native russian or russian speaker. >> the elections in ukraine are coming up on may 26, i believe. i think it's important for stability in ukraine that they have these elections. that they are fair, people vote. do you see, i'm asking you to do you see, i'm asking you to look 26 days in the future. do you see that the russians may cause a disturbance a crisis to try to postpone these elections? it seems like to me, if they cause a crisis, they want to solve a crisis by moving in their troops. are we expecting a possible crisis to try to get these leches postponed? -- these elections postponed? >> thank you for that. i would be hesitant to speculate too far into the future.

the conditions are such that that is a legitimate concern. in the negotiation of the geneva statement, the u.s., the e.u., and the ukrainians all urged the inclusion of a sentence that referred to the may 25 elections and the need that they be carried out in an orderly and transparent way. the russians refused to include that in the text of the statementle. the disruptions were already taking place in the ukraine that are bound to complicated the election efforts and we believe that those -- that the instability there is being fomented by the russians. >> thank you, mr. hartley, ms. friedt. the chair will yield to the gentleman from new york, mr. meeks, for five minutes. >> thank you, mr. chairman. let me, you know, there was a beginning where we thought that we'd be entering a new world, we would be able to have with the

new stark treaty, not abolishing ewe near -- nuclear weapons altogether, we were moving in the right direction the senate ratified the treaty and the russian federation ratified the treaty. there's a lot of things going on. it seems when we're dealing with crimea and the east, ukraining we've got to balance a number of issues also. our nato allies. i believe that sanctions work but only when they're multilateral sanctions and we do sanctions individually and not as strong as they would be multilaterally yet a number of our nato allies have concerns and we've got to make sure they're part of whatever we do. we can't separate ourselves, in my viewpoint, from them. and that's -- our nato allies are tremendously important. some control experts continue to report that russia could potentially withdraw from

treaties such as the i.n.f. and that they may further -- any further expansion of arms control efforts will likely make no headway for the foreseeable future system of, some of my colleagues, some of the pun -- i hear some pundits saying, give weapons, more sanctions, very few people are talking about diplomatic solutions. my first question is, do either of you still see, i believe there's still hope, we should talk and have conversations with nations we don't disagree with. is diplomacy an option here? do you seedy employee macy having an a chance here? or it has no chance? what role do you think diplomacy has in this. >> thank you, sir.

we -- we believe that diplomacy is a critical aspect of of this. that's why secretary kerry has had, i forget, six, eight, 10 conversations with the russian foreign minister over the last couple of weeks. that's why he went to geneva to negotiate the terms of the geneva statement that laid out a pathway for de-escalation and so we very much believe that the -- that that is the -- that diplomacy is the way to resolve this, to find a political solution. the sanctions that we're imposing have been imposed only after those efforts have so far proven fruitless. but sanctions are scaleable, they're flexible. if the russians make the decision that they want to de-escalate the situation and return to behavior consistent with international norms, then we can reslers the sanctions but we -- reverse the sanctions but even as we go forward, taking a harder line on those, we want to

keap the door open for -- keep the door open for a diplomatic solution. >> that being the case, try to prevent a scenario that we clearly have, and i do see some of the other regions, whether it's in the caucuses, the baltic, eastern europe, we've got to focus on some of those countries now, i've got friends in those countries, mr. poe may have said something, what should we say to them now? what should we do? you look at ukraine, its economy was in the tank, some say crimea will be a big burden on russia as it seems right now, but we've got to help economically, what do you see that we can do? you said there are huge concerns right now about russia, in some of these countries about russia coming in.

what can we do now before there's any possibility of russia invading? what can we do to help those countries now to ensure them that we're there, that nato is there, what do you think we can do right now? >> thank you, sir. with regard to nato allies, particularly those on -- we've now come to call frontline state the three baltic countries, poland, romania, bulgaria, we have already deployed u.s. forces on land, sea, and air and nato allies are deploying at this point, principally sea and air assets in a measured way to underscore that the article 5 commitment to collective defense is credible and has teeth. so we are in constant consultation with our nato allies with nato headquarters. >> i want to ask one last

question. do you think russia is backing down from its arms agreement with the united states, preparing to have a continued military escalation? that's what some are saying that -- in other words, people are saying that russia is building up and they're strong and kind of daring the united states to have a militariest talation -- escalation for nato to come up and meet them militarily, do you see that's part and parcel of what's going on here? >> thank you for that question. that is precisely why the new start treaty is so important,s the fact that it's been successfully implemented since it was signed and inspections began in 2011. russians are implementing the new start treaty and it sets the limits on their ability to build up nuclear forces. >> and you don't see them violating that right now? >> no, sir. >> so there's still cooperation in that regard? >> yes, sir. >> and there's a number of other things they're still cooperating with?

>> yes, sir. >> the gentleman yields back. >> may i add to that, sir? >> you need to make it brief. >> on the conventional side the russians have been modernizing but -- and it has been a source of some concern but we feel as though the assets available of the nato alliance are sufficient to deter any incursions on nato territory. >> thank you, mr. hartley. the chair will recognize the gentleman from pennsylvania, mr. perry. >> thanks, mr. chairman. ladies and gentlemen, appreciate your time. ms. friedt. the state department is aware that russia may have been in violation of the 1987 intermediate range nuclear forces treaty while negotiating the new start treaty. the first question is when, as far as cu -- as far as you understand it, did the administration first learn of the possible violation of the

i.n.f. treaty by the russians? was it in 2008? >> sir, the -- the treaty -- the ratification of the treaty did not -- it was, at that time russia was inch e.menting the treaty successfully. at this point i would prefer to go into closed session to deal with the circumstances, spe specific dates and specific questions you asked. >> ok, then, let me ask you this. when the president was overheard talking to medvedev at the time he said that after the election he could be more flexible. this is in the context of members of congress being concerned about our national security posture and our ability to secure our nation in light of adversaries and enemies if you want to call some folks that. what did he mean by that? what do you think he meant by that? >> what i can say here is that

the united states and this administration will only pursue arms control agreements that are in the united states' national security interests. and that is something that this administration, that the president believes. >> if we know or suspect with some credibility that our partner in negotiation is cheating, at the time we're negotiating a reduction in our capability, how is that -- and we don't take that into account and we continue to march forward with our reduction, how can -- can you explain to me how that is in our best interest? >> sir, as i mentioned in my statement this administration takes compliance with arms control treaties very seriously. during the negotiation of new start treaty, we took compliance with arms control treaties into consideration. >> but knee -- but we knew or suspected, we suspected while we were negotiating the treaty that they were cheating and we've continued forward and it's fine

to continue forward with negotiation, we, as far as you know, and as far as russia is concerned, based on your testimony, have upheld our end of the bargain. we still don't know, according to your testimony, we won't know until late they are spring and by the way, spring is almost over, the extent of their cheating. i recognize and act knowledge the sensitivity of the dates. i'd be happy to talk to you in closed session about that but my concern is we're unilaterally disarming america while we know or suspect with some certainty that russia is cheating on their end of the deal and i still don't understand how that's in our best interests. >> thank you for that question, sir. the united states -- arms control is in the united state'' national security interest. >> it's in our interest when we're controlling theirs, or they're controlling theirs within the paradigm as well as ours.

but it's not in our interest when we're controlling ours and they're not controlling theirs to our satisfaction in accordance with the previous agreement, would you agree? >> sir, we take compliance, this administration takes compliance of arms control very seriously. i'm happy to discuss the specifics in closed session. let me say with respect to the treaty, that was a carefully negotiated agreement based on the nuclear posture review, that was a document that received interagency, very close study by then secretary gates and by then chairman of the -- >> but did they have the knowledge at that time because we -- again, maybe you want to move to closed session but it's my understanding that we didn't report our suspicion our or knowledge of their breach of the previous treaty while the negotiation was happening to our nato allies. did our negotiators, did secretary gates, did he know at that time while he was in

agreement with this accord that we had a very strong suspicion that they were cheating on the previous agreement. >> sir, i would like to take you up on your offer to do this in closed session. >> all right. then moving on. based on recent actions in crimea, do you think the american people should trust the russians to adhere to a bilateral, multilateral arms control agreement? and if so, why? >> sir, this administration believes in trust but verify. verification of arms control treaties is very important. >> let me ask you one final question work due indulgence, mr. chairman. if we find out and prove, in the springtime, if it's determined and you report that they had indeed cheated for lack of a better phrase on the previous treaty, the previous agreement,

what will be the ramifications? >> sir, i'm not prepared to discuss this at this point. when the report is finalized -- >> thank you, mr. chairman, i yield. >> the gentleman yields back his time. the chair recognizes the gentleman from florida, mr. owe hoe for five minutes. >> thank you, mr. chairman, and i appreciate your testimony today. why do you think russia has become so emboldened here going back to august, 2010? as far as invading other countries. that was a simple question, i'm sorry. >> thank you, sir. if only there were simple questions in this life. it is of course difficult to know precisely why the russians and mr. putin have taken the actions they have. there are factors related to history, factors related to concern about the influence that

a successful democracy and market economy on its border by a land, a country that used to be part of russia might have on the part of the russian empire might have on the rest of the population of russia. >> let me go in a different direction here. as you said, there's no simple questions but the answers aren't often simple. do you see the 2010 treaty with us reducing our weapons to 1,550 and the administration's willingness to reduce further cus to 1,000, do you think that's emboldened the rugs, mr. putin and the russians? >> thank you for that question, sir, no i do not. >> do you see russia viewing us as weak, indecisive, not willing -- our credibility has been damaged if you go back over the course of the last two or three years new york red lines, no redline regimes must change, we never said regimes must change,

not fulfilling the missile defense system in poland and putting a stop to that, do you think they see us as kind of being weak and not with strong resolve? >> sir i do not see u.s. foreign policy as weak. >> ok. how about you, mr. hartley? >> no, sir. i agree with anita. >> so with what's going on in venezuela and our own backyard, with what china is doing drawing an arbitrary no-fly zone with syria and iran and iran is closer to a nuclear weapon, we are told that iran would have enough material to develop five to six nuclear bombs within four to five months, i see -- what i'm seing from where i'm sitting, what i read, is the lone superpower that bill clinton talked about that

america could no longer afford to be, becoming weaker, everybody else is becoming emboldened. i see people flexing their muscles buzz of our weakness and lack of resolve that we have. where do you think this will lead? where do you think russia will end up? will they go into other areas? where there's a large russian-speaking population. do either of you see that? >> we see that there's a risk and the russians have influence in those areas but it is our policy to exact a coast -- a cost from the russians for their behavior that's in violation of international norms. >> and do you feel the sanction this is a we are talking about, that we've done, do you think they'll have any impact on

russian's aggression? >> sir, the purpose of sanctions is to try to influence russian behavior, it's meant to bring it back within international norms. >> how is that working so far? ms. friedt? >> i couldn't -- >> if i may, sir. this could be a long process, sir. >> but again, do we have compliance with other nations? are they putting strong sanctions in place too or is it just us doing this unilaterally? >> yes yesterday -- yesterday as we announced our third round of sanctions we were joined by the g-7 which includesa pan, canada, and four other major e.u. members, but the entire e.u. also joined. you could -- we could -- the nor wee johns, who are not part of the e.u., also adhere to e.u. sanctions. we have a broad international coalition that is focused on bringing russia back into compliance with international norms.

>> let me ask you, do we have troops on the ground in ukraine right now? >> sir, we do not combat troops, i mean, it depends on how you define it. we have a defense attache, we have defense officials the pentagon that visit but the simple answer is no. >> mr. chairman, i yield back. thank you. >> the gentleman yields back. a couple more questions from the chair and then i'll give the ranking member time if he wishes. will the russians give crimea back, mr. hartley? >> sir, we're doing everything we can to encourage that. >> i know we're doing that, but are they going to give it back at the end they have day? will it be part of ukraine or russia? >> it's our policy that it remains to ukraine and should return to ukrainian control. >> so you done know. how about you? >> i agree with mr. hartley. >> you don't know. the kidnap watchers.

who kidnapped them? >> they weren't election observers, it was a team composed of eight europeans led by thiermans and they had five ukrainian escorts with ep them. they were kidnapped by a pro -- by pro-russia individuals, a pro-russia group in eastern ukraine. >> what were they doing in eastern ewe rain? you say they're inspectors, of what? >> they were there under the vienna document, all 57 nations that are participating states in the organization for security and cooperation in europe to include russia have agreed to a set of measures that are intended to build confidence among the partners, among the participants. part 1 mechanism of that is our inspections that each -- each participating state is obliged to receive a certain number of

inspections every year but they can also offer voluntary inspections. >> so they went over there for inspections of what? >> they were there to inspect ukrainian military installations and deployments but also to -- >> they were kid napped by russian sympathizers? >> correct, sir. ? last question. is europe slow-walking saxes because they're concerned about the fact that many of them are totally dependent on russia for their energy and that russia may then just retaliate? is that one of their concerns about sanctions, mr. meeks asked about the europeans and their not being too supportive as we hoped in this. is that part of the reason, or do you know, mr. hartley? >> both we and the europeans are looking for ways for sanction this is a will maximize the impact on the russians while minimizing impact on our own economies and businesses so it is fair to say that that's a consideration for the europeans,

sir. >> all right, thank you. i yield to the ranking member if he has any more questions. >> i want to thank both of our witnesses for their participation. any other questions any members of the panel have will be put in writing and we would expect a response from you. thank you for being here. the subcommittee is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014]

>> coming up next, secretary of 56th john kerry march the anniversary and the importance of transatlantic relationships. followed by jack lew testifying before a house appropriations panel about the economy and sanctions against russia. subcommittees examined u.s.-russia nuclear negotiations. islive wednesday morning, it prime ministers question time in the earnest house of commons. you can see it at 7:00 a.m. eastern on c-span 2.

>> everybody says how do you think these women came from such a very low rent part of the world? as you know, the victorian era was so stratus five. there was the very rich, then the middle class, then the real achievers. the life and times of these women, it was after the civil war. finances were beginning to become major. fisk, rockefeller, jim all of the robber barons out there making a lot of money. and i think it was easy for them because they had been running around with low-rent con artists . ballots go with the big boys. they were beautiful and -- now let's go with the big noise. they were beautiful and they were tough and they were driven. there were driven for both power and individuals. they could have been kept in a

fine manner if they wanted. but they were really pushing for their independence and women's independence. so they became these fiery feminists, unlike anybody on the scene. >> barbara mcpherson argues that two little remembered the transistors changed the course of women's rights and american history. sunday night at 8:00 on c-span's q&a. >> we are going to be taking a look at a new look by c-span "sundays at 8:00." emanuel tooley, why do a book like this? guest: the main reason to do the book is to share the stories that c-span has covered over the years. the sunday evening program, which airs at 8:00, started 25 years ago.

it became koran day 15 years later. the stories told -- it became me q&a 15 -- it beca years later. is a death that probably has not been in previous books. beginning with stories and then we have american history. we have media and society. we have money in politics. then we have post-9/11 america. form itself and shape itself and the books themselves and the stories and it are kind of a reflection of our times and the depth and breath of the footnotes of q&a over the years. host: how did it come together? show wheres a q&a you have a guess for one hour and you go through an in-depth

discussion of whether it is a public policy issue or history issue or what have you. we took up the questions. to questions are there facilitate answers and they kind of fade away at a certain point. and the answers are what matters. so what we have done, with a minimal amount of editing, is to inically allow the guest, their own words, articulate their story or viewpoint on whatever the issue is, whatever the story is. the viewer and the reader will get basically the answers and the guest in their own words. host: what are some of your favorite stories? guest: it was a path of discovery for me and for the team working on this book. there are so many fascinating stories. so many fascinating stories. just to mention one in particular, crystal and publisher of wasrvativeblackchick.com

talking about her politics and upbringing in virginia and how she was influenced by her parents. one thing we all know about this from american history is the isa parks moment where she forced to give up her seat and then you have history unfolding before you in the south. she said her mother said to her, before that happened i had my own rosa parks moment. she said what do you mean? she said i got on the bus in richmond and went to the back of and sat down and an older white gentleman got on the bus and asked me to give up my seat and she said what he wants me to do? i am rad at the back of the bus. what you have wrapped up in that moment was personal history, politics of public private policy. ofs is an extension

everything we do here. a candid moment in an extended interview and revealed something about the guest that was fascinating and something about the country and the country's history. where can people learn more about the book and watch the interviews that have taken place over the years? guest: you can go to all the interviews at www.c-span.org /sundayat8 you can click on any of the toes or images and be able watch the transcript. watch clips. you can watch those and read about the authors themselves. if they have websites you can look at that. quite a lot of information there. i think people will find it useful and interesting. 8:00.sunday at

people can buy it now. what happens to the loyalties. they go to the educational foundation here at c-span. there are no profits. this was a collaborative effort. hats.ar a lot of there were a lot of people involved in the process from people who make the program-two people who edited the interviews and work with brian to make it all come together. all of the proceeds go back into the continuation of the work that c-span does, and that is basically the educational foundation. emmanuel touhey, books on the next washington

journal, a discussion of suicide prevention. iraq was ambassador to for held talks about the elections and the stability since the withdrawal of u.s. troops. later, the spotlight on magazines features a recent article looking at the safety cigarettes. of e-g you can join me conversation -- join the conversation on this book and twitter. john kerryf state spoke about the situation in ukraine and the importance of transatlantic relationships at an event hosted by the atlantic council. commemorates nato's 65th anniversary. his remarks or 20 minutes.

>> good afternoon, everyone. we are enormously delighted to have secretary kerry here who has been such a great friend for years already. ready. secretary, as the administration grapples with what was called the most serious challenge to the international system since the end of the cold war, your presence here is a powerful message. it is also a testament that uf cap the promised you have made when you accepted the atlantic council global citizenship award. weould like to say that anticipated you would become secretary of state. celebrated the decision of president obama to

put you in this position. tackled the toughest strategic challenges of this position. back then when we gave you that award, you pledge to put the transatlantic relationship at the forefront of u.s. foreign policy to meet today's global challenges. you did that with the understanding that "the obituary of nato has been written and rewritten for more than two decades, but our alliance remains the cornerstone of security on both sides of the atlantic." we have witnessed your tireless efforts where you have taken the promise to the front lines. you a been a powerful voice for sovereign and secured ukraine. you reiterated this promise when you call for transatlantic renaissance at this year's munich security conference and reminded us of the task of building a europe is not complete. with that, join me in welcoming

one of the great american public servants of our generation, of our times, a strategic thinker, a creative diplomat, a patriot and the 68th secretary of state john kerry. [applause] >> after that, i thought i would stand up and say i accepted the nomination. [laughter] fred, thank you very much. very generous comments. thank you all for the privilege of sharing some thoughts with you at this both timely and very important gathering. it is my privilege to be here and i am particularly happy to be here with so many of my colleagues, both are foreign ministers and defense ministers who are here. we had a chance to chat briefly. we have been meeting reagan -- regularly along the trail and i

have come to admire and respect clarity ofm for the their vision and for the way in which they have been in these issues. i love the new digs. responsibleose over -- who are responsible. for yournk you so much leadership and the tremendous work that is being done at the atlantic council lately. the success of this particular theerence, but also, groundwork you have been laying and the focus you have had on the criticality of the nato relationship, european relationship which -- thinking back to comments of the near past about old europe and new europe and things that have been floating out there over the last few years, this discussion is even more timely and relevant.

a number ofrks different milestones that are really worth remembering. beginning with the fact that it is 65 years cents secretary of state dean hatchets and and his european counterparts came together and signed the north atlantic treaty. amazinglyn 25 years since the fall of the berlin wall. wall, as we know, symbolically and literally divided east and west europe. it has been 15 years and 10 years and five years since then that nato has welcomed new warners into the post-cold era. as anhave expanded organization, as nato has expanded, i think it is safe to

say we have also expanded democracy, prosperity, and stability in europe. opportunities new in order to be able to advance security even further and we have spurred economic growth around the globe. nato's newestr, members have proven their mettle in ways that we hoped for but necessarily were not able to predict with certainty. today, i can tell you i have seen it first-hand. we have had occasion to travel and we know what has been achieved in afghanistan. where our allies in central and eastern europe had served alongside us and others with distinction. on occasion, not just making a sacrifice, but asking very young soldiers -- their young soldiers

in making the ultimate sacrifice and that perhaps more than anything else can you find -- can define an alliance. in addition, over the nato haslong history of security,to promote more to promote prosperity, and more to promote freedom than any other alliance in human history. it serves us well to remember the words of president eisenhower who said about nato when he was talking to our nato allies. he said, we can take satisfaction from the past, but no complacency in the present. as we come together then to reflect on 65 years of partnership, perseverance, protection, we also have to take a look, a hard, cold, sober look

at the clear threats that regrettably still exist. not because of some inherent continuous push over these last years but frankly because of a fairly, it appears, uniquely, personally driven set of choices that are being made. after two decades of focusing primarily on our expeditionary missions, the crisis in ukraine now calls is back to the role that this alliance was originally created to perform. that is to defend alliance territory and advance transatlantic security. the events in ukraine are a wake-up call. our european allies have spent more than 20 years with us

working to integrate russia into the euro atlantic community. it is not as if we really haven't been -- bent over backwards to try to set a new course in the post-cold war era. we have pursued serious bilateral engagement. we invited russians to join organizations like the wto, the nato russia council, but what russia's actions in ukraine tell russiahat today putin's is playing by a different set of rules. through its occupation of crimea and its subsequent the civilization of eastern ukraine, change thes to security landscape of eastern and central europe. we find ourselves in the defining moment for our transatlantic alliance and

nobody should mistake that. we are prepared to do what we need to do and to go the distance to uphold that alliance. our strength will come from our unity. the strength of our alliance always has come from our unity over the course of 65 years. push backwe have to against those who want to try to change sovereign borders by force. together, we have to support those who simply want to try to live as we do or as others do. i remember being in kiev and a man came up to me and said to me i just came back from australia and i have to come back here and be part of this. people living so here can live the way i saw in australia. devices's era of mobile and smart phones, everybody is in touch with everybody all of the time.

that sense of aspiration and possibility is something that fills the imaginations of young people all around the planet. together, we have to support those folks who want to live free, making their choices about their own future. together, we have to continue our strong support for ukraine and we can do that through economic assistance and we can do it through support for free and fair elections, for constitutional reform, for anticorruption, and for the mobilization efforts. together we have to make it absolutely clear to kremlin that nato territory is inviolable. we will defend every single piece of it. article five of the nato treaty must mean something and our allies on the front lines needed and deserved no less.

obviously, there have to be consequences for those who want to put to test what is been been the norm of international relations and the goal of international behavior ever since world war ii. two weeks ago, i traveled to geneva with my counterparts from russia, from the eu, and from ukraine. number of steps that needed to be taken in order to de-escalate the situation in ukraine. i will tell you we had a very candid conversation. , foreign minister lavrov agreed that we needed to be reciprocal and the steps that we need to take. both sides needed to do things in order to move forward. i will tell you that i was directly in touch with prime fullter and gave him the download on those things that

were legitimate expectations out of that and he went to work immediately. immediately. so it was from day one, ukraine undertook to implement both the spirit and the substance of what was laid out a midget -- in geneva. he set out to do so and they did vacates and buildings. they immediately begin to remove the barricades. even now in the last 24 hours or so, they vacated an entire building because that was a specific complaint of russia. they have proposed a substantially specific amnesty bill in order to follow through on the amnesty to protester so they can leave buildings with a sense of security about the justice system. they with held their -- with held their legitimate right to use their power of the state to remove people from buildings. instead, stood back and canceled their ct operation over the

course of the easter weekend. they actually took a trip, the prime minister himself, out to the region to indicate a willingness to listen to people in order to shape the constitutional reform and in to open upct, again the dialogues which even today they are pursuing throughout the region in order to discuss how to do so reform. -- constitutional reform. that is what refrain did -- ukraine did. meanwhile, i have to say to you, not one single step has been taken by russia in any public way that seriously attempts to live by the spirit or the law of what was assigned in that agreement. they have not announced publicly to their people that they need to come out of the buildings. they have not engaged with the osce to negotiate people out.

every time you have a conversation, it is pointing the finger at what the ukrainians have been doing without even tallying up what they have done or knowledge and -- acknowledging their own. fair to say that escalated the crisis even further. there is strong evidence that i laid out several days ago of the degree to which russian engagement exists directly and has been building up over some time. yet, what do we hear regrettably? what we hear are the outrageous people thatcertain the cia somehow invented the internet in order to control the world. or that the forces are defined -- occupying the buildings armed to the teeth, all wearing brand-new military uniforms with the same xavier -- they continue -- insignia,

they somehow want to assert their people that these people moving in disciplined moving buildingsto take over and build -- and bring the local separatists in to occupy the building while they move onto another building in an orderly fashion, they assert that these people are merely local activists seeking to exercise their legitimate rights. as we have made clear, those kinds of claims are absurd. they defy any common sense. they defy the facts. worse, they are an indicator of the disingenuous dissembling, the policy of complete fiction that is being pursued in an effort to pursue their own goals and their own ends.

the russians claim the government in kiev is a legitimate -- you legitimate -- imate.tm but it is a power -- they came to power. own party deserted him because he deserted his country. illegitimacy,s you would step out of the way and encourage an election that is set for about three and a half weeks from now on the 25th of may and you encourage that election to take place. doingd, they are everything in their power to undermine free and fair elections. they claim eastern ukraine is be violent for monitors to there. when it comes to the armed pro-russian separatist, the ones

that are perpetrating the violence, they do absolutely nothing to prevent them from taking those prisoners and hostages they have taken. they allow them to be paraded in front of the press. we see no evidence at all that russia is actually pressured these groups in order to release any of these people or change course. , i say this with a certain element of sorrow because of all of the effort and energy that has been expended to try to create a structure by which we would behave all of us differently. representing the best hopes and aspirations of all people on the face of this planet. that is what all of our predecessors worked so hard to achieve setting up a structure of rule of law, international law, and multilateral mechanisms by the time we try to resolve these differences. as a result for all these reasons, yesterday, the united states announced additional

sanctions on more russian individuals and entities. we have also restricted export licenses for high-tech items that could be used to bolster russia's military capabilities. these steps and other steps that we have taken over the past few months are already forcing russia to pay asked the price for its actions to create this instability. i mean that. you just have to look at the ratings on the bonds. look at the capital outflow. you look at the gdp numbers that are trending downwards. this is having an impact. as long as russia decides to continue to fan the flames rather than help but them out, we stand ready with our partners to do what is necessary, not to necessarily punish them, but to find a way forward that restores this process we have worked so hard to honor through the years.

the russians have a clear choice. lead ukraine in peace and work with us together to create a strong ukraine, ukraine that is not a pawn pulled and tugged at. a ukraine that could be a bridge to both. with the ability to have an open trading mechanism on all degrees, 360 around ukraine. whatever path they choose, i can guarantee this -- the united states and our allies will stand together in support of ukraine. this crisis is a wake-up call for all us to accelerate the other work we have been doing to promote a stronger, more proper -- prosperous transco lannett -- transatlantic community. we can i continue to allow allied defense budgets the shrink. not all allies are going to meet the nato benchmark of two

percent gdp overnight or even next year. ares time for allies who below that level to make credible commitments to increase their spending on defense over the next five years. if we are going to move the line in a positive election, this has to be an alliance wide effort. two, if we want a europe that is we have toand free, do more together immediately with a sense of urgency to ensure that european nations are not dependent on russia for the majority of their energy. in this age of new energy markets, and this age of concern about global climate change and environ overload, we need to be able to rushed to the ability to make europe less dependent. if we do that, that will be one of the greatest single strategic differences that could be made here. we can deliver greater energy

independence and help to diversify energy sources that are available to the european markets. we can expand the energy infrastructure across europe and we could build up energy storage capacity throughout the continent. invest in the to underpinnings of our economic partnerships. together europe and the united states, two of the largest markets in the world. we could seriously strengthen our economic ties and accelerate growth and job creation and serve as a buffer to any negative impacts of some of the steps we need to take if we move on both sides of the atlantic rapidly to complete the transatlantic trade and investment partnership. that agreement will do more to change the way we do business and some of our strategic considerations that any other single economic step that we can take with the sole exception of

the energy independence. so, i just close by saying to all of you that this moment without reaching for any hyperbole because the moment is serious enough that it doesn't require that -- this moment is about more than just ourselves. the fact is that our entire model of global leadership is at stake. if we stand together, if we sit -- if we draw strength from the example of the past and refused to be complacent in the present, i am confident that nato, the planet strongest alliance, can meet the challenges. can take advantage of the opportunities that are presented by crisis and we can move closer to a europe that is whole and prosperous and at peace and free and strong. that is our goal and we look

forward to working with their fellow ministers and each of these countries to achieve it. thank you for letting me be with you. [applause] >> coming up, jack lew talks about the economy and sanctions against russia. russian-us nuclear relations. on the next washington journal, a discussion on suicide prevention. andguest art john madigan mary jo gibson. then former u.s. ambassador to iraq christopher hill talks elections.s and the country possibility since the withdrawal of troops.

in our spotlight on magazine features a writer from scientific american talking about the history and safety of ego cigarettes -- e-cigarette. you can join the conversation on facebook and twitter. there is a lot more drama in people's lives. notlies that are broken are -- should not be broken. good families. they cannot altogether because of the stress of life. going from one job to another. -- thein the world working-class world -- can put a lot of strain. even if addictions that are so rampant. it is so easy to get drugs and alcohol. it was happening 40 years ago, but not today.

all this is contributing to my story being the american story. >> the former gang member and activist luis rodriguez will take your russians starting at noon eastern. >> treasury secretary jack lew told congress that sanctions on russia are taking their toll. lew testified before a committee about this. one hour 20 minutes. well, good morning. good morning. the hearing will come to order. welcome members of the subcommittee and to our witness, jack lew, from department of treasury.

mr. secretary, glad you're here to consider the president's 2015 budget request. we also welcome yesterday's announcement about the many new treasury sanctions against individuals and businesses undermining ukraine's stability and sovereignty. we expect the department to use its power to both fully and forcibly against those who threaten ukraine's security. mr. secretary, i know you're pleased that the deficit dropped to 4.1% of gdp last year. but the deficit is still the highest it has ever been, both in real and constant dollars, other than the four past consecutive deficits that exceeded a trillion dollars. under this administration. so that string of trillion dollar deficits is why the gross federal debt last year exceeded 100% of the gdp. and will remain there, it looks like, for the rest of this administration. and i doubt that you or the president should be pleased about this legacy.

so, when we look at the mandatory spending in the president's budget, it's estimated to grow from $2.5 trillion in fiscal year 2014, to $3.6 trillion by the fiscal year 2019. and by then the gross interest payments on the debt alone will exceed $750 billion, which will dwarf our defense spending. and because of that, it troubles me, and i wonder why the administration didn't propose any serious entitlement reforms to prevent this further intergenerational inequality. so i hope that you will work with the budget committee, and the authorizing committees, to give the next generation the opportunity to forge their own way forward rather than saddle them with the debt of our grandparents -- of their grandparents and their parents. and over in the appropriations committee we've driven down discretionary spending every

year since fiscal year 2011. and i'm a little concerned that more progress has not been made on the mandatory side of the ledger. the department's own budget request also raises some questions. the request seeks to, number one, add more than a billion dollar increase to the irs. it seeks to authorize language to pay certain irs employees bigger salaries and bonuses that are actually allowed under the civil service system. it seeks to eliminate language enacted in the omnibus to prohibit the irs from targeting groups for additional scrutiny based on their ideological beliefs, and to prohibit the irs from targeting citizens of the united states for exercising any right guaranteed under the first amendment. it also seeks to eliminate language requiring the videos produced by the irs to be appropriately reviewed. requesting a billion dollars more, eliminating prohibitions against targeting that were

negotiated by this committee, and proposing a new rule for the 501(c)(4)s before investigations by congress and the department of justice have been completed will not build trust in the irs, the department of the treasury, the federal government, or over all government. so, i think that if you were to explain how the inappropriate criteria came into use, how they were allowed to be used for years, that's what we need to bring back some trust in the irs, and make sure the irs can administer the tax code in a partial and nonpartisan manner. similar to the department's 2012, '13 and '14 budget requests, the department is seeking discretionary spending for the irs above the spending caps by relying on discretionary cap adjustments that are not part of current law. absent a change to either the

budget control act, or the ryan murray agreement, $480 million of the irs request is both pointless, and meaningless. if the $480 million is of importance to the administration, then the president would have found a way to pay for it from the $1.14 trillion allowable under the ryan/murray rather than use a gimmick that the budget committees have rejected for the past three years. in addition i'm interested to hear from you today an update on the final regulations to implement the foreign account tax compliance act, which will take place on july 1 of this year. the so-called fatca has far reaching impact on u.s. based companies as well as foreign companies with assets in the united states or clients and i'm concerned with the amount of time that's going to be available to comply with these regulations when the final rules weren't released until the end

of february and that's going to give a lot of the global companies less than five months to comply. again i want to thank you, secretary lew for being here today. i'd like to turn to ranking member mr. serrano for his comments. >> thank you, mr. chairman. i'd like to join you in welcoming secretary lew before the subcommittee for the second time. you lead a department with a variety of missions important to our economy, our government, and our nation as a whole. the treasury department plays a central role in promoting economic growth, and opportunity through programs like the cvf-5 fund, ensuring financial stability through dodd-frank, enforcing our tax laws fairly and managing our nation's finances. your budget request for fiscal year 2015 promotes all of these things, most of the agency is held to pretty austere budget levels. but there are significant requests in investments at the irs, which is the largest part of your budget.

and those requests and increases are much-needed. as i said at our hearing on the irs a few weeks ago, almost $1 billion has been cut from their budget over past -- the past four fiscal years. and we should not be -- as a result of reduced service and an increased tax cap. since that hearing, we have even more evidence of the negative impact that these budget cuts are having on the irs. a recent gao report found that the budget cuts to the irs instituted over the last few years have resulted in reduced enforcement, and reduced taxpayer services. this comes on top of reports that irs audit rates are at their lowest level since the 1980s. as it currently stands these cuts have had the perverse effect of promoting noncompliance for those who want to cheat the system, while at the same time, deterring people who want to file their taxes currently from getting their questions answered. your budget request for the irs

attempts to reinvest in the agency, restore those losses, and reverse these wrong-headed incentives. on a different topic i'm a strong supporter of the community development financial institution's fund, which has helped promote vick investment and traditionally underserved areas. i understand that you're proposing a small decrease in the fy-2015 budget request for the cdfi fund. although i hope we will get to discuss this in more detail i'm particularly concerned by a separate proposal within this request to eliminate the bank enterprise award program within the cdfi fund. i have heard numerous concerns about this idea from various stakeholders and just recently visited a cdfi that has been able to do great work in my district with funding from the b.e.a. this is part of a program that's long-standing and i don't know that it makes sense to try and eliminate it at this time.

secretary lew there remain great challenges for your agency in the year ahead with the continued implementation of the tax provisions, of the affordable care act, the ongoing stewardship of our economic recovery, and the need for further investment in key areas. we will work with you to ensure that you have the resources to accomplish all of these goals, but you know you and i have worked together through this appropriations committee and other committees many times before. i have great respect for you and for your abilities and we hope that we can continue to have that as we move forward. thank you, mr. chairman. >> thank you. i'd like to now recognize chairman of the full appropriation committee mr. rogers for any opening statement that he might like to make. >> chairman, thank you for yielding. having marked up our first two bills, in full committee before we broke, that's the earliest since 1974, the adoption of the present budget act.

so we are well under way with the fiscal '15 process and mr. secretary we're pleased to have you with us this morning to discuss the president's budget for treasury. like the chairman, i have some very significant concerns. about the request. we worked on this committee in a very bipartisan, nonpartisan way for the most part, to construct bills that comply with the budget control act, and the ryan murray agreement the administration's request for treasury seemingly cast these statutory budget caps has cast them aside as merely suggestions. we obviously understand that it's more difficult to operate in these constrained budget environments, but, these challenging times calls for leadership and tough choices.

not a $480 million gimmick that the congress has patently and repeatedly refused and rejected on a bipartisan basis. it's sort of like deja vu all over again. in contrast, the fiscal '14 omnibus package is a prime example of what we can accomplish by working to the under regular order. this committee was able to provide every facet of the federal government with adequate, responsible funding while continuing to reduce federal spending totally $165 billion in cuts since fiscal '10 as we collaborated to reduce spending on the discretionary side of the ledger, i would be absolutely remiss if i did not if i did not echo the sentiments of chairman crenshaw and others in calling for some leadership

from this administration, and your department, specifically. on the problem of mandatory spending. that squeezing aside everything else. today, mandatory spending as you know accounts for two-thirds of federal spending. but i came to congress, 1980, '81. we appropriated two-thirds and now it's just the reverse. and it's zooming. we've managed to control discretionary. we've reduced discretionary over the last two, three years. but in the meantime the mandatories are zooming skyward and crowding out everything that you and we want to do on the discretionary side. and i see no leadership out of the administration, particularly treasury about trying to wrestle

the mandatory growth to the ground, mr. secretary, unless we do something, it's going to completely eat us alive along with the interest on the dealt. from transportation projects, medical research, housing assistance, criminal justice, everything else, including military, are going to be shoved aside. second mr. secretary, i have some very strong issues with the posture the administration has taken towards coal-fired generation in developing countries. i simply can't support many of the policies emerging from treasury in that regard. simply put these policies are bad for domestic industries in america and they're bad for areas in the developing world, in dire need of a reliable low-cost energy source.

to be blunt, the u.s. environmental protection agency have thrown up roadblocks at every turn to diminish our domestic producers' ability to mine coal and burn coal. in my region in southern eastern kentucky these regulatory attacks have resulted in some 8,000 miners laid off in just the last several months. men who were making a very skilled wage. 80,000, $90,000 a year, now trying to find a job at mcdonald's. unsuccessfully. and trying to support children and families. because of the regulatory attacks from this administration. like salt on an open wound, treasury has now sent a clear message that the u.s. should no longer be in the business of exporting coal.

your department issued new rules last year and now the united states will vote against financing any new cole power plant by the world bank unless it's in one of the poorest countries where the project uses carbon capture technologies that are not readily available even in the u.s. these policies deny our companieses ability to provide developing countries with more efficient technologies. and they encourage these countries to look at investors with lower vineal standards, particularly china. i would even go so far as to say these policies show the administration is in denial about the reality of expanding energy access to the poorest nations. for example, i do not understand how the administration can possibly meet its goal of providing more power for african

countries if coal is left out of the equation. i hope that you can help us understand that. finally in response to russia's continued threats against ukraine, we want to hear about the administration's efforts to support our friends. and allies, particularly yesterday's announcement of additional sanctions. unquestionably the u.s. mist send a strong signal, and demonstrate leadership in the international community that such acts of aggression in violation of ukraine's territorial sovereignty are unacceptable and should not be allowed to continue with impunity. mr. secretary we look forward to hearing your testimony. welcome to the committee. >> thank you. i'd like now to recognize miss lowey who is the ranking member of the full committee for any opening statement she might have. >> thank you, mr. chairman. and i'd like to thank you, and

ranking member serrano, for holding this hearing, and to my friend, secretary lew, thank you for joining us today. we are, indeed, fortunate to have a person of wisdom and talent in your position today. mr. secretary your fiscal 2015 budget requests $13.8 billion to support the department of treasury. as you note in your testimony, businesses have added more than 8.9 million jobs over the last 49 months. and the economy and housing markets continue to improve. and yet, much more must be done to provide access to capital and get people back to work. taxpayers need clarity in the tax code and responsiveness there the irs. the budget would address the funding shortfalls at the irs,

which amazingly have resulted in 39% of phone calls going unanswered in fy-2013. this is unacceptable, the american people deserve better, i am pleased that your budget would address this deficiency. i'm also pleased to see that the budget proposes to extend the terrorism risk insurance program for tria, this vital program which is scheduled to expire at the end of this year, provides a fed cal backstop for insurance claims resulting from acts of terrorism. if tria were to expire, infrastructure investments, and capital projects throughout the country would come to a halt. my friends on the other side of the aisle often say the government should not be in the business of doing the private sector's job, as there is no

affordable and accessible terrorism risk insurance program in the private sector. tria is very much a federal responsibility, and tria should be reauthorized without delay. unfortunately your hearing before the subcommittee on foreign state and operations could not be rescheduled. i want to take the opportunity now to reiterate my strong support for imf reforms. the imf is an excellent tool to help stabilize struggling economies, and protect our own financial institutions from getting directly involve d in bailouts caused by foreign financial emergencies. we need to maintain our leadership within the imf, expand its lending capacity, and support the code of reforms in order to protect our own economic and security interests. i also want to commend your

department's work, specifically under secretary cohen's office in disrupting terrorist financing networks and enforcement of sanctions against countries such as iran, and north korea. in particular, sustained implementation of these efforts must remain the backbone of our iran policy. especially while new korean negotiations continue. i hope to hear what additional economic actions and sanctions the administration will seek if negotiations with iran fail to yield an agreement permanently denying iran nuclear weapons capability. before i close i want to apologize not because of lack of interest, but i have another hearing directly across the hall, so thank you, again, for appearing before us. >> thank you. now i'd like to recognize the secretary for his opening statement.

your written statement will be made part of the record and if you could limit your oral testimony about five minutes it will give us more time for questions. so the floor is yours. >> thank you, mr. chairman. ranking member serrano, members of the subcommittee and thank you for the opportunity to speak about the treasury budget. i appreciate your cooperation on rescheduling the hearing, and i'll keep my opening remarks brief. let me start by saying what an honor it is to work with the dedicated men and women at the treasury department. they're talented public servants who are focused on strengthening our country and they performed with excellence under quite difficult conditions over recent years. and i want to thank them for their service and commitment. the president's budget addresses the fundamental challenges our nation faces. and the requests for treasury is part of that comprehensive strategy. this request will allow the department to help maintain a strong economy, sensibly manage the government's finances, foster a greater investment in american communities and small businesses, protect our national security, monitor risks to the financial system and promote conditions that support economic

growth and stability at home and abroad. over the past five years treasury has met its responsibilities efficiently and at a lower cost. today's budget request builds on that progress and includes even more ways to reduce costs and achieve savings while offering carefully designed proposals to increase the department's effectiveness. for instance we're seeking a second round of funding for the state's small business credit initiative which has been enormously successful in strengthening small businesses across the country. we're working to reduce the risks from cybersecurity attacks by helping to improve the financial sector's resilience to such attacks, and investing in treasury's own defenses and infrastructure. and we're requesting sufficient funding for the internal revenue service so it can provide the kind of quality service that american taxpayers deserve. as we consider what's in the best interest of taxpayers, it's important to note that it's been 5 1/2 years since fannie mae and freddie mac went into conservatorship. now is the time to reform our housing system and i'm encouraged that the senate banking committee is making bipartisan progress on this very complex issue. since the financial crisis

treasury has played a central role in designing and implementing the most comprehensive reforms to the financial system since the great depression. one major piece of unfinished business is housing finance reform and we need legislation that protects tack payers, ensures continued guidespread availability of consumer friendly mortgage products like the 30-year fixed rate loan and provides liquidity during times of economic stress and facilities the availability of affordable housing in an explicit and transparent manner. before i take questions, i'd like to talk briefly about ukraine. the united states and the international community have made it clear that we will continue to stand with the ukrainian people during this critical time. that's why we're united in our effort to impose costs on russia for its unlawful and provocative acts. on monday the united states responded to russia's latest actions with additional sanctions, which will increase the impact we've already begun to see on russia's economy, from u.s. and international sanctions. we urge russia to pursue a diplomatic solution to the situation, especially as ukraine moves forward with presidential elections next month.

finally, we continue to vigorously enforce our highly effective iran sanctions regime. as a result earlier today we sanctioned individuals and entities for providing support for the government of iran and evading oil sanctions and facilitating iran's ballistic missile procurement. with that let me thank you for the opportunity to appear before you today, and i look forward to answering your questions. >> thank you very much. members, we're going to try to conclude our hearing in an hour and a half, so we'll observe the five minute rule. and we'll have as many questions as we can possibly handle. let me start mr. secretary by a follow-up question. when commissioner kuskin was here with the irs, we asked a lot of questions about this proposed 501 c four regulation, and he told the subcommittee that he didn't think that the draft would be finalized before november and i wonder is that -- is that your view, as well? >> mr. chairman, i've said on a

number of occasions that there are many steps from where we are now to the final rule. there is -- there have been extensive comments, as you know, roughly 150,000 comments. there's a process for reviewing them. there's going to be a need for the administrative process to go step by step, as revisions are reviewed. so, i think his estimate of the time frame is consistent with our expectations. the challenge is to have a conversation about what to do to limit the discretion in this area so that we don't ever see the kind of problems that we saw that were reported last year. >> do you think, i know that you mentioned 150,000 comments, that's a fairly large number, maybe historic. but will there be, do you know yet whether there will be any further hearings when you have that kind of comment? >> well, i expect that there will be further comment. you know, further opportunities for public comment, both on the

written material that's issued, subsequently. and potentially with hearings. >> it's hard for you to say when you think it might be finalized. >> i think it's going to take awhile. i've been very clear about that. the goal here is to get this done right. this is a very controversial and complicated area. the proposed rule made clear that there was an active request for comment. so, we weren't surprised by the comment. we -- the rule is not even complete in every regard because it says there are some areas that without comment it would be very difficult to pave the path forward. so it was meant to open a process. i would just point out that last year when this whole issue came to light through an ig report there were a number of recommendations in the report, one of which was to clarify this rule. and the proposed rule was a first step in that process. >> got you. >> we implemented all the other recommendations. >> i appreciate that. let me ask you, i mentioned in

my opening statement about the foreign account tax compliance act. that's going after tax evasion. and, it's an extensive regulation. it's going to have a profound and far-reaching impact on our economy but sometimes i think when those kind of rules are proposed, they have unintended consequences. and for instance, i think the concept is that you have -- you don't want people hiding cash offshore, but if you have a noncash value insurance, in other words like property and casualty insurance, that's basically a promise by the insurer to provide payment to cover a specific event. now in florida, we have hurricanes and we have catastrophic events so people buy insurance, noncash, value insurance, property casualty insurance, reinsurance, and so it seems like they can't be used for the purposes of tax evasion, and i don't know that the irs can see any additional money there so the question becomes, did -- how did they happen to

include premiums that have no cash value in this regulation? do you know that? and for instance, did somebody -- because i'm told that these companies are going to have to spend an awful lot of money to demonstrate that there's no cash there, and i wonder if somebody did an economic analysis of the proposed rule before it was -- >> i'm happy to go back and look at this specific issue about insurance. the general goal of fatca is one i know we all support, which is to make sure that taxpayers cannot evade u.s. taxes or taxes anywhere, by, you know, hiding their income in overseas accounts. it is a complicated area. one of the reasons that we extended the period was to make sure that we had time to enter into agreements with other countries. there was a great deal of interest, in having bilateral agreements. i think it actually has been a tremendous success. as i go to international meetings, i don't like to use

acronyms at meetings so i wouldn't use an ack know nip like fatca but in various accents i've heard people saying we need fatca for all. we need a global standard. so we'll work on getting the details right. i'm not familiar with the specific issue on insurance premiums. i'm happy to look at it. >> i think we all think it's a great concept that we want to stop but if you think about it, if somebody is buying reinsurance or property casualty insurance and there's no way to understand it, they can hide any cash in there and it would probably be appropriate that just to revisit that and do some sort of economic analysis. and if it's not something they cannot be part of that. but certainly it's a great concept overall. >> i'm happy to look at it and get back to you. >> thank you. now turn to mr. serrano. >> thank you, mr. chairman. i'm going to try to get in at least two questions because i know we have a short time, and mr. secretary, you draw a big crowd. as you can see. great attendance.

your request eliminates the bank enterprise award program, something i'm very concerned about. i have heard very good reports about the impact this program is having in my district and elsewhere. in fy-14 we provided $18 million for it. why are you proposing to zero it out this year? and i must tell you that it's been awhile since i've gotten so many comments from constituents on an issue as i'm getting on this one. >> congressman, we had to make a lot of tough choices in this budget, as you have to make in the appropriations process. and, based on the current fiscal environment, you know, we thought that concentrating the cdfi funds in other areas was on balance the right tradeoff. the appropriated funding level for the bencht >> a. program has decreased overtime, and it really was a question of concentrating our effort in other very important

areas. but we understand that there are some concerns because of the decision. >> well, the big issue here is that you've got programs up and running, you have situations, for instance, in my district, an area that for years the biggest complaint was that there were no banks around, and through this kind of funding that this committee put forward, you know, local banks were able to spring up, and that's a bad pun, because one of them is called spring but anyway, so now, they run the risk of falling apart. i don't know what process you have going forward, we certainly have our role to play. but i must tell you that this is one that has support in the community, and support on this committee so you should keep that in mind as we move forward. >> i appreciate that congressman, i know there's support for the other activities

that cdfi funds, as well. so it's a question of competing goods, and obviously with unlimited resources we might make other decisions but we did try in this budget in a number of areas to concentrate our effort in a world of very tight budget resources, and this was a tradeoff that we made. but i'd be happy to follow up and discuss the matter with you. >> thank you. my next question is one that miss lowey wanted to ask you at her hearing, at this hearing, and i wanted to ask you so that merits being asked. the fy-14 omnibus required treasury to submit recommendations for reducing the response time for applications to the office of foreign assets control for a general license for humanitarian nongovernmental organizations seeking to provide aid to famine victims in south central somalia. while we appreciate the response you've given us, it doesn't really respond to the report language. we'd like to see a more thorough response delivered to the

committee. what time frame do you think can have to get that to us? >> congressman, i might have to go back and check exactly what the time frame is. i do know that the issuance of licenses in somalia has been a very challenging undertaking. i've had the responsibility to work on it from multiple different perspectives when i was at the state department, and now obviously at treasury, and the challenge is to make sure that humanitarian goods are going where they need to go and should go, but that we're not seeing support for organizations that are listed, terrorist organizations. and we've tried very hard to work to strike that balance, to make sure humanitarian supplies can continue to go forward. i'm not sure of the exact schedule. i'd be happy to get back to you. >> right. in terms of security issues to tell us what the challenges have been? >> well, the whole process is one that is some things are public, some are not.

rather than cross the line, perhaps we should have the conversation separately. but, over time, you know, there have been concerns about payments that got -- that were used to support organizations essentially charging tolls on the roads to raise funds for terrorist organizations. so there are real concerns on both sides. obviously our goal in humanitarian programs is to get the money in, to get it in safely, and to get it in without having there be the kinds of collateral support for people who are not intended to get benefit from these programs. and i'm happy to follow up on the timing, obviously, the -- humanitarian licenses are very important part of what affect us. >> i realize i put on your plate two questions that are some people would see them as being that far apart, because one is very local, and one is part of our foreign policy.

but both speak about growth and support for people so we'll be talking in the future. thank you, mr. chairman. >> thank you. mr. rogers? >> mr. secretary, let me ask you about marijuana. washington state and colorado have legalized recreational use of marijuana. but it remains illegal in most states, and certainly under federal law. nevertheless department of justice told the governors that it will not challenge their legalization laws, and has told federal prosecutors to de-emphasize marijuana prosecutions. in addition, and what i want to ask you about, the treasury department's financial crimes enforcement network issued new rules that give banks a green

light to do business with mare juan shops, illegal shops. the combination of this guidance should allow both medical and recreational marijuana related businesses to make full use of banking services, and institutions. even though dealing with an illegal operation. dea administrator recently told a congressional hearing that cash is the driving force for these drug trafficking organizations, and dea has already seen signs, they say, that gangs are attempting to exploit the new banking rules. the issuance of a green light for banking institutions to do business with these illegal marijuana shops and subsequent action by the treasury

department to in effect rubber stamp that gives me some pause. because this is still an illegal product in practically every state. is it wise to offer regulatory guidance from the federal government on illegal activity? congressman this is a very complicated area. obviously when two states pass a law making an activity legal in the state there's going to be an increase in activity in that area. obviously the justice department guidance provided guidelines for how prosecution matters would be considered. we believed it was important for there to be clarity in terms of the consistency between the prosecutorial guidelines and the banking guidelines. the risk of cash transactions is actually something that we were quite concerned about. without any guidance, there would be a proliferation of cash-only businesses, and that would make it impossible to see

when there are actions going on that violate both federal and state law. and that would be a real concern. we thought that the clarity, bringing it into daylight, was a better solution. obviously the -- the real clarity here would require legislation that conformed to policy. since we don't have that it was an attempt to have as much clarity as one can have given the complex situation with the state laws. >> what about cocaine dealers? shouldn't they be given the same break? >> i'm not aware of any state that has legalized, you know, activity in that area. >> but aren't you aware that practically every state, marijuana still is considered illegal? >> so, we -- the actions we took really just apply in the states where the state law makes these shops legal. where the business would be done with cash, if it weren't done through banks. and we think that the actions we've taken taken provide greater transparency and less likelihood of the kinds of

behavior that i think we're all most concerned about. i will note that there have been quite a number of bsas, suspicious activity reports filed which give us the ability to see where there are transactions in those two states that would violate both their state laws and federal laws. and i think would indicate the kinds of troublesome behavior and activity that we would all want to see. >> well department of justice apparently qualified its approval of legal marijuana only if that state created, quote, strong and effective regulatory and enforcement systems, end quote. washington's medical marijuana dispensaries still are not licensed, or regulated, by the state. and yet, you waive all of that and allow these regulations, and help with banks in doing

business with those shops which are illegal under the state law. much less the federal law. i wouldn't -- >> i can't conclude whether or not it's legal under the state law. obviously the states have to enforce their state law. but they did legalize the opening of that's shops and these transactions. the question was whether the transactions would be in cash or through a transparent banking system and that really is the area where the guidance was meant to provide some clarity. >> but as i say in washington state, these dispensaries are still not licensed by the state nor regulated by the state. if they aren't licensed or regulated, from a legal perspective, how are they different, any different from a drug dealer on a street corner? >> i'm happy to follow up with you on some of the details of how things are being done in washington, and -- >> this is not complicated.

>> but the -- >> i think -- >> both states passed laws that created space for transactions that under state law are legal, and the guidance we put out was clearly meant to facilitate having transparency so that would not become a kind of cash economy where there's no way to see when there are transactions that suggest, you know, large-scale transactions that would actually violate the state law. >> well, mr. chairman, my time is up. i'm sure, but it's not complicated. washington state is not regulating those drug -- those marijuana dealers. and yet the u.s. government, through your department, is putting a stamp of approval on banks doing business with illegal shops, even in the state of washington. >> i would just note that when

there are suspicious activities that would violate state law, they're being reported and being followed up on. i think the transparency is something that actually makes enforcement of law more likely to happen in effective ways. >> thank you, mr. quigley. >> thank you, mr. chairman, welcome, secretary. secretary, before i go on i'd like to just go ranking member's concern about the bank enterprise award program. i understand we all have different priorities. all we're doing today is telling you, this is a program that's high priority for your communities. and we understand your response, but in the meantime, half a world away, the president said that something like he thought the odds of the iran talks succeeding at about 50/50, and that if they broke down, that additional sanctions could be under way, and they could be

passed by congress in a very short period of time. you have a sense of what kind of additional sanctions might be in place? what kind of sanctions seem to be working right now? >> well, congressman, i think we've seen that the sanctions that are in place on iran's oil sector, and their financial sector, have been very effective. there has been a consistent degradation to iran's economy. you see it in their gdp. you see it in their exchange rate. you see it in their inflation rate, their unemployment rate. you see it in their willingness to come to the table and negotiate. and we don't know the outcome of the negotiation. obviously the president puts the assessment out there, made it clear we're going into this with our eyes open. you know, sanctions cannot force an outcome. what they can do is create an environment where a leader is feeling the pressure so that if they want to do what it takes to

improve conditions for their people, they have to change their policy. if, in fact, the negotiations don't succeed, we will look for other means to tighten the pressure. working with the world community is one of the reasons that the iran sanctions have been so successful. is that we have not been alone. we have worked with most of the rest of the world to have it be a sanctions system that has very little leakage. you know, we obviously are hoping and working hard to make those negotiations successful. but we are very much aware of the fact it could go either way, and i'm not going to prejudge whatprejudge what steps we would take, but i think the president's determination and mine is that if the negotiations do not go well, we'll have a full set of options to pursue. >> i appreciate that. in a different country, looking at what's worked here, the

second round of sanctions involving ukraine seem to be meet with underwhelming response by their stock market. having just returned from there, you get the impression that the type of sanctions that would work versus russia might be the same. those dealing with the more specifically with the energy sector and the banking sector. have those been considered are is this an issue with the european union? >> congressman they've been considered because the president signed an executive order that creates the authority for us to designate sectors should we make the determination that that's the appropriate step. i think that if you look -- >> this would have been stronger. >> if you look at the impact on russia's economy, it's a little misleading to look at what happens day by day. you have to look over the period of time since russia went into crimea. since we imposed sanctions. there has been quite a

substantial deterioration in russia's already-weak economy. we see it in their stock exchange, their exchange rate, in a number of important economic indicators. they were down graded one notch above junk. with the rationale and bond rating was, in part, the sanctions being imposed. i think the question here is how do we proceed in a careful way, step by step, building pressure? president putin has acknowledged that the sanctions are creating pressure on them. obviously, they didn't change their policy. i think that we need to continue to keep our options open. we are prepared to take more action and we've made clear we're prepared to take more action if the policy of russia doesn't change. the reality is again working in partnership with our allies is the most effective way to do it. and we're seeing movement there. we're seeing even yesterday that the europeans made additional designations. i think if you look at the individuals designated in russia, they are some of the

leading business people closest to the government. igor sechen, ceo of a huge oil business. the ceo of a big industrial complex that includes arms deals. a ceo of gun vore, the biggest energy trading platform. the regenberg brothers are close personally and support the people in the inner circle. i think they've gotten the message we are serious and we have more actions we can and will take. we need to remain determined and push ahead and work with our allies to do it in a way that is an effective way to change the situation on the ground. >> we appreciate that and look forward to working with you in the future. >> thank you. mr. womak. >> thank you, mr. chairman and thank you, secretary, for your testimony here today.

i want to go back for just a moment. i've got a couple of other more brief questions. as has already been mentioned, and i associate my remarks with that of the chairman and others who indicated that our collective effort to detect and deter offshore tax evasion is a goal that we all share. i know that some treasury officials have insisted that the july 1st fatca withholding deadline should remain in place. can you explain for the panel and our constituents what the risks are to u.s. financial institutions and the u.s. economy if large numbers of banks are required to withhold the 30% tax on routine cross border transactions? >> i'm not sure which risks you're -- the risk of not having the reporting is that transactions go undetected and tax avoidance and evasion goes

ahead. >> more to the concept of the regulatory requirements. let's just go in that direction. >> this is a new regulatory approach. the facta law put in place the authorities being implemented. we have been cognizant of the fact that it is going to require new reporting procedures to be put into place. we are cognizant of the fact it requires cooperation with banks and governments overseas, and we extended the deadline in order to facilitate a smooth, effective transition. i think at whatever point it goes into effect, there's going to be a new set of requirements, but i think they're appropriate requirements because if we don't have that reporting, we can't see where the tax avoidance is taking place. the bipartisan effort to make

sure we can see what's going on so that we can stop illegal tax avoidance is the purpose of it. i wish it could be done without any burden at all. obviously, any reporting program has some, creates some extra work. we've tried to keep it simple. we tried to extend the timeline to do it in a way that makes it as unburdensome as possible to meet the higher requirement. >> this year, what will be the estimated deficit, budget deficit in this country? >> the current estimate, i was not looking at budget numbers before i came up here. >> round numbers. >> i'll give you a single number. it's around 600. it's been coming down. the reason i'm hesitating, each time it's estimated, we thought it would come down 30 or 40, now 70.

it's coming down more rapidly. >> $600 billion. we are going to throw that on top of an already nearly $17.5 trillion public debt. do you agree that this -- because when i go home and i've got the debt clock on my website as a lot of my colleagues do. people are concerned about this public debt. when i make my presentations in large group, i try to explain i'm an appropriator as much to the credit of the people on this diaz today and mr. rogers, we live done a very credible job in trimming discretionary spending. as our overall chairman said in his remarks, we still have mandatory spending that has not been addressed. and honestly, i'm not seeing the

leadership there. i guess my question, mr. secretary, is do you agree that this debt under the interest rate structure we have today is a major national concern, and that the sands in the hour glass are running on us? >> congressman, i spent much of the last 30 years working on trying to have a responsible fiscal policy, so i certainly agree thought is a critically important issue. we made more progress reducing the deficit at a faster speed than since world war ii and demobilization after world war ii. we had an enormous coming together of drivers that drove the deficit up. first we had policies that created policy gaps in the early 2000s. then the worst recession since the great depression. we are now seeing a recovery from that. i agree mostly or very substantially it's been discretionary spending reduction. there were tax increases since the beginning of last year.

we've seen entitlement savings. we have proposals for medicare savings. we have looked forward to working on a bipartisan basis for many years to reach agreements there. i think we are on a path where the deficit will be below 3% of gdp. we're in a place where we have a little bit of time to deal with it. i have always believed that you shouldn't wait until your time runs out. i'm not going to say let's wait ten years to have the conversation, but we are in a much better place than just a few years ago. >> my time is up. i yield back. >> thank you. >> thank you. mr. chairman, i would like to request at some point with the secretary's willingness special briefing of our committee, subcommittee on the sanctions relative to ukraine and contrary implications. i don't know if the chair would be open to that or not. i think it's terribly important. i want to make the formal request. secretary lew, thank you so much, particularly someone's

career has spanned helping to restore the solvensy of social security in 1983 up to the balanced budgets of the clinton administration. president obama has put the right american in charge. we welcome you before our committee today. i wanted to focus in two areas in this round. first of all, in the housing sector where our secondary market is in a bit of a jam at this point. we know that wall street's terrible mortgage securitization record created the largest transfer of capital from main street to wall street in our history. african-americans lost all their accumulated equity since world war ii. hispanic americans similarly, working class people across this country. i represent communities terribly impacted by the securitization meltdown. my question is, what is treasury

doing to perhaps working with the justice department to recoup some of those assets for these hard-working americans in communities that have been so devastated? and have you considered, in addition to bringing back -- by the way, those banks are doing very well, the major ones that were a part of this. everybody seems to be fine up there. but have you considered, in addition to rec pens from those institutions back to the street to the people at treasury, have you considered working to develop new mechanisms such as efforts county land banks to better handle adjustment in the

housing sector in these communities? does treasury have a mechanism, a, to bring the big banks to the table, and b, to get more recompense and get local governments trying so hard to prevent further abandonment and adjust at the lower level. >> we don't directly have a role in that. there have been some settlements that have put money back into some of the programs, mostly in the department of housing and urban development. we have a series of programs where we have been actively engaged with local communities and homeowners to help homeowners refinance their mortgages, to help them modify their mortgages. we tried to be creative in using programs like the hardest hit fund to help the community as well as individual homeowners.

i was just in detroit last week and saw the first demolitions done using hardest hit funds because if you have a blighted house on a block that's struggling to stay above water, you need to have the house that's dilapidated and drawing down everyone's values dealt with. so we are trying in every way we can with homeowner assistance and community assistance to be engaged in this. we've seen millions of refinancings and modifications. there's obviously a lot more work to do. we have a number of other programs like the ssbci where we are not dealing with the housing piece but dealing with the economic development piece of it to create jobs in those communities. i think we had great success in that effort. >> i will have some follow-up for the record it. wanted to shift to ukraine for a second. just so the secretary of treasury knows this.

the agricultural sector of ukraine can pay all the bills as time goes on. i don't find in what we are doing yet as a country we actually are thinking about that power. i can guarantee you under the corrupt yanukovich administration, ordinary farmers were being charged 19% interest rate, but the friends of the deposed president yanukovich were being charged 4%. i hope in the financing schemes that the ifm and others are thinking about, that the identification of grassroots farmers in that country, not associated with the past regime, that somebody pays attention to those and competitive interest rates are offered to those farmers because that sector can ultimately pay the bills. finally for the record, because you get in meetings i don't get into, women of that country are feeding that country. in little villages, nobody sees them.

we need a humanitarian effort, in my opinion, that brings in good seed, shovels, basic equipment, and i'm talking about humble things like buckets of care does around the world to help these women feed that 75% of the food is raised in those small towns and those small villages. nobody sees those women, but all you have to do is look at the satellite over the weekend. you see all the people drive out of kiev, go get food and come back into the city because prices have gone up. i want to put that on the record. perhaps you can be a voice in the meetings that are occurring to support agriculture among those who want reform and those holding that country together as we weather this crisis. thank you for listening. thank you, mr. chairman. >> thank you. mr. graves. >> thank you, mr. chairman. mr. secretary, good to see you. wish you well on your continued recovery. i want to ask your thoughts on a recent proposal that was on the

white house blog and will read a little about it. it was authored by carolyn atkinson for international economics. it described in her proposal as requiring that all companies formed in any state to obtain a federal tax employee identification number requiring the internal revenue service to collect information on the beneficial owner of any legal entity organized in any state. for the irs to allow law enforcement to access this information without following the safeguards in current law that generally require and showing a reasonable cause. to believe a criminal act was committed before the irs shares taxpayer information under section 6103 of the code. in light of and the still unresolved question and scandals involving the irs targets proponenpro

poen opponents of the administration, they are still as relevant after watergate when implemented. it's incumbent on the government to scrutinize irs data about citizens and protection designed to safe guard it, even when the administration asserts the national security requires eliminating these safe guards. so i guess knowing that proposal has been issued as part of the president's '15 budget and described a few weeks ago on the white house blog, would this proposal by the president do away with requirement that federal, state and local agencies establish reasonable cause to believe a crime was committed before sharing confidential taxpayer return information? >> congressman, the protections of 6103 are extremely important. we spend a lot of effort to make sure that we honor 6103 in everything we do. it has to do with the basic

trust the american people have in their system. that's something that is our obligation to maintain. the issue of beneficial ownership is a very complicated one. it's a complicated one internationally because there is a huge demand internationally to seek more transparency to beneficial ownership because it is considered to be one of the things driving base erosion and tax avoidance internationally. we have taken the view we have to protect vide information and act in a way consistent with the individual protections that are provided in 6103. i have on a number of occasions in international meetings said we would not make beneficial ownership broadly public, but we would only do it through proper channels, law enforcement agency and tax an enforcement agency to one another. i'm happy to look at the blog post and answer any detailed question you have about it, but

that's our general policy. >> so if 6103 is in place and there's currently a process that requires reasonable cause, i guess my question would be why then propose a new concept that -- does it improve on protections for u.s. citizens or is it removing protections for u.s. citizens? >> i'm happy to take a look at that blog post and respond in more detail to you. >> okay. i guess just for clarity, do you think it's the administration's expectation that congress will curtail the protections in the current law as it relates to 6103 and as we look ahead and we're going through the process of some of the other questions dealing with 501-cs and such? >> i think that the protection of individual privacy and information and making sure our system is