with the rendering an opinion in public about what kind of force we should use. >> your answer to the chairman about giving your personal view is circumscribed by decisions that are still being made. >> i will render my recommendations are at the appropriate time. >> when might that be? >> if the administration and the government decides to use military force, we provided a variety of options. you know that. >> if it is your position that you do not provide your personal views when asked due to circumstances, you have just contradicted what i have known this committee to operate under for the last 30 years. thank you. >> thank you, senator mccain. senator donnelly.

>> thank you, mr. chairman. i want to get back to syria. i want to ask general dempsey in regards to mental health services for our service members , one of the things that has is there areened effects of sequestration. i was wondering if you know there has been increases and suicides or suicide attempts since the sequestration. >> i do not have that data readily available. it is a good question. we are aware of some of the reduction services. i can take that for the record. >> great. following that, are there efforts in place right now to the effect one mental health since it has such a germanic affect on service members?

-- it has such a dramatic affect on service members? of thegot the attention department and also the joint chiefs. we are concerned. the woundedritized warriors families and mental health services in the face of the declining resources, how that is implemented in the field can sometimes be missed >>. ok -- it can sometimes be missed. >> ok. are we still meeting the plan that we have laid out? hold andill able to

turn the taliban back? along onan going schedule? is it going faster or lesser? rb meeting the numbers we hoped to meet? -- are we meeting the numbers we hoped to me? -- meet? i reach out to as many people as i possibly can reach out to who can give us their views. fromrday we had a woman the congressional research service who has spent the last five months traveling around afghanistan and visiting with civilian and military. in alignedrt come with the assessment that we can achieve our military objectives on the timeline that is currently scheduled. >> ok.

i appreciate the update. if we are able to stay on that program, the afghan forces have a chance to make this work. to get back to the serious -- syria that senator mccain is talking about, if conditions do not change, does it look to you as it looks too many that in the near future another could fall to the assad government? >> the chair asked that. >> i apologize. >> i was reflecting on the fact that there are many people concerned about it. i met on saturday with aching from jordan and i will be visiting him next week and the leaders there as well. -- i met on saturday with the king from jordan and i will be visiting him next week and the leaders there as well.

the conflict seems to avenue and flow. it will always -- the conflict seems to ebb and flow. it will always ebb and flow. we want to make sure we have the option if necessary. >> what steps could have that effect that could slow down the assad or since? -- forces? >> there were significant work on this. there are a range of options out there. >> i know there is a range of options, but as you look at everything, the rebel forces are being moved from almost everywhere they are located. we have options, but the ball seems to be heading the other way. >> i would not want to get into any intelligence emitting judgments. -- committee judgments. it is commonly known where the rebels are most on the run right

now. that is in the central part of syria. it is a difficult situation for them. it happens to be the most important place besides damascus itself or the syrian regime to gain control. they really want that act. -- that back. i believe personally if that regime is successful in that area, they will move to aleppo. it is the largest city in syria. we have got to watch. we have to maintain vigilance. >> and whether it is aleppo or dhar, i know there are contingencies, but to not take action is to take action. i think there is a concern as to

how long this goes on before the momentum becomes irreversible. >> we are ready to act if called upon to act. it is a diplomatic track. discussed. have been i would not want to get out in front of the president or anyone else on what choices -- >> in effect, you're waiting to hear at this point. >> as we should be. we are providing every possible option we can in case we are called to use force. >> in regards to the rebel forces, as you look at them right now, we have been concerned about the activities there. one kind of peace growing stronger than the moderate piece? >> senator mccain referred to

where i was very concerned. there are hundreds of different groups that shift allegiances and alliances. it makes it challenging to determine what we are looking at. intel community is hard at it. we are hard at it with our regional partners. there was a period of time when the extremist element, the jihadists was gaining considerable strength. as of late, through efforts to have made to convince allies to avoid creating a problem by empowering some of these groups, we have had some success at that . we have also had some success in identifying more clearly a part of the opposition that could be built and trained not only militarily. this is the point i want to make sure resonates.

his opposition has to not only be prepared militarily, be prepared if it achieves a position of governance inside of syria. otherwise the situation will deteriorate further. >> thank you for your service. >> thank you. before i call and senator wicker , another senator has a brief comment. was told by my staff when i came back i might have been misunderstood in my comments. i'm arguably the strongest .upporter of opening it up the language is in the bill. , inow, mr. chairman appreciate good faith effort in this and the language in there. i am against the language. thank you for giving me the opportunity to state that. >> thank you. senator wicker. >> thank you.

general dempsey, welcome back. let's talk about the situation in egypt. there has been disagreement in washington about the wisdom to provide assistance to the egyptian military in light of recent events. when i look at egypt, i do not see many democrats. i believe the egyptian military is actively -- acting with restraint throughout the three years of the difficult transition since the 2011 houston -- oust of mubarek. thatf the primary reasons has not been more bloodshed and suffering during this transition time is the support of the united states that provided to egypt through foreign military cooperation. in light of recent events, some call for the end of these programs. let me tell you how i feel about and let you respond.

first, we must maintain the strength of this relationship to enable us to assist and influence agents military leaders. second, the u.s. would be short sighted to overlook the return on investment we get from the egyptian military. .or example, canal transit intelligence corporation and counterterrorism cooperation. these are examples of benefits we have derived from this relationship. third, the egyptian military has played a stabilizing role during egypt's transition. their sustainable peace between israel and egypt -- there is sustainable peace between israel and egypt. benjamin netanyahu statement this week will say that camp david accords have been a cornerstone of peace between us and our neighbors and it has been the cornerstone of stability in the middle east.

general dempsey, do you agree with me regarding the military relationship as enablers of u.s. foreign policy? >> i do, senator. >> do you agree with me that we should continue to maintain and foster the strength of u.s.- egyptian relationship? >> i do. if our government decides that they have to take some action based on existing legal frameworks and restrictions, i would recommend that we find a way to restore those as quick as it meanteven if conditioning in some way. i strongly believe we have to maintain contact with egyptian armed forces. >> do you have any reason to believe that some have feared and some fear now that weapons and equipment that we provide to the egyptians or that we have provided in the past have been

used or will be used or would be used in ways that might the unitedin danger states military or civilian personnel or united states interest? >> there is no indication at this point that would be a concern. >> in your opinion, was elected government of morsi moving toward dictatorship? i would like to use this opportunity to express my conversations with my counterparty. i can tell you they very strongly believe that. ok. let me ask you before i move on madeother topic -- i have some statements. would you like to elaborate? would you like to elaborate on what you said about the relationship we have had and

assistance we have had with the egyptian military? >> thank you. my own personal sprints goes -- my own personal experience goes back to 2008. they are a very strong partner of the united states. .e enjoyed preferential passage they have committed to the camp david accords. and theeli military egyptian military is a strong partner. in my personal experience that goes back about five years, they are worth the investment. with regard to serious -- syria, the chairman talked in his opening statements about a post-assad solution.

do you agree that unless the thinkum shifts, and i senator donnelly was concerned about this also, unless the momentum shifts back toward the rebels, there is hardly any chance for that sort of solution that the chairman seeks and is hoping for. >> yeah, i agree. ebbs and flows, each side is more or less compelled to find a settlement. if i can, i think you answered a question from the chairman about ways in which military support could be given

to the rebels. i think he asked about enabling other averments to support the military efforts if we are unable lyrically or unwilling to do so. do you remember that question? >> i do. or is you elaborate on it that something you do not feel comfortable talking about? >> uncomfortable talking about the commitment to improve the capabilities of the opposition. there are a number of ways. >> of military capability? >> that is correct. >> i understand that. >> and other nations as well. there is a significant nomadic diplomatic effort to bundle and increase the pace of which there capability could be increased. to whod you elaborate as

these allies might be? >> i would rather do that in a classified setting. >> ok. thank you, mr. chairman. >> thank you senator wicker. reald -- reid will yield to another senator. senator jill brand. senator reid will yield. >> thank you. thank you for your dedication and all that you do. i would like to focus the conversation on serious. i have grave concern over the broad -- i would like to focus the conversation on syria. i have grave concern over the broad --

i want to talk about what this means for syria's neighbor. has blood and lublin on has been a -- has below and -- has below do to prevent a jihad haven? >> you're exactly right to think of this as a a regional issue, senator. iran is not just a challenge to the united states in its nuclear aspirations, but also through its eerie it's an rock season arms sales. its armedo through sales.

the strategy that would undermine efforts would be regional. need to increase our support of the lebanese armed forces. turkish of our partners. with regard to the broader question on iran, i have heard cautious optimism and a grave concern about the election by the new president. what is your assessment of the impact of the election? to changean election their nuclear policy or international policy? backrst of all, i reflect on number secretary gates remarked a looking for the elusive. he does have a reputation for being a moderate. he has made moderate statements,

but he is not in office yet. there are those of us who have the opinion will struggle against the very conservative central government leadership that may prevent him if he wants to be a moderate to become one. i think the watchword is prudence. it makes sense to potentially read out -- reach out to him, but not to do so naïvely. i think we are in a good position. it is an interesting development. same time, the elusive moderate. we need to maintain the pressure we are maintaining on the regime and make it clear what our objectives are. >> thank you. turning to cyber. both of you have testified that ciber is a growing threat and a sick -- cyber is a growing threat and a serious one. we have been working on a

bipartisan basis -- basis called the cyber warrior act. we want to create a national guard unit that is dedicated solely to cyber defense. we get the best and brightest from the private sector who are dedicated to the military. can i have your opinion on what the units would be? would that be better for growing this talent in-house? where -- first of all, you have our commitment to the variousure out roles in all of the components of our military and branches of service. without making a firm commitment on that particular approach, i would say that each of the

services are taking a look at it. under the guise of our cyber is ander -- you say it growing concern. it is here right now. i think you understand that. we have to understand what the cyber world would be. there is no title to authority for cyber. >> it has been an interesting idea. we have looked at it. .e are growing our cyber force it is probably the only force that will grow under current budget conditions. we need this new force to do a number of things. they do help us defend our own networks inside the department of defense and defend the nation against cyber attacks. enforcement and the department of homeland security will play an important role. operations if we end

.p finding ourselves in a war we need to study and look at it. we are short on money. it will cost a lot to develop that capability. it is not there all the time. i think you make a fair point. we need to look closely as to whether this makes sense financially. >> i would like to work with you both on this. is something everyone cares deeply about solving. one of the things i want to get your thoughts on is the military has had a change of position on article 60. it could take them outside the chain of command and still maintain command climate control. why do you think removing article 30 would be different in any way? i would imagine that decision would not have a different impact am removing article 60. 60 -- we had put in

place over time in our judicial system. and ourchanisms military judges and prosecutors that allowed us to consider changing the authorities and changing the ruling after the fact. that is different than it seems to us then taking the offense out. do you want to add anything? >> the important thing to me is to make sure there is an active deterrent out there. someone who knows that they will be caught and they will be prosecuted. it is the same thing that worked in the drug world for us. the commander is responsible for that. would argue the commander

is still responsible for that. keeping a number of articles, you are still fundamentally responsible for command climate good order and discipline. the commander is responsible, you have to set the climate. or they cannot be retaliated against. the only difference is the legal judgment -- that evidence of fact will be done by an objective to let terror prosecutor. -- by an objective prosecutor. >> there are 35 cases were a civilian district attorney refused to take the case. the chain of command insisted that the case be taken inside the military chain of command.

there are 14 that are not yet resolved. you're still in the court system. -- they are still in the court system. of the remainder of the 25 -- i'm sorry, there are 39. ofat is a conviction rate. 424 got% convicted, 25 punitive discharges. they are doing prison time. or 24 got punitive discharges. they are doing prison time. if the army had not taken those cases, those people would be walking the street right now. they would not have the resolution that they deserved. this was done inside the chain of command. and it was pursued successfully.

i worry if we turn this over to someone else whether it is a civilian or a non-entity that they will make the same kind of decisions that the civilian prosecutors will make. i worry that we will have fewer prosecutions. >> we want prosecutions that will result in a guilty verdict. that is why being trained about what kind of cases you can win is so important. we are still having 23,000 victims that don't feel the system is strong enough to even report. if we address cases, or the judgment of the commander might have helped, we need to change the system. my time is expired. >> i hope you know that we actually embraced this discussion. >> thank you for your service and thoughtfulness.

>> senator ayotte. >> i want to thank both of you for being here and your distinguished service to our country. general dempsey, thank you for your recent visit to new hampshire. it really meant a lot to our men and women in uniform. they said to me, and said so much about your leadership to go here and also at the shipyard, the civilian work force. i wanted to ask you yester day, -- yesterday, i was deeply troubled by reports that came out about the pow accounting command. they said that unfortunately, the leadership structure is undermining the important function with more than 83,000 of our country's heroes missing or unaccounted for. i believe that we have a moral

obligation. this follows up with a recent report that says that an internal study, it was so mismanaged and wasteful that it risked descending from this function to a total failure. her allegations that the internal study had been suppressed by the dod -- there were allegations that the internal study had been suppressed by the dod. i would like to ask you, what are we going to do about this? how do we make sure that we do our responsibility and have been -- that we do our responsibility to those who have been left behind.

>> thank you for the hospitality last week. i get more that i give them all the components. i can tell you that the secretary of defense while on travel called me and made sure that i had been aware, to make sure that when i got back, he wants to get to the bottom of it. it is so discouraging and moving rapidly toward disgraceful. we'll get at it. we have got a new commander out there. i can tell you that he is seized with this as well. >> i have asked the chairman, and i wonder if -- i believe it is that important to get to some of the issues. the chairmen and ranking member

of this committee wrote to chuck hagel, we heard testimony in the readiness subcommittee about the impact of sequestration. for the defense budget, we did receive a response recently. it doesn't really answer our question on the specifics. have you put together a contingency plan for the reductions required by sequestration? >> the services having received their fiscal guidance, they are preparing that contingency right now. it will be one that addresses both the president's budget and sequestration. >> asked for this in july.

can you give me a commitment as to when this will be produced to us? so that we can understand and discuss it with our colleagues about what it really means in terms of the impact of the readiness of our forces. it is a fair question. the answer that came back was the first contours of what it would look like under those conditions. important for us to keep in mind that there are five budget planners that we're having to go through right now. we're going through what it will look like. they are finalizing what the executions will look like under the president's budget. they also develop two or three different scenarios. it is a little tough to produce

fine detail back quickly, but the services have been given the task. they will have an execution plan before the first of october. >> we need it sooner. you can do all the planning you want for the budget, but it is high in the sky right now. until the american people understand, and everyone understands what the impact of that is, i am hoping you will make that the priority. i will ask you about russia, and in particular, i saw a recent report that russia is in violation of the nuclear forces treaty. is that true? >> that is something we can't address that in the unclassified hearing, but i would be happy to talk about it in a classified setting. we watch this very closely. we believe that they are in

compliance with the start treaty. need to leave it at that in this setting. >> i will follow up because i am not asking about the start treaty. here is where are with russia. a man was tortured and killed for bringing out corruption within the government. they have not ruled out granting asylum to edward snowden. one of putin's chief opponents was convicted and it really wreaks of using the judicial system for him to punish his opponents. when i look at that, they are in violation of their treaty obligations. the president recently announced that he would be considering further reductions to our nuclear arsenal.

do you believe that we should do that unilaterally? >> the advice is that we don't do that unilaterally. we do it as a package of reductions. >> if there were going to be a unilateral reductions, would you oppose it? >> i would not give that advice to the president. >> we already have. >> appreciate that. >> preserve the triad and modernize the stockpile. >> given the behavior of russia, i think it is naive to think we will be able to negotiate i do notreductions. think that is the right direction for the protection of this country. in light of what i just described, if they are in violation of other treaty

obligations, i don't see how we can have good faith negotiations at the moment. >> thank you for your service. it is evident you can't do this alone. one of your duties is to provide formal advice on strategic environment and the needs to address the environment through the risk assessment. given the current environment that seems to be changing minute , senator ayotte does detailed what happened in the last 24 hours with respect to russia. what changes would you make your risks a set -- risk assessment that you submitted in april? >> which changed the one we submitted in april that

previously the accumulation of combatants. the requirements that they have submitted have actually increased notably. it is increasing risk and declining readiness. we tried to align what we are doing with national security interests because that is not our responsibility to prioritize. we made an estimate of what we are doing across the globe that is being placed at risk. also looked at how the health of the force is evolving. in that document, i made mention of the fact that it did not account for sequestration and once that became a reality, i

would have to revise my risk assessment. i would have to do so to align with the submission that we this just described. >> my colleagues, in particular, they have done an extraordinary service by pointing out that despite years of effort, we have a significant sexual abuse problem in the military. we have to, as you both clearly indicated, fundamentally responsive. one aspect is the judicial system. my experiences there are other levers that are critical to the climate and the command structure. that includes evaluation,

emotion, and retention. if we don't focus on those areas, we will not have the kind of force or trust that we need. can you comment on that? >> in terms of promotion? >> so that every day, somebody thinks about their responsibilities. this is how -- this is what they expect me to do, to stay in the force and have that force succeed. >> we hold commanders responsible for establishing the likelihood of the sexual assault hopefully dropping to zero. there are a number of aspects, teaching people what a heinous crime is.

it is about reporting if you see it. it is about intervening if you see it about to happen. we hold commanders accountable. that is why, if they detect a problem, it is not where it needs to be an action can be taken. it can be entered into someone's evaluation. >> keeping with prevention and the advocacy, investigation, accountability to take on this pernicious issue is absolutely vital that the climate comes to the forefront and we hold commanders responsible for that. >> can you comment on the level of cooperation between the government, issa, command --

every day seems to be another example of friction rather than harmony. >> the relationship with the president of afghanistan is scratchy. i think that is as good of word as i could describe it. he is addressing issues of sovereignty and we are trying to close the gap on what enduring presence and commitment might look like. >> in terms of the recent discovery of contraband coming out of cuba and north korea, do you have a rough assessment at this juncture?

were they trying to get the equipment in north korea so north korea could use it? >> it is hard to tell at this point. the intelligence committees -- communities are still evaluating that. it would be easy to come to the conclusion under the guise of returning equipment, these are jet engines and missiles that will be going to north korea to replenish their stocks or what have you. it clearly exposes their defiance of the international community. we're very glad that it was discovered so we can expose the world, the cynical behavior of the north korean regime. >> thank you both for your service.

the russian president said that if he thought hurting u.s. relationships with russia would be a consequence of granting him asylum, he would not do it. what would your advice be to the russian president? asylum?anting snowden >> i think there are consequences across all of our relationships. >> it would be damaging. >> i think it would be, sir. >> the prime minister of israel said the following things about iran. he is criticizing his predecessor for being a wolf in wolf's clothing. his strategy is to be a wolf in sheep's clothing. smile and build a bomb.

do you agree with that analysis? is there any doubt in your mind that this guy is actually a moderate? >> we are looking for the elusive iranian a moderate. >> my question to you, and this will determine how i vote for you. do you believe the current president is a moderate? >> he does not have a history of being moderate. >> if sanctions don't work, they have to know that you will be prepared to take military action. that is the only thing that will get their attention. do you agree about the threat of military force? might be the only thing to get their attention. >> that has been the approach all along. >> great. paper.all on the same

if they don't believe we are going to hit them, we will move. all of the problems that we have will be dwarfed by this apocalyptic extreme regime. it would make a terrible and catastrophic change. >> as to afghanistan, the current commander suggested a force,mber not counting american special forces troops, it would be a reasonable number to leave behind in terms of a fall in force.

does that make sense. >> we have said so. >> would it be a wise investment to keep them at 352,000 for a few more years rather than draw them down? >> i do. winning?-- is assad >> the tide seems to have shifted in his favor. >> do you agree? >> i say the tide has specifically shifted in the central and western part of the country. >> is he winning overall? >> i would have to pick the regime but not by much. >> the regime is winning but not by much. would they be winning without russia? the most important help the

are getting is iranian and hezbollah. evaluate theyou significance of russia's help to assad? >> if they said, we want you gone tomorrow, would it matter to assad? >> it would be a game changer. >> he is going to fight to the death, i think. >> do you agree that if they said we no longer support you, it would be the ultimate game changer? >> absolutely. >> do you see russia doing that? >> no, sir. >> if he stays versus him going, what is the most catastrophic outcome for us? if he wins over time and doesn't leave, having to do with the fact that we kicked him out

because he had to go, what is worse for us? him staying or going? >> it is the policy that he must go. >> it is worse for him to stay? >> that is my interpretation. >> do you agree? >> yes, i do. >> will he be in power next year? if nothing changes? are they all helping him? >> i do. >> you agree that hezbollah and russia are helping assad. >> yes. >> if nothing changes, will he be in power one year from now? >> i think so. >> what about the king of jordan? will he be in power a year from now?

>> he is concerned about the demographics of his nation. >> he said it would be destabilizing jordan. do you agree? >> that is his concern. >> what would that mean if the king of jordan is got one year -- is gone one year from now and assad is in power? it would be horrible, wouldn't it? >> yes. >> would that affect be on iraq? it would begin to fall apart at a faster rate? >> it would be a possible scenario. >> the likelihood of getting the -- of hezbollah getting russians advanced weapons would still be in power one year from now, does that go up or down?

from israel's standpoint, one of the worst nightmares for them is hezbollah getting an advanced weapons. >> yes. >> we will talk the second round about sequestration. thank you for your answers. >> if we can finish the first round by noon, there would be a very brief second round. that is my current intention. >> what i think we have made real progress on a wartime contract in, i realize we still have miles to go before we really have a handle on this. the latest incident is the military base in afghanistan. when the marines found out this was going to be built, they said they don't need it and don't want it.

that was may of 2010. february of 2011, contracts were issued at the building was built. it will never be occupied, probably demolished because it was done according to u.s. wiring standards. for the army to take it over, it would be quite an investment for them to convert the building for their use. i understand that investigation is ongoing. but i need to hear from you, general dempsey, that you are committed to getting to the bottom of this. if we don't fix accountability in this instance, whoever pulls the trigger on that expenditure really needs to be disciplined. in my opinion, they should be fired.

we have to send a signal that people say don't build it, it is a waste of money. are you aware of this situation? >> you have my commitment that we will get to the bottom of it. i can share just a bit of good news. this one was not caught, but we have about $1.3 billion in contract and for u.s. forces in afghanistan for the security forces. >> i appreciate that very much. the reason that sexual assault was talked about in the context that canada and europe have gone to a different system in order to provide more protection from

victims, we have a chance to take a close look at what happened. it is my understanding those changes resulted from a concern that there was not adequate due process. is that your understanding as well? >> we have got a lot of research into why the five other nations went that path. it is not just because they wanted to protect the accused. they were mandated to do it by human rights courses. -- courts. >> the other argument being made about leaving in the hands of civilians is that this would increase reporting. i have had an opportunity to look at this. 176 in 2010, look at the numbers in the u.k., their numbers have

gone down over the last several years. from 54 to 40, and australia, they have been stable over the last several years. in israel, there had been a fact of reporting going up when it related to lesser sexual offenses. there was a testimony of reporting going up 80%. these are sex-related offenses total in the military. understanding the difference in the enormity of challenges in our military and what they are looking at in israel. 27 in 2012. there is an 80% increase when they change this, but they only got back to the numbers they had previously before the change was

made. are you aware of the research you have done that this has resulted in an increase of reporting anywhere in the world? >> there is no evidence that it has increased reporting. it has slowed the system down. >> you mentioned that you have taken a look at prosecutors in isolation. i have some knowledge of this. there was discipline needed in my office when i found out that prosecutors at the end take desk were getting lobbied by some of the trial prosecutors on their decision because they did not want any losers. they did not want cases to

reflect poorly. when you are a prosecutor, there is a win-loss record. what status among your peers and your upper mobility depend on your conviction rate? when you isolate them in this decision, there could be instances where you have a prosecutor that did not want to look at it closely. didn't want a he said, she said. do you have additional and formation you can share in terms of numbers? where they said military prosecutors have said no, but there are victims out there today that have justice because the commander said yes?

>> i do. i will give you a couple of examples. the marine corps looked at 28 cases. 16 of them, the marine corps was able to have the conviction of court-martial 57%. those perpetrators are no longer walking the streets. the more startling numbers are from the army and i will repeat them. the army has looked at 49 cases. 14 of them are still in process. 35 of them have been completed. 25 of those resulted in a court- martial. 77% of these cases that civilian prosecutors would not take that resulted in serious action taken against the perpetrator.

there are some that were acquitted, understandably. most that were found guilty are doing hard time and have been given a punitive discharge from the military. some of these are very heinous cases. one of them was a 10-year-old autistic girl and a conviction was obtained. >> this is hard. we have the same goal. i want to say that anybody who characterizes me as someone who is protecting the pentagon, i am somehow in cahoots with the pentagon trying to hurt sexual assault victims -- with all due respect to you, i think you are terrific, but nobody would be

further in front of the line to keep you until your senseless if we don't get this problem under control. this is not victims vs. the pentagon and anyone characterizing the head as that is doing a disservice to victims, the military, and the members of this community that spent hours trying to find the right way to make sure that we prosecute more cases effectively. >> if i can take 10 seconds, we are actually very grateful for the intention that the entire committee has given to us. i want to say i look forward to our next chance to have people with experience over at the pentagon and your expertise in there. >> you don't need to worry about me being invited. i call them.

i am not reaching out because you're calling plays on this, i was infuriated that this was somehow you guys pulling strings over here. nothing could be further from the truth. believe me. we are not going anywhere. there was an implication in an article but the amendment which was did by this committee -- that was adopted by this committee was somehow cleared by the pentagon, and that is not true. are you aware of that? >> not that i am aware of. >> a two-page article that the pentagon screen door impact did the language we offered in a

public session with this committee that led to a bipartisan amendment. part of the article suggested the pentagon wrote something or screen something. they did was asked by the subcommittee for its reaction. we do that all the time. afterrote the language consultation with the pentagon, but the amendment that was did by this committee on a bipartisan vote was not shared with the pentagon. thatnot know if the folks wrote the article want to correct their article, but in

fairness i believe they should. just say on behalf of of senator mccaskill, the implication she was bought off why the pentagon, she has been the spark plug of this whole and i want day one, to let her know how much i appreciate that. your responses invaluable, including this project she has delved into with such tenacity. >> thanks for your impassioned leadership on this issue of sexual assault. it has been thoroughly vetted, but we know where you are and that you are trying to thek if i -- to rectify

situation, but i think you have an understanding that this committee is upset by what is going on in every branch of the military, and we have got to fix it. the system is roped in. -- roque and. is broken. in your answers to advanced questions from the committee, you said, we are at risk of insolvency if sequestration is administered while law. the word sounds like sending troops into combat and not being able to take action against threats to national security and not being able to assist allies in unstable regions.

is that what you meant? ofyes, it is a mismatch aspirations and abilities. i want to go back to syria. talkedbeen thoroughly about, but i am a little confused. theard your response to questioning. here is my understanding of where we are in the process. you have been in place about two years. theng those two years conflict in theory has been going on the entire time. virtually an uncontrolled slaughter, and the president nominee said yesterday

in the hearing that the failure of the un security council to respond to the slaughter in syria is a disgrace history will judge harshly. i agree. the uniteda fact states has watched what is happening over there and really had our hands behind our back. for two been in place years. you have been the military this issue and to others. has the president followed your advice on the involved meant of the united states -- involvement of the united states in syria? >> the president has asked for guidance. has he followed my advice? -- there are two issues at work. could we and should we?

on could we.d him we have not gotten into a conversation about should we as it relates to the current path, which is focused on building opposition. i am taking that to mean the president has listened to your options, but apparently you have not picked a side or been forceful on what the president ought to do. am i correct? let's talk about the chairman. it is my responsibility to provide options about the use of force and how they would contribute to a broader strategy. i am unwilling to discuss my advice to the president on

whether we should use force while that is ongoing. to the point of what is my responsibility to this committee, my responsibility is to have the same kinds of conversations we have had as to options and what the military power could do in the context of greater strategy, but whether to use force is he a deliberated toquently with regards syria, but for me to advocate in anld put me inappropriate position with the president and this committee. >> did you advocate for a fly zone or no-fly zone? ask i have not advocated any of those options. i have explained what i would do to the situation. >> you are the top military adviser to the president.

is the most influential going on today. syria -- see rihanna -- is the most influential going on today. there has been no change in u.s. policy for two years. if we approve you for another two years, is there going to be syria over policy in the next two years, or are we going to keep watching innocent people be slaughtered? >> i would hate to take that upon myself as to whether the situation in syria will change in the next two years. i willonsider options, consider whether they will be affect if, what are the risks involved, what are the opportunity cost.

let me tell you what has .hanged we are far more involved in higher states of readiness. we continue to manage the conflict in afghanistan, so there are significant risks we are accruing while we are also engaged in trying to match ways and means in the face of sequestration. >> secretary hagel announced a andcut in officers civilians. i applaud that move. i think that has got to be done. we appreciate you. hang out that direct this.

it is not going to be pleasant. >> if i could respond briefly. there are a couple of things we should do. one is to make ourselves more efficient at the institutional level, and the other is healthcare. >> i do not want to leave the impression it is only the top brass being reduced. it is the entire staff being reduced. we believe we have to be more .fficient it is the entire staff we are going to trim by 20% over the next five years. >> it is not just that you support it, but that you offer it? rex that is correct.

.- >> that is correct i want to thank you. toad a great pleasure , and i knowarrival to important the effort is the marine corps, our national security, and those who support it. this was reiterated during my visit on monday. about theworried damage sequestration is doing to and our national security. most of the members had their first furlough day. we actually have 19,000

civilians on furlough in north carolina. lee's know that i remain solution to finding a to sequestration, and what i really worry about is those in who understand the damage this will have if allowed to continue. i think it is important that congress here about the impact if it is allowed to continue. of the give us an idea impact as well as on the local communities that support them? give you a generalized answer. trade-offs are made in enough -- thingsnization,

like modernization, but the point is it is too much, too fast. we will suffer in readiness and modernization. later, we will be more ready but thinkodernized than we we need to be. in my view we will have forces inadequate to achieve the strategy, and we will have to look at how that is achieved. >> our first irt is to finish -- first priority is to finish the development of that program and to keep it on track. he of the importance of this row graham, we are doing everything of the program, we are doing every eight we can.

we are committed to this row , and we willram do everything we can to make this productive. it is a very important program to us. >> it is also my understanding the dod civilians to providers received notice recently that if they have knowledge that the employees that report to them work more than a lot it hours during their furloughs, that aree civilian supervisors find up to $5,000 and potential jail time, and when i realize there are guidelines that have to be followed, we do not want them to work without pay, but this seems to go too far. i am troubled these supervisors

could face these penalties because they have workers dedicated to the security of our country despite the furloughs, and we cannot fault them because congress has not acted. how does one find the right balance? >> i would make a shout out to our employees, who are fantastic. these are people who work because they believe in what they are doing, and they are tremendous. i believe the restrictions you referred to are illegal, -- legal, and i could not agree with you more these are american a tree at -- american patriots.

the sooner we can resolve this, the editor. -- better. i know they are working hard. it is a tragic situation. >> they are not supposed to look on ther blackberries days of furloughs. there are enablers that directly support their operations. said given the downturn we face, we must balance the need for capabilities with our need to address other capabilities. you believe ruby asleep direct the growth -- previously direct the growth should be detainment,

and how should they be prioritized compared to other demands? to telle to be honest are probably going to have to level off soft growth because there are so many row grabs that are going to be shrinking in size. level you are doing well. if you are growing it is unusual. everything else is going to be even in size. leveling off is probably all we can do. >> even with the demand today? >> they are doing important work. no question. have considerable forces doing counterinsurgency. that will end in 20 13. we were hoping to take that

home. these folks have been working hard. another would be to enhance holding capacity across the world. we may have to trim back a little bit he doesn't budget budget cuts.se of only leveling off in these circumstances. >> thank you for your service to and yourtry willingness to serve during these difficult times. i appreciate your coming to new hampshire and visiting the naval and meeting with a .umber of businesses

many people on the committee have expressed concerns about sequestration. one thing we heard was there can earn about uncertainty and what that means in terms of ability to provide the support theirlitary needs to do job. i wonder if you could speak to whether this is what you are hearing from other parts of the country and how concerned continuing affect the sequestration might have a damaging effect on this country. what i found interesting were two things. haveig corporations

enough flexibility they can weather the storm and will be there when we need them. we risk losing in two ways. one is they are going to look and the ability to innovate is being reduced. lose in several ways. >> the other thing you have is the peopleout who served in this country, those who serve actively as well as those who support your mission in the development capacity. one of the concerns i have is relative to the workers with

degrees in science, engineering, themath, and looking at statistics of the people in our military and in the future, the statistics do not look very good. the workforce became eligible for retirement in 2008. retirement eligible 2050. can either of you speak about how sequestration might affect recruitity of those who in the future? if we are looking at 2014, 2016,n in

what does that do for our civilian workforce? reflecting back to the naval yard, one thing i was aware of was the apprenticeship program where they take folks with the andl set you described, they build into them a passion in support of the navy and the coast guard as well. we will lose some of those. >> the real challenge we have is -- thee ms. of this cut,

. wepness of this cut cannot get people out fast enough. the only thing you have is readiness and modernization. those are very tech to go wings. number be jettisoning a of programs or vastly trimming , whichd reducing rates is also technical, so i worry about that. as we get smaller, the last arson in is the first person out. if they are the first to go, we are going to lose them. we have a force that retires, so it is something we have to watch closely.

beis something we have to mindful of as we go forward. >> one inc. senator mccain and i have worked on in the immigration reform bill as well as in the defense alteration would deal with the number of afghans and iraqis that have in the united states and international forces who were concerned about their andty once we get past 2014 nato withdrawals. i wonder if you could tell me how concerned you are about type of message it would send to people in the if we are not able to

provide safety to those who cooperate. the strongly support effort, but let me turn it over to the man who has been tracking it. > >> yesterday we had a meeting on and those whoue risked their lives. it has the attention of national security staff. it has our attention. if you hear any inc. of concern, we would we happy to talk about that. >> senator mccain and eyes and ready. i know it has the support.

-- and i stand ready. it has the support. >> thank you. i think it is a testament to bipartisanship. i just want to ask you to your responsibility and your best military judgment about matters and when asked you will give your best, unvarnished military opinion and not the influenced by political pressures of any kind. >> i can assure you that has been my intent and will remain then 10 -- intense

future. >> we have a lot of significant agenda items that will set policy for years to come, whether it is personnel involvement around the world, and we begin to have some hearings on nuclear capabilities. that he would like to reduce our nuclear arsenal raises concern, and we , andask your best judgment beyond the aunt -- technical issues. that ithe amazing issues

believe has caused the problem with the reduction in spending was the fact this was passed in august of 2011. the president said it was not theg to happen, but it was law of the united states. , and i wondered how it was going to get fixed. would getoubts it fixed, and the president indicated he wants more taxes and spending, and i would like to get one thing straight. with regard to the difficulties my have faced this year, understanding is you made no plans and no cuts in the first six months of this year even

though you were aware this was and as a result you had to make more dramatic s, more unwise reductions to try to finish this year within the budget you were told you had to finish under. has that in a problem for you, and why did we not plan to reduce spending all year instead of making up all that in the last six months? been a problem. we found ourselves 80% spent with half a year to go. how do we get to that decision? what is the budget we received -- that is the budget we received. i assume they got from the office of management and budget.

>> i remain concerned. i have a strong affinity for the men and women who serve us in unit of warm, -- in uniform, but because half the reduction thepending has fallen on defense department, so this is a disproportionate reduction in spending to our defense and it is a level that is troubling to me. i have seen the numbers, and we should look to other areas to help savings.

social security has no cuts. it did not help the defense department. food stamps has gone up fourfold in the last 10 or 12 , so we are at a point where we have got to figure out and i deal with this, believe you are asked to take a disproportionate cut, and congress should work with the to helpr in chief spread out some of this belt so other departments tighten their belts, two. -- too. >> thank you for your comments. is senator cain here?

senator nelson. >> >> take you for your service. let's talk about updating the fleet. the law directs the vice chairman and and undersecretary to certify annually the navy remains in compliance with supporting the needs of combatant commanders, and the ,avy has certified compliance so my interest is in the president's budget, the navy plans to draw down the and then the fleet.

it is my understanding the secretary of the navy is supportive of this position. have you spoken to the to make sure they fulfill their requirements? >> i have not been physically. they are going to have their list ready in the fall. i would have to see whether specifically we are addressing their needs.

>> there is some concern about to seeansition, and those platforms are utilized so there is not a gap while we are transitioning. we are withdrawing from afghanistan, there is going to s that will beset distributed. i wish you would take a look at what sequestration is doing to andn the southern command the huge success they have had in interdiction of drugs going north.

the last year columbia ed 207 metricict di tons. as it started to come to ward the joint task force interdict did 152 additional metric tons. by the time it got to the southern border they were getting another 10 tons. a lot of it was being interdicted before it even got , so i would appreciate as

these assets are going to be that you would consider southern command to use and i knowssets, you will, but would you state what are going to be the long- onm effects of the sequester the counter narcotics issue? >> in general i will tell you we will be able to do less because of some combination of sequestration and also maintenance that has been deferred over time. i am concerned to see if we can reiterate.to

>> we have had some considerable drugss with interdicting coming from central and south using other environments, so we're going to and to allocate resources, we will have to keep an eye on it. >> if we are fortunate enough to get a reform bill, and if it stays in the posture where it passes the senate, where all this additional money is being used to enhance the effectiveness of the land what is going to happen

is human smuggling is going to go to the maritime border. they would not accept helping with unmanned platforms. the navy blimp is also an asset. i have ridden in that. the amount of gas it takes for a 24-hour mission is the same for 16 to rund -- an f the runway. hopefully if we can pass immigration reform, we are going to be able to enhance the

maritime border, but this is theg to bring into question desperate need to avoid a place like southern command. i spent some time with the admiral, and he walked you through what is going to happen if we have the sequester, and it is ridiculous we would be not only shooting ourselves in the foot but start to shoot so ilves up the torso, wish you would take a look at the assets and allocate some of them to southern command. thank you. thank you, mr. chairman. senator nelson.

we have a vote. it is getting close to 12:15. i am going to have a two-minute second round. want to find a way to work through the issue on serious -- syria. i want to work through it, because i think there is a real uncertainty as to what your role in terms of the options you , what are the

and what i amrth, going to ask you to do is give a list of options and your personal assessment of pros and cons of those option. some of those pros and cons will be pretty obvious that you are not going to recommend some egg. tom not going to ask you -- recognize some things. i am not going to ask you point blank what your preferred option but you are willing to go

through plusses and minuses of ich option, and that is what want to go over. i want to work very hard on this issue of the options of syria. you are aware that i have her simile preferred -- personally preferred training the opposition. airstrikesalk about on certain facilities. i am not trying to persuade you that is the right position. my question to you is whether or not you are willing to give

to us and unclassified list of options and strengths and weaknesses and cost effectiveness of each of those .ptions as to theely, and framework in which they might make sense. >> anything you wish to add to it. i do not want to limit you in anyway. it it may help us work through this issue. >> i want to reiterate my point that the decision whether to use force is one i must communicate personally to the president. as you have seen me do in the past, the president takes my advice, i will tell you he took my advice. am more thant, i

willing to tell you it was something else. >> you said you are not going to share your opinion as to whether or not to use force. >> while it is being deliberated. >> i am not asking you to do that. if you are able to do what i ask clear at, it may be least some of those options you think are not wise options. >> i thought we got it said at it at some level. were willingf you to show pros and cons and various cost and so forth. , if youill do that could do that in the next four or five days.

am going to, but i refer to senator graham and then go. >> back to afghanistan, if no troops were left kind -- left in 2014, what is the likely in afghanistan? they would not have the level of confidence to sustain them selves over time if it happened that precipitously. >> it would lead to what i believe to be a larger safe s and for al qaeda type what i believe would be a sequestration, in

terms of the air force, how many tips will we have in the navy after 10 years of sequestration? rex i do not have the exact number. >> somebody said 200 33 ships. >> it would not be that low. >> one third of the fighter force is grounded today. onethe effect grounded third of the force? >> there are others flying at a lower rate. >> what would it take for the enemy to wipe out squadron? if i were the arabians i would send a thank you note, so to say i am upset about this is an understatement. what if the congress could not find a way to reach a deal on

funding the government? if the politicians cannot find a way for the budget, what signal would that be sending to our troops and our enemies? impact would it have on the times in which we live if there is no agreement to fund the government? mean forld that we've national security? the levelto assume of trust would be broken. >> what would you prioritize

first? >> i would prioritize the safety of the nation. >> would that mean protecting the homeland? pre-k's certainly. >> you said the first dollar we should -- >> you said the first dollar should be spent on discrimination power. from what i understand that was not in the budget or postal put forth by the department. why was that? >> one thing to remember is we have an you director. he is doing an exceptionally good job, and they have come to if you get that her discrimination, and he would add if the threat gets

worse we are going to need more missiles as well. >> you have said we have to watch the threat develop. in a recent interview he said a rant is trying to reach the american mainland -- iran is trying to reach the american mainland. , but shifts all the time 2015 is the current number. >> i am dumbfounded when we keep saying there is no requirement for a defense site when the priority of the nation ando protect the homeland, if we went to production of a missile defense site, it would take about the exteriors, wouldn't it? >> i would have to get the exact

numbers. we would have another threat assessment, and we would have to come to a decision pretty soon as to whether we would do that to start with. i look at possible capability, i think the tail is wagging the dog in terms of how long it would take. second dollard missile defense? them intoto get alaska. that is going to take a while. quality has a quantity of its own. we have to shoot fewer missiles. if we could accomplish that, that would really help us, and if it continues on a trichet three josh -- continues on the

trajectory we may need missile defense. >> we could do both at once if we wanted to in terms of protect the homeland, could we not? rex physically we could. thequestion is is that widest use of resources. the highest irt is defense of the nation. -- highest priority is defense of the nation. >> i hope we will have a speedy markup in confirmation. that would be up to the committee, but that would be my hope. thank you. we thank your families for the and we over the years,

stand adjourned. >> thanks, admiral. i appreciate it. >> in 2003 in an article you recommended historical reckoning of crimes committed by the united states. which crimes were you referring to, and which decisions of the current administration would you recommend for such a reckoning? >> inc. you for giving me a --nce to respond to that thank you for giving me a chance to respond. i think this is the greatest

haitian on earth. i would never apologize for america. -- the greatest nation on earth. with regard to that, one of the things written critically about the clinton administration's to the rwandan genocide, and president clinton expressed his regret the united states did not do more in face when i traveled to rwanda, i was stunned to the degree that his apology .esonated

>> saturday at 10 a.m. eastern. live coverage of the harlem book and yourluding panels calls. andlike charisse on history the political parties, sunday at 1:00. the political stories with the political editor. .e will take your questions also a political editor and white house careers bond and -- white house correspondent will discuss sequestration and strategy for dealing with the economy. live every day at 7 a.m.

eastern. i decided he was a delicious when itfor a biography dawned on me he had then not saidat president lincoln side when he died but also president mckinley. when i open the archive, i realized what a rich subject it was. his life really has two bookends. he was the private secretary who lived in the white house for four years. end of his life he

served not only under mckinley, but after his assassination he was secretary of state for teddy roosevelt, so you have these wonderful look ends, -- bookends, and you realize he is a presence in every one of the and in some cases he has written the chap your of american history. chapter of american history. >> now tax policy. they were at the economic club for aboutton, d.c., 45 minutes, focusing on their plan to reform the tax code.

>> can i have your attention please so we can get started? you still eating, please do it quietly. thank you very much. are very honored to have the chairman of the ways and means and i wouldre, like to briefly introduce our guest. for those who may not be is ther, senator baucus senator from montana. he is the third most senior in

the senate right now. he served in the house of representatives. he is a native of montana and when dachau after he got his law degree and has announced he will not run for a seventh term. i think he will feel the joys of liberation at that point probably, but he has done an extraordinary job as chairman of the finance committee. the chairman of the ways and means committee. fourthesents the division and has been the chairman of the ways and means committee since 2011. 's january, 2000.

is that correct? in thisoing to serve congress in that capacity. he would be term limited unless there is an exception. ,e is a native of michigan graduated from university of san diego law school and returned to michigan before getting elected to the michigan house of so both of you, are doing some very unusual in 10, which is hitting together a democrat and a republican. parties, democratic and

republican. is there any chance in this of getting a comprehensive tax reform? what are the chances? >> i think quite good. it has not been up to date since 1986. there are a lot of revisions that caused u.s. companies to be , thatompetitive corporate rates are too high compared to other countries. other countries have modernized their code, where we have not.

it takes too long to figure out. 90% of americans need someone else to fill out tax returns. they feel someone else's is getting the break they are not getting, which is shaking the confidence in our country. here we are working together

some of the fastest growing growth rates in the world are within that region. emerging markets whose choices will shape the character of the entire global economy are within that purview. so we reached out. we reached out to deepen economic ties and promote open markets and a rule-based competition for the 21st century.

we finished a free-trade agreement with south korea, as well as deals with panama and colombia. we launched negotiations on a new trans-pacific partnership that will connect diverse -- economies as diverse as singapore and peru. we've worked toward a more constructive economic relationship with china, including through the strategic and economic dialogue. and i opened the fifth round of that dialogue just last week. in terms of security, we undertook a major strategic review at the defense department and with our security personnel on how to assess our global posture and where do we need to evolve to match the moment. in the asia-pacific, we saw a region of remarkable promise, but also genuine uncertainty and political risk.

many nations have experienced rapid economic transformation that has fundamentally created a new dynamic -- rising ambitions and rising tensions. but the rules and norms that could provide predictability to deal with both those changes, the order needed remained incomplete. we are focused on the risks of disruptions of commerce, proliferation, human disasters, conflict between nations and the persistent threat posed by north korea. so we set about doing several things -- first of all, strengthening our alliances, deepening security partnerships and investing like never before in regional institutions to help manage disputes peacefully. president obama adopted a new defense strategic guidance endorsed by the joint chiefs of

area. and economically and strategically it's clear why the united states had to rebalance to direct more resources and attention toward the asia- pacific region. because imagine what can happen inif growing asia-pacific middle classes help lift the global economy even more than they already are? if nations reject the temptations of zero-sum thinking and rise peacefully together? if progress toward greater rights and freedoms proves that no country has to make a choice between democracy and development, which is a false choice. let me put it slightly differently. just imagine what will happen if those things don't come to pass. we'll all be in a world of trouble. andso we're all in, this

administration. absolutely committed to this youabsolutely committed to this rebalance. the president is absolutely committed, and so am i. and so is our entire national security and economic teams. and you don't need to look any further than my own recent engagement to understand the breadth and scope of the rebalance. and traveling to india next is that india is increasingly looking east as a force for security and growth in southeast

we welcome india's engagement in the region, and we welcome its

become important partners on everything from counter- proliferation to counter-piracy. that's why i'm going to singapore. and, of course, at the core of our strategy in the region are our alliances -- japan, south korea, australia, the philippines, thailand. across the board in these alliances, we're at a high water mark in terms of cooperation between our leaders -- both military and political -- and the support of our people. closer to home, our intensified engagement within the western hemisphere is also part -- not just parallel to -- our overall rebalancing policy. you see that very concretely in the trans-pacific partnership which includes five countries in the western hemisphere. you can also see it in the initiatives within the hemisphere like the alliance for the pacific -- a new group of free-market-oriented countries that are integrating their economies and looking west for trade and investment. as i said in a speech not long ago, for the first time, at least the first time i can remember, i believe the first time in history, it's possible it's not pollyannaish -- to envision an america -- an americas that is middle class, ancure and democratic from

there's much work to be done, but that is within reach. that kind of americas connected economically, strategically and through common values can make a himgreat contribution to a more prosperous and secure pacific. that's one of the reasons why president obama recently visited mexico and costa rica. that's why i was recently in acolombia, thailand, and brazil in may and will return to the region this fall. so what does all this add up to? our goal is to help tie asia- pacific nations together -- from india to the americas -- through strong alliances, institutions and partnerships. for the past 60 years, the security we provided has enabled the region's people to turn their talents and hard work into an economic miracle. and now, we want to hasten the emergence of an asian-pacific

order that delivers security and prosperity for all the nations ininvolved.i in short, we want to help lead in creating the 21st century rules of the road that will benefit not only the united states, and the region, but the world as a whole. the lifeblood of the region, to state the obvious, is economic development. but growth has slowed in india, china and many places in asia. and each country faces distinct and different challenges. but from our perspective, the way forward is fairly clear. to spark new growth, there has to be fewer barriers at and behind our borders, protections for intellectual property to reward innovation, new commitments to make sure everyone plays by the same rules because that's what attracts investment and jobs, as well as greater economic integration. that's what we're pursuing right now, today in malaysia as our

team negotiates the trans- pacific partnership with countries as diverse as vietnam, chile, new zealand, mexico, very soon, japan, and at which point the group will account for 40% of the world's gdp. the tpp has potential to set new standards for collective commitments to fair competition on state-owned enterprises, fair competition on investments, labor, the environment, open markets for automobiles and other industries. and we firmly believe this will create a strong incentive for other nations to raise their standards, as well, so that they can join. we've already had discussions with some of those very nations both in the americas as well as in the pacific. but not only is this ambitious, this tpp effort of ours, we believe it is also doable. and we're working hard to get this done this year.

out to the emerging economies of southeast asia -- partnering with lower mekong countries to improve food security, connectivity, water and health, encouraging responsible investments and reforms in burma, and last fall, the president launched a new initiative for enhanced economic engagement with the asean. we are addressing the challenges in our economic relationships with china as well. they are not at all inconsistent. we do not view our relationship and future relations with china in terms of conflict or the talk of inevitable conflict. we view it in terms of a healthy mix of competition and cooperation. a competition that we welcome. it's stamped into our dna. we like to compete. competition is good for both of us, as long as the game is fair.

it is clear that the chinese understand that to reverse their declining growth, there are internal reforms they need to make -- not reforms we're suggesting they have to make. they've made their own judgment judgments if they follow through on them will not only help china in our view, but help the region and the world. they've concluded china needs to shift to a more consumer-driven economy. they've concluded they have to create a market-based, well- regulated financial system. and they've concluded they need to liberalize their exchange rates. it will be difficult. it's difficult internally for them to do that, but i'm convinced they believe -- and we clearly do -- that it's necessary. and we are engaging directly with india as it makes some fundamental choices that the ambassador could speak to more directly than i could about its own economic future.

in the last 13 years, we've increased fivefold our bilateral trade, reaching nearly $100 billion. but if you look at it from a distance, an uninformed person looked at it from a distance, there is no reason, that if our countries make the right choices, trade cannot grow fivefold or more. just this week, india announced that it will relax caps on foreign direct investment in certain sectors. we still have a lot of work to do on a wide range of issues, including the civil nuclear cooperation, a bilateral investment treaty, policies protecting innovation. there's a lot of work to do. but we believe going with an open mind and listening, as well as making our case, we believe it can be done. as we all strive for greater growth, we have to recognize that the impact of climate

change also has an impact on growth as well as security. this is a priority for the president and for me. america now has the lowest level of carbon emission in two decades. and we're determined to move further, and in the process where we can, where ourand technological capability is available, also help other countries do the same. that's why we're working with asean to promote investment in clean energy, why we're helping pacific island nations mitigate the effects of rising sea levels. they are rising. we just concluded an agreement with china to reduce the use of pollutants called hfcs that cause climate change. and there's no reason we cannot do more with india as well. that's why secretary kerry agreed to an enhanced dialogue with india on climate change just last month. look, economic growth may be at

the core of all we're saying. economic growth critically depends on peace and stability. that's why we have to be -- there have to be 21st century rules of the road not only in the economic sphere, but also with regard to security. with regard to maritime disputes, it's critical that all nations have a clear understanding of what constitutes acceptable international behavior. that means no intimidation, no coercion, no aggression, and a commitment from all parties to reduce the risk of mistake and miscalculation. my dad, god love him, used to have an expression. he'd say, joey, the only war that's worse than one that's intended is one that is unintended. the prospects where they're so close -- cheek-to-jowl -- for mistakes are real.

so it's in everyone's interest that there be freedom of navigation, unimpeded lawful commerce, respect for international laws and norms, and peaceful resolution of territorial disputes. that's why i encourage china and asean to work even more quickly to reach an agreement on a code of conduct in the south china sea. setting clear rules is the first step to managing these disputes. and the u.s. has a strong interest in seeing that happen, as well. with regard to north korea, the one thing i think everyone now agrees on -- we agree that its nuclear and missile programs present a clear and present danger to stability in the area, in east asia in particular. that's why we're working closely with our allies, japan and south korea. but we're also working more closely than the 40 years i've been engaged with china and with

russia. in light of north korea's recent provocative behavior, we welcome president xi's important statement -- achieving a denuclearized korean peninsula, as that being a chinese priority. not just something they wish for, but a priority. we welcome that firm assertion. now, north korea is calling for dialogue. as my mother would say, i've seen this movie before. [laughter] we've been there before. but we are ready. we are ready, but only if north korea is prepared to engage in genuine negotiations. we will not countenance north korea's pattern of provoking a crisis and then insisting they be rewarded in order to cease and desist from the actions they

are taking. we've been there before, only to find that once they're gotten the space or the aid they need, they return to the same provocative, dangerous behavior and continue their nuclear march. north korea can have peace and prosperity like the rest of the region, but only without nuclear weapons. north korea has a clear choice it can choose a better path for its people, or continue down the road they're on. make no mistake about it, though. we are open to engaging with any nation that's prepared to live up to its international obligations. that's what we did in burma. and i think most would say we're

already seeing some tangible benefits from that engagement. so we've got a full agenda ahead of us in asia. and we're committed to seeing it through. but as i travel around the world, and i'm heading to india i'm about to cross the 700,000- mile barrier since vice president, not counting the previous 36 years -- but i hear questions wherever i go, questions in asia about whether we're truly committed to this rebalance. i've also heard questions in my recent trips to europe, with european leaders, about whether or not we're going to be leaving europe behind. it should be clear on its face, we're not leaving europe. i recently spoke to the european nations, nato members and eu members, in munich. and i said that europe remains "the cornerstone of our engagement with the rest of the world." that is a fact.

we're not going anywhere. as a matter of fact, we're absolutely convinced that our engagement in the pacific is in the overwhelming self-interest of europe. we're convinced the combination of new transatlantic economic agreements that we're now negotiating and the trans- pacific partnership i've discussed, they reinforce one another. they are not at odds with one another. together, they're designed to update and strengthen the global economic rules of the world in the 21st century. europe, just like us, will benefit greatly as well from stability in the pacific, in asia. and by the way, there is no reason why we cannot bring greater focus to the asia- pacific and keep our eye on the ball in the middle east. folks, that's what big powers do.

to use the vernacular, we can walk and chew gum at the same time. that's what big powers do. and there is no evidence that we are taking our eye off the ball as we should in the middle east, leaving europe or not intending on following through on our rebalance in the asia-pacific area. folks, we're better positioned than any time before to be able to do it all. i know you'll think it sounds like a campaign assertion i've been making for years, but america is back. when i was last in china, as i pointed out to the chinese leadership, it's never, never, never been a good bet to bet against america. the resiliency of the american people and the nature of our

system -- america is back. to paraphrase mark twain, the reports of our demise are very premature. our businesses have created 7.2 million jobs since we've taken office. we've gone from losing more than 400,000 jobs a month, over 12 months in 2009, to creating over 200,000 jobs per month thus far this year. manufacturing is back -- the biggest increase in manufacturing in nearly 20 years. and an awful lot of high-tech companies are looking to come home. there's a reason for it. american workers are incredibly productive -- three times as productive as chinese workers, to give you one example. they can be assured their intellectual property will be

protected. we have a transparent court system that will enforce contracts. our deficit is down more than 50 percent as a share of the economy since we took office. household wealth -- over $17 trillion in household wealth was lost in the great recession we inherited. it's all back. we're producing more energy from all sources. we now have over 100 years' supply of natural gas that would enable us to meet every single need we have in america -- energy need -- for the next 100 years. we're the largest natural gas producer in the world -- another reason why companies are coming back. the cost is a third to a fifth

of what it is around the world. we are prepared to help other countries as well. our oil imports are the lowest they've been in the last 20 years. and i believe -- if my colleagues from abroad will forgive me, i believe we remain the most innovative country in the world. but i also think, folks, that the rest of the world understands why this is happening, and it's not just the good fortune of having shale gas or having two oceans, etc. i think it's because of the enduring strength of our people and of our system. for all our difficulty in education for our children, they're still taught to challenge orthodoxy.

no one in america is diminished or punished for challenging orthodoxy. it's the only way there can be a breakthrough, is to challenge orthodoxy -- where competition is fair, where people have a right to express their views, practice their religion, and decide their future. these are universal values. they're not unique to americans. i believe there is no asian exception to the universal desire for freedom. and the issues that young people are seized with all across asia and the world -- corruption, land rights, pollution, food and product safety -- these are all fundamentally linked to openness and transparency, to greater rights and freedom.

in my humble opinion, no nation has to adopt the exact system we have. that's not what i'm suggesting at all. but it's awful hard to be innovative where you can't breathe free. it's awful hard to make significant technological breakthroughs where orthodoxy is the norm. in my humble opinion, the very things that made us such a prosperous, innovative and resilient nation -- our openness, our free exchange of ideas, free enterprise and liberty -- all of which have their downsides, as we've recently seen in boston and other places -- they have downsides -- but we would not trade them for all the world.

presumptuous for me to say, because you never tell another leader what's in their interest, never tell another country what they should do. but i believe these elements are the fundamental ingredients for success for any nation in the 21st century. there was that famous line by the founder of apple, when asked at stanford, what do i have to do to be more like you? and his response was, think different. you can only think different where you can think freely, where you can breathe free air. so let me conclude by saying we see, as neera said, this is not a zero-sum game.

it's overwhelmingly in our interest that india continues to grow. it's overwhelmingly in our interest that china grows. it's overwhelmingly in our interest that the world economy grow. because we believe asia's success is fundamentally linked to ours. so the president and i are going to continue to reach across the ocean, both east and west, particularly to the indispensable pacific nations, to help us shape a prosperous future, for america, for their people and, i would argue, for the world. thank you all for being so gracious and listening. thank you. [applause]

on the next washington journal will look at the week's political stories with lyrical editor of the washington times stephen dinan. the tell you about supposed changes -- propose changes to the filibuster law. also sam stein a political editor and white house editor of

"the huffington post" will discuss the effects of sequestration and the white house's strategy for dealing with the economy. "washington journal" is on c- span every day at 7:00 a.m. eastern. >> i decided that he was a good subject for a biography when it dawned on me that he had been not only at abraham lincoln's bedside after his assassination, but also at the bedside of william mckinley in 1901. of course, when i opened the archives i realized just what a rich subject he was. his life really has two bookends at either end of his biographical shelf he was abraham lincoln's harvard

secretary, he lived in the white house for four years. at the other end of his life, he served not only under mckinley, but after mckinley's assassination, he was secretary of state for roosevelt. you have these wonderful bookends of american history. you look deep were to realize that all the chapters in between the american history between the civil war and the beginning of the 20th century a was in every one of those chapters. in many cases he has written those chapters of american history. >> john taliaferro on the life of john hay. sunday at 8:00 on c-span's q&a ind is

sword home prices gained nationwide. new construction has seen double-digit growth new family home sales have also picked up. , buthomeowners remain overall numbers appear to decline. to make sure these positive trends in housing continue. two tos's role part address fha's short-term challenges.

a bipartisan legislation to get fha back on civil footing. effort we will turn to comprehensive finance several reform legislation. much progress has been made but the market has not fully recovered from the great recession. low, evenion remains when baby boomers and participation remains near historic levels. even many young college graduates have trouble finding gainful employment. these trends have a harmful effect on the economy.

it is important that we help not hurt american prospects and why it is so important that congress find a reasonable solution for the recent increase in student loan rates. fed should not prematurely step on the brakes. with consumer price inflation low and the unemployment rate unacceptably high, events musk -- the fed must continue to take action to support employment. on the time comes, it is important that monetary policy does not disrupt financial stability -- stability. i thank younanke, for your years of service, leadership as the federal reserve -- at the federal

reserve at a challenging time in our nations history. i now turn to ranking member. chairman bernanke, welcome. welcome bernanke back to the hearing regarding the federal reserve's monitor policy. weeks, the generators have been very active on a number of regulatory fronts, including releasing final regulation to implement the basel three financial rules. i think chairman bernanke personally for addressing the concerns that chairman johnson and i raised in february in our letter. a one-size-fits-all approach regarding capital roles does not work regarding these types of situations. regarding monetary policy, we have produced -- the fed pursued

qentitative methods known as in order to suppress long-term interest rates. as a result, the fed's balance -- recentlyands at released, meet minutes indicate that several members felt that a reduction in asset urges his would likely soon be warranted. several noted economists have called into question one of the benefits of these purchases outweigh the risks. the negative reactions by equity markets indicates that some of the increase of the price of equities and other assets is attributable to the fed's balance sheet expansion and not too early to economic fundamentals. month ford the worst

bond outflows. markets are still heavily reliant on market intervention which is not good for the long- term health of the economy. to what extent does chairman bernanke feel this will continue. the decision to taper remains data dependent. theinterested in hearing if chairman feels that laying out data will improve the fed's commitment to policy. , is the moreng important issue of winding down the fed's massive balance sheet. its balance sheet may not train for some time. a key element of the strategy adopted by the fomc is a three to five year. over which the fed expected that

it could eliminate its holdings of agency securities. this was done for the purpose of minimizing the extent to which the agency securities portfolio might affect the economy. since then, the balance sheet has increased in size by more than 20% to almost $3.5 trillion. the fed's holding of agency securities has increased by 30%. why does the fed see the need for such accommodating policy to theinue in the future? recent increases at the level and volatility of mortgage rates , will the fed revises principles? will be fed be revising the time. over which it expects to eliminate its holdings e is my hope that this hearing gives us

insight into the fed's plans for future reduction and a roadmap for the return to normalized rules-based monetary policy. >> to preserve time, statements will be limited. i would like to tell my, to welcome chairman bernanke. term began under president bush in 2006. bernankeat, victor served as a member of the board of governors of the federal reserve system. chairman bernanke, please begin

your testimony. pleased to -- >> in my brief remarks i will discuss current economic conditions and withrn to monetary policy respect to the outlook, the recovery has continued at a moderate pace despite strong headwinds created a federal fiscal policy. housing has contributed significantly. prices and house residential construction of moved up over the past year supported by more traits. rising housing construction are adding to job growth, substantial increases in home prices are bolstering household prices and consumer spending, while reducing the number of

homeowners with underwater mortgages. it will be important to monitor developments in this sector carefully. conditions in the labor market are improving gradually. nonfarm rural employment has increased by an average of 200,000 jobs for month this year. , the fed rateins is well oh above its normal level. unemployment is still much too high. meanwhile, consumer price inflation has been running below this softness reflects in part trends that are likely to

be transitory. expectations have remained stable. however, the committee is aware that very low inflation poses risks to economic performance. by raising real costs of capital investment. consequently we will monitor the situation closely as well. we will act as needed to ensure that inflation moves back to art two percent objective over time. ejected that economic growth would pick up in upcoming quarters. specifically, most dissidents saw tdp growth pickup in the second half of this year, eventually reaching a solid pace. the projected the unemployment rate declined between 5.8 and

6.2%. we saw inflation gradually decreasing. the pickup in economic growth projected by most committee participants reflects their view that federal fiscal policy would -- the committee believes that risk to the economy has diminished since the fall. the better budgetary position of states and local governments. that said, the risk remained. the debate concerning other fiscal policy issues will evolve in a way that could hamper recovery. with the recovery still proceeding at a moderate pace,

the economy remains vulnerable to unanticipated shocks. global economic growth maybe slower than currently anticipated. high andployment still declining only gradually and inflation reducing slower than our objective our policy role remain for the foreseeable future. forcommittee's basic tool providing monitoring has been close to zero since 2008. we are providing additional policy accommodations. the first tool is expanding the portfolio of longer-term treasury securities and agency mortgage-backed securities. we are purchasing $40 billion per month and 45 billion dollars per month and treasuries.

the second tool is forward guidance about the plans for the target over the medium-term. within our framework, we think of our tools of having different roles. we have made some progress toward this goal and with inflation subdued, we intend to continue our purchases and the labor market outlook has been realized. which will continue to put downward pressure on long-term interest rates, support mortgage markets and help to make broader financial conditions more accommodative. zeroe relying on here short-term interest rates.

even as the economic recovery strengthens and unemployment declines toward more normal levels an appropriate combination of these tools can combine a high level of accommodation needed to promote a stronger recovery. in the interest of transparency, participants agreed that it would be helpful to lay out more details about our thinking regarding additional information on our assessment of progress to date. economict --

forecast must be revised when new information arrives and those are necessarily provisional. overnight several quarters as a restraint from fiscal policy diminishes. committee participants also saw inflation moving back to our two percent objective over time. if the incoming data were to be consistent with these projections, we anticipated it would be appropriate to moderate a monthly rate of purchases later this year. if subsequent data continues to confirm this pattern of ongoing economic improvement and normalizing inflation, we expect did to continue to reduce our purchases in measured steps to the first half of next year, ending them around midyear. at that point, if the economy had involved along the lines we

anticipated, unemployment would be in the vicinity of seven percent and inflation would be moving toward our two percent objective. the outcome would be consistent with our goals that we established in september. that because her asset purchases rely on developments that are by no means on a preset course. if conditions were to improve faster than expected and inflation moving precisely toward our objective, the pace of assets produce could be moved more quickly. did not appear to be moving back toward two percent or if financial to beions were judged insufficiently accommodative to allow us to obtain are mandated objectives the current pace of efforts could be maintained longer.

as i noted, the second tool the committee has used is forward guidance. the committee has said it intends to maintain a high degree of monetary accommodation for a considerable time after the asset purchase program program ends. committee anticipates that its low target range for the federal funds rate would be appropriate at least as long as the unemployment rate remains above six .5%. as i have observed, the phrase "this lease as long as" indicates that the numbers for inflation are thresholds not triggers. reaching one of the thresholds will not automatically result in an increase in the federal funds target.

, the committee would be unlikely to view a decline in employment to six and -- so long as the economy remain short of maximum increases in the target for the federal funds rate once it began are likely to be gradual. providing youby with a brief update on progress on reforms to reduce systemic risk at our largest financial firms. reserve and the other role thanking agencies

adopted the final rule earlier this month to implement the basel three capital reforms. increases the quantity and quality of capital by establishing a new minimum ratio . the rule contains a supplementary levels ratio that apply only to large, internationally active banking organizations. in addition, the reserve will impose surcharges on firms that pose a greater risk. the federal reserve is considering further measures to strengthen the capital positions of large, internationally-active banks. the fed also is working to finalize the enhanced credential standards put out in sections

165 and 166. among the standards, we have stresstively engage in tests and reviewing the first wave resolution plans. with other agencies we have made progress on the key issues to the role and are hoping to completed by year-end. the reserve is hoping to we are developing a supervisory framework to be tailored to each firm. thank you, i will be pleased to take your questions. questions, i will

ask the floor to put five minutes on the clock for each member. chairman bernanke, with inflation low and unemployment so high, what trends in the data would you need to see before deciding to begin unwinding monetary policy measures. unwinding too soon threaten the economy and the financial system? >> we certainly faced the same issues that are always faced when monetary policy begins to normalize after it. of recession and expansion. if we tighten too soon, we risk not letting the economy get back to full employment. if we tighten too late we risk having some inflation. there will be issues of judgment that are unavoidable in any monetary policy. , essentially, a

three-stage process for our normalization. the first, which is dependent on the economy strengthening, the labor market continued to normalize and inflation moving back towards two percent is a process of slowing -- slowly moderating our asset purchases and bringing those two zero additional purchases at the point that we can say that we have made improvement in the outlook for the labor market. we have given some guidelines as to how that process would go forward. the second stage would be a lengthy. in which we are watching the economy for continued improvement, continued reduction in employment, reduction of inflation. when unemployment gets to 6.5% and not before, when inflation is looking poster to target, at that point we would consider whether tightening in the form of raising short-term interest

rates would be appropriate. that would be the second stage. the final stage, the raising of short-term interest rates and eventually the normalization of our balance sheet, as i noted in my testimony, assuming that the economy remains in a slow growth mode, that process will be a very gradual process. what explains the recent rise in long-term interest rates, and how much more of an increase in rates could cause a recovery to falter, and what with the federal reserve to to respond if interest rates bike? >> there are three reasons why we have seen some increased in longer-term race -- longer-term rates. investors see a brighter

prospect ahead. interest rates tend to rise. we saw a relatively good labor market report, which was accompanied by a pretty sharp increase in interest rates on that day. the second race for the increase in rates is the unwinding of leveraged and risky positions in the market. it's probably a good thing to have that happen although the tightening that is associated with that is unwelcome at least the benefit of it is that some concerns about building financial risks are mitigated in that way. the third reason for the increase in rates has to do with federal reserve communications and market interpretations of fed all the see. we have tried to be very clear from the beginning that we have

not changed policy, we are not talking about tightening monetary policy. we have been trying to lay out in the sequence i have just described to you how we're going going to move going forward and how we are going to tighten the economy. i want to emphasize that none of that implies that our monetary policy will be tighter at any time within the foreseeable future. >> what about housing market reform? i think it is very important for us to get our housing institutions, our regulatory structure, to get this cleared up, to get those in working order. i am glad to see that the congress is now looking at reforms of the fannie and

freddie, of mortgage securitization system. i think as there is greater clarity about the rules of the for mortgage making and mortgage securitization, we will see less tightness in the market for mortgages or first-time homebuyers or people with less than perfect credit scores. i think we one of the risks we take now is that there's still a pretty significant part of the population that is having considerable difficulty accessing more you -- mortgage >> chairman bernanke, you have indicated that the fed wants to see substantial improvement. in your june press conference you noted that substantial is in

the eye of the beholder. as i understood you today, you goes asd that if all expected we could expect to see this wound down completely by midyear next year him is that correct? >> if all goes as expected, yes. and if all does not go as expected, we could see q.e. continue for the indefinite future? >> i suspect at some point that the economy will reach that substantial improvement in the outlook, given the way we've seen progress to this point. whether it's later or earlier remains to be seen. >>i assume you would agree that there is risk in continuing q.e. indefinitely. would you agree with that? >> yes, there are costs and risks to q.e. we've said that one of the considerations is efficiency and costs of this program, and we do a benefit cost analysis as we discussed

benefits of additional purchases. >> i do not think it is easy for the markets to understand how and when we are going to see the winding down occur. to me it seems like targets would help reduce that risk. do you agree? >> this is an issue we will continue to discuss. we have given fairly specific qualitative advice, and i did say the unemployment was indicative of the kind of progress we are trying to achieve.