Transcripts For CSPAN2 Key Capitol Hill Hearings 20240622

He was the first africanamerican student body president and his law degree from new york university. After law school he spent a month in new orleans playing trumpet and becoming friends with wynton marsalis. Then he worked in a law firm and later served in the u. S. Department of justice and on the staff of the house judiciary committee. He returned to charlotte in 2001 to work in a law firm there and got elected to the Charlotte City council in 2005, and he was reelected in 2007. He was elected the citys mayor in 2009, the youngest person ever to hold that job, and he was confirmed as the 17th transportation secretary in june of 2013 by a vote of 1000 a rare moment of bipartisanship. So much for biography now on to the everpopular process portion of our program. As always, were on the record here. Ive been told our guest may commit news this morning and so youre listening to the following ground rules your listening to the following ground rules is important. As is always the case at these gatherings it just chokes me up. Excuse me. [laughter] just an emotional moment. Lets try again. Ive been told our guest may commit news this morning, and so the following ground rules are important. As is always the case at these gatherings please, no live blogging or tweeting. In short no filing of any kind while the breakfast is under way to give us time to actually listen to what our guest says. The embargo comes off at 10 00 this morning. To help you curb that relentless selfie urge, our photographer is here, and we will email several pictures to all the reporters here before the breakfast ends. As regular attendees know if youd like to ask a question, please do the traditional thing and send me a subtle nonthreatening signal, and ill happily call on one and all in the time we have available. Were going to start off by offering our guest the opportunity to make some opening comments, then well move to questions from around the table. With that, mr. Secretary, thanks again for doing this. The floor is yours. Thank you dave, and thank all of you for being here this morning. Ive been in government for a while, ive spoken at a lot of chicken dinners and breakfasts, so please feel free to go ahead and eat. Youre not going to be offending me at all. The first bit of business i want to take care of this morning has to do with an investigation that the department is opening on the allegations of price gouging following the tragic accident of amtrak train 188 in the philadelphia area. We have sent letters to four Airlines Delta american, southwest and jetblue to begin the process of uncovering whether, in fact, the airlines drove up prices in direct response to this incident and created a challenge for consumers who were trying to move in that area at that particular time. So this is the opening of investigation. That doesnt mean that we have closed an investigation but we are beginning the work today. So theres also other news in transportation obviously. Ive spent a good bit of my time as secretary traveling the country and going to more than a hundred communities in 42 states by this time really urging the country to not only avoid highway shutdowns, but to raise our ambitions for transportation investment and what we need in the 21st century. Theres obviously been a flurry of activity on the senate this week on this and ill just say at the outset that the encouraging thing is that we have folks on both sides of the aisle who i think are earnestly trying to do what they feel they can do. We are still in the process of drilling into this 1,000page legislation. It continues to change, and we expect that perhaps there will be some changes introduced today as a result of input that folks have received. So i dont have any hard and fast position on this bill at this time because its still very fluid, but i do want to point out a couple of things. First of all as the agency that is responsible for transportation safety, that is of utmost concern to us. And as introduced last tuesday there were portions of the bill that we found to be highly objectionable. I understand that theres been work to try to soften some of those provisions and well just have to see what the senate comes up with. But thats an area where our department is fiercely committed to raising the standards for the American People, not lowering them. And so with that, im just going to stop and maybe have some opportunity for back and forth. Im going to do one or two and then were going to go to joan lowy from the ap to start and mark janson from usa today, Michael Lindenberger from Dallas Morning News heather, lisa from the l. A. Times, jeff from Bloomberg Brian from gannette and [inaudible] from tax notes. Let me do one in the air and one on the ground. Let me ask you about gunfiring drones. Can you tell us what the department and the fda have learned about the homemade drone that fired a handgun four times while being operated in connecticut park and are those the kinds of things that will be covered in the standards the drone standards that youre going to try to have in september, and will you meet the september target . First of all, this is a matter thats still under review so i dont have anything to report out to you about that investigation. More broadly we recognize that the safe integration of these what the faa calls Unmanned Aircraft has to be done, and it has to be done as quickly as possible. Our small uas rule resulted in more than 3,000 comments weve received. Were sifting through them and trying to push that rule out as quickly as possible. But i also think theres some consumer side issues here over the availability of drones and the use of drones, and we are scouring our authorities to see what, if anything, we can do as an agency on this question, and well have more to say about that as, in the future weeks and months. Are you hoping to meet the september target date for the regs sir, or where does that stand . Well, i think, hopefully we will meet that deadline or come real close to it in terms of getting the rule over to omb and, hopefully, soon thereafter having the rule out there as final. Heres the last one from me, and then well go to my colleagues. A lot of talk this week about car hacking as a result of wired magazines report on it, the Entertainment Systems in jeep cherokees and other chrysler products where you can get control of steering, brakes and transmission. Wanted to know your view of the proposed legislation by senators markey and blumenthal and also where, what the department is doing on that subject. Of hacking. Look, this is a place where the government and the private sector have to be working very closely together. And we have urged the Auto Industry to develop a round table of sorts to focus in on issues like cybersecurity when it comes to these technologies. A lot of the technologies are proprietary in some respect but theyre common issues that the industry has to deal with, and we have found in other industries that these types of collaborations are useful. And weve offered to extend the resources of our department to help that work. So we, we feel like this is an area where the government and the private industry are going to have to step up in a big way. But we cant do it by ourselves. In the meantime, for the typical driver how concerned should they be about hacking . Um, you know, this is, you know its an issue. I think, you know, as we look forward into the future of transportation, well also see each more of a even more of a push towards technology with connected vehicles and Driverless Cars and things like that. And so the time to get on this is right now, and as i say we will push as hard as we can within government but as industry develops this technology theres going to be no substitute for Public Private collaboration to insure that the security of our vehicles is airtight. Joan lowy from from the ap. Yes. Actually i have two questions so i hope youll help me. Okay. One was i was hoping you could elaborate a little more on the pricegouging investigation that youve opened. You said, im sorry, how many there are four airlines. What is your evidence of this . Is this just the northeast corridor between washington and boston . And then the second part was the highway bill question. Okay. And i know youre still drilling down on that bill but republicans have made a lot of tweaks to it in the senate, and im wondering if you actually got a bill like this, do you think its something how would you feel about it . Do you think that its an advancement, a step forward or not . Okay. On the investigation um, its still very early. We Just Launched it today. But there are four airlines that were looking at. Ive identified them already. Those airlines have allegedly raised fees beyond what you would ordinarily expect in the northeast corridor at a time when the amtrak line was shut down. And our investigation our inquiry is focused on getting to the bottom of whether there were unfair practices involved in setting prices at that time. On the on the highway side, um, i think its fair to say that as introduced on tuesday a very mixed bag. Again, i want to give credit to folks on both sides who have been trying to figure this out. This is not easy. If it were easy, we wouldnt have had 33 shortterm measures in the last seven or eight years or be a decade since weve had the last sixyear transportation bill. But, you know, i think some of the glaring problems with it had to do with the safety provisions, and i know theyre working to try to accommodate some of the concerns there and well just have to see how far theyre able to get on that. I do think the this country is hungry for e for robust transportation, and the problems of congestion that have gotten worse over the last several years, the potholes in the road, the bridges that need to be repaired, you know, i could go on and on about the problems. And i think one of the questions is does this bill help us solve those problems in a substantial way. And we will continue reviewing as the Senate Continues the very fluid work theyre doing on this legislation, and once they have settled down, i think youll find us settling down into a position on it. Mark janson from usa today. Thanks for coming, sir. Sure. I guess ill ask one more on the investigation, can you say anything about what clues what hints about the airlines actions raised the suspicions to start the investigation . Do you monitor prices . What sparked the investigation . Well, theres, there were a flurry of concerns raised in the wake of the accident in philadelphia. Weve been asked to consider an investigation by senator murphy from connecticut, and were doing our Due Diligence through this investigation to determine whether, in fact, there were unfair practices involved. And on another airline question how soon might we see scheduled flights to cuba . [laughter] thats actually we play a role in that, but that also involves the state department and commerce department. Youre aware that secretary kerry is planning to visit cuba in august and my guess is that as we continue moving forward, youll see those flights resuming at some point in the very near future but i dont have a date to give you today. Were going to go to michael lippeddenberger from the Dallas Morning News. Good morning a quick follow up on the investigation and then a question about rail. On the investigation, i mean, it strikes me its probably legal if they just rose their prices raised their prices in response to a sudden demand. But is what youre concerned about them colluding to do that in an illegal way . And is it your investigation or the doj . Do they get involved here . So the department of justice focuses on criminal inquiries and what were doing as bears no relationship to what the department of justice is doing. We are looking at this from a consumer standpoint, and yes in fact, there is natural shift there are natural shifts in pricing depending on what demand is. The question really is was this, was this beyond the pale . And we will find that out in the course of this investigation. Were going to go next to heather from politico. Where are you . There, down at the end of the table. I had a follow up on okay, im sorry. Sorry. Texas your predecessor and folks from the Rail Administration came to talk about the excitement over highspeed rail early in the Obama Administration. Texas at that time had an opinion that there was no role for government and so it didnt get any of that big money out of stimulus. And six seven years later its moving forward with the private sector rail. Yes. Billions of dollars. And most of the places where the federal government has, had initially supported highspeed rail have either rejected the money or come into some slowdowns, etc. Im just wondering how big of a priority is that still for the Obama Administration . Is there any regret in the way they handled it Going Forward . Was it just the wrong time . Im just trying to get a sense of where you see the nations highspeed rail. You pick any big project that has been done in this country and there was opposition to it at the beginning. I dont care what youre talking about, the new york subway system, the the brooklyn bridge, you name any big the Golden Gate Bridge you name any big project thats happened in this country, there have been choruses against those projects initially. And i dont think highspeed rail is different in that respect. But we are seeing highspeed rail gaining traction in this country. The california project broke ground in january. Even florida the state that rejected the highspeed rail money back in the recovery act days, is working on a highspeed rail project connecting orlando and miami. And the work thats being done in texas to do high speed between houston and dallas, i mean, you know how its done is less important than that its dope. And i think youre seeing that its done. And i think youre seeing folks realizing that the president was right, that we these to connect our major city fares in this country, give people a different choice to get from a to b and youre starting to see it happen. Heather . Thank you, mr. Secretary. Hi. Has the administration been counseling senators over the last week to vote against this mcconnellboxer plan, and what happens when we if we get to december 18th and theres no tax reform deal to bail out the trust fund . Um, the short answer to your first question is no. Were not in a position to be either for or against the whole bill. Theres certainly portions of it that we find very troubling and weve been communicating those concerns. But because the bill is in such a fluid state, there hasnt been a settling down of a position because it continues to be a moving target. Your second question . What happens if we get to december 18th and theres no tax overhaul to bail out the trust fund . Well, this is the perpetual question weve been asking ourselves for the last 33 extensions. And at some point the music does have to stop and we need to get on with building the country. You know, i think the good news here is that youre seeing people struggling in earnest with how to get there. I just hope that we dont keep perpetuating the problems of, you know, looking more or just at what we think we can do and not looking squarely at what the country needs us to do. Because those can be two different things. Rich [inaudible] from reuters. Sure. Its the end of the month dead hugh on the highway bill, does the department do any recalculation of revenues on the chance that you could actually go a bit longer if Congress Fails to send the president a bill . And are there any steps contingency steps the departments taking in case that doesnt happen . Well, look if so when we think about the impact of the highway, cliff, you know, its not a small impact. You have internal to d. O. T. Probably 4,000 of our employees that would be furloughed. They range from folks on the federal Highway Administration who do permitting work to nhtsa to federal motor carriers. Those are primarily the agencies that would be impacted. External to d. O. T. We sent out letters to all the states and the territories explaining what we would do in terms of Cash Management in the event that we started to go below the prudent be balance which is 4 billion in the highway account. And, essentially we would apportion to those states programmings of the percentages of the remaining revenue until we ran out of it. On top of that, lets just be frank statements have already been adjusting their ambitions to the federal environment, and we have six states that have reduced projects, 2 billion worth of projects already and probably more states that we dont, we dont know about. So all this basically comes down to jobs, it comes down to the fact that our countrys infrastructure comets continues to deteriorate. And not only for me and our president , but for future people who sit in the chair that i sit in and that he sits in, im very concerned that folks in these positions in the future are going to be managing a declining system. And thats not in the interest of the American People. So thats a little bit of what the impact would be. And any recalculation of the [inaudible] you know, the last report i saw basically stuck to the set time frame which is that we will we will fall below the prudent balance sometime in the early part of august if they dont find a way to move forward. And, again, that will be a bad day for many states and many communities across the country. Lisa from the l. A. Times. Thank you mr. Secretary. Yep. Again on the investigation that youre announcing this morning yeah. Realizing these things take time, do you have any sense of the timeline and how involved its going to be, and then a question on the bill. Weve submitted information requests from each of the four airlines that i mentioned and [inaudible] we sent it, i think letter went out yesterday. Today. Its going out today. And, you know we expect within a reasonable time that well get that information back and well go where the information takes us. But we expect the information to be sent back to us promptly, and hope any we can close this out as quickly as possible, but i dont have a timeline. And just a follow up on that. Can you say what youre asking them for . I can get you a copy of the letters. And you say how optimistic or pessimistic you are that there will be anything either than simply a stopgap measure to keep the highway fund going past july 31st . And also, frankly, to the end of the year do you have any real optimism that there would be anything other than just another stopgap measure at the end of december . I think the, i think the American People are going to increasingly demand that congress solve this problem and really solve it, not paper over it. And thats because ive just been to so many places around the country where the traffic problems are getting worse, the conditions on the road are getting worse, and people are just seeing no way out. And increasingly people are starting to draw the line or follow the bred crumbs back to washington bread crumbs back to washington. And we just cant keep doing it. So im optimistic because i see people on both sides continuing to work at this, and theyre working at it earnestly. Thats not to say that whats being discussed in the senate doesnt have problems, because it does. But well just have to, you know, keep watching it and keep sharing our concerns on a memberbymember basis and hopefully, the end result either now or at the end of the year will be something good. Jeff [inaudible] from bloomberg. Yeah. Yeah. So in in all of your talks throughout the country you made clear in your tenure that, you know fixing this longterm highway funding problem has been one of your top priorities. Uhhuh. If the senate recedes on its plan, it will have a sixyear bill with three years of funding. This will pretty much take this issue beyond the Obama Administration. Uhhuh. So im just interested in your thoughts on that and whether there are some real priorities that you hope to address that you will have the opportunity to do so . Yeah. Well look, again, its hard to know whether were in the second inning or the eighth inning. But, you know, ill sleep peacefully at night knowing that ive done the very best job i can do of pointing the country in the direction we need to go. And i think the president has said repeatedly that its time for the country to move forward, its time to get rid of the stopgaps and begin focusing on the long term and the growth that we need as a country. But under our constitutional system, congress has to take this up and do something about it and, you know, as i say before, the fact that theyre wrestling in nest with this earnest with this issue at all is a very different place than where we were two months ago or ten months before that or, you know, you follow the, you follow the logic. So i think as long as people are wrestling with this, theres a chance it could work out well for the American People, and thats just what we have to believe. [inaudible] from gannette. Mr. Secretary one of the parts of the bill, the senate bill thats under discussion is the percentage of the trust fund money that goes to mass transit. Uhhuh. And there was a proposal in the initial bill to reduce the percentage. How important is it to maintain it, and what would the implications be for mass transit if it is reduced . Let me answer this way um, you know, we did this survey of the nations Transportation System beyond traffic a few months ago. We put the draft out, and one of the startling things about beyond traffic is it points out that were going to grow by 70 million people. So were going to have population increases, but not just population increases more concentration around metro areas. So pick los angeles, for instance. Can you build more highways in los angeles . No. You might be able to expand the lanes in some places but thats not going to get you to nirvana east. And so either. And so the need for transit is actually increasing in the country. Our grow america act had a 70 plus percent increase for transit recognizing the need for it as country continues to grow. So no i definitely dont think the percentage ought to be going down. If anything, it should be going up. But, you know, i know that there are folks in the senate who are very concerned about this and are pushing to at least keep it level. Let me tell you where we are time wise were about 28 minutes to go. Were going to go next to [inaudible] from tax notes then David Shepardson from the detroit news John Mackinnon from the journal, stephanie from bna, and were going to end with Bernie Becker from the hill. Cat, youre up. So you mentioned that the highway bill is a moving target, but are there any provisions or amendments that the white house would want to include in the Current Senate bill to get this forward . [laughter] well, i think exim bank, for sure. Thats something that the white house is very interested in. On the transportation front there are a number of Safety Measures that were still concerned about, and, you know for instance, if we recall a car because of some defect that could endanger someone whos using the car and you go to a used car lot to buy a car even if its been subject to recall right now, you could buy that car, and it wouldnt have to be fixed. And we think thats a loophole that needs to be closed. There are also pieces of legislation we wish the senate would consider like giving it hazard authority. We were criticized last year for having too cozy a relationship with industry, but the reality is that when a recall occurs, if the company that has been recalled disagrees with our assessment, our recourse is to go to court and spend years trying to litigate that issue while dangerous stuff is on the streets. The alternative is to develop some kind of settlement with the automaker or the oem and, you know, usually weve been able to get favorable results that way. But if Congress Wants us to have more teeth, give us the tools so that we can fight those battles directly. And, you know, these are the kinds of things that weve proposed previously, and itd be nice for those issues to be addressed through this legislation. Dave shepardson. [inaudible] deal breaker [inaudible] Housing Authority or im pointing out that we have serious concerns about the safety provisions in the bill. And its not just the ones i brought up. And, you know, i think were just waiting to see where they land as this goes through a very fluid process over the next several days. So im not prepared to say that it is or it isnt a deal breaker or that portions of it are or are not deal breakers. I think right now were just trying to see where the senate lands and to try as best we can to play a constructive role in helping congress get to yes on something thats vitally important to the american public. About the hacking earlier are you satisfied that Fiat Chrysler has not recalled the vehicles and is just offering this Software Patch . I am going to decline to comment for now on a specific automaker, but theres probably something coming on that. And also Fiat Chrysler, how close are you to a consent order, a deal to resolve this public hearing on the 20odd recalls that nhtsas been working on . I would urge you to just dui us some im give us some time. Were working very hard to get these issues closed out but i dont have any news for you this morning. John mackinnon in the journal, back in the cheap seats. Hey. Could you please explain exactly how your Authority Works in the area of price gouging . In other words, what is the whats the remedy that you have and do you go to court do you impose a fine . How much money could we be talking about . What happens . Yeah. Let me look, our authorities areu t foundq in 49usc41712, and it provides that we may investigate and decide whether an air carrier has been or is engaged in an unfair and or deceptive trade practice in air transportation. And we also have the authority to prohibit such conduct. Now, the extent to which we have the ability to levy fine is or issue fines or issue remedies, i would actually need to have our counsels office maybe reach back out to you and give you further clarification on exactly the breadth of our authorities. But if we find that its happening, we can stop it for sure, and ill get you more information on what other remedies may be available. Susan [inaudible] can i have a follow up . John ill come back to you i just want to let susan tell people whats coming. Theres a letter [inaudible] go back to john. Youre investigating whether this practice is continuing . In other words, it could be going on right now . In theory perhaps, but i think primarily were looking at the period of time following the accident in philadelphia and what happened immediately thereafter. But beyond what it is theyre finding or looking for thats a whole different d. , and id have to department, and id have to defer to my colleague, Loretta Lynch, on that. Theres a reasonable chance that the stars could align for some variation of the Business Tax Reform proposal we put in our bill that weve supported the house provision to this point. The jurys out on the current bill and so were still waiting on the senate to settle down on a final proposal, and were evaluating the ideas that were put forward on tuesday but were also concerned about some of the policy provisions in the bill as it was proposed on tuesday. I know the senate is working to try to clean some of that up, and until we see a final version of it, its going to be hard for us to articulate a solid position on it. Stephanie beasley from bloomberg bna. I just have one question. I know the white house endorsed the five month extension that passed out of the house. It has not done so yet for the senate bill, and im curious, do you think the administrations more likely to support an extension if it leads to a longterm bill thats fully funded through tax overhaul or whatever other means, over the senate bill sort of a variation on the same question. You know, look, theres a lot going on right now including the fact that we as an administration are opposed to continuing sequestration and thats a big philosophical fight that could emerge over the next several weeks. And every time there is some effort to use a source that could help on that issue use for some other purpose, including transportation, it creates a bit of a challenge because ultimately, theres a lot of government that needs to open back up and get going again. So theres just a lot thats in the chamber right now and what i would say is that were looking carefully at the Senate Proposal. Were taking the proposal seriously as we said we would for months. Weve been saying, congress, just tell us what you want to try to do, and well try to play a constructive role. So im not here to shoot it down whole, you know whole hog as we say in north carolina. Im here to say that we have some problems. I understand theyre trying to work through some of them, and well see where they land on the senate bill. But we have supported the house package because the house package is purposeful to the extent that its trying to get us to a place where we can get a longerterm bill done using a Revenue Source that doesnt put us in a compromising position on these other issues. Bernie becker from the hill, down at the other end. Im going to ask another variation of that question. Okay, great. [laughter] so, essentially, are you saying that the Senate Package would be there now, and it would be there at the end of the year no. And that the time would be right for tax reform to pay for this would be this fall . In a sense, thats saying you prefer the house [inaudible] what im saying is that the proposal we put forward two years ago and a revised version this year contains progrowth Business Tax Reform, and we still think that is the best way to solve the problem for transportation over six years. The political reality as weve learned from folks at least on the house side and perhaps even on the senate is that at best the ripe window for that tax reform discussion is probably the end of the year. So that is, in fact why the white house has supported the five month extension to this point. What the senate is now doing is putting forth an idea to try to address the transportation issue now. And, again this bill is a thousand pages. It was dropped on tuesday. They are furiously working to address concerns that members of the senate have raised about it, and we dont have a final version of that to review right now. So i cant tell you right now that were going to support or not support it. What i can tell you is that were taking it seriously and were trying to do what we said wed do which is to consider proposals that came out of congress. [inaudible] fair to say that you would accept the Senate Proposal, maybe theres a chance you would accept the Senate Proposal but it doesnt sound theres a way you would prefer the Senate Proposal to the house proposal. I think we would were just going to have to see. I just dont think i have a way of answering the question that youre asking with absolute precision. What we want is to see the Transportation System in this country be as strong as possible, and, you know, the policy thats contained in this bill is just as important as the length and the amount of growth in it, and we just have to look at the combination of those things once theyve settled down and figure out whether we can live with it or not. Before we let people do a second round, i want to see whether theres anybody who hasnt had one that wants one. If not well go to a second round. Michael lindenberger from dallas. Thanks again. Back to this investigation obviously, senator murphy asked you to look into it. Uhhuh. What else led you to send these letters . Did you look at the pricing . Were there other pieces of evidence why these four airlines theyre the only ones that fly there or did you see something in their prices that made them stand out . Well, weve a question about laser attacks on planes. As you know, there were five planes targeted in new york earlier this week, and it seems that efforts to actually nab the people who are doing this kind of stuff arent very successful. Have i is that a misapprehension on my part, or is that a problem that you really dont have a way to solve at the moment, the laser problem . Well, this was earlier in a previous question you asked, i mentioned we need to look at the consumer side of some of this and what i mean by that is if somebody is purchasing a product that could be dangerous, you know, like a drone that can go, you know, 2500 feet in the air right now we dont have a great mechanism to backtrack and find out who the owner is. And we probably need one. In fact ill take probably out of it. We need one. But finding out who has the authorities to do Something Like that is just the work that were undertaking now. So and id say the same thing about these lasers, you know . Were in an era where there are a lot of advantages to technology and a lot of great things that can happen as a result of having these Unmanned Aircraft in the air space. But its got to be done safely. And were going to look at every single thing we can do to make sure that our Enforcement Mechanisms have teeth to them. But part of that is being able to follow the bread crumbs back to whos using it. Anybody who hasnt had one . Otherwise we may make a record decision here and let you out early. My goodness. That would be clean living on your part. Oh, no see [laughter] there we go. Ap. Joan. Mr. Secretary, one of those provisions, those safety provisions in the transportation bill is a doubling of the maximum fine you could do against an automaker who is egregiously recalled to 70 million, but theres a caveat that you have to do a rulemaking first outlining exactly what the factors are that go into these fines. I know you asked for 300 million, some democrats think there should be no cap at all. What do you think of this 70 million . On the amount, um, its not what we wanted, clearly. Theres a little austin powers element to it. [laughter] and, but its better than the status quo. And well just, again have to see where the senate lands on it. I continue to urge them towards the number we put in our bill. But well see. Ellen ferguson, who hasnt had one, from cq. Im the transportation reporter, im just filling in. [laughter] youve worked very hard not to take decision either between the house or senate approach or to talk about some of the evolving pieces in the senate bill. Im guessing im going to take another stab at a question somebody asked before. Is there anything that the senate could put in that bill that would make it unacceptable to administration . Well, we have previously expressed support for the house measure, so i want to make that clear. So is that a model thats [inaudible] its a five month extension. And the only, you know, i think the carrot that made that acceptable to us was because we were advised that there was more time needed to try to get the longer term measure done. On the Senate Package, you know, i think there are a host of issues. I mean, the payfors themselves are bitter pills for some stakeholders including many in the labor community, for instance and others. And, you know, thats under review. Thats something that were trying to look at. The policy provisions and safety provisions are other parts of the bill that again, its not just us, its also members of the senate that are raising concerns about these things. Be and i know theyre actively negotiating out. But we just havent seen the results of that negotiation yet. So its impossible for me to say where we would actually come out on this bill. But, you know again, were trying to take it seriously, and were trying to nudge things in a direction, a constructive direction. But well have to just see. [inaudible] short followup question. You mentioned austin powers a little while ago in response to another question. On the house bill where theyre saying well do five months and then well have this grand solution given how congress functions and particularly some of ups and downs that the house has gone through wouldnt that be a bit like if you bet on that bill and that approach, like going to the casinos . Because you have no idea, i mean the odds of the house being able to come together on something and then to sell it to the senate are very high. Well, you know. [inaudible] that response. Yeah, im trying to figure out how to do that. [laughter] the guy the guy whos really Holding Cards on the house side im trying to work with your analogy is paul ryan. And hes made some very strong public statements that are supportive of the type of payfor that weve been proposing all along. And one has to assume that hes got the backing of his leadership and of other members of the house. And, you know, if youre sizing this issue up or really any issue, the house is where, you know, youre going to have a tougher time on any generic issue in the house than the senate. So the feeling is if we can get the house positioned to move, we can really get something done. Now, that doesnt mean that the effort thats underway now couldnt happen in some way and thats why were taking that seriously. But until, until it settles down into something that we feel hike is congealed like is congealed, were going to continue watching and go from there. Last question bart. I think i can get a crisp answer. All right. Do you have anything new to announce on either the gulf carrier inquiry the norwegian inquiry or consumer rule iiis advance . No. Thanks for doing this, mr. Secretary. Thank you, appreciate it. Nice to see you again. Absolutely. Thank you. [inaudible conversations] on the next washington journal, Norbert Michelle from the Heritage Foundation and julia gordon will discuss the successes and failures of the doddfrank financial be regulatory law which marked its fifth anniversary this month. And Washington Examiner correspondent John Siciliano looks at the ongoing house and Senate Efforts to move the First Comprehensive Energy Legislation in eight years. Be as always, well take your calls, and you can join the conversation on facebook and twitter. Washington journal live at 7 a. M. Eastern on cspan. This weekend on the cspan networks politics, books and American History. Saturday morning on cspan saturdaying at 9 45 starting at 9 45, the governors address the nations Opioid Crisis including mary bono. And later the governors will discuss how to stimulate their states economy and its impact on the employment rate with u. S. Department of labor secretary thomas perez. And sunday evening at 6 35 eastern an interview with former governor of rhode island and democratic president ial candidate lincoln chafee. On cspan2 saturday night at 10 eastern on booktvs after words, ralph nader on the many unanswered letters he sent to president s george w. Bush and barack obama about domestic and foreign policies. And sunday afternoon at 3 30, journalist roberta greats on new orleans ten years after hurricane katrina. And on American History tv on cspan3 sunday morning starting at 10 eastern we commemorate the 50th anniversary of president Lyndon Johnsons signing of the 1965 medicare bill. Our coverage includes how the president was able to get the bill passed phone conversations between johnson, his aides and congressional members about politics and strategy and the signing of bill at the harry s. Truman president ial library. And also this weekend saturday night at 7 15 u. S. Army Cyber Command historian Lawrence Kaplan on the history of computers, hackers and the governments response to computer abuses. Get our complete schedule at cspan. Org. Senate Majority Leader Mitch Mcconnell has set up a procedural vote sunday on reauthorizing the Exportimport Bank which saw its charter expire last month. The vote is in the form of an amendment to the transportation spending bill. This prompted fellow republican ted cruz an opponent of reauthorizing the exim bank, to call senator mcconnell a liar for his earlier assurance that there was no deal involving an exim bank vote. Here are the floor remarks by senators mcconnell and cruz. The hard work to pass a multiyear highway bill that doesnt raise taxes on increase the deficit continues. It hasnt been easy. We always knew obstacles would lay ahead at every turn, and they sure have. But our country needs a multiyear highway bill, and well get there if well just continue to stick together. Perhaps the most challenging issue now relates to amendments. Supporters of the exim bank are demanding a vote to reauthorize it and theyve made it clear theyre ready to stop all other amendments if denied that opportunity. Theyre already proven they have the votes to back up the threat as well. This presents a challenge for the senate and to opponents o. Exim bank like myself in particular. But i believe we can still move forward, and i believe the more equitable and more balanced proposal i just offered will allow us to do so. So let me explain. It provides for votes on two longsought nongermane amendments. First, it allows a vote on an amendment to reauthorize the exim bank, something nearly every democrat wants. Second, it allows a vote on an amendment that would repeal obamacare, something nearly every republican wants and something well continue to fight for. Exim shouldnt be the only vote we take on this bill, and under the compromise i just filed it wont be. Thats a much fairer way forward, madam president. I would urge my colleagues to join me in voting against exim and i urge every senator to take this important opportunity to join me in voting to finally give the American People a fresh start they deserve on health care. I know well engage in a robust debate on all of these issues. We should. And then well take a vote. And while the clock demands that we file cloture given that the Highway Trust Fund will expire at the end of next week, i hope we still have a robust amendment process on this critical bill. So i would encourage every one of my colleagues to work with the bill managers on their germane amendments. Senators should also note this yesterday i circulated bill language to both sides of the aisle that i intended to use to modify my amendment number 2266. That language contained technical and conforming edits as well as the removal of a provision related to fugitive felons that was not needed to fully offset the bill. I wanted to let my colleagues know that the amendment i just offered contains one additional modification. It removes provisions that would have terminated the 1. 7 billion hardest hit fund mortgage program. Several senators on both sides of the aisle and in particular senator portman on our side of the aisle have been a real champion on this issue. Expressed their op to is decision to its termination opposition to its termination. So we have reduced spending levels in the bill to accommodate this change while insuring the bill remains fully paid for for three years. Madam president , today is a sad day for this institution. The senate operates based on trust. Whether we are democrats or republicans, these hundred senators have to be able to trust that when a senator says something, he or she will do it. Even if we disagree on substance, but we dont lie to each other. What we just witnessed this morning is profoundly disappointing. I wallet to describe the context of i want to describe the context of two preceding discussions. Omotion authority a group of senators gathered on this floor and blocked t. P. A. For many minutes because they were pressing for the Exportimport Bank. They huddled on this floor and negotiated a deal in front of cspan in front of the world. Then when they had their deal, t. P. A. Had the votes to pass. Shortly thereafter, we had a Senate Republican lunch where i stood up and i asked the majority leader very directly what was the deal that was just cut on t. P. A. And was there a deal for the exportimport very directly, what was was the deal that was just cut . Asked t was there a deal for the exportder was import . It was a direct question. Stion, i asked the majority leader in front of all the republican deal, tre i representatives. The majority leader was visibly angry with me. He looked looked at me and said there is no deal there is no deal, there is not deal. Like st. Peter, he repeated it three times he said the only thing the opponents is like any other senator in this body, they, there could offer any amendment they n would like. And he w i gave them nothing. There is no deal. Disc he was emphatic. He wase repeated. Following that public discussion senator mike lee and i approached the leader afterwards in which he emphasized there is no deal, i will do nothing, nothing, i oppose the Export Import Bank. All he can do is offer an amendment. I sat and had a long discussion with my staff afterwards. My staff told me that afternoon, he is lying to you. Weve been around the senate a long time. He is not telling you the truth. I dont know if thats the case or not. I dont see how when he looks me in the eye and makes a promise. I dont see how i cannot take him at his word. As a result i cast my vote in may in support of tpa because i support free trade. I felt i have no choice but to assume that when the majority leader spoke to 54 senators and made a promise that he wasnt lying to us. As it went to the house it became abundantly clear there was a deal. There was a deal in the house for the Export Import Bank. The second time cpa came up i voted no because of that corrupt deal. I will note to the public they have repeatedly said there was no corrupt deal, there was no corrupt deal, we may we may no deal, we made no deal. Let me tell you a second element of the background. There were a number of amendments that senators had filed. I filed an amendment that would put teeth in the rate iran review iran review senator marco rubio wild and an amendment calling for iran to recognize israels right to exist as a jewish state before sanctions could be lifted. Our friends on the democratic side of the isle did not want to vote on that amendment. In response, the majority leader cut off all amendments. Mdm. Pres. I sat in the Majority Leader Office and urged the majority leader on senator rubios amendment. I indicated that should be set as a conditions before lifting sanctions. I argued with majority leader that if the democrats were so opposed to voting on that amendment, that that was all the more reason and the majority leader said no, he would not do so. That invoking cloture on an amendment was an extraordinary step and he wouldnt do so, so he cut off every amendment. The democratic leader senator harry reid, calling out the majority leader for engaging in the same procedural abuse that harry did over and over again in this body, now the republican leader is behaving like the senior senator from nevada. What we just saw was not what they told you and me and every other republican senator. What the majority leader just did is number one, he called off that amendment. He called it up himself. Why does that matter . He has priority of recognition. When he calls up and amendment no one can stop him. He didnt just he didnt just call it up he filled the tree. Just like harry reid. He blocked everyone elses amendment and by the way i agree with senator reid when he said the obama care is an empty amendment. Of course it is. We will have will have a vote on repealing obama care. It will fail, it will be an exercise in meaningless political theater. Mind you, when we had a fight in october 2013 to actually stop obama care and defund it, the majority leader, then the minority leader was opposed to doing something with real teeth in it to stop obama care. But an empty showboat is a good way way of distracting from whats going on. There is a profound disappointment among the American People because we keep winning elections and then we keep getting leaders who dont do anything they promised. The American People were told if only we have a republican majority in the house, things will be different. In 2010 the American People showed up in enormous numbers and we got a republican majority in the house. Very little has changed. The American People were told the problem is the senate. If only we get a republican majority in the senate and retire harry reid as majority leader, then things will be different. Well in 2014 the 2014 the American People rose up in enormous numbers and voted to do exactly that. Weve had a republican in both houses of congress for several months. What has that majority done . First thing we did, in december as, as we came back and passed a trillion dollar plan filled with corporate welfare and that was the very first thing we did. Then this republican majority voted to fund obama care, voted to Fund President obamas unconstitutional executive order and then leadership ran to the confirmation of Loretta Lynch as attorney general. Madam president which of those decisions would be one iota different if harry reid were still majority leader . Not one. Not one. This senate operates exactly the same. The same priorities. Let me tell you why. Its not that this majority doesnt get things done, it does get things done but it listens to one and only one voice. That is the voice of the washington cartel, the lobbyists on k street of bigmoney and big corporations. If you go to the American People and ask is reauthorizing the xm bank a priority for you . The standard report response for most of them is the what . They dont even know what this is. Let me tell you what it is. It is an egregious example of corporate welfare. It is the taxpayers being on the dime for hundreds of billions of dollar in loan Loan Guarantee given out to a handful. Giant corporations. It is a classic example. One person had the clarity of thought on that was of then senator barack obama who described it as a classic example of corporate welfare. That was when he was in the senate. Now that hes that hes in the white house it sounds pretty good. Now just about all the democrats are supporting the corporate welfare with the exception of bernie sanders. Ill credit to him. Every democrat who styles himself or herself a populace their actions on this matter and speak far let up louder than their words. When it comes to republicans republicans also are listening to k street and the lobbyists. Why . Its not complicated. The giant giant corporations that are getting special favors from the taxpayers higher lobbyists that write Campaign Check after Campaign Check. These checks checks go to both democrats and republicans. It is career politicians in both parties that are kept in office by looting the taxpayer to benefit wealthy, powerful corporations. The single largest recipient of Loan Guarantee from the xm bank is the boeing corporation. They just had an Earnings Call where their ceo said and im paraphrasing, will be just fine without the xm bank. Its not impacting us. There are plenty of private loan alternatives out there. You know even even though the market could provide, its a lot easier to have compliant lawmakers rob from the public to enrich giant corporations. You know who doesnt have lobbyists . A single mom waiting tables. You you know who doesnt have lobbyists . A teenage immigrant like my father was, washing dishes making . 50 an hour, struggling to achieve the american dream. You know who doesnt have lobbyists . A factory worker who just wants to work and provide for his or her children. They dont have lobbyists. So so what happens . Career politicians in both parties gang up with giant corporations to loot their taxes to make it harder for people were struggling to achieve the american dream. Coal matters mdm. Pres. , in your state. They dont have lobbyists who are representing them here, the individual minors. While the Majority Team up with the leader to take from there paycheck to give to corporations. It is wrong and it is corrupt. Mme. Pres. , it saddens me to say this, i sat in sat in my office i told my staff, the majority leader looked me in the eye and looked 54 republicans in the eye , i cannot believe he would tell a flat out lie. I voted based on those assurances that he made to each and everyone of us. What. What we saw today was an absolute demonstration, not only what he told every republican senator, but but what he told the press over and over again was a simple lie. This institution should not operate at the back and call of lobbyists in washington. This institution the majority and minority leader arm in arm, again should not team up against the american taxpayers. Its its why our children are going bankrupt. Now we are facing an enormous threat with this a rand deal. Nuclear iran poses the greatest Security Threat to this country, and yet, the majority leader refused to do what he just did for the Export Import Bank on iran. He refused to invoke closure. If he was telling the truth why would he do what he just did . We now know when the majority leader looks us in the eye and makes an explicit commitment that he is willing to say things that he no his faults. That has consequences for how this body operates. If you or i cannot trust with the majority leader tells us, that will have consequences on other legislation as well. As well is how this institution operates. There are a host of amendments that the American People are focused on like defunding plan parenthood after the gruesome videos. The majority leader doesnt want to vote on that. That is something the American People are focused on. He brought. He brought up the obama care amendment, but he didnt bring up the amendment to end the congressional amendment to obama care. The majority leader doesnt want to vote on that because he doesnt want to end of the cronyism for the member of congress any more than he wants to do so for large corporations. There are a host of priorities that the voters who elected you and me mme. Pres. I would ask you to think about when you were running for the senate not long ago. Do you recall any of your constituents saying we want the xm bank . No they have other priorities, but those are not the priorities of republican leadership. Sadly today we have government of the lobbyists by the lobbyists and for the lobbyist. That is not how the United States senate is supposed to operate. A far more important amendment than bringing back this corporate welfare in cronyism is my amendment that provides sanctions on iran cannot be lifted unless and until it does two things. Number one it recognizes israels right to exist as a jewish state number two releases the four american hostages languishing in iranian prison. That is a far more important issue than enriching more lobbyists on k street and getting more campaign contributions. That is what we should be voting on and accordingly, mme. Pres. , i call, i call up my amendment, number 2301, and the mcconnell amendment as modified. The amendment is not going to be offered. Mme. Pres. I have appeal the ruling of the chair that the amendment is not in order. The appeal is debatable. The latest images of pluto from nasas new horizons spacecraft. Senate majority leader and ted cruz debate a vote on reauthorizing the Export Import Bank. Robert gordon and neville talk about their documentary on the 1968 debate between war politics, god, and sex. Today i believe there is someone saying the numbers are dwindling. Talk about hot topics. Whereas, then, i dont think that was the norm in tv at the time. I dont think these guys needed that. Smith was the moderator. He was a distinguished news man who i think was embarrassed by this. He was moderating, but he disappears for sometimes five or more minutes at a time. Today you wouldnt have a moderator not jumping in every 30 seconds. I think really, everybody just did back and let the fire burn. Sunday night at 80s during an string and pacific on cspan q and a. Cspan2 brings you the best access to congress. Every weekend its book tv with nonfiction books and authors live coverage of book festival from around the country and behind the scene look at publishing industry. Cspan two, the best access to congress and nonfiction books. White house economic adviser jason furman talked about Economic Statistics and how to interpret Economic Data at the rushing to d. C. Think tank. This is one hour. Thank you everybody. Thank you for coming up. This is a beautiful washington summer friday afternoon. My name is jim koestner. Our goal today, for those those in the room and those were watching at home is to make us better consumers of Economic News and economic reports. In essence to be our own to help us achieve that mission we are lucky to have jason furman with us today. In his early time with president obama he is serving president obama since day one as a senior economic visor. He helps steer the nation out of the Great Recession and served under pres. Bill clinton which means between the two president s he is responsible, at least partly for many privatesector jobs. He has a phd from phd from harvard, he is a father of three and a brandnew father, three weeks to his son felix. Im just going to give you a couple highlights. He can juggle six flaming torches at once. Number two he unsuccessfully argued to his wife that chopping wood benefits test and he is far less successful than his College Freshman roommate matt damon. With that, jason thank you for joining us today. He is going to lead off with a presentation and ill ask questions and you can ask questions. Jason, lead us off and help us become better economic consumers thank you everyone in the room and thanks for organizing this and those watching at home. Im going going to take you through some slides that have ten tips. What it pretty much boils down to one really important tip that ill be giving you. This is a set of slides if its of interest to you, they will be up on the website later this afternoon. You can google the council of economic advisers and look for our speeches. This will be up there. , the presentation im going to give you. In terms of Economic Data i have been following Economic Data carefully for the last 20 years. It began when i worked as a staff economist in 1996. One of the great things about the council of economic advisers is we are responsible for conveying all of the Economic Data to the president. So the statistical agencies will give us the statistics a day in advance, embargoed, just for us to see. We spend a couple hours and analyze them and put that in a memo which goes to the president the evening before the data so he can understand whats happening in the economy. The significant release like the job numbers and gdp, we will brief the president in person as well. We also share the data with the secretary of the treasury and the chair of the Federal Reserve to make sure they have the information they need to understand what is going to be happening the next day in markets and the economy. Whats great about this is it gives you a real opportunity to think hard, but you also think without the noise of everyone else. Anyone who gets the data, the job numbers, the gdp, the gdp, they come out at 830 and there is tons of tweets and analysis and peoples opinions. Thats great and i recommend looking at that and aggregating that but there is something about locking yourself in a room and trying to digest it yourself unbiased and uninterrupted by the other people looking at the data. Then you can test what you think against it. Sometimes you find things other people didnt and sometimes the wisdom of crowds come up with an insight that you wouldnt have had. The biggest tip i have, and its underlying and you will see up pattern in the ten different tips i have is to never get to exercised and excited about any one piece of economic eight a. It is a big complicated thing. It bounces around a lot from month to month and quarter to quarter. Any given statistics we have only captures one aspect of the economy it doesnt capture the entire economy. The statistics we have are imperfect. It depends on limited samples, there are sampling errors, they depend on complicated adjustments algorithms to make sure every december people spend more on consumer goods, that doesnt mean the economy grew a lot in december, it means that yet again, christmas happened in december. There are statistical errors, seasonal adjustment errors, parts of the economy and just longerterm trend. Really everything i have longerterm trend. Really everything i have to say boils down to if theres one bias i see in the newspaper, it tends to be really good and really informative and i learn about it but the only thing the only bias i would say it has is an attempt to get too excited. Oh, this was a great month and the economy is zooming ahead. And this month the economy is terrible. This month we dont know whats going on. The truth is sometimes it turns on a dime and you want to be attentive to that and looking for that data but more often than not, trends continue and its better to look at a lot of pieces of data look at a lot of pieces of data than to look at it individually. Look at it over a long period of time. Let me go through a number of specific ways that this manifests itself. Through the course of the cell tell this ill tell you some of the numbers that i most like to look at, not just in the jobs report but in gdp and Economic Data more generally. So the first thing is, some numbers bounce around a lot more than other numbers. Every month, we have two different versions of the number of jobs added to the economy. One is the number of jobs added by employers and the other is the number of people whose employment went up or down. The one is what employers tell the bureau of labor statistics. The red line is what individuals tell the viewer of labor statistics. There are some conceptual differences due to people who are selfemployed or multiple job holders but these two numbers should be the same. If you see the red one it bounces around all over the place. In october of last year it said that employment went up by 800,000. You wouldve thought that was the most phenomenal month ever. This march, you are have thought the economy was collapsing when unemployment went down by 500,000. In both of those months you wouldve been wrong because you were relying on a sample of 60,000 households and has a decent amount of error and volatility in it. The reason that the market in the newspaper concentrate on whats called the establishment number or the Payroll Survey is because there you are surveying nearly 600,000 worksites that employ millions of workers. Theres also some air associated with that but the error is a lot smaller. Those two months i showed, october certainly was probably a better month then march but not the same dramatic differences. Thats the first lesson. When you have a choice choose things that are less volatile. Things that are less volatile are all also going to be things that rely on a larger sample size. The other advice i have is to look over longer periods of time. The blue bars are the establishment surveys or Payroll Surveys, jobs, it tells you the number of jobs each month and there you see once again, march looks really bad, but then may looks good and it bounces around from month to month. I spent some time looking at the blue bar but i spent a lot of time looking at the red dotted line. That red dotted line is the average over the last 12 months. If you look at that average over the last 12 months lately, what it tells you is the pace of job growth has picked up a bit 240,000 jobs a month on average for the last 12 months as a opposed to 217,000 before that. It broadly conveys a picture of stability. That is an accurate picture because some months you go way up in some months you go way down, but it it roughly, for the last seven years have averaged out to this pace to about 200,000 jobs per month. The economy is going to lag a little bit when you look at it 12 month moving average. Generally looking over a longer. Of time is going to get you a little bit less excited about each month to month a blip blip and a little bit more focused on the trend and the economy. This tip also applies or it especially applies with Something Like uninsurance Unemployment Insurance claims. Every every month we find out how many people make a claim. This is administrative data it isnt based on a gas. It is based on if you applied for Unemployment Insurance this week you would have uncorked the champagne when it was the lowest it had been since 19 73 255,000. Both of those numbers are probably too extreme and again if you look here, people look at a four week moving average and its much smoother than the red line that bounces around and zigzags the red line that bounces around and zigzags a lot from week to week. When confronted with noisy data one thing you can do is look to better data with larger samples. Another thing you can do is look over a longer period of time in the third thing you can do is find different measures of the same concept and combine them. This is something you are increasingly seeing being done with the Federal Reserve officials and labor indicators investment banks and analysis which is take indexes that combine a number of different measures. There are over a dozen measures of wages and compensation. They are all slightly different but they all embody different errors and quirks. This shows three of them. Compensation for our, the average Hourly Earnings and employment cost impact. They are all. They are all bouncing around in different ways. Theres a statistical technique called principal component technique that says imagine if theres some underlining component thats moving all three of these are much try to estimate it. Its just as simple of a weighted average of the three but it uses Statistical Analysis to find out which weight you should put on the three. That black black line there is probably a better measure of wage growth than any one of those three. If you look at those three things and average them together or if you have a statistical package at your fingertips, you can can do it and call it the first principal component. If you look there wage growth went down and there was a sign of wage growth pick up that you see in the black line that a number of people have referred to lately. Another another place where i really like combining data is when it comes to the gdp statistics. A little known fact is when the gdp numbers come out, they always report or not always, but but they eventually report two different numbers. One is Gross Domestic Product and that adds up how much everyone bought in a given quarter. How much consumers bought, how much businesses bought in terms of plants and equipment, how much the government bought. If you look at that, for look at that, for the First Quarter of this year it said the economy contracted. The other thing the statisticians do though, is they add up all the income in the First Quarter. How much wages were, how much profits were a few other concepts as well, and that was at 1. 9 turns out when you go through the arithmetic, those two are the same exact thing with two different ways of measuring the economy. The simplest way to think about that is imagine we dont trade and people cant save their income. Everything you make in a given quarter, youre going to spend in a given quarter. Income has to equal spending. You go through something a little fancier and it turns out that still true. One way of measuring the exact same thing was minus 0. 2 and one was plus 1. 9. Which was better . Gdp gdp or gdi . Turns out the answer and an average of them is much better than using either one of them individually. It is a much much more accurate reading of how the Economic Data will eventually be revised. Its much more predictive of whats going to happen in the economy Going Forward and if you could pick one number for growth, you would pick the average of the two. The good news i have for all of you is right now if you want the average of the two you need to add them together and divide by two. Starting starting next week, the bureau of Economic Analysis with the gdp number will, for the first time ever, Start Publishing that as a regular thing. It wont be in the headline, it will be toward the bottom of the lead release but i know i will be turning to that first before i look at the headline because that will be the best measure of how much the economy grew that quarter. Theres another thing you can do with noise. You can look over longer periods you can find the best data to look at, you you can combine different measures but the other thing is every measure tells you different facets of the economy so it can be good to look at a number of different ones. This first First Quarter gdp fell by 0. 2 appropriately colored red in this graph. Employment rose by 2. 2 which is quite a strong increase. Income went up 1. 9 in consumer nine and Consumer Spending went up 2. 1 and Industrial Production was 0. 0. There are a lot of other indicators but these are five particular ones to look at. If you just saw gdp, you would be more nervous about the economy in the First Quarter than if you take in the full context in the full set of data that one might choose to look at. One of the reasons why we are so concerned about data and why we dont want to overreact to any one piece of data and you want to put everything in context is the data we get is revised a lot. The reason its revised a lot is its all based on survey. In the the case of gdp for example, you dont have the first time you publish it they dont have the most recent trade data or inventory data. They only get that as time goes on. So the success of revision to growth, if you look at the fourth 1 45 thousand one, for example, the first estimate was 0. 2 and it first estimate was 0. 2 and it was revised up to 1. 4 and then up to 1. 7. The First Quarter of this year went from positive to a big negative to a small negative. You see that all the time. If you get really attached to a narrative around that first estimate turns out you might be attached to a narrative that subsequently will have a story to explain that was really good the First Quarter of 2001 and relatively weak the first 1 45 thousand 2015, at least measured in this way. This is probably a little bit upset you or for some, but it is a neat point so i thought thought it would show it with you. If you look at Something Like real durable good consumption and you look at the first estimate and the third estimate, they are almost exactly the same. Thats because when the gdp numbers come out, they have, they have a very good measure on Consumer Spending and they dont learn much by the time they do the third revision so they basically publish the same thing. Real healthcare consumption, the first estimate and the third estimate are almost entirely unrelated and thats because they use a survey of the Service Sector to figure out Health Spending and they dont get the result of that survey until after they published the first estimate. They they use very approximate gases to do the first estimate of Health Spending and then they revise it quite a lot for the third one. Thats important important because this year for example, or last year, people looked at the Health Spending data and constructed a whole narrative of its growing really quickly and that tells you blank. Then. Then two months later it was revised and turned out that wasnt what the data actually said. We have the council of economic advisers that had written something that said dont even look at this, the data will be revised and will be revised quite a lot. Once we get the data we will tell you what we think but the first estimate for Health Spending isnt very durable. Thats just an educated consumer who has a reset sense of whats going to be revised and whats not going to be revised. Part of why data is noisy is all these details to quirks, the small sample sizes that you dont get the survey you need on time you need to do seasonal adjustment, all these different things, but the economy itself the underlining truth itself is noisy. Just weird things bounce around from quarter to quarter. The First Quarter quarter. The First Quarter of this year for example, we had really bad weather and that temporarily impacted the economy but not in a long run. You can look at the data and get a better sense of the things that bounce around a lot and tend to reverse themselves and which things tend to continue. In gdp, inventories bounce around. They can be positive or negative and what they are one quarter, if theyre great one quarter that doesnt mean theyre going to be great the next, in fact the next, in fact it might mean the opposite. Consumption is more stable. One way we use that is we are very focused on the growth way, not gdp as a whole but of consumption plus investment. Those are the two parts of gdp that in our Statistical Analysis, we have found are the most stable which means they are the best predictor of what gdp is going to be in the next quarter or over the next year. If you look there at the blue, thats gdp, it was really negative at the beginning of 2014. A lot of that was for the noisy reasons. Of that was for the noisy reasons. If you are looking at the variable we like the orange one, it wasnt a great quarter because of the winter, but it, but it didnt look quite as bad. Then you have this huge rebound in the blue bars with gdp and you didnt get as much of a rebound because its a much stable measure. In general those orange bars dont jump around as much and theyre giving you more of a signal. The blue bars are just gdp noise. Another great piece of news for all of you, as of next week this also is going to be added to the release along with the gdp numbers. You will be able look this up yourself and again it will be one of the first things that i know i will turn to when i get the data next week. I want to just put a few more things down on the table for you. Then we will open it up to discussion with jim and all of you. One of the tradeoffs between some data which can be really up to the moment, the ism Manufacturing Survey, the market moves a lot in response to that survey or it can move a lot, and thats because you get it, we will get it the week after next at the very beginning of august. We will get the number for july. Thats great thats great because its about as uptotheminute as you can get in Economic Data but it is really noisy. If you asked me how the economy is doing in july of this year and you asked me that two weeks from now, i will look at the ism Manufacturing Survey because that will be the only piece of data i have for july. If you asked me how the economy was doing in july 2005 or july 1995i wouldnt look at this piece of data, i would look at Everything Else we have which takes longer to else we have which takes longer to compile but is ultimately more accurate. The other extreme, real median household income, the latest data we have for that is 2013. We will find out the 2014 number 14 number in september of this year. We find out more than a year after it elapses. The market could care less about those numbers because they dont care about the economy a year and a half ago, but if you want to ask, what happened to the typical family in the 90s, what happened to the typical family in the recession, those are the data you will want to use. They are less timely but more complete. Just to put two more things down on the table before we open it up, be careful about longer run trends. Some people like people like to look at the Participation Rate of the population for example, those are useful variables but it doesnt tell you of the economy is going up or down in a business cycle, it tells you about underlining society forces such as the age of the workforce, whether women are participating. So the example i have here is if you looked at the fraction of the population that was working you wouldve thought 2009 was a better year than 1955. If you look at the labor force partition patient rate you wouldve thought to thousand nine wouldve thought 2009 was a better year than 1995, thats why when we want to compare those two years, we use the Unemployment Rate. 55 was quite low and 2009 we 2009 we were in the Great Recession and the Unemployment Rate was quite high. I would do the same thing now as well. When we go monthtomonth, a lot of people looking at important variables but theres a reason why the Unemployment Rate is the headline. Thats thats more comparable of the time because its less subjective to some of these bigger broader demographic trends. Finally, this is the simplest one, always make sure you are distinguishing between real and nominal data. In 1981 wages rose 8. 6 , in 2014 wage wages rose 2. 3 . Which one of those years would you have rather been a worker in . The answer is definitely 2014 because the inflation rate 2014 because the inflation rate was quite low in that year sue gato wage boost opposed to 1981 where the inflation rate was very high and that cut into your real wages. Thats not just true of wages, that is true of everything. Make sure you are looking to see if things are adjusted for inflation. Summarize and be a little specific as i look at the Employment Situation we will get it to weeks from friday. It will tell us about the month of july so it is timely. The establishment job number is the first thing to look at watch for the revisions that we get for may and june and for the average of the last six months or a year. Unemployment rate can rise or fall for good reason but its the best thing to look at. We look at the Participation Rate, remember it just doesnt tell you the economy got better or worse but it tells you a few population got older or not older for example. When you do wages make sure you adjust for inflation which is hard to do because you have to wait a week or two for cpi data. The cost of gdp watch for the average of gdp and gdi. Look at look at the private domestic purchases which gives you more of a signal. Thats what i tried to do when looking at data and it is my advice for all of you. Thank you that was really terrific. I appreciate you taking the time to put together those tips and i look forward to seeing that on your website. For folks that dont do this already, you put out after the jobs report, a monthly blog. I think it is invaluable. It usually comes out in the afternoon. I usually get it out by 9 30 a. M. I usually read it in the afternoon and then. Okay, fair enough. I think that what it does is cut through the noise and clutter, which is what you talk about here, but i think i think just as importantly, is really one of the most understandable while at the same time deep dive into the economic, employment and wage situation in the country that i read on a a monthly basis. So i appreciate the readability of that report. Everybody should take a look at it. Lets start with wages, okay. There is definitely a lot of talk about how middle class is raised but we are also seeing some upward trends one of your later slides, 2013 numbers you are definitely seeing some upswing, one of the frustrations i have when im looking at Economic Data is they talk about how wages only rose 2 but inflation is under 2 . I worked in 1981 and i dont remember getting an 8. 6 raise, but inflation was Something Like that at that point or even higher. What are you seeing in wages and what do you look at in the wage area . So in terms of what data i look to the jobs number when you get those also include wages. Those wages wages are based on a survey of employers and that is quite a useful number to look at. But the 22 important lessons, three important lessons is look at a couple different measures of wages. Theres something called the compensation index and that might be growing more quickly than this other index. Which one is true, they can they can tell different stories and that usually means there is somewhere in between. The totality of it is not enough pickup but we do see some pickup and wage growth. Make sure sure you are adjusting for inflation. If you look at real wages for the last two and half years, they have been rising. They have they have been rising at more than twice the rate that they have rose from 2001 2007. Wed like. Wed like to see more wage growth but i think we are seeing wages growing. Something that makes it hard for people is that it has been trending down over time. There have been a fall in the price of gasoline that we can expect gasoline to always fall in price , but just the overall target or average for inflation has also fallen over time. So the nominal wage input increase is different than what it was in the past. The talk you gave recently at the peterson institute. Is that where it was . You talked about productivity and you also talked about total factor productivity. What that reminded me of that total factor productivity, in some ways the dark matter of the universe in where it is both the cause and solution to the mysteries. Can you explain a little bit what you are seeing in productivity and what total factor productivity is . So productivity and especially total factor productivity are some of the most important things in the economy. It has to do with what you get for one hour of labor. The reason you can get more output for a given amount of input is because your workers may be more educated or have more capital or machinery at their disposal or because it combines labor and capital together. Better ways of managing your inventory, what have you. That last that last thing is called total factor productivity. Its the most exciting thing that can happen in the con ami because it is a fixed amount of labor and fix amount of capital and youre getting more and more stuff out of it. If you want to understand our fiscal situation you need to know what productivity growth is going to be in the future. If you want to understand why wages have stagnated from the 1970s you need to understand why productivity growth has been slower since 1970. If you want to have a recipe for faster Income Growth Going Forward, there are a lot of things you need but one of them is faster but one of them is faster productivity. This is central to everything in the economy. In terms of measurement, some of the issues we are talking about, its just about the noise of economics. The numerator has output the denominator has hours. Both of those have errors and when you divide one by the other, heirs get even bigger. I like to look at productivity over periods of ten or 15 years, sometimes even longer. I never look at the quarterly numbers on it because they just bounce and make you dizzy. They bounce around they bounce around all over the place. To try to discern longer trends and use it as evidence that if you want to predict productivity in the future is not to look at the last year or two, those pick up a lot of noise, its to smooth the noise out and look over the last ten or 15 years. That gives you a sense of what the potential of the economy Going Forward is. We had about 30 years of very high productivity growth after world war ii. It declined for about two decades and then rebound a little bit. Is there a predictive nature to productivity russian mark is that time. After world war ii a unique time. That will that will never be repeated again unless we have world war iii and then we have a nice aftermath after that . Protecting productivity in the world and what inventions people are going to come up with in the future that they havent come up with yet and if i knew the answer to that i would be inventing those things that i wouldnt be sitting here talking with all of you about economic eta. There i dont think anyone knows the answer to that question. I think the end of world war ii, those decades were special. As the Global Economy came back together after those terrible collapse, as we figured out the jet engine that we developed for fighting the war but i think other things could be produced. That was a period of tremendous Infrastructure Investment and high levels of Public Investment and basic research. Theres no reason we cant do that again and if we did that again wed have higher productivity growth as a result. Im going to ask one more question that will turn it to the audience. Get ready. Get ready to raise your hand and ask questions. You will go over to that microphone and ask questions. Again looking backwards from 1950 until 2000, u. S. Economic growth averaged 3. 7 . Then from 2001 until the First Quarter of 2015 it averaged 1. 9 . Are there things beside i know you cant predict the things that are going to happen in the future but there is a limit to the growth that a country like the u. S. Can have on a sustained basis. 3. 7 is not a realistic place for it. What are the factors that go into growth like maybe this slow growth isnt as bad as what i just pointed out . Maybe ill do one equation with all of you. Output equals output per hour times hours. Output divided by hours times hours and the hours cancel that and equal output. To understand the future of growth you have to understand the future of output per hour and understand the future of ours. I think there is a lot to be excited about in terms of productivity with the internet cloud computing, mobile computing, personalized medicine, clean energy, you name it their all sorts of really exciting things going on. Many of which themselves could potentially increase innovation. I think there is reason for cautious optimism on the output per hour. We are we are not going to get the hours growth that we had in the 50s and 60s and 70s again. For two reasons hours growth was a result of the baby boom, people people that were born in 1946 and started to enter the workforce in the 1960s and 1970s. That led to a bullet big bulge in hours. The other thing is the percentage of women in the workforce. It it went from one quarter to two thirds so there was a big influx in women in the workforce. There is more room to grow but nothing like the huge transformation we had. On the our our side, the unique non repeatable story. On the output per hour, that is what we will ultimately get for what we do, theres no reason why we couldnt make choices to do a lot better in the future. Just a followup on a followup on that, we also have an aging population so that output per hour is going to have to cover benefits for people who are no longer in the workforce and will never be back in the workforce. Do the future workers have a bigger burden on their hands and do they need to become more productive . They have two things going on. Youre going to be supporting more people and you are going to be producing more with each hour. To understand the magnitude of the fiscal challenge we can predict reasonably well how many more people youre going to be supporting because certainly you can watch the baby boomers as they move through the generation. You dont know exactly what Life Expectancy will be her fertility rates will be but it somewhat predictable. To really get a sense of the fiscal challenge is and how much you can actually produce is critical