tv Key Capitol Hill Hearings CSPAN January 22, 2015 7:00pm-9:01pm EST
sanctions while negotiations are going on. recognizing and stating that the purpose of sanctions is to bring people to the negotiating table. having said, that i'm as skeptical as anyone that iran will actually come through and follow through on their agreements for the long term. i certainly hope they do. i am as concerned as you are about breaking up this coalition we have the p-5 plus one. these sanctions have been effective because they're multilateral. and i'm very concerned they will break up. they are at the table because this has been iran versus the west rather than iran versus the u.s. and i think that's what we need to make sure continues. and so i am sensitive to the administration's concern that congress move ahead now with additional sanctions even triggered that might upset the
negotiations and fracture the coalition, the effective coalition that we have.çn÷ i do believe that if the administration thinks that they can conclude an agreement and move on without congress weighing in, however at some point on that agreement that's a bridge too far. it is our right and responsibility to weigh in and i will be anxious to see the administration's formal response to the chairman's proposal and look forward to those discussions as well. also as a side agreement i'm glad to see the treasury has lessened its load a bit by changing our policy toward cuba and that we aren't spending so much time and resources
licensing americans to travel to cuba and can free up resources and time and effort to make sure these agreements and the sanctions we currently have and future sanctions if they should be ramped up, that we have the resources to actually do that. i would just say that i would applaud the chairman for putting forth the proposal he has in terms of congress weighing in on an ultimate agreement but i hope that we are sensitive to these negotiations. i do believe that as many of us discussed here that if this jpoa were to continue in perpetuity it wouldn't be such a bad thing as long as that breakout time is significant enough and that iran isn't progressing toward a nuclear weapon. that's what our goal should be.
i hope that we can stick with these negotiations. i hope they're fruitful in the end. but i'm certainly willing to play as constructive a role as i can in this committee to make sure that happens. >> thank you, senator. senator coons. >> thank you senator. i too support the administration's strong and persistent and determined efforts to bring iran to the table. and congressionally enacted and administratively implemented sanctions have made a critical difference in changing the trajectory of iran's illicit nuclear weapons program. like many of my colleagues, i have deep suspicion of iran's intentions and actions rooted in their human rights violations their support for terrorism regionally and around the ç÷@pworld. developments even today in yemen that suggest they continue to engage in activities not not just their illicit nuclear
weapons program but in many other ranges that should give us deep pause about any agreement with them. nonetheless, i think you've made significant progress in getting them to the table and in continuing negotiations. but i will just reassert that no deal is better than a bad deal and that a deal we cannot ultimately enforce and that we cannot ultimately live with in terms of where it leaves us in the long term or the short term is worse than no deal at all. and one of my core concerns is whether or not we really will have the time to react we'll be able to detect cheating and leakage, and whether we will be able to sustain the sanctions coalition that you have so successfully convened and put into place around the world. first just a comment, if i might, to the nominee to be the deputy director of the cia. my congratulations on your great leadership and work in sanctions
enforcement. one positive of the omnibus that i think was not widely remarked on was an increase in the resources for sanctions enforcement enforcement. and whether it's the lightening of the load that senator flake referenced or an increase in appropriated resources. it is my hope my confidence that your successor will continue the same determined and vigorous enforcement of sanctions that has been the hallmark of your time there. let's get into if we might, both where this deal as imagined and described would leave us and then where we are today. first where it would leave us. one of my core concerns expressed eloquently earlier by senator kaine is that we are no longer negotiating the dismantling of iran's nuclear infrastructure. we're negotiating for them to retain enough enrichment capacity and enough facilities that we have confidence that their breakout time is no less than a year. what does that leave us in 2021 or shortly thereafter? i know the exact length of the agreement isn't yet finalized.
but how do we avoid the regional proliferation that would come from an agreement that essentially locks in iran as a threshold nuclear power? and how do we ensure that the message that the region and the world takes from this agreement isn't that we have assented to there being a threshold nuclear weapons capable power? >> senator, thank you very much. just very quickly, we first of all share your deep suspicions about iran and its actions. that's precisely why we're driving to get a deal if we get one that satisfies very stringent requirements. and we also fully agree with you and other members of the committee that no deal is better than a bad deal. and indeed there have been opportunities to take a bad deal. some of our partners would have been willing in some of these areas to settle for things that we are simply not prepared and will not settle for. so we very much agree with the premise you that and other members of this committee put forward. in terms of where iran is at the end of this again a few things. in our judgment the one-year
breakout time is critical but also very conservative. besides the material for a weapon, they need a weapon itself. so we will be vigilant about their efforts to return to weaponization. they need ability to deliver the weapon. we will be vigilant about that. then we're also being conservative because quite frankly it's a little bit hard to imagine iran or any other country breaking out in that fashion when they get to one weapon's worth of material. it would be much more logical if they were to go down that path to accumulate enough for several weapons, which would take much longer. but if we have the one-year period, we believe that that would give us plenty of time if it proves necessary to take whatever steps are necessary to reverse that action. and it may be resuming economic pressure. it may be military action. or other things. in terms of where they're left, to come to your question they won't be in a sense a threshold state at the end of this. they can't become a nuclear weapons state through the front door, first of all.
there will be a permanent ban on weaponization activity. they have permanently have to apply the additional protocol to ensure to the best extent possible there's no undeclared program. there will be extensive iaea safeguards on the extent of the program to ensure there is no diversion. and for the duration obviously we'll have the enhanced monitoring and access. that will allow us to understand better than ever before every nook, every cranny, every person, every place every document involved in the program so that even beyond the duration of the agreement that knowledge will give us a much greater ability to detect whether they are trying in any fashion to break out. and of course at the end of whatever the duration is we retain exactly the capacity we have today to take action if they do something that threatens our security. we will be no worse off and indeed we will be infinitely better off given the knowledge
that we will accumulate over time. so the idea that iran would be treated at the end of this kind of agreement as a non-nuclear weapons state was actually one that was first advanced by the previous administration. and indeed our partners around the world. and this goes to i think what senator flake said a moment =g'1ago. the purpose of these sanctions has been to get iran to the table in order to negotiate something that gives the international community confidencet program iran has is going to be for peaceful purposes and should they violate any of those commitments we would be able to do something about it so as an effective matter as a practical matter they can't break out. that's what we're striving to achieve, and again, we hope that we can get there by march. >> and i am concerned that centrifuge r&d also be a central part of the negotiations because perhaps in the first phase of the jpoa it wasn't as fully embraced as it should have been. myx!k55e is that moving forward there are two different ways that they could expand their
breakout time. one would be the accumulation of potentially fissile material. i think the jpoa has dealt with that effectively and my understanding of the negotiations have that clearly in its sights. a core concern going forward is they not be allowed in any way to engage in the sorts of r&d that would change their breakout time on the back side, whether it's in 2021 or flue illicit means we do need to shut down any potential centrifuge r&d. >> we agree that r&d has to be a critical component of any agreement. >> thank you. >> mr. chairman, if i could for just ten seconds, in response to senator coons, thank you for your kind wishes on my new assignment. but i want to assure you members of this committee and anybody else who may be watching that the team that will remain a treasure after we move along is completely committed to ensuring the implementation of sanctions will be robust probably even better without me being there. but that team that has -- i've
worked with very closely over the past several years is the team that will remain, and i am certain that our sanctions will continue to be very very vigorously enforced. >> you've done a great job with limited resources. i'm glad you'll have even more resources and i wish you the best of luck in your new opportunity. thank you, mr. chairman. >> thank you.9 senator paul. >> thank you mr. chairman. when our founders brought together our government they brought together co-equal branches and the hope was that they would pit ambition versus ambition and that the ambitions of congress to maintain its power would be pitted against an executive who# ÷ wanted more power and that this back and forth would check and balance power. i'm glad to see that there's some exhibition that on"ié both sides of the aisle congress is trying to pit their ambition against the executive and check the power of the executive. in saying this, though, i believe that we've all concluded, both congress and the executive, that the final passage has to be done by
congress. we're arguing over waivers suspension of waivers and how long they will be. if we can get to the crux of the argument maybe there will be an agreement that could be found. the lesson to us, though is when we rewrite this legislation, any legislating moving forward, we need to be a little more careful with waivers we give because they won't want to give them up very easily. as we move forward i've been one who says new sanctions in the middle of negotiations is a huge mistake and may well break up the sanctions coalition, may well drive iran away from the table. i've been one who wants sanctions because i don't want war, frankly. there are many on our side who often say well, we don't need 535 generals, the president should just do what he needs to do in times of war. well, i think there's a certain analogy to diplomacy that we don't need 535 negotiators. but i also don't want to give up my right to approve of the negotiation. at the end of this you want a suspension to go on, i don't know, maybeóó-o to the end of the president's term. if i'm the iranians"l@ < would i
care to go through all of this to have sanctions relief for a year, year and a half? you have greater ability to negotiate once you affirm which is the law that will have to pass the final negotiation. just admit to it. come to an agreement with senator corker admit to it, what is the law, and then we could have permanent sanctions relief, trade with iran again if they will submit. they will be more assured of what we are doing and of the agreement if they know it has to pass us. i've heard whispered when i talked to people on your side, oh those republicans will never approve to anything. but as you listen to us all the way around, i think there is a nuance of opinion. i think there are several of us on this side who do not blanketly say no we will not vote to approve an agreement, but we want you to know we have the right to vote so you come and talk to us. so you talk to the chairman. i've been working with senator boxer on an agreement that wouldn't be new sanctions. it would basically be if they
don't comply with the current agreement sanctions would renew. but i'd also like to marry that with what senator corker is talking about, is the admission -- and this will be admission and a signal but it is the law that you will have to get our agreement in the end. is there any kind of compromise in there? maybe. i think you need to talk to senator corker. could there be something on thewz8ç suspension that is a period of time? but i don't know what 90 days really g7 you or 120 days. we could do years of negotiation to get 120 days of sanction relief. they want permanent relief. that is the carrot we're dangling, and we want something from them. we want them to live in a safe non-nuclear world. that's what we want. so i agree we keep asking for more and more. the centrifuges have to be part of, this all of it has to be part of this. but i don't know you that gain a lot in the administration by saying we're not going to agree to what senator corker's saying week, not going to agree that the final agreement has to be implemented by congress. in doing so you bring this to an
impasse. there's chance of an override of a veto frankly. i'm someone who wants to work to find a middle ground, but i also want you to include some of the los angeles that senator corker's talking about admitting that we don't want to be a consultant. i don't want you to pat me on the back and say hey, this is what we just did. i want you to ask me for permission and i want you to present the agreement to us and i want you to present an agreement we all like. you're not going to get everybody, but i think the vast majority will vote for a reasonable thing. and my argument is let's see if we can actually read proposals, talk to individuals, and see if there is some kind of common ground we can find. thank you. >> awéenator, thank you very much. just to respond very briefly, first of all, just as a matter of basic principle we and i personally absolutely welcome the opportunity to consult closely with the chairman, with the ranking member with every member of this committee on the way forward on iran and for that matter any other issues that are before us in foreign policy and
national security. so we can absolutely continue this gmzg2%5 )jjy this is a question of judgment i think and our best judgment right now is this. and i think, senator, you pointed to something very important. you're exactly right. what the iranians want is permanent relief. and it's precisely by holding back that permanent relief until over a significant period of time they demonstrated that they're making good -- >> and i actually agree with that. the idea of suspension is not about idea. however, then you need to work with us. i like the idea. we vote on a one-year suspension. let's find out if they're complying. if we like the terms of the agreement. let's vote again in another year on another year suspension. but don't just think you're going to be able to do it by yourselves. if you'll acknowledge you have to bring it to us come and sell us democracy's messy. and that's the thing. you've got to come and sell us on something.
it isn't consultation, we have to sell us because we're your boss, we're your co-equal on this, not your subjugant, we're your co-equal. and i fully believe you can bring, if you have all p-5 plus one on board with a negotiated settlement i think you can sell it to us. i frankly think it is not an impossible sell. >> thank you, senator. i will say consultations up until this point have been a phone call in the morning that something is happening. and generally speaking while we're receiving that phone call or reading "the new york times" or someone else reports, i do want to avoeftssociate myself with this comment generally speaking and do hope we'll come to some accord. senator udall. >> thank you senator corker. and let me join with others in thanking you and senator menendez in trying to work through things. you've shown it when your
positions were moved in bipartisan ways and i hope we continue that as we move along. a lot of what we're going to say at the last you repeat many things that have been said, but i also support the negotiations. i think it's very important that congress doesn't torpedo them. and disrupt them. but i think x the message you're getting from us is we want a hard-nosed negotiation, we want to be involved in the process, and part of it is going through this hearing. and i think one of the things you're saying that's absolutely key is if we were alone doing sanctions without all these other countries we would be in a much different situation. it's holding the coalition together that's tremendously
important. i think we need to remember that when we move forward with whatever the negotiations produce, that we want to keep all those countries together and keep the pressure on. and i'd like you to just comment on qzsjxthat. but i have a couple of questions here. one is how quickly could we put additional sanctions in place if you had a failure? that's one. and another is an observation on the side of we hear a lot about the supreme leader in iran. we hear a lot about the president. and then we hear a lot about the hard line. what role do the various players there -- who's going to really determine that iran signs on to this deal? and you know as you follow this
you begin to wonder who's in charge there. so then that leads to the question if you have an agreement who could undermine it in the future. i'm going to go ahead and let you take a shot at a couple of those, maybe follow up here in a minute. >> why don't i take the question about how quickly we could impose new sanctions how quickly congress could impose new sanctions. i think the answer to that is very quickly. it has been done in the past, in some of the legislation that has been enacted. there are sanctions that have gone into effect in a matter of weeks. in some of the executive actions we've taken. those sanctions are almost immediately effective. the answer is we would be able to working with congress as well as working on our own impoed additional sanctions frankly as quickly as we want to. >> do you think, secretary
cohen, the other countries that we're working with if things developed in a negative way that they would then be willing to join us on that? >> it's a crucial question. and i think the willingness of other countries to continue to work with us on imposing sanctions, contrary to the economic interests of many of these countries, contrary to the economic interests of their businesses, is dependent on their continued belief that we are resolution. and the future if the talks together the international coalition to intensify the sanctions is going to depend i think in large part on who our partners perceive is to blame for the breakdown. so long as we do everything in our power to try to achieve an agreement that meets our needs, meets the needs of our partners
and it's iran that is to blame for not reaching agreements, i think we'll have a much better chance of holding together the international coalition and being able to intensify the pressure at that point on iran. >> thank you. >> and senator, with regard to your question aboutsf@q the various players in effect, who's in charge, we obviously have imperfect knowledge of this. but i think what we've assessed and again this is something we can go into in more detail, there are clearly different power centers in iran. i think sometimes we have a tendency to look at iran as if it's the one country in the world that doesn't have politics. in fact it does. and they're very intense. the supreme leader has been at least the first among equals for some time. but there are critical other constituencies that 235rk9 into their decision making. and i think one of the most powerful things that happened in iran in recent years was actually the election of president rouhani because in our judgment that was a reaction to the desire of the iranian people to improve the economy to get
out from the isolation they're under and to move in another direction. and within the confines of the system, which is obviously heavily confined that was what rouhani was trying to be responsive to. whether that's because he believes it or it was politically expedient i don't know. i think the supreme leader also has to measure that in factoring in how much leeway he is going to give to the negotiators in the nuclear context. i will say this. to date, again as the iaea continues to confirm, iran has made about on the commitments it made in the interim agreement. it's held to the agreement. and going forward, if a -- the power center changed you know as we've made clear, iran if it violated the agreement in any fashion would be subject to an intense reaction from us. and as undersecretary cohen said, if we're able to preserve the unity of the international coalition that you pointed out at the beginning of your remarks, senator, that will give us a much greaterc
respond decision by iran to violate the commitments it makes. >> thank you very much. and thank ñx.ñou chairman corker. >> thank you, sir. senator rubio. >> thank you mr. chairman. secretary blinken much of this debate has been about the role of congress and our need to trust in the ability of the administration to craft a good deal and in the fact we're going to be consulted. that was the question you asked. i want to take you back to the last time you were before this committee and i asked you a question at that time during your nomination about whether there would be any unilateral changes or changes in cuba policy. and your answer, and i want to quote it to you, it said, "anything that in the future might be done on cubanocp will be done in full consultation with the real meaning of the word "consultation" that i you just alluded to with this committee." you told me that the last time you were before this committee. who did you consult with on this committee? or who did the administration consult with on this committee before it announced the changes on the 17th of december? >> senator i regrt that i did not live up to the standard i
set during that hearing and the remarks you just quoted. i think that i could have done a better job in engaging with you and consulting with you in advance, and i regret that. >> did you consult with the chairman of the committee? >> so a number of members i think were reached out andibt consulted. what happened is this. >> who were the members that were consulted? >> if i could come back to you on that, i would need to first of all get an accounting of that and also make sure any members who were consulted would want that. >> if i could interject, i asure you that i was not consulted. >> mr. chairman, you were the chairman at the time. were you consulted? >> well, no. there's a difference between notification and consultation. >> the reason why this -- >> to be notified when it's going to happen is not consultation. >> and the reason this is relevant is we're being told we're going to be in the loop on everything that's happening with iran. we have an example very recently
ly of we were not in the loop. you were aware at the time these conversations were occurring with the cubans, were you not? >> i was aware they were occurring. the end game was you know this was a very delicate situation in terms of we were trying to get our asset back and the endgame of that there was a lot going on to make sure that happened in a safe and secure way. but again, i come back to what i said at the outset. i think you're right to point it out. >> but i'm not quarreling with the alan gross release. i'm quarreling with the policy changes that were made. why it's relevant to iran is we're being asked to trust that we're going to be fully consulted. the use of the word consultation as it's been defined by the administration in the last incidence is problematic. i don't want to make this all about cuba, not to belabor the point but i also asked whether there would be any changes in policy absent democratic order and you said that it would just be -- i asked you whether this changes -- when you say move forward, move forward on democratic reforms, not simply economic reforms. and you said not simply economic
reforms. and clearly we don't see any democratic reforms. there was a release of 53 political prisoners. 14 had already been released on december 17th. one of them had been released almost a full year before december 17th. four had fully completed their sentences. five have been reassert rested. and since the deal was done on the 17th, 200 political arrests have been done in cuba. but here's why it's relevant to this. because we're being asked as a congress to sit tight. because we're going to be fully consulted. and it sounds like the only people that are going to be fully consulted is the people who agree with the administration. if you don't3with the administration you'll just be notified. my second point goes to the question that both senator udall asked about who's in charge but also senator johnson asked about why the iranians would go to so much pain in pursuit of this. the answer to choos who's in charge unless you dispute it is who they call the supreme leader, the ayatollah. is that accurate? >> he is the leader in our judgment but he does have other constituencies to factor in -- >> can they possibly agree to a
change of the kinds we're contemplating without his approval? given the support he has in their legislative branch -- >> that's highly unlikely. >> highly unlikely. the ayatollah is not simply a head of state as we normally see, it the head oftt1n a nation state. he is a radical cleric who views himself -- first of all, doesn't just view iran as a nation state. views iran ask-5áe3z a cause as henry kissinger has described it. and the cause@[nva to eventually have the entire world living under the flag of islam. that's actually stated in their constitution. it goes further and states that the ayatollah's not just the 4r5erd leader of iran, he's the leader of all muslims in the world. isn't that accurate? that's his position and title. he doesn't view -- he just basically -- iran is where he lives but he views his mandate as extending to the whole world. but it goes beyond this. these are unambiguous statements on their part. he doesn't just view himself as a cleric. he views himself as the temporary fill-in for the 13th imam, the mahdi who his
interpretation of shia and i think the mainstream interpretation of shia is an imam that's currently in occult occultation occultation-l return one day in the world and govern the entire world under the flag of islam. and their stated purpose for the state of iran is to serve as the basis of that effort throughout the world. that's what motivates him. we are ascribing to his regime nation-state characteristics of a normal country that has a cost-benefit analysis of what's in the national interest of iran. and i won't dispute that there might be some political leaders in iran that hold those views, but the ayatollah, the supreme leader, he doesn't view it that way. he views not just his calling but his obligation to bring about the arrival of the 13th imam and to unify the world under the flag of radical islam as he defines it. and here's why that's important. under his clerical interpretation and that of many in shia the 13th imam cannot emerge until there's a cataclysmic showdown between the muslim and non-muslim world. and when a country led by a person who wants there to be a
cataclysmic showdown between the muslim and non-muslim world has designs on a nuclear weapon, now we have cause for great concern. and that's why they expand their military capability, and that's why they want a nuclear weapon. now, what they've shown is some crafty ability to -- they reject everything that's not islamic in the world. they reject the legitimacy of the u.n. they reject the legitimacy of the united states. but they're very crafty. they accept the benefits of these international order -- of the international order. for example, their seat at the u.n. while still being able to reject their obligationsiuíq under that international order. so what have they dorn with all that? let's go through the timeline. in 2003 the position of the world was no enrichment. then it became you can enrich up to 20%. then it became you can enrich over 20% as long as you send it overseas. and now it's you can enrich up to 20% in iran as long as it's for research facility. if you go through the timeline of what they've been able to achieve it's pretty impressive. how they've been able to use
this process. another five years maybe we'll build the bomb for them at the rate this is going. and meantime the other two components of a nuclear program move forward unabated. a weapon design, you can buy that. you can buy that. you can buy a weapons design right now. heck, you can download it right now potentially if it's ãbrude weapon. and the missile program continues unabated. they continue to test long-range missile capabilities, not to mention adding to their already considerable conventional weapons capability. this is why we're very concerned and have a right to be concerned. this is not a traditional nation state undergoing a cost-benefit analysis. this is a cleric-led regime a clerical government with a clear intent of ultimately one day unifying the entire world led by someone who believes that will only happen after a cataclysmic showdown with the west. so we have real reason to be deeply concerned and skeptical about the ability to reach any arrangement and real reasons to believe that they are willing to
accept short-term suspensions because thes!qyjjtu at the end of the day they'reû%9 point and if they have nuclear weapons they're even better off than they would normally be. that's why we're so skeptical here. we're not dealing with belgium. we're not dealing with luxembourg. we're delg with a radical cleric with a radical view of his role in the world and he wants nuclear weapons to be able to do it and i think ultimately no one here could dispute that ultimately even if they agree towr;% a short suspension that is their goal in the long term and as the north koreans have shown you can agree to all sorts of short-term suspensions and you can always invent a pretext for why now i need a weapon because of the hostilities of the west because it's time for the hidden imam to emerge, whatever. and that's what we're concerned about. they will maintain all the infrastructure it takes tone rich. weapons design and delivery system in the missiles. and at some point, three years, five years, ten years they build a weapon and now the world is at their mercy. and that's why we're so
skeptical. >> senator, just to respond briefly, we share your concern and we share your skepticism precisely because of iran's long track record you alluded to, which is exactly why any agreement we reach has to have the most stringent restrictions on its program and the most stringent requirements on transparency and monitoring to give us confidence that they will not break out. i just want to say with regard tot, consultations going forward i thinkjb9e on this issue, and it's my sense that over the past months and the past years the administration's been here in closed sessions, obviously in open hearings, in one on one conversations and smaller group conversations to lay out i think extensively where we are, where we're trying to go on the iran negotiations. i commit to you, mr. chairman ranking member senator rubio, and others that going forward we will not only continue, that we will expand that and we will be up here anytime that you want, anyplace, to talk about where we are.
again, some of that we just have to do in a closed session or in a private group because the negotiations are ongoing. but we want to make sure you see the full details of what we're trying to achieve. with regard to the suspicions about iran and the supreme leader, again, we share them. we could spend all day here going through the outrageous things he has said in the past including theñ)ujt past about us, about israel, about other designs. but sometimes reality has a way of intruding. and no matter what it is that he may believe and he may want and no matter his sepgsal role in the system i think you're right about that he has to deal with the realities that iran is facing. and he has seen a country that has been subjected to extraordinary pressure economically, that has been more and more isolated, and he's seeing politically that a lot of the iranian people don't like that. and rouhani's election in our
judgment was a response to that. we've seen him give the negotiators i think more leeway than frankly we would have expected possibly at the outset. he's kept the talks going. we continue to make progress. and at the end of the day we will all have to judge whether what we've achieved in any kind of solution meets our security interests, and we will not take a bad deal precisely because we share your concerns and share your but this is not happening i vacuum. and i think we also have to ask ourselves continuously as compared to what? it's going to be if we are not able to reach an agreement, it may become increasingly difficult to sustain the sanctions regime. it depends a lot on what undersecretary cohen said about who is perceived as being responsible for the failure to get a strong agreement. many of our partners have come along kicking and screaming. it's been against their economic interests. we've held them there. a large part of that is because
they believe we're trying to charge to an agreement. that's the purpose of the sanctions, is to get them to the table. so we'll have to test all this out. we again start from the same proposition you do. we are very, very suspicious. but we also see the reality that's intruding on the supreme leader's thinking. thank you. >> thank you, senator. if i could say again, this committee is not proepding anything that breaks us apart from the international partners that we have. i know you keep referring to that, and i know it's a red herring that keeps being thrown out. but we are asking, many of us, for consultation and a vy9kix on the deal that we've been so involved in making happen. senator rish. >> thank you mr. chairman. i'll be brief. first of all put me in the column with the skeptics in this committee such as the chairman and the ranking member and likewise senator kaine. i've been sitting through this from the beginning. i thought these guys were going to scam you from the beginning
and i'm convinced today that they've done that. they've got us set up for what could be a real disaster. you justa ç think about how they went about this. first of all what you've got to do is look at the background as articulated by senator rubio but in addition to that look at the efforts we've had in the past. go back and read the chapter in rouhani's book about what he did to the american negotiators, how he kept them at the table and how he drug his feet and how he was using the peace process to actually continue their ambitions to get a nuclear weapon. use that as your background. then think about the u.n. resolution that says iran, you can't do this anymore. and iran said no, we're going to do it no matter what, we're not even going to negotiate unless you guys agree that we can have some kind of a program. so now they crossed that bridge. now they sit down. if you were going to do this, then you're going to continue
with your nuclear ambitions, go in the direction that senator rubio has suggested. why wouldn't you sit down with your enemy, negotiate this kind of a deal, and now you know exactly what thec"s- enemy is going to know. you're going to know what the inspection regime is how they're going to go about this and you'll be able to put together a system where you can continue your ambitions while the people who are supposed to be curtailing you are going about what they're going about and you're knowing all the way they're going to do it. i think you guys are being bamboozled. i really do. and i hope i hope you can come in here someday and say ha, you doofus, you had no idea what you're talking about. i don't think that's going to happen. these people are bad people. every time i'm on the intelligence committee i sit here, every time we have a problem in that area of the world, whether it's syria, whether it's iraq, whether it's yemen or whether it's hezbollah wherever it pops up, whose
fingerprints are on this? it's the iranians. so look it's getting late i appreciate what you guys are doing. bless you. i hope you can pull it off. but i've got to tell you i thought from the beginning you were going to get scammed, and every day that goes by here and as i listen to how these negotiations are going i think you're getting scammed. and i hope i'm dead wrong. >> thank you, senator. i would just say real quickly a couple of things. i think with regard to what president rouhani did in his past life as a nuclear negotiator, first of all we were very much inspired by that. in looking at what we insisted on in the interim agreement. it's precisely because we didn't want iran to be able to repeat what it's done in the past, which is spend endless time talking at a table while it's going full bore with its program. that we insist that the program effectively be frozen rolled back in some respects and we got increased inspections and access that have given us far greater knowledge of the program. we written spired by that. i'd say also i think he is a
politician. i suspect some of what he wrote in his book was to appeal as a politician to other iranians, and indeed he's a successful one since he got elected president. but again, we start from your premise that this is not about trusting, this is about absolutely verifying all the commitments they make. i think with regard to the inspections and access and monitoring peace again, this is fundamental to any resolution that we would reach. and i believe that they will have the ability if we reach the kind of agreement that we want to ranch to significantly enhance our ability and the ability of the international community through the entire production line in their program to know what they're doing, when they're doing, it where they're doing it. we will develop a base of knowledge we don't even have now about the people the places the techniques that will stand us in very good stead even throughout the duration of the agreement. we think it's in our interest. and again, right now based on what we achieved to date with the interim agreement you
remember prime minister netanyahu came before the united nations a couple years ago and he held up that drawing of a bomb and there was a line and it was getting close to filling up the bomb. that was 209% enriched.the 20% enriched. he was absolutely right. that was critically important particularly because it was being produced at a buried facility that is harder to deal with if it has to be dealt with. that has stopped under the jpoa. stockpile of that eliminated. the other pathways to a bomb looking at what they might do at the iraq facility, the plutonium pathway, there too we have deep concerns about it because once that facility is turned on and fueled it's very problematic, not impossible but problematic to deal with in other ways if we had to do that.fó[
grade, there too no new centrifuges, no next generation centrifuges installed. the stockpile of 4% capped at its pre-jpoa levels. i believe because you are right we didn't want -- >> you've said all that before. and i appreciate that. and like ik]ú said i hope it works. my problem is this. any inspection regime, any regime you put together for doing, this they're going to know all about it, they're going to know all the details of it. and just remember that their objective is not your objective. your objective our objective is to stop them. their objective is to get to that point and doing it such that they're not going to get attacked in the meantime. they're going to know all the details, how to do it and any regime you put together there's technologies that can get around that. i hope you're right. let me7pçñ just close with this on a very parochial matter. as we're speaking here right now, the president's on his way to idaho. andze)ru while he's there pursuant to a request from us, and we're happy he did so, he's going to meet with a woman by the name of
mrs. abedini. her husband's in prison in iran. shouldn't be. there's three americans that are there. for the life of me+z÷ -- and wendy sherman's head to sit there and listen to me say this month after month after month. why you guys cut loose of all that money when they are sok[;: cash hungry without putting your hand on it and saying we'repjsiz going to take it off when those three guys are free. i cannot believe that they wouldn't cut those guys loose. i want to urge you again. the administration says it's the compassionate arm of the government. so be it. but use some compassion. help mrs. oq?)abedini and these two little kids. let's get this guy home. he's got no business being in jail in iran simply because he's a christian and was over there doing christian kinds of things. with that my time is up. >> senator can i just say you're absolutely right. said abedini, amir hakmadi jason rezian must be released regardless of anything else we're doing with iran.
it's an =o"ñentirely distinct issue. they are wrongly imprisoned. and we need to find robert levinson and hopefully bring him home. we fully agree. but we also think that tying that to any agreement the success or failure for that matter of an agreement is not best way to get them out. i can assure you, and i think you know this, the only issue that we raise with them on the margins of the nuclear talks every single time other than the nuclear talks are those unjustly imprisoned in iran and we are working every day to get them home and we will not stop until we do. >> get it done. >> thank you. >> senator menendez. >> couple of quick yez and observations. senator blinken let's be honest. as relates to consultations, there were consultations, long consultations with members who were in agreement with the president's proposed policy changes but none who might be in
disagreement. and that is -- that's on cuba. and that gives rise to the concern that there will be no consultation but notification only to those of us who may be concernedj any agreement or continuous rolling extensions. so i hope you understand that as it relates to moving forward. it was the subject of your conversation with me when you were a nominee of questions i asked you here before the committee in your nomination and i'm disappointed. with reference to march 24th, if there is a quote unquote deal, will that deal be written? >> at this point i can't tell you. my expectation would be that we would be able to show all of the critical elements of the1d; whether there would be an actual initial agreement that would then be turned into a technical agreement at this point, i can't
tell you. >> well, wouldn't the outlines of a deal be something that the iranians and the p-5 plus one should be able to sign to at least so that there's no changing of, well that's not what we understood or that's not what we agreed to? >> it would be my expectation that's where we'd want to go. but as i sit here today i can't tell you what form -- >> it concerns me we may not have a written agreement. let me ask you this. there's no deal on march 24th, you can't come to even the outlines of an agreement. what then? >> so senator, i think if there is no agreement on the core elements of a d└zgx by march 24th, it will depend on exactly where we are. what i mean by that -- >> you may very well say let's keep it going? >> if it's clear by then that we are simply not going to get to yes by which i mean it is clear the iranians will not meet the requirements, then i think we'll have to work closely with you on what steps we will take to try to convince them to do that.
if, however, we have closed off most of the key chapters but let's say for argument's sake one of the key chapters remains that's something we'd want to talk to you about to see what the best way to proceed is. sitting here today i think a lot depends on exactly where we are. but the bottom line is if we '+ 'clude by the end of march that they are simply not going to do what they need to do, that puts us in a very different position. >> secretary cohen, any of those 100 sanctions that you talked about that you levied were any of them -- was iran complicit in any of them in terms of trying to evade sanctions? or was the individuals just working on their own? >> i think for some number ofjx them some of them in fact were iranian citizens, people in a!x iran, and others no question that iran was at least witting of what was under way. >> so during this period of time of the joint plan of action there actually were efforts by iran to evade sanctions.
fortunately, at least in those instances you caught them. it gives me another concern about their intent. let me just say a couple of observations. number one, with reference to senator paul and senator boxer i'm not sure that legislation that says this is what will happen if there's no deal or a violation of a deal which you say you think secretary blinken is acceptable, if it's any different really than what we are saying which is we impose nothing until after the fact if there's no deal. i think that's nuanced at best. it's interesting to note that sanctions on russia vis-a-vis ukraine hasn't caused them to walk away from what they think is an important deal to be achieved. so the suggestion that sanctions alone, that will never happen until after a certain point in time in which you've either concluded a deal or not and that won't happen if there is a deal you know if the russians wouldn't walk away with sanctions on ukraine saying if you'reg0c hurting us on this we're
think pretty telling. and to be honest you whyé x÷ with you, secretary cohen the overwhelming number of sanction this is committee has levied through the congress have overwhelmingly had a much more significant lead0klñ period of time than immediate imposition. and obviously, the time framezp#ñ#jñ necessary for it to have an effect on iran has been even greater. so there's no such thing as an immediate sanction thatz>,w ultimately has an immediate effect. there are very few of those. it takes time for there to be consequences. and i don't know, but it seems to me it took us a fair amount of time to know about parchin which was a covert yhó7u,v÷operation. so i'd hate to see that even with what we envision as verification inspections that an attempt to dd"2ç something covert would take us as much time as it took in parchin to uncover, and that would be consequential. and finally, mr. secretary, you
stated that we will have the same ability to respond in the future should iran breach or break out and we will have all options on the table. i think that igkî that iran iran will be in a different position. iran will be able to sellçiá more than 2 million barrels of oil. it will have access to $100 billion in reserves currently being held overseas, and it will have the ability to procure critical items for its fro program. it gets a lot that would require no we get a one-year alarmy6ábñ/t!jr bell, which may not be enough time to react. i'll tell you something, if you had nothing in place after a
no-deal situation, then the president may very well be of his own design in a position in which his only options is a military option or accepting iran as a nuclear state, and that is a pretty terrible set of@j circumstances. now maybe you don't fear that because maybe there's anotherks%f set of secret letters or deals on the side that we don't know about. there have been a lot of those so i don't know. maybe you can,4ñ tell us whether there's any that we should be waiting on. >> there are not. hopefully none will surface afterwards otherwise we'll have to have a real conversation. so i'll just say look, no one has worked harder to try to get you to the point to succeed. i want you to succeed. but by the same token, i have to be honest, you need to succeed in a bay that is meaningful at the end of the day and there is a bit of a trust problem here because when you have secret deals, when you don't ÷consult
which is to say ask -- we are thinking about proceeding in this course, what do you think about that? versus just telling us this is what we've done. that's notification, not consultation. and when secretary cohen and wendy sherman were here in the past, when i was pursuing sanctions, and i heard all the alarm bells as well, even after we were asked -- i was asked -- to work with senator kirk to come up with a more reasonable sanctions regime and have them oppose it before this committee it create as real concern about when you raise alarm bells and now you herald it. there's a difference between our aspirations a4hñ realism. aspirations how to strike a deal with north korea, realism is that they end up being a nuclear
arms state. and that's ha we're trying to avoid here. thank you. >> thank you for your efforts to bring us to this point, and i look forward over the next few days to seeqd2z if there's some common ground to address the consultation and congress's role ultimately in this. i do want to say one thing. i know there's been a lot of discussions about beebe netanyahu's, whatever you might call his prop at the u.n. i think it's fair to note that with the additional research and development that iran is moving way up the point of centrifuge development. they can move so much more quickly from 0 to 90%. that's the concern that we have is on the research and development component and the things they're doing to move rapidly, rapidly towards being able to get to 90% very very
quickly. but let he just give a few closing comments. i, too want you to be@ñ successful. i wake up every day wanting our nation to be successful in every endeavor, and i think i've shown to this administration my desire to work towards common ground and to try to solve problems. i want these negotiations to be successful. i think our concerns are, and i had one of the most impactfulf meetings, along with a number of people here on the committee, in israel in the last couple days. but i think the concerns are, as you look back over the history over the past ten years as some people have alluded to iran has stayed here and the here. and as these negotiations have progressed, what's happened is the p5 and us have continued to who have towards their position,
and i would just argue that, again, having congress as a backstop, as you enter!js these final steps, having congress as a backstop, someone that you do in fact not only have to consult with, but you have to seek theirbv1+ approval, would be somewhat of an anchor to keep us from continuing to move towards their position, and i think it would be very difficult for you to say that there hasn't been a continual movement towards their position. i mean you look at where we began, with the u.n. security resolutions. you look at wherew[bç we began with us potentially agreeing to them having enough centrifuges to serve their, quote, practical needs, which i understand every scientist says was 500 centrifuges, and we've moved way beyond that. so i would just say to you congress can be an excellent backstop to you as you're moving down the road.
i think senator cain probably expressed iüñq better than any of us here, when we=< entered into these agreements that senateor senator menendez talked about i don't think anybody ever thought that they would be suspended to the end of' the entire sanctions regime falls apart and i have tremendoh on the front end of the deal before you've dismantled the entire regime is an important step that i hope you will consult with us on. we've laid out a proposal. we hope you'll consult and we hope you'll dom an agreement that takes into account some of the nuance that you pointed out earlier that you want us to
discuss, but saying after the role that we have played to basically put the international community at the table just so say we don't really=jy6ñ want you to pzqpç a role, we want you to trust us is totally unacceptable from my point. the supreme leader as we negotiate we tend to be more concerned about the supreme leader. he has said publicly that one of his major concerns is that iran enters into an agreement and somehow over time congress changes its mind. we have a presidential race that's coming up. i assure you that the iran component will be a major part of the next presidential race. i believe that to be the case. and so since there's so much concern about the supreme leader and him walking away and doing whatever, i would just say that congress's approval of a deal, to me would be reassuring that
whatever deal that you've done would stand the test of time. so i would encourage you to sit down, to walk through with us some of the concerns that you have about timing. but i would say that general movement today is towards congress playing a role. i think again just stiff-arming doesn't take us to a place that probably meets the test that both of us need to meet. and i would encourage to you sit down and talk with us. we thank you for being here today. we thank you for your service to our country. and let me just give some formalities. for the information of the members, the record will remain open until the close of business friday, including for members to submit questions for the record. we ask the witnesses to respond as!c promptly as possible. your responses will also be made a part of the record with the thanks of the committee, this hearing is now adjourned. thank you. >> thank youg-z mr. chairman.t]b>3@?h+v3
finance committee will come to gjy÷order. chairman hatch take good care of this gavel as i know that you will. and just i want you to know how much i enjoy working with you your long history of bipartisanship. and this morning as i hand you the gavel i want to wish you, chairman hatch, all the best. >> well thank you very much.$ké [ applause ] >> thank you so much. that comes from a very good man who knows how to use this gavel. it's been so long since i've used one that i'm not sure i know how to do it anymore. but we're honored to be with everybody on this committee. this is a terrific committee. "pzet we're going to do some very, very important things as in huth
past and i want to personally pay.f senator from oregon for the fine way he ran this committee and we'll try to hopefully follow his ex)sc and run it in a way that's fair and reasonable for everybody. and i'm69@tax grateful to you.. it's wonderful to workpqmp with you. welcome, %?mkju+já to the first hearing of the6á t)á t @r(t&háhp &hc% committee in the q&mqf"h114th congress. it isz#y& and the any economy. i believe that regardless of party affilia)922 we can all agree that job strong vibrant economy are good j@0 things. the senate finance committee has a long tradiq[ of effect
testifinessy ness effecttiveness. my role isy1< to continue the tradition, to a/3 thezk9 committee to function and produce results as it has so many times in the past. that is why we chose this topic for our first h5áong. today i hope we can have a discussion that will help us findgq consensus on these challenges. rather than highlighting our n;nw differences. i will be sorely disappointed
compete and create more jobs. our current2fño j5detax code stands sxz/]9 us. and i believe senator widen feels the same. over the past few years i've been working to make the case for tax reform on the senate floor. i'm going to continue to do so. recently senator(!u widen andr(qjñávg i sha%pf1 o set forth the first steps for tax reform in the(! all assigned to study di areas of tax reform and to come up with proposals that we will use to work on bipartisan tax reform and+si bipartisan tax reform legislation. we have
just as committed to reform as we are. i look forward to seeing the results of their work. we need to getw,4 i'd like to ask each of the witnesses on our panel to use at least some of their time to give us specific ideas on how we can improve our nation's tax code. another area of the committee's jurisdiction that is essential to a healthy ñu÷ economy is international trade. the united states has a long tradition of breaking down barriers and providing access to goods and services in foreign markets. this has been great for our economy, and we must continue to do these things in the future. 80% of the power residev8 for our job competers to compete on the world stage, congress needs to renew tpa in short
order. this is also something we need to get done. and others on this committee toya=a find a path on tpa that will provide the best opportunities for tpa to succeed. i hope thatz( we're able complete our work soon. i met with the ambassador for a considerable amount of time on these particular the obama administration is involved some of the most ambitious trade negotiations in our history. the only way to get trade agreements to reflect the high standards is through a tpa. or trade promotion authority. i'd like to ask each of the witnesses on our panel whether they think trade is important to the economic opportunities and the development of a healthy economy and to include their statements. the finance committee's@lqg jurisdiction extends beyond, expands beyond tax and trade
into other areas that impact jobs and the economy and the economic security of the american households. we have growing health care costs that put strains on employers and taxpayers.'8 and we have an entitlement crisis that threatens to swallow up our government and take our economy with it. if we don'teo5 do something about that, that's exactly what's going to happen. all of these impact jobs and the important. i hope we can havezå a robust conversation today on committee and congress can+8ç do to address she'sthese issues as well as others. i hope we can avoid having a partisan back and forth. that doesn't mean critiques of any pol/14)should be considered out-of-bounds. nor does it mean we shouldn't have the spirit of debate. but i hope that0l questions we ask or statements we make we wille5'ñ stay focused on
promoting a healthy economy for our country. i'd like to take a moment to recognize we have new members of the committee. senators hiller,nvb cotes and scott. >> sounds like a law firm. >> once again, welcome them tox the finance committee and say that i look forward to their participation in xé. hearing and others in the future. i'm also va pleased that senator warner is still on this committee. i expect him to be a very hard-working member of this committee and somebody who can bring people together. and i'm counting on that and banking on it. and i'm pleased thatíñyñ he's with us. i have no doubtvgonñ that each of their contributions will be valuable to our efforts. finally, i want to note that at any point during the hearing that we have a quorum present i plan to move to executive session to formally organize the committee which will include
routinerafd matters. with that, i'll turn the time over to my counterpart senator widen for his opening statement. >> thank you very much, chairman hatch. and on behalf of this side of the dais, i, too, want to welcome our enough colleagues, senator cotes, heller and scott. and i will say as senator ha4l appropriately mentioned how important it is to fix>:r$ñ this broken dysfunctional mess of a tax code opportunityd:jq to watch senator coates in action. just/d9ti a couple of additional points about chairman hatch before i turn to the matter at hand. senator hatch is the second senator from utah to committee. who chaired the committee from
1923 to +jä933 and who is perhaps unfairly remembered best forvè% the tariff bill that bears his name. fortunately, chairman31ii÷ hatch has a very different view of economics thankprs senator smoot did. i'd also like to note that senator hatch is only the third senator toé p serve$%$ñ simultaneously as president pro tem and chairman of this committee. he is going to member of the senate. and he is only the second senator in the modern era to have been given the3kz heavy responsibility of chairing three major committees. senatorgpi((r previouslyr1qn chaired the judiciary committee and the health committee and the financevsc (ááá t in my view he has saved the best for d'ç]+ and the last point i mention is that if you look at senator hatch's record fromzí(l historical
standpoint he has a long focus of recognizingf&d that the3;+éáupq:ñ legislation is bipartisan legislation whe+x&you don't proceed unilaterally, but you try to find common ground, and i think that'sbr zcñ of us very well, and i do look forward, as we have in the past, chairman hatch to working closely with you. >> thank you senator. thank you senator and i don't think we have, we need a couple more(d:fñ in order to -- >>i+k)÷ if/$> i could turn briefly to the matter at hand, this is a technically important hearing because seven years afterr%j the economic clams shook our economy tot;ñ÷ the core our çn+5jju has a ways to -& too many middle class americans pounded by decades of flat wages are still struggling to make progress.1n &háhp &hc% and i want everybody to
unde2">d my bottom line for this congress. when working families see biggerqffq recovery is going to go from a walk to a run. over theá a lot of time talking with workers and businesses in my state about the challenges they face seven years after the start of a great recession.!÷ just this weekend i hall r lincoln counties, and it's pretty clear that there are a lot ofw!éç oregonians, a lot of americans, waiting for the economi#kl? them. for oregon's middle class moving the recovery from a walk to a run pretty much comes down to what we call the five t's. technology jobs tax reform, trade done right, transportation and my guess is probably everybody senator on this committee on both sides of the
aisle could come up with their own list. th/p.á no question in my mind there'd be a lot of overlap. now there are ñ a to be learn the about our history as&4cñbqy0ñ policymakers work to strengthen the foundations of the american tdwx=5e9ñ 70 years ago after winning world war ii and>âc÷ making the long slow climb out of dree pregs, our country took bold, new steps to create a thriving middle class. it expanded and connected every corner of the nation from portlandfçç oregon to port lan*zq maine. over time it reformed the tax system to better fit the modern challenges and found opportunities in markets abroad!kgr(t&háhp &hc% for our#kñ companies to size.eize. working americans and small
businesses for decades. year after year people feltilu confident that their kids would do better than they did. true economic recovery, in my view, will restore that confidence. it will mean more jobs with a strong, clear:g,dát to the middle d lass. jobs in which workers can support their families build their saéand send their kids to college. jobs that don't leave families stretching every paycheck month after month. so, in my view, there is a question for each of us to ask every vote we take in the congress. that question is how will this grow the american worker's paycheck. so, as we come together to tackle the overall tax code, which senator chairman hatch has correctly mentioned, let's ask, how's this going to grow the paycheck. when we take on the enormous job of rebuilding our infrastructure, again, the
question is how will this grow the paycheck. as we work to get more sturnts in the door to college, once more, how will this grow the( paycheck. and, as we try to ensure that our companies can be competitive]iu in a cutthroat global economy the issue is still how will this we can all be proud of the fact that the finance committee over the years has taken a starring role in so many of the important so there are 9l8me to be; opportunities for us to come together on a bipartisan basis to ensure that more ñldk$9m share in their getting bigger paychecks. i believe i can speak for the democrats on the committee in saying that we all look forward to working, to grow the middle -3u class,b!dg lighten their economic burden and that we believe there's an opportunity to pursue this in a bipartisanb3uefashion. again,6ksjñ chairman hatch
congratulations, i look forward to our first hearing. >> thank you,xqu j widen. i thank my colleague for his;#÷mq kind remarks. and i look forward to working with this committee. if we're going to solve the economic problems ofi@q7rj country, thispt play a pivot all role in that. since 2011, governor engler has served. prior to his time at brt, served for six years as the president and ceo of the national association of manufacturers. and he was also#9u2ñ a three-term governor of the state of87 michigan. governor e:g]? lushq on thegño board ofjg@ directors for the
universal forest products. he graduated from michigan state university requestptho a bachelor's degree. and later earned a law degree from lansing, michigan. we welcome you to the committee. i hope this is the first of many appearances before this committee to help us do our work and i want to thank you for being here. and i'll introduce the others as we turn to them for their statements. so pleaseklzpájut your then i'll interduts other two witnesses. >> thank7, you very much mr. chairman. congratulations on your receipt of the gavel. pleased to be here to testify on behalf of the business round table. in 2015, business round table would like to see a stronger economy creating the question before the committee is how do we get there. this week we released v)q+ing america's full potential, more
work greater investment, unliptsed 6é&aa=iqu9%qe9ñ i ask that a copy of the round table report be included with my testimony. >> itag included. >> committee also hasvpqw been provided 5vcopies. it includesixvñ expanded trade tax?+m÷ reform fiscal stability fixing our broken immigration system, infrastructure investment and a smart other approach to regulation. i want to focus on two topics,i]q6ñ trade and tax reform. business leaders believe strongly in the benefits ofrxç5 trade and trade agreements. it isñó- an opportunityís>w for the skrs and administration to demonstrate cooperation early on in swift.kç;qñ our agenda includes two key recommendations. we recommend the enactment of !áy#ñ updated trade authority as soon as possible. we recommend the consultationdwñ with congress pursue and secure high quality and fair9-$
agreements. particularly, thepsssttrans-pacific partnership, they;]z trans-atlantic trade. trade promotion authority legislation is the critical tool for achieving high standards trade agreements that will create strong, enforceblingable rules. a 21stc[;z century nb[ oversight of u.s. trade negotiations and assures our trading partnersncrr that washington is for enacting trade agreements. +-h economy. in 2013 business round table created a coalition of more than@l 230% businessf!)vz5oñ associations and companies all committed to
communicating on trade and strongly backing tpa. to work with this committee. and i offer1fn1#,aát)j help today. on the next topic, i think everyone agrees the u.s. tax code is&q brokengú] needs@,1vi be fixed. mr. chairman, the formation of the five working groups that you referenced earlier today on the u.s. tax codeoçm represents an excellent start to the kind of bipartisan effort5 afc:y modern more globally relevant tax system a ñ reality. just ñyesterday, jack lew reiterated the administration's desire to workoceiñ on business tax reform and we urge the administration and congress to enact tax reform this year. tax reform should bet+f improve the competitiveness of allçls that is0i and corporations'r alike. business roundsñh. table key tax reform recommendations for
corporations are two. first, set the corporate rate at a competitive 25%. i did bring a kb in the written testimony i;i7s#1+x oecd chart without amendment. but for purposes of the committee i thought i'd put a green line in asking for a 25% rate thqdbyi move from the bottom reåñ line where we are today, worst in the world, not up to the middle, but we get a lot more competitive. and that is within our reach. you'd love to be where ireland is, but progress is important. and that's where we'd be if we could get to a 25% rate. it actually shows it at rs/29.7 but8!;÷ that's with the local added in. the modern system would end the double taxation and eliminate a(8ceìáhp &hc% policy that's resulted ineéu more than $2 trillion in earnings trapped offshore.
reform will require hashed choices. in the2úá repeal of taxtw offset a revenue loss of corporate rate reduction, but the result would be a broader, flatter tax+rú code. america's business leaders have consistently maintained that tax reform will boost wages growth and investment. in 2014, rice universityfee professors analyzed then chairman camp their studies showed an increase of u.s. gdp of 3z0t2.2% afterncnd#n years and$l@bu a boost in after-tax wages of 3.8% for american workers after 10 we look forward to working with you. this growth can help us address our fiscal challenges as yñmq as we turn to suchwv+' issues as debt and entitlement reforms. cbo says that& each one tenth percentage point sustained increase in the growth rate of gdp would reduce the deficit by
full percentage point then would reduce budget deficit by about $3 trillion over a decade a nice, nice65gm:jz contribution.b3atñ mr. chairman, senator wide tt1 juáu for the opportunity to kick off the 2015 hearings ando:&ñ address the nation and those that would help us give a healthier economy and help america achieve its full potential. thank you. >> thank you governor, appreciate your excelleng5 statement. our next witness is dr. robert hall. he is from the joint hoover institution and'? añ professor of economics at stanford university. he1("
academy of0ñ arts and sciences and the society of labor economists. he serves on the national bureau of economickvçñ research. and has advised numerous government agencies on policy including the tre reserve and thefrñ congressional budget officer. dr. hall received his ph.d.i+e from m.i.t. in econo>>)ç we wantr. to welcome you, dr. hall. we're very appreciative of you being here. and we thankzoczñ you for appearing before us today. so please proceed with your opening statement. >> thank yovx mr. chairman for this opportunity to discuss the u.s. labor market, whichhsqéñ iscf1ñ÷ a specialty ofxb!ñ mine. i'll also comment on improvement
in trade andg6n$ñ taxation. the labor market is now back to normal. it's not depressed, but it's not in a boom state either. it's in between. for example the unemployment rate at 5.6% is just$"nz below itsá,wewujjtiu(jtt average. the key b+ñ point is that most people r:?m,oize is that employment has not grown by its normal amounts in the expansion. sjs>$u actually is the reason that familyoa incomes have not grown satisfactorily. wages have grown but [ the problem is employment has not grown, and the combination of the two has left stagnation. just to continue, though, on this point that the with respect to the availability of jobs, were iñ normal now, for example, short-term unemployment is at an all-time low. the time that it takes employers to findfsxñ a new employee has is
at a record high, which means that it's hard to find work earns, which means for workers, it's easier to find jobs.p$ on the other hand, there aresrkv negatives in the labor markethpxñ tod!=6m long-term unemployment and involuntary mi5ipart-time employment#fec are at above normalg.mñ limits and it's gratifying to see that they are declining and will approach normal soon. employment growth is disappointing. the fraction of the population bp5pworking-age population looking for work has declined. a trend in 2000j=cñ worsened after the crisis. the decline is not the result of demographic shifts. itkw j changes. teenagers and young adultsaccount for all of the
decline. participation has remained constant for those 35 to 59nv& and has increased for those 60 and above. the decline iniq1ié&l$ participation has been larger among young people in house holds with above median income. so18m it's not restrictedn-#6÷ as sol people i believe ineh!ézlow-income families. i don't see, then that there's a place for a policy that attacks the labor market directly. and i think most people agree with that.w,azrcwbv82 uhp &hc% rather, we need policies with ?j i &háhp &hc% economy-wide favorable impacts that would bring improvements in &háhp &hc% the labor market along with 9"rkutá áhr' the economy as a whole. the? outcomes and stimulate growth and it would close some of thc9k hcf1 o gap between the wage growth of
low wage and high-wageworkers. now turning to trade policy i think i just want to leave one point. and that is that earnings should be measured in terms ofnasñ purchasing power. if we allow american consumers to pursue bargains that are available in global markets that raised incomes. that's one of the major objectives. therefore, we should welcome imports from countries that are providing products at low prices. now there's lots moredqo- say ab specialty. let he turn tom61uñ tax reform, which is an area that i have beenz55ó active in. thej9 holyeah bushca plan is an airtight business plan. integration of the personal tax
and business tax should be the top priority of tax reform. there's too much double taxation of income.d for example we have the corporate income tax and personal income taxbqñ when individuals receiveé" and capital gains, that's a mistake. it is a very consistent approach to that and i recommend that everybody. it has the right incentivessi$ for savings and investment. iti:8u doesn't have to be a flat tax. it's the right way to go. it would provide the type of for. thank you for this opportunity to teszzx gñp>1él >> thank you very much. last, butqs,÷57%u certainly not least is dr. justin>7w wolfers. he is a professor of public policy at the gerald ford school ofyquc public policy at the
the good news is we are very much in aniqy improving economy right0%;4 now. last year we@ jobs per month on average, which is the fastest rate of job creation since 1999. the unemployment rate now is down to 5.6%. and importantly through this falling at a pull percentage point per year.rg it's down from 10.dbww÷%age points. the economy will finally be back to normal. but i should urge, as much asl@dç that's the natural projectionzh0e that we should got declare mission accomplished/0f we regarded a 5.6% unemployment rate as6 and it's certainly the case that we can do better. i think we(n learned through the$v
mid to late 1990s that the u.s. economy can sustain a 4%m unemployment rate rather thanjm[ú a 5%nlgy unemployment rate. but i think there'suhxññ reason to be optimistic that the recovery8t m could run a lotñólfurther. i'm more concerned about the longer run of the recent business cycle.igo we still have elevated rates of unemployment we would measure unemployment in the number of weeks that people )ñwdñ out. six, 12 weeks. today we measure it in months or in many cases 6 that's a new development for us. and it appears to me thatq@sz moving people back into the labor2 t force who have been out of work foror ñ one, maybe two years, we don't yet have the systems in place to do that. so perhaps there's a need for job search >q;x÷assistance. also, perhaps, we need to think
about the social; insurance that may be necessary if long-term"cz unemployment is going to be with us for the longer term. during the recent recession mb.$ m unemployment- emergency unemployment compensation for&l0 out of work for a lkt'i period of time. it seems to me that we want to be prepared for the next time that something like this happens again. which is to say that it would be, rather than acting, you know, on the spur of the moment, it would be useful to have a program in thatgi$d triggered on longer unemployment insurance÷'"# when the next deep recession hits. i think that's part of the second, broader ñr thing i want to we've learned from this recession is that the federal reserve can't necessarily do all it needs to do to offset a cyclical down turn. we're7i:-m at 0% interest rates now and the fed hasn't been able to be as aggressive as it needs to0
be. if when down turns hit taxes could be lower and spending could be higher, that i think would lean against the worst excesses of the business cycle. it also has the advantage that we'd actually be spending8!;÷ money at a timee when labor and interest rates arev/j0e.ñ particularly low. so what i would urge is that you any.0q(r)cumstances to tryé÷s build in triggers where we spend more and tax lessve'lñ duringafy recessions and inx, turn we tax less, we tax more and spend less during booms.7úúúwé we could imagine doing this for things like qár pell grants. we could do it for tanf ande>l %áp all sorts of as much as the aggregates tell us theev ñ economy is doingíp>ó well we're not seeing that of the families]6njñ out there.
we're seeing a shift in the my goes to7 labor. whereas historically economic growth went to the rich as much as ionú[ywç went to the poor, over the of economic growth have actually accrued toñq+9the top 10%zq9xbrá bottom 09%90% have seen no rise whatsoever. debate on capitol hill. but i think there's a separate and fash more5zkq useful debate to be had which is whatnñ/x is the right distribution of those taxes. are there groups who need greater incentives than other c.s usevu9 ú
movement. but that's run its course. my generation was the to not get moretbzpg;q education than my parents. and my kids, at the moment, it looks like the next generation is not getting more education than their parents. i think the president's idea of potentially expanding either community colleges or also early childhood education are potentially ways to reverse that long # trend which could be engines for growth. letcaubawn÷,vkñ( stop there. >> thank you so much. we do now have a quorum here. i want to thank my colleagues for their attendance.iéq we wegp0 now interrupt the hearing for business. the committee is to organize for the 114th committeengress. the committee must adopt the committee rules, authorize the budget. des igs nate senators to serve
ontqy several)fb4c panels and regarding the firsttw!-áuz of business, the i8*ááá tt rules all senators should have a copy of the proposed ruledxxzç the and" before them.lr specifically, they contain a change to rule 18 regarding the posting of transcripts for allmbu1 committeõ÷meetings. the change willbv allow the committeeo!eu toe continue posting transcripts on the commit website and to ensure that we are not in violation of rule 18 when theylaqny remainli following the date of the meeting. i will now epts tape a motion regarding the rules. >> i w 4h move that the committee adopt the rules. >> is there any debate? seeing none, if2it'ñ there's no further 90edebate without objection, the committee rules are adopted. the next order of business is to report the committee budget. all senators should have before
budget. >> i would move that the committee report the committee resolution concerning the budget at this time. >> is there any debate? if there's no further debate, then, without objection the committee budget is ordered reported. the next order of business is to assign senators to sub committees of this committee. senators have before them the list of senators on each sub committee and should be aware of the #m;hassignments. i will now entertain a motion to make those assignments. >> mr. chairman, i would move to make those assignments. >> thank the ranking member. if there7qm is no further debate without objection, the committee assigns the members to the committees listed. the next on the congressional oversight. by statute and tradition, the committee designates its most
senior and eligible five senators to fill÷zqxc that's roleese roles, and that is proposed in the papers before each senator. i would now entertain a motion. >>o]quñ i would move to make those designations at this time. >>jpaa ranking member. if there is no debate, the committee now de4yjz!tes those$isz l :úo cf1 o members. we'll now return to theç %rqp)ing ñzéjté, ç participate evenlbsmore. perhaps i can start off the questions. governor engler there is interest in tradeoffs in tax reform and to get the detailed report and in working with ranks member widen
and members of this committee onsjw ñ both sides haveñheed to work in five different policy groups. what are your thoughts on how tax reform can help grow jobs and promote a healthy 239=5eññ >> mr. chairman,õ4 thank you. -:é 's end i think it's a positive step for the senate as a whole. we have looked at an array of issues, and we talk about the united states in terms of its potential. and it is the sense of the business round table's ceo's that the most important thing that we could do for the8qma u.s.e,-tr(t&háhp &hc%é.mb5jjjáá)ju totke and 'z competitive state. and that, as i testified,zk-/ñ means+?b
addressing rate,snñ addresses the international situation. we believe that tax should be comprehensive in scope. and that if this# done, it has a dramatic and direct impact, we think thayer is -- there is an opportunity fors=zh the united states to lead a gl trillion back home as part of this z contribution. but we also look at things like6yz@%' mergers and we have a deficit.ges0ómvr we'd like to see u.s. companies being acquirers not being the acquired.>ps :6í:uj like to see the u.s. as it seeks to meet one of the president's goals of doubling exports andhjvsx.vsiñ being more competitive to do 8that. we have anbrp"energy advantage.
investment.d!t]iyc @&hc% all of these are enhanced byxq a taxhc5z code that's more';é@ñ competitive, mr. chairman. both of these have the opportunity to impact wages and jobs in this country in a very positive wa s >> thank you, governor. appreciate thosem.c/ñ comments. dr. hall, we just went through aob1z÷ devastating financial crisis so called great t!+÷recession. and financial&oz deleveraging by american households. now i wonder what the effects were of all those things on labor markets in terms of how long it has taken labor markets to recover and whether there will begó i also wond government should do>666 jobnq=! creation. and before you respond let me let you knee some people such as larry=mi summers, seem to búç have somewhat of a pessimistic economic outlook, long run or what heb callsqjq4ñ secular unquote stagnation.
that is a future with persistent sluggishness, near zero interest rates,#1j]év#ál lack of a monetary poll -- policy to do ?uñmuch. i'd likeozs to have your viewpoints viewpoints. >> so i was larryç teacher atx2[nm.i.t. and he and i havetbkuu been debating these issues. we've had two very interesting debates on this subject. there's a right part and there's a wrongv÷ãpart to the concept of$ stagnation. the, and]@qu i'ved released a paper on my website if anyone wanthävs to sigh more see more about this. but stagnation is a real thing not so much as larry summers talked about but rather in the earnings thatj snq families take from the labor market have been
stagnant in purchasing power2+jmç terms since about 2000. prior to that they've enjoyed substantial growth. now when youqj ñ take that apart, it falls into a number of interesting and important categories. that's also when productivity growth slowed down. thepy for restoring growth and prosperity is to get@l productivity growth up. it's a proven fact that the b1q economy. it raises the different groups. the other factors the one i:w÷ already mentioned in my previousj remarks that we've seen this of certain types of peoplexf! especially+< if you want to know what's most wrong with the u.s. economy here's a simple "< fact. in 2000, half of all dñf&(t worked. today, only one quarter of(x7z
teenagersv[yikcñ worked. the withdrawal of the labor market i think is a symptom of what's going on. i wish i could say that's because they're getting more2j[=÷ education or doing=ymother useful1v things, but that's not what the data show. instead, there's, teenagers are spending more time enjoying themselves, which is not by itself a bad thing but i think that it's important to understand those are.zyls! tworróñ big' sek(d factors. dr.5yt been happened. thatou]ñoesn't mean that the outlook isie we could restoreé,q productivity growth,çl reform. there are certain changes, for example, in disability programs
which clearly have a factor in declining participation badly ñ need reform and they're good ideas for reform. soxa as larry summers is. he made a big sflash with that. i think when you take apart the7hzi &háhp &hc% numbers carefully a lot of his'> a pessimism is not right. with respect toiisq the united states, one overwhelming fact that we ailll need to be proud of is that the performance in the u.s. economy has been so much better than other advanced economies, especially in southern europe. we need to be proud of the way the system works. and i think it's)qd=ç going to continue to work. >> my time has expired. >> thank @ gentlemen, for@. years thislpp= committee has debated thecq of supply-side economics. often as theñ consumer sees it
trickle down economics. my own view is that that kind of approach is a$zkñ particularly poor fit where two-thirds of economic activity is driven by consumer spending. i think we all understand that the affluent can only buy so what we need is more people buying homes and cars and other goods and services that make life better for them and theirxçe)wh so what you really need areewl policies, as i was touching on that are goi0w s to put more money in working family paychecks. and i think what i'd like to do ìáhp &hc% is just go down the row and have each one of you give me youryf: sense of a policy that would do the most to increase thei.=z paychecks of american worker. we'll start with you, governor. >> thank you senator. i think that a l'#ç[mw>z
gdp would be the thing that would result in manyb americans coming back into theh:qff workforce. it would raise wages for workers in the workforce, and that is that are not simply one thing, but it'sg infrastructure. it's doing many things. it's having the right trade agreement &úxqthe.ín it0#e% is investing in infrastructure. it's delivering on the 5 promise of our education investment. and i think immigration reform is part'w it. we have a vîl7p complex interrelated integrated economy, a global economy here in the u.s. oñ we've done well. iç,cn think it's been testified to today. we've made'"py great strides in our recovery, but there's so much more upside potential.
>> dr. hall, the governor's right that?a;ú it is a complicatedekm7ñ,ñ8> i think tax reform for sure. i think that there's a lot ofen improvements that, in our economic performance6 l#q we rationalizing the tax system and53k0q eliminating double taxationçitjso we have closer to uniform of tax rates, for instance entrepreneurial income. and then taxed again as a capital gain or dividend mostly capital gains. i think that's definitely holding things back. i think that we wouldf=+íñ see, we # would, could restore earlier
rates ofca before would be a huge factor in improvingç÷ér paychecks. >>"xps think certainly 3añ part of it. senator coates and i, and we were pleased that forfb @bp chairman camp picked up on thisé2slz in our bipartisan tax reform bill what we do is rñ triplesça& the standard deduction for midd class6( :x people. dr."ñáss wolfers? talked about the importance of the increase in size of paychecks. most families, it's about getting people back to work.1ozp@@r(t&háhp &hc% you get a second in a family, that will double theird income. whereas if we
about the 1970s, it used to be an economy where a rising tide would lift all boats. that appearsá]ñ to be broken today. so we need to not just raiseid size of the pie but make sure some of it gets out there. that's where i think the important work of the tax system is most critical. you asked for a very specific suggestion, what would put more money in people's p1dcvt-m9ñ iñ ÷ think the earned income tax credit sgrat way of ensuring that those who work get the rewards thattñk"ñ deserve. at the moment, we mostly reserve that for parents. why not nonparents. and actually toañwx be %oná the childless tic they would be noncustodial there are broad sways to the population that i think would have a huge effect in increasingoç6ñ take-home pay. >> dr.r)gh wolfers and just for you, dr. hall, and also a b you may not know, my mother!;r,m
a research associate at hoover institute when glen campbetáxóy was president. what i remember most isú%k8í they would always tease that they liked mrs. wyden so much they chose to ignore she was# democrat. there was a lot of=ç here's my question. >> i'm the same way about him. [ laughter ] >> this:e7áñ is on infrastructure investment which is something you have been interested in. we are clearly falling behind the american society of civil engineers, giving us a deep plus. you cannot havebñ? big league economic growth with( little league infrastructure. you recently -- there was a forum in u!hicago, a forum on global markets. you said the united states needs7u45uju chargmñzlñ for roads and é3 bridges. when you said that i pickedjo up on it at the úáime. whau8w do you mean by the kind of user charges that you would be interested in funding #cm8÷ infrastructure? >> well senator wyden, in
california, and other parts of the country we've adopted rational pricing7 of infrastructure of highways. úo that's so-called realtime pricing. so there are lanes in san diego and one near where i live where it's guaranteed that you can go 60 miles because there's a knob that gets turned automatically that raisesy good thing, because] pure xhim"xç economic waste,]j generates income. i would like to see better pricing of our infrastructure of all types, especially congestion pricing of highways. it would give a signal about where additional infrastructure is needed. that would be ones where the price is always high relative to how much it would cost to expand. relative to where we are today.
where there'ïb expansion of infrastructure highways in particular, highways that are not heavily rw relieve congestion. we could relieve theu[e by pricing it. in the long run we use the pricing signal to decide where to expand the infrastructure. it would be a whole new ball game. we're seeing that all over the economy. realtimet0qc pricing omab private ñ areas, like airlinesslax; particular,ñ increase in airline efficiency because all airplanes fly@17÷ full now. and that itself is;6cc÷ a 10% productíó-y improvement in the airline business and it's all from wóh &háhp &hc% realtime prices. >> thank you mr. chairman. >> thank you, mr. chairman. sno wyden, i'm still thinking about glen campbell, di$0jk you say? it's not a rhinestone cowboy? different glen campbell? ij4uthought i was7+kúzlçñ beginning to see a theme develop here.
that we can work on. because i think it will provide the kind5$@ governor engler alluded to, and that youfuvñ mentioned. but i know the president was celebrating a high quarter"ézyps of economic rtú quarter, b1zp!n i'm wondering whether he's spiking the football a little early. and here's myci9 appreciate your comments on kñsñ this. we'veoycv&=r accumulated&4(÷ $18 trillion];iz in debt.]ó÷;gf1 o the federal reserve has a huge balance sheet, because it's been purchasing our own bonds, that is going to have to at some point unwind. and interest rates will go up. and i worry that for all of the things that the american taxpayer pays for, via their federal tax dollar, that we're going to spend more and more money servicingjñ+c÷ that federal debt, and crowding out other important priorities from
national security, to safety net programs. but i'd be interested in hearing from each of you briefly what your -- what you see in the futureyfb[ñ in terms of the]bsd prospect of this9 qu looming debt challenge and rising interest rates if the federal reserve does what i think we all expect them to :ay do and begins to#& obviously)tús reduce the pace at which they're buying u.s. bonds, but also begins toxbx unwind that program. to tackle that? and pb real ñ4éwñquickly. >> thank you, senator cornyn.vñj>xae! @r(t&háhp &hc% that's not an easy question. i'm not sure my crystalfjseñ ball7?: any better than anybody b maybe not as good as some on this committee. looking ahead, i guess it is of the fundamental principles that?w w at the roundtable,4vdx it comes back to the idea of growth.
because i use the just .10% increase in 61;ygdp is about $3 trillion tg 5 the treasury. looking ahead at the 1%, then to have a growing economy in order to generate the kind of revenue that the government neslcé by prudent decisions relative to spending. and ultimately entitlement reform has to be addressed, because so much of the spending is nondiscretionary. and you're exactly right i mean, au rising(3v-ñ --nceñ i don't know that we're close to a rising$meu interest rate environment, or rapidly rising, given what's going on around the 5 ixworld what on the other hand, the numbers ;tc it did go. we're a very liquid market. it's the time to oinvest. i certainly want to support the notion that's in thisqrd
also an optimal way to be thinking about leveraging this low interest rate environment that we're w5ezin. we've got a lot of rebuilding that needs to be done in the country. and there are some creative ways. there are publish/private partnerships out there.?'z'd some of the very transportation systems that dr.d>í hall talked about. we see it in senator warner's statement. those arev privately. so there are mechanisms, but there are still big public decisions that need to be made. inland waterways of am electric grid. needs to be done. that also would be accompanied by a tremendous skilled workers to do that. >> i hear withuiu i hear a lot ofkn1l ideas about how we can spend money but i don't hear a lot of greaté@ ideas about
opposed to pass it on to the future generations. dr. hall and dr. wolfers i know my time is limited.7,@r& i appre+#"noiñ@ your thoughts. >> sure. well, senator, first of all, i strongly share"&wçñ youra% concern about the balance between revenue and spending.açé i run a spread sheet that looks 100 years into the future. obviously not accurately. one of the assumptie cbo that does the same thing on a shorter%3: factored in the growth of interest rates. and that, of course, feeds back into furthercú requirement for revenue to pay that. and it's scary.qg q6"hm the trend is)slíç adverse. the trend is for revenues of the fraction of gdp to rise substantially more slowly than spendin(@ &háhp &hc% and that's a long-term, and it it's just remarkably stable.