Transcripts For CSPAN Politics Public Policy Today 20110806

[laughter] make it memorable for you. [laughter] in the pt few weeks, we with gun and number of economic reports, including today's unemployment report which we will talk about. no matter afford it is, some many of them indicate to us the fragility of this economy. some of the debate is at -- basic weakness is we're seeing. the gross domestic product numbers released last friday showed that the economic growth in the first half of this year was a week. growing at an annual rate of less than, unfortunately, 1% during the first half of to-11. this week we have received additional data that suggests that the pace of the recovery is decelerating. months ago we were saying was moving too slowly, and now evidence indicates deceleration. two examples of that. first, the so-called ism manufacturing index dropped to 15.9% in january, the 24th consecutive month of expansion in the manufacturing sector, but the lowest reading since 2009. on tuesday, we learned that in the month of june consumer spending declined for the first time since september 2009 to. consumer spending as many of the new accounts for 70% of u.s. economic activity. that needs to be growing and not shrinking, obviously. i the committee members and those in the audience agree that we need much stronger economic growth. and there should be and will continue to be a big risk of vigorous debate on how to achieve that. the labor market we know, and we will give further into this today, faces significant challenges. more than eight quarters into their recovery, many have been out of work for six months or longer. hard to comprehend that. almost half of them out of work for six months or longer. we need to be immediately focused on providing incentives for job creation. just yesterday, this committee, the joint economic committee, released a report on the near record long-term unemployment workers continue to face. just a couple of highlights from that, first of all. also many groups within this study are having a great difficulty, if you're one of the following coming your challenges are even greater than the population at large. the following categories, those with a high school degree or less. all the workers, construction workers, and african-americans. those categories, those groups of unemployed americans face is proportionally higher rates of long-term unemployment. second, longer and individuals unemployed, a harder it is for the fourth line were privileged to both ends of the spectrum, those of the work for more than six months and those out of work at the other end of the spectrum for as low as five weeks. those were at that end of the spectrum are three times as likely to find work in compressor project comparison to those at the other improved employers are having difficulty finding skilled workers. that is a continuing problem. think we can move quickly despite all the bad news, move very quickly on a couple of strategies that will help very first of all, i and others have been pushing for small businesses -- the so-called small business tax credit that, which would create a one year quarterly tax credit equal to 20% of the total increase in employee wages, so if you are hiring in you are increasing your payroll and wage levels, you can get tax credit for that. surly vice chairman brady and i and others have been working on the life sciences jobs and investment act, a good idea. it is a way to both create high- paying jobs in all parts of the country, but also to move forward on healing and hope they come from the discovery of new scientific advancement. and thirdly, it is a way to get jobs back from overseas. many people here agree but democrats and republicans that we ought to may to research and development tax credit permanent. it makes a lot assisted it. which again makes a lot of sense. we need a new approach to manufacturing, actually a strategy to make sure that we are following in the years ahead and especially even in the next year. one of the small glimmers of hope in some of this bad economic and jobs data has been manufacturing. this year alone, i'm sorry, since the end of 2009, manufacturing has added 290,000 jobs, a little bit of good news in the midst of all this bad news. we will hear more about today's report. another during the month of job, the economy at of water 54,000 private-sector jobs. that is the good news, but not enough. the overall number, when you netted out, 117,000, a lot better than the last two months individually, but certainly not nearly enough. we have a long way to go. with strategies to create jobs and incentivize the creation of jobs, and without a will turn to our vice-chairman. >> thank you, chairman. welcome back. thank you for your many years of service for our culture. you will be missed and we appreciate all that you're done for the committee. increase in the number of payroll jobs provided relief for the market. mainly because it exceeded such fairy low expectations. certainly nothing to celebrate today. in the unemployment rate, it fell larsa because of 193,000 declines in labor forces. the ads will number of employed people in the household survey fell by 38,000. the broader merger of unemployment remains over a 16%. what troubles me is that we have the largest, the fewest number of people participating in the work force than a quarter century. those are not signals of a healthier economy. 215 years ago this month, carries an obama signed his extort stimulus bill promising to jump-start the economy, restores consumer confidence, and put people back to work. today with historic numbers of americans desperate for work, if consumer confidence plunging, the risk of a double-dip recession growing, and the stock market reeling, it is long past time to pull a plug on the president's failed economic policies. i do not fault the president for trying. lord knows he is done every big government solution at this economy. but it is not working as we warned. i conclude the white house simply does not understand how to create jobs in america. or serve with the government jobs in america. how much longer must americans watch the economy stumbled? after trillions of dollars and poorly designed stimulus and monetary intervention, must 9% unemployment be the norm? after all of the ghosts, how many more years of fantasy keep families and businesses suffer until we enjoy a strong economy in? america has been fair and patient. but after 2.5 years, enough is enough. you tried and failed to revive the economy. we deserve better than a second rate economy that is held up to ridicule by other dishes. when the economy is held in the wrong reason, common sense dictates you change course. instead of threatening to raise taxes on job creators on main street, we need to lower the cost of almost rigid capital, increase investment investment that is proven time and time again to create real jobs debate instead of granting companies as un-american for completing in the local board to global marketplace, we should teardown the barriers to reduce the cost of regulation and taxes that places miles behind the starting line, and lower the tax case so that an estimated $1 trillion in american profits stranded abroad can flow back home. and be invested here in america right now. passing the threepenny -- three pending trade agreements will create new american jobs. putting our energy companies back to work in the cost, alaska, and in the abundant american fields offshore and on, will create 1 million new jobs this decade. another 800,000 jobs will be saved this decade merely by calling a halt to the presence in national health-care law. dell will also eliminate the costly cloud of worry among small, medium, and large creators throughout is much more than these begun but nothing more important than the white house's and in its campaign of demonizing in press conferences the free market and our job creators who built the greatest economy in the world i can do so again if washington will simply get out of its way. it is telling that news reports on the economy today are often given with capital or the white house as a backdrop. not along main street or in the front of them american company. washington is directing this economy to a degree not seen in our lifetime. that is the problem. washington needs to get out of the way. needs to in this job killing rhetoric, the regulations, and interventions, and give americans confidence to do what we do best, innovate and lead the world and creating economic opportunities based on what the market demands, not on what market -- washington to mansbridge finally america's health does matter. in a more perilous dealt and deficit are shaking markets -- we also know that from four years of economic studies that our global competitors in similar straits have boosted their economies significantly and soon by reducing their debate the rigid their debt -- by reducing their debt. congress has taken an important first debt to reduce government is that it with the passage of the budget control act which the president signed. excluding the winding down of the wars in iraq and afghanistan, with our recent passage of the budget control act, the government will grow to over 22% of its size of our economy this decade. with this package, the federal government will shrink to 21.6% of gdp this decade. carries a reagan began to reduce the federal government as well. as federal spending shrank from 22.2% of gdp in 1981 to around 18% in 2001, and entrepreneurs on main street created 37 million new private-sector jobs. it's a federal grand began to grow again, adding 5.5 trillion dollars this last four years, which lost almost 3 million private sector jobs. --we have lost almost 3 million private sector jobs. i will conclude with this -- america deserves a strong growing economy that fully employs are people and is the envy of the world. we cannot do that to we pride that heads of washington of the throats of the job creators. we will create jobs if we change course today and get government out of the way. out of the way. >> congressman cummings -- >> good to be with you again, i concur -- commissioner paul. i am sure you have given your blood, sweat, and tears. so many of our public employees ar getting called everything but a child of god. i want to thank you i thank you for what you have given. i thank you for the lives you have touched and i say thank you for a grateful congress and a grateful senate. and also a greater will nation. i also want to take a moment -- today's report indicates that in july, employers created 117,000 jobs and the on a planet right dropped to 9.1%. these numbers are moving in the right direction but obviously, we have a long way to go to resolve our economic challenges and to insure that everyone who wants to work cawork. last week, we learn that the economy grew just .4% the first three months of this year and only 1.3% in the second quarter. in june, american consumers decreased their spending. additionally, the already battered housing market which continues to be a severe drag on the economy took another hit in june as existing home sales fell sharply due to cancel the sales contract. unfortunately, the policies ming out of congress are doing nothing to rebuild confidence or spare us economic growth. according to many experts, the may even hinder the recovery and causes us to give up the small gains that we have already won. an economist at barclays capital has warned that the debt deal that carper struck earlier this week could reduce economic growth by 1/10 of 1% in the firsyear alone. he said when the economy is only growing 1.5%, many economists feel this is not the right time to be fighting fiscal restraint. similarly, a chief global economt at deutsche bank advisers asks," why would you wa to read -- impose restraints on an economic recoveryhat is already fragile?" you remove spending power from the economy at a time when it needed. there is likely -- that is likely to make the economy weaker and in turn the budget gets weaker because tax revenues are going slow. the recent nosedive in the dow suggests that others may agree with this assessment. investors like all amerans are worried that congress is unable or unwilling to address the most important issue facing this nation -- the need to create jobs, jobs, jobs. some of the terrible consequences of our failure to focus on restoring economic growth are made clear in the results of a recent pew research center analysis which fou that the wealth gap between white households and african-american and hispanic households is the largest since the government began reporting on income 25 years ago. specifically, the housing bobbled and the gat recession took a much deeper toll on black families and hispanic families than it did on white families. we can do better and we must do better. i voted against the debt deal because i could not in good conscience support the use of a manufactured crisis' to implement ideologically-based policies that would further threaten our nation's economic growth and job creation potential. further, the debt deal tends to reduce our debt by reducing discretionary spending, requiring deep cuts in programs critical to our most vulnerable citizens. at the sameim the deal demands nothing, nothing from the wealthiest americans or from corporations that are receiving billions in x breaks. i believe that as we work to reduce what certainly is an unsustainable level of debt, we need a balanced plan that prioritizes the restoration of economic growth and that upholds our full faith and credit of the united states for what should be a national commitment -- for what should be shared sacrifice. i believe this is only fair given that the national debt we now face has been created by incread spending and by forgone revenues resulting from tax cuts provided to the wealthiest among us. with that, i yield back. >> thank you. i want to introduce dr. keith paul. hall. he is the commissioner for statistics for the lab -- for the statistics department. he analyzes and estimates the central statistical data to the american public, the u.s. congress, other federal agencies, state, and local governments, business and labor. dr. hall served as chief economist for the white house council of economic advisers for two years under president george w. bush and prior to that, he was chief economist to the united states department of labour. he also spent 10 years at the u.s. international trade commission. he received his b.a. degree from the university of virginia and his phd degree in economics from purdue university. we're grateful you are here with us again and we look forward to your testimony. >> thank you. thank you for the opportunity to discuss the employment and unemoyment that we released this morning. non-farm payroll employment rose by 117,000 in july. the unemployment rate was 9.1% in july and has shown little defensive movement since april. private sector employment increased by 154,000 over the month. health-care employment rose by 31,000 in july as hospitals and ambulatory care services added jobs. retail trade and but increased by 26,000. and love and expanded in the manufacturing sector by 24,000. mining employment grew by 9000 or the month and was up by 140,000 since the most recent low in october, 2009. employment in professional and technical services continue to trend up with industries adding to refer to 6000 jobs since march, 2010. health services was flat over the month. other private sector industries showed little or no change in july. the employment in state government decrees by 23,000 over the month. the decline was almost entirely due to the partial government shutdown in minnesota. local government employment continued to trend down over the months since an employment peaked in 2008. local government has shed 275,000 bs. from the survey of households, the on employment rate was 9.1% in july. the jobless rate has held in a narrow range between nine. 0% and 9.2% since. 44% of people have been out of work for 22 weeks or longer. this proportion was unchaste over the month and year. the labor force participation headed down from 64.1% to 63.9% in july. the proportion of the population unemployed was unchanged over th month at 58.1%. non-farm payroll employment rose by 117,000 in july with private sector adding 154,000 jobs. the unemployment rate was little changed at 9.1%. as i close my official statement, i would like to take a moment to recognize my colleague the deputy commissioner of bls. this is his last appearance before the joint economic committee after a 37-year career with the bureau of labor statistics. he is retiring in august i thought it would take a moment to voice my appreciation for his work and make a note about is a clear rebuke -- about his career and accomplishments of the year. he joinedbls in 1974, a graduate of the university of maryland with a degree in economics and social worker in his first position was eight gs-7 economist position and he has now risen almost entirely through the ranks. he has held several positions including supervisor, economist, chief of the division of labor force statistics and assistant commissioner for a liberal analysis. he has been the deputy commissioner since 2003 and served as the acting commissioner between 2006-2008. he has been by my side of tse hearings and in the day to day operations of the bureau. phil has directly work with literally most of the members of the bls family. he continually meet with every new staff member to walk them into the bureau as part of our new employee orientation. he has been a bi part of our long and rich tradition as an independent agency charged with providing accurate data free of political consideration or manipulation. he has been a big part of that and he will be missed. on behalf of all the employees, i wanto convey our sincere gratitude of his service for the american people. we wish him along happy retirement. >> thank you very much for your testimony as well as your tribute to phil. i wish some of the economic news s as upbeat as your tributary e. i wanted to start -- there is a lot to talk about and a lot to be concerned about, frankly. one of the sentence and from your statement that just jumps off the page is at the bottom of page two. "of the 13.9 million persons unemployed in july, 44.4% have been out of work for 27 weeks or longer." that is a stunning number. it has been a recurring problem about long-term unemployment. can you put that in some historical context in terms of -- of months?on >> the number of long-term unemployed, the share of the long term unemployed, work at easily record levels. it has never been this high in the history we have been collecting this data. the number it is extremely high. it i particularly concerning because one of the things that economic research has consistently shown is that the lumber somebody is unemployed, the longer it takes them to get re-employed. this will be a real challenge going forward. the median weeks of unemployment has basically ubled during this recession from five weeks to 10 weeks. there is a large share of people who have been unemployed for more than one year. these numbers are clearly very >> >> you say they are historic numbers? >> both in level and percent in any way you look at it. >> inhe testimony i gave today, i mentioned a couple categories where the numbers are disproportionately higher. i did not put the number is in bui want to review those. the african-american unemployment rate in this report is what? >> it is 15.9%. >> what was the month before? >> it actually declined 3/10 of 1% but that is not statistically significant. >> the african-american number for most of st year seems like it has been in the 14-15ange. is that right? >> yes, it has been probably over 15 for most of the time. >> i also mentioned few other categories. the americans who are unemployed and have a high school diploma or less, what number is that? >> that on point rate is 15%. >> that has been there that i that long? >> yes. >> because there are so many reports and some as data out there and sometimes it is hard for people that follow it closely to keep it straight, we know we get the unemployment rate derived from the so-called household survey. those numbers have not been very encouraging. that household survey has indicated a weaker employment situation than the survey of employers. how would that be relevant? >> four months d months, you will sometimes the difference signals bore the -- between the houseld and the payroll. if you look at it over a slightly longer time likthree months, they tend to move to get a pretty well. -- together pretty well. you don't often get a conflicting picture for very long between the two. >> if you could describe the survey of employers and how that is arrived at? >> the employer survey is an establishment survey. we are surveying places of work and it is a very large survey. it is something on the order of 440,000 establishments but it represents something like 40 million people we are counting directly every month is a ve large survey. and it is pretty accurate. the drawback is we are surveyi employers who are just looking at the number of people on payrolls, what their average hourly earnings are doing and we want to get more rich detail where we go to the household survey and collecting demographic information about education and ethnicity. the two together give you a complete picture or as complete a picture as we can of the labour market by month. >> thank you very much. >> i share the concerns about the long-term unemployed and the longer they're without a job, the bigger challenge is getting them back to wo. one of the areas that continues to trouble me because it is a sign of weakness in the labour market rather than strength is the labor force participation, how many people are actually in the labour force or actively participating. it has declined yet again in july to about 63.9%. this is the lowest since the early 1980's. it continues to stay there. are we selling into a new normal where there are going to fewer people participating in the work fce and therefore higher unemployment rates? >> i hope not. know but i can tell you that so far in this recovery, we have seen no recovery at all in the labor force participation. that is something that is typically starting to rise and should rise during a recovery. that is an important phase of the recovery is when we start to get people entering back into the bour force once that starts to happen, we could get a better idea of what the new normal will be and what the participationate will be like. >> it looks like it will take a while. any ideas what the factors are? >> this has been a severe and long recession and we have had a large number of unemployed. although long-term unemployed have stayed in the labor market longer than in the past, we still have quite a few people it the labor force. entirely. i think it is the severity and length of the recession. >> at the current rate of this month of 117,000 net jobs, for the average person back, wondering how long we'll be stuck in tough economic times, at the core rate of 117,000 jobs per month, how long would it take to regain the payroll jobs total we had prior to the recession? i understand it would be years. >> at 117,000, we would never regained. you need about 130,000 just to absorb the population growth in terms of recovery, you should look at how far above 130,000 we should get. that is really the recovery. 117,000 is still treading water. >> thank you. congressman cummings. >> thank you very much. i was listening to what you were saying. theh regard to people in labour market coming back in. let's talk about those who are starting out. a few months ago, millions of our young people graduated from high school and college and while many of them are pursuing higher education and we have had testimony before this committee in the past where young people -- we were told that yog people, many of them were basically kind of spending going into the job market and depending upon their parents, staying in school to g master's degrees and graduate degrees. what kind of pressure does the influx of job seekers place on the labour market and what are the employment ospects for recent high school or college graduates? >> i think our data supports what you said, that the new entrants into the labour market are having a difficult time finding work. if you look at something like the employment to population ratio and break it out by age range, members of the population that are working age that are 25 and below, the employment population ratio is very low and it declined conserably during this recession. the big concern is that at some point you start to feel like you're getting a generation of high school and college graduates who are not finding work. that could put a real strain on the labour market going forward. that is something that we should be concerned about. >> the significantart of the 2009 recovery act was a provision to a state and local governments to protect jobs of teachers, firefighters, police of a server ,etc. much of that aid is coming to an end. is the state and governmt local job market trends and how much are the trends in this market contributed to the overall rise in unemployment? >> right now in most industries, we are no longer losing jobs. we are at least holding constant and growing in some. one notable area where we continue to lose jobs his government employment. in particular with both state government and local government employment. they both lost significant numbers of jobs, more so than in most past recessions. with state government, it might be the biggest decline we have had er during a recession. >> it appears that less money will be going to the states. it has always puzzled me -- we hear these comments that we should not raise taxes on the richest of the rich during a fragile economy but at the same time, in my state, we have had to lay off people and we had furloughs and i'm sure thais happening in a number of states. yet these people and even on capitol hill, in our committee that i am the ranking member over, we have eloyees who have taken a 5%-10% cut and we have federal employees whose wages have been frozen. and that is in a fragile economy. can you talk about the minnesota situation? your referenced it and tell me about that as it relates to state jobs. and your statistics. >> will not produce the official statistics for minnesota but -- we have not produced the official statistics for the state of minnesota. they laid off about 22,000 workers. i believe they held onto about 13,000 that was a significant layoffs. that was pretty much the bulk of the decline in state employment this month. >> we've got some folksetting ready to run out of unemployment benefits. it is predicted that it is possible that those are not extended, we may have a zero 0.5% decrease in gdp. how might that affect the job situation? >> i don't want to speculate too much on that. certainly, the unemployment insurance benefit is a real significant policy concern. i am not sure i want to make a connection between the two. >> thank you. commissioner, i wanto look at some of the areas where there has been an increase. i want to add some good news here. the private sector number is up 164,000 which is good news. but not good enough. i notice that number and i want to see if you have this information nearby. i remember going back in the january-a p paroleeriod, we are getting three months in a row or private sector job creation -- where private sector job growth was above 2 20,003 months in a row. >> it averaged about 240,000 jobs per month. >> this month is a good number but i was noticing that where we got growth -- the reason we got 154,000 private-sector and 117,000, health care was up by 31,000, right? >> yes. >> retail trade 26,000. >> yes. >> manufacturing of 24,000 an mining up 9000 for the one that took the biggest hit was government and that is all government, right? >> that's correct. >> in terms of the private sector number which is pretty important, ideally, what would we want? what would be a healthier number? if we were averaging in the private sector -- 150000 within the next few months? with the private number after the close to what the overall number is? we know we can recover one of its 17,000. we have to get that closer to 200,000 or more. and the correlation between private sector growth and the help of the economy? it is a better to focus on the overall number? >> it is fine to focus on either one. the private sector is giving you some idea perhaps job creation. the government numbers are important but they are an indication of government employment but not quite the privatsector. in terms of strong job growth, we are so deep into job loss, we have lost quite a few jobs and have fallen behind that we really need really significantly higher job growth than we have had to make a dent. even then, it would probably take years. to recover the jobs. >> i was noticing the manufacturing job number was up. a good part of that is automobile manufacturing? >> yes, motor vehicles were about half of that. of the this part mfg. #going up in automobiles, is tt rebound partly a result of supply issues as it relates to what happened in japan? >> i think it would have been hard to attribute and figure out much of the impact of japan all along. the evidence now if you look of something like motor vehicle inventories that whatever japan a fact there was before is now out of the system. inventories are now back to normal. certainly now and maybe going forward, you'll probably not see any impact. >> one more question -- on the government number, can you tell us what the overall government number, the decline, has been from july 2009 - july 2010 until now? how many government jobs have lost? >> we are down about half a million jobs. >> thank you. >> i cannot resist asking you this. early this morning when jobs umbers came out, mark azanzandy called these numbers fabulous. would you say the same thing? it is welcome to see the numbers but the job growth increase but they are not fabulous. they are still not strong. >> and aias ro mr.an that as well? it provided some relief only because we were so worried in the last few days where the economy is headed. it is no secrei am not a big fan of the stimulus. it was a lot of money and a lot of dead and few jobs and the impact was pretty limited. we were tol that if we passed it, unemployment would be 6.3% today and that is way off. there are about 6 million jobs short. i continue to feel we were told to take the debt that you will get jobs and we certainly got the dead and that is a drag on our economy on business confidence and family confidence. when you look to the job gains in today's report, one view of the job market is that as laos return to whathey were before the recession, the job numbers improved because new hires have increased very little. they are far below what they wereefore theecession it seems premature to speak of a real job market recovery to begin with and a meager job gains recently are not a surprise. this is the argument that the former council of economic advisers chairman makes and i agree with that. as a look at this report, commissioner, is there a way to distinguish between job gains that result from fewer people leaving their jobs and job gains from a sustained increase in hiring? that sensitivity in different signals of the help of our labour market. -- they send different signals in terms of the health of our labour market. >> we look at how many people are exiting jobs and how many people are entering the labour market. your observation is correct. most of the improvement has been that the number of people losing jobs has leveled out and stopped going down. we have not yet gotten a significant increase in the number of people entering the employed. >> is that also why we have fewer people in that market while we had 190,000 step back out of the labor market this month? >> that is consistent with what i mentioned with the labor force. one thing we would like to see is the labor force start growing because people think they will be getting jobs and people start to expect they can move from unemployed to employed in that has not happen very strongly yet. >> retail jobs were up slightly in report but recent reports of the consumer spending down for the first time in a long time. is there a mismatch there? it is a timing issue when the survey was taken? >> there is a timing issue. some of the earliest that we have from july and this is the start of the third quarter and the consumer spending numbers are back frothe second quarter. >> what kind of seasonal adjustments do you make for this time of year? >> it depends by industry. in motor vehicle production, there is a good season because plants close down in july to retool. they reopen in august. there is a part of the bear. teachers around this time. in june and july leave the labour market for the summer. we have a season there. the last month season was the big one and that was about -- and that one was about 1 million. we expect the employment to go down by 1 mlion because of seasonal job loss in june. we adjust for that. the seasonal this month is not quite so big. >> thank you >> the congressman cummings? >> when you look at the rate of loss of government jobs, when you look at that as a portion of all jobs lost, is a trend in the same over the last year or so? if you lose 50,000 jobs and 10,000 government jobs, is that the norm for the last several months? >> over the last two years, we have grown about 700,000 job. we have lost about half a million government jobs. the job growth would have been not double but it would have been close to double what it has been without the loss of government jobs. >> centre mccarren hazmat click mark zandy was one of his advisers. -- senator john mccain has made it clear that z markandy was one of his advisers. he said we have to move from cutting to creating jobs. i am trying to figure out if we continue to go at the rate we are going, in other words, if we don't have -- if we don't come up with methodology to create jobs, we will find ourselves in real difficulty and we will only slide downward. i don't want to see that happen. i know the numbers are not great but what would you tell the president today if the call the right now -- if he called you right now? what would you say? >> i would say it is welcome news that the job growth has accelerated. over last two months. that is good news but it is not yet strong. this is pretty tepid job growth. we will have to do better in job growth in order to start to really recover in the labou market. >> the african american numbers are pretty stubborn, aren't they? >> yes, they are. >> what about the hist hispanic numbers? >> the unemployment rates to some degree underestimate the problem. the labor force participation rates for both those groups are below average. they sound battered but and maybe worse than it sounds. >> i would guess there are some areas of my disict where the african-american male unemployment rate may be as much as 50%. whenever i see those numbers, i say they are probably low. the chairman talkedriefly about this whole correlation between the amount of education and the impact that this recession has had on folks. do you see that trend continuing, the less education you have, the more negative impact the recession has on folks? >> absolutely, the unemployment rate for those with less than a high-scoliploma is about 15% and those with a bachelor's degree, is only about 4% which is a pretty significant difference. >> if someone was not watching us right now and they were trying to figure out whwhat kind of feel they might want to go into and what country they would want to get, what area they might want to move to to get a job, what would you say based upon -- i know you don't like to draw conclusions. based on what you have there in front of you, what would you say? >> obviously, education pays off and is very important. the united states is like other wealthy countries. we are a country of service jobs, service-providing jobs. something like 70%-80% of our jobs a in the svice- providing sector. that is important. you get into some things like the demographics that we've got going on like the health care jobs which i expect would have strong growth going forward as we have an aging population. that is the sort of thing -- the sort of advice i would give. >> thank you very much. >> unless there are further we'reons, mr. ahall, grateful for your testimony. phil, we hope you can come back in your years of retirement. you said you will be fishing but if you can squeeze in some hearings between fishing, we would love to have you back. unless there are questions and comments, we are adjourned. [captioning performed by national captioning institute] [captions copyrit national cable satellitcorp. 2011] [no audio] [no audio] >> next week, "washington journal" will look at the jobs situation. tuesday, the focus is on technical education and the work force. wednesday, a look at private- public partnerships and job creation, and on thursday, an assessment of key federal jobs programs. friday, opportunities for women in the work force. "washington journal is like every day at 7:00 a.m. eastern here on c-span. during a visit to the navy yard in washington d.c., president obama announced an initiative to help unemployed veterans find jobs. the unemployment rate among veterans is 4% higher than the national average and is expected to rise as troops returning from afghanistan. the president talked about the latest jobs report, showing unemployment dropped to 9.1% in july. >> ladies and gentlemen, the chairman of the joint chiefs of staff, admiral mike mullen. [applause] >> on behalf of men and women in uniform and their families, thank you for being here. welcome to the washington navy yard, our navy's oldest shore establishment. this is a special place in american history. through war and peace, sailors came together to build and repair america's fleet. here opportunity was created and innovation rewarded. here was spent the sweat and muscle and sinew of our overseas security. the "uss constitution" was brought in for repairs during the war of 1812 not far from here. and here scientists and engineers fashioned the components that made possible the accuracy of those guns. it is fitting that here today the president announces a new initiative to put the muscle and sinew and intellect of a new generation of veterans to work again. many of these young people have served five and six and even seven tours. some of them suffer from serious wounds seen and unseen. all of them what the chance to pursue the same dream as every other american. i think back to a young man i met in los angeles. he fought in afghanistan. was fresh out of the army, unemployed, and homeless. he told me, "i gave my country 100%. all i ask for is 100% in return." that does not seem like too much acid -- a job, and education, food on the table. -- that does not seem like too much to ask. they need an open hand when they come home. when the best way to extend that hand to honor a veteran is to hire one. with the right support, the right opportunities, our veterans and their families will not only make incredible contributions to the workplace, but also to their communities as well. they're smart, tech savvy, wired to serve, and great leaders. they will make terrific employees. i can tell you this, they darn sure know how to show up on time. the problem is that once they leave the service, they can be hard to find and tough to identify. 10 i am convinced there is a ceo good will let their people organizations eager to help. but there is no easy way to connect our hats with the employers and community leaders and community organizers remain so critical to making and sustaining those relationships. so i am pleased an extremely grateful to president obama has focused all of us on doing just that. how finding ways to make sure our veterans have the tools they need for success after service. and the jobs they need to continue their lives after they have done and given some much for us. he and the first lady have devoted an extraordinary amount of time ever to this endeavor. our first family is doing everything they can to put our military families first. they're doing everything they can to give back the 100%. the president has made the troops and their families his top priority, and he has backed that up day in and day out with real and substantial changes in the resources to make those changes work. i have seen him labor hard over these initiatives and worry about them and drive us all to better measures of success. he is nothing if not passionate, and yet somehow he does not look a day over 50. [laughter] [military fanfare] >> ladies and gentlemen, it is my honor to introduce our commander-in-chief, president barack obama. ["hail to the chief" playing] you can go ahead and cheer, too. [cheers and applause] >> please, everybody. just waiting, here. [laughter] >> last one! >> well, thank you very much, everybody. good morning. i'm glad somebody told me that was the last one because i had lost count. [laughter] it is great to be here at the navy yard. and first of all, i want to thank admiral mullen for being here and for his four decades of extraordinary service to this country. and i want to thank him for saying that for an old guy i look okay. i appreciate that. this may be one of the oldest shipyards in the united states, but today it's used to develop some of the most advanced technology in the military. although i hear your engineers are still working on a solution to the traffic when the nationals are playing. that's not ready yet. let me start by saying a few words about our economy. there is no doubt this has been a tumultuous year. we've weathered the arab spring's effect on oil and gas prices, the japanese earthquake and tsunami's effect on supply chains, the extraordinary economic uncertainty in europe. and recently, markets around the globe have taken a bumpy ride. my concern right now -- my singular focus -- is the american people. getting the unemployed back on the job, lifting their wages. rebuilding that sense of security the middle class has felt slipping away for years. and helping them recover fully, as families and as communities, from the worst recession that any of us have ever seen. today, we know that our economy created 154,000 new private sector jobs in july. and that's the strongest pace since april. the unemployment rate went down, not up. but while this marks the 17th month in a row of job growth in the private sector -- nearly 2.5 million new private sector jobs in all -- we have to create more jobs than that each month to make up for the more than 8 million jobs that the recession claimed. we need to create a self- sustaining cycle where people are spending, and companies are hiring, and our economy is growing. and we've known that will take some time. but what i want the american people and our partners around the world to know is this -- we are going to get through this. things will get better. and we're going to get there together. the bipartisan compromise on deficit reduction was important in terms of putting us on sounder fiscal footing going forward. but let's be honest -- the process was divisive. it was delayed. and if we want our businesses to have the confidence they need to get cash off the sidelines and invest and hire, we've got to do better than that. we've got to be able to work together to grow the economy, right now, and strengthen our long-term finances. that's what the american people expect of us - leaders that can put aside our differences to meet our challenges. so when congress gets back in september, i want to move quickly on things that will help the economy create jobs right now - extending the payroll tax credit to put $1,000 in the pocket of the average worker, extending unemployment insurance to help people get back on their feet, putting construction workers back to work rebuilding america. those are all steps that we can take right now that will make a difference. and there's no contradiction between us taking some steps to put people to work right now and getting our long-term fiscal house in order. in fact, the more we grow, the easier it will be to reduce our deficits. now, both parties share power. both parties share responsibility for our progress. moving our economy and our country forward is not a democratic or a republican responsibility. it is -- it's not a public or a private responsibility. it is the responsibility of all americans. it's in our nature to do the tough things when necessary, to do the right things when called. and that's the spirit that washington needs right now. it's also the kind of spirit found in the men and women who proudly serve in our country's uniform, and it's a spirit that endures long after they take those uniforms off. today's veterans are americans who have done their duty. they've fought our wars with valor, from the jungles of vietnam to the deserts of iraq to the mountains of afghanistan. and they include the members of today's military, the 9/11 generation -- some of whom are here today -- who volunteered to serve at a time of war knowing they would be sent into harm's way. to these men and women, i want to say that all of you have served our country with honor. over the last decade, you've performed heroically and done everything we have asked of you in some of the most dangerous places on the planet. your generation has earned a special place in american history. today, nearly 3 million extraordinary service members like you have completed their service and made the transition back to civilian life. they've taken their leadership experience, their mastery of cutting-edge technologies, their ability to adapt to changing circumstances, and they've become leaders here at home. just think about how many veterans have led their comrades on life-and-death missions by the time they were 25 years old. that's the kind of responsibility and experience that any business in america should want to take advantage of. these veterans are already making an impact, making companies and communities stronger. but for every success story, there are also stories of veterans who come home and struggle to find a job worthy of their experience and worthy of their talent. veterans like nick colgin. when nick was in afghanistan, he served as a combat medic with the 82nd airborne. over the course of his deployment, nick saved the life of a french soldier who was shot in the head and helped 42 people escape from a flooding river. he earned a bronze star for his actions. but when nick got back home to wyoming, he couldn't get a job as a first responder. so he ended up having to take classes through the post-9/11 gi bill, classes he easily could have taught, just so he could qualify for the same duties at home that he was doing every single day in afghanistan. they're veterans like maria canales. she was a financial specialist in the army, helping provide financial support for her unit in iraq. and when she got home, she finished earning her degree in business management. but even with her education and her experience in the army, maria still couldn't find a steady, working job in accounting or finance. that isn't right, and it doesn't make any sense -- not for our veterans, not for the strength of our country. if you can save a life in afghanistan, you can save a life in an ambulance in wyoming. if you can oversee millions of dollars in assets in iraq, you can help a business balance its books here at home. our incredible servicemen and women need to know that america values them not simply for what they can do in uniform, but for what they can do when they come home. we need them to keep making america stronger. our companies need skilled workers like our veterans to grow, and there's no reason why we can't connect the two. and keeping our commitments to our veterans has been one of my top priorities as commander-in- chief, and that includes helping them make the transition back to civilian life. that's why we're fully funding the post-9/11 gi bill, which is helping more than 500,000 veterans and their family members pursue a college education. that's why we supported extending the bill to include non-college degrees and on-the- job and apprenticeship training. that's why i directed the federal government to be a model employer and hire more veterans, including more than 100,000 in the past year and a half alone. so today, we're taking it a step further. first, we need to do more to make the transition from military to civilian life easier for our veterans. that's why i'm directing the departments of defense and veterans affairs to design what we're calling a "reverse boot camp." the problem is that right now, we spend months preparing our men and women for life in the military, but we spend much less time preparing them for life after they get out. so we'll devote more time on the back end to help our veterans learn about everything from benefits to how they can translate their military training into an industry- accepted credential. in addition, we'll make it easier for veterans to go to their local onestop career center and get help pursuing a career that fits them best. these steps will help bridge part of the gap between veterans looking for work and companies looking to hire. but that's only part of the equation. the other half is about encouraging companies to do their part. that's why i'm proposing a new returning heroes tax credit for companies that hire unemployed veterans. and i'm proposing an increase in the existing tax credit for companies who hire unemployed veterans with a disability, who still have so much to offer our country. and finally, we're challenging the private sector to hire or train 100,000 unemployed post- 9/11 veterans or their spouses by the end of 2013. this builds on commitments that many companies have already made as part of the joining forces campaign championed by my wife michelle and dr. jill biden. siemens, for example, recently met their goal of hiring 300 veterans, so they're aiming to hire 150 more by december. microsoft is helping more than 10,000 veterans get it certified over the next two years. and today, groups from the u.s. chamber of commerce to accenture to lockheed martin have all agreed to do their part to help veterans get back in the workforce. the bottom line is this. we still have a long way to go and a lot of work to do to give folks the economic security and opportunity they deserve. and that begins with connecting americans looking for work, including our veterans, with employers looking to hire. over the last few years, another generation of young veterans has learned that the challenges don't end in kandahar or baghdad. they continue right here at home. today, we're saying to our veterans, you fought for us, and now we're fighting for you -- for the jobs and opportunities that you need to keep your families strong and to keep america competitive in the 21st century. and at a time when there is so much work to be done in this country, we need everyone's help to do it. so thank you, god bless you, god bless all our services, and god bless the united states of america. ♪ ♪ ♪ >> standard and poor's announced that it downgraded the united states credit rating to aa + in do with their debt problem and deal with that in a responsible way. they feel that we're no longer a aaa rating. we're no longer offer a safe for investors around the globe. date downgraded dusted aa. >> if what about the congressional bill on tuesday? >> they were disappointed not that the bill was passed, and a default would of been even worse, but it tells us that the process that got their did not suggest that there would be a reason for steady progress toward deficit reduction over time. is not that the u.s. is incapable of paying its debt but the good political position to get there. >> how will this affect interest rates? >> we do not know for sure. we'll find out starting next week but it is hard to imagine it will be different. what may very well happen is that investors will say, maybe this is no longer were aaa asset and maybe i will demand at higher interest rates. t in this case may have to pay more to borrow money credos trickled through. if you're trying to get a mortgage are taken alone, even at higher issues risk across- the-board. >> what about the other rating agencies? >> so far not inclined to downgrade. standard and poor's has been more aggressive than the others. the question is what it would take for the others to take the same approach and downgrade. we do not know what that looks like but we continue have a divisive political process and the unwillingness in washington to arrive at a deficit reduction approach, then you can imagine the other rating agencies cutting as well. >> we were a aaa and now we read aa plus. hollen needs to happen to get the aaa rating back? >> hard to know. these are very opaque process these. we do not know what the line is. we do know that historically what a country is downgraded, it takes time. it is not as if a month later it is reversed. it tends to be a multi-year process. do we over the next two years in the analysis government get more thoughtful debt reduction? >> what impact could this have on the international economy? >> hard to say. we've never seen this before. we do not know what will clap act. -- what will happen. there was nothing in 2008 did said have caused a global financial crisis, and yet it did. people in government are not expecting economic collapse starting this week. they are nervous and they know that there is a lot we do not know about how this will play a. >> thank you for your time. next a discussion on a roll of public trust fees for some security and medicare. in a conversation with republican presidential candidate rick santorum. after that, a senate hearing on home mortgage programs. tomorrow on "washington journal," discusses julies -- daniel indiviglio discusses the overall economy. mark acton talks about the post office revenue shortfall, which always is my clothes, and when the clusters are expected. and west huddleston, ceo of the national association of drug court professionals, explains how drug courts are used to the state and local levels to keep eligible drug of vessels out of prison. w.j." live at 7:00 a.m. eastern on c-span. >> the house of representatives has been off for eight weeks. did you get eight weeks of vacation this week? i did that. on her show, she tries to take a more irreverent view on washington and the u.s.. >> we're willing to step outside the box and try something different, to figure out how to make tv news exciting and entertaining and informative again, rather than the garbage that it is whittled down to be. >> she will talk about her network in her show sunday night. >> days, so security and medicare is to public trusties talk about their roles at the national press club in washington d.c. for the entitlement programs have six trustees, including the secretary of treasury, health, human services, and liver. this hourlong discussion was hosted by boston college at's center for retirement research. >> today we are extremely fortunate to have the current public trustees of the social security and medicare systems. for almost three years, these important spot remains vacant, and fortunately, bop and schock >> today we are extremely fortunate to have the current public trustees of the social security and medicare systems. for almost three years, these important spot remains vacant, and fortunately, bob and chuck have been selected. bob has a long career in public policy. he is now president of the urban institute. chuck started in a strange direction. he was on the hill and was on the economic council, and now is a research fellow at the hoover institution. they were chosen for their high-level experience, they're accused in sight and their talents, not the least of which is a rare ability to command wide respect across policy spectrum. chuck will talk about social security. bob has a harder job of talking about medicare. they will take questions at the end of their remarks, so let's welcome them here today. [applause] >> thank you for the very kind introduction, and i thank you for inviting me to participate here. i have been looking through some of the papers in the book lists, i wished i had shown up for more of the proceedings. as always, fascinating presentations. i spoke to this conference a couple of years ago, and back then i was a social security, retirement security adviser to president george bush, and when the second term ended, you thought you were rid of me, but alas, president obama and the senate have ruined that hope. i am now back as a public trustee for social security and medicare, kind of like a song you are really sick of get remade by somebody else. just as it was vanishing from the airwaves in you hear it all over again. sorry about that. it is great to be here because we have the timely and important things to talk about in this setting. for the last several weeks, if not months, washington has been of your with the debt ceiling -- of sorb with the hold debt ceiling -- absorbed whole debt ceiling crisis, and now that that temporarily is past us, we are able to turn to other very pressing economic policy concerns. first and foremost among these are reviews of the public trustees on the actuarial sign, -- actuarial science, but a lot of them material that is covered in this event is going to be important to policy-makers in the months ahead. most of you know about the trustees process, and you know about what we'd do, but for those of you who are not familiar with it, let me say a little bit about who the trustees are and the functions we perform. there are six trustees. four of them are government trustees, secretary of treasury, labor, hhs, and the social security commissioner. there are two public trustees, one democrat and one republican, guess which one i am at the end of the proceedings -- and these positions were formed in the 1983 social security amendments, and the idea was there would be two external pairs of eyes looking at the projections on a bipartisan basis and substantiating public confidence that they were put together in a most of jessica -- most objective possible way. i have been a longtime fan of this process, the center of this -- defender of this process, and even before i was a trustee, i would be in the debate over the significance and accuracy of their projections. that is an appropriate thing to occur each year. the projections should be debated and approved for one year to the next, but i have always been in the position of saying i thought process was serving the public well, and i thought projections were released in a qualitative sense reasonable. now i have a high honor of serving as a trusty, that long time confidence and support i have had for the process, i found it only further substantiated by my experience over the last year. i have had the opportunity to participate from inhofe in the inside, and the clear commitment, object of the, -- the objectivity, freedom from agendas, ideological or otherwise, and it has been a gratifying thing to be a part of. i will talk about social security. ball will talk about medicare. medicare is the difficult one. [laughter] let me begin with what the trustees report projects. before i say how we as public trustees interact with these projections, and seems worthwhile to know what they are. this chart, if you were to pick a single graphic in the whole report that expresses the projections of the trustees in a nutshell, this is the one. of information on this graphic. everything is expressed as a percentage of the programs taxable wage base. you can see the ball line -- bold line representing the expenditures, and you can see how they're projected to grow dramatically over the next quarter century as the baby boomers leave the ranks of the work force and enter the ranks of the beneficiaries. in some respects the latest versions of this graph decides -- disguises this democratic phenomenon. -- this demographic phenomenon. if you look at 2008, you see a son spike in costs. -- a sudden spike in costs. we also have a difficult spike in disability claims and some increases in early retirement benefit claims and other things you see as a consequence of that recession. around 2008, what you would see pete on this graph is a pretty steady an uninterrupted and sharp increase in program costs relative to that tax base, stressing from about 2008 to 2035, directly as a consequence of demographic change. as the baby boomers move out of the workforce. what this chart shows even though it is focused on annual system operations, you also get information about trust fund financing. if you look at 2036, you see the bolt line coming down, and that is the point of trust fund depletion, where you see this hippocrene the benefits and the -- ucla split between the benefits -- you see a split between the benefits and the resources it will have on hand. this graphic presents the information that combines trust fund depletion as projected for 2006. you can see clearly that this is a situation where democratic change is causing house to rise -- causing costs to rise lot of income. this phenomenon crests in the 2030's. it is the increase in costs that treats the imbalance between income and outflow. the graph also shows the percentage of benefits that can be financed from revenue once the trust funds are depleted, and that percentage in 200036 and graduate declines in years afterwards. there are a few key summary measures in statistics that appear in the report each year. this year we project the combined social security trust fund will be exhausted in 2006, but the trust funds, there are more than one. there's the old age and survivors insurance trust fund. there is that disabilities trust fund. the disability insurance trust fund is projected to be depleted far earlier in 2018. the report also contains projections for what i would call the nightmare scenario. what if we do not do anything-- 2036? if we fail to act to correct program finances, we will face terrible choices. i was a ridiculous choices. it is not possible to leave -- to believe that our system when annette austerity measures -- would be able to enact austerity measures required in 2006. you have to reduce benefits across the board by 23%, and people already those in retirement, and you would have to hike the tax rate up to 16.4%. one of the things, you do not tend to see qualitative changes in the social security protections. the projections tend to be stable because most of the factors, unlike the medicare projections, that bear upon the projections in a qualitative way are well-known relatively easy to estimate. if you go back and look at every trustees' report over the decades, you see 0 again the same general cost curve. you might see the imbalance move around a little bit, but the qualitative shape does not vary that much. this year we find that the 75- year actuarial and balance is -- in balance -- imbalance is 2.2% of taxable payroll. that is not a qualitative change. that is a .03% is a bigger deterioration of the scene in a report since 1994. it is not a qualitative change, but by standards, it is a pretty big one. the reasons for the large single year deterioration this year are presented in the pie chart. it was pilfered from another presentation given -- from another presentation. the vast majority of -- about half of it arises from changes in longevity, updated mortality figures. we are living longer than previously projected. that is good news, but it is not great news for social security finances. the vast majority of the part of the pie chart that refers to demographic changes -- functions, a portion our updated projections also appear in the methods and other day that slice because as we extrapolate in the immediate future, we do it at the rate of change of recent years. there is a little bit of that longevity change in those slices of the pipe. roughly half of the worsening in this report is because of longevity changes. rather, changes in the longevity data. there is also some worsening because of the sluggish economy and spillover defects reducing immigration, but longevity is the biggest piece of its. -- it. i would say first and foremost that our primary responsibility as trustees is to vet assumptions that go into the projections and sign off on them as being reasonable and objective. reasonable does not need right, we do not know what is right, but we can make a determination whether or not we think we are using the most reasonable assumptions. basically, what happens is the economic and demographic variables that bear on projections are basically developed by the office of the social security actuary. those recommendations are before us, and we reviewed them, edit them if they require editing, or accept them here the same economic variables are used for medicare reports and social security reports. there are other durables the other developed by the medicare actuary's office, but these come out of their shop. they present us with recommendations for an intermediate assumptions for each variable, and also a low cost for a high-cost carrier of all that represents what would happen if that particular variable broke in the direction that either increase or decrease system cost. the first two items you see, fertility and longevity, they are very important to the long term sheet of social security finances. a couple of notes i would make. net immigration, it has been my experience when people look at the trustees reports, the immigration numbers often strike them as looking small. i think that is because they are presented as net immigration figures. there is a differential. people coming into the social security arianna and people coming out of the social security area. that accounts for part of the reason why they tend to appear smaller than many people expect. spurred activity is an -- productivity is an assumption that is fly-specked a lot each year. future productivity will be roughly consistent with what has few business cycles. you do not fund the system with productivity. you fund it with taxes upon wages. an important component of this is what is the share of productivity growth that is expressed as real wage growth. this is important because compensation that is expressed as real wage growth is taxable by social skirting, where -- social security, whereas compensation that comes in forms that are not taxable like other benefits, do not result in additional revenue for social security. there is the wage differential more than productivity projections that is relevant to social security finances. we are projecting a slight increase in real wage growth: peace ford, based on projections that the share of worker productivity growth going forward expressed as rising real wages will be slightly higher than in the past due to in the past having an extremely high rapid growth in benefits not subject to taxes such as health benefits. a very important additional matter that the trustees have to speak to his not only what the assumption and the projections are, but we have to tell policy makers how much confidence they should have in these projections. how certain are they. a lot of different ways that the cannot trustees' report speaks to projection uncertainty or certainty, and one of the tasks we have is how we should talk about it and how much emphasis the trustees' report should place on different forms of uncertainty. as i indicated previously, there is a sort of low cost and high-cost scenario built around illustrated assumptions. -- illustrative assumptions. if you took every variable and as soon their broken in the direction that decreases system costs, then you get a low-cost scenario. if it breaks in a way that increases costs, that is a high- cost scenario. they are meant to be illustrative event region -- they are meant to be illustrative. there is sometimes a tendency to colm to the report and say here's a projection in which the social security trust fund does not become insolvent. op ed writers will occasionally do that. there must be a significant chance that this program never becomes insolvent it all event -- at all. i will say that is the wrong way to think about the trustees scenarios. they are illustrative. did not appear within a broad range of possibilities for program finances. this is an analysis that appears in the report, and it allows the difference rebels to fluctuate -- different variables to fluctuate and shows the wide range of scenarios that can result from these fluctuations. i have shown one graph resulting from analysis here, and you can see with respect to the long term direction of the trust funds, qualitatively you do not see that much change even under a pretty wide variations in the economic and demographic assumptions. under the medium scenario, that combined trust funds become insolvent in mid 2030's, but d.c. that date fluctuate only in a few years. you will see several years of movement in the insolvency date, but you do not see a qualitative change in the direction or the health of social security. the scenarios are outside the bounds of even that 95% scenario intervals. there is not much basis when you look at the trustees analysis of uncertainty for adopting a wait-and-see attitude towards program finances. under all these plausible scenarios, we will be much better off if we correct the program finances today than if we waited to a future date. the last thing i would say before turning it over his that the trustees always have an issue of deciding what to emphasize. what is important? the trustees reports last several hundred pages and very few people read them all the way through. i suffer from this melody when i was congressional staffer. -- i suffered from this malady when i was a congressional staffer. there is a lot in there, and policy makers did not have time to wade all through them. we have to choose what to emphasize. that is an important role of the trustees. it is expressed in different ways. when we go to testify before congress and we have a five- minute statement to make, we have to choose what to put in that statement. when we talk to the press, when we talk like this, we have to talk about what to put in our statement. in the summary and in the message specifically by the two public trustees, we have to make choices about what to put in those messages. i thought i would review a couple of the things that we as trustees or the trustees as a group chose to emphasize this year. one is that we would be much better off if legislative corrections are enacted soon. this. this has been said in almost every report stretching back for decades. it is important. it is important that policy makers understand it. there are adverse consequences, especially for potentially for all beneficiaries the longer we put off dealing with this problem. certainly in social security, but also to a larger extent with medicare, the vast majority of the cost growth of these programs taken together occurs before 2035. on the social security side, it is almost always by 2035. then things level off. cutbefore that, the primary factor in driving the increase is demographic change. the change the ratio of workers to beneficiaries. this is not to say that inflation is not a significant problem. it grows more significant the further out in time one looks. we have an immediate problem affecting our ability to get federal finances under control and to get these programs finances under control, and it is coming out very rapidly and plays out in the next quarter- century. it is important to understand how wonderful opportunity is in -- our window of opportunity is then many ways the find by the way in which demographic factors drive the program cost growth and are doing it not only the very long-term, but from now until the mid 2030's. the certainty is different with respect to the two programs, and the degree is different with respect to the two programs, but the fact of the uncertainty is for sure. another item we chose to emphasize, and i will say having appeared with the doctor had a couple of hearings are ready, i am not sure how we're doing it at this point, but it is easy to get distracted by a lot of other debates people 1/2, and people -- people wanted to have, and people want to debate the trust fund, is it real, is not real? people want to debate such as dirty and medicare's relationship to the larger federal budget. these are important things to discuss. you can get sucked into an angels on the head of the can discussion that can distract you from the reality that regardless of we come out, we have to deal medicare. i compared this to the blind man feeling the different parts of the elephant. or the side or the tail, they can all be right, and they all want to emphasize different aspects of the trust fund, and you can choose to emphasize different sides of this the and on what would want to make. as soon as he stepped back from the arcane discussion, step back from discussion about how big a problem is social security rights respect to the larger federal deficit, the bottom line is you come around to the same conclusion. you have to deal with these programs. a you are better dealing with it sooner than later. there's no interpretation on any side which argue seriously for not dealing with these programs. another point we make is important, difficult to quantify, but we make it in the report, we can show you technically how the costs of repair rises over time. in many ways, we are understating the actual cost of delay because of practical political constraints, practical policy constraints. we could show you in 2036 you would have to cut benefits across the board. they are not going to want to do that. they do not want to cut benefits for the poor widowed. if you want to get a realistic assessment of how the cost delay plays out, you have to factor in things like we did not want to cut benefits from people already in retirement, we do not want have a sudden reduction in benefits for low-income people, you put those factors together and explain to policymakers how is the window of options become more narrow with time, the it is the window to solve these problems is closing much more rapidly than he would ever know from these various across the board illustration's we do. we make that point in words and the report and i tried it to stress it when i testify, but the bottom line is that when we talk about the costly and look at that lands, it is bigger than it first appears. with that, i will turn it over to my learned colleague to talk about the more complex of the two programs. thank you. [applause] >> thank you. i have attended a number of these conferences over the years, and have always been interested in what is being transmitted. i want to start by acknowledging the tremendous contribution of the return -- retirement research consortium and all the folks who have worked with them have made over the last 13 years to our understanding of retirement policy and our knowledge of the behavior of those approaching retirement and in retirement. i also want to congratulate the consortium on producing papers that by and large have been accessible to the non academic, and had been policy relevant. this has been over these 13 years a tremendous investment that will pay even greater dividends in the future as we get around to reforming the nation's's retirement programs in ways that reflect the change in social and demographic and varmints, as well as physical -- environment, as well as physical realities we face. we were asked to say a few words about the responsibilities of the public trustees as well as the challenges that the trustees face in making long- run projections. with respect to the first of these topics, as you might have suspected, no training manual for a briefing in which to roles and responsibilities of the public trust these are laid out excess. -- exists. when i was first called and asked what i have an interest in being nominated for this position kamakura i asked the individual who called as loss of his colleagues in the white house what the expectations were and what responsibilities were, there was silence at the end of the phone. [laughter] been a researcher at heart, i went next to the statutes and the language and discovered that there were four tds and rated for the trustees -- four duties enumerated. to remind you what they werethe first of this is to hold the trust funds, the legislative language. do we go out to western kenya -- virginia and open the file cabinet -- west virginia and open the file cabinet to is that a heavy lift or a light left? [laughter] do we do this every year to judge the situation of the trust fund? i have been disappointed to find out that is not the case. no trips. second is to report to congress each year on the past and future status of the funds, is what the reports do. third, report to the contras -- congress immediately if the amount in in the trust fund is too small, which i guess -- [laughter] maybe you have to go to parkersburg and check it out. finally to review policies followed in managing the trust funds and recommend changes. there is no separate distinct roles for the public trust fees from those of the ax of his to -- ex officio trustees. as you all know, public trust these positions are not particularly visible ones, so you cannot look at the behavior of incumbents and the -- and get an idea of what to expect from an observational standpoint. it would not have helped us because as pointed out, there were no incumbents to observe, and neither can you call up those who will be your fellow trustees, they been cabinet secretaries who have more important things to do than answer questions like this. in any case, none of them nor any of the political appointees in the department who served as their representatives on the working group would have been able to say too much because, for all the time they served, in new there was no public trust the. -- no public trustees. one can consult with those who held positions in in the past, what those discussions revealed was that at different times, the public trust these roles have been quite different and there was nothing to generalize about, except there was one common message that i heard from all of them, and that was to be most useful to this process and most effective, the public trustees should collaborate and develop common positions wherever possible, and chuck and i, with one glaring reception, have followed this advice, and the glaring exception is that every time we are in a room with more than two people, i have been come dr. richauer, and he remains chuck. [laughter] then used me for a little while, and then i realized this was his way of saying i am a lot younger than you are. [laughter] here we are again. i did not go through this investigation. i did not have to go through this to know what the primary responsibility of the public trustees was, and that is to ensure to the public both the integrity of the reports and the object of the and high quality -- objectivity and high quality of the analysis that underlies them. notwithstanding the independence of the actuaries and the social security administration, it is possible that political pressures could make incentives to massage the projections in optimistic projections. those of you who are older thanhchuck remember that during the nixon administration some people in the white house had obsessions with certain data series and tried to tinker with them. it is not totally fanciful, neither would it be surprising the any of you that while in theory this is a danger that exists today, and practice it is not something anyone should lose even a minute's worth of sleep over. the offices of the actuaries are probably independent and committed to preserving their reputations that have been burned over the years for developing sophisticated methods and producing objective analyses. the department will staffs that support the trustees are highly skilled professionals who take their mission of the object of the very seriously, as does the staff ssa. is also clear from having gone through one cycle and watching the give and take that occurs when the reports are to gather that there is no administration position. each department and agency has its own perspectives and its own reviews, and as far as i can tell, feels free to express them, even when it is a minority view, even when steve goss is frowning or rick squirming in his chair, in their displeasure. we were not offering to be exotic products. we did not believe in the public's. therefore, we did not offer them. because servicing is a low- margin business, we thought it was important to have a good quality portfolio. we were conscious about underwriting our loans very strict up front. i think it starts with the underwriting. we keep our homes, therefore we are concerned about what we put in a portfolio. >> mr. hopkins, there has been a significant consolidation in the mortgage services industry. the largest banks now service the majority of the loans in the country. have more workers and communities benefited from this consolidation? >> absolutely not. i think is part of the problem. an article i saw in 2010 showed the four largest servicers controls 70% of the market. they do not have the customer contact we do. if there was a more diverse market on the servicing side, the customer would have a better experience. >> professor, i in your testimony you recommend a fair credit reporting act equivalent for mortgage services. what should that includes and cal would it prevent -- and how would it prevent some of the problems we are currently seeing? >> there are many people working on the details. yet there is a mistake being made about the customer, we actually think of fix it. that is part of what i am pointing out. i think it is a step in the right direction. we have issues around dual tracks. that is part of it. having disclosures and avoiding conflict of interest to make sure the investors do what is right for the customer and not for other parts of the portfolio, i think that is some of the things we would like to see reform. >> mr. schwartz, with the effort being put forth, when a national mortgage servicing standard help provide clarity for servicers, homeowners and investors? >> centaur, yes. we do believe there is a strong need for coordination and align that for what is going on today in the regulatory efforts and others on servicing standards. i would caution the senator to let this fall out to find out what is finally happening to the standards in the discussion as we see how it works through the system before there is another effort to make new standards without testing how these are coming through. >> mr. couch, i in your testimony you argued that homeowners have not been harmed by the problems in mortgage servicing. do you disagree with the assessment and the required changes imposed by the federal banking regulators and the f h h a? >> in my testimony, i said that in the event a borrower has been damaged, he or she should be entitled to be made whole for those damages. in terms of harm, it is important to keep in mind that in the case of foreclosures in this process, the length of time during that 400 plus days, depending on what state you are in, that bar were is not monetarily damaged. it is rent free, so to speak, during that time. there are in place in all 50 states mechanisms for making the borehole if there are damages. in every state -- in every case they should take place. it is important to take a look at who is actually been damaged in the process brigid. >> my time has expired. >> go ahead. >> i will proceed to the second round if need be. senator. >> i would be more than glad for you to take all the time you need. to the witnesses, thanks for your testimony. one of the fortunes of our office -- someone in our office was talking about a year or so ago they had a decision to make about it to borrow money from because they, obviously being a staffer, had experience with what happens in mortgage servicing. a community bank would actually know a person. on the other hand, the larger institutions the rates are cheaper, but they may be put through the meat grinder and something happened. i used that example to say the customers do have a choice. to go to achoose smaller institution and pay a higher fee, but add that personalized service, or go to one of these institutions where your loan may be in a warehouse in kansas. there is a difference there. i used to borrow money for commercial loans. i am just wondering, mrs. schwartz, what your response would be to that. people do have a choice. >> they do have a choice. i would say the evolution of a $3 traded market, there was a lot of buying and selling of mortgages. today most of the mortgage market is controlled through the investor guidelines through fannie mae, freddie mac, and fha. many lenders participate and those guidelines govern the service. there are choices to user community bank versus online or 800 numbers. they have the right to buy or sell those loans today. some do. >> that is a good point. i believe a lot of the things we do around here -- we look at some of the regulatory practices that were put in place by dodd- frank. there is a concern that that provides consolidation over a period of time if we put in place uniform standards by law, will there be consolidation? >> i believe you can have standards and have a. protections in place for smaller servicers or banks that have too much burden with that. you can have standards to protect customers. >> how does that happened exactly? some committee bankers note that the market is going to migrate away from them if they charge higher fees than larger institutions. how would that actually work? if the one else want to chime in, that would be helpful. >> one of the basic distinctions whether the bank retains the service or sell them to somebody else -- you can write rules to say that if this is retained, you can also have a limit said that the smaller banks that retains servicing or more likely to have a customer relation than those sold out to a national market. >> if i may step in -- we have already defined in here what a small or a large investor is. under the fannie mae guidelines, 65,000 loans for a small market investor. as far as the cost, what we are looking at at, we do servicing for some other banks. i caution -- we do some servicing for other banks, but we do by some servicing. the vast majority, probably 98% of the loans, originate with us. if we are doing our own product, we are not looking to increase the standards. we are looking at things that almost forced us to have a call center in implemented in order to do that. in order to track all our contacts with customers. when you're talking about the cost of a mortgage from a committee bank versus a large bank, i do not think there is a difference in cost, particularly with the new incentive rules. i think the pricing is virtually identical between the large and small servicers one marquee advertising points is that we service locally. >> you still do not want national standards. >> no, we do not. we do not want the standards that are very prescriptive. we have been successful. our delinquency rate shows that. we have been very successful in servicing. i am cost just that we have standards that -- we do not have those types of issues. our biggest issue is whether or not they pick up the phone. "some people change their number motley. -- some people care -- some people change their number monthly. >> i think there are ways to create standards where the regulatory oversight body can work with the smaller community banks others. you have a customer service right that is very low. but larger companies may have different processes in place because they are a higher volume shop, therefore they need different structural concepts. in all cases, though, if there are ways to be flexible with standards. >> senator mendez. >> mr. chairman, i ask my statement to be included in the record. i thank you for holding the hearing. i appreciate the testimony i have read from the witnesses. i have a few questions i hope you can answer. let me start off with, i know some of you talk about single point of contact and will track, but if you had to name a few specific national mortgage service standards that you believe would be helpful, what would those be and how would they be helpful? anyone on the panel? >> i am at the to answer. clearly the single point of contact has become a dominant discussion in the regulatory environment and the legislative environment because customers are not happy. to turn that into something where they understand what is happening around them, it to them, and through the options made available, a single point of contact is something that makes them get to the process in an easier way. i testified earlier that it does not mean the outcome will differ if they are not able to make an affordable payment or if they are unemployed and there are few tools that will help them get through a long process. single point of contact, a dual track processing is another significant issue out there. it is confusing to homeowners to get help from the left side of the house, -- i spent four years working with the industry. at the same time, the laws create process and standards to serve -- for foreclosure to occur. to explain the complicated process as to work much sooner for the consumer. >> you suggest you should be subject to the servicing standards. to what extent does that depend on what servicing standards or we're talking about? >> we are subject to some standards. i think we have been able to follow the standards very carefully. we are dealing with fannie mae and freddie mac. they all had their standards and when they expect us to make contact with customers. what we are concerned about is the cost we are looking at to document what we are doing, that we are having the contact with the customer. but i think, again, our results show we are there. what we are looking for is anything that does not at a cost or burden to us. we have a car bomb if we are making certain standards. our delinquency rate will prove that 1.7% -- we are one-third the national average. we are doing the job we have only had a handful of foreclosures over the last few years. in full, i am talking 23 last year. that is not out of 5000 loans. it is not an excessive number of foreclosures. divorce, loss of jobs, etc. is causing that. >> let me ask some of the council here. does the panel acknowledged that it is a conflict of interest for mortgage services to have an ownership interest in a company that performs services associated with mortgage service foreclosures, property magnate, inspection -- does that not get the services and incentives to force homeowners to use expensive and on services for their own profit even when that is likely to draw the homeowner into foreclosure? >> senator, i think you raise a good point. there are all sorts of different interests in place that have to be balanced. i would maintain that there is not necessarily a conflict of interest. in fact, it may make it easier for the consumer to have services that are provided in- house versus going outside the house. i thing most of the standards that are proposed would require the services to be offered at fair market rates and not be marked up. we have had extensive debate throughout about what is required in that regard. you raise a very good point. i think it is a case by case. >> held out foreclosure insurance? >> keep in mind that if you need money and i give you a security interest in my house to secure that money, part of the deal is i keep insurance in place so that your security interest in my house is protected. if i do not go out and get property and casualty insurance to keep your security interest secured, i think you as an investor would like to be a contractual provision for that coverage to be put in place so your security interest is secured. >> we have found cases where that insurance has been well overpriced. again, how you maintain it? i see, a professor, you're trying to get in here. thank you for your patience. second lane conflict of interest by mortgage insurers -- suppose it is a conflict of interest for the company servicing primarily but also owning the second lein. it might be in the financial self-interest of some private sector parties for the conflict to continue. is that not the kind of situation where it is legitimate for the government to step in? >> are you directing that to me, senator? keep in mind that in most of the cases we are talking about, we can talk about the piggyback loan. why does the bulk of the way they did. the relationship between the first and the second is established by state law. -- it is established by the investors or the lender that has the first and the lender that has the second and any competing interest is governed by state law and also by the contracts. >> i understand the privileged rights of whatever the first lender is in the second letter is in terms of their status and album will be compensated. my concern is a second lein also been the servicing entity -- in that context, are the working in a way to satisfy their interest as a second lien holder or are they working in the interest of the homeowner and the resolution of the process that desk ensures that they can keep the person in their home? >> the primary party affected is the owner of the first lien. if he has concerns about the second -- about how the secondly will be serviced will have to raise that concern at the point where he purchased the loan. those are the rights that most directly affected. i recognized that there had been suggestions that the servicer of the second lein may but the interest of the second lane in front of the purse -- of the first. i can easily envision the conflict that could arise. the beef, if you will, is the investor in the first mortgage. >> just a couple of quick points. the logic of having insurance to protect investors is strong. the fact there is a reason for something does not mean it is implicated correctly i think with the insurance and the fees is one way to address the problem. i know from my time in the administration there was great concern that the decision by seconds by major banks -- a lot of times sectors become first and get a lot of conflicts of interest. it makes it harder to make, -- modifications for the homeowners. >> thank you, mr. chairman. i thank all of you for being here today and on skype. i travel across north carolina and hold conversations. it is an opportunity for constituents to help north carolina to come to these events and actually -- we talk about the issues of the day, but also bring their concerns to me. we have a constituent staffers that can help immediately work on issues. without a doubt, there are always concerns about foreclosure. always concerns about mortgages that have questions. in just about every situation, they discuss how documents have been requested and they get lost. they send them in again, they get lost. it is a repetitive comment that i hear each and every time. my question is -- mrs. schwartz, i think you mentioned this in your opening talk -- held a single point of contact might help solve problems like this. >> good morning. earlier, i also referenced -- we created a web portal for just that reason so that consumers, counselors, and servicers no longer had anecdotal back and forth, but rigorously track communication so there will no longer be an issue we created a mutual nonprofit entity for that reason. secondly, there is nothing more frustrating than of losing documents and having 20 phone calls from someone and someone on the receiving end does not have it. at the end of the day, this is not complex. there are ways to address it, -- to just sit through document think in nature there is communication through all stakeholders. we need to keep working towards those solutions. >> thank you. >> first of all, the portal mrs. schwartz just described i think is getting better. what i saw in my own experience was that they would receive the documents and if it did not have their loan number on it, and they ignored the document even though they had the insurance agents phone number. they ignored it because they did not check a box. they went ahead and bought the insurance. that is in the file i provided to staff. >> thank you. >> some have suggested that one way to improve servicing is to create performance thresholds that servicers might meet. if servicers failed to meet the delinquency rate target, time lines -- the servicing rights would be sold and the servicer replaced. can you discuss whether you believe that would be effective? mr. hopkins, could performance rentals get servicers to perform better on behalf of investors and borrowers and, at the same time, avoid placing regulatory burden on committee banks that service loans? >> there are already, in a sense, performance thresholds. fannie mae and freddie mac have time lines required for foreclosure processes. they measure them against state law and other efforts for how long it takes to foreclose on a loan. certainly there are great things being done by small and special servicers out there. all they do is help the borrowers in distress. that is their main business. the larger shops have performing and nonperforming assets in their departments and have a lot of performing loans they deal with. a threshold that news servicing by investors is something that should be considered because we have been locked up in the system with an inability to move on loans. it has called some stress in the system -- caused some stress in the system. >> from our standpoint, particularly when we are talking about performance standards, we do have some penalties if we get certain delinquency rates. these are actually reduced. we are incentive to have contact with our customers. under some of the new proposals we are looking at, we are taking and cutting the servicing fees for your performing loans. that would drive me added the business. it is a break even at best business as it is. we are looking at, in my opinion, rewarding bad players by paying them more to service and to modify those loans. i think that is a perverse relationship. in my opinion, you should not be rewarded for making bad loans and paying people more to service bad loans. we would be in favor of servicing standards. >> thank you, mr. chairman. >> mr. hopkins and mrs. schwartz, as we have heard from your testimony, results of services it takes time and diligence. to help correct things sooner, can our worst acts -- access their records to ensure that payments and fees are being applied appropriately? mr. hopkins? >> yes. they call in to our servicing department, we will happily supply them with their payment record and any other records they would like on their mortgage. or if they come in and talk to us. it might find a discrepancy, we will work with them to resolve the discrepancy. obviously, we are a high touch, i feel type bank. we rely on our servicing and expertise in servicing and our reputation. >> mrs. schwartz? >> yes, sir. what i have seen from some of the largest shops is they have very impressive, web based access systems where they have a read only review in a private, secure setting to sea where they are. i think the industry has made great strides in that area. i am not familiar enough to know across the industry the consistency of that opportunity. >> what do you not to say to that? >> degette o observations -- washington mutual did provide me with records on that issue. they showed a lot of fees i did not think i allude. the second thing is this issue of access to records. there is no access -- right to access in general. in practice, it usually buys comply with it, but there is no legal right to our financial records. >> thanks again for all our witnesses for being here with us today. as more developments in the servicing industry continue to surface, the committee will continue to exercise oversight over this important issue. the record will remain open for seven days for additional statements and questions. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> next, a joint economic committee meeting of the july employment numbers. after that, but the obama outlined the job is to give our veterans. after that, your calls and comments on washington journal. >> if every weekend, american history tv highlights the 150th anniversary of the civil war. if this week, when the most important documents in our nation's if history, the emancipation proclamation paul fink, and on april 10 -- on the gramm lincoln. the civil war, every weekend on american history tv on c-span3. this month, c-span regular features more of the lbj tapes caring for the first time. today, hear conversations between the president, secretary of state dean rusk, and senate armed services committee chairman richard russell. >> i am trying as hard as i know how to get peace in viet nam as quickly as i can. for that reason, i am not running. >> nationwide on channel 19. online at c-span.org. quite the nascent but the economy added one of its 17,000 jobs in july, dropping the unemployment rate slightly to #1%. keith hall testifies about the report before the joint economic committee on capitol hill. this runs about 55 minutes. >> we are grateful for your many years of service. he has been working at the bureau of labor statistics since 1974. he served as the deputy commissioner since 2003, including 1.5 years as acting commissioner during the bush administration. thank you for your years of service and your dedicated commitment to the united states of america. we are grateful for that service. is this your last hearing in congress? we will try to make it memorable for you. [laughter] in the past few weeks we have gotten a number of economic reports, including today's employment report about which we will talk mostly about. no matter what report it is, so many of them indicate to us the fragility of this economy and some of the basic weaknesses we are seeing. the gdp numbers released last friday showed that economic growth in the first half of this year was weak, growing at an annual rate of less than, unfortunately, 1% during the first half of 2011. this week we received additional data that suggest that the pace of the recovery is decelerating. months ago we were saying it was moving too slowly. now some evidence indicates actual deceleration of that. two examples of that -- first, the so-called manufacturing index dropped to 50.9% in july. this marks the 24th consecutive month of expansion in the manufacturing sector. it was the lowest reading since 2009 -- july of 2009. on tuesday we learned that in the month of june consumer spending declined for the first time since september of 2009. consumer spending, as many of you know, counts for 70% of economic activity. at least to be growing and not shrinking, obviously. i note that the committee members and the folks in the audience agree that we need much stronger economic growth. there should be and will continue to be a bigger debate on how to achieve that. the labor market, we know -- and we will get further into this debate -- faces significant challenges. more than eight quarters into the recovery unemployment remains above 9%. hard to comprehend that. almost half have been out of work for six months or longer. we need to be immediately focused on providing incentives for job creation. just yesterday the joint economic committee released a report on the near record long- term unemployment workers continue to face. first of all, while so many groups within this study are having great difficulty, if you are one of the falling, your challenges are even greater than the population at large. the following categories -- those with a high school degree or less, older workers, construction workers, and african-americans. those groups of unemployed americans face disproportionately higher rates of long-term unemployment. second, the longer an individual is unemployed, the harder it is to find work. if you look at both ends of the spectrum, if those out of work for more than six months and those out of work at the other end of the spectrum for as little as five weeks. those at that end of the spectrum are three times as likely to find work in comparison to those at the other end. third, employers report they are having difficulty finding skilled workers. we know that is a considerable problem. despite all that bad news, i think we can move very quick -- very quickly on a couple of strategies. we have been pushing for a small business jobs tax credit pact, which would create 81 year quarterly tax credit equal to 20% of the total increase of employee wages. if you are hiring and increasing your payroll, in total you can get a tax credit for that. vice chairman brady and i and others have been working on the life sciences jobs and investment act. it is a way to create high- paying jobs in all parts of the country, but also to move forward on healing and hope that comes from the discovery of new scientific advancements. thirdly, it is a way to get jobs back from overseas. third, many people agree, both democrats and republicans, we ought to make the research and development tax credit permanent. it makes a lot of sense to do that. i do not know what we have not, but we should. we also need a new approach to manufacturing. we have a strategy to make sure we are all linked in the years ahead, especially in the next year. one of the small glimmers of hope from this bad economics and jobs data has been manufacturing. since the end of 2009, manufacturing has added 290,000 jobs. that is a little bit of good news. we will hear a lot more today about today's's report. during the month of july the job at it 154,000 private sector jobs. is good news, but not enough. the overall number is 117,000. that is better than the last two much individually, but not nearly enough. we have a long way to go with strategies to create jobs and incentivize the creation of jobs. with that, i would turn to our vice-chairman, vice chairman brady. >> thank you. thank you for your many years of service to our country. it will be missed, and we appreciate all you have done for the committee. clearly today's increase in the number of payroll jobs exceeds such very low expectations. certainly nothing to celebrate. the unemployment rate fell largely because of 193,000 declines in the labor force. the actual number fell by 38,000. the broader measure of unemployment remains over 16%. what troubles me is that we have the fewest number of people participating in the work force than in a quarter of the century. those are not signals of a healthy economy. 2.5 years ago this month president obama side his historic stimulus bill promising to jump-start the economy, restore consumer confidence, and put people back to work. to date with a historic number of americans looking for work, the risk of a double dip the brush and growing, it is long past time to pull the plug on the president bought the failed economic policy. i do not fault the president for trying. lord knows he has thrown every government stamp at the economy, but it has not worked as he wants. the white house simply does not understand how to create jobs in america. certainly, at least, not government jobs in america. how much longer must americans was the economy stumbled? after trillions of dollars in poorly designed stimulus and monetary intervention, must 9% unemployment be the new norm? how many more years will family and businesses suffered until america enjoys a strong economy again? america has been more than patient. but after 2.5 years, enough is enough. you tried and failed to revive the economy. if america deserves better than a second raid economy that is held up to ridicule by other nations. when the economy is headed in the wrong direction, common sense dictates you change course. instead of threatening to raise jobs -- raise taxes on job creators, we need to lower taxes and increased business development. it has proven time and time again to create jobs. we should tear down the barriers, reduced the cost of regulation and taxes that place us miles behind at the starting line, and lowered the tax rate so an estimated $1 trillion in american profits abroad can flow back home we can invest it here in america right now in new jobs, more research, business expansion, and a stronger financial future. passing the free-trade agreement will create 250,000 new american jobs. putting our energy companies back to work in the gulf and alaska will create more than 1 million new american jobs this sector. another 800,000 jobs will be saved nearly by calling a halt to the president's new health care law. that will also eliminate a costly cloud of worry among small, medium, and large job creators throughout the country. much more needs to be done, but perhaps nothing more important than the white house ending this campaign of demonizing the free market. we built the greatest economy in the world and can do so again if washington would get out of the white. the news report on the economy today all the begins with the capital of the white house as a backdrop. not on main street or in front of the headquarters of an american company. the zero entrepreneurs that make the critical decisions to make jobs have been forced to become washington century because washington is directing the economy to a degree not seen in our lifetime. that is the problem. washington needs to get out of the way. if it means to end its job killing rhetoric, regulation, and intervention and give americans topless to do what we do best -- and the date and lead the world to create opportunity. and finally, america's financial health does matter. we know our perlis debt and deficits are shaking markets and confidence at home and abroad. we also know from 40 years of economic studies that our global competitors in similar straits have boosted their economies significantly by reducing their debt, by cutting spending, and restoring business and consumer confidence. congress has taken an important first step to reduce the size of government this decade with passage of the budget control act, which the president signed. excluding the winding down of the wars in iraq and afghanistan, without recent passage of the budget control act the government would grow to over 23% of our economy this decade. with this passage, the federal government will shrink to 21 by 6% of gdp this decade. president reagan began to reduce the size of the federal government. as federal spending shrank in 1981 to around 18% in 2001, main street trade 37 million new tried it -- may street created 37 million new private-sector jobs. we get lost almost 3 million private sector jobs. i will conclude with this -- a market disburse a strong growing economy that fully employs our people and is the enemy -- is the envy of the world. we have to private washington's hands of the throats of the job creators. we will change jobs -- create jobs and we changed course today and get government out of the way. dr. hall, i'd look for to your testimony. >> congressman cummings? >> it is good to be with you again, commissioner paul. i want to thank you for your service. since 1974, i am sure you have given your blood, sweat, and years to support our nation. at a time when so many of our public employees are being called everything, i pause here to thank you for what you have given. i thank you for the lives you touch. i say thank you for a grateful congress. i also want to take a moment -- let's talk about this. today's report indicates that in july we created 117,000 jobs and the unemployment rate dropped to 9.1%. obviously we have a long way together to resolve our economic challenges and to ensure that everyone who wants to work can work. last week we learned that the economy grew just 0.4% in the first three months of this year and only 1.3% in the second quarter. in june, american consumers decreased their spending. additionally, the already battered housing market, which continues to be a severe drag on the economy, took another hit in june as existing home sales fell sharply due to cancel sales contracts. the policies coming out congress are doing nothing to rebuild confidence or spur economic growth. according to many experts, they may even entered the recovery and cause us to give up the small gains we have already won. thus, an economist at barclays capital has warned that the debt deal congress struck earlier this week could reduce economic growth by eight tenths of a percent in the first year alone. he said, "when the economy is only growing eight. and a half, a lot of economists feel this is not the right time to be finding fiscal restraints." similarly, a chief global economist at deutsche bank asked, "why would you want to impose restraint on an economic recovery that is already fragile?" you are removing spending power from an economy at a time when it needs it. it is likely to make the economy weaker and, in turn, the budget gets weaker because of tax revenues are growing slow. the recent nosedive in the dial suggest others may agree with this assessment. suggest others might agree with this assessment. congress is unwilling to address the most important issue facing this nation -- the need to create jobs, jobs, jobs. some of the terrible consequences of our failure to focus on economic growth or make clear in the results of the recent piu research center analysis, which fell the wealth gap between white households and african american and hispanic households is the largest since the government began importing on and come 25 years ago. the housing bubble took a much deeper toll on black families and hispanic families than it did on white families. we can do better. we must do better. i voted against the debt deal because i could not in good conscience support the use of the manufactured crisis' to implement ideologically based policies that will further threaten our nation's economic growth and job creation potential. further, the debt deal intended to reduce our debt by eliminating discretionary spending, simply requiring deep cuts in programs important to our most marbles citizens. at the same time, it demands nothing from the wealthiest americans or corporations receiving millions in tax breaks. i believe that as we work to reduce what is certainly an unsustainable level of debt, we need a balanced plan that prioritizes economic growth and upholds the full faith and credit of the united states through what should be a national commitment that entails shared sacrifice. i believe that this is only fair. the national debt we now face was created by both increased spending and by forgone revenues resulting from tax cuts provided to the wealthiest among us. with that, mr. chairman, i yield back. >> thank you congressman. and what you and introduce dr. keith hall. he is the commissioner of labor statistics for the u.s. department of labour. as i mentioned, this is a national statistical agency that collects, processes, analyzes, and disseminates statistical data to the american public, the u.s. congress, other federal agencies, state and local governments, business, and labor. dr. hall served as chief economist for the white house council of economic advisers for two years under president george w. bush. prior to that, he was chief economist for the united states department of labour. dr. hall also spent 10 years at the u.s. international trade commission. he received his b.a. degree from the university of virginia, his m.s. and ph.d. degrees in economics from purdue university. dr. hall, we are grateful you're here with us again and we look forward to your testimony. >> gracias. mr. chairman and members of the committee, thank you for the opportunity to discuss the unemployment data released this morning. non-farm payroll employment rose by 117,000 in july following two months of little change. the unemployment rate was not put one% in july. it-all little movement since april. health care employment rose by 31,000 in july in both hospitals and ambulatory care services. retail trade employment increased by 26,000. the manufacturing sector expanded by 24,000 with gains in motor vehicle and semiconductors. mining employment grew by 9000 and was up by 140,000 since the most recent low in october 2009. employment in professional and technical services trended up in july. employment in temporary help services was flat over the month. it changed little in 2011. other private sector industries show little or no change in july. employment in state government aid -- decreased by 23,000. it was due to the partial government shutdown in minnesota. local government employment started down over the month. they have shed 475,000 jobs. turning to measures from the survey of households -- the unemployment rate was 9.1% in july. if the jobless rate held at an average range between 900% and 9.2% in april. 44.4% have been out of work for 27 weeks or longer. this proportion was unchanged over the month ended essentially unchanged over the year. labor force participation is down from 64.1% to 61.9% in july. the portion of the population but was unemployed has remained unchanged. in summary, not form a payroll -- non-farm payroll increase by one of the 17,000. the unemployment rate was little changed at 9.1%. as i close my official statement, and i also would like to take a moment to recognize my colleague, the deputy commissioner. this is his last appearance before the joint economic committee after a 37 year career with the bureau of labor statistics. he is retiring august 26. i thought i would voice my appreciation for his work and his accomplishments over the year. as you have noted, he joined in 1974. he graduated from the university of maryland with degrees in economics and social work. his first position was an economist position in the office of the unemployment statistics. he has risen entirely through the ranks. he has held several positions, including a supervisory economist and assistant commissioner for current employment analysis. the has been deputy commissioner since 2003. he served as acting commissioner between 2006 and 2008. he has been by my side not only at the hearings, but the day-to- day operations at the bureau. phil has worked with most of the members of the bos family. he meets with every new staff member as part of our new employee orientation. he has been a big part of our long, rich condition -- tradition as a independent agency. he's been a big part and he will be missed. on behalf all bls employees, we want to express our appreciation we at the bureau wish him a long and happy retirement. >> dr. hall, a process for your testimony as well as your tribute to phil. always some of the economic news was as ugly as orchard beat, but we have to look at only the numbers. there is a lot to talk about and a lot to be concerned about, frankly. one of the sentences from your statement that jumps off the page is at the bottom of page two. "of the 13.9 million persons unemployed in july, 44.4% have been out of work for 27 weeks or longer." that is a stunning #. i know it has been a recurring problem. our committee has taken a close look at this. can you put that in some historical context in terms of the lane of months -- the lenght of months? >> gosar with the basic facts. the share of the unemployed

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