technology program we're painstakingly building back from unacceptably low levels in the current fiscal queer. these research efforts will better protect our aviation and transit systems and we need to continue cutting edge research. we also need to protect our national security so we can prevent or thwart attempted attacks before they occur. as we saw just last month, terrorists remain committed to attacking the united states. our citizens and our allies. finally, with this amendment, front office and management activities would also be negatively effective -- affected. already this bill slashes funding by 21% below the administration's request. i know that's an easy target, mr. chairman. there's no constituency out there for good management. and for necessary administrative expenses. but believe me, cutting those

front offices, cutting those administrative functions, does affect front line operations at the end of the day. . the secretary and her staff have to run the day-to-day operations, adequate staff support. the officers are already operating on fumes. this additional cut would do great damage. so, this is an amendment that i believe despite the offerer of the amendment has good intentions and his critique of certain departmental operations, the amendment is overly broad and would do damage. mr. dicks: i associate myself with the gentleman's comments and the chairman's comments on this amendment. this is -- we are talking about homeland security. and we have been hit before. and we can't have a meat-ax

approach. and we have to have the same kind of discipline on our side. i suggest in good faith to the gentleman from colorado, if you've got all these reports and all these things about various programs that aren't functioning, offer amendments on each of those programs and then we can vote on them and make a discerning decision. but going across the board is the easy way out and i urge rejection of the gentleman's amendment. mr. price: i thank the ranking member for his comments. i agree with him and i yield back. the chair: the gentleman yields back the balance of his time. the question is on the amendment offered by the gentleman from colorado. those in favor say aye. those opposed, no. in the opinion of the chair, the noes have it. mr. polis: mr. chair, on that i request the yeas and nays. the chair: a request for a recorded vote. mr. polis: yes.

the chair: pursuant to clause 6, rule 18, further proceedings on the amendment offered by the gentleman from colorado will be postponed. for what purpose does the gentleman from georgia seek recognition? mr. broun: i have an amendment at the desk. the chair: the clerk will report -- would the gentleman specify his amendment. the clerk will report the amendment. the clerk: amendment offered by mr. broun of georgia, at the end of the bill, before the short title, add the following, section, none of the funds made available by this act may be used to enforce section 44920-f of 49 united states code. the chair: pursuant to the order of the house of today, the gentleman from georgia, mr. broun, and a member opposed will each control five minutes. the chair recognizes the gentleman from georgia. mr. broun: thank you, mr.

chairman. my amendment says no funds in the underlying bill may be used to restrict access to the screening partnership program of the transportation security administration, t.s.a. s.p.p. is a pilot program that the federal government is using to test privatization at certain airports. currently, there are 16 airports that participate in this program . and a 17th airport has just recently been approved. these airports have received overwhelmingly positive reports and feedback from passengers as well as security personnel alike. in fact, last night i was talking to my good friend, congresswoman lummis from wyoming, and she was telling me about the success of the jackson hole airport in wyoming, which is part of the s.p.p. program.

almost three-fourths of all travelers in the state of wyoming fly in and out of jackson hole. and congresswoman lummis said that the screening process, there is top of the line and haven't had any problems whatsoever. you see airports can still be effective and do their due diligence without the federal government dictating how their security should be set up. i understand that the language in the underlying bill attempts to make access to s.p.p. easier. however, the purpose of my amendment is to ensure that we don't ever use funds to restrict participation in the program and here's an example of why. kansas city airport is another airport that has been testing out privatization. there -- they have been part of s.p.p. for a few years and have received stellar customer reviews with no reported

problems. recently, though, the private contractor handling the security reapplied for the s.p.p. program. but the administration denied their application. even worse, the administration selected a different bidder that has no experience whatsoever in airport security. i don't understand this. this makes no sense. and it's a perfect example of how the administration was shut out good private contractors in order to ensure a lasting place in the federal government and the t.s.a. mr. chairman, the s.p.p. program will not only spur our economy by creating good jobs in the private sector, but it will also relieve some of the burdensome costs that the t.s.a. imposes on our federal budget. i urge my colleagues to support this commonsense amendment, so we can take privatization of the

t.s.a. one step further. and i yield back the balance of my time. the chair: the gentleman yields back the balance of his time. for what purpose does the gentleman from north carolina seek recognition? for what purpose does the gentleman from alabama seek recognition? mr. aderholt: i rice reluctantly to oppose the amendment. i do support privatized screening however i'm concerned how the amendment that has been proposed by the gentleman would be applied. the effect of the amendment would prohibit t.s.a. from cancelling a contract for cause such as the case where privatizing screening airports fails to apply with applicable laws and security requirements. the amendment may restrain t.s.a. from cancelling contracts but it would go too far and tie the t.s.a.'s hands.

again, i reluctantly -- cannot support my colleague's amendment. and i would urge my colleagues to vote no. the chair: the gentleman yields back the balance of his time. for what purpose does the gentleman from north carolina seek recognition? mr. price: i move to strike the last words. i want to associate myself with the remarks of the chairman. i confess to some confusion as to the exact intent of the amendment. it seems to have gone through many drafts. i'm not sure if the idea is to say you can't terminate an agreement or somehow you can't restrict access to the program, but in any case, it seems to me the problem with this amendment is a tying of the administrator's hands when some flexibility and some judgment is called for. i certainly have no objections to the principle of the screening partnership program. if a private company can provide

screening in accordance with t.s.a.'s standards and a local airport contracting company wants to contract with them, so be it. it increases it over $15 million. but to say that under no circumstances that -- can the t.s.a. exercise discretion in granting these contracts or continuing them, i think really goes too far. we need standards. we need qualified professionals to screen passengers and need for the administrator to have flexibility to protect the flying public. so if a private company fails or doesn't meet the standards, then they shouldn't be given this contract and we have to have the flexibility to make sure they receive the contracts. i associate myself with the position of the chairman and urge rejection of the amendment.

and i yield my time. the chair: the gentleman yields back the balance of his time. the question is on the amendment offered by the gentleman from georgia. those in favor say aye. those opposed, no. in the opinion of the chair, the noes have it. the amendment is not agreed to. for what purpose does the gentleman from georgia seek recognition? mr. broun: mr. chairman, i have an amendment at the desk. the chair: the clerk will report the amendment. the clerk: amendment offered by mr. broun of georgia. at the end of the bill, before the short title, insert the following, none of the funds made available by this act may be used for behavior detection officers. the chair: pursuant to the order of the house of today, the gentleman from georgia, mr. broun, and a member opposed each will control five minutes. the chair recognizes the gentleman from georgia. mr. broun: thank you, mr. chairman. my amendment eliminates all

funding for the behavior detection officers and for the screening of passengers by observation techniques program better known as the spot program. it trains detection officers to monitor regular airline passengers for stress, fear or deceptive behavior. the officers then are supposed to put any passengers that exhibit tests-like behaviors such as stress, fear or deceptive behavior through a more rigorous screening process. this seems to be reasonable, but actually, mr. chairman, it is laughable. these agents go through very minimal training and they are hardly equal filed to delve into the psychology of a possible

terrorist. this program was modeled after a very effective one used in israel, but their agents go through a very extensive program of preparation for this line of work. plus, they focus on a handful of airports in israel as opposed to the hundreds that we have to worry about here in the united states. moreover, almost any passenger having a bad day could be deemed a terrorist under the list of emotions that the agents are supposed to take note of. we've all stood in line and seemed an awkward, invasive patdowns that many passengers have to endure. many of us have seen the crying children or elderly grandmas suffering through these embarrassing protocols as we try to get through security. it's got to stop. i would like to point out that the spot program costs us a quarter of a billion dollars to

operate annually and will require $1.2 billion over the next five years. we don't have that kind of money to spend on a program that simply does not work. and believe me, it doesn't work. the government accountability office has found that 17 known terrorists, all that are on the no-fly list have been able to board airplanes over 24 different times from eight different spot certified airports. 17 terrorists, all on the no-fly lists have voted airplanes, at least 24 times at eight different spot-certified airports. g.a.o. also found that not one terrorist, not one terrorist has been caught in the spot program

and the program hasn't been scientifically validated any way. that is enough to convince me that the spot program is a waste of our time, a waste of our money and flat out is not working. so let's get rid of it, and instead, invest our resources in intelligence and in technology that help us catch terrorists before they ever step foot inside an airport in the first place. i urge my colleagues to support this amendment. and i yield back. the chair: the gentleman yields back the balance of his time. for what purpose does the gentleman from alabama seek recognition? mr. aderholt: mr. chairman, i again, i rise in opposition to the gentleman's amendment. the chair: the gentleman is recognized for five minutes. mr. aderholt: i thank the chairman. i do appreciate the gentleman's oversight, concerns and how we can better make this a better program. however, behavioral detection officers are actually a meaningful layer of our

risk-based approach to our security. while there have been questions about the size, this committee has addressed any concern for robust oversight. and i would welcome the opportunity to work with the gentleman from georgia as to how we might address these concerns. but this does not mean we should completely destroy a program that is designed to counter new and evolving tactics against our terrorists as we speak. as recently as last month, after a full terrorist plot that originated in yemen, we learned enemies are still plotting to hit our aviation sector, but these operatives are devising new methods for attacking this nation and some are more difficult to detect than the screening we see in airports. this is where the behavioral detection officers come into play. these officers serve as additional layers, as i mentioned, as defense, to root

thought these adversaries that try to slip through our defenses. this committee will continue to make sure that the program is rightly sized and that the department valid dates the science behind it and it is something that we focused on this year and we need to focus on. cutting the entire program would be irresponsible and would open up holes in our nation's security posture, particularly in light of the continued attempts to attack our nation's transportation system. again, i would rise to oppose the amendment and i would urge my colleagues to do the same. i yield back. the chair: for what purpose does the gentleman from north carolina rise? mr. price: i move to strike the last word. the chair: the gentleman is recognized for five minutes. . mr. price: i associate myself with the words -- words of the chairman and oppose this

amendment. the behavior identification program trains people to recognize high-risk passengers. it's not a new or novel idea, it's been a cornerstone of the israeli government's security for years. a man who has spent his entire career dedicated to protecting this country does believe in this program. he's also attempting to refine it and to utilize it to its fullest potential. our committee has resisted greatly expanding the program. in fact, we don't fund the administration request for an additional 57 -- 75 officers. and we do reduce the fund big $7 million. but the program is important. it is part of the layered system of security. and so it would, i think, not be wise to eliminate the program all together. i think it would be unsafe, in fact and i urge rejection of

the amendment. i'm happy to yield to the ranking member. >> would the distinguished gentleman yield to me? mr. dicks: in washington, we had the millennium bomber who came across from victoria on a ferryboat. as he was going through the regular search procedures, he showed anxiety and because of that, he was -- he was sent over for secondary screening. and he got out of his car and ran and he was captured, actually by a former prosecutor from my home county, dan clem, but this is an example. this is a guy who was going to go to los angeles and blow up the los angeles l.a.x. airport. and because of this behavioral and the alertness of the officers that this person was, you know, was showing signs of

anxiety, we were able to thwart that. so i'm with the chairman and the ranking member here. let's not do something precipitous. let's defeat, as we always do, the gentleman's amendment and i yield back. mr. price: i yield back my time. the chair: the question is on the amendment offered by the gentleman from georgia. those in favor say aye. those opposed, no. in the opinion of the chair, the noes have it. the amendment is not agreed to. who seeks recognition? for what purpose does the gentleman from minnesota seek recognition? >> mr. chairman, i have an amendment at the desk. the chair: the clerk will report the amendment. the clerk: amendment offered by mr. cravaack of minnesota. at the end of the bill, before the short tite 8, insert the

following, section, none of the funds may be used in contravention of 236-c of the immigration and nationality act, 8 u.s.c. 12-26-c. the chair: pursuant to the order of the house of today, the gentleman from minnesota, mr. cravaack, and a member opposed, each will control five minutes. the chair recognizes the gentleman from minnesota. mr. cravaack: thank you, mr. chairman. i rise to offer an amendment to the fiscal year 2013 homeland security appropriations bill to prohibit immigration and customs enforcement, i.c.e., from using taxpayer dollars to process the release or administer alternatives to detention to illegal immigrants who commit a crime in violation of section 236-charlie of the immigration and nationality act. importantly this section requires the u.s. government to detain illegal aliens who have committed serious crimes until the illegal alien is deported to their home country.

for example, section 236-charlie would require i.c.e. to detain an alien who committed murder until the alien is deported. i think this is a common sense provision. in fact, it's my opinion that criminal illegal aliens shouldn't be in the united states in the first place but that's another debate for another day. make no mistake, i believe that the vast majority of ice employees are -- i.c.e. employees are great americans and i appreciate the work they do to make sewer the nation remains one founded under the rule of law. however, i.c.e. does not always operate in accordance with section 236-charlie. for example, they have aloud

criminal illegal aliens waiting for deportation to leave federal deportation facilities and re-enter the general public if they are fitted with a g.p.s. tracking device or regularly checks in with an i.c.e. supervisor. this is troubling to me, mr. chairman. in august, 2010, i.c.e. policy for releasing dangerous criminal ail generals proved deadly. according to a freedom of information act report, illegal alien carlos montano was nnsed to over a year in jail for a second d.u.i. and was released from i.c.e. custody wearing only a g.p.s. tracking device. this is in direct violation of section 236-charlie and is a violation that had tragic consequence. on august 1, montano got drunk, got behind the wheel and collided head on with a vehicle carrying three nuns. the head-on collision killed 66-year-old sister jeanette moser of virginia. to protect nencht citizens from criminal illegal aliens, i firmly believe we need to enforce our immigration laws, especially section 236-charlie. mandating the detention of dangerous criminal illegal aliens is plain common sense. last year, this amendment

overwhelmingly passed the house on a bipartisan vote but the provision was stripped out in conference so i'm offering the amendment again this year. i urge my colleagues to support this amendment -- yes, i will yield. mr. aderholt: i would like to say we agree with the gentleman's amendment and would support it and think it's a good idea. mr. cravaack: thank you. i think this is a goodus of taxpayer dollars and i don't believe in releasing those who have -- those illegal aliens who have committed crimes. the chair: the gentleman from north carolina. mr. price: i rise in opposition to the amendment. the chair: the gentleman is recognized. mr. price: i have read this amendment carefully and ke we dealt with it as colleagues may remember on the floor last year.

the gentleman offering the amendment says it does nothing but restate existing law but at a minimum it sends a strong anti-immigrant message. the gentleman says the amendment prohibits the use of funds by i.c.e. to process the release of illegal immigrants, to administer alternative forms of detention, to immigrants who committed crimes which supposedly mandated incarceration. if we're following the existing law, i don't understand the need for this language. the need for this amendment. mr. cravaack: will the gentleman yield? mr. price: i'd be happy to yield. mr. cravaack: i.c.e. is in the following existing law this would prohibit the funds to ensure that those funds would not be use t.d. allow illegal

immigrants that committed heinous crimes to be admitted back to the public for any reason. mr. price: if i.c.e. is not enforcing existing law then i.c.e. needs to be brought into line but this amendment, you're saying, does not add to existing law. mr. cravaack: if the gentleman would yield. this would prevent illegal aliens to be released back into the public to be released into the yen public either on a bracelet or by checking in, quote-unquote, with their i.c.e. supervisor. mr. price: the gentleman from colorado. mr. polis: i thank the gentleman. this amendment highlights the flip side of this issue in some alternate reality universe. there's a real issue with detention. the issue is not that criminal aliens are being released, they're not. the issue is that we are continuing to pay for the ongoing and indefinite detention of noncriminal aliens

at great cost to taxpayers. we are putting those who have commit nod crime, may have violated our civil code, but putting them up to the tupe of $220 a night when the alternative to detention which has proven effective at $15 or $20 a night. criminal aliens are not being released, and if they are, we need to focus on detaining them. but why are the noncriminal aliens caught up in this net? at a detention facility that's outsourced to a private provider only 40% of the detain quees are criminal aliens. 60% aren't

aliens, why should we, and nobody thinks we should. i yield back to my colleague. mr. price: that's the point. there's no evidence, no evidence that the gentleman's presented or that i've seen that i.c.e. is in fact releasing or holding in alternatives to detention people who according to the law should be detained. the law is what it is. is amendment does not add or subtract to the law. it clearly insinuates that things are going on that we have no evidence are occurring. and so for that reason alone, it seems redundant on one level but to have a misleading and hostile message on another and i urge its rejection. i.c.e. isn't pursuing alternatives to detention in cases where they shouldn't be doing so.

i see no evidence to that. for that. in fact, i think alternatives to detention often is -- are useful. and certainly more cost effective. an the absconding rate is very, very low. if we have people who should be detained, then of course we should detain them but the notion that i.c.e. is not doing that, that i.c.e. is pursuing other alternatives with people who shouldn't have access to them is not accurate. for that reason, i urge rejection of this amendment. the chair: the gentleman yields back. the question is on the amendment offered by the gentleman -- for what purpose does the gentleman from arkansas seek recognition? >> i move to strike the last word. the chair: is the gentleman from arkansas the designee of the gentleman from alabama? >> mr. chairman, i strike the last word and yield to the gentleman from arkansas.

the chair: the gentleman is recognized. >> mr. chairman, i prefer to yield time to the gentleman from minnesota. that's the purpose of my move. the chair: the gentleman from alabama controls the time. mr. aderholt: thank you. mr. cravaack: i thank the gentlemans for yielding. mr. chairman, yop -- the chair: the gentleman from alabama. the gentleman may proceed. the gentleman from minnesota. mr. cravaack: mr. chairman, i don't know what alternate reality they're speaking of. i'm speaking of a reality of this world. i'm speaking of mr. montano who got drunk and got behind a car because he was on a g.p.s. tracking device of creating a heinous crime and being tracked, supposedly, by i.c.e. i'm talking about illegal aliens that are left -- let into our society and the majority of which don't come back to their supervisor but

they also just disappear into the fabric of the country. that's the reality i'm speaking of, to protect the american public from illegal aliens that are in the -- that are illegally in the united states, that have created a heinous crime against americans. this is the reality i'm speaking of. this law will defund i.c.e. to ensure that illegal aliens that are -- that have committed heinous crimes, that are not deported back into their home states are kept detained until such time they are deported or remain in custody. with that, i yield back. mr. aderholt: i yield back. the chair: the gentleman from alabama yields back. for what purpose does the gentleman from washington state seek recognition? mr. dicks: i move to strike the requisite number of words. i yield to my good friend from colorado to tell us more about the alternate reality.

mr. polis: i thank the gentleman from washington. loob, if criminal aliens are not being detained in accordance with the law, simply restating the law won't change that. . what is happening today is noncriminal aliens being detained. mothers are torn from their sons. fathers are torn from their daughters. means that spouses and families are torn apart across our country who have not committed any crime. now, criminal aliens represent a significant percentage of the illegal immigrants in detention and we all agree they should be detained. we aren't talking about paroling or alternative detention for criminal aliens. now, how can we address this problem in a real way in the real world to ensure we have ways to detain criminal aliens and the best way is not to detain noncriminal aliens.

we save money and make darn sure that criminal aliens aren't exempted from detention. let's talk about colorado. in our detention facility, we have 450 beds. we have more demand than that. and our county jails are used as detention facilities. now the counties are reimbursed by department of homeland security. it is another federal bailout of the prison industry. many of them are private prisons. but our federal government is paying $120 a night, $150 for the detention of noncriminal aliens. and as people are being let go because there is no room for them, it's because we are filling the cells with innocent mothers and innocent children and with families being torn apart. that's the why -- if he are

making sure to detain until they are deported or sentenced, we need to do something about noncriminal aliens and fully embrace the successful alternatives in detention which alouis families to be with their kids and participate in school conferences and making sure their kids have food on the table, but also save taxpayer money and keep those beds open for criminal aliens whom there is no disagreement whatsoever. we should remain safe in society and should be kept behind bars. this already states something that is already in law and not an actionable change. if we want to make an actionable change, i would be happy to work with my colleague and we can aggressively pursue alternative detention for those who have not committed crimes in this country. there is a legitimate issue

here. we want to make sure that criminal aliens are detained and deported. no disagreement about that. and to do so, rather than simply restating that is obvious and already the case, we should move forward and make sure we target our resources and target our limited resources after criminal aliens rather than the vast majority of our illegal population, which is engaged in a civil violation that are not threats to society. we are talking about people who are important to our economy and communities. we are talking the president of the student body of a high school in my district who happens to lack documentation, families that play an important economic role in our district, in agriculture and service industries across various sectors and consumers in our stores, driving demand and driving support for job creation in the middle class.

other people who are a threat to society, yeah, some are americans, some are green-card holders and some here illegally. and we agree that those who are a threat to society need to be removed from society. but we can do it more efficiently if we can reform our detention system to make sure we aren't catching all the noncriminal aliens up in a system because they happen to be in the wrong place at a wrong time. mr. dicks: do you think they deserve a trial? colorado colorado absolutely. mr. dicks: we assume because something happened there has to be some kind of legal process. mr. polis: the way they do it, noncriminal aliens red different colored jump suits and in different areas and in part because we don't want the criminal element to corrupt the

noncriminal aliens. so they are separated out. we are paying 120 bucks a night for all of them. why not focus that enforcement element on the criminal element to detain and deport them. the chair: the gentleman's time has expired. mr. polis: i oppose the amendment. the chair: the question is on the amendment offered by the gentleman from minnesota, mr. cravaack. those in favor say aye. those opposed, no. in the opinion of the chair, the ayes have it and the amendment is agreed to. who seeks recognition? for what purpose does the gentleman from north carolina seek recognition? mr. price: i move to strike the last word. the chair: the gentleman is recognized for five minutes. mr. price: i would like to yield to our colleague from the authorizing committee, ms. jackson lee. ms. jackson lee: i thank the ranking member and the ranking member of the full committee,

ranking member of the subcommittee and full committee for their courtesies and i think clearly over this process that we have had, an opportunity as authorizers to work with our friends on the appropriations committee. and i wanted to have the opportunity to share what i think is important information, an amendment that i believe and hope that the policy aspect of these amendments that we can work together in conference to assure that we have come to the right meeting of the minds. i look forward to working with the conferees and working with the senate to make some corrections. last evening, my amendments to help to restore the mission of f.a.m., was in essence an amendment that needs to be clarified. and i again rise with the policy

amendment that would help f.a.m., the federal air marshals which i think i could poll any american and ask them the question as to whether or not federal air marshals are a crucial element of our security. today in our hearing, administrator pistol whether a $50 million reduction would reduce the mission of the federal air marshals and his emphatic answer was yes. that is what is happening. my amendment that we were hoping that would be discussed was an amendment to restore the $50 million and it should be noted that this was taken from $5 billion and many members thought that we were, in essence, drawing resources that were taking away from a small pot, but $5 billion, we're simply

asking 50. 61 would be to respond to questions about cabin security. we have an amendment that i hope the policy of it will be moved in conference, the overall look of adding resources to the transportation security administration, particularly t.s.a. in the amount of $50 million that will help restore the reduced mission of the federal air marshals. more training, professionalism. but there is no doubt when we have to close offices and furlough f.a.m. and try to meet the concerns of, in essence, the question of cabin security, it is very difficult to not have this $50 million. i'm going to work with conferees and work with the ranking member and chairperson to see the value of providing some restoration to

the f.a.m. dollars. also, i think it is very important on this question of buy america, and that is legislation that requires department of homeland security funds to in this time of unemployment, to be used for american companies only. and one might say we already have a buy america. let me just educate my colleagues. in the issue of screening, where there is this desire to have screening partnership programs through the f.a.a. legislation that was passed in february, the prohibition of using foreign companies to screen americans in the united states airports was removed. and so foreign companies can now be our screeners. that, of course, is a question of jobs. it is particularly a question of federal dollars dealing with

security going to foreign-owned companies. this amendment is a crucial amendment, which my colleagues would have allowed on the floor of the house. but i believe that this should be a matter taken up under the security premise as to whether or not even if there is a provision for the screening partnership program, which again, mr. pistol indicated that the $15 million that was allotted out of our screening program was going to undermine the screening program, the federally-based screening program that our program should be federally focused. if there is a federal screening program, then the idea of having foreign-owned companies secure the contracts, take away american jobs and then be screening americans is ludicrous. i would encourage individuals that we can work together.

i look forward to working together and i hope -- the chair: pursuant to clause 6, rule 18, proceedings will now resume on those amendments on which further proceedings were postponed in the following order. first amendment by mr. king of iowa. second amendment by mr. king of iowa. first amendment by ms. blackburn of tennessee. second amendment by ms. blackburn. an amendment by mr. sullivan of oklahoma. an amendment by mr. turner. an amendment by mr. pol is of colorado. the chair will reduce to two minutes after the first vote in this series. this will be a 15-minute vote. the unfinished business is the request for a recorded vote on the first amendment offered by the gentleman from iowa, mr. king, on which further proceedings were postponed and on which the ayes prevailed by

voice vote. the clerk will redesignate the amendment. the clerk: first amendment offered by mr. king of iowa. the chair: a recorded vote has been requested. those in support of the request for a recorded vote will rise and be counted. a sufficient number having arisen, a recorded vote is ordered. members will record their votes by electronic device. by electric tron -- this will be a 15-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

8 -- 9:15. 9:15. 9:15

the chair: on this vote the yeas are 224, the nays are 19. the amendment is adopted -- 189, the amendment is adopted. the unfinished business is the request for a recorded vote on the second amendment offered by the gentleman from iowa, mr. king, on which further proceedings were postponed and on which the ayes prevailed by voice vote. the clerk will redesignate the amendment. the clerk: second amendment offered by mr. king of iowa. the chair: a recorded vote has been requested. those in support of the request for a recorded vote will rise and be counted. a sufficient number having arisen, a recorded vote is ordered. members will record their votes by electronic device. this is a two-minute vote.

[captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the chair: on this vote the yeas are 236.

the chair: on this vote the yeas are 238, the nays are, 175 the amendment is adopted. -- 175. the amendment is adopted. the unfinished business is the request for a recorded vote on the first amendment offered by the gentlewoman from tennessee, mrs. blackburn, on which further ed proceedings were postponed and which the noes prevailed by voice vote.

the clerk: first amendment offered by mrs. blackburn of tennessee. the chair: a recorded vote has been requested. those in support of the request for a recorded vote will rise and be counted. a sufficient number having arisen, a recorded vote is ordered. members will record their votes by electronic device. this will be a two-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the chair: the yeas are 130 and the nays are 282. the chair: on this vote, the yeas are 131, the nays are 282,

the amendment is not adopted. unfinished business is request for a recorded vote on the second amendment offered by the gentlewoman from tennessee, ms. blackburn on which the noes prevailed by voice vote. the clerk will redesignate the amendment. the clerk: second amendment offered by ms. blackburn of tennessee. the chair: a recorded vote has been requested. those in support of a recorded vote will rise and be counted. a sufficient number having arisen, a recorded vote is ordered. members will record their votes by electronic device. this is a two-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the chair: on this vote, the yeas are 204 and the nays are 210 and the amendment is not adopted. unfinished business is request for a recorded vote on the amendment offered by the gentleman from oklahoma, mr. sullivan, on which further proceedings were postponed and on which the yeas prevailed. the clerk will redesignate the amendment. the clerk: amendment offered by mr. sullivan of oklahoma. the chair: a request for a recorded vote has been requested. a sufficient number having

arisen, a recorded vote is ordered. members will record their votes by electronic device. this is a two-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the chair: on this vote, the yeas are --

the chair: the yeas are 250 and the nays are 164, the amendment is adopted. the unfinished combiss is request for a recorded vote on the amendment offered by the gentleman from new york, mr. turner, on which further proceedings were postponed and the nays prevailed by voice vote. the clerk will redesignate the america. the clerk: amendment offered by mr. turner of new york. the chair: a recorded vote has been requested.

those in support of a recorded vote will rise. a sufficient number having arisen, a recorded vote is ordered. members will record their votes by electronic device. this is a two-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the chair: on this vote the yeas are 99, the nays are --

the chair: on this vote the yeas are 101, the nays are 314. the amendment is not adopted. the unfinished business is the request for a recorded vote on the amendment offered by the gentleman from colorado, mr. polis, on which further proceedings were postponed and which the noes prevailed by voice vote. the clerk will redesignate the amendment. the clerk: amendment offered by mr. polis of colorado. the chair: a recorded vote has been requested. those in support of the request for a recorded vote will rise and be counted. a sufficient number having arisen, a recorded vote is ordered. members will record their votes by electronic device. this will be a two-minute vote.

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the chair: on this vote the yeas are 99 and the nays are 316. the amendment is not adopted. the clerk will read the last two lines of the bill. the clerk: page 99, line 18, this act may be cited as the department of homeland security

appropriations act, 2013. the chair: for what purpose does the gentleman from alabama rise? mr. aderholt: mr. chairman. mr. chairman, i move that the committee do now rise and report the bill back to the house with sundry amendments and with the recommendation that the amendments be agreed to and that the bill as amended do pass. the chair: the question is on the motion that the committee rise and those in favor say aye. all those opposed say no. the ayes have it. the motion is adopted. accordingly the committee rises.

the speaker pro tempore: mr. chairman. the chair: mr. speaker, the committee of the whole house on the state of the union, having had under consideration h.r. 5855, direct it's me to report the same back to the house with sundry amendments, with a recommendation that the amendments be agreed to and that the bill as amended do pass. the speaker pro tempore: the chair of the committee of the whole house on the state of the union reports that the committee has had under consideration h.r. 5855 and reports the bill back to the house with sundry amendments adopted in the committee of the whole. with the recommendation that the amendments be adopted and that the bill as amended do pass. under house resolution 667, the previous question is ordered. is a separate vote demanded on any amendment reported from the

committee of the whole? if not, the chair will put them engross. the question is on the adoption of the amendments. those in favor say aye. those opposed, no. the ayes have. it the amendments are adopted. the question is on engrossment and third reading of the bill. those in favor say aye. those opposed, no. the ayes have it. third reading. the clerk: a bill making appropriations for the department of homeland security, for the fiscal year ending september 30, 2013, and for other purposes. the speaker pro tempore: the house will come to order. for what purpose does the gentleman from massachusetts rise? >> i have a motion to recommit at the desk. the speaker pro tempore: is the gentleman opposed to the bill? >> i am opposed in its current form. the speaker pro tempore: the gentleman qualifies. the clerk will report the motion. the clerk: mr. teerny of massachusetts moves to recommit the bill, h.r. 5855 to the committee on appropriations with instructions to report the same back to the house forthwith with the following amendment. page 19, line 18, after the

dollar insert, reduce by $16,630,000. page 32, line 16, after the dollar amount insert, increase by $16,630,000. page 39, line 20, strike $150 million and insert $490,300,000. the speaker pro tempore: the gentleman is recognized for five minutes. the house will come to order. the gentleman is recognized. mr. tierney: thank you, mr. speaker. tonight i rise to offer the final amendment. i want to be clear, this is a final amendment to the bill. it will not kill the bill. nor will it send it back to committee. if it's adopted, the bill will be voted on immediately as amended. let me start by saying that it's unfortunate that the house republicans unilaterally reneged on the agreed upon discretionary caps that were established by the budget control act. doing so just to financial more tax cuts for -- finance more tax cuts for people already

tremendously well off has resulted in the appropriations committee having to absorb $19 billion in reductions below the budget control act. the speaker pro tempore: the gentlelady is correct. the gentleman will suspend. will the house please come to order. please remove all conversations from the floor. the gentleman is recognized. mr. tierney: so i recognize, mr. speaker, that subcommittee chairman aderholt and ranking member price did the very best that they could with this bill, giving the subcommittee's allocation. nevertheless i offer this final amendment that focuses on two important areas. combating the increasing cyberthreat facing this country, and protecting our urban areas from terrorist threats. this week's "the washington post" d pointed out that in recent years have there have been numerous revelations about how the unknown vulnerabilities of our networks and cyberinformation were used to

break into systems that were assumed to be secure. one came in 2009, targeting google, dow chemical and hundreds of other firms when actors from china targeted the penetrated systems. over several months the high jacketers siphoned off oceans of data, including the source code that runs google's systems. according to the same article another attack last year took aim at cybersecurity giant r.s.a. which protects most of the fortune 500 computers -- companies. but it's not only a problem for the largest companies. in fact, according to reuters, 40% of all the targeted internet attacks tax are toward companies with fewer than 500 employees. i suspect the chairman will support these investments and i appreciate that he would do that. but did he what he could do and

we should be doing more. while we spend more than china, russia and the next eight countries combined ensuring that our military superiority is intact, we have not take than same sense of purpose to cybersecurity. my amendment does precisely that, adding near $17 million in new funding to the national protection and programs directorate for additional cybersecurity personnel. including training and education opportunities to grow the future cybersecurity work force. with repeatedly increasing dangerous threats to our networks, it's critical that we have staff with the utmost up-to-date training and skills to address these threats. the final amendment also increases the bill's investment in urban areas security initiative grants from $150 million to $490.3 million. this will not take money away from anybody, it just re allocates the distribution. this is the amount secretary napolitano devoted to the urban area security grants in 2012, as my colleagues know these grants are intended to protect the highest risk and highest density urban areas from terrorist threats. these grants have been substantially reduced under the republican majority and these

reductions have put our nation's most populated areas at greater risk. with that, mr. speaker, i yield one minute to my colleague from new york, mrs. lowey. mrs. lowey: while i appreciate language in the bill set aside for high-threat areas, i fear it is simply insufficient to combat the threats we know are facing our most populated cities. this motion simply raises the floor that must be spent protecting our major population levels to be equal to current levels. the amount of money dedicated to urban areas has dropped from $887 million in 2010, $725 million in 2011, to now under $500 million. yet the threats we face have not diminished. so i thank the gentleman for offering this motion and for yielding and i urge my colleagues to vote to protect our critical population and economic centers. mr. tierney: thank you. this final amendment improves the underlying bill and hopefully will garner bipartisan support. let's take these additional steps to combat cyberthreats, let's step up our efforts to protect our urban areas from

terrorist threats. please support the motion to recommit and with that i yield back the balance of my time. the chair: the gentleman yields back the balance of his time. does the gentleman from alabama oppose the motion? mr. aderholt: yes. the chair: the gentleman -- the speaker pro tempore: the gentleman is recognized for five minutes. mr. aderholt: mr. speaker, i rise to oppose the motion. this bill is already robust on cybersecurity. it provides a substantial increase in every cybersecurity program across the department. furthermore this bill already does more for grants to high-risk areas than any previous d.h.s. appropriations bill and we increase grants for more than $400 million. let he repeat that, by more than $600 million we increase grants. in short, this motion is not needed. this bill cuts spending overall but it also fully sustains all frontline and high-risk operations. it is bald bill, it is a disciplined bill.

it is a bill worthy of support. mr. speaker, it's time to vote. it's time to meet our nation's needs for security and fiscal restraint. i urge my colleagues to reject this unnecessary motion and to enthusiastically support this bill. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. without objection, the previous question is ordered on the motion to recommit. the question is on the motion to recommit. those in favor say aye. those opposed, no. the noes have it. the motion is not agreed to. mr. tierney: mr. speaker. i ask for a recorded vote. the speaker pro tempore: a recorded vote is can requested. all those in favor of taking this vote by the yeas and nays will rise and remain standing until counted. a sufficient number having arisen, a recorded vote is ordered. members will record their votes by electronic device. pursuant to clause 9 of rule 0, the chair will reduce to five minutes the minimum time on the vote.

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the speaker pro tempore: on this vote the yeas are 165, the nays are 251. the motion is not adopted. the question is on passage of the bill. under clause 10 of rule 20, the yeas and nays are ordered. members will record their votes by electronic device. this is a five-minute vote.

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the speaker pro tempore: on this vote the yeas are 234, the nays are 182. the bill is passed. without objection, a motion to reconsider is laid on the table. the chair lays before the house a communication. the clerk: the honorable the speaker, house of representatives, sir, pursuant to the permission granted in clause 2-h of rule 2 of the rules of the u.s. house of representatives, the clerk received the following message from the secretary of the senate on june 3, -- june 7, 2012, at 6:08 p.m. that the senate passed senate 3261, that the senate passed without amendments h.r. 5883, h.r. 5890. with best wished, i am, signed, sincerely, karen l. haas.

the speaker pro tempore: for what purpose does the gentleman from georgia seek recognition? mr. broun: mr. speaker, i have an amendment at the desk. the chair: the clerk will -- the speaker pro tempore: the clerk will report -- mr. broun: a motion at the desk. the clerk: motion to instruct conferees on h.r. 4348 offered by mr. broun of georgia. mr. broun of georgia moves that managers on the part of the house at the conference on the disagreeing votes on the two houses on the senate amendment to the bill h.r. 4348 be instructed to insist on provisions that limit funding out of the highway trust fund, including the mass transit account, for federal aid, highway and transit programs for amounts that do not compete $37,500,000,000 for fiscal year

2013. the speaker pro tempore: pursuant to clause 7 of rule 22, the gentleman from georgia and the gentleman from oregon each will control 30 minutes. the chair recognizes the gentleman from georgia. mr. broun: thank you, mr. speaker. i yield myself as much time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. broun: thank you, mr. speaker. we all know that our country is facing an unprecedented fiscal emergency. we're broke as a nation. while a number of us believe that the federal government spending must be limited, from the very start it's very clear to us here that any spending we do must offset. we cannot continue to build debt for our children and our grandchildren. in most cases when we wish to increase spending, we're presented with a difficult, a very difficult choice. whether to increase taxes, as

some would have us to do, or reduce spending in other areas of the federal government. but the case before us today, the federal highway system, is different from most federal programs. much of the spending in the underlying bill is filtered through the highway trust fund, which is built on a unique principle of user pays. unlike most government programs which rely on general tax revenues, the programs which provide for new roads and highway improvements are paid for by highway users through the 18.4 cents per gallon gas tax. it isn't a perfect system. but it was created with a built-in accountability measure in mind. that the highway trust fund may only give out in obligations the amount in which it takes in through gas tax revenues. until recently this principle worked relatively well.

but uncreasing construction costs, stricter federally mandated fuel efficiency standards and a reluctance to increase the gas tax, especially during an economic downturn, have led to a decrease in the highway trust fund's purchasing pour. none of these -- power. none of these problems should have been a surprise to congress, mr. speaker. as many of them are direct results of actions taken by this body. nevertheless these obstacles should have led us to some sort of congressional action in order to keep the highway trust fund and the federal highway programs as a whole all solvent. so what did congress do? did we increase the gas tax? did we reverse the fuel efficientsy -- efficiency standards? did we reorganize any of the

programs or do anything to encourage the production of cheaper fuel during the -- here in the u.s.? no. absolutely not. when faced with the threat of bankrupting the highway trust fund in 2005, congress did nothing to rein in spending or increase revenues. and instead congress passed the safetealu law which was the biggest, most expensive transportation authorization in history. not surprisingly by 2009, the highway trust fund was broke. since then we've passed three separate bailouts of the highway trust fund, totaling nearly $30 billion. mr. speaker, i feel that the bill which is currently in conference will only lead to more of the same of that deficit spending. my fear is supported by numbers from the congressional budget office, which show that for each

of the next two years there's a projected $8 billion to $9 billion gap between the likely revenues and the expected outlays within the highway trust fund. it is important to note, however, that these estimates are developed using current budgetary conditions. this means that changes could be made during the conference which would prevent the shortfall from happening again. . one approach that has been embraced by many members is to tie the u.s. energy production to highway financing. on its face, this approach looks like a win-win situation, to drive down gas prices and allow investment in transportation infrastructure. while i support language to authorize the keystone pipeline and other domestic energy projects, i must caution my colleagues about combining such

initiatives to pay for a transportation authorization. there are many regulatory hurdles that these projects must cross as well as litigation before they come to fruition. i don't agree with these burdens, but they are a reality. even in the best case scenario, it will be years before we see any profits from keystone or any of our energy development that many of us would like to see us undertake. indeed, using potential production to pay for other priorities is not new in this body. in fact, the house has voted to allow development of the resources in the atlantic -- in the arctic national wildlife refuge, more than 10 times since 1995. as many of us know, policies that have passed here in the

house or even in both bodies do not always take effect as intended. while i agree that our nation's infrastructure needs significant help, we simply cannot allow ourselves to spend billions of dollars that we simply don't have based on the promise of potential unrealized energy revenues. that's why i brought this motion to the floor tonight. my motion to instruct would restore the inherent limits which were built into our highway trust fund originally and would ask that the conferees only obligate funds which are equal to what the congressional budget office projects that the government will take in via the federal gas tax over the course of fiscal year 2013. if my language were added to the bill, it would return discipline to a broken program until either additional real revenue becomes

available or policy changes are made which would relieve the pressure on the highway trust fund. we are in a fiscal crisis, mr. speaker. as a house member, when i initiate legislate, i ask myself four questions. the first, is it right, is it moral? the second, is it constitutional according to the original intent of the constitution? the third, is it needed? and the fourth, can we afford it. given what the conferees are working with, i can't sign off on that last question. it is simply not affordable. we cannot continue to create more debt. and i'm not the only one that feels that way, mr. speaker. in fact, likewise, just two days ago, the u.s. chamber of commerce sent a letter to house members earlier this week expressing its fear of a, quote,

impending fiscal cliff, unquote. in part, the letter states that, quote, america is accelerating toward a fiscal cliff while at the same time congress and the president are ignoring a growing long-run fiscal imbalance, unquote. mr. speaker, it seems clear to me that passing the motion before us here today would be an important step towards reining in spending and allowing us to step back from the precipice on which we find ourselves, a precipice of total economic collapse of our nation. unfortunately as with every other issue, the debate over transportation spending has become cuts for thee but not for me. the time for such games has ended. my motion would attempt to rein in federal spending and hold us

to our honest limits for now. and if the best case scenario presents itself down the road, all the better. i urge my colleagues to support this motion. and i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. for what purpose does the gentleman from oregon rise? mr. defazio: to oppose the motion to instruct and i yield myself such time as i might consume. the speaker pro tempore: the gentleman is recognized. mr. defazio: well, here we shall in the dark of the night voting what is really for the most part meaningless, which is a motion to instruct conferees, which is nonbinding. but in this case, since this might indicate the intent of the majority should this motion prevail, this is a very significant discussion of the future of our country. now, the gentleman talked about

runaway spending, and we have some substantial agreement there. i was the lead democratic sponsor on a balanced budget amendment which would force us to agree on ways to move towards fiscal responsibility, including both revenues, which that side denies, and expenditures. but when we look at expenditures, we need to discriminate between consumption and investment. investment is transportation and infrastructure. giving the united states of america a 21st century competitive infrastructure system, to compete with the rest of the world. our competing nations get it. china is spending 10% of their gross domestic product on transportation investment. so they can be more competitive, get their goods to market more quickly, more efficiently, move their people more efficiently. india, 5%. brazil, 6%. united states of america, umh, a

little bit less than 1%. and the gentleman's amendment would cut it to zero for the next year. yes, zero. how does that happen? well, the fact is as we incur obligations to spend money on infrastructure, there's a lag. we only reimburse the states once a project is finished. over the next year, the past obligations which the federal government has committed would equal the amount of money to which the gentleman would limit us, which would mean no new investment in transportation infrastructure in this country, despite the fact we have 150 bridges on the federal system that are at the point of collapse or need substantial rehabilitation. 40% of the national highway system that need to be dug up and need to be totally rebuilt and $70 billion backlog on our transit system.

that's the 19th and 20th transit system. what about the 21st century transit system? if we make these investments which many of those are opposed to, we would put millions to work in this country. we are fighting for more on more investment on this side and they are asking for reduced investment but this motion would propose zero investment for the next year in transportation infrastructure in america with a deteriorating system and that is fiscally prudent? the gentleman talked about the chamber of commerce. interestingly, because i have a letter dated june 5 from the chamber of commerce, passing transportation re-authorization legislation is a concrete step congress and the administration should take right now to support economic job growth without adding to the deficit. the chamber strongly opposes the

broun amendment, the motion to instruct conferees and urges you to vote against this effort to slash funding for highway safety and transit programs. the chamber may consider votes on in relation to this broun motion to instruct. that's good, i might end up at 5% or 10%, zero with the chamber. so, that's good. they get it. there's a long list of businesses and others that are opposed to this amendment. they understand for america to compete in the modern 21st century world we need an up-to-date system and we don't have it. the legacy of dwight d. eisenhower, a republican president, is falling apart. and at the levels the gentleman would mandate with this motion to instruct, according to the congressional budget office,

there would be zero new investment in the coming year. that is hundreds of thousands of jobs lost, opportunities lo. now, i understand that on their side of the aisle they are having a robust debate about the issue of devolution. and that is a theory that the federal government shouldn't be involved in national transportation policy. it should be delegated to the 50 states and they should be responsible for paying for it. guess what? we had that system until 1956. dwight d. eisenhower and the surface transportation system he gave us. i have a great poster, which is a great photo from the air of the kansas, brand new spanking new, kansas turnpike, 1956 and it ends abruptly and you say wow. why does it end there? oklahoma said, we'll build our

section, too. and have a new coordinated thing. they said we don't have the money and couldn't do it. and it wasn't done until the eisenhower bill was adopted and we had a national investment and national transportation highway system. they want to go back to the good old days, a system funded by the 50 states. flake comes into l.a. which is going into the western united states, maybe not all the way to georgia, who knows, maybe some of it and i guess california would have to move all the freight for the rest of the country. and maybe they aren't going to do that and maybe the other states aren't going to do that under this bizarre theory of devolution. we need a competitive, world-class, national transportation system. the bill that the senate passed won't get us there.

i would vote for it. the bill that was proposed on the republican side of the aisle which they couldn't get out of conference, this bill would take us back to third-world status. it would be fourth world. formerly first world. we are going to let it fall apart and let it up to the 50 states. this is nuts. with that, i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. for what purpose does the gentleman from georgia -- the gentleman from is recognized. mr. broun: i yield myself such time as i may consume and then i will yield to my good friend from alabama. but i would like to say, my good friend and i have utmost

admiration and good feelings to my good friend from oregon but factually is incorrect. if this motion to instruct is indeed put into the conference report that hopefully that they'll get out, there will continue to be new investment in our infrastructure. the difference will be that we just won't create any more debt. and the argument that i got from our -- my colleague on the other side just shows a very drastic difference in philosophy between my democratic colleagues and me and many on our side, and that's that it seems to me that the philosophy of the democratic party is that only government

creates jobs. the government doesn't make any money. they just take money from those and spend ating jobs on whatever government decides that they want to spend it on. we spent a tremendous amount of trillion in a stimulus package that our president gave us, and where are the jobs? created some temporary jobs. created even temporary infrastructure jobs, but our economy is no better. american people are asking where are the jobs? where is the stronger economy? there is none. and there is none because the philosophy of my democratic colleagues just simply does not work. socialism has never worked under any social is particular regime in the history of this nation and isn't going to work under barack obama and my democratic

colleagues. i believe in transportation. it's one of the few truly constitutional functions in the federal government under original intent. in our founding father's time they call it the postal road system. i'm against creating debt for my grandchildren who are six and seven. and they live in georgia. and what we are doing here in this body and what we have been doing here is creating more debt that them and their children and grandchildren are go to go have to pay and will live at a lower standard than we do today and it's because of this philosophy of big government spending and the philosophy of government knows best for america, it's a philosophy of government's going to take away from those who are

producing and creating jobs and give it to government bureaucrats to try to tell us how to run our lives, and it has to stop. america is broke. and we have to stop this deficit spending. where are the jobs? we can create some part-time jobs. i would like to see our highway transportation bill and see us have a 10-year highway transportation bill and not go into debt any further. . . so the philosophy of my friend from oregon is a philosophy of economic failure as a nation. and we've got to stop it. i'd like to yield 10 minutes to my good friend, mr. brooks from alabama.

the speaker pro tempore: the gentleman from alabama is recognized for 10 minutes. mr. brooks: thank you, meek. i support representative broun's motion to instruct. let me explain why. for six decades america's been the greatest nation in history. we are blessed with a standard of living envied by the world, a military unmatched in history, freedoms that others can only dream of. why is america great? because americans before us sacrificed that their children, their grandchildren, their country would enjoy a better future. our founding fathers exemplified america's spirit when they stated in the declaration of independence, and i quote, and for the support of this declaration, with a firm reliance on the protection of

divine providence, we mutually pledge to each other our lives, our fortunes and our sacred honor. in contrast, today's washington abandons america's foundational principles. today's washington supports unsustainable spending, binges that abandon our children and grandchildren and america's future. perhaps a refresher is needed to emphasize america's financial fight. mr. speaker, let me first direct your attention to this deficit chart. as the chart reflects, america suffers from three consecutive record-breaking and unsustainable trillion-dollar deficits and we're in the midst of the fourth trillion-dollar deficit that is projected for this year. think about that for a moment. in fiscal year 2011 washington borrowed 36 cents for every dollar it spent. no household or business could survive borrowing 36 cents for it to operate. similarly no nation can survive

that either. the result, america blew through the $15 trillion accumulated debt mark in november of last year. this year america's going to blow through the $16 trillion debt mark. mr. speaker, the next chart reflects spending for f.y. 2010 and f.y. 2011. in f.y. 2010 the cost of america's debt service was $196 billion. in f.y. 2011 the cost of america's debt service was $221 billion. relatively small slices of those pies. however, in just one year the cost to american taxpayers to service americans' debt increased by $25 billion. to put that into perspective, $25 billion is more than nasa's entire budget. and this is at record low interest rates. if america's creditors become as insecure as the creditors of greece, spain, itsly and any number of other nations, and

interest rates go up accordingly, america's debt service would jump to the $800 billion a year range, making debt service more costly than our entire budgets the. for national defense, our entire budget for social security or our entire budget for medicare and consequently if we had this small slice of the pie increase to $800 billion a year, every other service provided by the federal government would have to shrink. so that we are clear, reckless out-of-control spending is the cause of america's deficit. in fissdalkeer -- fiscal year -- fiscal year 2007 when nancy pelosi became house speaker andujarry reid became senate majority leader, america spent $2.7 trillion. in f.y. 2011 america spent $3.6 trillion. in just four years the federal government spending went up $900 billion, a 33% increase. simply stated, mr. speaker,

there is no end in sight to washington's reckless and irresponsible spending. mr. speaker, if washington does not gain wisdom and backbone, if washington does not change its reckless spending habit, then there will be an american insolvency and bankruptcy. for emphasis, the question is not if, the questions are when and how much damage will be done to our nation from that insolvency and bankruptcy? president obama's chairman of the joint chiefs of staff, mike mullen, gave insight when he stated, and i quote, i think the biggest threat we have to our national security is our debt. and he is right. already america's out-of-control spending threatens to force the firing of 700,000 national defense personnel starting in a mere seven months, january 1 of 2013. let me emphasize that. threatened with 700,000 lost jobs. no enemy has ever undermined

america's national defense so badly. but it does not end with the decimation of america's national defense that may leave america at the mercy of our enemies abroad. america's involume sentsy and bankruptcy list, elimination of social security and medicare, thereby breaching our obligations to our elderly and leaving them impoverished and without medical care. to summarize the danger to america, think back to the great depression in the 1930's. imagine how bad it would have been if then the federal government had been insolvent. as you do this, remember the result of the great depression. an ensuing war that killed tens of millions of men, women and children worldwide. all of this brings me to representative paul broun's motion to instruct. the transportation bill is a micros could much of what threatens america. we enjoy roughly $37 billion in expected highway revenue, yet some in washington seek to spend roughly $51 billion.

that's $14 billion a year that we don't have. now, there are solutions to this budget gap that i could support. we could cut $14 billion in foreign aid and spend it on american roads. but my colleagues across the aisle oppose that. we could cut welfare and stop paying $14 billion a year to people to not work and instead pay $14 billion a year to work on buildings and bridges but my colleagues across the aisle oipose that. there are plenty of solutions out there, but simply borrowing another $14 billion a year we don't have is not one of them. mr. speaker, i cannot in good conscience support a transportation bill that spends roughly $14 billion we don't have, thereby accelerating america on its path to insolvency and bankruptcy. in that vein i thank congressman paul broun for filing his motion to instruct and displaying the leadership america so sorely needs. congressman broun is a man of principle, he has the intellect

to understand the economic disaster that awaits america if washington does not live within its means. more importantly mr. broun has the backbone to do something about it. it is an honor to stand with congressman broun in support -- and support his motion to instruct. mr. speaker, i yield back. the speaker pro tempore: the gentleman yields back. the gentleman reserves the balance of his time? the gentleman from oregon. mr. defazio: well, i appreciate and i certainly do respect the gentleman from georgia and he is a gentleman. but let's get a few things straight here. we're not talking about government jobs. we're talking about private sector jobs. the federal government does not build brings. the federal government does not restore the condition of our highways. the federal government does not build transit vehicles nor invest in transit systems. what the federal government does is invest with strong buy america provisions to the best

low-cost bidders to make and restore these products. to make america more competitive. one of the things that underlays our system, the most basic thing, i mean, george washington, he started to build canals. abraham lincoln, the transcontinental railway. dwight david eisenhower, the national highway system, which is now falling apart. and ronald reagan put transit into the highway trust fund because we shouldn't neglect our urban areas and the needs of those people. the effect of the broun amendment would be zero, zero federal expenditures, new federal expenditures beginning october 1, next year, on transit , highways and other investments in transportation in this country. yet, you know, you can't get around that. that's what they're proposing because we have passed obligations in the way they've

written this would limit us to only pay for past obligations, not any new obligations. they rattled on and prattled on a bit about the obama stimulus. you know, i voted against it. why? because 7% was transportation investment and 40% was tax cuts. and guess what? those damn tax cuts didn't put anybody back to work and they won't put anybody back to work in the future and that's all you guys want is tax cuts. we need investment in our country. we need investment in moving people and goods. we need to compete with the world. and you don't want to do it. that's nuts. i'd yield to the gentleman from oregon such time as he would consume. mr. blumenauer. the speaker pro tempore: the gentleman from oregon is recognized. mr. blumenauer: i appreciate the gentleman's courtesy in permitting me to speak against this motion to instruct. now, i've been through this movie before as a member of the budget committee. this is not new ground.

when it was first unveiled before us, and i looked at the transportation provisions, i asked to the republican staff, what -- to pin down exactly the amount of money that's available, and this essentially is what the republican budget is , and it was not enough to meet the current obligations. it meant that there would be no new programming. and now we're bringing it to the floor with instructions to make sure that this is what the conference committee enacts. now, let us be clear. what my friend and colleague from oregon pointed out is that this is an opportunity for us to empower the private sector. republicans and democrats alike have been visited time and time

and time again, first of all, you could hear from people in your district that the recovery act kept businesses afloat, kept people working, made a huge difference in every state in the union, even though i agree with my colleague from oregon, it wasn't enough infrastructure. but the contractors, electrical contractors, unions, pavers, were thankful for it, to help many of them not go out of business. but a list of people who oppose this amendment are not opposing it because it's -- because our proposal is socialism. to the contrary. the american coal-ash association, the american concrete paving association, the american general contractors, the laborers international, the portland cement association, the carpenters and the u.s. chamber

oppose this because it would add to the depression that we have in the construction cycle in the united states right now. we would not be able to keep pace and it would result in hundreds of thousands of jobs being lost. we had a proposal that passed the senate with 74 votes, half the republicans, that would enable us to have two construction cycles. the republicans who could not get the votes to even have the courage to bring their proposal to the floor, it fell apart, having been brought to the transportation committee, and i am a proud alumni member of that committee, for the first time in history a blatantly partisan bill that had never even had a

hearing, and although they somehow got it out of committee and they got it out of our ways and means committee, but the support within the republican party completely fell apart before it came to the floor, and they were afraid to have it voted on because it would have been defeated because it was bad for america and we had -- i had a list of 600 groups when i was arguing against it in the ways and means committee that thought it was terrible policy, terrible policy. . we requested the republican leadership to at least allow the senate bill to be voted on, and they were afraid to do that. so we are in conference now merely because the republicans just had a short-term extension. i'm willing to allow this body, and i know there would be a number of my republican friends

that would have joined us, not a majority, but enough it would have passed cuffle -- comfortably. my colleague from georgia is concerned that his grandchildren will be facing debt. the republican budget would force us to increase the debt ceiling and force us to borrow in order to have more unfunded tax cuts even while it undercuts investment in infrastructure. this was admitted by the republican chair of the committee in our budget hearing yesterday. he admits that it's not going to balance any time in the foreseeable future and will require an increase in the debt ceiling, but there is a very different philosophy. doesn't have anything to do with socialism. my lord, i thought that the john

birch claim that dwight eisenhower was a communist or socialist was discredited. the partnership we had with the highway trust fund and investing in america's future is something that is the opposite of socialism. it is a public heist private partnership that has involved people in all levels of government and things that made a difference. we are looking -- i had a meeting today with 80 stake holders primarily from the private sector, including environmentalists, unions, businesses and trade associations who are perplexed at the prospect that this house would go on record to shut down all new investment for the next year and further undercut the opportunity of moving a

bipartisan senate bill to at least get us to construction cycle and move forward. i agree that we need to be concerned about a debt burden and independent analysis of why we have had an exploding debt, includes unfunded tax cuts. remember, mr. defazio and i served here when the big fear was that we weren't going to pay off all government debt. what would the insurance companies do? what would the pension plans do if there wasn't government debt to invest in? this is part of the rationale of the bush tax cuts of 2001 and 2003 because we were looking at a $5.3 trillion surplus. well, they solved that problem. they solved it with tax cuts primarily for people who need them the least. yet, we have serious problems with increasing health care

costs and they are trying to dismantle the affordable health care act which over 20 years which would start reining those costs in. they had not one but two unfunded wars which my colleague from my state opposed and the collapse of the economy. it is interesting that mr. romney's adviser, when he was -- when there was critism of the romney record in -- criticism of the romy record in massachusetts, he said that's not really a good criterion because a lot of those jobs were lost in governor romney's first year in office and you shouldn't count those. certain merit to that. but if you use the romney standard of not being accountable for the first year as governor of massachusetts,

the problems with employment and the problems with the debt look much, much different, because this president inherited one of the worst situations in american history. it is important that we focus on where we need to go forward. we actually had a much higher percentage of the gross domestic product in public debt immediately after world war ii. it's much higher than the debt burden today. how was that solved? was it solved by cutting taxes to zero? no. they had much higher tax rates for 20 years until the kennedy-johnson tax cut. they invested in america, as my friend from oregon pointed. they invested in education for returning veterans. they invested in the highway --

transcontinental highway fund and invested in america's future. that's what we should be doing now. the absolute worst thing, the worst thing would be to shut down investment this next year in transportation and infrastructure. that's why companies from a to z oppose this motion to instruct. i hope, instead, we pass the senate bill, get two-year construction cycle and reject this wrongheaded approach. i thank the gentleman's courtesy for permitting to speak and i yield back. mr. defazio: i would point out that the senate -- proposed senate bill, which we could pass tonight if we called back or tomorrow or next week if we stayed in town to work, but we

have breaks every other week, 39 legislative days until the election. we don't need to be here, right? come on. but the bottom line is the senate bill would not create a penny of new debt and would fund current levels of investment, which are not what we need, but we could get by with that for two years until we figure out a way to make morrow bus investments. but the -- make more robust investments. but the gentleman's motion would reduce it to zero. no federal spending for transit. no federal spending for highways next year. that is hundreds of thousands, millions, over a million jobs that we would sacrifice on the altar of what?

again, back to the principle, investment consumption. certainly you can understand that on your side of the aisle. it has been a republican tradition to invest in america, invest in a more better transportation system to move our people and goods more efficiently, to avoid importing foreign fuel and all the things to do with an inefficient system. this would defile all that and say the united states of america, we aren't going to invest, we are going to deinvolve that to the 50 states and go back to 1956 when one state makes an investment and the other state doesn't and the road ends at the border. i can't understand what this is all about. and i reserve.

the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from georgia. mr. broun: may i inquire how much time is left? the speaker pro tempore: the gentleman from georgia has 10 minutes remaining. the gentleman from oregon has 8 1/2 minutes. mr. broun: broun thank you, mr. speaker. my friends from oregon are factually incorrect. this would not cut out all new spending and they are using scare tactics to promote their big government agenda. i would like to now yield some time, five minutes or up to five minutes to my good friend, jeff duncan from south carolina. the chair: the gentleman is recognized. mr. duncan: i thank the gentleman from georgia. i think the colleagues on the other side of the aisle are in denial about deficit and debt. i put the debt clock in front of everyone to see. 15.74 trillion dollars in debt. we have had over $30 million added to the nation's debt since we have been talking this

evening and the clock is running right now. $50,000 per american citizen in this country is your share of the nation's debt. back in july, 2010, my wife and i, took our boys after the campaign and went out across the nation in 17 days, we went through 19 states and visited no less than 11 national parks. this was after the $1.2 trillion stimulus package passed by president obama and the democratic-controlled congress. what did i see as i drove through the 19 states. where did i see the construction projects on the road, the $1.2 trillion in deficit spending to get the jobs we never got? i saw the construction happening, road construction happening on roads leading into national parks. i didn't see it on the interstate highways that would allow transportation on commerce. i saw it in the national parks.

$15.7 trillion in debt, the gentleman is saying collect the highway tax and let's not continue to perpetrate deficit spending. we throw words around like billions, trillions around this nation and we lose track. let me just tell you. if we decided to get serious about paying back our nation's creditors and did it at the rate of $20 million a day and did that every day, seven days a week, 365 days a year, and ladies and gentlemen, listen up, if we did that every day of the year from the time jesus christ was born until now, we have only paid back $14.9 trillion, our debt, less than what we owe. at the rate of $20 million a day for 746,000 days that it's been. it's time to get serious what we

are doing with regard to revenue and deficit spending. this is the fourth year in the year we will be in excess of $1 trillion, spending $1 trillion more than we are bringing in and all we are doing on the republican side is saying, we need to have america live within its means. we need a balanced budget to require this body, who shows no fiscal restraint and requires this body to live within its means like we have to do at home like in our family budgets and business budgets. we need to get serious about our debt. quit spending money on jobs we never got from the obama stimulus package. and with that, i yield back. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from oregon. mr. defazio: i yield myself such time as i may consume. the language is limit the funding out of the highway trust

fund for federal aid to amounts that do not exceed $37 ,500,000,000 about a third of the continuing war in afghanistan, which i would like to bring to a close. but the existing obligations of the federal government for past construction we reimburse states once the project is done, transit projects, highway projects, done, we reimburse them and don't pay them in advance. our current obligations for the next year are delrts 38.8 bill -- $38.8 billion and if we limit the outlays to $37.5 billion and owe $38.8 billion to the state, that means we would have negative spending on federal investment in transportation and

infrastructure. while our competitive nations around the world are investing dramatically to more efficiently move goods and people, we would spend less than zero. i don't know how we spend less than zero but that's what this amendment would do. you keep talking about the obama stimulus. i voted against it. and i voted against it not because of investment in infrastructure, but because it didn't invest in infrastructure. the president talked about it. larry summers hated infrastructure. timmy geithner hates infrastructure. all the advisers hate it. 7% of the money we borrowed was invested in infrastructure. 7% of that 800 and some billion

dollars. i can justify to that borrowing because i can say we built that bridge, we built that transit system, we built that highway and you are still using it and made america more competitive. but over 40% was tax cuts. he adopted the republican approach. how many jobs did the tax cuts create? nada, zero, none. you want more tax cuts and don't want to do any more investments. that's what this would lead us to. you want to continue all the bush tax cuts, all of them. all of them. and want to invest zero in federal infrastructure. and with that, i reserve. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from georgia is recognized. mr. broun: i'm not sure where my gentleman gets his math from but it's not reality. mr. defazio: would the gentleman yield? i yield to mr. jordan.

the speaker pro tempore: the gentleman from ohio is recognized. . mr. jordan: look, we've heard all kinds of emotional stuff and language here but let's cut to the chase. this doesn't cut anything. it doesn't slash anything. this is a motion to instruct conferees in the transportation bill, the conferees on that legislation, to limit spending in the transportation legislation to the amount of money that's in the highway trust fund. it's as simple as that. here's the money that came in, all you can do is spend what you have. imagine that concept. imagine government actually just following that simple concept. here's what came in, that's all you can spend. if we'd be doing that, we wouldn't have this debt that mr. cun dan -- duncan so eloquently spoke about. we wouldn't have the problems we see. you can say all the things you want, but it is that simple. spend what -- this is apple pie, this is baseball, this is as

plain as it gets. this is what every family has to do. this is what every small business has to do. this is what every township has to do. this is what every village has to do. every county has to do. every city has to do. every state has to do. the only entity that doesn't have to do this is, oh, by the way that entity that happens to have a $16 trillion national debt. this is as simple as it gets. what you take in is all you can spend. you can't do what the politicians love to do, borrow for someone else, borrow from some other program, which means you have to sell bonds to run up -- the you can't do what politicians love to do. spend more than you have. you can only spend what you have. that's -- and yet the other side says, this is terrible, this will ruin everything. this will make us third world status. i'll tell what you will make us third world status. what will make us third world status is a debt larger than our g.d.p. that will lead us to the --

that's where greece is, that's where these countries that are -- that's where they are. that's what will make us third world status. this is as simple and as plain as it can get. and i appreciate the courage from the gentleman to bring the motion forward and to have this debate. this is a debate that we need to have in this country. if we can't even -- look. if we can't even limit spending in this program to what comes in from the dedicated revenue, if we can't even do that, how are we going to cut other spending elsewhere to get a handle on our deficit and debt problem? if we can't even do this, it's as plain and -- the american people get this. and you can try to confuse them with all the fancy language we've heard from the gentleman from oregon. you can try to. but the american people get it. i want to commend the gentleman for offering his motion and i plan on supporting it tomorrow when we have a vote. i yield back. mr. broun: i reserve the balance of my time. the speaker pro tempore: the gentleman from georgia reserves. the gentleman from oregon. mr. defazio: request the apportioned time. remaining. the speaker pro tempore: the gentleman from oregon has six

minutes. the gentleman from georgia has 3 1/2 minutes. mr. defazio: i'd yield myself three minutes. the speaker pro tempore: the gentleman is recognized for three minutes. mr. defazio: again, we are failing to discriminate between investment and con summings. the republicans are all for con suptive tax cuts. i.e., give people the money, they'll spend it on consumer goods, that will somehow put people back to work. as opposed to investing in the future of our country. that's what i'm talking about here. it's interesting that they're on the wrong side from the u.s. chamber of commerce, the association of general contractors and other groups that are incredibly generous to them during the campaign season. who think they're very wrongheaded with this amendment. this isn't fancy language. i have the statistics from the department of transportation. over the next year the federal government is legally obligated for past construction projects

authorized under law to pay $38.8 billion to the states. this amendment would say, we can spend no more than $37.5 billion in the coming year. that means we cannot even meet our legal obligations for past construction which will be completed by october 1. that means an end to all federal investment in transportation in this country on october 1, next year, for the next year. it's not fancy language. it's a fact. it comes from the congressional budget office, which the republicans control, and the department of transportation, which the obama administration controls. it's pretty much consensus in the business community, the chamber of commerce, the association of general contractors, everybody else. this would mean an end to

investment for one year. that's a minimum of 1.6 million jobs lost. it's an incredible lost opportunity for the future of our kids and grandkids. you need to understand the difference between -- you're supposedly the party of business. it's like, people borrow the money when they're in business if they have a good investment to make. if they can make their company more competitive. we can make our country more competitive. if we invest in our transportation and infrastructure. if we neglect it and people have to detour around the 150,000 bridges that are weight-limited and about to collapse like the one in minnesota, if they have to detour around the 40% of the deteriorated national highway system, if people can't get to work or get killed like they did here in washington, d.c., on a deficient mass transit system because we have a $70 billion backlog and all of these investments when made by the

private sector, for the private sector and for the people of america are made in america. and you would defer instead to more tax cuts. the gentleman from georgia. mr. broun: mr. speaker, i have the right to close and i'm going to reserve the balance of my time until the time to close. the speaker pro tempore: the gentleman reserves. the gentleman from oregon. mr. defazio: how much time do i

have remaining? the speaker pro tempore: the gentleman from oregon has three minutes remaining. mr. defazio: again, i wish this wasn't the dark of the night. because this is a debate america should and would like to have. i'll reiterate, the united states chamber of commerce, with whom i frequently disagree, strongly opposes the broun motion. we have a long list of groups, private sector business groups, who oppose this motion. because this is not about government jobs. it's about private sector jobs. this is not about government gone wild, 7%, i wish it had been different. i wish that the stimulus had been half as large and 100% invested in the infrastructure of this country. we would have put millions more people back to work and we would be on the road to recovery today. but instead indeference to three senate republicans, the president wanted to look bipartisan, gave in to six times as much money for tax cuts as investment in infrastructure and you want to blame infrastructure for the debt and the deficit or the obama failed stimulus? no, guys, no. it's your policies, we implemented them. and they don't work. we need to invest in the underpinnings of the country. when i was first elected to office i served as a very, very

conservative republican, a guy named bill rogers. and he would always say, government's for two things. i'd say, what's that, bill me? said, roads and rope. roads and rope. that is public safety and infrastructure. and there has been bipartisan agreement since george washington, since george washington, that the federal government has an obligation to more efficiently move goods and people in this country. that's a long time before the incredibly competitive 21st century and what we're dealing with today, with our huge trade deficit and everything else. that was george washington. abraham lincoln, republican president, built a transcontinental railway. borrowed money to do it, by god. what do you know? and then dwight david eisenhower, the national highway system. national defense highway system. and ronald reagan, we need to

invest in transit in our cities. and you would turn back the clock to pre-george washington and say, the 50 states, we didn't have states then, but you know, you guys are going to at least allow us to keep federalism and that in tact, but they should create somehow a federal system. they should coordinate, they should raise the money. this is not an obligation of the federal government. this is not imaginary, this is not play, it's not ideology, it's simple, hard numbers and facts. the number you would allow for the next year is deficient to the previous obligations. i know you guys took us -- there are a number you on that said that said, it doesn't matter if the united states of america defaults. i think it does. i've been good for my dat deaths, i think our country's got to be good for our debts and i think we would be in a disaster if we weren't. you can say that. this is reality. invest in america. why do you hate this country so much? the speaker pro tempore: the gentleman's time has expired.

the gentleman from georgia. mr. broun: mr. speaker, i was just charged by this gentleman for hating america and i challenge those words and i ask that his words be taken down. mr. defazio: i did not direct it at an individual. the speaker pro tempore: the gentleman will be seated and the clerk will report the words.

the speaker pro tempore: for what purpose does the gentleman

from georgia rise? mr. broun: i withdraw my request. i want to say this. the speaker pro tempore: the gentleman's demand is withdrawn. the gentleman is recognized for the remaining three minutes. mr. defazio: if the gentleman would yield for one second. mr. broun: one second. sure. mr. defazio: give me four, maybe. i did not mean to direct the remark to you. so that was -- it was a generic statement out of concern. thank you. the speaker pro tempore: the gentleman from georgia is recognized. mr. broun: the gentleman did obviously direct the remarks towards me. he pointed at me when he said, why do you hate america so much. i love my country. i'm a u.s. marine. i'm trying to save my country from financial collapse. and that's what this is all about. stop spending money that we don't have. we've got to finish a project that we've already started. those that have already been approved and funded, before we

start dipping into the general fund. it's estimated that we'll have a short fall of $8 billion to $9 billion if this motion to instruct is not put in place. we cannot afford status quo. their argument is to continue spending money, continue down a road that is going to cause a financial collapse of this nation. in my opinion. we need to create jobs. we need to get this country going economically. the policies of this administration have not worked. the policies that were put forward while nancy pelosi was speaker of this house, with the stimulus bill and other peak spending bills, just have been essentially abject failures. we cannot continue spending

money that we don't have. and that's the reason i brought this motion forward. a motion to instruct the conferees to spend, continue transportation funding, continue building our transportation infrastructure, which i think is absolutely critical. to economic development. but creating more debt is not the answer. i reseptember being accused of hate -- i resent being accused of hating america and that angers me. when i'm accused personally accused by somebody that i thought was a friend. i'm going to try very hard not to take this personally. i will not carry a grudge. because i know from my heart we can disagree on issues and i don't take it personally. but when he appointed -- pointed at me, accused me of hating

america, that's the reason i asked for his words to be taken down. when i ask my colleagues in this house today is look in their hearts, because we absolutely have to change the way this house, this congress, this government is doing business. we cannot continue spending ourselves to object live onand that's the way we're headed. we need to create jobs. we need to create a strong economy. this is not -- this has not been about tax increases or tax decreases. it's been, as i've been -- or as has been accused tonight. this is about spending money that we have and no more. and i encourage my colleagues to please vote for this motion to instruct. and i yield back. the speaker pro tempore: the gentleman's time has expired. all time for debate has expired. without objection, the previous question is ordered. the question is on the motion.

those in favor say aye. those opposed, no. in the opinion of the chair -- mr. defazio: on that i ask for a recorded vote. note the absence of a quorum. the speaker pro tempore: the yeas and nays are requested. all those in favor of taking this vote by the yeas and nays will rise and remain standing until counted. a sufficient number having arisen, the yeas and nays are ordered. pursuant to clause 8 of rule 20, further proceedings on this question will be postponed. the chair lays before the house the following personal requests. the clerk: leaves of absence requested for mr. bilirakis of florida for today and mr. more inow of pennsylvania for today -- marino of pennsylvania for today. the speaker pro tempore: without objection, the requests are so ordered.

for what purpose does the gentleman from georgia rise? mr. broun: do i move that the house now do adjourn. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it the motion is adopted. accordingly the house stands adjour

legislative branch. when the house returns at 9 eastern, live coverage here on c-span. more about the house in the senate in the congressional directory. it includes contact information, district maps, and committee assignments. also information on supreme court justices, and the nation's governors. it can pick a but copy for 1295 -- $12.95 plus shipping and handling. >> tomorrow night, live coverage of the 68th annual review and television congressional correspondents dinner. house speaker john boehner and comedian wayne grady address the gathering that starts at 9:00 p.m. eastern tomorrow and

dickensian life here on c-span. -- you can see it live here on c-span. >> i can't think of a better name. >> general counsel of the general black caucus on the role of today's caucus. >> is designed to ensure that members of congress who are african-american can come together on issues that are plaguing the community at large, issues that may be placing their districts where they can find commonalities. the can discuss legislative proposals and solutions. for people who do not have a voice. >> more on c-span sunday at 8:00 p.m. and bernanke testified before congress today. he said another recession could hit the u.s. without action by

congress. i generally one, the bush era tax cuts are expected -- are expiring as well as tax cuts signed into law by president obama and other spending cuts are scheduled to take effect. this tax increases and spending cuts could damage the economy, ben bernanke said. >> the hearing will come to order. thank you for being here. we're grateful for your presence here and your testimony. after my opening statement, vice chairman brady will go through his statement and we will go to the chairman. we are looking at the as his perspective on actions the federal reserve may take to strengthen the economic recovery. with the may job report, this past friday, it is clear that washington needs to continue our focus on creating jobs. today's hearing is especially

timely for that reason. there are a number of bipartisan action congress can take right now to create jobs and strengthen the recovery. we know the transportation bill dinallo is one opportunity to create jobs. we have to get that legislation out of conference and signed into law. that infrastructure, transportation infrastructure is central to our national competitiveness and the bipartisan bill passed in the senate with 74 votes, it would create almost 3 million jobs by accelerating those infrastructure projects. we should do more to support small business. by targeting tax incentives to firms that expand their payrolls, we can help strengthen the recovery. a bill i have introduced would provide tax credit of 10% for any increases to the payroll tax

base. that could be hiring workers, increasing hours, or raising wages of existing employees. third, the senate this week is taking up the farm bill which is legislation that cuts the deficit by $23 billion. i think has tremendous bipartisan support. it helps farmers manage the risk related to rapidly fluctuating prices for their crops and provide support to rural america. apart the was hit in the recession and still has major challenges. we have fiscal challenges to tackle in a bipartisan manner as well. without congressional answer -- action, spending cuts contained in the budget control act of 2011 along with the expiration of several tax cuts will present a significant economic headwind in 2013. the congressional budget office recently estimated real gdp growth will slow to just 0.5%

in 2013 unless washington in fact act. chairman bernanke has expressed concerns regarding the risk that a so-called fiscal cliff presents to the recovery. i chair that -- share that concern and others share that same concern. there are right ways and wrong ways to balance the budget. we have to be smart about the cuts we make so we can keep growing the economy and create jobs rather than make a bad situation even worse. that means we should not increase taxes on middle income families. we cannot put america on the road to full recovery unless we all agree on tackling the huge budget deficit and debt that america faces. we need to continue to cut spending. no doubt about that and you cannot reduce the deficit by spending tens of billions of dollars on tax cuts for the very wealthiest.

before this committee when we spoke about this, i would like to address briefly currency manipulation especially on the part of china. because it has such a harmful impact on the american economy and american jobs. we recently learned china allowed its currency to weaken in may than -- more than in any of the month since 2005. allowing the one to appreciate would be good for the u.s. and china. the economy as well. the chinese government manipulates their currencies so that there could sell for less than it should. some people may think it is some far off theoretical issue. it is not. when china achieves, we lose jobs. i urge my colleagues to pass the neck -- currency exchange legislation that deals with this issue. we want to get that out of the house. our economy while in the better

shape is recovering from the great recession. with unemployment above 8%, the labor market still needs to heal. europe continues to wrestle with debt issues as well. we know that. which will continue to impact the u.s. financial markets and the global economy. against this backdrop, it is clear we need to stay focused on promoting stronger economic recovery and that means jobs. thank you for your testimony and i will turn to vice chairman brady. >> thank you for holding this hearing and thank you, chairman bernanke for appearing at this critical juncture to discuss america's economic outlook. while we're all anxious for signs of a strong, sustainable recovery, the recent jobs report for may was grim. with employers -- job growth over the past two months has dropped by two-thirds from the

first quarter of the year. business and consumer confidence is down. first quarter gdp estimates were revised downward. 4.5 years after the recession began, americans are enduring the 40th straight month of our rates at or above 8%. this is a post-war ii record. the rest of the drop high of 10% in october of 2009 is attributable to americans dropping of the workforce. the labor force participation rate is gripping a 30-year low. without the severe drop in the number of workers since the rig ocean -- recession began, employment would be at 11%. our economy has struggled to grow at an annualized average quarterly increase of 2.4%. to place in perspective of the 10 economic recovery since world ii lasting more than a year, this recovery ranks regrettably 10.

and last is unacceptable by any standards. because our economy is not flying strong and steady at 50,000 feet as it should be at this point, or rather flying low and slow, we are vulnerable to external shocks. the economic crisis in europe has intensified in recent weeks and brick banks are depleting eligible collateral. not just greece but the european union as a whole appears to be in recession. questions of whether greaser other member states will exit the euro, currencies are dominating the news. we hope you'll get your perspective including the likelihood of a greek exit from the eurozone. and the consequences of these possible events for the european union, the u.s., and the rest of the world. when you appeared before this

committee last october in response to a question about the tools you are considering to mitigate and avert the impact on the nine states, you testified you believed european central bank has enormous capacity to provide liquidity to european banks that traditional currency swaps can provide dollar funding for global dollar money markets. the main line of defense is adequate supervision of well- capitalized american banks with the fed's standing ready to provide as much liquidity against collateral as needed as the lender of last resort to the american banking system. is that still your assessment and are you considering any tools beyond those? in addition, american taxpayers and lawmakers like their counterparts in germany, are becoming increasingly concerned they will be asked to bail out, however indirectly, struggling european governments and banks. there is a growing concern that u.s. treasury will try to bail out the eurozone either directly.

the fed has a challenge as well explaining to a skeptical congress why swap lines with the european central bank will not turn into an indirect bailout of eurozone countries. at the same time, european economies are weakening and growth is slowing in china and india. given the prospects of global slowdown, some economists are speculating the federal reserve may initiate a third round of quantitative easing. during the questions i would like to discuss with you whether and under what conditions the federal reserve would consider launching a third round of quantitative easing. it is my belief the fed has done all i can do and perhaps done too much. further quantitative easing will not stimulate growth and create jobs. there exists a real risk the massive amount of liquidity the fed has injected into the economy could trigger higher inflation before the fed can

execute its exit strategy. another round of fed intervention will increase uncertainty among job trainers while ignoring below -- the reason. which is sound, timely, fiscal policy. are not looking back on -- holding back on hiring -- they are holding back for fear of what the government will do to them. the obsessive push for higher taxes, the unsustainable structural federal debt and deficit along with the flood of red tape and fear the consequences of the president's new health care law, these are the two drugs on the economy. no matter what action the fed takes, without strong leadership by the president today and action by congress now on these fiscal issues, americans will not -- americans will not see

the jobs our economy we deserve. the accumulation of debt is a toxic brew that can spark a debt-driven economic crisis here at home unless the u.s. soon reverse course. last january, the federal open market committee adopted and put in target -- by doing so, the fed has taken an important step toward establishing a rules based monetary policy going forward that should help to achieve price stability and protect the purchasing power of the dollar over time. your adoption of the target raises many questions. is it -- is a 2% target the minimum or maximum? how will the federal reserve tolerates the deviance from the range before taking action? my -- i will request further

clarification on this monetary policy statement in more depth. thank you for appearing before the committee. i look forward to your testimony. >> thank you. two housekeeping matters. we will keep to our time limits more strictly sometimes than we do because of the number of members here. the senate has a vote at 10:30 a.m. and i do not think that will change. we will accommodate members for that reason. let me briefly introduce chairman bernanke. he began a second term as chairman of the board of governors of the federal reserve system on february 1, 2010. dr. bernanke serves as chairman of the federal open market committee, the principle of this -- principal policy-making body. he took office in 2006 when he

began a 14-year term as a member of the board. he was chairman of the president's council of economic advisers from june 2005 through january of 2006 prior -- 2006. he was a chaired professor at princeton and has been a professor of economics and public affairs at princeton' since 1985. >> thinking. i appreciate this opportunity to discuss the economic outlook and policy. economic growth has continued at a moderate rate so far this year. real gdp rose at an annual rate of 2% in this quarter after increasing at a 3% pace in the fourth quarter of 2011. growth last quarter was supported by further gains in private domestic demand which more than offset a drag from decline in government spending.

labor market conditions improved in the latter part of 2011 and earlier this year. the unemployment rate has fallen one percentage point since last august. payroll employment increased 225,000 per month on average during the first three months of this year, up from 150,000 jobs added to -- in 2011. in april and may, however, reported pace of job gains slowed to an average of 75,000 per month. the unemployment rate picked up. this apparent slowing in the labor market may have been exaggerated by issues related to seasonal adjustment and the unusually warm weather this past winter. it may also be the case that the large gains seen earlier last year and this year were associated with some catch-up in a hiring on part of the players that pared their work forces aggressively after the recession. the deceleration may indicate this catch up has largely been

completed and consequently, more rapid gains in economic activity will be required to achieve significant further improvement in labor market conditions. economic growth appears poised to continue at a moderate pace over coming quarters, supported in part by accommodative monetary policy. in particular, increases in household spending have been relatively well sustained. income growth has remained quite modest but the recent decline in energy prices should provide some offsetting left to real purchasing power. while the most recent ratings have been mixed, consumer sentiment is nonetheless up noticeably from its levels late last year. despite economic difficulties in europe, demand for u.s. exports has held up as well. the u.s. business sector is profitable and has become more competitive in international markets. however, some of the factors that are restraining the economy persist. notably, households and businesses appear quite cautious about the economy. for example according to

surveys, households continue to rate their income prospects as relatively poor and do not expect economic conditions to improve significantly. concerns about developments in europe, u.s. fiscal policy, and the strength and sustainability of recovery have left some firms has been to expand capacity. the depressed housing market has been an important drag on the recovery. despite historically low mortgage rates and high levels of affordability, many prospective -- prospective home buyers cannot obtain mortgages as standards have been impaired. at the same time, all large stock of faith -- of vacant houses and a backlog of foreclosures will add further to the supply of vacant homes. a few encouraging signs in housing have appeared recently including some pickup in sales and construction, improvements of homebuilder sentiment, and

the apparent stabilization of home prices in some areas. banking and financial conditions have improved significantly since the deficit and crisis. myth -- recent stress tests conducted by the federal reserve to the balance sheets of the 19th u.s. banks show those firms have added $300 billion to their capital since 2009. the tests also show that even in extremely adverse hypothetical economic scenarios, most firms remain able to provide credit to u.s. households and businesses. lending terms and standards have become less restrictive in recent quarters although some bar or such a small businesses and as noted, potential home buyers with less than perfect credit, are still reporting difficulties in obtaining loans. concerns about sovereign debt and the health of banks and the number of your area countries create strains in financial markets read the crisis has affected the u.s. economy added -- by acting as a drag on

exports, wearing a business and consumer confidence, and pressuring markets and institutions. european policy makers are taking a number of actions to address the crisis but more will be needed to stabilize euro area banks, calm market fears about finances, to be workable fiscal framework for the euro area, and lay the foundations for longer- term economic growth. u.s. banks have greatly improved their financial strength in recent years as i noted earlier. nevertheless, the situation poses a significant bricks -- risks to the economy and must be monitored closely. as always, the federal reserve remains prepared to take action is needed to protect the u.s. financial system and economy in the event financial stresses escalade. another factor is the drug be exerted by fiscal policy. reflecting on going budgetary pressures, real spending by state and local governments has

continued to decline. real federal government spending has also declined since the third quarter of last year and the future course of fiscal policy remains quite uncertain as i will discuss shortly. with regard to inflation, large increases in energy prices caused the price index for personal exemption to rise at an annual rate of 3% over the first three months of the year. oil prices and retail gasoline prices have since retraced those earlier increases. in any case, increases to the price of oil or other commodities are not likely to result in increases in overall inflation so long as business and household expectations become stable. longer-term inflation expectations have been quite well anchored according to surveys of households and economic forecasters and has derived from financial market information. the five-year forward measure of inflation computation derived

from yields and nominal and inflation protected treasury securities suggests that expectations among investors have changed little since last fall and are lower than one year ago. meanwhile, the substantial resources slack should continue to restrain inflationary pressures. given these conditions, inflation is expected to remain at or slightly below the 2% rate that the federal community just as consistent with our mandate to foster maximum employment in a stable crisis -- and as stable prices. with unemployment high and the outlook for inflation subdued and in the presence of significant risk to the outlook, the fomc is maintaining a highly accommodative stance of monetary policy. the target range of means -- remains at zero to 4%. the committee has indicated it anticipates economic conditions are likely to warrant low levels of the federal funds rate at

least through 2014. the federal reserve has been conducting a program announced last september to link in the average security -- maturity of its security holdings by purchase of longer-term treasury securities and selling an equal amount of treasury securities. the committee continues to reinvest principal receipts from its holding of agency debt and agency mortgage-backed securities and to roll over its maturing treasury holdings at auction. these policies are supported -- supporting the recovery by putting down pressure on longer- term interest rates and by making broader financial conditions more accommodative. the committee reviews the size and composition of its securities holdings readily and is prepared to adjust those holdings as a program to promote a stronger recovery in the context of price stability. the economy. the performance over the medium and longer term will depend on the course of fiscal policy.

fiscal policy makers face daunting challenges. they should keep three objectives in mind as they do so. first to promote economic growth and stability. the federal budget made -- must be put on a sustainable path. the federal budget deficit, 9% of gdp, is likely to narrow as the economic recovery needs to -- needs higher tax revenues. nevertheless, the cbo projects its -- if current policies continue, the deficit would close to 5% of gdp in 2017 when the economy is expected to be near full plumbing. under current policies and economic assumptions, the cbo projects the structural budget gap and the ratio of debt to gdp will trend upward thereafter. reflecting rapidly escalating health expenditures and the aging of the population. this dynamic is not sustainable. at best, rapidly rising levels of debt will lead to reduced

rates of capital formation and increasing foreign indebtedness. it will provoke a fiscal crisis that could have severe consequences. fiscal policy must be placed on a sustainable path that results in a stable or declining ratio of federal debt to gdp. even as fiscal policy makers address sustainability, a second objective should a severe tightening of fiscal policy be getting next year that is built into current law, so- called fiscal cliff would allow to occur pose a significant threat to recovery. but uncertainty about the resolution could undermine business and household confidence. they're fully compatible. preventing ace 7 contraction and

fiscal policy will support full employment which should a long- term fiscal says -- stability. a credible fiscal plan to put the federal -- budget to help keep interest rates low and improve household and business confidence supporting improved economic performance today. a third objective is to promote a stronger economy in the medium and long-term care the careful policies and spending programs. to the fullest extent possible, they should increase incentives to encourage investments and work force skills, stimulate private capital formation, provide necessary public infrastructure. although we cannot expect our economy to grow its way out of federal and balances without adjustment and policy, a more productive economy will ease its

ban by policy makers. >> thank you. i will start with the first round of questions. i will set the predicate before asking. based upon three news items, i will call them. we know that china announced today that they have cut their benchmark lending rates for the first time in nearly 40 years in order to reverse an economic slowdown. secondly the european central bank hinted that it would take no further action to aid the the faltering european economy. third, two federal reserve governors as well as the vice chair have hinted at additional action by the federal reserve. based upon those three items and based upon your testimony, the question i have for you is, is the federal reserve planning to

take any additional action in the short term to spur economic growth and create jobs. >> first, i think china and europe face different economic situations that we do. we have to make our judgments based on what is happening in the united states. bucking for a two hour meeting and about 11 days, i think the main question we have to address has to do with the like the strength of the economy going forward. as i discussed in our testimony, in the last couple of months, it may reflect the end of a catch-up period. they were offsetting the sharp declines that occurred during and after the recession.

that is the essential question we have to look at. will there be enough growth going forward to make material progress on the unemployment rate. my colleagues and i are still working on our own assessments, staff are working on their updated forecasts. we will have a new round of economic projections and of the participants between now and the meeting. if we decide for their action is required we have to decide what is appropriate or water consumed -- communications are appropriate. we do have options we can consider. we will have to make some

difficult assessments about how effective they could be and how there are costs orris associated that would outweigh the benefits they would achieve. i cannot directly answer your question. is too soon for me to do that. we have a committee being we will try to evaluate these questions. well economic growth be sufficient to achieve continued progress in the labor market? our mandate for maximum employment says we should be looking to try to achieve continued improvement. >> that helps to give a sense of how you are approaching the question. i want to ask about the fiscal cliff you have spoken to a number of times. when up the manner as we have to confront and it literally a number of months.

the tax cuts, automatic spending cuts put into place by last year prosy budget control act, federal unemployment insurance route -- expires and a whole host of other challenges, can uss -- if you can assess it we want to hear your assessment, the impact of the economy on one of those items, specifically f the tax cuts for middle income folks or to inspire. that particular question. you can make an assessment of that. >> the expiration -- i am not sure i can break it down to the components. the expiration of the bush tax cuts in 2001 and 2003, the single biggest item in the fiscal clef.

if everything else held constant, it would have an adverse effect on spending and growth in the economy. it would be significant. in saying that, i am talking about the size -- the fiscal impact of that. i am not saying that the right thing to do is extended those cuts. there could be other steps that would have a similar impact. that is the biggest component of the so-called cliff. >> keeping with our orders on time. i will turn to the vice chairman burry the. >> you mentioned options on the easing. what other debt securities be purchased? >> we have made no decisions. the law permits us to purchase

treasurys and a government agency securities. those are the securities we have purchased in the past. i would not want to take anything off the table at this juncture. i want to emphasize again that there are two steps here. the first as determined what we think growth will be adequate to further improvement in employment, i think at the same time we will be as -- and price alert for inflation. if we determine it is potentially warranted we have a number of different options and we would have to consider each of them. the costs and benefits associated with them. at this point i cannot say anything is off the table. >> a guess my most direct question is, other than the financial crisis we have not

seen this level since the 1950's. do we think that is holding back our economy. >> the question is, if additional stimulus is needed, could the actions of the federal reserve achieve additional financial accommodation? putting aside potential bad side effects, the costa might be associated with that, i recognize rates are quite low. that clearly is consideration. i do think that we do have methods -- we do have tools the would allow us to give further accommodation into the economy and provide support. it is not quite the same thing to say the problem of the u.s. economy is not -- is not lack of financial accommodations.

it is a different thing -- it is that the same thing to say that and say even if the main problems are coming from elsewhere, it might provide some support from using tools that it has. i do want to say -- i have said this before. it would be much better to have a broad based policy of third addressing a variety of issues. i would be more comfortable if congress would take some of the burden from us and address the issues. >> the thing that is the point of like to make. i wish he would take a third round of quantitative easing off the table. i wish you would say, the fed has done all it can, perhaps too much. i wish you would let the president and congress in the eye and say it is time to do your job. get your financial house in order. rebalance your regulations say

you are encouraging to of care rationed. mitigate uncertainty over the new health care policy. i am not asking you to sit that today but i wish you would. i believe those are the elements holding the economy back. until we get that right, no actions by the fed will get the recovery moving in it we will be satisfied by. on europe, a lot of concerns about what will happen to greece as far as sex sting the euro. what kind of contagion will occur. earlier he said, last october you said the tools you believe are important is providing liquidity to the currency swap, insuring banks are in strong condition and being there to provide liquidity to seven banks. are there any other tools that you are considering the?

should the rich as from europe? >> you have a pretty good list there. we did the swaps as the know. they were helpful in reducing stress. they have been coming down significantly from a peak of $110 billion down to $20 billion. the need it seems to be declining. on the banking side we have worked really hard to make sure the banks and financial system would be resilient to shocks coming across the atlantic. our reviews -- ongoing reviews to exposures in europe. we are taking steps to make sure we are as well-prepared as possible. as i said in my remarks, the federal reserve retains broad based authority to provide

liquidity against collateral in the event of stress. and its role as liquidity providers. it stands ready to do whatever is necessary to protect the financial system. >> thank you. >> thank you mr. chairman. thank you for being before us today. i want to go back to -- i want to go back to something he just said to my colleagues from the senate. you were talking about one of the biggest portions of the fiscal clifford b. the expiration of the best tax cut. he said i am not advocating that. in your wisdom could you tell us what the other steps might be a, to articulate them so i have a to do list?

>> i think i am wise enough not to tell you. what i am saying is, the concern here in the short term is that all of these measures together, they will amount to a withdrawal of spending and an increase in taxation. that is the pending how you count between 3% and 5% of gdp double have an impact on recovery. ever benefit you might see in the long term. what i am saying is, in ways that are up to congress, steps should be taken to mitigate that overall impact in what combination of tax reduction and spending increases, that is really up to you. if that action is taking, what is striking here, this is all preprogrammed. if you go on vacation it will

still happen. it is important to think about that and see how you mind address that concern at the appropriate time. >> that leads me to my second question. i hear this on television, some of my colleagues, from people back home. we are all heading towards this situation. to some people the situation is, hey, he spent too much. you retired early. there are not enough workers. there is not enough economy going to sustain people who are living on the payments mostly from the taxpayers. then there are other people saying, the situation is, you cut it too much spending and are trying to collect taxes too fast. the economy has contracted.

it is almost like a vicious cycle going on. for those people saying we are heading towards a situation, what you think the situation is? is it true we are nearing get in any form -- in a totally different manner, are we subject to what is going on the in greece with the economy we have? >> i think the in the states and agrees are different economies. greece is a small economy. the causes of the crisis are very -- they vary quite a bit from country to country. that is a major reason why it is in such trouble. the united states is a large difference economy with deep

financial markets, international currency and monetary policy. great credibility of to 200 years of paying our debts. which, by the way, that is not something we should squander if that all possible. we are currently paying 125% for money we could borrow any price essentially. i do not think we should be complacent. we have a situation that is not sustainable. we should be thinking about how to put the fiscal budget -- the federal budget on a path that is sustainable longer term. >> thank you. because we have so many members, i will yield back my time and i will call on mr. campbell from

california. >> you made it quite clear that qe3, a decision of may for at least 11 days, i would like to ask from my perspective, qe3 would defect to -- interest rates and liquidity, neither which are obstacles to growth. interest rates are low and there appears to be, illiquidity. considering a qe3, is the decision were made to do it, in what way are we to believe or does somebody believe it would help the current situation? >> putting aside the question of if we need current steps. putting aside current side

effects, our analysis is that quantitative easing programs in the past did ease the financial conditions. it lowered interest rates. a lower the spread between private rates and government rates. even given a level of treasury security interest rates, it could lower the rate paid by corporations. we lowered mortgage rates. raise stock prices and wealthy fax for consumers. -- wealth he fax for consumers. -- wealth effects for consumers. we believe that potentially these measures would add some

additional accommodation, some support to the economy. and then again as you point out, there may be some diminishing returns. we would have to look at and as we analyze what our options are. >> let me move over to europe if i can. you said we should monitor the situation and that the federal reserve prepares to take action. what should we as policy makers be monitoring? what action might we be prepared to consider or take? in europe we cannot control their political decisions. if there were to be a deterioration of some situation in europe, be it the currency or

the banks. how can we put up a fire wall? what might be -- what might we be prepared to mention you are doing what you can to minimize the impact on the economy? >> the congress and the administration have not agreed to any kind of support to europe. the administration is not out -- i think the main things congress could do is strengthen our own economy. the more momentum, the stronger our economy the better we would be able to withstand the spillover from problems in europe. that goes over to the earlier point about getting our fiscal situation clarified. taking appropriate steps to help troubled parts of our

economy from the housing market to what ever else it would be looking at. and again, i think my bottom line is there is not a whole lot that can be done in that i can think of it. we have to monitor very carefully. the best thing we can do is make sure we are strong and prepared in the united states perry >> are the risks to our economy, are the greater today the they were six months ago? >> the risks have waxed and waned this has been going on for more than two years. periods of greater intensity and less intensity, earlier this year, particularly following the refinancing operations by the european central bank has well as the debt restructuring of

greece situation calmed down for a while. for a number of reasons including debris collection that would meet the requirements of its program and the concerns about spain and italy, the it has risen pretty significantly. i am not quite sure whether it is the highest. it has been. it is important for european leaders to take additional steps to contain the problem. >> i will recognize rip cummings from maryland. >> good to see you again. when you appeared before the committee last october you testified in the most recessions

the housing sector is usually a big part of the recovery process. you testified many people are under water. the loss of equity means they are less willing to spend and addressing the housing situation is very important. in january the federal reserve had a report on the housing market. it says the continued weakness in the housing market poses a barrier to the more vigorous economic recovery. i assume you still believe addressing the housing crisis is critical to resolving our situation. >> yes. >> economists and experts across the spectrum believe one key tool to addressing the housing crisis is targeted reductions for underwater mortgages because it saves taxpayers money by

avoiding the fault. in 2008 said, in this environment to restore some equity for the home owner may be a more effected means of avoiding delinquency and foreclosure. a lot of people have characterized it as helping only homeowners. please explain why in some cases it could help taxpayers, too. >> i think we have made some progress on this. the housing market looks to be stabilizing. if true that would be good news going forward. it would be helpful for recovery. there has been a lot of effort since i give that speech to try to modify mortgages. to try to reduce foreclosures. some of that has taken the form

of principal reduction. notably fannie and freddie has decided some principal reduction or at least they're looking at principal reduction as a tool for reducing foreclosures. principal reduction is part of the settlement of a large services. we will get more evidence on this very sen. the board of governors does not have an official position on principle reduction versus other means of modifying mortgages or voting foreclosure. i think as a practical matter, a limited amount of resources available. whether reducing payments is more effective than reducing principal owed. i think there are some important questions there. generally speaking i think the point was trying to make a few

years ago is, while we all focus on the health of avoiding foreclosures gives to the homeowner, it also -- if successfully done it reduces the loss to the lender. it supports the housing market. that helps the broader economy. to the extent we can avoid foreclosures and do so in a cost-efficient way, there are benefits broader than the the health to the homeowner. cox the president of the federal reserve testified before the oversight committee. he said this, we think we can devise a program performed by years, mortgages that are underwire, we can set them to continue to pay on those by giving some principal reduction. the devil is in the detail. you have to have a program designed.

we are confident one can design a program that would be beneficial and positive to the tax payer. do you 83 that this program could be designed in a way that would be -- positive to investors? clark's first, he was speaking for his self. did do not have the official opinion on that. the devil is in the details. a lot would depend on what the criteria are for being eligible for principal reduction. some think a useful approach would be to give principal reduction. to have an equity sharing arrangement whereby future gains, those would go back to the lender. it depends very much on the way the principal reduction is

structured. no doubt there are some situations where there would be the most effective method of diverting unnecessary foreclosures. now only that, we should get the whole range of tools for diverting foreclosures. steps to improve the access to credit for mortgage borrowers and so on to really address a range of issues in the housing market. >> thank you. >> i want to talk a bar a different topic today. a topic that may monday and interest to a lot of people. the interest-rate derivative market. specifically the market for interest rates. apparently if i have my number is correct, the size of this market has grown from $682 billion in 1987 to 400 trillion dollars today. i recognize that is notional

valley but it applies to the gross market value of this particular market. there was a federal reserve of new york called and and ask -- and interest derivative market that said, this was very difficult to as i was reading this it struck me that a lot of those words could be used to describe what happened with the mortgage- backed securities and the debt issues we had back in 2008. i first question is, should we be concerned about this market and its lack of transparency? >> it is probably one of the most important business markets and we pay a lot of attention to

it as do the ftc and the cftc. i think his comportment to say on one hand, that those numbers you psych greatly over state the exposures that the people in the swap are facing. it is also true that interest- rate swaps are typically among the most straightforward and simple to understand of derivatives, so that many of them are vanilla swaps that are pretty easy for regulators and participants in the market to understand. in some ways, it does not pose the risk that credit defaults swaps during the crisis post, for example. all that being said, i agree with the general thrust, which is that we have seen that over-

the-counter derivatives can be dangerous, and following the spirit of financial reform in congress, we and our fellow regulators are working to put as big a share as possible of swaps on centrally cleared, central counterpart attack exchanges, and to increase the transparency. we are working in that direction. i agree it is an important objective. >> does it give a false impression of the true demand for debt and a false impression of the true interest rate? >> interest-rate swaps are basically ways in which participants can convert, for example, a fixed interest payment into an interest payment which is floating and depends on it is really a way of just customizing the flow of interest

received or interest paid. you can have enormous amounts of interest-rate swaps base, are relatively modest amount of underlying debt. i don't think it overstates the amount of actual debt in the market. it is really a hedging tool for market participants who want to customize the flow of their payments and receipts and interest rates. >> does the size of the market and the risk of some of the larger financial institutions, i think it is mostly just large financial institutions at play in this market. given the losses they could incur, does that somehow impair your ability to perform your job? does it compare your ability to exercise independence in monetary policy? >> no, i don't think it does. the underlying instruments, credit instruments are still the

same. it is just a way of sharing the pattern of interest-rate -- receipts and payments. i should have said that to the extent that interest-rate swaps are not traded on central counterparties, that are traded over-the-counter, the regulators are also working to make sure that there is a sufficient margin posted on both sides of the swaps so that if there are rapid changes in the value of the swaps that both parties will be protected. also, in fact this afternoon, we are going to have a meeting, an open meeting at the federal reserve to discuss basel 3 and our discussion will include capital requirements for the market book, including derivatives. in other words, even over-the-

counter financial institutions are going to be protected both of the capital they hold and the margin that they play and they transact with counterparties. it is important for us to take steps to make sure that individual banks are not exposed unduly to large swings in interest rates, for example. the counterexample is an aig, which was basically taking a huge, one way bet. when lost the bet, and lofty enormous amounts of money which nearly brought down the company. -- it lost enormous amounts of money. that means as much central counterpart of trading as possible and added capital and margin for over-the-counter transactions. >> thank you very much. senator albert r. . >> thank you very much. thank you for being here.

there are something like 45 of us democrats and republicans trying to come up with a comprehensive solution for the debt. we have made some headway in it would be a mix of spending cuts and revenue. it will give us four trillion in debt reduction. you may declare -- do something to address the fiscal challenges. i think a balanced approach would be the best way to do it with a mix of spending cuts and revenue. >> first of all, i congratulate you on these efforts. i am glad to see people working hard on this. it is really not my place to advise congress on the particular mix of spending and tax changes, so i hope you will understand that. but i am glad to see that there is a bipartisan effort involved in trying to address this important problem. >> i remember the last time we talked, you did talk at the hearing about how, if we fail to

act again, and went to the brink, as happened last summer with the debt ceiling, which has clearly created some problems with it our economy and fiscal situation in our country. >> the debt ceiling is a separate issue. it is a strange thing that congress can approve to spend $5 and attacked $3 and not approved the $2 issuance of debt. no other country that i know of has anything like the deficit rule but we have. the brinksmanship last summer over the debt limit had very significant adverse effects for financial markets and for our economy. it really knockdowns consumer confidence quite noticeably. that is a somewhat separate issue but i urge congress to come to agreement on that well in advance so as not to push us to the 12th hour. again, i think that trying to

put our fiscal situation on a sustainable basis is perhaps one of the most important things that congress will be working on. >> when you look at the fed's action since late 2008, short- term interest rates at 0, the fed has pushed over $2 trillion in the u.s. treasury and began efforts to support our economy. the the past actions inform you as to go forward in the current economic situation, as you make your decisions? >> yes. obviously when we began these non stated actions, we did not have the benefit of very much experience, except looking at japan. we now have more actual data, more experience, so we have been able to observe the effects of these actions on financial market crises. we have some model based analysis of the effects on the broader economy. there is still a lot of uncertainty about the effectiveness of these tools and

the channel through which they work. it is probably also the case that monetary policy is less effective than it would normally be because of various restraints on lending and so on. having had that experience, it certainly made us better informed and better prepared to use these tools that necessary. >> my state is doing better than a lot of the states pick our unemployment rate is 5.6%, but there are still people hurting. one of the things i noticed when we look at the numbers in past recoveries, we have seen a more direct correlation between economic growth and hiring. we don't think have that correlation today. what has changed, and the think we should be doing more to address that issue? >> i talked about this event in my testimony. in fact, the pace of improvement in the labor market from last summer through, say, march, was

actually surprisingly strong, given the relatively tepid rate of growth and overall economic activity. it was supposal we were trying to understand. i gave a speech in march, and one hypothesis is that there was a burst of extra hiring that reflected the reversal of what might have been excess of layoffs during the recession period. if that is true, and we do not know for sure because there are a lot of other things going on, but that is true, then the implication is that if growth stays going forward near the potential rate of growth, 2.5%, that the improvement in the unemployment rate going forward might be quite limited. again, that is a question we really have to think about.

>> thank you. >> thank you, mr. chairman, for being here. my experience in business and politics tells me that most of the time and we are trying to solve problems, we are actually treating symptoms. i am worried about that with our political policy as well as monetary policy. it is pretty clear that tax rates did not cause the great recession. they were implemented during the downturn in the 1990's. we had six years of growth. the problem clearly came from a loose credit policy that resulted in subprime mortgages and toxic securities. we have not really address that except it appears we over addressed it from talking to a lot of businesses, home builders, realtors, that we have constricted credit to such a degree that local banks don't have the flexibility to deal with their local economy because

the federal government and various agencies are telling them what has to be in their portfolio. i feel like maybe the solution is much simpler. maybe not simple, but we are not addressing that problem that would allow the flexibility. we cannot deal with over building of houses. it will take years to do that. i don't we have addressed the true cause or a least a big part of the calls. instead, we tried unprecedented bank bailout, and president government spending and monetary activism. it is not working. i am concerned about that. the thing i am really concerned about now is since 2008, the national debt has increased about 50% with the interest paid on that debt increasing 2%. some of the things you are doing at the federal reserve is giving us a false sense of security. last year you bought over 70% of

the debt that we created, which masks the real problem, and i think probably gives us a debt interest rate that is much lower than it would be. part of my concern now, as my colleague just said, on one side to appear to have to keep our interest rates low, and on the other side, if we don't keep treasury yields low, banks are going to park the free money we are giving them in treasurys. it seems you are caught in a catch-22 now where you have to work both sides of this to keep interest rates abnormally low, and you have to continue to buy treasurys or we will be paying so much on our national debt that the fiscal problems we are looking at will complicate overnight. on one side we are doing things

that don't appear to address the true root causes of our problem. we seem to now be in a quagmire i am sure you have a totally that we cannot get out of. different take on that, but i think he would have to agree that the activism has been unprecedented, and reason to at least cause some concern. >> of course, there has been a whole range of approaches and responses to this terrible crisis and required a strong response. i guess i would comment on your point about interest rates and the federal debt. the reason we keep interest rates low is not to accommodate congressional fiscal policy. we do it because it would think it will help the economy recover faster and keep inflation near or 2% target. those are our objectives for low interest rates. i would question whether or not lower interest rates are in some way enabling fiscal deficits.

the deficit over the last three years has been over a trillion dollars a year, as you know, about 9% of gdp. we were to raise interest rates by a full percentage point, and ignoring the fact that most debt is of long duration, that would still only raised annual deficit by something over $100 billion. >> a trillion dollars over 10 years, that is real money. >> a trillion dollars a year is what the current deficit is. >> we are talking a trillion over 10 years. we are talking real money. >> a trillion there, a trillion here. i agree with that, but what i am saying is, the situation -- the deficits are so large, going out over the next few years, the respective of the level

interest-rate, i would think congress would have plenty of motivation to try to address that, and whether or not interest rates are currently 1.5% 14 years or 2.5% just as not make that much difference. >> just one other point. my concern now is, we are equating pro-growth economic policies with more government spending. our president is talking about that, that european austerity is bad. on one hand you are telling us the debt is creating a potential huge crisis, yet they are telling us we need to keep spending, with more debt. what is the real signal here? >> first, it is not necessarily more spending. a profit tax relief would also help in the same way. but i have always said, and i said in my remarks and i have said a number of times that you don't want to just two short

runs of stuff and just ignore the long run. you need a balanced program that -- a do no harm policy is what i am looking for here. at least avoid derailing the recovery in the short term, but combine that with a strong and credible plan for reducing the deficit over the immediate term. that is the best policy. principle that would be the best way to go. >> we have a bipartisan commitment to keep in time. senator sanders . >> thank you very much, mr. chairman. i will try to be as brief as i can. number one, this one deals with conflicts of interest at the fed. as you know, jamie dionisio and chairman of j.p. morgan chase, which is the largest financial institution in this country. during the fed bailout, some 16

trillion dollars in low-interest loans given out to every financial institution in this country. j.p. morgan chase received over $200 billion of those loans. the american people, i believe, perceived conflict of interest when you have, among others, the head of the largest financial institution in america sitting on the new york fed, presumably supposed to be regulating the fed, regulating financial institutions. many people, including myself, see the situation as the fox guarding the hen house, and we need real reform in the fed to make sure it is representing the middle class and small business of this country, rather than just wall street and the big money interests. would you be supportive of legislation that i have introduced that representatives of financial institutions get

off of the fed and be replaced by folks in the general public crestar >> you raise an important point. this is not something the fed will do the federal reserve created. congress in the federal reserve acts that this is the governments of the federal reserve, and more specifically that bankers would be on board. >> set out -- 6 out of nine in the regional banks. >> that is in the law. what we have done is try to make something useful out of that. first of all, we have taken a lot of actions to negate conflict of interest. under dodd-frank, the gao did a comprehensive study of our governance and did point out some appearance of conflict of interest. it also found that there were no actual conflict of interest,

because there is a fire wall that the bankers do not have any information or ability to influence cimbri three decisions. the answer to question is that congress sets us of. we have made it into something useful and valuable and we get information from it. congress wants to change it, we will work with you to find alternatives. >> you are quite right. this is something congress established a long time ago. i think is the time to change it. my second question is, in america today, we have the most unequal distribution of wealth and income of any major country on earth, worse than at any time in our country since the depression. 400 individuals owning more wealth. the top 1% -- the bottom 60% owned only 2% of the well that

america. the last report have seen in terms of incomes suggest that in 2010, 93% of all new income from the previous year went to the top 1%. my question -- we can talk about economic growth all you want, but it doesn't mean a damn thing if all that income is going to the top 1%. do you believe we can see an expanding middle class if we continue to have that kind of growth in equitable distribution of wealth and income? >> it is not so much a question of bringing down the top 1 percent as bringing up the lower 99%. how can you strength in the middle class and make middle- class incomes higher and more secure? this is a trend that has been going on for 35 years. his car related to a lot of factors including globalization, the technical change which has

made a high school education simply less valuable. i would be very much in favor of measures to strengthen the middle class and to help average americans do better. approaches like education and so on would be very constructive. >> you have six of the largest financial institutions in the country, large wall street banks that have come together, assets equivalent to two-thirds of the gdp of the united states of america. over nine trillion dollars. you have some folks beginning to talk about the need to break up these huge financial institutions which have so much economic and political power. the top six banks write two- thirds of the credit cards in this country and half of the mortgages. my suspicion is, if teddy roosevelt were here, a good republican, he would talk of breaking up these financial

institutions. how do you feel about the need to finally break these large financial institutions that have so much economic and political power? >> a lot of these people say they want to break up the banks but they are not very specific. does it mean making them a little smaller, or making everything community banks? the dodd-frank act put forward a strategy for ending to be to fail. i think it is incredibly important to end too big to fail. that strategy involves taking away the advantages of size. banks will be allowed to fail, but through a safe method that will avoid the effects on the broader financial market through the liquidation authority that dodd-frank created for the fdic. means large banks will have higher capital requirements, tougher supervision. it will be subject to a whole set of rules that smaller banks will not face. i will guess that if the size of

banks is basically motivated by two big to fail motivation, we take that away and market forces themselves will make it attractive for them to downsize, rationalize, and so on. an additional tool that we have from the dodd-frank is called living wills, which require banks to give up information about their very complex structures. one approach would be to ask banks for the purpose of being able to be brought into receivership if necessary, is to simplify their structure to avoid these very complex, interconnected types of situations that are part of the problem of sheer size. >> thank you, mr. chairman. and page 4 of your statement, you talk about inflation. you say with regard to

inflation, expectations have been well anchored. expectations among investors have changed little. we are lower than a year ago. potential resources slack should continue to restrain inflationary pressures. that is good news. it is good news for all of us. let me ask you a question about the reverse of that. that is deflationary. we have gotten some bad employment numbers. bad news out of asia. it appears that the australian manufacturing is in recession. india has seen the slowest growth in nine years. china is on the verge of a manufacturing downturn. a lot of people are saying we

are at stalls be here in the united states -- stall speed. what is the risk of spending too much time worrying about inflation and ending up in a potentially deflationary new recession? perhaps prompted by a shot from europe but they cannot pull it together. what are your concerns about that? what is the fed thinking about that? is that something we should worry about? what kind of guidance can you give us on that? >> when we set our definition of price ability at 2% inflation, we meant that to operate in both directions. we don't want inflation above that or well below that. we obviously want to avoid deflation. one of the principal motivations for the so-called qe2 we did in 2010 was to avoid deflationary pressures.

we were successful and brought deflationary back to target. there are some signs in europe, china cut interest rates today, and some of the emerging markets have seen slowdowns. there are certainly signs of global slowdown and we are trying to assess how important those are and what implications they have for the united states. i would say at this juncture that in respect to inflation specifically, at this point is probably a pretty low probability risk. at the moment, inflation seems to be pretty stable, close to 2%. we have not seen much indication of declining inflation, particularly when you look at either of the non commodity prices or look at expectations. that particular concern right now is not very much in the forefront of our concerns.

>> what would a shot to the system, war in the middle east, europe coming apart, what would that do to that analysis of what you just gave? >> i think it depends on what the shot is and how it -- a shot in the middle east would cause oil prices to go up a lot. that would tend to be inflationary, but it would probably slow the economy further because it would be like a tax increase on consumers who would have to pay more for gas and therefore less for other things. the euro situation depends a lot, in the situation which we hope will not occur, in which there is a big escalation of financial stress. it would depend a lot on exactly how that happened. if greece, for example, were to leave the eurozone, but stresses were contained there, then the

effects will likely be fairly moderate. if the financial stresses were to spread more broadly, that would create a lot of volatility in our own financial markets. it would put stress on our financial institutions and probably reduce lending picked at a minimum it would tend to slow the economy. but again, i don't think deflation is the main concern here. i think the main concern is promoting adequate growth to continue to bring down unemployment over time. >> given the kind of fragile state we are looking at from an economic standpoint, in particular the situation in europe as it is unfolding, do you sleep well at night? >> i generously pretty well, yes. but i have a lot to do