principal on the debt. what else? the legal issues even regarding interest and printable on the debt, r, given. principal on the debt is not something we pay out of cash flow. it is a function of the markets rolling over. there is a question of what we can do as a government how the markets function when the government is failing to pay its bills. we have never been there, anyone who suggests that they know what that means would be projecting. after 244 years of paying all of our bills, what happens when we stop? i do not know how you could choose between social security and veterans benefits, between medicare and food assistance. there is our obligations we have made. we would not have the money to pay our troops in full, our benefits in full.

our systems were not designed to not pay our bills. the legal issues are many. i do not know how you could make the legal issues are many. i do not know how you could make the decisions and i do not think the legal authorities are clear at all and i do not think the administrative process would permit the system to work. we write roughly 80 million checks per month. the systems are automated tube a because for 224 years, the policy of congress and every president is we pay our bills. you cannot go into those systems and easily make them pay some things and not other things. they were not designed that way because it was never the policy of this government to be in a position that we would have to be in if we could not pay all our bills. >> if you were to prioritize, it's my understanding, we know what you're out pay obligations are to some degree. we have a social security payment due and major medicare bills do.

on the other hand, knowing the revenues are a little bit sketchy. could you go over that a little bit? >> we have estimates and if these estimates are wrong, there is the real risk, miscalculation. i would note that even in the. of time i have been keeping congress in forms, we have swings in the normal course of things of $20 billion in terms of our cash on hand. that is not because anyone did anything wrong. it's because quarterly tax receipts were not exactly where they were estimated to be. i would also remind everyone that we are now in an unusual position with the government shut down not having economic consequences that we are just beginning to understand. all of the revenue projections we have based our analysis on were based on a world where the government was functioning and were all the services related to government activity were

happening. it's not a can to account any layoffs that might occur or any reduction in payroll or payroll taxes. i have to assume that the estimates from before the shutdown are likely not to be an accurate richter of exactly where we are. >> how do you reprogram computers? >> mr. chairman, i don't believe there is a way to pick and choose on a broad basis. the system was not designed to be turned off selectively. anyone who thinks it can be done just doesn't know the architecture of our multiple payment systems that are very complex and designed properly to pay our bills. they were not designed to not pay our bills. >> so prioritization does just not work? >> i think that is default by another name. it is just saying we will default on some subset of our obligations. by definition, if we don't have enough money to pay all of our bills, we will be in default on our obligations.

>> thank you. i want to be clear about the administration's position on the debt limit. as i understand it, the position is the president will only accept the so-called clean debt limit hike with no other accompanying policy or fiscal considerations. how much of a debt limit increase would you like and for how long? you have responded that it is up to congress. i believe the administration's position is unfortunate because it is clear that we have a debt problem and the fundamental driver of our debt is unreasonable and unsustainable spending an hour in tiedemann programs. i believe we can answer uses as an opportunity to address these

promises and i mentioned five modest bipartisan proposals on entitlement reform to the president earlier this year. you received copies but i have heard no response to that. i sincerely did that. nevertheless, the administration is entitled to its opinion and position. i want to be clear concerning the debt limit. as long as there is nothing attached to a debt limit increase, the administration will say nothing more about it including its preferred outcomes in terms of how much of an increase and for how long? is my understanding correct? if you wish to give me your preferences how big of a debt limit increase you would like to have and for how long you would like it, at least we can begin discussions and negotiations on this particular issue. >> senator, we have discussed this a number of times. we have corresponded a number of times. i wrote to you just last week, a

few days ago, stating what error view is. our view is that this economy would benefit from more certainty unless you mentioned. the longer p theeriod of time is, the better for the economy. it is congress's decision how often it wants to vote on the debt limit. i believe that more certainty is better. i think the senate leader and the chairman have put forward a proposal -- >> i'm just asking how much do you want and how long? those are two simple questions. how much do you want us to raise and how long? >> senator, the question of how long is one i think i'm answering as clearly as i can. the longer that congress is prepared to extend it for is the best. the president tried to be clear in his statements in recent days that if congress passes something shorter, he was hoping he is not looking for there to be a crisis here. congress would be right back dealing with it so the good solution is to do it longer. everyone knows the numbers associated with different areas of time. >> it's not clear to me. between 2009-2012, the federal

government recorded the largest deficit since 1946 crossing federal debts to soar to an amount higher than at any point in u.s. history except during world war ii. it now stands at 1.7% of gdp. our debt path is unsustainable, threatening to bring us to this fiscal crisis. third, the root of our spending problem is the government's major healthcare programs. that includes not just obamacare but medicaid and medicare as well. trust funds on social security and their health entitlement programs face exhaustion. when it comes to negotiating solutions to our entitlement spending problems, all i hear from the administration is that negotiations can only proceed if first the president is guaranteed yet another tax hike or if the only spending restraint we enacted thus far is turned off. when it comes to so much that is

even discussing entitlement spending programs, all i hear is that negotiations can only proceed if we pass a clean continuing resolution and a clean debt limit increase. what does it take beyond a guarantee to the president and congressional democrats that they first get another tax hike or that the sequester be undone to get the administration to the table to talk about entitlement reforms such as the ones i have proposed and which have been met with total silence from the administration? is it reasonable to say that there can be no negotiations unless there is another tax hike when we know this very day that disabled american workers face a benefit cut of 20% or more under current law when they disability trust fund is exhausted in 2016 or earlier? >> i think the record is clear that the president has negotiated and wanted to negotiated and remains anxious

to negotiate on a bipartisan basis to have a fair and balanced approach to dealing with our fiscal problems. >> it's not clear to me. >> he has been on the verge of deals twice and it was not acceptable to republicans in congress prayed he was prepared to do very hard things and was ready to have an agreement twice in 2011 and at the end of last year. he put in his budget tough policies, that many democrats on this committee find very challenging because he wanted to make clear he was looking for a balanced approach to entitlement reform and tax reform to settle our fiscal matters in a sensible way for the medium and long- term. the president's record on willingness to negotiate is clear. i would make comment briefly on the trajectory of our deficit -- when the president took office in january, 2000 nine, we were in the middle of the worst recession since the great depression and in the middle of two wars and we had a deficit that was nine percent of our economy. we have cut in half and are making progress. we have more to do but but i

don't it's fair to say that we are in the same place we were. we have made tremendous progress. >> thank you, mr. chairman. it seems to me, in the event of a default or near default, the dominoes are going to fall fast and hard. those hit early on will be older people who depend on their own retirement savings to get by. these are the older people who saw much of their life savings you that operate during the recession. they are struggling just to get those private savings back to the water line. be as specific as you can with respect to what to fault or near default would mean for those seniors who depend on their private savings. >> i can only begin to imagine what it would mean to a retired american who relies on social security as their major or sole

source of income if we had to tell them their check was going to be late. our member my late mother lived under social security check. many of us had relatives who lived on that. if the check did not come, if they did not have the ability to call someone who can help them out, you are in trouble. anyone thinks that anything short of default has never experienced what it means to live on social security. in terms of medicare -- >> what about private savings especially? i share your view about the others but the public has heard you given comments with respect to mortgages but i am concerned about the retirees and their private settings as well. >> retirees so there -- let's talk about retirees because workers have their savings at stake. the effect is the same, it's just more immediate for retirees. we saw during the financial crisis, people's retirement assets fell quite dramatically

in value. it reduced what retirees had to live on and caused anxiety among the working people as to how they could catch up. we are now in a place where because of the resilience of the american people, the recovery of the american economy, the good policy decisions made by congress and the federal reserve board, we are in a better place. we have a lot of work to do but you can see from the economy that people are beginning to feel the economy is moving in the right direction. if you create a crisis that causes assets to shrink and value for retirees, they don't have time to catch up. even if it all rights itself over aeriod of time, for the retirees, they are in a bad spot. i think it is very unfair to have manufactured crises that have a real-life impact on working americans and retirees who should be able to worry about market risks, not government policy risks.

>> let me ask you about the effect of default and the deficit. budget sequestration is not -- has not been an ideal instrument, it's not perfectly targeted for driving down the budget deficit but it has produced budget savings that actually accrue to the benefit of the american taxpayer. in the event of a default or near default, is it fair to say that some of those budget savings would be eaten up to pay higher interest costs, a substantial amount of which would go to foreign governments and other foreign creditors? >> we have seen just this week that for the bills that mature at the end of october, the rates have almost tripled over the last week. we still have access to the credit markets but it's more expensive and for no reason. it could be resolved by just

settling this issue and making it clear that the debt limit will not be breached and we will not have any problems. >> what's troubling to me is after the american taxpayer has gone through something of a painful process and you see the savings, in effect, the results of the default would produce higher interest payments and in effect transfer of american wealth from our taxpayers to foreign creditors. >> i would add that higher interest rates also flow through the economy in terms of higher mortgage rates and higher student loan interest rates. the costs of multiple levels of impact on real people. >> thank you, senator. senator grassley. >> majority leader reid cleaned debt limit increase in to the beginning of 2015 likely be an increase of around $1.3

trillion. my understanding is that it is leaving the debt limit increase up to congress and that you won't negotiate, require a cleaned debt limit increase and will say nothing about its negotiating preferences regarding how long or how much the debt limit increase is desired. with that being the case, if the majority leader cleaned debt limit bill raise the limit for one month and the amended bill was passed through congress, than the president will sign it, i assume. is that correct? >> i would have to see a bill and the president would have to look at it to say what he would not sign. he made clear that dealing with with this for a longer period of time would be better for the economy but he did not rule out something shorter. we have been very clear about what the right thing to do is. >> both you and president obama

have repeated the talking points that negotiating deficit reduction policies on the debt ceiling increase is unprecedented, the debt limit has been used in the past as a means to enact deficit reductions, policies congressional research services since 1978, congress has voted to raise the debt ceiling 53 times, 27 of those, the debt limit increase was tied to the reforms. i assume you are aware that more often than not, the debt ceiling is raised with other policy or reforms. if you are aware of that history, why do you and president obama continued to use the talkingpoint that negotiating debt limit will is unprecedented when the facts demonstrate otherwise? >> i don't think that is an accurate version of history. it is not what i recall having

lived through many of the budget debates over the last 35 years. in the last nine budget limits, only three have them have involved the debt limit. if you look at the budget agreement that did involve the debt limit, in several of them, the debt limit was just added onto a bill. it was not driving the debate. what i think changed in 2011 was the affirmative case was made in 2011 that a certain faction -- i'm not saying the people in this room -- but a certain faction of the house, if they did not get their way, they would prefer default over a compromise they found unsatisfactory. that is different. we cannot have the debt limit the something that's a threat to the economy unless policy concessions are made.

that's not our democratic system works. a minority cannot do that. >> secretar lew, before i go onto my next question, at least you cannot say it is unprecedented to have negotiations and reforms tied to a debt increase. >> i have never said it's unprecedented for an increase -- it has always been a hard vote for it since 1917, this country has work to turn it into a more ministerial vote. congress used to have to vote on every bond issue and the debt limit was put in place to reduce the number of times congress had to on debt. in the 1980s -- in the 1970s, we try to turn it into an automatic vote so there would not have to be a boat on the debt limit. two years ago, senator mcconnell put in a mechanism to make it easier to vote on the debt limit. it has always been a hard vote. is it going to be used as a threat to the economy? that cannot be. >> the president has made clear that if we pass a clean cr and a cleaned debt limit extension,

he is ready to negotiate. where we need to negotiate is obvious. if you look at long-term protections and spending on health care entitlements demands our attention. in the next 25 years, spending on medicare and a medicaid as a percentage of gdp is expected to nearly double. if i ask you if the president is willing to negotiate on health care entitlements, i think you have already said what the president put in his budget. you are probably going to sites the president's budget. you have already done that. i don't consider that negotiation. i consider it a restatement of your position. negotiation means you are willing to give serious consideration to the other side's ideas. senator hatch is made numerous proposals on health care entitlements. i am told the message of the 2012 election was that democrats no longer have to negotiate on health issues. can you convince me that is

wrong? >> senator shumer. >> can he answer the question? >> i think the budget reflects the president's openness to entitlement reform. he has been willing to work in a bipartisan basis to do things that are unpopular on the demo craddick side and is looking for a partner who has given take. >> thank you, mr. chairman and thank you for coming, secretary lew. this hearing as much new did -- much needed. it is about dealing with the debt ceiling deniers. they try to claim that default will not be a big deal and middle-class families will not be hurt, we can just pick and choose which bills to pay, prioritization. the debt ceiling deniers need a dozen debt ceiling reality and you have given them that today. you have said prioritization is default by another name. prioritization is extremely difficult, as you have said.

do we pay foreign debts or veterans benefits? do we make sure social security benefits go out or pay medicare, do we pay for education or our troops? american people don't want that. they would want us to pass a clean debt ceiling bill and avoid those awful choices. i would like to talk about the other -- by the way, one of these debt ceiling deniers, a congressman named brown, he said that much of what he learned in medical school relies that came from the pits of hell. if we are letting people like this lead us, god save america. i would like to deal with the second issue which is the timing. in my view, we are like a blindfolded man walking towards a cliff and if we keep walking in that direction, very soon, we will fall off. we may fall off on october 16 or october 17 or are over 25 or

november 1 but we will fall off. the most interesting -- the most important point is we don't know which day we will fall off. the markets are somewhat mystical. they can come to the view that the u.s. will default and anticipate that and treasuries go down in value and interest rates go up much of our financial system freezes and we are back where we were in 2008 when aig failed. i want to ask you this question to be clear, isn't there a risk almost every single day starting around october 17, even perhaps a day or two earlier, and we can't tell exactly when we will not have enough money to pay our bills and default could occur? even if you laid out the most meticulous plan and the world. >> i have been trying to be as

transparent as possible for several months. i very much fear that miscalculation is something that could lead to a very severe consequence. since august, i have been very clear -- we are already on overtime. we hit the debt limit in may. we have been using extraordinary measures. we call them that that everyone assumes they are infinite. they are not infinite. i warned in august that we were going to run out of extra and remeasure sometime in the middle of october and i went a step or their which mostly has never been done and said we are going to have roughly $50 billion in cash. one month later, based on the year end tax receipts and expenditures, i updated that and said no later than october 17 we would run out of our own capacity and instead of $50 billion, we would have roughly $30 billion. i think that should indicate that what i said at each of these correspondences is true.

it's impossible to predict with accuracy. we are talking about in arm as variations in day to day expenses and an economic activity which generates tax revenues. it is impossible to predict with accuracy. it's typical to keep roughly $50 billion in reserve at all times just as a cushion against the unknown. when you talk about having less than $50 billion in drawing it down, that's a dangerous place to be. that's why congress needs to act to raise the debt limit sooner rather than later. >> they would avoid a potential cataclysm. they should not delay and say we can wait until the eve of october 17 or 19 or october 31, is that right? >> there is a parlor sport in washington of when is the last minute. you cannot do that with the debt limit. if you look for the last minute and you make a mistake, you have done serious damage to the u.s. economy, to the world economy. it's just not responsible.

it's reckless. >> would you deal with my analogy of a blindfolded man and we don't know exactly what date we will fall off? >> i have tried to describe it in my own words. >> thank you. you indicated in your beginning remarks that we face a terrible threat to the economy from a manufactured crisis. i understand the fact that the issue of whether the federal government's borrowing limit should be raised is problematic and faces -- and creates serious concerns with regard to our economy. the fact is, we do face a debt crisis. it's manufactured but we face a real debt crisis. as we hear the discussion about whether the united states is going to lose its good faith and credit, ultimately default, the

real crisis is that default. it's the one we are screaming toward because of our refusal to engage as a country. congress and the president, with regard to forming -- to reforming our failed entitlement and tax policy and dealing with the real debt crisis that we face. i think senator schumer's, about the blind man walking toward the cliff is more appropriate with regard to the debt crisis we face with almost $17 trillion debt. my question to you is -- don't you believe the long-term trajectory of our debt gives our economy a greater threat and gives investors even more concerned in terms of their confidence about the ability of the united states to avoid default? >> we clearly have long-term challenges but i think the financial markets and when you

talk to financial policymakers around the world, they see that we have made a lot of progress in the last few years. we have more to do in terms of entitlement reform and tax reform but we have taken a deficit that was nine percent of gdp and brought it in half to four percent. if anything, we are getting criticized around the world for having too much deficit reduction too fast because they want more growth. i agree we should be dealing on a bipartisan basis with sensible balanced approaches for medium and long-term reforms. i would love to be engaged in that conversation. >> the very progress you are talking about occurred as a result of significant tax increases and the debt ceiling compromise that was breached with the budget control act. the fact is that we have not dealt -- in that compromise, we dealt with discretionary spending almost entirely. we have not dealt with

entitlements with the -- which the administration says is off the table but now we have more demands for greater tax hikes. that's what the negotiations we want to engage in are about. >> the president has engaged on multiple occasions. i have been part of those negotiations. we very much believe that a balanced approach where you do entitlement reform and tax reform would be good for the country. we tried in 2011, we tried in 2012 -- we are ready to try again. the president said when we take away the threat of economic disaster, he is ready to engage. if i heard him correctly in his press conference, he said he would pay for dinner. he is willing to talk and wants to talk but it cannot be with the u.s. economy being threatened if one small part of congress does not get its way. >> so we need another $1 trillion or more of debt the four we can even discuss whether

to start reforming entitlements and reforming the tax code? >> what we believe is the government needs to open, congress needs to open the government, and congressman needs to make it possible to pay our bills and we need to engage and we are ready to do that. >> to conclude my questioning -- back to the issue of our long- term debt and the threat it poses to our economy -- are you telling me those fears have been allied? >> what i tried to say and i hope i was not confusing -- there is a challenge to deal with in the medium and long- term. it is not the same as a crisis which is what happens if you fail to act on the debt limit in the next short. of time. i would like to do it sooner rather than later and i think it's better for the country and it would've been better for the country if we had been able to mix -- to complete the negotiation where the president and speaker were closed until house republicans said they would not vote for it. we would love to be in a place where we were talking about a sensible alternative to these mindless across-the-board cuts.

we have been clear about that. it cannot be with the threat that the government is shut down and we will default on our bills. that is not a way to engage in the kind of bipartisan negotiation men need to happen. >> thank you for your testimony about how you think this serious prospect and uncertainty to the market are right now. i guess that is my question to you. everybody is talking about default as if that's the triggering point. this moment could happen at any time according to your testimony. the reason i brought this chart if you're not involved in the financial markets, it is a mysterious thing. this chart shows the treasury is held in the u.s. by businesses but in europe and china and there is -- it is a network, complicated and complex. it comes to all the individuals involved.

it is not just picking up the phone and calling wall street and telling them to settle down. my question is -- i just went on the web and wondered about treasuries and if you google treasuries, it it comes up the most important market indicator, way important than the stock markets, how important a number it is in the economy because of interest rate being pegged off its interest rate. here we are now basically almost talking the interest rate up with the talk in the city in the last 48 hours i can point out this chart because we have seen a dramatic spike from

0.0.3% up which is more than doubling in 48 hours. if the interest rate on treasury's in the next 48 hours i am, aren't we already to that tipping point? >> i have been trying to careful and report what has happened. i cannot predict what markets will do. i think if you look from last week to this week, a tripling of interest rates on short-term bills is not a good thing. we have seen stability in the long term bond markets but markets are delicate things. i don't know how markets will translate one day's news or actions into discomfort. i do know that every week we roll over $100 billion of treasury bills. that relies on the market eating open and willing to function. i think everyone has to remember it's not just interest, it is also the principal. the markets have to keep working. >> i think the thing that people are missing in dc is that everybody is at risk in the u.s. economy. it's not just what you just

explain that everybody at home. last time, we had this discussion about whether we were going to default or not and the stock are could drop 20%. -- and the stock market dropped 20%. we could have this discussion and by monday, one of my constituents that you could see as much as a 25% drop in the stock market. this is triggered off a treasury so we don't have to go to default. just the talk of default is causing the level of uncertainty we are trying to avoid. >> that's what we saw in 2011. we had an 11th hour agreement then and we avoided seeing what happens when you cross the line. we had the damage spread we had the drop in the market, we had the higher interest rates and we suffered a downgrade in the u.s. credit rating. that is what happened when we did not cross the line. i don't think any one should want to test what happens when we cross the line. with the government shutdown, we

are seeing every day that new things are coming out that are really bad. people thought it was ok to shut down the government and are now rushing to open up one piece or another at a time. it would be reckless to see what happens when you cross the line and don't pay america's bills. >> i think what we are doing is reckless and i hope our colleagues will come together. thank you. >> senator roberts. >> thank you. i don't think we have a blindfold on walking toward a cliff. i think we are walking toward a cliff with their eyes wide open. that's the problem. all this talk about self- inflicted wounds -- it was not a self-inflicted wound when we raise the debt limit and we also achieved the hollings act, the balance of budget act. it has been referred to by other senators.

it gets down to a willingness to really negotiate. [feedback] it's the nsa again. the president said over and over again that he will not negotiate but i don't think that's true. there is a meeting as reese week with republican leadership in yesterday he met with democrats. you have been briefed on the agenda of this meeting with regards to the time that the president would defer to an extension of the debt limit and the agenda, i'm talking about sequester flexibility with the appropriations committee oversight, the repeal of the medical device attacks, the restoration of the 40 hour workweek to the aca as opposed to the 30 hour work week causing all the problem and perhaps even a decision or at least a time frame on a decision on the

keystone pipeline. there is a long list that all of us have that we have talked about. senator crapo asked specific questions on entitlement reform. that's the real cliff i think we are walking toward. i would only opine to you that why this is so tough, the american people get this. maybe not on the shutdown, although there has been a lot of debate back and forth, but they sure get this on the debt limit. 52% do not want any interest in the debt limit. they get it. they look at this is their own family budget and they understand this. 70 -- 80% say no spending -- no increase without any spend reform and we hear no negotiation. it reminds me of the debate of the paris peace talks in the vietnam era, thus size of the table in the height of the chairs. maybe this morning when the

president recently republican leadership and the democratic leadership previously, we could get the high chairs and we will take the low chairs. this is silly. senator schumer said that basically we are walking toward a cliff with a blindfold. i think we have the blindfold off. no action on entitlement reform, no action on tax policy -- i have been to the dinner with senator isaacson at the white house print it was a privilege. when we talked about how we achieve the grand bargain on tax reform, the president said he needed $800 billion. that prices been raised by the distinguished majority leader to $1 trillion. i don't think you will find much support on the side of the aisle for that. we talked about reform, he said why can't we take mortgage interest and charitable giving

and retirement? he gave some specific examples. i tried to put in regulatory reform and i would put that in on the agenda if you agree to it. or if the president would agree to it. we will not do that. we will not test everything in the tax code and we are not going to raise taxes $1 trillion. that's a nonstarter. i hope we can do that. have you been briefed or what is the up to date news you can give us about the agenda of this meeting as to the time amount and as to what could be on the table? >> the president has been very clear. congress needs to reopen the government and make it possible for us to pay her bills and then he is open to talking about anything. it is not a question of the shape or size of the table. it's a question of whether there is give and take.

>> you indicate that the president is willing to negotiate but he is not willing to tell us what agenda or what specific arts of the agenda he might be interested in or not or the timeframe? >> congress has to open the government, congress has to make it possible for us to pay his bills and he is to -- and he is happy to talk about anything. he is clear about what he wants to on in our budget and numerous communications. give and take means everyone coming and doing hard things. he demonstrated his willingness to do hard things of others are willing to do hard things, maybe we can do something important. >> i am over 13 seconds, i apologize. i think what you are saying is if the government shut down can be discontinued, everybody wants that, i don't want to get into that debate again, but he is willing to negotiate only if we end of the shut down and to an extension of the debt limit and then he may negotiate with an

agenda that's just amorphous. >> he has always been willing to negotiate just not with the threat of destroying our government. >> my colleagues have already expressed a series of dimensions in which both the shut down and the threat of default affect our country domestically economically. i want to look at a different dimension that has domestic issues. in the other role i play as chairman of the senate foreign relations committee, i worry about the incredibly extremely negative affects the government shut down and the threat of default have on our foreign policy and their national security. both now and in years to come. the shut down and the default affected some of america's near- term foreign-policy priorities

such as the president not being able to go to the asian economic summit. his absence although appropriate due to the crisis feeds into existing fears having traveled to the region that our rebalanced asia is more rhetoric than reality. who showed up and was more than willing to fill the void, china. in doing so, america's loss is china's gain. this is an opportunity about opening markets for u.s. businesses, and to sell products and services, this is an opportunity to promote economic and security questions. i think our allies are going to wonder -- is the united states capable of meeting its promises

whether about economic initiatives or security initiatives. perhaps the most damaging and difficult thing to reverse is the impact this has on america's reputation in the world and the economic consequences that flow from that. the entire global financial system depends in large measure on the faith that the united states government can and always will pay its debts. america enjoys the unique privilege of having its currency acts as the world's reserve currency. it seems to me but playing political games, we give credence to other emerging powers like china and brazil who want the world to become less reliant on the dollar and there are consequences to becoming less reliant on the dollar. not only does that undermine our standing in the global economic system, it puts our

dependability in question with allies. in your role as treasury secretary, you fill various international roles. can you give the committee a sense of the consequences at home but there are consequences abroad that affect us here at home. >> i think it would be impossible to overstate the importance of playing the role we do in the world in terms of stability. there's a reason why the dollar is the the reserve currency. the world counts on us being responsible and making the kinds of decisions they can continue to look to washington for that kind of stability. we have finance ministers from around the world gather in washington this week. yesterday, i met with the finance ministers from africa and latin america. it is challenging when they look at you and they ask what is going on in washington. and makes them nervous about their economies and we need them to have growing demand because that is good for our economy. this question of world reserve currency, it's no secret that there are discussions around the world where others would like there to be a basket of currencies that might be used as an alternative to the dollar.

i have to ask the question -- when our role in the world is important to our economic stability and to the world, why would this kind of a manufactured crisis be seen as something that is necessary to pursue when it undermines that? the questions you are asking are quite significant. >> some suggest that is not a real issue because the rest of the world has no place to go. >> i'm not going to speculate on whether someone else will emerge as an alternative. we are in a place right now where it's important for the united states and the world for us to maintain our position and we have the capacity to do that. we have the economic ability to do that. it's only a medical of lyrical will. >> and there is no reason to risk that possibility, to continue to find out whether there is some other universe of currencies for which people could look to and there is no

reason to risk having the potential economic impacts we can have globally that provide domestic opportunities for growth and jobs and opportunities? >> i think there is no reason and i would go further and say it is against their interest to invite that kind of discussion. >> thank you, mr. chairman. mr. secretary, i think this is the 11 time i have been through this discussion about the sky is falling and the earth will erupt. wyoming families are not buying these arguments. they say that you cannot spend more than you take in. you can't definitely do it for ever and ever. i've got a person that in turn for me several years ago who now is the owner of a major company in wyoming and operates in four states.

he pays his people well but every once in a while, somebody comes in and says i need a pay raise. he hands them a copy of dave ramsey's basic look and says you don't have a problem with income, you have a problem with outog. that's what wyoming people think. they are not interested in having their taxes raised so that we can put more people in the wagon. i used an example on the floor the other day of how the private sector are getting upset because government keeps growing and when it grows, that means there are more people in the wagon and less people pulling the wagon. they are getting tired of it. in fact, it is getting pretty hard to pull. we are not doing anything about it. that's their impression. they can't increase their income, why should we be able to increase our income? how do we solve this problem of outgo?

we keep asking for this debt limit increase and it's always asked for as though sometime down the road, we are going to negotiate and figure out a way to solve the problem. you mentioned that you would rather we did not have these manufactured crises. america would prefer that as well. i think this is a manufactured crisis again because we did not work on it yesterday. the shutdown with government, we have not done the budgets the way we are supposed to. we are supposed to start on those on april 15 and do one per week and not get to this continuing resolution situation on october 1. everybody will know exactly how much they can spend. it does not compress the sequester like it did last year. these discussions -- i was invited to blair house when we were doing obamacare and i spent at day of the president chopping down every suggestion that republicans made. it was a waste of a day.

when we hear this thing about willing to negotiate and if you have any ideas get them to me -- it is wearing as thin as the sky is falling. why do you and the president feel we should not be discussing, right now, this dire financial situation and commenting -- and coming up with a solution that will put a little bit of room and ever something to be done right now? if these people are running up their credit card debt and need to raise their limits, they are expected to say what they will do in order to be able to take care of their debts. they are not real interested because the interest rate goes up and that's the same thing we are facing. you said it has tripled in the last week. we are running into the same problem. why should we not present a solution? it could be a long-term solution. it doesn't have to be a one-week

solution. we are not even providing a long-term solution. i put out a penny plan along with sequester that would take care of the debt in two years. not the debt, it would take care of the deficit in two years and result in a balanced budget. some variation on that might be helpful but why do you think the president should not discuss right now and come up with solutions right now in conjunction with the extension of the debt limit? >> the wyoming families know that after they wrap their credit card, they don't get to ignore it. they have to pay the bill. the debt limit is just paying our bills. you know that i would very much like to be in a conversation about long-term, sensible and settlement and tax reform to give the kind of stability going forward that this country needs. that cannot be done by saying we will not pay our bills next week. that's what's wrong with engaging right now. the president wants to negotiate. >> we keep saying that this

terrible thing will happen and this is just paying our bills. how many times can we say that? the public does not get that same option. >> the time to reduce what we need to borrow is when we make the decisions on what we are spending, not after. if congress appropriates the money and puts laws in place for people are entitled to benefits and commits military resources, once those commitments are made, you cannot tell a contractor who is doing work that i will not pay you because we changed their mind. >> that takes me back to my comment that we should take care of this one at a time. >> the senators time has expired. many senators here have questions to ask. many senators have been good about sticking to the limits. i hope you can stay longer.

they will shorten their question so you can stay. >> it will be difficult to go more than five minutes. >> thanks for joining us. i just stepped out of the room for a few months and was watching the hearing on television in an adjoining room. people watching this on tv must be frustrated and disappointed with us. some of the finest people who serve in the senate sirhan this committee and that's why i want to be here. there are people who are willing to be pragmatic and find compromises. the problem is simple. democrats need to support entitlement reform that saves money, saves these programs for the long haul and is consistent with our obligation to look out for the least. that's what we need to do. republicans need to embrace tax reform that provides certainty and predictability for businesses and investors in this country but generate some

revenue. we go back to the four years at the end of the clinton administration where we had for balanced budgets and a row and revenues as a percentage of gross domestic roddick around 20% all four years. -- gross domestic product around 20% all four years. our deficit is down from $1.4 trillion. last year, the deficit was about $700 billion. we cut it in half. it's not enough. we need to do more. we cannot do more unless we do entitlement reform. over half of our spending is entitlement spending and we cannot do more unless we generate revenues. what we have here is a failure to communicate is part of our problem. we are talking past each other. i talked to people all the time and people have a lot of money and i say they will have to pay more taxes and they say i don't mind paying more taxes but don't waste my money.

i don't want to waste their money either. none of us do. tom coburn used to be on this committee and i introduced legislation. it was not to hurt the least of these or the wealthiest of these to help everyone. everyone has gotten a letter from tom coburn to ask as a cosponsor and i hope you will join us. we held a hearing on monday this week on social security disability. no one stood -- no one wants to harm anyone on disability. one judge in west virginia approved 99.7% of the people who applied for social security disability. 99.7%. that kind of thing is the exception. there are people applying that get approved who can work and don't deserve to be on disability. the idea that we cannot meet our moral imperative and meet a fiscal imperative is a fiction.

we can do both. i would say we should not just boost our approval rating but instill confidence in the american people and stuff talk past each other and work with each other. we will meet with the president today. somehow, the president has to make it crystal clear that he's willing to negotiate and i have heard him say it on the entitlement stop. the republicans have a willingness to negotiate on tax reform that generates some revenues. there is a matter of trust here and i don't know how to break through. any ideas? >> i think the kinds of conversations that he is having are meant to try to rebuild some of the trust and make it clear that once we get beyond where we are right now and once congress reopens the government and takes away the threat of default, he has been and remains open to honorable compromise which means give and take. it has to be a two-way street and that has always been the

case with any negotiation. >> thank you. >> thank you, mr. chairman. i will be brief. thank you for joining us. i have heard a lot from the debt limit deniers about how october 17 is not the day we default. we hear that they assure nothing will happen since we can pay china and wall street first, but the fact of the matter is, on that day, october 17, the day we run out of borrowing capacity is a thursday, which happens to be the date the treasury holds its weekly auction. comment, if you could, what would happen at that auction if we do not raise the debt limit. what could happen if -- what are substantiallys increase? what would happen if we are

unable to roll over the $100 billion in debt. >> i am not going to comment on what markets might do. i think the history is clear that anxiety leading up the boat 2011 cost a bad market reaction. we have seen in the last few days on the ease, certainly with maturities in the. between october 17 and the period after that. i can say the consequences of in it -- any inability for us to roll over would be quite serious. budget, of a household it is like instead of having to pay your monthly payment on a mortgage, having to pay the mortgage. that would be a problem. >> second question, and i will make it brief. weeks i last couple of spent a lot of time calling people in ohio, community bankers, executives, entrepreneurs, evil running research institutions, fall

manufacturers, regardless of the party, and i assume, i assume most of them are republicans because they are in lines of work that might suggest that. over and over, they say the same thing. why is this happening? we cannot risk a default. did you not understand the government shutdown. they understand it is one faction of one party and one house. one branch of government that has brought much of this to a halt. the national association of manufacturers, the largest manufacturing association in the country, wrote on monday -- "the failure of policymakers to address the debt limit is injecting uncertainty in u.s. economy, hampering the ability of manufacturers and the broader business community to compete, and invest, and create new jobs." for the last several years, since the health care act, since dodd-frank, the criticism i hear more than anything from business in my state is uncertainty, uncertainty, when are the dodd- frank rules going to be finished? what's going to happen with implementation of obamacare? all of these.

the uncertainty, that pall that they claim hangs over our country, our economy, i hear, and especially from politicians who are critical of many of these programs. so my question is, if we agree to a short-term clean debt limit increase, does that provide the certainty that we would need to compete? >> senator, i've tried to be clear that i think longer certainty would be very good for the economy, and the shorter the period, the less stability it provides. you know, when you talk about shifting debates to different time periods, retailers are very worried about what happens in november and december if we are going through what we're going through now. so i think longer is better but avoiding a crisis is better than having a crisis. and in no case is the president going to end up in a position where the threat of destroying the american economy is the basis for compromise. he wants that negotiation to be with the basis of the kind of

give-and-take that honorable compromises come from. >> this is -- thank you, mr. chairman. this is the worst uncertainty and the most precarious uncertainty i've ever seen in our economy in my time in public office. and what's tragic about it is how self-inflicted it is. thank you, mr. chairman. >> thank you, senator. senator portman. >> thank you, mr. chairman. secretary lew, you've said again today the president won't negotiate on the debt limit. and the president, as was noted earlier, has asserted that there haven't been additional items added to debt limits in the past. and, as you and i have talked about, and as you know, when you look back at the last 30 years of the history of debt limits, it's the only thing that has worked. in fact, every significant deficit- reduction package that has passed this congress in the last 30 years has come in the context of a debt limit. i found one that didn't. it was in 2005 for about $40 million, a relatively small deal. that's the way it has worked. and it's gramm- rudman, it's the 1990 balanced budget agreement or the andrews air force base

agreement. it's the 1997 balanced budget agreement. it's pay-go rules that many in this committee on the other side of the aisle talk about favorably. of course, it's the 19 -- it's the most recent budget control act, just a couple of years ago. all in the context of the debt limit. so my view is kind of strange the president would, one, not my view it is kind of strange that the president would not not -- not want to negotiate. you indicate this earlier, that it makes sense because it's a tough vote grade our constituent don't get it. why would you extend the credit card again the go to the limit again without dealing with the underlying problem? that's why the polling shows from two to one that you should extend the debt limit, but only if we deal with the underlying problem. that's what we are asking for. speaking for myself, we need to avoid a debt limit crisis, but we also need to a void a debt

crisis. avoiding a debt limit crisis today and avoiding a debt crisis tomorrow should be our objective. the president said in 2006 when the debt is half as big as it was today, that america has a debt problem and the failure of leadership. he said i'm going to oppose the increase in the debt limit. he said we need to deal with the underlying problem area -- the underlying problem. says we need to deal with the fastest-growing part of the spending, that it's on autopilot and we don't appropriate every year, in response to that question, you said he put in his budget significant entitlement spending reforms. he wants to do this. you are right. the president's proposal mandatory big list of savings, $730 billion.

we are likely to add another $8 trillion to the debt. but he has $730 billion over 10 years. not all of those choices reflect my top right 40s or others on this committee. but in a negotiation, you don't get every thing you want. byuestion is very simple -- adding some of those proposals, maybe it's 500 billion or 400 billion, but by adding some of the president owner for postals consistent with what has been done in -- and consistent with what the american people are asking for, isn't that what we ought to be doing? dealing with the debt limit but the underlying problem and taking the president's own proposal to do it. >> on the history of the debt limit, you and i have been back and forth many times. it makes a big difference if you tag a debt limit increase onto beenhing that has already agreed to. a debt limit increase was put

into it. nobody threatened default. we are in a different situation since 2011. defaulted because you didn't have a president saying he would not negotiate. just goimportant not to to a president budget and cherry pick the things that are hard for him to do. look at it -- the negotiations are events eight. there could be a serious conversation. >> the president also said in the budget that we have to have specifically with regard to corporate tax reform, you indicated it should be i thinkneutral area it's an urgency right now and i think we will continue to use -- to lose more jobs.

i agree there should be a give and take, but let's look at the president own proposal. congress,tions to the would you all be willing to move that will work? on thepresident view debt limit is he's not negotiating over the debt limit great congress as to make it possible to pay our bills area >> i hate to call attention to the time, but i'm going to be late for another commitment. how about two more? -- there's two more nothing more important than this and i want to make sure everyone on our site has a chance. >> thank you, mr. chairman and thank you mr. secretary for your indulgence. i will just take a few minutes.

in your view, would failing to raise the debt ceiling be better or worse? >> it doesn't do anything good or if the cost of borrowing goes raises our expenditures, it doesn't reduce them. >> if the cost of borrowing went up one percent or two percent, what would that cost much more >> i would have to do the numbers exactly. >> we are clear and ronald reagan shared this view -- this will just make matters worse. unless we were to do something unthinkable and say we were never going to pay those bills and your borrowing money at a higher interest rate and it only costs. >> which means our interest cost will continue to go up and our ability to do things like respond to floods in colorado or be able to educate our kids will

be diminished. i'm going to let you go because i know you have to go but i have heard a lot of people on both sides of the aisle today talk about their willingness and desire to meet in the middle. to do this.eed people in colorado are sick and tired of a lot of things about washington, but with their mostly sick and tired of his our managing by crisis and our inability to manage in this case of the full faith and credit of the united states and have the reserve currency of the world, the american dollar. >> thank you, mr. chairman. secretary, you said a couple of times in reference to previous discussions over the debt limit that it is different now. it's true. it is different now. it's urgent that we deal with the underlying fiscal problem,

unlike in past years, we are spending 3.6 trillion dollars and have run at the string of deficits and it is scheduled if there is no structural changes to get must we have a total debt that is 100% of our total out put, already limiting economic growth. we have guarantees we didn't used to have, tens of trillions of dollars of unfunded liabilities, large entitlement programs, the largest of which are growing faster than our economy, and are they could legally do -- and are on a completely unsustainable path. our situation is much more diane -- much more dire now than it was. the president is saying you give me everything i want and then we can have a conversation about these things that are important to you. i still find that shocking, but if thethe bottom line --

president refuses to agree to include even a modest reform that begins to take us in the direction of a more sustainable path in the context of the debt ceiling increase, there appears to be a real chance that this hunger us will not pass a debt ceiling increase before october 17. pass a debt ceiling increase with appropriate reforms because there's no question in my mind at some point if we don't raise the debt ceiling, it will become disruptive. ongoing tax revenue is only about 85% of all the money this government intends to spend in the coming fiscal year. get 85% of everything we intend to spend and tax revenue, the shortfall would have to be covered by borrowing or else we would not be able to pay everything in full and on time. that would be disruptive. but the greatest disruption by far would occur if you were to

choose to not pay interest on our debt. senator cantwell made a very compelling argument about the role treasuries play in the world. my question to you, mr. secretary, as secretary of the treasury, are you prepared to and portly the millions of americans who are investors in u.s. treasuries securities and the entire american economy, that under no circumstances will you permit a missed payment on a u.s. treasury security obligation? >> the only way to make sure we pay all of our obligations as for congress to act and raise the debt limit. no president has ever had to decide whether to pay some bills and not others. and i'm not the one who makes that decision, as you know. it is actually not my decision. it is something -- the president would have to decide. i am telling you it would put us

into default if we went to a place where we could pay one bill and not others. ont would you say to people social security? >> i have acknowledged it is not were i hope to go, but i'll he control one vote in the senate and they control zero in the house and senate. the only appropriate thing to do is plan for contingencies. the presidentg be would assure me we would not miss a payment on treasury securities question were >> there is no good solution if congress fails to raise the debt limit. that's why the president has called on congress to raise the debt limit. that's the number -- but we fall behind his unthinkable. congress has to do its job and act. >> and i hope the president will work with us so we can avoid this, but frankly, i'm shocked the secretary of the treasury will not assure the financial markets and the millions of people who hold treasuries that

they don't have to worry about the security of their treasuries. i'm extremely disappointed. toi would refer you back statements by president reagan and secretary jim baker who made the same warnings i am making because only congress can act to raise the debt limit. no resident has ever been put in the position of having to figure out what that is. >> on tuesday, the president said we plan for every contingency. so obviously, worst case scenario, things are tried -- things we will try to do. could you tell us about these contingencies? options are all bad. i tried to describe how the federal payment system -- it's hard to pick and choose what we will lay -- what we will pay. anyone who thinks it works smoothly, it would not work smoothly. >> the question is whether the

treasuries prepared to try to minimize the disruption. >> we have looked at many options. there have been reports indicating things that have been look that over the years. nobody has had to put any of these things into effect. >> the gentleman's time is expired. mr. secretary, you're very patient. there are four senators last event not asked questions. if i might ask if they can state their questions in 10 seconds each. >> i'm happy to do that. just questions because we don't have time. >> thank you very much for your testimony. my question relates to social security and medicare investment benefits. he is going to read two lines from a letter i got from a constituent talking about her parents. she said at 85 and 83, they should not have this uncertainty about the impasse. these should be their golden years and it breaks my heart to see my mother saying she cannot sleep and has a stomachache from

the worry about where our country is headed. tell us about the impact of a default when it comes to social security and medicare. he didld the secretary not have to answer the questions because so many senators have questions. >> i'm happy to follow up great justank you great i would like to ask we put in the record the complete letter from the national association of manufacturers and i would read one sentence -- a default would put upward pressure on interest rates raising both short and long-term cost of capital and discouraging business investment and job creation in america. >> thank you. senator nelson. concernedretary, i'm you have indicated that we might agree to a short-term extension

on the debt ceiling. i think that would be counterproductive. we would be back in this soup right at the end of that short- term extension. i commend the president for standing firm. we cannot negotiate over the debt ceiling. national security is another consideration. i will put that in the record. thank you, mr. chairman. >> mr. chairman, thank you. .ecretary lou, thank you it out -- it is our responsibility to pass the extension of the debt limit and it is congress's responsibility and it's hurting this country and we cannot govern from crisis to crisis. i strongly support your view that the longer-term is what we need here. my question would be what legal authority do you have to pick and choose? it seems to me any

analogy we use to accompany or a business that cannot pay its bills, there's a limit as to how you can make those judgments. i would be interested as to the legal authority you have on prioritization. hereher senators are not to be able to submit questions. secretary, you've been very generous with your time. we deeply appreciated. the hearing is adjourned.

we will be turning to the shutdown and its effects and its effects in just a moment. first, it looked at some tweets this morning. chuck grassley says i can't be an iowa to talk about the shutdown. i want all to know i appreciate digest the great amount of e-mail. says shutdown is the direct result of lack of leadership and an leader looking for political gain, not what is good for the people. 1:00enate will be in at eastern time and you can watch live coverage on our companion network, c-span2. a number of senators on the sunday morning talk shows today talking about the government shutdown in the debt ceiling. lindsey graham was on abc's "this week" ann joe manchin was on fox news sunday. here is what they had to say. >> here is what i am worried

about -- a deal coming out of the senate that a majority of republicans can't vote for in- house. that really does compromise speaker boehner's leadership. after all of this mess is over, do we want to compromise john boehner as leader of the house? i don't think so. i'm not going to vote for any plan that can get a majority of republicans in the house understanding that new funding obamacare and delaying it for years not a realistic possibility now. >> at the end of the day i do believe the democrats have moved the goalposts twice in the senate. we are in a freefall as republicans, but democrats are not fall -- are not far behind. after listening to us all talk now, you probably know why 50% of all americans want to vote all incumbents out. we are ruining both institutions. it is unrealistic to expect us to defund or delay obamacare by shutting the government down, but the fight on obamacare is far from over. after this mess is behind us,

obama care will be a liability for democrats and the government shutdown, we can survive if we are smart. paul ryan is working on a plan that could start in the house involvingnk would be the government proposals to prevent huger shutdowns to do some things for obamacare that needs to be done in terms of correcting the problem and, quite frankly, putting every member of congress in the same plan on the same terms as all americans. i would hope that would come from the house. >> is no way it is acceptable for this government to be shut down. his is a self-inflicted tang on millions of people and it's unnecessary. and now we are on the brink of a government default, which is catastrophic to her country, and the people in this country. how they can let that happen is beyond me. we have a group of 12 bipartisan , a core equally divided six and six, democrats and republicans, and we have something that has a little bit for everybody.

a divided government, you can't have it all your way. >> forgive me, your leader, harry reid, said it was too generous to the republicans and rejected it. >> we are waiting to see the leadership come back with something he believes is more fair. we looked at it from this standpoint and they wanted to repeal the medical device tax. republicans wanted that. date compromise and gave us the delay for two years. they wanted oversight as far as people who were signing up and the bottom line is we don't want that to gut the bill and it's not going to gut the bill. give obamacare a chance to work. if it doesn't work, it will fall on its own. >> some of the comments from senators on a sunday morning talk shows. you can listen to them in their entirety on c-span radio. these -- the senate scheduled to be in at 1:00 eastern time today. you can watch live coverage on c-span two.

>> we want to know how the government shutdown is affecting you. make your short video message about the shutdown and uploaded from your mobile device. touting others are about. >> now testimony from the commerce committee meeting about which services have been affected since october 1. this is about two and half hours.

>> they will be here. john thune may or may not come. if he does not come, i bless them, and if he does, i bless them. this is what happens when you are in washington and then you read about snowfall in the upper midwest. one half of all the cattle in his state were killed. that is their business. they are not north dakota.

oil.don't have they are south dakota. they have cattle and farming. one half. comes back, that's glorious, if he doesn't, we should all wish them well. people, but they cause people to lose their way of living. rightk i should leave it there and headed to my statement. you promised not to go to sleep this time? [laughter] >> i'm always enthusiastic about your opening statement. >> are you? you are probably interested in fisheries. would you like the captain? >> i love the captain. >> that's good. >> i want to bring him back to work.

>> in 2008 and 2009, this country went through the worst recession since world war ii. arguingprobably never about what or who caused any of the comebackknow from a great recovery has been very slow and very painful. it is odd to look at the charts that there continues to be new economy,ing into the which is a good part, then you start thinking about all these people who have been laid off and the ripple effect of all of that. so you don't know where the economy is but you have the feeling it's not making much progress and a lot of people are trying hard. that crash,fter unemployment remains at very high levels, stubbornly, and

while our country is finally growing a little bit, it isn't a whole lot of satisfaction. i think we can say that fairly. our financial experts and business leaders are telling us there's a fragile recovery. the economy is not systemically coming back. they say if we are not careful with our actions, and nobody has been very careful around here for several months, a misstep could easily slip the economy back into recession. if it goes back into recession, that's very bad news. you are talking several years to even begin to have a comeback. frank about be this. small group of people in congress have been ignoring these warnings.

they have in my judgment been recklessly putting our economy at risk of a relapse which would be a disaster. last week, they wanted the repeal of the affordable care act. this week, they don't know what they want, but instead of coming to their senses, they are digging in and it only fixes further pain on her family. , others didagain again on both sides and even though i would predict there are some breakthroughs that were reached this morning or will be reached in the next couple of days, the feelings have not declined and therefore the implications for the future are not very good. some people seem to think manufacturing budget crisis is good politics. i think they have been learning over the past two weeks that it is not good politics.

i hope they realize it is also bad public policy. if you don't trust my opinion that this shutdown is hurting our economy, let me read from a letter the u.s. chamber of congress who usually writes two different kinds of letters. 250 other business groups sent to the congress on september 30. it's not in the best interest of the american employees are people to risk the government shutdown to be disrupted and create more uncertainty for the u.s. economy. not an enormously interesting statement, but the fact they wrote it and the senate is putting more and more pressure on all parties is very important. that damage and disruption caused by this government shutdown are very very real. what i regret in this hearing is

we will be talking about things that come under our jurisdiction and we will not be discussing the wit program, food stamps and everything of that sort. it, we areussing recognizing we have jurisdiction over certain things. within the certain things, there are the same human tragedies that are happening. it is hurting our families under our jurisdiction. often talk about the economy in abstract terms, but what we are talking about is millions of skilled and productive americans in public and private sectors it was hard work and dedication made our country strong and all of us who serve on the congress committee understand that economic success is based on a successful private-public partnership. in this case, the private sector will do anything to help the

public sector which is being cantankerous and not particularly helpful. u.s. aviation manufacturing a worldwides reputation for quality and safety. how do we know our aircraft are safe and reliable? because the federal aviation administration inspects them. seen the faa inspected airplane? i have. it's terrifying. that's why we have a really safe they certified that they meet high safety standards and if they don't, they cannot take off. our highway, railroad, our say whenrd to you see all the fracking and natural gas drilling and fires that come out of a blind that nobody knew where their, to say

that, but we are still pretty good at that. experts from the department of transportation in the national transportation safety board constantly monitor them and study how to make them safer. that, theyre doing have to make new maps because they uncover new pipelines which they did not know were there simply because pipelines have never really been inspected and that's why you have to have regulations over things that can have a disastrous effect area why has the united states led the world for decades and eligible that -- technology innovation question mark is a nsf, dod andnasa, other agencies perform the basic research and engineering that private aerospace and technology companies need for commercial purposes. how do we keep dangerous imported products out of the

hands of children and off-the- how do we stop dangers roddick from entering our commerce? the captain before us will oaalain and tell us why n helps the country harvest marine sources in a sustainable way. perhaps he will explain to us how his industry relies on something called the coast guard which is part of our work here. for two weeks, house republicans have locked these agencies from doing their important jobs. they have told most of our safety experts, scientists and engineers, go home.

i apologize for the link of this. if you don't have appropriations, some of the world's most talented professionals are prohibited by law from continuing to help our country. home wasr people sent dr. david lyman, who i had never heard of. had.obel prize people they gave him a nobel prize in 2012 for his work on atomic physics. he's just sitting at home. he cannot go to his lab. the lab is closed. don't seem tol value his work as much as the rest of the scientist in this world do. i regret i had to call this hearing today. i had to say what's on my mind. this shutdown is doing enormous

harm to our country and it was totally avoidable. it's like black lung. you know what lack lung is? coal -- youu mind mind: to breathe dust and do autopsies on minors for the most part, they have black lung and die from it because they cannot breathe. the federal inspectors to inspect these mines who operators find expensive to keep safe and ventilated and raid it scares me in places like west or junior that do have coal and other states what is going to happen. all we needed was a house of representatives willing to accept reality and the clean cr

bill the senate has sent them. i apologize to all of our colleagues, i just want to read this thing. it very short and terrifying. consumer product safety of 540 total18 employees for load great not there. department of commerce, 40,000 of 46,000 total employees not there. the department of transportation, 18000 and 55,000 not there. the federal communications commission, one thousand 700 of 1754 not there. commission,maritime 120 of 120 total employees all of them, not there. the federal trade commission, there.the 1100 not

nasa, 17,000 of 18,000, not there. 97%. the national science foundation, which i cherish, 1970 of 2000, not there. so forward america? not yet. that concludes my statement. who should i call on? are we in oral -- are we in order of arrival? >> you spoke so eloquently here at >> this is unprecedented behavior. [laughter] let me do that then. we are going to start with deborah herdsman.

nationalman of the transportation safety board and ,he honorable marion blakey former head of the federal aviation administration. dr. alan leshner, chief executive officer and executive publisher of science magazine. , owner andith coburn f/v wizard. and the legislative director of the consumer council federation of america. afternoon chairman rockefeller and members of the committee. i appear before you to discuss the effect of the federal government shut down on the mission of the national transportation safety board.

on october 1, 2013, the ntsb toivered for load notices 300 and 83 of our 400 and five employees. our contingency plan for operations following a lapse in appropriations provides that all act to these of the ntsb be shut down except for those necessary to prevent imminent threat to the safety of human life or protection of property. consistent with anti-deficient act requirements and omb guidance, here is what we are not doing in the 10 days that have passed since the shutdown. 14 accidents have occurred in which we have not dispatched investigators, including eight atal bus crash in tennessee, general aviation accident that occurred in arizona, and a worker fatality that occurred

just locks from here on washington post metro system. weaddition with activities are not initiating, the shutdown has resulted in the suspension of work on over 1000 investigations in all modes of transportation. oure delays slow determination of probable cause and the issuance of safety recommendations. toentially delaying safety the american public, resulting in lost lives and injuries. as examples, this week, we announced the postponement of two investigative hearings. rail hearing involving two accidents on metro-north railroad and the second, and aviation hearing involving asia on a 200 14 that crashed on approach to san francisco airport. both of those hearings have been postponed due to the shutdown.

as one of the preeminent investigation agencies in the world, we routinely feel request from our domestic and international colleagues to provide technical expertise in their investigation such as reading flight recorders. in the last 10 days, we have declined to international requests for assistance and one request from the state ntsbtment for support. the has received dozens of notifications from our counterparts around the globe about accidents involving u.s. manufactured aircraft. while we are shutdown, the ntsb is netted -- is not able to fully represent u.s. interests in aviation around the world. ntsb is doinghe during the government shutdown in the last 10 days. we have identified five accident investigations that met the legal requirements for accept inc. employees from for low.

we have also issued two sets of urgent safety recommendations identifying imminent threats to life or property. of legalent transaction, that meets the legal criteria for bringing employees back from furlough, we will launch a limited investigative team. our furloughed employees are prepared to resume their roles as safety investigators to collect perishable evidence and issue urgent safety recommendations only. , you should know investigations would be just that -- very limited. we would not provide the other important functions the public has become accustomed to that do not meet the imminent threat of life or property threshold such as providing support to accident survivors and victims families after a crash or providing up

dates on our investigations. the ntsb provides a vital service to the traveling public as the independent voice in conducting detailed accident investigations. i urge you to reopen the government so the ntsb can fully resume our safety mission, thank you. >> thank you very much. now, the honorable marion blakey. the chief investigative officer of the aerospace investigative organization. thank you, members of the committee for holding this hearing today. it is a very important topic and we are very appreciative of your attention on this. isortunately, the shutdown negatively impacting civil airspace programs that advance

our nation's technological edge and economic process. the longer this goes on, the worse it becomes. not much attention has been paid so far to the private sector workforce that supports our government agencies. they too are suffering shutdown consequences, especially smaller companies that are a vital link in the aerospace and defense supply chain. with limited cash flow, their list of shuttering operations in the event of an extended shutdown. unlike the department of defense, many domestic agencies have furloughed most of their financial and accounting staff, therefore leaving companies that need to perform essential support for government work without payment. arena, nasa space is operating just as the chairman said with a skeleton crew. high industries work on his abilities based programs, so far it has been an effective due

to smart planning on the part of industry and nasa. these programs are on borrowed time. if the shutdown drags on, major problems will develop. additionally, industries work on commercial programs is already being affected. with a few exceptions, nasa's unique facilities are shuttered and unavailable for industry access on government or commercial space programs. support contractors working at nasa locations are simply unable to do their jobs. to compensate, larger companies are encouraging their workers to take unplanned vacations, try to find other assignments, but are facingloyers difficult decisions because they have notions they will be paid for work during the shutdown and the ripple effects are being felt throughout those communities. at the faa's office of

commercial space transportation, reduced staffing is leading to delays in the approval of launch licenses. this is burdening companies already risking their own capital to restore america's leadership and help nasa become independent of russia for crew launch. there's also the potential impact to nasa's whether satellite development. the joint satellite system is scheduled to launch no earlier than a teen month after the end for the satellite now up their functioning. worsens schedule could if the shutdown extends much longer. aviation, civil nearly 15,000 employees, one third of the workforce are furloughed. while air traffic controllers are still working, they are doing their job without normal support functions and they are not able to train or qualified

new controllers. a larger impact is eating scene at the faa certification programs. the training simulators before somecan service, there are being recalled to work, more than 90% were furloughed when the shutdown began last week. this is delaying delivery of new products to customers and worsening a backlog that was already affected by the sequester last spring. also, the faa aircraft registry office in oklahoma city is closed, halting delivery of new aircraft to their rightful owners and regrettably, the faa has suspended the operational testing and implementation of next gen technologies designed to make air transportation safer and environmentally better and efficient. we should not lose sight of

sequestration's long-term harm. federal agencies have dealt with fiscal year 13 sequester by freezing hiring, illuminating trading and cutting operational travel. these priorities cannot be sustained as agencies are forced to choose between today's operating budget and tomorrow's capital investments. there is no doubt investments will suffer. in working to develop the final fiscal year 14 budget, we urge the sequester's replacement be found by more reasonable budget caps. it's important to stress the shutdown has only lasted 11 days. a much lengthier shutdown could lead to cascading, devastating consequences. i believe congress and the administration must and the shutdown and begin work on a bipartisan option.

make sure federal options that advance our nations economy and security interests will receive the funding they need. thank you very much. >> inc. you every much. the chief executive officer of the american association. when the issue comes out, you have read it all. >> every word. you mr. chairman and members of the committee. i'm pleased to have this opportunity to testify before you about the impasse -- impact of the government shutdown on the scientific enterprise. i can say this shutdown has come to anery serious blow already beleaguered scientific

enterprise. the shutdown is affecting both government scientists, many of those supported by federal agencies, and it will interrupt many long-term studies that depend on continuity over time our communityess. has already in hit hard by the sequester which came as an federal science budgets that have already declined dramatically just in the past three years. these realities are coming at the same time other countries, many of our competitor countries are dramatically increasing their research and development investments in bite -- in spite of similar economic conditions. the cumulative effect of these trends exacerbated by the shutdown are threatening america's very standing in the global scientific community.

losing our imminence and science would be a drastic consequence. likely result in fewer foreign scientists coming to study and work in the united states. fewer us-based science and technology breakthroughs and in jobs.rtup companies about the shutdown, unfortunately, the vast majority ballderal science staff into the so-called nonessential categories and are directly affected by the shutdown. i would like to give you just a few examples. there are more in my written testimony. at the national institute of health, employees allowed to continue to provide care for patients in the clinical center, but new patients are generally not being accepted. new patients are entered into trial every single day. at least six new clinical

studies have been deferred. the national science foundation this week announced it would be forced to cancel the u.s. antarctic program's entire upcoming field season if the shutdown continues past october 14. this could jeopardize the entire research season for hundreds of important projects in astronomy, particle physics, leather, thesey and many of projects have been many years in development. of four radio telescopes which are largely funded by nsf are off the air, impacting several thousands of researchers who cannot collect important data. at nasa, scientists have been tracing the shape of the lucky way using the long baseline array which is not shutdown. they are missing an observation. that means a years worth of data could go to waste and they would have to start over.

aa's scientific portfolio is what you might call environmental intelligence, requiring continuous monitoring and interpretation of scientific or amateurs. much of that monitoring will be suspended. effective water management such as in the great lakes is depending on understanding water monitoringues. that will be suspended as the relevant scientists have been furloughed. the same is true for drought managers. most of the national labs which are managed under contract will be shielded for a time but their resources will be short-lived. for example, sandia laboratory in new mexico plans to shut down on october 21. in oak ridge, tennessee, the y 12 national security complex, a

critical component in the nation's nuclear defense enterprise has already started partial shutdowns. call extramural researchers, those in our great research universities are somewhat shielded from the immediate impact of the shutdown button the effect would soon reach their labs as grant renewals are disrupted and new grants are delayed in starting. congress faces many fiscal challenges in the weeks ahead. the millions of scientists and engineers in academia of a small businesses and large industries we represent call on you to ensure sustained and robust support for scientific research as you deal with these challenges. continuing to decrease the nation's investment and research would only exacerbate the fiscal problems

slowing down the engine of discovery that drives innovation and economic growth. we urge you to help revive a powerful legacy of scientific discovery for future generations. >> thank you very much, sir. now it is captain keith coburn, alaska fishermen and owner and /the wizard.the f you have much to tell us, sir great >> think you, chairman rockefeller. ranking member and members of the committee. appreciate your invitation to appear here today. inky for carrying on the legacy of the late senator in a way for advancing legislation to combat pirate fishing. i would like to thank other senators from the alaska, washington congressional delegations for their strong support for alaska fishermen. coburn and i'mh

an alaska. some of you may recognize me as the captain of the sissy -- wishing vessel wizard from the series "the deadliest catch. while i am honored to be here today, i would rather be 4000 miles away from here awaiting the opening of my king crab fishery. this is the first time in 28 years i have not been in the bering sea in the month of october. i am here today on behalf of fishermen. about theto talk impact to the fishery and i want people to understand this is causing impacts to fisheries nationwide. the lack of personnel to perform routine administrative functions such as managing court allocations will result in loss of millions in revenue to that sector of the industry. the federal observer program will also be impacted the longer this shutdown continues. across the country, vessels required to carry observers will

be forced to stay tied to the docks. many coastal communities are already facing tough times. this unnecessary shutdown may be the tipping point if the situation is not resolved soon. the alaska king crab dish or he is the model of sustainable fishery practices. it is managed in a strict code a system where each fishermen is allocated a percentage of the total catch. the alaska king crab stock is healthy and with a conservative management approach, overfishing does not occur. in hundreds of millions in economic to the and provides thousands of jobs for fishermen, processors and support businesses such as welders, shippers, distributors and retailers. i want to be very clear. crab fishermen fund the management costs of the classroom covering program. landings to on our

cover costs. no one has money in the bank left over from previous years. we need to issue our permits. the employeesact, have been overloaded for the employees necessary to start the season in october. at issue are cap -- are crab quotas. have significant impacts on our fishermen and alaska fisheries. electively, the fleet has invested millions of dollars a pocket just gearing up for the season. these boatll cost thousands more. while the short-term impact are relatively easy to measure, the longer-term market impact are the scary part. we relyty of our crab, on the holiday market in the u.s. and japan. caught,rab is not

processed and shipped out by the second week of november, we stand to lose access to that market. we cannot afford to lose any more days to the government shutdown if we want to meet that deadline. it will decrease the revenue we earn at the dock by 20% to 25%. in the case of japanese market, we also stand to lose market share if the japanese markets do not have alaskan product on hand, they will force their crab from russia. watchers are already noticing the uncertainty in the japanese trade press over the alaska supply. the russia came crab fishery is unsustainable, unsustainably anaged and have sustained significant amount of pirate fishing. it's already cost the russian fleet $500 million. if it continues, that amount will only increase. time is critical. smallzard is one of many family run businesses. my wife manages the short side,

my brother is on the boat with me. my crew depends on me to feed their families. we've been racking up bills to go fishing. if we are tied to the docks waiting for the government, we cannot pay those bills. on behalf of all fishermen, i'm asking congress to end the shutdown now. i'm a small businessman and a big ocean with big bills and i need to go fishing. thank you and i would be happy to answer any questions. but thank you, captain. >> thank you, captain. >> i'm the legislative director and senior counsel at the consumer federation of -- consumer federation. i offer this on behalf of consumers union, the national consumer law center on behalf of their low income clients, public citizen, the national association of consumer

advocates, and u.s. purge. we all expect the air, food and products we use every day are going to be safe. we do not expect to be ripped off i a bank or telemarketer. we expect we can find information on government websites and government agencies will investigate concerns and enforce existing law. part of our security as consumers can be linked to the word thing -- by the work we are conducted by many different government agencies. during the government shutdown, however, many consumer protections we depend upon have been significantly curtailed great things could get worse if the shut down continues much longer. in this testimony, i'm including what i hope to be most current information available. at the situation is fluid and changes rapidly. i would like to highlight the shutdown on katie agencies. first, the federal at ministry -- federal aviation

administration has furloughed thousands of employees. many staffers who support air traffic controller seven furloughed and virtually the entire safety inspection force has been sent home. this is virtually unprecedented. even during the 1996 shutdown, most inspectors stay on the job. the faa announced wednesday bring back inspectors and oversight staff but that's only 15% of the furloughed safety personnel. at that said, which is responsible for the safety of millions of people on our roads and highways, 333 workers out of 597 have been furloughed. they are not able to alert consumers about safety recalls, work on will making and conduct investigations, research and testing. any defect that emerges will not be investigated properly,

leaving consumers and our highways at risk. the impact of the shutdown the -- consumerduct product safety commission is significant. 4% of the total workforce remains on the job grade that is 23 employees out of 540 full- time employees area leaving our ports vulnerable, especially problematic during this holiday season. is conducting only business that protects against imminent threat to human safety and government property. negotiations are suspended unless they write to that threat. the database is receiving reports but will not be publishing them. last monday a two-year-old girl was killed when a television tipped over crushing her to death. last week and one year old boy swallow part of a