the committee will come to order and i'm congresswoman maloney and i recognize myself for five minutes for the first time since the recession began two years ago the labor market appears to have stabilized after month after month of punishing losses november's employment picture was relatively stable less than a year ago job losses were growing more and more severe last november the economy shed six hundred thousand job los increased until january when they hit a post great depression record of seven hundred and forty one thousand jobs lost the last month the president bush was in office but we turned a corner job losses have steadily fallen for the last six months yet there is no escaping the cruel math of recovery the recovery of the job market lags behind the recovery of the broader economy must have more customers before they add employees although the labor market appears to be stabilizing too many americans remain out of work more than fifteen million workers are unemployed while we have brought the economy back from the brink we are not yet where we need to be in terms of job creation the mission is to create high quality private sector jobs congo has already done a great deal of work on this front the seven hundred billion dollar recovery act included a tax cut for ninety five percent of american families and created jobs while investing in clean energy technologies infrastructure and education and we see those investments paying off in the steadily improving labor market the effect of the stimulus on job creation has been verified by the nonpartisan congressional budget office just last month we extended the eight thousand first time homebuyers credit that will spur construction jobs we extended tax relief to small businesses we are boosting funding for small business loans small business administration these two initiatives for hiring earlier this week president obama announced a new job creation agenda with three key initiatives to accelerate job gro first we need to focus on small businesses small businesses are the engine of the american economy by helping small businesses expand investment and access credit they can fuel job growth second we need to invest in our future by rebuilding america's crumbling infrastructure finally we need to focus on green jobs smart targeted investments in energy can help create jobs while improving energy security and saving consumers money congress and the president will work together to aggressively pursue a job creation agenda the labor market recovery of course some of those initiatives will recognize new spending and require new spending and we are committed to transparency regarding the cost of our initiatives but let me be clear while putting americans back to work today may require deficit spending the dangers of inaction are even more costly americans and their very hard hit suffering families nearly six million americans have been unemployed or more over three million americans have been unemployed for over a year research shows that the longer a worker is out of work the harder it is for him or her to gain employment we must invest in these workers with aggressive job creation policies coupled with targeted job training initiatives otherwise we face  americans are a hardworking resilient people but the millions who have been battered by the economic storm need our help today getting back to work and i am confident that we are up to the task that we are joined today with dr joseph one of america's brightest economic minds and who is here to help us learn more ways to accomplish our goal of a rapid and complete labor market recovery and i welcome also dr robertson thank you both for being by the president for stimulus two are further signs this administration's economic policies are failing the american public consumers are frightened by the debt and their job understandably reluctant to spend businesses of all sizes are worried reluctant to add new workers while washington promotes higher health care costs energy costs more regulation in the white house in this congress have taken their eyes off the economic ball opting instead pursue ideological agendas that contribute nothing to our economic recovery in fact fuel fear among job creators along our main street we need to stop frighten the horses if we hope for a stable and reliable economic recovery led by our local businesses rather than the government united states is at an economic crossroads the road to the right is a free market economy in which the decisions of americans consumers workers investors and savers are determined to do while the road to the left is a social market economy which the federal government plays a controlling role to the right congress would gradually reduce federal budget deficit by restraining the growth of federal spending in pruning unnecessary  ineffective programs reforming health care on this path would focus on empowering patients and lowering the left congress would continue its reckless spending reforming health care on this path would focus on empowering the federal bureaucracy expanding health care entitlement benefits with little consideration about long term cost to the right congress would direct the treasury to sell its years in crisis citi group general motors and the truth privatized fannie mae and freddie mac as quickly as possible once again the market would determine which which companies prosper or fail to last congress would establish an industrial policy of the united states determining winners such as green technology and losers such as oil a natural gas production based on political criteria thousand is one of the few sectors the us economy which the federal government has pursued an industrial policy the collapse of the housing bubble bubble in the insolve should warn us about the dangers of makes in public purpose and private profit to the right necessary regulations would be as simple as possible and fairly enforced old regulations would be regularly reviewed and regulations appro costly ineffective or unnecessary would be eliminated to the last new regulations would multiply the cost effectiveness of regulation would matter little so long as their intent is good to the right congress would stabilize the federal tax burden as percent of g d p as it post world war two average would reform the federal income tax system to encourage both domestic and foreign investors to make job creating investments in the united states rather than forcing them abroad pursue new customers around the globe tearing down barriers and creating u s jobs by approving the pending free trade agreements with colombia panama and south korea and engaging in dynamic growing markets such as the asia pacific region the left congress would block these agreed to withdraw from the global marketplace and impose protectionist measures that block access to the u s market at the behest of the labor leaders in history both here and abroad proved that the right make sense in order to solve problems we have to understand the cause of the problem and the cause of problems was bad economic policy over the last eight or nine years i want to say just a word about the stimulus act i just want to read madam chair if i might from the hearings going on but i want to hear as much of this testimony as i possibly can there have been many such hearings held in the house transportation infrastructure committee and we have been repeatedly briefed on the projects around the nation that have reduced immediate gains through long term investments and that's what we're doing now over there in the transportation committee however my colleagues on the right continue to argue that the money can be better spent by paying down the debt and we do it reducing the deficit is a tough position to argue against who doesn't want fiscal responsibility from their government but abandoning the long suffering and long term unemployed citizens in baltimore and all over this country is short sighted is a shortsighted worldview and one i simply cannot endorse not only is abandoning these americans a moral failing but it is bad fiscal policy as well the result would be higher future costs for unemployment insurance food stamps public health benefits as well as lore property values and higher crime rates that will stand steadfast by my original statement that is a moral failing to continue to let our constituents lose their homes their savings and their health care in the name of supposed fiscal responsibility after eight years of gross fiscal irresponsibility and blatant catering to the wealthiest among us that is why i wholeheartedly support president  obama's continued average to help the economy recover in addition to the infrastructure investments a proposal office tremendous assistance to small business is the engine that drives our greater economy taking office in january the president has not lost sight of the ultimate goal of helping all americans with cover last fall when when we were told that the sky was fall we took action to bail out wall street and banks all over america however record bonuses now follow from those same bailed out firms and lobbyists tell us the increased consumer protections currently being debated on the floor will spill the end spell the end of the business as we know it i don't buy it only further entrench is me in the mindset that stronger consumer protections are exactly what we need further financial regulatory reform bill being considered on the floor i was for it is we will provide three billion dollars for short term loans john inflate homeowners nearing foreclosure this is the kind of relief that can move us from trial modifications to permanent stability while we took the necessary action to stabilize the financial system last fall the time has come to embrace consumer protection job creation and real foreclosure prevention in order to meet the larger goal of creating a recovery but not just wall street but for main street and fall of americans  welcome the testimony of of our witnesses this morning and i look forward to a frank and productive discussion with that made them madam chair i yield back thank you very much and i'd now like to introduce our distinguished panel professor joseph stiglitz is a university professor at columbia university in new york city and chair of columbia university's committee on global he is also the co founder and executive director of the initiative  at columbia in two thousand and one he was awarded the nobel prize for economics dr was a member of the president's council of economic advisors from ninety five ninety three to ninety five professor professor russell roberts is professor of economics at george mason university a distinguished scholar and a research fellow hoover institution the author of a in our recovery the banks have been rescued large amounts in bonuses yet there remain severe problems in our financial markets with mortgage for foreclosures continuing apace and massive problems in commercial real estate on the rise and the suffering of homeowners who have lost much of their home equity and not their homes and workers who have lost their jobs as possible the divide between wall street on the one hand and the rest of the country and even between parts of the financial system that have received special favors from washington those that have not has perhaps never been greater in recent memory the fact of the stock market is up or credit markets are less frozen should not distract us from the problems ahead these are especially grave in the labor market we should not be fooled by the fact that the right this month drop by point two percent to ten percent more than one out of six workers who would like a full time job still can't get one such and unemployment rate should be an acceptable my written testimony i tried to describe how bad the situation the labor market is why i am pessimistic concerning a quick recovery of you i think that is now shared by the fed we're lucky if the unemployment rate returns to normal level before two thousand and twelve or thirteen less strong measures are taken soon navan then the prognosis is not good i also explain why i would be short sighted even more short sighted in those in the financial markets markets who got us into the mess if we were to give in to deficit  we would be mapping in two senses to focus on one side of the balance sheet rather than both sides the assoc spending can create is simply bad economics these investments can yield returns far in excess of the cost of capit investments in jobs can even help reduce the deficit in the long run unemployed workers lose their job skills risk of replicating a phenomena observed in europe in the one nine hundred eighty s call history says those with extended periods of unemployment never return to the labor force or if they do it is in jobs with bassie lower wages and productivity lest we manage this crisis well we could be setting ourselves up for an extended period of high unemployment what economists call the natural unemployment rate may be significantly increased and if that happens and tax revenues for years to come will be lower than they was or wise would have would be with the results of the national debt would be higher that does not mean that we should ignore the deficit it doesn't mean that we should be careful in our spending ensuring that we get value for a dollar my earlier book for instance with linda bilmes highlighted the high cost of the iraq and afghanistan wars including the future cost of providing disability payments and caring for the large number of injured and permanently disabled returning troops at the time we estimate it brings those costs in the order of half a trillion dollars or more evidence since the publication of our book suggest of those numbers were excessively conservative they also suggest  the costs in afghanistan are marginally higher than in iraq the ministrations estimates of about one million dollars per troop which does not include future costs of disability and health care the money spent on the thirty thousand additional troop surge could have created more than one million jobs in america that pay thirty thousand dollars and the jobs created in america would have higher multipliers that is to say second and third round effect is also one of the reasons why i have been so critical of the manner in which the bank conducted the congressional oversight panel has described how at the time money at the time that money was provided to the banks we got back sixty six cents on the dollar  not to put too fine a point on it we as taxpayers were cheated and we got a fair deal our national debt would be in the in the future would be much much lower as we approach the looming debt jobs problem we should not repeat the mistakes we have repeatedly made in responding to the crisis too little too late there is an economic something akin to the power doctrine in the military when you attack the problem with overwhelming force if things turn out better than the pessimistic high returns especially those directed at national needs like improving technology in public transportation systems flexibility automatic stabilisers spending commensurate with economies and meeting some of the economic and social exigencies created by economic crisis we need to take in a portfolio approach there is no single measure that will solve the problems of the magnitude that we face but i do want to emphasize in response to some of the discussion that's been raised that the stimulus has  worked it's not good enough it could have been better designed but there is absolutely no doubt that had it not been for the stimulus the job situation would be far worse than it is today assessing alternative measures in terms of the criteria i've laid out some sense of priorities which would include extending unemployment benefits government job programs research and technology programs and longer term investments here let me just make a couple of comments and in my written testimony aberrate on the first we should take advantage of the fact that this is like a downturn we should be drawing up plans now for a higher return public infrastructure projects that are not shovel ready but could be ready in one or two years time if it turns out that the economy have no vision of what kind of a financial sector what kind of an economy we want to emerge after the crisis cannot and we should not go back to the world of two thousand and seven our financial sector was bloated and distorted it will have to be downsized but the question is what parts should be downsized we should be strengthening the venture capital firms and the banks that lend to small and medium sized firms a vision of the economy that we want after the crisis should also guard our spending economy the future will require more educated workers and be based on high technology that is why it is particular disturbing for me to see universities furloughing teachers and other top backs in our education system and i in my written testimony i discuss the special problems facing small medium sized enterprises which are the source of job creation they are facing increasing difficulties in getting access to credit even as the banks seem to be recovering more than a year ago we were told that we need to bail out the banks to maintain lending but giving huge business and real estate speculation is not exactly what the condom needs at this juncture many s m s rely on the use of home or other real estate as collateral for lending and with these prices plummeting access to credit is being impaired this is only one of several complex linkages between the real estate sector and the rest of the economy explaining why it was such a mistake not to do more earlier about that sector and this is only one of several channels through which problems the real estate market are transmitted to the rest of the economy bring stings the weak housing so market will contribute to high unemployment and lower productive in another way distinguishing feature of america's labor market but if individuals mortgages are underwater is significantly road they will be unable to move to reinvest in a new home and this will really undermine what has been one of our great let me say a word about global  imbalances this is a global economic downturn well before the crisis there was a worry that there would be a disorderly i'm winding of the global imbalances this is sort of the i'm winding was not because of the current crisis but it could be of the next it is important  difficulties of particular measures undertaken by the bed as a book sonic's balance sheet around a trillion dollars or more we should recognize that when it mortgage interest rates will rise and this will have an adverse effect on real estate prices and investment another of the many cost of the failure of our financial system and the have imposed on our society these costs are one of the reasons that we have to have affective regulatory reform our financial system failed to perform it economy well there is a simple test of the adequacy reform of our financial system if these reforms have been put in place in two thousand and three with the crisis of occurred and if it had occurred would have been less costly my assessment of the reforms currently on the table is that they fail to meet this test unless we pass an adequate regulatory reform we can look forward to another crisis some years down the road this is not good news either for our citizens or for our economy i am i am particularly concerned about our failure to deal effectively with the too big to fail institutions and with derivatives and credit default swaps my written testimony and explain what we should be doing and why what is currently under discussion falls far short our regulations failed but so did our regulatory institutions again i explain why i think it would be a serious mistake to make the federal reserve system the system regulator let me conclude with three general comments the first gender of our economic reform broader our tax laws encouraged excessive leverage and risk taking what kind of society says that speculation should be encouraged at the expense of hard work but that is what we are saying when we tax earnings far higher than capital gains bankruptcy laws and corporate governance to contribute to crisis secondly we need to keep in mind that the real cost of an economic downturn caused by a bubble occurs after the bubble breaks crises don't destroy the assets of an economy the banks may be bankrupt many firms and households may be bankrupt but the real assets are much as they were before the same buildings and people the same human physical or natural capital in the runup to the crisis resources were wasted by the private sector this is water over the dam the question is will resources after the bubble is broken this is typically when most of the losses occur as resources fail to be used efficiently and fully as unemployment soars this is the real market failure and one that has a boy the right policies are put into place what is striking is how often the right policies are not put into place the losses during the bubble or compound of the losses by the losses after something that's wrong when we simultaneously have homeless people with empty houses meet firms and workers willing to produce more we are a rich country we can afford to squander hundreds of billions of dollars where there are limits for even a rich country the combined effects of unbridled spending on unproductive wars and corporate welfare and bank bailouts and they are told when these effects are compound  has been on temporary tax rebates just as the bush administration temporary rebates of february two thousand and eight had little or no impact and were mostly that's been true of the direct pending components about one hundred forty five billion of that eighty percent has been spent by the departments of health and human services the department of labor education the social security administration those agencies don't have roughly one half of the job losses since december of two thousand and seven construction of manufacturing spending doesn't do much for those folks some argue it doesn't matter what the money spent on people spend the money they receive jobs puts more money to people's hands and so  counts on the multiplier doesn't work any better than monetary policy stuck in that this is particularly true of temporary increases and fiscal and monetary policy are constrained by the anxiety that people have about the future plan no change in staffing for the first quarter of two thousand and ten at the highest level of the one thousand nine hundred employees are waiting to see what the rules of the game are going to be so what has to be done everybody assumes there's something that has to be on there has to be a solution something to get people back to work faster that may not be the government policy induced in a natural expansion of the housing sector over the last decade that naturally drew a lot of people into construction twenty five percent of the losses in the job market have been in construction the workers who no longer hold those jobs have to find other things to do and they're taking their time and fortunately it is natural that unemployment lingers if you have to beating let's let the states deal with their past recklessness rather than giving them incentive to be reckless in the future they are obligated to balance their budget they can cut spending they can even cut spending if they like without laying workers off i think that's a good incentive don't funds as free money they aren't don't waste it the way the stimulus money has mostly been wasted instead of spending randomly let's cut the payroll tax cutting the payroll tax makes workers less expensive to employers cut it by twenty five percent for the next five years you'll see an impact on job creation it will reduce revenue by about two hundred fifty billion a year but it has a chance of creating jobs to reduce uncertainty in every aspect of the economy maybe it's not the best time to try to radically change the health care system and the energy market while propping up banks and the auto industry and borrowing trillions of dollars stop issuing such short term debt would get wall street in trouble the government rescued wall street mistakenly in my opinion there is no one to rescue us some aspect of government spending to show that grown ups are in charge and that the government can act responsibly get rid of corporate welfare cut tariffs and quotas which are a silent tax on the is a step in the right direction thank you very much for your very thoughtful presentation and both of you mentioned the challenge that we have in creating private sector jobs and i have  think we have made top down investments in technology we have a lot of bottom up investments for individuals training on their own through their own choices we have the most vibrant technology sector in the world we have the venture capital sector in the world and those able to substitute technology which is really human knowledge embodied and made our workers more productive so i'm optimistic about our future in competing in the marketplace very strongly that we have a very in technology but the high technology sector that has not been as job creating employment creating it hasn't been as integrated into manufacturing as some other countries but i wanted to really focus on one other point which is that normally we think of low factor input prices as a good thing as stimulating the economy so the fact that the cost of capital was made artificially by should have been the basis of a large job creation if our financial sector had been doing its job the fact is it could have directed that capital to productive uses we could have had a real boom if things had gone the right way but unfortunately our financial sector our private financial sector didn't do what it should have been doing combined with these other problems that depicted and the result of it was that what would have been an that a lot of people to accumulate second homes and third homes as a way of investing which is not particularly productive that was a terrible terrible mistake but i think we also have to recognize that the government pushed money explicitly into low interest loan downpayment mortgages fannie and freddie were pushed tremendously in this period of two thousand and one to invest in a lot more low income housing is a lovely goal but as a result a lot of those mortgages went underwater the private sector the financial  wall street side that professor stiglitz was referring to also get into that but that was until about two thousand and four two thousand and six when they did make a lot of bad bets questions why did they do that and i worry a lot that they were expecting to be bailed out by the  thank you madam chair john said that the government could stimulate the economy by paying someone to dig a hole and fill it back up again dr stiglitz do you agree with that but it's not the best way to spending money because we have better ways of spending money than either going to war or digging holes dr robert don't agree with it in fact i want to emphasize one thing we do agree on is that money spent on war is wasted it's not a stimulus package i think one of the most destructive and  saying here's a list of the stimulus that famous money that was put in your district interestingly the very first thing on the list in my district was two point three million what a green roof on a federal building what they didn't point out was that that bedell building is scheduled to be torn down so we are spending two point three million green roof a building in my district which will subsequently be torn down now that is clearly digging a hole and filling it back up again now to your point d yes somebody got hired to put on that roof but there's no multiplier there's no there's no downside no additional jobs that and i would think it sounds like you would both agree that if we were going to ban or through tax credits or any other way federal money that it would be much better spent rather than digging a hole and filling it back up again in something that creates a number of downstream jobs let me let me just throw two ideas that you both and get your comments on  an infrastructure thing suppose you the government put free broadband internet wireless internet in the two hundred fifty largest markets in the country and then let the high technology community do what they could with that that capability actually would be that expensive to do that or let me give you a second idea what if we had a capital gains tax holiday but different than what's been talked about that you said that for twelve months or nine months or six months pick a period of time that any investment made by someone would be free from capital gains tax when ever they sold it they sold it five years from now ten years from now didn't matter it seems to me that one of the problems right now is the perception of risk out there and that people are not making investment not hiring not doing anything dr stiglitz talked about financial sector and you're both and i want to have both of you on that by the way i agree on the war in afghanistan on all of that is very close to zero and that's the kind of facility where there is a particular role for government in the provision so it seems to me because the private sector could provide  charges a distortion because the price exceeds the marginal cost of usage and so this is a particularly good example of something where government could provide it it increases efficiency and then an environment and it's part of the infrastructure which is particularly relevant for modern technology so i think that's the kind of thing that we ought to really seriously consider the second point you raised has to do with how do we reduce the risk of investment and there's a second problem that i want to also emphasize and that is access to capital is one of the problems particularly facing small and medium sized enterprises a lack of access to capital so it's not both the demand for investment but it's also the capability of doing that investment one way of trying to attract tackle both problems simultaneously for instance it's sort of like a loan but this is a particularly good time for doing that because it reduces government revenue it will increase government revenue in the future because the depreciation that they would have taken in the isn't there to income taxes so that everybody can see which what the effects of government spending are on their pocketbook but that's politically difficult to do and it's probably not the best thing to do right now because it's question i have for you given we come up with some bill that dr bird and i would both supporter you and i would support given the nature of energy policy and energy and given the nature of health care acknowledge that whatever we would do it would take several years to implement i mean how can we sit back and say we will do nothing until we can look ahead and several years of  paradise economically and socially and in the worldwide international community and then we will act in these areas that's not going to happen when in fact i have people come to my office all the time from the business community and they have been doing this  have limited access to health care which is what we really fundamentally care about we could create a program that would help those folks it would cost a lot of what we could subsidize their insurance a larger entitlement program for medicaid than we have briefly there although there been studies about the effect of unemployment insurance on job search most studies are not in the context of the high unemployment in the particular situation that we are today the problem is there are no jobs  having lots more people looking for the same jobs isn't going to be more employment it's not lack of search lack of jobs and we ought to remind remember that this particular situation not always the case fact large numbers of people are moving over to disability and those do not appear in the unemployment even in the broader measure of discouraged workers discouraged workers do not include disabled people who've applied for disability the estimates are somewhere that the increased number of people applying for disability not all of them will get is about a million about half of them will get it and those will likely remain on  but it really what i'm emphasizing is that the labor market situation right now is worse than even that one out of six number then that i mention the third point i want to reiterate what dr roberts said there is going to have to be a lot of structural change people moving from one industry to another and that is why what i think of after labor market policies are required and that requires education framin thank you very much mr cummings i want to just pick up exactly where we left off and so what are we training them for in other words if there are  jobs are not there and i have we had testimony in this committee where less than a week ago where they were told that one of the areas that seems to be increasing  as you know i just saw you on c span i want you to tell me what you would do if you were me what would you deal with this job situation what would you tell them and both of you you know why i'm asking this question is because you know when you go back and forth this reminds me of a ping pong game go back and forth back and forth we can have our theories about all kinds of stuff but the fact is that when i go  baltimore i still got people who don't have a job i still got people who it's about christmas time that they're not able to buy presents you know they're not trying to get to disney world they're just trying  equity in their home they're looking at their stock portfolio and realizing that almost overnight they've been wiped out so i'm trying to figure out when we can go to  jobs you know what is it that we can do we have all this naysaying all we can do this what can we do and how soon can we do it because the people that i'm talking about are holding on by a thread and the thread is getting very very very very thin so they don't want to hear all the crap i mean i'm not grab but you know they don't want to hear a lot of you know theory that over the past year alone governments of the state and local level have local governments have reduced their employment by ninety six thousand compound government is compound the problem because of lack of revenue  i think not because of they mismanaged anything macro problem that was imposed on them so i would have what i call revenue sharing of the con economy turns up you don't have to help them if it turns down you need to give them it today i also think research and technology programs are important the big changes are technology that have transformed our economy for the most part come from the government problems of things that you not have been done we're going to have a long term this is a long term thinking about what we can do over the longer term if it turns out that we're wrong and it's a shorter term states the real problem right now is we're actually having a problem because our lending money to banks close to zero interest rate and they are worried abroad that we are creating bubbles in their understand the complex system called the economy so maybe you're looking up the wrong to make jobs for people in the streets of baltimore because that's not what presidents are good at what presidents are good at is trying to create a policy environment that might make  businessmen who say in the energy sector the real problem right now is they know that sometime in the future they're going to have to pay for the price of carbon the price of carbon the mark equilibrium price of carbon is much higher than zero if we don't do something europe is going to put a border taxes we are going to have to do something and they want a response that is a they want to know what the they know something is going to have to be done and they want something to be done sooner rather than later so there is no way getting out of this inherent uncertainty of the world that we live and same thing about health care that was one of the discussions that we had  earlier so my mind you know i agree it would be a lot better if we could do something that was transparent that was clear but there is no getting out of this inherent uncertainty  invest knowing that sometime in the next five years or ten years we will have to deal with this problem of climate change and they would rather have a dealt sooner than later and so this is not going to go away and if we resolve i will be taxes put on our exports if we don't we we should recognize that that that we can't be the free rider on the global system and so we know that they will face these border taxes  a deep recession has its primary results in the loss of employment we have more people who are unemployed then we have been a long long time and economic circumstance we're dealing with harking back to the one nine hundred twenty  nine recession depression that the economic stimulus package that we've introduced seven hundred eighty seven billion dollars was in the opinion of many of us about half of what we should have put out and unfortunately only about thirty percent of what needs to be done to get it out there more effectively what of the focus of attention that it needs to have and what else we need to do to create and stimulate the much needed jobs that are going to be essential to addressing this and if i agree that the stimulus package that was passed was both too small and not as well designed as it could have been the part of a large part that went into tend to save a lot of that and the nature of a stimulus is that you have to stimulate to have people spending so that part was not very effective if we had had to if one were to have a tax cut it should have been aimed at investment and incremental investment tax credit as i mentioned earlier or other provisions encouraging investment would have been better some of the money went to help states and localities but not enough and the result of that is while the federal government is expanding states and localities are contracting and that's and doing the stimulus checks of like a negative stimulus coming from the state and local level one of the lessons we should have learned from the great depression and we didn't exactly the same thing happened during the great depression so that the magnitude of the net public sector stimulus is much smaller because it's being offset and that's another thing i would have  changed i think would have been important one of the discussions that we've been having this morning is the view that different economists disagree and that's always going to be the case but i think that the overwhelming number of economists will have a disagreement about this we've had lots of experiments of situations where there is an economic downturn and the problem is lack of aggregate demand and in those contexts increasing aggregate demand by a large does lead to more output more jobs and  technologies a new industry yes and let me try to make clear because there's a lot of debate about a discussion we've had earlier this morning about the issue of what is the role of government in stimulating technology  technologies we've all benefited enormously from inventions like the internet like the laser we could all list a whole set of things where the inventor got only a small percentage of the social benefit arising from a innovation that kind of r and d that kind of basic is always necessarily needs to be supported by the government that's even more true when we're talking about gentleman's time has expired and we have been called to a vote but i want to briefly ask time for two brief questions in your testimony dr stiglitz you pointed out that there were going to be severe shocks and problems with our financial markets due to the mortgage industry foreclosures continuing in the looming problem of commercial real estate did you have any solutions or ideas of what we should do with these challenges that are before us in the area of homeowner foreclosure is the real problem is that the policies of the administration so far have not been sufficient the main deficiency is that we have not written down principle a quarter of all homes are underwater we know that homes that are underwater the probability of a default in a foreclosure goes way up eventually that leads to problems in our financial sector that leads to problems and of banks to lend it leads to all kinds of consequences so we need to get those mortgages the value of those those mortgages restructured unfortunately we make some mistakes when what we've done so far two mistakes in port takeover we allow the banks to keep on their balance sheet mortgages at face value rather than the writing down to reality i call that marking the hope not marking the market and  and that encourages people to again for the gain because they get the upside and the government takes the downside and so that again courage is there not to do anything i think we need to homeowners chapter eleven that would encourage provide a legal backdrop to encourage restructuring we have chapter eleven that allows for a rapid restructuring of corporate tax because we think it's important to keep  and commercial real estate which is looming time by which we do about that is a problem that there is i think no easy solution other than to recognize that it is a problem and that as we that we ought to be demanding at a capital adequacy on the part of banks recognizing that if we don't we are going to have a problem with  welfare and other entitlement thank you for your ideas to help us work in government to help the private sector create more jobs and move our economy forward we've been called to have a i could listen to both of you all day thank you very much for being here thank you