al-qaeda has set up a franchise most present of algeria but in areas that are largely unpopulated. there is -- we know that there is some activity from al-qaeda sympathetic groups. we don't -- we have some presence in different places, not a great deal. how concerned are you about that area? and is that an area where we need greater coverage at least in terms of the isr because this huge vast open spaces out there. there's stuff going on but we don't have a lot of coverage of it and we don't know exactly. is that something we should be concerned about or really not? >> i think we should understand that as pressure is applied as it was in iraq and now in afghanistan and as the pakistanis are applying pressure in pakistan, that this will not

necessarily end the activity. it will shift some of the sanctuaries to other places and i think in these large expansives of undergoverned regions because the government doesn't have the capacity to govern in some of the places where they have the will, then we've got to find ways of having a better understanding of what's happening there. isr would be one of those possibilities. >> certainly. thank you very much. and i don't think my colleagues have any more questions. i want to again conclude that our subcommittee has many roles but one of of them we consider to be the most important is being as supportive as possible to what the special operations command is doing. we could not ask for a better partner than we have in you as the commander there and i look forward to continuing that relationship. so thank you for coming out and testifying. and we look forward to working with you. and with that, we are adjourned. >> thank you very much.

>> we're now going to take you live to the joint economic committee looking at the latest monthly unemployment figures just released the unemployment rate jumping to 9.4% in may, the highest in more than 25 years. that is elijah cummings of maryland and the acting chairman today. they'll hear from keith hall the bureau of statistics. live coverage on c-span2. >> the consumer index experienced a small uptick and the european central bank held rates steady yesterday. signaling expectations that the global economy may just had bottomed out. i'm encouraged by the marginal improvements like consumer confidence but even this good sign is accompanied by a sobering counterpoint increased consumer spending that yet to translate by actual spending of consumers of businesses or businesses rather, families are

saving and i don't blame them. they see that more than 1 in 4 unemployed workers has been unemployed for over six months. and that the median duration of unemployment is now 14.9 weeks, a record high since the series started in 1967. the cumulative effects of the recession seven conservative months of loss totaling 6 million jobs have left these ordinary, very hard-working americans in on precarious footing. when the person is laid off the person experiences, quote, income shock. this is a vast understatement. now unemployed families must work through any savings they have accrued to pay bills and continue to feed their children. and then as home values fall and mortgages go unpaid, they're

suddenly looking for foreclosure in the face. while the foreclosure crisis started with homes that fell victim to plunging values and then moved to the subprime sector, the borrowers interest rates now prime borrowers have been affected as well. the "new york times" wrote on may 24 that -- and i quote, this third wave of foreclosures can be attributed in large part to the rising tide of unemployment. fortunately, many homeowners, some degree of help is available. we have strong mortgage modification programs in place that allow homeowners to decrease their payments and work out solutions to stay in their homes. but for the unemployed, however, when home values fall, a mortgage modification will take them only so far. what a modification cannot do is

bring back an income or health insurance. so without new and creative ways to help the unemployed, these americans may still lose their homes. you also know a job loss doesn't just affect the individual employee and his or her home. surrounding home values fall with each foreclosure and some cities have seen more than 100 foreclosures every day. further, our safety nets are stretched then and that is all some folks have. i just read in the "usa today" that 1 of every $6 of american's income is from unemployment, social security or public benefits. further, republica has reported

that they have gone through their funds and the effects are being felt in so many places by all of us. accordingly, this congress and the president, president obama, have taken decisive action against the recession through the american recovery and reinvestment act as well as legislation addressing predatory mortgage lending and unfair credit card practices. we're also helping people at the local level. tomorrow in baltimore, we're planning -- we are putting over 500 borrowers together with 19 lenders to try to work out mortgage solutions. i hope everyone who shows up can save his or her home but i suspect there will be -- that will not be the case as the unemployed still may not qualify for modifications. it will be almost impossible to modify a loan when you don't have a job. knowing this, i look forward to the testimony of dr. hall as we must understand exactly where we

are in this crisis and just how far we have to go. with that i'll yield to mr. brady. >> thank you, mr. cummings. i join you in welcoming commissioner hall before the committee this morning. the increase in the unemployment rate to levels 9.4% is disturbing for several reasons. first, the higher unemployment rate reflects greater hardship for american workers and families. second, along with other economic data, it reflects a continuing weakness in the economy. and third, the higher unemployment rate underscores the unrealistic nature of the administration's economic assumptions based on the idea that the stimulus spending would cap rising unemployment. the payroll report shows the economy continues to reextract. 345,000 job drop in may payroll employment is a significant monthly job loss. and is broadly based in many industries. although the overall pace of job

loss was not as terrible as in recent months, manufacturing continues to suffer large employment declines. there's some tentative evidence suggesting the economy may bottom out in coming months. for example, financial market conditions have improved. some measures of manufacturing activity have stabilized. and some data related to housing in construction are less negative. however, measures to prevent foreclosures are not working well. and redefault rates are very high with more loan losses to come. business investment has collapsed and the commercial real estate continues to be under stress. consumer spending is weak and exports are falling as many of our major trading partners are also experiencing recession. i continue to be concerned about the administration's unrealistic economic assumptions which were the basis for the president's proposal. the "economist" magazine called

these dangerous because they understate the true cost of the administration's deficit spending and debt accumulation. unfortunately, according to the congressional budget office, administration policies will triple the national debt to a level of $17.3 trillion by 2019. this avalanche of government deficits and debt is one reason long-term interest rates including mortgage rates are on the rise. a central problem is that the administration assumed that its stimulus spending spree would significantly improve the economy. as this poster show as we compare the projections by the white house versus the real economy, just in january, two top administration economists projected that the unemployment rate would not exceed 8% this year or next if the stimulus was enacted. the administration followed up by forecasting an average unemployment rate of 8.1% of all

of 2009. however, as this poster shows, the current level of the unemployment rate well above 9% is enough to show that the administration's assumption about the positive impact of the stimulus was wrong. if the administration's forecast were internally consistent, this would also indicate that the economy will be lower, the g.d.p. will be lowered than projected. an economic upturn should occur by next year. if only due to the huge amounts of money and credit injected into the economy by the federal reserve. however, the economic recovery probably will be quite weak and not consistent with the white house's rosy scenario for 2010. so what will be the sources of economic growth next year? with many households forced to pay down debt, a surge in consumption isn't likely. government spending levels and debt is already rattling financial markets so much more government stimulus spending is not a feasible option.

u.s. exports may be constrained by weakness in other countries and by retaliation against our own trade policies. that leaves investment as a main source of growth but how many will undertake long-term investments when facing a tidal wave of new taxes, entitlement spending and inflation? future economic growth will rely heavily on investment but more taxes, government borrowing, regulation and inflation all will hit investors very hard. government is not evil and up to a point provides more benefits than costs. but beyond this point it becomes counterproductive. policymakers should understand that excessive government does have the the potential to choke off healthy economic employment growth. if the long-term rate of economic growth is reduced from 3 to 2% or below, the result will be much slower job growth and higher levels of unemployment. congress should wake up to the damage that it is inflicting and

stop can't enacting legislation that only increases the burden on the economy. with that i would yield back. >> thank you very much, mr. brady. now we're very pleased to -- mr. burgess, do you have an opening statement? >> mr. chairman, i do. >> thank you. >> i'll yield for five minutes. >> thank you. thanks for the indulgence. well, each month this committee receives the numbers from the bureau of labor statistics numbers and each month continue to feel the need for what president clinton used to call that laser-like focus on the economy. this month we see significant job losses without any focus on economic priorities. perhaps congress needs to appoint someone solely responsible for focusing the efforts on domestic economic issues.

we could use someone in the room who will say, how exactly will this new initiative, this new czar, this new czarina, how will this great new jobs? two weeks ago in our -- in one of my other committees we heard a lot of about cap and trade. i said cap and trade will lead to new jobs. a report that was released claims that the president's concept of healthcare reform will create 500,000 jobs a year. well, we can all look forward to those potential jobs in 2012, 2014, 2016 when these plans take effect. but where is the plan to build job growth this month or even this year? looking at the numbers released this morning, the only industry that appears to be on a hiring spree is us, the federal government. it only makes sense that at the rapid pace, the size and scope of the federal government has increased over the last four

months, the federal government would need more employees to keep up. however, government spending is a boon for people living here but government hiring is not an effective method for aggregate job growth or industry-wide all states employment gains. to illustrate the real impact of the job losses we certainly could look at the home foreclosure numbers. nationally foreclosures -- the foreclosure stated rate the homes that are starting to enter the foreclosure process is 1.4% compared to just 1% a year earlier. the foreclosure inventory stands at 3.9% compared to 2.5% a year earlier while 7.2% of mortgages are are delinquent compared to 4% earlier. in texas the inventory of foreclosed mortgages is 1.7% compared to 1.5 the prior quarter and 1.45% for all of the past year. needless to say, these trends are troubling. what is most troubling is the

fact that these are not foreclosures due to an unexpected uptick on the adjustable rate mortgage or the result of some subprime mortgage swindle. these problems have for the most part been purged from the financial system. these foreclosure numbers represent homes in trouble or lost due to loss of family income related to loss of a job. we can take away the bank's ability to foreclose or force bankruptcy judges to modify mortgages but these actions ignore the source of the problem. the downward trends in foreclosures need to be addressed and they need to be addressed before major social initiatives like environmental reform through cap and trade legislation and certainly before congress undertakes to name an additional 50 post offices. again, i call for all hands on deck and all efforts to focus on improving the domestic economy. i would like to point out that where we are going to continue to see job losses is if the government is allowed to close

789 chrysler dealerships, 1100 gm dealerships as part of the administration's auto industry restructuring plan. it's interesting that all of these decisions are made by someone in the west wing of the white house who's never even held a private sector job. if these dealerships are comfortable staying open and the banks in the community can continue to provide the capital, i frankly cannot see a reason why these dealerships should be forced to close. who else is going to sell these little green cars if we don't have the dealerships there to provide the services. well, i would like to thank dr. hall for testifying before the committee and for his team's important work at the bureau of labor and statistics. i will yield back the balance of my time. >> thank you very much, mr. burgess. i'm very pleased, again, to welcome commissioner keith hall of the labor and statistics for the united states department of labor. thank you very much for being with us. i yield to you, sir.

>> mr. chairman, members of the committee, thank you for the opportunity to discuss the employment and unemployment data that we released this morning. nonforeign payroll employment declined by 345,000 in may. job losses averaged 643,000 per month during the prior six months. in may, the unemployment rate rose from 8.9 to 9.4%. since the recession began in december of 2007, payroll employment has fallen by 6 million and the unemployment rate has increased by 4.5 percentage points. job losses continue to be widespread in may but the rate of decline moderated in construction and several service-providing industries. large job losses continued in the manufacturing sector with employment declines in nearly all component industries. employment fell sharply in motor vehicles and parts, machinery and fabricated metals. since the start of the recession, manufacturing employment has decreased by 1.8 million accounting for 30% of

the job loss during this downturn. construction employment declined by 59,000 in may, half the average of the previous six months. job losses moderated in the private service providing industries with employment falling by 113,000 in may compared with an average monthly decline of 356,000 in the prior six months. employment was little changed in temporary help, retail trade, leisure and hospitality and the healthcare industry added jobs in may this is about in line with a trend thus as far in 2009. in may, average hourly earnings for production and nonsupervisory workers in the private sector were up by 2 cents to $18.54. over the past 12 months average hourly earnings have risen by 3.1%. from april 2008 to april 2009, the consumer price index for urban wage earners and clerical workers declined by 1.2%.

turning to measures from your survey of households the unemployment rate increased from 8.9 to 9.4% over the month. the number of unemployed rose by 787,000 to 14.5 million. since the recession began, the jobless rate has increased by 4.5 percentage points and the number of unemployed persons has grown by 7 million. among the unemployed the number who have been out of work 27 weeks or more increased by 268,000 to 3.9 million. these long-term unemployed represent 2.5% of the labor force, the highest proportion since 1983. over the month the employment of population ratio edged down to 59.7% the lowest levels since october, 1984. since the recession began, the employment to population ratio has fallen by 3 percentage points. among the employed the number of persons working part-time would prefer full-time work was little change for the second

conservative month. at 9.1 million in may involuntary part-time employment was 4.5 million higher than at the start of the recession. among those outside the labor force, that is persons neither working nor looking for work, the number of discouraged workers was 792,000 in may up from 400,000 a year earlier. these individuals are not currently looking for work because they believe no jobs are available to them. in summary, nonforeign employment payroll fell compared with the average monthly decline of 643,000 for the previous six months. while job losses continue to be widespread declines moderated in construction and in a number of service providing industries that that employment rose by 2.9%. my colleagues and i would be glad to answer your questions. >> thank you very much, commissioner hall. commissioner, i think we had a loss of about 652,000 jobs in

march. is that right? is that the estimate. >> yes, that's correct. >> and we had a loss of about 504,000 in april; is that correct? >> yes, that's correct. >> and this month we're talking about 345,000; is that right >> that's correct. >> tell us the significance of that. is that a slowing down of the job losses, the rate of job losses. is that a reasonable statement there? >> yes, it is. we've had a steady moderation in job loss for -- it looks like four straight months now. >> and what does that tell you? i mean, when you -- you know, you're trying to look forward, what does that say? and what do you attribute that to? >> well, this is -- well, this is clearly not an improvement in the job market yet. this is -- this is in moderation in the job loss. so this is -- this is what we

hope to see on the way towards eventually job growth. >> now, we've heard a number of here recently folks the so-called experts say that we are -- it looks like we may be coming out of this recession at the end of the year or some who are not -- don't, you know, look at it a little more conservatively say sometime in next year. now, what do you see? >> it's hard for me to project but i will say this sort of moderation is consistent with -- with an improving job market as far as whether it will hold -- continue to moderate the future, i can't say. >> now, is it possible to identify the effects of the stimulus bill with regard to employment data? i mean, is there any correlation you can make from looking at what you see there?

>> it's hard for us to do that. we're rather focused on just sort of getting the numbers correct and we don't tend to try to look and see where the stimulus spending has occurred. >> i understand. >> and where we're seeing the improvements. >> well, where have the improvements been? >> they have been fairly widespread outside of manufacturing. so we have had a moderation of job loss and very much in the service-providing sector which is interesting because in the prior six months, about half the job loss was in services and now it's maybe a third of the job loss. >> and what -- why is that so significant? i think it's significant because this downturn sort of started in manufacturing and construction. and when things got really -- really severe, the most severe job loss -- and this job loss is still severe, it was very widespread and really included even services. so having services back out is a

good sign. it's not a good sign, obviously, for manufacturing but it's a good sign that -- well, it's a good sign that we're seeing broad moderation. >> now, there have been recent reports with regard to -- i think the "new york times" carried an article just recently saying basically we have a situation where, for example, new york they predict now that they will not get 44% of the employment taxes. in other words, earnings taxes because, i guess, the unemployment rate is down. when you hear figures like that, how does that affect -- how do you see that affecting this job situation? in other words, state governments getting less money possibly and there's another report that says that a number

of these state governments are just in almost every area that they had predicted that they would be gaining funds, they're actually coming up very short. and so what do you see with regard to state government? how does that state and local government, how does it relate to all of this? >> so far even the last six or seven months the employment at state and local level has been pretty flat. >> uh-huh. >> what obviously the concern would be that at some point of the budgets may start -- start to cause state and local governments to decline employment. >> and that would be a major problem? >> it would. >> the other thing that mr. burgess referred to was the foreclosure situation as a matter of fact mr. brady and mr. burgess referred to it. and we've got situations where we're doing these modifications but if people don't have jobs, that's a real problem. do you see that -- that is the loss of housing, does that

create a problem with regard to jobs too? >> i'm sure it does. i think it's the same sort of cycle that you see with consumption or anything else. when you have -- when you have foreclosures, when you have consumer spending down, it creates unemployment and en this the unemployment creates more -- bigger decline and consumer spending so it's a cycle. so it would be the same thing, i think, with foreclosures. >> i see my time has expired, mr. brady, for five minutes. >> thank you, mr. chairman. you were making the point that the job market is not improving. it's continuing to decline at a significant rate. thankfully, not as quickly as in the past months. what does the may decline in payroll say about the current economic conditions? >> although there's been some

moderation in the job loss, there's still a significant job loss and still signals a labor market that's not healthy >> that's what i sense back home in visiting with retailers and manufacturing industry and in the service and in the commercial real estate, we're not seeing -- the government programs to help people with mortgages are failing. i think the hope for homeownership -- homeowners programs was supposed to help 400,000 people keep their homes and help like 200, the incentives for new homeowners to purchase homes again almost no takers. we're hopeful that some of the new redrawn plans might help but i still think underlying as mr. cummings said is a very weak economy that's got some future challenges ahead. there's been a lot of spin in washington these past months about the impact the stimulus and it's almost like we're listening to baghdad bob again from iraq tell us about how the country is winning the war as

the u.s. troops are rolling into his city. last january, two top administration economists argued if we enacted the stimulus which has added, you know -- will add almost a trillion dollars to our debt, that if we did that, we would keep the unemployment rate at or below 8% this year. this level has already been exceeded; correct? >> correct. >> isn't there from an economic view looking at the poster in watching the rising unemployment which trails the economy as we all know but looking at the president's projections of 8%, 8.1% versus the current 9.4%, is that statistically significant in unemployment? >> yes, that's a significant difference. and to reach an 8.1% average for the year we would need to see the unemployment rate drop to well below 8.1% for a good portion of the year to hit that market.

it seems difficult. >> yeah, and indeed as we go in the year the more severe -- we'd almost have to be in the 7% or 6% range at some point to be able to meet that need, which again worries me because these projections were used for the budget which means we're hiding a deeper level of debt. the administration, including the vice president's claim that stimulus policies have added 150,000 new jobs to the level of employment, we see this cited almost daily by the administration. can you substantiate that claim? >> no, that would be a very difficult thing for anybody to substantiate. >> and the chairman who's a highly respected chairman of the council economic advisors chairman roemer, also cited that 150,000 job creation figured in a recent testimony before this committee, you're saying you can't verify that the administration's policies have created those 100 -- additional 150,000