terminated. it is a very, very powerful threat. it is a threat to, he essentially, for the commercial banks to end their ability to transact with the dollar and their ability to function it is a threat to, he essentially, for the commercial banks to end their ability to transact with the dollar and their ability to function as major financial institutions. that threats being focused on our closest allies risks a dynamic with those governments and with these banks that i think is as likely to push them away and to impede the ability to bring together coordinated effort against iran as did generate that.

>> an opponent might say they are not serious about putting pressure on iran. >> we have seen quite the opposite. these countries have demonstrated a willingness to work with us closely to bring real and sustained pressure to bear on iran. i think we are seeing in the european union just today additional steps being taken to bring pressure to bear on iran. it is our judgment that the best way to proceed is to continue to work with our partners to develop the means, the mechanisms, to bring up pressure to bear, including pressure directly on the central

bank of iran and on iran's ability to sell oil and to earn revenue from its oil sales. the way to accomplish that is in part to pursue the suggestion of president sarkozy to bring in multilateral freeze on the cbi's assets, and as well to work with our partners who have already shown a willingness to continue reducing their imports of iranian oil, and to do that in an orderly and coordinated fashion. that, we think, is better calculated to achieve the ultimate objective here, which is to reduce iran's access to a very important source of revenue for its economy, its oil revenue. >> what you are really saying is that this is a very blunt instrument that risks of adverse reaction as opposed to a calculated, carefully

orchestrated effort that achieves the same goal. >> that is right. >> you might add also how perhaps even this amendment which, we all understand its motivation and we all agree with it, but it may have the unintended consequence of enriching iran and even providing money to the very program we want to stop. is that accurate? >> absolutely. that is where i was going to start. the irony of this amendment, and as you say, we all agree with the impulse, the sentiment, the objective, which is to really go at the jugular of iran's economy. indeed, analysis that we have done, although there are many analytics to this and no one knows for sure, but there is absolutely a risk that in fact

the price of oil would go up, which would mean that iran would in fact have more money to fuel its nuclear ambitions, not less. and our real objective here is to cut off the economic means that iran has for its nuclear program, and in fact, the sanctions that have been imposed, the toughest regime in the history of our country and in the world, quite frankly, has meant that not only do those sanctions act as a deterrent, but probably more importantly in the short run, they act as a way to slow iran's progress. it is harder for iran to finance its program. it is hard for them to get the materials they need. in 2007, the head of the iran and atomic energy organization boasted that iran would have

50,000 centrifuges installed within four years. we are now nearing the end of 2011, and the iaea is reporting that iran has installed 8000 centrifuges with perhaps 6000 operating. iran's ambition to really be much further in its nuclear program has been undermined by sanctions that have been imposed in a multilateral fashion in a targeted and careful way. as you mentioned, mr. chairman, i have had the honor of being in this position for two months. in those two months, i have met with every director, been to china, russia, of brussels, and a variety of other places. in every one of those meetings, the first priority is iran. the response has been amazing. every day people are willing to

take another action. the multilateral approach that the under secretary so well articulated is crucial to maintaining that multilateral framework, and we know that sanctions are the most powerful when they are multilateralized. >> thank you. i am going to place this letter from secretary timothy geithner, to chairman levin, written today, into evidence. the secretary says, as currently conceived this and threatened severe sanctions against any commercial entity if they engage in certain transactions. rather than motivating these countries to join us in increasing pressure against

iran, they're more likely to present our actions and resist following our lead, a consequence that would serve the iran and more than harm them. further, there is substantial likelihood that this amendment could have the opposite effect of what is intended and increase the iranian regime's revenue, literally feeling their nuclear ambitions. it goes on to describe expanding iran's actions and focusing on cbi, working with our partners to achieve the amendment, but in a fashion that we believe will have a greater and more sustainable impact on iran. i think it is important for our members to take note of this when we think about what will occur, potentially, on the floor. senator lugar. >> thank you very much. it seems to me that thinking

through the actions in regard to iran, we have not mentioned what frequently is in the press, and that is the thought that israel might, in fact, decide to attack iran, and simply attempt to take out some of the elements of the nuclear program. we advise that this would be difficult to do, intelligence maybe not being complete, but nevertheless, there is clearly an argument in israeli politics that cannot be ignored. secondly, some would say that is the case, it would be preferable for the united states to do the attack because we're likely to be more efficient and more effective. so what we are really talking about here is, because of the nuclear threat and this particular kind of regime, of the potential for war.

the potential for actual, physical attack, retaliation by the iranians, and the destruction that is very sizable. this is not an academic argument. you have not post it as being that. you have posed it as being very serious. there has been criticism of the voice of america's activities, not that we are not spending money, but that our bureaucratic mechanism is rendering them less effective than it should be. i am not a critic of the program.

i would just say that clearly, with two-thirds of the population under 30 years of age, maybe more than that, and the british getting a better audience than our program, according to some analysts, we need to beef it up. i would ask you to take a strong look at that because there still is an avenue towards two-thirds of the population with the older people getting older. secondly, with the sanctions, it would appear to me that although there are risks in alienating our allies and others, the central bank focused really is a deadly problem for iran if executed completely. secondly, we ought to think through the possibility of blocking oil exports. at this point, the chinese are thoroughly and cooperative with regard to even the banking

sanctions, and would be outraged that their oil imports from iran would be disrupted. they are not taking this very seriously, anyway. we're going to have to contend with either diplomacy with the chinese or potential warfare with the iranians. i would prefer that we visit with the saudis and give them an opportunity to export to the chinese in greater measure, and in essence delete the income. over 50% of the income is coming from oil exports. if you hit the central bank and stop the exports, you do make a very big difference in terms of the ability of their government to function. apart from the ability of the people to tolerate it. again and again, people are saying that the arab spring came in egypt largely because of people who were starving, who were not getting

necessities from the government because the price of food is going up. that is occurring in iran too. that can be excel rated very substantially. i asked for your comments on these editorial opinions. we all feel very strongly about this and are attempting to act as wisely as possible. >> thank you very much, senator. let me make a few comments on the military option you mentioned, communication capabilities come a ways to reach the irani in people, and a comment again on cbi. we agree with you. we think the broadcasting possibilities, social media possibilities are quite critical to reaching iran in people. voice of america reaches as many as 20 million iranians per week.

on facebook, we have 37,000 fans. we obviously want to increase that decidedly. youtube, 270,000 views. in may, the secretary announced an extension of student visas. in october, the secretary gave interviews on the bbc persians service and on a satirical news show which is wildly popular. bbc persian is incredibly well- penetrating.

we work very closely with bbc. this is, again, part of our multilateral effort to work with others. they have been present, at least until now, and into iran, which we have not. according to the international statistics on education, 5200 students from iran studied in the u.s. in 2010. we think it is important. it is why we are starting virtual embassy in iran, and will be launching that shortly. we use technologies worldwide to help people ensure that they have access to the internet and can get past satellite jannings.

-- satellite jammings. some of that i would be glad to have someone brief you about further in a classified setting, but it is quite crucial. secondly, military action. the president has repeatedly said that all options remain on the table in this situation we are facing because we do not want to peak in a situation, anyone in the world, and there is very strong international coalition on this, to be in a world where iran acquires nuclear weapons. at the same time, we think that the dual track approach we are taking, which is pressure and engagement, although iran has yet to take that hand towards engagement, so we will intensify and increase the pressure decidedly on a regular basis. on cbi, i take your point that if one has to make a choice

between war and the risks with cbi, that is a tough and compelling calculation. we do not think we need to go there today. what we do need to do is have targeted efforts that can be multilateralized as the undersecretary mentioned. nicolas sarkozy has made suggestions we're talking with our colleagues about around the world. you're quite right that we need to be pushing parties around the world to get tougher, to take action. that is much of what i was doing in china, and china has agreed, and publicly so today, to finally accept special envoy bob einhorn to assist them in the sanctions.

the need to take further action, and we would agree with you absolutely in that regard. let me turn, if i may -- >> i think we're going to have to just take that answer. thank you. senator menendez. >> thank you, mr. chairman. i have to be honest with you. i am extremely disappointed. you all did not like the original amendment offered. at the request of the administration, we engaged in a good-faith effort to try to create an amendment that would have the maximum effect on iran's economy and a minimum

effect on any disruption in the oil markets in the united states. that original amendment had no waivers whatsoever. maybe we should have allowed that to stand. that is the vote we would be having. at your request, we engaged in an effort to come to a bipartisan agreement that i think is fair and balanced, and now you come here and vitiate that very agreement. that says to me that in the future when you come to me and asked me to engage in a good- faith effort, you should have said that you want no amendment, not that you do not want that amendment. everything you say in your testimony undermines the credibility of your opposition to this amendment. the clock is ticking. published reports say we have about a year. when are we going to start our sanctions regime robustly?

six months before the clock has been achieved? before they get a nuclear weapon? this amendment was crafted in such a way that gives the president two significant pieces of discretion, number one to determine that there is sufficient supply in the oil market that would not create a destruction. if he finds that is not the case, the actions would not go into effect. secondly, notwithstanding that he might find that yes there is enough oil in the market that would not create a disruption, that in fact he has a second option, and in national- security waiver. i find it pretty amazing that you all come here and say what you have said in response to the chairman. let me just say that i have looked at the treasury secretary's letter. nowhere does he talk about economic disruption to us. they're interesting. i think he would have made that

case if there was in fact that destruction. he actually makes a case that was pretty redeeming of our amendment. he said congress has been absolutely critical in providing some of the tools we use to accomplish the goal of tightening sanctions. but for congress, you would not have the sanctions, and i have never seen in this or any other administration come before the congress and say please, give me a sanctions regime. you have rebuffed it every step of the way, even though it is the sanctions law that we have given you that has allowed you to seek some limited progress. secondly, he says that the sales of crude oil lie in the regime's pockets, sustained its human rights abuses, and feed its nuclear ambitions like no other sector of the economy. well then, if that is the fuel that allows the iran march to nuclear weapons, then you need to cut off the fuel.

that is exactly what we are focused on doing. i find it amazing when the europeans are considering doing some of this, certainly france in particular has been advocating such a measure in international reports earlier this month, when it was revealed that iran was moving closer to building its own nuclear weapon. the european nations are discussing imposing their own embargo. so, we basically say to financial institutions, do you want to deal with a $300 billion economy, or do you want to deal with a $14 trillion economy? all i think that choice is pretty easy for them. i find it pretty outrageous that when the clock is ticking, and when you ask us to engage in a more recent effort, and we produce such an effort on a bipartisan basis, that in fact

you come here and say what you say. which really undermines, certainly, as it relates to this member, your relationship with me in the future. you are not going to tell me, please engage with us in an effort to find a more refined solution, and then when we do that, you do not care for it. it would have been more honest to say we do not want any amendment whatsoever. the fact is, several energy traders continued to make prohibited sales in iran. our response has been to sanction front companies rather than major figures behind the sales. you have been reluctant to sanction chinese companies for energy sanctions when there is ample evidence they are violating our laws and there is precedence. so, even though we have given you the tools, you have not

shown us the robust effort when the clock is ticking to use that which we have given you. that is why 80 members of the senate have joined in our iran/north korea serious sanctions act, because they understand that just as iran moves to circumvent the sanctions regime that we have already imposed, and to find ways to achieve loopholes, we understand that we must be a step ahead of them, and that we must close those loopholes at the end of the day to be able to ensure that our sanctions regime is effective. now, had you all embraced that effort, maybe we would not be where we are today if you had used the sanctions regime you already have to be more robust. instead of taking the shell

group's, go to the heart of it. i think this amendment that we will hopefully vote upon today is reasoned. it is balanced. it gives the president discretion both to determine the oil markets and whether there are sufficient supplies. look, libya coming back on track, we see certainly iraq producing more, the saudis have appeared to produce more. i find it disconcerting to say the least. i do not really have any questions for you. i just felt that after having vitiated my amendment, i wanted to put the record straight. >> i do not think a vitiated it. i think they villified it. that is different. let me just ask you this question. is there a way, madam secretary, to address -- in a

letter, i notice that it said in its current form. you have a number of times said in its current form. therefore, both to afford you the opportunity to respond but also to try to deal with what is on the table here, is there in fact a way -- is in no amendment situation or is it the amendment in its current form and is there a way to in fact address what your concern is? >> if i may, let me defer to undersecretary cullen. -- cohen in a second. there is a way to target c.b .i. i think it is important that we do it in a way that is multilateralize. our perspective from the state department is that it is true that europeans are talking about this, and we are working

diplomatically around the world to encourage everyone to make the right decision to do what the united states has already done. today, we have no interactions with cbi, and we hope that others would do that as well and make the right decision in a way that works economically for them, and ensures that iran does not get more revenue because the price of oil spikes. i appreciate that you have tried to address those issues in the amendment, but if i may, let me defer to my colleague at treasury. >> let me first address the concern about how we have been working with you and your staff with respect to the amendment. we very much appreciate the opportunity to work with you on this issue. we wholeheartedly share the objective of bringing real pressure to bear on the cbi.

what we were doing working with you and your staff was trying to devise an approach that is best calculated to bring that pressure to bear directly on the central bank while avoiding potential adverse consequence is to our international diplomatic efforts as well as to the economic situation in iran in particular. if there was a misunderstanding with respect to whether we were supportive of the amendment as it was modified, i apologize for that. we had tried to be clear that we wanted to work with you, work with your staff to modify the amendment in a way to improve it, but i think we tried to be clear throughout that our judgment is that the best course to pursue at this time is

not to apply a mechanism that puts at risk the largest financial institutions, the central banks of our closest allies. the course we should be pursuing to bring real and significant pressure on the cbi, and to do exactly what you, senator menendez, highlighted, which is to attack iran's ability to get access to the revenue from its oil sales, is to work collaboratively and cooperatively with our partners to reduce their import of oil from iran. we now import no oil from iran. we have no relationship with the central bank of iran.

we want to work with our international partners in an effort to have them get to that same point, but in an orderly, cooperative, collaborative fashion. that is our sense of the best way to proceed. just to reiterate, we completely share the objective of addressing the ability of the central bank of iran to operate within the international financial system. the issue is, how do we go about this in a way that is best calculated to achieve the objectives we want to achieve while minimizing the potential for adverse collateral consequences? >> bottom line, you are saying it is not curable. you oppose the amendment. >> mr. chairman, our position is that the right course is to not adopt this amendment.

we recognize -- >> we also recognize that there is substantial support for this amendment in the senate, and if it is to be adopted, we do think that there are some important changes that should be incorporated to ensure that it achieves the objectives that we are all looking to achieve. so, our preferred course is for this amendment to not be included in the defense authorization act. if it is included, we do want to continue to work with senator menendez and the senate as a whole to bring in a few additional changes that we think are critically important to ensure that it operates in a way as designed.

>> thank you for your indulgence. >> i am understand we have an amendment on the floor. senator menendez referred to published reports of iran having the ability to have a weapon within a year. is that the timeline that you all believe is worth at least internalizing? >> senator, there is great debate. >> i do not want a long answer. >> there is great debate about the time frame. the time frame is at what point they have a break out capability, at what point they will have a weapon, and all of those time frames are seen differently analytically. >> is it worth thinking about the published reports as being

generally where things are? >> published reports are one data point. others would disagree. what our objective is with iran is for them not to have nuclear weapons and to lengthen the period of time for as long as possible that it will take them to get there. everything we do every day takes any time frame you have seen in a published report and makes it longer. anything we can do to degrade their program will make that time line longer. >> for what it is worth, i respect the work that you all are doing. i understand you do not want congress to end up with a blunt object that does not work for you. at the same time, and i think it has been pretty fascinating,

actually, to see the effects you have had on some areas of their economy, but it does not look to me like the lines are going to cross. or at least at the right point. it does not look to me like the sanctions, even though there have been some successes, are going to achieve their and prior to the time that iran actually has a nuclear weapon, and that is what has gotten much of congress concerned. so, i think we generally think the published reports are not way off. i do not think you are going to get there, personally. i do not think you're going to get there, and so i share senator menendez's concerns. we have worked with you also on other proposals. i have to say that treasury, generally speaking, has stiff- armed on a number of fronts,

and the responsible approach would have been to lay out what you wanted to pass. i am not a co-sponsor, yeah, but i am pretty irate that senator menendez has worked with you all this time. i know they have made changes. we have been meeting with staff. why have you not offered what ought to be put in place before today's vote?

that seems highly irresponsible on your part. >> senator, we have continued to engage with senator menendez. >> i do not want to engagement. why doesn't timothy geithner lay out what it is he would like to see happen? >> i think timothy geithner's letter, with all respect, does lay out what we think should happen with this amendment, which is that -- >> it be defeated. >> that it not be adopted. that being said, there are additional amendments to the amendment that we have provided to senator menendez and his

staff. we are eager to continue to work with senator menendez and the senate as a whole, if this is going to proceed, to have to proceed in a fashion that is more workable. if i could just comment on one other of your remarks, on the timeline. we're trying to convey that we recognize but the urgency, whether it is a one-year time line or what ever it is, that there is a significant urgency on the pressure track, and that if you are thinking about the lines crossing, we agreed. the administration agrees that the pressure needs to accelerate. what we are intent on doing is bringing additional pressure to bear, consequential pressure to bear on iran in very short order. the question that i think we are addressing is how best to achieve that, and our concern with the amendment is that we think that may not be the best way to proceed. it is not that we are coming before the committee and saying, everything is fine, and leave us alone, let us continue on. and what we are saying is that

we recognize that we are at a point in time where the right course is to intensify the sanctions, and we want to do that in a way that is best calculated to work. we think the way to do that is to work cooperatively with our international partners in a fashion that has, i think, born substantial effort over the last several years, and we think can work going forward. >> let me ask you this, and i mean, would it make sense that, for menendez and kirk to give you 60 days to make that happen and if that doesn't this goes into effect? >> i think we are interested in continuing to figure out how to work -- >> let's go to another -- and i

appreciate the fact you are working with allies and friends. it does send a signal that we really are willing to work on sanctions on everything but that that matters, and that is petroleum exports. but i understand that you went to work with our friends in a way that makes the most sense. but you know, you made a comment that every political candidate has made for eight years, that all options should be on the table. and yet, i guess i would ask the question, are we making plans with our friends toward military action, not doing it, but are we making those kind of plants that are known and send signals to iran that if these sanctions do not work, we really are prepared to use that option? is that taking place in the present? >> i would say briefly to do things. one, the president of the united states has said publicly on several occasions that all

options are on the table. from iran's point of view, when the president of the united states says that, they understand the seriousness. >> george bush said that. the george bush before him properly said that. >> we have reason to believe that they understand that. in terms of planning, my experience, and i am sure yours as well, is that the department of defense prepares for virtually every hypothetical situation that there is in the world. >> thank you for refocusing on this issue. >> there may be some disagreement on the timeline as to when iran will have a nuclear capacity for a weapon, but there is no disagreement on the timeline on the vote on the menendez-kirk amendment. that is going to take place momentarily, certainly within the next 24 hours. i would urge you with a sense of urgency, not just as it relates

to this amendment, but with this issue. we have all talked about iran. let me put it in context. iran is an extremely dangerous country. they're supporting terrorism and we know what cost that has been to the american people. they're abusing their own people. they are supporting syria's efforts on the abuse of the people of syria, and the list goes on and on. we have the international referee in nuclear proliferation has judged that iran is proceeding with a nuclear weapon. they point out that what they are doing would be inconsistent with anything but a nuclear weapon. we know that we are in an extremely dangerous situation, which brings us to timing. i just want to underscore, on both sides of the aisle, we appreciate the leadership of the obama administration in reaching out to the international community and getting more support for sanctions than we have had in the past.

that is extremely important. but it starts with u.s. leadership. we have seen over and over again that without the united states stepping forward, the international community is slow and in many cases will not act at all. so, dealing with the central bank of iran, your own reports showed that they are money- laundering. they are assisting the proliferation of nuclear weapons, and they are assisting terrorism. we have cut off relations with the central bank of iran. it is a clear signal to the

international community that we are very serious about trying of the financial capacity of iran. that is the only way we believe that sanctions will effectively change the course of iran on its nuclear ambitions for a nuclear weapon. that brings me again to the timing issue. if we do not move forward rapidly, than i am not sure it can be effective. but i do not understand, and maybe you can help clarify for me, the menendez amendment gives you two months before any action takes place. you have another three months after that to cool off the issue, and then you have another five months with the waiver authority. it seems to me that it speaks volumes as to ratifying what you have already stated. we want the international community to work with us to cut off the central bank of iran. this amendment gives you the tools to work with the international community to be selective as to what national banks should be sanctioned. you can be selective.

so i am not exactly sure the resistance to the passage of the amendment. maybe you can help clarify this for me. all of the horrible things you have said, i have heard before. oil supply, we have heard that before. it seems to me that this gives us the power to work with the international community to provide the type of unity necessary, showing that america is very serious about cutting off the financial capacity of the government of iran. where am i wrong on the five months you have? that gives you a lot of time for your diplomacy. i know diplomacy can take time. five months is a long time, particularly when we are looking at and iran where if action does not take place within the next couple of months, it may be too late. >> the concern is that in the

course of that effort, whether the 60 days or the five months, for various aspects of the provision, we are operating in an environment where we are going to our closest allies with a stick rather than with an effort to -- >> a stick requires the president to make certain findings before it can be used. >> it does, but from the perspective of the financial institutions and governments involved, there cannot be any confidence from their standpoint that a waiver will be invoked.

>> isn't our objective to get them not to deal with the central bank of iran? >> it absolutely is. we have a disagreement in the tactics to achieve that. >> but if country a, our close allies wants to work with us and block the central bank of iran, and country be, our ally does not. is it not helpful for country a to know that there is a reward and punishment issue involved in the sanctions? we want all of our allies to cut up the financing of iran to the central bank in order to avoid a nuclear iran. >> it will be helpful. at the risk of repeating myself, the judgment of the administration, broadly, is that the best way to work with our allies on this is not by

threatening our most severe sanctions against their largest financial institutions, but to build on the international consensus that already exists and to take these steps. >> i understand your point. i think it represents a traditional difference of view between the executive and legislative branches and i think the legislative branch will speak today. >> first of all, let me say that the views expressed here by senator menendez and senator

gore are very representative of the consensus of the legislative branch of government right now. i do not have any doubt, and i do not think any member of this congress has any doubt that the goals of the executive branch are exactly the same as the goals of the legislative branch. however, we have a real problem in what i would call an enthusiasm gap or a sense of urgency gap between how the legislative branch to use this and how the executive branch views this. what you're seeing today is a result of that gap between us. that needs to be resolved and we believe it needs to be resolved urgently. i believe and many of my fellow senators believe that after the iaea report, your sense of urgency should have risen to our sense of urgency, and we are not hearing that. we hear the words, and we hear the talk, but we have wanted action for some time and it just has not happened.

the result of that is what you see in front of you. so, i would strongly suggest that rather than coming up here with a strategy on how you are going to torpedo this amendment, you figure out how to make this amendment work. it is not going to pass by a close vote. it is going to pass by a very

large vote. many of us in a house-senate hope that it will send the signal we want to see cent. this is not a trade issue we're arguing over. this is not a dispute on borders or something. when it comes to the issues in the world today, this issue ranks right up at the top. the united states cannot be wrong on this. the world cannot be wrong on this. we cannot make a mistake on this. unfortunately, i think most of us agree with what senator corker said when he said, you know, you are trying to do this through sanctions and i think he said, i do not think you are going to get there. i believe that is the consensus view of the senate of here also. again, that is why you are seeing what you are seeing in the form of this amendment. i guess what i would tell you is that you probably need to go out of here and figure out how you are going to make this work and how you are going to raise the level of urgency that we have and that you have seen here today. thank you. >> thank you. i apologize for arriving late. i am on the armed services committee and we had a markup on the floor, but i was able to watch a good portion of your testimony while we were considering amendments in my office. i want to ask you a couple of

questions. again, i apologize if i may have missed this already being discussed while i was doing these other things and getting over here. first of all, i am not a great fan of sanctions in general.

i believe that's if circumstances require that they take place, that they should be clearly targeted. they should have somewhat of a -- cannot say a guarantee, but somewhat of a certitude that they would be effective and also that they would be widely supported in the international community. listening to your testimony, i could hear, i think, a very sincere concern about the possibility that we may end up doing more harm than good if certain types of sanctions are put into place here. i have not decided how i am going to vote on this amendment. i am still thinking it through, but i would like to ask you three questions in the time that i have here. the first is, and again i apologize if you have already stated this, but could you compare the sanctions that will be put in place under this amendment with the sanctions that the u.k. put in place earlier? >> the sanctions that the u.k. put in place last week essentially brought the u.k. into line where the united states has been for many years. we, years ago, cut off the iranian financial sector from the united states. the u.k., over the past several years, has taken action against particular institutions. what we did monday was to cut off the entire international sector.

they are now in line with where we are. the canadians as well are in line with where we are and where we have been for some time. >> with respect to your concern, and this concern also being expressed from the letter that the secretary of treasury wrote, that our closest allies could curtail purchases in the future or cease to cooperate, do you see a predictable outcome among these countries we are discussing if this amendment were passed? >> senator, i think what we and what the secretary was driving at is that we see and we are working with our partners to have them reduced their reliance on imports from iran. the united states imports and no oil from iran. we are seeing that our partners recognized, in part because of the actions we have taken and the in the nation we have put out into the public domain, recognize the danger involved in purchasing iranian oil and having the cbi use those revenues to fuel dangerous activities.

what we are doing is working with our partners to drawn down, if possible, entirely cease importation of iran's oil. >> you are saying that the potential of the amendment is to reduce that level of cooperation? >> i think there is a danger that it will result in less cooperation because of the reaction to the threat that is being visited on their financial institutions.

>> if i might add a couple of -- >> if i might, senator, at a couple of things to that. there are close allies that have a relationship with iran, not in the arenas that we have already imposed sanctions, but just household goods. and our reading of our effort by senator mendez and senator kirk and semenya objectives to achieve the life blood of what we have achieved to cut iran off of their nuclear weapons program, but our action as a blunt instruments taking away their way of life. >> as the other policies have been put into place, china has very noticeably not cooperated. they're becoming iran pose the most active trading partner. they are still trading in oil. what would be their reaction to this sort of process of new legislation, or even existing policy?

what are they doing? >> putney speak to the broad relationship with china in regards to iran, and i defer to undersecretary cohen on specific action. we think what china is doing, we take that quite seriously a great deal of the meetings i held were on this point. as a result, they have finally agreed that the special envoy, bob einhorn, can go to china and help them to better enforce the sanctions in place. they have, in fact, slow down their actions.

the have not, to the best of our knowledge, backfield -- back filled. we have sanctioned five chinese individuals and five chinese firms are under sanctions. there are other chinese companies currently under investigation and i was quite candid with china about each of

those cases and the action we would expect. >> i apologize for interrupting you. i have about seven seconds. do you see china's economic activity with respect to iran decreasing as this goes forward? >> the senator, i cannot pretend to predict how china will react to this. we think is quite possible that the chinese, is this amendment were adopted, would take the risk, essentially. we would cut off their financial institutions from the united states, but i am not in a position to predict exactly how the chinese will react. the relationship between china and iran is a very complicated one, one we have been working on the. >> to the bottom line, they have not reduced their economic participation as we have put policies in place? i am one minute over. >> i will answer briefly. what the chinese have essentially remained at the same level of economic engagement with iran, give or take the last several years.

>> thank you. >> thank you, senator webb. senator isaacson. >> thank you, mr. chairman. undersecretary sherman, there are concerns about oil prices with passage with this amendment. i've heard just what a today about concerns about what it might do to other countries that have banking relationships with iran that are friends of ours. are we aware of what an iranian nuclear test might do to stability or to oil prices or what an incident in the straits of hormuz might do? are we calculating that? i know the concern i have and i only really speak for myself, but i think i am speaking for the people of georgia. it seems like the sands in the hourglass are running out. we do not know when, but there's no question that ahmadinejad and the iranians, if given the material, probably would use that material in a nefarious way against israel or someone in the middle east. that is a calculation that has to be paramount in terms of how we deal with iran.

that is why i think it is so important that we send a legislative message to the congress and the united states that time is running out on iran as well. i would like you to respond to that. >> senator, as you have said and others have said this morning, and as i want to reiterate, we absolutely share the urgency of the congress. we were not surprised by the report that said that up until 2003, there was a structured program in iran to develop nuclear weapons. and since then, clearly, there are ongoing activities and possible military dimensions because there are activities for which there is no plausible explanation except military use, and certainly, iran has not act -- offered a plausible

explanation. we were not surprised because we're one of the 10 countries who supplied information to the inspector general for the report. it was quite understandably know what is happening in iran. we have successfully, through this multilateral and phased and cooperative sanctions approached that has been helped with tools that progress has been given to us, as well as executive orders has, indeed, slow down iran's capabilities. it has slowed down their wanting to have been 50,000 it has slowed down their wanting to have been 50,000 centrifuges to having 6000 or 7000 centrifuges. we quite agree with you. and i think that is why when the report came out, and that was virtually a unanimous vote at the iaea board of governors. and it did not happen by governments -- by accident. it happened by a concerted effort we approached along with the u.k. and canada to add additional sanctions to our arsenal to try to deal with iran nuclear program.

we are completely where the congress is in terms of urgency, as the secretary said earlier. what we are talking about today is tactics of getting there. and in that, we have some disagreements. we should continue this debate. and as secretary cohen said, we are well aware of the support for this amendment today and we understand the impulse for that amendment because we share the objective. we just think there's a better way to go about it. >> thank you. the secretary cohen, as i understand it, there were some pretty astounding revelations about the central bank of iran in terms of them financing and other banks that are sanctioned by the united states, and the construction firm that is under sanction. what do those findings alone

tell us about why we have not sanction the central bank yet? those are clear findings of treasury that are clear violations are sanctions already. -- our sentience already. >> in the findings, it broadly described illicit activity and specifically included information about the central bank of iran and the deceptive practices that you identified. we are using the foundation of that finding with our partners as a way to further highlight the risk of doing business with iran, any of the financial institutions of iran, and with the central bank of iran in particular. it has allowed us to have in one place a comprehensive presentation of the risks involved in doing business with iran, including the central

bank. the question of how we then take the next step is something that is left for us to continue to work on, work on with the congress and with the administration. the findings in the 3112 not determine any particular action -- in the 311 do not determine any particular action, but describe a range of steps that we have spoken about with iran this gets back to the, the undersecretary sherman said. what we are looking to do is bring to bear on iran and on the central bank of iran, but more generally in iran overall, substantial additional pressure.

and if the right step is to bring a sanction on to the central bank of iran, we are prepared to take that step. we think as we sit here today, the right thing to do is to proceed with a multilateral effort to isolate the central bank of iran, to work with our partners to reduce their import of iranian oil, and to take action to freeze the assets of the central bank of iran. that would be, in essence, the steps that we would want to pursue with respect to the cbi with a real sense of urgency, with a notion that the clock is ticking, and we've got to ramp up our efforts here. that is where we are looking to proceed. >> i will respect the fact that both of you have a very difficult job and diplomacy under any circumstances is tough, particularly when you are dealing with it is honest broker like the iranians have been. but i think menendez-kirk does

reflect the sentiment of the people of georgia and i would say that a sense of urgency is something all of us must consider in dealing with the central bank and the nation of iran. thank you. >> thank you. senator isaacson. >> centre shaheen, i do not think it is an award, but i think you get special recognition to greatest price paid trying to get to a meeting of the foreign relations committee. >> thank you, mr. chairman. i hope you will acknowledge that in the future will have legislation pending before this committee. >> absolutely. we owe you. >> you should have seen the other guy. [laughter] let me begin first by thanking both of you for the efforts you all have been making to address iran's move toward achieving a nuclear weapon. i do want to share the sentiment that has already been expressed by my colleagues on this committee that i believe the menendez-kirk amendment is going to pass.

i would hope that if there are suggestions that the administration has about things you would like to see different in that amendment, that you would share those with us because i think, as you have heard, we're going to act on this within the next 24 hours. it would be hopeful to know what else you might like to see happen. having said that, both senator menendez and senator kirk raised concern that the sanctions have not been doing enough that have already been designated, and particularly with respect to some of the chinese companies. i wonder if you would respond to that -- he responded to that briefly undersecretary sherman, but can you tell us whether the administration has been doing enough with the sanctions that you already have, or what else could it be done?

>> thank you, senator, and thank you for the suggestion of bringing to senator kirk and senator nunn does any other suggestions we might have. we will take that back and might consider that. as i said, we understand the concerns about china. it was the focus of the trip i made last week. to impress upon china the reality and a prompt action that was required on their behalf regarding a number of situations. my request for a special envoy bob faw einhorn to finally be welcome to china and to, in fact, follow through on the sanctions regime and the obligations, which we have not talked about enough in here. under the security council resolutions there are five resolutions that have passed. four have legally binding requirements.

this is not just the united states request. this is the u.n. security council of obligation of states around the world. we have sanctioned 280 individuals and entities over the last few years. we, of course, think we should do more and better. in fact, when the qddr was written at the secretary clinton's request, one of the things that came out of that was to increase our enforcement capability, to increase the number of fte, to organize the state department in a better way, to enforce sanctions. the process is under way. we are trying to not have it constraint -- constrained by the budget constraints we all face. but yes, we think we should do

more. we have excellus of that province -- progress and we expect to be accelerating even further. this is an urgent problem. >> thank you. there is an interesting opinion piece in today's european edition of the "wall street journal," which i assume both of you might have seen that highlights the involvement of the revolutionary guards in not just the nuclear and missile program, but in so many other economic areas in the country. the article quotes you, mr. cohen, that the revolutionary guard has expanded its reach into so many critical sectors of the economy. can you talk about how difficult it is to draw lines between the reach of the guard and how that affects our ability to address through sanctions to bring pressure on iran?

and also, if you would, talk about how we are working with our european allies to address the irgc's moved into legitimate businesses. >> i'm happy to because i think the irgc has been one of our key targets for sanctions over the last several years. it is recognized in security council resolutions, recognized by the eu and certainly recognized in our sanctions as a target that is very deserving of sanctions. the irgc is involved in the most dangerous activities in iran. and as it continues to expand into the iranian economy to the detriment of the average iranian citizen, it frankly, provides us with additional ways to apply pressure on the iranian

regime. earlier this year, for instance, we applied sanctions on an entity called tidewater middle east company, which is a port operator at seven of the port in iran, including the largest container terminal at the bottom -- at the bottom abbas port. the rtc took control of that -- the irgc took control of that several years ago. any foreign financial institution that engages with tidewater risk having its access to the united states terminated. we are continuing to press our allies in europe to add the tidewater to the list of sanction the entities in europe as well because europe has taken a number of steps to sanction irgc-related entities, including an entity that is a major construction firm in iran.

cracks have we been successful at persuading them on tidewater? -- >> have we been successful at persuading them on tidewater? >> i am waiting to see if it is included on a list of sanction entities that the eu has released today. but if not today, then we will continue to press the europeans to at tidewater to the list of sanction the entities to the you list. -- to the e.u. list. the irgc has expanded into the iranian economy as more and more average citizens are moved out of the economy.

the government and its most agent -- a dangerous entities expand their economic region, as they do so, will continue to take action against those entities and work with our partners to do the same. >> thank you. >> senator koons. >> thank you for holding this hearing. i will simply renew comments. i know you have heard from literally every single member of the panel so far about how rapidly iran is making progress toward the acquisition of a nuclear weapon, about how bravely the people i represent are concerned about this, and about a real lack of clarity about the communication with senator mendon says about an amendment for which i make co- sponsored -- co-sponsored and for which i intend to vote today.

it is rare -- i take very seriously the letter of the secretary and your input and respect your efforts, but august 9, the letter went to the president from 92 senators urging prompt engagement and action against the central bank of iran, urging more progress toward an executive sort of multilateral sanctions regime that we have been discussing at great length. what we are hearing is a steadily increasing level of great concern and alarm. since august, the iaea report has come out, allegations of an assassination plot against a saudi diplomat, the assault on the british embassy. there is no doubt in my mind that iran is the most dangerous nation in the world at this point.

this situation, as it steadily moves in a bad direction is going to push us toward some tough decisions. the ranking minority member start by asking you about the planning for potential military action. i wonder what we are doing to prepare the american people for the possibility of necessary action by either a close ally, israel, where the united states. the level of engagement your hearing from this panel simply reflects that, a concern that six months on -- that letter was in august. it is december. you are pushing back very hard and amendment by senator mendez that by its structure give marks for iran in diplomacy. by their actions, they have made abundantly what they are doing and their intentions. and a statement -- the statements of ahmadinejad are appalling and a clear source of legitimate concern by the people of israel and the united states and all of our allies. i hope you take this very

seriously, and in the absence of any clear input from you about what is insufficient with the men mendez amendment, i intend to vote for it today. there is not a lot of time for back channel communication. i am eager to hear from you anything more that would give me some confidence that the chinese, who are still the worst actors in this field, with whom we have so many other problems, and the luttrell property, currency manipulation, and ongoing -- we are in a fall on trade war with the chinese. we need to manage it as appropriately as we can and in the interest of the people of the united states. one of the things i had hoped to hear today is that we are making real progress with them and engaging them for a sanctions regime bearing down on the iranians. i'm encouraged that they are accepting einhorn, but i do not see that we have aggressively sanctioned chinese actors in this area.

and given the hour glass that has been referred to the mine concerned we are not being aggressive enough in this field. >> with my colleague give me 30 seconds before i have to leave to respond to something? >> certainly. >> two things, number one, as the secretary mentioned, there are many nations that have complicated relationships with iran. but our section specifically only focuses on sale of and purchase of petroleum products. it is not going after all those other complicated relationships. and number two, and i appreciate your support of the amendment, the chinese have already taken the risk under the existing sanctions regime and the chinese have not moved. the answer to that seems pretty clear. i thank the chairman for give me the time. >> undersecretary? >> thank you. i thank both of new centers. -- you senators.

on china, i would reiterate what i said earlier, which is i agree. we want more action out of china. they have taken some action to slow down their activity, not to backfill from others that have pulled out of the iranian oil sector in particular. we have centered one individual and five other entities in china. we have others that we are looking at. that was this -- that was the subject of my discussion with them last week. i will say this, they have stuck with the international coalition. they did co-sponsored the resolution and the iaea. they did vote in the u.n. general assembly for the resolution condemning the actions from -- against the saudi ambassador. it is important to have them inside the tent as opposed to outside the tent, but there is no doubt in any of our minds that they need to take far more

action than they have and we are quite aggressively engaged with them. this was the subject of some of the president's discussions in honolulu and in bali just two weeks ago. secretary clinton with councilor dai. vice-president biden with a leader who was said to be the next leader of china. we share the focus and attention and the obligation china has under the u.n. security council resolutions to, in fact, follow through. we share that and i take your message that we need to pursue it even more urgently than we already are.

again, on the kirk-mendez, we appreciate that this will pass. we obviously would appreciate more discretion than even exist in the current draft of the amendment. we think tactically that it may both increase the price of oil, which will give iran a windfall. that is not the objective of the legislation, but may have that effect. secondly, we are concerned -- and it may even create that would fall during this five month time frame of extensions that exist in the legislation because of the anticipation of the markets. no one knows exactly what will happen, but there is most definitely a risk that iran could get a windfall from this, let alone complicate our relations with very close friends and allies. >> thank you. seeing that i have run out of

time i will submit some additional questions for the record. buyers the undersecretary to use his great skills -- i urge the under secretary use his great skills to urge the market. i think it is important to send a clear message about our determination to prevent iran from making any further progress in acquiring a potential weapon. >> we are grateful for your testimony in your public service. i think what you are hearing in this discussion today is a real concern about a sense of urgency, or what some would assert, a lack thereof. like a lot of us, we get the chance to travel in places like the middle east. when i was there last in the summer of 2010, and senator shaheen was on the trip as well, and we had about seven countries in nine days. at that time, it was months before the arab spring. at a time when there was a real consensus about the threat posed by the iran in regime, whether you were in israel or saudi arabia, egypt or some other place.

there was real consensus, but also real worry. that was the summer of 2010. if anything, it has become not only more apparent, but more urgent. i think it is finally more apparent to people across our own country because of the assassination plot, because of what the iaea reported recently. i do not want to walk through all of it, but the language is pretty compelling. when the iaea says they have credible information that iran has carried out activities and "and relevant to the development of a nuclear explosive device" and of course, they outline it further.

the sense of urgency here -- i think there's a greater sense of urgency that a lot of people feel in our country, and perception is very important in these situations, as you know. but that does not seem to be an administration policy or set of actions that is commensurate with that sense of urgency. i am a co-sponsor of what the senators are trying to do and i have long labored in this vineyard. but when we leave -- read letters like the one from secretary geithner, "continue to work with." it-late -- to have our allies resist following our lead -- we all want to have collaboration. we all want to have a steady effort here, but this is moving way beyond where we were in 2010.

and the problem -- let's assume for a second that there was no nuclear threat. if we could magically removed the threat, just the impact of the central bank has on being a banker for a lot of the bad guys in that region -- hamas, hezbollah. so many bad guys they provide resources for. that is another reason for this sense of urgency. i think that is what you are hearing. my question is very simple. if not this, what should we do right now in the next month or two? and if not this now, how long will the strategy that you want to put in place or continue, how long will that take? cracks on the sense of urgency, -- >> on the sense of urgency, i can assure you that on my own behalf and on behalf of the entire administration, there is not an issue that focuses the attention of the administration more than the threat of iran as it is laid out in the iaea report.

we feel that sense of urgency every day. i have just returned yesterday morning from a short trip to israel and the uae, which is the most recent of my journeys, both to consult with our allies who are working on this issue and to learn about their perspective on the threat, and to bring that back and to feed that into our process. we are working on this issue every day and have taken steps to bring to bear more financial, commercial, and

diplomatic isolation on iran today than it has ever seen before. this is fair to say that we have applied a substantial degree of pressure on iran, and up the same time we recognize there is more to do. the steps that we are prepared to take in the short term, assuming the menendez-kirk amendment is not adopted, which may not be a valid assumption -- we are committed to taking action against the cbi, to freeze its assets, to work with our allies to have them take a similar action, and to work with our allies to encourage them to take the steps that they have already indicated a willingness to consider, which is to ramp down their

involvement with the cbi and their purchases of iranian oil. that will constrict iran's access to the hard currency and revenue it needs to fuel the acts -- activities that you address, senator. that is the course that we want to proceed on, while at the same time continuing to apply the sanctions that we have across our range of areas. the new executive order from just 10 days ago on the chemical sector and the production of oil in iran is a very significant new step. it goes after anyone providing goods or services to either of those industries. the petrochemical industry is the second most important source of export revenue to iran. the petroleum industry is the

first. if those sanctions directly target iran's ability to develop both of those sectors. we have been pursuing and are intent on continuing to pursue a range of significant and powerful sanctions on iran. the issue -- i think we have been discussing it this morning. the issue is how best to achieve that, while minimizing the potential of an adverse consequence of this backfiring. and as under secretary sherman alluded to, and as secretary gardner knows, we have real concern that the amendment as it is currently drafted, even with the phased in and even with the potential for waivers, has the potential to actually increase revenues to iran.

that is something we want to assiduously avoid. >> i am out of time. secretary sherman, anything you want to add? >> the only thing i would add that we have not discussed this morning is that the international environment is changing on a daily basis. probably one of the most significant things that will happen in the near future is a change in syria. iran really has only two allies left, syria and hezbollah. and when, indeed, bashar al- assad steps aside, which he will undoubtedly do -- it is not if, but when -- iran will lose one of its properties in the world. it will further focus the attention of the international community on what has to occur here and create some political circumstances that are different that will help us to further isolate iran and to make it pay a price for it illicit activities.

>> thank you. senator casey, thank you. let me say that i think we, in the congress, have a difference of opinion about a particular step. but i want to assure my friend and colleague that on the issue of urgency, i can attest that i cannot think of any issue that is concentrating the minds of the administration right now more than this, or at -- or more than any other time. yesterday, i was at the white house at a meeting about this particular topic. i know the secretary of state and the state department are as focused on this as they can be. i do not think anyone has any illusions about the time frame or the urgency. there may be some differences about timing on a particular step or methodology, but i would not view this amendment or the discussion this morning as some house of a great departure.

i think is important for everybody, particularly outside of here, to understand that. there is a universal understanding amongst our allies also. this is the topic of conversation right now. i think everyone needs to be aware of that. senator yudof. >> thank you, chairman. thank you for holding this hearing at this very appropriate time. i appreciate you being here and your service to the country. under secretary cohen, i do not know if you can answer this, but publicly i wanted to have these try to explore a little bit with you -- it has been reported that f.a.q con's design -- about aq kahn's plans are being replicated. do you know of that and what tools we have to deal with black-market nuclear materials? the whole discussion has been about our allies and working with our allies.

but we have some other very dangerous situations to deal with here. and secretary sherman, if you want to start, please go ahead. i do want to be mindful of the setting -- >> i do want to be mindful of the setting in our response. let me just say this. we are focused carefully on who is supplying material to iran, and in particular, to iran's nuclear program. we have a range of sanctions already in place against entities in iran as well as outside iran that have been supportive of their nuclear proliferation activities. and we continue to track very closely the individuals and entities involved in supplying iran the material for its program.

i do not want to get into any greater specificity on that in this setting. we would be happy to brief you in a different setting with additional information. we spend an enormous amount of time trying to understand who is that is supplying iran, and then taking action to try to isolate them from the international for economic and commercial and financial system so they are not able to do so. >> i would only add -- and i would be glad to go into further detail in a classified setting that aq kahn's tentacles throughout the world have been much discussed and a sword and much tracked.

the state department and the administration pays close attention to the trading routes of nuclear material. one of the great experts in this regard is the ranking member of this committee, who probably understands the trade of materials, the technology as well as any of us do. i would note as well as we do this not only for iran, but north korea and other would-be nuclear powers. and secretary clinton in her meetings in burma in her efforts to not only encourage the democratic trend that are taking place, but also is being very clear with the leadership in burma that ties to north korea and potential shipments need to stop. the tracking of these routes that might increase nuclear proliferation is something that is quite well attended to.

>> thank you for that answer. we may have an opportunity to explore this in other settings, but the amendment that is being discussed here today is targeting the sale of iranian oil. i have a couple of questions. i will throw them all out and have you try to answer them. in light of the widely reported pullout of major energy firms from iran's energy sector, what is your assessment of the iranian oil and gas industry at this point? if that sector is declining, how will world energy prices be affected going forward? who is purchasing iranian oil? who are the big purchasers? what are the percentages there? are those numbers going out or down? for example, with the chinese, how major of a purchaser our day?

-- are they? and from what you have described, is that going down? and is there any indication that iran cannot sell its oil on the world market? >> thank you. the date on all of this fluctuates. in this setting i can discuss open source reports. iran is still doing relatively well because the price of oil is quite high. that has been the nature of a lot of our discussions and concerns about the menendez- kirk amendment, which is that it may increase the price of oil, which would be the benefit of iran. in terms of deliveries of refined petroleum to iran, which is quite crucial to their economy, whether they are lower today than they have been in the past, although month-to- month numbers fluctuate, it is our view that they are significantly lower than the force asada -- then before sasada was passed.

and in fact, the refined petroleum coming in, as many on this committee may know, but the public may not know -- although iran may have a lot of oil, but it does not have the capacity to refine that oil. it has to send it out and have it refined and come back in. the price for that refined oil has increased 10% to 25% since sasada. the sanctions that we have are biting. yes, iran is employing a deceptive practices to circumvent the sanctions, but we

are working very hard to stay ahead of those tactics. >> and just to respond to your question about who is purchasing iranian oil today, there are purchasers in the you, greece, italy, benevolence. outside of the eu, china is a big purchaser as its south korea, india, turkey, sri lanka -- i think it get all of its oil from iran those are the major purchasers of iranian oil today. >> do you have percentages? is china the biggest purchaser backs to the purchase 50%? >> china purchases about 20% of iranian output. these are on classified figures. i can give you a chart that sets out exactly each of these countries' imports from iran and what percentage it makes up

of their imports. >> and the things that you are describing, or any of those going down at this point? which countries would be impacted or taking action or doing something that is putting a crunch on the iranian situation? >> we are looking to do is to work with our closest allies, particularly in the eu, in asia, in india potentially, to try to have them reduced their importation of iranian oil. i think we have not seen to date that occur, but i think we see the potential for a coordinated effort to bring that about. >> thank you very much. sartre, mr. chairman, for going over a little bit. -- sorry, mr. chairman, for going over a little bit.

>> i appreciate your participation, and everybody's. undersecretary, you can see from the broad presence here today and the number of questions the intensity of the concern, and the focus here. i know you knew that before you came. we're very appreciative for your presence here today. i think this hearing has helped to underscore for the public, certainly, and for all interested parties the deep concerns that exist right now. and hopefully in the next weeks and early months, everybody will be able to come together in a sensible way to avoid the potentially very dangerous alternatives and options that are facing everybody in this.

almost certainly, we will have another hearing on broad policy aspects regarding this, i would say in early february. depending again, on the return schedule and what happens in the next few days here. we will start to leave the plans for that. -- leia the plans for that. we know you are focused on it. thanks for contributing to this. we are very appreciative for your presence today and we look forward to continuing a good dialogue with you. we stand adjourned. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> the senate approved the menendez-kirk amendment tonight in a 100-0 vote. the white house has warned that the financial sanctions in the amendment could cause oil prices to rise. the programs bill also passed tonight 93-7.

>> coming up next on c-span, the house debate a bill. herman cain is interviewed. later, at a foreign relations committee hearing on financial sanctions against the central bank of iran. >> he did not have a lot of

romantic ideas. he saw for water was. >> carl examines the length of the cia spymaster, his father. >> my father changed after he was thrown out. if you watch it closely, he is a soldier. he took on the toughest assignments given to him by the president's spirit when it came time for the president to ask him to lie and mislead congress, he cannot do it. >> sunday night at 8:00 a.m. eastern pacific. >> when i but that why the country does well are does not, it is fundamentally a values thing. it is the resources.

do you believe the future can be different decks do you believe you control your future? this is not universal. it is good for us. >> your questions for david brooks. he will take your calls, e- mails on a variety of topics. david brooks's live and noon is stern -- at easnoon eastern. >> if this financed by $3 contributions by taxpayers and holds the balance of about $200 million. this debate is just over an

hour. gentleman is recognized. mr. harper: i would like to thank the committee on science, space, and technology, mr. hall, for his continued assistance in ensuring these important matters are considered by the house. he has been a helpful partner. mr. chairman, we live in uncertain times, with job creation stifled by crushing debt, but there are two things i am certain of. the necessity of cutting unnecessary spending and the fact that h.r. 3463 is a simple and straightforward way to do ju that. h.r. 3463 cuts up necessary spending in two ways. first, it ends the taxpayer financing of presidential election campaigns and party conventions, a program growing less and less popular for both taxpayers and candidates. second, h.r. 3463 terminates the election assistance commission and -- an obsolete

government agency, originally intended to sunset in 2005. every federal program, including these, is there because someone thinks it is a good idea. but if we do not eliminate some programs in a $15 trillion debt -- then a $15 trillion debt will just be the starting point ofur decline into a european style crisis. everyone talks about tough choices and we have to make them. frankly, mr. chairman, these choices are not even very tough. they are about as easy as w are going to find. mr. chairman, since 1976, american taxpayers have spent $1.5 billion funding presidential primary campaigns. presidential election campaigns, and national party conventions. my colleague from oklahoma, mr. cole, has been a loader in trying to end those campaign subsidies, and i'm pleased to work with him today to continue that effort. when taxpayer financing of

political campaigns and conventions was adopted, proponents said it would improve the public's trust in our government, clean up politics and increase the competitiveness of political campaigns. sadly, it has failed on all counts. now we find that more and more candides are opting out of the system altogether. the federal election commission has just this week confirmed that no presidential candidate to date has opted to participate for the 2012 election. mr. chairman, we're talking about eliminating a program that literally no candidate is currently using or preparing to use at this point. that includes president obama, who in 2008, famously became the first esidential candidate ever to decline to participate in both the primary and general election phases of the program. and it's not just the candidates who don't like it. as this chart indicates, support for americans overall

is dramatically low for this program. since peaking in 1980, the percentage of taxpayers opting to participate has declined from a high of 27.8% to 7%. that means that 93% of taxpayers choose not to participate. they refuse to subsidize political campaigns. and who can blame them. it's bad enough that they have to watch campaign commercials, but should they have to pay for them with taxpayer dollars as well in the money designated by a check off on tax returns is diverted from those taxpayers' payment into this program so every other taxpayer has to ma up the difference in revenue to the treasury. the 93% of taxpayer who do not participate have to make up for the money spent by the current 7% who do. mr. chairman, eliminating this system will save taxpayers an

estimateders $447 million over five years and immediately return nearly $200 million to the treasury. this is sensible and it's long overdue. also long overdue is the elimination of the election assistance commission. the e.a.c., created in 2002, as this chart indicates, was pected to sunset in 2005. instead, as you see on the chart, despite its dwindling services, mr. chairman, this agency has more than doubled its employee size in three years. this is clearly an abuse of what should have taken place. the e.a.c. was established for a noble purpose, to allocate federal grants for state voting systems swrup grades to conduct research and to test and certify voting equipment. aside from the certification

services which can be carried out by another agency, the e.a.c. has fulfilled its purpose. over $3 million has been sent to states over the years to help them modernize their voting equipment. now the e.a.c. has allocated all of its remaining election grants and even zeroed out its requests for additional grant funds in its last three annual budget requests. the national association of secretaries of state, a bipartisan group, the direct ben fashe -- beneficiary of the e.a.c.'s dwindling services, has pass not one but two resolutions calling for the e.a.c.'s dissolution. as this chart indicate the e.a.c.'s f.y. 2012 budget request devotes 57% of its budget to managemenand overhead costs. more than half. under this plan, the agency

would use $5.4 millioto manage programs totaling $.5 million this bill would transfer the e.a.c.'s remaining value cruble service, its voting system testing and certification program, to an existing agency instead of paying the overhead cost of a pleat agency just to operate that program. like its predecessor bill, h r 6 2, this bill maintains an adrisery system to give state and local election officials input into the testing and certification program. mr. chairman, since december of 2010, the election assistance commission has not had a quorum. that means it has not been able to make policy decisions requiring approval by the commissioners. has anyone even noticed? compared to the real crisis facing our country, has there been harm caused to justify

keeping an obsolete agency. the e.a.c. is not merely obsolete. it's also wasteful. i have spoken to this house before about the two hiring discrimination lawsuits against the e.a.c. unfortunately, the more time that passes, the more problem comes to light. just recently, we learned that a former e.a.c. commissioner who continued serving for a year after the end of the term and then resigned has been collecting unemployment benefits. neither the commissioner's resignation letter nor any factwe know of indicate the departure was anything other than voluntary. when we have millions of people in this country struggling to make es meet, how can a senior government official who leaves a job voluntarily collect unemployment benefits? when we have an agency that is not needed and produces scandal

after scandal, misperformance after misperformance, it is time for this agency to go. according to the c.b.o., dissolving the e.a.c. will save taxpers $33 million over the next five years. mr. chairman, we have a $15 trillion debt. weave to start somewhere. we now have annual deficits over $1 trillion. h.r. 3463 eliminates one government program that virtually no one uses and shuts down an agency that has completed the task that it was assigned. amazingly, we've had proposals not to shrink tweeze program bus to eand them. only in washington is the answer to this -- to dysfunction, expansion. this bill will not cure all of the problems that we have on its own. but it is one of many steps we are going to have to take. otherwise, we will sipping deeper and deeper -- we will

sink deeper and deeper into debt and trap our children and grandchildren in a downward spiral. today is the time to act this agency and this pam are the place to start. i urge my colleagues to support h.r. 3463 and i reserve the balance of my time. the speaker pro tempore: the gentleman reserves. the gentleman from pennsylvania. mr. brady: i yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. brady: i rise in opposition to h.r. 3463. this is not new territory for this congress. this proposal to eliminate the presidential election campaign fund has already been dealt with in this congress. this -- the legislation before us proposes to combine these two really bad ideas. in an era of rapidly changing election law, both in terms of campaign finance regulatioand voting rights, these t programs are more important now than ever. the electoral landscape is much different today than it was even four short years ago. the supreme court allows

unlimited cricks from special interes and super p.a.c.s are raising vast amounts of funds with no government oversight or regulation. corporations and special interests are donating massive sums of money and some may expect return on their investment. unfortunately this return often comes at the expense of the american people and sometimes at the expense of the integrity of this body. we cannot expect to trust the electorate -- a trusting electorate if they feel they do not have a voice. we should pride transparency and accountability no secrecy and irresponsible. last congress, we passed the disclose act, to call for more transparency in how our elections are financed. that bill was killed by sate republicans. mens of -- members of the house such as mr. van hollen of maryland and mr. larsen of -- larson of connecticut, would stngthen public finance of elections, not weaken it, as this bill does. when servicers of funds are

concealed what message does this send to the country? it sends the message that we don't care where we get our contributions as long as they are secret. this is wrong. this is the best course of action. across the country states make it harder for voters to ct a ballot. new laws requiring vote identification and eliminating the days for early votg are all part of an ert to limit voter participation an turnout. voters have noticed and have already started to push back. this was the case in maine last month when they used the people's veto to throw out a law passed by the republan legislator and governor to limit the state's successful same-day voter registration program, which has been in place for 40 years. in other state, restrictive new laws may be forced onto the ballot for possible repeal and

referendums in 2012. if that wasn't bad enough, overworked and underpaid local election officials and volunteers are expected to keep track of election law changes while administering large, complex and often unpredictable elections. the election assistance commission does much of the heavy lifting for them, maintaining a database for local election officials to utilize, it produces instructional videos and materials which cash-strapped ection officials claim save them thousands annually. and letters of support f the e.a.c. which have also been sent to my colleagues across the aisle are still rolling in. i ask unanimous consent to include several such letters in the record at t end of my statement. the speaker pro tempore: without objection. mr. brady: the services do not stop there. they are charged with the testing voting machines, the only agency tasked to do this in the federal government. who will ensure our votes are counted? who will ensure that everyone

has the opportunity to cast a ballot for their intended candidate. who will ensure we don't repeat the debacle of florida in the year 2000. it is important to remember that events that led to the establishment of the election campaign funded on the e.a.c., the watergate scandal in the early 1970's and florida respectively. these e-- eroded the public's faith in our political system. these measures are meant to restore their faith, restore accountability to washington and ensure that people were heard. all this bill will do is weaken further what little faith the american electorate has left. today, i stand withvery letter writer that has pleaded with us not to terminate the e.a.c. i stand with those who cannot afford to make huge contributions and would rather speak with their votes than their wallets. i stand on the principles that

voter inclusion, not voter exclusion, is what we should strive for and the atelled disenfranchise. is despicable beyond words and should not be tolerated. mr. speaker, i reserve the balance of my time. the speaker pro tempore: the gentleman reserves. the gentleman from mississippi. mr. harper: thank you, mr. chairman. it is clear that what ha happened here is there's been no response to many of the allegations of mismanagement that we have heard soar. it is clear on the things that have happened that the e.a.c. in particular, it is me for this to come to a conclusion. it is an agency whose average salary for its employees, which the employee size is more than doubled in the last -- since 2007, the average salary is $106,000 for this agency. . rond reagan said the closest thing on earth to eternal life

is a temporary government program, and this was supposed to last for a period of three years. the national association of secretaries state in 2005, did a resolution, a bipartisan group, did a resolution saying, bring this to an end. they renewed that resolution again in 2010 and yet it remains. if we cannot get rid of an agency like the e.a.c., then we are never going to be able to get rid of anything up here. with that i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from pennsylvania. >> mr. speaker, now i would like to yield two minutes to the gentlelady from california, ms. lofgren. the speaker pro tempore: the gentlelady is recognized for two minutes. ms. lofgren: i rise in opposition to the bill. instead of focusing on jobs and helping middle class families, the republican leadership is hard at work today creating additional ways in which corporations and special

interests can dominate our elections process. ending the presidential election campaign fund opens the doofor large political spenders to enjoy an even greater role in the funding of political campaigns. the voluntary republic financial system for presidential campaigns was created in the early 1970's as a direct result of the corruption of watergate, the largiers political scandal of our generation, stopping croppings and appearance of croppings is as important today as it was during the nixon years. a level of spending by corporations and special interests since the supreme court decision in citizens united should give every american reason for concern. so do my republican colleagues really believe that more corporate and special interest money in politics is going to benefit in any way the 99% of americans who don't have lobbyists? the current public financial system for presidential elections has problems. most notably it has not kept pace with the cost of modern campais, so we should fix it instead of eliminating it.

i would note that the republican national committee recently received $18 million from this fund. so if the republicans think it's such a bad idea, perhaps they should ask the r.n.c. to return the money. as for the election assistance commission, the e.a.c. is the only federal agency focused on improving federal election. this was an outgrowth of the disastrous process of the 2000 election. remember that 100 million votes were cast but it took the decision of the supreme court before a winner was declared. the experience left a black eye on our elections process. it's not something america should go through again. in the state and lal budgets are cut, the value of this commission is going to grow. have there been problems at the e.a.c. -- i would ask for an additional 30 seconds. yes, there have. there have been problems and

what should we do about it? we need oversight and reform. we shouldn't just abolish this commission because we are going backwards to the bad old days of inconsistency among voters. i urge my colleagues to focus on the economy, focus on jobs, and don't pass bills that give corporations and special interests even greater influence in our elections. i yield ck. i thank you. the speaker pro tempore: the gentlelady yields back. the gentleman from mississippi. mr. harper: thank you, mr. chair. it is amazing that there is a reference, we need to if he cuss on jobs instead of doing something like this. if that's the case we passed about 25 bills this year out of the republican-led house that dealt with jobs, that dealt with the economy. we have done our job on that. and now it's sitting over in the senate who knows where or why. it's awaiting action.

we have been doing those things, the tough decisions, the this that will create jobs if the senate and the white house will join with us on those things. so that is a -- simply not accurate to say that we haven't been focusing on jobs because we have done that since we started this year. and we will continue to do so and encourage and urge our colleagues overn the senate to bring these mters up. they include things that will help on overburdensome e.p.a. regs, with things that will deal with permitting and drilling in the gulf of mexico. ings that will have a direct impact on our economy and jobs. it is clear, particularly on the e.a.c., that was created in 2002 after hava, help arica vote act, after the bush-gore recount so we wouldn't have another hanging chad or butterfly ballot situation, and this agency

administered over $3 billion worth of grants to the states for machines. when it was passed, it was designed to be a three-year agency and program. we are nine years into this. instead of trying to say, ok, we showed the chart a minute ago with $5.4 million worth of management costs, and yet only about a little over $3 million in program cost. and the grants for the machines, mr. chair, are now gone. and they are not there. we have the letter from the national association of secretaries of state which restates their position othe resolution to eliminate the e.a.c., done in 2005. again in 2010. again on the e.a.c. we have rerts from different agencies. we have an i.g. report criticizing the management practices of the.a.c. this report was done in march of 2010.

we have a report from the e.a.c.'s financial records back in november of 2008 which i dealt with when i first got on the committee on house administration in early 2009. this rept is an audit of the election assistance commission's fiscal year 2008 financial statements. the records were so mismanaged this agency that the other side wants to keep instead of trying to make us more efficient, that -- it was so bad that the agency couldn't be audited. the records were too bad tell them how bad it was. so that lengthy report is available to anyone who cares to read that. then we have a report from the office of special counsel that was done in 2009, the office of special counsel talks about having to settle a political discrimination case. an agency that's supposed to

talk about fairness and helping in elections themselves gets sued for political discrimination. and one of those that created that problem is the one that voluntarily resigned and received unemployment benefits for a voluntary resignation. we have an organizational chart that shows that the e.a.c. included a special assista to a vacant position. i can go on and on, mr. chairman, on the situation and the mismanagement of the e.a.c. it is clearly time to say -- and i understand there are some things that we need to keep these. we are saying, the essential functions of this group, send them on over to the s.e.c. and we can take care of those situations on testing and certification, make the process more efficient and save money for the taxpayers. with that i reserve the balance of my time. the speaker pro tempore: the gentleman reserves. the gentleman from pennsylvania. mr. brady: mr. chairman, i now

would like to recognize the gentlelady from california, mrs. davis, for three minutes. the speaker pro tempore: two minutes? mr. brady: three minutes. the speaker pro tempore: the gentlelady is recognized for three minutes. mrs. davis: thank you. mr. speaker, i rise in opposition to h.r. 3463. it might sound surprising, but right behind jobs one of the top concerns my constituents contact me about is campaign reform. you'd think that campaign rules would be the very last thing people would think about when they are worried about their livelihoods, their mortgages, and their family's health care, but they know, they know that the electoral process is at the heart of everything their government can do for them. the american people are frustrated. they are frustrated by what i call supersized campaigns. it's all too much. it's too slanderous. it's too hard to tell who's paying for what and who's saying what. they feel that big donors, big

corporations, and ideological groups are running the show and they are being left out. but the american people care. and they believe in we, the people. public financing gives the voice back to the middle class. in the elections assistance commission can help election officials better the process for voters. neither of these is perfect. right now we acknowlge that. but we should be improving rather than eliminating them. throwing away what public financing we have. what financing worked for every president from 1976 to 2004 and making it harder to bring election improvements together is a step in the wrong direction. rather than making it even harder for the average voter to make a difference, congress should be improving access to

democracy by expanding public financing, assisting election officials, and increasing voting opportunities for all merps. -- americans. our people are our strength and we have no business shutting them out. the supporters of this bill say it will save us money, but in fact, mr. speaker, it will mean our democracy's up for sail. -- sale. thank you, mr. speaker, i yield back the balance of my time. the speaker pro tempore: the gentlelady yields back. the gentleman from mississippi. mr. harp: mr.chairman, may i make an inquire as to the time of time remaing on each side? the speaker pro tempore: you may. you have 16 1/2 minutes left. 15 1/2. the gentleman from pennsylvania has 20 1/2. mr. harper: mr. chairman, i yield one minute to the gentleman from texas, mr. baon. the speaker pro tempore: the gentleman from texas is recognized for one minute. mr. barton: i thank the gentleman from mississippi for yielding and thank the gentleman from georgia for presiding in an

even and fair fashion. one of the arguments that's been made about the e.a.c., spreebling, -- mr. speaker, is that it's the federal election commission that ensures every american citizen's right to vote. if only that were true, mr. speaker. the national association of secretaries of state, which are the organizations in each state that oversee the elections, have called for the dissolution of the e.a.c. the committee has heard firsthand testimony from secretaries of state all across the country both in 2005 and again in 2010, the national association of secretaries of state have called for the dissolutio of the e.a.c. if the organizations that are actuallyresponsible in each state for holding the elections, mr. speaker, are asking that the federal agency that's supposed to help them should be dissolved, i think it would behoove the congress to listen

to the states and in this case dissolve this commission. with that i yield back to the gentleman from mississippi. the speaker pro tempore: the gentleman yields back. the gentleman from pennsylvania. mr. brady: mr. chairman, i'd like to recognize the gentleman from missouri, mr. clay, for two minutes. the speaker pro tempore: the gentleman from's is recognized for two minutes. -- the gentleman is recognized for two minutes. mr. clay: i thank the gentleman from pennsylvania for yielding. mr. speaker, there are ongoing attempts to suppress the valid legal vote of some communities in this country. earlier efforts to stop selected americans from voting such as literacy tests and poll taxes were overturned by ts congress. but while the tadgetics of these people -- tactics of these people have changed, their strategy remains the same, intimidation, discourage, or otherwise prevent certain groups of america -- american citizens from voting. current tactics include burdensome voter i.d. laws.

outrageo registration requirements. dishonest inactive voter lists, and unlawful disenfranchisement of ex-offender. to these flagrant tactics, proponents of voter suppression have added more subtle aappropriation. including disinformation campaigns and behind the scenes quiet and unfair enpurging of voter rolls. now we are presented with their latest plan to deny certain americans their right to vote. the elimination of two programs whose sole aim is to ensure that every american's voice is heard in our election. the presidential election campaign fund and the election assistance commission are in need of strengthening not elimination. they help make sure that all voices can be heard and that all votes will be counted.

i support improving these programs, but the only reason to want to eliminate them is to further suppress votes. the votes are the same groups who were targeted by jim crow laws decades ago. the votes are the same groups o are now targeted by inactive voter lists, and voter i.d. laws and all of the other new tactics designed for a single goal. voter suppression. i urge my colleagues to defeat this bill and defeat yet another attempt to stop american citizens from voting. the speaker pro tempore: the gentleman's ti has expired the gentleman from mississippi. . >> i yield two -- mr. harper: i yield two minutes to the gentleman from wisconsin, mr. sensenbrenner. the speaker pro tempore: the gentleman is recognized for two minutes. mr. sensenbrenner: i can't believe what i just heard from my friend from missouri. doing away with the presidential election campaign fund is not a jim crow law.

i'll put my record alongside his on insuring voting rights to minorities as the author of the test extension of the voting rights act and one who got the 1982 compromise passed and signed into law by president reagan. the presidential election campaign fund was destroyed three years ago by president and then-candidate barack obama. he refused to be bound by its restrictions, senator john mccain was, and he was put at a signicant disadvantage in the general election campaign by running against candidate obama who rejected the election campaign fund's funds an raised huge and unlimited amountof money. >> would the gentleman yield? mr. sensenbrenner: i have a limited amount of time. if i have time left i'll be happy to yield.

this year, so as not to disadvantage themselves, none, that means none, of the republican primary candidates have signed up for presidential election campaign fund money. the obama money making machine is running all around the country and we see this in the newspapers, we hear it on television, and because the campaign fund would limit the amount of money that whomever the republican nominee, if they took these funds, could use in order to spread his message on what opaw ma ought to be replaced by the vots, we ought to just get rid of this fund altogether. it was destroyed three years ago by then-candidate obama. we might as well not spend any more taxpayer funds on it. may it rest in peace. the speaker pro tempore: the

gentleman's time has expired. the gentleman from pennsylvania. mr. brady: i would like to recognize the gentleman from new jersey, mr. holt, for two minutes. the speaker pro tempore: the gentleman is recognized for two minutes. mr. holt: i thank the gentleman. we already know that in 38 state there is is introduced legislation that would suppress the participation in the votes of young, minority, and elderly voters. now we see their allies here in congress trying to eliminate the only federal agency charged with improving the conduct of elections and making sure that every vote counts. if you like the direction of the state legislatures, you're going to be thrilled by the legislation before us today to close the election assistance commission. the voters vote -- the voter's vote should be behind a curtain of secrecy but the process by which registrations right hand elections are conducted should be transparent. if not, voters will cease to believe the voting is fair and their vote counts.

let me remind my colleagues, there is nothing more crucial to democracy than the fairness and accountable of elections. democracy works only if citizens believe it does. the system must work and the people must believe in it. voting shouldn't be an act of blind faith. it should be an act of record. the e.a.c. helps maintain the integrity of the electoral process too many people across the country have lost confidence in the legitimacy of the election results, dismantling the e.a.c. would further erode that necessary faith in the process. we've discussed, several times, and others have talked about it, but if manipulating the outcome of elections occs, how much easier will it be once the e.a.c. is eliminated? millions of americans are casting their votes now on un auditable voting machines and the results of most elections are not audited.

eliminating the e.a.c. would increase the risk that the electoral process would be coromised by voter intimidation, by voter system irreregularities. can we afford to take that risk? certainly not. do we want problems to go undetected? i would hope not. les oversight, les standards, less test, fewer audits weaken ours democracy. abolishing the e.a.c. is the wrong way to go. the speaker pro tempore: the gentleman from mississippi. mr. harper: mr. chairman, may i make a further inquiry into the remaining time for each side. the speaker pro tempore: you may. you have 12 1/2 minutes. the gentleman from pennsylvania has 16 1/2. mr. harper: mr. chairman, i yield four minutes to the gentleman from oklahoma, mr. cole, a distinguished member of the appropriations and budget committees and also has been heavily involved in this matter

as a co-sponsor and also great work on trying to eliminate and bring to an end the presidential election fund. the speaker pro tempore: the gentleman from oklahoma is recognized for four minutes. mr. cole: i thank the speaker and thanthe gentleman for yielding. the legislation before us actually does three important things. first, it eliminates an antiquated, outdated system of public financing. second it terminates an obsolete commission, and finally, and not incidentally, it actually saves money. something we talk a lot about around here but seldom actually do when the presidential election campaign fund was actlly created in 1973, it was during a time before things like facebook, youtube, twitter, widespread use of the internet did not exist. that's no longer the case today. today it's pretty easy to contrite money to a candidate a presidential candidate if you want to do it. i would advise anybody,

regardless of their political persuasion, to simply type the name of the candidate that they like into the internet and wait and see what pops up. they'll have an immediate opportunity to donate to that individual. there's no need to take public money at a time when we're running trillion and a half dollar deficits and divert it to what is essential politil welfare for candidates. absolute waste of money. it's so much a waste that our president who defends the system, but chose not to participate in the system. 2008, he did not participate, did not raise money this way. did not do it during the public campaign. actually broke precedent and frankly, a commitment he made earlier in the campaign and chose not to do it. and that's fine. that was his right. he was certainly more than adequately funded. his opponent, senator clinton, now secretary clinton, was also adequately funded. she did not use the public

financing system. the one person who did, john mccain, was heavily outspent, although i don't thinkhat had much to do with his defeat. i think honestly, americans know how to contribute to presidential candidates. they don't need the federal government letting them check off a portion of their taxes and divert it for that purpose. public participation in the system has declined radically. it's never reached even a third of american taxpayers willing to do this, peaked at 28%, and in 2009 was down to 7% of american taxpayers that chose to do it. we're not denying anybody the ability to participate. we we are giving very expensive welfare to presidential candidates and to political parties at a cost to the taxpayer when that cost can't be afforded. two weeks ago, we had something that occurred that honestly ought to concern everybody on this floor. i don't fault either party for it. but the democratic party and

republican party both received $17 million for their conventions from the federal treasury of the united states. $17 million to two political partie $ million in total to run their -- 34 million in total to run their conventions. who believe th's a needed expenditure. each of those party, i can tell you pause i used to be a chief of staff for one of them, will spend over $100 million on their conventions, they don't require federal help. it's a waste of time and money. as for the election assistance commea and i said that as a former secretary of state, this is a commission whose time as hom -- has come an gone. it currently spends over 50% of its budget on administration, not on direct assistance to the states. and the idea that state governments and stays who have been running elections for 200 years suddenly need the federal government to tell them how to

do it and spend this kind of money is absurd. frankly, the national association of secretaries of states, which is the oldest public association of elected officials and appointed officials in the united states has twice called for the elimination of this. they don't feel the need for it. they certainly don't see that they're getting any assistance from it. so whatever good it did in the immediate aftermath of the 2000 election i think is now concluded. with that, i ask for an additional 30 seconds from the gentleman. mr. harper: i yield another minute to the gentleman. the speaker pro tempore: the gentleman is recognized for an additional minute. mr. cole: i thank the gentleman for yielding. without putting too fine a point on it. this is a system an this is a commission who simply exist to solve problems that aren't problems. we have no problem funding presidential campaigns in the united states. there's plenty of money, probably too much money around. there doesn't need to be taxpayer money.

nor do political 35er9s have -- parties have a problem funding their conventions, they can do it themselves. nor do we need a commission whose purpose has now passed into history a whose people that are supposed to -- entities supposed to serve the secretaries of state around the country have asked us to abolish. let's just finally prove we can get rid of outmoded programs, end the expenditures and actually save the taxpayer some money. in doing so, i can assure everybody on the floor that our democracy will remain healthy, our leches will be fair, and the american people in their wisdom will figure out which candidate to contribute to if they choose to contribute to any candidate at all. with that, i yield back. the speaker pro tempore: the gentleman's time has expire. the gentleman from pennsylvania. mr. brady: i recognize the gentleman from north carolina, mr. price, for four minutes. the speaker pro tempore: the gentleman is recognized for four minutes. mr. price: mr. chairman, i rise for the third time this year to

oppose a measure that would summarily repeal our system of funding for federal leches. once again the house majority seems intent on remaining the few remaining safeguards we ve against the influence of special interests in politics following the supreme court's citizens united ruling. the fact that they are ostensibly bringing this forward ss a deficit reduction measure in ordero pay for a bill to undermine workers' rights is the height of cynicism this bill before us toy would destroy one of the most successful examples of reform that followed the -- followed -- followed the watergate scandal. dare we forget what that can dal wa about? the group trying to elect the president breaking rules. at that time cfidence in public government was dainls low. this was a voluntary program of

public financing forresident elections. to this day it stands as up with of the greatest steps we have take ton bring transparency to our election system. it's worked -- work remarkably well, being used by every candidate from 1976 to 2004, and by john mccain in 2008. perhaps the best example's -- example of the program's success is ronald reagan who used it in all three of his campaigns, in 1976, 1980, and 1984. it shows the positive effects it's had on both parties. it illuminates the way in which the system benefits ways the candidates challenge the party's establishment and highlights the focus on small donations rather than big bucks for large clintors. notehat this is no free ride no willy nily spending program.

ndidates must seek the support of thousand of small doe nos to prove their viability and only then do they receive matching funds. today, one could wish for a bipartisan effort to repair the system and restore its effectiveness. i don't know any policy that better exemplifies the maxim mend it, don't end it, than this one. earlier this year, congressman van hollen and i introduced a bill to do that, modernize the presidential public finance system and make it an attractive and viable option for presidential candidates. it would bring available funds into line with the increased cost of campaigns, adjust the program to the front-loaded imary calendar and enhance the role of small doe noes. it's been carelly deseened and deserveseliberation and debate. instead, ware faced with yet another republican attempt to open the flood gays for

corporate cash and special interest influence to pour into our political system. with confidence in government at rock bottom and the perception of government corruption through the roof, why is the majority trying to return us to the dark difes water depate? let's instead restore and improve our public financing system, move on to real solutions to put our nation's fiscal house in order. let's not use valuable floor time to pass a bill that has no chance of becoming law. the american want us to get to work to revive the struggling economy and put people back to work. i you remember the majority to heed that call. get to work on passing appropriations bills, fixing medicare reimbursement, extending the payroll tax cut an patching the a.m.t. and re-authorizing the f.a.a. in time for families' holiday travel. i'm afraid these pleas are falling on deaf ears in these chambers these days. we need to get to work on the people's business, not on the

flawed bill that threatens to allow big money to pay a larger role in ourolitics. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentleman from mississippi. . the gentleman reserves. the gentleman from pennsylvania. mr. brady: i would like to recognize the gentleman from texas, mr. gonzalez. for three minutes. the speaker pro tempore: the gentleman from texas is recognized for three minutes. mr. gonzalez: thank you very much. mr. speaker, i rise in opposition to this bill in its entirety, but especially to that provision with attempts to eliminate the elections assiance commission. i need to address a few points that have been made by the proponents of this bill. i was there when this original bill came up for consideration years ago and i have been there for the subsequent hearings in the committee of jurisdiction. first of all when it comes to the secretaries of state, they have been opposed to the creation of the election assistance commission from its

very beginning. this is nothing new. their renewal of opposition basically used form letter that didn't even change the 2006 date. the 2010 opposition letter referred and still used the same letter of previous years. but the most important thing to point out is the secretaries of state have multifaceted responsibilities and obligations. one of them is to conduct elections. but each one of us in this body know who really runs an election and it's going to be your local election administrators. you and i and anybody involved inhe electoral process knows that on election dayer' not going to find secretary of state personnel at the polling places. when the ballots are mailed for absentee voting, you are not going to find anyone from the secretary of state's office. they are not going to count the ballots. they are not going to be there. it is a local effort. and that's what the election assistance commission is doing. it was never meant to have a life span of three years.

if you read the bill carefully, and mr. hoyer who will be taking the floor later, will remind us of the legislati history of that particular bill that created this commission. if we are to criticize them for an inordinate amount of their body being applied to personnel, then we must look in the mirrors as member of congress because i assure you because i also sit on a committee, obviously the same committee, that entertains the budget request of the different committees. and each one of those committees and individual members of congress will tell you that they spend a greater proportion of their budget on personnel than the election assistance commission. and there's good reason for it. it was never really intended to fully fund every effort at the local level. it's to give advice. that's why i have received in the past from local election officials, from maryland, texas, florida, and ohio, the local experience in texas in my county

there was that we saved $100,000 by the suggestions and recommendations that were issued by the commission. lastly, you criticize the commission for not functioning because it doesn't have a full body of commissioners. but whose fault is that? it's the individuals on the other side of the aisle that have blocked consideration -- that reminds me, when i was a lawyer we used to have an old joke about the individual defendant who was there charged with murdering his parents and at the end of the trial goes before the jury and asks for mercy because he's an or fan -- orphan. it's a self-fulfilling prophecy. 10 seconds. if you want to help your local election officials, vote no on this bad bill. thank you. the speaker pro tempore: the gentleman's time has expired. the gentleman from mississippi. mr. harper: mr. chairman, i yield 2 1/2 minutes to the

gentleman from indiana, mr. rokita, who is the distinguished member of the committee on house administration, former secretary of state for the state of indiana, and he also served as president of the national association of secretaries of state. the speaker pro tempore: the gentleman is recognized for 2 1/2 minutes. mr. rokita: thank you, mr. speaker. i thank the gentleman for yielding time. listening to the prior comments i can't help but wonder if certain members of this body can't help but not do more than e thing at a time, but certainly secretaries of state and your local election officials can multitask. and they do an excellent job of executing the state's elections. i want to focus on the portion of the bill that eliminates the election assistance commission, mr. speaker, as has been said, i have a unique perspective on this. in 2005 as indiana secretary of state and serving as the president of the national association of secretaries of state, i co-authored the successful resolution that was talked about earlier to dissolve

the e.a.c. after the 2006 election. as the oldest organization of bipartisan elected officials in the nation, we renewed the call to dissolve the commission in 2010. and no, mr. speaker, i can assure you from the debates that we had in that organization it was not a form letter, it was not a form renewal. furthermore, the vote for the renewal was4-2 with 13 republicans and 11 democrats calling for its dissolution. this is not a partisan issue. we recognized on a bipartisan basis that the election assistce commission cannot be justified on the grounds of fairness, justice, opportunity, or necessity. e.a.c. bureaucrats do not make elections fair. in fact, e.a.c. makes them less fair by producing biased, inaccute reports on the state of elections in our nation and offering recommendations based on these junk studies. bureaucrats do not enfranchise

voters. states and individuals do that. as our federal constitution dictates. giving un-elected, unaccountable bureaucrats in washington more power over elections does not lead to more just election outcomes. if anything, it interferes with the just outcome because these bureaucrats, many with an ideological axe to grind, face little or no accountability for their actions and they know it. voting is fundamental to our system and legitimacy of our government, ensuring qualified american citizens have an opportunity to voteis essential. the constitution tasks the states with execution a maintenance of elections not federal bureaucrats. like i said, mr. speaker, i believe states do an excellent job and by managing elections closer to the voters at the state and local level, we stand the best chance of ensuring opportunity for all and correcting injustice at the opportunity to vote is denied or interfered with. the speaker pro tempore: the gentleman's time has expired. the gentleman from pennsylvania. mr. brady: mr. speaker, i would now like to recognize the

gentleman from rhode island, mr. langevin, for two minutes. the speaker pro tempore: the gentleman from rhode island is recognized for two minutes. mr. langevin: i ask unanimou consent to revise and exnd my remarks. the speaker pro tempore: without objection. mr. langevin: i thank the gentleman for yielding. mr. speaker, as a former secretary of state to the state of rhode island and now a member of t congress, i have serious concerns about this bill. mr. spker, voter participation is the cornerstone of our democracy and a fundamental civic duty that empowers every citizen to affect change within our society. unfortunately many individuals with disabilities have been shut out of the voting process due to the lack of accessibility. that's among my particular concerns with this bill. we have made impressive strides in recent years to close that gap, and the election assistance commission established under the help america vote act, was an important part of that effort. as a member of congress who lives with a disability, co-founded the bipartisan disabilities caucus, and has worked at both the state and federal level to modernize and

make accessible our voting systems, i find it unconscionable that the republican leadership is considering this bill to abolish the election assistance commission, an agency whose fundamental mission is to promote security, accessibility, and trust to our electoral process. could the e.c. use reforms? yes. but the republican solution of eliminating an agency with such an important mission is unnecessary. everyone, mr. speaker, should have full faith in our system of elections, including seniors, military members, minorities, and people with disabilities. that's exactly what the election assistance commission seeks to provide. no, mr. speaker, we have precious little time left before the end of this congressional session. instead of considering a bill that will only serve to erode amica's faith in our democratcy, our time wou be far better spent rebuilding it by focusing on job creation, getting this economy back on track. i urge my colleagues to oppose this bill and turn our attention

to legislation that would extend tax relief for families and small businesses, reduce unemployment, and create greater economic stability. that is exactly what my constituents expect from me and that's exactly what the american people expect from this congress. thank you, mr. speaker. i yield back the balance of my time. the speaker pro tempore: the gentleman's time has expired. the gentleman from mississippi. mr. harper: mr. chairman, i yield three minutes to the gentleman from california, mr. lungren. he is the distinguished chairman of the house administration committee. the speaker pro tempore: the gentleman from california is recognized for three minutes. mr. lungren: i thank the gentleman for yielding. mr. chairman, h.r. 3463 will eliminate the presidential election campaign fund and election aistance commission. that's good news. the american people have been asking this congress to get serious about spending. begging us to take a critical look at government operations

and get rid of the dead wght. mr. chairman, if there ever was -- mr. speaker, if there ever was a government program, government agency ripe for the cutting it is the presidential election campaign fund and election assistance commission. the election campaign fund is an unused government program only supported by a meager 7% of the american people. in other words, 9 % of the american taxpayers have opted out of participating in this program. candidates and nominees have routinely opted out of the system altogether. in 2008 we know then candidate barack obama designed public financing in the general election. in 2012 it is expected that neither general election candidate will participate, and no candidate has requested eligibility thus far in the election cycle. accordg to c.b.o. elimination of this program would save the american taxpayers $447 million over the next five years and return nearly $200 million to the public treasury for deficit

reduction immediately. i know some people think $500 million isn't much, where i come from that's a lot. we can eliminate something that the american people have rejected by a vote of 93-7. it seems to me to make sense. mr. chairn, the last congress the committee on house administration held hearings on the issue of taxpayer financing of campaigns. one of our witnesses asked this question, he says, if the voters are not willing to pay for the program, then why should it continue? as for the election assistance commission, this agency has been the subject of two hiring discrimination lawsuits, spends over 50% of its budget on administrative cost, a is asking this congress for $5.4 million to manage programs totaling $3.5 million. in short, mr. speaker, this bill before us eliminates an unused government program, shuts down an obsolete government agency, saves the taxpayers $480 million

over five years, and returns almost $200 million to the treasury. how can we not vote for it? i yield back the balance of my time. the speaker pro tempore: the gentleman's time has expired. the gentleman from pennsylvania. mr. brady: mr. speaker, could i inquire how much time we ve? the speaker pro tempore: the gentleman from pennsylvania has seven minutes. the gentleman from mississippi has 2 1/2 minutes. mr. brady: thank you, mr. speaker. i'd now like to recognize the gentleman from ohio, mr. kucinich, for one minute. the speaker pro tempore: the gentleman from ohio is recognized for one minute. mr. kucinich: thank you. after $5.3 billion was spent in the 2008 federal electio, i never heard anyone utter a word that said the problem we face today in washington is that we need more private money in politics. never has anyone said to me, i wish the superrich had more influence over our government and elected officials, especially in campais for president and congress. never received a letter from a constituent that expressed a desire to get further away from

one person, one vote, and move closer to one corporation, one vote. what i have heard from my constituents is a deafening demand to get money out of politics. this bill takes us in the opposite direction. we should be chasing the mon changers out of the people's temple. not turning our government into an auction house. this legislation is upside-down. private financing of elections core roads our democratcy. private contributions to federal elections must end. private financing equals government in the private interest. public financing, the hope of government in the public interest. we need to restore democracy. and end private contributions. we shouldn't have any contribute shuns for special interest. we need government of the people, for the people, and by the people returned to this government. the speaker pro tempore: the gentleman's time has expired. the gentleman from mississippi. mr. harper: mr. speaker, i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time.

the gentleman from pennsylvania. million brady: i'd now like to recognize the gentleman from ohio, mr. ryan, for one minute. the speaker pro tempore: the gentleman from ohio is recognized for one minute. mr. ryan: i thank the gentleman. let me just take this from 30,000 feet for a minute. and reiterate what the gentleman from ohio said. we have too much private money in the people's house. we can't get anything done now because it somehow may affect what wall street's doing. we have a china currency bill on the floor last year, 350 votes, 99 republicans, we can't even get it up for a vote now in the house because wall street doesn't want it. we are in dire straits with trying to balance our budget. we need to ask people making more than $1 million here to help us close this gap so we can reinvest back in our country. nothing's happening because wall street doesn't want it. we have oil and gas still getting benefits when profits are going through the roof. we can't close that loophole because the oil and gas industry doesn't want it closed.

. there is too much private money in the people's house. we need public fuppeding of elections. let every citizen kick in 50 or 100 bucks. we have elections by letting people on the airwaves, making these discussions, having a little bit of money to do it. we have to reform this country no wonder we can't make investment in public education, public health, public infrastructure because the private interests are running the whole show here. >> mr. speaker, i yield one minute to thegentleman from georgia, dr. gingrey, chairman of the subcommittee. the speaker pro tempore: the gentleman is recognized for one minute. mr. gingrey: maybe the president will listen to e advice of the gentleman from ohio and sign up for public financing for his re-election efforts but mainly i rise to support me effortof my

friends mr. harper of missisppi and mr. cole of oklahoma, to reduce federal spending by ending public financing for campaign and terminate this assistance commission. presidential campaigns are becoming increasingly expense i have to the tune of hundreds of millions or even billions of dollars, the idea of having taxpayers contribute matching funds to them is lewd crowd. this practice -- ending this prackties would save $617 until over 10 years. as a member of the me on jurisdiction over e.a.c., the house administration committee, i've learned firsthand that this agency has olived -- outlived its usefulness, mismanaged its resources, costing we the taxpayer millions of dollars a year. the election assistance commission's budget request for 2012 devoted 51.7% of its budget to management and overhead costs.

let's eliminate this commission and support this bill and i yield back the balance of my time. the speaker pro tempore: the gentleman from pennsylvania. mr. brady: i'd like to recognize the gentleman from pennsylvania, mr. hoyer. the speaker pro tempore: the gentleman from maryland, the distinguished whip is recognized for three mutes. mr. hoyer: i ask unanimous consent to revise and extend. i thank the gentleman for yielding. first of all, we ought to be talking about jobs. the contention that this bill funds bills that are about jobs is spurious in my opinion and no economist, in my opinion, will assert that that is a fact. we ought to be dealing with jobs. but what are we dealing with? i know of what i speak. i tell the gentleman from georgia, i understand, as a member of the house administration committee for, i

think, 15 years, i, along with bob ney, was sponsor of the help america vote act which created the election assistance commission. i know something about the election assistance commission. it was created by -- becau in the year 2000 we had a disastrous election which was resolved, finally, but not very acceptably by most people. whether your candidate won or lost. so the assistance commission was created for the purposes, for the first time in history, of having some federal presence in the oversight of federal elections. not mandatory, but advisory. now what we see, frankly, throughout america, in republican-controlled legislatures in many, many states, is an effort to make voting more difficult.

to, in my opinion, suppress the vote. to require more and more documentation of people who have already registered to vote. and claiming problems that ist that do not exist. now if you want to up the -- to obfuscate the election process, if you want to suppress the vote, if you want to make it more difficult what is one of the things you want to co-? eliminate the election assiance commission. whose responsibility it ito advise and counsel on best practices to assure that every american not only has the right to vote but is facilitated in casting that vote and making sure that that vote is counted. that's what the election assistance commission does. what do they want to do with the elections assistance commission responsibility? transfer it to the federal lech commission. whose sole responsibility is to oversee the flow of money into

elections. they neither have the expertise nor, frankly, of this the time. they hardly have the time to do what they're supposed to do right now. now frankly, the bush administration did not fund the election assistance commission very robustly. and like every agency, it requires an should have proper oversight and should in my view be more vigorous in the carrying out of its responsibilities. that is not, however, a reason for eliminating it. the only reason for eliminating it is to make voting more obscure, lessversight, and less assurance to our citizen that they not only have the right to vote but that a vote will be cast. the speaker pro tempore: the gentleman's time has expired. the gentleman from mississippi. mr. hoyer: i thank the gentleman for the time he so graciously gave me and i yield back the balance of my time.

mr. harper: mr. speaker, may i make an inquiry for the time remaining on each sides. the speaker pro tempore: one behalf minutes for the gentleman from mississippi, two and a half minutes for the gentleman from pennsylvania. mr. harper: mr. speaker, i reserve the balance of my time. the speaker pro tempore: the gentleman reserves. the gentleman from pennsylvania. mr. brady: we only have one speaker to close, if i could reserve the balance of my time until the democratic leader gets here. the speaker pro tempore: the gentleman reserves. the gentleman from mississippi. mr. harper: i yield one minute to the gentleman from texas, mr. gohmert, the distinguished member -- a distinguished member of the judiciary committee and former judge. the speaker pro tempore: the gentleman is recognized for one minute. mr. gohmert: thank you, mr. speaker. listen, let's cut to the chase. this is a tax credit for people who want to contribute to the president's campaign fund. we were told you can check this boxnd it doesn't cost you

anything. no, but it takes 40-plus million dollars a year away from the fund that could be used for other things, including social security, things like that, and it gives it to the president's election campaign fund. i stand with our president, barack obama, on this issue, who found that fund is worthless, it's an impediment to getting elected, so i stand with president obama saying, let's get rid of the fnd and not use it anymore and let the $200 million in that fund go to something helpful instead of being an impediment to being elected president. i yield back. the speaker pro tempore: the gentleman yields back. the gentleman from pennsylvania. mr. brady: mr. speaker, we're prepared to close. thank you. in close, the presidential campaign fund currently has other $190 million.

tens of thousandsf americans put that money there. they wanted their money to go to this purpose. we would be foolin an deceiving our very own citizens should we -- should we pass this bill. they put that money there to be able to have the small say in who they want to support and put it toward campans. we would be giving it back to the treasury. this should be wrong. we would be fooling the american people. we would be telling them, we told you to check a box off and give us x amount of dollars for a campaignnd now $100 million, we're going to take, of the money we td you check off, we are no longer going to use for that purpose. that's wrong. it's not right. it's deception. that is why i urge a no vote on this bill and i yield back the balance my time. the speaker pro tempore: the gentleman yields back. the gentleman from mississippi. mr. harper: mr. speaker, it's been told that we haven't done anything about jobs.

here we have a card that lists 25 different bills we've passed that help on the economy, energy, great job creators. yet the complaint has beethat the.a.c. is going to -- is not dealing with those issues. i'll point out that the members that have spoken on the other side of the aisle that this is something that is not appropriate, that it's going to disenfranchise voters, should remember they all voted for this in 2002 when it had its three-year provision to sunset afr that. so i think that argument will not work and in addition the e.a.c. has no regulatory or enforce. authority. mr. speaker, i urge my

.

[captions copyright national cable satellite corp. 2011] >> i'm with the second school of thought. in other words, whether there is clear and conclusive evidence whether congress or staff members have benefited from insider information and whether or not the s.e.c. believes it can act against members of congress for insider trading under its existing authority, there ought to be a law that explicitly deters such unethical, illegal behavior by members of congress and punishes it when it happens. our goal today is to sort out the facts and determine precisely what legal reforms are

needed to ensure that regulators and law enforcement officials have the tools they need to bring to justice members of congress and our staff that defy the public trust by using insider information for personal gain. our first witnesses we will call on in a short while will be kristin gildebrand and scott brown. the point we are focused on today is narrow, but it touches on much broader views in reality. the fact is the elected representatives is the cornerstone around which our democratic republic was built.

when that faith ebbs, as it now has to historic lows, we must increase our efforts to ensure that the people who did us the honor of sending us to washington to represent them are confident that our only business is their business. i have been reading a lot about george washington recently. on the first day of our new government, i quote, the foundation of our national policy will be laid in the pure and immutable principles of morailty and free government will be -- have all the attributes which can command the respects of citizens and the respect of the world. end quote.

adopting a new law that explicitly makes insider trading by members of congress illegal will strengthen the foundations of our national apolicy, and i hope, in a small way, will hope to repair the breech that exists today between our government and our people. senator collins. >> thank you, mr. chairman. unfortunately, i do not have an eloquent quote to pick up where you left off today. i do want to thank you for holding this hearing to expand whether or not current laws are adequate to prevent members of congress from engaging in insider trading. i very much appreciate your inviting our two colleagues,

senator brown and senator gillibrand to share with us their bills today. this hearing is an important step in ensuring that members of congress are not profitting from trading on insider information. recent press reports on "60 minutes" and elsewhere demonstrate why this committee must explore the application of existing laws to congress and identify what actions may need to be taken to close possible loopholes that undermine the public's confidence in this institution. elected office is the place for public service not private gain. as demonstrated by recent press

stories, however, there are questions about whether lawmakers have been exempt, either legally or practically from the reach of our laws prohibiting insider trading. the recent allegations come at a time when the public's faith in congress is already extremely low. a recent gallop poll shows that 69% of the american public has little or no confidence in congress. other polls show that americans race members -- rate members of congress at or near the bottom of the list when it comes to perceived levels of trust and ethical standards. this taints the public's entire

view of our entire system. why does this matter? well, with so many critical challenges facing our country, if the american public does not believe that the decisions that we are making are in their interests rather than our interests, it will be next to impossible to tackle the truly significant problems that we face. and we must address the concerns that underpin the american skepticism. we must ensure the public that we are putting our interests a-- their interests above our own. stock portfolio out-performed

market nearly 20% year in congress. mr. zombrowski concluded from his study that senators have a definite advantage over other investors. though he also was careful to point out that his results should not be used to infer illegal activity. in his view, current law does not prohibit senators from insider trading. a more recent study by the professor showed similar but less dramatic investment returns for stock portfolios held by the members of the house between 1985 and 2001. at the same time, however, not all experts who have examined these data share the professor's

conclusions or his legal interpretation. so the purpose of today's hearing is to analyze the need for greater scope into the insider trading laws, and i'm eager to hear the views and recommendations of the witnesses on the legislation presented by our colleagues to close any hoopholes and also to disclose whether this is simply a matter of insufficient enforcement under the existing fraud laws. whatever the problem is, one thing is certain, we should not be shielding congress from laws that apply to other americans. thank you mr. chairman. >> thank you, senator collins. senator gillibrand and senator

brown, thank you for your leadership. it is because you introduced the bills here, we take these legislative proposals very seriously. and it is senator collins intent and mine to research this matter. it turns out senator gillibrand by a small amount has more seniority, or it is clear senator 0 brown is much -- senator brown is much older. >> and he's a member of our committee. >> thank you. i appreciate you holding this extremely important hearing and inviting me to offer my testimony this afternoon. your strong leadership together is a shining example of how important it is to shine light

on an issue as important as fundamental fairness. it is a very important step forward on restoring america's faith in our government, just as you said, mr. chairman. like millions of americans across the country, i was surprised to learn that insider trading by members of congress or their staff using nonpublic information gained from congressional work is not clearly and expressly prohibited by the law or by the rules of congress. the american people need to know that their elected leaders play by the exam compact same rules that they play by. they also deserve the right to know that their lawmaker's only interest is in what's best for their country, not what's best for their own financial interest. members of congress, their family, their staff should not be able to gain personal profit from information that they have access to that everyday americans do not. i do not believe this is right. nobody should be above the

rules. i introduced a bipartisan bill with 16 of our senators. we have all offered this bill to close the loophole. this legislation is similar to the legislation first introduced in the house by congresswoman slaughter and congressman hall. i want to thank them for their advocacy on this issue. i would also like like to thank my colleague, scott brown, for his requesting the hearing today. our bill which has received the support of at least seven good government groups covers basic important principles. first, it says members of congress, their families, their staff should be barred from buying and selling securities on the basis of knowledge gained through their congressional service or from using that knowledge to tip off anyone

else. the s.e.c. must be empowered to tip-off these cases. such acts should also be in violation of congress' own rules to make clear the activity is not only illegal but inappropriate for members of congress. members should also be required to disclose major transactions of $1,000 or more within 90 days providing dramatically improved oversight. lastly, individuals doing political intelligence work contacting members of congress and their staff to gain information and help with investment decisions should have to register as lobbyists to provide additional oversight into this industry. there are those that do not want us to succeed. some critics will say that the bill is unnecessary or already covered under current statutes. i have poken with experts in the

past in investigations of this nature, and they strongly disagree. we must make it unambiguous that this kind of behavior is illegal. others may say that the legislation is too weak. let me be very clear. our mission here is to pass a strong bill with teeth in it that will make any and all insider trading clearly illegal and a violation of our congressional rules for all members ever congress, their entire -- members of congress, their entire families, and their staff. there will be legislation to ensure the final product meets this goal. anything less is unacceptable. as my home state newspaper recently noted, "the stock act would ensure steps are being taken to restore trust in this

very broken congress." thank you senators collins and lieberman, i am very grateful you held this hearing today. >> it was requested by senator brown we hold it as soon as possible, and that's why we held this today. senator brown? >> being new here, i had no idea that something like this was even allowed. as a result, i wanted to do something about it to make a difference. there was a "60 minutes" piece that featured insider trading in congress which garnered widespread public attention. it is interesting when you even have to hear about things like this that ahappen apparently in washington, there is clearly something wrong. you referenced it, mr. chairman. there is a breakdown of trust.

there is a need to reestablish that connection and let people know that we are subjected to the same laws and rules that they are. we should not be passing laws and then not have to adhere to them their trust in congress is at an all-time low, and that is very disturbing. we should be held to the same. quite frankly, i think a higher standard than the members of then public, and we should not be able to profit based on nonpublic information. that's why i introduced the stock act of 2011. i greatly appreciate your jumping on it. it does not surprise me at all that both of you would move so quickly on something that affects our body on such a dramatic way. this affects members of congress

as well as the executive branch on using nonpublic information for the purpose of making personal financial gain. consider this, a member of congress hears during a meeting that a program will be cut or something is going to happen dramatically and then they go in and either buy or sell his or her stock avoiding losses when the news breaks. and under current law congressmen would likely walk away for -- with a fatter investment, and everyone else would do jail time. that's not right. i have heard we don't need it. i disagree. if it is in effect, why haven't we done something about these things. there has not been one prosecution. the s.e.c. has all this power, and they don't use it. we must clarify and define the affirmative duty that we have as

americans pertaining to this. this will leave an absolute gap. it is clear it has left a gap that invites abuse and contributes to a breakdown of trust among the american people. that is not right. this legislation is directly aimed at correcting this problem that academics such as professor zombrowski has identified. in his work, professor zombroski in his work found that members of congress may have benefit may have benefited from information that the public does not have. it was noted in his book that members of congress are making a killing and profits on buildings and land. we all have access to information that the public doesn't through briefings, conference reports, and all

these sources can give us non-public information that we can find of significant value and trade accordingly. we create policies as well, and we can influence things that way. when we act on legislation, frequently that legislation has real financial consequences to many different industries in this country. because we have that access and we create information, we must not portray the public's -- bee tray the public's trust. diminishing the public's trust is what we do not want to do, and that is why you called this hearing today.

some say this does not need to be done, but i say, if not, then why hasn't something been done? i believe the uncertainty which exists around the illegal frame work provides an excuse for enforcement officials and agencies to avoid the difficult task of police and congress, especially when we control the purse strings of agencies. i believe the vast majority of members of congress are here to help the public and they are not here to line their pockets. this law will vastly increase the public's trust in what happens here. the legislation i have introduced is similar to the bipartisan legislation that has been introduced in the house for many a year now. back in the 109th congress i know congresswoman slaughter and

congressman baird actually filed, and now congresswoman slaughter and walsh have continued their action in this regard, and it is getting more and more support. i want to thank them for their support. media attention has brought a good eye to this. the american pu public is watching what we do. they watch more than ever, especially with all the new media opportunities out there. i am not afraid of acting in the public's interest. that's why i introduced this legislation. it is critically needed. there are differences between our two bills. mine does not amend the ethics rules. it doesn't need a 67-vote thresh hold, it needs 61 votes. i would suggest you take the best of both votes and have us put them all together in a clearly bipartisan manner and get this thing done. the american people deserve it.

we'll see if politics will play a role in it or not. it is up to us. i look forward to getting on that committee chair right there. >> thank you, senator brown. thank you for your closing comments about the process. i will note for the record that senator gillibrand was nodding her head affirmatively. there are some differences between your two bills, but there are many more similarities. i hope that the two of you will be able to work with senator collins and me to come up with a joint bill. we may want to separate them, as you said. we will probably want to have a separate resolution on the senate rules so it will be separate from the legislative proposal. i'm going to set a standard that may be hard to meet, but if we work intently, it would be great

if we can bring this for a mark-up before we break for the holidays. we would tentatively schedule a mark-up for december 13 or 14. let's set that as a goal and see if we can put that together. thank you both very much. we will now call the second panel. melanie sloan. donald g. lingibort is from georgetown university lieu center. i'm having flashbacks to those terrible days at law school. i'm fearful. remember, here i'm the one who

asks the questions. it wasn't that way in law school. finally, robert walker. and former chief counsel of the senate and house staff ethics committees. thanks to all of you for being here on relatively short notice. you bring a wealth of experience and information. miss sloan, we begin with you. your organization has one of the best acknisms in washington, c.r.e.w., citizens for responsibility and ethics in washington. please proceed. >> thank you, senator lieberman. thank you for inviting me here today to join such a distinguished panel. no disrespect intended to any of you personally, but the fact is

america does not trust you. 46% of americans believe congress is corrupt. stories like the one on "60 minutes" a few weeks ago become such big news because they confirm what so many people already believe, that many of your colleagues use their positions not for the public good but to feather their own nest. my organization, c.r.e.w., has focused on misconduct of congress for many years. we have seen and complained of numerous legislators of using their positions to earmark projects, to increase the value of individual real estate holdings, buy into companies that soon after increased in value, taking action to benefit themselves or family members, and pushing through legislation in parent exchange for campaign contributions, and finally even trading on inside information. as others have said, at no time in history has the public's view of congress been so dismal.

members -- the public is suffering but members of congress has never been richer. 61% of members of congress are millionaires. members have significant stock portfolios. only some maintain their assets in blind trust. there is a widespread view that congress is using its position to increase its wealth. members are possessing pensions that most americans only dream about. at the same time congress exempts itself from whistle blower laws and laws like insider trading that are applied to everyone else. notably presidential appointees requiring senate confirmation often have been required by the senate to divest themselves in committees they oversee, but congress is under no such

exemption. 19-28 members of the armed services committee held businesses in assets in the pentagon. the senate has passed laws to stop watchdog companies from reporting on their actions. there is a featured debate claws clause which alaws -- allows members who engage in such activity as bribery to go unnoticed. only when it is so egregious that is becomes fodder for the news does it get addressed. i am not an expert to discuss whether insider trading laws apply to you. given that there has been no prosecution of a member of

congress for insider trading and no member of the house has been disciplined for remotely related conduct, it is imperative that congress passes a stock act soon. members need to demonstrate to america that you take our concerns about your ethics seriously. there is featured debate about whether a member traded on confidential information received information from a stock inquiry. not only should this conduct be addressed, but the house and senate should amend standing rules to make clear such conduct is disciplined, including perhaps a financial penalty of three times the amount of a profit obtained. disclosure of trade must be a key component of legislation. the 90 days we have seen under the bill is far too long and should be cutback dramatically. electronic confirmations of

trade are often instan -- instantaneous making such delays of time unnecessary. further, as with personal financial disclosure reports, this should be punishable under the false statements act. americans are becoming increasingly frustrated with a congress viewed as part of the 1% more concerned in preserving that status than interested in helping the status of the remaining 99%. passing the stock act would be a step in the right direction. thank you. >> thank you, ms. sloan. now ms. nady. >> i am honored with the opportunity to testify.

my name is donna nagy. i have written many articles, including one published last may on the precise topic of today's hearing. the article sought to debunk what at the time was becoming an urban myth that congress had exempted itself or was somehow immune from the laws for insider trading. congress in no way has sought to immunize itself. beyond that it concludes that insider trading is already illegal under existing law. based on my research i would expect the court to hold a member of congress liable for any securities trading that is based on material non-public information obtained through congressional service. if the s.e.c. or d.o.j. successfully proves the facts alleged. i acknowledge that many distinguished security law scholars see shades of gray, and

some believe a court would rule, likely, the other way. the controversy surrounding the application of existing law to congress stems from the fact that congress has never snacted securities statutes that explicitly prohibits anyone from insider trading. a stock act would only address one manifestation of this much larger malady. in the absence of this stock act, the insider trading has been prosecuted as a violation of section 10-b. these provisions prohibit fraud in connection with the sale of any security. the department of justice also prosecutes insider trading as a criminal violation of either rule 10-b-5 or the federal mail and wire fraud statute. thus in the vast majority of instances, insider trading is

illegal only in so far as it can be deemed an act of fraud. because the term "fraud" is not defined in these statutes, the task of finding insider trading has defaulted to the lower courts. in literally hundreds of cases courts have imposed liability where traders were decidedly not insiders of the issuer whose securities were traded. for example, courts routinely impose liability in so-called outsider trading cases involving family members who trade on information entruffletted to them by spouses or relatives. other outsider cases would include federal ask state -- and state officials who obtain information based on government service. including an f.d.a. chemist who plead guilty last month and now awaits a likely prison sentence. in misprum -- misappropriation

cases such as these the likely offender has breached a fishery-like duty of trust and confidence by secretly profitting from the use of material, non-public information that rightfully belongs to somebody else. the constitution refers repeatedly to public offices being "of trust." members also take an oath of office to faithfully discharge their duties. there should be little doubt that members undisclosed self-serving use of congressional knowledge constitutes a misappropriation that would defraud the united states and the federal courts among others. four courts have viewed otherwise. they would view this as a perq of office belonging to an individual member to do with as he or she wished. such a view would be strikingly different than the tenets of

democracy. i recognize that a member of congress has never been prosecuted for insider trading based on nonpublic congressional knowledge. but the d.o.j. has used the federal mail and wire fraud statutes to successfully prosecute congressional officials for defrauding the united states and the public through the undisclosed misappropriation of congressional funds and tangible property. and the supreme court has dictated that material nonpublic information constitutes intangible property. in some congressional violations violates the broad rules in 10-b-5. my final point relates to one possible consequence of a staff act. i applaud the endorsed legislation and the motivation behind this act. i fear this could be viewed as

the only insider trading law that applies to congress. this risk is troubling because the proposed legislation fails to reach a host of possible insider trading scenarios that would fall within existing law. thank you very much for letting me share my thoughts. >> thank you. that was very helpful. professor, thank you very much for being here. >> thank you, chairman lieberman. my testimony today strongly supports the legislative efforts to explicitly proscribe insider trading by members of congress and their staff. as intended by the various stock act bills recently introduced in the house and senate. there is no current prohibition for members of congress and

staff. as professor nagy just told you, it is possible courts would rule insider trading law adequately proscribes all insider trading. i hope they would. but there is sufficient doubt, especially in light of how courts recently have been reading section 10-b and rule 10-b-5. the primary responsibility requires the trader was a fishery of the -- fiduciary of the information and effectively stole this information. this theft of someone else's secrets concept does not fit neatly. if the idea that members of congress or their staff can freely step ahead of ordinary investors to profit from information required from their

legislative roles is disturbing, to say the least. congress should therefore act to ensure insider trading is illegal for members of congress and their staff. the external pressures to bring such cases or not bring them will of course be great when any suspicions arise leaving any ambiguity as to the question of whether and to what extent the insider trading on capitol hill is unlawful is hardly encouraging to those matters that deserve to be courageously investigated and pursued. service in congress carries with it -- the message would be that

congress carries no fishery like duty. that should be the last headline congress should want to see. i fully support the intent behind the stock act bill the legislation must be carefully crafted to ensure legislation does not create the very problem it seeks to address, the very perception that congress has sought to exempt itself from insider trading. it is a time to nare -- narrow not be overly broad. i would like to work with congress to ensure this reflects the true intent of the trafters.

>> in trying to fix this problem, we do not want to create other problems, as you said. next a professor from columbia law school, john c. while reasonable people and reasonable professors can disagree, and reasonable professors almost always disagree, i think there as much ambiguities we need to act. why has there not been

enforcement? i think prosecutors would not indict if there is uncertainty in the law. we don't indict in a case where the law is 50/50. that may be the reason they have restrained their hand in cases where they could have gone forward. point two, which he alluded to, but i want to say more fully, is the proposed legislation has language that does not quite work. i say this respectfully, but one of the key concepts is the information received has to relate to pending or proposed legislation before there is libet. unfortunately that is not the most common case we are likely to see. i can imagine a department official calling congressman and saying that bill you have been pushing us two years to pass to give that defense contract in our district, that defense contract will be announced tomorrow for $5 billion. there is no legislation there.

there is nothing under the existing language that makes that possible. congress has spent much of their time with existing oversight scomprks that oversight does not exist in the pending legislation. that's flaw one. flaw two is there is a reference that you can't trade in securities of an issuer. frankly the most likely trade you you are likely to see would be an options or stock issuance which are not financial deals. they are not particular companies you are buying in. we need to play with that language. i would say there is a difference in the two bills with regard to tipping. tipping by the congressman is covered. that should be reconciled. there are cases where you need to talk about directly or indirectly. there could be a chain of four or five people and there could be a distance between the congressman and the tippee. let me go to my third point.

doing less is more. rather than attempting to write a detailed code that would codify terms that have well recognized judicial meanings. it mite might be better to write a one-sentence statute. for example, such a statute could say a member of congress is a fishery with respect to all material non-public information that such -- congress is a fiduciary with respect to all material non-public information such that they are not exempt. if you attempt to do more, congress has tried that before, and it has proven to be a disaster. i testified in this field 30 years ago in the 1970's and

1980's, and congress wisely backed off from writing a universal statute and trade -- changed the penalties. i think that is wiser. if you adopt legislation with new terms, the federal courts will spend 10 to 15 years resolving what those new terms mean. there will be conflicts in the circuit. no one needs that. i am afraid that every special interest group in the united states will want a safe harbor for what they do, and you will find this statute goes from short to page after page of safe harbors. i think you should keep it short and simple. members of congress. last point, members of congress will face some illiquidity if such a statute is adopted. i want to advise you i don't think this is as big a problem

as you might think. there is 10-b-5-1 that permits anyone, including members of congress to adopt a trading plan. this is different than a trust. you can give instructions to a fiduciary or broker or bank advising them of exactly you want done if stock prices fall. i think that would solve most of these problems. in addition you could instruct the s.e.c. to give no-action letters to you. and i think you can rely on the advice of counsel that if you are not engaged in material information, i believe that no enforcement will proceed against you where you have a reliable counsel defense. thank you. >> thank you. again, very helpful. we are not acustomed to adopting legislation as brief as you suggest, but it is a very constructive recommendation.

robert walker comes to us with the unusual and helpful experience of having been chief counsel on both the house and ethics committees. thank you for being here. >> thank you ebs members of the committee. thank you for the opportunity to address the important issue of insider trading and congressional accountability. i am not here to address the stock act. however, i will say prohibitions apply fully to members of congress under the misappropriation theory. information made public would

probably be an obstacle given the continual swirl of information around the capitol. there is unique insight to insider trading cases. it is alluded to under the free speech clause in the constitution. certain congressional activities cannot be cited and used as proof in legal acks as -- of actions outside congress. but even this could not trump constitutional free speech privilege. within congress itself, existing standards of conduct do provide a basis for sanctioning a congressional individual for profitting from securities trades based on material, non-public information gained through his or her official position. paragraph 8 of the code of ethics for government service states that a person in federal

government service should never youzhny information coming to him confidentially in the performance of governmental duties as a means for making private profit. insider trading based on public trading would be a clear violation of this trading, and the mechanism for enforcement would be the congressional ethics process. having said this, it cannot be said as clearly exactly what information would be considered confidential within congress for purposes of enforcement of this code provision. under the rules of the house and senate, there is no blanket duty of confidentiality under the house and staff. senate rules for example basically leave it to each committee and office to determine what information before them is confidential. but relatively few committees of the senate or the house actually have specific rules imposing duties of confidentiality on their members and staff. paragraph 8 of the code of

ethics does not provide a systematic tool for addressing allegations of insider trading. use of this provision for pursuing insider trading allegations within congress requires a case-by-case analysis. this does require congress to take a look at the definition and scope of duties related to confidential information. according to paragraph 8 insider trading in congress may be addressed under the fail-safe statute which enjoins members and staff never to engage in conduct which may reflect discredit on the house or senate. if credible allegations of securities trading by a member or employee based on material non-public information were to come before the senate ethics committee, the house ethics committee, or the house office of congressional ethics and

these allegations were more than mere insinuations, the allegations would be pursued by the ethics committee as potentially conduct reflecting discredit and they would be pursued and investigated regardless of whether any other specific law or rule were applicable. finally, let me turn to the issue of whether members of congress may trade in or hold securities of companies or industries that fall within the jurisdiction of their committee aassignments. as you know, recusal is seen as disfavorable. the preferred approach to monitoring and policing potential conflicts in the legislative branch is through public financial disclosure. the provisions of the proposed stock act that would require public disclosure of securities transactions within 90 days is consistent with and would extend this approach. there would, of course, be a compliance burden on members and

staff. but there would also be a substantial increase in the accessible pool of information based upon which a members constituents could form their own ultimately conclusive and unappealable judgments of the appropriateness of the member's financial transactions and as to the propriety overall of the member's conduct. thank you. >> thank you. we will have seven rounds now for each senator. basically, the research i did before i came into the hearing today, i reached a tentative conclusion that under existing law the s.e.c. would have the authority to pursue and

prosecute members of congress or staff for insider trading. based on the testimony that the witnesses have given, i think now i come to a different kind of conclusion, which is that there is genuine ambiguity in the law. my original feeling is that we should legislate to make clear that members of congress are included in laws against insider trading because the existing state of the law, obviously, as we said earlier, insider trading is not mentioned or defined in law. you have to take a two or three-step jump to get there. but now you convinced me that there is ambiguity that has to be resolved. if i'm hearing you, particularly langervoort and professor coffee, it goes to this question of identify douche ri -- fiduciary duty.

the supreme court really has set the law here because a person can be found to have committed insider trading if the person trades on the basis of material, nonpublic information. but only if the person is breaching a fiduciary duty, which as i understand it, normally is to share holders or -- shareholders or the source of the nonpublic information. so the normal reaction does not necessary airline prevail in courts -- does not necessarily prevail in courts of law. the normal reaction would be of course we have a fiduciary duty. but your testimony leads me to believe that that is ambiguous because members of congress and our staff are in such a

different relationship to this nonpublic material information. so i want to ask particularly the two of you, professor langenvoort and professor coffee, to weigh in on the duty established. is it a fiduciary duty? how do we define it? is it a broader duty of trust and confidence? that is the kind of language that we normally use or that we think we have. professor langenvoort why don't you go first. >> sure. the courts are still working out that question. the supreme court established misappropriations theories. this was the case of a partner in a law firm who misappropriated information from a law firm belonging to the

client. that is the quintessential fiduciary relationship. a firm has a right to sue a partner in terms of fiduciary responsibility and care. as you move away from settings where there is an ememployer, a principle who would be able to take action against the principle in question, the ability to make the kind of argument that the misappropriation theory clearly applies grows weaker. as i said, i would hope that a court would make that ruling, but i'm not confident. >> yes. thank you. professor coffee? >> in participation of the circuit they ruled husbands and wives are not fiduciaries to each other. that will really surprise you.

they were not fiduciaries because the court ruled that there has to be scregsri authority -- discretionary authority on one side. and the more equal it is, the less fiduciary responsibility there was. that ruling that it only exists with discretionary ability on one side, no one wants to see that applied. but that's why there is this ambiguity. we think because there is ambiguity there is no down side to passing this legislation and considerable upside. >> and your proposal dealt exclusively with this question, am i right? >> if you start defining what

"material" and "nonpublic" means there will be counsel who says that is different. so it would not be enough, for instance, if we avoided the issue of fiduciary duty all together and simply declared members of congress may not trade on the basis of material, nonpublic information, which they on tained only -- obtained only because they were members of congress. >> so if you did it that way, you would be creating problems. you want to cover both the tipper and the tippee. >> professor nagy, do you want to get in on this? >> yes. the circuit on bonds supremely narrowed what the supreme court had set out as the relationship of trust and confidence.

and in direct response to the chessman case the securities and exchange commission prom gated -- promulgated a rule which creates a rebuttable presumption that family members owe duties of trust and confidence to each other. but the rule as to other provisions in terms of histories, pat erneds, and practices of exchanging confidences can create the requisite duty of trust and confidence. the other point that i would have is that if courts were re-- were routinely applying the now discredited chessman analysis to the department of justice, we would see far fewer victories with the securities and exchange commission and the department of justice and far fewer settlements. there have been cases involving -- within relationships where

one partner misappropriated information from the other. clearly not a spousal relationship, but the result was a prison term for the boyfriend who misappropriated from his attorney girlfriend. certainly the chessman start standard is a very high standard of fiduciary relationship and would not have supported a prison sentence in such a case. trust and confidence is where the securities and exchange commission has put the emphasis on this duty. i would ask to imagine a situation where a district court is faced with this hypothetical case. if a district court were to conclude that a member of congress does not owe a duty of trust and confidence to the united states and to the american people, i would be shocked and we could all anticipate what the headlines the next morning would be on that ruling. to which i would say the district judge would likely find the requisite duty of trust and confidence under existing law.

thank you. >> ok. very interesting. obviously, this is important, because we want to get this done, but we're not -- if i can use a metaphor, we are not painting on a blank canvas. there is a lot on the canvas of existing law and existing rulings. i have actually understood what the three law professors said to me today, which says to me i am more prepared to go to law school now than i was when i went. senator collins? gentleman thank you, mr. chairman. professor coffee, you made an important point that members of congress do more than just legislate. we act as the advocates for our constituents. we endure public funding through