tv U.S. House of Representatives CSPAN January 25, 2012 1:00pm-5:00pm EST
mcconnell said what he said, but i think when you look at the policies of this president, i want him to be able to, you know, pivot, much the same as bill clinton did in 1994 after the midterm elections. and whether we see it, we saw he created surpluses, we saw we had balanced budgets and we saw that we had welfare we lorm -- reform. so no one can tell me that democrat presidents and a republican legislature cannot work together in washington, d.c., it's been proven and i think that we need to come to the table and do that. . host: unemployment in florida just under 10%. >> we are as competitive as we've ever been. for a lot of companies it's starting to make a lot more sense to bring jobs back home. but we got to seize that
opportunity. we got to help these companies succeed. and it starts with changing our tax code. it starts with changing our tax code. [applause] right now companies get all kinds of tax breaks when they move jobs and profits overseas. think about that. a company that chooses to stay in america gets hit with one of the highest tax rates in the world. that's wrong. it doesn't make sense. we've got to stop rewarding businesses that ship jobs overseas. rejobs like convair who are doing business in the united states of america. -- conveyer who are doing business in the united states of america. [applause] now, before the other side gets all excited, let me be clear.
if you're a company that wants to outsource jobs and do business around the world, that's your right. it's a free market. but you shouldn't get a tax break for it. companies that are bringing jobs back from overseas should get tax breaks. manufacturers like conveyor that stamp products with three proud words, "made in america," those are the folks who should be rewarded through our tax code. [applause] jeff and greg told me if we pass tax reforms like these they would be able to buy more equipment for their facility. so let's do it. today, my administration is laying out several concrete actions we could take right now to discourage outsourcing and encourage investing in america.
you need to tell congress to send me this tax reform plan. i will sign it right away. we need to make it easier for american businesses to do business here in america, and we also need to make it easier for american businesses to sell our products other places in the world. i don't want to export our jobs. i want to export our goods and our services. so two years ago i set a goal of doubling u.s. exports within five years. and by the way, iowa, you should be interested that obviously a big chunk of those exports are also agricultural which is doing wonders for this state's economy. the agriculture sector is doing very well. i want to export manufacture. and we are on track of meeting our goal of doubling exports. fuelly, we're ahead of
schedule. exports has been one of the strengths of this recovery. and soon, thanks to new trade agreements i've signed, not only are we going to be sending more soy beans into south cree i.t.a., but we're also going to start seeing new cars on the streets of seoul, south korea, exported from the streets of detroit, toledo and chicago. [applause] i don't mind kias being sold here, but i want to make sure they're buying some chevies and fords. so we are going to keep boosting american manufacturers. we are going to keep training workers for the skills they need to find these jobs. we need to create jobs in american energy, including alternative energy that's been a source for a lot of rural communities in iowa. and an economy built to last
also means making sure that there's a sense of fair play and shared responsibility. now, most immediately, i was talking about taxes on business. the most immediate thing we need to do with our tax code is to make sure we stop a tax hike on 160 million working americans at the end of next month. [applause] people can't afford losing $40 out of each paycheck. not right now. your voices convinced congress to extend this middle-class tax cut before. you remember there was a little resistance there at the end of last year. but you guys sent a message. we new that payroll tax cut. strengthen the economy. but they only extended it for two months. we need to extend it for the entire year, so i need your
help to extend it. tell congress to pass this without drama, without delay. [applause] no soap operas. just get it done. on the longer run if we are going to invest in our future, we also have to get our fiscal house in order. you hear a lot of talk about deficits and debts and those are legitimate concerns, although the most important thing we can do to actually reduce the debt is to grow the economy so we can't abandon our investments in things like manufacturing and education and investment because if we're growing faster the debt and deficits start coming down, the numbers get easier to manage. you just can't cut your way out of it. just like a family. if you are struggling to get out of debt but you decide,
well, i won't repair the roof or the boiler and i'll stop sending my kid to college, that's not the way you're going to solve your long-term problems. now, we're going to have to make some tough choices. and right now we are scheduled to spend nearly $1 trillion more on what was intended for a temporary fax cut for the wealthiest 2% of americans. a quarter of all millionaires pay lower tax rates than millions of middle-class households. warren buffett pays a lower tax rate than his secretary. warren buffett's secretary was at the state of the union last night just to confirm. [laughter] now, does that make any sense to you? do we want to keep these tax cuts for folks like me who don't need them?
i'm doing ok. i really am. and, look, nobody likes paying taxes. i understand that. so if we didn't need it, if the country was in a surplus like it was back in 2000, you know, i'd understand us saying, well, let's try to, you know, let millionaires keep every last dime. you know, i get that. but that's not the situation we're in. and so we got to make choices. do we want to keep investing in everything that's important to our long-term growth -- education, medical research, our military, caring for our veterans, all of which are expensive, or do we keep these tax cuts for folks who don't need them and weren't even asking for them? because we can't do both.
i want to be very clear about this. we cannot do both. [applause] you got to choose. so i believe we should follow what we call the buffett rule. if you make more than $1 million a year -- i don't mean that you got $1 million worth of assets. i don't mean a family that's been saving all their lives and doing well and, you know, and is comfortable and finally we got a little nest egg, if you make more than $1 million a year, you should pay a tax rate of at least 30%. [applause] if on the other hand you make less than $250,000 a year, which includes 98% of you, your taxes shouldn't go up.
now -- [applause] and by the way, if we do that, and we make some smart cuts in other areas, we can get this deficit and debt under control and still be making the investments we need to grow the economy. now, a lot of -- [applause] now, i hear folks running around calling this class warfare. this is not class warfare. let me tell you something, asking a billionaire to pay at least as much as his secretary, that's just common sense. [applause] that's common sense. i mean, we're talking about going back to tax rates that we had under bill clinton. you know, when by the way the economy grew faster and jobs increased much faster. and in the meantime, warren buffett will do fine, i will do
fine. we don't need tax breaks. you do. you're the ones who've seen your wages stall. cost of the very thing from groceries to college tuition going up. so i want to give you a break. i don't need a break. look, we don't begrudge success in america. this family business right here, i want them to thrive. i want these guys to keep growing and growing and growing. [applause] and hire and hire and hire. but when we talk and when americans talk about folks like me paying my fair share in taxes, it's not because americans envy the rich. most of them want to get rich. most of them will try to work
hard to try to do well financially. it's because if i get a tax break i don't need and the country can't afford, then either it's going to add to our deficit -- and that's what happened between 2000 and 2008, basically. all these tax cuts just add to the deficit because they weren't fade for. so it takes money out of the treasury. or alternatively if we're going to close that deficit, somebody else is going to have to pick up the tab. it might be a senior who suddenly has to pay more for their medicare. it has to be a student who suddenly has to pay more for their student loan. it might be a family who's just trying to get buy and suddenly their -- get by and suddenly their tax rates are going up. that's not right. it's not who we are. you know, one of the biggest disagreements i have with some folks in washington is the nature of america's success. you know, each of us is only
here because somebody somewhere felt a responsibility to each other and felt a responsibility to our country's future and that starts within our own families. it starts with us making sure our kids are responsible and we're instilling in them the values of hard work and doing your home work and treating other people with respect. but then it expands from there to our neighborhoods and our communities and we recognize that if everybody is getting a fair shot everybody has a chance to do better. that's what built this country. now, it's our turn to be responsible. now, it's our turn to leave an america that's built to last, and i think we can do it. i'm confident we can do it.
[applause] i believe it because of what i see in places like cedar rapids, what i hear when i meet the folks who are gathered here today. i mean, think about what you've accomplished coming back from those floods. now, that wasn't a matter of each person being on their own. it's a matter of everybody pulling together to rebuild a city and make it stronger than it was before. that's how we work. and fema assistance didn't come out of nowhere. it came around because as a country, as a united states of america, we decide, you know what, when any part of the country gets in trouble we're going to step in and help out. that's what we do.
this country only exists because generations of americans worked together and looked out for each other and believed that we're stronger when we rise together. and those values are not democratic values or republican values. those are american values. those are the values we have to return to. [applause] so we're going to keep on moving on american energy. we are going to keep on moving on american manufacturing. we are going to push hard to make sure that american workers have the skills they need to compete, and we're going to make sure that everything we do abides by those core american values that are so important. and i know that if we work together and in common purpose
we can build an economy that gives everybody a fair shot. we can meet this challenge, and i want to remind everybody just why united states of america is the greatest nation on earth. thank you, everybody. god bless america. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]
>> president obama leaving iowa and heading off next to arizona. he'll be in chandler, arizona, later this afternoon, in the phoenix area. on thursday he'll be at events in las vegas and aurora, colorado and on friday, ann arbor, michigan. all of those holding early primaries. coming up in about 45 minutes or so we'll take you live to a news conference with federal reserve chairman ben bernanke. this is what the federal
reserve said today, it's unlikely to raise interest rates until 2014, extending the record low rates by more than a year. and on more "road to the white house" coverage for you at 4:45. newt gingrich along the space coast has a speech today on space policy. he's in cocoa, florida. we'll have that live event for you as well. >> for more resources in the presidential race, use c-span's campaign 2012 website to watch videos of the candidates on the campaign trail. see what the candidates have said on issues important to you and read the latest from candidates, political reporters and people like you from social media sites at c-span.org/campaign2012. we'll have ben bernanke's news conference at 2:15 p.m. more reaction from florida republican representative allen west.
host: we want to welcome back to c-span congressman allen west from florida's 22nd congressional district that includes west palm. guest: thank you for having me. host: what did you think? guest: i want to read a couple quotes because i hope it will frame the discussion. a democracy cannot exist as a permanent form of government. it can only exist until the voters discover that they can vote themselves largess from the public treasury. from that moment on the majority always votes for the candidates promising the most bem fits from the public treasury with the as a result that the democracy always collapses over loose fiscal policy. always followed by dictatorship. the average age of the world's greatest civilizations have been 200 years. so let's see if any of the listeners out there know
exactly who said that and where it came from. i will tell you with the speech from last night, i spent 22 years in the united states military, been through a couple combats zones so i've been on missions before and i appreciate the president paying honor to those men and women in uniform and all the great things they've done but when you talk about mission, one of the things the president should have brought up last night was the fact that we were at 1,000 days yesterday without the senate having passed bauget. and i think that's very important if we're going to get this economic situation on the right track, if we are going to get the federal government on the right track. and when the president has already -- his administration has already told congress that they are going to have to push back the deadline for submitting a budget because they are not ready to do that, that goes back to mission. host: let me follow up on that point and i understand where the republicans are coming from. when the speaker of the house on sunday calls the president's state of the union speech pathetic before even hearing what's in his speech and when the republican leader in the senate, mitch mcconnell, saying his job is to make barack obama
a one-term president, how can both parties come to some sort of a compromise on some of the big issues? guest: i think there were some excerpts of that speech sent out. i tell you republicans did not get that speech until about 8:54 last night on our black berries but i looked across the aisle with democrats with paper copies of that speech. i appreciate we could have gotten it earlier. i was not up here when mitch mcconnell said one-term president. when you look at the policies of this president i want him to be able to pivot much the same bill clinton did in 1994 after the mid-term elections and what did we see? we saw he created surpluses. we saw we had balanced budgets and we saw we had welfare reform. so no one can tell me that democrat presidents and a republican legislature cannot work together in washington, d.c. it's been proven. and i think we need to come to the table and do that. host: unemployment in florida, according to the latest figures, just under 10%.
florida has the sixth highest unemployment rate in the country. tied with north carolina and a 2% foreclosure rate. the seventh highest nationwide. what's the state of the florida union economy? rrr are are are are r are guest: i think that the question before the american people is, do you believe in an equality of economic
opportunity or do you believe in equality of achievement which i think leads more to economic dependency and we have to change things up here in washington, d.c., and i think it's very clear what we can do, i call it blocking and tackling, that we need to get back to. host: are you giving out any coffee mugs or prizes for those who guess the quotes? guest: in the military we call it a gentlemen's bet so it's a dollar. we'll refund you like $1. i am not like mitt romney. i don't have $10,000. host: democrats with representative allen west. you're on the air. caller: thank you for taking my call. mr. west, let me ask you this -- tell me three things that you like about obama and what he is doing in the economy but leave the military -- just leave the military out? can you just give me three good answers that what you like about obama as far as what he's doing with, you know, american
people? guest: i tell you, i have to go back and be very objective. i look at policies. and so therefore when i look at the fact that we have a debt that has increased in the three years under president obama that matches the amount of debt from george washington to almost president bill clinton, when i look at the fact that our debt-to-g.d.p. ratio which means what we areology compared to what we are producing for the first time since world war ii, we are upside down. we are about 101% to 102%. unemployment that has been at or above 8% for 34 straight months, let's talk about unemployment in the african-american community. we had a black conservative forum a couple days ago that c-span covered, you are talking about 16 president unemployment. i think when we look at these hard fax fakts and these economic indicators, these policies have not been successful. and i think that when you see a failure of these policies i wish the president would move
away from some of the divisive rhetoric that we see and come to the table and sit down with us. you know, the payroll tax cut issue, you know, we passed legislation that would have tended that payroll tax cut for a year, sustained growth rate, the doc fix for two years. yet what do we get back from the senate and what the president support was just doing it for two months, and the pay-fors that we had for that payroll tax cut extension were many of the proposals that the president put forward. so we did exactly what the president wanted. then the politics of demagoguery took over instead of good policy. host: let me share with our audience what you told wmal in washington during the recess. you said you were upset with speaker boehner and the republican leadership. you used the word pathetic. you also said when you come back you all need to be sing from the same sheet music about the tax plan. what did you mean? guest: absolutely. i was upset that we were told in our house conference that this was a good policy, this
was something we were going to send forward. and what did we get back from the senate to include 40 senate republicans was a two-month extension and the means by which we are going to pay for this two-month extension was to raise the fees on loan guarantees for the government-sponsored enterprise. so in other words we are going to put this on the back of america's homeowners. i thought that was a horrible senate amendment to come back. i thought there was a disconnect between the house republicans and obviously our leadership and the senate and i do think that last week when we went up to baltimore and we had the house g.o.p. conference, strategy session, we should have had some of the leadership from the senate republicans come over because we have to get on the same sheet of music. i think we are not bringing that forth right now. host: so if the speaker is running for another term next january, if the republicans keep the house of representatives, will you support him? guest: well, i mean, i will right now. i think that the speaker's doing the best job that he possibly can. are they things that can be done better? absolutely. you know, i've been up here for one year. i've been in politics for just one year in my entire life.
it will be just the same as a brand new second lieutenant trying to have judgment on a colonel or general. i am pretty satisfied with the speaker right now. host: when you say that the rrp leadership sold you down the road -- guest: i feel more so. most of my angst is with the senate side. i feel and i think that's a lot we feel within the house g.o.p. skrches. i think it's so important and i think if you continued on with the quote and i talked about us coming to a jesus meeting or campfire meeting, all republicans, and we need to have the leadership of the minority leader to talk about the way ahead. host: republican with congressman allen west. caller: thank you very much for being here. i have to say that i have been troubled about some of the things you said and some of the attitude that you had. i try to say you are a new
legislator and there's a lot to learn about governing. business doesn't necessarily prepare you for that. a business is a dictatorship. but my concerns are, of course, we do need spending cuts. but the thing that the republicans and my party will never accept is that we have to do something about our tax code so that we have income coming into this country where it needs to come and some of these add-ons that have gone into these bills, no one could vote for. actually i was impressed with mr. obama. i was impressed with him years ago with mccain and palin. i could not vote for sarah palin. i have to reassess a lot of things i believe in. guest: well, i will tell you this -- the president talked about the corporate tax rate in his state of the union address
in 2011 and we didn't see any movement. i do believe that we have to do something about the corporate business tax rate. it's 35%. it's the second highest in the world. when you add on some business fees you are talking about 46.7% that corporations and businesses have to pay to do operations here in the united states of america. i think just give them a good competitive tax rate. let's reduce it down to 20%, 21%, maybe the maximum of 22% and then get rid of the loopholes. that's something very simple. that's something i can agree with the president on. let's take the action to do that. look at the personal income tax. i think one of the callers i heard when i was driving in, we have a progressive tax code system ever since woodrow wilson brought in with the 15th amendment, now we have 53% that are pulling the wagon, 47% are paying absolutely nothing. if we go to a flat tax system,
maybe we can add the tiered flat tax system. we need to broaden the tax base here in the united states of america. i believe somewhere between 13% and 16% for the lower tier, having two deductions, child tax credit, mortgage interest tax deduction and then having an upper tier maybe with 20% and there you have once again those deductions and then maybe you add in the charitable contribution deduction. but we can reduce all of those loopholes. but the most important thing is, how do we get the hard earned american taxpayer to get the capital out of washington, d.c., back into their pocket so we can grow the economy? that's the most important thing. when i look at small business owners that have a subchapter s, i want to try to get the money back in their pockets so they can help grow the economy. host: a question from our twitter page. rick. this is the first time i've seen you.
your reputation precedes you. he wonders if rush limbaugh is one of your constituents. guest: i do represent palm beach. rush limbaugh is one of my constituents. let me talk about american exceptionalism. you are talking about a guy born anyoner city georgia in 161. thanks to the greatness of this nation i have the opportunity to represent areas and a district where my parents -- they could not have taken me to the beach and where i can go and speak on palm beach island and the breakers, a place i would not have been able to go to, palm beach is the highest income per capita. young men from inner-city is the congressional representative. that is the duty of america -- that's the beauty of america. host: you mentioned the forum that took place on capitol hill. that is at c-span.org.
what did you learn? guest: well, the thing is very interesting. 33% of african-americans say that they are conservative. but yet when you go back and you look at where their vote go, it is going pretty much en masse to the democrat party. so there is a sharing of values but there's not a joining of the votes. i think one of the things we have to do is we have to talk about how we can get people to understand those values. the conservative principles, you know, effective, efficient government and what does that mean for the black community. individual rights and freedoms but yet individual responsibility. free market. how do we get urban empowerment zones and economic zones back in the inner city to help minority small businesses so they can hire and we can keep income and we can keep wealth within there? traditional values, how do we support education? how do we protect the family? and faith is also important and then a strong national defense. host: are you a member of the
congressional black caucus? guest: absolutely i am. caller: good morning. guest: good morning. caller: my question is -- i've noticed -- i'm 59 years old next week. i graduated in 1971. i noticed consistency since i graduated from high school that they lowered the taxes on the rich. and i consistently watched the middle class get smaller and the poor get more and more. so please explain to me how lowering the tax on the rich is helping our country? guest: well, i have to tell you, who do you think are going to be the ones to create the opportunities out there for everyone? and i think there are income levels in the united states of america. i just told you my story and the fact i am sitting here on c-span under the shadow of the capitol. so i think that we have to take a look at, how do we expand opportunities out there? i don't want to see people become more and more dependent on the federal government and i think that's what is starting to happen. i want to see people who can be, you know, self-sustaining and i want them to be able to provide those opportunities. if you continue to, you know, be more and more stringent,
you're not going to have those opportunities. you are going to have more closed storefronts like what i see in my congressional district. so we have to have tax policies that unleash the entrepreneurial spirit and the capital of hardworking american taxpayers and their families to be able to grow this economy. and i think that i just gave you the numbers. you know, the top 1% of wage earners in the united states of america pay 38%. the top 5% pay 58% of federal income faxes. and the top 25% of wage earners in the united states of america pay 86% of federal income faxes. what you're saying is you want to -- i don't know if it's fairness, fair share, who is the one to make the determination? i tell you if we don't take a look at how we broaden this tax base we will continue to have more debt, more deficit and continue to have higher unemployment. the best way to turn this around is set the conditions for job creators to be able to do that. and that's what house republicans have been able to do. i'll give you a great example. last night the president talked
about high-skilled immigration work force. we passed a bill, home run 3012, fairness for high-skilled immigrations act. that's sitting on harry reid's desk right now. you know, you look at small company capital formation act, entrepreneur access to capital act, access to capital for job creators act, all of these things have passed through the house of representatives, sitting over on harry reid's desk. some of the things that the president talked about last night. that's the truth. host: let me get back to another tweet and your early questioner quote of the greatness of a nation because charles says it wasn't the greatness of the nation that liberated you, it was martin luther king. guest: it's interesting that charles would say that because the neighborhood i grew up in atlanta was the same neighborhood that dr. king was born in. as a matter of fact, my school is right across the street from ebenezer baptist church. dr. king did not liberate me. dr. king brought forth a challenge for this country that said the dream that he has is
the dream within the dream of our founding fathers. because thomas jefferson talked about the preeminence of the individual, the preeminence of their inalienable rights that comes from life, liberty and the pursuit of happiness. what i don't want to see is a federal government that guarantees happiness. martin luther king talked about equality of opportunity which enables me to be here, not the quality of achievement that says there's only so much that allen west was going to be able to achieve. that's what i thank dr. martin luther king jr. doing for me. host: our guest is representative allen west from florida, republican. harold is joining us in mobile, alabama. good morning. caller: good morning. my question is -- how many elderly people in your district is upset about taxation on their social security benefits, and do you think that taxes and social security benefits is double taxation? thank you. guest: i absolutely agree. i don't think we should be
taxing social security benefits and i think that's one of the things we can correct. i also look at the fact that we have a lot of people down there in south florida that are concerned about medicare and social security. we got to get americans back to work. in 1950 we had 17 americans working for every recipient of social security. to today we have gotten it to about 3-1. what we talk about down in south florida, we have to turn this around and get people working so we can get that social security fund protected, get it replenished. and we got to do something about medicare. right now the medicare expenditure to what it is paid to is about 3-1. we can talk about discretionary spending all day long. it's about 38% of the federal budget that we have up here. 62%, net interest on the debt, medicare, medicaid, social security. we have to come up with some serious reforms or else in the future there's not going to be any of these programs for any of us and i think that's what we have to be focused on.
it's going to take courageous leadership to do that. host: let's look at a map of florida as you well know in the state, the northern part of the state from jacksonville to tallahassee to pensacola tends to be more conservative part of the state. it's a closed republican primary next tuesday. the central part of the state where the vast majority of -- guest: i-4 corridor. host: down to miami which has large influx of hispanic and cuban american voters. what can we expect tuesday in terms of turnout and in terms of your republican primary? guest: i think the turnout will be very big. as a matter of fact, i think you've already seen an incredible amount of absentee ballots cast. it's diverse from the panhandle area over and then really that's almost an extension of georgia, alabama and mississippi. and then to the central to the southern. so you have the fourth largest state in the union, you have a very diverse subpopulation.
it will be interesting to see if speaker gingrich can ride the momentum of georgia into florida or if governor romney can regain the momentum that he had and be able to stand up and combat as far as the ideas and contrast and ideas of what we see coming out of washington, d.c. washington, d.c. host: 19 members have endorsed -- are in the delegation, eight have endorsed mitt romney, one newt gingrich. you remain undeclared. guest: yeah. i think the people should make that decision. you know, i will go into the voting booth next tuesday and make a decision based upon all of the inputs and research that i'm going to do and looking at the candidates. assessing their vision, their ability to be able to, you know, go into the arena and present that vision and that contrast of principles against where our country is right now. but i don't think it's my place to sit down and endorse and i'll let people to sit down.
host: if speaker gingrich is the republican nominee, can he defeat barack obama? guest: i don't know. i'm not claire voyyent because a lot of people thought hillary clinton was going to be the nominee. as my mom would say, many has slipped between the cup and the lip. host: is he the nominee? do you think he could -- guest: i don't know. host: would mitt romney have a better chance of defeating the president from your standpoint? guest: i think both of them have their strong points. if i could bring together, you know, santorum, paul who is good on fiscal and monetary policy, gingrich and romney altogether, you would have the perfect candidate. it's going to be very simple. there is a record the president has. people need to assess that record and make the right decision based upon that. host: you began the conversation with some quotes. we haven't had any guesses yet from our viewers. guest: oh, that's not good. those queaths quotes came from alexis who in the early 1,800's
traveled across america, a french statesman, and wrote in democracy in america and i think those quotes were very pressing and very pertinent to where we find ourselves today. host: we know him well at this network. we retraced his steps and if you go to c-span.org and look at our featured websites, take a look back to some of our coverage of the french writer. chuck is on the phone. san diego, republican line, good morning. caller: good morning, sir. great to speak with you. i am a vietnam veteran. guest: thank you for your service and welcome home. caller: thank you for yours, sir. i was in the u.s. army and i got quite an education there. i have gone to the constitution and the federalist papers and the declaration of independence and i see absolutely nothing there that says that it is legal for the federal government to take money from one group and give it to another.
the constitution only guarantees an opportunity. i firmly believe if this government would spend more time concentrating on lowering the taxes, letting businesses thrive and giving people the opportunity, we would be much better off. i'll hang up and listen. thank you for your service. it's been an honor to speak with you. guest: thank you very much. it's important to go back and read those founding documents. that's why i brought up alex is and i know c-span is a fan of him. that's correct. when i look at a comparative analysis, let's say where president reagan where he was coming out of a recession and president obama, president reagan at this time had a g.d.p. growth of this country at about 6.4%. last year in the third year of his presidency what we saw here right now was a .4%, 1.3% and
we are estimating about a 1.3% in the final quarter of last year as far as g.d.p. growth. but on average that's 2.4%. so something has to be done as far as the policies that like i said, the tax regulatory policies. i go back to something that lisa jackson, the administration of the e.p.a., when she testified before the ners committee, when he had -- energy and commerce committee, when she was asked if she considered the economic impact of the regulations they are handing down on businesses. she said absolutely not. host: from mary wondered if you sign the grover norquist tax pledge. guest: i did back in 2007. i did run in 2008. that was sent to me while i was still in afghanistan and i signed in 2007. they asked me to resign that pledge again when i ran in 2010. i did not do that. host: again, you can join the
conversation on our twitter page at twitter.com/cspan wj. you served in iraq. the president indicating there are no troops left in iraq outside of a few doing some cleanup operations. right move or wrong move? guest: well, i think we can see right now it's the wrong move. when you see a very astute and accomplished general over there who i served over at fort brag and he asked originally for 10,000 to 15,000 troops. and based upon a campaign promise it was taken down to zero. i think mind sight we should have left some military presence in iraq. we should have put them out on the borders with iraq and syria, iraq and iran and up north continue to work and support the kurdistan region of government. we've seen what's happening in iraq right now with the resurgence of sectarian violence.
maliki is -- muqtada al-sadr and the army is there. i think it was a political decision and not a good visionary national security decision. host: canry at the outset attribute an error on my part because we had some people on our twitter page quoting alexis so one of our viewers saying, steve, where can we collect our $1 from congressman west? we were expecting some calls. i guess the check is in the mail? guest: contact our office and we'll be happy to refund $1. i'd be honor to do that. host: in a word or phrase, how would you describe the tone of the president's speech last night? guest: i kept a little count here. fair was used six times. fair share was used five times. and there was three times where some divisive rhetoric. i think that the president needs to, you know, take responsibility for some of the things we've seen here in the past three years and chart a new course for our country.
and that's what leadership is about. host: congressman allen west from south florida, the 22nd congressional district, thank you for being here. >> coming up in about 20 minutes, a news conference with federal reserve chair ben bernanke. the fed has pushed back the date for any likely increase in their benchmark interest rate by at least a year and a half by 2014 at the latest. we'll hear more from chairman bernanke on c-span with our live coverage. earlier today, republican presidential candidate mitt romney gave a rebuttal to president obama's state of the union address. the former massachusetts governor said the president was, "in fantasy land," citing the president's visit to walt disney world last week, "this is a critical time. we have a president who is detached from reality." from american douglas metals company in orlando, florida, this is 20 minutes. [applause]
>> mitt! mitt! mitt! >> thank you. wow. wow. thank you. you are very kind. what a welcome. in is terrific. what a spot this is. this is very impressive. american douglas metals. i want to get a chance to look at what all you do here. congratulations on maintaining a strong business in a tough environment. scott and jeff, this is your business, right? the owners. stand on up. these are the guys that run this place. thanks, gentlemen. now, last night, as i was watching the state of the union address, i took some -- i took some notes, all right, and so you see, i crossed some things out and i thought i'd just speak from those notes this morning and give you my reaction of what i heard. by the way, i thought mitch daniels' address was a heck of
a lot better than the president's. [applause] but my first take was this which is as i watched the president speak i was reminded of his trip to florida just a week or so ago when he spoke in fantasy land. because he was speaking at fantasy land again last night. he seemed so extraordinarily detached from reality. detached from what's going on in florida. i mean, he came to fantasy land but apparently didn't spend much time in the communities around fantasy land and around the state. he said last night how well things are going. if you really think that things are going well in this country, his policies are working, you ought to vote for him. if we ask the american people if we think things are going well or not so well and he wants to get the votes, he won't be president much too long. i believe as i've gone around
this state and states around the nation that people are hurting. the income for middle americans has been devastated under these last several years. as a matter of fact, over the last four years the median income in america has dropped by 10%. and that's at the same time that health care costs are up, gasoline costs are up, food prices are up and so people are really feeling the squeeze in the middle class. here in florida, 9.9% unemployment. and the real unemployment and underemployment level is 18%, almost one out of five people and, of course, you know the foreclosure story one quarter of all the foreclosured homes in america right here in florida. so -- foreclosed homes in america right here in florida. so, president, things are not going -- so, mr. president, things are not going to swimmingly. when you got up on the "today show," if you didn't turn this economy around in three years
you would be a one-term proposition. you were right and we're here to collect. [applause] now, there's another way in which i thought he was detached from reality last night and detached from the people of america. he laid out a number of prescriptions. some of them were just i thought flat wrong, but some were actually not bad. he said some of the things that you looked at and said, well, that makes some sense. for instance, he said we really ought to lower the corporate tax rates to be competitive with others in the world, that ours is the highest in the world. he's detached from his own pretty what's' done. his words and his actions are so different it's sometimes hard to believe so he's raised taxes on companies as opposed to lowering them. then there was this whole riff about regulations and how it burdens enterprises and small business. didn't he realize that under his presidency the rate of new regulation introduction has tripled and he's also laid out
a whole series of new regulations that he wants to put in place? so he says he wants to cut regulations even though he's the guy that dramatically increased them. and then there was the talk about energy. could you believe that saying he was in favor of any of the above, he said, any of the above energy resources. he wants to use all these energy resources. it's like, wait a second. isn't this the guy that's been holding off offshore drilling? isn't this the guy whose e.p.a. has made it impossible for us to get oil out of north and south dakota and parts of oklahoma and texas? isn't this the guy whose regulators are making it impossible to get natural gas out of pennsylvania? i was with one senior executive, chief executive of a big oil -- excuse me -- of a big chemical company. he said, we just announced a $20 billion factory in saudi arabia. we would have loved to have it here in the u.s. but we can't count on getting out the natural gas because of government regulators. this is a president who talks
about deregulation even as he regulates, who faux about lowering taxes even as he raises them, who talks about developing all of our energy resources even as he fries to shut them down. coal in particular. regulation after regulation making it almost impossible for coal users and for coal miners to be successful. and then, of course, there was his discussion of china. i must admit i took some pleasure in the fact that he's talking about cracking down on china even as he has not done so. . he has labeled china as a currency manipulater which would allow him to apply tariffs to chinese products where they have manipulated currency that kill american jobs or where they've hacked into our computers to steal our technology or where they've stolen our intellectual property, our patents, our designs, our know-how. even as he's talking about cracking down on china, he's left the door wide open for them to come in and run across our countryside, stealing our jobs and killing our businesses.
the detachment between reality and what he says is so extraordinary, i was just shaking my head as i watched the tv last night. i think it's time to have somebody who says what he means and means what he says and if i'm elected president that's the kind of president i'll be. [cheers and applause] now when i got up this morning, anne was already awake and she terp turned to me, we were still in bed, and she said, you know, the funny thing about listening to barack obama is that you not only have to listen to what he says but you have to think about what he didn't say. my guess is that what he didn't say was probably even more disturbing and detached from reality than some of the things he did say. what he didn't say last night is that we're spending too much and borrowing too much and that america is on a collision course with debt and that if we don't get off this course, we could sink the american economy and go into calamity.
where, if you will, a virtual titanic. and he's saying full speed ahead. the difference of course is that with the titanic they couldn't see the icebergs. in this case we can see the iceberg. we see it. we're headed toward it. and he's saying, full speed ahead. it is inexplicable that he can speak to the american people about the state of the union and not describe the massive deficits we have, the fact that he has put in place almost as much public debt by the end of his first four years, his only four years, he will have put -- [cheers and applause] he will have put in place almost as much public debt as all the prior presidents combined. and then obamacare, we have another $1 trillion deficit that we can't afford, $1 trillion entitlement, rather, we can't afford. he is emperiling the future of america -- imperiling the future of america and is unwilling to speak about it and unwilling to speak about the need to secure and protect medicare. and social security. perhaps he is doesn't want to
talk about medicare very much because he cut medicare $500 billion to help pay for his obamacare. i hope we remind our senior citizens in florida and across the country, there's only one president in history who cut medicare by $500 billion, it's this president. and if i'm president of the united states i will secure social security and medicare for this generation and for coming generations by making sure they're financially solvent and we reform them to preserve them for coming generations. [applause] now, i wrote another note during the speech. there were times when the president said, if you send me this legislation, i will sign it. i thought, well, aren't you the leader of the free world? why don't you draft some legislation? why don't you go out and say, here's what i want, here's what needs to happen, come to the white house, let's sit down,
let's hammer this out together, this is what i want, you pass it, and then i'll sign it? no, it's you go on to work on this and second it to me and i'll sign it. it's a legislator's legislate arguey where instead of leadership you're always blaming and accusing and pointing fingers. instead of playing golf, yeah, instead of taking action you're lobbying others instead of acting. it's so different than what you do. the culture of washington is all about lobbying and blaming and campaigning and saying someone else should do something. the culture of what happens right here with you guys is if you don't do it, this place loses jobs and loses customers and if you become unprofitable year after year you'll lose your investment and your jobs and a lot of people's futures depend upon people on main street making decisions. i think it's time to have a president who's not just a lobbyist and not just a legislator and not just a blamer and a campaigner, but a president who knows how to get
the job done because he's done it time and time again. and i have and i will. [applause] let me tell you what i will do. what i'll fight for. what i will achieve. i will get our tax rates competitive with other nations so we're not the highest taxed in the world in enterprises. number one. number two, i will actually put a hold on all the obama era regulations, get rid of those that kill jobs. make sure that our regulatory burden does not make us work at a disadvantage relative to other nations around the world. number three, i'll take advantage of our energy resources. i will give licenses, drilling permits, to the oil and gas folks that are ready to go on lands already approved. let's start taking advantage of those resources and get america energy secure. number four, i will crack down on china. i will insist that they are a currency manipulater. [applause] i like trade, i like trade, i
like being able to trade with other nations. i like free trade. but free trade to be protected means that you have to have all the players play by the rules and if they don't, you slap their hand and say, if you don't play by the rules then we won't play with you anymore and that has to be brought to trade as well. number five, i'll make sure we end crony capitalism. [applause] what you're seeing today and it's creeping into this administration is a practice that exists in a few other nations around the world where people in political power use the power of government to take care of their friends. and it's a dangerous course. when general motors went through bankruptcy which it needed to do, came out of bankruptcy, who did they give the company to? the u.a.w.. who supported the president? the u.a.w. when it came time to decide what we're going to do in the solar energy industry, instead of saying let market choose the
winners and losers, no, he gave $500 million to solyndra. he gives money to a couple of electric car companies, tesla and fissker. fissker builds the new facility to make their cars in finland. these are contributors, political people. this kind of crony capitalism will infect our economy, frighten away entrepreneurship, frighten away innovators. it is the wrong course. we've got to get rid of that. number six, we've got to have institutions that build human capital. that means great k through 12 schools, great institutions of higher learning, great training programs for people who want to come back in the work force. i was glad that last night the president talked about work force training. he described another new work force training effort. do you know we have 47 different work force training programs in washington now? 47. reporting to eight different agencies. all this money goes to the bureaucrats and the administrators and the overhead. let's get all of those 47, collapse them down to one, send them back to the states and let
states run the programs in the way they think best. [applause] and one more thing, my seventh thing that i'll do, i will finally cut cap, the spending in washington, and balance our budget. we can't go on -- [applause] we just can't go on generation after generation spending massively more than we take in. and it's gotten worse under this president than any time in our history before. people say, well, how are you going to do that? how are you going to cut? i had the experience, not just of slowing down the rate of growth in my state, but actually cutting spending. i came into office. we were in tough financial shape. and it looked like we were going to have a cash crisis and i went to the legislature and i said, i'd like special authority not just to cut certain areas but to have the ability to cut everything i'd like in the state budget.
and they gave me that authority. and i cut spending in my state. cut it. not just slowed down the rate of growth, absolutely cut spending. in my first year. every year we balanced the budget. let me tell you how i do that at the federal level. [applause] at the federal level i'd do this, i'd take all the programs we have, a lot of them good, a lot that we don't need, and i'd say, is that program so critical to america that it's worth borrowing money from china to pay for it? and if i apply that test i know i'm going to get rid of some programs. i'm going to get rid of some programs i don't like like obamacare, that's first on the list. but number -- [applause] but i'll get rid of some problems -- programs that we do like. i say to folks, it's great to have pbs and big bird without advertising. but i'm afraid we shouldn't keep on sending hundreds of millions of dollars to pbs. instead they should get advertisers like everybody
else. big bird can survive with kellogg's corn flakes on the tv tube. [applause] i really do feel, and i've said this before and i'll say it again, i do feel this is a battle and an election about the soul of america. [applause] this is a president is turning america into a welfare-style state like europe. i don't want to become like europe. i want to stay like america. last night mitch daniels had a phrase that i thought was very powerful. he said, look, trickledown government doesn't work. that's what we're seeing under this administration. bigger and bigger government saying somehow as government gets bigger and takes more it will be good for everybody else. well, they're wrong. the right course for america is not to head toward europe and not to become a social welfare state, it's instead to restore the principles that made america the hope of the earth. and those principles -- [applause] those principles are embodied
in our founding documents and when the founders said that the creator had endowed us with certain unalienable rights, among them life and liberty and the pursuit of happiness, they laid out a path for america that was not temporary but enduring. a path that says, in america we can pursue happiness as we choose. we do not need a government to tell us what kind of car to get. we do not need a government to tell us what kind of light bubble we can have. we don't need a government to tell white house kind of health care we're going to have. we free people get to choose our course in life. that's the nature of america. i want to keep the american ideals and dreams of our past existent and powerful in our present. i will fight to restore those principles. i will get america working again because i know how to get america working again. now and then people go after me and say, you know, in the past, you've turned around some businesses, you've had -- you've cut in certain places. absolutely. if there's ever been someplace that needed cutting it's in
washington. i will take those skills to cut back the size of washington. [cheers and applause] you guys, i just want to say thanks to you for spending some time with me this morning. i'm looking forward to shaking your hands and saying hello. you're generous to be here and spend some time with me. this is a critical time. we've got a president who's detached from reality. he's detached from the people. he's detached from his own words. his actions are so different than what he says that people are surprised and shocked. i want to restore to america a president that will tell people exactly the way it is. the way it is right now is trouble. a lot of people are having a hard time. i'm going to fix that. i'm going to tell people the truth and i'm going to make sure that america remains as it's always been, the hope of the earth. thank you so much, guys. thank you. [cheers and applause]
>> we'll take to you ben bernanke, the federal reserve chairman is holding a news conference expected to talk about the fed's policy statement that it doesn't plan to raise its interest rate before 2014. it's just starting live here on c-span. >> then i'll discuss next the consensus statement that has been distributed to you regarding the committee's longer-run policy goals and strategy. and finally i'll place today's
policy decision in the context of our economic projections and our assessments of the appropriate path to monetary policy and i'll then of course take your questions. as indicated in the statement rea leased earlier this afternoon to support a stronger economic recovery and to help ensure that inflation over time is at levels consistent with our statutory mandate, the committee expects to maintain a highly accommodated stance for monetary policy. in particular the committee decided to keep the target range for the federal funds rate at zero to .25% and says that economic conditions are likely to warrant exceptionally low levels for the rate until at least late 2014. to provide support for the recovery in a context of price stability, the committee will also continue the program that we announced in september to extend the average maturity of the federal reserve's holdings of securities. following careful deliberations, committee participants have reached broad agreement on a statement that
sets forth our longer-run goals and policy strategy. this statement should not be interpreted as indicating any change in how the federal reserve conducts monetary policy. rather, it's purpose is to increase the transparency and prohibitability of policy. there is today widespread agreement that clear and transparent central banking communications facilitate well-informed decision making by households and businesses, reduce economic and financial uncertainty, increase the effectiveness of monetary policy and enhance accountability to the public. the statement begins by noting that the committee's firm commitment to fulfill our statutory mandate, promoting maximum employment, stable prices and moderate long-term interest rates. since monetary policy actions tend to influence economic activity and prices with a lag, our decisions appropriately reflect the committee's longer-run goals, our medium term outlook and our assessment of the balance of risks
including risk to the financial system that could impede the attainment of our goals. an important aspect of policy transparency is clarity about policy objectives. with respect to the objective of price stability, it is essential to recognize that the inflation rate over the longer run is primarily determined by monetary policy and hence the committee has the ability to specify a longer-run goal for inflation. the committee judges that inflation at the rate of 2% as measured by the annual change in the price index is most consistent over the longer run with our statutory mandate. over time, a higher inflation rate would reduce the public's ability to make accurate, longer term economic and financial decisions whereas a lower inflation rate would be associated with an elevated probability of falling into deflation which can lead to significant economic problems. clearly communicating to the public this 2% goal for
inflation over the longer run should help foster price stability and moderate long-term interest rates and will enhance the committee's ability to promote maximum employment in the face of significant economic disturbances. maximum employment stands on equal footing with price stability as an objective of monetary policy. a difference of price stability is that the maximum level of employment in a given economy is largely determined by nonmonetary facts that are effect the structure and dynamics of the labor market including demographic trends, the pace of technological innovation and a variety of other influences including a range of economic policies. because monetary policy does not determine the maximum level of employment that the economy can sustain in the longer term and since many is a determine nance of maximum employment may change over time or not be measurable, it is not feasible for any central bank to specify a fixed goal for the longer run level of employment.
although the committee cannot freely choose a longer run goal for employment, it can estimate the level of maximum employment and use that estimate to inform its policy decisions. the committee considers a wide range of indicators in making the assessments of maximum employment, recognizing that such assessments are necessarily uncertain and subject to revision over time. for example, in the latest set of projections that have been distributed to you, committee participants estimates in the longer run normal rate of unemployment have a central tendency of 5.2% to 6.0%. roughly unchanged from last january but higher than the corresponding interval several years ago. as i know that the level of maximum employment is not immutable, in particular it could be increased by effective policies such as education and training that improve work force skills. if the committee's assessments pointed to an increase in the max in -- maximum attainable level of employment, our strategy would be modified to
aim at the higher level. in setting monetary policy, the committee seeks to mitigate deviation from its consistent rate and deeskations of employment from our assessments of its maximum level. these dual objectives are generally complimentary. under present circumstances in which the unemployment rate is elevated and the inflation outlook is subdued, the committee judges that sustaining a highly accommodative stance of monetary policy is consistent with promoting both objectives. and in the longer term, low and stable inflation can help promote healthy growth in output and employment. of course circumstances may sometimes arise in which the dual objectives are not complimentary. in such cases the committee follows a balanced approach in promoting these two objectives, taking into account the magnitude of the deviations and potentially different time horizons over which inflation and employment are projected to return to levels judged consistent with our mandate.
in other words, the committee always treats its primary objectives of price stability and maximum employment similar et rickly and the stance of policy at any given time is determined by the size, social cost and expected evolution of the deviations of each in the committee's policy objectives from its desired level. i will now turn to the economic projects that 17 participants, that is five board members and 12 reserved bank presidents, submitted in conjunction with today's meeting. the central tendencies and ranges of those projections for the years 2011 to 2014 and over the longer run are depicted in the figures that have been distributed. the longer run projections shown at the right of each figure represent participants' assessments of the rate to which each variable can verge over time under appropriate monetary policy and in the absence of further shocks to the economy. incoming information suggests the economy has been expanding
moderately, notwithstanding some slowing in global growth. the committee expects the pace of economic growth to be moderate over coming quarters, reflecting ongoing drags from the -- from the housing sector and still tight credit conditions for many households as well as businesses. specifically participants' projections for the growth rate of real domestic product in 2012 have a central tendency of 2.2% to 2.7%. strains in global financial markets continue to pose significant downside risks to that outlook. looking further ahead, economic activity is expected to accelerate gradually in conjunction with strengthening consumer and business confidence, improving financial conditions and the continuation of a highly accommodative stance for monetary policy. specifically, participants' g.d.p. projections for 2013 have a 3.2% and their projections for 2014 have a central tendency of 3.3% to
4.0%. noticeably higher than the central tendency of the percentage for their longer run growth projections. a number of recent indicators point to some further improvement in overall labor market conditions but the unemployment rate remains elevated. moreover, in light of the anticipated modest pace of economic recovery, the committee expects that overcome -- over coming quarters, the unemployment rate will decline only gradually toward its mandate consistent levels. indeed, participants' projections for the unemployment rate in the fourth quarter of this year have a central tendency of 8.2% to 8.5%, that is little different from the latest monthly reading of 8.5%. with economic growth expected to pick up somewhat over time, the unemployment rate is expected to decline to 6.7% to 7.6% by the fourth quarter of 2014. still well above participants' estimates of the longer run normal rate of unemployment.
i'll turn now to the outlook for inflation. the prices of oil and other commodities have generally flattened out or turned downward other over the past couple of quarters while low levels of resource utilization have continued to constrain the growth of labor costs. consequently, consumer price inflation which surged in the first half of last year has been subdued in recent months. survey measures and financial market indicators imply that longer term inflation expectations have remained stable. overcome -- over coming quarters, the committee anticipates that inflation will run at or below levels consistent with the mandate consistent rate of 2%. specifically participants' inflation projections have a central tendency of 1.4% to 1.8% for 2012 and remain subdued at around 1.5% to 2% through 2014. as a further step in enhancing the clarity of our communications, the committee recently decided to begin
publishing information about participants' assessments of appropriate monetary policy. that is, the path of policy that each participant judges as most likely to foster mandate consistent outcomes for employment and inflation if the economy evolves as expected. these judgments about future policy underline the participants' projection of growth, unemployment and inflation that i just described. rather, -- excuse me, importantly these policy assessments should not be viewed as unconditional pledges. rather, just as with our economic projections, these policy projections reflect the information available at the time of the forecast and are subject to future revision in light of evolving economic and financial conditions. in the chart labeled appropriate timing of policy firming, each shaded bar indicates the number of committee participants who judged that the initial increase in the target federal funds rate would appropriately occur in the specified calendar year shown below the bar.
six participants anticipate that policy firming is likely to commence in 2013 or 2016 while others expect it in 2014. the remaining six participants judged that policy liftoff would be appropriate in 2012 or 2013. more details provided by the chart lainled appropriate pace of policy firming. in that chart the dots predict the assessments regarding the appropriate level of the target federal funds rate at the end of the next several years and over the longer run. for example, based on current information, 11 participants expect that the appropriate federal funding rate at the end of 2014 will be at or below 1% while six participants anticipate higher rates at that time. in effect, those judgments are reflected in today's meeting's statement in which the committee indicated that economic conditions are likely to warrant exceptionally low levels of the fund rate through
at least late 2014. as i have noted, we are also proceeding with the program that we announced in september to extend the average maturity of the federal reserve's holding of securities, thereby fostering more accommodated financial conditions without changing the overall size of the federal reserve's balance sheet. the committee regularly reviewed the size and composition of our securities holdings and we will adjust those holdings as appropriate. in particular the committee recognizes that hardships imposed by high and percentent unemployment and an underperforming committee and it is prepared to provide further monetary accommodation if employment is not making sufficient progress towards our assessment of its maximum level or if inflation shows signs of moving further below its mandate existent rate. thank you for your patience. i'd be happy to take your questions. >> thank you. mr. chairman, we have several months of economic data that's
been stronger than most forecasters expected. employment was over 200,000, the unemployment rate has come down to 8.5%. there seems to be very little mention of this recent strength in the statement. do you and the committee, mr. chairman, harbor doubts about the recent strength in the economy? and are you and the committee baking an additional quantitative easing in order to achieve the growth rates that you've even forecasted here? thank you. >> there have certainly been some encouraging news recently. we've seen slightly better performance in the labor market, consumer sentiment is improved, industrial production has been relively strong. so there are some -- relatively strong. so there are some positive signs, no doubt. at the same time we've had mixed results in some other areas such as retail sales and we continue to see headwinds emanating from europe, coming from the slowing global economy and some other factors as well. so, you know, we are obviously
hoping that the strength we saw in the fourth quarter and in recent data will continue into 2012. but we're going to continue to monitor that situation. i don't think we're ready to declare that we've entered a new stronger phase at this point. we'll continue to look at the data. we will, as i've said in my statement, as we have in fact in the statement, we continue to review our holdings, our portfolio holdings, securities, and we are prepared to take further steps in that direction if we see that the recovery is faltering or if inflation is not moving toward target. so that's something -- that's an option that's certainly on the table. i think it would be premature to say definitively one way or the other but we continue to look at that option and if conditions warrant, we will certainly consider using it.
>> thank you. i'm a little confused by these forecasts. it seems to say that you expect that at the end of 2014 unemployment will be at or above 7%, inflation will be at or below 2% and yet 11 of the 17 members of your committee think that will be a good moment to start raising interest rates again. if unemployment and inflation are in fact objectives for the fed, how can that be the case? and is there any tolerance for above trend inflation in the service of catchup growth? >> let me first observe that we have in fact of course been very accommodative in the last couple of years. we've kept interest rates close to zero, we've done two rounds of asset purchases. we have announced today in fact
an extension of it's period over which we expect to see rates very low and our maturity extension program is still ongoing. so we maintain a quite accommodative path of policy at this point. i would further say that i think it's important to emphasize that we're not going to mechanically take the interest rate projections that participants' provide -- that participants provide and build policy off of that. it's still going to be necessary for the committee to exercise collective judgment, to consider the cost and risk of additional policy actions, to discuss the uncertainty about the forecasts and other factors that come into the policy decision. now, all that being said, if inflation is going to remain below target for an extended period and unemployment progress is very slow, then i think your implicit question is right. there is a case for additional
policy action and we want to continue to observe the situation but we're certainly prepared to look for different ways to provide support to the economy if in fact we have this unsatisfactory situation. >> hi, mr. chairman. congrats on the inflation target or goal. that's a big achievement for you i'm sure. i'd like to ask if could you explain a little bit the way you think inflation's now working in the economy. the 2012 central tendencies kind -- tendency's kind of low and along with that question i'd like to know where you think full employment is in the near term like next year or two, given the structural impediments that many officials have been talking about. >> well, there are a number of factors that make us expect inflation to be quite low in the next couple of years.
certainly we are seeing a reversal or at least a flattening out of the commodity price increases that caused headline inflation to rise earlier in 2011. and futures markets in our own estimates of supply and demand globaly, with a slowing global economy, suggests that most likely, although of course there's a lot of uncertainty, that commodity prices will remain well controlled over the next couple of years. on top of that, of course, we have a very high rate of unemployment, pressure on wages is quite restrained and putting that together with strong productivity gains, the costs of production, labor costs, are growing very slowly. expectations of inflation seem well-anchored. in fact, they have been on the low side, relative to recent history and recent months. so for all those reasons inflation looks to be at or modestly below the 2% target
going forward. with respect to the maximum employment measure, we provided a -- we have been providing in fact for four years, as long as we've been providing the economic projections, an estimate of the long-run, sustainable rate of unemployment which is currently the central tendency's currently 5.-- 5.% to 6%. that's higher than it was a couple of years ago. reflecting structural impediments and other changes. we are concerned that the large amount of long-term unemployment may be causing some workers to lose skills or lose labor force attachment which at least for a while will also likely increase the so-called natural rate or sustainable rate of unemployment. so there are a number of factors working in that direction. but in any case, while there's certainly a lot of uncertainty about exactly where the natural rate of unemployment is,
clearly the 8.5%, i think we're comfortably above anybody's estimate and for that reason we still consider the labor market to be obviously quite slack. >> thank you, john hillson from "the wall street journal." mr. chairman, how much confidence do you have in the fomc's ability to forecast the economy and inflation out three years? and consequently, how much confidence do you have in the interest rate projections that the fed has made public today? particularly the ones that go out to 2014 and beyond. and if i may add a follow-up to that, there seems to be an asymmetry in these dots that there's a view that the view that matters the most at the fed is the view of the chairman. so when we look at these projections are we really seeing the most likely expected
path of interest rates because the chairman's view isn't represented exclusively here? >> well, your first question, our ability to forecast three and four years out is obviously very limited. there's no question about that. nevertheless we have to make a best guess, a provisional plan in the same way that a firm making an investment has to make a best guess. a provisional plan where about where the economy and the industry is going to be over the next few years. so it's certainly possible that we will be either too optimistic or too pessimistic in which case we'll have tie just both our forecasts -- we'll have to adjust both of our forecasts and our policy suggestions. currently the zero lower bound on policy rates, at least according to many estimates, is still binding. that is, even if the economy were a bit stronger, the very
low interest rates we currently have would still be valid, still be appropriate. and so for that reason, unless there's a substantial strengthening of the economy in the near term, i would think it's a pretty good guess that we will be keeping rates low for some time from now. we don't identify the specific individuals who provide the projections. among other reasons, we want to make sure that people come to the meeting willing to talk and not weded to a specific position -- we hadded to a specific position and that's why -- wedded to a specific position and that's why the committee makes a collective position after using as input these projections which are circulated to all the members of the committee before the meeting so they can see what their colleagues believe. as far as what individual members do believe, is he learnly have other vehicles for expressing our views. all of us give speeches, all of
us give interviews. i give frequent testimony. so there's plenty of opportunities to get a sense of what individual members believe. but, again, we felt that this information which prevents -- presents both the diversity of views on the committee but also shows you where the central tendencies lie would be useful. i guess i might add to that, you know, the chairman's term is not infinite. at some point there will be a new chairman but there's a lot more continuity on the fomc collectively. the average bank president is on the fomc for as much as 10 years and governors' terms are 14 years. so even as the chairman changes, much of the fomc remains continuous. so, as we talk about interest rates in 2014, the fact that
there is quite wide-ranging agreement that interest rates will be low for a long time should give you more confidence that that's not dependent on a single individual. >> mr. chairman, the fed's statutory goals are price stability and maximum employment but traditionally the fed has interpreted that somewhat flexibly in the sense that if there was a conflict between the two they would push for price stability rather than full employment on the view that over time stable prices was the best contribution monetary policy could make to max mument employment. but today you went to some pains to say that actually you treat these goals, put them on an equal footing and that there might be circumstances in which you put one above the other. so following up on that question, do you take it that in in-- if inflation were to move above your 2% preferred level that would you tolerate that in order to make further
progress on unemployment? >> the period of time, yes, we treat them symmetrically. we cannot control where inflation and unemployment are in each moment of time so there will be periods when for reasons out of our control inflation and unemployment will move away from their desired levels. if in those situations the speed at which i think tolerate might be too strong of a word because we want to get everything, both sides of the mandate back to their desired levels, but the speed at which we would enforce that return would depend on what's happening with the other variable. so, for example, if inflation did go above target by a modest amount, we would certainly try to get it back down to target. but if unemployment were very high, it would lead us to be more cautious and slower in returning to target. so that's why medium term, which is these targets are all
medium term, is a flexible concept and it depends on the initial conditions, how far away the two key variables are from their objectives at the beginning of the process. >> gregg rob, "market watch." mr. chairman, thank you. you haven't had a very good time in all the republican presidential debates and i was wondering if i could have your comment on what you've heard and some of the analysts i talked to said that one of the reasons for this hostility perhaps is that a lot of the republican primary voters are on fixed incomes and have an inability to invest and make money with their funds. so, could you talk to them as well? and one more thing, if republicans take back the white house in november and ask you to resign, would you?
>> i'm not going to get involved in political rhetoric. i'm just going to stay completely away from that. i have a job to do and as long as i'm here i will do everything i can to help the federal reserve achieve its mandate of price stability and maximum employment. that's my answer to the last part as well. i'm not going to be thinking about hypothetical situations in the future. in the case of the savers, you know, we think about all these issues and we certainly recognize that the low interest rates that we're using to try to stimulate investment and expansion of the economy also impose a cost on savers who have a lower return. and we do hear about that obviously and we do think about that. i guess the response i would make is that the savers in our economy are dependent on a healthy economy in order to get
adequate returns. in particular, people own stocks and corporate bonds and other securities as well as say treasury securities and if our economy is in really bad shape then they're not going to get good returns on those investments. so i think what we need to do which is often the case when the economy goes into a very weak situation, then low interest rates are needed to help restore the economy to something closer to full employment and to increase growth and that in turn will lead ultimately to higher returns across all assets for savers and investors. so that's -- i think that's how we would explain it. but again, you know, we recognize that during periods like this, savers are getting a lower return. one reason why it's extremely important for us to maintain price stability, of course, is that at least that minimizes any loss due to inflation that savers might suffer.
>> john, then mark. >> donna. shifting a little bit, i'd like to take a look back to the rules that the fed released back in late december. obviously it was a as it particular for the fed staff to put forth and considered the heart of dodd-frank. there were certain provisions that were left out including the liquidity requirements due largely to the fact that thank there's global consensus needed on those rules. but i was hoping you could expand a little bit more on the decision for fed staff to forego specifying with the additional capital requirements would be for those banks that were not necessarily deemed -- [inaudible] at least now we're still above the $auto billion threshold and to talk a little bit about what the core issues are in deciding whether or not that additional capital should come in the form of a surcharge, what that surcharge might look like and when we might know.
>> well, you're referring i think to the 165-166 rules which will focus on the supervisory oversight of the largest banks. it's a very big and complicated rule as everyone knows. and so our position at this time is that we would still like to get feedback from the industry and from the public about what the best approach is. so we put out a lot of questions and we'll be considering those during the comment period and after as we put together a rule. the notion of the surcharges is that banks which do not pose significant threats to the systemic stability of the united states, you know, should not have a significant surcharge. we're required to consider these issues by dodd-frank by our view is that if the largest
banks, the ones whose failure would endanger our financial that should be subject to the surcharges because -- first because we need to have them be safer than smaller banks and secondly because we want to try to equalize the cost of credit that they face. in other words, a bank which is thought to be too big to fail gets an artificial subsidy in the interest rate that it can borrow at and by having additional capital requirements, it tends to equalize the cost of funding to different banks and reduces the incentive of banks to get large, just to create the impression of being too big to fail. so we think those are important and we'll continue to work with them. the basil committee has provided some sense of the range of what those surcharges will fall into. and so we're still working on defining exactly the criteria but you can assume it will be a
fairly continuous range between the $50 billion banks and the very largest banks in our economy. as i said, we're getting reactions and comments. we hope to get, early this year we hope to come back with a clarification on the rule and of course we're also working hard on implementing basil three itself which we want to do during 2012 -- we want to put out the rule during 2012. >> mr. chairman, for more than three years now the fed's conducted policy through extraordinary means and yet the new information that we have today pertains mostly to an eventual tightening of policy through raising interest rates. why is there no new information about the size of the fed's balance sheet? and what should anybody looking at your communications say deduce about an eventual expansion of the balance sheet through more asset purchases?
>> so, we will be providing in our minutes and in our survey of economic projections which will be released in three weeks, we're providing some additional qualitative information about people's -- participants' views about the balance sheet going forward. the reason that i can't provide all that information now is basically that we received, you know, a whole range of qualitative comments and we had further discussion during the meeting yesterday and today and so we need a little time to summarize that and to have it approved, the minutes and of course are approved by the entire committee. it will be a definitive statement about what we currently know about the balance sheet. i can tell you a few things. you know, one is that it certainly remains -- expanding the balance sheet certainly remains an option. one that we would consider very seriously in particular if
progress towards full employment was continued or became more inadequate or if inflation remained exceptionally low. so we'll continue to look at that. as we say in our statement, we're prepared to take additional measures in general and that would be certainly one cost of member measures we would want to consider. i can make one additional point which maybe wasn't obvious which is that in june we provided some principles relating the sales of assets, ultimate sales of assets to the path of interest rates. and those remain -- those principles remain in force and so one implication of our extension of our expected point of takeoff through late 2014 is to imply that the initial sales from our balance sheet which
again are far down the road, but that begins, that will be later than previously thought. that will be presumably in twist. -- 2015. so we do expect to hold our balance sheet at a high level for a locker -- longer period. additional sales again, i'm sorry, additional purchases remains a topic that we are still debating and it will depend both on our assessment of the efficacy and risks of that particular tool but also of how the economy's evolving. >> mr. chairman, when i look at these forecasts for 2014, the median of the forecasts i think is .75% and the mean is 1.12%. if i was to draw a line through these dots, how should i draw
it so i best understand what the fomc is most likely to do? and the second part, if the minutes you say that the committee will consider further options for improvements to the s.e.p., the economic projections. could you tell us a bit more about what sort of things you might do? thank you. >> again, i want to emphasize that there's no mechanical relationship between these projections and the outcomes of the fomc decisions. of course they're a big input into those decisions but it's an elective decision. if you want to draw lines i guess my suggestion would be to look at the median, the middle of the distribution, because we do have a democratic process in the committee and so the median will give you some sense of where the weight balance is against -- in favor of higher or lower rates. again, we did note that in support of our assessment of
late 2014 which is a committee decision and of course there was a 9-1 vote in favor of that, but that is supported by the observation that 11 of the 17 participants expect the funds rate at the end of 2014 to be 1% or less. so presumeably the takeoff would not be much earlier than that. in terms of future additions, there's a lot of ways we could go. we could provide, for example, for relationships between -- more information about the relationships between individual's policy preferences and their forecast and so on. but there's nothing specific now that has been decided. we have a very capable subcommittee which is charged with continual a's -- assessments of transparency. so we will be looking at additional possibilities and we would welcome feedback for that matter. but there's nothing specific planned at this point.
>> associated press. last night the president unveiled a plan to revamp and expand the government's refinancing program. essentially the fed released a white paper earlier this month that said that up to 2 1/2 million homeowners could benefit from this. essentially save $3,000 per year in mortgage payments. right now there's a mortgage settlement being brokered between state attorneys general and the nation's major mortgage lenders. something to the tune of $25 billion. much of which would be in the form of principal reduction. in the white paper that was released earlier this month the fed seemed to indicate that principal reduction could be helpful but it was unclear about whether they thought that this was a acceptable or even feasible option. they also made clear that a lot
of the proposals that are currently out there eat around the edges so to speak when you're dealing with the foreclosure crisis and a lot of economists agree. do you think a principal reduction in the form of the major mortgage settlement would do a lot to help the housing crisis? and if not, is there any other alternative proposal that would help? >> the federal reserve obviously has a very strong interest in the housing sector. the weakness of the housing sector is an important reason why the economy is not recovering more robustly. and the problems in housing finance are part of the reason why monetary policy has not been more powerful. because part of our transmission mechanism is through lower interest rates which effects refinancing, it effects sales. and purchases as well. so, in addition to that, as bank supervisors, we have considerable interest in serving -- servicing, in loan modifications and he will link
-- delinquencies and all aspects of mortgage lending. so we have a considerable interest in this area and as you say, we did a white paper which looked at a number of issues including refinancing and mortgage finance. i think it's important to say that our intent in that white paper was to provide the benefit of our analysis to the public and to those who will be making policy. we did not take specific stands on individual issues. what we tried to do was provide the pros and the cons and provide some context for these debates. so we did discuss refinancing, we did discuss principal forgiveness. i would say that there's a variety of views about principal forgiveness within the federal reserve system and there is no official position. there seems very likely that principal forgiveness could be
helpful, depending on how it's structured in reducing delinquencies. there are also some potential drawbacks. one of them is the fact that the amount of negative equity in the united states is about $700 billion. which is enormous. and so there's no conceivable program that is going to put everybody in the country above water. so i think the issue then becomes, if we have 20 -- $20 billion or $25 billion or whatever the number may be in this settlement, what is the most cost effective way to help as many people as possible and i think that's an ongoing debate. but with respect to principal reduction, i've spoken about this in the past and it certainly has some advantages. a lot depends on how it's structured and a lot depends on what the alternatives are that you're considering.
>> fox business. one of the goals of the fed and the release of all these new materials, the forecast and the policy announcement are to help create expectations and set expectations. are you concerned at all that the materials and the forecast and the policy announcement passed today might help create negative expectations? in order, the average american's takeaway of your announcement to keep interest rates low for an exceptionally low through 2014 now might signal to them that maybe the fed thinks that the economy's in much worse shape than we all thought. and that in turn could affect consumer confidence, consumer spending and the ability to create a self-sustaining economic recovery at some point. is there a risk of this? >> well, whenever the fed takes a policy action there's always
some potential for a signal. i mean, that's true not just in these current times but any time the fed lowers or increases interest rates and that's something we have to think about. but i think generally speaking that those considerations are outweighed by the need to maintain accommodated financial conditions so that it's attractive to firms to invest and hire. attractive for those who are eligible to buy homes and so on. and i think that that ultimately is more powerful than the signal from the change in policy. in particular, the markets and the news media are very good at picking up the underlying economic data and making assessments to the state of the economy and reporting what different people think about the economy. so i wouldn't overstate the fed's ability to massively change expectations through its statements, for example.
so again i think that while we certainly take that into account, we think it's important for us to say what we think and we think it's important for to us provide the right amount of stimulus to try to help our economy recover from its currently underutilized condition. >> let me kind of follow up on peter's question. why should somebody looking at these numbers from the outside say, as aggressive as you have been, it doesn't look like you're meet anything of your goals for the next three years on the economy so why isn't the fed doing more now? >> as i said earlier, the fed has been doing a great deal, just since august, we have put the date on our expected period of low interest rates, we undertook the maturity extension
program, which is still continuing. today we announced a further extension of the -- of the expected period of low rates. by issuing these expected policy rate information, we hope to convey to the market the extent to which there is support on the committee for maintaining rates at a low level for a significant time. so you know, i don't accept the premise that we have been passive. we have been quite active in our policy and in one respect, the low level inflation is a validation in the following sense, that there were some who were very concerned that our balance sheet policies and the like would lead to high inflation. there's certainly no shine of -- no sign of that yet and it hasn't shown up in financial markets or outside forecasters' expectations.
now that being said, as i mentioned earlier, if the situation continues with inflation below target and unemployment declining at a rate which is very, very slow, then more -- our framework, the logic of our framework says we should be looking for ways to d more. it's not pleatly straightforward because we're now dealing with a variety of nonstandard policy tools, we can't just lower the federal funds rate 25 basis points like in the good old days but your basic point is right, we need to adopt policies that will both achieve our inflation objectives and hope the economy recover as quickly as is feasible. i would say that your question actually, and earlier question, shows a benefit of explaining this framework because the framework makes very clear that we need to be thinking about ways in which we can provide
further stimulus, we don't get some improvement in the pace of recovery and normalization of inflation. >> i have two questions, your predecessor, mr. greenspan, once said about his personal long-term inflation goal, if appropriately measured, i would like you to compare your inflation goal with that statement. the second question is, comparing what you did today, are you approaching more some kind of inflation target like sweden or norway or are you approaching more the european bank which has some kind of inflation goal but not really an inflation target? >> excellent questions.
so a literal reading of price stability would say inflation should be at zero. now there's some technical reasons why that may not be true. there are probably some measurement biases and other issues that mean that measured value of inflation above zero is probably consistent with stable prices. but as we talked about, frequently, we set our inflation objective in a way that was consistent with both sides of the mandate. price stability, 2% is low enough that we believe that's not going to extensively interfere with financial planning and economic planning on the part of households and businesses but also in the interest of employment prks a target for inflation that was zero would have several consequences. first, we would be spending maybe half of our time, or at least a significant amount of our time, in a deflationnary zone and we have seen in many
instances that deflation can be bad for economic performance and bad for employment and therefore setting inflation target at zero would be not consistent with the other part of our mandate. incidentally, related to that, a zero inflation rate would mean nominal inflation rates would be at very low levels, 2% to 3%, whatever they might be, and that would increase the possibility we would be in a situation like today where we can't cut the rate any further. there are reasons to have inflation greater than 2% and i would add if you look at central banks around the world, whether they're nominal inflation targeters or not, that 2% is the number most use. the e.c.p. and other central banks use 2% or a range around %. so this is not at all different from what many other central banks do.
are we inflation targeters? if by inflation targeter you mean a central bank that puts top priority on inflation and other goals like employment as subsidiary goals, then the answer is no. we are a duel-mandate central bank, we put -- a dual-mandate central bank, we put equal weight on stability and employment, those are the goals given us by congress. so in that respect, as i mentioned earlier, we're not absolutists. if there's a need to let inflation return a little bit more slowly to target in order to get a better result in employment, that's something we would be willing to do. having said all that, i think it's worth noting that even banks that -- central banks that call themselves inflation targeters typically pay at least some attention to other parts of the economy, employment, growth, financial stability, and the like. so i don't think there's really any central bank, or very few, that focus only on inflation.
again, in terms of terminology, i guess i would reject that term for the federal reserve because we are going to be even handed in creating the price stability and maximum employment parts of our mandate on a level footing. >> two questions. first, can you clarify whether if actual economic conditions match the projections that would require additional easing? and secondly, in the past, a number of times you said that even when interest rates are at zero, the fed can have influence on economic growth. do you still believe the fed has the capacity to deploy tools that would have a significant impacten bringing down unemployment at a faster pace if it chose to to so? >> on the first question, you
know, as was pointed out by steve, for example, we've had some good data recently, i think there's some uncertainty about where the economy is going, we want to continue to observe how the economy is developing, but i would say that, as i said on several -- in several answers, that if recovery continues to be modest and progress on unemployment very slow, and if inflation appears to be likely to be below target for a number of years out, so the configuration we're talking about in the projections, i think it would be a strong days -- case, based on our framework, for finding different, additional tools for expansionnary policies to support the economy. so we'll continue to look at the different options and try to decide what might be most effective. we are in a difficult situation in terms of the effectiveness of policy tools.
my own view, thinking about the effects, for example, of additional purchases, additional securities purchases, i've been pretty satisfied in the sense that, in the following sense, that purchases do seem to have the dezeroed effects on financial conditions. they tend to ease financial conditions, lower interest rates they tend to strengthen asset prices, and those are exactly the kinds of things that monetary policy normally does in order to try to provide stableness to the economy. but it's been a bit more -- what has been a bit more uncertain is the effectiveness of the transition mechanism and we have seen developments in the economy that have probably weakened the effectiveness of policy, including the housing sector where one would expect, with mortgage rates below 4%, we would expect to see more growth than wie seeing and that's part of the reason expansionnary
stimulus is not feeding through as much as we would like to the real economy. i would not say, though, that the -- that our policies are -- that we're out of ammunition. i think we still have tools but we need to further analyze and study those tools and try to make comparisons in terms of effectiveness, risks, and the like. i still -- i think we still have a process to figure out what is the most effective approach. >> i have a question about the new forward guidance language, peter anticipated one of my questions about the potential of it sending a negative signal but let me ask, what was the rationale for continuing to have
forward guidance phraseology instead of just letting the new forecasts of the funds rates speak for thems? >> that's a very good question. i might have commented on that question that our two main tools, given that short-term interest rates are close to zero, are asset purchases an the other is communication. to the extent we communicate that rates will be lower for longer, that will ease financial conditions and affect the state of the economy. that's part of the reason, other than just general desire for transparency, that we have brought out some of these ideas at this point. the reason we just don't release the economic projections and leave it at that, is because while the economic projections of future policy rates are an important input to our policy discussions around the table,
the decision ultimately is made by the federal committee, which is the voters, sitting around the table, and in a process by which we exchange ideas and make arguments and come to a collective determination. so you know, we don't set the federal funds interest rate by having members sending their vote and not having a meeting. we have a meeting for a reason, which is to talk to each other and try to come to some kind of consensus. so the f.o.c. will trump projections of forward interest rates but clearly because the participants and people around the table are the same, the projections should give significant information about where it's likely to go.
>> they stated local growth has slowed and that's weighing on financial conditions in the u.s. arguably, one way that the federal reserve could help would be by extending a loan to the international monetary fund. there have been other central bank that was been doing that when the government was reluctant to do so and we have all noted that the fed was not shy when it came to extending loans to international financial institutions, private banks, and so on. is it something that you could consider if the debt crisis got worse? >> well, lending to financial institutions is part of our mandated function. it's part of our rayson detray -- our raison d'etre.
committing funds to the i.m.f. i don't think is in the mandate. i think the appropriate deciders in that case would be the administration and the congress, not the federal reserve. >> my head is full of questions, but i'm going to try to limit it to two related questions. your -- you're linking your inflation target of 2% to the p.c.e. the p.c.e. is something that hundreds of millions of americans have no idea what it is. they do know what the c.p.i. is. can you explain in layman's terms, something that regular folks might understand, why they should not worry too much when inflation, if the c.p.i. is different than the p.c.e.?
and the second question is related to, also to inflation and to the targeting, the fed has always been vague in terms of what sort of inflation it would accept. this is a market cheage. because criticism of the federal reserve, criticism of you, but the institution itself, has been so intense this year, because it's a political year, there are people out there who are going to say, the federal reserve has finally just admitted it, their policy is to destroy 2% of the value of my dollars every year. how are you going to respond to those people? and also could you answer the question about the c.p.i. and p.c.e.? thank you. >> sure. we chose the p.c.e. index for some, i think, very valid technical reasons. it better allows, better accounts for changes in people's
purchases -- purchasing patterns. when some things become more expensive, people tend to move to other types of goods and services. that's not accounted for by the c.p.i., which has a fixed rate. also, the p.c.e., i think, more relevant to the average person, the p.c.e. encludes all health care costs, not just out of pocket costs. and that has two benefits. one is, it reduces the share of the inflation index, which is tied to housing. and the c.p.i. is a very large share devoted to housing and a large share of that part of the index is made up numbers. so that's one benefit, it keeps, not to put too much weight on the imputed numbers which is part of the c.p.i. the other is that even if people
are not paying for health care immediately out of pocket they do pay for it. either through taxes or through reduced wages, as increased health care costs raise insurance premiums for employers. so i think this is probably a better measure of the inflation that's faced by typical consumers in the c.p.i. that being said, these various measures, the c.p.i. and others, p.c.e. index and others, move very closely together. you won't have the c.p.i. 10% and the p.c.e. 2%. they may be a few tenths' difference but they're very close. if people look at the c.p.i., they should feel comfortable that that will be pretty close to where the p.c.e. inflation. is on the 2%, again, that's where the united states has been
for many years. that's where most central banks are around the world. there's a very good reason for it torque avoid deflation which is very negative. i think the argument that, you know, the value of your dollar declines 2% a year is not a very good one, unless you're one of those people who does the lifetime savings in the mattress. most people invest in various kinds of instruments, receiving rate of interest. and now it's true, as pointed out, at this moment, interest rates are still low, they're still positive, but other a longer pord of time if you, even if you have money in a c.d. or some other investment vehicle, the interest rate will compensate you for the -- for inflation. the two will be tied together. and so there realy shouldn't be, levels of inflation this low,
interest rates should pretty much fully compensate for the losses to savers. but i would reiterate, that we are not unaware of the problems that low interest rates cause for savers, cause for pension fund contributions, insurance companies and other parts of the economy. and we do try to take that into account as we think about other ramifications of our policy. >> this will be the last question. pete her >> thank you, mr. chairman. two questions, if i could. separate from your role here at fed chairman. two issues in congress right now, which your advice might be worthwhile. the payroll tax cut is coming up for debate again. there's debate about whether to extend it for a full year. what's your assessment of what impact it would have if it were not extended? and likewise what if congress
would not impose the automatic spending cuts imposed by the failure of the supercommittee, what impact would that have? >> the federal reserve makes it a policy to try to avoid commenting on specific individual tax and spending programs, and i don't have those numbers at hand in any case. what i would say, what i've tried to convey to congress and many other economists are taking the same view, is that responsible fiscal policy has at least two components at this point. one, of course, importantly, to achieve fiscal sustainability and to achieve fiscal sustainability over a long period of time, we need to be acting soon, now would be preferable, to making credible commitments to reducing spending, to improving our programs, to modifying or simplifying our tax code and so on in ways that will be persuasive to the markets and
the public that over the longer term, the next 10, 20, 30 years, that our position will be sustainable. that's an important thing to do. relates to the second part of your question. i think it's important to take steps, at least to, again, specific steps are up to congress but it's important that action be taken to provide a credible plan to achieve fiscal sustainability. the second part of my recommendation, though, is that we need at this juncture to be sensitive to the effects of whatever policy degreeses are made on what is still a very fragile recovery. there are many ways to do that. i think it should be taken into account as people are looking at policy alternatives in terms of taxes or spending. >> thank you. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> coming up shortly here on
c-span, we're going to take you live to an event with newt gingrich tissue gingrich, the republican presidential candidate in florida, the third of three events will be a speech on u.s. policy, he'll be speaking in cocoa, florida, it was scheduled for 4:45, we understand it's going to be closer to 8:30. we'll have it live for you here on c-span when it starts. for more resources in the presidential race, use c-span's campaign 2012 website to watch videos of the candidates on the campaign trail see what the candidates have said on issues important to you and read the latest from candidates, political reporters and people like you from social media sites at c-span.org/campaign 2012. >> again, we are expecting to hear from newt gingrich at about 3:30 eastern. we'll have it live when it starts, live from cocoa, florida, until then, more reaction to the president's state of the union from this morning's "washington journal." center mark pryor and joins us.
--senator mark pryor joins us. the president did not mention the xl pipeline. your reaction. guest: i did not expect him to talk about it in the speech. pipeline.ehe xl there will let us refine it here and burn it in our automobiles cleaner and safer than any other country or there will send it to china. we should do this. i think it is the right thing to do. it is a north american source of energy from a friendly neighbor. we should do this.
this has become a red hot political issue. it is full of rhetoric now. i am hoping we will get this done in a year so. host: you indicated you disagree with the president's decision. did you talk to the president or the administration about the pipeline? guest: i didn't have a chance to talk with them. they know where i am. i support the pipeline. it will have an impact on our state in a couple of different ways. i fill the pipeline can be done safely and you can meet all the environmental standards. we have a better source -- near domestic source of gasoline and
diesel. they may build some of the pipeline parts in our state. some manufacturers may supply the pipeline. it would help jobs. host: you are a veteran of the senate. you talk about common ground between democrats and republicans. why has been so hard for both parties to reach a compromise? guest: what has happened over the last several years is hyper partisanship has taken over. you can get a good idea in washington. good sense just goes out the window. people oppose it just because he is 48.
the same thing happened under president bush. once he laid it out there, democrats would just block it. we need to stop that. that is not the way the founding fathers designed our system to work. the campaign seems to never stop. governing seems to never start. it is all completely fixable. there's nothing wrong with washington that we cannot fix. i felt like the speech was not confrontational. i thought some of the media was predicting it would be confrontational, that he would lay down the gullet against the republicans. -- he would lay down the gauntlet.
i thought his speech was full of optimism. america needs to hear some optimism. there are some signs of the economy that are positive. he focused on a few of them. if we work together, there is nothing that we cannot achieve as a nation. we should get it done for the country. host: look at the growing debt and deficits as we approach a nearly $5 trillion debt, approaching $14 trillion in total. guest: we'll have to make hard decisions. we have to put all three things on the table. they talk about discretionary
spending. we have done some things there and we have to do some more. we talked about entitlement spending. speaker boehner is willing to put entitlements on the table. the third thing is the tax code. we have a big disagreement in washington about the tax code. people start saying that this is class warfare. we need comprehensive tax reform in this country. anybody that looks at our tax code objectively, they understand that we need tax reform in this country. the debt commission said you can do a comprehensive tax reform and lowers people -- and lower
people's tax rates. if you follow the general outline by the simpson-bowles debt commission, you will find-- you'll creek two million new jobs just by reforming the tax code -- you will create two million new jobs. we have to make decisions to accomplish anything that we will work together. that is what is lacking here right now. there are not enough people willing to work together. host: frank from new jersey, good morning. caller: you guys have a great show. i heard more of the same last night in obama's speech. he wants another stimulus
package, ok? you talk about you guys working together, ok? for 1,000 days, the senate has not passed a budget. the first two years of his presidency, you guys have the senate, the commerce, and the white house. you cannot avoid that and i'm not on the republicans. you could have passed all the stuff you wanted. the people should start reading the bills and what is in the obamacare bill. guest: i appreciate that call. you covered a lot of ground. the president focused on manufacturing. i heard an expert this morning talk about how this president last i talked more about
manufacturing than any president has in 25 years. he did focus on manufacturing. we have gone through the talking point by the republicans in the last several days. it has been 1000 days since we had a budget. that's a great talking point. that's not true. we did pass a budget. we did this in august. bipartisan budget. 74 votes in the senate. several republicans joined in. we passed a budget. the talking point sounds great, but it is not true. the budget control act of 2011. we passed a budget.
it is now law. the budget resolution is binding with congress. 10 years of spending caps for our government. we done that. it did get 74 votes in the senate's. thank you for the call. i would respectfully disagree with some of the things that you said. host: we have a comment about bowles-simpson. guest: i agree with that. i wish that when the devils a commission came out, i wish there was a bipartisan group led by the president a year ago where everybody would embrace that and say this is the blueprint -- i wish when the
deficit commission. they brought a lot of smart people together and they studied it. it doesn't matter how much you study the debt and deficit. you are going to end up coming out about where simpson-bowles is. look at the numbers and the political realities. it is about shared sacrifices and about putting everything on the table. i wish the house and senate would have embraced it or move it to the floor and allow us to work on us and try to pass it in the house and the senate. host: next will go to wally, from indiana. caller: thank you for taking my call. i am a republican but an american first.
i remember when president obama stood before the american people and he said, "we're going to pass the stimulus and we will build the roads and build infrastructure and of all these --" that he was caught off tape laughing that they were not shovel-ready. take moneyd, let's and build roads. guest: we have done some of that. the stimulus is mostly positive but a mixed bag. if people say it was a total failure, they are wrong. we did build a lot of roads and we invested in infrastructure and that could be schools and other things around the country. i see stimulus projects over the state of arkansas when i drive
around. federal taxpayer money that is being reinvested back into the nation. the president talked about nation-building. we need to continue to invest in infrastructure. that is an investment into our future. focusing on roads and runways is very important. we to invest in broadband -- we need to invest in broadband. that is like the new rail. if you don't have access to broadband, you are left out of the global economy. broadbent in a small town of arkansas connects the world to the small town. someone can start an internet business sitting right there in
small town, america, but you need world broadband to do that. host: can the president win arkansas? guest: i think it is unlikely. i don't think he as much of a strategy. my guess is arkansas will go for the republican candidate. now. it is kind of uncertain on the republican side. we will give it time. certainly i would hope the president will try to come to the state and forcefully make his case to arkansas voters. the economy is improving and we have a lot of reasons to be optimistic and i think in the end he will have a pretty good story to tell. host: senator mark pr
>> republican presidential candidate newt gingrich has several events in florida today. ahead of that state's primary on tuesday. one of those events is a town hall discussion focusing on the future of the u.s. space program in cocoa, florida. we're going to take you there live. it was originally scheduled for 4:45. we understand it could be a lot sooner than that. we'll take you there live once it does start. on tuesday, the mitt romney campaign released his tax returns for 2010 and the estimated 011 returns. we posted those on our website, c-span.org. we talked to tax coim's contributing editor for an analysis of the returns. attention to mitt romney's taxes. marty sullivan is a contributing editor for tax.com. we have a copy of his taxes, about 500 pages, aour website. what did you learn?
guest: there really are no surprises from what we knew. we knew that mr. romney was a very wealthy individual. we knew he was paying a lower effective tax rate and that turns out to be true. there were nomoking guns that we can see in, anything that is inappropriate or overly aggressive. we think it is setting the stage for the upcoming campaign. it illustrates a lot of the issues that we will be seen discussed this year in the election and next year when tax reform becomes the main issue. host: let me give everybody a sense of what it looks like when you go on to the c-span.org website or the mitt romney campaign. he release these yesterday at 7:00 in the morning. the story in the new york times saying that if nothing else, they indicate just how complited the u.s. tax code is.
guest: 2010 return, that was just as federal return. he hadtate returns as well. yes, it does illustrate a lot of the problems or issues that are in the tax code and the complexity comes out when u see that 203 page return. host: many share you the first sentences of this new york times story. mitt romney and his wife made $27 million in 2010, held millions in a swiss bank account and millions more in partnerships and the cayman islands. as you indicated, nothing illegal, nothing wrong, based on
what he released over the last 24 hours, but a lot of questions about where some of the money was stored and also the u.s. tax cut issue. guest: that is right. the cayman islands issue in the swiss issue grabbed headlines because there were problems with swiss bank accounts and offshore accounts in the caymans. but there is nothing to indicate that there has been innovation or even aggressive tax avoidance. for example, that came in corporations related to his holdings in bain capital, those are very common tax framing devices used by universities and pension funds. they basically allowed them to -- these tax-exempt entities, to invest in these active businesses. they are circumventi a u.s. tax rule that is really an tifact of a lot that really is not that central.
in fact, this rule, if mr. romney was not allowed to do this type of tax planning, congress would probably change the rules anyway. there is no smoking gun here. just because there is a cayman islands account. host: but when you see the ads of offshor accounts, swiss accounts, cayman island accounts, will this come back to hurt him? guest: i do not think so. there are a lot of problems in other contexts and i have done research on that. but the more that you look at this, you will see that there is really no problems in this case. he has paid his taxes on these accounts, just as if they were in the united states. host: these investments earning him $20 million in the last year. going back to the story, the same tax level tt an individual or family earning $80,000 a year. this was notn come.
this was profits from investments that he earned a the last 12 months. what does that tell you about taxes in this country? guest: there are two types of people when it comes to taxes. there are other rich wage earners and small business owners, lawyers, doctors, corporate executives. they pay the 35%. but the wealthy individuals who do not have that type of full- time employment, to get most of their income from their investments, pay much lower tax rates. because most of that in, and it is true of the ranis, it is received in the form of capital gains and dividends and those are taxed at 15%. host: let me ask you about -- estimated taxes. did you take a chance to look at those stocks -- those documents? guest: we do not have as much information as the 20 returns
but the same picture emerges. it is still a low rate of tax because most of his income is in the form of tax favored carried interest, capital gains, and dividends. host: he also taed about tithing 10% of his come to the church of jesus christ of latter-day saints. guest: it would not his tax rate off by a few percentage points. he might been up to 18%. he is very generous and that reduced its rate. if he was as generous as the average american, his rate would be higher. host: we also looked at newt gingrich's taxes. he made far less in 2010 than mitt romney. an estimated income of $3
million in a higher tax rate. guest: that is right. he receives most of his income from his business. he is in affect a small business owner, a chapter s corporation. that in come close to his aunt -- his corporation and he is taxed on the ok. that reap remind our audience that our phone lines are open. -- all let m remind our audience that our phone lines are op. the telephone numbers are on the screen. you can join the conversation at twitter or send an e-mail and here's more from last night's state of the union address with the president. [video clip] >> right now because of
loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. right now, warren buffett pays a lower tax rate than his secretary. do we want to keep these tax cuts for the wealthiest americans or do we want to keep our investment in everything else? a education, and medical research, a strong military, and care for our veterans? because if we are serious about paying down our debt, we cannot do both. host: marty sullivan, your reaction. guest: a lot of controversy about the puppet rule. -- buffet rule. there is a subset of wealthy amicans that pay a much lower tax rate than other americans, even aricans who are middle
clas again, tt goes to that fact that they're rich -- these very rich individuals get most of their income from dividends and capital gains which are taxed at lower rates. if we are going to make the tax system progressive for these individuals, we would have to address the capital gains issue. host: from california, the democratic line. go-ahead. caller: i like to make three quick points. one is a lot of things can be hidd in the 500 pages. two, it just because it is legal does notake it right. and three, i happen to be one of the poverty-stricken people. you know, it is mainly rich and poor. there is no in-between. host: from california.
guest: mr. romney's return illustrates a lot of the issues that we're going to have in the year -- in the 2012 campaign. should the rich pay more in taxes? that is starkly illustrated with his return. again as the cler said, there is nothing illegal, and the question is, is it right that a wealthy individual should have a lower tax rate? that is for the voters to decide. it is not an issue of economics as it is political preference. host: the scopback to the washington post, taking a look at the numbers. tax documents shedding light on the investment well. looking of the total income, total income for the first family about $1.7 million last year. $3.1 million for the former house speaker.
nearly $22 million from mitt romney. in terms of the total taxes paid, the obama's paid roughly 200 -- ford $50,000. newt gingrich almost $1 guest: that is right. is 26.3%.s tax rate .ingrich's is very high this illustrates how certain circumstances, our tax system is not as progressive as we sometimes think is. for individuals like mr. romney , he pays a very low taxes because most of its earnings or in the form of investment income
president obama and mr. gingrich, those are wes, salaries, and small business income. host: this information is available on our website, c- an.org. joan has this comment from vermont. a tax: well, we want t system that promotes economic growth. one thing that mr. romney is proposing that may be controversial is to eliminate the estate tax.
for some like mr. romney, he stands to gain tens of millions of dollars from that. the fairness issue i think is if mr. rahm it does become the republican nominee is going to be front and center -- if mr. romney does become the republican nominee. host: it has been 24 hours since the gingriches released their taxes. any questions as you review these docents? guest: i have not seen any so far but there is still a lot to go through. there seemed to -- it seems to be pretty straightforward. most of his income would be from small business and come and it is being taxed at the top rate.
that's the main story. host: our guest is marty sullivan from tax.com. caller: i understand there has to be a change in the tax code. somebody making that much money at 15% is not correct. i just hope people cannot make mitt romney the villain because he worked hard and he made this money legally. he is paid what he is supposed to pay. he does not owe anybody anything. thank you. host: joy has this question. guest: well, i think that is a loaded question. we all know that the limits on
payroll taxes is about $110,000. you pay about 15% on that. he paid about $15,000 of payroll taxes on his income of $0.1 million. -- $21 million. host: let's break down the numbers. host: what is carried interest? guest: fees paid to investment fund managers but onlyaid if the managers are making money for their clients. this has been a controversial issue over the last few years. many people consider this to be
not really a capital gain b an ee.inary salary or f it is now being taxed 15%. president obama and the democrats are proposing they be taxed at default 35% -- at the full 35%. host: just over $20 million for knit and and romney -- miss attd ann romney. caller: how much was mr. romney's money taxed? guest: most of these private equity funds are not taxed as corporations. they are flow through entities. a big corporation like gm or
apple -- there is no corporate level tax. they are organized as limit liability partnerships. host: dale from cherry hill, new jersey. caller: good morning. i like that last caller. people think that they had to pay 35% or 30% when it was investment income. i think everybody understands the tax code needs to be anged. i am a democrat and i was an independent for many years. i feel i'm on the side of the democratic side. all these debates there been throwing around what to do with the tax code. i thi the obama administration
should listen to everything they said and say, there are four good ideas. let's suppose that and throw it out to the congress and get it passed. by the time there is a debate between the republican candidate and obama, he can say, we already did that. host: thank you for the call. guest: there is more agreement than folks might realize between the democrats and republicans on tax reform. we need to reduce the corporate tax rate and to close loopholes. e rtisanship between the parties is more on whether the bush tax cuts can be extended. on reforming the tax system, the problem is not the partisanship between the parties but the special interests who are trying to protect their tax breaks. startlet's go back to the
there were brought up at the beginning of the conversation. this is front page above the fold from "the new york times." host: follow-up on that point that seems to be a general theme. he is taxed at a different rate than most americans who see their pay check and see what is taken out every other week. guest: the private equity industry has a host of tax advantages.
they do leveraged buyouts. they reduce the taxes of the entities of their target companies by loadinthem up with debt, which reduces their business taxes. the funds themselves pay no corporate tax. the fund owners are lucky enough to have a loophole of carried interest. there's a series of tax befits that makes private equity funds and their owners able to have their low taxes and these opportunities are not available to regular wage earners. host: this is from ben who lives in ohio.
guest: that is a deeper question. i do not think we would want to get into the business of trying to distinguish what is a deduction that is for america and what is a deduction for foreign interest? if you're making a donation to top-flight aids in africa, should we disallow that because it is not directly benefiting americans? that does not seem like sothing that we would want to look at. i have not heard anything ang those lines. host: what is the gift tax loophole? gues the gift tax is a tax
that is imposed on all americans they give more than $13,000 a year to any other individual. whenever think about that -- i do not know what you mean by "the gift tax loophole." this is an elaborate and complicated area of the tax law that mostly is available to the very wealthy. host: we are talking with marty sullivan, a contributing editor to tax.com. he has written a number of books. ent from mary --r will go to bonnie from maryland. good morning.
caller: this proves that romney is a shrewd businessman. they used insider tradingo make themselves richer. what does man to pelosi pay? you didn't hear nothing about that. guest: we i did not have meant to policy's -- i do not have nancy pelosi's tax returns in front of me. her tax rate might be well below buthat is speculation on my part. caller: good morning. host: go ahead, jim. please go ahead. caller: i take eeption to these rich people being able to
give to their church and write it off on their taxes. this essential it makes me pay more taxes, which then in turn is me giving to his church. this country would not have the debt problem. our cities would not have the debt problem. guest: i think congress is reluctant to limit charitable deductions. there is some talk of a broadbased limitation on the deductions, emized deductions overall which wod include charitable deductions. there may be something in the works in the upcoming months and years to look at putting some limitations onharitable deductions. host: last call from missouri, dee. caller: good morning.
this whole thing -- i heard you talking or reading in the newspaper about how they did not see anything unusual in mitt romney's taxes, according to the way he made his money and the way he is earning his money. they did not see anythg out of the ordinary. if what i heard last night, bain capital in 2007 and other companies of that ilk did an extensive amount of lobbying back in 2007 to maintain the current tax rate. guest: i think the caller is referring to the carried interest loophole. at is a controversial issue.
it became more of an issue. during this campaign, it is going to be front and center because the president and democrats feel strongly it should be repealed and the financial industry has a very entrenched lobby opposing it. ould a flat tax reduce the amount of paperwork? guest: it would simplify the system because it would eliminate a lot of the deductions and special interest loopholes that would simplify the competition -- computations. it will be simpler than current law. host: 1 final tweet. guest: that is a good question.
let me put it this way. you can invest across a street in your own home bank as well as you cainvest in a swiss bank account. just because you have your money in a swiss bank account and you're paying taxes, that is perfectly legal. host: you can log onto our website, c-span.org. we have the returns of mitt and ann romney and also newt gingrich's financial information. marty captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> newt gingrich is in cocoa, florida for a couple of events, a town hall meeting focusing on space policy.
a political editor with "time" magazine tweeting a few minutes ago about the poll, the results, romney, 36%. gingrich. and says big jump for newt in one week. we will have it live for you here on c-span. more reaction to the president's state of the union address. senate democratic leaders called on republicans to join them in implementing the president's economic plans and said they will go for a comprehensive tax reform this year and their comments are about 20 minutes. >> when the president finished his speech, i leaned over to
senator durbin and i said this as seriously as i could, i really enjoyed the speech. i think it was a speech that was a clear call for us to come together and restore fairness to the country. too many families in nevada and across the country wake up every morning wondering why the opportunities for them and their children are so scarce and they look at the top 1% and find out that they have a tax rate that is lower than what they pay. no wonder the buffett rule has become well known because it is so easy to understand. why the wealthiest among us are paying a lower tax rate than the middle class. and why the system seems to be rigged in their favor. we believe that the middle-class
americans are sacrificing every day and it's only fair to ask why people making millions shouldn't pay their fair share. so i agree and we agree with president obama's call for fairness on you are system. we have much to do this year and we have many challenges to face. but nothing is more important to congress than reducing income inequality. this isn't a radical proposition. as president obama said last night, it's common sense. issues going to be at the forefront of the debate we have all year. there is something wrong with the tax code. individual who makes, two-year period, $43 million and pays a tax rate of less than 15% suggests that maybe things need to be changed a little bit.
americans across the political spectrum, independents, republicans and democrats, agree that the wealthy should contribute more. only question is whether republicans will stop listening to the tea party and start listening to the american people. if they do, i'm confident we can meet in the middle and move towards commonsense solutions for our country. >> president obama's state of the union address touched on something that the overwhelming majority of american families already know. they are working harder and falling further and further behind. they did a survey and asked families that were working if they could come up with $2,000 in 30 days for an emergency. almost half could. that's a safe commentary on working families across this country who are struggling to survive. and when the president spoke to that issue, he spoke to
something that resonates all across the country. people understand what's going on. republicans are saying pay check envy or class warfare. and the president spelled it out. if we don't have a fair tax code, those at the top who are off the hook are going to add to our deficit or make it more difficult to provide the most basic services we count on in america. and those at the other end are going to have to pay more. that's just unfair. what the president suggested last night, a 30% minimum tax for those making over $1 million a year is not an outrageous amount. by historic standards, it is a moderate amount compared to those rates that have been charged in the past. and we have to be certain, too, that whatever we do helps those in lower and middle-income categories make it paycheck to
paycheck. and i just want to add one thing to what the majority leader said when it came to the front runner in the republican race to the presidency, if we have reached a point in america where it is considered normal and expected that american business leader opens a swiss banking account or invests in notorious tax havens like the cayman islands or bermuda, if that is normal, we need to have a new normal. most businesses struggle to keep their businesses open and profitable and keep the local people. and the notion that high fliers can owner over $20 million and pay less than 15% when it comes to their tax rate and not supposed to raise that as a matter of policy? of course we should. it's our job to do that. the president is leading us in the right direction for the debate should face in congress. there is a clear contrast and
clear choice. >> i thought the president knocked it out of the park last night and our republican colleagues as shown by their muted response really don't know what to do and talk about morning in america, the reagan optimism. the republican speaker last night, mitch daniels talked about, americans must talk about the state of the union as grave. so we think we are in great shape, we're in good shape. if you are wondering what our agenda will be this year, you pretty much heard it last night. the president's bluepresident for -- the blueprint will be our agenda. we will focus like a laser on the middle class. make no mistake, this is a president who has not given up
governing. the middle class is at a crossroads and isn't going to wait for the next election to be its champion. the speech he gave focused on the middle class with lots of proposals across the board, some requiring legislation, some not, that would help average americans do a little better. that is what we should be doing. and don't underestimate the chances of congress to enact parts of the president's blueprint. republicans will not go along out of a desire to cooperate, but they may find they have to out of political necessity. the republicans have spent the last three years opposing the president at every turn for political reasons, but they may find the strategy only takes them so far this year. the payroll tax debate last year showed this strategy has its limits. it showed that if they take their strategy of obstructionism
too far and make casualties out of popular middle-class priorities, they will be faced with a political backlash. so, don't be surprised if election-year pressures in 2012 may pressure republicans to cooperate with this president more than they might be planning to. otherwise, they will find themselves on the wrong side of the middle class again and again. so we intend to test this theory out by pursuing major chunks of the president's middle-class agenda and push serious proposals to help create middle-class jobs, we are going to defend medicare and we will pursue tax reform that makes sense for the middle class. i have heard republicans repeatedly call for tax reform, but their idea is simply to cut rates for the wealthiest of americans. that is their goals. when they say tax reform, it is
code words for reducing taxes on the wealthy. tax reform after the president's speech now has a different definition. we intend to pursue a different kind of tax reform that borrows from the president's proposals. for instance, we agree with a president that it makes no sense that a millionaire should pay a lower rate than his secretary. so, if the priority for us to act on some kind of romney -- i mean buffett rule this year. the president proposed more details that could shape this proposal, which improves our ability to bring it up in the senate. we agree it's unfair for some corporations in this country to be able to exploit loopholes in the tax code. we are going to look at the president's fix on that. next, we need to address the state of the so-called bush tax cuts which expire this year in a way that puts the middle class first. this means letting tax cuts we
can afford, like those for millionaires and billionaires lapse on the schedule of 2012 and we need tax reforms that rewards firms that shifts jobs overseas and help those that bring jobs back home to america. tax reform has a new definition since the president's speech. it's the kind of tax reform that puts the middle class first. it was a key component of the president's blueprint and will be a key component of our senate agenda this year. and don't underestimate our chances of success, because the payroll tax debate has shown republicans there is a price to be paid for opposing middle-class people on issues of tax fairness. >> well, i thought last night that the president laid out a very clear vision for building a
country that really works for middle-class families again. you know, for too long, policies have favored the wealthiest americans and the biggest corporations. loopholes and gimmicks have piled up in our nation's tax code and brought down taxes for the rich to the lowest levels in modern history. and it allowed some of our biggest corporations to avoid paying taxes, in some cases, even getting subsidies for sending jobs overseas. while the richest americans got richer, the middle class has been left behind. our schools have suffered. our roads and bridges have crumbled and far too many of our workers and small business owners are suffering from an economic collapse that they didn't cause. it's wrong and it's the result of a failed ideology that doesn't believe that government can have a positive force for our middle class. it's even ideology continue to
be pushed by republicans who focus above all else on cutting programs that our families depend on, eliminating support for the middle class and ending investments in the future of our great nation. their voices may be the loudest here in washington, d.c., but their points of view of the vast majority of americans who understand that the investments that we make have been a positive force in our nation's history. so i'm proud to stand with my colleagues and join with president obama in saying we aren't going back to those policies that have devastated our middle class. we have worked very hard to bring this economy back from the precipice but we need to do more for our middle class to get them on their feet. make investments in our communities, in our workers and our families to move forward as president obama called on us last night to build an america to last. so i'm proud to stand with the senate democrats in moving that
agenda this year and fighting for those people who need our help and support right now to make this nation strong again. >> are you going to encourage your confereys on the payroll tax measure to incorporate the buffett rule or something related to tax fairness? >> i don't think that's the place to tax reform. we know we have to do tax reform and there will be hearings in that regard, but we know we have to do tax reform and i think there are some who think we can do it on a bipartisan basis, but the the extension is not the basis to do the tax reform. >> do you and senator schumer can tell us -- >> we vote odd that once in the last couple of years and certainly that will be part of
what we do with tax reform. and senators want to vote on that issue standing alone, we'll perhaps have that opportunity, but i think it would be appropriate that we approach this quickly to have tax reform. we already voted -- the democratic caucus stands strongly that there should be some change in that tax structure. >> when the democrats controled both houses of congress and the white house, nothing was done -- i don't think any suggestions that capital gains, tax rates or dividend tax rates be increased. why taking this buffett rule seriously now? >> i think all you need to do is look at the former governor of massachusetts' tax return and it indicates why it has become an
emergency and absolutely should do it. >> $14 billion profit and they know that -- >> we know that. >> isn't that a bigger issue that mitt romney's tax returns -- >> senator schumer talked about that specifically. he mentioned in his statement that there are some who pay no taxes, of course that's wrong. doesn't mean we should do only one thing. what he does is improper. they may follow the tax code but not fair they have the breaks that they do. and someone who makes $42 million in two years they pay less than 15% in taxes. >> the president also talked some sort of new rule that would require an up or down vote on judicial nominees. given your past statements on this issue, do you support that idea? >> we have to look at this nomination situation. it has really become for those of us who have been in the
senate even for a short period of time how it is simply come to a point now where we have a senator -- the least i understood their statement they are going to approve no new judges. we have to look at the nomination process. it is not working very well. we tried to do something on secret polls and that hasn't helped much at all. the system has to go back to where it used to be and not be forcing us to have cloture votes on judges that come out. i do not think a majority of the republican caucus support what the republican senator said on the floor yesterday. it has been very clear going back to the gang of 14 or however many there was, that
they simply said that we shouldn't filibuster any trial court judge unless there is unusual or extraordinary circumstances and there haven't been any. they have been reported out of committee. >> the judicial nomination is only one of the things that the president put forward. the other piece of that was in regards to conflicts of interest and transparency. one of the things he is suggesting that senators or congressmen -- and they come before the committees -- do you think that is something that is reasonable or should be pu sued? >> it's common sense if you have holdings in a business, a corporation, you shouldn't be voting on anything in that regard. it's only common sense. and i'm disappointed it's going to take a lot to change that but
i'm happy to support such a law. >> one of the things that president obama asked congress to do is extend the payroll tax cut. is that realistic that there isn't going to be a fight? >> we believe the payroll tax extension is extremely important for the economy. as the president said last night, why should the average guy pay $40 every week extra because the republicans aren't willing to extend the payroll tax holiday. they have said the right things publicly, but we will see. i talked to my confereys yesterday after they did the opening public conference and i was somewhat surprised at the rhetoric that came from the house. it didn't appear that they were anxious to do something. but i think with all of the statements their leaders have made that we will get this done and i hope it's done quickly.
one last question. >> is there going to be a housing plans, do you have any details? >> no, i don't. but i'm interested, because nevada is the number one foreclosure spot in the country. spoke to secretary donovan and he is going to nevada, some meetings i helped set up and i told him i hope something is coming very quickly. thanks. captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> florida's republican primary is six days away and our coverage continues this afternoon. newt gingrich is in cocoa, florida, holding a town hall,
focusing on u.s. space policy. we'll have it live between now and 5:00 eastern. john boehner was critical of the president's state of the union speech. in particular his comments on health care and he spoke today to the association of health underwriters here in washington. >> thank you all. thank you very much. thank you. let me say thanks to john for the very generous introduction. let me say thanks to all of you for taking the time out of your productive lives and running your businesses to come to washington to play a role in
your government. it's important that the voices of the people of our country come to washington, talk to their members of congress about the important work that you do in your communities. as john pointed out, you know, i used to have a small business myself. the last thing i thought i would ever do would be is involved in politics. i got involved in my neighborhood homeowners' association -- [laughter] >> and ended up in the united states congress and i tell people, this, too, could happen to you. [laughter] >> i never thought i would do this. i come from a family of -- there's 12 of us and i grew up working in my dad's bar, but i had the same kind of opportunity that all of you in this room have had, an opportunity to get a good job, to start a business,
to grow a business. and live the american dream. and i got involved in this for one simple reason, i thought government was getting in the way of those opportunities that would be available for our kids and our grandkids. it's as simple as that. and i believe someone from the real world, someone from the private sector ought to take a more active role in our government. and that's what's brought me here. i can tell you it's an honor to be chosen by your 434 colleagues as the speaker of the house. and but i don't feel one bit differently today than the first day i came here 21 years ago. i'm still fighting for a smaller, less costly and more accountable federal government here in washington, d.c.,
[applause] >> last night, we heard from the president and let's understand that i get along with the president fine. i have a good relationship with him. he's a likeable person, the american people like him. the fights that we have are not about personality, it's about the policies that we're dealing with. and the president acted last night like it was his first year in office. somehow thinking that over the last three years, maybe he was backpacking around europe. [laughter] >> and so we got a list of new proposals but it really boils down to this but the president is going to double down on the same policies that haven't worked, more spending, more taxes, more regulation. the idea that government knows best and government can always
do this better than the people of america. and i know that as i listened to the president's speech last night, it was another list of failed policies and not only have his policies not helped our economy, but i would argue they have actually hurt our recovery. and this election coming up this year is going to be a referendum on the president's economic policies. there is no other way around it. as we listened to the president, i thought to myself, you know, i have reached out my hand and i have tried to work with the president, but at some point, the president has some responsibility to actually work with us. [applause] >> the president ran on the theme that he was going to be the great uniter, not the great divider. as we saw last night in the president's speech, the politics
of dividing america, the politics of envy are central to what he's trying to do in his campaign. if i had the president's economic record, i would be looking for something else to talk about this year than those policies. but does not help our country. and while i have tried to reach out and work with the president, i can tell you that for the last four months since last labor day the president has been in campaign mode every day. someone from the press asked me, when was the last time you talked to the president? i thought about it and it was december 23 as we were coming together to finish the payroll tax agreement. there is no reason why there should be this much separation. and the president has said last night, he truly wanted to work with us and i'm here to say i'm always ready to work with the president of the united states to do what we can do to help our
country, help our economy, and get the american people back to work. [cheers and applause] >> the president acts like the congress hasn't done anything. on the house side, we have had a plan for america's job creators since last may. we have been our central focus all of last year and we passed 30 bills that we believe will help our economy and put americans back to work. and all 30 of these bills have passed with bipartisan support in the u.s. house of representatives. 27 of these bills still sit in the united states senate. where they get no opportunity for debate and no opportunity for a vote. so the first place we could start is maybe the president could call harry reid. [laughter] >> maybe the president could urge harry reid to at least give us a debate and give us a vote, because i believe that many of
these bills will get bipartisan approval in the united states senate. [applause] >> you know, there has been a lot written about the difficulty of my job. let me tell you, it's tough. my job every day -- i have 242 republicans in the house and 218 votes needed to pass anything. i like to describe it, what i have to do everything is get 218 frogs in a wheelbarrow and keep them in there long enough to pass a bill. [laughter] [applause] >> it certainly is possible. you know, as i look at where our economy is and the difficulties that business people around the country are facing, i was there. i have done this. i don't think there isn't anyone
on the president's economic team who has ever had a real job, but i know what our economy needs. it needs more certainty, it needs a fairer tax system. it needs a health care system that empowers patience rather than empowering our government. [applause] >> next week, we're going to repeal the class act. this was the long-term care proposal -- [applause] >> a part of the president's health care plan that the president and his administration couldn't figure out how to implement so they decided not to implement it. i believe there are other parts of this law that are facing the same types of impossiblebilities. but why leave this on the books. just go ahead and get it off the
books and take this threat from the private sector away. when you look at the president's health care plan, i believe it's the wrong prescription and it is what the american people didn't want. they want to be empowered to go see their own doctor and be empowered to take care of their health care. they don't want big brother in washington d.c. making every decision about our health care system, which is exactly what will happen with the president's health care plan. you saw this week where the secretary of h.h.s. has come out and ordered that every new health insurance policy is going to contain all types of mandates over what types of contraceptives have to be offered in every plan, whether you want them or not, whether you are 60 years old or not. you are going to pay for it. and the protections that have been part of the law for the
last 50 years all get stripped away, putting many religious organizations in a very difficult position. in my view the president's health care plan will not only ruin the best health care delivery system in the world, but will bankrupt our country. [applause] >> when i ran my business, i offered a health care package to my employees. i needed professionals like you to help shape a plan that would work for my employees and work for our business. i remember when i was back running my business, i had a pension plan, profit-sharing plan that i fully funded on behalf of my employees, again, offered by professionals and put together by professionals to help meet our needs. as someone who has been in virtually every corner of every state of our country, i know how
wide and how diverse our country is. and whenever the federal government does something by its very nature, it becomes a one-size-fits-all approach for the entire country and invariably never works. when you look beyond the health care issue and look at the costs associated with it, i'm deeply concerned about the crushing debt that hangs over our economy and hangs over the american people. today some $15.2 trillion of debt, no one can quite get their arms around $15.2 trillion other than we know it's approaching the entire size of our economy. we know we can't continue to spend money that we don't. we know that we, we, it's our responsibility for those of us in washington and frankly those of us in our generation, it's our responsibility to take on this burden and to solve this
problem. and if there's one thing, just one thing that the president could do to help make our country more secure to feel better about our future is to work with us in a bipartisan way to tackle this crushing debt burden that's facing our country. [applause] >> well, i'm going to get out of here and let you all go home. sorry i was late. today is gabby giffords' last day in congress, and we had a ceremony -- [applause] >> very nice bipartisan ceremony on the floor that wept a lot longer than i would have expected. but i want to thank you for doing what you do, thank you for being involved in your community, thank you for the
hirings of thousands and thousands of people that you hire to help make our economy grow, because our job is to leave our country in better shape for our kids and grandkids. god bless you and god bless the united states of america. thank you. [cheers and applause] captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> and more from that event in just a moment. newt gingrich campaigning in florida has a couple of events, one of which is coming up shortly. we will take you there live once it starts. a poll released today that the race is as a dead heat. romney with 36%. and newt gingrich, 34%. we will have live coverage once it starts on c-span. we'll take you back to the
association of health underwriters. steve larson for the centers of medicare and medicaid services spoke and talked about the affordable care act and said the health exchanges depends on active role from agents and brokers. we'll show you as much as we can until the newt gingrich event starts in florida. >> there are so many important health care reform issues that we are working on. and when i was insurance commissioner, i had a lot of positive experiences with our agents and brokers and underwriter community. i'm pleased to be here. you all -- and i know this from my past experience, really our critical partners in the health care system and certainly in the implementation of health care reform that's going on now, there are so many opportunities ahead and i know you have been working hard here in washington and across the country to
facilitate implementation in your respective states. and i just want to share with you this morning some of our thinking at h.h.s. on some of the key issues relating to the implementation of the a.t.a. with respect to exchanges and the state-based exchanges. let me start by saying that we believe that the success and effective functioning of the exchanges will depend on a strong and active role for the agent and broker community. we believe that the a.t.a. creates an infrastructure that preserves an important role for agents and brokers and also will soon provide you with significant new business opportunities. you probably know these numbers but the c.b.o., congressional budget office estimates that 14 million americans will gain access to health care through the exchanges by 2015 and up to
22 million in 2016. and in addition, the c.b.o. has estimated that two million more people will be enrolled in employment-based coverage in 2014. and other estimates, estimates from rand health care and the urban institute confirm these projections and say the offer rates offered by small businesses are going to increase significantly under the a.c.a. and these businesses will be accessing these conference through the exchanges as part of the expansion. again, in short, as it is with the private issuers because this is a private-market-based expansion, this is a major business opportunity for you all. and you, i think, are going to be central to the success of the exchanges particularly with respect to the shop exchanges for small businesses.
you are the people that are trusted by the small employers out there to help them navigate the system and you are small business owners yourself. i want to share with you a couple of findings that we at h.h.s. that we find instructtive and you may be familiar with some of these but in looking at the material out there. for example, the state of pennsylvania recently did what i think is a pretty extensive survey of small businesses and small business employees on health care exchanges. and first, as you might expect, unfortunately, two out of five businesses currently don't offer coverage. and again as you know, they particularly cite the current cost of coverage is the main reason and this is the problem with the current system and this is why the affordable care act is so important and it's the issue we are seeking to address. for those businesses that do access health coverage information, agents and brokers are the most trusted source of
information, more than the company web sites and at least for now, more than government web sites. by 2013 and then 2014, exchanges we believe will become the key vehicle for health care information and shopping for individuals and small businesses. but we think they will do so in working in tandem with, not in competition with, you all, again the trusted sources of information for so many people today. so we recognize this and we think the states recognize this, too, in large part to the work you all are doing in the states. again, a couple of examples, maryland's advisory group on exchanges recently issued a report emphasizing the important vital role that agents and brokers play in the market today. the report found that 90% of
small businesses who purchase insurance do so through producers. the insurance advisory committee recommended looking at partnering with existing resources out there, you all, in the states to make sure that the shop exchange is going to meet the ongoing needs of businesses and individuals there in maryland. utah has developed -- already developed an exchange that focuses on implementing choice and employer-defined contributions in their market before the market reforms have taken effect and that exchange relies heavily on you all and has assured agents and brokers are paid a uniform commission inside and outside the exchanges and we will come back to that in a minute and other states are following the lead of utah. and we know that the experiences in massachusetts when they first started out and also in california point to the need to
work together to ensure a successful exchange experience. so we at h.h.s. certainly expect there to be a large number of state-based exchanges, but we do realize there are going to be some states when we get to 2013 and 2014 that aren't ready to operate a state-based exchange. i want you to know that we're going to continue to seek your input and your visas we develop the shop -- your advice as we develop the shop exchanges. we look forward to ramping up the input over the coming months. as we continue to develop exchange policy at h.h.s., there are some guiding principles for us as we think about the next set of regulations and guidance
in the operational development of the fed ex changes. first, we recognize the shop exchanges and exchanges germly have to operate, efficient and appealing process for individuals, but for employers for employees, for agents and brokers and all the stake holders in there. so exchanges have to add value if they have to be effective, and we think they will in terms of ease of shopping experience and efficiency on both administrative expenses and other costs as well. second, as i said, we anticipate that your community is going to continue to be involved in small employers' purchases of conference in the shop exchange and to this end, we believe we can accommodate in the technology we are looking at a way to ensure that insurers are
compensated even where employers and individuals enroll through the exchange. and we are in the process of designing and looking at tools specifically to help you all explore and present options to employees and employers and individuals to facilitate exchange enrollment of employees efficiently in the exchange in the coverage that they select and then manage your book of business through the businesses. that's all under development. and thirdly, again, i think you know this if the commissions on the shom products are not equivalent to those outside the market then we risk losing business to outside the market. so that is a quick survey of kind of our guiding principles as we think about how we are going to operate the federal exchange, which we hope will be a small number of states and we are hoping and expecting they will transition to a full state-based exchange if not in
2014, then afterwards. so i want to share with you some of the statistics that we look at that give us a reason to be optimistic about the progress that states are making. and let me run through some of these. first of all, 46 states have begun their background research on their markets, their current conditions, their capabilities and 34 of the states have completed that basic research. almost all of the states have consulted with stake holders and over 30 of them continue the process which is required by the a.t.a. to have regular meetings with stake holders in the development of their exchanges. one of the most important things that states can do is to assess their current i.t. capabilities particularly as it relates to enrollment and medicaid and the merger and the synthesis of the kind of single point of entry as
we come into exchanges. 43 states have initiated what we call this i.t. information technology gap analysis. 33 states have completed that initial analysis. that's a precursor to the subsequent work and procurements that they do. 17 states have drafted their business requirements for key functions of the exchange, such as the plan management function, eligibility and enrollment. 23 states have developed a governance model and are in the process of appointing a governing body, whether it is a management team. 10 of them have developed charters and by-laws. 17 states have different types of authority, whether it's legislation, existing high-risk pool, executive order. and one of the big ones that we focus on is the number of states that have received the -- what we call the establishment
exchange establishment funding. this is the significant grant program provided for. we have 28 states and the district of columbia who have received establishment grants to conduct the process of establishing exchanges in their state. and we have obligated over $700 million to the states to do this work. so we view this as a key measure of success and key measure for potential for a state to operate their own exchange. and we just had another deadline recently in december for states to apply for another round of these establishment grants. and so we anticipate making another round of awards in february. and again, we were very encouraged at the number of states that have come in. i think we have to finish reviewing them. we can talk about specific states until the decisions are made, but i would very much expect that we would be well over 30 states that have
received significant funding under this establishment grant program to proceed with their development. some of you may have seen last week, we did issue a short report that again summarized some of the progress that states are making. the report doesn't go through all of these 28 states individually, but does highlight some of the interesting examples of how states are working to create their own exchanges. and again, i think you know this, but these are states, kind of across the geographic spectrum, across the political spectrum, which we find very encourage. in alabama, governor bentley issued an executive order setting up a study commission and recommended that alabama establish its own exchange commission and they have supported creating a state-based exchange. colorado passed a bipartisan bill to establish the colorado
health insurance exchange. and there has been key involvement by great groups, national federation of independent business, the nfib, colorado association of commerce and industry have been active participants in creating the small business component of the exchange there in colorado. in nevada, unanimous bipartisan support for the legislation that authorized their state-based exchange, which the governor signed the legislation back in june. so, again, we are pleased with the progress that states are making out there. and we are working extremely hard to make sure that we're getting the guidance that states need to proceed with their decision-making process. we know -- we put out a set of five different rules in july and august of last year, and we know that states are hungry to get additional guidance to get the rules finalized.
we had a number of discussions with states to gather up the types of information they need to proceed. so we're looking at that. we issued a number of, i think, significant pieces of guidance to states at the end of last year that you may be familiar with. first of all, in november, we posted a set of -- what are called frequently asked questions, which is one of the ways we convey information out to the stake holder community on a whole range of topics, questions on, how are the exchanges going to be funded, is it going to cost us anything if there is a federal exchange in our state, how does eligibility work. if we want to do eligibility for medicaid but don't want to do eligibility for the advanced tax credits, can we still do that and run a state-based exchange and we said yes. how are we going to coordinate
with the local departments of insurance, which is an issue that i'm very sensitive to. and on that one, for example, we -- i think we indicated clearly we intend to preserve the traditional role of the states as best we can and rely on them to do as much as they are willing to do and as much as is practical if we are running a federal exchange in a state and this could come into play in a whole number of areas whether it is certification and rates as well. so, again, we want to be able to rely on the state d.o.i.'s as much as we can in states where we are ultimately implementing a federal exchange. and we intend to issue further guidance to the states in the coming months about those and other issues. in that november question and answer, states have a longer time line to request funding from that establishment gram --
grant program that i mentioned. come january, 2013, which is not that far away, they can continue to get funding through 2014 if they think maybe a year later they are ready. i think you are familiar with ideas we floated last year which is well, it's not a black and white situation. we can have a federal exchange, but the state can perform many of the key functions in that state, even where we are a federally facilitated exchange and the guidance we put out last year says you can continue to get funding for those state-based exchanges. so we provided a lot of latitude and longer onramp for the states to get to the exchange to the state-based exchange. i think you also know or may have heard in december, we put out a bulletin on essential health benefits.
we wanted to make sure that as states were coming into their legislative sessions this year that they had, i guess a sense of our thinking on the direction that we're going to go on e.h.p.'s. in the bulletin, we indicated our intent to propose that essential health benefits be defined using a benchmark approach. the bulletin is an expression of what we intend to and will be followed up by a proposed rule and then a final rule. and we have gotten a lot of good reaction back from the states on that. and that one follows the rule that we've used in many of the exchange decisions, which is try to leave to the states as much flexibility as we can as they implement their exchanges. in this case, states have the ability to select from a number of different benchmark plans that are out there. and that would be the essential health benefit package in your state. and one of the things we allowed
them to is select from market-based packaging and that is small group benefit packages. we think doing that is consistent with what is intended in the affordable care act, but avoids market disruption and gives the states to look to their own benefit packages as to what they think what is an essential health benefit package in their state. we are continuing to review all the comments we got in for the set of regulations that we put out last year. that's the key part of our process and we are working closely with the department of labor and the i.r.s. to develop and provide guidance on a lot of the employer-based issues relating to employer responsibility, employer-sponsored insurance verification, disclosure of tax data for eligibility and other of the technical issues that the employers have to deal with in connection with the offer of coverage and exchanges.
one of the other important things that's on the horizon for us is putting out some guidance about what does the federally facilitated exchange look like? i shared with you the principles in terms of the shop exchange and your role, but we get a lot of questions from states about what is that going to look like. and when we put out our regulations last year providing flexibility to the states, like how's the plan management going to work or network adequacy or is there going to be an active purchaser model or open market, all of those decisions left to states, we have to make those decisions when we implement the federal exchange and now we are going to interact with the states. we are hoping to put guidance out to states and other stake holders on how we are going to land or how we propose to land on those issues as well as clarifying how the interaction is going to occur between the
federal government and the states. and there are other issues about cost-sharing reductions and implementation of many of these provisions that we are plowing through as well. . . we've got to first define the key functions, what does the exchange do. we'll finalize that, then we have to develop business process flows for laying out, how do we accomplish those functions? and write the requirements for implementing the business process flows. ultimately you're writing a code to do all the things you just mapped out under that blueprint.