galbraith, dr. rivlin. >> i think many of our problems now are due to a disastrous deregulation and desupervision of the financial sector, which led to a catastrophic meltdown of that industry and of the solvency of much of the american middle class, and the consequences, the effects that we see in the federal budget are largely a consequence, no the a cause, of that phenomenon. tax revenues fall, unemployment insurance payments go up. other kinds of stabilizing payments go up. we are much better off, actually, for having a large federal government, federal budget that can stabilize the economy in this situation than we would be if we didn't have it. we didn't have it in the 1930s and the -- our output fell by about a third. the overall decline was much less this time around and that was because incomes were substantially stiblized by the fiscal actions of the government. >> wow. we've got a lot of food for thought there, doctor. you've defined the crux of the contrast between the two sides of this

galbraith? >> i think it would be very hard for -- >> you may have to hit your mike. >> i think it would be very hard for the federal reserve to raise interest rates rapidly, and i don't think it's likely to do so. is there a situation -- one way to interpret your question, ask whether there is a situation in which the markets might sell off u.s. bonds rapidly without that being controllable by monetary policy action. i think that's also unlikely under present conditions. what the markets have shown us is that in adversity, people want to hold u.s. bonds. they want to hold u.s. bonds over practically any other asset because we are the largest, most liquid, and completely reliable market in the world for safe liquid assets. >> in no -- i'm sorry. pardon me, sir, but how much more capacity do you believe is pragmatic for the fed to continue to grow at? go to a $4 trillion? $5 trillion? how big do these balance sheets get? >> an interesting question for which, congressman, i don't have an answer. >

credit galbraith, as the architect of the dual mandate, can you share with this committee the vision and the need that the two legislative auth authors had for the dual mandate then, back then, senator humphrey and congressman hawkins? >> yes, congressman- >> please turn on your microphone. >> i had the privilege of working directly with congressman hawkins. >> yes. >> at that time. of course, an academic policy mandate was not a new thing for the united states. we had the employment act of 1945, which stipulated maximum employment production and purchasing power as the goals of united states academic policy for the whole of the government. the humphrey-hawkins full employment and balanced growth act sought to modernize and to make a little more ambitious and a little clearer the objective, particularly with respect to employment. it also ended up clarifying what was meant by purchasing power, where reasonable price stability came into the preamble. it was a way of, broadly, specifying academic policy objectives for the entire government, but also with respect to the federal reserve,

galbraith for his opening statement. >> chairman paul, ranking member clay, it's an honor to be here, especially given that i am a former member of the staff of this committee and that i served on the team that drafted the humphrey/hawkins full employment and balanced growth act. i wish to speak mainly today in defense of the dual mandate, the plural mandate, the flexible and practical language of present law. that law was drafted at a time of acute theoretical conflict in economics and on the staff. i was a young full employment liberal, one of our colleagues, james pierce, former federal reserve research director, was a mainstream keynesian at the time. who our colleagues were chicago monitorists trained by milton friedman. we promised on lang that gave clear reporting transparency and accountability requirements to the federal reserve in the presence of ultimate objectives but that did not impose anyone's theoretical views. had we done so, i fear the oversight process would have failed long ago, perhaps when man stream economics adopted the concept of a natural rate of unemployment

james galbraith is the lloyd and benson junior chair of government business relations and professor of government at the lyndon b. johnson school of public affairs at the university of texas at austin. dr. alice rivlin is a senior follow in academic studies at the brookings institution and former vice chair of the federal reserve board of governors. without objection, your written statements will be made part of the record. you will now be recognized for a five minute summary of your testimony and we'll begin with dr. herbener. >> chairman paul, ranking member clay -- >> keep the mike up close. >> and distinguish members of the committee, it is an honor to appear before you. left to the market the production of all goods including money, passes the profit and loss test to socially beneficial production. like all private enterprises a gold mining produces if the revenue from the sale of its output exceeds the cost of its inputs and beneficial because the value of inputs to satisfy its customers exceeds the value of those inputs in producing those goods to satisfy other customers. in the

i'm joined by peter galbraith, a former u.s.mbassador in croatia and second highest angelling u.n. diplomat in afghanistan who helped expose widespread fraud in that country's 2009 election. now serving as a democrat state senator in vermont. hello. >> should we be there for another decade? >> i don't think so. we will have been there twice as long as the soviets. they were there for a decade. we'll be there for two decades. what are we going to accomplish? the war has not gone well. the taliban insurgency is clearly stronger in 2012 than it was in 2001. we're supporting a government in kabul that is no way worthy of the support or saveses that we're making. it's corrupt, ineffective and illegitimate. many of the people associated with it, many of the power brokers are also collaborating with the tall on at the expense of the coalition. it's very unclear what we're going to accomplish by another ten-year commitment. >> doesn't that sound to me as though the president persuaded--you let me begin with the first principle. the pres

later, economist james galbraith discusses inequalities in the global economy. >> i think the problem is with walter cronkite people cms the friendly man, which he was to everybody but there's another side of him that wanted to be the best. he was obsessed with ratings and beating the huntley brinkley report every night and he is probably the fiercest competitor i've ever written about and i've written about presidents and generals and cronkite's desire to defeat the bust was very pronounced. >> next, tv and radio talkshow host's tavis smiley and princeton professor, cornel west, talk about poverty and the united states. their book is, "the rich and the rest of us." they spoke last month that hunter college in new york city. this is about one hour and 20 minutes. [applause] >> thank you.yo first of all dr. green thank you for the invitation to be here tonight. dr. west and i are on ahat three-week tour across the country for this new text, "the rich and the rest of us" at thet povertye manifesto, and when wee were asked to consider making one of our stops here, to support this great w