tv Key Capitol Hill Hearings CSPAN December 19, 2013 9:00am-11:01am EST
being done by congress. what kind of harm to you think is intended every day americans by the supreme court? >> well, i think the supreme court has done lasting damage to the system of democracy. this supreme court the quakes money with free speech. now let's think about that. you actually believe that washington and jefferson were sitting around the table one day, and jefferson says, you know, george, i have twice as much money as you. therefore, i should have twice as much free speech as you. i can't fathom that. that this supreme court has been very, very, very fond of and accommodating to corporate america. they've done lasting damage to the system. under their rules you can hardly regulate the flow of money in
the political system. it's difficult to see a way without a constitutional change. and so they've done lasting damage to it, and i hope that we will see some change. do i think that's going to happen? i'm not going to bet the ranch on it. [inaudible] i'm executive director of great teaching llc. in an era where it seems, it would seem that union membership would grow very fast, it's not. what's the mentality out there that is holding them back? and how do you intend on battling at? >> first of all, you don't have to take my word for this. international groups study these things and they think that the labor laws in this country are
woeful. you have a significant intimidation, and i'll tell you what happens. not just one comment are between 25-30,000 workers who get fired illegally each year for trying to organize. so think about this. you're in a job, tough economy, there aren't many jobs out there. you want to organize because your employer, for whatever reason, you think you're not getting enough benefits, money, bad working conditions, whatever you want to organize, come together so you have a voice. and i want to get back to the positive reasons to organize, not just the negatives. and they called you into a meeting. you have to sit in a room like this and i get to tell you what i'm going to do if you organize. but i'm going to move this plant -- this plant could move to china if you organize it and then they fire a couple of people. a couple of the ringleaders. they put a couple of heads up on the wall and everybody goes,
these guys are serious. >> tell us some positive reasons. >> the positive reasons is, if you look at institutions that have really empowered workers by giving them more say on the job, those systems are longest lasting and most effective when there's a union there. because when you come together, wind employer, group of people come together, if you're of relatively equal power, then you make better decisions. i used this example to prove that. my kid comes to me when he was three years old. he says, i want a bicycle. i say no, and i walked off. what's my kids resources? he has no power. now, the same day my wife comes to business i want a new car. and i said, let's sit down and talk about this. [laughter] i like to think where of relatively equal power. i'm probably exaggerating my position. but that's what happens.
you make better decisions when you're of relatively equal power, and a union gives that to workers so that been you can do systems. look at what ford has done. look at what harley has been. look at a number of -- in the coal industry. i joined together with a guy in alabama. you would never believe it, and we put together a system that empowered workers. productivity went up. health and safety increased the number of injuries went down. we were in high cotton. that's one of the great reasons for having a union there. it allows your workers to actually come to you and achieve their fullest power and folders capability. >> we are getting the hook but i will sneak in one more twitter company. what does it mean that three industry unions have come out against tpp, will be afl-cio
follow suit and when will you decide? >> well, you know, it's not done yet so i want to look at what is in there. look, everybody knows that the nafta model hasn't worked. most economists now, the vast majority are out, 80% say that the nafta model has lowered wages for middle-class workers. so if it is lowering wages where to look at a different model. tpp is geared to that same model. can it be a naked? can it be changed? can we get a different type of system in a different model? i hope so. [inaudible] spent if it's modeled after nafta, it a failed model so yes, we will oppose. i hope for the sake of the country that change and hope for the sake of america's workers that we actually get it right for a change. spent as we say goodbye, you have one other problem your the steelers are six and eight. spent you have to remind of
that. breaking my heart. they are getting like me. i was out hunting and a look at the sun. the sun was setting but it was just above the mountain, below the trees that i thought me and that sun might have a lot in common. the same with the steelers. they might have a lot in common with that setting sun. i think they need to change systems and come together. they had a bit of bad luck, a battle of interest. but i've got to tell you this. if they were zero and 12, i'm still a steelers fan. >> we would like to thank our c-span viewers and listeners. everyone out of live stream lead. want to thank bank of america, your colleagues for this fantastic series. thank all of you for coming out right before the holidays. thank our political colleagues. merrie crispus, happy holidays, see you in the new year for our more "playbook breakfast" and we thank president trumka for a
live coverage on the wilson center at 10 a.m. eastern on c-span. later in the day, a conversation about where the funding is coming from for the syrian opposition forces. that's live from the brookings institution at 2 p.m. eastern also on c-span. >> at his last scheduled news conference, federal reserve chairman ben bernanke explained the central bank's decision to start reducing its economic stimulus program known as quantitative easing. he spoke after meeting of the fed's open market committee. president obama has named janet yellen to replace the outgoing chairman. >> good afternoon.
the federal open market committee concluded a two-day meeting earlier today. as you already know from our statement, the committee decided starting next month tomatoes reduce the pace at which it is increasing the size of the federal reserve's balance sheet. the committee also clarified its guidance on interest rates, on interest rates, emphasizing that the on interest rates come into something that occurred near zero range for the federal funds rate target likely will remain a appropriate well past the time that the unemployment rate declines below 6.5% especially if projected inflation continues to run below the committees to present longer-run goal. today's policy actions reflect the committee's assessment that the economy is continuing to make progress and that it also is much farther to travel before conditions can be judged normal. notably, despite significant fiscal headwinds the economy has been expanding at a moderate pace and we expect that growth will pick up a somewhat in coming quarters, held by highly a comedy to monitor policy and
waning fiscal drag. the job market is continue to improve with the on the planet right having declined further. at the same time, the recovery clearly is far from complete with unemployment still elevated and with both underemployment and long-term unemployment still major concerns. we've also seen ongoing declines in labor force participation which likely reflect not only longer-term influence such as the agent of the population but also disgorgement on the part of potential workers. inflation has been running below the committees longer-run objective of 2%. the committee recognizes that inflation persistently below its objective could pose risks to economic performance and is monitoring inflation developments carefully for evidence that inflation will move back towards its objective over time. this outlook is broadly consistent with individual economic projections are made in conjunction with this meeting by the 17th fomc participants, five board members and 12 reserve bank presidents. each participants projections are conditioned on his or her
own view of appropriate monetary policy. fomc participants generally expect economic growth to pick up somewhat over the next few years. their projections for increases in gross domestic product have a sensual tennessee of 2.2-2.3 brett upper 201 2013 rising to between 2.8-3.2% next year with similar growth estimates for 2015 and 2016. participants in the unemployment rate which was 7% in november as continuing to decline. the central tendency of the projections as the un-opponent ray falling between 6.3 and 6.6% in the fourth quarter of 2014 and then between 5.3-518% by the final quarter of 2016. meanwhile, participant continue to see inflation running below are 2% objective for a time moving gradually back towards 2% as the economy expands. the central tendency of their
rejection for 2013 is a 3.9 to 1.0% rising to 1.4-1.1.6% for nt year, between 1.7-2.3% in 2016. let me return to our decision to reduce the pace of asset purchases. when we began the asset purchase program in september 2012, we said we were continue purchases until the outlook of the labor market had improved substantially in a context of price stability. since then we've seen meaningful cuba to progress in the labor market. for examples as we began the current perch at the pentagon has added about 2.9 million jobs and the unemployment rate has fallen by more than a percentage point to 7%. for comparison when we started the program, many forecasters saw the unemployment rate remaining at 8% throughout 2014. recent economic back -- that the job market gains will continue. for example, nonfarm payrolls have recently been increasing at a pace of about 200,000 jobs per month and the unemployment rate
has fallen by six-tenths of a percentage point since june. with fiscal restraint likely diminishing with signs of housel spending is picking up, we expect economic growth to be strong enough to support for the job gains. fomc participants now see the risks around their forecast of growth and unemployment as having become more nearly balanced rather than tilted in an unavailable direction as they were at the inception of the asset purchase program. as you know we've been purchasing $85 billion per month in longer-term treasury and agency mortgage-backed securities. starting in january we will be producing $75 billion of secure is a month, reducing purchases of treasuries and mortgage-backed securities i $5 billion each. it's important to note though that even after this reduction we will be expanding our holdings of longer-term securities at a rapid pace. we will also continue to roll over maturing treasury securities and windows principal payments from the federal reserve's holdings, agency debt and agency holding back
securities. our sizable and still increasing holdings will continue to put downward pressure on longer-term interest rates, support mortgage markets and make financial conditions more a comedy if. which in turn should promote further progress in the labor market and help move inflation back towards the committees objective of 2%. our modest reduction in the pace of asset purchases reflects the committees belief that progress towards economic objectives -- objectives will be sustained to incoming data from the support of the committee's outlook for employment and inflation we will likely reduce the pace of security purchases in further measure to steps at the future needs. of course, continued progress is by no means certain. consequently future adjustments to the pace of asset purchases will be delivered and depended on incoming information. asset purchases remain a useful tool that we're prepared to deploy as needed to meet our objectives. with unemployment still well
above its longer run number rate which committee participants estimated to be between 5.2-5.8%, and with inflation continuing to run below the 2% longer-term objective, highly accommodative monetary policy remains appropriate. to emphasize its commitment to provide a high level of monetary accommodation for as long as needed, the fomc today also enhanced its forward guidance. for the past year the committee has said that the current low target rate for the federal funds rate would be appropriate at least as long as the unemployment rate remained above 6.5%. inflation was projected to be no more than half a percentage point above our superset longer bundle, and longer-term inflation expectations remained well anchored. we have emphasized that these numbers are thresholds, not triggers. meaning that crossing a threshold will not lead automatically to an increase in the federal funds rate but would indicate only that it was appropriate for the committee to consider whether the broader economic outlook justified such
an increase. with many fomc participants now projecting the 6.5% under the threshold will be reached by the end of 2014, the committee decided to provide additional information about how it expects policies to evolve after the threshold is crossed. based on its assessment of current conditions in the outlook, which is informed by a range of indicators, including measures of labor market conditions, financial conditions and inflation pressures, the committee now anticipates it will be appropriate to maintain the current federal funds rate target well past the time that the unemployment rate declines to be low 6.5%. especially a projected inflation continues to run below which 2% goal. in part this expedition reflect our assessments based on a conference instead of indicators that goes to the substantial amount of flak in the labor market unemployment rate falls to 6.5%. this continuing job market -- on
the unemployed and underemployed and their families, and reduces our nation's productive capacity weren't in our ongoing highly accommodative policy. but as the last phrase of the enhanced guidance underscores, the prospects for inflation provide another reason to keep policy accommodative. the committee is determined to avoid inflation that is too low as well as inflation that is too high. and get anticipates keeping rates low at least until it sees inflation clearly moving back towards 2% objective. our forward guidance is reflected in committee participants latest projections for the path of the federal funds rate. although the central tendency of the projected unemployment rate for the fourth quarter of next year encompasses 6.5%, 15 of 17 fomc participants do not expect a rate increase before 2015. most see our target for the federal funds rate as rising only modestly in 2015 while three do not see an increase until 2016. for all participants, the median
projection for the federal funds rate is 75 basis points at the end of 2015, and 1.75% at the end of 2016. in summary, reflecting cumulative progress and an improved outlook for the job market, the committee decided today to modestly reduce the monthly pace at which it is adding to the longer-term securities on its balance sheet. if incoming information supports the committee's expectation of further progress towards its objectives, the committee is likely to reduce the pace of monthly purchases in further measure to steps in future meetings. however, the process will be delivered and data depended, asset purchases are not on a preset course. the fomc also provided additional guidance on future short-term interest rates, stating it expects to maintain the federal funds target in its current new zero range well past the time that the unemployment rate falls below 6.5%. especially if projected inflation continues to run below 2%. the federal reserve's enhanced
guidance about its policy intentions set a substantial and still increasing holdings to longer-term securities will ensure that monetary policy remained highly accommodative, consistent with the pursuit of its mandated objectives of maximum employment and price stability. thank you. i'll be glad to take your questions. >> thank you. i'm with the "washington post." today was the first reduction and asset purchases. you just said future reductions will likely occur in steps. can you tell us anymore about the framework you all begin to use to determine the size and the timing of this reduction? previously said you expect the program and altogether by the middle of next year. is that still a likely scenario? >> well, as i said, the steps that we take will be data depended. if we're making progress in terms of inflation and continued job gains, i imagine we will continue to do probably at each
meeting a measured reduction. that would take us to late in the year, not -- certain not by the middle of the year. if the economy slows for some reason or we are disappointed in the outcomes, we could skip a meeting or two. on the other side if things really pick up, and, of course, we coul did go a bit faster, buy expectation is for similar moderate steps going forward throughout most of 2014. >> mr. chairman, thank you. when you say similar moderate steps going forward, is 10 billion intimate that people should anticipate? and is equal amounts of mortgage-backed securities and treasuries also what one should anticipate? finally, when you say well past the unemployment rate of 6.5%,
why not pick a number x. y. say, well past? thank you. >> sure. on the first issue of 10 billion, again, we say we will take further modest steps subsequently, so that would be the general range. but again, i want to emphasize that we're going to be data depended. we could stop purchases if the economy disappoints. we could pick them up somewhat if the economy is stronger. in terms of mbs versus treasuries, we discussed that issue. i think that the general sense of the committee was that it will reduction are approximate equal reductions was a simpler way to do this. it out this doesn't make a great deal of difference in the end to how much we hold. so that was going to be our strategy. on the issue of another number, the unemployment rate, let's talk first about the labor market conditions at the unemployment rate is a good
indicator of the labor market is probably the best signal indicator we have. so we are comfortable setting 6.5% unemployment rate as the point at which we would begin to look at a more broad set of labor market indicators. however, precise because we don't want to look just at the unemployment rate, once we get to 6.5 we want to look at hiring, quits, vacancies, participation, long-term unemployment, et cetera, wages. we couldn't put it in terms of another unemployment rate level specifically. so expect there will be some time past the 6.5% before all of the other variables that we are looking at we are looking of a line of in a way that will give us confidence that the labor market is strong enough to withstand the beginning of increases in rates. the sep, survey economic projections which were destroyed, odyssey that's individual assessments about the
committee's collective view. but nevertheless, it gives you some sense of current expectations about the length of time. the sep shows that the 6.5% is expected a large number of people to be reached about the end of next year, end of 2014. then the first rate increase is according to the so-called dots chart take place in the end of 2015. so that's the order of the magnitude i think that people are currently expecting. but again, i emphasize that it will depend on our being persuaded that over, across a broad range of in the labor market is sufficiently strong, that we can begin to withdraw accommodation. >> john from "the wall street journal." mr. chairman, as you well noted, the fed is going through a transition next month. can you talk about the role that janet yellen played in formulating the policy that's
being laid out today? and what kind of consistency the public can expect as we go into her tenure, assuming she is confirmed, with the program that you are laying out today? will they carry on under her leadership? >> yes, it will. i have always consulted closely with janet come even well before she was named by the president. and i consulted closely with her on these decisions as well. and she fully supports what we did today your. >> -- what she did today. >> robin from the financial times. mr. chairman, your inflation forecasts never get back to 2% in the time horizon that you cover your out to 2016. given that, why should we believe the fed has a symmetric inflation target? in particular, why should we believe you're following an optimal policy, optimal control policy as you said in the past,
given that would bite inflation going a bit of a target at some point? >> again, these are individual estimates. big standard errors implicitly around them and so on. we do think that inflation will gradually move back to 2% to we allow for the possibility, as you know in our guidance, that he could go as high as 2.5%. even though inflation has been quite low in 2013, let me give you the case for why inflation might rise. first, there are some special factors such as health care costs and some other things that have been unusually low and might be reversed. secondly, if you look at the fundamentals for inflation, including inflation expectations, whether measured by financial markets or service, if you look at growth which we now anticipate will be picking up both in the u.s. and internationally, if you look at wages which have been growing at 2% and a little bit higher, according to many indicators, all of these suggest inflation will gradually picked up.
but what i tried to emphasize in my opening remarks, which is clear in our statement come is that we take this very strangely. it's not easy -- inflation cannot be picked up and moved where you want it. it requires, obviously, some lock and some good policy. but we are very committed to making sure that inflation does not stay too low. and we are continuing to monitor that very carefully and to take whatever action is necessary to achieve that. [inaudible] >> even under optimal control it would take a while for inflation -- inflation is quite -- can be quite, take quite a time to move. the responsiveness of inflation to increasing economic activity is quite low. particularly given in and of underwear we have falling oil prices and other factors that are contributing downward forces on inflation, it's difficult to get inflation to move quickly to
target. that we are, again, committed to doing what's necessary to get inflation back to target over the next couple of years. >> craig torres from bloomberg news. there's been a great deal of discussion in your profession about the potency of policy at the zero boundary. kind of bounce off robin cook it's very striking that inflation has fallen while qe3 has been in place. and the economy continues to undershoot the fomc's forecast. so i guess a simple question is, are you giving up? you know, i mean, have you reached the limit other policy tools? is there nothing more you can do? the economy is still running way below the trendline that existed before the financial crisis. >> well, everything depends on what benchmark you compare it to, as you know. i said last year that monetary
policy was not a panacea. it couldn't solve all our problems. and in particular, it can do anything about a slowing and potential growth, which appears to have happened at least to some extent. it can't do much or anything about fiscal policy which is working in quite the opposite direction. so given those things, i think the outcomes we've had are perhaps not as bad as you might think. in particular, as i've mentioned many times, the congressional budget office access to the fiscal drag in 2013 as being about 1.5 percentage of growth. were looking i will get in the low twos actual growth. at those numbers together, it's kind of a counterfactual. this is the monetary policy appears to have succeeded in offsetting a good bit of that fiscal drag which we were not at all sure that we could accomplish. we are not giving up. we intend to maintain a highly accommodative policy. nothing we did today was intended to reduce accommodation
to we are still going to be buying assets at a high rate and increasing and holding and increasing our balance sheet and holding onto those assets. our guidance today we strengthened our guidance to make clear we expect to keep rates low well beyond the point unemployment hit 6.5%. >> peter barnes, fox business, sir. was it a close call in the discussion today among participants and members of, given all you've said about outlook and your forecast, was there a lot of debate on whether not to go ahead and start tapering now or wait longer and wait for more data? >> well certainly it's a very important decision and we debated it quite extensively. that being said, the question we asked ourselves was, did we feel comfortable to say that we have met or were at least well on the way towards meeting the criterion we said when we begin
the program in september 2012, and that, of course, was a substantial improvement in the outlook for the labor market. if you look a at the cumulative improvement, and i mentioned some figures in my opening remarks, or if you look at recent numbers either on employment, unemployment, also in terms of growth, we are seeing encouraging numbers in terms of household spending, for example, auto purchases, fiscal drag is reduced, stronger numbers internationally. ..
it is true that while we have passed will made significant progress on the labour market there's a question about inflation which is a bit of a concern as we indicated in our statement, our outlook is for inflation to go back to 2 prison. i told you why that would happen. we take that very seriously and if inflation does not show signs of returning to target, we will take appropriate action. >> mr. chairman, now that you have introduced capering into the system, if the economy were to stumble again in the future would you recommend or have you discussed with your colleagues increasing bond buying in the
future and have you considered any alternative measures, more direct stimulus directly into the economy if it were to stumble again? >> what stimulus did you have in mind? >> any type of stimulus he would not be buying from the banks? >> in terms of the legal authorities the federal reserve has, we don't have -- we are getting into a fanciful discussion. our basic tools are asset purchases, and agency securities, we don't buy corporates or other things like central banks are, with interest rates near zero, we can manage our forward guidance and has been helpful, has been effective, and there are limits to that because at a certain
point, markets may not view long distance way ahead guidance as being credible. we can change the interest rate we pay on reserves which is something we talked about. the other kind of thing that amounts to a direct infusion into the economy is action similar to the british funding for lending program where they provided cheap funding to banks if the banks could show they increased their lending from small businesses. and to banks, at somewhat differently in the u.k. and in europe, hear our banks are flush
with liquidity. and the sense that we don't have taken under current conditions, we do not have the authority to lend directly to small-businesses or other institutions and in any case i don't think right now credit in most areas is the major problem. what we have in many cases is firms are not looking for credit or balance sheets not strong enough to pass creditworthy screens at the bank. we do have a range of things we can do but we are already being pretty aggressive. under some circumstances, yes. -- >> in narrow question and related broader question. the changeover in leadership play any role in the decision when to begin tapering? did you have a preference to get
started before you left? the broader question is you're a historian, what do you think teachers will have to say about eight years as federal reserve? >> the first question is no. the answer to the question is to read the textbooks, what we have showed, there have been two big changes, two that i would cite in the last few years, the result in many ways of the crisis first is federal reserve has rediscovered its roots in the sense that the fed was created to stabilize the financial system in times of panic, we did that and we use tools that were analogous in spirit, and the financial
system. the other thing that is unique, and the economy to recover from a deep recession at a time when interest rates were almost ease tension in zero and that required us to use other methods most prominently forward guidance, which is entirely new, and clearly this, unless you put aside the depression where monetary policy was on the whole pretty passive, this is the first, the first examples of aggressive monetary policy taking place near a zero interest rate environment and now we're seeing japan and uk and other countries taking similar approaches and i think that will be an issue, an area that monetary historians will be interested in exploring and monetary theorists and empirical
studies. >> chairman ben bernanke, today, with one hand you are giving the economy something by telling us or signaling that you may keep interest rates lower for longer than we previously thought but you are taking something away by reducing large-scale asset purchases. if you think that overall this is maintaining the level of monetary accommodation steady, the decision to reduce the asset purchases is relatively less about an improved outlook for the economy, and the concern that the asset purchases are less effective or might be feeling bubbles? >> as i said before asset purchases are a supplementary to. our main tool is interest-rate
policy. the reason is because it is a much less familiar tool, less ability to calibrate how big the effects are and it is also true that as the balance sheet of the federal reserve gets large managing the balance sheet xing from the balance sheet becomes more difficult and there are concerns about the effects on asset prices but that is something they will be looking at carefully. our view was in september of 2012, we had interest rates already low and they were expected to stay low for a long time. the economy was faltering. we needed an additional boost so we brought in the asset purchase program again, we put in a specific objective which is substantial improvement and outlook for the labor market. once that intermediate objective
was obtained the economy was moving forward, at that point we could begin to wind down the secretary tool, supplementary to lend achieve the same amount of accommodation using interest rates and forward guidance, i want to reiterate this is not intended to be tightening, inflation problem or anything like that. on the one hand asset purchases will be continuing, rebuilding our balance sheet. total assets we require are more than what was expected in september of 2012 or june of 2013. we will have a substantial balance sheet which we will continue to hold and now we have clarified our guidance that we will be keeping rates low well past unemployment of 6.5% so we are trying to get high levels of accommodation. it is true that the purchases review is supplementary to the interest rate policy, but again
the action today is intended to keep the level of accommodation more or less the same overall and enough to push the economy forward. >> in an earlier response you laid out the argument -- explained why the committee didn't lower the 6.5% unemployment threshold. is that conversation over? have you put off the table changing those? has there been any further discussion on adding lower bound to the inflation target as well and specifically on inflation, what tools or actions could the committee take if inflation continues to run below your targeted or falls further? >> we want to make an assessment now. i wouldn't expect any changes in the near term.
we want to see how much accommodation we have and whether it is sufficient for the economy is continuing to grow, as we anticipate. there are things we can do. we can strengthen guidance in various ways. the view of the committee is the best way forward today was a qualitative approach which incorporates elements of the unemployment threshold and inflation for, and further strengthening would be possible, something that is certainly not rule out. and asset purchases are still there to be used. we have tools to manage a large balance sheet. made a lot of progress on that. again, we think we can provide a high level of accommodation with somewhat slower pace but very high pace of asset purchases and
our interest rate policy, we do have other things we can do to ramp up again. that being said, we are hopeful that the economy will continue to make progress and we will begin to see the whites of the eyes of the end of the recover, a more normal period of economic growth. >> members of your staff published a paper earlier this fall arguing in times of high unemployment when the unemployment is calcifying into disengagement there is an argument for monetary policy to be more aggressive and yet you are now announcing you will do less rather than more. the fed has done that twice before and regretted the decision. can you talk about why you are not erring on the side of doing more? >> we are not doing less. we will see how accommodation
shapes up. we are slowing asset purchases a bit, again we expect total balance sheet to be quite large and maintained at a large level for a long time, and we expect to keep rates low, we are providing a great deal of accommodation to the economy. i agree with your observation and the observation of the paper that you cited and there is a case for being particularly aggressive and we have been aggressive to keep the economy growing and progress in the labour market. i would dispute the idea we are providing a lot of accommodation to the economy. >> wyatt andrews at cbs. given billions of dollars the fed has put into the economy over the years do you see a leading reason the economy has
not created more jobs? >> we have been -- it has been a little over four years since the recovery began. it has been a slow recovery. there are a number of reasons for that. something for economy attritions and historians to grapple with that there have been a number of factors that contributed to slower growth. they include for example the observation that financial crises disrupt the economy, they affect innovation, new products, new firms. we had a big housing bust, the construction sector has been depressed for a while, continuing financial disturbances in europe and elsewhere and very tight on the hole except for 2009 very tight fiscal policy. we could appreciate how tight
fiscal policy has been. at this stage in the last recession, a much milder recession, state, local and federal governments tired 400,000 additional workers from the trough of the precession. at the same point in this recovery in state, local workers are a million workers different, how many people have been employed at all levels of government. fiscal policy has been tight. about head winds. all that being said, we had been disappointed in the pace of growth and don't fully understand why. some made be a slower pace of underlying potential at least temporarily, productivity is disappointing, it may be some bad luck for example the affects of european crisis and the like.
compared to other advanced industrial countries, europe, the u.k. japan, compared to other countries, recovering from financial crises, the u.s. recovery has been better than most. is not good, not satisfactory. we have a labor market where it is not easy for people to find work. a lot of young people have not gotten the experience and entry into the labour market, but given all the things we faced, it is at least in retrospect not shocking the recovery has been somewhat tepid. >> thank you. you talked little about fiscal policy. congress is set to pass a budget deal and they haven't done much
to reduce the deficit and it looks like they are not going to do anything until after the next presidential election. can you talk about that? you have been pressing for a bigger deal and reducing the u.s. debt burden. thanks. >> as always, and a couple things about this deal, relative to where we were in september and october it is nice that there has been not bipartisan feel and it looks like it is going to pass both houses of congress. it is also at least directionally what i have recommended in testimony which is it eases a bit of fiscal restraint in the next couple of years, a period where the economy needs help to finish the recovery. in place of that, if it achieves
savings further out in the ten year window. those things are positive things. there is a lot more work to be done. it is a better situation than we had in september and october or january during the fiscal cliff. and fiscal policy and congressional leaders work together to -- even if the outcomes are small it is a good thing working cooperative lee and making some progress. >> american banker. as you look back on regulatory reform over it last several years, those that have yet to be finalized what rules would you have like to have seen tougher and would you like to see
finished before you leave? as someone that has been a steward of the financial crisis and reform effort, as you leave now do you feel safeguards are in place, the system is safer? >> the system is certainly safer and one indication is the amount of capital banks hold and for example, on the capital side we have imposed basel iii requirements, surcharges will be part of the process. we have imposed -- one of the main innovations is the use of stress testing, trying to see whether banks have enough capital not only to deal with normal fluctuations but the very severe condemnation of a sharp downturn in the economy and very bad financial conditions and that has been a very important
test of banks's abilities to survive a bad situation but also the abilities to measure their risks which was very deficient going into the crisis. beyond that, we are looking at a leverage ratio we expect to complete soon, the possibility of having the debt required at the holding company to assist in a resolution. we are looking at capital for -- to backstop firms that rely heavily on wholesale funding. a much stronger capital oriented drive at this point to strengthen our financial -- that is just one dimension, liquidity of many other aspects. is not up to me to say if these are tough enough or not. fuel and other observers who are writing about this and thinking about it will have your opinions, but what i would say
is we are not done. we have some important rules to complete also all of them are well advanced. as we get these rules done and implement them they will make a substantial difference in the safety of the system and more needs to be done. is an open question and we are looking at this for some time. >> mr. chairman, thank you for holding -- i hope you will encourage your successor to get more of them. you will miss travelling to capitol hill to testify and one thing happening next year, the chairman of the financial services committee, a full review of the federal reserve, the structure of the fed, the mission of the fed, the mandate of the fed. i want to see if you might be willing to impart final words of wisdom to members of congress for a possible legislative
changes. to structure the federal reserve, the dual mandate that might help fed policymakers in the future, do you think it is merited and a final question as you get set to leave and the last news conference here you talk about the frustration, the head wind you faced in the course of eight years. is there a decision with the benefit of hindsight, one change in a decisionmaking process your fellow colleagues have made that you think would have made a difference materially over eight years? >> on the centennial review, one of the things i am proud of and tried to accomplish over the last eight years is to increase the transparency of the fed and to increase the accountability of the fed.
you mentioned those trips -- testified many times. this notion, and secret books, as you all well know, and government accountability office, we have an inspector general of your own and a private accounting firms and cuff sponsors. we are by all means willing to work with congress to see if there's anything, a more effective way. we are open to doing that. i hope, the central bank will
recognize central banking is an old activity. the seventeenth century is when the swedish bank and the bank of england began operations. there are a lot of experts on central banking and monetary policy. every country has a central bank. we are not starting from scratch. we have a lot of expertise on this and as we talk about these issues we are bringing in serious issues and people who can make good suggestions. there are a range of mandates, there are some single mandates. it is our sense the dual mandate has served us well, in particular that the fed has been able at times to speed the recovery from recession and put people back to work more quickly. we can't do anything about long run employment opportunities that we can help the economy
recover more quickly. that is valuable. i would note by the way, at the current moment it doesn't matter whether we have one mandate or two because we are below our inflation target and unemployment is above where we would like to be sold both sides of the mandate i pointing in the same direction which is to provide strong accommodation to the economy to help it recover. in retrospect, this is a hard question. every decision is done in real time, with the efficient information and wherever you go at the time and -- on any particular issue. obviously we were slow to recognize the crisis. i was slow to recognize the crisis. in retrospect, it was a traditional classic crisis but a very different guys, types of
financial instruments. and more difficult to see. and in 2006, house prices declining. obviously, and try to take preventive action. we have done everything we can think of, and financial markets to stabilize the economy and the financial system. we are much better prepared to deal with these events than we were when i became chairman in 2006. >> thank you, outgoing to indulge the local question and a
broader question, the paper that owns the south carolina papers, a lot of interest whether you are going to retire to dillon, south carolina and write your kiss and tell book but do you envision a role for yourself in south carolina post chairmanship and the broader question, your predecessor, dr. greenspan in his new book argues long-term investment, one reason we may be seeing such a slowing economy, debts and deficits are reducing long-term investment, companies are investing in the things that make them leaner, get by with fewer people but the expansion we are not seeing. do you feel but and deficits are weighing down these long-term decisionsmaking and does it argue for more drastic action on the short term? >> do you own the charlotte observer? most of my family is in north carolina and i have a number of family members in charlotte and in durham.
my wife and i will spend christmas vacation in north carolina. i have my uncle -- 85, very chipper. i think for the immediate future, my wife and i will stay in washington for a bit of time. about investment, investment is weaker than we would like. the first and most important reason is the recovery is slow. investment is driven by sales, the need for capacity, and with a slow growing gdp, slow-growing economy, most firms do not yet feel that much pressure on their capacity to do major new projects. there is a variety of uncertainty out there, fiscal,
regulatory, tax and so on that affect calculations. we hear that from fomc participants as they report from their local districts. a lot of factors. usually you think the way a deficit or long-term debt would affect investment would be through crowding out, raising interest rates but high interest rates, we have many problems that high interest rates are not the problem. plenty of larger firms, plenty of credit available at lower interest rates. >> we will leave this program. you can see it in its entire early at c-span.org. as we look at the u.s. capitol here, the senate is about to gavel in to start the day. more work expected on the 2014 defense programs and policy bill providing $625 billion for pentagon spending. votes are expected today although they have yet to be scheduled. the senate could consider several executive nominations
including janet yellen to the fed chair replacing ben bernanke. lawmakers approved the federal budget agreement, that vote was 64-36. now to live coverage of the senate here on c-span2. the presiding officer: the senate will come to order. the chaplain dr. barry black will lead the senate in prayer. the chaplain: let us pray. eternal god, who has made us
children of promise, thank you for bringing joy to our world. we're grateful for the freedom you have given us to enjoy. may we use this gift to live steadfast in liberty, refusing to be entangled in the chains that would shackle us with addictions and miseries. during this season of cheer, give our senators and their loved ones the gifts of love, joy, peace, patience, kindness,
goodness, faithfulness and self-control. may they fulfill your command to love their neighbors as they love themselves. bless also the families and loved ones of our support staffs. o god, let there be peace on earth and let it begin with us. we pray in your great name. amen. the presiding officer: please join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all.
the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., december 19, 2013. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable brian schatz, a senator from the state of hawaii, to perform the duties of the chair. signed: patrick j. leahy, president pro tempore. mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: i move to proceed to s. 1356. the presiding officer: the clerk will report. the clerk: motion to proceed to calendar number 243, s. 1356, a bill to amend the work force investment act of 1998, and so forth and for other purposes. mr. reid: mr. president, following my remarks and those of the republican leader, the senate will resume consideration of the national defense authorization bill. roll call votes are possible
throughout the day, and we will do our best to notify senators ahead of time as to when the votes will occur. mr. president, for more than 50 years, consecutively -- that is, 50 years in a row, every year, the united states has passed the national defense authorization act. this year is not going to be an exception. this tradition indicates the respect and gratitude with which members of this institution regard the members of our military. the work to get to this point has been extremely difficult. we have had the usual good work of one of the finest senators ever, the senior senator from michigan, and also the cooperation and hard work of the ranking member of the committee, the senior senator from the state of oklahoma. it has been with some difficulty -- the senator from oklahoma has had physical
problems, the tragic loss of his son, an unfortunate airplane accident, but these two men have continued to move forward with this legislation, and it's important to mention their counterparts in the house. this is an important piece of legislation that we're going to vote on. today the senate will continue debate on this critical measure which safeguards our nation and ensures our troops have the resources and training they need. this bill includes a pay raise for members of the armed forces and reauthorizes dozens of special pay rates and bonuses, such as bonus payments for service members who are stationed overseas. this legislation also supports military families who support the mission of our fighting men and women. also yesterday, we passed the budget -- ryan budget -- we
passed the ryan-murray budget. very important. because, among other things, it did away with sequester, which would have been -- if that second year had kicked in, it would have been a $23 billion hit to the united states military. that's gone. and this year, the defense authorization act also includes robust new provisions to combat sexual assault in the military and guarantee perpetrators are punished. with cooperation, the senate could easily pass this bill today. we could have done it last evening. with cooperation, the senate could also consider a number of pending nominations today and friday. but without cooperation from our republican colleagues, senators should expect late-night and weekend votes. mr. president, after we complete work on the defense authorization bill, this body will consider several essential nominations, including a new federal reserve chair. so important. as we learned yesterday from the announcement of chairman ben bernanke how terribly important
that institution is. he is leaving. we need someone to replace him. we also are going to approve a deputy secretary of homeland security, a new director of the internal revenue service. we'll also consider the nominations that have been pending for two years, more than two years, actually, mr. president. the nomination of brian davis of florida to fill a judicial seat that has been declared an emergency as well as a handful of other nominations. all these nominees are qualified and dedicated public servants. i haven't heard a single word about these nominations being flawed in any way. these nominees have broad bipartisan support. their positions safeguard the economy, thus ensuring our national security. i'm disappointed that republican senators have suggested that these nominees are nonessential or unimportant. i heard one senator yesterday afternoon say just do them next year.
another said yeah, they're nonessential and they are really unimportant. why don't we do them again -- why don't we do them next year. mr. president, everyone should understand the senate will not wait until the new year to consider these nominations. these are critical nominations. and if that means working through the weekend and next week, so be it. the senate will finish its work before we leave for the holidays. it's our constitutional duty. public servants who set our nation's monetary policy, guard against terrorism and deliver its justice don't hold nonessential positions. mr. president, is janet yellen to be chosen as federal reserve chair nonessential? it's shallow to even suggest this. brian davis, i have already talked about this good man who has waited two years to become a federal trial judge in a place
in florida that has too many criminal cases, too many civil cases. it's been declared a judicial emergency. i suggest that it's very shallow to suggest this nomination is unimportant and not essential. alejandro mayorkas to be the number two person at the department of homeland security. it's really a vitally important position, as has been laid out in detail by the chairman of the committee, tom carper. how shallow to think this important nominee is nonessential. how about this one, mr. president? john koskinen to be director of the internal revenue service. with all the many things going on in this country, with obamacare, with all the many other things happening. we need a -- someone to direct
the internal revenue service. to suggest this is not a critical position is really very, very shallow. with all the republican obstruction delay we have seen over the last two weeks, is it any wonder democrats changed the rules last month? of course not. the american people want congress to work not obstruct. even under these new rules, republicans are wasting weeks on matters that could be resolved in mere hours. as always, there is an easy and a hard way that we legislators can take. one is to move. the other is to obstruct. so far, my republican colleagues have obstructed and continue to do so. the choice to obstruct is theirs. their obstruction has become a bad habit of theirs. for the good of the country, their obstruction, these bad habits need to go away. mr. president, i would like the chair to announce the business of the day. the presiding officer: under the previous order, the leadership
the presiding officer: the majority leader. without objection. mr. reid: i ask unanimous consent the senate proceed to s. 1859, a bill that includes the following provisions, an extension of a provision to exclude mortgage debt forgiveness from taxable income, deductions for state and local sales tax, qualified tuition
expenses for students and classroom expenses for teachers pay out of their pockets, a commuter benefit that helps workers that take mass transit to their jobs every day, the new market tax credit and low income housing credit, the short line rail tax credit, provisions that increase energy technology including production tax credit for wind as well as credits that promote the development of biofuels, alternative fuel vehicles and energy efficient buildings and tax incentives for small and large businesses including section 179 expensing and r&d credit. i ask the bill be read the third time passed and the motion to reconsider with laid on the table with no intervening action or debate. the presiding officer: is there objection? mr. mcconnell: reserving the right to object. it is unfortunate the senate's schedule is completely full with nonurgent nominations. if these nominations were
deferred we could consider this important and timely legislation today. i ask the pending cloture motions on the pending nominations be withdrawn and following disposition of the defense bill the senate proceed to immediate consideration of h.r. 2668 the house-passed revenue measure and the text of s. 1859 be the first amendment in order and the majority and minority sides be recognized to offer amendments in an alternating fashion so that these important issues could be considered this week. mr. reid: mr. president? the presiding officer: is there objection? mr. reid: reserving my right to object and i would ask my statement that i gave earlier today appear in the record, and i object. the presiding officer: without objection. the objection is heard to the modification. is there objection to the original request? mr. mcconnell: i object. the presiding officer: the objection is heard. the senator from utah. mr. hatch: mr. president, i'd like to briefly comment on the absurdity of what just transpired here on the senate floor. my friends on the other side have been the longest serving
majority since 1980. we're enduring some would say suffering the seventh consecutive year of their majority. yet, if someone were to take a close look at the strategy and tactics of the senate democratic leadership, they would think that the roles were reversed. democrats are the majority. they have even enhanced their majority by breaking the rules of the senate to give themselves more power. indeed they have not been a bit reluctant to overreach. part and parcel of having a majority here in the senate is control over the senate's schedule and committees. yet still we see what we saw here today from my friends on the other side of the aisle. under the senate rules, tax policy matters, including the tax extenders, they are referred to the finance committee. trade adjustment assistance was also included in this bill, also
falls under the jurisdiction of the finance committee. the finance committee process tax extenders in a bipartisan fashion last year, and that legislation was eventually enacted into law. the committee has also been able, though without as much bipartisan support, to deal with the t.a.a. in the recent past. yet now what do my friends want to do? they want to ignore the senate rules, the expertise and proper role of the finance committee and pass a complicated senate policies here on the floor without discussion or debate. with regard to tax extenders, the finance committee staff from both parties have in just the past few days started the process of developing tax extenders legislation. to put it bluntly, the majority leader's partisan actions today make a sham of that deliberative, methodical and constructive bipartisan effort. why are they afraid of going through regular order? they are the majority, including my friend, the chairman, there
are 13 democrats on the finance committee and only 11 republicans. what are they afraid of? don't they set the committee agenda? don't they have the votes? political stunts like unanimous consent requests that are designed only to draw objections from the other side may be good political fun for the proponents. they might even provide some good campaign fodder. but they don't solve any problems. it's amazing to see this kind of activity from the majority party when it controls the agendas on the floor and in the committees. you might expect this action from the frustrated minority party which have also shut out in the committee and on the floor but here you have role reversal. i'm here currently a member of the minority party in the senate defending regular order, senate customs and the role of the committee system. i reiterate my challenge to my friends in the senate democratic
leadership. why are you so afraid of regular order? why not process this legislation in a careful, methodical and transparent manner? being in the majority means being accountable. today my friends on the other side of the aisle tried once again to avoid accountability in order to blame their own failings on republicans. as the saying goes, that dog just won't hunt. mr. president, i yield the floor. mr. mcconnell: mr. president? the presiding officer: the republican leader. mr. mcconnell: if i may, before the senator from utah leaves the floor, i correctly stated the state of the senate these days. i mean, it's not the same body it was just a few years ago in the way that we are being treated. it's a very discouraging development as we approach the end of the year to see the way the united states senate has deteriorated under the current leadership. and i thank the senior senator
from utah for pointing out that it's not just too long ago that the two parties actually functioned on issues like the majority leader was trying to ram through today without any committee consideration. mr. hatch: the distinguished minority leader expresses it very well. i'm appalled. i've only been here 37 years, but i've never seen the rules violated as they have been lately. and, frankly, violated in a way that really is distractive of the senate, not helpful or constructive to the senate. and this was just another illustration. and i think our side is getting pretty sick of it. mr. mcconnell: i thank my friend from utah. mr. president, earlier this year the internal revenue service admitted responsibility for an incredible abuse of power. in the midst of an election season, it targeted an harassed americans for the supposed crime of thinking differently.
an agency with access to some of the most personal information of every taxpayer, every tax-paying american betrayed their trust. and in doing so it showed the lengths to which this administration will go to stifle those who dissent from its policies. all of this was and remains a complete outrage. it's the kind of thing we might expect from a banana republic or a third world dictatorship, not the world's leading democracy. the worst part is we still don't know everything that happened or if it's still going on. that's because the bipartisan investigation into all of this still hasn't concluded. it's unclear to me how seriously the white house is taking this investigation. in many ways it seems to have treated the scandal more as a public relations problem to get past than a serious problem to solve. and now get this.
they just expect the elected representatives of the people to roll over and rubber stamp a new presidential nominee to head the i.r.s.. they want congress to forget what happened too and just simply move on. they expect us to just clear the way tomorrow and let them ram through the president's new pick to run the i.r.s.. look, the american people deserve answers about how and why this targeting happened. and they deserve justice too. and i'll not be supporting any nominee to lead this agency until the american people get the answers they deserve. but of course the democrats in charge of the senate changed the rules a few weeks back in order to ensure they could get their way on nominees. no matter what the american people, it's the same kind of attitude we've seen on the defense bill where the majority prevented other members from offering amendments. they'll just do what they want,
even if it means breaking the rules. so if kofbg -- if john koskinen does find himself confirmed tomorrow i want him to understand a few things. i don't hold animas against him personally. we had a good conversation when we met to discuss his nomination. but he's also someone i'll be keeping a close watch on as will the other members of my caucus as will the american people. because big challenges lie ahead for the next i.r.s. commissioner no matter who he or she may be. we expect the next i.r.s. commissioner to cooperate fully with the ongoing investigation into this scandal. we expect whoever is eventually confirmed to hold those who broke or bent the rules fully accountable.
we expect the next commissioner to fairly implement the laws that he or she is charged with executing. to his credit, the nominee has assured me he agrees with me on a topic i feel very, very strongly about, that the i.r.s. should stay out of regulating political speech. let me say that again. the i.r.s. should stay out of regulating political speech. he told me so himself that he agreed with that, and i was pleased to hear it. and so were he to become commissioner, i'd expect him to oppose the extremely misguided proposed i.r.s. rule that aims to overturn more than 50, 50 years of settled law and practice unfairly targeting the speech of those who criticize the administration while leaving its supporters untouched. this proposed rule which redefines what -- quote --
"social welfare" means in order to target certain groups that seek to educate the public would end up penalizing federal, state and local organizations for the supposed crime -- the supposed crime -- of providing information, much of it nonpartisan or bipartisan. the goal is clear, to make it easier to push through the back door what congressional democrats have been unable to pass through the front door. discriminatory policies that seek to silence those who dare to oppose them. it's just the latest in a long and troubling pattern of chicago-style tactics under this administration, and it's exactly the kind of political meddling that the next commissioner needs to ensure never happens again. so let's not forget the i.r.s. should be a boring place. should be a boring place, an impartial agency of tax
collectors. not the vanguard of the left. the next commissioner needs to see to it that the organization finally, finally returns to its mission. and he or she needs to root out those who would have the i.r.s. target americans for the way they think. lastly, as i've told the nominee, i'm deeply concerned about the i.r.s.' role in implementing obamacare. the fact of the matter is obamacare represents a dramatic expansion of the use of the tax code to pick winners and losers. it gives the agency broad new responsibilities for enforcing obamacare's most onerous mandates. and to hand out nearly $1 trillion -- $1 trillion -- in taxpayer subsidies. and in order to do all of this it will need to know who has insurance, penalize those who don't and determine who is eligible for subsidies and how much they ought to receive, something that the agency has a very troubled history in doing with other programs.
and if they get any of that wrong, they'll need to come back and repossess subsidies after the fact. in my view, the i.r.s. doesn't have any business snooping even further into the lives of our constituents, especially at a time when it is already under a cloud of scandal. it's just one of the many reasons i opposed obamacare in the first place and why i continue to oppose it. so if the nominee is to become commissioner, then at a minimum, i expect them to hold the agency to the highest standards, the highest standards when it comes to protecting the privacy of the people we all represent. i expect them to provide regular, transparent updates to congress on the status of implementation and to let us know of any problems as soon as they arrive. the last thing we need, mr. president, is for the i.r.s. to compound the pain it and
obamacare have already inflicted upon the american people by allowing fraud and further mistreatment to happen under its watch. the i.r.s. has done a lot to lose the trust of the american people. it will need to do a lot more to regain it. following the advice i just laid out would put the i.r.s. on a better path, and if this nominee ends up becoming the next commissioner, that advice will form the criteria upon which his performance will be judged. mr. president, i yield the floor. a senator: mr. president? the presiding officer: the senator from new jersey. mr. menendez: mr. president, first i want to ask unanimous consent that miss krishna patell, a detailee of the banking staff, be granted floor privileges for the duration of today's session. the presiding officer: without objection. mr. menendez: mr. president, i come to the floor to call attention to a critical provision in the tax extenders act which i wish would have
received consent because it's important for creating prosperity and economic opportunity in our country and to give certainty to businesses in order to achieve that goal. that extenders act provides our nation's most innovative businesses some certainty as they plan their investments for next year. every year, the congress extends a very popular law that provides a tax credit to businesses for certain research expenses. this credit is important for a number of reasons. it creates jobs, it encourages more research and it bolsters u.s. competitiveness. unfortunately, despite the efforts of a number of us here in the congress, notably the distinguished chairman of the finance committee, the credit is taxpayer and has been extended on what's been an annual basis. it's unfortunate because the lack of long-term certainty prevents businesses from fully relying on the credit when making their global investment decisions, and i know that the
presiding chair understands this very well as a state in new jersey that has some of the leading innovative companies in the world that very often rely on the research and development tax credit to make those millions, sometimes billions of dollars of investment in order to produce the next life-saving, life-enhancing drugs or the next technology breakthrough. in the meantime, at the very least, we can ensure that that credit is extended. if we can't make it permanent, it should be extended in a timely fashion to give businesses confidence in putting more research investment in the united states in 2014. this bill would extend the research and development tax credit for another year, and i sincerely hope we'll be able to get this done very soon in order to maximize the credit's effectiveness in order to unlock that investment, in order to create the economic opportunity, the jobs and the growth in our economy, and i'd like to yield to my colleague, the senior senator from ohio to discuss another important provision in this bill.
the presiding officer: the senator from ohio. mr. brown: i ask unanimous consent -- the presiding officer: without objection. mr. brown: i thank the presiding officer. i'm here to join my colleagues in asking for unanimous consent to pass -- which we will do later -- to pass the tax extenders act of 2013. the bill will do number of important things, including particularly importantly for my state extending the health care tax credit for the hctc. it's important we extend it for workers and retirees who lose their jobs and benefits due to no fault of their own. extending it -- extending ht -- ctc preserves for people in my home state of ohio who worked hard and played by the rules, know, understand and trust. these tax credits are set to expire in just two weeks at the
end of the year. while affordable health insurance will be available on the health exchanges, one of the most important things about the affordable care act, obamacare, extending the hctc to hctc ensures that retirees who have already faced a number of transitions can keep insurance that is familiar to them while they learn about new options. extending the tax credit for one year is fiscally responsible. we could and should do more. we should improve the hctc and make it permanent as i have proposed in legislation that i have introduced with senators rockefeller and stabenow and hirono and donnelly. but in the meantime, we could and should at the very least maintain this critical tax credit for a population who needs it desperately. that's what this bill does. that's why the senate should move it soon by unanimous consent. i'd like to take a moment to emphasize how important the tax extenders act of 2013 is on a number of other issues besides
the hctc and credits that my friends have discussed. among other important measures, we should move to extend the new markets tax credit and the low-income housing tax credit. these programs are oversubscribed and are able to help revitalize communities by leveraging tens of billions of dollars in private investments. they are among the best programs we have for economic development in ohio and across the country. i strongly support that extension. finally, i want to associate myself with senator stabenow in calling for unanimous consent to pass the tax extenders act of 2013 in order to extend mortgage debt relief. without this critical extension, homeowners who make modifications to their mortgage or receive loan forgiveness could face a crippling tax bill. imagine that. after you have done a loan modification, whatever money you saved, you are taxed on, imagine getting that tax bill. that's why the mortgage debt relief extender is so very important. thank you, mr. president. i yield the floor.
ms. cantwell: mr. president? the presiding officer: the senator from washington. ms. cantwell: i want to thank chairman reid, chairman baucus, senator brown, senator benz all for coming to the floor to talk about this important issue of tax extenders and why we need to get them done now. in washington, the state of washington, taxpayers are opening the morning's newspaper to find "the seattle times" editorial, congress should extend the sales tax deduction. "the seattle times" has been following this issue for years and knows that taxpayers are waiting to find out if we can continue to deduct our sales tax for more federal income tax obligation. being a state that doesn't have an income tax, we want parity with other states and we want to be able to deduct our sales tax in the form of those taxes from our federal tax be obligations, and every year millions of washingtonians have to wait to find out whether that particular tax provision is going to be
extended. i want to make it permanent, and i hope that when we do tax reform, we will be able to do this. but in the meantime, we have got to give the certainty to the taxpayers in washington state that these important tax policies that congress can act and get things done. so i'd like to submit for the record that particular editorial. at new year's as the ball drops in times square, a number of other tax provisions are going to expire. in the lapse of these important tax provisions make it harder for americans to invest in clean energy, to hire veterans, to pay for public transportation and to build low-income housing. like my colleague, senator brown, was discussing, the tax extenders of 2013 is about providing predictability and certainty to the citizens and to american businesses about what our tax benefits and -- what are tax benefits and investments. on january 1, the commuter tax benefit will expire. that means that an increase in household expense for 2.7 million public transit commuters.
in king county, which is the county that seattle is in, more than 1600 workers use the commuter tax benefit to enable employees to get to and from work. and if you have ever been in the puget sound area, you know that transportation and traffic are big issues for us, so obviously trying to defer some of that traffic congestion by getting people into commuter transportation is a key part of our strategy, but if we're taking away the certainty and predictability of tax deductions on this, we're just going to make our transportation problems worse. on new year's day, the tax benefit for those employees who take public transit will be cut nearly in half from $245 to $130 a month, and we need to extend this benefit as a matter of tax fairness. transportation is the second largest expense in an american household, and american families should be able to choose whether they want to drive or take public transit, and they shouldn't be punished because they are taking a bus or ferry or train, and across washington
state, we have seen firsthand how the other tax extenders help actually create an environment of certainty and predictability for jobs and job creation. these are bipartisan principles that we can all get behind. of particular attorneys to me is, as i said, the state and local sales tax deduction which affects many people in our state, individuals living in other states with a state income tax are not faced with these same challenges but alaska, florida, nevada, south dakota, tennessee, texas and wyoming are all in the same boat, and i'm sure these citizens would want to have this sales tax deduction certainty predictability. as a result of that, a tax average of $640 in deduction is real money back into people's pockets when they itemize those various tax benefits, and so we hope that this won't continue to be placed in washington state. we need these tax extenders now.
additionally, there are other things like the new market tax credit, which is a great program for encouraging investment into challenging areas of our country. the biodiesel tax credit, the veterans work opportunity tax credit, the tax credit to employers to encourage them to hire veterans, and we have had many of these events around washington state talking to employers who have successfully used this tax credit. the low-income housing tax credit. i know the president of the senate probably has projects all over his state that have benefited from the low-income housing tax credit. a great incentive to get more affordable housing built in hard-to-serve areas and challenging areas because of high costs. as i mentioned, the commuter tax benefit. all of these are tied to job creation. so instead of giving predictability and certainty on tax credits, here we are not getting our job done, and we should get this done as soon as
possible. it's time for congress to extend these important provisions and to make plans accordingly. i hope that the i.r.s. can be given the predictability and certainty, too, in the new year about these provisions so that we're not delaying or affecting the tax season at the end of next year. so the time to act is now, and i hope my colleagues will help us get these measures that usually are renewed, usually are renewed in a bipartisan fashion done so as soon as possible. so i thank the president and i yield the floor. ms. stabenow: mr. president? the presiding officer: the senator from michigan. ms. stabenow: thank you, mr. president. first i want to thank my friend and colleague from washington for her passionate advocacy, and i want to join with her and other colleagues today in supporting the unanimous consent request to pass immediately the tax extenders act. there is no reason not to get
this done, as colleagues have said, absolutely none. we're in a situation where there are critical tax policies that will directly affect families, middle-class families across the country are going to be hit by a number of different things. small businesses, large businesses. a number of different entities will be affected if we don't get this passed. and i want to specifically talk about an urgent priority that i have been offering and we have been able to shepherd through a number of different times that needs to get done as a part of this package or by itself, however we want to do it, we need to make sure that struggling homeowners across the country, in terms of all of the economy as well, are able to continue using tax policy to protect them from not only being hit with a mortgage problem that puts them under water and struggling to keep their homes but an extra tax bill on top of
it that makes absolutely no sense. and let me explain that. at the end of the year, a law that i authored back in 2007 to protect homeowners against unforeseen and unfair tax bills is set to expire. before this law, when a portion of distressed homeowners mortgage was canceled, either in a loan, worked out with a bank, a short sale or even a foreclosure in some instances, the i.r.s. treated the canceled debt as taxable income. so think about that for a minute. you are already struggling with your home, you could lose your home or maybe you are able to refinance in some way and work with the bank, get a short sale, and then on top of that you get a tax bill for whatever the value was of what you were able to work out. it makes absolutely no sense. it's frankly outrageous. the i.r.s. was telling homeowners that money they had already lost on their home was income.
so we have essentially been correcting that since 2007 through a tax change. the i.r.s. before that was taxing families on what is considered phantom income at the worst possible time for the family. with the onset of the housing crisis, congress recognized how critical it was to protect struggling homeowners from paying this kind of tax on mortgage debt relief. in 2007, x relief for homeowners by excluding mortgage forgiveness from their income for tax purposes. made sense then; it makes sense now. expires at the end of the year. we came together on a bipartisan basis. we said to millions of families, working families, middle-class families struggling to keep a roof over their head for their families that if you're struggling with an underwater mortgage, the i.r.s. shouldn't kick you while you're down. you can secretly without having to worry about incurring a
massive tax bill. this provision has aided millions of families and helped enable the housing market to begin to recover. however, in too many areas of the country and for far too many homeowners the housing crisis is far from over. nearly 6.5 million homeowners are still under water in their mortgages. they owe more than their homes are worth. and that includes 250,000 hardworking families in michigan. nearly 13% nationally of homeowners are under water and, again, 18% are in michigan. above the national average. it's critical that we extend this provision, and it is very important that it be done before the end of the year. it needs to be done ahead of time so that homeowners know what the i.r.s. rules are going to be in 2014 as they are literally making decisions
today, tomorrow, the next day, over christmas, they need to know. if we don't act, homeowners who are offered relief from their lenders or are thinking about a short sale won't know if they'll be hit with a major tax bill as a result and that will affect decisions that are being made. on average underwater homeowners owe $53,000 more on their mortgage than the market value of their homes. in some cases much more. for a typical middle-class family that could mean a tax bill of more than $15,000, mr. president. merry christmas, $13,000 tax bill you shouldn't be paying as you're trying to figure out how to protect your home. who would want to take that risk? brokers and housing counselors in michigan have been asking me what we should tell homeowners and we need to act right now so we can tell them they don't have to worry about this. this is not just about fairness for homeowners. this is about keeping the
housing recovery alive. the last thing we want to do is to tax people into foreclosure where they feel their only option is default and walking away from their home. as we've seen in so many communities, foreclosures and vacant properties destabilize neighborhoods. and i can walk from community to community in michigan and show where that has happened. they push home values down. we can't let that happen at a time when the housing market and the economy are finally recovering. so we all have a stake in extending this important tax protection for families. mr. president, i would ask unanimous consent to insert into the record a letter from the national association of realtors. the presiding officer: without objection. ms. stabenow: thank you. and one from over 200 housing consumer and community organizations urging us to act now. the presiding officer: also
without objection. ms. stabenow: thank you, investment mr. president, this is a bipartisan initiative interintroduced with senator heller and 18 other bipartisan cosponsors. to my knowledge, it is not controversial. there is no excuse not to act before we leave. and i would urge colleagues to do so. thank you. the presiding officer: the senator from new york. mr. schumer: mr. president, thank you. first, i want to thank my colleague from michigan for her heartfelt words. i couldn't agree with her more on the mortgage deduction. and i want to thank the majority leader and my colleagues from ohio and new jersey as well for recognizing the importance of this package of tax relief. the tax extenders act of 2013 would extend tax relief that business and middle-class families in my home state of new york and across the country depend on. they are noncontroversial. they've gotten bipartisan support in the past. and because of the great uncertainty over our economy, doing this quickly and not
saying we'll do it three months after it passes, after they expire makes a great deal of sense. so i would hope my colleagues -- i know they've objected to all of these on the other side of the aisle -- would reconsider, because for the good of the economy, which is just beginning to pick up a little bit, we need to do these extenders. now i'm going to talk about four of them, but one is particularly critical, and that is because it doesn't work very well retroactively. the others do. and that's why i would urge my colleagues to reconsider. i am going to ask for a separate u.c. before we leave here on this particular one because it has particular need right now. and that is the mass transit, the commuter tax benefit. there are about 700,000 commuters in the new york metropolitan area, including from your home state, mr. president, that take advantage of this current incentive. the commuter benefit currently covers up to $245 a month from a
person's income to pay for their mass transit commute to and from work. so whether you take the subway, the bus, the train or drive to work and park, the benefit provides significant savings. the tradition unfortunately in this senate and in this congress was to treat mass transit as a second-class citizen, if you will, because the benefit traditionally had been significantly greater for those who drive and park than for those who take mass transit. and we have had serious problems. first, the mass transit one until we changed it a few years back was half the benefit of the transit -- of the parking and driving. and second, it was not indexed for inflation the way the parking benefit was. and so, if we let this provision expire, the mass transit benefit will revert to $130 a month
while those who drive and park will actually get an increase to $250 for 2014 because of inflation. we cannot -- we cannot -- let these transit benefits for mass transit users get left behind. to do them is a win-win-win. it's a win, of course, for those who use mass transit. and we have so many in the new york area. it's also a win for drivers because every person who is encouraged to use mass transit by this benefit will actually take a car off the road, remove some degree of congestion and allow drivers to move more quickly. and of course it's a win for our environment because mass transit is a far more effective way environmentally of moving things along. so when the leader a few minutes ago requested that the senate pass the tax extenders act, i was disappointed that it was blocked, and particularly
disappointed that this benefit was blocked, because as i said, while we can do it retroactively, it's harder to implement than the others that are done retroactively because most of them take effect when you pay your taxes in 2015 whereas this one takes effect month by month by month. the proposal that we're asking for is exactly the same as was included in the bipartisan negotiated tax extenders package considered by the senate finance committee and passed by the senate on a bipartisan basis for one additional year, through 2014. i hope we'll consider it now, not retroactively later next year as we did last year. employers need to plan whether they'll provide the benefit. commuters need to elect to take it. and as i said, it's done on a monthly basis. you can do it retroactively but it's much harder. so i would hope -- i know we have lots of problems here between the parties, but we should not hold the mass transit
commuters of america hostage. we should not make them second-class citizens. their deduction is every bit as important, every bit as justifiable as those who drive and park. and i would hope my colleagues, before we adjourn this year for the christmas holiday, would in the christmas spirit extend this benefit. now i'd like to talk about a few other credits that are also part of the package, that are also being blocked right now. one is the new market tax credit. individuals and businesses across my state are counting on the new market tax credit. the new market credit program was created to stimulate private-sector investment in economically distressed communities. it's done exactly that. i've seen it work in buffalo, in rochester, in syracuse, in the capital district in new york. over the first decade of the program, $20 billion in new market tax credit investment leveraged an additional $25
billion in capital from other sources to finance economic development in communities where financing might be difficult to come by. the program is a proven job creator. between 2003 and 2010, new market tax credit investments created over 500,000 jobs across the country. again, it's always had bipartisan support. it's sort of a no-brainer. it should be continued. let me talk about the short line rail tax credit. it's a little like the new market tax credit in that it's a tax credit that encourages private investment and jobs. we have short lines all across the country. they connect the main trunk lines on rail to the more isolated regions. but in those somewhat isolated regions are factories. we have opportunities for tourism, say, in the adirondacks, and the short line rail tax credit helps maintain
and renovate the short line rail system. rail is very prosperous these days. the big carriers can maintain the trunk lines very well. but it's harder to maintain the short line. and congress in its wisdom decided to give a tax break for those. if you are unfamiliar, the short line rails are a web of tracks all over the country connecting local businesses and manufacturers to interstate rail systems. the unheralded links that bring raw materials into our businesses and connect them with other cities and supply chains, they must be maintained. over 50% of rail track in my home state are short-line rails. approximately 550 short-line railroads preserve 50,000 miles of track in the country. and the credit is extremely useful. in my state financing hundreds of thousands of tkrars in rail infrastructure -- thousands of dollars in rail infrastructure annually. we have 42 bipartisan cosponsors
in the senate for this legislation. so i hope we will consider this one and pass it. finally, the i.r.a. rollover. the i. r-fpl a. rollover -- the i.r.a. rollover provision is also set to expire affecting so many retirees. they need to know whether or not it will be extended in order to plan their charitable giving in the coming year. if it is not extended many taxpayers over 70 1/2 years of age will be surprised with a tax bill when they transfer funds from their ira to their favorite charity in 2014. so this is important, and, again, it is one that truly is in the christmas spirit. so in conclusion, mr. president, businesses, families, retirees will pay the price if all of these valuable tax relief provisions and many of the others mentioned by senator reid are not extended by the end of the year. i would hope in the same spirit of comity that we passed the
budget, we could come together and pass these extenders. they have always had bipartisan support. they are, after all, tax reductions. i know my colleagues on the other side of the aisle believe in tax reductions. and to delay them and do them retroactively would be doing a disservice to our economy and to the millions of americans who are working or seeking work in our country today. with that, mr. president, i yield the floor. mr. wyden: mr. president? the presiding officer: the senator from oregon. mr. wyden: mr. president, before he leaves the floor, i just want to commend my colleague from new york for a very fine statement. he and i sit next to each other on the finance committee, and we are going to be working very closely together on these issues. mr. president, i have long felt that the best choice in terms of looking at these tax issues is comprehensive tax reform. the reality is the tax code in
america is a dysfunctional mess. it is 100 years old at this point, and i think it's pretty fair to say it looks its age every year. and when it comes to energy -- and clearly a lot of senators on both sides of the aisle have done a lot of work on this -- my preference would be that the congress would simplify the various energy provisions, replace the dozens of separate incentives for each energy technology with fewer technology-neutral performance-based incentives that bring us to a more level playing field in the energy area, a more level playing field, and one where there would be certainty for those who are going to do the innovation; those in new jersey and oregon and elsewhere who have those kind of breakthrough, innovative ideas and who are telling us that they badly need to get off
this roller coaster of extenders and have some real predictability for the important innovative work that needs to be done. those kinds of of incentives should take into account important policy goals of domestic energy security and reducing this country's carbon footprint while getting the tax code more out of the way and letting the free market decide which technologies break through and ultimately succeed. it is my view that what chairman baucus released yesterday -- and he consulted with us extensively extensively -- certainly has some promising ideas in that regard. now, with respect to where this debate is now, i think it's important to be clear about the challenge. it looks more and more like the