ridiculed by the press but he @@ bit like governor rendell you build it and the people are going to come. i think, looking at our energy future, i don't know if any of you have comments on that, it may be very hard to predict

what reliable ridership is right now. please, governor rendell. >> if o.m.b., c.b.o. and the g.a.o. were predicted the success of columbus' venture if they were advising queen isabel lark we'd all be speaking italian. i garne tee you. you hit it right on the head, senator. some of this we've got to do because a we know it works in other parts of the world, and some of this we've got to do on faith. when i invested $7 million dollars in commonwealth, that's not a lot of money down here we spend that sum of money before breakfast in washington but for the commonwealth that's a nice hunk of change. i wasn't sure. there wasn't a study that said we'd jump up ridership that much. but i knew we had to try. this was our best shot. if you look at the topography of pennsylvania, this was our best shot to prove there was a market for high speed rail and it work.

it worked. so times -- so sometimes as mr. skancke said, you have to do it. >> senator, in the texas-new mexico connection there, it's not just about the train system. we spent a lot of time talking about moving passengers, but it's about the transit oriented development and the additional demand in thesing me on liss that would grow -- the megopolis we refer to and it's hard to measure until it's in place. >> mr. skancke, did you want to talk about reliable ridership issue or comment on this? >> i think we have studied ridership in this country for hundreds of millions of dollars. i didn't say years. hundreds of millions of dollars. and as i said, we have to stop studying. we know on all the amtrak corridors throughout the

country that there's a need and demand. as fuel prices go up, ridership goes up. as congestion goes up, ridership goes up. we don't have to guess. the problem we have is, we're afraid to do it. because it may fail. what we need to do is not set up our high speed rail and transit systems to fail. let's set them up to succeed. create systems that work, not pieces. so as we've all said, instead of doing 100 mile segments, let's try a 500 mile segment, let's actually, i'll be little partisan for a second, let's build a line from los angeles to las vegas. let's build a line from phoenix to las vegas. let's go from albuquerque to denver. let's try it. what do we have to lose? nothing. if we fail, then we fail, but we don't even know what failure is yet, because we haven't gotten there. >> senator udall.

as the good governor was saying to me, who was that guy that built our 110-mile-per-hour service, i said david gunn, it's the only good thing he did for amtrak. but that's not true, i want to say that because david and i are friends, i talked to him a couple of days ago, i accused him from using the turbo money from the project in new york to get that done. but i know he got pennsylvania money. i think what tom is talking about is sab lutely true, with an exception. that is that the culture in this country is not a train riding culture. in the northeast corridor, about 43 million people live within 40 miles of where we operate ocela. it is a success. in 2000, we had about 37%, this was before it started, of the air-rail market was with rail. today, in 2008, we have just

the opposite of that. we have 63% of the rail-air market. that's with service that's two hours and 45 minutes. from new york to washington. and on north end, from new york to boston, it was at about 20% and is now, or 22%, it's now at about 49% in the same way system of we are demonstrating success. but the piece that we can't miss, and i think administrator szabo pointed it out, is that we need to do both. we need to talk about having very high speed and it needs to connect. t-bone needs, i listened carefully, i didn't hear it connecting to amtrak, it might. but amtrak is the only connected intercity service coast to coast, border to border in the united states. and we need the incremental improvements knot 90 to 110, so that people build a culture of

riding the train. so they fill up the high speed trains that are connected in some fashion, and it might even be at an airport, but it could be somewhere else, where you connect our system. people want to be seamless. they don't want to go to the border of pennsylvania and new york at route 15, when we had to build the connection, if you remember, governor, to make sure that new york kept up with the leadership that was coming out of pennsylvania. to make that interstate connection. that's the difficult -- difficulty we have today with railroads. we don't always connect. >> senator, if i may, the texas t-bone does connect into the amtrak houston metro multimodal facility in downtown houston. >> great. it's a good way to finish. we very much appreciate this panel, very informative.

thank you very much and i will -- >> thank you, senator. >> i will adjourn. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] acand we'll

be touching a lot on payment reform and how to control healthcare costs. we brought in some great examples of some things that are working at the state level. i'm going to just go ahead and push right through. we're going to hold questions until the end. we do have a microphone here. and there is a purple paper in your slide -- in your packet of information that you can go ahead and fill out if you have questions. you have a yellow one. [laughter] >> so yellow. sorry, yellow one. so you have a yellow question card and we'll hold questions until the end so that we can

make it through all of our speakers. so let's start with bob reischauer. he is president of the urban institute and former director of cbo under clinton. he's been through this once before. he is really uniquely positioned to understand the incredible need for healthcare reform, the politics around healthcare reform, the economics and, of course, the arcane language of scoring which is becoming increasingly important. and i have learned to always listen to bob because not only is he very insightful with his analysis and judgments but he's almost always right. and so i'm always asking him -- not only me but others always asking him to handicap things so here he is. bob reischauer. [applause]

>> thank you, nancy. one correction, it wasn't under clinton. [laughter] >> that i served. i predated him but he outlasted me. [laughter] >> so i think to his relief. let me add my welcome to all of you, to that of nancy. i also want to take the opportunity to congratulate -- nihcm has become influential and a respected voice on healthcare policy. it's done this on a number of ways. first through its issue briefs called expert voices, which top analysts summarize succinctly the state of knowledge on a particular issue and then add their unique perspective and for those of you who haven't

accessed one of those, i think there's probably some out on the table, i would. i have a little stack of them somewhere in my office that i refer to quite frequently. it's also had influence through the reports that it generates from its research projects on a wide range of topics from childhood obesity to health system capacity and on and on. and it's been an important convener, which is a vital role in the health policy debate. it's brought together practical business leaders from the insurance industry with policy analysts, with legislative staff and policymakers to explore important health issues that are facing the nation. but in my opinion, probably the most important and unique

contribution that nihcm has made has been an indirect one, one resulting from the various annual media awards that it puts out. it awards a prize for radio and tv journalism, one for general audience print media and one for the trade publications. and these awards, i think, have had a big impact stimulating more and better coverage of health issues throughout the nation and it's raised the prestige of the journalists and investigative reporters who cover health. the awards also have caused editors and publishers to channel more resources into covering health topics and for that i think all of us who are interested in this area should be grateful. enough patting you on the back.

>> oh, that was so nice. [laughter] >> you can pay me afterwards. [laughter] >> let me turn to the assignment that i was given when i was first invited to@@@@@@å well, unfortunately, i didn't have time to put the finish touches on my secret painless plan that raises $1.5 trillion without cutting provider

payments or increasing taxes or imposing burdens on employers so you're all just going to have to wait a few weeks for that to come out. and instead what i'll do is focus a couple of the implications of our perilous financial situation on health reform. if we press rewind and go back a decade and a half to when the clinton administration was struggling to enact fundamental healthcare reform, we find that the effort was driven largely by what i would call a moral imperative. how could the richest nation in the world leave 40 million people, which was the number at the time, uninsured? and many more millions fearful that they would lose their access to affordable health insurance and access to care if they lost their job or they found themselves sick? especially, in a weak economy which prevailed during those

years. of course, financial issues were important back then. but the fiscal challenged really been dealt with through the deficit reduction act of 1993, which was signed into law august 10th of 1993. that piece of legislation raised individual and corporate tax rates and the gas tax and eliminated the tax cap on h.i. payroll taxes and extended the discretionary spending caps and it subjected more of social security to the income tax. supposedly this sort of put the nation on a good path with respect to the deficit, and the order to those trying to develop health reform was, you know, don't screw up what we've already accomplished.

you know, go out and do health reform, but, you know, it doesn't have to play a big role with respect to the budget. this piece of legislation that had dealt with the deficit, of course, was a very fragile and hard-fought accomplishment. it passed the house 218-216 with no republican votes. it passed the senate only after the vice president cast the tie-breaking vote also with no republican votes. so there was a lot of concern that this achievement not be undone by health reform. but no more burden was placed on health reform. of course, the situation has changed markedly over the last 15 years. while the moral imperative is as

strong now as it was back then, there's a new and in many ways more urgent imperative for health reform, and that's namely the fiscal imperative. after the surpluses of the 1998 to 2001 period disappeared, devoured as they were by a recession by the response to 9/11, by two wars and by huge tax cuts it, became increasingly apparent to budget wonks that the nation was hurdling in an unsustainable fiscal path, peter orszag and his not so merry band predicted this unsustainability and concluded that it was largely if not entirely attributable to the projected excess healthcare growth of programs, by excess cost growth, what i mean is the excess growth

in spending largely in medicare and medicaid over and above the growth of g.d.p. historically, that's been about -- somewhere between 2 and 2.5 percentage points a year and it was projected to continue into the future. gao, the center on budget and policy priorities, a number of analysts in the private sector, like henry aaron, and bill gale, and allen hourerback did similar calculations and came up with similar conclusions. when i played around with these projections back in 2007, i concluded as others had that through some miracle we could hold down federal healthcare spending growth to half a percentage point faster than g.d.p., we could extend all of the tax cuts that were enacted since, index the alternative

minimum tax, allow discretionary spending to grow along with both inflation and population and have a balanced budget for at least the next 40 years. so this gives you an indication of what role rapid healthcare spending plays in the projected unsustainability of our fiscal situation. without some restraint on healthcare spending, the choices that faced us were quite unpleasant. sharply higher taxes, deep cuts in nonhealth programs or budget deficits that would begin to balloon and at some point would explode. no one paid much attention to these dire warnings isn't surprising. we had a president who had no real interest in pushing for fundamental health reform and a deficit that while unsustainable in the long run appeared to be on the right path in the short run.

from 2004 until the economy tanked in 2008, the deficit was coming down. and people tend to forget this. by 2007, it reached a mere $180 billion or 1.2% of g.d.p., which is a lower figure than any that was experienced in the 22 years between 1975 and 1996. that the budget wonks were predicting fiscal disaster in 15, 20, 30 years fell on deaf ears, of course, because the long run that counts in washington is the number of years until the next election. by this measure, the wolf wasn't anywhere near the door and the economy, while it wasn't great, was certainly okay. of course, the last year has seen all of these elements change. we now have a president who is

deeply committed to fundamental healthcare reform and an omb director who is appropriately obsessed with the role that health plays in our fiscal future. and the economy has taken a deep dive. our financial sector has imploded and asset values have plummeted. what this has done is cause a sharp reduction in revenues and an increase in spending on cyclically sensitive entitlements. the administration and congress have also enacted a huge stimulus package and used various other forms of financial wizardry to prop up asset values and give a boost to the financial sector and, of course, pick up a few car companies on the cheap. [laughter] >> the bottom line of all of this is that our deficits are soaring. cbo has estimated that for the current fiscal year, we will have a deficit of around $1.8

trillion or 13% of g.d.p., which is over twice as large as any deficit we've experienced since the end of world war ii. in percent of g.d.p. terms. looking at fiscal 2010, the next year, doesn't look a whole lot better, a deficit of something in the order of 1.4 trillion or 10% of g.d.p. and even looking out over the full 10-year period, the cbo projections of what the president's policies would entail are pretty, pretty bleak. the specter of a financial disaster is no longer two or three decades away. in short, the wolf -- if the wolf is not at the door, we should look for him in the foyer. [laughter] >> all of this points -- all of this puts the fiscal imperative front and center as we consider the size and the shape of fundamental health reform.

in contrast to 1994, this time around we have to ask how can reform contribute to a broad effort to bring future deficits down? this is no mean feat because it's inevitable that any reform has expands access to insurance in any kind of significant way is going to increase deficits in the early years. subsidies are expensive and spending cuts and tax increases that might pay for them can't be turned on immediately. one has to phase them in gradually over several years, especially, when we are experiencing such a weak economy and fragile financial sector. let me close drawing your attention to three implications of our current fiscal situation as they relate to healthcare reform. the first of these is that while it's important that we try to pay for reform fully over the first 10 years, it is equally, if not more important, how we

choose to pay for that reform. there's been a lot of political rhetoric about fully paying for health reform. and i applaud both the congress and the administration for making promises on that front. but the impact of the reform on health spending, both in the public and private sectors, 15, 20, 25 years from now, is more important than what happens over the next 10 years. offsets or pay-fors that we might consider really come in two different flavors. one flavor is those that grow more slowly than costs. and the other is pay-fors that have -- hold out the prospect of compounding at a faster rate than program costs will grow

after the tenth year. many of the cuts of the provider payments fall into the first group. reforms that alter the incentives facing patients, providers, and payors in the structure of the delivery system tend to fall in the second group. given the current fiscal situation, it'd be better to have a reform that fell a few hundred billions dollars of paying for itself for the first 10 years but the exceeding costs in the growing amounts in the eighth, ninth and tenth years and a fully paid-for plan than spending was just offset by savings at the end of the first 10 years and annual savings quotas were met each year by an ad hoc package by new one-shot measures. what this suggests is that a lot of effort should be devoted to instituting from the start measures that can incredibly bend the curve, change behavior and restructure the institutions

in the health sector. second, as we craft the package of policies that will pay for health reform, we have to be cognizant of the reality that notwithstanding what i said about health costs being the root cause of our unsustainable fiscal future, health reform, even wildly successful health reform, is not going to get us all the way to the fiscal promise land by itself. other deficit reduction actions are going to have to be enacted. this is a good reason to focus the search for pay-fors in areas that are related to health. taxes on sugary soft drinks, taxes on alcohol, capping the tax inclusion on employee sponsored premiums and flexible spending accounts and cuts related directly to medicare and medicaid fit the bill. if health reform is paid for through savings from nonhealth-related parts of the

budget, we can expect that when policymakers return to the issue of how we deal with our long-run fiscal future, how we cut the deficit, they are going to -- they are going to inevitably come back and whack whatever is done in health reform, which would not be constructive especially to a new policy trying to get off the ground. finally, everyone should be aware that there is a world audience for health reform and this audience isn't particularly concerned about universal coverage or the quality of healthcare. it's interested in the course of the u.s. deficit and what health reform might do to the borrowing needs of our nation and the value of the dollar. in recent years, the united states has been heavily dependent on large capital inflows from abroad. a significant portion of the treasury's n