Transcripts For CSPAN2 Key Capitol Hill Hearings 20140116

[applause] this of this going to make it easier for these wide man gaps semiconductors to go from the drawing board, the factory floor, the store shelves without necessarily the stores shelves. What i just saw, for example, or these really big piece of equipment, test Utility Companies or windmills translate the power that they are generating demand actually committed transmitted to where theyre going to be finally used it will bring together shift designers, manufacturers with Companies Like exxon and delphi the stand to benefit from these technologies. And this will help the companies but it will also help Small Companies because they will be able to use equipment that otherwise would not be able to afford and test a prototype new products and, of course, American Workers will be able to come right here to North Carolina to learn the skills that companies a looking for. In the next generation a manufacturing will be an american revolution. So in the coming weeks to be launching to more these innovation hubs. We already have them all planned out. Bonn will focus on digital design and manufacture. Another will be developing lightweight metals that can transform everything from Wind Turbines to military vehicles. Together theyre going to help build new partnerships in areas that show potential, helped to lift up of communities to help spark the technology and research that will create the new industries, the good jobs required for folks to punster to get in the middle class, and that is what americas all about. Now, we have always been about research, innovation, and then commercializing that research and innovation so that everybody can benefit. Then we start selling yourself all around the world. We start exporting. We create good jobs. Middleclass families that are able to buy the product that results from this innovation commend you get a Virtuous Cycle where everyone is doing better and no one is left behind. And that is so we can do if we pull together the way those companies and universities have pull together this as part of this bid. This is going to be a long haul. Were not going to turn things around overnight. A lot of jobs were lost. The textile industry, furniture making, but they great news is is that ultimately because our people are good and smart and hardworking and willing to take risks, we are going to be able to start bringing those jobs back to america. [applause] and that is what we do. When times get tough, we dont give up all we get up, we innovate, we adapt, we keep going, we look to the future. [applause] and now one of you to know, North Carolina, that as long as we keep working together in fighting together and working telomere to widen the circle opportunity for more americans of that no one is up behind. If you work hard and are responsible, you can go out there, guinness still, traders of, find a job, support a family if we work together, and that is our focus, there is nothing we cant achieve. There is no limit to how felt frolicking go. The policy. Time bless america. [applause] [applause] [applause] [applause] [applause] coming up tonight honor cspan2, imf director kristine lagard cox about her al look for the economy. Then Homeland Security threats followed by remarks by president obama on the economy and efforts to boost manufacturing. Thursday treasury secretary jack lew speaks about the economy and even hosted by the council on foreign relations. Live coverage at 8 30 a. M. Eastern here on cspan2. Environmental Protection Agency testifies about the president s Climate Change policy. Live coverage starting at 9 15 a. M. Eastern on cspan cspan three. As the president for stated in march and reemphasized tuesday night the goal of the United States in afghanistan pakistan is to disrupt, dismantle, and the to al qaeda and its extremist allies in a prevent his return to brunt prevent its return to both countries. Stabilizing afghanistan as necessary to achieve this overarching goal. Robert gates served two president s as defense secretary. Cia director. Fridays 6 30 a. M. Eastern, and live book tv the event. Secretary gates talks about his management in the wars in iraq in afghanistan. And then a few weeks womens history for beginners author Bonnie Morris will take your questions and comments live on in debt to february 2nd at noon eastern. An online for the rest of january, join our book tv book club discussion. Go to booktv. Org and click on book tv to enter the chat. International Monetary Fund chief Christine Lagarde spoke about the World Economy in 2014 citing the u. S. Budget deal as one step toward stabilizing the economy. From the National Press club, this is an hour. Now for our guests today she is the first woman at the helm of the international Monetary Fund and the first woman to hold a finance minister job in a g7 country. Christine lagarde has led the imf for two and a half years during which she has been erased and the European Economic crisis. Not new to the u. S. Capitol. She attended Holton Arms School in bethesda and mark that the u. S. Capital as an aide to then representative William Cohen where she helped him correspond with his french speaking constituents. [laughter] a onetime member of the French National synchronized swimming team, she became the first female chairman of the International Law firm baker mckenzie. Earlier in her career and a Job Interview in the law firm in paris she was told she would never become a partner because she was a woman. It later in her career she would stress equal opportunities for women, encouraging them to work in advancing their careers. Coming her a letter she joined the french government in june june 2005 as minister for foreign trade. She worked briefly as a minister for agriculture and fisheries in 2007 became the french head of finance. She also chaired echo friend council, the body of economics, and finance ministers of the european union. This experience came in handy when she had to negotiate the bailout of greece and economic help for portugal at cyprus. According to news reports of the darkest hours she handed out m m candies. Shephard global counterparts. [laughter] with europe slowly emerging from the deep recession and the u. S. Dealing with its own budget issues she expressed optimism about the Global Economy in recent weeks saying, the imf will raise its outlook both for the u. S. In the Global Economy. Yet she remains concerned about the Global Recovery being uneven and subdued and about the flowing of emerging market economies, the main engine of Global Growth in the last several years. She said the risk of heightened volatility in Financial Markets may create new challenges to the emerging market economies and further slow their growth. In the u. S. She is urging the funds largest shareholder to fill a pledge made three years ago to approve the increase of the imf capacity and allow more states in developing countries including china. Clearly for the iron lady of the Global Economy the challenges are far from over. To hear about these matters today please join me in giving a warm National Press club welcome for managing director of the imf [applause] thank you so much. [speaking in native tongue] as you can tell, do as i am told. At the time when my predecessor would sit down, and clearly have failed. Good afternoon and thank you for having me with you. But like to thank the National Press club and especially presence far not only inviting me to this prestigious venue but essentially presenting meola nevada want to talk to you about now. Something we have prepared together, which we have not. That me, first of all, begin by wishing you all a happy new year i guess its still time to do that given that we are just exactly halfway through between our western new year and the Lunar New Year which will bloom in a few weeks time. At the its also appropriate to wish our cells at the new year google one of like to talk to you about which has to do with the Global Economy and what we should expect for 2014. Of going to test you numerologys skills by asking you to think about the magic seven. Okay. Most of you will know that seven is quite a number in all sorts of themes, religions, and im sure that you can compress numbers as well. So if we think about 2014 all right. Im just giving you 2014, dropped to zero, 142107. Okay. This just an example, and were going to carryon. So 2014 will be a milestone and hopefully a magic cure in many respects. It will mark the 100th anniversary of the First World War back in 1908 1914. The 17th anniversary of the conference that actually gave birth to the imf, and it will be the 25th anniversary of the fall of the berlin wall, 20 theft. It quickly turned into the greatest Global Economy calamities as the great depression. The crisis cylinders. Yes. Optimism is in the air. We have left the deepfreeze behind this and the horizon looks just a bit brighter. So my hope and my wish for 2014 is that after the seven miserable years we can we have seven strong years. I dont know whether the g7 will have anything to do with it the weather will be the ag 20. I certainly hope that the imf will have something to do with it. Is this Wishful Thinking . No. But it will not happen randomly without us together and policy makers in particular making the right decisions, having the right policy makes, organizing themselves in a coordinated way. Let me talk about first of all the global bark as we see it and then i would like to touch on the policies that i believe will help us transform those miserable years into strong years. Now, i am going to anticipate potential questions that some of you might be to to task by adjusting clearly than not going to give you the number of our revised World Economic outlook number that will be this close and january 21st. Suffice to say that it will be directionally positive as a revision. But im here to discuss the main trend. We saw momentum strengthen in the latter half of 2013, and we believe it will continue to strengthen in 2014, largely due to improvement in the advanced economy. Yet despite that directionally positive movement, growth is still stuck in fairly low gear. It remains a potential which we believe is 04 which means that the world could, if it worked, create a lot more jobs than before that we have at the moment, and we could do that without having to worry about the inflation genie coming out of the bottle. With that positive initial statements ive but like to have that it will not be without significance. With inflation running way below central bank targets in most corners clearly were seeing rising risks of deflationary which could prove disastrous for the recovery. If inflation is the genie, then certainly deflationary is the over that must be fought decisively. Throughout the years of crisis we have relied heavily on the emerging market economies and on the lowincome economies to be it drivers of growth. If you combine those two categories, they produced actually about threequarters of Global Growth. However, a growing number above emerging market economies are slowing down as the economy cycle turns. So that is also one of the risks, as we see, going forward. We also see risk arising out of the Financial Markets turbulence in the volatility of capital flow. Their reaction to the fed tapering is partly due to the fact that we have had a dry run in may and june. It is good news that this reaction was found, but there could still be rough waters ahead. Overall as i said that direction is positive, but Global Growth is still too low, fresh out, and many had. Moreover even as it is or as we forecast that it will be, it is aiden of to create 200 million jobs needed by people looking for jobs everywhere the world. Additionally into many countries, actually most, the benefits of growth by being enjoyed by far too few people. Just to give an example, in the United States, 95 percent of income gained since 2009 went to the top 1 . 95 percent of the Income Growth gained went to the top 1 . This is not a recipe for stability and not a recipe for sustainability. Lets now turn to the policy recommendations. Because all of that really points to the policy makers all need to stay focused on the policies that are needed for sustainable inclusive growth as low as rewarding jobs. And we so far have certainly avoided the worst case scenario, and no policymakers have made part of the necessary effort. Those that arent when clearly beyond the call of duty with the central bankers. Government in most places deployed fiscal stimulus where they could and applied adequate, sometimes a bit too much Fiscal Consolidation whether should. The road has certainly been difficult and continues to be so, but as head toward moral one said, the difficulty is the excuse that history never accepts. Now that the Global Economy looks more stable the big party for policymakers from our point of view in 2014 is going to be to fortify the few Global Recovery in make sustainable. Great. And going to have run you through the advanced economies that have will take by groups, then the emerging markets, then in come countries as to what we see as a good, coordinated policy makes this should be applied in order to secure and strengthen growth in secure jobs. To look at the advanced economies first with a means is that your member what i said about the monetary policies. Central banks are going to have to slightly gradually, over time, and properly communicated and do what they have done, but they should not to that and tell growth is robust enough and firmly rooted perrys of the way in which state perry is applied, the way in which from unconventional to conventional they return will have to be very well timed. At the same time countries will need to use the rule created by that unconventional policy to put in place the reforms that are needed to jumpstart growth and jobs. So it is not just for central bankers to do some policy work but also for the other in terms of budgetary policy in particular. Let me get deeper in touch on the different regions and look first at the largest economic player in the world, the United States. Growth in the United States is certainly. [inaudible conversations] , driven to essentially buy private demand. And theyre public that we have observed in 2013 unfortunately was tried by the Fiscal Consolidation of 2013, helped by the loosening of the fiscal course it as a result of the recent budget deal. Still, it will be critical to avoid premature withdrawal of military support and to return to an order in the budget process, including removing the threat of the debt ceiling. It if we live look at the arrow, it is clearly turning the corner from recession to recovery. But when you drill down growth is still on balanced. Some kurds trees growing reasonably well and some economy is doing quite well and others lagging behind. Some of those are actually suffering from significant high debt and credit constraints as well. So here is Monetary Policy the continued health. Clearly the ecb has done quite a bit to facilitate the financing of the economy, but i can do more, and we believe that it can do so in a very targeted way by facilitating targeted lending, in particular, in order to avoid the financial fragmentation that is still there is much beyond conventional policy it has been applied. We believe that the forthcoming asset quality and stress tests that would take place in the course of 2014 and going to help if it is done even in italy and in a credible manner in that obviously will communicated as well. In the euro area, there is a need to accelerate reform, booze labor Market Participation and that applies pretty much across most euro area countries. Lets now turn to japan. In japan the initial boost from economics and the three errors has been effective, but it is weakening a bit. Hopefully temporary fiscal stimulus that it announced will actually upset or this sparsely upset the negative effect of the necessary consumption tax increase end to the account economic and social reforms that we believe are needed to strengthen growth in japan. What 29 that . Well, regulating the service of product markets other heavily regulated and badly protected command that is where i mean by social reform, making sure that women in the japanese economy can access the job market. I am very pleased actually that the prime ministers listens to that recommendation and that he is including in his budgets of 2014 significant amount of spending on Day Care Centers for japanese women. Now, moving away from the advanced economies camillas look at the emerging markets, the challenge is going to be to navigate in a pumping this in stay strong. Policymakers may be wary of any signs of financial access, and they should, especially in the form of asset bubbles or rising debts, including two backdoor channels or offbalance sheet instruments. Financial regulation needs to be strengthened and implemented in order to be able to better manage credit cycles. Yes, many countries also could do more on the structural front. If only by way of investing in the necessary infrastructure in a wellmanaged and with a good strategy in order to remove the bottlenecks of some of the emerging market economies facing as they have grown quite steadily of the last five years. What about lowIncome Countries . Here the news is generally good. These countries have really been a bright spot of the Global Economy now is the time to lock in gains and make sure that some of the buffers they have used during the time of the financial crisis are reconstituted and can build Strong Defense against either the direct by way of the commodity market for instance of a consequence consequential external short the could result from movement of capital flow which would weaken the growth in the emerging market economy that is typically the trading and Investment Policies of those two income. In addition countries should keep those countries, low Income Countries in addition to building buffers, including by raising revenues because they have had the benefit of strong growth, but we have not seen it in those economies, an equivalent and proportional increase of revenue, so they have to focus on that, but they also should keep on spending effectively in selectively an important social programs and infrastructure projects. I have to say that i am just coming back from two fastgrowing regions of the world. Just before christmas i was a nation visiting me in my and career which is certainly not in the category of lowIncome Countries, managers cut back from south africa, kenya, and molly. You know, those two regions are growing at the rate of six and a half and 5 respectively. And when we are here in d. C. Often we tend to forget the massive movements that have taken place and as markets and how those economies are on the go, how the middle class is actually building in the economic power is trading in those areas. Everything is relative. The middle class is rising in everything is rosy. No, but there are massive changes under way command the speed at which theyre taking place is just phenomenal. Now, i will not close that sort of panorama of the Global Economy without mentioning the arab countries in transition. On your right that we have to spend quite a bit of time of europe with, we have also spent quite a lot of time on the arab countries in transition to try and help them strengthen the economy in order to restore some political stability going forward. It is exactly three years ago that the arabs during started and then spread out to the rest of the region. And as this countrys crippled with the reforms 82 unleashed the dynamism of the private sector and create more jobs for the young people they need support and International Support in a significantly and not just from next door neighbors say. So i have tried to take you through the various regions of the world both in terms of where we see those economies, where we see them going forward, and then try to discover the policies in coordination of policies that they should apply which does not mean to say that there are no issues which cut across the different groups requiring common resolve and solutions to common problems. Think about the legacy of public and private, for instance. Think about the fiscal and current account consolidation, think about the reform to the Financial System that does not apply on the beverage of of the dollar going up and apply across the board because just like in a terminal threats, just like contagious disease, those issues known on borders. The same is true with rising inequality. As i mentioned to you colorizing income has grown to 1 percent of the population. You will say to me, of course, this is the result of the improvement of the First Security market. Not only because of that. Those are problems that cut across all groups of countries and are not abstract challenges. By addressing them we can insure future prosperity, we can meet the rising aspiration of the young people in those countries in Global Services more generally for jobs, a security, for Opportunity Commission for dignity. So i will conclude, at the outset i made reference to the conference here in this country than 70 years ago and the multilateral and it is behind the funding of the imf much others. To move forward and for the imf to continue to be supportive and allied and partner of Financial Stability needed for all economies prosper, we need is a spirit of cooperation and Global Solidarity today. Some people sometimes worry and wonder and say, why is it that the imf is supporting europe at the moment. And i remind them come of 70 years ago the first country that had the benefit of the imf support we European Countries like mine. France was the first program. It moved around the planet. We had to help Latin American Companies come asian, helping african countries on a regular basis. And were out in europe at the moment, and will be another group of countries next time around. And i believe that the imf can play an especially valuable role here as a forum not just to learn and intellect as a realist to, but to upgrade as a foreign. We have certainly played a part in the collective response to the crisis. We have made no less than 154 lending commitments and provided Technical Assistance to 90 since of our since the onset of the crisis in 2008 and have provided our best possible policy advisers to all 188 members. One of the strengths of the imf is that we actually see the bigger picture. And it is not me be arrogant about it. We just have to look under the skin of the economy of 188 members commandery have to compare best practices, and we have to offer advice that actually takes into account was spillover effects will be as the result of the policy of one country over the other. No other institution can do that at the scale at that level. And their role will serve to become more important with time. Ready to continue to adopt the changing dynamic of the Global Economy and our which is what we need to continue the support of our entire. I will end with one thing. I would like to take credit. Through you very often to what this commitment to truth and honesty and do that sometimes in difficult circumstances in a very faraway places where they take risks much more so than we often think of. And i will end with another micron of american journalism. [laughter] i mean walter cronkite. And he actually says you all know what he says comices something which i have heard the president say seven times in the french version, of course, during cabinet meetings. He used to say after having described something horrendous in the world and all of us waiting to see what we could do. And thats the way it is. Thank you very much. [applause] thank you. We have lots of topics from all around the world. What is your reaction to the u. S. Congress leading the increase in the imf budget and do you have you met with our lawmakers in recent weeks and do you plan any more meetings . Is that the only question . A can. Good. I did say so right after the announcement of the deal which in and of itself as great. To have a deal on the budget the matter what the deal is is a good indication that there is willingness to work in a more orderly fashion. That is one step of many, and i certainly hope that in the many steps to come the imf reform will be included. So i hope it is the question of timing and not a question of determination to exclude the imf i would find it extraordinarily concerning given that the international Monetary Fund was actually created in the United States largely at the sort of joint initiative of treasury secretary white from this country and large gains from the united kingdom. Given the fact that the imf main mission is to work, help with commanded sure the best possible Financial Stability in the world which is clearly in the interest of our economies, first amongst all the u. S. Economy which is clearly the largest player among my largest shareholder, and one that is bound to have a vested interest and Financial Stability serve very much hope that it is the imf working in partner in with its members that easily as far as this country is concerned , the United States of america. And as i work with lots of people, yes. I have. What is your strategy for testing those arms to get a different result than the u. S. Works on its next budget bill . The partners will tell you that i have never been in the business of twisting arms which is partly the reason i will never be good politician. I, on the other hand, believe that time is on our side and the merits of the case will convince those in charge that it is a force for good and a force for Economic Development and Financial Stability which is not only in the interests of the entire planet, but in the interest of the economic players including, of course, a unit is its of america. Given the role that it can play, when i was up is that by continuing to explain what we do , why we do it, what principles we do it in the name of, i hope that sensible and commonsense judgment will prevail. Says the imf still have a timetable . This is coded language. Not everyone knows about this. And going to explain. The 2010 reform was a decision made by all members of the imf, particularly the g20 countries because that is where was released essentially pushed. It was decided to actually strengthen the institutions, to give it more per minute financial strength to intervene where was needed to win that was called the doubling of the quota. The imf as a quota institution. The second part of the reform was to chase the board so that there would be less european representation on the board in more voice, boats, quota available for emerging and dynamic countries that were underrepresented. That was the genes of the 2010 reform. The commitment was to complete the reform by the end of 2012. Were not the end of 2013, beginning in 2014 and there still short of one of the three thresholds to complete the reform. The United States supported. The repercussions of the u. S. Congress section and noneuropean programs and their support among developing countries . Well, i am not sure about the intention of the question to the European Countries, the your area countries demand lots of other programs a we have, just to give you an example, we have programs with jordan, to be easier to morocco, we have programs to pakistan. There are lots of public conscience. Those programs are developed, negotiated and partnership with the government on the ground and then taken back to the board of the imf approved by members of the board. Once the program is approved its become a program of the country is importing the kutcher takes ownership. Can nisi the failure to increase the funding as attorney. Reporter as a key partner of the tables the notices of america if abound to support the institution to work for stability the interest of the entire, but clearly in the interest of the United States as well. There of the difficulties in those been a part of the world. Is a key part of the United States and the key economic region in the world. If it had been in disarray everyone would have suffered as a result. I think everyone is interested, including the u. S. Looking to the fed, what is your assessment of the impact of fed tapering on the Global Economy . Its a bit difficult to say. Theyre beginning now. Sort of hands in may and june that there might be looking into tapering which gave us a bit of a dress rehearsal of what it might be. What in the dress rehearsal, i think it helps everyone anticipate what the outcome of the tapering could be which has helped countries, particularly emergingmarket companies prepare for the provincial tampering. What the consequences will become a difficult to predict. The announcement that was made in december survey did not produce the outcome that we saw in may and june. We can hopefully expect that most of the anticipation has now taken place, and tapering is conducted gradually if well communicated as it was the case in december, should not produce massive effects. It will be consequences clearly because you dont move has significantly yet gradually as is announced without consequences, but we do not anticipate massive, have become and serious consequences. What would a premature timetable apply . Premature. Exit timetable. Why should we speculate on that . Has been clearly announce that it would not be that it would be gradual, that it would be anchored in various economic criteria is that have some flexibility about how the ball of the federal read them, but it does not seem that there is any prematurity to be feared. Prematurity wedded to a lot of things. Because people thought about it, why should i speculate . Are well. Looking to the leaders, much attention is being paid to the fact that janet yellen is the first female fed chair. What is the significance of that . That women can do anything. [applause] if i may add, particularly janet. In addition to yellen we of course now have this week mary bear running gm, heads of state, and this is all happening in recent months. Are we finally starting to see real change in terms of women in need top rows of . Those changes are very welcome. Happy to see that the head of gm kenya and a few other countries were also women, not as if it was a token a point of to show off with a woman at the helm. A clear determination and a clear potential that is being tapped and the hope will continue to be tapped. Think it requires constant vigilance as well. Looking at women who are not necessarily at the top, tell us a little more about the importance of women in the professional workplace as it concerns Global Economic growth. What other countries besides japan the uc positive development in . There can be Political Development pretty much across the board. The work was done, the analysis that was conducted the test to believe it is a positive across the board terminated never. Countries are it is more so the case. Japan won, a country like saudi arabia is one job at the United States of america as well. As i said it is across the board and in some countries where the hurdles and obstacles are more pronounced in new address the critique the debt that we already have. Well, the imf works on models. Clearly you develop your model on the basis of historical data. And then we dont just up there. We dont just run numbers for models to anticipate and develop. A real so check with a hundred and 88 country, economics because sometimes Financial Experts focusing on those particular markets. We also used knowledge, close to the ground understanding of where things are going and then read not from tea leaves with the economic indicators, what is happening both at the private sector level but also at obviously on the basis of the policy mix decided by the country. Its a combination of both. But has a lawyer by background in economics by background of would say that the forecast is a forecast is a forecast. Its been proven to closer to the truth the better we are, but its a forecast. We tried to do it as well as we can. A year or two ago that term currency wars was very popular, but we have not heard as much about them recently. It are they over now . There was a big talk about it. The finance minister brazil he started that in the first place, we dont see the currency war and clearly in our model we see a much better alignment relative to fundamentals of the economy. Added to which, you know, the monetary tools that have been used by those countries where there were capital flows, movements in currencies have been adequate to actually facilitate a much more consistent and harmonious monetary system. So we dont. You have suggested that is to be more than one reserve currency. How do you see more currencies emerging over time . When you look back you see that the sterling, the british pound gradually over time which was accelerated by the war lost its role as a reserve currency and gradually the u. S. Dollar would not. This is a reflection of a combination of the strength of the economy in the confidence that the rest of the world has in an economy. It would actually take both for more reserve currency to not necessarily a rival but join the u. S. Dollar as a reserve currency. I think we will see that. In what time, i dont have a clue. How would you assess the stability of the Global Banking system at this point and what more needs to be done to shore that up . The Banking System is certainly more stable than it was six years to go. But we also believe that a lot more needs to be done. There has been significant work conducted by the Basil Committee which brings all of the financial and monetary experts together which is a bit of an informal groups. There has been a lot of work done by the fasb, the Financial Stability board. End the National Regulatory levels of legislative levels there been a lot of work conducted in various corners of the world. Several directives that have not taken place. There is more work to be done on the issue of border resolution. Significant trouble in such trouble were to extend beyond the borders of one country to with the issue of cross border revolution is not yet established and resolved. I would say that the derivative product market, there is still work to be done. And that the debt we need to think more and are doing that at the imf. We need to think more about the consequences of the financial regulatory changes as they apply to the emerging markets but also lowIncome Countries because were clearly seeing a translation of some of the financial movements affecting lowIncome Countries in need to be wary of that. What about derivative regulation in the u. S. . I think it is not just in that country. That is the point i was trying to make. About seven years ago when we had no idea when those products were, where were the counterparties. The clearing platforms have to be strengthened. They have to be more coordination between the various markets. That is where we need more. The consensus is forming that the developed world, particularly the Central Banks should accept or at least tolerate higher inflation. What is your opinion . If only inflation could be as high as the high end of the target it would already be quite good, but were not there. I dont think that it can be straight forward and one size fits all is the question would imply. It needs to be very tailored to the specifics of the economy. When i like japan were clearly the inflation target is to end somewhere around the one at the moment and it will take time to get to to, that is an effort in the right to erection. Particular to the regional currency zones, there are depreciations which could be helpful. That is not the case at the moment because theres one helpful but is not the case at the moment because there is one single target number. I would say a little bit more would not hurt. At the imf meeting in october you were quite critical of the u. S. Congress and of course a lot has happened since then. I had nothing to do with it. To the Government Shutdown hurt Global Confidence in what is your assessment of the u. S. Congress since october . You know, i said at the time that any degree of uncertainty is hurting the economy simply because the economic players do not know in which framework they are going to operate, whether its budgetary, whether its tax wise, whether its regulatorywise. In all dimensions they need predictability so the Government Shutdown in and of itself without mentioning the dire consequences of having federal employees not operating in a normal way although i know there have and salaries have been constant compensated, it questions the ability of a sovereign to monitor its operations. So i think we are all very pleased to see that an orderly budgetary process is back on the hill, that there is a determination to observe fiscal principles so all of that is much better. As i said you know any deal is better than no deal, lets face it area and see if the stock market in the u. S. Has the correction this year that it has anticipated, what sort of impact would that have on growth in the Global Economy and how significant an impact do you see your rear with that he felt the most . You no more importantly than the stock market corrections i think what will be very important on a crossborder basis particularly the emerging markets will be the Monetary Policy. That is what will be observed and will have consequences if not done properly. I doubt a slight correction in the stock market would have a major impact outside of the u. S. What do you see for the value of the euro relative to the dollar this year . This questioner says strategists have been calling for this for the last couple of years, only to lose their shirts. Strategists have been predicting the euro will fall relative to the dollar for the past couple of years only to lose their shirts. They have been saying that for the last 10 years. Some observers have been saying that ever since the euro was put in place. They still have pages of magazines and the financial newspapers that were predicting it. As much as there is trepidation and concern, and there was in the stability about the eurozone and its viability is to protect the currency and the level of the euro visavis the dollar are not going to go there. Is europe really likely to face deflation . You now as i said the inflation target which is then the Monetary Policy decided by the European Central bank is much higher than the inflation actually observed in that region we really have to distinguish the core inflation to see if that is the case, and it is. So to inflation is a rising risk we are seeing some interesting development. Spain for instance was almost, at least for short period of time, moving into the deflation zone. It has picked up. It is back in the inflation zone so it is a risk, but i would not put too high a probability on that. We have questions on probably every continent in the globe on the pile but moving to one of their continent. Its been a year since johanns johanns share with us your opinion on how successfully you think that program has been and whether it has had any spillover effects around the world . There is no question there has been success as a result of what is now commonly referred to as clearly the massive shift in the Monetary Policy decided by the central bank of japan has had a huge impact. The fiscal stimulus that had been announced a few months ago will also have an impact. We understand that there is political determination to actually raise the consumption tax first in april and then later on. I think it is still short of two things. One is a mediumterm Fiscal Consolidation policy that will be anchored in the economic policies of japan and probably even more so than has already been identified by the japanese authorities. The Economic Reforms that will actually boost and consolidate japans economy. I think more can be done. What the should the imf do to address rising income will fully . You mentioned the scope of the problem. What is your role in addressing that . You know, the only thing that we can do because this is our mission in article i of the articles of the imf is to locus on stability and financial and economic stability to the extent that any factor jeopardize that stability we need to look into it and internalize it and do enough correlations and so on and so forth to identify where there is a problem. So this is what we have a gun doing and we will continue doing so as we will continue to work and study the relationship between growth and jobs. Because we also regard that as a critical issue. We are unfortunately almost out of time but before asking the last question just a couple of housekeeping matters to take care of. First of all i would like to remind you our next speaker on january 22 we have d. Murray smith the executive director of the nfl players association. Secondly i would like to present our guest today with the traditional National Press club coffee mug. See i was told about that. [laughter] are we making a. Yes, we are doing a swap. Lovely. Thank you. [applause] ladies with the mugs. [laughter] and they match. One last question. One of our audience members wants to know whether you will consider a run as candidate in frances next president ial election . [applause] you now im very happy as budget director of the imf settled here in washington d. C. Thank you. [applause] thank you. Thank you for cominto thank you for coming today. I would like to thank our National Press club staff press club staff including our Broadcast Center National Press Club Journalism institute staffer helping organize todays todays and more information about the National Press club on line as well as a copy of todays program at www. Press. Org. Thank you. We are adjourned. [inaudible conversations] next year and cspan2 a hearing on emerging Homeland Security threat. Thats followed by remarks from president obama on the economy and efforts to boost manufacturing. Environmental Protection Agency Administrator Gina Mccarthy testifies about presence Climate Change policy. And then i would tell him. He didnt always agree with me but i would tell him. It usually worked out. Wednesday House Committee examined threats to Homeland Security and the expansion of islamist extremism in the middle east. Former senator Joe Lieberman and former representative jane harman were among the witnesses. This is two hours and 40 minutes. [inaudible conversations] the committee on Homeland Security will come to order. The committees meeting today to examine the danger to the homeland from the threat of extremism. I now recognize myself for an opening statement. Today the president s rhetoric on the threat of al qaeda and its franchises are in stark contrast to the reality we are witnessing in the middle east and northern africa. Whether or not the downplaying of the threat of these islamic extremist groups and the real threat they pose which are metastasizing from the civil war in syria is to further a political agenda or to simply avoid the conflict altogether. I believe this false narrative really endangers our National Security. Protecting this may shimura choirs that we correctly identified the threats against it. It also requires that the United States lead on the world stage. Im increasingly concerned we are doing very little of both. The administration has labeled the ford could massacre in my home state work face violence. Explained benghazi way with the protest through a video as opposed to an al qaeda driven attack. It removes words like violent islamist extremism from their vernacular. With each attack the administration appears to distance themselves from who is behind it. President obama repeatedly tells us that al qaeda is on its heels and on the run. In may of last year the president said that Osama Bin Laden is dead and so are most of his top lieutenants. There have been no largescale attacks on the United States in our homeland is more secure. Killing bin laden was an important accomplishment but it has not put al qaeda on its heels or secure the homeland. In fact, peter bergen just recently wrote in an article last week that al qaeda appears to control more territory in the arab world than it has done at any time in its history. For most in the narrative is the administrations frequent use of the core al qaeda concept. This is a false construct in my judgment and misleading for a number of reasons. Today there is no central al qaeda nucleus. References to a core al qaeda imply that its defeat would dismantle terrorist efforts around the world and eliminate the terrorist threat to the homeland. This is simply not the case. Over time the term al qaeda has come to symbolize an ideology of hate towards the west with the goal of the establishment of the caliphate ruled by sharia law and the pathway through violent jihad. We have seen it play out in the middle east, and africa and in the caucasus and even though many terrorist groups subscribe to this ideology we must understand that they are independent organizations planning and conducting operations without the oversight of an al qaeda central command. The only core is the ideology itself and the defeat of an ideology requires more than just drone strikes. The failure to recognize this truth prevents us from understanding the real threat from islamic extremism and clouds our judgment in fighting against it. Ultimately you cannot defeat an enemy you are unwilling to define. The second part of the policy narrative is our increasing willingness to advocate our responsibility as a world leader. In the aftermath of world war ii, president truman said, the peoples of europe face the future with great uncertainty composed almost equally of great hopes and great fears. In this time of doubt, they look to the United States has never before for goodwill, strength and wise leadership. Again today, we face the world with great uncertainty and look to the United States for stable leadership. We are witnessing a worldwide rebalancing as we have never seen before in modern history. This time however, it is exacerbated i is sunnishia sect conflict that has consumed the middle east cause great unrest across the reason region and forcing countries around the world to intercede yet our steadfast leadership is notably absent. Terrorist groups are multiplying. They are spreading like wildfire like a spider web across northern africa. Foreign fighters are pouring in every day into syria at an alarming rate. While syria itself is being pulled apart by saudi arabia and iran. Red lines are drawn and crossed diminishing our world standing and forcing other countries to act where we have failed. Our negotiations with iran damaged our relationship with saudi arabia and israel. American forces pulled out of iraq and al qaeda now has taken over fallujah. Once a symbol of the United States commitment to stability in iraq. We are pulling out of afghanistan where not so long ago the 9 11 masterminds plotted against the United States and in egypt we have been indecisive with our support while radical elements are rowing. Our lack of leadership has damaged our standing in the world and created a power vacuum being filled by terrorists who are prospering in our efforts. President kennedy told the search giant as well as our convictions have imposed upon this nation the role of leader and freedoms cause. I believe that statement is as true today as it was then. It is your stable leadership and clearly identifying our enemies that we will secure the homeland and protect the American People. I look forward to this distinguished panels testimony and todays discussion. And i want to thank all of the witnesses for being here today. The chair now recognizes the Ranking Member the gentleman from mississippi, mr. Thompson. Thank you mr. Chairman and i also welcome our Witnesses Today ms. Harman, its good to see you as you know you were an original member of this body when it was a select Committee Without any jurisdiction. We still have a little bit around. We are working on it. Todays hearing seeks to examine whether u. S. Policy to address unrest in the middle east on al qaeda and the withdrawal of u. S. Forces from afghanistan and iraq adversely affect Homeland Security and United States. Such an examination must begin with an authoritative statement of this administrations policies and actions in each area. However, because there is no witness from the administration for us to question about these policies, it is unclear how this hearing will aid this committees understanding of these Critical Issues or help inform our oversight of the policies necessary to impact this nations Homeland Security. It appears that this hearing began with an assumption that to maintain safety and security within its borders, this nation must use its military to address every shores. Given such a prospective United States would be in a position of constantly engaging in military action abroad. After 1. 5 trillion and 6000 american lives lost, there are many in this country who want us to consider a viable exit strategy. There are also many people who believe the state of this nation can be secured by means that are tailored to each circumstancebased on a realistic assessment of the threat. As we consider the threat, we must acknowledge our current posture. Most experts agree that the death of Osama Bin Laden has substantially weakened al qaeda. Its capabilities to mount largescale attacks has been reduced and al qaeda is more centralized, more dependent on and has come to rely on its ability to radicalize and recruit does to recruits to carry out attacks. The lack of a clear organizational and Leadership Structure has severely diminished the groups ability to develop joint plans and wage largescale attacks. I am not advocating that america return to a preseptember 11 posture. I do know anyone i dont know anyone who would abdicate such a position. However we must plan based on the facts as they are not the facts as they were. As a legislative body we must ask serious questions about her Homeland Security policies and our posture should be given the ongoing dismantling of some of the questions we should ask involve the costs associated with continued u. S. Military presence in the challenges of restoring the readiness of our forces. We must discuss a strategy that protects u. S. Interest as well as the integration of efforts across u. S. Government agencies in support of a broad u. S. Political strategy. As we consider our policies, we need to ask about the National Security apparatus that has developed in this country. The revelations about the massive collection of information and operation of the five a course that have caused people to question how these activities have improved our homeland. I understand the administration will announce its plans to revamp the nsa surveillance programs. I look forward to hearing about those plans. This committee needs to be part of the discussion about the effects that these metadata collection programs have on our Homeland Security. Mr. Chairman i agree that we need to take a serious look at how world events play into our Homeland Security policies. This Congress Must be willing to legislate and make changes in the laws that affect the Homeland Security of this nation. However, before we legislate we need to be willing to discuss the law and the underlying policies with all the relevant parties, the congress and the administration in the room. I look forward to having that discussion. I also look forward to the administration being invited here to testify about how their overseas policies will affect our Homeland Security. With that mr. Chair i yield back. I think the Ranking Member and Opening Statements may be submitted for the record. We are pleased to have for distinguished witnesses with us to discuss this important topic. First we are delighted to have senator joseph lieberman. He represented the state of connecticut and United States senate from 1989 to 2013 and in the months after september 11 senators lieberman led to the creation of this committee and the Senate Committee on Homeland Security. Which he chaired until his retirement from Congress Last year. Next we have our dear friend who served on this committee. She actually was sort of my boss if you will. She was the chairwoman of the intelligence subcommittee as i was Ranking Member. Congresswoman jane harman. Its great to see you here today. She represented caliph won his 36th district in the u. S. House of representatives from 1993 to 2011, served on multiple congressional committees boards and commissions including this committee and the House Permanent Select Committee on intelligence and a House Committee on armed services. She is currently the president of the Woodrow Wilson International Center for scholars and a member of the defense policy board and the Homeland Security Advisory Committee among others. Its great to see you. Next we are pleased to have a very distinguished witness, general jack keane. A retired fourstar general, he completed 37 years in Public Service in december of 2003 culminating as acting chief of staff and vice chief of staff for the u. S. Army. He currently serves as chairman of the board and the institute for the study of war and sits on the board of directors for met life and general dynamics. Thank you sir for being here. Next dr. Seth Jones Associate director of interNational Security and Defense Policy Center at the rand corporation. He served as plans officer and a budget to demanding general the u. S. Special forces in afghanistan as well as representative for commander of the u. S. Special Operations Command to the assistant secretary of defense for special operations. The witness is full written statements will be included in the record. The chair now recognizes senator lieberman for his testimony. Thank you chairman mccaul and Ranking Member thompson. Thank you for convening this hearing and thank you for inviting me to testify in thank you for putting me in the Great Company of the other witnesses at the table. I think its very important that you are holding this hearing and let me briefly explain why. In the aftermath of the attacks of september 11, 2001 the overwhelming focus of our government and of the American People was on the threat of terrorism. 12 years later, this is no longer the case. Our loss of focus is in part a consequence of the success we have achieved namely that we have not had another catastrophic attack on her homeland since that terrible Tuesday Morning in september of 2001. Prior to this achievement must be tempered by an awareness of some harsh realities. First, al qaeda and its affiliates remain a ruthless, determined and adapt the adversary. Second, the underlying ideology that inspires and drives al qaeda to attack us and our allies, namely the ideology of violent islamist extremism, is neither defeated or exhausted. It manifests itself not just in a resurgent al qaeda but in terrorist organizations that are either unaffiliated with al qaeda or loosely affiliated with it but have exact with the same goals and capabilities to use violence against innocents. For that reason our safety as a nation is ultimately inseparable from our ability to meet the fullness of the threat. Our security as a nation also requires as you have said, that we staying gauged in the world he on our borders. That is the best way to prevent another terrorist attack against america like the one that occurred on 9 11. Yet, increasingly we hear voices on both sides of the political spectrum who say that the threat of terrorism is receding, that the end of this conflict is here or near and therefore that we can withdraw from much of the rest of the world. That narrative is the title of this hearing suggests, is false and really does endanger our homeland. Theres no question question that the United States under president bush and president obama has inflicted Severe Damage to core al qaeda, the Senior Leadership that reconstituted itself in the mid 2000 in the tribal areas of northwestern pakistan after they were driven by the courageous American Military from neighboring afghanistan after 9 11. But to borrow a phrase from general petraeus the progress we have achieved against core al qaeda is while significant also fragile and reversible. For example and this is a very timely example, core al qaeda and the trial areas of pakistan has been degraded by the persistent target application of the military force against those individuals and networks. The precondition for those operations and the intelligence that enables them has been americas presence in afghanistan. If the United States withdraws all our military forces from afghanistan at the end of this year, the socalled zero option which some now abdicate, you can be sure that al qaeda will regenerate on both sides of the afghanpakistan border. And if you doubt that i urge you to look at what is now happening in western iraq where just a few years ago during the u. S. Led surge al qaeda was dealt an even more crippling blow than core al qaeda has suffered in pakistan. Yet now it is al qaeda that is surging back in iraq hoisting its black flag over cities like fallujah and ramadi and murdering hundreds of innocent iraqis just in the last year. To me, this leads to an important conclusion which is that whilst base tribal pakistan has been shrunk thanks to persistent leadership New Territories where al qaeda affiliates can find sanctuary has grown significantly during the same period particularly the middle east and north africa and subsaharan africa. Al qaeda and other violent islamist extremist groups have long exploited muslim majority countries that have been weakened or fragmented by conflicts and neglected by the International Community including the u. S. They take advantage of these places to recruit radicalize and train the next generation of extremist foot soldiers. They use these places to plot and plan attacks including against our homeland. That is why al qaeda and its affiliates first went to afghanistan in the 1990s. That is why they later returned to yemen and somalia in the 2000s and that is why today they are fighting to build sanctuaries in syria, iraq and libya. There is now a clear precedent and increasing threat to america and our allies from those three countries that administration policymakers have signified that any involvement and i stress any involvement by the u. S. Military there is for all intensive purposes off the table. That means that the u. S. Will not evil to assist our local allies in combating the rise of al qaeda in these countries. It also means that we are failing to help deal with the underlying conditions of making al qaedas resurgence possible. To put it is lightly loudly as they can, do not today see a credible or coherent american strategy for these countries syria iraq and libya that most threaten to emerge as al qaedas newest and most dangerous footholds, places from which terrorist attacks against our homeland can and will originate. This failure it should be added has consequences for National Security that extend beyond counterterrorism, across the middle east and beyond the credibility of American Leadership is being questioned as it has not been for a very long time. Among friends and enemies alike aircard doubts about her staying power and the reliability as an ally and suspicions at the end of the day america will hesitate to back up our promises and historic commitments with the use of force if necessary in a dangerous world. Thats the reality. I believe its how the u. S. Is seeing right now in too many places in the world. Some in washington look at what is happening in syria, iraq and libya and downplay their significance for our security and with it or need to get involved. Guess Al Qaeda Affiliated web site there the skeptics say that theyre mostly focused on fighting other muslims. The situation is confusing and chaotic we are told and after all these sunnishia conflict have gone on forever and will go on forever. It is someone elses civil war it is a familiar refrain we are hearing often again. That is again a very false and dangerous narrative. But keep in mind that 20 years ago during the 1990s, most people in washington dismissed what was happening in afghanistan as someone elses civil war. And thus began the road to 9 11. I fear very much that 20 years from now or less, someone else is going to be sitting here testifying before this committee saying much the same about pulling back from syria, libya and iraq today. In brief, what do i think the u. S. Should be doing now to protect her people against future 9 11 attacks . First, i dont advocate sending tens of thousands of troops to these countries. I dont believe this went than our power or our responsibility to solve every problem these countries face. These are the standard and i think hollow strawman arguments against what we can and should do and theres a lot we can and should do. Syria, we can and should much more aggressively provide militarily revel in support to nonextremist rebel forces. In iraq we can and should make clear to the government that we are willing to support iraqis against al qaeda with u. S. Airpower as well as putting a small number of embedded on the ground while using that increase assistance as leverage to encourage the maliki governor to reconcile particularly with sunnis. And libya we could put in place and should a largescale wellresourced u. S. Led effort to build up the new libyan army and Security Forces as quickly as possible and in afghanistan, we can choose not to squander the gains of the past decade and dishonored the brave americans who risked and lost their lives there. Instead we can keep a sufficient follow on military presence to sustain the increasingly capable afghan National Security forces and our shared fight against al qaeda and the taliban. That will also safeguard instantly the gains that have been made in human rights and Human Development more broadly particularly among afghan women, all of which will be a race to the taliban returns. Mr. Chairman and Ranking Member none of these possible actions by the u. S. Represents simple or quick solutions. There are no easy solutions to this threat but there are smart strong steps we can take that will put us in a better position to deal with the evolving threats we face here at home and that will ultimately make us safer as a country. Mr. Chairman i ask unanimous consent that the rest of my statement be entered into the record is that greta and i think you. Without objection so ordered. Thank you senator for your analysis in the chair now recognizes our former colleague commerce woman jane harlem jane harman. Thank you mr. Chairman and warning to so many friends. This feels like a homecoming. As you pointed out i spent eight years on this committee, for when it was a select committee and for when we finally eked out a little bit of jurisdiction to form a real committee. I worked with most of use certainly all of you in the top row and as you pointed out chairman mccaul you and i were partners on the subcommittee on intelligence. Mr. Thompson when he chaired the committee and then he was the Ranking Member and i traveled the world looking at garden spots where terror cells were growing and i feel that the history of a partisanship of this committee has set an example for this house and i hope it will continue to set an example and oh by the way that other body somewhere in the capital. Because my little deathless phrase that ive been repeating for years is that terrorists wont check our Party Registrations before they blow us up. We need to focus on this and sorting ourselves out by party is not help will. Now i am at the Wilson Center a garden of nonpartisanship and i have to say that feels very good and i continue to focus on these issues. As you pointed out im on the defense policy board the state departments Foreign Policy board and recently joined the Homeland Security board and where i will hopefully advise jeh johnson in his new role and i care intensely about the policies here and getting them right. So in true bipartisan fashion that may start for something not in my testimony and that is an endorsement of some of the things you said chairman mccaul and some of them sees it Ranking Member thompson in your Opening Statements because i think they are both true as are many of the things my dear friend Joe Lieberman just said. Chairman mccaul, you said that a Terror Threat is growing and some are not paying adequate attention to that. The Terror Threat has changed from the 9 11 days. The core al qaeda as a think as a thank you seven and no senator lieberman said has been substantially destroyed by the efforts of two administrative and, one a republican and one democrat and i think most people would agree president obama not only continued the efforts of president bush that he increased those efforts against core al qaeda and most of those highvalue targets have been removed so its less of a force. But the Terror Threat has morphed. It is now a loosely affiliated horizontal threat. Many of those groups are called al qaeda. Some are in some arent but they are opportunistic and they come together like cancer cells when necessary. The new organization isis, the islamist state in iraq and syria is called al qaeda. It really is since technically al qaeda. It was the old zarqawi organization that Osama Bin Laden disliked. His successors run this organization and it has taken advantage of an unfortunate vacuum in iraq because unfortunately president maliki i think makes an adequate efforts and some parts of this country but also in syria for obvious reasons. So the Terror Threat has changed but Ranking Member thompson is also correct that to defeat this threat we need more than kinetic force. Playing waccamaw which we have done pretty well and which we should continue to do in some parts of the world using drones and other activities will it eliminate individuals but it wont defeat the threat. We really in and have to win the argument and that is why a whole of government approach is so important and that approach is embraced by our Defense Department by the way which has done some of this as a Defense Department by our state department, by publicprivate partnerships, by ngos and by many in this body and around the world and we need in addition to applying the strategies to project the american narrative and i think all of us agree on that. That explains what we are we are doing, why did we are doing it and persuades some kid in the boonies of yemen not to strap on a suicide vest but rather to hopefully join a productive economy in this country and go to a school that doesnt teach extremism in the guise of having people memorize the koran that teaches reasonable subjects in a truly dispassionate way. We have to help build those schools by the way and we have to make sure that girls get to go to them. So i have a long statement here but i want to now turn my focus because i remember the fiveminute rule and im about to exceeded as did my buddy here on two things that i think are the more immediate threats to the homeland and they relate to terror obviously, but i dont want us to lose sight as we are thinking about foreign terror organizations. One of them is homegrown terror, something this committee is focused on extensively. Since 9 11 there have been homeless for hundred homegrown terrorists indicted on terrorrelated charges that were killed before they could be indicted in this country. Lone wolves are a big part of this problem. This committee has studied and i know this because i was involved in it, how people who have radical beliefs which are protected under our constitution than transition to wanting to be engaged in violent acts which are not protected. We passed legislation a couple of times which in ford gently died in the senate but its a huge issue and we have to look at it in our country and then we have to look at these distant that good americans being recruited for attacks abroad by alshabaab, i groups in syria etc. All of which has recently been in the press but the other issue that is a huge m m problem and you and i were just talking about this mr. Chairman is cyberterror. It is absolutely imperative that congress pulled together to pass legislation that gives our government the tools to work with private industry which is a huge partner in this on solving this problem. Congress has been a last extremely partisan. There have been all kinds of problems why bills have been passed. I know senator lieberman and my dear friend senator collins had a bill in the senate that they couldnt move. You just told me that there may be a chance of moving the bill here. I hope so, god. As we are way behind the curve in it understanding and adapting to them preventing cybers and sadly the leaks by Edward Snowden had given some of our toolkit to the bad guys, our technical toolkit and i think this has been pernicious. So in conclusion the threats today are different. They are on a smaller scale but they are very serious and we have to keep focused on it. We need a narrative than the whole of government approach as much as or more than we need a kinetic approach in my view. Endless partisanship is a huge obstacle to progress and i urge this committee in true Homeland Security committee fashion to pull together and do the right things about homegrown terror and helping us make the wise decisions about the u. S. International role. Thank you mr. Chairman. Thank you jane harman and its great to see you again. Let me just say today actually congressman pat meehan and Yvette Clarke will be marking up our cybersecurity l. At the subcommittee level. I have enjoyed a Good Relationship with the Ranking Member and as you said in the spirit of bipartisanship on this committee. That will be passed hopefully unanimously just as the Border Security bill was passed unanimously out of this committee and i think when it comes to National Security as you say they dont check our Party Affiliation and we should be working together when it comes to National Security so thank you for that comment. Next the chair recognizes general keane for his testimony. Good morning mr. Chairman ranking minority and distinguished members the Committee Ranking for inviting me to testify today on an important subject concerning the security of the American People. Im honored to share this panel with three distinguished colleagues particularly to friend senator Joe Lieberman and congresswoman jane harman. Let me just say that they are both Great American patriots and i want to thank them public they for the many years of devoted and Selfless Service to this great country. You have asked us to consider the president s at the National Defense university as a basis for commentary on the security of United States in the American People. His true bin laden is dead in their been no major attacks on the homeland and fewer troops are in harms way but it is not sure that our alliances are stronger. Indeed they are weaker because their allies are questioning the will of the United States. Many allies believe the United States would not be there if not in a time of peril and sadly recent polling indicating the United States standing the world is at its lowest since prior to world war ii. How did this happen . Is because of the protective force in iraq and afghanistan . Is that the u. S. Backing of israel and her ability to resolve the israelipalestinian dispute . Absolutely not in my judgment. It is because of American Leadership. When American Leadership is strong in the world, the world is a safer place. And when American Leadership is inconsistent, indecisive and we are willing to permit others to lead could not have the capacity or when we are paralyzed by the fear of adverse consequence than American Leadership is weak and the world is a more dangerous place. As such our adversaries are emboldened and they become more aggressive than they take more risks. Your results are more death, more casualties in the security of the American People is threatened. Tragically this is where we are today. Despite our success in denying sanctuary and driving al qaeda from afghanistan and pakistan defeating al qaeda in iraq while also killing Osama Bin Laden and many Al Qaeda Leaders, the harsh reality is radical Islam Al Qaeda and its affiliates represent an ambitious Political Movement with the committed ideology and it is on the rise and the evidence is overwhelming. Al qaeda are quickly taking control of western iraq while they have seized control of northern syria. The border is nonexistent and today there is a bona fide sanctuary for which operations can be conducted against their allies in the region specifically jordan. The radical islamists were not the catalyst for the revolutionary changes that swept over the middle east three plus years ago but they see geopolitical chains as opportunity to gain influence and as such controlled territory and people. This is happening in syria libya yemen tunisia and maui. While al qaeda affiliates are exerting pressure on somalia and kenya. Because of the failure in my view of American Leadership the term islamic extremism is not mentioned in u. S. Policy which is quite astounding. Furthermore, 12 years after 9 11 we still have no comprehensive strategy to did be radical islam or al qaeda. We do not even have a military strategy. We use drones to kill Al Qaeda Leadership in pakistan and yemen, as we should but that is not a military strategy. It is a tactic and an instrument of war. It has limitations also because leaders are replaced with the an Ideological Movement in the mission goes on. Contrast this current reality with our strategy and policies in the 20th century when the United States was involved in another struggle, another ideological struggle, communism. We fashioned a grand strategy and organize major alliances in europe and Southeast Asia nato and sedo to contain it by agreeing on a common Political Goals as well as sharing intelligence, training, doctrint takes. We encourage some of our best universities to hold departments around the subject ass matteroffact and thinktanks like my colleagues and others were initiated because of the challenge of communism. After all, ideas and ideological struggles truly matter. To understand our adversaries ideas their history of development, their witnesses weaknesses and strengths into challenger on ideas against them is fundamental in defining and understanding our enemy. Today, there is no such data cheat. We have no formal alliances to partner politically intellectually and looked fairly against them. This is not about our troops fighting against radicals worldwide at assisting our allies so their chips can do it only when its necessary. I agree with congresswoman harman. This is a whole of government approach in its largely nonkinetic. The radical islamists understand us better than we do them. As such, they fear our ideas, democracy and capitalism. Advancement of these ideas in the region is a major threat to radical islamists because it makes it all the more difficult to bend the peoples will enforce surrender. This is why the arab spring is such a threat to them. None was demonstrating in the streets for radical Islamic Jihad to achieve a better life. The people in streets were looking at what the United States and the west has two help change their lives, political and social justice, economic opportunity. That is democracy and capitalism. Therefore the radicals are all in to influence the income that is so uncertain and unpredictable. On the contrary ask any of our friends in the region about u. S. Policy in the middle east and the two most frequent descriptions are, disengagement and retreat. No one can say with certainty depending on open sources that any one of these al qaeda hotspots as we have mentioned is a direct threat against the people of the United States. But this much we can say, that when we permit sanctuary and on interactive recruiting, planning and equipment as al qaeda was able to do for almost 10 years prior to 9 11, then the risk to u. S. Interests and the security of the American People is exponentially higher. After all, what makes this movement the most threatening we have ever faced is their stated in unequivocal desire to use wmd against the people of the United States. Unchecked, radical islam and ambitious lyrical movement is an ideological struggle with the United States and its allies that will dominate most of the 21st century. We lost 3000 americans on our land and now almost 7000 troops in foreign lands. As we attempted to feed it and protect our people and our way of life. We desperately need strong American Leadership to define radical islam for what it is, to fashion a conference of strategy and to partner effectively with our allies to defeat it. We have a long way to go. Thank you and i look over to your questions. Thank you general and i certainly it read its a war of ideology that joint strikes have been affected by dont think they can kill an ideology and a movement and thats a great challenge we have today. The chair now recognizes dr. Johnson for his testimony. Thank you chairman mcauliffe, Ranking Member thompson and members of the committee. Theyre obviously of range of perspectives on al qaeda and the threat to United States from islamic extremists. My own view and those noted both in my written testimony and oral testimony are informed by ongoing work, my own work on the subject including a forthcoming report on this, worked that i am overseeing and then my past Service Within u. S. Special operations and particularly visits recently including to those same units overseas especially afghanistan which i will come back to. The argument that i will make here in my oral remarks will be several fold. One is, while al qaeda in the Broader Movement has become decentralized they think the data is important. What we have seen in running the numbers is an increase, a notable increase in the number of what i will call selloff the jihadists groups. Over the past several years particularly since 2010 and especially in north africa syria lebanon and sinai there. Second there has been an increase, an increase in the number of attacks perpetrated by these organizations and has parted that an increase in the casualties and the televisa come out of that. Now while this trend is troubling, it is worth noting that not all these groups are plotting attacks against the u. S. Homeland and its interests overseas over as i welcome back to in a moment i think its worth highlighting which of these groups presents the most serious threat but i do want to note on the verge of the sochi olympics that we have most of groups in the north caucasus and in central asia that you present a threat to american citizens traveling to this area, to our athletes traveling to sochi and so this threat obviously impacts is not just in our Infrastructure Overseas like embassies in our homeland but also major events like the u. S. Olympic spirit i wont rehash the structure of modernization because my colleagues have noted that but i do want to highlight the fact that the weakest increase in what some of called the Al Qaeda Movement has been in the organizations that arent sworn affiliates. That is they dont pledge allegiance to all men up also where he would have a selloff the jihadist worldview and would like to establish an emirate in areas they control and a project where we see that increasing groups operating in north africa and lenfant. I will go back to the thread posed by this groups a moment but let me shift to afghanistan where he visited not that long ago and where i have noted very serious concerns among u. S. Military and Intelligence Units operating in those areas, that we have worked for a long time against groups operating in those areas. There is still a notable presence of those groups along a very porous border both afghanistan and pakistan. We have tried for the last several years to kill or capture the amir of al qaeda in northeastern at anna stan, farouk all qatari with limited success, no success in the fact he has not been captured or killed. I would ask a rhetorical question that as we pull out our forces, close down our bases and potentially even exit will it be easier or harder to continue to target these individuals . I dont mean just with force but collecting information and intelligence on these individuals rating in these areas. The answer is straightforward. It will be much part of the owl. I would say also we have a number of groups that have plotted attacks against the u. S. Homeland. This includes taliban, times square bombers u. S. Forces and Government Installations in the region and u. S. Citizens to include other groups like lashkaretaiba and the connie network. Let me come back briefly to these groups and what threat do they pose to the homeland. In my view in looking at this problem the ones that pose the most significant threat at the moment, contingent be the rub operating in yemen and out the yemen peninsula and the inspired Networks Like the tsarnaev brothers that perpetrated the boston bombings. I would note this is not just a homegrown plot. Both of the brothers listened extensively to the Al Qaeda Leaders including the now deceased anwar alloc and use propaganda including from the inspired magazine so there was a connection. Just happen to be on the internet, to what we consider core al qaeda. We have threats to u. S. Embassies overseas from groups like alshabaab, targeting plots from onstar we have americans, and growing number that is going to syria. Europeans that are fun to syria so again i would highlight that there is a very serious threat to u. S. Infrastructure, citizens overseas. This is not just about homeland and this is definitely not just about core al qaeda. And let me just say in closing that we need a proactive policy. In my view we have been reactive. We have now returned advisers and trainers into somalia that we are lucky to do that in our back very trainers have been very useful on multiple levels. I think we did a phenomenal job during the cold war of combating soviet marxistleninist ideology. Think we have been slow to develop policy along those lines and let me just end by saying with the nsa debates, we cannot lose our ability to monitor individuals that have linked up with web sites that are radicalizing americans like the boston bombers. Whatever happens in this nsa discussion we cannot lose our ability to monitor those web sites. Thank you mr. Chairman. Thank you dr. Johnson i agree as al qaeda does spread in a different form and jane you are absolutely right they have involved he bawled lettuces spreads as peter bergen says al qaeda has the largest presence now in the air of world in history. So too does the stretch threat to the homeland and that is my concern is chairman. I would also submit that the boston particularly tamerlin was not only inspired by the internet but he did travel to pakistan. He got through some of our red flags unfortunately. We will be releasing our report later this month of the boston bombings which i think well document some of these influence he had while he was over there. General keane i would like to ask you my first question. Secretary gates book wrote under president obama the National Security staff was in his words filled primarily by former hill staffers academics and political operatives. With little experience in managing Large Organizations and the National Security staff became increasingly operational resulting and mike or management of military matters the combination that has proven disastrous in the past. We have seen that in history. This political heavy handedness and the president s statements about all kind of being on the run are concerning to me. Do you believe the administration is downplaying the threat of al qaeda to further their political goal claiming victory in the middle east . In my view there is no doubt that they are downplaying it. You know certainly championing the success of killing bin laden and many of its leaders but the fact of the matter is as we have all testified here its clearly on the rise. And it clearly is a threat to us here in the homeland and to our interests in the region. Listen, this business of al qaeda becoming more decentralized as part of the plan. Al qaeda has always been intended to take territory and gain control of people and to use affiliate rubes in those countries as the start place and then they take foreign fighters to that scene. So what is being played out in front of us is part of their overall strategy. Now we have suffered the command and control of that strategy to a large degree where they do not maintain operational control of this because of the pressure. And that is a good thing. Does that answer your question mr. Chairman . Okay. I think so but again i think al qaeda is on the run and the war on terror is over, i personally have experience with the state department and other agencies traveling overseas and attempts not to even use these words, to change the vernacular and look, jane you know i miss by partisan as they come but it concerns me that this which has been taken out of vernacular. I agree and i have had problems with the bush of and not educating the American People to what this movement is in keeping us posted on what our progress is against it. I challenge them for not having a conference strategy to deal with this. It was taking sanctuary away in a dentist and initially and then going after wmd in iran. That is not comprehensive strategy to defeat al qaeda, believe me. This administration doesnt have that either but its even worse because it has its head in the sand about it and it will not call it for what it is. It will not describe what it is and its downplaying this success, the movement is having is that takes advantage of the revolutionary change sweeping through the middle east. I think it goes to the point that you cannot defeat an enemy that you cannot define and the analogy is correct. I think frankly they just want to say its over and lets move on to something else. I dont know. I do applaud the president with respect to bin laden. I thought that was a courageous effort to go in with military forces and not just bomb the place to prove to the world that bin laden was killed. The house s Committee Tea classified testimony after months of hearing. Geer