tv Key Capitol Hill Hearings CSPAN April 29, 2014 9:00pm-11:01pm EDT
to make sure that taxpayers cannot evade u.s. taxes or taxes anywhere, by, you know, hiding their income in overseas accounts. it is a complicated area. one of the reasons that we extended the period was to make sure that we had time to enter into agreements with other countries. there was a great deal of interest, in having bilateral agreements. i think it actually has been a tremendous success. as i go to international meetings, i don't like to use acronyms at meetings so i wouldn't use an ack know nip like fatca but in various accents i've heard people saying we need fatca for all. we need a global standard. so we'll work on getting the details right. i'm not familiar with the specific issue on insurance premiums. i'm happy to look at it. >> i think we all think it's a great concept that we want to stop but if you think about it, if somebody is buying reinsurance or property casualty insurance and there's no way to understand it, they can hide any
cash in there and it would probably be appropriate that just to revisit that and do some sort of economic analysis. and if it's not something they cannot be part of that. but certainly it's a great concept overall. >> i'm happy to look at it and get back to you. >> thank you. now turn to mr. serrano. >> thank you, mr. chairman. i'm going to try to get in at least two questions because i know we have a short time, and mr. secretary, you draw a big crowd. as you can see. great attendance. your request eliminates the bank enterprise award program, something i'm very concerned about. i have heard very good reports about the impact this program is having in my district and elsewhere. in fy-14 we provided $18 million for it. why are you proposing to zero it out this year? and i must tell you that it's been awhile since i've gotten so many comments from constituents on an issue as i'm getting on this one. >> congressman, we had to make a lot of tough choices in this
budget, as you have to make in the appropriations process. and, based on the current fiscal environment, you know, we thought that concentrating the cdfi funds in other areas was on balance the right tradeoff. the appropriated funding level for the bencht >> a. program has decreased overtime, and it really was a question of concentrating our effort in other very important areas. but we understand that there are some concerns because of the decision. >> well, the big issue here is that you've got programs up and running, you have situations, for instance, in my district, an area that for years the biggest complaint was that there were no banks around, and through this kind of funding that this committee put forward, you know, local banks were able to spring up, and that's a bad pun,
because one of them is called spring but anyway, so now, they run the risk of falling apart. i don't know what process you have going forward, we certainly have our role to play. but i must tell you that this is one that has support in the community, and support on this committee so you should keep that in mind as we move forward. >> i appreciate that congressman, i know there's support for the other activities that cdfi funds, as well. so it's a question of competing goods, and obviously with unlimited resources we might make other decisions but we did try in this budget in a number of areas to concentrate our effort in a world of very tight budget resources, and this was a tradeoff that we made. but i'd be happy to follow up and discuss the matter with you. >> thank you. my next question is one that miss lowey wanted to ask you at her hearing, at this hearing,
and i wanted to ask you so that merits being asked. the fy-14 omnibus required treasury to submit recommendations for reducing the response time for applications to the office of foreign assets control for a general license for humanitarian nongovernmental organizations seeking to provide aid to famine victims in south central somalia. while we appreciate the response you've given us, it doesn't really respond to the report language. we'd like to see a more thorough response delivered to the committee. what time frame do you think can have to get that to us? >> congressman, i might have to go back and check exactly what the time frame is. i do know that the issuance of licenses in somalia has been a very challenging undertaking. i've had the responsibility to work on it from multiple different perspectives when i was at the state department, and now obviously at treasury, and the challenge is to make sure that humanitarian goods are going where they need to go and should go, but that we're not
seeing support for organizations that are listed, terrorist organizations. and we've tried very hard to work to strike that balance, to make sure humanitarian supplies can continue to go forward. i'm not sure of the exact schedule. i'd be happy to get back to you. >> right. in terms of security issues to tell us what the challenges have been? >> well, the whole process is one that is some things are public, some are not. rather than cross the line, perhaps we should have the conversation separately. but, over time, you know, there have been concerns about payments that got -- that were used to support organizations essentially charging tolls on the roads to raise funds for terrorist organizations. so there are real concerns on both sides. obviously our goal in humanitarian programs is to get the money in, to get it in safely, and to get it in without having there be the kinds of
collateral support for people who are not intended to get benefit from these programs. and i'm happy to follow up on the timing, obviously, the -- humanitarian licenses are very important part of what affect us. >> i realize i put on your plate two questions that are some people would see them as being that far apart, because one is very local, and one is part of our foreign policy. but both speak about growth and support for people so we'll be talking in the future. thank you, mr. chairman. >> thank you. mr. rogers? >> mr. secretary, let me ask you about marijuana. washington state and colorado have legalized recreational use of marijuana. but it remains illegal in most states, and certainly under federal law.
nevertheless department of justice told the governors that it will not challenge their legalization laws, and has told federal prosecutors to de-emphasize marijuana prosecutions. in addition, and what i want to ask you about, the treasury department's financial crimes enforcement network issued new rules that give banks a green light to do business with mare juan shops, illegal shops. the combination of this guidance should allow both medical and recreational marijuana related businesses to make full use of banking services, and institutions. even though dealing with an illegal operation. dea administrator recently told a congressional hearing that cash is the driving force for
these drug trafficking organizations, and dea has already seen signs, they say, that gangs are attempting to exploit the new banking rules. the issuance of a green light for banking institutions to do business with these illegal marijuana shops and subsequent action by the treasury department to in effect rubber stamp that gives me some pause. because this is still an illegal product in practically every state. is it wise to offer regulatory guidance from the federal government on illegal activity? congressman this is a very complicated area. obviously when two states pass a law making an activity legal in the state there's going to be an increase in activity in that area. obviously the justice department guidance provided guidelines for
how prosecution matters would be considered. we believed it was important for there to be clarity in terms of the consistency between the prosecutorial guidelines and the banking guidelines. the risk of cash transactions is actually something that we were quite concerned about. without any guidance, there would be a proliferation of cash-only businesses, and that would make it impossible to see when there are actions going on that violate both federal and state law. and that would be a real concern. we thought that the clarity, bringing it into daylight, was a better solution. obviously the -- the real clarity here would require legislation that conformed to policy. since we don't have that it was an attempt to have as much clarity as one can have given the complex situation with the state laws. >> what about cocaine dealers? shouldn't they be given the same
break? >> i'm not aware of any state that has legalized, you know, activity in that area. >> but aren't you aware that practically every state, marijuana still is considered illegal? >> so, we -- the actions we took really just apply in the states where the state law makes these shops legal. where the business would be done with cash, if it weren't done through banks. and we think that the actions we've taken taken provide greater transparency and less likelihood of the kinds of behavior that i think we're all most concerned about. i will note that there have been quite a number of bsas, suspicious activity reports filed which give us the ability to see where there are transactions in those two states that would violate both their state laws and federal laws. and i think would indicate the kinds of troublesome behavior and activity that we would all want to see. >> well department of justice apparently qualified its approval of legal marijuana only
if that state created, quote, strong and effective regulatory and enforcement systems, end quote. washington's medical marijuana dispensaries still are not licensed, or regulated, by the state. and yet, you waive all of that and allow these regulations, and help with banks in doing business with those shops which are illegal under the state law. much less the federal law. i wouldn't -- >> i can't conclude whether or not it's legal under the state law. obviously the states have to enforce their state law. but they did legalize the opening of that's shops and these transactions. the question was whether the transactions would be in cash or through a transparent banking system and that really is the area where the guidance was meant to provide some clarity.
>> but as i say in washington state, these dispensaries are still not licensed by the state nor regulated by the state. if they aren't licensed or regulated, from a legal perspective, how are they different, any different from a drug dealer on a street corner? >> i'm happy to follow up with you on some of the details of how things are being done in washington, and -- >> this is not complicated. >> but the -- >> i think -- >> both states passed laws that created space for transactions that under state law are legal, and the guidance we put out was clearly meant to facilitate having transparency so that would not become a kind of cash economy where there's no way to see when there are transactions that suggest, you know, large-scale transactions that would actually violate the state law. >> well, mr. chairman, my time
is up. i'm sure, but it's not complicated. washington state is not regulating those drug -- those marijuana dealers. and yet the u.s. government, through your department, is putting a stamp of approval on banks doing business with illegal shops, even in the state of washington. >> i would just note that when there are suspicious activities that would violate state law, they're being reported and being followed up on. i think the transparency is something that actually makes enforcement of law more likely to happen in effective ways. >> thank you, mr. quigley. >> thank you, mr. chairman, welcome, secretary. secretary, before i go on i'd like to just go ranking member's concern about the bank
enterprise award program. i understand we all have different priorities. all we're doing today is telling you, this is a program that's high priority for your communities. and we understand your response, but in the meantime, half a world away, the president said that something like he thought the odds of the iran talks succeeding at about 50/50, and that if they broke down, that additional sanctions could be under way, and they could be passed by congress in a very short period of time. you have a sense of what kind of additional sanctions might be in place? what kind of sanctions seem to be working right now? >> well, congressman, i think we've seen that the sanctions that are in place on iran's oil sector, and their financial sector, have been very effective. there has been a consistent degradation to iran's economy.
you see it in their gdp. you see it in their exchange rate. you see it in their inflation rate, their unemployment rate. you see it in their willingness to come to the table and negotiate. and we don't know the outcome of the negotiation. obviously the president puts the assessment out there, made it clear we're going into this with our eyes open. you know, sanctions cannot force an outcome. what they can do is create an environment where a leader is feeling the pressure so that if they want to do what it takes to improve conditions for their people, they have to change their policy. if, in fact, the negotiations don't succeed, we will look for other means to tighten the pressure. working with the world community is one of the reasons that the iran sanctions have been so successful. is that we have not been alone. we have worked with most of the rest of the world to have it be a sanctions system that has very little leakage. you know, we obviously are hoping and working hard to make those negotiations successful.
but we are very much aware of the fact it could go either way, and i'm not going to prejudge whatprejudge what steps we would take, but i think the president's determination and mine is that if the negotiations do not go well, we'll have a full set of options to pursue. >> i appreciate that. in a different country, looking at what's worked here, the second round of sanctions involving ukraine seem to be meet with underwhelming response by their stock market. having just returned from there, you get the impression that the type of sanctions that would work versus russia might be the same. those dealing with the more specifically with the energy sector and the banking sector. have those been considered are is this an issue with the european union? >> congressman they've been considered because the president signed an executive order that creates the authority for us to
designate sectors should we make the determination that that's the appropriate step. i think that if you look -- >> this would have been stronger. >> if you look at the impact on russia's economy, it's a little misleading to look at what happens day by day. you have to look over the period of time since russia went into crimea. since we imposed sanctions. there has been quite a substantial deterioration in russia's already-weak economy. we see it in their stock exchange, their exchange rate, in a number of important economic indicators. they were down graded one notch above junk. with the rationale and bond rating was, in part, the sanctions being imposed. i think the question here is how do we proceed in a careful way, step by step, building pressure? president putin has acknowledged that the sanctions are creating pressure on them. obviously, they didn't change
their policy. i think that we need to continue to keep our options open. we are prepared to take more action and we've made clear we're prepared to take more action if the policy of russia doesn't change. the reality is again working in partnership with our allies is the most effective way to do it. and we're seeing movement there. we're seeing even yesterday that the europeans made additional designations. i think if you look at the individuals designated in russia, they are some of the leading business people closest to the government. igor sechen, ceo of a huge oil business. the ceo of a big industrial complex that includes arms deals. a ceo of gun vore, the biggest energy trading platform. the regenberg brothers are close
personally and support the people in the inner circle. i think they've gotten the message we are serious and we have more actions we can and will take. we need to remain determined and push ahead and work with our allies to do it in a way that is an effective way to change the situation on the ground. >> we appreciate that and look forward to working with you in the future. >> thank you. mr. womak. >> thank you, mr. chairman and thank you, secretary, for your testimony here today. i want to go back for just a moment. i've got a couple of other more brief questions. as has already been mentioned, and i associate my remarks with that of the chairman and others who indicated that our collective effort to detect and deter offshore tax evasion is a goal that we all share. i know that some treasury officials have insisted that the july 1st fatca withholding deadline should remain in place.
can you explain for the panel and our constituents what the risks are to u.s. financial institutions and the u.s. economy if large numbers of banks are required to withhold the 30% tax on routine cross border transactions? >> i'm not sure which risks you're -- the risk of not having the reporting is that transactions go undetected and tax avoidance and evasion goes ahead. >> more to the concept of the regulatory requirements. let's just go in that direction. >> this is a new regulatory approach. the facta law put in place the authorities being implemented. we have been cognizant of the fact that it is going to require new reporting procedures to be put into place.
we are cognizant of the fact it requires cooperation with banks and governments overseas, and we extended the deadline in order to facilitate a smooth, effective transition. i think at whatever point it goes into effect, there's going to be a new set of requirements, but i think they're appropriate requirements because if we don't have that reporting, we can't see where the tax avoidance is taking place. the bipartisan effort to make sure we can see what's going on so that we can stop illegal tax avoidance is the purpose of it. i wish it could be done without any burden at all. obviously, any reporting program has some, creates some extra work. we've tried to keep it simple. we tried to extend the timeline to do it in a way that makes it as unburdensome as possible to
meet the higher requirement. >> this year, what will be the estimated deficit, budget deficit in this country? >> the current estimate, i was not looking at budget numbers before i came up here. >> round numbers. >> i'll give you a single number. it's around 600. it's been coming down. the reason i'm hesitating, each time it's estimated, we thought it would come down 30 or 40, now 70. it's coming down more rapidly. >> $600 billion. we are going to throw that on top of an already nearly $17.5 trillion public debt. do you agree that this -- because when i go home and i've got the debt clock on my website as a lot of my colleagues do. people are concerned about this public debt.
when i make my presentations in large group, i try to explain i'm an appropriator as much to the credit of the people on this diaz today and mr. rogers, we live done a very credible job in trimming discretionary spending. as our overall chairman said in his remarks, we still have mandatory spending that has not been addressed. and honestly, i'm not seeing the leadership there. i guess my question, mr. secretary, is do you agree that this debt under the interest rate structure we have today is a major national concern, and that the sands in the hour glass are running on us? >> congressman, i spent much of the last 30 years working on trying to have a responsible fiscal policy, so i certainly agree thought is a critically important issue. we made more progress reducing the deficit at a faster speed
than since world war ii and demobilization after world war ii. we had an enormous coming together of drivers that drove the deficit up. first we had policies that created policy gaps in the early 2000s. then the worst recession since the great depression. we are now seeing a recovery from that. i agree mostly or very substantially it's been discretionary spending reduction. there were tax increases since the beginning of last year. we've seen entitlement savings. we have proposals for medicare savings. we have looked forward to working on a bipartisan basis for many years to reach agreements there. i think we are on a path where the deficit will be below 3% of gdp. we're in a place where we have a little bit of time to deal with it. i have always believed that you shouldn't wait until your time runs out. i'm not going to say let's wait ten years to have the conversation, but we are in a much better place than just a
few years ago. >> my time is up. i yield back. >> thank you. >> thank you. mr. chairman, i would like to request at some point with the secretary's willingness special briefing of our committee, subcommittee on the sanctions relative to ukraine and contrary implications. i don't know if the chair would be open to that or not. i think it's terribly important. i want to make the formal request. secretary lew, thank you so much, particularly someone's career has spanned helping to restore the solvensy of social security in 1983 up to the balanced budgets of the clinton administration. president obama has put the right american in charge. we welcome you before our committee today. i wanted to focus in two areas in this round. first of all, in the housing sector where our secondary market is in a bit of a jam at this point. we know that wall street's
terrible mortgage securitization record created the largest transfer of capital from main street to wall street in our history. african-americans lost all their accumulated equity since world war ii. hispanic americans similarly, working class people across this country. i represent communities terribly impacted by the securitization meltdown. my question is, what is treasury doing to perhaps working with the justice department to recoup some of those assets for these hard-working americans in communities that have been so devastated? and have you considered, in addition to bringing back -- by the way, those banks are doing very well, the major ones that were a part of this. everybody seems to be fine up there. but have you considered, in
addition to rec pens from those institutions back to the street to the people at treasury, have you considered working to develop new mechanisms such as efforts county land banks to better handle adjustment in the housing sector in these communities? does treasury have a mechanism, a, to bring the big banks to the table, and b, to get more recompense and get local governments trying so hard to prevent further abandonment and adjust at the lower level. >> we don't directly have a role
in that. there have been some settlements that have put money back into some of the programs, mostly in the department of housing and urban development. we have a series of programs where we have been actively engaged with local communities and homeowners to help homeowners refinance their mortgages, to help them modify their mortgages. we tried to be creative in using programs like the hardest hit fund to help the community as well as individual homeowners. i was just in detroit last week and saw the first demolitions done using hardest hit funds because if you have a blighted house on a block that's struggling to stay above water, you need to have the house that's dilapidated and drawing down everyone's values dealt with. so we are trying in every way we can with homeowner assistance and community assistance to be engaged in this. we've seen millions of refinancings and modifications.
there's obviously a lot more work to do. we have a number of other programs like the ssbci where we are not dealing with the housing piece but dealing with the economic development piece of it to create jobs in those communities. i think we had great success in that effort. >> i will have some follow-up for the record it. wanted to shift to ukraine for a second. just so the secretary of treasury knows this. the agricultural sector of ukraine can pay all the bills as time goes on. i don't find in what we are doing yet as a country we actually are thinking about that power. i can guarantee you under the corrupt yanukovich administration, ordinary farmers were being charged 19% interest rate, but the friends of the deposed president yanukovich were being charged 4%.
i hope in the financing schemes that the ifm and others are thinking about, that the identification of grassroots farmers in that country, not associated with the past regime, that somebody pays attention to those and competitive interest rates are offered to those farmers because that sector can ultimately pay the bills. finally for the record, because you get in meetings i don't get into, women of that country are feeding that country. in little villages, nobody sees them. we need a humanitarian effort, in my opinion, that brings in good seed, shovels, basic equipment, and i'm talking about humble things like buckets of care does around the world to help these women feed that 75% of the food is raised in those small towns and those small villages. nobody sees those women, but all you have to do is look at the satellite over the weekend. you see all the people drive out of kiev, go get food and come back into the city because prices have gone up.
i want to put that on the record. perhaps you can be a voice in the meetings that are occurring to support agriculture among those who want reform and those holding that country together as we weather this crisis. thank you for listening. thank you, mr. chairman. >> thank you. mr. graves. >> thank you, mr. chairman. mr. secretary, good to see you. wish you well on your continued recovery. i want to ask your thoughts on a recent proposal that was on the white house blog and will read a little about it. it was authored by carolyn atkinson for international economics. it described in her proposal as requiring that all companies formed in any state to obtain a federal tax employee identification number requiring the internal revenue service to collect information on the beneficial owner of any legal entity organized in any state. for the irs to allow law enforcement to access this
information without following the safeguards in current law that generally require and showing a reasonable cause. to believe a criminal act was committed before the irs shares taxpayer information under section 6103 of the code. in light of and the still unresolved question and scandals involving the irs targets proponenpro poen opponents of the administration, they are still as relevant after watergate when implemented. it's incumbent on the government to scrutinize irs data about citizens and protection designed to safe guard it, even when the administration asserts the national security requires eliminating these safe guards. so i guess knowing that proposal has been issued as part of the president's '15 budget and described a few weeks ago on the
white house blog, would this proposal by the president do away with requirement that federal, state and local agencies establish reasonable cause to believe a crime was committed before sharing confidential taxpayer return information? >> congressman, the protections of 6103 are extremely important. we spend a lot of effort to make sure that we honor 6103 in everything we do. it has to do with the basic trust the american people have in their system. that's something that is our obligation to maintain. the issue of beneficial ownership is a very complicated one. it's a complicated one internationally because there is a huge demand internationally to seek more transparency to beneficial ownership because it is considered to be one of the things driving base erosion and tax avoidance internationally. we have taken the view we have
to protect vide information and act in a way consistent with the individual protections that are provided in 6103. i have on a number of occasions in international meetings said we would not make beneficial ownership broadly public, but we would only do it through proper channels, law enforcement agency and tax an enforcement agency to one another. i'm happy to look at the blog post and answer any detailed question you have about it, but that's our general policy. >> so if 6103 is in place and there's currently a process that requires reasonable cause, i guess my question would be why then propose a new concept that -- does it improve on protections for u.s. citizens or is it removing protections for u.s. citizens? >> i'm happy to take a look at that blog post and respond in more detail to you. >> okay. i guess just for clarity, do you
think it's the administration's expectation that congress will curtail the protections in the current law as it relates to 6103 and as we look ahead and we're going through the process of some of the other questions dealing with 501-cs and such? >> i think that the protection of individual privacy and information and making sure our system is a fair one and transparent where it should be transparent but not transparent on personal matters where it shouldn't be is one of our very highest obligations. i'm not aware of any effort for us to change that. i'm happy to look at this particular matter. >> okay. i would hope that the administration would not be proposing any kind of concept that would allow the internal revenue service to share freely information to other agencies without reasonable cause. that's what i'll be looking
forward to your response on. >> thank you. >> thank you very much, mr. chairman. mr. secretary, good to see you, sir. a few issues. i wasn't going to bring this up but chairman rogers brought it up and i think it got me thinking, obviously. it's your responsibility to enforce federal law. my understanding is it hasn't changed that marijuana is illegal under federal law. yet i understand now your department is doing these guidelines or guidance, giving guidance to banks as to how to deal with something that is illegal under federal law. are those guidelines going to at least have a very clear statement that marijuana is illegal under federal law? >> our guidelines in no way change federal law. the department of justice -- >> is there going to be -- my
question is this, sir. i apologize. in those guidelines, is there a statement stating that, hey, folks, this is illegal under federal law? which is the federal law, correct? >> we are in no way telling people things illegal under federal law are legal. the exact language i have to go back and look. >> it would be interesting to note in fact since your responsibility is to enforce federal law and you're giving guidelines on something that is against, is illegal according to federal law that at least there should be an indication that it is illegal under federal law which is what your obligation is. >> to be clear, the department of justice guidelines make clear what their prosecutorial priorities are. it does not say things that are illegal are legal. i don't think any of the activities confuse the question of federal and state law.
our concern is that in a very complicated situation where states have made certain activities legal, where there will be transactions, to have those be cash transactions rather than banked transactions creates more risk of illegal behavior than we need to see. we tried to put out guidelines to be clarity for banks to be able to provide transparency into these transactions. >> i understand. i think if somebody receiving, a banker receives guidelines on how to deal with certain entities from the federal government, i think that in itself will make it very unclear whether it is something that is illegal under federal law. i think making that very clear would be something that would be helpful. >> i actually think they very much understand they are in an area where they're at risk. and they're filing suspicious activity reports. a lot of banks are not taking these accounts. i don't think there is any ambiguity in the banking world that they have to work a very
narrow line. >> you do believe they are at risk if they do so. >> they are filing suspicious activity reports for behavior that warrants suspicious activity reports. >> mr. secretary, let me bring you to a couple of points brought up and one not brought up. last week, mexico i heard was considering filing an amicus brief with the u.s. supreme court taking the side of argentina. we had the secretary of state, i asked him whether the department of state would intervene even if asked, he said absolutely not. now we know by press reports that last july, junior officials in your department urged imf to file a similar brief before they were overruled by the senior department officials. the u.s. then obviously withdrew such support. again, that would have been an unprecedented move by the imf. can you tell us with respect to this mexican brief, has any
official in your department encouraged mexico, expressed approval to mexico, contacted mexico at any point in the last year regarding them filing that brief? >> congressman, be clear we did file in the lower court proceedings a brief. i am not going to defend argentina's behavior in any general way but this narrow issue of banking, of law, we do think that the rights of creditors warrants attention an we filed a brief. there is a general policy in the executive branch to only file amicus brief. we didn't feel amicus brief. >> i had conversations with my counterparts. i told them exactly what i told you, which makes it clear what we think the right legal outcome
would be. i think the conversations with the imf last year kind of reflected them just conforming to the fact we weren't filing a brief, they didn't file a brief. >> mr. secretary, my question is separate. my question is have folks in your department as far as you know, have any contact or have contact with mexico asking or encouraging them to do that. >> i said i had conversations with my counterparts. >> in mexico. >> yes. >> so you have had those. >> no. i just told you they asked us our views. i told them what i told you. >> i think i'm out of time, mr. chairman. thank you, sir. >> thank you. mr. yoder. >> thank you. mr. secretary, welcome back to the committee. i have a couple of different areas i would like to ask you about this morning. first of all is the designation that the fsoc is going forward with and i'm concerned they are
not taking a deliberate and thorough process reviewing the asset management industry for potential sifi designations. the only public report was criticized for failing to demonstrate a complete understanding of the asset management business and differentiate it from banks and other financial institutions. it does not define what risks it is concerned about with asset managers or confirm specific methods and thresh holds used to evaluate asset managers. fsoc said it would hold a round table may 19th. last week "wall street journal" reported two asset managers have been moved to stage two of the sifi designation process. can you explain why the fsoc is advancing asset managers when they are gathering information and what can be done to ensure proper decisions are made here and all voices are heard to make sure we don't make problems worse through improper designations?
>> congressman, i think if you look at this issue, it is one of many issues that fsoc will be considering. it was created to look not in the rear view mirror but forward. what are the potential risks to financial stability? ofr was asked to do some analysis here. it was not a regulatory action. it was a piece of analysis. i won't discuss any specific conversations regarding any one entity. i'm just speaking to the review of the sector. there is no one on fsoc who knows the outcome of this process because we are still in the fact-finding stages. there is going to be a public session where there will be views presented and some will disagree with the ofr study, i'm sure. some will support it. our challenge is to make sure we ask hard questions and we are not afraid to ask questions when we don't know whether the answer is yes or no. that's the only way we are going
to be able to detect the threats of the future. i think this is an area where it warrants attention. it is way premature for anyone to be speculating on what the outcome is. i can tell you as chairman of fsoc, i don't know the outcome and i shouldn't know the outcome until we are fully informed. >> appreciate that. returning to the national deficit for a minute, my colleague mr. womak asked pertinent questions. anyone who pats himself on the back for a $6 million deficit knows that is not an achievement that is going to create the fiscal responsibility this country needs to get back to. we now have revenue coming in over our 40-year average into this government. i believe we have more revenue coming in dollarwise than any time in american history. we are running the sixth largest deficit in history only because the last five were the five
largest, were larger, all within this current administration. cbo projects another $1.5 trillion in debt the next ten years. i can't find anyone in my district that want to see us borrow another $6 trillion to $7 trillion. we have president's budget increasing spending beyond that, ai attempting to increases deficits greater and deficits going up attributed to health care costs, affordable health care act, debt and interest, payments. many of our colleagues are tired of sending more money to washington, d.c. they are tired of the constant request of additional taxes that washington can't live within its means. there is $3 trillion in new taxes because of tax increases that occurred in the last couple of years. my question is will the administration, i know we talked about the short term,
congratulations that the administration feels $600 billion is an achievement in a deficit. that's short term. long term will the administration get serious about our long-term debt challenges or does it intend to leave this for the next administration? if so, what are the specific ideas that the administration is going to put forward? >> congressman, i think that you have to look at where we started. we made enormous progress. i have not said that i'm happy that there is a $600 billion deficit. i'm happy we reduced the deficit and on a path towards keeping it coming down so it will shrink as a percentage of gdp. affordable care on net is reducing the deficit not increasing it. the thing that is driving entitlements up, baby booms are retiring and claiming social security and medicare they are entitled to. these are challenging areas. unless somebody wants to say they are going to do something other than pay social security and medicare, the solutions are
very hard. we tried over a number of years to work on a bipartisan budget agreement. the president put his every beth effort into it we are with not able to get an agreement on a bipartisan basis. not the with standing that, we made enormous progress. incrementally doing it on discretionary spending, doing it with the tax bill the beginning of last year. i think that right now, the most urgent thing facing americans is what can we do to promote more growth and more job creation in this economy? what do we do to get construction and housing moving again? i think we have a little bit of time, not decades, but it's not today's crisis to deal with the deficit. i think today for most middle class families, what they want to know is what are we doing to grow the economy? the things we've been talking about in terms of helping small businesses and helping to make job creation more robust is
frankly what we should be paying our current attention to. >> thank you, mr. secretary. thank you, mr. chair. >> thank you. mrs. butler. >> thank you. i have a couple of questions. the first one has to do with debt collection. "the washington post" reported on a couple of weeks ago that the government was seizing state and federal tax refunds that are, i think they were on their way to about 400,000 americans who have relatives who owe money to social security and refunds intercepted never heard of the debt and the debts were as far back as the mid century. it was the farm bill in 2008 that set up the authority to go get back taxes, but i wanted to ask, in my understanding of it, i don't see anywhere where we have given you the authority to offset payments from an individual to pay debts that are
not in his or her name. where did you get that authority? >> so the issue here, treasury's role is really as an agent of other federal agencies. the 2008 form bill did create an authority here. social security administration certified valid claims. treasury executes on those claims. it doesn't create them. the social security administration has said they're changing their policy, so this is not going to be happening going forward. i think the concerns raised are frankly concerns that i share in terms of how some of these issues developed. >> so those folks who had, you now, assets seized on behalf of a debt that his or her father had before they perhaps even perished when they war a kid, is that money going to be returned
then or how do you move forward with that? >> i'm not aware of how social security is handling retro actively. i'm happy to look up on that and get back to you. >> i find it concerning with your direction or under your permission a federal agent would see fit to read what is beyond the law saying you can go back appropriately when people owe money to get it, but take it a step beyond and say we'll get it from your kids and grandkids without them having been permission in the law. >> just to be clear, the specific collection item is not something the treasury exercised judgment over or would exercise judgment over. i'm not the right person to answer some of the questions how the climb was determined.
once a claim is certified by a serial agent system. >> you do the collection? >> it triggers a responsibility, yes. it's not an independent action. >> i understand it's not independent, but if you're the one taking the money then there is some shared responsibility for ensuring you're taking it appropriately, no? >> i think we all collectively have the responsibility we do business in a way we are comfortable with. >> and abides by the law. >> different direct lines of responsibility. that's why i'm not the right person to answer some of these questions. >> switching gears. treasury inspection general announced an investigation from october of 2010 to december 2012. more than 2,800 employees with
recent subantated issued received $2.8 billion in bonus awards. more than 1,100 irs employees with substantiated federal compliance problems received more than $1 million in cash awards with more than 10,000 hours in time off. do you believe that poor performance and especially the failure to pay taxes should be rewarded through bonuses to irs employees? >> congresswoman, our position is individuals found to engaged in significant misconduct, including nonpayment of taxes should not be eligible for performance awards during the relevant time period. the irs already had discussions with the union. this is a collective bargaining agreement this bonus program, about the eligibility standards, poor performance awards, and i understand the union agreed to work with the irs to address
this issue. clearly, this has to change. >> any chance you are going to go back and collect that money paid if you believe it shouldn't have been given? >> let's first make the policy going forward, then we can look at questions whether or not there is any retro activity to it. the most important thing is -- these bonuses were for several years ago. the question is what happens with future bonuses and this will govern that. we've already changed the policy for things discretionary bonuses at executive levels that performed with this kind of performance and misconduct are taking into consideration. now will be taken into consideration for all bonuses. >> thank you. yield back. >> one thought, mr. secretary. someone mentioned the fsoc. i would just leave you with one of the concerns i hear from time to time that there are complex
issues that are dealt with fsoc that would would argue, other regulators didn't have the expertise in those areas, so i just want to share that concern that you not reinvent the wheel and duplicate regulatory aspects. that is something we heard from time to time. thank you very much for being here today, working with us to reschedule this hiring, being here under less than ideal circumstances. want to thank the members for their interest and their attendance today. so with that, the meeting is adjourned. >> thank you, mr. chair. >> center public and say they will block action on the minimum that will raise the minimum wage to $10.10 an hour
over 30 months. the procedural vote is expected at noon eastern. senator john thune spoke about it on the senate floor tuesday. here is a look. >> i come to the floor today to discuss the proposed minimum wage hike and the job that will cost americans. with more than 10 million americans unemployed, the last thing that this body should be legislationsidering that would jeopardize jobs. yet this week we are back in session with another one of democratic election-year gimmick. a 41% election -- minimum wage hike. resultstimated it would in the loss of one million jobs in this country. minimum wage hikes are a favorite democratic proposal when election-year prospects are dim. hiking wages sound good and democrats figure it is a surefire way to appeal to
americans. the truth is, when the consequences of the hike is explained to them, americans do not want that. americans want jobs and a minimum wage hike during a weak economic recovery would not result in job gains. it would result in job losses. it is simple. when you make something more expensive, people can afford less of it every when you drive up the cost of hiring, workers, employers cannot afford to as high as many of them. especially when you consider minimum wage owners are often small business owners. democrats are proposing a 40% hike in an economy where job growth is weak. a massive minimum wage hike under the worst possible conditions. surprise no one that the congressional budget office has estimated this would cost up to one million jobs. who would be hurt most by these lost jobs? women, for one.
the congressional budget office estimates that 57% of the roughly 500,000 jobs that would be lost by the end of 2016 thanks to this bill would be jobs held by women. young people would also be hit particularly hard. our economy's overall unemployment rate is not good, but the rate for 16-24-year-olds is even worse. more than twice the national average. the unemployment rate for african-americans from 16-24 is worth than that. -- worse than that. 23.4%. almost four times the national average. anthony davis estimates that the proposed minimum wage increase would hike unemployment for those under 25 years old without a high school diploma by seven bank--- 7%-10%. so if you are under 25 without a
diploma, the unemployment rate which is already staggeringly high could go up by 10% according to a duquesne university economist. would harm wage hike the lowest skilled worker. in other words, the people it is supposed to help. when businesses are faced with the reality of higher employment cost from a minimum wage hike, who are they going to let go? low-skilled workers. the same workers who are most likely to be making the minimum wage. in a march 2014 survey of businesses employing minimum wage workers, 38% reported they would have to let some employees go to cover the cost of the hike, while 50 for present -- 54% reported they would reduce hiring. south dakota business owners told me the same thing at a recent roundtable. multiple business owners told me that they would stop hiring younger, less experienced
workers and would reduce the hours of their current employees. others spoke of the devastating impact the cost would have on their businesses. one gentleman who employs 30 workers at a dairy queen in south dakota told me that a three dollar increase in the minimum wage would cost his business and additional $100,000 a year during -- a year. that is a huge amount for a small business in a rural area of south dakota. this, this owner, like so many other owners around the country, will be forced to hike prices on the products he offer. that will affect families across the country. middle-class families have already seen their incomes fall by almost $3500 on this president's watch. the congressional agenda office makes it clear that a minimum wage hike means their purchasing
mr. president, the evidence is clear. minimum wage hikes cost jobs. a strong majority of americans reject the hikes. but democrats have a habit of ignoring the evidence and the american people. take obamacare. democrats jammed the bill through congress over the objections of the american people. despite plenty of evidence to suggest it would not work. their liberal fantasy of government run health care, they ignored the evidence to the contrary and forced the bill through. the american people are suffering as a result. you have canceled health care plans. lost of doctors and hospitals. higher prices, fewer choices. the list goes on and on. last small business
survey reported that businesses now rank health care as their number one concern. more than 60% of them now say the long-term impacts of the affordable care act will be negative on their business. thater article reported health insurers are preparing to raise rates for plans issued under the affordable care act. that is from a weekend article. another article from the hell -- hill. democrats regard obamacare as a four letter word. that obamacare has failed, but instead of trying to replace the law, they are trying to distract with more that policies that make it harder to create jobs. american families are hurting.
they need jobs. steady, good paying jobs. democrats are ignoring this priority in favor of pet objects that pander to their political base. there is a clear contrast developing in the senate. democrats are offering distractions, republicans are offering proposals. the bill to force approval of the keystone pipeline and the 42,000 jobs that the president's state department says it would support. proposal toollins's amend me work week provision that is causing employees to cut hours. to repealsal obamacare's tax on medical a text that has damaged
tens of thousands of jobs. so fewerment to -- regulations emerge from the administration. mcconnell'd bill parents more flexibility so they can make it to soccer dance recitals. center rubio's -- senator rubio's bill. my own bill to help long-term unemploymed workers. >> the time has expired. oughtse are the things we to be focused on, mr. president. i hope we will start. and start grading jobs and opportunities for the american people. >> tonight on c-span, joint
house foreign affairs subcommittees examine relations. and in the 65th anniversary of the importance of transatlantic relationships. secretary jack lew testifies about sanctions against russia and the economy. the inspectors general from homeland security cia, and leading upartment -- to the boston marathon bombings. wednesday morning, they appear before the homeland security committee. live at 10:00 eastern. i know you give me grief from time to time, but we work around the clock trying to help you do your job. [laughter] what other administration would make thousands of memos and
documents available for your enjoyment? is is just a representative sample. you will have the mall tomorrow. [laughter] here is a memo. leon, fyi. maxwell house coffee is on sale this weekend. ar $10,000, you can have private meeting with vice president gore to discuss investing -- reinventing government. for $20,000, you don't have to go. [applause] [laughter] >> rosie o'donnell was the first choice. she withdrew. citing a nasty and brutal confirmation process. [applause] i was in even the second choice. dennis miller was the second choice. he got hung out by an illegal many technicality -- nanny technicality.
but isn't that what confirmation is about? weeding now the qualified to get to the available? >> what's the correspondents dinner saturday night. an audience of celebrities, journalists, and the press corps. night on c-span. state department officials testify before a subcommittee about russian intervention in ukraine and u.s. nuclear arms negotiations. this is one hour and 20 minutes. >> the subcommittees will come to order. without objection, all members may have five days to submit statements. questions, extraneous materials for the record. and subject to the length of limitation in the rules. in a matter of weeks, putin and
his commandos stole crimea. now he's on to eastern ukraine. i and other members of congress were in ukraine last week and the people were rightfully concerned about putin's next move into their nation. according to press reports this morning, secretary kerry said that we now have intelligence revealing that operatives in ukraine are taking orders directly from moscow. secretary kerry also said some of the same russian operatives from crimea and georgia have shown up in eastern ukraine. when i went to eastern ukraine, one of the officials gave me a wanted poster for what he called russian saab tours. it is in ukrainian and he's on the screen. i'll hold this up. this is a copy of the wanted poster and he was willing to pay
out of his own money for russian equipment that had been -- if it was confiscated by ukrainians, everything from machine guns, rifles, to anybody that's occupying one of the ukrainian buildings without permission. he's willing to offer rewards for that. so i thought that was quite interesting, that they are concerned about the insurgents in his own part of the state. i believe these actions should -- we should understand that we have to re-evaluate our agreements with the russians because of their failure to abide by international law, in that they have entered crimea, ukraine and even other baltic states are concerned and so reflected that in conversations with them.
in my opinion the russians are not our allies, or friends, and we certainly can't take them for their word. exhibit a is the intermediate range nuclear forces treaty, i.n.f. this treaty between the united states and russia places limits on ground-launched ballistic and cruise missiles with ranges between 500 and 5,500 kilometers. the united states has held up our agreement in the treaty. it appears the russians have not. according to press reports, it appears the russians have tested a ground launch cruise missile from an operational launcher. the russians have responded, this is a sea-based missile which does not fall under the treaty. there's no way to know if it's a sea-based missile until it's deployed but even so, if it was a sea-based missile and the russians tested on land using an operational launcher, it's in violation of the treaty. either way the russians are violating this treaty. according to press reports, the administration knew about the violation back in 2008. six years later the state department says, the violation is still under review and is not officially classified as a
violation or not. time for the state department to pick a horse and ride it. either it's a violation or it's not a violation. i've introduced h.con.res. 94 with representative rogers and joe heck calling the russians out for their violation, and the administration for its refusal to tell it like it is. we had hoped that a formal determination would be in this year's arms control compliance report but the report itself due in april is already late. apparently the state department needs more time to figure out what the rest of us already believe. the russians do not have to worry about violations as much as the new start treaty. during negotiations they gutted the verifications that were in the old treaty. the most significant changes were the elimination of verification measures for some icbm's and reduction of total number of inspections. when the senate was debating approval in 2010, critics argued the treaty was nonsensical because the russians were already at or below the required levels or we had delivery vehicles that were way above these new levels.
just like the critics warned, russians have undergone modernization, all without violating the new treaty. we had a reason to be suspicious of the russians and we have more reasons today. the fact is russians willing to treat these treaties is less than binding when it suits them. that's not how treaties are supposed to work. despite this, the administration has pledged to seek deeper cuts in nuclear arms. in june, 2013, the president called for the reduction of our deployed strategic nuclear weapons by up to 1/3. my personal opinion is this would be dangerous and is misguided based on the information we have about the russians. fortunately putin may have saved us from ourselves. the russians have, quote, no apparent interest in further arms reductions before 2017, according to numerous arms control experts.
the united states should not continue to seek agreements with the russians when they either cheat or show no interest in those agreements. i don't think -- it's not now the time to be kowtowing to putin and i will now turn to the ranking member from california for his opening statement, mr. sherman, for five minutes. the gentleman from massachusetts, mr. keating, is recognized for five minutes. >> i thank the chairman for allowing me to attend a meeting where my presence is required for a quorum. and i thank chairman poe and chairman rohrabacher for convening this important hearing. i'd like to begin thanking the people appearing today. both witnesses have extensive experience on russia and on european security interests. i'm looking forward to hearing their assessments of the long-term strategic implication of russia's illegal invasion of crimea, its subsequent efforts to destabilize ukraine's interim government, and other matters.
despite its april 17 pledge to help de-escalate the crisis in ukraine, russia has done exactly the opposite. the role that russian special forces have played is indisputable, in supporting so-called separatist coordinated armed attacks on government buildings and in orchestrating kidnaps and violence against local politicians, reporters and even monitors. this information campaign has only made matters worse. russian forces use the masked warfare and other covert attacks seen to signal a strategic shift in its approach to the region and to european security. it's essential that the united states and nato allies respond. i welcome the administration's decision yesterday to impose a third round of sanctions on individuals and entities closely linked to the russian leadership's inner circle. i also welcome the decision to impose export restrictions on 13 russian companies and the
additional restrictive measures on defense exports. the goal of these targeted sanctions is to send a clear signal that russian aggression against ukraine comes at a price. i share the president's hope that these measures will persuade president putin to reverse course. unfortunately i'm not optimistic that the steps taken today will be sufficient. i therefore fully support the administration's readiness to impose additional penalties if russia continues to press forward, including targeted sanctions against specific sectors of the russian economy. as the united states moves forward, it's imperative that we do so in a coordinated effort with our european allies. i applaud today's announcement of further e.u. sanctions on russia. i look forward to hearing from mr. hartley about the status of the administration's ongoing discussions with the e.u. as well as plans within nato to counter russian aggression and reassure our central european and baltic allies.
i also look forward to hearing from ms. friedt about the status of existing arms and existing control agreements between the united states and russia. while further arms control reductions seem unlikely in the current environment, i'm relieved that the united states and russia have continued to implement the new start agreement, included by exchanging notifications and conducting onsite inspections. these exchanges provide much-needed stability and predictability at a time of increasing mistrust and uncertainty. i also support the administration's efforts to work through i.n.f. treaties compliance review mechanisms to address concerns that russian activities may be inconsistent with its treaty obligations. i strongly support the administration's decisions to cut off defense cooperation with russia. i've consistently called on our european allies to follow suit and to exercise similar scrutiny with respect to defense exports to russia. however, we're when it comes to
nuclear security, the stakes are much too high to break off communication. continued implementation of our arms control agreements with russia is essential, especially given the unprecedented and unpredictable nature of the crisis in ukraine. the last thing we need is another nuclear arms race in europe. with that i thank you and yield back the balance of my time. >> the gentleman yields back his time. i now will turn to the chairman of the europe, eurasia and emerging threats security committee, mr. rohrabacher from california, for five minutes. >> thank you very much, chairman poe, for calling this hearing and -- which we are -- is jointly being held in your terrorism, nonproliferation and trade subcommittee and the subcommittee which i chair of europe, eurasia and emerging threats. during the 1980's i had the honor of working with and for president ronald reagan.
through his leadership and strength, the united states brought about the collapse of the evil empire, the soviet union. i would add that there are many people who i worked with during that time period who can't seem to get over that the cold war is over and are still treating the current russian government as if it was the soviet government. we are thankful however that the world no longer lives in fear of annihilation and no longer lives with a soviet union that is controlled by a diabolical philosophy of marxism, leninism which motivated people to attempt to put on the world a marxist, an atheistic dictatorship in the name of perfecting human kind. we are thankful that that world has been changed and that
reality no longer is present and that we no longer live in fear of annihilation between -- of a nuclear exchange between those motivated by this evil theory of marxism, leninism, communism and the people of the free world. one of reagan's greatest accomplishments was negotiating and signing the intermediate range nuclear forces treaty which banned two entire categories of horrific weapons. i look forward to this hearing today from witnesses about the current efforts to maintain and verify the provisions of that agreement. i look forward in the future to be discussing with my colleagues some of the fundamental information that they have gleaned from their visits to ukraine and other places and to have a broader discussion of the nature of the government in
russia today and the threat that it poses or does not pose to the free world as compared to what it was like when i worked for ronald reagan in the 1980's. i also want to speak about another power, however, which i think we shouldn't, when we're discussing this issue, mr. chairman, we should not lose sight that we're not just talking about russia and the united states. we are talking about other nuclear weapons and other countries in relationship to what we're doing with the russians. and that is what's communist china doing and what are we doing with russia and other countries that relate to this very issue of strategic weapons with communist china? i fear that by continuing to focus our arms control efforts
only on russia, while excluding china, we are making a grave miscalculation. our negotiations with russia dictate our nuclear posture and define our military capabilities. it should be a major concern that china is not included in these limits. including caps set by the new strategic arms limitation treaty signed in 2010. over the past two decades, the people's liberation army, the armed wing of the communist party of china, i might add, has engaged in a massive arms buildup. the capability has increased in every area. it is illogical to believe that china's strategic forces and their nuclear stockpile have not also likewise been expanded and improved. the united states-china economic security review commission stated in 2012, the p.l.a. continues to modernize and expand its nuclear stockpile.
china is now on the cusp of obtaining a credible nuclear triad of land-based, intercontinental ballistic missiles and submarine-launched ballistic missiles and air dropped nuclear bombs. end of quote. we also know, thanks to the research by dr. phillip garber of georgetown university, that china has built some 3,000 miles of underground tunnels to store and to transport their nuclear missiles and war heads. this secret effort by the chinese military is so massive it is known as the underground great wall. beyond this incredible infrastructure, china is also researching hypersonic missiles, icbm's, with maneuvering war heads which can outmaneuver our defensive systems. communist china must be included in any discussion of arms control.
and if we focus only on russia, we are doing a great disservice to the security of our country. addressing concerns and priorities with russia does remain important and the things that are being said today need to be taken into consideration. ignoring china's strategic weapons is not an option and will lead us to a much more dangerous world. they must be part of this discussion today and hopefully in the weeks ahead. thank you, mr. chairman. >> the chair recognizes the ranking member from the terrorism subcommittee, mr. sherman from california. for five minutes. >> if you watch american television you'd think with foreign policies as simple as a cheap western. some people are in white hats, some cowboys are in black hats. if you watch russian television, you come to the same conclusion, only the hat colors have been changed. if you review what has happened, you see that this is far more
complicated. a pro-russian president was elected in legitimate elections in the ukraine. that legitimately elected president broke his promises, turned his policy on a fundamental issue. democrat elected presidents have been known to do that. he was swept from power by an insurrection. those occupied and it is considered a criminal act to use armed forces, organized government armed forces to dislodge them. now the government that has taken over in kiev is using armed government forces to dislodge eastern ukrainian occupiers of various government buildings. throughout foreign policy we're faced with the tension between territorial integrity and self-determination.
those were the two greatest wars fought on our territory. our fight for self-determination from the british and our fight for our territorial integrity and against the self-determination objectives of the confederate states. we look at crimea as an effort at the self-determination of the russian-speaking majority there as an illegal act. we used our air force to achieve the independence of kosovo which, like the crimea, was an autonomous region within a republic which was a relatively newly independent republic having seceded. so we have been on both sides of territorial integrity and self-determination, both on our territory in the first 150 years of our existence and in eastern europe more recently.
the russians are interfering in the eastern ukraine, our friends in kiev are not without fault. they have adopted a change in law that would strip the russian language of its official status in its southern and eastern provinces. fortunately that law was vetoed. but clearly a parliament and i should point out a parliament in which many of the eastern ukrainian members felt unsafe and did not attend would be allowed to pass such a law, shows that this is not a government dedicated to reaching out to all of its citizens. so we have the simplicity of westerns, we have the reality of foreign policy in eastern europe. it is overly simplistic to say that one side is entirely right and one is entirely wrong.
just as it's even more simplistic to say that everything would go our way if only we had a president with a different personality. we had a president with a radically different personality just a decade ago, when georgia lost not one but two of its autonomous regions to russia. georgia being smaller, the regions being smaller, the issues being smaller. but you can say what you like about our last two presidents, the one thing everybody agrees on is they had different personalities. as to arms control agreements, we've got to trust but verify. ronald reagan entered into agreements with a soviet union that clearly was less trustworthy than putin is today. those who enter into these agreements and rely on trust are fooling themselves. the allegations are twofold.
one, that a russian missile that they call long range was tested at an intermediate range. it seems clear that it is a long range missile. the other is that a midrange missile that the russians say was for sea-based purposes was tested onground, which is allowed, but tested onground with what appears to be a operational, usable ground-based launcher, perhaps one, and i'd like to hear from our witnesses, that was mobile. and so it appears as if they were developing a ground-based capacity for this intermediate missile. finally i will point out that four countries have given up their nuclear weapons or their nuclear programs. south africa, where it worked out well. saddam, gaddafi and the ukraine. two of them lost their lives.
one of them lost the crimea. it may be more difficult in the future for us to convince dictators to give up nuclear weapons. it doesn't always work out well. i yield back. >> without objection, all the witnesses' prepared statements will be made part of the record. and i ask that each witness keep your presentation to no more than five minutes. we are in the middle of votes so we will see how far we can go before we recess for votes and we will resume immediately after the votes. i'll introduce both of the witnesses at this time. ms. anita friedt. verification and compliance at the u.s. department of state. she has earned numerous awards for her work on u.s.-russian-european -- >> mr. chairman, are other members allowed to give opening statements? >> all members have five days to submit statements because we have votes and two
subcommittees. they can make their comments during their questioning if they wish. mr. brent hartley. he has extensive experience in european security issues and has served in various roles related to arms control, counterterrorism and nato and more. ms. friedt, we'll start with you. you have five minutes. >> thank you, mr. chairman. chairman poe, chairman rohrabacher, ranking members sherman and keating, and members of this committee, i am grateful for the opportunity to speak to you today about the administration's arms control policy toward russia. today i want to speak to you about three things. one, why arms control agreements with russia continue to be an important tool to enhance the security of the united states, our allies and partners. two, how we have used arms control tools since the crisis in ukraine began to increase transparency and stability in
support of our broader regional efforts. and, three, the seriousness with which the administration takes compliance and arms control treaties. first, as it has been recognized for over four decades, arms control is a tool that can be used to enhance the security of the united states, our allies and our partners. the obama administration has continued the long standing bipartisan approach to arms control with russia that had its origins in the days of the cold war. the administrations of presidents ronald reagan, george h.w. bush were the architects of many of our most successful and enduring arms control efforts. let me affirm that the united states is committed to maintaining strategic stability between the united states and russia and to encouraging mutual steps to foster a more stable, resilient, predictable and transparent security relationship. that said, russia's illegal
actions in ukraine have undermined trust. while diplomacy between the united states and russia continues, no one can ignore that russia's actions in ukraine have violated the very principles upon which cooperation is built. further, as we consider arms control priorities this year, or in any year, we will continue to consult closely with our allies and partners every step of the way. our security and defense, as well as that of our allies and partners, is nonnegotiable. we will only pursue arms control agreements that advance our national interest. during the cold war, washington and moscow found it in our mutual interest to work together to cap and then to begin reducing the number of nuclear weapons in service in reversing the nuclear arms race and improving mutual security and stability. we judged that the new start treaty was in the united state'' national security interest for the same reasons and that is why we continue to implement the new start treaty with russia today.
we are now in the fourth year of implementation and despite the crisis in ukraine, we and russia continue to implement the treaty in a businesslike manner. since entry into force in 2011, the united states has inspected with boots on the ground russian nuclear weapons facilities 58 times. these inspections are the part of new start treaty verification regime which is a vital tool in ensuring transparency and predictability between the world's largest powers. in the realm of conventional arms control, the united states and our allies have been using arms control mechanism in an effort to promote stability in europe, provide transparency and russia's provocative actions, and ensure our allies and partners. i want to underscore that our nato allies and other partners in europe strongly support arms control in europe as well as our active participation and leadership in those efforts. since the ukraine crisis began,
the united states and our treaty partners have used the open skies treaty to fly 11 missions over ukraine and western russia, yielding imagery of thousands of square miles of territory. these flights have resulted in valuable data and insights not only for the united states but our partners and allies as well. we also have confidence building measures in the vienna document to conduct inspections. let me now turn to the issue of compliance. first and foremost, the administration takes compliance with all arms control agreements extremely seriously. for this reason, this administration worked hard to produce compliance report in 2010. the first compliance report delivered to the congress since 2005. and we have produced one every year since. we endeavor every year to produce a compliance report by april 15. this is admittedly challenging given the volume of information,
the multiple agencies that must comment on it and the seriousness with which the administration conducts its annual compliance review. despite this, we plan to have the report fully coordinated and available later in the spring. as we've previously stated, we have concerns about russian compliance with the i.n.f. treaty. we have raised these concerns with russia and are pressing for clear answers in an effort to resolve these concerns because of the importance of the i.n.f. treaty to euro atlantic security. we've briefed our nato allies on our concerns and will continue to coordinate with them on this and other matters that affect our common security. we've kept congress informed on these matters and will continue to do so. we will continue to work with russia to resolve our concerns and to encourage mutual steps to help foster a more stable, resilient, transparent security relationship. we're not going to drop the issue until our concerns have been addressed.
let me conclude by reiterating our strong belief that arms control treaties and agreements continue to be an important tool that can enhance the security of the united states and our friends and allies. the successful implementation of the new start treaty and the important contributions that open skies treaty and the vienna document have played recently in ukraine demonstrate the continued relevance of arms control for our national security. thank you very much. i look forward to your questions. >> thank you. mr. hartley, we just have a few minutes left in the voting process. so we will do your testimony as soon as we come back. we have two votes. after the second vote is concluded we will start immediately after that and we'll hear what you have to say. >> the second meeting will come to order. mr. hartley, have five minutes. >> thank you very much, mr.
chairman. members of the committees, i appreciate very much your inviting me to testify here today on our efforts to reassure allies and partners and to bolster security in ukraine and the region. and i would like to thank the members of both subcommittees or both committees for your engagement on european security in light of the ukraine cry sills. it is important to remember how we got to this point. russia's illegal annexation and occupation of crimea and its continued campaign to undermine and intimidate the government of ukraine have up ended the post-cold war security structure. russia's maintaining a contention of 40,000 troops on ukraine's eastern border and conducting military activities that raise deep concerns. there is strong evidence demonstrating the actions of recent weeks, the road blocks, building seizures, hostage takings and other violent acts in eastern ukraine have not been a spontaneous set of events but
rather a well orchestrated campaign led by russian special services. we strongly condemn the abduction last friday of a german-led vienna document inspection team and their ukrainian escorts by pro-russian separatists. we are deeply disappointed that senior officials in moscow have not condemned the abduction of the team, nor have they demanded the team's immediate release. russia's aggressive actions in ukraine are in violation of international law and do not uphold the letter or the spirit of the april 17 geneva statement. yesterday the united states acted imposing new sanctions on seven russian government officials, including two members of president putin's inner circle. and 17 companies linked to putin's inner circle. these steps demonstrate that the united states is committed to
increasing the costs on russia, as it persists in its efforts to destabilize ukraine and that we will hold russia accountable for its actions. russia's actions have also forced the united states and nato allies to fundamentally re-examine our strategic engagement in europe. my testimony today will focus on three areas of this effort. first, i will talk about efforts to reassure nato's frontline allies and to bolster our other partners in the region. second, i will discuss the organization for security and cooperation in europe's important role in monitoring the security situation and facilitating dialogue in ukraine. third, i will address u.s. bilateral security assistance to ukraine. first, we are pursuing measures through nato and bilaterally to reassure our allies and partners in the region and in particular to demonstrate our solemn commitment to our collective defense responsibilities to our nato allies. we've deployed six additional f-15's to the air policing mission. we've deployed 12 f-16's and other aircraft and personnel for exercises, joint u.s.-polish exercises coordinated by the
u.s. aviation training detachment in poland. nato's deployed awax to provide aerial surveillance over poland and romania, as well as a mine counter measure naval group into the baltic sea. the united states has deployed ships into the black sea for exercises with romania and bulgaria. on april 16, nato allies agreed on additional measures to provide reassurance and demonstrate nato's resolve and solidarity. the u.s. army in europe has deployed over the last week company-sized contingents of paratroopers to poland, latvia, lithuania and estonia for exercises with those host governments' troops. these will be a first in a series of expanded land force training exercises in the region that will take place at least through the end of the year. as we prepare for nato summit in
wales, it will be an opportunity to reassess the alliance's long-term priorities. that along with nato-ukraine relations, questions related to the open door and nato enlargement, afghanistan capabilities and enhancing nato partnerships. we're engaged with other frontline states like georgia and moldova. secondly, we see a vital role for the o.c.e. in this crisis. along with our allies in europe, we are committed to maintaining a large presence of international monitors as part of the special monitoring mission. this mission is positioned to objectively assess the security situation and investigate claims of human rights abuses as well as to assist in de-escalating tensions in eastern ukraine. but for this mission to be properly implemented in accordance with the geneva statement, russia must take active and concrete steps immediately to de-escalate the
crisis, including public and private messages to pro-russian elements engaged in illegal activities in ukraine, as well as active support for the monitoring mission's role. the o.c.e. is also involved in election observation for the may 25 election. the office for democratic institutions and human rights is laying the groundwork for the largest observation mission in its 40-year history, planning to deploy approximately 1,000 observers in the run-up to the election. third, we're working with the ukrainian government to provide security assistance. as vice president biden announced last week, we're providing $8 million in assistance to allow the ukrainian armed forces and border guard service to fulfill core security missions. this is in addition to the $3 million of meals ready to eat, $3.5 million of health and welfare systems to the armed forces and $3 million in other security assistance to ukraine's state border guard service.
looking forward, the united states will continue to reaffirm the security and stability of the region across multiple fronts, using multiple tools at our disposal. in this effort we appreciate congress' bipartisan attention and support for ukraine and for stability across the region. and will continue to work in close coordination with you in all three of these areas. thank you very much and i look forward to your questions. >> thanks for yielding back time. the chair will now recognize the chairman of the subcommittee on europe, eurasia and emerging threats, mr. rohrabacher, for five minutes of questions. >> thank you very much, mr. chairman. as i say, perhaps the focus of this hearing, which we originally thought would be our weapons, nuclear weapons and the relationship between the united states and russia in terms of cooperating on reducing and
restricting the number of nuclear weapons, the threat to human kind, we have gone beyond that and we of course, however, i believe the purpose of that is to put in perspective the decisions we must make in terms of weapons control, after the events that have happened in ukraine. let me just note that from my perspective, there's been too gleeful a response from so many of my former colleagues and i'm not talking about members of the house, i'm talking about people who worked with me over the years in various administrations and various anticommunist causes, there seems to be a gleeful response to what's happened in ukraine because it gives them yet a purpose in going back and beating up the old enemy.
frankly the soviet union was our enemy because it was directed by people with an ideology that was trying to supplant the rest of the world and doing so in a big way as well as building up their own military. russia is a powerful force in the world which we need to deal with as a major country, a major nation. major countries have their interests. i do not see what's going on in ukraine as as a outcome of the communist ideology but instead you have a very important international power there, russia, that is governed by someone who is looking out for its national interests and who that leadership of that country obviously believes that what was going on in ukraine was contrary
to their national interests and that they were not being treated fairly in a way in which a pro-russian leader was removed from office by street violence rather than by elections, which was going to result in their losing -- what they had was access to crimea and a port for their fleet. that said, i'd like to go back to the original purpose that we came here today, to talk about arms control and how that will be impacted by this new shift in our relations with russia and i say that no matter what i should have said the bottom line is, it is in recognition that we are now not in as positive a relationship or neutral relationship that we are in two years ago with russia. we were in fact -- things -- our
relationship with russia has the deteriorated. whose fault that is, and does the russian government with putin have all the blame or do we share some of it, or was there a power grab by the e.u., that's something to discuss but the fact is we know that relationship has deteriorated. what i would like to ask the panel is, does this mean that what we negotiated with, and i'm very proud of what ronald reagan accomplished in eliminating a whole classification of nuclear weapons and brought down the number of nuclear weapon this is a threaten the world, does that mean we can no longer work with russia in this area? should we postpone our efforts or pull back from cooperation with the current russian government on those issues? should we then also pull back
from economic cooperation, should we declare the space program that we are partners with russia, now to be not something that we believe we can count on and thus we should go the opposite direction? what about that? should -- what are the implications for arms control, what are the implications for cooperating in other areas of russia and the whole ukrainian situation? >> thank you, mr. chairman. i'll be pleased to answer that question. first of all, i would say that this administration has made it very clear that it is important to continue to cooperate with russia where we can, where our national security interests coincide, but then when we disagree, we disagree and we make our disagreements very clear. so there's no question that it is in our national security interest to continue to work with russia and international partners in multilateral efforts
that are key to global security. such efforts as elimination of syria's chemical weapons, for example. our work together on iran. and i would add also our work together in the arms control field that means continued implementation of -- >> so you're not advocating, the administration and what you're suggesting today a good policy would be not to punish russia in those areas. for what they're doing in the ukraine? i would not say punish. we have a very clear position on the events of ukraine -- >> so we should not let cooperation be a tool then. mr. hartley, could you answer that? i've already taken too much time, i'm sorry. >> yes, sir, thank you for that question. as anita said, we -- terror areas where both we and the russians perceive our national
interests to coincide and anita outlined a number of them. one area where we now have a profound difference is over what the -- what the post-cold war european security environment should be, what the ground rules are. coming out of the cold war we had, we thought, some very clear rules based on the helsinki final act of 1975 and other agreements that european borders would not be chamed by force. the russians have undertaken to do that with regard to crimea. we believe that they are actively involved using their special forces and other agents to destabilize eastern ukraine and it's for that reason, because of this behavior contrary -- >> thank you very much. mr. chairman, again, as we discuss this, china is still in the world and in the picture and i would hope that as we look, as
we work these problems out, that we keep in mind that china has to be part of the equation or the world will be less secure. thank you very much, mr. chairman. >> i thank the gentleman. i recognize the ranking member of the subcommittee from california, mr. sherman, for five minutes. >> this has intock some extent a ukraine hearing and we are honored by the pence of the deputy assistant secretary from the relevant bureau. mr. hartley, has the ukrainian government been successful in disarming anti-russia militias? >> thank you, sir, for that question. my expertise falls more on the nato, the o.c.e. and bilateral security assistance side. it is my impression that they've made some progress there but i
would be happy to take that question for more authoritative response. >> while you take that question, the other question is what are we doing to urge the government in kiev to honor and even make less subject to alteration statutes adopted in the past to assure the russian language would be an official language in the south and east of ukraine? what are we doing to say, yes, there may be forces, political forces in kiev that say let's impose the ukrainian language on everyone, and there may be forces on the other side. i for one understand america's spending its treasure and taking riskers in territorial integrity of the ukraine. i'm an ags no i -- agnostic as
to what lang watch -- language should be spoken in the east and i would hate to think we find ourselves exposed to risk and cost because the noncompromising elements reprail in kiev on these issues. ms. freed, what -- has russia put forward any argument this is a we are in violation of any of the arms control agreeps we've entered into with russia or its predecessor government? >> thank you for that question, sir. yes, as a matter of fact, russia, when we issue our annual compliant report every year, the russians regularly hi come back with some -- >> so they have their own compliance report which may even be issued on time. sorry about that. sorry. go ahead. and what do you think is their strongest complaint? >> strongest complaint, the one i would say, i can't give you
all their complaints right new because i haven't looked at them recently but certainly our missile defenses is what they focus on. >> and which treaty do they believe the missile defense efforts are in violation of? >> well it would be more than likely the i.n.f. treaty. >> ok. now as -- i'm trying to understand what is the legal obligation of russia with troord interimmediate yalt missile this is a they claim will be used only in naval warfare. as i understand it, they're allowed to test these missiles from a ground-based launcher but not if that ground-based launcher would be the effective launcher to use in case hostilities broke out. what are they allowed to do on
land in order to test weapons that they say are exclusively for naval use? >> sir, quite -- thank you for your question. i'm not prepared right now to go into technical details, the focus -- >> i'm asking what the treaty provides. i'm asking for you to just inform us what the treaty provides. what is the -- what is the united states allowed to do? i'm not asking for a secret here. >> not at all a secret, but let me just briefly state that as i mentioned before we have very serious concerns and as you have stated that russia is developing a ground launched cruise missile that's inconsistent with the i.n.f. treaty and we have made those concern clears to the russians. >> i am hoping you would make them clear to us. is the mere testing of -- mr. hartley, i don't know if you have a comment on this but is the mere testing of this missile
a violation if they can claim that they only plan to deploy it on ships? >> sir, that would go into the specific range and such that it is tested. >> it's being tested for -- it's an intermediate range missile. the question is, is it a naval intermediate range missile or are they creating a ground-based missile? >> i can't get into details here on that topic, i'd be happy to talk -- >> the details i want are, what are the provisions of the treaty but my time has more than expired, thank you for your time. >> thank the gentleman. mrs. friedt it's taken five years for the state department to reach a verdict on this treaty in my opinion. my question is, are the russians, in our point of view, in violation of the treaty? i see one of only three answers.
yes, no, or you don't know. which one of those is the answer? >> sir we're in the process of finalizing the annual compliance report and we'll have a finding shortly. >> so you can't tell me whether it's yes or no you don't know? >> i can't at this point. >> when will you have this report ready? it's like the ranking member said, it's overdue. >> sir -- >> five years it's take ton get a report here, either they're in compliance or they're not. we've got to make foreign policy decisions and we don't know if the russians are cheating or not. when are we going to get a verdict on the are eport? >> we report on this issue every year on the i.n.f. treaty and at this point, as the annual compliance report is in the process -- >> when will it be finalized? >> later this spring. >> you don't know. each of you have said that the actions by putin are illegal.
you've seen there's some disagreement here as to whether russia can to what they're doing internationally or not. why is the action of russia going into crimea and now eastern europe -- ukraine, illegal in the united states' point of view? you both said it was illegal, so why is it illegal? >> yes, sir. thank you for that question. the -- by undertaking the actions they did, the russians have violated their commitments under the u.n. charter. that's from a legal standpoint from a political standpoint, they've violated -- well, they have broken commitments made under the 1994 budapest memorandum as well as the commitments thurnt ehelsinki final act, among others. >> ms. friedt, do you have any other comments other than what
mr. hartley has said on why the action is illegal? >> no, sir, i think mr. hartley is -- has answered the question. >> when i was in ukraine, in recent weeks, talked to other heads of state in the areas, they're not the only country that's concerned about their territorial integrity. mull doe va, other form -- moldova, other former soviet republics, not yet in nato and some that are in nato, are there concerns warranted? mr. hartley? >> yes, sir, if i may, the -- of course >> i'm talking about concerns of russia coming in and taking over their territory. >> yes, sir. the actions of the russians have undertaken with regard to crimea and what they're doing in eastern ukraine gives deep cause for concern.
on the part of those nations. any couldn't that ry that has a russian minority or russian-speaking minority, at least according to mr. putin in his april 18 speech, according to mr. putin's public statements is -- would seem at risk of being at risk of russian intervention. >> the ukrainian government on the interest of russians in the east, there's no definition as to what a russian is. is it a russian that was born in russia? is it a russian that's moved to eastern ukraine? is it a russian who wants to be russian? there's no definition as to what a russian is. do we have a definition of what a russian is in the eastern part of the ukraine? >> i don't know that we do, sir. >> it means different things to different people. >> that's true. and mr. putin defines it as a
native russian or russian speaker. >> the elections in ukraine are coming up on may 26, i believe. i think it's important for stability in ukraine that they have these elections. that they are fair, people vote. do you see, i'm asking you to do you see, i'm asking you to look 26 days in the future. do you see that the russians may cause a disturbance a crisis to try to postpone these elections? it seems like to me, if they cause a crisis, they want to solve a crisis by moving in their troops. are we expecting a possible crisis to try to get these leches postponed? -- these elections postponed? >> thank you for that. i would be hesitant to speculate