns of the israelis. sanctions and pressure have done it again. >> next, a texas congressman kevin brady on his proposed changes to the federal reserve. then, john jogmei -- hofmeister on oil prices. then, a house hearing from the energy department. the japanese ambassador to the u.s. will be the speaker at the american enterprise institute monday, discussing the rebuilding efforts one year

after an earthquake hit japan. the natural disaster set up a nuclear crisis at the fukushima plant. live at 1:30 p.m. eastern here on c-span. republican congressman kevin brady unveiled legislation that would narrow the federal reserve board's mandate, expand the board's membership, and increased transparency. the bill would give congress control of the budget for the new protection bureau. speaking at the american enterprise institute, he admitted the proposal is not likely to pass any time soon. following his remarks, a panel of former officials discuss the bill. this is just under two hours. >> remarks are representative kevin brady. the objective of aei is to have policy discussions about key issues of the day and to try to

generate dispute as much as possible. [laughter] when we invite a politician such as mr. brady to present his ideas about what we ought to do to fix the world, we are careful to follow those events with a roundtable discussion, that is generally a set of people we select. we don't know what they will think, but we expect they will be critical. there is a long tradition of that year. we begin with remarks from congressman kevin brady. after the remarks are done, immediately following, we have an all-star lineup of former fed officials to discuss the merits and lack thereof of mr. brady's proposal. mr. brady will go for perhaps as long as an hour. he has in prepared remarks. -- has a some prepared remarks. there is anger in washington

about the bailouts. a lot of that anger has generated some pretty kooky ideas about what we should do to monitor policy. when i heard a few months back that the joint economic committee was starting to ask the question about how should the fed really be reformed, i was reassured, because, again, some of the ideas of reform of the monetary system in the u.s. struck me as caulk a mamie -- cockamamie. senior officials are usually bipartisan and academic in their approach. the joint economic committee was taking up the idea, and it meant that something better than "let's go back to the pure gold standard" would likely be forthcoming.

it was with great enthusiasm over the weekend, when i got a chance to see what mr. brady's remarks would be. it presented something that, well we can debate whether it will work or not, at least there is a lot of sound argument for it. we will see that today. our first speaker is one of the most important politicians in washington, for those watching. in addition to serving as top republican on the joint economic committee, he is also the gop deputy whip and a senior member of the ways and means committee. most importantly for me, as president of the urban baseball foundation, an official in little league, mr. brady is a former mvp of the congressional baseball team. he plays a mean second base. he surprises every year that a person of his advanced age could be so competent on the field, still. we're delighted to have mr.

brady here to discuss legislation. as soon as he is done, we will assemble the panel here. mr. brady? thank you. [applause] , of how the issues at the joint economic committee and the ways committee -- ways and means committee as well. i appreciate the american enterprise institute posting the forum. they are involved in such key issues on capitol hill and abroad, that it is a delight to be here today. i also appreciate the panelists who are here and that they agreed to be part of the round table. you bring tremendous experience in the role it can play in the future.

thank you for taking time from your busy schedules. some say that the 19th century was -- belongs to the brits. the 20 per century, perhaps, to the chinese. i think, while there are real challenges ahead, if we look to our economic future, washington should have one goal, which is ensuring that america has the world's strongest economy throughout the 21st century. to ensure the 21st century is another american century, we have to renew our commitment to what works well, the free enterprise system. what is not always worked well is the federal government. in the context of building a strong economic future for the next 100 years, we have to thoughtfully and clearly define the role of the federal reserve. in my view, the sound dollar is

the surest foundation for a long-term economic growth. it creates a certainty, facilitates new business investment, and long-term job creation. the folks in the federal reserve should be to protect the purchasing power of the dollar by maintaining price stability. are there other fundamentals of america that we must get right to maintain our standing? absolutely. the congress and president must make our tax system simpler and more competitive by lowering marginal tax rates, by moving to a modern system, and ending the distortions within our tax code winners and losers in the free market. congress has to reform medicare and medicaid to make them solid. we have to transform our regulatory system to one where we can achieve our goals, including a clean environment,

but doing it in a way that is efficient and balanced, and less economically destructive as it moves forward. we have to have trade agreements and open markets to allow our companies and workers to sell throughout the world, to the 95% of consumers that live outside the united states, and do so in a way that we compete to win. these reforms by themselves will be insufficient if the federal reserve failed to maintain the purchasing power of the dollar over time. that is why we must examine what monetary policy should be going, what we should be doing going forward. economists broadly agree that the best way for the central bank to help maximize real economic growth and job creation is maintain stable prices over time. one need only look to the great depression and the great inflation of the 1970's to see that both price deflation and

inflation are destructive. both reduce real output an. the goal of monetary policy should be long-term price stability. in 1977, the congress mandated that they pursue monetary policy to promote moderate long- term interest rates. the goal of stable prices and moderate -- term interest rates are interrelated. this is why the federal reserve is described as having to do a mandate for maximum employment. the employment half of the mandate is reflected in the employment act of 1946 and required the federal government to pursue economic policies that "promote maximum employment, production, and purchasing power."

the price stability mandate reflected concerns in the 1970's. when thinking about the federal reserve's dual mandate, it is important to remember an observation made by an economist. to achieve the policy outcome, you must use the right policy lever. recently, there is a statement in 2012, when ben bernanke and members recognize that monetary policy is the right levers to maintain purchasing power of the dollar. they declared the inflation rate over the longer-run is primarily determined by monetary policy. in contrast, it is now pogrom lever to declare the maximum level of employment is largely determined by non-monetary factors.

congress delegates monetary policy to the federal reserve and should hold it accountable. it makes no sense for congress to charge the federal reserve to control what it cannot control, except in the very short-term. monetary policy cannot boost real output and job creation. instead, use my tory policy as a short-term tool to spread growth -- use monetary policy as a short-term tool to spur growth. you must create the climate the drives economic growth and job creation. there is no substitute. since congress gave dual mandate to the federal reserve, governments in many countries that revised the charters of their central banks -- in most cases, these governments gave their central bank either a single mandate for price stability, or a primary mandate for price stability, with other

goals clearly subordinating. among the 47 central banks in major countries surveyed by the bank of international settlement, only the bank of canada and the federal reserve have organizational laws that give other goals equal weight to price stability. jpw sjpi;d t -- how should the fed pursue its mandate? according to john taylor, the choice between a discretionary regime and a rule-based regime -- the discretionary regime creates uncertainty because it relies upon a the assessments of central bank policymakers, and in contrast, a role-based regime reduces uncertainty because it follows rules based on the observable economic data with a clear focus on a long-term goal. inflation targeting is a rule- based regime under which the

central bank establishes a target inflation rate expressed in terms of a broad-based price index of business services. ace sent -- a central bank tightened monetary policy when deflation right lyses -- rate rises. the last four decades, the u.s. monetary policy demonstrates the benefits of a rule-based regime. during the 1970's, the federal reserve had policies in which monetary policy quickly swung from ease to tightness, and back again. this created a volatile economy and rising inflation. this sea change occurred with the appointment of paul volcker 's board of governors in 1979. the fomc tackled inflation by controlling the growth of the money supply. this strategy was a significant

step toward a rules-based monetary policy. while the economy did suffer back-to-back recessions from january, 1980, until june, 1980, inflation as measured by the consumer price index dropped dramatically, from 13.3% in in 1982..8% between 1983 and 2000, the federal reserve pursued price stability to an increasingly rules-based monetary policy, effectively ignoring the second half of this mandate. two long economic boom resulted -- booms resulted with low inflation. they were interrupted with a short, shallow recession related to the gulf war.

between 2000 and 2005, they deviated from this regime, moving to a discretionary regime by pt -- keeping interest rates too low for too long. this loose policy contributed to the inflation for the unsustainable housing bubble that eventually triggered a global financial crisis. since the height of the financial crisis during the fall of 2000, washington has increasingly relied on the federal reserve to take unusual intervention, such as tripling the size of the balance sheet under qe1 and qe2 by purchasing the debt. indeed, the open market committee justified these extraordinary actions by invoking, for the first time since the -- since 2008, the employment half of the federal

reserve's dual mandate. ultimately, the open markets took these actions to compensate in part for president obama's failure to pursue pro- growth and regulatory policy. they may well continue. as low borrowing costs are masking the pain of historically high federal budget deficits, the federal reserve's monetary experimentation continues to permit the white house and congress to shirk their responsibility for creating a competitive business climate. the monetary experimentation the last decade must and. -- end. the federal reserve should turn to a rules-based system of inflation targeting to achieve the mandate. to provide the foundation for a long-term economic growth in america, today, i am unveiling the sound dollar act.

it reforms the federal reserve in several important ways. specifically, it replaces the dual mandate with the single mandate for long-term price stability. it increases the fed's accountability and openness. it diverts supplies the open market committee. it ensures neutrality for future purchases. it institutes congressional oversight of the consumer financial protection bureau. critics of a single mandate often focus on the sound dollar, and implied that it ignores the needs of americans. it is the opposite. americans can only maximize our real economic output with long- term price stability. thus, it protect the purchasing power of the dollar, provides the strongest foundation for lasting economic growth and job creation. the mandate for price stability

gives the federal reserve the right goal, but does not ensure the federal reserve achieves s -- achieves price security. in january of 2012, they announced an inflation target of 2%, defined its terms of the price index. i strongly applaud chairman bernanke and the other members for this step toward a rules- based inflation targeting regime. however, this is merely a policy statement that can easily be reversed. therefore, the sound dollar act mandates that the open markets committee targets inflation, continues inflation targeting. as you know, accurately measuring inflation is not easy. in the last decade, we saw that price indices of goods and services do not always record

all the price movement in our economy, allowing bubbles to inflate undetected. this relies upon the price index for personal consumption expenditures. this index should not be the sole indicator the federal reserve uses for measuring inflation. to identify incipient asset bubble before they inflate to dangerous levels, the sound dollar act requires that the committee also monitor the prices of than the returns on the assets, including equity, corporate bonds, state and local government bonds, agriculture real-estate, commercial real estate, and residential real estate. it consists they monitor the price of gold and the foreign- exchange value of the u.s. dollar. to be clear, the sound dollar act does not prescribe any specific action that the federal reserve must take if it detects

an asset bubble. the appropriate response is dependent upon the circumstances. these responses may include a tightening of policy, supervisory persuasion, and actions to reduce the flow of credit to fund purchases of the asset. discretion with respect to the response and should be left to the open market committee. however, identifying and asset price bubble early might help to avoid over-investment that must eventually be liquidated at a heavy cost in terms of lower real output and lost jobs. let's turn for a moment to the federal open markets committee. as important as they are, there's more to the u.s. economy than new york and washington. broadened input, and reducing the influence of new york and

washington into the decision- making, the sound dollar act grants a permanent seat to every regional federal reserve bank president. currently, only the governors and the president of the federal reserve bank of new york have permanent seats. four of the remaining 11 presidents rotate on and off each year. implementing this change restores the original intent of congress to establish the fed as representative of the broad cross-section of america's diverse economy. i am also firmly committed to the independence of the federal reserve in conducting monetary policy. that is why i am particularly troubled by the decision in september of 2011 to reinvest the proceeds from maturing federal agency debt into new federal agency debt, instead of allowing them to decline as

intended. this reverse occurred amid intense pressure from special interest groups to support the ailing housing market. when the fomc deals and securities other than treasurys, we purchase agreements in reverse. the federal reserve is allocating credit among different sectors of our economy. credit allocation exposes the federal reserve's political interference. to maintain the independence of the federal reserve and to ensure frederick -- credit neutrality, the sound dollar act requires the fomc to deal in treasurys and repos unless the fomc finds unusual circumstances exist. they could then purchase other securities, so long as they are

liquidated within five years after the unusual circumstances. looking ahead to the next crisis, it is important to note that in its nearly century of existence, the federal reserve has never articulated its lender of last resort policy. an economist described the problems this void creates. the absence of a lender of last resort policy has three consequences. uncertainty increases. no one knows what will be done. troubled firms have a stronger incentive to seek a political solution. they ask congress for support or to pressure the federal reserve or other agencies to save them from a failure. repeated rescue's encourage banks to take greater risk and increase leverage. this is a well-known moral hazard problem. each of these problems became

manifest in 2008. to avoid these problems, the sound dollar act requires the federal reserve to publish as lender of last resort policy. we do not expect a precise tactical plan. as president eisenhower observed, more plants never survive the first battle. nevertheless, were planning is essential to victory. in the same way, the federal reserve cannot anticipate every nuance of the next financial crisis. publishing a lender of last resort policy will reduce future market uncertainty. next, i want to applaud chairman bernanke for steps to increase transparency in monetary policy decision-making, but there is an additional step the federal reserve should take. the sound dollar act speeds the release of transcripts of meetings from five years up to three years.

some critics claim this acceleration woulddiscussion ate need different fomc members. a three-year lag will allow congress to review these fomc transcripts before the fed chairman is reconfirmed, which is absent from the deliberations today. in another reform, the sound dollar act eliminates the slush fund that has been abused by secretaries of the treasury. to prevent it in the future, my measure transforms the exchange stabilization fund into a drawing rights fund, liquidate the assets over three years, and uses the proceeds to reduce federal debt. as you may remember, in 1934, congress -- into the exchange

stabilization fund and authorized them to intervene to support a fixed exchange rate. in 1960, congress placed special drawing rights issued by the international monetary fund into the same stabilization fund. after the system of fixed exchange rates collapsed in 1971, the treasury has used the assets in the fund for purposes the congress never intended, such as bailing out mexico in 1995, and guaranteeing money market mutual funds in 2008. the sound dollar act ends this. the dod-frank -- dodd-frank diverted the federal reserve's profits, which would otherwise be paid to the treasury. it could avoid congressional scrutiny. this is a dangerous present's

common nothing other than the operating cost of the federal reserve should be paid for out of this process. this requires the consumer financial protection bureau to seek annual appropriations from congress just as other agencies do. there is no justification not to. to conclude, it is appropriate that we have this discussion and debate about the fed's role in the future of our economy. on this day in 1933, 24 hours after he became president, franklin d. roosevelt ordered the banks closed. he banned the export of gold to stop a growing panic as the depression intensified and call congress back to a special session. this is a historic day and a reminder that we ought to focus on not the reactive results and actions of the fed, but the strong, proactive rolls by which

we want them to operate. to ensure america has bought lead prepared for the challenges ahead, the sound dollar act poses the best path to help the united states retain its economic pre-eminence by preserving the power of the u.s. dollar. it gives the federal reserve a single mandate for price stability and strengthening the fed's independence, even as the act increases the fed's accountability. these reforms, i believe, are critical to ensuring the 21st century is another american century. with that, thank you. [applause] i will be glad to take your questions at this time. i will. >> why don't we table the questions until --

speak into the microphone and identify yourself. >> my name is michael. i am a student at the george washington university. you just mentioned the guarantee of money-market funds during the 2008 financial crisis. do you think that was an inappropriate policy? do you think the way it was taken was what was wrong? >> you know, there is debate about what were the appropriate actions to take the time during the middle of the financial crisis. my point is the federal reserve should not be taking those actions by themselves, using those dollars reserve for other purposes, and there ought to be a function in the discussion of congress and lawmakers. >> i am michael from "the weekly standard." what is the political future for this bill? do you see this being a bipartisan -- reaching a bipartisan agreement on this? can you see the president signing this bill into law?

>> i would like to see bipartisan effort. i do not see the president signing this bill. i think it is a long-term discussion on the role we want the federal reserve to play if we want to compete in the next 100 years and beyond. it has reforms included in it that i think not only lay a strong foundation for job growth for america going forward, but creates that certainty in the accountability and openness that will allow the market to act -- to maximize what it can do. i think those are goals that should be embraced by both republicans and democrats. our goal today is to start a thoughtful debate on what role we want the fed to play. we will begin seeking sponsors as we move forward, starting today. on the way over here, we got a notice from scott garrett that he will be a key sponsor of this

legislation. we will start to grow it from here. >> thank you. i am from the pearson institute. you talked about requiring a 2/3 vote for the federal reserve to purchase assets beside treasurys. currently, the limit to a agency that guaranteed instruments, would your bill allow them to move into other assets, such as corporate bonds or equities? would you limited to agencies? what about the foreign exchange fund? do you mean they will not be able to buy foreign exchange? would that require a 2/3 vote? >> we want to give the fed the flexibility to respond to unusual circumstances, which may occur. we give them that flexibility to do that.

the 2/3 vote seems to be that their standard, where a circumstance would certainly create that type of support. as to whether it would limit the ability or ban the ability of the fed to get involved in the foreign-exchange rates -- >> [inaudible] no effect on what the federal reserve may or mike -- may not do? >> karen johnson. you mentioned, or encompassed, absent price bubbles, he referred to things such as the price of gold and so forth. if there were a way to identify

and asset price bubble early, and to deal with it early, that would be a good thing. does the proposed legislation -- our consumer goods prices or the prices of goods and services augmented by some index extension? is there a difficult problem of figuring out what the bubble is alluded to, but not in the draft of the legislation? >> it is more of a monitoring and reporting function. there will be looking at those asset prices in the potential of a bubble, and to be sharing those thoughts with congress as it goes forward, the hope of being, if there is an opportunity to detect early on an asset bubble, you can make the move is necessary to deflate that before we have another serious financial crisis going for. -- forward. it is an effort to raise the

profile of those potential bubbles with in the fed and also within congress as well. >> hello. you had mentioned in your remarks that during the great moderation, they did not put my -- put much weight, or ignored the employment part of the mandate. if you look at their behavior, such as in the early-1990's, the fed did cut rates considerably, and then kept them fairly low in early stages of that recovery, did the fed really ignore the important part of the mandate? >> in my view, it made the primary focus of their actions. i think there were a lot of non- monetary factors going on at the same time that affected the economy. my belief is that going forward, the experimentation we are seeing today has clearly mixed

results. when the fed focuses on preserving the purchasing price of the dollar, when it focuses on inflation and guarding against deflationary, it really does create a very solid foundation going forward. we don't -- i don't intend to downplay the role of employment in our economy. i just know if the fed does its role correctly on price stability, what could follow with the right business climate is a maximum job creation in the strongest economy going forward. i looked toward what role we want them to play over the next 100 years, or whatever period we're looking at. that sets the table for potential growth. >> mike, consulting economist.

as you think about a price stability objective, do you think of it in terms akin to what i perceive the fed to be, a forward-looking inflation rate target? do you see it more in terms of what economists would call a price-level target? >> my thought is long-term. i think it creates the strongest foundation. obviously, there are questions about a 2% rate, for example. is that over the long-term, is that permissible each year, which, over time, quickly devalued the purchasing power of the dollar? there are questions that remain about the 2% rate. i am thinking long-term, that provides a sound foundation. >> warren coates.

much of the non-traditional activities of the fed in 2008 and 2009 had to do with structural weaknesses in the distribution of liquidity. we were talking about bills only, but much of that activity was not through market operations, but for lending to non-traditional counterparts. it seems a lot of this flows from the primary dealer system, which makes no sense whatsoever in an economy like the u.s. is in. it is the structural weakness as far as how liquidity is allocated. i assume your bill does not really address that kind of thing. it seems to me an important structural element in why the fed went so far afield from its traditional approach. >> not being an economist, my

thinking is that the bill addresses this in two ways. i really do believe having a lender of last resort policy articulated helps at least to find the rules going forward in those crisises. as you know, there's a big difference between lending to an insolvent institution and lending to one that is simply illiquid. in a crisis, the lines bore quickly. i think any thought we can put in ahead of that potential crisis puts us in a better position to make good decisions and during that crisis -- decisions during that crisis. >> i am randy. i would like to ask about the great bailout. do you think this will go through congress? what is the cost going to be? >> as far as the fed's role in

swapping currency with europe? i would not want to predict what the actions of congress would be in that area. i know the interest is growing about what the u.s. role is in currency swaps and those types of actions. i also think there is a much higher level of interest about the role of europe. their economy is tied to the u.s. obviously, we have a great deal of banking and financial relationships. they are buying one out of every four trade dollars we are selling around the world. if our economy was flying at 50,000 feet, strong and steady, turbulence from europe is not a problem. when you are flying low and slow, it is a problem. i think that portion of the global economy has sunk in in a major way with policy-makers. it has not yet moved to what we

believe the role is that the fed should play in that. we're watching it intensely. >> thank you very much. appreciate it. thank you. [applause] i will ask the panelists to come forward. i applaud mr. brady for taking some of these hard questions. we will begin in just about 10 seconds. ok. according to the nerdy part of our program -- for those of you who have followed that policy

over the last decade, and i do mean decades, you will know we have an astonishing all-star lineup of influential former fomc members and former fed staffers to discuss this issue. since we have a television audience and they don't all have access to the bios, i will read them. it is a little stilted for me. i think that is what we will do. our first speaker -- i will introduce them one at a time and let them speak for five minutes or so. our first speaker is don, a senior fellow in the economic studies program at the brookings institution. he is an expert on monetary policy, financial regulation, and macroeconomics. he advised and bernanke throughout the 2008 and 2009 financial crisis. he also was an advisor to alan

greenspan. before taking office as a member of the board of governors, he was an advisor to the board of monetary policy, director of the division of monetary affairs, and the deputy staff director for monetary and financial policy. he has written extensively on issues related to monetary policy and its implementation by the federal reserve. >> thank you, kevin. thank you, both kevins. thank you for the opportunity to read your proposed legislation and for the opportunity to comment on it. this is a very welcome effort. in my opinion, and this is a constructive way to respond to concerns about past and potentially future performance of the federal reserve. open up the debate. open up the debate on

objectives. the optimal central banking is thought of as the elected representatives giving the central bank the objectives and the central bank having to assert independence to move instruments around to achieve those objectives, and then be held accountable for them. i want to concentrate on the monetary policy aspects of the legislation. we will get into other aspects later. i certainly agree that long-term price stability is the appropriate long-term goal of a central bank. it is a goal that is under the control of the central bank over the long run. for maximum employment is an estimate given by market structures, not something that is under the control of the central bank. over the long-run, stability is the way they can contribute to a maximum employment. chairman bernanke has talked

about price stability as an end and the means to an end, the means to high employment. he would completely agree with that. i agree that credit-fuelled asset bubbles have undermined economic -- it was true in the 1980's and 1990's. we had a banking crisis of two years ago. the federal reserve would agree with both of those characterization's. they have been reflected in speeches, testimonies, and as you noted, in the most recent statement of principles. reflecting that recognition by the federal reserve, inflation now comes in the u.s. have not been distinguishable from inflation and out comes -- inflation outcomes in other countries in the last 10, 15 years. the federal reserve has been focusing on inflation forecasts.

it has been engaging in implicit, flexible inflation targeting. over the last five years, inflation has been 2.2%, less than the united kingdom and new zealand. it is a few tenths more than sweden and canada. the last 15 years, the u.s. cpi has been 2.4%, the same as new zealand. the standard deviation of variability of inflation in the u.s. has been roughly the same as in most of these other countries. some countries with inflation targeting have experienced considerable asset booms. the united kingdom, the eurozone, one reads about concerns in canada right now. most inflation-targeting countries have it explicit in their mandate or website that

the central bank, while pursuing price stability first and foremost, will also, within that context, will also minimize fluctuations of income are round employment as they pursue that goal. there is no long-run conflict. fluctuations in output hurt business planning, make it hard to make capital investments. if you don't know what demand is going to be -- there is really no reason why a central bank cannot pursue full employment or minimize the fluctuations around estimates of full employment at the same time it pursues price stability. the rule of asset prices and capital allocation is very tricky and difficult. people care about having certainty about the purchasing power of their income in terms of goods and services, including the cost of imports

and housing services. every inflation targets, at least that i am aware of, is in terms of cpi and doesnot add i -- does not add in. a number of the metric before in the bill have a similar flavor overriding private markets about asset prices and capital allocation. at the same time, it is true that asset-price distortions can get in the way of long-term price and economic stability, as we have seen. the first line of defense against those distortions could be read -- should be regulation. my bottom-line on the objective is, it is fine. it is ok to conform the legislative mandate and a common

understanding of the hierarchy of goals. that has already been done by the fed in words and actions. it would not have made any difference about monetary policy in the past 30 years, including the past few years, or in the future as well. subject to long-term pricing, they should attempt to stabilize it around output. the federal reserve should pay attention to implications of perceive distortions and capital allocation prices for financial stability. the federal reserve should include its assessment of these in its report to congress, and it should tell congress what distortions it sees and what problems it sees, and what the regulators or whomever, or the congress, or the federal reserve, should do about it. i think all those elements should be there, but i am not

sure -- well, those elements should be in there. let me comment on some of the other titles. the federal reserve precedents do bring valuable and diverse perspectives to the policy process/ -- process. i think it is wonderful that they have their research departments. they're not dependent on the board's staff for their views. i can assure you, inside the fomc, there is a diversity of views being expressed. the open market committee is already an anomaly in that it has people sitting on it, making important public policy decisions that don't go through the constitutional process of appointment by the president and confirmation by the senate. i am concerned about the democratic legitimacy and

support for the institution over time, if all the open market and all the presidents were given the vote. we are diminishing the authority of the president and the senate. the reserve bank presidents are not accountable to congress. i am concerned that putting them on the committee undermines support for federal reserve independence over time. you may like the current policy, but that could change over time, and if the concern is on the board of governors, we might concentrate more on ways to encourage defense, get a better variety of people on the board, etc. transcripts. in my view, in shorting the years from five down to three, they have already had a bad

effect on deliberations. i am interested in the views on this. there is less give-and-take, more prepared statement that don't -- compared to before 1994 -- that don't respond well to other people's views/ -- views. i think the federal reserve should be held accountable for the results, for the actions, and how they are explained, to relate to the results, for the rationale in large part because of the legs -- lags in policy. the federal reserve needs to explain why it is doing what it is doing and how it is expected to affect results in the future. if results and explanations are not up to par, congress has every right to examine the processes as things go wrong. holding people accountable for the way they argue, for the words they use in leading up to

the decision, in my mind, will only dampen the debate. finally, results rather than words leading to results. finally, on the agency purchases, i agree with the sentiment behind that particular title. purchases are usually undesirable. we should return to a treasury- only focus as soon as consistent with achieving congressional goals for the federal reserve. the open market committee agrees with that also. it has made it clear in various announcements and speeches. i have two points of concern about the wording. i would not use the accident words. it ties it to discount window. why those particular words? i would tie it back to title one.

we want to dealing only with treasury securities, unless you think it is absolutely necessary to achieve the objectives of this piece of legislation. asking for a report about why you think it is necessary is perfectly appropriate to me, as well. tie it back to the objectives of legislation. i would not dictate the timing. i would tie it back to title one. violating the instrument independents with five years. you can ask for a special section of some report as long as the agencies were outstanding, saying why they were there. thank you. >> thanks a lot. our next speaker just retired from the bank of richmond, 2004. he served as president from 1993 until 2004. he served as a member of the

open market committee. before his term as president, he held a variety of positions in his career with the bank, including director of research. he is currently director of the corporation, faison corp., and t. rowe price group. he is a member of the board of visitors of virginia commonwealth university. he is going to tell us whether monetary policy would have been a lot better if he got to vote more. >> i am not sure i will do exactly that, but thank you very much. it is a pleasure to be here and to participate in this program. as you suggested, i worked for most of my career i have seen a lot of proposed legislation. congressman, i applaud you for this proposal.

i have some strong reservations about some pieces of it, but i think by and large it is a very important proposal and i salute you for making it. i thought what i would do is go through each of the titles briefly. most movie reviews give you some type of star rating system. if it gets five stars, that is outstanding. one start means a much weaker movie. i thought i would share my star ratings for each title. i hope it does not sound arrogant. it is my way of trying to give you a reasonable bottom line. on title line, i have many of

the same thoughts. this would replace the current dual mandate. i would give this title five stars. i think it would be great if we could go there. i recognize the political imperative over the years for a dual mandate to never made sense to me for a central bank. the economics seemed clear to me. we have already heard this the fed and other central banks can directly influence and control the price level. it cannot control output, jobs, in any meaningful way. many of us are persuaded -- many of us believe the price stability it would do a lot to

maximize growth. a single mandate focused on price stability seems to me for monetary policy. i salute you for proposing it. i have to confess some discomfort with the right up i was sent on this metric evaluation. it would require the fed to monitor various asset prices. monitoring would be ok if it is strictly monitoring. some sort a supplement to evaluating the behavior of the conventional price indices. what would worry me is that this monitoring might morph into something a little bit different. it would be focused on targeting something like that with something like exchange rates. that would undermine some of the value of the price

stability mandate. nonetheless, that i give five stars to the overall title despite those reservations. the current dual mandate intentionally undermines the ability of the fed to conduct would i would think of as optimal monetary policy. title 2 regarding the fed articulating a lender of last resort policy gets three stars. i understand the motive, the differential treatment of bear stearns and lehman brothers on the other. i give it only three stars because frankly, i did not think the problem is an unclear policy. i am not sure what the legislation says exactly, but

there is a policy that is reasonably clear. it is to provide temporary liquidity against good collateral. it seems to me to be -- i know this is easier said than done -- if congress would establish some type of specific fiscal crisis -- process, somebody other than the fed will do the bailing out. this is a big topic and i would leave it that for now. title 3 is the one -- it would make all fed bank presidents permanent members of the fomc. that has some emotional appeal to me as a look back at my years at the table. it makes me feel a little uneasy and a little disloyal to the banks, congressman, to give this title only two stars.

i have a lot of the same concerns. the basic issue is the fomc's legitimacy. for the fomc to be fully legitimate, as a practical matter, a majority of the voting members must be appointed by the president and confirmed by the senate. enactment of this title would require that for all reserve banks. the way things work in this town, that would mean that as many as two or three reserve banks would not have a president. vacancies, if governor's appointments are any indication, you might have extended vacancies. these are big institutions that

have to be run day today. that is not healthy. you guys have enough gridlock appear. i did not want to greet an opportunity for any more that would involve the -- create an opportunity for any more about involved the presidents. i do not think getting meaningful input into fomc discussions is too much of a problem. all of the nonvoting president's still attend all the meetings and participated in the discussion. if there reserve bank president does his or her homer, they could be employed when till even if they do not have the vote. i can remember many meetings were i did not know who had the votes and who did not have the vote. with the disclosure procedures now, they do not get to publicly dissent.

they have ample opportunity to put their views forward. that is my view on that. title 4 would require the release of transcripts and three years rather than five. i take issue a little bit with you on this. i would go to three. i think five may be better, but not for exactly the same reasons. if you go to three or two, a lot of the focus will be what somebody said in the recent past. i would be fine with three. it's seems to be essential that you need to go there to have another transparency to ensure credibility, but i am not sure it is optimal. i will give you four stars on this title for pushing for more transparency.

more transparency is a good thing. title 5 addresses the relationship of the fed's monetary policy to the value of the dollar. it is currently vulnerable to misuse and abuse. to the extent that the fund can be used, the fed may get drawn into, it has the potential for being harmful to the independent fed and to credibility. i give the second part of title 55 stars. the first part of the title would require the fed to report to congress howled the monetary policy is influencing the value of the dollar. that sounds innocent enough. but for many of us to live to the long arduous process of establishing credibility for low inflation, something like this smells to me like another mandate sneaking into the back door. that could undercut the credibility your single mandate

for price stability is trying to achieve. for this reason, and i confess to some possible paranoia, one star. if a congressman wants to know how the fed feels monetary policy is affecting the foreign exchange value of the dollar, ask the chairman. did not make a formal requirement. title 6, it addresses what my long-term colleague at the richmond fed calls a fed credit policy. it can affect macro credit

allocation. title 6 would still permit sec's action -- such actions by the fed. i think of as a nebulous term. whether that is the case or not to be determined by a two- thirds vote of the fomc. at the end of the day, even with this legislation, it might seem constructive at the time, it could undermine the independence. at a minimum, i would hope that if the fed is going to continue to be engaged in these kinds of operations, they should require the consent -- concurrence with some fiscal authority. i give this title 3.5 stars for

addressing this issue. finally, title 7 would require congress to fund the operation of the new consumer financial protection bureau. five stars, enough said. i would give it a composite average of four overall. maybe 4.5. bottom line, i would love to see at least some of these elements become law. thank you very much. >> thank you. i will give the presentation 5 stars. >> our next speaker recently joined citigroup as global head of international economics. his own research focuses on global things with an emphasis on the position of the united

states in the world economy. previously, he worked at the federal reserve board for 18 years in a variety of positions. he served as the director of the board's division of international finance bridges also served as one of the three economists in the open market committee. he represented the federal reserve at many international meetings. from 2006 to 2007, he worked as a senior adviser to the u.s. executive director at the imf. he worked on a range of issues. he has lots of academic research.

>> i am very happy to be here today to discuss these important proposals. i will focus my remarks on four key features of the act. i think it is fair to say that i am a little less enthusiastic about some of this. even so, i see this proposals as being very constructive, very helpful, and very serious proposals that deserve to be carefully considered and debated. first, given the balance of the academic evidence, i agree that if you are establishing a new central bank, there would be a good case for considering a single price stability mandate. the euro area countries went exactly through this exercise during the 1990's. the united states is not establishing a central bank from the ground that. -- ground up.

i have several concerns in this respect. i think the federal reserve's record of achieving price stability over the past decade has been strong. as a practical matter, central banks, whatever their explosive mandates, was respond to the evolution of academic -- economic activity. the bank of england with a single mandate for price stability has been particularly aggressive in its quantitative

easing program. inflation is running well above target. i also doubt that present circumstances with millions of u.s. workers unemployed or underemployed are an opportune time to shift the fed's focus away from the objective of full employment. the dual mandate strikes me as powerful. i very much agree that the central bank cannot directly influence the long run levels employment in the economy. the stance of monetary policy can have a significant effect on how quickly the economy returns to full employment. i think that consideration at limbs quite large at present. -- looms quite large at present. this would be closely aligned with the european model where all national central bank governors representing individual countries consistent -- constituencies. i see the important underlying question as being how to balance the public versus private aspects of federal reserve governance.

i believe both of these are desirable and important. on the one hand, i share the view that reserve bank presidents to bring valuable geographical diversity to the fomc deliberations. on the other hand, the board members who now vote at every meeting have strong political standing. they are nominated by the president and confirmed by the senate. this is a policy choice. another observation, it leaps out from the fomc transcripts, the voting and non-voting participants are treated in an entirely symmetric way during fomc meetings. opera to 32 reports on their

districts comment -- opportunities to report on their districts. i see this as unlikely to change the underlying dynamics and discussions at the fomc meetings. frankly, likely to on change -- unlikely to change the fomc policy decisions. i very much agree that the art of central banking is ultimately about striking and appropriate balance between rules and discussion. much of the academic literature has concluded that the political process should establish the goals and objectives for monetary policy, namely the central bank's mandate. they should have a fair amount of flexibility to choose the instruments and approaches they will use to achieve those objectives. my observation after watching central banks around the world formulate policy during the crisis and over much longer horizons is the central banks

with operational flexibility including the capacity to use tools and instruments to influence policy, have been most affected. as such, i am very much in favor of planning, i am uneasy about proposals that would limit the range of assets and which the fed transacts. lock the fed into a lender of last resort policy. i think this is the key points, the dollar's performance over the past decade has been quite sound. in terms of the value against goods, we have seen average inflation of about 2 and 1/4%. the fed's recently announced an inflation target. the commodity prices, this has been beyond the fed's control. 1.9% over the last decade. the value of the dollar against major currencies has been on a depreciating trend over the past

decade. much of this -- more broadly, i see the foreign-exchange value of the dollar as in line with deeper considerations regarding the sustainability of u.s. trade and current account balances. the u.s. current deficit has narrowed from 6% to 3% of gdp in recent years. it means the u.s. economy much closer to a position of the external balance. during the height of the financial crisis, we saw massive inflows into u.s. treasuries and a sharp appreciation of the dollar. the dollar retains its status as a safe-haven currency. my experience suggest the treasury and the federal reserve have a very effective relationship in managing the dollar.

including the drafting of public statements and decisions regarding possible interventions. the treasury brain's enormous expertise to bear on such issues -- brings enormous expertise to bear on such issues. i believe there are distinct benefits in having the treasury deeply involved and taking the lead upon such issues. i see these proposals contained in the bill as important and very substantive. in my view, the burden of proof rests on the proponents of this legislation to make the case is reforms will lead to better monetary policy. >> thank you very much, nathan. our next speaker is a resident scholar at aei. we decided to recruit an economist who is reasonable. welcome. he joined us after a career at the federal reserve board. he was actively involved in the fed's analysis of the u.s. economy and financial markets. his research spanned a wide range of paul -- of topics. he is a visiting scholar at the ucla center for real estate. he also maintains an economic consulting practice.

as does every former fed economist, apparently. [laughter] >> i am really pleased to have the opportunity to participate in this panel. i would like to congratulate congressman brady for starting what is an important discussion about the status of the fed and the conduct of monetary policy that will extend far beyond today's discussion. i did not come up with a star rating, but i think my overall assessment of the bill is probably more in line with nathan's than al's.

i am probably more in the three- star range. there are some that gives me pause. i will try to go through the various titles to hit the high points on each. on a single mandate, i think the more important thing is whether there is an explicit inflation target. then what the specific mandate is. the fed now has an explicit inflation target. even before there was an

explicit target, the fed was implicitly and inflation targets are. the behavior of the fed has not been seriously constrained in terms of establishing a stable inflation by the dual mandate. i do not think changing the dual mandate will actually have a material affect on the inflation performance of this economy. nathan made the point that the actual behavior of central banks is a lot more similar are around the world. the inflation targeting central banks than their mandates are. that is certainly too. i would like to mention that there is recent research that has compared the behavior of the fed to the ecb and the behavior of the fed to the bank of england those other two

banks have hierarchical mandates in the sense that their first goal is price stability and subject to meeting that goal, they are instructed to pay attention to other economic conditions. the research i have seen it really suggest the actual responsiveness of the fed and those other banks to fluctuations in output inflation is three similar. does not relieve the mandate language that drives the behavior. -- it is not really the mandate language that drives the behavior. there are other goals in the shorter run that need to be pursued. i would say if there is a desire to change the dual mandate, i would not change it to the single mandate that is in the bill now. it makes no mention of what the

fed's shorter run objectives are supposed to be. something more like the hierarchal mandate would be a more imparted mandate for the fed. -- informative mandate for the fed. perhaps they found this section to be very confusing. it is very confusing because it is written as if the dodd-frank act did not exist. it was not clear to me as to what part of this act was trying to achieve it. specifically, the dodd-frank act and section 11 already requires that any lending programs before the specific purpose of providing liquidity in a broad

based program and not to a specific and single company. a bill out of aig would already be prevented by this provision of dodd-frank. second, dodd-frank requires the collateral be sufficient to provide tax payers -- to protect taxpayers from losses. it prohibits the fed from lending to borrowers that are insolvent. it requires the fed to terminate any such lending programs in a timely fashion. it would conform with these requirements. the fed has been working on this. they are not finished. they are in the works. the only uncertainty is whether the fed intends to release these new lending regulations to the public. the dodd/frank legislation is not completely clear. i expect it will be made public. i do not know that. the first up would be for congress to make sure that these policies and procedures that

will be governing this will be made public. that is the most important thing. what more is necessary. what will be needed to provide a fault lender of the statement? i cannot tell from the way it was currently worded. the next act, i think this sounds reasonable. i really do agree with al and john that it would make the fmoc less accountable and subject to concerns about decisions being made by a majority. i would really suggest not going in this direction. if the desire is to shift the balance of power away from washington and new york, to

where the other representatives, one way this could be done -- i am not drawing this out as something other than thinking through an issue -- would to be changing the voting position. they get to vote it under rules that were devised in 1942. these roles are anomalous. they provide the new york fed to vote every other year. it is not clear why those rules are still relevant rules in the modern economy that we have today. and it's a killer, if one wants to make sure there is broad representation of the american electorate's, it is not at all clear why a district like stan's francisco that has 20's are of

the u.s. population -- 20 % of the population has less. there are anomalies that can be worked with. one possibility could be to include new york as a voting group so does not votes every meeting and to try to rationalize the whole scheme which is due for another look. i would not lose this every very years. i think the basic premise is wrong. the earlier decision, i think it is not true. i think it has a great deal of timely information about monetary policy. there is a statement immediately after each meeting. they are released only three

weeks after the meeting. there is unemployment, inflation. the chairman gives quarterly conferences that he takes to an hour's worth of questions. he get semiannual testimony is. there is a report. there are very frequent speeches they give their views of the economic outlook. participants are the understand very well the rationale for the decisions long before the transcripts are released. moving back from five years to three years will not change the fact that everything that is needed have already been known. >> on the exchange-rate issue, this is not an area in which i am an expert. i will defer to the others to have offered.

on the credit allocation, i am really somewhat uncomfortable with the specific constraints that would be placed on the asset purchases under this part of the acts. i would agree that the fomc is uncomfortable holding on treasury assets and a light to go back to end all treasury -- back to an all treasured asset. i would not write that back into law, especially not with the addition bar. i think that is an extremely high bar that the fed has a really used to characterize situations when markets were not working properly. there can be significant circumstances in which asset purchases could be appropriate. they would not necessarily be

one of the markets were disrupted. this is all we have now. i am not sure they would feel comfortable declaring that circumstances are usual based on products are weaknesses. >> finally, i fully agree with what is in this bill. the production year should be funded through explicit appropriations. it was an egregious that it was ever funded out of the fed's budget. that should be changed. >> thank you very much. before i open it up, you'll see if anyone in the front months to respond. i have a couple of questions. i do not buy the argument that if congress passes this law that

that it willdon undermine it appeared there are lots of ways to pursue that. inpose that some other nod the direction of that accompanies this. maybe they had to be confirmed. suppose also, because i want to explore the biodiversity, that we were comfortable it would happen expeditiously. it seems to me that it happens with the vote. >> the problem is the issue.

i think it is a practical matter. i think the could be difficult for me to see how it would not involve an intrusion of political consideration. in theory commissure. if there were some way for congress to do this without the kinds of issues that icy and other context of the time. fine. my position is mainly the practical what about this would function. >> i think if you want to put them through the senate is to be one thing. i would restructure it and go down to about five presidents that always have a vote and give them the external one.

make sure they half their own research staffs. the processes so broken. but congress can change the law. that is relevant when deciding what it is today. you have much different laws. if they see something bad happen, then they can change the rules again. >> things are already happening. >> went to vacancies are on the board -- >> they have all this support. i do not view it that way. if congress decides this is an act that restores the confidence, then arguing against it because congress is going to undermine it seems odd to me.

people see the private interests represented on the boards of directors and having more influence and the people they vote for. it strikes me as not a good idea. >> you have more free than to say this. >> and might have cause trouble earlier. one of the byproducts of the greater transparency has been increased media attention that is a result of the news outlets. i think it is fair to say it is much more visible not only in their own districts where we have always made speeches and

reach out to various groups, but to a national audience. one thing that could be done is for the congressional committees to bring these people before it the committee. you wantave something he want to add them. good luck to you. >> we will give them five stars. >> there is a halfway measure. it could help if congress is concerned. >> it seems like the argument that you guys were using end both ways in a way that was consistent. pretty much everybody is saying the civil mandate we do not need

to do. that has not been universally true. i guess i agree with al. demand day and that direction is probably a solid idea. it would make policy more predictable in the long run despite what may happen in the future. >> i think it is important to have an explicit inflation targets. i think the evidence shows the countries that have it adopted and had much improved inflation. i do not think you need to have a single mandate in order to achieve that the performance. you need to be accountable. i would focus more on the accountability.

>> if i could just make one comment. but when one talks about the mandate, what is on everyone's mind is inflation. there has been so much criticism and what is sometimes the unusual actions. people think are immediately aimed at job promotions and shoring up growth. to me, i've gotten support for most of these actions because i believe that there was a deflation risk. i think there is another one

later. i think the chairman has been motivated in taken many of these actions by an effort to do that. in some sense it seems this helps get rid of that problem. that has to do with my thinking. >> the science of central banking, the emphasis on accountability, i see there being broaa broad consensus. noware in a place right nea

where the economy is far from at will librium. i am afraid it could be a while until we get back to anything approximating full employment. i think in this environment, and tinkering with the mandate, will increase the level of uncertainty about what policy is and where it is going. i see the set on a trek trade toward greater transparency and clarity. there is the establishment of forecasts. i just do not see what is to be gained at this juncture in opening the federal reserve act and trying to reach engineer with the federal reserve is trying to do. maybe at some point in the future when this crisis is behind us, maybe such a discussion would be constructive. in this environment, i think it would be very risky.

>> of monetary policy does affect it in the short run, even if it cannot affect the long run values. there is nothing wrong with seeking this and putting people back as quickly as possible. i would hate to take the view away from that. it is not clear what is broken. u.s. inflation has been similar to other targeting. i know there is worry about the future. the fact that we have had this thing since about three years since the mandate has been ill. successfully.

this is this. quite a you suggesting they ignore the second part of a mandate? nell nor are other inflation targets. -- neither are the other inflation once. they are on estimates of potential walkie being inflation close to two%. i do not think it is ignoring the second part at all. they are not in conflict most of the time. >> will not open it up. -- we will now open it up. >> i will make two observations. one is this notion of evaluating performance is based on results. i think that is a dubious

approach. monetary policy is made in an uncertain environment. things happen that one could not have expected. the logic upon which a decision was made at the time would seem to me to be a very important consideration in evaluating how the central bank is functioning. the second observation is perhaps is because it does not show up clearly in the bill. i heard them talk about the roles based on the policies. he implied that this system he would legislates would move the fed in that direction. what i heard tim described in the history sounded very much like john taylor's critiqued, a departure from his particular

role. i wondered whether anyone had anything they would like to say about how this bill might relate to this question of discretionary. >> i do not think the language of the bill really specify said they have to take a rolls face a rules based approach i do not think there's anything that to specify that there should be some specific role they are using. i think there is a way to achieve it. i think you have to be judged to

some extent. expected,t what you ought to be able to explain why they came out and how your policies were moving things back toward your objective. i agree with your logic. we cannot expect inflation to be at 2% or employment to be at full employment of the time. i think it makes the rules based policy difficult. it is hard to specify the role. john taylor's role is not the only rule. -- the rule. is not ther's rule only rule. the house winds up with a whole variety. as a policy maker thinking about

where we where and why we might be deviating, i found it to be a valuable exercise i would not be driven by a particular role. >> on the outcome versus logic decisions, they agree with mike's point. i think that is why transparency is so very important. i think the fed over the last 5- 10 years has come a long way in that direction. i think the federal reserve should continue to think about ways to increase the transparency of the decisionmaking process and the ability to explain the logic. ules versus

discretion, and the one place i saw it was the lender of last resort policy. it was not clear to me based on the remarks or the proposed legislation exactly how constraining that would be. i think it is one place where there is quite an emphasis on roles. >> i do not have anything to add. we have been on that many times. i agree with you strongly on the idea that we need to understand how decisions were made and how they can be improved. that is the reason for this. there is a lift some more distance.

there is an article in the current journal of the national association of business economists. this is very long. it is very good. it uses extensive quotes from the transcripts from 1992-early 2000's. it is all about the increase in productivity growth and how it was dealt with in the fed. it is really worthwhile. it is exhibit a in understanding how the transcripts can be used to improve monetary policy. >> the question raises this bureaucratic intransigence a little bit. we are saying we already know everything. steve listed all the things they do to be transparent.

this should not be harmful. they should be discussing their genuine views. and the state of the world where it is informative, i want to be informative. if they are saying one thing but in the meetings there sang difference, then that is something that i think congress should be informed about when they're voting on the reef formation appeared they should be commended for all the transparency. i like this. i think the argument to get set -- i could do its. >> we will see how exciting this is. i do not want to have to put makeup on. >> the supreme court deliberation. they decide how to vote.

>> i do not know their views. this is completely different. >> you all mentioned how modern inflation target and has some flexibility. historical development in new zealand was spurs. there was pro market oriented reforms. it gave a single inflation mandate and a target of around one% inflation. over the next 10 years, it was you that this was way too restrictive. it gave rise to a political backlash. the mandate that change to allow more flexibility. i think this is a lesson that we should keep in mind.

i forgot my question was. it seems to me that this is driven at least a large extent by the idea that we have one policy and one target. what do you think about making that argument. it affects prices. it is one thing the public at. it is one thing he can stabilize. if you really want a single

target, i think the only drawback would be how to explain nominal gdp. it might be understandable. >> a lot of time on that one. does anyone want to talk about nominal gdp target? >> it is complicated and hard to explain. it to be difficult for people to form a inflation expectations. there's nothing wrong with that. it to be difficult to implement.

>> you are trying to hit it. it is very hard. the have to think about what the potential is. it is a complicated beast. >> once this thing gets into the legislative process, they are pushing to the target. a kid pushed into the substitute. -- it could be pushed into the substitute. this is not an easy question. i question is because the credibility. a gives the fed credibility and of the exchequer station

augmenting power of that. that is what is nice about this. it is not have that kind of relevance the wanted but they focus on price stability, you can view the g.d.p. on the cover for allowing inflation to be over target it. that is what i've always been concerned about. >> we have one last question. i am an intern here.

a lot did you talked about the fact that monetary policy, in the long term its good to have steady prices to give good output. in the short term, who are what would be the best action to deal with short-term high unemployment. ? he is not here to answer the question. i would guess there would say it is congress's job. i like to conclude this session that when congressman brady and his staff began discussions to set this up, and they ask us to assemble people who we really

thought would be harsh critics that to give us food for thought. that is why i think the joint economic committee are so special. iny're very few politicians town that would ask us to do that. i like to thank them for helping us getting congress member ready to come. i look forward to seeing what happens to the bill. i think it is probably going to be something we talked about for the next couple of years. thank you for coming. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

john hofmeister upon the budget requirement. then the author of the history of the fbi. newt gingrich and rick santorum is the trade forum hosted by the alabama republican party. coverage begins at 6:30 p.m. eastern here on c-span. >> now a discussion on the rising price of gasoline. this is from today's "washington journal." >> and what to focus on the price of a gallon of gasoline. this is john hofmeister. he is author of this book. he served as the president of

the shell oil company from 2005 - 2008. right now the average price of gas is $4.25. it is higher in some and lauren and others. some are predicting by summer we're looking at $5 and beyond. why? >> in september 2010, of i said if we stay on the path we're on, we're headed for $5 gasoline by sometime in 2012 here comes the $5 gasoline. the problem is we have had no plan in this country to take care of ourselves. we have been living off imports for 30 or 40 years. while we are in a nation that has more oil than saudia arabia