Transcripts For CSPAN2 Capitol Hill Hearings 20130919

Present when you are talking about the president marking the vote and there were 41, not 40 soontobe 42 when we vote on this mark i understand what you say about him having signed them but that still does not take away the fact that it is a signature piece of legislation that came from this president and those that supported it and its not likely that he is going to change his mind in that regard. That is what i dont see or hear and principally what i dont see is an alternative. The question that i have is what your Republican Study Group a year ago or a year and a half ago repeal and replace and repeal and replace used to be the mantra and now the mantra is defund. I ask you, do you and the study group have a plan or would we go back to the status quo . Absolutely we do have a plan. Let me get this plug. We officially unveiled our alternative called the American Health care reform act. The Republican Study Committee has would endorse this bill to comprehensively address the problems in health care. [inaudible] we are seeking cosponsors but we have a number of doctors in congress. I will send you a copy. This is the first time im hearing this. It allows people over state lines and allows medical malpractice insurance and we make sure that people with preexisting conditions cant be discriminated against and protect the lives of the unborn. We allow tax equalization. If you buy Health Insurance that sounds like obamacare. None of that is obamacare. There are few options and they are higher costs. The condition is something that is part of that. We work through existing highrisk pools instead of creating basically a mandate that has resulted in higher Health Insurance costs for everybody. Thats not a solution. They are higher now. We want to Lower Health Care costs and give families more options and that is what i will absolutely give you a copy and i would love to have you as a cosponsor. It will surely fix the problems in health care. Better than that i would love you to beat bipartisan and cross lines and let me be part of your Republican Study Group. I dont know if you would agree with a lot of things that we represent. I will work on you and i will have to switch card that will be available as well. I dont think its beyond reach. When ships are passing in the night there is not likely to be a compromise. I am an optimist. We are open and we think there were way to do Health Care Reform is to include all the good ideas from people of both parties. Clearly that didnt happen with the Current Health care law but it is achievable and we lay out a lot of those principles and we will be happy to give you a copy of that bill. Would the gentleman yield . Off course. If theres anyone out there that wants to shut the government down why didnt they do it for this hearing started . [laughter] i am speechless for the reason that i fully concur with my colleague. The gentleman yields back is time. Is there anyone else that seeks time . Is there anyone else that seeks time . I see a gentleman from florida is recognized. Thank you mr. Chairman. I just wanted to say one thing about almost two and a half years ago this issue was before us on an appropriations bill that we declined to make that amendment. I would just like to apologize myself for member steve king who brought this amendment here very briefly and we didnt make it in order and now we feel we are going to hopefully make it an order. I think he paved the way for this and i appreciate what he did. Thats all i have to say. Thank you. The gentleman yields back is time. The chairwoman is recognized. Thank you mr. Chairman. Isnt there a rule that the chairman is supposed to leave after 8 00 p. M. . That would be after 8 30. [laughter] the gentlewoman yields back are time and the gentleman dr. Burgess is recognized. I do feel obligated to point out seven of those appeals have been signed in law by the president that we forget the seven times the president jettisoned the own part of this law. People can sign up for that because you close the window. Employer mandate we know that was suspended and reporting requirements for Small Business Health Exchanges wont be open until 2015 said they were delayed by a year. The deadline for insurance contracts to be in hand by october 1 that was delayed and then the administrator of the medicare and Medicaid Services promised me at the end of july that all of the rates in states like texas where the federal fallback exchange would be set up would be available on september 15. Mr. Chairman we are going the wrong way from september 15 right now. This amendment is absolutely critical for our country right now and i thank the gentleman for bringing it and i yield out. The gentleman yields back is time. I want to thank both of you for taking time to not only prepare yourself by sitting in here probably for several hours before we got to you but to represent ideas of both of you strongly believe in that will make our country stronger and better and will better allow you to represent your constituency. I hope it will work well enough where you will want to come back at a future time with the knowledge that we care a lot about the ideas which you having can present to this committee. You are now excused. Thank you very much. This now closes the hearing portion and i would acknowledge to our members that we have now to rules that we will consider before the rules committee and i would ask for a motion. I remove h. R. 687 the Southeast Arizona Land Exchange and conservation act from 2013. The rule provides one our general debate divided and controlled by the chair and ranking minority member of the committee on Natural Resources and consideration of the bill. It makes it in makes it an order its original text for the purpose of the amendment and the nature of a substitute recommended way Natural Resources printed in the bill shall be considered as read. All points of order against the amendment in the nature of substitute. Only those further amendments in part a of the Committee Report such an amendment may be offered only by a member designee and shall be debatable for the times specified an equally divided and controlled by an opponent and a punish up enough subject to amendment and shall not be subject to demand in question. All points of order against the amendment printed in part a of the report. The motion to recommit with or without instructions. Section 2 of the rule provides for the consideration of h. R. 1526 restoring health for Healthy Communities act under the structured rule. The rule provides one our general debate equally divided by the chair and ranking minority member. The committee on Natural Resources the rule all points of order against consideration of the bill. The rule provides the amendment in the nature that can substitute consisting of 113 two unmodified by the amendment printed in part a. The rules Committee Report shall be considered as adopted in the bill as amended shall be considered as read. The rule at all points of order against provisions in the bill as amended. The rule makes an order on those further amendments printed in part c of the rules Committee Report. Each such amendment may be offered only in order printed in the report and may be offered only by a member designated in the report shall be considered as read. Shall be debatable for the time specified in there for equally divided and controlled by the proponent and an opponent. Zhou mouth not a subject to amendment and subject to a demand for the provision of the question. All points of order against the amendment printed in part c of their port the rule provides one motion to recommit with or without instructions. Section 3 of the rule provides for consideration of h. R. 3102 the nutrition reform and work opportunity act of 2013. Under a closed rule, the rule provides one our debate equally divided and controlled by the chair and ranking minority member of the committee on agriculture to the rule all points of order against consideration of the bill. The rule as all points of order against provisions in the bill. Finally the rule provides one motion to recommit. You have now heard the motion of the gentlewoman from north carolina. Is there any discussion on the amendment . The gentleman from massachusetts. I have an amendment to the rule. I move the committee for h. R. 26 , 687 and 3102 open rules that all members have an opportunity to i just wanted to say with regard to h. R. 3102 im on the Agriculture Committee. There has not been a single hearing issued by snap at all on the committee. There has been no hearing in the subcommittee or full committee on the bill that is before us today. In fact the bill before us today could go to a symbolic markup and we find that entirely direct from the majority leaders office. Given the fact that cbo has made it critically or that a lot of people will lose their benefits here. We ought to have the opportunity to be able to allow members on the floor especially the Agriculture Committee who you offered amendments to this. Those in favor signify by saying aye. Those opposed, no. The nos have it. The gentleman asked for a recall though. Ms. Fox . [roll call] [roll call] im sorry. Ms. Slaughter, aye. [roll call] the clerk will report the totals. Three yeas, nine yeas. The amendment is not agreed to. I have an amendment to the rule. I move the committee make in order and the necessary waivers for the Ranking Member defazio amendment number 42 h. R. 6787 and amendment number eight to h. R. 1526. Those amendments are closely aligned. Mostly pretty much the same as the 8 royalty to pay abandoned mines. I think it would be very prudent to make sure we get that into the bill. So i ask for a yes vote. You have now heard the amendment of the gentleman from new york. Is there further discussion on the issue . Will now vote. Those in favor of the slaughter amendment signify by saying aye. Those opposed, no. The nos have it harriet the amendment is not agreed to. Further discussion . Ivan amendment to the rule. I move the committee give rule to h. R. At 3102 by mr. Connolly and number two prohibit members of congress to receive benefits for subsidies from many agricultural program. You have now heard the amendment by the gentleman. Further discussion the gentlewoman is recognized. I would just like to say i think it may look like it doesnt matter but there are a number of people on the Agricultural Committee and the Agricultural Committee that votes against foodstamp for poor people should not benefit from that. Further discussion . Those in favor of the amendment signify by saying aye. Those opposed, no. The nos have it. The gentleman asked for a roll call vote. [roll call] [roll call] the clerk will report. Three yeas, nine yeas. The gentleman is recognized. Ivan amendment to the rule and i move the committee make an ordering give necessary waivers for the amendment to h. R. 3102 by mr. Conyers and number four which would strike the bill and replace it with h. R. 3108. Extends not cut s. N. A. P. Benefits act. The bill provides a oneyear extension of the current 13. 6 increase in snap and if its for additional year and that temporary increase is due to expire in november. You have now heard the amendment by the gentleman from florida. Further discussion . Those in favor signify by saying aye. Those opposed, no. The nos have it. Mr. Chairman i ask for a roll call. The gentleman asks for a roll call. [roll call] [roll call] [roll call] the clerk will report the total. Three yeas, nine yeas. I have an amendment. I am tempted to read it real slowly so we have can get you to 8 31. [laughter] please note that i have extended an offer and also if you would like to join me. I met the committee make in order to give necessary waivers for the amendment to h. R. 3102 by mr. Kildee which would bring healthy food to those with limited access to fresh fruit and vegetables through a publicprivate partnership. The amendment increases funding for snap programs for fresh fruits and vegetables by 5 million a year which is offset by the increasing the adjusted gross income limit for certain title i and title ii programs. This seems to be something there may be some that would not believe that children dont have apples and oranges in our country but i just mentioned apples and oranges. I guess i need to say grapes cranberries. Trying to touch everybody. What if have you all got an oklahoma quest the government owns all their land. Anyway thank you mr. Chairman. The gentleman makes a good point as a point of discussion. I think its an awesome idea and i know the gentleman kildee wants to further work through the committee and i would say at this time i would offer resistance and would offer a no vote. Further discussion . Was in favor . Mr. Chairman i think the languages in the base bill. This is the Fresh Food Initiative and it was part of the base vote that we voted on the s. N. A. P. Program at the end of the summer so although funding levels may be different i think they baseline is in the base bill. I stand corrected. I just know that sounds like a darned good idea and i know that fresh fruits and that shovels are important to childrens nutrition and would be good for them. I will tell you that my down syndrome son excels because of fruits and vegetables a. Im not a medical bang on this but i respect the gentleman for offering that. Those in favor of the hastings amendment signify by saying aye. Those opposed, no. Mr. Chairman i would ordinarily ask for a roll call vote but in light of your statements and. Your gohmert and assuming that it is in the base bill if it is not then i will come back at another point in time. You are doing the right thing. [laughter] i was trying not to call names. I would hope that the gentleman would provide excuse me dr. Burgess. I would hope the gentleman would provide feedback. I see no further amendments or discussion. Those in favor of the motion by the gentlewoman from north carolinas signify by saying aye. And those opposed, no. The ayes have it. We will now move to and that motion passes. We will now move to the discussion about the manager of the amendment will be myself. Mr. Mcgovern. Mr. Mcgovern will be there and we look forward to seeing you on the floor. Thank you very much. Next we will have another motion prepared by the gentlewoman and the gentlewomans record nice. Mr. Chairman i move the committee grant h. J. Res. 59 the continuing appropriations resolution 2014 close rule to the rule rule provides when our debate equally divided and controlled by the chair and Ranking Member of the committee on appropriations. The rule waives all points of order against consideration in joint resolution through the row provides the amendment printed in the rules Committee Report shall be considered as adopted and the giant resolution as amended shall be considered as read. The rule waives all points of order against provisions in the giant resolution as amended. The rule provides one motion to recommit with or without instructions. Finally section 2 of the rule provides we shall be in order at any time from the calendar day of september 26, 2013 through september 29, 213 for the speaker to entertain motions of the house rules and that the speaker or its designee shall consult the minority leader or her designee on the designation of any matter for the consideration pursuant to this. You have now heard the motion from the gentlewoman from north carolina. Is there discussion on the amendment today . The gentlewoman is recognized. Ivan amendment to the rule. I move that the committee make an ordering give necessary waivers for the amendment by mr. Van hollen. Mr. Van hollen who is the Ranking Member on the Budget Committee would fund the government and nonsequester levels and levels originally agreed to in the budget control act. It replaces the entire sequester which will cause deep cuts to important domestic priorities and defense for fy2014. The savings for specific policies that reflect the balanced approach to the deficit reduction. Its exactly the same thing that mr. Van hollen is trying to get an amendment on for seven times and this is number eight. Our most vulnerable systems protect you from cuts eliminated agriculture direct payments and cut subsidies for and i would ask for a yes vote. You have now heard the amendment by the gentlewoman from new york. Is there further discussion . Seeing no discussions about will now be on the amendment. Those in favor signify by saying aye. Those opposed, no. The no votes the gentlewoman asks for a roll call vote. [roll call] [roll call] [roll call] the clerk will report. Three yeas, nine yeas. The amendment is not agreed to. The gentleman is now recognized. [inaudible] [inaudible] it i thought ms. Holmes nortons words here were very thoughtful and certainly were good to me. I dont believe that she or any of us are prescient and what the senate is going to do or what you all are likely to do when december 15 rolls around. I will make a prediction for you that this measure will go over to the Senate Either tomorrow or whatever day you all vote on it and it will come back next week without the scalise self executed language. And then we will likely cobble together whatever it takes to get it to december the 15th and then we will be around here december the 15th talking about being here until christmas the way we have done so many years foolishly in my judgment. But that said i hope that chairman rogers prediction or his desire and ms. Lowlys desire to finish the appropriations process accordingly is done and in addition that they are able to get an omnibus provision so that we dont have too continued to postpone what all of us know are extremely difficult and complex issues. But i thought ms. Norton will was the least deserving of having the measure and she began her discussion by saying that she would not ordinarily be here on acr and i made the continuing argument and will continue to make it that i dont think mr. Cool scalises language being self executed on the cr or the appropriations measure and perhaps we will see it again on the debt ceiling issue. But we are messing up the process. That is not unprecedented on the rules committee from either the democrats are the republicans. The gentleman yields back is time. I would just like to state that i do agree with the gentleman. I agree that ms. Holmes norton is treated with respect and dignity but was offered a hand of thankfulness that she represented all of us well earlier in the week. There were difficult things that happen here in washington. Secondly that i believe that she well and faithfully represented the people of the district and we have a thing treated her well and told her that we dont intend to shut down the government and i invited her back anytime she would like to come see us. I do appreciate and respect the gentleman for that amendment and theres a fervent discussion on that. The vote now on the hastings amendment. Those in favor signify by saying aye. Those opposed, no. The gentleman asks for a role called for. [roll call] [roll call] [laughter] three yeas, nine yeas. The amendment is not agreed to. We now would move to the final vote on the motion. All those in favor signify by saying aye. Those opposed, no. The motion is agreed to. The motion is agreed to and the gentleman who will be handling this for the republicans im sorry. No problem at all. I wanted to make sure the gentleman mr. Cole will be representing republicans. And the gentlewoman from new york will be there for the democrats. I want to thank each and everyone of you for taking time to be here today. I will note that it is it should be noted that what has happened today i thank the members of the committee helped me to make happen and i want to thank each of them for being here today that we have now finished with our business for the day. Thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] you when helen taft became first lady in 19091 of the first thing she did was address having cherry trees planted around the tidal basin. The tidal basin the japanese heard about her interest and they decided to give 2003 is to the United States in her honor. Everyone was shocked. The trees that were sent were older and very tall and bug invested so was decided they would have to be burned. In fact president tapped himself made the decision that they would have to be burned. The japanese were very accommodating and understanding and decided to send 3000 trees which arrived in 1912 and its those that we still have a few up around the tidal basin. Federal reserve chairman ben bernanke says that even though the job market has improved the fed will continue its Asset Purchase Program to help the economy. He spoke with reporters for an hour following the quarterly federal open Market Committee meeting. The federal Market Committee approved a twoday meeting earlier today. As you already know from our statement the committee decided today to keep the target range for the federal funds rate at zero to one 4 and make no change in either its Asset Purchase Program or its Forward Guidance regarding the federal funds. I will discuss the rationales for our decision in a moment. Economic growth has generally been proceeding at a moderate pace with continued albeit somewhat uneven improvement in the labor Market Conditions. Of course to say that the job market has improved is not imply the Current Conditions are satisfactory. Notably at 7. 3 and implement rate remains well above acceptable levels. Longterm unemployment and under employment remain high and we have seen ongoing declines in Labor Force Participation which likely reflects discouragement on the part of potential workers as well as longerterm influences such as the aging of the population. In the committees assessment the Downside Risk to growth diminished over the past year reflecting among other factors somewhat better economic and financial conditions in europe and increased confidence on the part of households in the staying power of the u. S. Recovery. However the tightening of financial conditions observed in recent months could slow the pace of improvement in the economy and the labor market. In addition federal fiscal policy continues to be an important restraint on growth and a source of Downside Risk. Apart from fluctuations due primarily to changes in prices inflation has continued to run below the committees 2 longerterm objective. The committee recognizes that inflation persistently below could pose risk to Economic Performance and we will continue to monitor inflation developments closely. However the unwinding of transitory factors has led to moderately higher inflation recently as expected and longterm Inflation Expectations well anchored the committee anticipates inflation will gradually move back towards 2 . In conjunction with this meeting the 17 participants in our policy discussions five word members and 12 reserve Bank President submitted individual individual as always these participants projections are conditioned on his or her own view of appropriate Monetary Policy. Also at this meeting we extended the horizon of our projections through 2016. Generally the projections of individual participants show they continue to expect moderate Economic Growth picking up over time as well as gradual progress towards levels of unemployment and inflation consistent with the Federal Reserve statutory mandate to foster maximum employment and price stability. More specifically participants projections for Economic Growth have the central tendency of 2. 0 to 2. 3 for 2013. Rising to 2. 923. 1 in 2014 and 2. 5 to 2. 3 in 2016. For the Unemployment Rate the projections for the Fourth Quarter of each year is 7. 1 to 7. 3 first declining to 6. 4 to 6. 8 in 2014 and by 201625. 425. 9 about the regular level for the Unemployment Rate. Most participants the inflation greatly increasing from its current low level toward the committees longerrun objective for 2 . The central tennessee projections from client 1. 2 for this year and 1. 7 to 2. 0 in 2016. With unemployment still elevated and inflation projected to run below below the committees long run objective the committee is continuing its highly accommodative policies. As you know in normal times the committee eases Monetary Policy by lowering its target for the shortterm interestrate the federal funds rate. However the target rate for the federal funds rate currently at zero to one fourth person cannot be lowered further. Accordingly the committee has been providing policy support to the economy through two complementary methods by purchasing and Holding Treasury securities and mortgagebacked securities and by committee getting the committees plans for saving federal funds rate target over the medium term. I will discuss these tools in turn to getting with the program of asset purchases. In september 2012 the fomc initiated a program purchasing 40 billion per month in agency mortgagebacked securities in addition to the 45 billion per month and longterm treasury securities that we were already wearing as part of our extension program. We stated that subject to ongoing assessment of the cost of the program purchases would continue until we saw substantial improvement in the outlook for the labor market in the context of price stability. December 2012 we announced we would continue to purchase a 45 million per month in longerterm treasuries after the Maturity Extension Program ended later that month. Thus our total purchases of longerterm securities are maintained at 85 billion per month in addition to the reinvestment or rolling over of maturity securities on our Balance Sheet. The committee agreed today to continue asset purchases at that rate subject to the same conditions we laid out a year ago. Because the committee tied its asset purchases to the outlook of the labor market its important to assess how that outlook has evolved. As i noted earlier conditions in the job market today are still far from what all of us would like to see. Nevertheless meaningful progress has been made in the year since we announced the Asset Purchase Program. For example the Unemployment Rate has fallen from 8. 1 at the time of our announcement to 7. 3 today. And about 2. 3 million private sector jobs have been created over the same period. Over the past 12 months hours of work are up by 2. 4 new claims for Unemployment Insurance have fallen by 50,000 surveys suggest households received jobs more readily available. Importantimportantly these gains were achieved despite substantial fiscal headwinds which are likely slowing Economic Growth this year by a percentage point or more and reducing employment by hundreds of thousands of jobs. Not all labor market developments over the past year were positive and notably the Labor Force Participation rate fell by 0. 3 Percentage Points in real wages remained flat. In light of this cumulative progress the f1c concluded at our june meeting that the criterion of substantial improvement in the outlook of the labor market might well be met over the subsequent year or so. Accordingly the committee sought to provide more guidance in how the use of purchases might be adjusted over time. The committee anticipated in june that subject to certain conditions that might be appropriate to begin to moderate purchases later this year and continuing to reduce the pace of purchases in measured steps through the first half of next year and ending purchases around the year 2014. However we also made clear at that time that adjustments to the pace of purchases would depend partly on the evolution of the Economic Outlook. In particular the receipt of evidence supporting the committees expectation that gains in the labor market will be sustained and that inflation is back to its 2 objective overtime. At the meeting concluded earlier today the sense of the committee was that the broad contours of the mediumterm Economic Outlook including Economic Growth sufficient to support ongoing gains in labor market and inflation moving towards its objective were close to diffuse it held in june. But in evaluating whether a modest reduction in the pace of asset purchases would be appropriate at this meeting however the committee concluded that the Economic Data did not provide sufficient confirmation of its baseline outlook to warrant such a reduction. Moreover the committee has concerned the rapid tightening of the financial conditions and use of funds would have the effect of slowing growth as i noted earlier a concern that what the access or grated if conditions tighten further. Finally the extent to the effects remain unclear and upcoming fiscal debates made on additional risk to Financial Markets and the broader economy. In light of these uncertainties the committee decided to await more evidence that the recoverys progress will be sustained before adjusting the pace of asset purchases. The committee will of course continue to monitor economic and financial developments closely. As noted in todays statement in judging when to moderate the pace of asset purchases the committee will at his coming meetings assess whether incoming information continues to support the committees expectation of ongoing improvement in labor Market Conditions and inflation toward the long run objective. However as we have said and as todays decision underscores asset purchases are not on a preset course. The committees decisions about their pace will remain contingent on the Economic Outlook and on the committees ongoing assessment of the likely efficacy and cost of the program let me turn now to f1c Forward Guidance. The committee again reaffirmed its expectation that the current exceptionally low range for the funds rate will be appropriate at least as long as the Unemployment Rate remains above 6. 5 so long as inflation and Inflation Expectations remain wellbehaved as described in our statement. As i have noted frequently Economic Conditions we have set out have received future rate increase our thresholds and not triggers. For example a climbing Unemployment Rate would not lead to an increase in the federal funds rate target but would instead indicate only it would become appropriate for the committee to consider whether broader Economic Outlook justified such an increase. The committee would be an likely to increase rates if inflation were projected to remain below are 2 objective for some time for example and in making his assessment the committee would also take into account additional measures of labor Market Conditions such as job rates. Thus the first increases in shortterm rates might not occur until the Unemployment Rate is considerably below 6. 5 . The projections on the path of the federal funds rate by individual participants are generally consistent with this guidance. Although the central tendency projected Unemployment Rate for the Fourth Quarter of next year encompasses 6. 5 12 of the 17 participants expect the first rate increase to take place in 2015 and two expected to occur in 2016. Most participants also see the funds rate target rising only very slowly after the process of removing policy accommodation begins. The median projected funds rate for the end of 2015 is 1 and notably although the central tendencies of projections for both inflation and the Unemployment Rate in 2016 are close to the longerrun normal values of those variables the median projections for the federal fund rate at the end of 2016 is 2 well below the longerrun normal value for the federal funds rate of 4 or so projected by most participants. Committee participants generally believed that because the headwinds to recovery will abate only gradually achieving and maintaining maximum employment and price stability will require a patient policy approach that involves keeping the target for the federal funds rate low its longerrun value for some time. Let me close by noting that although the f1c is implying to instruments of policy asset purchases and Forward Guidance on shortterm Interest Rates the overall stance of Monetary Policy is what matters for growth jobs and inflation. Our program of asset purchases was set up a year ago to help achieve the substantial improvement in the outlooks for the labor market in the context of spry stability relative to conditions for when the program was initiated and we have made progress toward meeting that part criterion however even address of purchases or wound down which we will do in a manner that is deliberate and dependent on the incoming Economic Data the Federal Reserves rate guidance in its ongoing holdings to security will venture Monetary Policy remains highly accommodative consistent with an aggressive pursuit for mandated objectives and maximum employment and price stability. Thank you and i would be glad to take your questions. Thanks mr. Chairman. The progress in the labor market both on the unemployment front and in terms of payroll growth but much of the decline in the Unemployment Rate has been due to the decline in participation so my question to you and also on the table front some people would argue that while there has been growth it hasnt been Strong Enough to keep up with population growth that we had from their session. So how high do you think the jobless rate would they if it were noti have heard estimates h as 10 to 11 . Could you put the labor market in that context . Certainly. I think there is a single component to participation and in that respect the Unemployment Rate understates the amount of sort of true unemployment if you will in the economy. But on the other hand there is also a downward trend in participation in our economy which is arising from factors going on for some time including the aging population lower participation by prime age males fewer women in the labor force and other factors which arent really related to this recession over the last year the Unemployment Rate has dropped by 810 of a percentage point. The Participation Rate has dropped by 310 of a Percentage Rate which is pretty close to the trend so in other words i think it would be fair to say that most of the improvement in the Unemployment Rate not all that most of it in the last year is due to job creation rather than lower participation. I would also note that if you look at the broader measures of unemployment that the dos publishes including including parttime work and disparaged workers and so one youll see those rates have fallen to about the same amount of overall standards. I think there has been progress and steered to some extent by the downward trend in participation but i would also agree with you that the Unemployment Rate is while perhaps the best single indicator of the state of the labor market its not by itself fully representative. The to what extent do you regard yourself as responsible for the tightening in the financial conditions that you noted . Was it a mistake to talk about tapering at the way he did in june and do you stand by your guidance that it will be appropriate . You still expect it will be appropriate to bow down asset purchases by the end of this year . Speak to answer the first part of your question, i think there is no alternative in making Monetary Policy but to communicate as clearly as possible and that is what we tried to do. As of june we had made meaningful progress in the labor Market Conditions and the committee thought that was the time to begin talking about how the eventual wind down of the program would take place and how it would be tied to the evolution of economic variables. In particular i talked about a proposed strategy that would take about a year for the total wine down to take place which in turn was fully contingent on the ratification so to speak of our outlook which included continued improvements in the labor market so all of that was consistent with what we said when we began the program. Our goal was to achieve a substantial improvement in the outlook for the labor market and we needed to communicate how that was going to be put into practice. Failing to communicate that information would have risked creating a large divergence between Market Expectations public expectations and with the Committee Intentions were and that could have led to much more Serious Problems down the road. I think the communication was very important. The general framework to answer that part of your question the general framework is still the same. We have a threepart baseline projection which involves increasing growth that is picking up over time as system drag is reduced. Continuing gains in the labor market and inflation moving back towards me projected. We are looking in the coming meetings we will be looking to see that the data confirm that basic outlook. If it does we will take the first step at some point possibly later this year and then continue so long as the data are consistent with that continued progress. That basic structure is still in place but what i want to emphasize is really two things. First is a set of asset purchases are not set they are conditional on the data. And secondly even as we move from asset purchases to rate policies the principle tool of Monetary Policy its our intent to maintain a highly accommodative policy and to provide the support necessary for our economy to recover and to provide jobs or our citizens. John from the wall street journal. Just to follow up on his question mr. Chairman, go you said that you could pull back the purchases possibly later this year. You sound a little bit less certain that its going to happen later this year so i want to ask you to talk a little bit more about your conviction about whether these are likely to pull pull the pullbacks are likely to start this year and i think i heard you mention 7 unemployment number that you talked about back in june, could that was the rate the Unemployment Rate that was supposed to prevail when the fed was done doing this. Is that no longer operative . So there is no fixed calendar schedule . I really have to emphasize that. If the data confirm our basic outlook, if we gain more confidence in that outlook and we believe that the threepart test that i mentioned is indeed coming to pass then we could move later this year. We could begin later this year but even if we do that the subsequent steps will be dependent on continued progress in the economy so we are tied to the data. We dont have a fixed calendar schedule but we do have the same basic framework that i described in june. The criterion for ending the Asset Purchase Program is a substantial improvement in the outlook or the labor move market. Last time i gave 7 as an indicative number to give you some sense of where that might be but as my first answer suggested the Unemployment Rate is not necessarily a great measure in all the circumstances of the state of the labor market overall and for example just last month the decline in the Unemployment Rate came about because of declining preservation not because of increased jobs. So what we will be looking at is the overall labor market situation including the Unemployment Rate that including other factors at as well. In particular there is not any magic number that we are shooting for. We are looking for overall improvement in the labor market. Steve with cnbc. Mr. Chairman one question with three parts if you dont line. Have you indicated to president obama you do not deserve a third term and if so when . Those two parts notwithstanding what you serve a third term if asked . Thank you. Is convenient because i have the same answer to all three parts of your question. If you will indulge me just a little longer i would prefer not to talk about my plans at this point. I hope to have more information for you at some reasonably assume date but today i want to focus on Monetary Policy and i would prefer not to talk about my own plans. You mentioned part of the fiscal conditions are a concern for the committee as you guys think about whether or not its appropriate to reduce asset purchases. What do you all expect to be able to do in the future when you actually do begin to pull back on asset purchases so that we dont see another increase in rates . What is the relationship between the pullback and the fiscal policy . Oh im sorry i meant financial conditions. Financial conditions calm kosher. Part of the reaction we have seen and it comes from a number of sources. Part of it comes from improved Economic News and is part of the reason why rates have gone up in other countries as well as the United States and to the extent that tighter financial conditions reflect a better outlook that is a good thing and its not a problem at all. Part of it reflects the views about Monetary Policy and that we want to make sure we get straight. That is why the answer to the earlier question again is why communication is so important. We need to explain as best we can how we are going to move and on what races we are going to move. Its much more difficult today than it was 20 years ago because the tools are more complex but its still very important. I think the other factor which was at play was an unwinding of excessively risky leveraged positions in the markets and insufficiencies of liquidity in some cases meant that those unwinding led to larger reactions in prices and rates than might otherwise have occurred. The tightening associated with that is to some extent longer but on the other hand to the extent that some of the riskier positions have been eliminated i think that makes the situation more sustainable and reduces at least the rest that there will be an over strong reaction to further announcement so we will do our best to communicate clearly. That is our goal and our objective. The more clearly we can communicate the better the chance that markets will understand our intentions and we can avoid any sharp movements but again we are dealing with tools that are less familiar, harder to quantify and harder to communicate about than the traditional funds rate. Rogen with the financial times. Mr. Chairman the 2 Interest Rates at the end of 2016 and in the long run they expect Interest Rates to return to 4 . Can you give us any sense of when you were when the committee expects Interest Rates to get back to that 4 great . Let me first state i think the key point here which is that the large majority of the participants at the f1 see including voting and nonvoting members who are asked to describe their own assessment of optimal policy at large majority of them estimate that the appropriate target for the federal funds rate at the end of 2016 will be around 2 even though at that time the economy should be close to full employment according to our best estimates. Our best projections. The reason for that there may be possibly several reasons that we didnt discuss this in the committee today. The primary reason for that low value is that we expect that a number of factors including the slow recovery of the housing sector, continued fiscal drag and perhaps continued effects from the financial crisis may still prove to be headwinds to the recovery and even though we can achieve full employment doing so will be done by using rates lower than the longrun normal so in other words in economics terms the equilibrium rate the rate that is used for employment looks like it will be lower for a time because of these headwinds that will be slowing aggregate demand growth. That is why we expect to see the growth i mean rates at an unusually low level. I imagine it will take a few more years after that to get to the 4 level. I couldnt be much more precise than that. We are already stretching the bounds of credibility talking about specific projections to 2016 that i think you would expect to see the base would gradually rise two or three years after 2016 and ultimately get to 4 . There are a number of reasons for that. One reason for it, though, is that it appears, and i talked about this in the speech last year, it appears that as part of the after math of the financial crisis. Temporarily, the potential growth rate of the economy has been slowed. Perhaps because new businesses are not being formed at the same rate. By the resession and the financial crisis. You can see that in the productivity figures. We have, you know, we havent anticipated that slow down in productivity. Thats one of the main reasons why we havent anticipated the relatively slow growth. Its important to recognize, though, what Monetary Policy effects is not the potential rate of growth, long run rate of growth, but rather the the deviation of output and employment from the normal level. In predicting the amount of slack in the economy, we have done a little better. Our prediction in unemployment has been better than our predictions of growth. And in particular, one thing has been striking is that unemployment we were too pessimistic on unemployment for this year. Unemployment is fallen faster than we anticipated. So in that respect, we were too pessimistic rather than too optimistic. Well continue to cothe best we can. We are looking again to see conformation of our broader scenario, which basically is that well continue to see progress in the labor market. The growth will be sufficient to support the progress and inflation moving back to the target. Thats what will determine our policy decisions. In terms of press conferences, i think its important to say that theres an understanding in the committee that weve had for awhile that there are eight, quote, real meetings every year. Every meeting is which a any policy can be taken. And should anything occur at the meeting without a scheduled press conference, it requires additional explanation. We certainly could arrange public ontherecord way of answering the medias questions. [inaudible] you said the committee would be unlikely to raise federal fund raid if inflation remains below target. But your own projection of inflation the midpoint of your inflation projection are through the target. Is that inconsistent with a liftoff in the federal funds rate in the period . And related is there a case to be made that the threshold would be a lower balance inflation rate. So in the latter part, you know, of course youre seeing Interest Rate projection and inflation projections separately. Youre not seeing them beginned by individual. Each is making their own projection. Youre right that we should be reluctant to raise rates if it remains below target. Thats one of the reasons i think we can be patient in raising the federal funds rates we havent seen any inflation pressure. On having an inflation floor that would be in addition to the guidance. We are discussing how we might clarify the guide enon the federal funds rate nap is certainly one possibility. I guess an interesting question there is whether we need Additional Guidance on that because we have a target. Implicit in our policy strategy is trying to reach that target for inflation. But that inflation floor is certainlying . Something that could be a senble modification or edition to the guidance. Victoria, news wire. Many investors were expecting the fed to move a little bit in pull back the Bond Buying Program today. Given you decided not do that, do you have any concern that once again the fed is confusing investors and sending mixed signals . I dont recall stating we would do any particular thing in the meeting. What we are going is the right thing for the economy. And our assessment of the data since june is that taking collectively that it didnt quite meet the standard of satisfying our or ratifying or confirming our basicout look again increasing growth, improving labor market and inflation moving back toward target. We try our best to communicate with markets. Well continue to go that. We cant let Market Expectations dictate. Our policy actions have to be determine bid our best assessment of what is the best for the economy. Peter barns, fox business. You mentioned fiscal issues in the statement today. Are you concerned about the government shut down . Were hearing more about the ability. Did that come up in your discussions at this meeting . What do you think will be the impact of a government shut down on the economy . And what would the fed be prepared to respond to that healthy economy with additional accommodation, for example, additional asset purchases . Thank you. Well, a factor that did concern us as in our discussion was some upcoming fiscal policy decisions. I would include both the possibility of government shut down but the debt limit issue. These are obviously, you know, part of the complicated set of legislative decisions, strategy, battle, et. Cetera. Which i wont get in to. It is the case, i think, that the government shut down even more so a failure to raise the debt limit could have serious consequences for the Financial Market within the economy. And the Federal Reserve policy is to do whatever we can to keep the economy on course. So if these actions lead the economy to slow, we would to take a this in to account, surely. Its one of the risks we are thinking about as we think about policy. That being said, again, our ability to offset the shock is limited. Particularly the shock. And i think its extraordinarily important that congress and the Administration Work together to find a way to make sure that the government is funded, Public Services are provided, that the government pays its bills, and that we avoid any kind of event like 2007 which had a noticeable adverse effect on confidence and the economy. Cnn money. This week marks five years since the financial crisis began. And harng paulson who you worked closely with said his biggest regret wasnt able to convince the American People what was done the bank bailout were front wall street they were from main street. What is your big e regret as you reflect on the fiveyear anniversary. Do you believe that the fed, the congress and the president put the necessary measures in place to prevent another deep financial crisis . Well, on regret frank said i have many [laughter] i think my, you know, reasonably the biggest regret i have is i didnt forestall the crisis. I think the crisis got going it was extremely hard to prevent. I think we did what we could given the powers we have. And i would agree with hank that we were motivated entirely by the interest of the broader public that our goal was to stabilize the Financial System it would not bring the economy u down. It wouldnt create massive unemployment, and Economic Hardship even more severe by many times than what we actually saw. So i agree with him on that. I guess sin you gave me the opportunity, i would mention that of course all the money that was used in those operations have been paid back with interest. So it hasnt been costly even from a fiscal point of view. In term of progress, the doddfrank passed in 2010. We come to an agreement on a number of bays l three and other agreements relating to the shadow Banking System and other aspect of the Financial System. That firms can withstand not only normal shocks but large shocks similar to those they experienced in 2008. And very importantly, of course we have a tool that we didnt have in 2008 which made have made, i think, a significant difference the doddfrank bill gave to the fdic in collaboration with the fed. Under the authority the fdic with the other agencies have an ability to wind down a failing Financial Firm in a way that minimizes the direct impact on the Financial Market and on the economy. I should say i dont want to overstate the case. I think theres more work to be done in the case of resolution, regime, for example. The united has set the course internationally. Other countries in International Body like the fsb are setting up standards for resolution regime. Which are very similar to those in the United States. Which is going to make for better cooperation across borders. But were still some distance from being fully geared up to work with foreign counter parts to successfully wind down an International Multinational Financial Firm. Thats we made progress in that direction. We need to do more, i think. I think theres more to be done. Theres more to be done on derivative. Its going to be probably some time before all of this stuff that has been undertaken. All the measures are fully implemented. And we can assess the ultimate impact on the Financial System. Steve becker in. A number of economists and indeed some of your fed colleagues have argued that the effectivenesses of quantitative easing has greatly diminished if not disappeared. They point to the recent performance of the economy as proof of that. There have been a number of people that argue there had are regulatory and other impediment to growth beyond the reach of Monetary Policy. What are these valid arguments. If the economy does not speed up, it does not reach your objectives, how will you ever get out of quantitative easing . Well, on the effect i haveness of our asset purchases, its difficult get a precise measure. Theres a large academic literature on the subject. They have a range of results. Some suggests its a powerful tool others suggesting its less powerful. My own assessment is its effective if you look at the recovery. You see that some of the strongest sectors and the leading sectors housing and tall tow. These policies have been successful in strengthening financial conditions, lowering Interest Rates and there by promoting recovery. I think that they have been effective. You mentioned that there hasnt been any progress. There has been a lot of progress, as i said at the beginning, labor market indicators are not where we like them to be are better today than the latest program a year ago. Importantly, actually referenced in our statement it happened notwithstanding a set of fiscal policies which the cbo said it would cost between 1 and 1. 5 points and job. We have maintain improvement in the labor market that are as good or better than the Previous Year, notwithstanding the fiscal drag is some indication that there is at least a partial offset from Monetary Policy. As you say, there are a lot of things in the economy that Monetary Policy can address they include the effectivenesses of regulation, they include fiscal policy, they include development in the private sector. We do what we can do. If we can get help we are delighted to have help from the other policy makers and the private sector. We hope it will happen. The criteria is not some very high rate of growth. What it is a financial improvement in the outlook for the labor market. We have made significant improvement. Ultimately with will reach the level. And that point well be able to wind down the asset purchases. People dont fully appreciate that we have two tools. We have asset purchases and rate policy and guidance about rates. Its our view that the latter, the rate policy is actually the strong reliable tool. When we get to the point where we can, you know, were close enough to full employment that rate policy will be sufficient. I think that we will still be able to provide asset purchases of reduced and still be able to provide a highly accommodative monetary background that will allow the economy to dont grow, and move toward full employment. [inaudible] the Financial Stability oversight counsel already designated two nonbank firms as you know. And potentially a third soon and presumably others to follow. Hour, little has been said in term how specifically they will be regulated by the fed which achieved criticism. Given that, can you provide any guidance at this point in term how far along the fed in term of letting the banks now they will be regulated besides, you know, tailoring the plan. Well, the two firms that have been designated aig and ge capital are have been regulated by the fed. Both of them are saving and loan thrift Holding Companies. We have a lot of already experience with the firms and lot of contact with the firms. We will i want to reuse the word tailor. We want to design a regime that is appropriate for the Business Model of the particular firm. But our other objective and what makes designation by the fsoc particularly note worthy the primary goal super vision by the fed is to make sure that the firms doesnt endanger the well be looking at not just the usual safety and soundness type matters or supervision which both can be tailored to the type of asset and liability the firm has. But also were going want to focus on things like resolution authority, practices relating to derivative and other exposure. Interconnectedness, et. Cetera, to make sure that the firm in its structure and operations doesnt pose a threat to the wider system. Thats what is going to be distinctive about our oversight. Not only of the designated firm but the large Holding Companies we already oversee and subjecting to tougher super vision, higher capital, stress test and the rest. Expwhr peter of bloomberg television. One of my colleague was we dont oven get surprise from the Federal Reserve. It was a surprise. You talked about you had hadnt telegraphed anything specifically. You have seen the Market Reaction, im sure. Were you intending a surprise today . Did you get the intended result judging from the Market Reaction . Related to that taking the action and continuing the bond purchasing Going Forward. At what point to you believe start to complicate the exit strategy simply by continuing to keep the fed foot on the gas pedal. Do you make life more complicated for the Federal Reserve down the road . Our intention to set policy as appropriate for the economy, as i said earlier. We are somewhat concerned. I wont overstate it. We want to see the effect of higher Interest Rates on the economy. Particularly in Mortgage Rates on housing. To the extend that our policy makes conditions decisions today makes conditions a little bit easier, thats desirable. We want to make sure that the economy has adequate support, and in particular its less surprising the market or easing policy it is avoiding a tightening until we can be comfortable that the economy is in fact growing the way we want it to be growing. So this was a step it was a step precautionary step, if you will. It was a intention is to wait a bit longer and try to get confirming evidence whether to to whether or not the economy is conforming to the general outlook that we have. I dont think that we are complicating anything for future fomcs. Its true that the assets we have been buying at the size of our Balance Sheet, but we developed a variety of tools. We think we are numerous tools can be used to manage Interest Rates and to ultimately unwind the Balance Sheet when the time comes. So i, you know, i feel quite comfortable we can raise is Interest Rates a the the appropriate time. Even if the Balance Sheet remains large for an extended period. And that will be true, of course, for, you know, future as well. Mr. Chairman, Kate Davidson from politico. Do you think the recent who will be your replacement had any immediate effect on the fed . Could have any lingering effect on your successor . Do you think the process has become too politicalized or part of a healthy debate . I think the Federal Reserve has strong institutional credibility, and it is a strong institution, highly competent institution, and its independent. Its not partisan. Im not particularly concerned about the political environment for the Federal Reserve. I think the fed will be continue to be an Important Institution in the united, and that it will maintain its independence Going Forward. [inaudible] thank you, mr. Chairman. Market watch. Was there a discussion among the committee today about changing the Forward Guidance of the 6. 5 jobless rate . Could you say why the committee decided to tholed steady in light of the weaker economy . Well, as i mentioned earlier, the committee has regularly reviewed the Forward Guidance, there are a number of ways in which the guidance could be strengthened. For example, they mentioned inflation. There are other steps question take. We can provide more information about what happens after we get the 6. 5 and those sort of things. And the extend we could provide precise guidance, i think it would be desirable. There a number of options we have talked about. But today we as of today we didnt choose to make any changes to the guidance. As you may know, the sense us is bureau reported yesterday that poverty rate and the Median Household Income saw no improvement last year. And i wonder when you see Median Income turning up significantly for most people, and in light of the fact that people in the middle and bottom consume little of the gain relative to higher income house hold. How would you assess the quantityive and said policies . Sure. So thats certainly the case there are too many people in poverty. There a lot of complex issues involved. There are complex measurement issues. I would have to mention that. There a lot of issues that are longterm issues as well. For example, it might seem apuzzle the u. S. Economy gets richer and richer and there are more pool poor people. The explanation our economy is becoming more equal. The more very rich people and more people in the lower half not doing well. Theres a lot of reasons behind this trend which has been going on for decades. And economists disagree about the relative importance of things Like Technology and International Trade and unionization and other factors contributed to that. My first point that the long run trends its important address the trends. The Federal Reserve doesnt really have the too late to address the longterm giewxal trends. They can be addressed by congress and the administration. Its up to them, i think, to take those steps. The Federal Reserve is we are doing our part to help the median family. The median american. Because one of our principle goals. We have two principal goal. One is maximum employment, jobs. The best way to help families is to create Employment Opportunities which will not satisfy, obviously, where the labor market, the job market is. We dont try to provide support for that. The other goal is price stability. Low inflation also helps make the economy work better for people in the middle and the low part of the distribution. So we use the tools we have. It it would be better to have a mix of tools at work. Not just Monetary Policy, but fiscal policy and other policies as well. The program reserve, we only have a set of tools. Those are the ones we use. Again, our objectives of creating jobs and maintaining price stability, i think are consistent with helping the average american. But theres limit to what we can do about long run trend. And i think those are very important issues that congress and the administration, you know, need to look at, and decide what needs to be done there. Hi. [inaudible] what is your take on that. Where did you judge the market react to your announcement back in june . Thank you very much. Let me just talk about communication in june. Let me talk about the emerging market, i think which is an important issue. Let me first say we have a lot of economists who spend all of their time looking at International Aspect of Monetary Policy. And spend lot of time looking at emerging market. I spend a lot of time talking to my colleagues in emerging markets. We watch it carefully. The united is part of a globally integrated economic and Financial System. Problemses in emerging markets or any country for that matter, can effect the United States as well. Again, we are watching the developments very carefully. It is true that changes changes in locker term Interest Rates and other advanced economies does have some effect on the emerging markets. Particularly those who are trying to peg their exchange rate. And can lead to some capital inflow or outflow. There are other fake factors. Those include changes in risk performance by investors, changes in growth expectations. Different perception of institutional strength within emerging markets across the different countries. There are a lot of factors there playing a role. Its one reason why different emerging markets have different experiences. They have different institutional structures and different pots policies. To come to the bottom line here, we think its important that emerging markets grow and are prosperous. We pay close attention to what is happening in the countries. It effects the United States. The the main point, i guess i would end with, though, that what were trying to do with our Monetary Policy here is, i think, my colleagues in the emerging market recognize is trying to create a stronger u. S. Economy. And a stronger u. S. Economy is one of the most important things that could happen to help the economies of emerging markets, and again, i think my colleagues in many of the emerging markets appreciate that notwithstanding some of the effects they may have felt that efforts to strengthen u. S. Economy and other advanced economy in europe and elsewhere the benefit of the economy including emerging markets as well. [inaudible conversations] House Speaker john boehner said the house will House Majority leader, erick cantor, said republicans would release a plan later in the year to raise a dell ceiling. You can see the entire comments online at cspan. Org. Here is a little what they said wednesday morning. The president thinks that American Family and Small Businesses are doing just fine in this economy. The speech after speech about justifying his failed policies. And one of his biggest failure is adding 6 trillion to the national debt. For decades congresses and president s have used the debt limit for legislation to cut spending and even president obama worked with us two years ago in the debt limit negotiations to put control on spending. This year is not going to be any different. Were going continue to do everything question to repeal the president s failed health care law. This week the house will pass a cr, that the locks the sequesters saves in and defunds obamacare. The president signed seven bills over the last two and a half years to make changes to obamacare, i sinner sincerely hope our friends in the senate have plans to make this an eighth time. The law is a train wreck, president protected big business and American Families from the unworkable law. Good morning. First i want to express my deepest condolences to the families who have lost loved ones on monday in the horrific attack on the navy yard blocks away from capitol hill. Its in the tragic moments we witness the steel resolve of all of those who serve our nation there, as well as the First Responders who came to help. Now we just come out of our conference and had a good discussion on our work on a budget measure that will continue our record of reduced government spending. And deals head on with obamacare. Not since the creer war has the federal government reduced two years in a row. We aim to name happen. And we aim to put a stop to obamacare before it cost one more job or raises a family out of pocket expenses one more dollar. That fight will continue as we negotiate the debt limit with the president and the senate. In the coming weeks, we will unveil in the coming week well unveil a plan to extend our nations ability to borrow while delaying obamacare and protecting working middle class families from horrific effects. Those discussions will also focus on a path toward on tax reform and a keystone pipeline. And variety of other measures designed to lower energy prices, simplify our tax system, and get our economy going for the middle class working people of this country. Together we House Republicans will not ignore the problem of our debt or the problem facing the working middle class of this country. We hope and we ask that this president finally engage with congress and work with us on behalf of the American Families. In a few moments deafen secretary announcing the review of military installation security in the wake of the navy yard shooting. In about a half hour, the House Armed Services committee looks at the effect on the spending cuts may have on military readiness. On the next washington journal. This weekend look for book of its full day live coverage of the National Book guest festival. Looking ahead to october. Young children said how can you be in the congress when you got arrested . [laughter] you violated the laws. And i always said, they were bad laws. They were customs, they were traditions, and we wanted america to be better. We wanted america to live up to the declaration of independence. Live up to our creed. Make real our democracy. Take an oath of people and make it real. When i got arrested the first time, they i felt free. I felt liberated, and today more than ever before, i feel free and liberated lincoln, 150 years ago, freed the slaves. But it took the modern Day Civil Rights Movement to free and liberate a nation. Civil rights leader and congressman john lewis will be our indepth guest sunday the 6th. Hell take your call and comments for three hours. Also scheduled for indepth november 3rd boyographer kitty kelly. January 5th radio talk show host mark levin. Chuck hagel announced a review of military security they discuss syrian chemical weapon fitness half hour. [inaudible conversations] good morning. Let me begin with a few words about mondays tragedy. As the investigate proceeds at the Washington Navy yard. I have been consulting closely with dods leadership including secretary may vis and chief of National Operations as well as with our federal and Law Enforcement official. I also con federal funds coniferred yesterday with the fbi director. The attorney general, attorney general holder, and president obama. First our thoughts and our prayers are with the victims and their families, and all who have been effected by what happened at the Navy Shipyard on monday. We will grieve, whether he remember, and we will comfort each other. The department of deafen is a strong and resilient community. We will do everything question to help our colleagues at the navy yard get through this terrible, terrible time. In the coming days, more information will come to light about what happened. About what went wrong, and importantly what must be fixed. Yesterday i directed two departmentwide reviews. These reviews will be lead by deputy secretary ash carter, and we will do Everything Possible to prevent this from happening again. First, i directed a review of physical security and access procedures at all dod installations worldwide. The highest responsibilities leaders have is to take care of their people. Our people deserve safe and secure workplaces whenever they are. Second, deputy secretary carter will also lead a review of dods practices and procedures for granting and renewing security clearances. Including those held by contractors. This review will be closely coordinated with other federal agencies. Including the dni and omb. I have also districted that an independent panel will established, this independent panel will conduct it own assessment of security at dod facilities, and our security cleern procedures of practices. The panel work will strengthen secretary carters effort and provide their findings directly to me. The department of deafen will carefully exam the assessment, the conclusion, and remght of the reviews. And we will effectively implement. As you know the nay i are is conducting it own review. The lult feed to the broader dod review worldwide. Where there are gap, well close them. Where there are inadequate sincerity, well dress them. Where there are failures, well correct them. We owe the victims, their family, and all the people nothing less. Thank you. Thank you, mr. Secretary. I want to add my condolences over mondays horrific shooting at the nay i are yard. My heart goes tout families of those fallen and those injured during the attack, their coworkers and the entire navy family. While i cannot discuss the detail of an ongoing sky discuss the bravery of the first responder. Even until the mist of tragedy there are moment of triumph. The most visible feat were accomplished by professional, our military, police, and emts, but there were other unseen moments equally heroic. The urge to run toward danger to help someone in a need is an testament to an americans character. Our military family will continue to help those in need. Secretary of the navy has granted december knee status to provide medical care to those injured the attack. We mobilized teams and military chaplain throughout the area to minister those in need and Counseling Services are available for all of those effected by mondays rampage. I look forward to your questionses. Thank you. [inaudible] to the general public who sees sort of string of events notice just on bradley manning, now this. Its [inaudible] will are incidents, studies and something happens again. You did extensive study after the hasan incident. Can you talk about what is it . What changes were not made then that should have been answer read are there gaps . And when you look at security clearances, should we lower the bar to include more personal information or take note of greater personal information in order to protect safety . Where is that line . First, obviously something went wrong. That stuff in point of the directive that i have made in the review that will go forward. As i said in my comments, we will review everything. And from that review, the intendty of the review, the depth and width of the review, we would hope that we will find some answers to do it better. How can we do it better . Ing with the tragedy of what happened monday. You mentioned other tragedies. We dont live in a riskfree society. Every day all the millions of dod employees whether they are uniform or civilian come to work. They help the country contribute to the security and safety of the country. Theres always some risk. Its not good enough they deserve the security of the safe environment. Well find the gap, as said and fix the gap. So to go beyond that, in the specific area of your qefs, i would leave that to the review. There are many questions that are going to be asked and need to be asked. Many review and the intendty of the review have to go down every aspect. The security clearance. Standards of the security clearance are the Strong Enough . Why do we do certain things the way we do . We need answers and well find the answers. I just add that the whew the secretary said, in term of what we change after some of the earlier consistencies early indications are actually contributed to too a less horrific outcome. Where alert notices coordination in advance of other Government Training for for employees and Law Enforcement on active scenario. Some of the things we did as a result of those earlier incident, we believe, actually, reap the benefit we intended. The clearance piece is one, i think we have to clearly take another look at. The secretary directed us do so. Jim . Do you believe that the security clearance procedures and investigations are not rigorous enough. Or for the lower level security cliernses that tenyear time frame may be too long, and again, a question for you, general dempsey, on syria. You have express the concerns before about the difficulty in securing chemical weapon site in syria. Even in a nonhostile environment. If syria should agree to open up the sight not only to inspection but seizure by the end of the week, or at any time frame. On your question on time frame and security clearances. In the entire specific and component of security clearances time frame, the depth of the clearance, kind of clearance. Access different clearances give individual. Were going look at all that have. Obviously the longer clearances is go without review. There is some jeopardy to that. Its no question about it. Were going to take a look at every one of those components. On syria, like my current role and the current role of the military is provide planning assistance to the organization for the prevention of chemical weapon. Opcw who has the lead. And as well as to maintain the credible threat of force should the diplomatic track fail. My comment about the security of the stockpile remain valid. That is to say its a challenging environment. Indicators at this point, though, the regime does have control of its stockpile. And so long as they agree to the frame work which causes them to be responsible for the security. I think that the an to your question it is feasible. But we have to make sure we keep our eye on all of those things. With the help of international assistance, other foreign military. The u. S. Has been trying for decades in the process to rid the utah and the russians too. Their chemical weapon. Could it be done in a short time frame in the middle of a civil war . The framework calls for it to be controlled destroyed our moved. I think in some combination it is feasible. In some combination it is feasible. Those details have to be worked by the opcw. [inaudible conversations] to general dempsey. I wonder if you think today if mr. Assad is strongier you assess the and mr. Hagel. I wonder if you could talk about what your feeling of this how the syria incident how it resolved i. T. Are you comfortable with the National Security United States is on . Do we still need to keep up the military pressure . You know, i havent spent much time trying to understand assads personal feelings about the recent turn of events. Ive said previously and ill say it again that these kind of conflicts ebb and flow. We know from open source that opposition is concerned that the focus on chemicals will detract from the willingness not only of the United States but other partners to support them. In terms of threats to u. S. Interest, i think that i have said spreaghsly that the elimination of the assad regime chemical capability is the top of our national interest. And to this process wears fruit and achieve the stated purpose. Well be in a better position. I think the first its clear that the credible threat of u. S. Force in syria lead to the diplomatic process where we are today. Yes, we should keep that military option exactly where it is. We have assured the president that our assets and posture remain the same. We are prepared to exercise any option he would select. But at the same time you ask if i was comfortable with the process as it is now. Yes, that was always an objective of the president. A diplomatic solution. A resolution. So i think its wise to let the process play out. Remember, the resolution when the president made the decision he did in the resolution to go to congress was about chemical weapons. And so the diplomatic process, i think, is the responsible, wise approach. S was a credible force of threat that got us to where we are and well dont have that credible option available. Still being one clearance [inaudible] he [inaudible] talking to supply of further u. S. Military equipment. Any decisions have you made about the [inaudible] no final decision has been made. On the question regarding the rhode island incident, with this individual, we are reviewing automatic that have. Im aware of those reports. I have havent seen the specific. We will obviously get those kind of specifics. The fervegs will be part of the mix here. What should have been done that wasnt done. Should have been more done. How could we have brought those kind of report in to the process. I think that will be part of the. Let me explain why alexis was granted secret security clearance. In the first place despite a Police Record and have they explained to you or either of you why he was allowed to keep that secret security clearance despite growing number of police incidents. The quick answer is no. I havent seen all of it. Ly continue to see more of it. You have asked this very basic relevant questions. Which will obviously, again, be part of all of the review of the navy is looking at this. Theyre going back to the history of it all. The pen gone going to take charge of arming the syrian rebel . Is that option now postponed because of this agreement to remove syrias chemical weapons. Could you give us both an idea what the factors involved in looking that the option . The president said hes looking at all options. The pentagon is not presently directly involved in any of those lethal weapons activities. So the president continues to look at different options. Making that change would you advise [inaudible] those decisions are ongoing. Of course, as ive said previously, we have any number of options under development that could expand our support to the modern opposition. No decision has been taken that the point. The department lower house people in three major gun violence incidents. Aurora with, fort hood, and this. My question to both of you, you have to have reviews. Is that good enough at this point . Is it enough . Why not break the mold and get involved in the public the department both of you gentleman, the u. S. Military, and get involved in the public debate in this country about gun violence. We havent heard either of you say youre supporting the president s position on gun violence and gun registration. Why not get involved . Why not talk about it . And specifically, then, hear both of your views about gun violence in this country, and what you now now youve lost so many people military families are at risk. What do you think needs to be done . Well, to start with, gun violence is an issue. And it is tragic. I think every american who has witnessed this over the years and as the general and i have expressed our sense about it this morning, our thoughts and prayers and heart goes tout everyone who was a victim of this. Gun violence is now a violation of the law. And so theres no question a matter not trying to defend it or excuse it. As to our position here. General dempsey can speak for himself. My rule as secretary of defense, im not involved in domestic policy issue. Thats not my role. Thats not my responsibility. I couldnt agree more, mr. Secretary. Its pretty difficult to separate the view of citizens dempsey from chairman dempsey. I try not to do that. It is not my role as the chairman to become involved in political interest. I guess you are both saying and no disrespect. You have lost people risk military family. Youre going stay out of the public debate and the debate over the president s policies and views of this. Well, again, i would say my role is not the role of the policy maker. When im called to congress, i answer questions about request security in the country and aspect of it and the responsibilities i have. I dont engage in the domestic policy debate. Thats not my role. [inaudible] critical of the administrations policy in syria. Secretary gates weighed in saying that if there were military action taken over a couple of days, it would throw fire to a situation. He said launching a couple of missiles over a couple of days is not a strategy. Secretary pan nah net that was equally he was also critical. How do you respond that . Do you agree with them. Did budget cut have anything to do with the attack at the navy yard on monday . And a few years back, they took off Mental Health questions on the security clearance review in order destigmatize ptsd. Do you think Mental Health questions should be returned to the security reviews . Because they are relevant . Do you think you a difficult position having trying to destigmatize Mental Health issues and remove the questions from security clearance forms . I have the greatest respect for secretary. They have every right to their opinions on every issue. If they feel it appropriate, they have every right to express those views. Obviously i dont agree with their perspectives. And i, again, unwhat theyre saying. But as i have said a number of time on the last two weeks on capitol hill. I was part of the decision and the process that the lead up to the president s decision. I support the decisions. Thank you. Is it difficult weigh in like this . Like i said, they are individuals, private citizens, and they have every right to express themselves if they feel they need to or want to. On the let me categoryially share that based on testimony that admiral greene is giving as were sitting here, that the budget issue did not degrade the security at the navy yard and any way contribute to this. As for the questions about Mental Health on security clearance forms. I actually was one of those with pete and others who believed that men and women should have the opportunity to overcome their mental disorders or their mental challenges or their Clinical Health challenges, and shouldnt be stigma diaz stying ha stigmatized. I still remain in the camp. They should have the ability to overcome them and fruitful life and gain employment including inside the military. This particular individual, of course, wasnt a simple matter. I dont know what the investigation will determine, but he committed murder, and im not sure that any particular question or lack of question on a security clearance would probably ever reveal that. Obviously there were a lot of red flags, as you do. Why did we not get incorporated into the clearance process, what was he doing. Those were all legitimate questions we are going to be dealing with. So how do we fix it . He doesnt have a choice, he was arrested. That i know. That is again part of the complications. But what i understand is that was passed on two different officials. But to go beyond that without fax, i dont want to do that. But honestly when you go back in hindsight and you look at all of this, there were some red flags. Should we have picked them up, why didnt we, how could we all of those questions need to be answered. I think that this will be scrutinized a great deal. Until i understand the outcome of the investigation, i cannot make a judgment about whether it was a red flag or something that flew beneath the radar. Thank you. [inaudible conversations] [inaudible conversations] coming up in congress on wednesday, by the end of next year the significant part of the army wont be ready to deploy. They were joined by the other Service Chiefs before the House Armed Services committee. Good morning, ladies and women. We received testimony today were planning on sequestration in fiscal year 2014, and perspectives of the military services on the strategic choices and management review. Id like to begin by expressing shock and sadness about this weeks tragic shooting at the Washington Navy yard. The victims and their families continue to be in our thoughts and prayers. At this time i request that the committee hold a moment of silence to honor those patriots who lost their lives. [moment of silence] thank you. Admiral greenert, i hope that you will convey the committees deepest sympathies to all those that were affected under your command. I spoke yesterday to the secretary and i asked him to express our thoughts also as we remember the nabel family that he comes in contact with. The nation is grieving with you. Thank you, mr. Chairman, i appreciate it. Thank you. As you are all aware, we have been meeting in this committee since 20 women. Many of us are worried about the catastrophic cuts through this had been according to our military readiness, we have nonetheless encouraged the department of defense to fully planned for sequestration. Our attitude has been work for the best, but prepare for the worst. With that said we welcome the review in the hopes that well answer some of the many unanswered Unanswered Questions about how the department will operate in a post sequestration budget environment. While i appreciate the intent of this review as an assessment, frankly i was disappointed and troubled. By the lack of specificity in that it offered. The review contained little in the way of new information, leaving us only marginally more informed than we were two years ago. Last month secretary chuck hagel directed each service to two separate defense programs for fiscal year 2015. One of the president s budget levels and accounting for focused and trent sequestration. We would all agree that a higher budget level would be preferable, our focus today is on the alternative an alternate program under development. Earlier this month i wrote to secretary hagel to authorize each of you to discuss pacific impact that you have identified in the preparation of the alternate programs. Including the reductions in size of the force, the modernization programs will be canceled or curtailed, capability is that no longer can be sustained, and training that will be limited. In your testimony today, i hope that you will be frank about the remediation that will have to occur to the president s fiscal year 2015 budget request as a result of sequestration. And how those decisions will impact the execution plans for fiscal year 2014. Gentlemen, for two years you or your predecessors have come to this committee describing the processes of sequestration in generalities and percentages. The chairman of the joint chiefs told us that you cannot be cut another dollar but vouching the defense strategy. But when you cut the administration and the downplays the impacts, your credibility with this committee and with me is on the line this morning. I respect each of you deeply. But now is the time for you to act. Each of you carries a responsibility to give congress your best and unbiased military advice. Each of you have a higher obligation to provide security for the American People. This today i expect to hear in very clear terms what elements of that security you will no longer be in a position to provide should sequestration continue. I expect to hear what risks you will have to assume in order to provide a. Last week we had a hearing with secretary kerry and secretary chuck cagle and general dempsey. I have been talking for the last couple of weeks against going into syria or going anywhere else with this military until the sequestration problem is fixed and we have backloaded the money that has been taken over and above the 487 billion, which all of you said you could live with, but not a dollar more. But they each pointed out in her testimony that i was probably focused too much on money when things evolve in the curt about our National Security, we would find the money. There is no question that we will find the money. But it comes out of Something Else, Something Else that is very important to us. I would like to hear from you today what that would be. I would like to thank you for your testimony and i think the witnesses for being here and for your service to this nation. Now i recognize the Ranking Member for his statement. Thank you, mr. Chairman. I would like to join the chairman and expressing my condolences to admiral greenert and the navy and the tragic lives are lost in him tremendously. Our thoughts and prayers are with you. Whatever we can do to help, please let us know. I think the chairman for his leadership. I also think the chairman for the hearings we have had on sequestration. This is a significant challenge and i dont think anyone in the congress has been more upfront than chairman buck mckeon and especially in explaining what is coming in the challenges and trying to sound the alarm so we can do something about it. I appreciate the hearings and the discussions. I hope today we would skip the normal partisan arguments about whose fault it is. We have done that throughout so many times that just about everyone would repeat what i did say and so we know all about. We need to figure out where we are going to go and how are we going to deal with this and it is a multifaceted problem, certainly sequestration, which is set to go on for another 9. 5 years. We have only been dealing with it since march and i do the math in my head, but that is roughly six months. You know, those six months have been bad. This the choices that have to be made. Members and their individual districts. See the impact impact on the military insurgency attacks on contractors. But that is six months and we have 9. 5 years ago of sequestration if we dont do something about it. In addition, here we go again in terms of another threat of government shutdown. As we come up to september 30. It is to the point where there is virtually no hope of getting an up appropriations bill. We are hoping we can get acr. Depending on who you are, it is in many ways is that a sequestration including the money can be spent. Including dod. This is shortly thereafter we have a debt ceiling. As well as the debate over whether or not to asap. I will just say that, you know, you dont have to debate with your credit card once you have incurred the charges. You pay the bill. Then you can have a discussion about whether or not you want to continue to rack up bills that are that high. But with the United States government, i dont think you have the option of not paying your bill. But we will be set as well. And all of these fronts, we need to figure out what money we have. I would hope that congress would continue to work to solve sequestration and get past the debt ceiling. I know that that is going to be a challenge. But its not something that we can throw up our hands on and say, well, were not going to get there. We have to keep trying to get there. In the meantime we need to try to figure out whether or not we are going to get to and how we will spend the money. I take the chairmans point about how we would like more specifics. I would like to remind the committee that you are not free to make the decisions that you want to meet. You are reliant upon us for a number of those decisions. Personnel costs are enormous part of what we face. But if you want to do anything with retirement or health care, you have to come through us. About the only clear message that congress has sent you is do not cut back. That has been a lot of Different Things from the guard to retirement and on and on. But you are limited by what we allow you to do in many instances. And you have to backfill from now. So we have this discussion i hope that the members will approach it in a cooperative spirit. Not to say what are you going to do, but more accurately look at it and say, what can we realistically do together. I agree with the chairman. We will have a fundamental change in our strategy. But to get to that, it is the nature of our system, no one person can do that. The executive and legislative branch have worked together to come up with whatever the new testament. Right now we are not. So if i have one hope for the hearing, its that we can have that cooperative spirit. If you do not trim gentleman say this is what we need to cut and many say we cant do that, well, where do you want to cut and what im greenert advised we have would be what would be acceptable to us and how we restructure this given the fiscal realities weve all talked about. I think the chairman for his leadership on focusing on this issue. I would say that i look forward to your testimony. But i dont really look forward to this because this is not an easy subject and there is no good way out of it. We will build it the best we can. Thank you. Lets start with general odierno. Gentleman . Chairman buck mckeon, breaking member, and other distinct members of the committee. Thank you for the opportunity to speak with you about sequestration in 2014. As well as the strategic choices facing the army. The United States has drawn by military portions of the close of every war and todays no different. But this time we are joined in our army before the war is over. And at a time when there is great uncertainty in the interNational Security environment that we witness every single day. Today the active army, the u. S. Army reserves, remains heavily committed in operations overseas and at home. More than 70,000 soldiers are deployed as we sit here today. Including 50,000 soldiers in afghanistan in nearly 80,000 soldiers stationed across the globe. During my more than 30 years of service, the u. S. Army has fought in more than 10 conflicts, including the longest one in our nations history in afghanistan. No one can predict where the next contingency will arise that will require the employment of ground forces. We only know the lessons of the past. In every decade since world war ii, the United States has deployed u. S. Army services to defend our National Security interests. Some have suggested that there will be no end wars in the future. Well, i wish that were true. Unfortunately we will not ask our soldiers to deploy again in the future. But we have also one from previous drawdowns that the burden of a hollow force will fall directly on the shoulders of our men and women in uniform. We have experienced this too many times in our nations history to repeat this egregious error again. As the chief of staff it is my response ability to provide my best military advice in order to ensure that we have a army that will meet our National Security needs in the complex and uncertain environment of the future. It is imperative that we preserve full range of Strategic Options with the commander in chief, secretary of defense, and the congress. Together we must ensure our army can deliver a trained and ready boys for when necessary has the capability and capacity to execute a sustained successful major combat operation. The budget control act simply does not allow us to do this. If congress does not act to mitigate the magnitude and speed of productions under the sea with sequestration, the army will not be able to fully execute the requirements of the 2012 strategic guidance. By the end of fiscal year but 14 we will have only degraded readiness in which 85 of active reserve combat teams will not be retained for contingency requirements. Fy14 will require us to operate in a smaller force and we will have extensive Monetization Program shortfalls. We will be required to end, restructure, or to weigh delay over 100 acquisition programs, putting at risk combat pogroms, the outcome of the reduction in modernization of our other aviation programs and system upgrades for Unmanned Aerial Vehicles and the modernization of our air Defense Command and control systems just to name a few. Only fiscal year 18 through 23 will we be able to rebalance readiness and modernization. This will come at the expense significant reductions in force structure. The army will be phased to take further action in the act of the army, and in the Army National guard, 205,000 in the u. S. Army reserves. No more than 420,000 in the active army. 315,000 in the Army National guard and 185,000 in the u. S. Army reserves. This will represent the total reduction of more than 18 over seven years. 26 reduction in the active army, 12 reduction in the Army National guard, and a 9 reduction in the u. S. Army reserves. Additionally, this will result in a 45 result in trent reduction in brigade combat teams. In my view, these will put at risk our ability to conduct one major combat operation. Ultimately this size will be determined by the guidance and funding provided by congress. It is imperative that congress not implement a tool of sequestration. I do not consider myself an alarmist but a realist. Todays International Environment emerging threats require a joint force with a component that has the capability and the capacity to deter and compel our adversaries. Those who threaten our National Security interest. The budget control act severely threaten our ability to do this. I want to thank you for the opportunity to speak with you today and i look forward to expand on the comments ive made. They do, mr. Chairman. Thank you, admiral. Chairman, but he never smoked, distinguished members of the committee. And every opportunity to testify about the navy situation and fiscal year 2014. Including the strategic choices and management review. Before i address that in a statement of mine, please indulge me. Id like to extend my condolences to the family and the friends and coworkers chairman, we have lost shipmates on monday. The secretary of the navy and our leadership have our full attention on ensuring that the victims families and coworkers and her coworkers their coworkers are provided with care and support they need and that they deserve during this difficult time. We are grateful for the teamwork and the heroism with which the First Responders showed and we are working closely with the fbi and other Law Enforcement authorities to conclude this investigation. As directed yesterday by the secretary of defense and the secretary of the navy and me, we are reviewing the security procedures and Access Control for all the Navy Installations around the world. And i expect to have a rapid review completed within two weeks, which we will share with you. Nothing matters more to us than the safety and security of our people. I know you are aware of the dod, the department of defense report that cites cost control measures as a potential cause of vulnerabilities with procedures for our bases. Basis. Chairman, i have read the report. We are reviewing it right now. To the degree that we have one abilities, we will correct them and do it expeditiously. We are grateful to them for working with us on us and i can assure you that the cost control measures that were mentioned in this report have nothing to do with budget shortfalls or sequestration itself. We do not cut budgetary corners for security. The two are unrelated. Something needs added or changed, well fix it right away and we will continue to work closely with the i. T. Staff and we will reconcile all of these recommendations in this report that i just held in my hand. Again, nothing is more important to me, chairman. Id like to address with the time remaining two more points. Our budget situation and our plan and fiscal year 2014 and the longterm impact of sequestration. Mr. Chairman, this remains a mandate for the navy and we have to operate forward where it matters and we have to be ready when it matters. Recent events have demonstrated our ability to do that and quickly we have positioned ourselves and we have offered options to the president in the past month. This ability also reassures our allies and ensures that u. S. Interests around the world are properly served. As we prepare for 2014, sequestration is going to further reduce already does. The impact of sequestration will be realized in two main categories. Maintenance and investments. There are several operational impacts, but the most concerning to me is a productions are going to result end up with one ready Group Trained and ready for a operations. He will be forced to cancel maintenance. This will lead to reduced life for our ships and aircraft. We will again conduct only essential renovations and further increase the backlog in this area. It will probably be compelled to keep hiring freeze in place and that will force spectrum of the balance and civilian force. We will not be able to use funds to mitigate sequestration cut and our investment is likely concurrent 15. We will lose the least a combat ship and they staging base and we will be forced to do delay the delivery of the next Aircraft Carrier and the overhaul of the George Washington Aircraft Carrier. Also procurement of taxable aircraft, 11 of them. The key is a spending bill and the ability to transfer money. We need to transfer it, i think, about a billion dollars to operations and maintenance and are secured accounts postsequestration. Mostly so we can get ship Building Back on track to meet our essential needs. Leakages by january. Other Program Deliveries of programs and Weapons Systems may be too late regardless depending on the authority of reapportioned funds between accounts. When it comes to the strategic choices and management review, the navys focus is on crafting a balanced portfolio of programs within the fiscal guidance that we will provide. More details of what were doing outline in my written statement, which i requested for the record. In summary we will maintain a credible and modern base. We will maximize this forward presence as i talked to before, thats what we need to do. We will use ready to deploy forces to do that. We will continue investing in asymmetric capabilities. With this committee, we will do our best to sustain a Relevant Industrial base. However in a given fiscal scenario, with the budget control act, there are numerous missions that are in the defense strategic items and we cant perform. These are laid out in great detail in my written statement that will save you going through each and every one of these in my statement here. Applying one fiscal and programmatic scenario, we would result in about 255 shifts in 2020, that is my benchmark year for strategic items. That is about 30 less than today. About 40 less than our submission and 51 last but not for Structure Assessment of 306 ships. Mr. Chairman, i understand the pressing need for the nation to get its fiscal house in order and i am on board with that. But i think we need to do it in a thoughtful manner to ensure that we sustain appropriate fighting capabilities and that we have proper forward presence and readiness. Those are the attributes that we depend upon from our navy and from your navy. I look forward to working with congress to find solutions that will ensure the navy retains the ability to organize and train and equip this in the defense of our nation will operate in concert with the record. My thanks to you in the committee for the sport until you have shown us during this difficult time. And in many other times as well. Clearly you continue to have our best interests at heart. Thank you. And i think you. General . Thank you, mr. Chairman. Established members of the committee, its always an honor to appear before you. I think you for your continued support. The results were sobering, i think to all of us. Sequestration remains in place for fiscal year 2014. And we are forced to cut hours 15 . Many of her flying units fine units will not be able to maintain Mission Readiness and we will have to cancel or curtail exercises programs, which we were able to avoid in 2014. Over the longterm it will impact both structure of readiness and modernization. The next five years, we can be forced to cut up to 25,000, which is about 4 of our people. We also probably have to cut about 9 of our aircraft inventory. We will be forced to do this with the entire aircraft. As we look at what for structure need to maintain, we will advertise longrange capabilities and capabilities in a environment. Other platforms will be at risk. We plan to protect readiness and prioritize training. Because if we are not ready for all possible scenarios, we will be forced to accept what i believe is unnecessary risks, which means we may not get there in time and it may take to drinking longer and are people beat placed in the risks. Our forecasts are bleak and it will impact every one of our programs. These disruptions will, over time, cost more money to rectify contract breaches and delay delivery of critical equipment. We are looking at as many as 50 of our modernization programs we will favor recapitalization whatever that decision is required. That is why this will remain the f35 and longrange strike bomber. United States Air Force is the best in the world. And as a vital piece of the worlds best military team. That will change even if sequester persists. We will answer and we will win. But the impacts are going to be significant in the risk occurs in ways that impact our airmen. Thank you for your efforts to pass this bill and give us some stability and portability over time, which is something we need most. I look forward to your specific questions. Thank you. Chairman buck mckeon, Ranking Member smith, thank you for the opportunity to speak to you regarding sequestration in the strategic choices management review. Sequestration by scale will significantly degrade readiness while at a time of strategic rebalancing and all done on the world stage with chaotic and volatile qualities. I urge the congress to consider the full range of risks across the joint force. And as for your continued assistance in mitigating the effects of sequestration. Our nation expects a force capable of responding to a crisis anywhere around the globe at a moments notice. Readiness is the critical measure of our ability to be able to do that. This is our nations strategic hedge against uncertainty. In times of crisis, deployed naval forces provide decisionmakers with immediate options i can control escalation and create decisions and enable joint followup forces. Including mitigating the risks inherent in an uncertain world by responding to a wide range of capabilities across realworld scenarios. Your marines remain a constant effective hedge against the unexpected and provide the American People a National Insurance policy. Our world is a dangerous place and america must always be ready for emerging crisis as it could threaten our security. I am particularly concerned about the devastating impacts of sequestration. The very nature of it arose and that of the joint force. Scheduled readiness is not an option for the United States greenport. We must be prepared when a crisis erupts. Over the last year we have maintained our readiness to the maximum extent possible. Meet maintenance costs are increasing and the our marines are working longer hours to keep aging equipment running. We have maintained the nearterm readiness at the expense of infrastructure and sustainment and modernization programs. This cant continue over the long haul. We are out of catch22. If we are to succeed our future battlefields, we must modernize and care for our infrastructure and our training facilities. Sequestration is already starting to degrade our infrastructure. We have been force to reprioritize recapitalization efforts and to be able to sustain a ready force. Susan miller will be little left to offset a readiness requirements. Over my 42 year career as a United States buried, i have seen the effects of strategic miscalculations resulted from declining resources and budget driven strategies that resulted in cuts. We only need to look back to the 1990s when our nation executed the first drawdown of the overall volunteer force. Following the gulf war we saw firsthand how the cuts produced unintended consequences and increased risk to our nation. During the midtolate 90s, we were challenged with limited conflicts in somalia, kosovo, and along with the bombing of our east african embassies. By the end of the decade the u. S. Military had reduced its activeduty force by 25 . Operations and maintenance funds or . Wearing down the force, wearing down our families. For this very reason, congress began to require the services to track and report our deployment tempo. Consider this to be peacetime. We see the same problems today. In order to meet the requirements of the defense strategic guidance, i need a marine corps 186,800 activeduty marines, a force of 1. 86 allows us to meet our requirements as well as to be able to go to war. Our share of the 20 love and budget control act, 487 billion reduction. Based on sequestration, i simply cannot afford a force that size. Sequestration will force a to plow through scarce resources, in an attempt to keep them alive and functional. We will be forced to reduce or cancel modernization programs and Infrastructure Investments in order to maintain readiness for those deployed. Money that should be available for procuring new equipment will be rerouted into maintenance and spare accounts and this includes her 42yearold nixon era Amphibious Assault vehicles. We initiated a parallel study to the defense of Strategic Management review. Our internal review redesigned the marine corps to a force that i could simply afford under sequestration. This was my is my strategy driven over by budget driven effort. Our Exhaustive Research backed by independent analysis determined that a force of 174,000 marines is the smallest force that can meet mission requirements. This is a force of levels of risk that are minimally acceptable. For instance, assuming the global requirements remain the same over the foreseeable future, upwards of 174,000 will drive it to virtually all marine unit. Down six months, home 12 months, furthermore, the 174 fours and 10,000 force, in plain terms we will have 11 fewer combat arms battalions and fewer aircraft squadrons to defeat our adversary. This is a single major Contingency Operations force that would deploy until the war ends. In other words we would come home when the war was over. Koreans who joined the court during that time would like to go from drills filled the battlefield. Across the joint force, america will begin to see shortfalls in the militarys ability to accomplish its national strategy. Today we are seeing only the tip of the iceberg. Tomorrows marines will face violent extremism and battles for influence and natural disasters. Developing states and nonstate actors will acquire new technology and conventional weapons that will challenge our ability to project power and gain access. In order to be effective in this new environment ,com,com ma we have to maintain our forward influence and strategic mobility and Rapid Response capabilities that marines are known for today. We will balance the increasing force focus on the Asia Pacific Region with a sustainable emphasis in the middle east and african literals. I will continue to work with the members to fix the problems that we are faced with today. I think you for this opportunity to appear before you and im prepared to take your questions. Sumac thank you very much, thank you for your service and your testimony. I am going to yield my time this morning to the gentle lady from south dakota. Thank you, mr. Chairman, thank you for yielding. I would like to thank our Service Chiefs were being here and for your service to this great country. Our prayers are with you during this difficult time and we appreciate your service. We are again confronting the difficult choices and tradeoffs that we have in the face of sequestration. Like you, i have Heard Service members that have concerns about the sequestration in their personal impact and secondary compared to only two defend this great country. As you mentioned, we have had our b1 bomber squad grounded, which is eroding our readiness and costing more in the long run. A National Guard witchery technicians were furloughed. While many of the technicians that i talked with were extremely concerned about the inconvenience for them and how hard it was on their personal budgets. They also mention that if we continue to break with them in the coming year, they told me they will find the need to look for another line of work. The thought of losing such highly trained individuals is very troubling to me, and im sure it is with you as well. Clearly the options that are presented are not pleasant ones and i hope we can rally around what is her most important duty, that is to provide for the common defense and protect our National Security. General, my first question open to you. Air force base is located in south dakota and part of the b1 bomber fleet. It contemplated all of the fleet is retired, given the strong track record and our operations in afghanistan, i believe that it would be very shortsighted. Are their foreseeable medicines that will go on and how would you mitigate that loss of the Aircraft Group grew in this overall strategy . We have a problem with mitigating losses with bombers, especially over time. Were we to make a major reduction, we would have extreme difficulty meeting some of the guidance in the defense strategic guidance. As a result, i dont think that there is major discussion inside the air force without needing fleet. In your testimony talk about and you quoted that we cannot continue to banish this. Old airplanes airplanes airplanes with potential adversaries will not throw off the assembly line. Then he mentioned that the b52 is as old as you are, which i will not speculate on that today. But why would you then consider retiring a b1 bomber is not half the age of the b52 . I know we cannot retire a major portion of the bomber fleet at all the midst of strategic guidance. I think when we look at what we can do over time, we have to look at every platform and we are looking at every platform and program and the impact of divesting an entire fleet. What we will need to do is balance which is something that the entire bomber fleet is engaged in. If god for god for bid we run a major conflict requiring that to be operated that way versus the shortterm risks that sequestration has presented us with. Those are the only two places that we can go to have an impact on us right now and to take money to pay for the bill over the next couple of years. That is why we are having the discussion. Not because we think strategically its a good idea. I was glad to see within your testimony that you talked about longrange bombers being a priority in something that you identified as well. Although i did have some concerns with the ideas that were laid out. It was protect us. So i will open up the questioning to anyone else or whoever would wish to answer this question. We understand that funds can be used to reduce the impact of sequestration on current year accounts. However many available prioryear funds have been utilized with the fiscal year 13 cents a trade sequestration. What magnitude does this impact fiscal year 2014 . I will open it up to general amos if you would like to speculate on that. Congresswoman, we have been successful in doing that in the past. As you implied in your statement, as we move to a fully sequestered budget, the flexibility is not there. As we move into the procurement and even in some cases military construction accounts, there are opportunities to be able to rely monies and region with mummies across what might be a boundary, a rule boundary. All i would like to see in the future, especially as we go to the sequestration budget, is the ability to take a look at how we are doing in execution. And as things become apparent, but you cant do things, i would like the opportunity to have applicability. The flexibility does the road as we get deeper into sequestration. Thank you. Back, mr. Chairman, i yield back. Thank you. Thank you, Ranking Member smith. Thank you, mr. Chairman. One question with two parts. I know that we are supposed to talk about sequestration and i know that we will continue to do that. But can you give us an idea of the impact, assuming that we can get one and then also the impact of the threat of what we dont raise the debt ceiling. How do those two things impact all of what we are talking about here today. But i will throw that opened whoever wants to dive in. As we talk to the room before. Mr. Smith, the issue with the resolution is that you cannot get any new starts. Every year that we would like to do new projects from runways who did shipbuilding started, to overhaul an Aircraft Carrier. Thats a new start. But under a continuing resolution you cannot do that. Youre also limited to the prior years funding. When youre limited to that when it comes to maintenance and operations, they are not consistent. To the extent that they are greater, we are out of luck. We just dont have that money because we are spending that Previous Year at that level. When it comes to personnel, in order to have the ability to shape our force, those are new starts as well. Including bonuses, reenlistments, it is about shaping the force. Including a lot of flexibility in the ability to operate the force. Thank you, colonel. Congressman, as you know, it depends on how the cr is, then you have cr plus acquisition, which will pile on to what occurred in 2014. As well as what you have are to bush, 400 million from 13 to 14, 100 million of problems in our maintenance accounts. We have pushed over 100 million of training readiness and now you have a continuing resolution and continuation of sequestration. Soap like to build and build, and to get to a point that ive mentioned. If that occurs, 85 of our Army Brigade Combat Teams are now im ready because of this continued pressure on our budget. I cannot take this drink down fast enough. I gain nothing in our base budget, even though we continue to reduce the size of our army over the next few years. For us us it is a huge problem. That is one of the real issues that we face and we are planning for that because that is the worstcase scenario. So that is what we are planning for this year. So now we are looking for significant degradation. My biggest fear that keeps me up at night is that i have to i announced to deploy soldiers and they are not ready. So we will get we will have to tear the readiness, to say that maybe i can get this for great strength, so that we have to go with seven brigades and we have to go more than that, we now have a problem. Its so that is the impact on us. Thank you. Congressman, are the things that affects all of us. The longer the cr does come in greater. The length of that period makes a major difference. We have paid the full 25 of our sequestration bill with am obligated funds, which are not available. The other thing is that we have all deferred infrastructure maintenance sustainment and we are down to only doing Critical Infrastructure sustainment. Keeps us from doing as that as well, which adds into greater costs in the future including what we have experienced last year. Okay, thank you. Congressman, a point of reference with last years effort as we finally got that fixed in the hr 933. Because of no new starts, last or i had 850 million for the military construction that was in jeopardy because i could not execute it. This year because of the way the budget is written under sequestration, i got my military construction by 40 . So if i cant execute those military construction tracks, ive gone from 60 to perhaps nothing. In many cases i cannot rule that and we will have to restart it and it will pile on most requirements. Thank you, gentlemen. I yield back. Thank you, mr. Jones. Thank you. General amos, the marine corps has issued correspondents and the passion of anna in april of 2000. The correspondent seems to acknowledge for the first time that problems with the program may have contributed to this tragic mishap. Can you please comment on that statement . Youre absolutely correct, a letter was sent to the families of both of those great pioneers, those that lost their lives in that airplane. It acknowledged a series of complex Programmatic Program executions and monetary of substantial monetary support. There is a series of things that were all happening during this program during the summer of 2000. The springtime and the summer. That is what the letter acknowledged. There is also challenges aerodynamically because the program had been cut back in some areas to the point where it was the bare minimum. Those pilots were the pilots that were flying an airplane, using the data that they had at the time. So its an acknowledgment of that. Congressman, as if they they take you in private, i am going back through all of that right now. It was a complicated period of time. And its interesting because we are talking about budgets and sequestration and reducing costs that program was about as anemic as any program that i have ever seen. A major acquisition program. And that is part of how we ended up getting where we were. Not only during the march timeframe that the summer in and the fall. Going back in there again, not the aerodynamics but the reality of what was taking place. I intend to come back to you in this house with my final resolution on. [inaudible conversations] the copilots wife, connie gruppo, she was in my district. The pilots wife was in the district of steny hoyer. I want to thank the commandant publicly for making this state and taking this position. Because i have always believed that the dead cannot speak for themselves. For the commandant take this position, i wish to thank you on behalf of the two wives, the 17 marines sitting at the back of the plane or that were burned to death. Sir, this shows that you are a man of integrity that seeks honesty as to what happened and i want to say that i have Great Respect to you for making the statement that you just made to the committee. Thank you so much, sir. Thank you, congressman. Thank you, ms. Davis. Thank you, mr. Chairman. I want to thank you for being here. I especially want to thank you for continuing to sound the alarm. We are hearing what you are saying. We know that readiness is at risk. And yet i do sincerely worry that we are not acting on what we are hearing. This is really getting serious. I wonder if you could talk about some of the decisionmaking that goes on. You are dealing with capacity and capability at the same time. I know that admiral greenert, you mentioned the need for cyberoperators. Yet we also have Fleet Maintenance and the whole number of other areas that you have to focus on. So i think just the shortterm and longterm. What else do we need to know to be able to act on what youre telling us . Well, you have to prioritize. That is obvious. So my job is to provide petite chick Nuclear Deterrent states. Right behind that is cyber. We have talked quite a bit about the importance. We are staying the course that we have briefed here through any budget scenario that i see out there. We have to maintain. That is critical. As i have mentioned before, i have to be where it matters when it matters and we do everything we can using whatever innovative means that we cant be forward but we have to be ready. So whatever we do we have to be ready. Then you say, what is the rest of it. Well, the rest of it is the issue that i talked about. It is getting less and less and im very concerned about it. Today one strike group is ready to surge with the organize training. Normally we have three. So you can see that. In the future, im not so sure. I had to look at the scenarios and that is an important attribute. It is critically important. We have to own up. We have to do that in the future. So it is about prioritizing and then deciding within, you know, you have to have a certain capacity to have a capability. But once you have the capability, how much of it can we afford to have. That is the conundrum that we are dealing with today. Okay. General odierno . So part of it is the process of the budget. But you have to put the puzzle together properly. So for the army, as we face just the reductions in the 487 billion, which we are still implementing, as we implement that, in order to get our strength down to the levels from 570 which is the first based on potential decision so we have in the budget, we have to take risk and readiness and modern and the trend modern ideas. As we get cuts come all of the cuts, they almost all come out of readiness and modernization. Its like and reduce the industry further. Then what happens is we are going to get our and strength reduced to a level that i believe makes our army to small to get it in line with the readiness and modernization efforts that we have. The other thing is there are fixed costs to operating a service. We tend to overlook them. Just the fact that how we recruit and initially train and educate. That is a huge fixed costs within our service that we have to fund first. Because we dont do that, we lose our ability to develop this. So then you have to take what is left and that is the problem that we are facing as we move forward. And as i know that 171,000 is a figure that sounds like not a figure that people feel good about. So im wondering how much lower do you think of that can go . At the end of the day, we will go as low as congress is willing to pay for. The force is the floor that occurs in several ways. First of all, it does meet a major war and history has proven over time that we will commit our nation again, even though its hard to imagine right now, but we will probably do that again. When that happens, that forces the minimum size for scoffed award. The Opening Statement will talk about that. But even the steady study requirements around the world, they require a force that is lower than 174,000. That is the stuff that is happening right now. That is what is happening aboard our ships and that is what is happening in afghanistan and the far east and the pacific in australia. That is the state requirement. Inside of that, which i think there has been an alarm bell, it is best designed to be a dwell force and i refer to that in my Opening Statement. Its a critical point because as the assistant commandant, we want to build a force postafghanistan post afghanistan that is at least one to three. So we give them the opportunity to reset, to come back and reset things with their loved ones. So that is unprecedented and must this is during a time of peace. Thank you. Chairman, thank you for being here and not just to flatter you, but any one of the four of you have experience defending this country than any other member sitting on the committee. If we took the four of you collectively, you have more knowledge right now of what we need to defend the country and the resources that we have in this entire committee together. Most of us on the committee, some of us will disagree on how we got to sequestration. We disagree on a way forward. But we are unified in the fact that we need to do away with sequestration. Unfortunately that is not true for all the leadership in congress over every member outside of the committee. Part of that is because the message has not always spoken with clarity. When we have these cuts that we can argue with, which our staff believes it to be, we were not really clear. We were not clear from the pentagon. But we are where we are today. That is why i want to ask you this question so we can speak with clarity to those who may think that we can go forward. The defense strategic guidance that you talked about in 2012. Before that we had a winwin situation as our defense strategy. Because of cuts that we made, we basically felt that we need to go to the new defense strategic guidance, which is really somewhat of a mentalist approach when we said that we would encounter and hold another one in this way. My question to each, and its close to a yes or no answer, but just so we can be clear in communicating mess, if sequestration goes forward, can you meet the requirements necessary that you have to be to comply with the minimal defense strategic guidance of 2012. And if youd give us your assessment. Dimension in my Opening Statement and i will just repeat it, that i believe we cannot leave a full sequestration. Its my opinion that we could struggle to meet one operation. It is a very positive assumption and for that, we need to come close to meeting that. Thank you, admiral. I know that you have looked at this, you have agonized over it. Can the navy meet the requirements necessary if sequestration continues. No, sir, we cannot. I am concerned with sequestration in 2014, im very concerned about our Strategic Nuclear situation. It falls behind and it cannot fall behind. So im concerned about this as well sumac general, the same thing with the air force. Can you meet the requirements with the way it is Going Forward . No, we cannot. Any executable strategy will always be resource constrained and if the resources change significantly, we will have to be looked at. General amos, what about the marines . Can we meet the requirements necessary for the strategic guidance if this continues forward . Congressman, no. If it is something that we do somewhere else, i cannot. I do not have the depth. But we are going to continue with the rebalancing in the pacific that comes at the price of readiness back home. Well be unacceptable. So the answer in both cases is no. Mr. Chairman, i would just like this say that if nothing else, that message ought to be communicated. We need to have a commitment to make sure that we are doing whatever we can in congress to get this foolish thing stopped so we can make that requirement. I yield back. And some of us that met last week, we had just gone into the field asking the American People if they felt like they would be more safe or less safe. And they said 83 felt like they would be less safe 10 years from now than they are now. That is before they heard this testimony. You can see if the america