and we will be looking at how for congress spend to travel outside the u.s. our guests tomorrow, monday, on "washington journal post quote -- "washington journal. quote [captioning performed by national captioning institute] >> today on c-span, "newsmakers" steve scalise with followed by ben bernanke on the economy and the government bond buying program. later, jack lew discusses fiscal challenges facing the white house and congress.

onwsmakers" >> this week represents the first district and chairman of the republican study committee. welcome. two reporters with us. jake sherman of "politico" and paul kane of "the washington post." just saw you passed a resolution to keep the government open until mid- december. you have this language stripping obamacare funding. even ted cruz has admitted that when it goes to the senate harry reid has the votes and is probably going to be a post to -- be able to strip it and send it back to the house. you have 48 hours or so to decide what to do next. what do you do next? >> the first thing we do is pass

a bill over to the senate that keep government funded while also defending the president's health care law along with the full faith and credit act to ensure the fault is not an option for a nations debt. is not an option for a nation's debt. if you look at all of the problems that we hear across the country about the president's health care law, this is an unworkable bill. it is so unworkable that the president has acknowledged that it is not working but he only wants to get a reprieve to big businesses that can get access to the white house in the bill it is to all american families. >> it has been an interesting week to use. you've had a revolt and scrapped a plan to scrap another version of the resolution.

what has the situation told you about john boehner and eric cantor? >> they listened to the members of the house that elected them. we have a very diverse congress on the republican side. you see over 230 members very serious. brought forward, a united our conference. it was a lot of conservatives that put these ideas together. we worked with our conference and a rate that i think that's only united us that you had a bipartisan vote on the bill. it will be responsible in funding government while also tackling all of the problems the president health care is creating. >> how many votes are there when this comes back? clean continuing resolution at the funding levels, how many votes, republican votes? speculate. going to

they may take this bill. there is a public outcry going on. the problems that so many of the they go back do home and say they're going to keep it in place even though the president has admitted it is unworkable? back, andg does come there are a lot of legislative tools we have their debt available. vcr is one. -- th ise one. we willc make surer the health care law will be delayed and also addressed the economy. we will put some provisions like pipeline.ne the president has listened to special interests and turned the jobs away. why do we not say yes and get our economy moving again? the bills we will continue to pass sure that we're doing our job and we will continue

fighting to keep government- funded and address the problems in our economy. appears to be tension between house republicans and senate republicans. john boehner said very adamantly it is time forces and republicans to pick up the mantle. ted cruz that he will use all measures possible including a filibuster. if he does not do that, has he failed to live up to his words and his promises? >> whatever the senate does is going to be their responsibility. the first thing we have to do is do our job in the house. i would encourage all senators, i hope they would stand tall and represent and fight for the american people who are saying this is unworkable. we probably have some tactics over the last few weeks. i do not think any of us had disagreements. that is to fight for the

american people who are losing the good health care they have. families are facing 50% increases in costs. these are real, dire consequences. wanted to pass obamacare. he has said that this law is unworkable to the point where it is destroying middle-class families with a 40 hour workweek. the president has said he wants to get the ladies of the law but only to the select few with access to the white house. all of ourourage senators to stand up and fight for the american people. i think they will be hearing from the american people. >> john boehner and eric cantor that thed to say better higher ground for you guys to fight on is on the debt ceiling, that government shutdowns never go well. john boehner lived through it in .995 and 1996 with greenwich

do you think this is something obama desperately needs and you have more leverage their than you do on the cr? >> we have a number of leverage points. the continuing resolution is a leverage point. all of the things -- these things will be coming up. you only have about a two or three week gap between the end of the fiscal year and when the debt ceiling is going to be hit somewhere in mid october to november. we're going to use every tool we have available. this should not just be a plan to have this done in one bill. we're at the beginning. there are a lot to different things we can do to achieve our goal. >> if it does not quite pan out the way you guys want to on the cr, will enough of your guys understand that there is another five-year two or three weeks out

or will there be a big explosion and that this was some sort of dramatic failure of leadership? >> two weeks ago the only talk in washington is that there would be a vote on syria and whether or not to attack syria. today nobody is talking about that. the president has pulled that down. the seismic shifts that can changede something that dramatically. we cannot predict it. one thing we do know it's be have passed a bill over to the senate that does defund the president health care law. whatever the sentence as is their business. to not lock yourself into any one position. at some point the president will have to get engaged and start working with us. he happened to negotiate with prudent and russia but he said he didn't want to with house republicans. they realize this is not a

tenable position. he is more willing to negotiate with the russian leader than he is with republicans in the house who were elected to be in the majority. >> on the topic of negotiations, the president and democrats think they have the upper hand. john boehner and many of your members have set the fault is not -- default is not an option. that is when push comes to shove we are not willing to "shoot the hostages." your leverageease at all? are you willing to not raise the debt ceiling? >> we have said that default is not the option. the president is the only one talking about default. i think he likes threatening families in saying that the country might default on its obligations. it would be the most irresponsible thing anybody could do, especially the president. the president has the sole aboutsibility to take in

three dollars -- $3 trillion. the most with a dash for the president to suggest that there is an impasse that somehow he would stop paying our debts including our senior solutions on social security who hold some of that debt. i do not think we will have any threat of default. a full faith and credit active that injures default is not an option. it is time for president obama to try to stop scaring seniors. >> is there a chance that republicans do not raise the debt ceiling? john fleming said he thinks maybe that is possible. is that something you agree with? is there a situation where you do not get what you want? >> when you look at any of the big-budget deals that come out of washington in the last few decades, many have been attached to the debt ceiling. when president obama's running around saying he did not

negotiate with republicans on the debt ceiling, he failed to remember the history that he -- entereder into into and signed. the president has done that. you have seen bill clinton, george bush, ronald reagan. they have all negotiate a budget deals. default is not an option or something we are pushing for. have all entered into negotiations and agreed to budget reforms that have been good for our economy and country. this is a different type of question. you are in year three of your majority. is there a single day, what was the best day of your majority so far? what was the day you looked around and said this is how it is supposed to work? >> the best it was probably the it that john boehner yanks out of nancy pelosi's hand.

the things she did with cap and trade. so many bad policies. we passed a number of jobs bills out of the house this year. passedislation that we to keep government running was one of the high water marks. we had a number of votes like the keystone pipeline. all of those have been important votes. we have been fighting to get our economy back on track. of goodve been a number days like that where we have done our job and forced the senate and the president to do theirs as well. when they threatened vetoes, the president threatened to veto the student loan bill. that bill is now law of the land . these threats are very hollow when you look at what happened when we unite as republicans and

pass good policy. >> you are chairman of the republican study committee, a group of conservatives in the house. you will spend most likely the rest of the year on fiscal issues. what are the priorities you want to see get done in an election year? >> members are very focused on policy, getting good, smart policy done. we have 175 members. to beings we're going focused on our making sure we get our economy back on track -- getting spending over under control in washington. one initiative we just kicked off his our american health care reform act, a true alternative to the president health care law that is focused on solving problems at a lower cost and increased access to families

without the taxes and mandates that are creating so many problems. we are very proud of the bill. we focus on things like many people buy insurance across state lines which they cannot do now. allowing small businesses to pool together so they can get the same buying power as large corporations. we protect the lives of the unborn. a lot of really good things including medical liability reform. mandates.l of the given you speakers any indication that it will get floor time? >> we brought this to our leadership. had a few days of the bill formally violence. we have been working on this for a few months -- months. we also brought this to our leadership.

we want to see this bill moved through the congress. they are very interested in the bill. not only are there so many republican study members that are behind this bill pushing for this bill, your same people all across the country that are not in the republican study committee and like what we are doing. it shows there is a better way to reform health care. we take the president health care law. less than 200 pages. you can read it. it solves real problems. it actually fixes the problems in place before the president health care law that are made worse now. i am real proud of that bill. >> a couple of years from now john boehner is retiring as speaker. , who do youook to think should be his successor? there in the horizon. let's assume it has ended well. who do you look at as is most

likely successor? >> right now i think the speaker is doing a really good job of leading us to get the things we terms ofet done in policy. members.ery talented you look all across the spectrum from our committee chairman to rank-and-file members who fight for the believes we stand for us conservatives want to get our country moving again. those are things that will be dealt with in the future. you are seeing a lot of our members and others that are working really hard to unite our conference. in a way, that ultimately keeps us focused on the things we want to do to get our economy back on track. >> one thing that not that's that has not come up is immigration reform. is that a bubble?

>> we still want to see a focus on border security. it is not working with our broken immigration system. seek thes came here to american dream. we had a functioning immigration system. we want to first fix the things that are broken. our visa problems, there are serious problems. the numbers are too low. so as to graduate from one of our colleges with an engineering degree, the losses they had to leave the country to go compete against us. if they want -- the law says they have to leave the country to compete against it. if they want to stay, they ought to be able to do that. there are real differences between what i think the senate bill does. we have a number of good bills that have come out of house committees to do that. there are some big battles going

on in fiscal policy. ultimately, i think you will see immigration come back because our system is broken and needs to be fixed. >> do you think it'll come back next year? is there not enough bandwidth for congress to handle the debt ceiling and all of these fiscal issues and immigration? >> and economic issues. we want to see energy development. we want to get more regulations put in check. you have seen so many regulatory policies killing jobs. we have a job that says if a bureaucrat comes up with a regulation should and they go through the legislative process? should congress have to improve it?-- approve immigration is one of the many will confront. there are a lot of big issues. i am sure at some point we will get to it. we have good bills that have come out of a number of our

committees from some of our leaders that have really worked hard to tackle the problems not just to say they want to handle some big massive bill but actually go peas by piece and adjust these problems and get it done. >> does not sound like immigration reform will become law. is that the right perception? >> there's no consensus between the house and senate. follows the failed history of the 1986 law. they had some real serious problems. they did a lot of other things including amnesty but they have never done anything to address border security. they never did it. the senate bill takes the same approach and repeat the same mistakes in 1986, which should not be repeated. we ought to learn from those in solve real problems. lawoes immigration become

by 2014's election? >> yes. i do not see any consensus to get it done yet. >> do you think the republican party broadly needs to appeal to hispanic, asian voters in a better way? is immigration reform a way to do that? if not, what ways do you appeal to those voters? >> a lot of times just reaching we and talking about what believe in. there are a lot of things that people say. hispanict is communities or other people that come from foreign countries. there are a lot of myths out there about republicans. a nationalization service a few weeks ago. we have people that represented over 40 countries.

it was really uplifting. here legally. a million people come to america every single year to become citizens. there are people that wait in line and follow the rules. i met a woman from brazil that joined the army. it was uplifting. this is one of the things that has made our country great. maybe we need to talk about them more and explain what our beliefs are and how we want to help people see that american dream that is in jeopardy right now. into 2014 and an election year, what is your outlook on the house? do you gain seats? >> if you look historically, the sixth year of any president is typically a bad year for the president's party. worsek it will be even

for this president because the economy is doing so bad and policies are having such a negative impact. when you labor union leaders saying that the health care law is destroying the good health care their employees have, those are folks that always show up and help get democrats elected. i think you are going to see the ability for us to gain more seats. i think there is a real chance we can win the senate next november as well and focus on getting the economy back on track. >> you mention an important issue of labor leaders, problem with the health care law. their suggestion is to not repeat the but work within existing law to fix it in some way. should republicans be open to that, correcting this law? is this law not correctable? >> they are seeing 1400 different entities including labor unions.

we are able to get waivers. big business is getting an exemption from the president. you saw insurance companies getting a special deal a few weeks ago. by ifans are disgusted you have some method of getting to the white house you can get a special deal. the folks that have been shut out do not get that special deal. we are planning to get that same exemption to all american families that he only wants to get to a select few. becauseions are angry what is happening with the keystone pipeline. it would be great for americans. a lot of the jobs will be union jobs. we are fighting for the jobs to be made here in america. the president has turned his -- timea time and can and time again. you cannot fix something so

broken. the author of the senate called it a train wreck. was ar baucus that it train wreck. people realize how devastating it is. i see doctors every day leaving the practice of medicine. over 50% increases for people that are trying to get health care in the private marketplace because of all of the mandates that are so unworkable. the medical device tax alone is running jobs out of our country. everybody across the country is seeing the devastating impact is unworkable. bill that piled our says there is a better way. you start with a clean slate and then you go fix the problems. the president made a lot of promises that sounds a good. all of the promises have been broken. let's go back to square one. this was done in a hyper partisan way.

goodis not the way to make policy. >> we had time for a couple of these. there are about 40 or 50 who are continually dragging in and leadership to the right. there are those that are not as in conservative trains. do you think of something that they can actually support? think you can get 218 votes? >> absolutely. votes one can get 233 the bill we put together.

there are democrats that like what we're doing in the bill. if you look at our conference, it is diverse. there are different factions of people. look at what happened with the government funding bill. congress was united. we are not holding out for the perfect bill but we want policies for the country. it is good that we take some time to get it right, the fact that leadership listened -- listen to the things we have concerns with. we put real alternatives on the table. >> we will have to leave it there. i apologize. we only have time for one more

question. thank you for being our newsmaker. i appreciate it. >> thank you. >> we are back with our reporters paul kane and jake sherman. we heard from steve scalise after the house has voted to keep the government running but if everybody goes along with defunding the affordable care to the senate,s what happens? >> he was trying to say we do not know what the senate is going to do. already basically admitted what he knows is going to happen. here we read has the votes. it is an odd parliamentary procedure. has the votes. it is an odd parliamentary procedure. they will send it back to the house. all ofll have cleared the filibuster hurdles by the that vote.ave

it will happen on a simple majority vote and then it gets shipped right back to the house. >> it seems that senator ted cruz and mike lee and others that over the august recess pushed for this effort to take place. are they in a corner now? house republicans are saying you have to put up over there. you need to fight. will seepossible we some real theatrics later next week. who knows. mic and other rand paul, strong thurmond style old-fashioned filibuster were they take the floor for 10 or 14 hours. the mechanisms, senate republicans from mitch mcconnell to bob corker have all has the votes.id

he will be able to get the bill moving because that is on the ted cruz bill. then he will strip it out and send it to the house. then house republicans are in the same box. >> jake sherman? >> john boehner has created a situation where he has framed the debt ceiling. say look at this shiny objects. we can do something with the health care law. is not going to be much better either. what a lot of republicans privately tell both of us is we lost the presidential election. we do not have the senate. our options are somewhat limited. republicans do believe they can get some concessions on the debt ceiling. it is unclear how that will happen. the president has said at every opportunity. he went after a massacre and

said he will not take the debt ceiling. one thing people might be asking themselves is the government shut down worse to defund the president's affordable care act? any there are two different answers to this. among republicans, and these are the people that hate obamacare the most, 60 six percent of republican voters told us a default would do serious harm -- 66% of republican voters told us default would do serious home. 51% said do not raise the debt ceiling. bloc ofe a large

republican voters who think caused it will serious harm. they are willing to do it. i think republicans in the house leadership do not want to shut down the government. i think they think they will lose their majority or puts the majority at risk. john boehner has told wall street and every other street that the default is going to be catastrophic and he is not willing to go there. if you're not willing to do either of those things that will be next to impossible to defund the law. >> we will see what happens. paul kane, jake sherman, thank you very much. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] today, ben bernanke talks about his agencies asset purchasing

program. then treasury sector -- secretary jack lew talks about funding the federal government. then imf director christine lagarde talks about budget cuts under sequestration. >> next, ben bernanke announces his agencies plan to continue its asset purchasing program. he also talked to the press about unemployment and the health of the economy. this is one hour. >> good afternoon. the federal open market committee (fomc) concluded a two-day meeting earlier today. as you already know from our statement, the committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and to make no change in either its asset purchase program or its forward guidance regarding the federal funds rate target. i will discuss the rationales for our decision in a moment. economic growth has generally been proceeding at a moderate pace, with continued-albeit somewhat uneven-improvement in labor market conditions.

of course, to say that the job market has improved does not imply that current conditions are satisfactory. notably, at 7.3 percent, the unemployment rate remains well above acceptable levels. long-term unemployment and underemployment remain high. and we have seen ongoing declines in labor force participation, which likely reflects discouragement on the part of many potential workers, as well as longer-term influences such as the aging of the population. in the committee's assessment, the downside risks to growth have diminished, on net, over the past year, reflecting, among other factors, somewhat better economic and financial conditions in europe and increased confidence on the part of households and firms in the staying power of the u.s. recovery. however, the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and the labor market. in addition, federal fiscal policy continues to be an

important restraint on growth and a source of downside risk. apart from some fluctuations due primarily to changes in oil prices, inflation has continued to run below the committee's 2 percent longer-term objective. the committee recognizes that inflation persistently below its objective could pose risks to economic performance, and we will continue to monitor inflation developments closely. however, the unwinding of some transitory factors has led to moderately higher inflation recently, as expected; and, with longer-term inflation expectations well-anchored, the committee anticipates that inflation will gradually move back toward 2 percent. in conjunction with this meeting, the 17 participants in our policy discussions-5 board members and 12 reserve bank presidents-submitted individual economic projections. as always, each participant's projections are conditioned on his or her own view of appropriate monetary policy. also, at this meeting, we extended the horizon of our projections through 2016. generally, the projections of

individual participants show that they continue to expect moderate economic growth, picking up over time, as well as gradual progress toward levels of unemployment and inflation consistent with the federal reserve's statutory mandate to foster maximum employment and price stability. more specifically, participant'' projections for economic growth have a central tendency of 2.0 to 2.3 percent for 2013, rising to 2.9 to 3.1 percent in 2014 and 2.5 to 3.3 percent in 2016. for the unemployment rate, the central tendency of projections for the fourth quarter of each year is 7.1 to 7.3 percent for 2013, declining to 6.4 to 6.8 percent in 2014 and, by 2016, to 5.4 to 5.9 percent-about the longer-run normal level for the unemployment rate. most participants see inflation gradually increasing from its current low level toward the

committee's longer-run objective of 2 percent; the central tendency of their projections for inflation is 1.1 to 1.2 percent for this year, 1.3 to 1.8 percent in 2014, and 1.7 to 2.0 percent in 2016. with unemployment still elevated and inflation projected to run below the committee's longer-run objective, the committee is continuing its highly accommodative policies. as you know, in normal times the committee eases monetary policy by lowering its target for the short-term policy interest rate, the federal funds rate. however, the target range for the federal funds rate, currently at 0 to 1/4 percent, cannot be lowered meaningfully further. accordingly, the committee has been providing policy support to the economy through two complementary methods: (1) by purchasing and holding treasury securities and agency mortgage- backed securities, and (2) by communicating the committee's plans for setting the federal

funds rate target over the medium term. i'll discuss these tools in turn, beginning with our program of asset purchases. in september 2012, the fomc initiated a program of purchasing $40 billion per month in agency mortgage-backed securities, in addition to the $45 billion per month in longer- term treasury securities that we were already acquiring as part of our maturity extension program. we stated that, subject to our ongoing assessment of the efficacy and costs of the program, purchases would continue until we saw a substantial improvement in the outlook for the labor market in a context of price stability. in december 2012, we announced that we would continue to purchase $45 billion per month in longer-term treasuries after the maturity extension program ended later that month. thus, our total purchases of longer-term securities were maintained at $85 billion per month, in addition to the reinvestment or rolling over of maturing securities on our balance sheet. the committee the

committee agreed today to continue asset purchases at that rate, subject to the same conditions that we laid out a year ago. because the committee tied its asset purchases to the outlook for the labor market, it is important to assess how that outlook has evolved. as i noted earlier, conditions in the job market today are still far from what all of us would like to see. nevertheless, meaningful progress has been made in the year since we announced the asset purchase program; example, the unemployment rate has fallen from 8.1 percent at the time of our announcement to 7.3 percent today, and about 2.3 million private-sector jobs have been created over the same period. over the past 12 months, aggregate hours of work are up by about 2.4 percent, weekly new claims for unemployment insurance have fallen by about 50,000, and surveys suggest that households perceive jobs as more readily available.

importantly, these gains were achieved despite substantial fiscal headwinds, which are likely slowing economic growth this year by a percentage point or more and reducing employment by hundreds of thousands of jobs. not all labor market developments over the past year were positive, however; notably, the labor force participation rate fell by about 0.3 percentage points over the past year, and real wages remained about flat. in light of this cumulative progress, the fomc concluded at our june meeting that the criterion of "substantial improvement in the outlook for the labor market" might well be met over the subsequent year or so. accordingly, the committee sought to provide more guidance on how the pace of purchases might be adjusted over time. the committee anticipated in june that, subject to certain conditions, it might be appropriate to begin to moderate the pace of purchases later this year, continuing to reduce the pace of purchases in measured steps through the first half of next year, and ending purchases around midyear 2014. however, we also made clear at that time that adjustments to

the pace of purchases would depend importantly on the evolution of the economic outlook, in particular, on the receipt of evidence supporting the committee's expectation that gains in the labor market will be sustained and that inflation is moving back toward its 2 percent objective over time. at the meeting concluded earlier today, the sense of the committee was that the broad contours of the medium-term economic outlook-including economic growth sufficient to support ongoing gains in the labor market, and inflation moving toward its objective-were close to the views it held in june. but in evaluating whether a modest reduction in the pace of asset purchases would be appropriate at this meeting, however, the committee concluded that the economic data do not yet provide sufficient confirmation of its baseline outlook to warrant such a reduction. moreover, the moreover, the committee has some concern that the rapid tightening of financial

conditions in recent months could have the effect of slowing growth, as i noted earlier, a concern that would be exacerbated if conditions tightened further. finally, the extent of the effects of restrictive fiscal policies remains unclear, and upcoming fiscal debates may involve additional risks to financial markets and to the broader economy. in light of in light of these uncertainties, the committee decided to await more evidence that the recovery's progress will be sustained before adjusting the pace of asset purchases. the committee will, of course, continue to monitor economic and financial developments closely. as noted in today's statement, in judging when to moderate the pace of asset purchases, the committee will, at its coming meetings, assess whether incoming information continues to support the committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. however, as we have said and as today's decision underscores, asset purchases are not on a preset course. the committee's decisions about their pace will remain contingent on the economic outlook and on the committee's ongoing assessment of the likely efficacy and costs of the program.

let me turn now to the fomc's forward guidance regarding the federal funds rate. the committee again reaffirmed its expectation that the current exceptionally low range for the funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, so long as inflation and inflation expectations remain well-behaved (as described in statement). as i have noted frequently, the economic conditions we have set out as preceding any future rate increase are thresholds, not triggers. for example, a decline for example, a decline in the unemployment rate to 6-1/2 percent would not lead automatically to an increase in the federal funds rate target, but would instead indicate only that it had become appropriate for the committee to consider whether the broader economic outlook justified such an increase. the committee would be unlikely to increase rates if inflation were projected to remain below our 2 percent objective for some time, for example; and, in making its assessment, the committee would also take into account additional measures of labor market conditions, such as

job gains. thus, the first increases in short-term rates might not occur until the unemployment rate is considerably below 6-1/2 percent. the projections of the path of the federal funds rate by individual committee participants are generally consistent with this guidance. although the central tendency of the projected unemployment rate for the fourth quarter of next year encompasses 6-1/2 percent, 12 of the 17 participants expect the first rate increase to take place in 2015 and two expect it to occur in 2016. most participants also see the funds rate target rising only very slowly after the process of removing policy accommodation begins. the median projected funds rate for the end of 2015 is 1 percent. and notably, although the central tendencies of the projections for both inflation and the unemployment rate in 2016 are close to the longer-run

normal values of those variables, the median projection for the federal funds rate at the end of 2016 is 2 percent, well below the longer-run normal value for the federal funds rate of 4 percent or so projected by most participants. committee participants generally believe that, because the headwinds to recovery will abate only gradually, achieving and maintaining maximum employment and price stability will require a patient policy approach that involves keeping the target for the federal funds rate below its longer-run normal value for some time. let me close by noting that, although the fomc is employing two instruments of policy, asset purchases and forward guidance about short-term interest rates, the overall stance of monetary policy is what matters for growth, jobs, and inflation. our program of asset purchases was set up a year ago to help achieve a substantial improvement in the outlook for

the labor market in a context of price stability, relative to conditions when the program was initiated, and we have made progress toward meeting that criterion. however, even after asset purchases are wound down-which we will do in a manner that is both deliberate and dependent on the incoming economic data-the federal reserve's rates guidance and its ongoing holdings of securities will ensure that monetary policy remains highly accommodative, consistent with an aggressive pursuit of our mandated objectives of maximum employment and price stability. thank you. i'd be glad to take your questions. >> you cite rugrats in the labor market on the unemployment front and in terms of a role growth -- you cite progress in the labor market on the unemployment front and in terms of growth. on the payroll front, some people would argue all while there has been growth, it has not been strong enough to keep up with population growth and

make up the gap we had from the recession. how high do you think the jobless rate would be if it were not for the decline and participation? i have heard estimates of 11%. can you put the labor market in that context? >> certainly, i think there is a cyclical component to participation and in that respect, the unemployment rate understates the amount of sort of true unemployment, if you will, in the economy. on the other hand, there is also a downward trend in participation in our economy which is arising from factors that have been going on for some time including an aging population, lower participation by prime age males, fewer women in the labor force, other factors which are not related to this recession. over the last year, the

unemployment rate has dropped by eight/10 of one percent. the partition -- the participation rate has dropped one percent. most of the improvement in the on employment rate but not all is due to job creation rather than to lower participation. i would also note that if you look at the broader measures of unemployment that the bls publishes including part-time work and discouraged workers and so on, you will see those rates have fallen about the same amount as the overall standard civilian unemployment rate. there has been progress and it is obscured by the downward trend in participation but i would agree with you that the unemployment rate, while perhaps the best single indicator of the state of the labor market, is not by itself a fully representative indicator. >> to what extent do you regard yourself as responsible for the tightening in financial conditions that you noted?

was it a mistake to talk about tapering in june and do you stand by your guide is that it will be appropriate? will it be appropriate to dial down asset purchases by the end of this year? >> to answer the first part of your question, i think there is no alternative and making monetary policy but to communicate as clearly as possible and that's what we try to do. as of june, we had made meaningful progress in labor market conditions and the committee thought that was the time to begin talking about how the eventual wind down of the program would take place and how it would be tied to the evolution of economic variables. in particular, i talked about a proposed strategy that would take about a year for the total wind down to take place which in turn was also fully contingent on the ratification, so to speak, of our outlook which include continued improvements in the labor market.

all that was very consistent with what we said when we began the program, our goal was to achieve a substantial improvement in the outlook for the labor market and we needed to communicate how that was going to be put into practice. failing to communicate that information would have risked creating a large diversions between market expectations, public expectations, and what the committee intentions were and that could have led to much more serious problems down the road. i think communication was very important. the general framework under which we are operating is still the same. we have a three-part baseline projection which involves increasing growth that is

picking up over time as fiscal drag is reduced, continuing gains in the labor market, and inflation moving back toward its objective. we are looking to say date -- to see if the data confirms that basic outlook. if it does, we will take the first step at some point in the possibly later this year, and then continue so long as the data are consistent with that continued progress. that basic structure is still in place. what i want to emphasize is two things -- first, as i said, asset purchases are not on a preset course. they are conditional on the dates and have always been conditional on the data. secondly, even as we move from asset purchases to rate policy as the principal tool of

monetary policy, it is our intent to maintain a highly accommodative policy and provide support necessary for our economy to recover and provide jobs for our citizens. >> to follow up on that question -- you said that you could pull back the purchases possibly later this year. you sound a little less certain that it will happen later this year. i would like to ask you to talk more about your conviction about whether the pullback is likely to start this year. where do you stand on that? i also don't think i heard you mentioned the seven percent unemployment number that you talked about back in june. that was the unemployment rate that was supposed to prevail when the fed was done doing this. is that no longer operative? >> so, there is no fixed calendar. -- schedule, i have to emphasize that. if the data confirms our basic outlook and we gain more confidence in that outlook and believe the three-part test i

mentioned is indeed coming to pass, then we could move later this year. we could begin later this year but even if we do that, the subsequent steps will be dependent on continued progress in the economy. we are tied to the data. we don't have a fixed calendar or schedule but we have the same basic framework that i described in june. the criterion for ending the asset purchases program is a substantial improvement for the outlook of the labor market. last time, i give a seven percent as an indicative number to give you some sense of where that might be. as my first answer suggested, the on implement rate is not necessarily a great measure in all circumstances of the state of the labor market overall. for example, last month, the

decline in the on a raking about more -- came about more about the participation not about the increased jobs. what we will be looking at is the overall labor market situation including the unemployment rate but including other factors as well. in particular, there is not any magic number that we are shooting for. we are looking for overall improvement in the labor market. >> mr. chairman, one question with three parts -- have you indicated to president obama you did want to serve term and if so when? did president obama indicate that he did want you to survey three term -- to serve a third term? >> it's convenient because i have the same answer to all three parts of your question. [laughter]

if you indulge me a little longer, i prefer not to talk about my plans at this point. i hope to have more information for you at a soon date but today, i want to focus on monetary policy and preferred not to talk about my own plans. >> you mentioned that tighter fiscal conditions are a concern for the committee as you guys think about whether or not it's appropriate to reduce asset purchases. what do you all expect to be able to do in the future when you actually do begin to pullsse expectations and managed the market reactions such that we don't see another increase in rates? >> what's the relationship between the pullback and fiscal policy? >> i'm sorry, i meant financial conditions. >> sure, part of the reaction that we have seen comes from a

number of sources. part of it comes from improved economic news. that's part of the reason why rates have gone up in other countries as well as the united states. to the extent that tighter financial conditions reflect a better outlook, that is a good thing, that is not a problem at all. part of it reflects the views about monetary policy and that we want to make sure we get straight. that's why, to answer the earlier question again, that's why communication is so important. we need to explain as best we can how we are going to move and on what basis we will move. it's more difficult today than it was 20 years ago because the tools are more complex and less familiar but that is still very important. the other factor which was at play was an unwinding of excessively risky and leveraged positions in the markets and insufficiencies of liquidity in some cases meant those

unwinding's lead to larger reactions in prices and rates than might otherwise have occurred. the tightening associated with that is, to some extent, unwelcome, but, on the other hand, to the extent that some of the riskier positions have been eliminated, i think that makes the situation more sustainable and reduces the risk that their will be an over-strong reaction to announcements. we will be our -- we will do our best to operate clearly. the more clearly we communicate, the better the chance that markets will understand our intentions and we can avoid any sharp movements. again, we are dealing with tools that are less familiar, harder to quantify, and harder to

communicate about them the traditional funds rate. >> mr. chairman, the meeting committee predicted two percent rates at the end of the year and in the long run, they expect rates to arrive at four percent. can you give us an idea of when the committee expects interest rates to get back to four percent? >> let me first restate the key point which is that the large majority of the participants at the fomc, voting and nonvoting members, who are asked to describe their own assessment of optimal policy -- the large majority of them estimate that the appropriate target for the

federal funds rate at the end of 2016 will be around two percent even though come at that time, the economy should be close to full employment according to our best projections. the reason for that -- there may be several reasons but we discussed this today -- the primary reason for that low bow you -- low value is that a number of factors including the slow recovery of the housing sector, continued fiscal drag, perhaps continued effects from the financial crisis may still prove to be headwinds to the recovery and even though we can achieve full employment, doing so will be done by using rates lower than the long run normal. in other words, in economic terms, the equilibrium rate, the rate that achieves full employment, looks like it will be lower for a time because of these headwinds that will be slowing aggregate demand growth. that's why we expect to see growth -- rates at unusually low levels. i imagine it would take a few years after that to get to the four percent level. i could not be more precise than that. we are already stretching the bounds of credibility to talk

about specific projections into auntie 16. -- into 2016. i think you would see rates rise gradually after that and ultimately get to four percent. >> mr. chairman, you indicated you can see the fed lowering the pace of purchases once the economy starts to grow faster in line with what the fed has projected. for the past four years, the fed has been projecting that growth would quicken to about three percent and it never has. at what point are you going to decide that other costs and benefits are the reason you are making the decision? are we getting close to that having to be a deciding factor even if you do not get the growth forecast the way you have in the past four years and is the complication of this -- this is a second question -- does the complication of this mean you need a press conference to make

a tapering decision? >> well, you are certainly right that we have been overoptimistic about out your growth. -- out year growth. there are number of reasons for that. one reason, though, is that it appears, and i talked about this in a speech last year, it appears that as part of the aftermath of the financial crisis, at least temporarily, the potential growth rate of the economy has been slowed, perhaps because new businesses are not informed at the same rate and innovation might not be translated into new technologies at the same rate. investment is slower, etc. it appears, again, that the potential rate of growth of the economy has been slowed somewhat temporarily by the recession and the financial crisis and you can see that in the productivity figures. we have not anticipated that slowdown in productivity and