tv Key Capitol Hill Hearings CSPAN March 20, 2015 12:30pm-2:31pm EDT
policy judgments about, in real time on our monetary policy decisions, congress itself decided in 1978 that that was a bad thing to do. that it would lead to poor economic performance and they carved out this one area of policy reviews of monetary policy decision making from gao audits. the gao looks at everything else that goes on within the fed. . .
>> of course, we are ready to provide information that congress needs to evaluate the fed's decision making in monetary policy and elsewhere. with respect to monetary policy rules, they can be useful and i find them useful and long have as a kind of benchmark for thinking about what might be the appropriate stance of policy. but to chain a central bank to follow a simple mathematical rule that fails to take account of many things that are very important in making monetary policy, for example i was earlier asked about being against the euro lower bound which is an important special
consideration, that would be a very foolish thing to do, and i oppose it. with respect to proposals having to do with voting and the structure of the fed that you mentioned, a lot of ideas have been mentioned. i would say for my part i think the federal reserve works well. the system we have was put into place by congress decades ago. i don't think it's a system that's broken. of course, congress can revisit decisions it's made about the structure of the fed. there were good reasons for making the decisions that were made about how the structure voting and other things, but -- and i don't think it the system the is broken. i think it's working well. so i don't see a need for changes but, of course, it's up to congress to rerue that. to review that. >> [inaudible]
>> ma'am, i was wondering whether you could quantify the effect that the stronger dollar has had on economic output so far this year. the extent to which it's sort of acted as its own rate increase and what sort of obligationing you feel if any to make life easier for the ecb, bank of japan and the me merging market countries that are struggling with some of the issues we struggled with not that long ago. >> so with respect to the impact of the dollar on the u.s. economy, i don't have a quantitative estimate to offer you, but i certainly expect net exports to serve as a notable drag this year on the outlook. but remember, we have to put that in context. there are a lot of things that affect the u.s. outlook, and while that is serving as a drag
on economic growth overall the committee continues to see sufficient strength particularly in private spending that we are expecting above trend growth even so. with respect to our neighbors, we look very carefully at what's happening in the global environment. we realize that our own policies affect performance in the rest of the world and that performance in other countries has an influence on us. so we spend a good deal of time discussing global developments. it is important for us to keep our own house in order to put in place the policy that's consistent with the objectives that congress has given us, and i think a strong u.s. economy certainly is something that is
good for other countries as well. we have pledged to communicate as clearly as welcome -- as we can about monetary policy, and i am trying to do that and will continue to do so. >> [inaudible] >> nancy -- [inaudible] with marketplace. we talked about the risk of tightening too earlier. what about the risk of waiting too long? especially since it can take while for fed actions to work their way through the economy? >> well, i agree with that. many, many studs over -- studies over decades and decades have showed lags and, therefore, monetary policy does have to be forward looking. that's why we spend so much time preparing forecasts and discussing them. and we want to put in place a policy that will be appropriate
for where the economy is heading. that is a, you know a reason that my colleagues, most of my colleagues are anticipating that it will be appropriate to bin to tighten policy -- to begin to tighten policy sometime this year in spite of the fact that they are projecting that inflation will be low. they're looking forward, and they see that by the end of 2016 or 2017 with the labor market recovering and assuming that inflation expectations remain stable and transitory influences no longer affecting inflation, they see inflation heading back toward 2% objective. so just as the we don't -- just as we don't want to be premature in tightening policy and aborting a recovery that we have
worked long and hard to proceed as far as it has we also don't want to be behind the curve in beginning to tighten begin those lags. >> craig? >> madam chair, i'd like to preface this by saying i do believe you stand for accountability. so recently a bunch of us were in a room over there, there was a police car outside, and your staff had taken our cell phones and they controlled the internet in the room. all this to guard the security of the fomc statement. if one of us had leaked it we would lose our jobs. surely there's be a prosecution and my friends here in the press would certainly have a banner day with that story. there was a leak in the fomc. we don't know what happened. i've asked, i can't get an answer, and now congress is asking. both parties want to know. i'm not going to ask about the ig's probe, i understand that's
an active case now suddenly. after two years of just sitting there. but i would like to ask what you found ott t the board. you -- at the board. you weren't chairman there, you were vice chair, i believe. so what answers do you have, and are you going to respond to congress? >> so let me say that the committee and i personally take very seriously our responsibility to safeguard confidential information. we have a set of policies and procedures that are in place that we're to follow if we believe that there have been leaks of confidential information, and this is something that doesn't occur very often. but if it does occur, we follow those procedures. it has been reported that our minuter yen -- that our
inspector general is engaged in a review at this time of this matter, and in light of that ongoing review, i'm not going to get into details. but let me just say that we welcome that review and are looking forward to its conclusions. with respect to congress congressional inquiries we have arranged to brief members of congress who have asked about this and we'll certainly cooperate in trying to provide them the information that they seek. >> [inaudible] >> madam chair thanks for taking my question. the banking sector has colorly improved since the crisis in terms of capital retention, but there's also seemingly a number of scandals involving 4x
manipulation, of course, libor. do you think that the culture at the banks is where it ought to be? and if not, what is the fed going to do to m prove it and when? >> well, it's certainly been -- i mean, it's certainly been very disappointing to see what have been some really brazen violations of the law and we absolutely expect the banks that we supervise to comply with the law and to have in place controls that insure compliance many organizations. and while changing the culture of organizations is not something that we can achieve through supervision, we will make sure that the banks that we supervise have appropriate compliance regimes in place and
to the extent that compensation schemes might be incenting such behavior that inappropriately reward risk taking, that's manager that was -- we will, you know, look for in our supervision as well. >> follow up? you introduced a compensation rule in 2011. when do you think we might see some movement on that, on that rule? >> well, the agencies, the agencies are working jointly to bring out a rule on this, but we do have supervisory policies in place concerning the structure of incentive pay and compensation and our supervision covers that topic now. and we have seen i think meaningful changes already in
the structure of compensation in banking organizations to diminish ways in which it might incenturiesing taking. incent risk taking. >> pedro da costa with dow jones news wires. i guess i have two questions one with regard to craig's question. so before the inspector general's questioning, he says that it is my understanding although the federal reserve's general counsel was initially involved in this investigation, the inquiry was dropped at the request of several minutes of the fomc. now, that predates the ig. who are the members who truck down this investigation, and doesn't not revealing these facts kind of go directly against the sort of transparency and accountability that you're trying to bring to the central bank? >> that is an allegation that i don't believe has any basis in fact. i'm not going to go into the
details, but i don't know where that piece of information could possibly have come from. >> second follow-up on his question, i think when, when you get asked about financial crimes and the public hears you talk about compliance, you get a sense if there's not enough enforcement involved in these actions and that it's merely a case of kind of trying to achieve settlements after the fact is there is there a sense in the regulatory community that financial crimes need to be punished sort of more forcefully in order for them to be, for there to be an actual deterrent against unethical behavior? >> so you're talking about within banking organizations? so the focus of regulators, the banking regulators is safety and soundness. and what we want to see is
changes made as rapidly as possible that will eliminate practices that are unsafe and unsound. we can't -- only the justice department bring criminal action and they have taken up cases where they think that that's appropriate. in some situations when we are able to identify individuals who were responsible for misdeeds we can put in place prohibitions that bar them from participating in banking, and we have done so and will continue to do so. steve becker in of mni. the fomc said last september that we'll wait til after the first rate hike to stop or to
discontinue reinvesting proceeds of its mbs holdings and stop rolling over maturing treasuries. what is the fomc's current thinking about how long after liftoff you should wait to stop reinvestments and rollovers and given the very large amounts of treasuries maturing next year, would it make sense for the fomc to vary the pace of runoff that it allows? >> so we issued in september a set of normalization principles and as you noted, the committee indicated that we will eventually cease reinvestments or diminish the pace of reinvestments as a way of gradually reducing the size of our portfolio over time. we said we would do that when
economic conditions were appropriate after we begin raising rates because we want changes in our target range for the federal funds rate to be the main tool by which we shift the stance of monetary policy. we have not made any decision at in at this point about how long it will be once we begin to raise rates before we reduce or cease reinvestment. we will see how things go, and the committee will revisit that and make a decision at a later time. you also indicated that we have a substantial quantity of treasuries that will roll off our balance sheet over the next several years. that's true. and that will um, i think over the next two years almost 800 billion will mature. and that, they will be short
term, obviously, treasuries at that point. and that's a way in which we anticipate diminishing the size of our portfolio. >> could i follow up, please? some people have suggested that you might need to manage those runoffs a little more granularly, if that's a word, perhaps pursue a different track for treasuries versus mbs or you know given quarters when you'd have very large amounts maturing and there might be a spike in long-term interest rates, that maybe you would vary the rate of runoff. is that any consideration given to that? >> that's, that's something for which we've made no plans, and i don't really have anything for you on that. >> okay, greg and then peter.
>> greg rapp from market watch. we hear that productivity takes a long time before you can understand it but it's been very low in this cycle. what does that mean for fed policy? >> well, i agree it has been very low. it's been disappointingly low. a positive aspect of what is fundamentally a disappointment is that the labor market has improved more rapidly than might have been expected given the pace of economic growth. so the unemployment rate has come down more rapidly than i would have expected, and the labor market has improved more rapidly than i would have expected. we have written down our
estimates of potential output. in the long run, it is a disappointing factor about the ultimate prospects for the u.s. economy if it continues. i would expect it to pick up, and as you can see from the longer run growth projections, most fomc participants believe it will pick up above current levels. but it means it's something that would, if it persists, retard living standards and would likely retard real wage growth and improvement in living standards for ordinary households. >> okay peter? last question. >> peter cook of bloomberg television. madam chair, one clarification if i could lo gist isically, and then a question about congress,
a follow up. first of all you've been asked this before. when you decide to start raising interest rates, could that decision happen at a meeting in which it's not followed by a press conference and on my congressional question i i would like to get your reaction to the treatment you received up on capitol hill the other day. didn't look like a very pleasant exe appearance in front of the house, certainly at moments. i wonder if you have concerns about that. has the relationship between the fed and congress deteriorated to a point that it causes you concern? what if anything can you do about it as well? >> i said this previously and let me reiterate it that every meeting that the federal open market committee has is a live meeting which we could make a decision. clearly, if we decided for the first time to raise the federal funds rate, it is something i think it would be appropriate to answer questions and explain in
more detail. we have long had the capacity to call a press conference after a meeting that we would hold by teleconference, by conference call and that's capacity that was used on a number of occasions by my predecessor during the financial crisis. it is something that remains a capacity we have and would expect to use if it were necessary. um, on the second part of your question with respect to testimony, you know, it's very important for the federal reserve to be accountable to congress. we have a wide range of responsibilities and it's entirely appropriate for me to testify and be quizzed on a range of topics by members of
congress. i, you know, i think i need to be ready to answer questions on any aspect of federal reserve behavior, and that's an important principle. >> thank you so much. [inaudible conversations] >> a live picture from the national press club here in washington, d.c. where shortly we'll return to coverage of the republican national lawyers association conference. attendees have just returned from lunch and they're taking part in an awards ceremony at this point. the speaker this afternoon is michael carvin whos has argued against the -- who has argued against obamacare before the u.s. supreme court twice. again, live coverage of his remarks starting shortly here on c-span2. while we wait for this we'll get the latest on loretta lynch, president obama's nominee
to become the next attorney general. we spoke with a reporter covering the story on this morning's "washington journal." >> host: good morning. >> guest: good morning, how are you? >> host: good. thanks for joining us this morning. just want to start with the latest on the timing and the current vote count for loretta lynch possible confirmation. >> guest: yes with. so it's going to be pretty close, but she does have support from four republicans and that's jeff flake of arizona, orrin hatch of utah susanors collins from maine and also lindsay graham from south carolina. but as we get closer, you know there's always a chance thatclos support can lessen.. devoted to voting on her, butth they also agree with mcconnell that they need to bring up thiso br trafficking bill before they continue to vote on lorettantin lynch. >> host: and with this vote on athis confirmation possibly delayed
until april after a two week recess after next week in the senate, how much pressure is there going to be during that time to try to pick off a flake or a hatch or a grawm or a collins -- or a graham or a kohl hundreds to puck off that t republican support overhe the next couple of weeks? >> i'm sure there will be some. movement to do that. advocacy groups are putting pressure on republicans. we've seep in the past that can have a big influence on capitol hill. we saw that in a story reported on the hill. so i think it's very difficult to say exactly how much pressure these lawmakers are going to get, but they're going to get i some, especially from somepr outside groups who would prefer that loretta lynch not be theome. president's nominee.at but we have to remember w that,er you know for every day that she l isn't confirmed eric holder --nomi who republicans have a very aggressive relationship with -- is not, continues, he doesn't step could could down. he comets to serve as the attorney general. as >>nera >> host: and is part of the efforts by republicans right nows
ri a specific strategy to try to buy time for that pressure toy to build?for one republican, rand paul, who's obviously come out with hisob statement against the confirmation of loretta lynch, his tweet over the past 24 hours, president obama's hou executive amnesty is illegal but loretta lynch calls it reasonable, is there a specific strategy to buy time to get some of those republicans who have a s said they will vote for her to come back? >> guest: it's unclear whether or not the republicans are trying to buy time here or whether they're just trying toepub get some leverage to pass the trafficking bill. you know they want to proven that they canning govern, and i think there's a little bit ofy ca frustration that this is a bipartisan bill, now it's stuckhis ask they can't seem to unstick it. i think that's part of the trick here, is they're trying to use lynch as a way to move forward. >> host: and you bring us the a latest on the trafficking billhost and what's going to happen next week before the senate goes on that two week recess?tw >> guest: yes, certainly.
so basically the trafficking bill is stuck until after the budget. mitch mcconnell moved it, reversed the order and just moved it until after the trafficking bill. and one of the things that we have to remember is that, you know, there is some bipartisan compromise coming up. heidi heitkamp and susan collins announced one yesterday, john cornyn had his own alternative for democrats but they don't o seem willing to bite on that. so the trafficking bill continues to be stuck here asive well. of. >> host: lauren fox,t staff t correspondent for the nationalhanu journal,es thanks so much for joining us on the "washington journal" this morning. >> guest: thank you, i appreciate it. >> both the house and senate not in session today as we look at a live picture of the u.s. capitol. snow is falling in the nation's capital. next week we are expecting both chambers to take up the 2016 republican budget resolution. the senate should start monday at about noon eastern. we expect the house to take it up later in the next week. and as always, you can see the senate life on c-span2. -- live
on c-span2 and the house over on c-span. house speaker john boehner planning to travel to israel, according to the associated press. it's a visit that comes as relations between the obama administration and israeli prime minister benjamin netanyahu have reached a new low. a spokesman says boehner will visit israel during the two week recess that starts on march 30th. a trip was planned before this election in which netanyahu won a fourth term. boehner angered officials when he invited netanyahu to deliver a speech to congress this month without consulting the white house. and we're live again at the national press club here in washington where shortly we will have coverage of the republican national lawyer ares association conference. we are expecting to hear from michael carvin. he has argued against the affordable care act before the u.s. supreme court. he did it twice. he will be the luncheon speaker today. >> to receive an award named for her from an organization filled with friends colleagues and,
let's just be honest, some pretty cool people -- dick wiley, jim bach -- [laughter] is beyond gratifying. this organization has meant a lott to me, and because this organization exists, lawyers like myself have a platform to be a watchdog for our constitutional democracy. some wrongfully say there is a war on women. i don't really know about that. but i think there are a lot of republican women who are on the warpath. [laughter] [applause] and i think we're on the warpath to return the rule of law to this dems accuracy and pretty quickly. [applause] in closing, let me say this to betty, wherever she might be.
investigative agency, and it was during the tenure of michael bloomberg who was briefly a republican, i must admit but only long enough to get the election. and they clearly were not partisan, and they were led by a very professional woman who was a lifelong democrat, whose dad was law partners with ed koch, former democratic mayor. and also their allegations about problems about our board of election and they decided to do an undercover investigation of the city's board of election. and one of the elements that they did is they went out and to look at the voter rolls and they identified voters who were on the rolls and that they could prove he on a shadow of doubt
not just reasonable doubt. they could prove it, were dead. that was the easiest. were convicted felons and in jail. they could prove that one without a problem. or had moved out of the jurisdiction more than a year ago but were still on the voting rolls and they had pretty strong proof of that. as one of these elements base in investigators on election day to pose as these voters. and they didn't even try to fool anybody. they had a 25 year old hispanic woman who voted as an 87 year old jewish lady in one place and then a 73 year-old polish lady in another place, and nobody blinked an eye. and point in fact some 25 different incidence of going in
and engaging in voter fraud openly and notoriously, went unchecked. one, one person was not allowed to vote. and that was somebody impersonating a convicted felon, and they just happened to pick the wrong precinct to do it in because the democratic election inspector in the polling place was his mother. [laughter] true story. you can go to the department of investigation website. you can download the report, nobody reports this. and by the way, she didn't call the copts. she just said you're not my son go away. in another matter when so we did call the police with a. fraudulent voters the police
said that's not our jurisdiction. we don't do it election fraud. go to the board of elections. so i guess it does go on summer and we've seen of the cases but i love that example because it's not a republican or a democrat in a partisan hack. in new york's board election by the way reacted most wonderful of ways. they filed a complete with the district attorney to have the investigators arrested for voter fraud. didn't go too far. so we are doing a lot. we continue to do the lot and all of you help us and we want to do a lot more. we told you about our project where we are producing how to get on the ballot in 50 states, all of the candidates and that is ongoing. many ugly see us come our good friend -- heading up the project
to do model voter id laws. so that those were interested in pursuing that will do so with laws that have been tested in courts and our legal and our forcible. and our friends tom wheeler has told us that it is actually increase voter participation and in particular minority participation. again you won't be reading that in "the new york times." we want to be a resource to everybody. we want to committee with each other and help each other to get these things done. one of the other things we do every year is we have an election school and we move it around from place to place. and this year on august 14-15th we're going to host election school in new york city about three blocks away
from ground zero in the national memorial. we hope you all and participate and get a whole bunch of cle credit and continue to help us move forward. again its it's august 14 and 15th in new york city. we promise a program that might not have as many senators but will be just as good as this one. with my commercial done, let me move on. it's my great pleasure to introduce our lunchtime speaker and attorney probing on to everyone in this room at least by reputation. michael carvin of that little boutique jones day. michael is a litigation machine. he's a trial and appellate lawyer, and he spends most of his time suing the federal government. i want to point out he is an
equal opportunity lawyer. he says democratic administrations and republicans, and we thank him dearly for doing that. these of course the lead lawyer in the king v. burwell case but if you look up super lawyers in d.c. this year or last year or the year before, michael is there of course. and if you look at america's best lawyers, michael is there. you know what would you expect? indeed this guy has argued more times before the supreme court and the circuit court's that i've argued with my wife of 43 years. [laughter] and i'm real upset because he's got a better record. [laughter] and i want to share an observation with you rather than going on and on about the many, many cases michael has been in. talk about one for a moment.
again, you know, i'm sorry, i'm a new yorker so i initiated a litigation in new york in late 2012 challenging new york's campaign finance law which seemed to believe said senior and decisions of the supreme court and several district courts and circuit courts some which people in this room have brought the cases and one. i know a couple of them, they didn't think that applied to new yorkers. they could still limit independent expenditures. so on and jason brought a lawsuit in the northern district of new york and we drew a relatively calm a very new federal judge that the northern district as we sued the state. and our kids got somewhat bogged down because this judge believed making a decision that under
nine months would be premature and endanger the health of the decision. so we were getting dragged on. and now in new york the male race is in odd years. so in 2013 it's a mayor race we've got a terrific guy running for mayor as the republicans which is not an easy thing to do in new york a dear friend of mine, and unless we can get super pac and get a whole bunch of money out there there was no way we could introduce him to the public and give him a fighting chance. so mike carvin got called in and he brought a suit in the southern district of new york because i to in new york the campaign finance law for new york city is different than the campaign finance of upper new state. in new york city it's all matching funds and very controlled, but the law about
super pac money still applies. so mike brings the case and refused to recognize citizens united attorney general of new york, i believe supreme court is wrong and, therefore, he doesn't have to listen to it and we should really to get it because he is doing gods work so it's okay. "the new york times" for support them with stories and editorials and fundraisers and all that stuff. i've been -- i went to watch michael make the argument. you spend in front of very prospective jurors, federal jurists who happens to be a friend of mine and a former boss of mine. i sat in the audience and watched and has the argument is going to see the judge is buying some of the attorney general's argument and quoting "the new york times" as legal source. michael is quoting the supreme
court for they are quoting the editorial page. they're doing okay. and michael got up and i will never forget this, and he looked at the judge and he said, judge or you going to listen to the roads or "the new york times"? and i went gosh i don't know that i would have said that. [laughter] the judge decided against michael. did not give him his injunction. he filed an immediate appeal, went to the second circuit and it took them about 30 minutes to reverse, and they didn't just remand, they ordered the district court to issue an injunction forth with. sort of a postscript, as i said the judge was a friend of mine and i saw him all little later that day i was in the courtroom and he said what do you think of that michael carvin fellow? some piece of work?
i of course agreed with him last -- [laughter] and firmly convinced is he not only some piece of work but if i've got to go to war he's a guy i want in the foxhole with the. i give you michael carvin. [applause] >> i'm really worried about that introduction for two reasons because this is not going to be entertaining and it's not going to be intellectually stimulating stimulating. the reason being, this is literally the simplest case i've ever done that anybody could ever do. it has a lot to so clearly on our side in king v. burwell. as you probably know the relevant provision says that the subsidies for the aca exchanges
are available on quote exchanges established by the states under section 1311. the obama irs region that language said that means of course they are available on exchanges established by hhs under section 1321. so the issue is whether or not an hhs exchange is a 1321 is a state established stand under 1311. this is not a complicated question for -- [laughter] at least for the nonlegal mind. [laughter] this would be relatively straightforward, and then he do. if this was a mortgage deduction case, no judge would say what are you talking about? if only because we're in this political maelstrom involving the affordable care act that people are take this argument seriously. i am not going to bore you with walking to all the there is a statutory nuances of this but i will give you the basic pitch on
the other side is you are just ripping these words out of context, and what an extraordinarily i'd place. why would they ever put in you know, a tax credit in the tax code? [laughter] so you really can't take this language very seriously. and our response is i normally -- tax credits impact could. we're not hiding any elephants here. the only provision in the affordable care act is section 36 d., the only provision in the act of discusses the subsidies for the exchanges or that limit them. all of the limits on when subsidies are available are contained in 36 b. for example, it's quite clear if you bought insurance outside of an exchange you can't get the subsidy. and so everybody seems to understand that and it's not in the same provision and naturally of course this would be the place it would be.
as to context, i can assure you we did not stand up for sprint court and say, please just focus myopic we on these words and ignore the statutory context and the purpose of the act. i think we should possibly 7000 times we employ you to look at the context of the overall lack because in each and every particular of the structure and purpose of the act, reinforces our argument. the most obvious contextual point is section 1311 of the act says states shall. this is in the act state shall establish the exchange. so congress chose the strongest possible in which it could to convey the deep desire for the states to create these exchanges. 36 b. tell you that there are no subsidies available unless the states create the exchange, and 1311 tell us you want, why would congress have done that.
they did it because they need to provide -- creating these exchanges. the only one that would work would be saying if you don't do it then your citizens don't get the subsidies. this is not some novel invention of the aca. this is medicaid. this is likely how they get the states to participate in medicaid. they say they don't do what we want your citizens won't get the medicaid. this was a key part as you of the aca went to greatly expand medicaid. my final boarding contextual point is the government kept arguing that because section 1321 says if the states don't established exchanges then hhs shall establish such exchange committee said such exchange. and we are like this they said such exchange. hhs will establish such exchange.
but 36 b. turns on who establishes the exchange whether it's the state you get the subsidy, if it's hhs you don't. if there's any ambiguity about when to use of words such whether they're trying to somehow magically transform hhs into the state, all you have to do is look at the context of the act and look at the provisions dealing with territories. territories are also required to authorize or establish such exchange. and immediately after they held them, it says and shall be treated as a state for these purposes. so we know that such does not connote that hhs or the territories are a state and we know that congress does have a treat a nonstate entity as the state entity in the aca when it wanted to do so. so the argument on the other side we were taking hyper liberal myopic approach in getting this effect to the text
of the statute. and while people like scalia might buy that argument, no serious person can buy the argument because after all they look at other manifestations of congressional intent, most obviously legislative history and there certainly is a fight between scalia and breyer on whether not clear text in the statute can be affected by contrary legislative history. and my point has always been however that debate is resolved it doesn't affect this case. because you can look through the blogs of legislative history surrounding the aca and you will not see a single expression by anyone anywhere suggesting that subsidies are available on hhs established exchanges. so even look at any legal materials that any justice ever looked at any context that concern congressional intent, here's what you arrive at. clear text saying subsidies are only available on state
exchanges clear text explaining why subsidies are only available there so they can incentivize states and not a scintilla of history. so as i begin this, this is literally the easiest case that a federal court has ever entertained. the response again is well secret, congress didn't intend this and we know this because msnbc keeps telling us that congress didn't intend this. this is not only a legally relevant argued. it's difficult to hypothesize an argument that is more insulting. nobody in the world wants to insult democratic majority that enacted the aca more than i do. but think about how insulting this is to them. these people english speaking people sat down and wrote the words established on an exchange established by the states under
section 1311. according to my opponent they didn't intend to convey that. they can't explain to you why a rational person who intended for subsidies to be available on federally established exchanges ever would've written down those words and more important they are saying not only do they consciously write down the opposite of what they intended it never even occur occurred to them that somebody might intro but the word established by the state to meet established by the state. so they went to the entire legislative process and it didn't could anybody to say when we set state can we really meant hhs, for some goldberg reason but we did say the opposite of what we mean. so this was just a giant mystery that existed throughout. this was some kind of scrivener's error. that's what the basis of the above. among the many problems with
that, additional once i put in for is the phrase that appears 11 times in the aca. so it's not a scrivener's error. it's some kind of bizarre to read syndrome where -- [laughter] where they kept saying with the domain over and over again -- tourette's syndrome. without any ability to control this. so really what they're arguing that really what everybody in the court room knew what they were argued was a naked policy argument which is, look 37 states have said no to the irs deal not surprise lake since they gotten out nothing out of it for establishing the exchange, which means two-thirds of the states won't have the subsidies if you follow the rule of law. and this is really really bad. and in addition to the fact of course his policy arguments for the legislative branch, not the judicial branch, irs caused the
problem. if i arrested told the states as the drafters of the act intended to only get the subsidy if you establish the exchange, they just like medicaid they would've established the exchanges. if you need that billions would have been deprived to their citizens, then they would have done something about it. so not irs has caused this problem and they come into court and say, sorry you can't change what we have created to our lawless action. you must perpetuate which to me is always like the criminal defendant who kills his parents and then pleads for mercy because he's an orphan, right? he's the one who has create the problem but he nonetheless needs something. i don't know how this argument is going to be received. i've stopped making predicted a long time ago about how the court is going to be in any circumstances, particularly with respect to this act. i will identify two or three things that came up in argument that maybe it's of interest to
folks. the first one is justice kennedy did ask well if they did condition the subsidies on thin green these exchange isn't that unconstitutionally coercive activity use of the funding power? the government has not made this argument. no state that has a stake in this argument is in front of the court. so i don't think i certainly think justice kennedy is taking this argument very serious about it doesn't have the normal prerequisites for them to actually opine on the constitutional issue. in addition to the absence of any the absence of anyone arguing this or any entity with a stake in this in front of the court, he really to find that this coercive, find this funding scheme is coerce would require them to return a previous decision on medicaid from just three years ago.
because clearly there they did endorse a form of funding i.e. you can condition all the medicaid funding on the states upping their eligibility requirements which is at least as coercive and is as at least problematic as anything involved here. and in the face of precisely the same kind of argument that you are receiving. the hospitals came in and said listen, if you don't, if you accept this argument and we don't get these medicaid funds spent we are going to go bankrupt. because of the deal in the aca was we get less money for serving poor people, low-income people at our hospitals and in exchange we were going to get all of these medicaid funds. if we don't get where going to go bankrupt. i will point out 20 of the states have rejected the deal. the hospitals actually are doing fine but this is exactly the kind of argument that was bothering justice kennedy in terms of the insurance companies. the other practical point is that the states filed a briefing
saying we're going to reject this exchange via regardless so the notion that it is unduly coercive strikes me as odd. i don't think therefore that justice kennedy can reach the constitutional question, but what a don't think the liberals who now embrace federalism for the first time understand is, if he does this will result in the worst result for them that if we prevail on statutory portion. why? if he says condition medicaid funds, excuse me conditioning subsidy on establishing the exchanges is no good he's not going to say i am therefore going to extend subsidies to all 50 states. is going to say no states get the subsidies because the deal was unconstitutional. how do i know that? because that's exactly what justice can be wrote in a dissenting opinion. he said if the medicaid medicaid deal is to coercive, the answer is not
to let medicaid funds go without the condition. the answer is to eliminate the subsidies entirely. so in these circumstances people who were on the other side of the aisle who are taking part to justice kennedy's opinion should actually be quite worried. in that regard there is a mild form of the constitutional issue that might influence his decision but there's a candidate out there that if you can interpret a statute one way that doesn't raise constitutional issues by federal put it another way does, go with one that doesn't raise the constitutional issues. that would be marshaled an argument to avoid the unconstitutional coercion point. but two statements that justice can be made at a couple of other pointpoints i think refute that that will happen to first of all in order to do that you need an unambiguous interpretation of statutory code with the question. justice kennedy was clear he didn't think there was any
ambiguity about whether statesmen hhs. he also made and i think this is a key point there's a basic separation of powers principle that you can't take money out of the federal treasury unless the custodians of perth congress has expressly authorized the treasury to expand those monies. so we said therefore needs to be very clear that the subsidies were unavailable and you would lose, you've the government would lose ambiguity. if you think about that, he can't therefore say because there's ambiguity in the statute i am now going to expand subsidies to all 50 states and congress was clearly imposing some kind of condition on it. in other words, he would be great if you'd separation of powers problem that he himself identified at the argument in order to solve the federalism concern. and the final point i did get to make in rebuttal was there's no winter for the statute doesn't
raise a serious concern about infringing on state sovereignty. the government's version of the statute imposes a very serious federalism concern. why is that? the point i did make of course it's not just a question of subsidy. the employer mandate the requirement that employers provide insurance for their employees is tied to the subsidy. in other words if the employer doesn't have that obligation unless one of his employees goes out and reaches and gets one of the subsidies. so if these saying that no subsidies will be available in all 50 states that would extend the employer mandate to all 50 states automatically. and the states would have no ability to veto it or as they would under our interpretation. what he would be saying is the federal government got the ability to tell states that they have to provide certain kind of health insurance benefits to their own employees which is the
core principle of federalism that you really shouldn't be able to tell the state how to conduct their relations with her their own employees. so either way you interpret the statute raises serious questions. in light of all that, what i think might happen and why think would be a resolution that really would preserve justice kennedy's constitutional concerned would not affect the outcome of the case is to do what he's done in a number of other cases including under the voter rights act where he would join the proper statutory interpretation holding of the court but then write a separate brief saying this gives me great constitutional concerned and if and when the state wants to raise it i will certainly entertain it. other than that i'm not going to make any predictions about how the court is actually going to rule. these things always remind me of people are like chief justice roberts didn't say a lot during the argument, sort of like those
old, is gorbachev looking to his left at the general? we're supposed to read tea leaves. i think it's generally a sucker's game. i think it's a suckers game in this context to try to discern these types of predictions about how the justices are going to be a. so my bottom line is for the reason i've articulated i expect a nine to nothing victory in june to some of you saw the argument who are attending me have detected some skepticism by for the justices about my argument but nonetheless i think once they read the briefs and it said the plane landed in the statute this would be a very short hike page opinion. [laughter] [applause] >> well, thank you, michael. since today's theme is the
imperial presidency, i'm going to act in the early and we will extend lunch 10 minutes minutes of weekday questions if anyone has them of michael. >> mike, i was at the argument and i have to tell you you did a fabulous job. i've seen a lot of arguments. i've never seen an assault by the liberals in any of the cases. but my question is this. justice ginsburg -- spent a really good sentence. >> guess it was a good sense. before she brought up the issue of standing which is such a subtle issue that the government didn't even argument in their brief. in fact, the first time this was brought up once a month before i think on msnbc which -- my question is i read that the
liberals are desperate because they gauged how the other justices will were feeling about the case and were hoping they could bring up a standard issue that might dispose of the case without it being disposed of substantive ground. is my reading do you think my reading is off on the? >> i have to disagree with the premise. i just told you she was on my side. sure, why are -- it was bizarre. every judge including all the judges who ruled against us on the merits, it was a very vanilla case of stanley. -- standing. msnbc gets involved. there was really no serious issue about it. installation is almost doing me a favor i must say because i
got i think killed of the standing issue so it didn't come back and give it solicitor general verrilli was not arguing. i think it was a nonissue. in terms of the vigor of the candidates changed a few points there was literally the justices were not only interrupting my answers, they were interrupting their residents questions. it was a very hot bench and unused to hostile questions. this one was maybe unique because for the first time i've ever seen chief justice roberts just on his own site, you get 10 more minutes. he gave us 10 more minutes because he knew it'd been impossible for us, for me to get to my answer on that. >> let me go to the dark side for a minute and just ask, if
the court somehow rules that the statute means what it doesn't say, are you able to discuss at all what you think that means for the loss of statutory interpretation of the future? >> well, if they continue to interpret statutes the way that you would have to interpret this statute to mean north means south, black means white then there will literally be no law in the united states right? because it would be quite impossible for you to enact the law that lines the judiciary or the executive agency to mean what it says and says what it means. i take solace in the fact that if we lose it will be only in this case only for this act and they will revert to when they like the results to honest,
neutral interpretation of law. i think it really would be. there's a lot of obviously issues in terms of policy about, that divide people by policy obligations of the affordable care act at this case is about the rule of law. this case is about whether or not we're going to honestly and neutrally interpret an act of a coequal branch of whether we're going to let policy concerns profit. there was a very revealing exchange i think during the argument where justice scalia said to solicitor general verrilli, who by the way i thought did a fine job of arguing. he's a very able advocate that legitimate unrealistic because he said his policy arguments are so convincing well then with congress right across the street and they can fix. justice pashtun solicitor general really said, this congress? [laughter] which elicited this kind of snarky laughter but i was looking at chief justice roberts
and some of the other justices and the notion that the solicitor general of administration would say your deference to congress turns to the composition of who is leading the congress, is extraordinary insulting something the court is never going to take seriously, and i thought they were blanching at that notion. particularly since, my own prediction is this congress will actually take steps in the wake of our victory, numerous op-ed by senate and house leadership saying that there's a way to fix this come a better way to fix this thing but there is a way to fix it. i'm hoping that that assurance that eventually the law to mean what it says won't result in these dire policy consequences should be enough solace for them to do the right thing. >> one more.
>> you mentioned that the chief justice gave both sides 10 more minutes but there was no other case scheduled for that day. did that mean that they were anticipating they're going to give them more time? >> no. but you're right. gave them more flexible because there was not a no one. it was very strange. they had another argument scheduled. did you hear about this? the guy was complaining pro se many non-representative, deployment. they couldn't find him. he disappeared. so they accepted the case and then they said well i guess he's not going to be here so they canceled the argument after that. >> she's got one more. >> assuming you win a lot of people are going to lose subsidies, government subsidies. how do you see the applications of this playing out politically
for the republicans and for the future of obamacare? >> right. so look let's put this into a better perspective. they are going to lose subsidies to the notion these subsidies are essential to health care is a whole fabricated. these have been able except for the last 50 months. these people would be in exactly the same position would've been at the end of 2014 which was not exactly medieval time we saw sick people scattered across the sidewalks in d.c. and they say that because it's important recognize that nobody is arguing the absence of subsidies will drive up insurance premiums. whether proponents are arguing other provisions of the act making insurance so expensive these preexisting conditions, that those will drive up insurance premiums and we need them, subsidies to offset them. so i think the republican response of the federal love this one indicated a minute ago which is if you've read these op-ed's, there's a good way to get people who need the money the money.
if you give them a tax credit but you don't say to them just buy insurance on the exchange and don't want all of this restricted insurance that the affordable care act under the affordable care act you can't buy catastrophic interest. you have to buy the so health coverage, maternity. go out and buy the kind of insurance you will. i think didn't think about going to buy insurance across state lines. if you live in new york you can go to utah and get a great deal. the point would be people who need to help are getting it in the same way under this republican alternative but they're getting it in a way that empowers the consumer to make the choice about the insurance that he or she likes best rather than listening to it hhs says big my own view is that should be amenable to a consensus of republicans in the house and senate, and i think it will be very difficult, not that he won't come i think be difficult for president obama to say no because after all, he would be
saying no these people are not getting their needed monies simply because they're not getting them the way i want them to get. i think that's very tough for him and, of course, if they can't reach a compromise on the federal solution, then, practice president obama perfectly amenable and easy say no no no we are not changing anything. if he maintains the status quo that exists if we prevail in this case then under his own prediction there will be a meltdown on exchanges in 34 states. they won't be an employer mandate of 34 states edited he would do that as detrimental to what i assume would be what he would do as his legacy. so i think the normal option the president has thus far of just saying no me i may not be available. so it will be interesting politics over the summer obviously i think the republicans have a relatively straightforward message that would appeal to people who think
relatively low income people should get subsidies and those who think that the affordable care act goes about in the wrong way. >> thank you. [applause] >> please mark it in your notebooks one point for credibility for larry. i promise you a piece of work and you got it. [laughter] we're going to take a seven minute break and then we a symbol for our next panel. thank you. >> [inaudible conversations]
>> remarks from attorney michael carvin u.s. twice chose the affordable care act before the u.s. supreme court. if you missed any of what he had to say or any of our coverage of the republican national lawyers association conference you can watch it on our website c-span.org or we're going to lead our coverage here and once again you can see it online at c-span.org. i road to the white house coverage will continue tonight with possible 2016 presidential candidate former maryland governor michael o'malley. scheduled to make remarks before the scott county democratic party committee in davenport iowa. you can see that at 9 p.m. eastern on c-span. he wrote in an op-ed in the "des moines register" and any
proposed an approach to safeguarding the nation's economy. he says the largest banks should be broken up into more manageable institutions. five banks until half of the financial industries $1820 invested. even those of congress, reserve board of governors and major players in the financial industry are recognizing that institutions that are too big to fail are too big to succeed. you can read that entire article online in the "des moines register." you can watch martin o'malley in iowa live tonight at nine eastern on c-span. earlier this week the head of the secret service joseph clancy was before congress answer questions about the latest investigation involving alleged drunk driving by senior officials. you can see that hearing sunday at 10:30 a.m. eastern on c-span. the house and senate are not in session today but next week we expect both chambers to take a 2016 republican budget resolutions. the senate should start monday at about noon eastern and the house is likely to take it up later in the week.
>> this weakens the c-span cities tour has partnered with me to come to learn about the history and literary life of columbus, georgia,. >> writer inside the museum is the remains of a confederate ironclad css jackson. this is an ironclad it was built in columbus during the war. those oval-shaped juicier actually the gun ports of jackson and jackson is armed with six rifles, the rifle that was fired the day was one of the guns bill specifically for the jackson. it was cast at the selma naval
works in selma, alabama, and completed in january of 1865. the real claim to fame is directly connected to the fact that the are only for ironclad on the civil war that we can study right now, and the jackson is right here and this is why this facility is here is first and foremost to tell the story of this particular ironclad and to show people that there were more than just one or two i'm class. there were many. >> watch all of our event from columbus saturday at noon eastern on c-span2's booktv and sunday afternoon at two on american history tv on c-span3. >> politico reports that u.s. faces a bigger threat from iran and from isis according to a former intel chief. former cia director general david petraeus says the islamic
state of iraq and levant is not the biggest threat facing the trend in iraq. in fact, i would argue that the foremost threat to iraq's long-term stability in the broader region is not the islamic state, rather it is a shiite muslims, militias, many backed by iran he said in a written comment to the "washington post" bureau chief. you can read the rest of the story in today's politico. and now from earlier this week deputy secretary of state and tony blinken reassured congress that if the nuclear deal is achieved and iran fails to comply they will face severe consequences. he testified before the house foreign affairs committee. this is about two hours and 10 minutes. >> this hearing will come to order and the committee here today will continue to evaluate the administration's nuclear diplomacy with iran that's the
substance of airing today. negotiators face a high-stakes deadline next week. we'll hear the administration's case today. but it's critical that the administration hears our bipartisan concerns. deputy secretary blinken, this is your first appearance before this committee. i congratulate you on your position and wish you well. after the hearing i trust you will be in touch with secretary kerry, under secretary sherman and the others at the negotiating table to report the committee's views. i think this is very important. this committee has been at the forefront of examining the threat of a nuclear iran. much of the pressure that brought tehran to the table was put in place by congress over the objections of the executive
branch, whether it was republican or democratic administrations, but is a house of representatives that has driven this process. and we'd have more pressure on iran today if the administration hadn't pressured the senate to sit on the royce-engel sanctions bill this committee produced and passed in 2013. and passed by the way unanimously. and passed off the house floor 400-20. so congress is proud of this role and we want to see the administration get a lasting and meaningful agreement. but unfortunately, the administration's negotiating strategy has been more about managing proliferation than preventing it. case in point, iran's uranium enrichment program, the key technology needed to developing a nuclear bomb. reportedly, the administration would be agreeable to leaving much of iran's enrichment
capacity in place for a decade. if congress will be asked to roll-back its sanctions on iran which will certainly fund its terrorist activities, there must be a substantial roll-back of iran's nuclear program. and consider that international inspectors report that iran has still not revealed its past bomb work, despite its commitment to those inspectors, to the iaea to do that. the iaea is still concerned about signs of iran's military-related activities including designing a nuclear payload for a missile. iran hasn't even begun to address these concerns. last fall over 350 members wrote to the secretary of state expressing deep concerns about this lack of cooperation from iran. how can we expect iran to uphold an agreement when they are not meeting their current
commitments? indeed, we were not surprised to see iran continue to illicitly procure nuclear technology during these negotiations. or that tehran was caught testing a more advanced centrifuge that would help produce bomb material quicker. a new grade of supersonic centrifuge right in the middle of this process was a violation of the spirit and in my view, the letter of the interim agreement. iran's deception is all the more reason that the administration should obtain zero-notice anywhere anytime inspections on iran's declared and undeclared facilities. you have to have a verification regime in this process that's going to work for us. there is also the fact that limits placed on iran's nuclear program as part of the final agreement now being negotiated
are going to expire. that means, the final agreement is just another interim step, what you call a final agreement as an interim step with the real final step being iran treated as any other nonnuclear weapon state under the nonproliferation treaty, licensing it to pursue industrial scale enrichment. with a deep history of deception, covert procurement and clandestine facilities, iran is not any other country. it is not certainly any of the country to be conceited international scale nuclear program. any meaningful agreement must keep restrictions in place for decades, as over 360 members of congress, including every member of this committee are demanding in a letter to the president. meanwhile iran is intensifying its destructive role in the region.
the islamic republic of iran is popping up assad in syria while its proxy hezbollah threatens israel. iranian-backed shia militia are killing hopes for a unified, stable iraq. and last month, an iranian-backed militia displaced the government in yemen, a key counterterrorism partner. many of our allies and partners see iran pocketing an advantageous nuclear agreement and ramping up its aggression in the region. as a result of hard currency that they will have at their disposal have the sanctions are lifted. so this committee is prepared to evaluate any agreement to determine if it is in the long-term national security interests of the united states and our allies. indeed, as secretary kerry testified not long ago, any agreement will have to pass muster with congress
-- those were his words -- yet that commitment has been muddied by the ministrations assistance in recent weeks that congress will not play a role. that's not right. congress built the sanctions structure that brought iran to the table. and if the president moves to dismantle it we will have a say. so i now turn to the ranking member, mr. only angle of new york for his opening remarks. >> thank you very much, mr. chairman, thank you for calling this very important and timely hearing. mr. deputy secretary mr. undersecretary, welcome to our committee. we are grateful for your service and we look forward for a test would and i want to congratulate both of you on your new positions. the chairman's remarks are very similar to mine. we worked very hard on this committee to have bipartisanship, because both the chairman and i agree that if
there's one place or we need bipartisanship more than any other place, it involves foreign policy. and so where ever possible we try to talk with one voice, and i want to associate myself with the chairman's remarks. we've seen a lot of speculative reporting in the press about might or might not be included in the conference of nuclear deal with iran. today we're going to send over a letter to the president signed by 360 moves of congress in both parties, a majority of each party, talking about some of the things that we are concerned with and we would hope that we could get a prompt response from the white house. it's truly a very bipartisan letter expressing congresses strong feelings about things that need to be in the agreement. i want to emphasize, reemphasize
what chairman said. there really cannot be any marginalization of congress. congress really needs to put a very active and vital role in this whole process and any attempts to sidestep congress will be resisted on both sides of the aisle. we've seen a lot of speculative reporting in the press about what might or might not be included in a conference of nuclear deal with iran. we don't technically even know right now if there's going to be a deal but if there is i think we would all be wise to review the details before passing judgment and whether it's a good deal or bad deal or simply a deal we can live with. i think it's safe to assume that we're not going to do what i would consider a perfect deal. i've said all along that iran should of been required to freeze enrichment or negotiations, but they weren't and it's clear that a freeze is not on the table for a comprehensive agreement. at this stage for me to focus on making the deal as good as it
can be. i'm hoping that our witnesses can shed light on a few key areas that from the could tip the scales between a bad deal and a deal the we might be able to live with. we need total clarity about where iran stands in terms of its ability to weaponize its nuclear material. how far along are they? secondly will the deal given sufficient time to respond if iran reneges and present full throttle towards a nuclear weapon. there's a one year breakout period of time until iran has sufficient enriched during to build a bomb. is not enough time to catch the violation and react? next, how would a conference agreement stop iran from pursuing a nuclear weapon covertly if to make a decision to sneak out rather than breakout? iran's leaders don't deserve an ounce of trust. we need very strong safeguards. lastly, how will be certain that
sanction believe won't just open the fossett for funding terrorism or fuel the regimes already abysmal human rights record? in my view these questions lay out clear markers for what we need to see. here's the bottom line. if we say yes to a deal will it be worth unraveling the decades of sanctions and pressure that the united states and our partners have built against iran? but if we say no we we be able to hold the sanctions coalition together? and if we maintain or even increase our sanctions wouldn't iran just move full speed ahead toward a bomb? i know these negotiations have gone on for months and months. another p5+1 is under intense pressure to produce something, but we cannot allow those factors to push us into a bad deal being sold as a good deal. the administration has argued that reaching a deal is the best chance to solve a nuclear crisis diplomatically and avoid another war in the middle east. it would undermine the talks and
as i've repeatedly said i'm i am willing to see what is actually in the deal before passing judgment, and i strongly urge my colleagues to do the same. but make no mistake, congress will play an important role in the violation of a final deal. again i want to say that i will not stand by and allow congress to be marginalized. any permanent repeal of sanctions is by law congress is discretion, and before we do that we must be completely convinced that this deal block all of iran's pathways to a nuclear bomb. so i look forward to your testimony and hope we can have a frank discussion on these issues. and again, mr. chairman, thank you for calling this or and today. >> thank you mr. engel. this morning we're pleased to be joined by senior representatives from state and from treasury. treasury. mr. tony blinken as the deputy. mr. tony blinken is the deputy secretary of state, previously served as the assistant to the president and was principal deputy national security advisor. is to blink and also worked as
>> our influence with our partners negotiationugoingsegotiateing with iran over the nuclear program and our goal is to provide the program for peaceful purposes and we seek to cut off four pathways that iran can obtain for pathways to a nuclear weapon. there are two uranium and a platonium outlet. we must have monitoring and transparency measures that maximize the ability to detect any attempt to break out. as a practical matter we are making sure iran should they renege on commitment to produce
material for one weapon and that would allow us more than enough time to detect and act on aggression. in exchange we have a phase with sanctions relief tied to verifiable verifiable actions. sanctions would be imposed if iran violates the proposals. it is iran's responsibility to convince the world the nuclear program is peaceful. that is why we are seeinging a deal of sufficient length to establish a track record. only then would they be treated like any other party with all of the right and all of the obligations of such a state including continued monitoring and inspections and a binding commitment to not build a nuclear weapon. the bush administration proposed this for iran and dozens of
countries respond to this act. a deal with iran will have an ending and much has been said about this. some contraints would be removed after a significant period of time some in effect for longer and some lasting indefinitely. they will have to safety code and inspection giving access to all declared nuclear facilities and unsuspected declared facilities. so far more intrusive inspections of iran will be needed before this development. iran would be prohibited from developing a nuclear weapon and we had have a greater effort to defect if they were. they would be able to have a
peaceful program continuously verified. we hope to complete the deal by the end of the month and the technical issues by there end of end. in switzerland it has been intense and we made progress on core issues. significant gaps remain on some of the other issues. between what we and the partners believe must be part of a deal and what iran is willing to do. it is vital in our judgment we avoid action that lead the world to think the united states is responsible for failure. new sanctions at this time including so-called trigger legislation are unnecessary. iran knows if they refuse the agreement or renege on the commitment new sanctions and can will be passed in a matter of days. new sanctions would we inconsistent with the agreement and undermine the sanctions
coalition and give iran an ex cuse to walk away or take a hoard line that is not achievable. we call on the authority of the president to make negotiations they will keep. this is the president's responsibility. if there is confusion on this point no foreign governor will trust when a president reports to speak for the country he does. this could poison the prospects for a deal and make it difficult to sustain existing support for the sanctions nevermind make new ones. that is critical to the success of the sanction regime. up until you now we kept other countries on board because they think we are serious about a
deal. but if they lose the conviction the united states could be isolated and the regime could collapse. congress is playing a central role in this. tools have us around the negotiating table and only congress has the authority to lift sanctions as part of any solution. since signing the deal we have been on the hill to update with more than 200 briefings, hearing and phone calls. if we reach an agreement we will welcome intense, robust scrutiny and expect criticsx plain why the deal is looking and what could be a better alternative it and how it could be achieved. this doesn't alter the commitment to the allies in the region. that commitment will thought change with or without a deal. we will retain the necessary
tools and the determination to continue encountering iran's troubling behavior. we will continue to support those in iran demanding greater respect for the universal human rights and rule of law they deserve and continue to insist iran release three people they are keeping captive and help us find the other. thank you very much. >> thank you. good morning, chairman royce, ranking member, and membersoffss of the committee. -- members of -- it is a pleasure to be here in my new role as treasury in the department. in my time including nine years of leading the office of control, i devoted the majority of my working hours to building
honing and implementing sanctions on iran. both executive sanctions and the bipartisan sanctions you have enacted. so i am appreciative of being able to testify here. the strength and the international foundations that underpin the deal with iran is vital. working with partners around the world and congress we have assembled a coalition that has altered iran's economic posture. as a result we have a chance of solving one of the world's most vexing security threats. it is important to note iran remains under massive strain and has no viable root to recovery without relief from the international sanctions. this strain is visible in every
section of iran's economy. they were exporting 2 and a half billion barrels of oil and today they are exporting 60% less oil to just six jurisdictions. the losses of course have been compounded by the steep drop in oil prices such that iran's chief revenue source is bringing in less than one quarter of what it brought in for iran just three years ago. just as troubling for iran is the fact it can't freely access those revenue. it has a reduced stream of revenue which, thanks to congress, is going too restricted accounts either frozen or tied up in banks around the world. foreign investment in iran has dropped from 2004-2013 as
capital was pouring into developing country iran saw an 80% drop in the investment. it is estimated the oil, gas and pet row chemicals will need approximately $170 billion to recover. their funds have depreciated and lost value as we have been negotiating. the imf projects iran's economy will enter stagnation with gdp growth falling to 6%. this the lowest projected country that is looked at at the middle east including countries like afghanistan that sell no oil. the banking sector sis -- is isolated and their economy is under strain. but this sanctions pressure can thought be sustained without
work. accordingly, over the jpoa period we have worked very intensively to enforce our sanctions. in the past 15 months we targeted nearly a hundred actors, individual and companies who are helping iran evade sanctions or conduct other misconduct. we have imposed nearly half a billion in penalties on companies that were conducting illicit transactions. as we speak, nucoercion -- negotiators are hard at work ander regardless of whether or not they succeed i want to insure you we are able for whatever is next. we will structure the erelief in
a way that is phased and proportional and reversible. we believe that powerful u.s. legislatureive sanctions should not be terminated for years to come so we can continue to obtain leverage into the deal. if we determine a deal with iran cannot be obtained the administration working with congress is prepared to ratchet up with the pressure. over the past decade we have developed subtle insight into the financial flows, stress input and how it plans to work around the sanctions. we stand ready to raise the cost on iran should they make clear they are unwilling the address the international community's concerns. we remain hopeful week achieve a peaceful resolution to this serious long-standing threat.
thank you for inviting me here today. >> thank you. if i could go to my first question here. it goes to the sunset. deputy secretary lincoln, major concern is the expiration date. in ten years all of the restriction and other measures you are touting will come off and iran's nuclear program is going to be treated as then it is the equivalent of the netherlands. why ten years? do you hope they will have moderated within that program? >> first of all, there is no agreement on the duration of various obligations. some whether some aspects are ten years or less that is all to be negotiated. looking at this as a sunset is not the accurate way to look at
what we are trying to achieve. what we are proposing and seeking to achieve is a series of constraints and obligations. some ending after a long period of time, some continuing and some indefinite. the bottom line is even after certain obligations are completed it cannot become a nuclear weapon state. it will be legally bound not to make or acquire fucnuclear weapons. it will have to sign and implement a safe guard agreement -- >> that is why we are here today. you are putting stock in iran's signature and its safe guard's agreement. they have had the same commitment and have been violating those commitments for years. that is why this process -- i would just point that out and the other point i would make is that ten years or whatever that
time frame is they are then going to be treated as any other non-nuclear weapon state and that means no sanctions, no restrictions on precurement or the stock pile or number of centrifuges it can spend at that point ten years out. or on the purity level to which it may enrich uranium. and this is an example of where they would be they would enrich at levels near weapon grade claiming the power to form a nuclear navy because that is what brazil is doing. and that is all blessed under this agreement, as i read it, no matter who is in charge. and that is why we have a letting going the president signed by 300 people in congress
demanding the verifiable parts of the agreement last decades not a shorter period of time. let me go to my next question and that goes to the one year breakout. the administration set a bench mark of a one year break out period but is a year sufficient to defect and reverse potential violations and why not insist on a period of two or three years. >> mr. chairman we think a one year breakout time is sufficient and conservative. we believe with the verification and inspections we invist on will give us more than enough time to detect abuse of the agreement and to also act on it. if you look at experts, many said a far lesser period of time would be sufficient to defect and act on any violations. and if i can add to this
quickly, one year's very conservative. first of all that is the most -- if everything went perfectly for iran -- but the idea that any country, including iran would break out for one bomb's worth of material sun likely. >> let me go to this question. will you insist the iae inspectors have any time anywhere access to all facilities in iran including revolutionary guard bases and will iran have to satisfy all questions we have involving research on a nuclear war head including access to key personal and paperwork. >> without going into details because this is still in talks we will insist they have access to do their jobs. >> my list is specific based on
my discussions with the iaea and i want to make sure they are found and followed. and lastly it seems the administration plans to push the security council to adopt a new resolution to basically bless this agreement and relax sanctions. but at the same time you are pushing off congress. why push for un action but not congress? >> we are not pushing off either. i think as you said and ranking member ingle said congress will have exercise authority to lift the sanction if iran agrees. >> our concern is if you push us off for ten years, let's say in theory and this is going to the u.n.security council under
baghdad, damascus and this is not a regime that looks like it wants peace. iran continues to fuel terrorism around the globe. it has been number one in my opinion state support of terrorism around the globe. i believe that a nuclear agreement should not whitewash the fact that iran remains a destabilizing act in the region and funds terrorism. the iranian revolutionary guard
core theoretically could take advantage of the sanction relief because money is fundable to them. how could relief be structured to minimize benefit do is the iranian revolutionary guard core? >> thank you very much. first let me tell you we share concerns about destabilizing activities, support of terrorism and their human rights violations which is why we will oppose those efforts. we have pushed back on proliferation and terrorism support and intersecting cargo and working with our partners as we have been for six years. with regard to money iran
receives as a result of sanctions i turn to my colleague but first we see iran is in a deep hole and the president was elect elected by the people to get out of the hole. so they are trying to plug the economic holes at home and you are right about this freeing up resources but we agree that denying iran a nuclear weapon is the single-most important thing we can do to further in bold them. >> that is what we are concerned about. iran is in a deep economic hole and by having an agreement and releasing that helping them so to speak get out of that hole we want to obviously make sure and you do as well to make sure the safe guards are in there as well. that is what is making me
nervous. once you lose the leverage it is very hard to get back. >> yes ranking member thank you. and i will say as well that is a concern we have been extremely focused on. the truth is the size of the hole that iran is in across almost any indicator you look at is far deeper than the relief that is on the table. even the substantial relief should iran make good on all of the commitments being set out we are talking about a hole that could be described as a $200 billion hole which is the loss they have received since 2012 in sanctions. their minister said they need $170 billion to regain footage in that area. the average iranian has seen
steady decreases in the standard of living and purchasing power even since the jpoa went into affect. it will be a years long effort for iran to right itself and that will not happen overnight. finally, i want to reiterate what deputy secretary blink said. with respect to the investigations in syria and so on we will pressure any forms of terrorism support we see. >> let me mention one thing because you mentioned hezbollah. we all agree iran continues to support terrorism and instability in the middle east. but the director of national intelligence didn't include
hezbollah or any terrorist threat in the assessment of the u.s. intelligence communities. can you tell me why? that didn't make any sense to me. >> i am happy to get back to you on that but my understanding is hezbollah remains front and center in our concerns. i think the director was talking about the immediate front burner concern we have with isil. it remains a foreign terrorist organize and remains to counter and isolate it and push back. >> and could not exist if it wasn't for iran? >> that is correct. >> thank you. >> thank you so much chairman. during your conformation hearing in the senate you promised senator rubio and the foreign relation committee that you and the administration would consult
congress on any policy changes the administration was seeking toward cuba and that turned out to be a complete falsehood. i worry the cuba example was a deliberate attempt by it administration to keep congress in the dark regarding the castro nugauche ace negotiation negotiations and this is important because of the cuba deal but how it implements us in the iranian deal. it foreshadows the administration's approach to congress and keeping us out of the link on the iranian deal. the administration made it clear they don't want them to vote on the deal any time soon. but you said to mr. royce the security counsel will have a binding vote on the deal. you will go to the security
counsel to vote on a deal yes or no? >> we will go to take note of the deal -- >> vote on the deal. >> if there are any requirements pure pursuant to the deal. >> congress can wait -- no problem. palestinian statehood. there were reports last night in order for president obama to continue his temper tantrum toward prime minister benjamin netanyahu what we will be doing in the united nation is push in the shadows for a vote on palestinian statehood in order to pressure israel to be at the negotiation table with the palestinians. is that press report true? >> no. the administration's support for israel is absolutely unshakable.
we have done more -- >> that is what i wanted to hear. thank you. and i am going to ask you another question on iran for a minute. but first, your cuba sanctions and regulatory regulations took a license authority on the trading with the enemy act and i fear they are using cuba as a test case and will utilize license authority to provide fraud relief for iran. the united states is commit today removing nuclear related -- committed -- sanctions on iran but as the author of the iran sanctions' law the concept of a defined nuclear sanctions on iran does not exist in u.s. law because
the sanction are intertwined with iran's human right record ballistic missiles and terrorism. so which sanctions will you suspend and ultimately lift under a final agreement and will you to come congress to ask before action is taken? >> thank you. with respect to the action we took in cuba's amendment amending our regulations i will note that the license authority is one that has been drawn on by administrations, democratic and republican, over the last decade and i have been involved under both presidency and it is an authority -- >> thank you. this will take a long time. iran has been cheating skirting the rules violating international agreements you have heard from both speakers