before this house about the singling out and targeting of conservative organizations. she spoke up and gave a detailed assertion of her innocence and then refused to answer questions. she later spoke with d.o.j. attorneys for hours but still refused to answer a lawful subpoena and testify to the american public. as a public servant, she decided to forego cooperation, to forego truth and transparency. in 2013, ms. lerner joked in one uncovered email that perhaps she could get a job with organizing for america, president obama's political arm. this is no surprise. our committees have found ms. lerner used her position to unfairly deny conservative groups equal protection under the law.

ms. lerner impeded official investigations. she risked exposing and may actually have exposed confidential taxpayer information in the process. day after day, action after action ms. lerner exposed herself as a servant to her political philosophy rather than a servant to the american people. this, mr. speaker, is why the house has taken the extraordinary action of referring ms. lerner to the department of justice for criminal prosecution. and why we will request a special council to investigate this case. not only has the president asserted that there is, quote, not even a smidgen of corruption at the i.r.s., but leaks from the department of justice have indicated that no one will be prosecuted.

that's not surprising, as a top donor to the president's campaign is playing a key role in their investigation. potentially compromising any semblance of independence and justice. an independent, nonpartisan, special prosecutor is needed to ensure a fair investigation that all americans can trust. mr. speaker, the american people deserve to know the full context of why these actions were taken. as early as 2010, leading democratic leaders were urging the i.r.s. to take action against conservative groups. the decision made to take action against them? the american people, ms. lerner's employers, deserve answers. they deserve accountability. they deserve to know that this

will never happen again, no matter what your political persuasion. the american people deserve better. because of ms. lerner's actions, because of her unwillingness to fully testify, and because she has refused to legally cooperate with this investigation, i urge my colleagues in the house to hold ms. lerner in contempt. and i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california reserves. the gentleman from maryland is recognized. >> i yield to the distinguished gentleman from massachusetts, mr. lynch. the speaker pro tempore: the gentleman from massachusetts is recognized for three minutes. mr. lynch: thank you, mr. speaker. i thank the gentleman from maryland for yielding. in response to those recent allegations, i do want to point out that our committee did look at the question of political motivation in selecting tax exemption applications. we asked the inspector general, russell george, on may 17,

2013, in a hearing before the ways and means committee, and i quote, this was the question, did you find any evidence of political motivation in the selection of tax exempt applications? he -- he responded, the inspector general who investigated this case testified, and this is a quote, we did not, sir. period. mr. speaker, i rise in strong opposition to this contempt resolution. what began as a necessary and compelling bipartisan investigation into the targeting of american citizens by the internal revenue service has now deteriorated into a -- into the very sort of dangerous and careless government overreaching that our committee was set out to investigate in the first place. the gentleman from california commenced this investigation in may of 2013 by stating the following during his opening statement. this is a quote. when government power is used to target americans for exercising their constitutional rights, there is nothing we as representatives should find more important than to take it

seriously, get to the bottom of it and eradicate the behavior, closed quote. i would remind the chairman that our solemn duty as lawmakers to safeguard the constitutional rights of every american does not only extend to cases where a powerful federal department has deprived citizens of freedom vested in the first amendment, rather, we must be equally vigilant when the power of government is brought down on americans who have asserted their rights under the fifth amendment and its guarantee that no person shall be compelled to be a witness against him or herself, nor be deprived of life, liberty or property without due process of law. and in a system where innocent until proven guilty lies at the bedrock of our constitutional protections, ms. lerner's brief assertions of innocence, 36 , rds, should not be enough to e -- ax her fifth amendment rights. regrettably this contempt

resolution utterly fails to reflect the seriousness with which we should approach this constitutional issue at stake. in the face of supreme court precedent and a vast body of legal expert opinion, holding that ms. lerner did not in fact waive her fifth amendment privilege by professing her assistance, chairman issa has moved forward with a contempt proceedings without even affording the members of our own committee the opportunity to receive public testimony from legal experts on this important constitutional question. as held by the supreme court in 1949 in smith vs. united states , testimonyal waiver is not to be lightly inferred and the courts accordingly indulge every reasonable presumption against finding a testimonial waiver. chairman issa has also chosen to pursue contempt against ms. lerner after refusing an offer from her attorney for a brief one-week delay so that his client could finally provide the testimony that members on both sides of the aisle have

been asking for. these legally flawed contempt proceedings bring us no closer to receiving ms. lerner's testimony and have only served to divert our time, focus and resources away from our rightful inquiry into the troubling events of the i.r.s., they also reflect the bipartisan -- excuse me, the partisan manner in -- -- the partisan manner in which this as been conducted to date. he has released two staff reports on these events that were not even provided to the democratic members prior to their release. in closing, i urge my colleagues to join me in opposing this resolution and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from maryland reserves. the gentleman from california is recognized. mr. issa: i'd like to correct the record. it's now 40 transcribed interviews and we received

1,000 emails from lois lerner today. so that 14 million probably went up a little bit because today the i.r.s. finally turned over some of the documents they owed this committee under subpoena for over half a year. i now recognize the distinguished gentleman from florida, mr. mica, for two minutes. the speaker pro tempore: the gentleman from florida is recognized for two minutes. mr. mica: thank you, mr. chairman, mr. speaker. it's probably nothing more sacred to americans, nothing than portant to protect the democratic electoral process which has made this by far the greatest country in the world, getting everyone an pportunity to participate. we're here today to hold lois lerner in contempt. it's been stated she didn't have her rights recognized.

she has the right to take the fifth. she's done that. under the constitution. may ught her in twice, 22, 2013, march, 2014. she began -- and you can see the tapes -- declaring her innocence. even before that, when it was pointed out that she was at the heart of this matter, in fact everyone and her employees, when she tried to throw them under the bus, they said she threw them under a convoy of mack trucks. every road leads to lois lerner. lois lerner held the congress of the united states in contempt and is holding it in contempt. lois lerner held the electoral process that is so sacred to his country in contempt.

lois lerner has held the american people and the process they cherish and the chief financial agency, the i.r.s., who we all have to account to, as a tool to manipulate a national election. this was a targeted, directed focus attempt and every road leads to lois lerner. she's had twice the opportunity to come before congress and to tell the whole truth and nothing but the truth and she has failed to do that and i urge that we hold lois lerner in contempt. that's our responsibility. and it must be done. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentleman from california reserves. the gentleman from maryland is recognized. mr. cummings: with all due respect to the gentleman who ust spoke, even the i.g. found that lois lerner did not learn about the inappropriate terms until a year afterwards. the i.g. that was appointed by

the republican president with. that, i yield three minutes to the distinguished member from virginia a member of our committee, mr. conway. the speaker pro tempore: the -- mr. connolly. the speaker pro tempore: the gentleman is recognized. mr. connolly: i thank my friend. i think if the founders were here today and had witnessed the proceed thonings government and oversight reform committee with respect to ms. lois lerner, they would have unanimously reaffirmed their commitment to this -- to the fifth amendment because rights were trampled on, frankly starting with the first amendment rights of the ranking member who was cut off and not allowed to speak even after the chairman allowed himself abopen -- an opening statement and no fewer than seven questions before cutting off entirely the ranking member. then we proceeded to trample on the fifth amendment.

and case law is what governs here. the court has said the self-incrimination clause must be interpreted in favor of the right it was intended to secure. since the respect normally accorded to prive sledge normally buttressed by the defendant in a trial, in other words it's the same. it's the equivalent of the presumption of innocence. madison said if all men, and he meant all men and women, i'm sure, were angels we wouldn't knead need the fifth amendment. lois lerner is not to be defended here. she's not a heroic character. but she is a citizen who has an enumerated right in the constitution of the united states. the relevant case, besides quinn vs. the united states, in the 1950's a u.s. citizen, diantha ho fwmbings ue was taken tpwhever permanent subcommittee, she also had a prepared statement declaiming her innocence, that she was not a spy, not engaged in

subversion and then she proceeded to invoke her fifth amendment. ms. hogue answered some questions yes or no that were put to her. she was found in contempt. the chairman of the committee jumped on it and said, aha, i got you. the court found otherwise. the court unanimously ruled that ms. hogue had not waived her fifth amendment right, she was entitled to a statement of innocence and that didn't somehow vitiate her invocation of the fifth amendment right and her fifth amendment right was upheld. this is a about trampling on the constitutional rights of u.s. citizens. and for a very crass reason. for partisan, political reason. we heard the distinguished majority leader, my colleague and friend from virginia, assert something that's absolutely not true, which is that only conservative grouped were targeted by the i.r.s. that's not true and we have testimony that's not true. words like occupy.

acorn. progressive. were all part of the so called bolo list. they too were looked at. this was an incompetent, ham handed effort by one regional office in cincinnati by the i.r.s. was it right? absolutely not. but does it rise to the level of a scandal or the false assertion by the chairman of our committee on television as the ranking member cited that somehow it goes all the way to the white house picking on political enemies? flat out untrue. not a scintilla of evidence that that's true. and to have the entire house of representatives now voting on the contempt citation and declaring unilaterally that a u.s. citizen has waived her constitutional rights does no credit to the this house and salo moment that evokes the spirit of joe mccarthy from a long-ago era. shame on us for what we're about to do i yield back. the speaker pro tempore: the gentleman yields back. the gentleman from maryland reserves. the gentleman from california is recognized.

mr. issa: nobody answered the debunking we put out this document this document makes it clear it was all about targeting and abusing conservative groups and the gentleman from virginia knows that very well. with that, it's my honor to yield two minutes to the gentleman from oklahoma who has champion sod many of these issues in our investigation, mr. lankford. the speaker pro tempore: the gentleman is recognized for two minutes. mr. lankford: thank you, mr. speaker. about three years ago, all of our offices started getting phone calls from constituents. they were being -- said they were being asked unusualle -- unusual questions by the i.r.s. they were applying for nonprofit status. they were patriot groups, tea party groups, they were getting questions coming back new york questions like, tell us as the i.r.s. every conversation you've had with a legislator in the -- and the contents of those conversations.

tell us and give us cop dwhroifs documents that are only given to members of your organization. if there's a private part of your website that's only set aside for members, show us all of those pages and by the way, all of those questions were prefaced with the statement from the i.r.s., whatever documents you give us will also be made public to everyone. so the statement was, tell us what you privately talked about with legislators, tell us what only your members get because we're going to publish it. so of course we start to get questions about that. the inspector general starts an investigation on that. on may 10 of last year, 2013, lois lerner stands up in a conference, plants a question in the audience to talk about something completely irrelevant to the conference so she can leak out that this investigation is about to be burst out and four days later, the inspector general launches out this investigation and says, conservative groups have een unfairly targeted.

298 groups had their applications held, isolated. they were asked for all these things when they turneding to be yumets in, they were store the initial accusation is, this was a crazy group from cincinnati that did this so our committee happened to bring in these folks from cincinnati. they all said they wanted to be able to advance these applications and they were told no. we asked the names of the people in washington that told them to hold them. we brought those folks in. they said they wanted to move them. they were told by the counsel's office to hold them. as we continue to work through point after point, through person after person, all come back to lois lerner's office. lois lencher who had come in before us on may 22 of 2013, made a long statement professing her innocence, saying she'd done nothing wrong, has broken no law, and then said i won't answer questions. what's at stake here is a constitutional principle, can a person sit for a court or before congress and make a long statement, i've done nothing wrong and then choose to not

answer questions? this is a precedent before every congress from here on out and in front of every court. can this be zphone and we would say no. it's not just a statement about accepting that she's guilty. though all the evidence leads back to her and her office. it's, if you have the right to remain silent, do you actually remain silent during that time period? with that, i yield back. the speaker pro tempore: the gentleman yields back. the gentleman from california reserves. mr. cummings: i would say to the gentleman, we are talking about the constitutional rights of a united states sint and we do not have the right -- united states citizen and we do not have the right to remain silent if those rights are being trampled on. i yield three minutes to the distinguished leader from hoyer from maryland. the speaker pro tempore: the gentleman is recognized.

mr. hoyer: thank you, mr. speaker. if this is a precedent, it is a bad precedent. it is a dangerous precedent. it is a precedent that we ought not to make. read the constitution, i heard, over and over and over again. i've read probably the opinions of 25 lawyers whom i respect from many great institutions in this country. none of whom, as i'm sure the ranking member has pointed out, none of whom believe that the precedent supports this action. mr. speaker, what a waste of the people's time. for congress to spend this week on politics and not policy. we are about to vote on a resolution that is really a partisan political message. everyone here agrees.

everyone. that the i.r.s. should never target anyone based on anything other than what they owe in taxes. not their political beliefs or any other traits. other than their liability and their opportunities to pay the fair share to the united states of america. and in fact, during the exhaustive investigation into the i.r.s., chairman issa's committee, interviewed 39 witnesses, analyzed more than 530,000 pames and could not find the -- pages and could not find the conspiracy they were looking for. that they always look for. that they always allege. $14 million of taxpayer money has already been spent on this investigation. and all that was found was that

which we already knew. that the division led by ms. lerner suffered from fundamental administrative and managerial shortcomings that bore no connection to poll tirks or to -- to politics or to partisanship. independent legal experts concluded that chairman issa's efforts to hold ms. lerner in contempt of congress is constitutionally deficient. this resolution before us today is of course not meant to generate policy. it's nonet generate headlines. -- it's meant to generate headlines. republicans once again are showing that they are more interested in partisan election year gimmicks than working in a bipartisan way to tackle our country's most pressing challenges. we ought to turn to the important matters of creating jobs, raising the minimum wage, restoring emergency

unemployment for those who are struggling to find work. issues the american people overwhelmingly support and want their congress to address. i urge my colleagues to give this partisan resolution the vote it deserves. and to feed -- and defeat it so we can turn to the people's business. in closing, let me say this, mr. speaker. there are 435 of us in this body. the speaker pro tempore: the gentleman will suspend. the gentleman from california reserves. the gentleman from maryland is recognized, the gentleman from maryland is recognized for an additional 30 seconds. mr. hoyer: i thank the gentleman. i urge all my colleagues, do not think about party on this vote. think about precedent. think about this institution. think about the constitution of the united states of america.

and if you haven't read, read some of the legal opinions. that say you have to establish a predicate before you can tell an american that they will be held criminally liable if they tobet respond to your questions. -- if they don't respond to your questions. that's what this issue is about. not about party. not about any of us. but about the constitutional protection this is a every american deserves and ought to be given and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentleman from maryland reserves. mr. couple spgs: may i inquire how much time is remaining? the speaker pro tempore: the gentleman from maryland has eight and a quarter minutes remaining, the gentleman from california has eight minutes remaining. mr. issa: i want to correct the record, earlier a minority member stated that with 35 words said by lois lerner, our count is 305.

hopefully the inaccuracy of their experts will be considered the same. with that, i yield two minutes to the gentleman from arizona, mr. gosar. the speaker pro tempore: the gentleman is recognized for two minutes. mr. gosar: i thank the gentleman for yielding. mr. speaker, i rise in support of this resolution. the people's house has thor hi documented lois lerner's trespasses, including her history of targeting conservative groups as well as the laws she has broke . there's a 443-page committee reporting supporting these allegations. we know ms. lerner refuses to comply with a duly issued subpoena from the house oversight and government reform committee and without ms. lerner's full cooperation the american public will not have the answers it needs from its government. my friends across the aisle have continuously cried foul over this legitimate investigation. but where is there evidence -- where is their evidence to put this to rest? i do not enjoy hold anything federal official in contempt or pursuing criminal charges because doing so mean we was a

government run amok and a u.s. attorney general who does not uphold the rule of law and such a predicament is a lose-lose situation for all americans and our constitution. as uncomfortable as it may be, it is our job to proceed in the name of government accountability. i support this resolution and it is way pastime for contempt for lois lerner. with that, i yield back. the speaker pro tempore: the gentleman yields back. the gentleman from california reserves. the gentleman from maryland is recognized. mr. cummings: i yield two minutes to mr. welch. mr. welch: i thank the gentleman. mr. speaker, there's a reason that the american people hold the congress of the united states in such low esteem. we're providing them with some additional basis to have that opinion. and here's what it is. number one, this was an important investigation. we should do it. we should do it energetically and we should do it together.

instead, information was constantly withheld from the minority. our own ranking member was cut off with really quite a bold gesture by the chairman at a certain point, and it created an impression that it was going to be a one-sided affair rather than a balanced cooperative approach. that's essential to having any credibility. the second thing is, what do we do about mrs. lowey: who took the fifth -- will lois lerner who took the fifth? and the manner which she did that took her to waive that. your side think she waived it and therefore should be held in contempt. our side, and we have the side of legal opinion, said she didn't waive it. you know, that's a legal question and there is a document called the constitution that separates the powers. whether this person crossed the line or didn't

the idea that a congress, this time run by republicans, next time by democrats, can have a right to make a determination about the rights of a citizen is in complete conflict with the separation of powers in our constitution. i yield back. the speaker pro tempore: the gentleman from vermont yields back. the gentleman from maryland reserves. the gentleman from california is recognized. mr. issa: i thank the gentleman from vermont in advance for his yes vote on this because the only way to send this to the court to be decided is to vote yes. in fact, we are not try lois

lerner. we are determining that she should be tried. the question should be before a federal judge. with that, i yield two minutes to the gentlelady from wyoming a member of the committee, mrs. lummis. the speaker pro tempore: the gentlelady is recognized for two minutes. mrs. lummis: thank you, mr. speaker. i contend that in the interest of protections the -- protecting the constitutional rights of this country from the behavior of the i.r.s., from lois lerner, herself a lawyer, who understands that you can waive your right to remain silent as to matters to which you chose to testify. and that she did that. she said, i've done nothing wrong, i have broken no laws, subsequently, we find out that she blamed the rimplet s. employees in cincinnati for wrongdoing that was going on here in washington, d.c. that she was targeting conservative groups and only conservative groups, thereby

violating their first amendment constitutional rights. the oversight committee needs to find the truth and to that end, we need answers from lois lerner. the committee has sought these answers for more than a year. lerner's refusal to truthly answer these questions posed by the committee cannot be tolerated. i urge a yes vote. following that swift action by the justice department to ensure that lois lerner provides answers on exactly what she i.r.s. was up to. mr. chairman, i thank you and yield back. the speaker pro tempore: the gentlelady yields back. the gentleman from california reserves. on the time remain, the gentleman from california has 11 -- has 12 minutes left. the gentleman from maryland has 6 1/4 minutes left. the gentleman from maryland is recognized. mr. cummings: i yield two minutes to mr. davis of illinois. the speaker pro tempore: the gentleman is recognized.

mr. davis: i agree that one of the responsibilities of our committees is to investigate, to try and make sure that the laws are carried out the way we intended and to try and make sure that the money is being spent the way we intended for it to be spent. that we spent $14 million up to this point investigating this one issue, and while i think the investigations are designed to tell us something we don't know , we have not learned anything new. we have not learned of any kind of conspiracy. we have not learned of any kind of underhandedness. the only thing that we know is that we have said to a united states citizen that you cannot invoke the fifth and say that i

have a right not to answer questions if i think it's going o damage me. i'd rather see us spend the there are 14 million creating jobs, providing educational opportunities for those that need it, doing something that will change the direction and the flavor of the economics of our country rather than wasting $14 million more on continuous investigations. i vote no and yield back. the speaker pro tempore: the gentleman yields back. the gentleman from maryland reserves. the gentleman from california is recognized. mr. issa: at this time it's my distinked honor to yield two minutes to -- distinct honor to yield two minutes to the gentleman from georgia. the speaker pro tempore: the gentleman from georgia is recognized for two minutes. >> you know, it is amazing. the american people still have not received answers that they deserve, i believe, from lois lerner. i think sitting here on the floor and listening to the last

few minutes, it just really amazes me about what's being said. said if the chairman had done this and if we had not done this then maybe we would have had more time and maybe we'll find out the truth. mr. collins: she did talk. she said a lot of things, including making 17 different factual assertions and then decided, oops, don't want to take anymore. here's the problem. no one has said or even implied that you can't assert your fifth amendment right. that's never been said on this floor. it's never been asserted by any member of the republican party. what has been asserted is you can't come in and you can't say, i've done nothing wrong, i'm clean, and oh, by the way, quit asking because i'm not going to answer any of your questions. when do you that, then you're taking advantage of a system

that you are not supposed to be taking advantage of. you could have -- she could have said, mr. chairman, with all due respect, i am not going to answer your question. i am asserting my fifth amendment right. she did not do that and what we have now is not a waste of time. i believe there's a lot of things. the republican majority is working on economic development. one thing we have to reassert in this country is trust, and right now the american people do not trust us and they do not breeb the government is in their favor. and incidents like this when they are being asked inappropriate questions, when they are trying to fulfill their right and freedom of speech, this is why you're here. you can't keep doing it. ms. lerner needs to be held in contempt. i have heard arguments that reminds me the song from pink floyd, i am comfortably numb, because at this point the facts don't matter. she chose to say, i didn't do anything wrong. that's not the way this process works, ms. lerner. it's time to testify. with that i yield back. the speaker pro tempore: the gentleman yields back. the remaining time for the

gentleman from california is 10 minutes. the gentleman from maryland has 4 3/4 minutes. mr. cummings: i'd say to the gentleman who is leaving the floor, the arguments do matter this is still the united states of america. there are still constitutional rights which we declare -- mr. collins: if the gentleman will yield? mr. cummings: no. i'm about to yield to ms. norton, it's her time. i yield two minutes to the gentlelady. the speaker pro tempore: the gentlelady from the district of columbia is recognized for two minutes. ms. norton: if the point is of the contempt resolution is to find out what ms. lerner knows, what the committee wants to know, deliberately here, of course, is whether there was deliberate targeting of citizens for political reasons. the fact is that the committee passed up the opportunity to

learn this information. it asked her attorney, would you tell us what she will tell us? t's called a prover. indeed, her attorney sent a letter to the chairman offering to provide a prover. that's the information -- a proffer. that's the information we want to know. this proffer would detail what ms. lerner would testify. instead of accepting that proffer, the chairman went on national television and claimed that this written offer never happened. the chairman, therefore, never obtained the proffer that the attorney was willing to offer. the information which is the only reason we should be on this floor at all and when the ranking member tried to ask about it at a hearing in march,

the chairman famously cut off his microphone and closed down the hearing in one of the worst examples of partisanship the committee has ever seen. the chairman did something similar when mrs. lerner's attorney offered to have her one-week h a simple extension, mr. speaker. since the attorney had obligations out of town. rather than accepting this offer to get the committee the information that is at the ttom of this contempt matter today, the chairman went on national television and declared inaccurately that she would testify without the extension. of course, that meant nothing could happen. there was no trust left. clearly what the committee wanted was a fifth amendment show hearing in violation of ms. lerner's rights. hey wanted a contempt citation

vote. that's an example of a political contempt citation vote. it will never hold up in the courts of the united states of america. and i yield back. the speaker pro tempore: the gentlelady yields back. the gentleman from maryland reserves. the gentleman from california is recognized. mr. issa: i work long and hard with the gentlelady from the district of columbia, and she's a good person but her facts are simply 100% wrong. in every single one of her assertions -- and every single one of her assertions was simply not true. you can go to every page and see that none of those statements are true. we would have accepted a proffer from the attorney. we were not given one. although i will say he did tell one time we wouldn't like what she would say if she said something. i went on national television to say she would appear and testify. additionally, the gentlelady did make one point that was

very good. it was very good. the attorney told us that she needed a week to prepare, which we were pg willing to give her. when we learned it was actually inconvenient for the attorney to necessarily prep her, we said if he would come in with his client and agree she was going to testify we would recess and give her the additional week. when they came in that day, no such offer was on the table from her attorney but in fact he said she had decided that she simply didn't want to speak to us. not that she was afraid of incrimination because you can't be afraid of incrimination and not afraid back and forth. that's pretty clear. her contempt for her committee was in fact contempt for the body of congress while she was happy to speak at length apparently with the department of justice, perhaps with that $6,000 or $7,000 contributor to

president obama that is so involved in that investigation. and with that i yield two minutes to the gentleman from michigan, mr. bentivolio. the speaker pro tempore: the gentleman from michigan is recognized for two minutes. mr. bentivolio: thank you very much, mr. chairman. mr. speaker, i stand in support of this resolution recommending that the house of representatives find lois lerner in contempt of congress. our pledge of allegiance ends with the words, for liberty and justice for all. lois lerner's actions have made it nearly impossible for us to follow those ideals for the victims of the i.r.s. targeting scandal. she has placed obstacle after obstacle in front of our pursuit for the truth, worrying that her ideology and actions of a corrupt federal agency will be exposed. i ask my colleagues to join our effort in promoting transparency in our government. as members of congress, it is our job to protect rights, not take them away. and with that i yield back. .

the speaker pro tempore: the gentleman is recognized. mr. cummings: we reserve. the speaker pro tempore: the gentleman from california is recognized. is is with that, i yield two minutes to the gentleman from texas, member of the committee, mr. farenthold. the speaker pro tempore: the gentleman is recognized for two minutes. mr. farenthold: i'm here today because i believe lois lern waived her fifth amendment rights to testify and by so ing in not answering our questions. the other side makes a big deal about this. but the way the system is supposed to work, we will find mrs. lerner in contempt. there will be a full hearing in the court and this may well make it to the united states supreme court. her rights will be protected. but we have also got to protect the rights of the people. we are the people's house. it'sure job to get to the bottom

of the scandals that are troubling the american people so we can regain the trust to the american people. you know, it's healthy to be skeptical of your government but if you don't believe a word that comes out of the mouth of the administration, there is a real problem. i don't think the justice department is going to pursue this. the same thing that is going to ppen to ms. lerner and we've got to do our job. we've got to deal with these people that are in contempt of congress. for that reason, i have h.r. 4447 that is pending before this house that would withhold the pay of anyone in contempt of congress. we have to use the power of the purse and everything we've got to reclaim the power of the purse and the power that the constitution gave this body to get to the truth and be the representatives of the people. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california reserves. the gentleman from maryland is recognized.

mr. cummings: we reserve. the speaker pro tempore: the gentleman from california is ecognized. the gentleman from california has 5 1/2. the gentleman from maryland has 2 1/2 minutes. the gentleman from california is recognized. is is i yield a minute to the gentleman from texas, mr. gohmert, who is, in fact, a constitution -- the speaker pro tempore: the gentleman from texas is recognized for one minute. mr. gohmert: i was struck by the comments by the minority whip instructing us to check the constitution. that really struck me, because i believe i recall him standing up and applauding in this chamber when the president said if congress doesn't do its job, i'll basically do it for them. so someone that would do that doesn't need to be giving lectures on the constitution.

we have powers under the constitution we got to protect. and when someone stands up and exerts their innocence repeatedly and then attempts to take the fifth amendment right, it's not there. this is the next step. it will preserve the sanctity and the power of this body whether it's democrats or republicans in charge for anyone who attempts to skirt justice and provide truth. and with that, i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california reserves? is is i reserve subject to the close. the speaker pro tempore: the gentleman from maryland is recognized. mr. cummings: mr. speaker, as i close, i want to remind all of my colleagues several references have been made to the oath that

we take every two years in this chamber. and every two years we extend in this chamber and say i will swear and support and defend the constitution against all enemies foreign and domestic. the first words we say. but it's interesting that in the beginning of that swearing-in is that we will defend the constitution of the united states of america. and yesterday, we had a very interesting argument in rules when one of the members of the rules committee questioned whether when one becomes a public employee, whether they then lose their rights as an american citizen. and it is clear that those rights do stand no matter whether you are a public servant or whether you are a janitor at

some coffee shop. and we are in a situation today where we need to be very clear what's happening. not since mccarthy has this been tried, that is the stripping away of an american citizen's constitutional right not to incriminate themselves and then holding him in contempt criminally. mccarthy. we are better than that. we are so much better. and the idea that somebody can come in after their lawyer has sent a letter in saying they are going to take the fifth, then the lawyer comes in and sits behind them while they take the fifth, then that person said they are taking the fifth, and then suddenly when they say i

clare my innocence, we say gotcha. the supreme court has said this is not a gotcha moment. it is not about that. the supreme court has said these rights, no matter how much we may not like the person who we are talking about, no matter how much we may think they are hiding, they have rights. and this is what this is all about. with that, i yield back and i urge my colleagues to make sure that they vote against this, because this is about generations yet unborn, how they will view us during our watch. the speaker pro tempore: the gentleman's time has expired. the gentleman from california is recognized. is is mr. speaker, i regret that we have to be here today. and if it is within my power, if at any time lois lerner comes

forward to answer our questions, i'm fully prepared to hear what she has to say. and at that point, i would certainly ask that the criminal prosecution be dropped. it may not be within my power after today, but for more than a year, our committee has sought to get her testimony. for nearly a year we have sought to get her to testify honestly. it was shocking to us on the ommittee that a lawyer represented by a distinguished lawyer would play fast and loose with the fifth amendment assertion. it's a pretty straight-forward process to assert your rights and in fact, her attorney may have planned all along to have a controversy. i'll never know. what i do know is we asserted that she had waived because we were advised by house counsel, an independent organization, that she had. we continued to investigate and

only today, nearly a year after a subpoena was issued, the treasury, the i.r.s. gave us like 12,000 emails and earlier emails, they indicate a deeply political individual, partisan in her views, who apparently was at the center of deciding that when the president in this well objected to citizens united, that it meant they wanted us to fix it and she was prepared to do it. that's for a different court to decide. the only question now is did she, in fact, give testimony and then assert the fifth amendment and then give some more testimony and can we have that kind of activity? we have dismissed other people who came before our committee, asserted their fifth amendment rights after enough questions to know they were going to continue to assert, we dismissed them. we have a strong record of respecting the first, the

fourth, the fifth, the sixth amendment and so on. that's what this congress does and we do it every day and our committee does it. rather than listen to debate here which was filled with factual inaccuracies, refuted in documentation that is available to the american people, rather than believe that the minority's assertion should carry the day because the gentleman from georgia said, if about eight different ifs, thans, they would vote for this. the gentleman from vermont said, we shouldn't be doing this or finding her guilty, this should be before a judge. he may not have understood because what we are doing is putting the question did she properly waive or not and should she be back before us or be held in contempt and punished for not giving it? this won't be my decision, this will be a lifetime appointment

nonpartisan federal judge. the only thing we are doing today is sending it for that consideration. and if the court rules that, in fact, her conduct was not a waiver, then we will have a modern update to understand the set of events here. but we'll still have the same problem, which is lois lerner was at the center of an operation that abused americans for their political beliefs. asked them inappropriate questions, delayed and denied their aprovals. the minority asserted well they could have self-selected. maybe they could have, maybe they should have, but it wouldn't change the fact that der penalty of perjury the i.r.s. was asking inappropriate questions. the i.r.s. is an organization we don't have confidence in. we need to re-establish that and

part of that is understanding how and why a high-ranking person at the i.r.s. so blatantly abused conservative groups in america that were adverse to the president, no doubt, but that shouldn't be the basis under which you get scrutinized, audited or abused and yet it clearly was. it is essential we vote yes on contempt and let the court decide but more importantly let the american people have confidence that we will protect their

next, that of reserved chair janet yellen appears before the joint economic committee. and the house armed services committee looks on the annual defense spending bill. >> on the next "washington fournal" congressman adam schif discusses the new investigation into the 20 12th attack on the u.s. consulate in the gauzy. attack on the u.s.

consulate in benghazi. describes u.s.ee efforts to aid in the search for the nigerian schoolgirls cannot buy the chair bristow group boko group-- by the terrorist boko haram. up my own prison. we do not know we are contributing to it. you get addicted to drugs. the whole world gets built around your need for drugs. you get suicidal actually. every signal of go world kind of dice. a beautiful sunrise. it is a beautiful day. your parents and you people love you. all you can think about is that you have got to go.

we ourselves get caught up in those traps. hand, we cannot see what is really out there. we can see that the world is really there. there are angels and mentors that really care for you. >> book tv book club selection is "it calls you back" by former gang member and community activists luis j. rodriguez. start reading and join us in the book club chat room. find us at booktv.org. speaking before the joint economic committee is federal reserve chair janet yellen discussing the declining market and geopolitical tensions as potential threats to the economicgrowth. she emphasized the fed's commitment to keeping the overnight interest rate near zero. this hearing is in our and 45 minutes.

>> good morning. we will begin. .ongratulations we welcome you to your first appearance before the zoning committee. we look forward to many more good june will mark the anniversary of the end of the great recession. this is that weakness or the -- near the bottom. --s has graded a growth cap created a growth cap. if this recovery had been nearly average, the u.s. economy would be $1.4 trillion larger. american workers would have 5.7 million more private sector jobs available. they would of four,

have more money each month. , the one exception to this is wall street. the s&p 500 total return index has more than doubled. last week the bureau of economic analysis statistic released conflicting data about the strength of this recovery. on the one hand, real gdp growth is basically flat in the first quarter. moreover, the employment population rate is lower than when the recession ended up. it means they are proportionately less adults working today than when the recovery began. it is heading in the wrong direction. on the other hand, for the fifth

time since the recession ended the monthly growth of nonfarm payroll jobs, it exceeded the average of job growth during past recoveries. the unemployment rate declining to 6.3% from its october 2009 the cut 10%. incorrectly judging the strength of the labor market is very important. the federal market committee has tied the scale of assets and interest rates to its assessment of the labor market. members have attributed much of the slack in the labor market to cyclical factors. they believe they can strengthen the economic output. however, the substantial portion of the weakness in the labor market is due to structural factors such as an aging population and a skills mismatch, maintaining the policy could instead create economic factors.

there needs to be different poly such as strengthening job-training programs and modernizing programs to encourage work. i'm encouraged that they began to taper large-scale purchases in december. it appears on track. however, i'm concerned that it will likely maintain its zero interest rate policy long after qe ends. i am equally concerned that the discretionary nature of the changes of their guidance is undermining the fed's credibility in weakening the confidence market participants and increasing uncertainty. i believe the fed reserve help stabilize financial markets after the panic in fall of 2008. there are extraordinarily low interest rates.

they have done a lot to stimulate wall street. i noted earlier that it is a roaring while for the average , it iss and individuals only a mere 4.2%. yelling, you pretty sister had confidence. that the knowledge, tools, and political fortitude. ratesmalizing interest and the size of the balance sheets, before an inflationary , it has hadld occur a satisfactory record. they have been acting in a timely manner. the task is difficult. today i'm hopeful you can enlighten the committee on several points. what is your assessment of the strength of the labor market? to much to believe is due

cyclical factors? how much is due to cyclical ones? how much weight are they being given. accommodating policy create price inflation that may not be fully captured by the cpi? by stock rises reflect the strength of the economy impartial due to monetary policy? created moree uncertainty and undermine credibility, when will they return to a rules-based approach of monetary policy to help the performances of the u.s. economy? fourthly, is the fed reserve tank in center cisco said correct that higher federal -- san francisco correct? is there a better way for the

spending side of the fiscal balances. are they willing to make their balance sheet more transparent? will they provide a consolidated list of holdings that has values in the average purchase price? as was the current market value push to mike with that, that is a lot of questions and you don't have to answer all of them by the way. [laughter] i look forward to your testimony. the record will be kept open for one week so members could submit additional records for the record. i yield to the vice chairman of the committee. .> thank you very much thank you for holding this timely hearing. i will only add 15 questions to is list. no, i won't.

we have seen the impact that monetary policy can have on economic growth at a time when congress has been gridlocked and very important things. the fed has had to step in several times. we will be able to move ahead as the fed continues to wind down quantitative easing. agree that thed recovery has not been as fast as we like. after a long, hard winter, it is good news that the employment numbers are picking up. unemploymentwest

rate in 5.5 years is a positive sign. it means something as you move into a summer season that we believe will bring more construction jobs and add more tourism jobs. economy has added jobs for 50 consecutive months as you can see from that chart. it has regained more private sector jobs than were lost during the recession. in april alone, almost 300,000 jobs were added. as we discussed, the unemployment rate is down to 4.8%. , wouldn't say we are roaring we are moving in a bash at a fast clip and major expansions were now -- we are moving at a fast clip and have major expansions now. the national unemployment rate and 6.3% has dropped almost 4 percentage points. .nflation is low it is well under two percent.

there's no sign of a rise in inflation. the first quarter was lower than anticipated. helped in about the economic recovery. i think congress did some good news. i think we should do more to the chairman has outlined some of them. the fed will lower interest rates near zero at the end of 2000 and eight and said recently he will keep rates low for a time.erable period of low interest rates have helped stimulate the economy by keeping borrowing costs affordable for businesses and consumers. they were reducing their purchases under quantitative easing. last month announced they would

further reduce their purchases to 45 million each month. it has been always understood these efforts would be scaled back as economy strengthened. economic activity has picked up recently. the short term unemployment rate has fallen to close to its previous session level.

this is high on her list of priorities. despite some good news recently about job growth, there are still 3.5 million americans out of work for longer than six months. i look forward to hearing your thoughts on the dual mandate. look forward to hearing your thoughts on increased transparency at the fed and then of course i would again mention as i had several times at this committee when your predecessor was here, i think there has been congressr issues with in terms of bouncing back and forth and careening from crisis to crisis. andoesn't help the economy help bring stability with a budget in place with the work that we have done since the tragic shutdown. we can now work on these issues that can build on the stability that we see in the economy. i list immigration reform as

very important is my state. we have trouble getting engineers. our spouses of doctors at the mayo clinic. i focus on that exports and the job training. on comprehensive tax reform. an issue was brought up recently to me. that is the issue of the tax incentives and the depreciation for manufacturing equipment. i'll be asking about that as all. thank you for appearing before us. >> thank you. janet yellen is chair of the board of governors with the fed reserve. she also serves as chair of the open market committee. disposition, she served as vice chair of the board of governors. she is a professor emeritus at the university of berkeley where

she was a professor of business and economics. she has been a faculty member for over 30 years. she also served as an economist for the federal reserve board of shernors and on the fact -- graduated summa cum laude from brown university with a degree in economics and a peach in economics from yale university. welcome. ph.d. in economics from young university. welcome. >> thank you very much. i appreciate this opportunity to discuss the current economic situation and outlook along with monetary policy for turning to some issues regarding financial stability.

real domestic gross product went up to an average annual rate of and a quarter percent over the second half of last year. a faster pace than in the first half and during the preceding two years. although real gdp growth is currently estimated to a pause in the first quarter of this year, i see that it is mostly reflecting transitory factors, including the effects of the unusually cold and snowy winter weather. with the harsh winter behind us, many recent indicators suggested a rebound in spending and production is already underway. putting the overall economy on track for solid growth in the current quarter. one cautionary note is that readings on the housing activity

is a sector that has been recovering since 2011. main disappointed so far and we will be watching. conditions for the market continue to improve. the unemployment rate is 6.3% in april, one and a quarter percentage points below where it was a year ago. moreover, gains in unemployment averaged nearly 200,000 jobs per month over the past year. recovery,economic employment has increased by about 8.5 million jobs. the unemployment rate is declined by about three and three quarters percentage points since it spake. -- its peak. conditions have improved appreciatively, but still far from satisfactory. even with recent declines, the

unemployment rate continues to be elevated. moreover, the share of the labor force that has been unemployed for more than six months and a number of individuals who work part-time, but would prefer a full-time job are at historically high levels. most compensation has been rising slowly. another signal that a substantial amount of slack remains in the labor market. inflation has been quite low even as the economy continues to expand. some of the factors contributing to the softness of inflation over the past year such as the declines in non-oil prices, will probably be transitory. importantly, longer front inflation expectations have remained stable. that said, the market committee

recognizes that inflation persistently below 2%, the rate the committee judges to be most consistent with its dual mandate, could pose this to economic performance. we are monitoring developments closely. looking ahead, i expect the economic timothy that will extract economic -- economic activity -- and later in will begin to move up toward 2%. a faster rate of economic growth this year should be supported by reduced restraint from changes in fiscal policy. gains in household in home prices and equity values affirming economic growth and further improvements in household and business confidence as economy continues

to strengthen. u.s. financial conditions remain supportive of economic activity in unemployment. , considerable uncertainty surrounds this baseline and economic outlook. , one risk is that adverse developments abroad such as heightened geopolitical tensions for an intent -- and densification of financial economiesmerging could undermine confidence in the global economic recovery. another risk domestic in origin is that the recent flattening out in the housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery. both of these elements of uncertainty woke their post observation.

theing to monetary policy, fed reserve remains committed to policies designed to restore the label market -- labor market inflation to levels consistent with those the committee judges to be consistent with its dual mandate. as always, our policy will continue to be guided by the evolving economic and financial situation. we will adjust the stance of policy appropriately to take into account changes in the economic outlook. in light of the considerable degree of slack that remains in the labor market and the continuation of the inflation below the committee's two percent object to, a high degree of monetary accommodation remains warranted. with the federal fund rate and the traditional policy tool near zero since late 2008, we have relied on conventional tools to

provide support for the economy. asset purchases and forward guidance. because this list of tools are familiar, we have been attempted in recent years to communicate to the public about how we intend to employ our policy tools in response to the changing economic circumstances. our current program of asset purchases began in september 2012 when the recovery weekend and progress in the labor market has slowed. we said that our intention was to continue the program until we saw substantial improme look ofr market. the progress in the labor market warranted a modest reduction in the pace of asset purchases.

at the first three meetings this year, our assessment was that there was sufficient underlying strength in the rotter economy to support ongoing improvement in the labor market conditions. further measured reductions in asset purchases were appropriate. i should stress that even as the committee reduces the pace of its purchases of long-term securities, it is still adding to the holdings. those sizable holdings continued to put significant downward pressure on long-term interest rates and support mortgage tokets and contributes favorable conditions in broader financial markets. tool intant policy recent years has been forward guidance about the likely path of the funds rate. beginning in december 2012, the committee provided threshold

base guidance that turned on the bigger of the unemployment rate. the unemployment rate nearing the threshold that had been laid out earlier, we undertook a significant review of the forward guidance. while indicating that the new guidance did not represent a shift in the policy intentions, the committee laid out a fuller description of the framework that would guide its policy decisions going forward. specifically, the new language explains that as the economy expands further, the committee will continue to assess both the -- the maximum unemployment and two percent inflation.

assessing the progress, we will take into account a wide range of information, including measures of the labor market conditions and indicators of the pressures and inflation of expectations and readings on financial developments. april,h and again last we stated that we anticipated that current target remains at federal funds rate and it would ofmaintained in a time purchase program is, especially if inflation continues to run the load 2%. provided that inflation expectations remain well anchored. information one of thinking the likely path the race after the committee decides for policy commendations.

even after they are near mandate consistent levels, financial and economic conditions may for some time war and keeping the target of the federal funds rate below levels that the committee views as normal in the longer run. the pollution is so certain -- they need to watch for signs they was diverging from the waistline outlook and in a way to stabilize the economy. for both the purchases and the forward guidance we've tried to communicate as clearly as possible and have changes in economic outlook to dr. policy stance. in doing so, we will help them better understand how the committee will respond to unanticipated developments and reduce the uncertainty.

addition, the federal reserve works for financial stability. on identifying and monitoring vulnerabilities in the financial system and taking actions to reduce them. in this regard, the committee recognizes an extended period of low interest rates has the potential to induce investors to reach a yield by taking on sks, ored leverage, ri credit risks. some behavior might be evident in the lower rated corporate debt markets. issuance have anything high yield bond that has continued to expand briskly.

underwriting standards have loosened further. or'sfinancial intermediate -- intermediaries, it appears modest today. generally, valuation for the equity markets as a whole and other rod categories of assets such as residential real estate remain within historical norms. in addition, bank holding companies have improve the liquidity positions and have levelsapital ratios to significantly higher than prior to the financial crisis. for the financial sector more measures of short term funding continues to be far below levels seen before the financial crisis.

they have taken in a number of regulatory steps, mainly in conjunction with other federal agencies and to continue to improve the resiliency of the financial system. were recently, the fed reserve finalized a rule implementing section 165 of the dodd frank act to establish standards for the formking firms in of risk-based and leverage capital, liquidity, and risk management requirements. in addition, the rules requires large banking organizations to form a u.s. intermediate holding company and imposes requirements for the company's. looking forward, the fed reserve is considering whether additional measures are needed to further reduce the risk associated with large

interconnected financial institution. have seen substantial improvement in the labor market conditions in the overall economy since the financial .risis and recession we recognize that more must be accomplished. many americans who want a job are still unemployed. inflation continues to run above the projected work remains to strengthen our financial system. i will work closely with my colleagues and others to carry out the important mission that congress has given the fed reserve. thank you here i would be pleased to take your questions. >> thank you. i want to get a clear picture of the strategy in a number of areas. purchase and a qe sometime this fall?

>> we have indicated that as see as we continue to improvement in the week market and we believe that outlook is for continued progress and as long as we retain you to believe and see evidence that inflation will move back over time to our two percent longer run objective, we anticipate beginning to reduce the pace of the asset rich as is. worth to change the outlook, we would consider that plan. if those conditions hold, we would continue. >> i will leave it to my cause to ask about the different changes beyond that.

the $7 trillion on the balance sheet is extraordinarily large. when you expect to begin normalizing the size of the fed's balance sheet. is there a range of years? >> when we complete the asset purchase program, the community expectscated that it there'll be considerable time before we begin to normalize policy in the sense of beginning to raise our target for short-term interest rates? >> let's move to that. what is the appropriate size? do you have an appropriate size? >> i can give you a number that would be the inappropriate size. i believe that committee anticipates that our balance sheet over time will move down the extension of the lower levels than it is now whether or not it will ultimately return to

something levels is that we will remain and -- when way that we are likely to turn to normalizing our balance sheet eventually would be to cease reinvestment of sensible asset as it becomes due. committee is not given definite guidance at this point about when it will take this step of stopping reinvestment or principal and eventually as we come closer to realization, i expect we will get a search guidance. that todo you expect begin? said in our most

recent guidance is that in determining when that time is right, we would be looking at how much progress we have made in coming close to our mandate from congress to obtain maximum unemployment and inflation of two percent and we will evaluate the pace of which we expect progress going forward. concretely, the committee indicated that it is a kind of purchase program -- he thinks that it will be a considerable time beyond that before it will be appropriate to begin that progress. , wer its baseline outlook would like to see or expect to see further progress in the labor market and it has emphasized that the level of inflation will also matter.

>> if their projections, what is that range if i were to say the would begin normalizing interest rates in 2015, would i be wrong? >> there is no timetable for when that would occur. i know you work through projections going forward. , if thereere to hold was some range of time to begin that process, what range is it? saide committee has simply a time without mechanically stating what that time interval is. if i were to say this will begin normalizing in 2016, would i be wrong? >> there is no specific timeline for doing that. individual members of the federal committee every three

months provides their own forecast for how they see the economy evil thing under monitoring policies. that becomes a basis for discussion in the committee. you can look at those projections that include .ndividual participants membersd see that most believe that in 2015 or 2016, normalization would begin under their baseline outlook. you put into perspective what year or range of years can we expect that target rate to reach two percent for example? >> i think the answer is that it depends on the evolution of the economy. what we are focused on is adjusting our monetary policy in light of the incoming evidence

about the evolution of the economy. >> granted. projections, how far are we looking at to move about halfway to normalization? >> again, i'm afraid i can't give you a timetable, but the committee did try to in its recent statements in march and april provide some guidance to the public about the pace at which it expects interest rates, short-term rates to increase. once that process has started. and what they said is that they think it will take some time, even after the economy is in a sense functioning normally, namely we are operating at full employment and inflation's around 2%, they think it's likely it will take some time to come back to normal or historically average levels of interest rates.

short-term interest rates, they would see as normal levels based on history of something on the order of 4 and they have indicated that they think it's going to take some time to reach levels like that. i would emphasize that that's a forecast. it's not a promise. but we have had head winds that have acted on the economy and head winds in the global economy and perhaps a slowdown in the pace of growth in the economy and those are some of the factors that lead them to believe a gradual pace of interest rate increases will prove appropriate. >> understood. fed holds about $1.6 trillion residential mortgage bank securities, a large amount. so again assuming the fed's economic projections hold, when do you expect to begin moving them back into the market? reverse, or other approaches? what range of years -- i do worry i think there will be political resistance when you take those steps, but what years will you see that occurring?

>> so we have indicated that we do not intend to steal mortgage backed securities from our portfolio except perhaps when the hole thing's through very small, eliminate some residual holdings. so eventually, and the committee hasn't decided on the timing of this, we are likely to cease reinvestment of principal and at that point our holdings of mortgage-backed securities would begin to decline over time as principal matures.

so it would take a period of some years for our holdings to diminish. >> i have a question about bank reserves, $2.6 trillion is for many, including me, potential fuel for inflation. when the economy strengthens and banks begin to lend, we hope sooner rather than later, to keep rapid inflation in check, will you raise reserve requirements or rate of interest paid on the reserves? do you have a view at this point? >> it's my expectation that when the time comes to raise the level of short-term interest rates, that we will certainly raise the interest rate that we pay on excess reserves and are likely to use a number of complimentary tools that we have developed, including our tool kid includes overnight, reverse repos, term repos, and our terms of deposit facility, we'll use those tools to push up the general level of short-term interest rates, but interest on reserves will be a key tool we will be using.

>> what impact will have that on economic growth? >> we'll only be taking that step when we have judged that the economy is strong enough, that economic growth is sufficient, the labor market has recovered enough, and inflation is moving back toward 2%, we will have judged that the time is appropriate to tighten financial conditions in order to make sure that we don't overshoot our inflation objective. so the effect it will have on the economy is to restrain the economy, to make sure that we don't allow inflation to rise above our longer term objective. >> thank you. my main concern having served on the committee in the early to mid 2000's, very able and highly predecessor sat where you sat and assured the committee maintaining low interest rates for an extended period wouldn't

cause general price inflation or inflate -- which didn't prove to be the case. after the credit fueled housing bubble burst in 2007, the predecessors assured the committee that this would -- the committee, this resulting weakness would be confined to the subprime segment of the housing market and the damage would be limited to about $150 billion. roughly the cost of the s&l crisis. some financial crisis in the fall of 2008 we were repeatedly assured the fed had its strategy exit from a large expansion of the balance sheet to normalize the policy. yet the goal posts have been moved time and time again, now removed. today you have assured the committee once again, and i so appreciate your testimony, that the fed is confident it can exit without sparking high inflation, but that we can't know the details or the timetable, but that the fed have essentially handled.

i don't expect the fed to be perfect. yours is a tough job. theirs is a tough job. but it just strikes me this -- over time this don't worry, be happy monetary message isn't working. at least in my view for the committee. certainly not for the economy at this point. i know my colleagues will ask about today's "wall street journal" where noted economist, federal reserve historian makes a point never in history has a country that's financed big budget deficits with large amounts of central bank money avoided inflation. my worries that the track record of central banks, including the fed, in identifying these economic turning points, acting quickly to prevent inflation, that track record is not as good as we would like.

forgive me for being skeptical. i believe we need more specifics and clear timetable on the comprehensive exit strategy. with that again thank you so much for being here. advice chair. >> thank you. as the chairman was talking about with the change to the forward guidance policy in the past it was tied, of course, rising interest rates was tied to the 6.5% unemployment rate, and now the feds said it will consider a wide range of economic indicators and not just the unemployment rate. he questioned you a little bit about this with the other indicators, but could you tell me what you see the benefits of this new approach and what are the drawbacks of moving away from an exact number? >> so let me, if i might explain about the number, the 6.5%, we issued the number 6.5% at a time when the unemployment rate was around 8%, and we were very far from what anyone could call full employment. which is our goal. we wanted to indicate to markets that we would need to see a lot of improvement in the labor market and assuming inflation

was under control before we would dream of raising our target for short-term interest rates. and to make that clear we took the number 6.5%, we felt confident that we would not, if inflation was under control, consider it appropriate to begin that process as long as unemployment -- the unemployment rate was over 6.5%. the gap would be sufficiently wide that something we should -- should consider as a possibility. and so we gave the number 6 1/2 considerable distance from where we were to the public to say we will wait at least that long. now, we did not say that we would raise the -- our target for the federal funds rate when we reached the level of 6.5%. what we said was that would be close enough that we need to look very carefully at what to assess using many different metrics of the labor market, where is it, and what is appropriate policy. now it's appropriate to really look at many more things. and we changed our forward guidance only because we were coming close to 6.5% and we have now crossed it.

there's no change in the guidance, we are saying now that we are there, we want you to understand we have to develop a more nuanced approach to what's going on in the labor market. now, the unemployment rate is a

good indicator of the state of the labor market, and if i could only have one, i think that's the metric i would probably choose. but there are different things happening in the labor market we need to take account of. for example, part-time employment that's involuntary. people working part-time, who want full-time jobs. want to work more. it is at exceptionally high levels, 5% of the labor force. it's unusually high relative to the unemployment rate. we have really never seen a situation where long-term unemployment is so large. so large a fraction of total unemployment, around 35%. that's very unusual. other things are happening that we really in evaluating how much

slack is there in the labor market? labor force participation rate hags fallen -- has fallen a lot. there's some structural reasons for that demographics, baby boomers are aging and getting into the years when they retire and their labor force participation naturally declines. so the declines we have seen, it's not entirely because of a weak economy. but i think some of it is because of a weak economy and in a sense it's hard to give you a precise number for how much of that decline is cyclical, but to the extent there is a cyclical decline that's more slack, and that's what we are looking at and trying to judge. we are also looking at wage developments and the level of payroll employment creation. >> let me follow up on a few of those. what do you think the fed can be doing about long-term unemployment which we all acknowledge is too high? >> i think that a stronger economy as we have growth in the economy, my expectation is that long-term unemployment is going to come down.

short-term unemployment is around normal levels. but i fully expect long-term unemployment to decline as the economy strengthens. there is a debate about ether or not long-term unemployment may have less effect on wages and in turn on inflation than short-term unemployment, and that's something that's receiving a great deal of public attention and discussion, rightly so. but i have very little doubt that if growth in the economy picks up and continues long-term unemployment will come down. >> one of the hearings i chaired this last year was with robert rush, it was about income inequality. he talked about how right now we have a situation in our country where the wealthiest 400 have the same amount of wealth as the bottom 50%. and the international monetary fund recently warned that income

equality is actually a drag on our country's economy. why do you think we have seen this rise and how does it affect economic growth on the country as a whole? do you think it's a factor? >> we have seen a trend towards rising inequality in income and also in wealth, and i personally view this as as a very disturbing trend that policymakers should be looking at and considering what is the appropriate response. in part a weak economy, the people who are affected by unemployment are disproportionately people at the lower income end of the spectrum. so a weak economy contributes something to income inequality, and i think what the state can do is to promote a stronger economy, a stronger job market, generally and that will help. but the trends that are responsible for rising inequality go much deeper than the fact that we have had a deep recession. we can see those secular trends in operation at least since the mid 1980's.

there's a great deal of discussion about what they are. but they probably have to do with technological change in the way it's increased the demand for skills in the work force with globalization. so the return to education and to skill has gone up dramatically. there may be institutional changes that are at work as well. so there are deeper forces that are affecting this that go beyond anything that the fed can do. but i really do think -- >> it's something we should be taking up? >> we should be thinking about very carefully. >> one of the things you

mentioned in your opening was about how how the thing has flattened out. could you expand on that? i think what we have seen while the housing market has come back with housing prices in my state's one of the ones where they have gone up the most, residential construction moving up, one thing that's held housing back is the significant drop in household formation which gets to the income equality during and after the recession. about 800,000 fewer households were created each year than in the previous seven years. young people aren't forming households as much and getting new houses. can you comment on this? >> i agree with the data your -- you're citing. we have seen very slow household formation. many young people who are living with their parents, it also is very difficult for people hoe come out of school with heavy burdens of student debt to be able to qualify for morlts. a -- mortgages. >> it's very timely since my daughter is arriving at 10:00 p.m.

she's only a first year in college. still. >> my expectation is that as the job market strengthens and the economy strengthens we'll see household formation pick up. but it's hard to note here exactly what the new normal is. and i think we need to see some pickup in household formation in order to see continued recovery in the housing market. mortgage rates went up quite a lot over the spring and summer. they're still quite low by historical standards so when that -- in that sense housing remains affordable, and i expect housing to pick up, but really it has been -- has flattened out and recovery seems to be in progress really has now flattened out.

heavy burdens of student debt to be able to qualify for mortgages. >> the first quarter, as one of the major reasons we saw a slowdown in the first quarter and will you see anticipation of improvement in the first few quarters? >> yes. we've heard many pieces of evidence as well as what we see in broader statistics that suggests that the weather played a role and recent data is certainly much more encouraging on a wide range of fronts from car sales, retail sales, industrial production. so i'm quite hopeful that we are seeing a pickup in economic activity. >> in my opening i talked about how we don't foresee a rise in inflation in the significant future. do you agree with that? >> that is my forecast. inflation has been running under 2%. we expect it to move gradually back over time up to 2%. there are some transitory things that can give it a boost over the next year or so but my expectation is that it will be

gradual, gradually moving back to 2%, but obviously this is something we will watch very closely. >> yeah. i asked that guy that tweeted me and said i was wrong. i thought i have you -- >> i'm with you. >> so whoever he is with that strange handle he knows the answer now. so, ok, i mentioned -- my last question here. i mentioned in my opening about what we can be doing to continue to -- i mentioned a bunch of things. immigration reform, tax reform, to make the things more straightforward. not playing red light/green light every single year with our tax code and incentives. i mentioned to you as head of the mappings federal reserve talked to me in my office last week was the section 179 deduction limits for depreciation of business investment, that they were increased to $500,000 in 2010 but the increased depreciation

deduction expired at the end of the 2013. and when i -- ironically after i met with him i met with small businesses through the next few days. as they had said to me during the height of the downturn they thought this was a very useful thing to stimulate investment and add more jobs. and i wanted to get your thought about that as we look at these tax extenders. >> so you know, i think the cost of capital is an important factor that influences investments although the state of the economy and business confidence and optimism about growth is a very important role as well. and the tax provision that you mentioned is something that was put into effect at a time when investment spending was very weak and i can't quantify what its impact was but it probably played a role in having it pick up.

there are a number of different tax provisions that affect the cost of capital and so tax policy generally, including the provision that you mentioned, are definitely relevant to the strength of investment spending. >> thank you very much, chair yellen. >> thank you. members should note we've been very generous to make sure the chairman has plenty of time to answer questions. we will be returning to the five-minute question period. representative hanna. >> thank you very much. thank you very much for being here. i want to follow up on something that chairman brady talked about briefly. milton friedman once said inflation is always and everywhere and today we see that the united states department of agriculture estimates that food costs may go up as much as 3.5% this year

and that is the highest potential rate in the last i think three years. in this morning's "wall street journal" allen melzer, a distinguished federal reserve historian writes, the fed focuses far too much attention on distracting monthly and quarterly data while ignoring the long-term effects of money growth. beyond the pure inflationary concerns, he said some of the side effects of the fed policies has the ugly consequences which is the low interest rates for retired persons that forces them to take substantially greater risks than bank c.d.'s and that many of them relied on in the past. he says -- goes on to say -- this usually ends in tears for a lot of people. and we see people who planned on retirement and simply based on historic rates and they are just not there for them anymore. is maintaining an extraordinarily low interest rate for a decade creating market distortiones that will have long-term effects on the economy? and you know, it's nice to talk about being able to control

inflation going forward and you'll respond to keep it below 2%. last year it was a percent and a half. account federal reserve identify, you think accurately, a change in economic conditions and execute an exit strategy before inflation occurs? just as mr. brady said, never anytime in history of this country that finance big budget deficits with large amounts of central bank money avoided inflation. >> well, i do believe that we have the tools and absolutely the will and the determination to remove monetary accommodation at an appropriate time to avoid overshooting our inflation objective. everybody on the committee, the experience for them was the 1970's when we saw very high inflation and a huge effort by chairman volcker to tighten monetary policy to bring it down. we lived through a period in which fed policy wasn't sufficiently tight and high inflation led to a rise in inflation expectations. we saw that those inflation

expectations could become a persistent source of high inflation and that it could be very costly to lower inflation. the lessons from that period are very real for all of us, and none of us want to make that mistake again. i do believe we have the tools and the determination to avoid that. we indicate inflationary developments and inflationary expectations are part of our focus. as we watch what the likely evolution of inflation is and i can't say that, you know, that we will get it perfect but i can tell you that the committee has adopted 2% inflation objective in order to make

clear our commitment to achieving that objective and to be held accountable for it and we're determined to have that happen. >> of course, if we raise interest rates, our debt payments, our interest payments will exceed our national defense budget i think within eight or -- seven or eight years. i think 2021 is the estimate. so all of that working together we really need to grow our economy to afford to be able to manage that. >> we want to be able to, and we expect as the economy

recovers that a point will come when it will be appropriate to raise short-term interest rates , long-term interest rates are likely to be rising over time as that occurs, and this is something i think congress should certainly be taking into account as you look at what fiscal burdens will be down the road. >> thank you. my time has expired. >> thank you. representative delaney. >> thank you, mr. chairman. and thank you chair yellen for being here. i also want to comment, i was stunned at how remarkably clear and linear your remarks have been here today. it is good to see firsthand. you touched on some deeper structural trends going on in the employment market and the job market and you tied those i think very appropriatery to the trends of -- to the macro trends of global technology. which as we all know have benefited people with terrific educations or with access to

capital or with highly refined skills but they have been very disruptive to the average american. and in my judgment this is the root cause of some of the concerns that we have around income inequality and job creation, particularly job creation of jobs that have decent standard of living. we're created high skilled jobs and low skilled jobs. is it possible -- and you hate to use those four words that people always regret, quote, this time is different, is it possible that these trends, as they continue to play out in our economy and in our job market put us in a position that we have -- the fed would have accommodating monetary policy for a sustained period of time as we work through these things? particularly absent congress doing things like immigration reform, greater investment in infrastructure, more targeted weighted work through these challenges, is it possible that that is the new norm and that the size of the federal verve's

balance sheet in fact stays quite large for a reasonable period of time? which i don't think necessarily is a problem which is my second question. i would be curious on your thoughts on that. >> so -- i think these longer term trends have to do with relative wages in the work force and have been going on for a long time for reasons that you stated. i don't think that those trends are ones that the federal reserve can really address the appropriate policies where they may have to do with education and training. in that sense, when the labor market has returned to normal, in the sense that most people who were looking for work are able to find work for which they are suited and skilled in a reasonable period of time, there really won't be much more that is in our domain that we can do.

so we wouldn't keep our balance sheet large or refrained from raising interest rates for that reason. but there are some people who have suggested that the distribution of income and rising inequality are pulling down spending and holding down spending growth. and it's hard to get clear evidence on that. to the extent that that's frew, it would be a way in which inequality would be slowing the pace of recovery and that would be how long we would hold interest rates where they are. >> and my second question is around -- and you mentioned in your testimony how you think about certain financial indicators at the polls in particular because we've definitely seen in the last couple of years a delinking that's gone on between leverage spreads and leverage, right, which as leverage goes up

others go down? just as we have seen the delinking of market values with corporate earnings. so this delinking i think more as froth as opposed to formation asset bubbles. how do you think about these things or what kind of benchmarks do you use to indicate that we may in fact be using asset bubbles? >> so we can't detect within any certainty whether or not there is an asset bubble. but we can look at a variety of different valuation metrics akin to price earnings ratios in the stock market. a variety of ways of measuring those and we can look to see how valuations in that sense moved out of historically normal ranges.

and i would say for the equity market as a whole, the answer is that valuations are in historically normal ranges. now, interest rates, long-term interest rates are low, and that is one of the factors that feeds into equity market valuations. so there is that linkage. so there are pockets where we could potentially see misvaluations in smaller cap stocks, but overall those broad metrics don't suggest that we are in obviously bubble territory. but we don't have targets for equity prices and can't detect if we're in a bubble with certainty. >> thank you very much. >> thank you. senator coats. >> thank you, mr. chairman.