they were talking about following hernandez around. i was caddying for him last week. he does everything good. >> he swings the bat. he bunts. he fields his position. we're going to go to the tape there. we see the fly ball, single to right. fontenot singles to center. gonzalez goes to 2nd base on this play. he probably should have came home. because the runner is baring down so much, it's tough to turn a double play. anyway, it worked out great. then just the story line. theriot lines to right. byrd flies out to center. ramirez pops up. fontenot lines out. the reason we're giving you all this is because you notice all these balls ares in the air. smart pitcher. he throws the ball because the wind conditions are blowing in. he knows they're not going to hit the ball out of the ballpark. he throws the ball over the center of the plate. a lot of the pitches up.

great play here by willingham as he goes full tilt, outstretched. he just throws the ball down the middle and says hit it as hard as you want to. >> there's the numbers tonight for hernandez. 7 innings. he walked one, struck out one. he went 7 against the mets. complete game against milwaukee. here you see the pitches. 99 thrown, 62 strikes. he gets the win. the cubs will take a break. ray and i will come back to continue in just a moment to take a look at the nationals' offense. not a lot of runs tonight, but hits came through when they needed them. mcdonald's bacon and cheese angus third pounder.

as if it wasn't enough to make it with a full third pound... of 100% angus beef, they had the audacity to use a bakery-style bun... and crinkle cut the pickles. there's no denying it, that's a third strip of bacon. have they no shame! angus axiom #39: it's an embarrassment of riches. the astonishing angus third pounders. all angus. all mcdonald's. ♪ ba da ba ba ba [ male announcer ] achievement has its own patch of grass. ♪ achievement unleashes hidden potential. ♪ all right! achievement looks forward to dinner at home. achievement enjoys newfound freedom. i love you. [ male announcer ] mortgages, home equity loans, and lines of credit from pnc. helping achievers borrow with an eye towards the future. pnc. for the achiever in us all.

welcome back. this is the nats xtra post game. brought toy you by commuter

connections. >> well, gonzalez kind of did everything tonight. he stole the bases, got the base hits, he drove in the runs. he had a terrific ball game. >> desmond did. >> he did. >> did you say gonzalez? >> yes, but he made a great effort. >> i knew what you were saying. i'm just hammering you want to. anyway, we are swinging the bats well enough to win ball games. it's because of the pitching and defense. every night it's a different guy. tonight, five really got a defensive plays. we didn't turn a couple double plays, but the pitcher's making pitches. these guys are just picking everything clean. >> this time last year, they probably wouldn't have won a game like tonight.

let's see what a play gonzalez at 3rd base. >> i want you to do this one. >> go ahead. >> another great play as he charges, goes to 2nd. guzman didn't clear himself. we're going to do a little demonstration with that. he's got to limb get himself out of the way. the 3rd inning started back. guzman, i'll show you tomorrow what he didn't do. how good is that? range all the way to the middle of the diamond. willingham, making as good a play as you can make. the most improved defensive player on that ball club. he ranges far to the left. picking it clean and making the play. >> willingham has got more speed than people realize. >> he runs well. they always say runs well for a big guy. he runs big league average. that's a good runner. >> let's take you back to the

1st inning. nyjer morgan leads things off with a triple. >> then desmond coming right behind him. nyjer, he's going to lead the league in triples, no question about it. but fastball away from him. stays right in it. guzman comes up and smokes this ball. steals 2nd base. can't forget that. we stole three tonight. guzman drills the ball almost to the wall. look at that. that wind blowing so hard from left to right. those were the two runs early. then in the 8th, nyjer reaches on a an error. look at that slide, head first. betalked about that in the pregame. then desmond. he got a 3-0 hack. 3-2, base hit to left field.

nyjer scores easily. two base hits tonight, two rbis. both with two outs. >> take a look inside the box score. guzman, an rbi. a couple walks for maxwell. pudge rodriguez goes 1-4. the nationals only get six base hits, but they win it by a score of 3-1. just a couple minutes ago, debbi caught up with jim riggleman. >> reporter: for the 4th consecutive start, you get another outstanding performance. what did you think of him tonight? >> you said it. he was outstanding. really could have been out there with no runs scored. it was a win city night and all that stuff. just outstanding. kept throwing strikes, mixing locations, just a professional job. >> reporter: the guys are aggressive early too. especially desmond. >> they both swung the bat

well. i was a little disappointed. we only got two out of that. livan just never let the momentum go their way totally, so the game flattened out. >> reporter: of course, we have to mention tyler dealership associate's degree and matt capps. they've just been right on, haven't they? >> they've been really good. you can't draw it up any better than that. you know, we just keep riding them and see how far we go. >> reporter: some of these controversial calls, are they starting to get to you? it's been a pattern recently. >> no, i mean, everything is close. we're going see it biased. i thought i was right when i was arguing, but i still don't know. >> reporter: you were. >> well, you know, it's a tough

job those guys do out there. i just try to make my case. we move on. we got to go to the next pitch and the next play and try to finish it off the best we can. >> reporter: thank you very much. >> thank you, debbi. what we're seeing on this ball club, a nice mix of the veterans and the young guys. the way jim has confidence in a guy like desmond in the 8th inning, he's got the green light. >> i don't care if it's your mother, father, teacher or preacher. when somebody shows confidence, it makes you a better player, person, you feel better, stronger about yourself. that's what's happening with this ball club. he's allowed guys to steal bases on their own. he's allowed pitchers to go three or four batters more. tonight, he let's ian desmond swing on a 3-0 pitch. the only way you're going to learn to get a good pitch to hit 3-0, be allowed to swing.

this kid is going to be a guy that drives in a lot of runs. he's going to be a shortstop that hits maybe 15 to 18 home runs and drives in 80-plus runs. >> and he goat that base hit. somebody else who drove in a winning run tonight for harrisburg, that was steven strasburg. what a day he had. we'll talk about him when we come back. also, hear from tyler clippard. gecko: uh, you wanted to see me sir?

boss: come on in, i had some other things

you can tell people about geico - great claims service and a 97% customer satisfaction rate. show people really trust us. gecko: yeah right, that makes sense. boss: trust is key when talking about geico. you gotta feel it. why don't you and i practice that with a little exercise where i fall backwards and you catch me. gecko: uh no sir, honestly... uh...i don't think...uh... boss: no, no. we can do this. gecko: oh dear. vo: geico. fifteen minutes could save you 15% or more on car insurance. what happened with steven strasburg tonight? look at numbers. one run, two hits for harrisburg. no runs, two hits. strasburg goes 5, allows nothing, nobody. in fact, he walked nobody, struck out six. he drives in the winning run and they win it.

tomorrow, we're going to have steven strasburg on the telephone with us on our nats xtra pregame beginning at 1:30 before the game. nats win it to tonight by a score of 3-1. how about the bullpen? you talk about a solid one, two punch. i don't think anybody in baseball has guys that can get it done like these two, taylor clippard and matt capps. >> they've been as good as they can possibly be. byrd grounds out weakly to 2nd base, then gets ramirez. again, the changeup. that was a slider actually. nice little play there. gets over there. pretty much a flawless inning. then capps comes in blowing some cheese.

95-mile-an-hour fastball there. he struck out the pinch hitter with another fastball. a base hit to right field. i don't remember those hits when they don't count. then a strikeout to enthe ball game. a bunch of 0s up there for the boys. >> yes, sir. one walk off clippard. capps comes in and closes it out and gets two strikeouts. he gets his 9th save. best in major league baseball. somebody put a microphone in front of him a few minutes ago. >> i don't know. i was just finding a role and trying to bridge the gap there. you know, we couldn't really be in that situation if livan doesn't go out there and get the job done. our staryts are getting it

done. >> what was working the best for you tonight? >> i felt like i had to mix it up a little tonight. in the cold weather, it's tough to get a grip on the ball. it worked out. >> what's it like to be out there and see livan pitch strongly? >> it's awesome. it's fun to watch the way he pitches. we can learn a lot from him as a pitching staff. for him to give us that stability a n the rotation is huge for the bullpen and just to have him, you know, be reliable every five days is nice. i hope it continues, and i'm sure it will. >> timely, you win tonight. a chance to take another series. how big is that? >> it's huge. we're playing well. i'm excited about everything that's going on right now with the nats. it's fun to watch. it's fun to be around. i'm just excited about this season and hopefully we continue to try to keep it

going. >> so the nationals are back over .5 00. they're 11-10. they've had 8 quality starts. three of them have come from livan hernandez. we'll take a break and look ahead to tomorrow when we come back. what's all this? big news! we have another way to help you save. oh, really? how? by bundling. if you get your homeowners and auto insurance together, we give you even more savings. ooh!

big bundle. [ chuckling ] home and auto together. it's like peanut butter and jelly. oh, or like burgers and fries. or pickles and ice cream. unicorns and glitter! no? bundling to save you more. now, that's progressive! call or click today.

3-1 the final tonight. the nats with in chicago. right back at you tomorrow. we'll be with you at 1:30. friday, saturday, and sunday will be with the marlins. on tuesday night, atlanta comes in. that'll be on masn 2 in hd. welcome back, everybody. you talk about a couple of veterans. the nats have got a couple of veterans in hernandez and rodriguez. it's pretty nice to pitch to a

guy with pudge. >> we got to meet him before the games. me and the coach and the pitching coach, and we put everything together before the game. all that we're bringing to the game. for right now, everything is working perfect. you know, we got a good communication in the game. sometimes, you know, we talk. sometimes, i give you a sign from the mound. sometimes we talk in spanish. it's something, you know, we got to do and make the game better. >> is there any one thing that steve has been helpful to you with so far this season? >> we're working in spring training. like i say, in this game, you make a mistake and don't get the ball down or sink a pitcher. this is what we're working on every bullpen section. we work on in spring training. we're working together. i think it's good.

you know, you got a guy like that, you've got to listen. >> so there's the starters for tomorrow, ray. luis atilano and ryan dempster. >> atilano went 5 innings. reign dempster has been around a long time we've never beaten him. >> incidentally, the nationals have sent english down to syracuse. expected to be recalled tomorrow to join the ball a club. so the nats and the cubs tomorrow. we hope you'll join us beginning at 1:30 for our nats xtra pregame. nats win it tonight 3-1 in chicago. good night. [ music throughout ] [ male announcer ] achievement: starts small...

and dreams big. achievement: makes big moves... ...and takes baby steps. it helps you keep the lights on... ...and it knows when to turn them off. achievement: is all around us. a part of our very lives. at pnc, we help make achievement happen. pnc. for the achiever in us all. i think it will be a buzz when you can bring a guy like strasberg with his hype and bring him to a team around 500 rather than a team that's way below .500, and there isn't any excitement. you can take the momentum that

the fans are starting to get. they're believing in a new management team and new manager. and taking a number one pick, inserting him in the rotation and putting people in those seats. >> yeah, it would be nice. nationals win again tonight. cavs, his ninth save of the season already. they're doing things down in the nation'su can see this guy all e time. he is chris singleton. thank you very much. >> thanks, coach. >> >> tale of two halves for lebron james. he and the cavs out of the eastern conference semifinals. lebron dealing with a bad right elbow. elbow. we hope to getting a bartender's attention is an art form. where boldness is rewarded and the meek go thirsty. the "waving of cash" is considered unimaginative. there's the "vegas hit-me." the "charade" technique. the "prairie dog." the "periscope." the "third base coach." some resort to "phoning the bar"... which has been known to backfire. but whatever your technique, tip well. and enjoy the beer that starts with full flavor,

and ends with a crisp, clean finish. it's what we do. budweiser. [ grunting, shouting ] [ grunts ] [ man ] mike, come on! mike, you're playing like betty white out there. that's not what your girlfriend says. whoa! whoa! baby, come here! eat a snickers. better? [ male announcer ] you're not you when you're hungry. better. [ male announcer ] snickers satisfies.

>> lakers and thunder, series tied at apiece. kobe, the alley-oop to andrew bynum. we started the game 4 for 4 from the floor. l.a. started the game on a 14-1 run. kobe the scramble for the loose ball. the duck down to odom puts l.a. up 22-8. go to the scoreboard now. l.a. doubling up 32-16. andrew bynum leading the way with nine points. kobe has six. los angeles has won 12 straight home playoff games between the thunder franchise. we'll keep you posted rest of the way here on espnews. >> spurs-mavericks score. 80-64. spurs travel to dallas trying to send dallas home for the summer. right now the mavericks are

responding. hoping to send the series back to san antonio. down 3-2, caron butler had 19 points in the first half. now has 29 to lead dallas. full highlights and postgame coverage coming up here on espnews. >> game 7 between the detroit red wings and phoenix coyotes. first game of this year's "stanley cup playoffs." or first series to go seven games. second period, all detroit all the time. pavel datsyuk getting the scoring started for detroit. moments later it's datsyuk again. second of the period. detroit up 2-0. still in the second period. red wings on the power play again. zetterberg's shot off nicholas lidstrom. -1 detroit now in the third. >> top stories on the way here on espnews. including what may have been dwyane wade's last game in

national car rental knows i'm picky. so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious! okay. seriously, you choose. go national. go like a pro.

with esurance. let's see what happens when he reads his statement. ♪ oh, yeah! uh-huh! all right! eee-eee-eee-oh-ee! apparently, saving money agrees with him. the constitution line-item veto or reach that authority from the president joined rather than continent a joint resolution by annual budgets discretionary spending caps or paygo rules. this has shown if lawmakers do not want to lean in on the spending and raise taxes to curb deficits, no procedure reforms can make them do it. at most, the reforms can stiffen the backbones of the lawmakers said that they stay the course that has already been enacted or provide a modest degree of political protection that those who are already committed to the deficit reduction effort. fourth, stay focused on the

ultimate objective of the effort which is to ensure the healthy growth competitiveness and stability of the nation's economy over the long run. this implies the spending programs and provisions of the tax code that rigorous objective analysis has shown contribute significantly to the economy's long run growth potential showed if possible not be scaled back. of course this is easier said than done because many programs and tax breaks without much hard evidence their comparative effectiveness claims to be promoted. that is also true that many programs would wish there is evidence to the broad economic growth could be restructured in ways the would deliver a lot more bank for the buck. let me conclude with a couple of observations about tax burdens, entitlements, health care costs and the appropriate long run goal. many observers pointed out that revenues average roughly 80% of

gdp over the post cold war to period. from this they've reduced the natural wall of american political budgeting and assumed that going forward the revenue have to say because the close to 18%. but, and we then would naturally have to keep spending couple of percentage points above that at most, 21, 20%. since the mid-1970s getting the revenue at about 18% of gdp clearly has not been enough to keep the debt from growing faster than the economy. looking forward it is not likely the spending can be held at 20 or 21% of gdp unless we are willing to fundamentally rethink our entitlement commitments, downsize defense capabilities significantly or eliminate virtually all of the federal government's traditional nondefense activities. in short, to achieve fiscal

sustainability we have to accept higher tax burdens than the past. getting to a sustainable budget have over the long run would also require measures to moderate the growth of entitlement spending. but such measures are not likely to contribute significantly during the next five or ten years because most of the spending goes to the retirees and vulnerable individuals who have limited ability either to of sorb benefit reductions or compensate for any cut by working more therefore changes of entitlement benefits must be phased in gradually although over many years. there may be some short runs to producing the implicit disease enjoyed by upper-income entitlement beneficiaries the amount of deficit reduction that can be garnered this way is quite modest. as you know most of the fiscal imbalance projected in the

future derives from the expectation that health expenditures will continue to rise more rapidly than the rate at which the economy will grow. it is natural to look at ways to curb the growth of the federal health care spending which is concentrated overwhelmingly on the medicare and medicaid programs. however, this is going to be very difficult over the next decade for three reasons. first, under the recently passed health reform, medicaid costs will rise significantly because the program plays the primary role in expanding coverage for low-income americans. while the recent report concludes that significant savings were possible in this program realizing them would require adopting effective coordinated care for medicates radio to lead to regular population and community-based coordinated care for medicare -- medicaid's long term care beneficiaries. effective coordinated care of this sort is both on the popular

and quite difficult to do well. second, under the health reform law medicare spending has already been reduced significantly so much so that the chief actuary of medicare has warned the beneficiaries may face access problems in the future if the required reductions in payments updates or adhered to. while the act contains promising projects designed to test incentives and organizational changes that might slow spending growth there will be more than five years before the results will be informed policies. third, the growth rate of the cost of the government's health programs cannot be reduced for any significant period of time below that of the private-sector without creating access problems, inferior care for government beneficiaries or burdensome cost shifting onto the private sector. for this reason, system wide

reforms and incentives are the only way to rein in the growth of medicare and medicaid costs over the long run. it would take time before we know which measures can effectively hold down systemwide costs. finally, while the medium term missions spelled out in the president's executive order is specific, the long run mission is less clear. some may argue we should strive to balance the unified budget by some date certain. others would say as several independent groups including the one that rudy shares the goal should be to stabilize the debt to gdp ratio at some specific level like 60% or 70%. there is no need to strive for a balanced unified budget modest deficits are consistent with the gradual reduction in the debt to gdp ratio. this is what happens between 1946 and 1974 when we have

reached deficits over half a percent of gdp and debt to gdp ratio fell from 109% down to 24%. stabilizing the debt to gdp ratio is an important goal but whether the target is 60%, 70% or even 90% is less important than a credible package of policies that can achieve that goal. everything else equal to lower debt to gdp ratio are better than higher figures but setting a target that is too ambitious could prove counterproductive if the public regards the necessary spending cuts and increases to be too large and lawmakers respond by giving up the effort attaining fiscal sustainability is likely to acquire several major efforts over the next decade or two. nevertheless it is important that we start the journey now by enacting some significant deficit-reduction measures that

will send financial markets a clear signal that no longer will we be if as if american exceptional some means of the fiscal front that the united states can avoid the unavoidable >> thank you. we will now open for questions from the members of the committee. >> if you have sort of put your finger on the elephant in the room which is the unfunded liability of the government estimated to be about $66 billion the three major programs about city if that is medicare and the large percentage are the results of medicare. but as i understand you don't think because the health care health bill there is a whole lot of places to go in the health care area that will adjust those numbers. is that what you are saying?

there is an opportunity -- >> if we leave medicare structured the way it is now, unmanaged fee-for-service care, it is unlikely you can bring significant savings out of it without adopting measures that will slow down the growth of health care spending across the entire system namely across the private sector as well because there would be great disparity between payment levels in medicare versus the rest of the health sector and that would have undesirable consequences for medicare beneficiaries if access became a problem because physicians and other providers didn't want to serve medicare

patients or if through government regulations you required access to be preserved but providers then shifted medicare losses on to the private sector. >> something that -- to follow-up -- he started if the medicare system was maintained in its present structure. what is the alternative in your opinion? >> well, rudy lead out the same thing, alternative, which is restructuring it more all along the lines of premium support, a vulture system. i think it is not likely that we are going to find out that the desirable if what we're doing is saying folks under 65 tough 14 of insurance and delivery system and folks over 65 disabled are

operating at a different system so that's why i am saying that i think where we have to go is more systemwide reform. one effort along those lines was the tax fee on high premium plans this is included in the current reform measure but there are other ways of refining that. >> if i might add it is difficult to imagine another debate after the recent one was so intense and in did such a short time ago. donner really do we have to think radically on the health site and i mean the kind of reform that i'm talking about could be system might. but somehow or another we have

got to get more control over the budget than we do in this open-ended system. >> senator bachus [inaudible] >> i think we are belabored in the false assumption, and you said if the fee-for-service, that was the premise of your answer and the health care bill does not. the health care bill was premised upon moving off of the fee-for-service and moving more towards reimbursement of medicare based on the outcomes and the quality. we did mention the projects that might take some time but is true the basic underlying premise of health care reform is to decrease the cost and improve quality at the same time sounds somewhat paradoxical but it's true moving off of the fee-for-service moving it much more towards the reimbursement based on the quality and out

comes. i just want to make that clear. >> i think i want to congratulate you and others who were instrumental in putting for from these changes and what you're doing is building the foundation upon which that can be. we don't have the plans without the house of this point. >> that's correct. >> talking about systemwide reform, the driver of the increases in government spending has been put medicare and medicaid and like the veterans administration that those negotiations on prescription drugs and things like that and has more control for the cost is reliant on the private insurance that is based on that so clearly

as you say if we were to cut medicare and medicaid, the disparity between what revenue are from the private sector would be so great people would be denied access to care. so we have considered as senator baucus correctly pointed out ways that we can change the system but we have also built in something like 80%, 85% of every dollar must go to health care cost and the insurance company. if they don't reduce -- if the increase the cost too much they won't be eligible to go into the exchange's. but i'm wondering, don't you think there might be other ways? dianne feinstein and i have ways

the would give the government some great making authority or control over dramatic increases in the private sector. we've seen 30, 40% increases over time. don't need to get a handle on the private sector cost increases? >> we do but we don't know how to do that. we put controls on insurance companies and the amount spent on direct medical intervention on administration and profits but the fundamental problem is downstream. the rising cost of procedures

that people are being given and are asking for which relates to technology behavior of individuals and behavior of providers. >> but will we see greater than the cost of medical inflation certainly higher than the cost of the increases when we see those kind of increases shouldn't the -- what is your thought about the federal government on that? >> the question is half profit margins and insurance industries expanded more rapidly of over one or two years but over a decade than profit-margin is in the economy as a whole. i don't know the answer to that but i think the answer is not

been great. i'm not here for the insurance companies but it goes much deeper than their behavior. >> allow to clarify something you said earlier. you're not suggesting that we can't have a system that this prospective and grandfather in a current population into the current system as it has been known as people wuhan and prospectively adding a new system of health care entitlements to be under the 55 population. you did not say that we can't do something like that? >> in number of years ago, more time than i can remember, henry and aaron and i wrote an article in health affairs suggesting a premium support system for

medicare that went down that path. >> r. dee, quickly, on designing a plan that looks a bit like what we came up with, do you believe we can supply enough support for the bull run double in the society? can we adjust the system like baba said on premium support where you have enough support for people of modest means or high health costs and achieve fiscal sustainability of the health care side, do you think you can devise a system like that where we can do that and achieved what we need for the fiscal system the? >> i think you can certainly defies a system like that. you have to planas with care. there are a lot of proposals out there to the income test, social security to the medicare and various ways the income related

premiums. as you pile of one of these income related plans on top of another you begin to accumulate some very large tax rates so you have to be very careful about that. so you don't totally destroy the incentives to save and so forth but if you are asking if it's possible to do that way yes i do believe it is. >> we are going to run the question and answer pergola to about 11:30 and everyone will have five minutes of their own to make a statement. the people who in order or representative becerra, hensarling, senator bourbon, chairman spratt and chairman konrad are the ones i've noticed who want to speak and we will start now with representative

the -- beccara. >> the problems in debt, we've talked a bit already about health care and what is driving up the cost of government. give us some of the other fish taking up more room in the sea than they should when it comes to what the people of the country would want us to be doing and the second question would be when we talk of a systemwide reforms doesn't require us to examine more than just the items that you catalog with in the federal budget? we talked about medicare, about defense, we know about domestic programs but where in that would you put the aid of the 700 billion-dollar bailout of the financial service industry

which president bush proposed back in 2008 which the taxpayers had to front load on a deficit basis through deficit spending for us to tackle the problems that we have as a government and as a people, we have to look beyond just what we categorized as the federal budget, don't we, to get a grip systemwide of what ails the country economically. >> in terms of the other fish in the sea there is a great huge shark their and in the longer run it dominates everything. in the shorter run, social security will grow sufficiently to take up a growing proportion of the gdp. but when you get beyond that,

the rest of the government have a long enough historical time from the rest of government really hasn't expanded that much real the -- relatively to the gdp. defense has gone up and down with the tension, the welfare programs are very crudely speaking that allows the same proportion as they have been over the long haul. now that is different than saying that the solution to the problem should focus only on those things that are growing. there is a widespread political feeling that everybody has to get in the boat and so you have to talk about things like to agricultural subsidies and all sorts of corporate welfare and on and on through the system but we had in the report is very long list of programs that we

thought were of dubious value or that could be handled better at the state and local level. >> what rudy there is one big shark and lots of little sardines and the sardines are difficult to catch. they are zipping around and we can make lists of those and cbo and others have. but the have strong protectors and they don't have huge visibility among the public so it's difficult to catch them. we are, however, feeding another shark, and that shark is the interest on the national debt. and over time if we continue on this current path, you know,

it's going to be an equal competitor to health care costs and the big problem of course is interest on the debt from the public's standpoint is in a sense worthless. health spending, you are getting health care, you are getting something for it. interest on debt is payments that go out for goods and services but via public has enjoyed in the past but it gives them no benefit now and were we to run up huge debt and seek a balance of the budget people would be paying large amounts of taxes for which they saw no services in return because the services had been enjoyed by their parents and grandparents.

>> thank you, mr. chairman. i think that one thing the witnesses agree on is that the status quo has been sustainable all the way think unsustainable in the challenge before us. if you took a good note that we are a ruinous past i want to explore the cost of the tax side and on page nine of your testimony i want to make sure i understand it properly. you talk about i think if we attempt to maintain the current benefits under our three big entitlement programs at least under the one scenario the ten year budget window that tax rates would have the top bracket would have to go to 50% and a value-added tax would have to be imposed; is that correct? >> that is one of our scenarios, yes. >> when you sit to maintain the current benefits by 2014 roughly

over the course of the next generation since early this morning when we talk about our children and grandchildren you would see that value-added tax reaching 7.7% and you also say i believe that is not prudent to consider a top rate above 50% top marginal? >> given the inefficiencies in the current system. >> by any efficiency you mean? >> our system has become so complicated with so many incentives to do so many things but completely distorts the trace from what the real economic incentives would tell you to do with the before tax income would tell you to do so we put the different wages all over the economy between the before tax and after tax income and it creates enormous costs in terms of economic efficiency and

economic growth. spec then i think you said by 2014 again over the course of the next race to maintain the status quo the overall federal tax burden would increase by 50% compared to 17.7% in 2008 so are we talking relative to gdp? >> yes. >> i'm sorry you said we were going to 50% of gdp on the tax side or we are going to 27, 28% of gdp would for the math is? >> the 50% just reference to the top rate if you try to finance a high spending path only by increasing all the rates in the current system before. then we have the other scenario which is ever so much a desirable of raising the revenue through the fundamental tax reform. >> that last point now be finalized this portion of the testimony by saying the tax burden which is considerably

below the oecd average would have to be higher than the average by the mid center within a few years after that we would be in the highest tax nation? >> that's including state and locals. >> thank you mr. chairman. >> we now go to senator durbin. >> thank you, mr. chairman. it strikes me, stepping outside and looking in that social security and medicare's calculus the tax code is astrophysics or something and you just touched on it here because each year we go through a very public display in the appropriations process involving a very small amounts relative to the size of the federal budget yet when it comes to the tax expenditures which we are making each year there are

very few sunsets and little and you will review about where we are going. i don't know if this qualifies as a starting or a short but the amount of money we spend on tax expenditures use it can distort business and economic decisions exceeds the amount that we appropriate in domestic programs each year so would you say that among the things we should consider are not only the entitlement programs and the spending programs but also this tax code that is literally spending tax dollars or forgoing the tax dollars each year in the name of social policy and goals? >> absolutely, senator, as i sit in my testimony i think it just screams out that we have to do something about the tax code. there are different approaches. more extremely radical types that we had in our report as

senator gregg and senator wyden's bipartisan approach that is maybe somewhat more realistic publicly. the problem on the tax side is that you also have some really big sharks and i guess on like most they're very popular sharks. [laughter] so we are talking about things like the inflation, a huge amount of money. >> home mortgage. >> we have an incredible array of different things to try to encourage savings and they are so complicated i can't figure it out and it's the ones for college savings that blow the mind. so i very much agree with you but then after the sharks, think

cbo lists about 70 or is at budget lists about 70 which are small compared to the savings. islamic would like to ask a follow-up question. do you believe that in addition to the sustainable debt of the nation deficit and economic growth we should also take into consideration the growing income disparities in america? ..

congressman spratt. [inaudible] >> instead of social security, but human wrote one of the best little polygraphs readable by almost anybody on the subject some time ago. how immediate is the problem? how urgent is that problem and what are some of the options available to cave-in person-years to come? >> well, looked at compared to some of the other contributors

to growing deficits, social security may not look like a princess that, but as we look over the next half-century, as we showed, when we think about social security policy, it's clear that some significant changes are going to have to be made. those changes can be quite modest if we begin doing them now. social security saucily program, which has not been changed in significant ways over there. since night and 35 notwithstanding the fact that the demographics of the country have changed, the patterns of marriage and work have changed

and income levels have changed. and i think they're about to other steps that could be taken to modernize the program and make it better meet the needs and equitable fashion of today's population in the future population while folding the longer solvency problems of the program will face. >> the options are modest. you describe the substance as modest. he said there some options that can be taken there quo vadis. could you touch upon those? [inaudible] [laughter] >> first of all, changes need not affect it. what we're talking about is those who begin to retire 10 years and beyond from now.

as we suggested, there are ways of taking the benefit structure a bit more progressive. we should think about indexing the program to longer life expectancies coming in now, we have a program, which when it started, there weren't large numbers of people going to college, people weren't with it as long. probably we should index the program to adult life expect and see and make modest changes and not one. we have seen a growing fraction of compensation paid in the form

of non-taxed fringe benefit and help them if it's an vacation pay, things like that. raising the threshold that which we tax make say think a lot of sense. you know, there is clearly a problem with respect to widows and individuals who live a very modest means for long periods and adjusting the benefit system for that would make sense. i could go on forever but i mean, just to maybe say something that's a bit more controversial. you know we have a spouse's benefits in the system now,

which a spouse who doesn't work at all is given the equivalent task of his or her spouse's benefit. another spouse could work at a low-wage for a long period of time contributing to the system the whole time and not get more than 50% of the primary workers benefit, which might have made sense, you know, in 1945, but it certainly doesn't make sense now when virtually all men and women are in the labor force. >> if i could just briefly make two points about social security. one, when you talk about modest changes, i mean, most of the changes that bob is talking about don't imply cutting the

standard of living of the elderly compared to what we're talking about slowing down growth and benefit, the way the system is structured it promises the elderly ever-growing real benefits. the other point that i make about social security, though it's not as important as the budget problem is help, it's ever so much more simple to understand. we know the effects of every option bob mentioned here do we know who would be affected, how much they save. we know about with considerable degree of confidence, whereas we do not know the same sort of things in the various health options were talking about. so to me, that really makes a strong argument that this commission show that area closely at social security, moreover if it made some suggestions for improving its

financing, i think it would read very helpful in showing we are serious about the long-run problem and with us maybe make foreign investors more confidence in our discipline. >> we're going to conclude the session with sessions from three people and then we'll go to the five-minute statements are the questions are from senator conrad, representative camp and from under crapo. >> thank you, mr. chairman. i just want to get both of your reactions to two concepts, one on the spending side, one on the revenue side. on the spending side, but it's always struck me is in medicare, 5% of the beneficiaries use 50% of the money. when i what to business school, they taught us to focus on that kind of statistic like a laser. so 5% is 50% of the chronically

ill. they have multiple serious conditions. we do a very poor job of coordinating their care. and the one attempt to head to better coordinate their care, at least has better cremation of care, they did a study with 20,000 patients who are in this category and they put a care coordinator on each of their cases. and the results they got were so striking, dramatic reduction in cost, significant improvement in health care outcomes because what they found is these people are getting duplicate test. they're taking prescription drugs that actually don't help them, but hurt them. so it seems to me there is a major opportunity in health care to revisit that issue. on the revenue side of the

equation, again what's very striking to me is under the current system we only collect about 80% of what is out. if we collected all that is actually owed, we would dramatically reduce the structural deficit. about the same time, we've got a tax system that doesn't help america's competitive position in the world because this tax system is written in the time we didn't have to worry about that. now we do. i just like your reactions on this two points. one on the spending side, one on the revenue. >> let me take the revenue side were feel much more confident. i think part of the difficulty in collecting taxes if it does in fact the complexity of the system. with all of the deductions even named, you can cheat a lot. i mean, the irs has limited capacity for auditing. while we could undoubtedly do a lot better in the collection,

the problem on the other side, of course, is that there's a big cost and increasing collections, and money cost in terms of the budget of the irs, but i think much more important the kind of harassment cost. you know, you don't want an irs agent following everyone of us around as we do our work, so you have to balance those two things. but having said that cumin is absolutely no doubt in my mind that right now we're striking the balance too far in the side of lending. >> with respect to coordinate a care, i think you're right on the money. and the question is, why did we do this? and there's two simple answers. one is that the structure of our delivery system is pernicious to coordinate a care. it's a fragmented system and operates to consolidate, have

not been very successful. and secondly, there were very few incentives given to providers to courtney care. it's just the opposite generally. so it can be done. you're right, but it involves some very significant structural changes in the way we organize health care. >> thank you. representative camp here at >> thank you, mr. chairman. there's a lot of care coordination going on called medicare advantage in either of you have mentioned that. it's correct, is not? >> there is some. there are many major advantage plans that have virtually no coordination in the authority of individuals are in those other people in medicare advantage are

in those plans. it has potential him about the potential is far from being realized. >> mr. penner, at what rate would you have investment taxes under your proposal? >> well, under the actual proposal, we rode down, they would be taxed at the same kind of traits that i mentioned. we just to back a 15% and 25%. one could worst compete moving the system much more to our consumption of non-taxing saving investment in all, but developing a set of rates on consumption that would duplicate roughly the same income distribution we have today. tonight i think you both mentioned this increase in health or expenditure is greater than the rate of growth of the economy and they think you both

used pretty strong language to dominate actually the whole issue and you mentioned, mr. reischauer in your testimony that if the medicare reduction with a bill enacted, the medicare actuaries determine they never heard seniors access to medicaid as you commented in your testimony. but what you both did mention was that the actuaries found is this new bill actually increases health are spending over the long-term. so the problem that you said is the biggest problem we're facing is actually exacerbated by this recently passed legislation. would you care to comment on that? >> well, i did say my prepared testimony, sir, that they think it just means that we have to give cost control higher priority. i think we really have to work on a much harder now that we've expanded the federal health budget. >> the actuaries memo was

referring to national health expenditures overall throughout the economy, not to the government portion of those and given that some people without insurance are going to be required to be a part of their own pockets, firms that offer inadequate insurance are going to have to raise the level of their insurance and many more people are going to be covered by health care, buy health insurance, you know, over the medium term anyway it would be very surprising if there wasn't an addition to national health expenditures from covering 35 million more people. but i think you're right. >> the expenditures are going to increase 50% more than were estimated initially under the bill.

>> okay, we'll go to senator crapo. [inaudible] >> i was interested in one of your comments about budget process reforms. you indicated that you thought that was not a very productive area for us to look at. i think in your words, it was the history is shown if lawmakers don't want to rein in spending or raise taxes to curb deficits, nor procedural reforms can meet them do it. and having served in congress right now i know which are talking about. i think all of us here have seen congress go into contortions at times to get around budget reform. >> i would noninclusion ministrations than this. [inaudible] >> would i want to limit it to just congress because that's correct or that being said however, actually blew the process reforms can be and should be pretty good part of the effort to try to make sure that we get it right and keep it

right once we move forward. i have seen circumstances. in fact, infrequently in congress at least where process reforms have inhibited spending or other tax policy changes that might otherwise have been undertaken. and so i guess i just wanted to raise that issue with you because although i totally understand the dynamics are talking about and i know that no congress can bind a future congress in any specific way, forcing some of these votes to move forward or forcing the be highlighted in specific ways or maybe there's some other process too, but that would be more effective i think is very helpful. in fact come the process i think a congressional leaders have agreed to which compared the recommendations of this committee will actually be beneficial in helping us to get a vote on them. so i just wanted to ask you to discuss that with you a little

bit. i want to want to see them leave this topic off the table. >> if you're asking me to process reforms have some modest, can i have some modest impact on deficit growth? my answer would be yes. i think they did damp down deficits a bit. i think even measures like the sgr and medicare in fact have moderated the growth of medicare spending, but what i was trying to point out is beside the silver bullets, you know, you're going to have to raise taxes. you're going to have to cut spending. it's going to have you heard and it can be reinforced through some process reforms, but don't count on them to do the heavy lifting. >> you know, if i cannot, i

believe exactly the same thing and i think he described it very well as to what process can accomplish. but i do think there are major flaws in our current process and the number one flaw i would point to would be that i think it much too short to oriented. i think one could do things, which would ring long run considerations into the yearly process that would be very helpful. and even just increasing the information, australia has this very interesting process, where they report every three years on what the budget does two different generations and that provokes an interesting debate, which i gather is somewhat influential. so i think that they're all kinds of things like that that can help a lot. >> thank you had >> thank you all very much. i was very helpful. i certainly learned a lot and i hope others do too.

we appreciate it. when i go into a five-minute statements. were going to go in alphabetical order with the exception of senator simpson will go first and i will go last. in alphabetical order beginning with senator baucus down through this fudge. [inaudible] >> well, i want to think or witnesses. it was very helpful, very provocative, showing us how tough a role he has. i want to thank and you've got to watch me closely because i have to set a glorious tone here are five minutes. >> will raise a red flag. >> my god, i didn't intend you to do that. a red flag at the table. okay quickly want to thank the president for his active participation here. it is absolute critical. i think we'll appreciated his presence this morning. we have been very supportive of

bias and the columns when i knew i would involved with her skin had the deepest admiration and respect and regard for this man. i want to savor tema names came up, the shriek when i appear they are. the horse for taxes and we said were stalking horses work and children. i have six, he has seven. the problem has been described as unsustainable. i say it is unconscionable. that's where we are. simply took the final share with you i've been called mr. toady of the republican faith, covering the president standing among that the come of their come of their other great adjectives, a tax or at all times for debtors prison because of my presence here. so as you get rained on you from those in the extremely met my party, i have never been their very favorite. i believe that abortion is a

deeply intimate and personal decision. i know that's a sick idea, but i've worked with the date and committee and i realize that is a very extreme idea. i've been called a lot of things, but i never opened a store to buy him. you're entitled to be called boop, i-india, and everything else in the skin, but never let them distort ewart as a person. furthermore, i never figured out too many ways to the other side or my colleagues. that is a thankless way to live. hatred corrodes the container it's carried in. furthermore, i love the aa he can't forgive a person it's like letting them loose in your head ran free. and the word tolerance is incised in the speaker's platform in the house right there, right in the front when

you do the state of the union address. for me just give you one other example. i see max looking on is crippling. we came here together and he never could read my notes. [inaudible] >> it's mine. >> a quick example, when i've been here two years, reagan takes over -- i'm the chairman. i become the chairman of immigration, nuclear regulation, veterans affairs country ranking members are all cranston out cranston, ted kennedy and gary hart. now i've been here two years and these fine gentlemen all three were running for president. as of now the guys, don't use this committee or the subcommittee for your quest and i won't use it in any way to embarrass you. we shook on that, never broke our word. i was bob dole's assistant leader for 10 years, one great

american mayor annie sardi contacted me and is ready to help in any way. i've also had encouraging calls as risk and had the leadership of both houses of congress in both parties. here is my naïve vision, that maybe just maybe we can all agree on where we are by more than a vote of 14 and 18 of us and i think we might get there by using honest figures and honest fax. we will use the actuaries of the social security system who are poised and ready to exist we will use the actuaries of the health care system and will be used cbo figures. to me, what would be a remarkable first step would be for us to say book, i don't know where we are going. i have no idea where we're going, but i will agree that those are the figures, that

those at the figures, those are the things we face, those are the liabilities, the deficits, the unfunded liabilities, the works. and if we could possibly do that and then go from there to try mildly to suggest some options and solutions for america. if one we may be able to get to that point, maybe cannot flip back to decide that we have just given up, not only given up, but decided to score more points to demagogue leek our work, then fine. i'll head back to cody and won't my thumb and i'll say i did my level best. the american people have always been smarter than their politicians. i mean that, you know that. they know that something is terribly, terribly wrong. the few people that elect good, both parties have done nothing

to stem this unstoppable tide. i was in the senate for 18 years, the cry for me was always go break on the bacon. well, the pig has died. [laughter] , confectionery store window will close. in an evil witch the boil of all those who will be servicing the candy counter. we are in it, this is it, there is no game for me or any of you. none of you will gain from this, none of us will gain from this. i wish you all to have skin in the game and that's our children and grandchildren in anything will be met by howls of anguish. not me, how could you? you uncaring slobs. get ready for it, the extreme right and the extreme left will

salvage our final project. whatever it may be, forgetting that we are not democrats and republicans and zealots, first we are american citizens, so we have to establish and reestablish trust. i think that's the key. we must do that in this commission. the coin of the realm and legislating this trust. i didn't agree with max. we came here together, but we trusted each other and never violated that trust. judd gregg was same thing, conrad, we trusted each other. so it's a tough order in the coin of the realm and legislating adheres trust, not more bs, but say, that's where we are. so i've only ask for your honest participation, your intelligence, your wisdom, your honesty, your goodwill and as corny as it sounds, your

patriotism. no one will ever do this fitful exercise again because it seriously messes up what we, you and me, politicians were trained by our handlers to do and that is to get reelect ted at all cost and whatever cost. there are no easy answers that we will be better served, we build a better served by our natures of each and every one of us knows deep down in our gut that this might eat the last best hope to write this listing ship state of ours. and i thank you, each and every one of you, for your willingness to pitch in to see if we can make a difference. i believe we can and i feel we must. thank you very much. >> you stated the obvious and i make a couple of suggestions.

just again, why do we care about deficits? obviously, deficit a debt or to buy things can happen and both are bad or adverse deficits can drive up interest rates, this could cause recession, in the long run this could reduce investment growth and that would reduce our standard of living. second, we could on more debt to foreigners here in the interest we pay on that deadwood ship ship taxpayer money overseas that would also lower our standard of living. the size of the foreign holdings of our debt also puts our country at risk. other nations decide at some point it's too risky to hold u.s. treasuries and searches on because life interest rate as an advocate read to recession. in short, letting deficits and debt grow too high puts america at risk. so we here have to work together. when previous commissions have succeeded, it breaks the party

commissions. in 1983, greenspan social security mission succeeded. it was bipartisan. the budget so much of 1987, 1989, 1990, they were bipartisan that was the budget agreement of 1997. so when our commission has completed its work am i hope that we can say the same. i have an idea for the first step to achieve bipartisan agreement. the first thing that this commission should do is to focus on what i call the three caps, the tax gap, the spending gap and the productivity gap. the tax gap is the night of taxes are legally owed to the federal government today, but not collected to the irs estimates that there is a $345 billion tax cut every year could the irs does not know the current tax gap.

every year legally owed an unpaid. that's about half the total budget that currently projected for 2015, turkey or for the commission to reduce the deficits. earth resources of the $345 billion tax count. 80% is from understated income for overstated deductions and credits. 10% per month by less than 10% for taxpayers who fail to pay their taxes on time. if we can put a man on the man and we can think about landing a master not on mars on the weekend collect more taxes owed. and we should not cut one dime of federal benefits of his onetime federal taxes until we've done everything we can to collect taxes that are already owed. collecting these taxes will reduce our deficit without raising taxes on anyone. the spending gap is the amount of fraud, waste and errors in federal funding and what there's a lot of that. we all know that.

take medicaid rate is estimated at $25 billion of medicare provider payments are made in error every year. once again, $25 billion every year there are lots of ways to get added to give you the same kind of systems for the credit card reporting companies use to identify outlier payment for things to reduce that fraud waste him at least 25 billion. my guess is probably higher. there's a task force working on reducing fraud medicare and the department task force. i think our commission should meet with that task orders. third is the productivity gap. that's the amount of technology and efficiency is come a successfully employed the private sector tobi petit is use in the federal government. white house has just announced the creation of the president's management board, jeffrey science is god the deputy director of the office of

management. other members for the error code efficiencies that occur in the attack could occur in the public yours as well. but the also make two points about social security. worse, changes to social security will do little two-minute deficit target for 2015. authority been stated by some of our panels. it's just the nature sensible social security changes that they play out over the very long periods of time. second, some people think it's easy to address social security, but cutting social security benefits are recent social security payroll taxes is far from the sea. and that's why the first thing that we should do about social security is just like the first thing we should do for the deficit generally. we should look at the $50 billion annual tax gap is social security payroll. at least $50 billion tax gap and payroll taxes. and so by closing the tax gap let's address the spending gap

and work together to reduce the deficit and improve america's standard of living for years to come. you bet your mr. chairman, thank you to the two of you for hosting this. i say we're actually pretty good start. i hope you can continue to check our egos at the door and i honestly believe if we portray an honest picture of our nation's economic diet, americans won't be afraid to eat their vegetables and nuts where we should go. to me the principal question i want to see answered as we explore the economic condition is what kind of nation do we want to be? because we can balance our budget, but if we sacrificed educating your children, china would overtake us a lot faster than most people expect. we could balance the budget, but

if we did to the sake of making spurred expenditures for national defense, we may not be around very long to see the fruits of that balanced budget. and so i hope what we do is answer the question of what kind of nation do we want to be. last year general elect eric over $10 billion in pretax income for the vid up owing nothing to uncle sam. and the fact $1.1 billion back in a tax rebate. that's what happens when we are out of whack fiscally and economically as a country. today, some $120,000 will be spent on capitol hill by 25 of the top banks in america come most of which benefited directly or indirectly by the t.a.r.p. back financial bailout that they will spend about $120,000 today lobbying most cases against wall street reform. they've done that for the last several days. in fact, in the first quarter of

this year, they have been spending at that clip $120,000 a day lobbying. to put it in perspective, that's more than two and half times what the average salary is of an american working for a full year. to me, rebuilding the middle class will be paramount in discussing all of what we do over the course of the next several months. the best thing we can do for our fiscal future for future generations is to rebuild the america's middle class between them is decent jobs in a business climate to support our families, being able to send our kids to college and i say that as they first met my family to have an opportunity to get a bachelors, homeowners sure dignity and a portable quality health care. i think there with me the first big step with the passage of historic health care reform. they too often greedy get the game will people get the pain and i believe that it's time for us to recognize that during the

height or the deaths of this economic recession, the net worth of american households shop more than $16 trillion, far more than what it's going to take us to balance the deficit and balance the death of this country as we see them. and so, i hope over asking ourselves is what does it take to restore the quality of life for the middle class and how do we rebuild that american middle class. and to me, the largest deficit we face is a jobs deficit. if you put american stewart, america will work. yet, in the last two above the last of the 1.2 million manufacturing jobs. if we have an efficient and productive government, i think we can take a lesson from what true weston said. he said it time politicians stopped running forward or against government and started running it well.

if we ensure that it are people are getting their moneys worth, from every dollar we spend as a federal government, americans will be for dennis, whether it's because we dealt with all the tax expenditures, which by the way added to about a trillion dollars every year in spending, those tax loopholes or whether it's dealing with direct spending through government programs. a couple of quick examples, the department of defense not long ago, in the early two thousands bought an aircraft refrigerator. they ended up being twice as much as they had expect it. instead of paying panther thousand $825 for the aircraft refrigerator, maybe $32,642. cost overruns, the general accountability office has told this has caused the department of defense and taxpayers over $296 billion. that's larger than the amount that we are trying to find to

cover the deficit for the 2015 budget to since i conclude by saying this, i hope we take a look under every rock there is and i hope we do it for the american public because at the end of the day, this would help the middle-class believe that they can send their kids to college, if we make them believe that we are destroying the integrity to government, will benefit from it and will be rewarded. but rather than running for or against our government, overprepared to help make it run well and so mr. chairman and looking forward to working with everyone here and i appreciate the opportunity to serve. >> thank you very much. >> thank you, chairman. we've heard from a number of people from the federal reserve chairman, former ceo directors i know we're going to hear from many more in the months ahead in a tortilla. as many have stated, the problem is obvious. we simply can't sustain the level of taxing and american

thought and we know it and while tax revenues have dipped, spending has skyrocketed to 25% of the gross domestic product in its forecasted to remain well above historic averages even after the economy recovers as you heard this morning. this has created a record deficit of over 1.4 trillion the debt now totals $12.9 trillion, nearly $42,000 for every man, woman and child in the nation. and these problems have been decades many kids they have become both parties watch proportionally come the situation for maybe even more difficult to overcome, as we heard from the cbo director is because the congressional budget office and the medicare actuary has just confirmed what most americans already believe and that is that the health care but does not reduce health care costs, and increases them. and in a similar fashion, we have not seen the jobs created

that americans were promised by the stimulus bill, begetter debt invested even worse. so i say these things not to create it or to send debate, the deployment we have not one deficit to close, but to. a budget deficit and a public trust deficit and we cannot solve the first without addressing the second. the question before the commission remains clear. who would listen to the american people, will work together to get back on track. with on the table decided good fan and i were going to make the tough choices need to restore our budget, to past levels of spending and revenue that are consistent with robust economic growth. a message and have to answer to each of these questions yes. and i pledge to my fellow commissioners in my constituents in the american people that are ready to listen in to help find solutions towards any problems. on the coast with just one final five. the only member on this commission from michigan and for the last for years my home status of the nation in a

very -- actually the worst possible way, the highest unemployment in the country heard in my district alone its five counties dangerously close to 20% unemployment. so while we're here to address our nation's fiscal responsibilities, we must wait and a solution against our current and future economic conditions that another president has set up a separate task force with paul bucher on tax policy and mr. volker has hinted that adding a value-added tax to assist them, but given the national unemployment rows to almost 10% in the precarious position of american families and employers is difficult to imagine them to pay on top of everything else and when they can least afford it what amounts to national sales tax or he may banqueting food, medicine, clothing, housing him a washington as part of it from the american taxpayer and future generations. it can to prove we can responsibly manage the people's money by getting spending under control are the problem before us is daunting and not one that

lends itself to a quick fix but i look for to working with all of you to try to find it pro-job, progrowth solutions. >> thank you. first i thank you all for taking on the for president for aiming this commission. i think this is the right approach and the one that has the best prospect for success. it's going to be extraordinarily challenging. i think we all understand that. but we've heard here today is we are on an unsustainable course. i don't know if anything could be more clear. we are headed very quickly for a debt that will be 100% of the gross domestic auto to the united states. on the current timeline, cbo tells us we are going to have a debt that will be 400% of the gross domestic product of the united states. we've never had a typed anything

like that in the history of the united states and we know will never get there because those who are lending us money to float this but would never prevented. already the chinese have warned us publicly and privately that they have grave doubts about continuing to lend money to this country. i just talked with former top government official that came back several months ago for my trip to china. is it a bipartisan group of former top officials, republicans and democrats and some of the top chinese leadership took him aside at one point and said, you know, we've concluded that your system is simply unable to face up to your dad. and as a result, over time, you will become a second tier power. it's not going to happen immediately, but over time we have concluded that you don't have the will to face up to this problem. you are too divided, to split

along partisan lines and you will not be able to respond. i hope very much this group proves them wrong. because if we don't, we all know where this is headed. if we stay on a path towards a debt that's 400% of the gdp of the country, at some point there'll be a dollar crisis, the dollar will collapse, interest rates will skyrocket, economic growth will be badly impaired and that's the course we're on if we don't have the will to face up to it. i personally believe that saying everything is on the table is critical. i hope none of us will take things off the table prematurely because i think it's clear it's going to take dramatic changes on the spending side of the ledger and it's going to take changes on the revenue side of the ledger and they should be seen as an opportunity to right

size our government long-term and to reform our tax system to help america be fully competitive in this new world that we confront. with that, i just want to again conclude by thanking al and thank you were setting the right tone. you know, we've been handed a very serious responsibility. i hope history will write that we were equal to this challenge and that we produce a result that was critically important for this country. >> i've been asked by many about my participation in this group and a sight to most this could easily fall into the category that it goes unpunished. whereat about a $33 billion company, 120,000 employees with about half of those sales enough of those employees outside the

u.s. so i travel a lot and i go to a lot of converging regions. one of the things i wish that there is a strong hunger to make a difference, to work hard, to create the conditions for growth and to be especially competitive with developed economies. we face a tough problem as we all say today and i think it's important to recognize that it's one that does affect our global competitiveness. and while another student of history, i would like to build on senator conrad's comments because in the course of my career one of the things i have observed is that the root cause for failure in most institutions and whether that's government, business or organization is when they lose that hunger, when they lose that ability to coalesce politically to make tough decisions that will lead to progressive society institution. i do applaud the creation of

this group and the willingness of all the participants to work together and make the step decisions. i really think there needed to make us globally competitive. and i go into it with high hopes that by working together we will accomplish its end will be reported with dynamic and growing economy that i think is something that the american public would like us to achieve and that i think we're culpably fully capable of doing. >> thank you, mr. chairman. i also want to start out i think in our cochairman for being willing to undertake these fact. like i suspect everybody on the commission here, i also wonder how the needle turned to me and i got appointed. but i also agree that serving on this commission is an honor. and i look forward to working with each of you on a task that is critically important to the

american people. as we've heard from our witnesses today, we are an unsustainable course. several of them said it's just a matter but with today. and frankly the american people have this figured out and about figured out for a long time. and that is the math just doesn't equate. we're spending far more than we're bringing it in revenue. we are amounting unsustainable debt and deficit that will cause the same kind of impact that we've heard now from many of us and from our witnesses. to just look at it again very briefly, it was eerie how consistent the advice of our witnesses here today was, that if we don't get a handle on this, we're going to see interest rates go up, farnborough in growth, higher taxes to save an investment. our policy options will be fewer the longer we taken the nation to deal with this issue. we will crowd out capital and result in a collapse of the dollar and the economic loss of investment and productivity in the economic slump that will

follow that. there's many other ways you can describe it but again the american people understand it and they want to get past the politics to the solution and do what is necessary to put before congress and the administration the recommendations that can give us a path forward. it's going to be tough and i agree with the comments of a number of those of us here already today the we've got to be open-minded, bipartisan and fair and look at every option that is necessary to help us if they are. that being said i'm one of those who believes that we must recognize that our country is spending are in excess of our capacity and that a significant portion of the solution will be found on the spending side of the ledger. i'm also a strongly willing to reform our tax code to another are going to be a lot of

differences of opinion here. i've been fighting for reform of the internal revenue code for my entire career in congress and will continue to do so. i hope that we are going to be able to get some of the solutions on the tax side that will not result in increased tax burden from the american people, but will result in our ability to have a fairer, more effect did and frankly simpler tax code. again, our witnesses today could be very helpful to our economy. and i like the idea of looking under every rock as i think was mentioned. i like the idea that senator baucus mentioned if we should start looking at some of the areas we know what the tax gap in the spending gap in the productivity gap. we've got to look at everything. and i also believe that we must not fall to the notion that some have put out a that it will be hard for this commission to do much significant than we can

maybe practice a little low-hanging fruit and taught success. i think we need to be let larger and powerful vision than that. and i believe we can achieve it because the american people needed and expected others and we have a unique opportunity to really do something that makes a huge difference for this country. >> thank you very much. i want to thank mr. bowles and mr. simpson for cheering that. i want to thank this opportunity. what is special credit to two members in this commission could do with a little over a year and a half ago when senators gregg and conrad approached me with an idea that really sprung this commission and they built that idea into a political force in the united states senate. special credit to kent conrad who can really be a burden your saddle when he gets focused on

an important issue and we wouldn't be sitting here today were it not for his dogged determination that we address this issue honestly. so cat, thank you are much for your leadership on that. i think the issue before us is not just an issue of quantifying the cuts we will make in spending and we will do with taxes, but making some important decisions about what we're going to do with this nation and its future. it's true that our largest creditor in the world as china, but it's also true that china is fast becoming our greatest competitor. they have a vision, they have a plan and they are executing it. i would say flawlessly, but with great impact and we need to have the same vision and plan or a better one. and i think we can achieve that goal. i asked the question directly here about income disparity because they believe that as we talk about balancing our budget and economic growth, let us do

it in the context of promoting the general welfare of our nation, which was in the preamble of our constitution. and over the last two years, we assume the opposite occurred. we have seen tax policies that favor those who are well-off and we've seen a growing income disparity in america. american workers are very productive workers, but they're not being rewarded for effort and they are falling behind. as we come up with the solution we need to be able to save the working americans, we've not only their best interest in mind in terms of their grandchildren and legacy, but also in terms of their productivity and every words for that productivity. the president was careful in his order to sms responsibilities for the medium and long term. it did not include the short term because the short-term as the president notes in his order as the recession. and the recession were too many people are out of work across the nation. at least 8 million currently

unemployed and another 6 million discouraged. and each one of our states is a sad story to tell. there's a lesson in history about the definitely was franklin roosevelt used in even greater economic challenge. he faced in the employment rate in the early days visit ministration of 25% nationwide. he started on his new deal program to try to inject money into our economy and that the unemployment rate down to 14.3%. but four years into it, there were voices in congress saying but what about our national debt? we've got to be worried about this debt. and so they started retrenching them back enough of the earlier commitments and they watched as the unemployment rate crept up again to over 19%. sadly, it took the shot of economic activity involved in world war ii to finally bring us completely out of the depression. let's not make this a mistake. we the executive order carefully here in the short term we need to make sure we have an aggressive effort to rebuild its economy and rebuild jobs through

the last thing i like to say is there some that i think have preconceived notions of why we're here. i don't believe this is a trojan horse for a flat tax, but we've faced a vote on the senate floor over there were facing a fat tax. i wasn't given any secret marching orders about a tax before he was appointed to this commission. i also want to say that this really shouldn't be a forum for revisiting the greatest tips of the latest health care reform date. you know, that was a contentious debate. it went on for a lifetime in lifetime in parts of the dishes there have to be reconsidered your insurer. but i think we need to get beyond that. and the lesson at css. if this commission is going to make an historic contribution to america, the conservatives on this commission need to open their minds to the safety net in our country and the traveling plate as many working americans. and the bleeding heart liberals on this commission have to open

their mind to what it takes to inspire competition and economic growth in our economy and make real sacrifices to strengthen our nation. thank you, mr. chairman. [inaudible conversations] >> i did your work for 18 years, 10 years as assistant leader. it takes some guts to say those things. excuse me, and. >> first of all, let me thank the chairman and also my fellow members on the commission. this is my first participation in an effort of this sort and i had many questions before finally saying yes. but i too was driven by the importance of the issue that we are dealing with, which leads to my comments. i thought it was interesting that both bob and rudy and their comments to about quote, that the copyright involves more changes than the american people

are used to and also the comment that quoted as they are a few americans fully understand the seriousness of the problem from the consequences of inaction or the degree of sacrifice required to ensure that our children and grandchildren enjoyed an economy rising income and expanded opportunities. they come to this commission obviously with my 30 plus years in business and that is the lens through which i am dealing this area i also come to this commission as a mother and grandmother and so that is another lens through which i deal my participation. it's been interesting over the last several weeks i have read a lot of information. today they finegan hearing the facts in the numbers, but ultimately i think that we are here to servers fellow americans. and the biggest service that we can do during the process of this commission is to help the public understand the issue that we are dealing with.

the one thing that i played consistently and i'm sure dave would agree with me in business. it is great to come up with strategies and policies. but if we can't execute and execute in a way that people are accepting of these recommendations, though the work will be for not. and again, we can have a great business strategy, great policies, but poor execution will ultimately yield failure and unexpected of the policy recommendations. and we are all in agreement that we are not in a position and we cannot afford to stay open. we cannot afford to fail or filler markets. we cannot afford to fail one another in this effort to work together and my god, we cannot afford to fail our grandchildren. so if i look forward to my participation in the collective work or we're going to do together, i think it's important

that we understand that we're in a position to create a framework, a framework for sustainability for fiscal sustainability, we may not come up with all the solutions, but my god the information that we have available to us today is rich with options for us to consider. and i was really happy to hear many of you say that we have to look at everything on the table. it's not an either/or solution here. we've got to look at everything and every option. ..

challenging times americans even members of congress are capable of rising to the location. my hope is also based on the fact a number of these commissions for successful. i think what mr. the 9/11 commission and back it not to mention social security which was mentioned earlier by senator conrad. expectations are based on the fact unfortunately more often than not these conditions in the obscurity and i do have some concerns over the design. unlike the 9/11 commission i know that two-thirds of the

members of this commission by the president or to the party i know that the results of these missions are not due until after the next election and according to the press reports it was some in the administration that would like to take health care of the table so time will tell whether the conditions are an exercise in to political expediency and exercise in its utility or actual first step in saving america from. i certainly believe that it can be the latter. the first challenge we have is whether or not we can agree with fiscally responsibility looks like honey believe in a balanced budget and i truly believe the deficit is, central standing remain disease. we can debate the desirable the, but i do know that we now see an 84% increase in the non-defense

discretionary spending and less than two years, $1.2 trillion stimulus plan on the debt service, new health care plan that just last week was certified by cms to increase national health care cost and then to the real bad news and that is as we all know a federal government which is on automatic pilot to grow the government from 20% of the economy to 40% of our economy over the course of the next generation so for those who simply wish to approach this problem on the tax side i know that over the two-year budget window we could balance the president's budget by increasing the tax burden 50%, income taxes go up 50%. according to the members one by the cbo mustachio over the long term we can balance the budget by increasing taxes 2.5% which leaves a 10% bracket to the 25%

bracket, 35% bracket would increased 89%. i think at that point we all know number-one economic growth was clearly stagnate the fact government revenues would decrease. i think at that point our children and grandchildren will be living in smaller homes driving less reliable older cars and competing shrinking jobs with sinking paychecks to the limited to small to mid raising taxes to that level either by income tax, corporate tax, death tax, excise tax or european-style about tax is not my idea of fiscal responsibility. i think ultimately the attempt to tax our way out of this crisis will lead us to be the first generation in america's history to lead the next generation with a lower standard of living. historians when they might know

that in the 20 the sentry belonging to america perhaps the 21st entry into a cup of to china. my idea to fiscal responsibility as a budget that does not for faster than the family budget ability to pay for it. mine is the current generation that does not have a future generation with more debt. my idea is a government limited power scope and experience enabling americans to enjoy the high standard of living and freedom the world has ever known. to achieve this ideal of a humble we've respectfully submit a couple of ideas in the commission for its consideration one would be h.r. 3964 when the spending deficit and debt control co-authored along with fellow commissioner paul. it isn't a silver bullet is a budget process reform bill but i

do believe it would impose statutory spending caps on mandatory discretionary spending, cap on our deficit increasing such reforms as annual budget only since setting the federal agencies and it's already been mentioned fellow commissioner offered h.r. 3529 the road map for america's future and human not consider it the plan but it is at least a plan that secures the center of the entitlement programs for the current generations and the reforms for future beneficiaries without bankrupting the nation and i think it's critical for each of us on any ideas helpful in achieving fiscal responsibility that unless we deal fundamentally with reforms of entitlement spending in general and health care in specific idp dewitt be all for none. finally i would submit h.j. res

spending amendment to the constitution i've offered along with congressman mike pence and congressman john campbell. i might want to differ slightly with one of our witnesses in a churchill quote if my memory serves me correctly it is americans can usually be counted upon to do the right thing once the fix allston every other possibility. unfortunately we are at a time to complete that exercise. i sincerely look forward to considering all of the proposals by members of this commission. i will have an open mind but not an empty mind on every one of those proposals and finally i am mindful we will one day face the judgment of. i've heard almost to a man and woman people speak about their children and grandchildren and i know that one device since a picture of my children like blackberry if you each take out a photograph of our children and grandchildren as we go through these deliberations we will

probably do the right thing. thank you. >> i am very pleased and humbled to be on the commission. i think we are a group assembled to deal with a very big problem at the moment we had a chance to make a difference. i was struck by the fact that there was almost nil disagreement among the people who briefed us starting with the president and going through the federal reserve and various experts on the dimensions of the problem. we are not arguing about that and we are not arguing about the danger. people put them in different terms but i think we all realize we are facing a serious perhaps

catastrophic threat to the prosperity, future transparency of its united states and whether the threat comes in the form of reducing standards of living gradually over time or in the form of a tremendous but unpredictable crisis one of us know but the threat is there and the problem that both the senator emphasized the long run problem or the on sustainability of the federal budget is not a new problem. i've been making speeches about for a very long time. like 20 or 30 years. we have known that social security but more importantly medicare and medicaid was invested in the economy

>> so we have a problem in this growing wedge. the reason it is so much more urgent now is two things. the baby boom generation is a different thing they are retiring now and in the last couple of years we've had this recession that has thrown it into a different debt situation with rapidly rising debt. that wasn't true three or four years ago it was still modest in relation to the gdp but the rapidly rising debt but one problem in the long run sustainability which was bigger we've had two problems, the needy problem of how do we keep this a bit from rising faster

from the gdp. we have to stabilize it somewhere there is no magic number but we've to stabilize it fairly soon and that means getting the medium-term down. and senator baucus is write the things we need to do about the long run are not going to help with that very much because we get to them quickly. we need to think about some of the things we can do more quickly that will not be a real recovery and that is going to be tough. one more thing i want to take issue with bob reischauer on the process is not so important. process ascent everything but i do believe that when the budget enforcement act of 1990 is enforced by partisan we

supported from 1990 to 2002 that we use paygo and caps to get to the surplus is that did happen. now it's harder paygo will help us not make it worse but the programs that are already on the books are what are driving spending. medicare and medicaid particularly so we have a harder problems but i'm optimistic and excited to be part of this group. thank you. >> when your name is william and you go in alphabetical order [inaudible] let me try to say something a little bit different. first to the chairman senator simpson, each of you have a great reputation of integrity and i look forward to working with you on this effort.

most of us were in congress during the last economic crisis and the was a crisis where the chairman of the federal reserve and treasury secretary came rushing to the hills in panic mode and we got together and we governed in a panicked situation. we have before us the most predictable economic crisis we have ever had in this country. we all know that. we also i think are getting a good grasp of the size of the magnitude of the crisis. sovereign debt crises are popping up all of the world and we are kidding ourselves if we don't think it can come to us next. here is one of the problems i think we have to end up discussing as we know health care is the biggest part of this. unfortunately it doesn't matter how you voted on the last bill it is all. we took 529 million of state savings out of medicare not to go toward spending medicare solvency but toward a new entitlement. we increased by one-third and we

have a new entitlement and the entitlement speak many of us have been in this week is to call to the big three medicare medicaid and social security and now it is the big four. that is an issue we have to talk about what do we do about this entitlement affect that in this session of congress we passed 1.8 trillion of new spending to buy 670 billion in new taxes so i would argue the fiscal trajectory was bad and now is getting worse and that is my personal perspective. i put the number of ideas as a mine shaft on the cutting of reform and if there's anything i've learned from that experience is that the american people are ready to be talked to like adults. we are ready to know the fiscal facts and if there's one thing we can accomplish on this effort is better public education about the nature of the problem and it is getting our congress and the nature of the problem. on, too will get this with an open mind, not an empty mind.

i think if you look at the mass of all of this spending mathematically speaking you literally cannot tax your way out of this problem so i don't think we should try to go down that path taxing away on the problem. if you look at the congressional budget office model the model of the future of the country, the economy shutdown and the computer cannot think of any way out of this fiscal problem we have we know for a fact it is irrefutable we are giving the next generation and interior standard of living. we've never done that before. in the legacy of the country is always been to on the challenge before you to make sure your kids have a better life. all of us agree with that challenge with that legacy. it will take a lot of heavy lifting and i would simply say when you look at the spending problem the sooner you act the match better off you were going to be. we've got millions of our fellow citizens who organize their lives around these programs

acting very soon you can assure their lives won't be uprooted. we will not yank the rug from underneath them and we can make perspective changes when forward so that people have time to organize their lives, learning from so to speak but if we keep taking the can down the road not confronting these massive spending challenges that kind of assurance to those involved in organized their lives in the program cannot be maintained. so we are in a situation where time is of the essence to deal with this and i would simply say we have got to spend most of our time i think on the spending side of the ledger because after all that is what is driving at the end of the day the level of personal and economic freedom, living standards, jobs and international competitiveness have to be the overarching concern said drive the decisions we are making. >> i am very honored to be on this commission and i look forward to working with all of

you with the statements that everything does need to be on the table but i want to say that we are gathered here not as encounters or as columns of numbers but us policy makers and leaders who care deeply about the lives of the american people of today and tomorrow were impacted by the economic policies of the country. the president said last week, quote, some on wall street forgot that behind every dollar traded or leveraged there is a family looking to buy a house or pay for an education, open a business comes a for retirement, that happens on wall street has consequences across the country and across our economy. and the same can be set up a task that we are engaged in a now balancing the budget and reducing the debt in my mind are not in and of themselves.

the welfare of the american people have said to be the goal of the fiscal policy. everything we do here should be measured in terms of the impact of the wellbeing of our people, the opportunity we provide for our children and grandchildren as the value of our space society. so watch is when to be said about what we can afford to do and what we can't afford and these questions in my view ought to be considered in the biggest context possible. for example, i believe we can't afford to skip on our children's education, assuring access to quality affordable health care, retirement securities, achieving energy independence, investing in our infrastructure, supporting medical research, creating more jobs and the bottom line is while we are committed to saving our children and grandchildren from the crippling debt we must be as committed to ensure they are not ignorant, or unemployed.

there are many items and practices we can't afford to continue that i intend to put on the table for example i do think we can't keep up with the double-digit premium increases and private health insurance and we can't afford costly contract and policies that resulted fought and abuse we can't afford tax loopholes and identify sniffing american jobs overseas. we can't afford to build to pay for outdated and ineffective cold war weapons systems or to find 200,000 americans servicemen and women plus contractors and iraq and afghanistan and it definitely we can't allow wall street to run amok and frankly i've heard enough sanctimonious statements by the most entitled about internet programs. wall street bankers who saved tens of millions of dollars of bonuses while the touring retirees who bring home an average of $18,000 a year about

tightening their belts. tax entitlements as well as programmatic entitlements need to be on the table. we have to acknowledge as the current deficit isn't solely the result of spending and tax policy, substantial cause of the current deficit was the recklessness of the wall street banks that cost 8 million american jobs and the failure of our regulatory policies that we need to present our financial sector from spinning out of control. the recession as senator durbin said like the current one is no time to make the same mistake that led to the double-digit -- double-dip downturn in the 1930's, short-term reduction of the deficit i think is the worst thing we can do for the economy. we need government spending to create the jobs that drive continued economic growth. and i am absolutely certain we are not engaged in mission impossible. we've done it before just a

decade ago. we ushered in the era of the fiscal responsibility during the clinton administration creating over 20 million jobs producing budget surpluses and a rapidly declining debt and we can do it again. we are ready beginning to see signs of progress. americans should be confident that we have it within our power to fully restore the economy and soundness of the federal budget while keeping the commitments to with our grandparents and our children. americans should feel confident that this great country can continue the american tradition of each generation looking forward to an even better life than the one that came before it is up to us to show the way. >> thank you for taking over. [inaudible] this commission faces a great challenge, one that is worthy of our best efforts. the public debt is rising

relentlessly has alternately the worst recession since the great depression. the mounting debt in the interest of the true entitlements because they are have to be paid. they must be paid with the country will collapse. coming on the heels of this debt are the internal and obligations, healthcare and others increasing faster than the economy is growing in time it will be in support. this is a great fiscal threat. the sooner we act the better. in january this year the congressional budget office released its annual budget and economic outlook for the next ten years. cbo found that under the current law assumptions those that govern the typical forecast the current assumptions deficits in 2020 would total $687 billion that assumes of course that the tax cuts passed no one in 03 without being carried forward. we must assume the current

policies will stay largely unchanged between the over $1 trillion. everybody at this table knows that is not attainable. the budget to be warning signs lead us to even more questions about the current situation. how long can we choose to or from the generations to satisfy our current needs? how long will the world's greatest debtor be able to command the greatest superpower? the in the fundamental question raised by someone earlier who will tell the people? while the fiscal challenges that face us are daunting the historical record provides hope, cause for hope. in 1990 under president bush we had a bipartisan process which resulted in significant reduction in the deficit were at least proposed reduction deficits that results. president clinton came to office

and build on that foundation a successful budget that paid off in 1997 both sides came together in a bipartisan effort to pass the agreement of 1997. we've done it before and we can do it again. i had a small hand in the 1997 effort and i brought away from it lessons lie can share with you. common sense listens. first everybody needs to be at the table and the competition strikes me as a better life. we are democrats and republicans, members of the house and the senate. we have representatives from the sectors as well as public sectors so we need this diverse mix but we need these more for everyone to lean into the problem and look at the common ground. second everything it needs to be on the table. it was 97. we can't come out of these discussions successfully if we enter with rigid preconditions by what can or cannot be done to

the government finances on the line. the problems that confront us are clear. the elements of constructive solutions. i look forward to working with all the members of the commission and i hope that we can set our fiscal policy in route to long-term solvency. thank you. >> i was honored when the president asked me to serve. you can call me old-fashioned but i love this country. i happen to think america is a gift and its greatest gift is people have come here generation after generation like my grandfather who became a butcher in north new jersey. all my grandfather ever wanted from america was a chance to work really hard. all he hoped for was maybe his work would be rewarded but what he dreamed about is that his son milton and his grandson, andy,

with a tube with a better life than he did. that is a wondrous remarkable and incredible american dream. despite the civil war, two world wars, the recession, natural disasters that dream has endured. but as congressman hensarling and why it had set maybe not anymore. 79% of americans think their kids are going to do worse than the duty and that is not the america any of us want or need or came here to create. so, i think everywhere but washington, d.c. we've come to realize something is put out a different in our country. it's not the 20th century. it's the 21st century. the economies internationally is international. america isn't clearly going to be the dominant economic superpower in the long run the heavy competition in china for the first time in our history. among to make 3.3 at one, this is not our fathers and

grandfathers economy and i would say it is even much more profound. our country and the rest the world is living through what is third economic revolutions. the first economic revolution was agricultural. the second of economic revolution was the 300 years. this revolution, and it is the third economic revolution has of course from national to international and for manufacturing the finance knowledge environmental innovation economy is only going to take 30 years and we are only halfway through the revolution and everything has changed. and in this revolution, countries are teams and team usa, the red white and blue team has no plan. we have all said what is going on here. you can say it is unconscionable, it is unsustainable, team usa needs an economic win and that is what we are here to do to win the global economic competition by making the plan together. my second point, we had a

assumption here when you listen to people that we are going to automatically return to the kind of job and wage growth we had prior to the economic collapse and if that is true we have a problem. we had a jobless decade in america the senses to recipe for the collapse people didn't get a raise in four years, the august sec nation in history and the goldman sachs profits were record high and wages were a record low so we need to be very thoughtful that we cannot simply cut away, tax our way, spend our way out of this. we need to have job growth and wage growth in the short run if we are going to be able to do anything we wanted and that is quite to the thoughtful about changing anything. that might interrupt us getting back to the kind of growth we need to begin the conversation. last point. everyone i talked to in washington called upon to answer some of them have said although this is a critical discussion,

they deal with as democrats and republicans with a look at it in terms of less than right and i think we need to look at it as what is right or wrong for the country and i think if we view that all of the assassins of change as i like to call them in washington, d.c. stand around trying to make sure nothing happened there would be very disappointed. i've met every single republican member of the commission and of the democrats i've known for a while and i would say this to happen to agree there is a lot of interesting ideas here. it's not about democrats and republicans really said that dr. colburn earlier and many others here that i think focusing on the waste, fraud and abuse is important. as congressman boxer said to think about all of the tax caps that we have and the whole question about two-year budgeting and the questions about how we have an accountable budget makes absolute sense. i happen to not be a great fan of earmarks and i like congressman becerra's idea about

taxpayers' bill of rights and about how we simplify the tax code and senator conrad's indictment of the general and fairness of that current tax. the congressman ryan said the income tax rate for corporations are too high and the loopholes are too big and we need to think about effective rates much as absolute rates and i agree with those on the panel who say that we need to address retirement security not just social security and there's a question because adequacy as well as solvency and i think there is a question about how people are going to have universal add-ons to what we have now and look at all of the tax expenditures we need for retirement and more integrated and better ways like congressman kemp's idea how we simplify the current tax structure and i want to and by saying senator creepo said to me in our meeting that the goal is not just about fiscal balance, but we need to make decisions that restore the economic engine

of the greatest country on earth. so until we have an economic engine pulling the train, we are not planned to get where we want to go so i would say that our future is not a matter of chance. it is a matter of choice and it is time for america to decide. >> i don't need to sum up. >> yes you do. [laughter] >> first play of the greatest partner in the world. if this team can develop a trust that we have and there's nothing we can't accomplish. but it's all about trust. a lot to talk about the 97 budget agreement. the reason we got that agreement done was because we developed a trust on both sides and in the that getting 75% of the members in both houses of congress on both sides of the aisle to go

forward. we can do it. i thought representative ryan said it best in saying this is the most predictable economic crisis in history that we face. and we are on autopilot right now and if we don't face up to the deficits, and rising debt we will have a tremendous economic crisis and as you said, mr. stern, we do the economic plan. everybody here from a president to the fed chairman to every member in this room has every witness said the path we are on today is not sustainable. so we all get. now do we have the courage to do something? to me, this date is like a cancer. it is a cancer that is when to destroy the country from within. it is as plain as day. the arithmetic is compelling.

the problem is easy to agree upon. what is hard is the solution and there are a lot of ideas out there. i want to protect the social safety net. i want to make sure that we invest in those areas that will make american competitiveness competitive and knowledge based economy. i want to make sure any time we discuss revenue that we don't do anything that has a negative impact on economic growth. but we have to be willing to change. we have to be willing to make the tough choices. we are not going to solve this by waste fraud and abuse or by limiting foreign aid. we have to make tough choices and that is going to involve the entitlements, it's going to involve the military, and its splinter involves discretionary items and it's going to involve

revenue and we have to face up to that. i think the president was right. he has insisted every time he's talked to us that everything is on the table. that he will support the conclusions of this committee if we have the courage to make the recommendations. i think if we trust each other we can get there. i have three goals. first i want to make sure that we do it to keep the american people. we've got a huge education job to do and that is a big marketing job. we have to make sure they understand that look there will be no jobs out there if we don't get this debt in control. in fact that in the business world, small businesses can't grow it can't create jobs without capital. if they beat credit out of the capitol markets if we don't get this debt under control. i am in education. i know the importance of making sure that we have a highly trained in a highly skilled workforce but there is going to be no money for education

infrastructure, transportation, innovation if we don't get this debt under control. and max, do talked about the best chinese start to sell our debt, but if they quit buying it? we will be in deep trouble. so we've got to educate the american people that there is a crisis. that paul ryan is right. second, we have to agree on a set of numbers. al and i believe the numbers of the actuarial numbers from the social security commission and from the medicare commission. we also believe we'll reduce the cbo numbers because the of the most residency in this town. i hope we can agree on a set of numbers. that we have to explore these options. these two guys that came, the former head of the ceos and there's lots of options out there. you guys have great ideas. let's explore the great ideas

and leave everything on the table until the end and then we have to make the difficult choices. we have agreed we are going to make those choices. we are cui to work together. we are not a republican democrat we are just americans but we have a big problem in the american problem and i am excited about working with each of you on it. thank you for serving and for being part of it. we have a couple of issues to bring up before we leave. the next full commission meeting will be on may 26 o'clock to 11:30 up on the hill and we will announce we're in between that we will have working groups that will deal with the mandatory spending, discretionary spending and revenue reform and we will have each of those on every wednesday going forward. the subsequent meetings after the next may 26 meeting if i can find my notes we will have a

third public meeting on june 30th and on july 28, 5th on september 29th, 6 on november 10th and a seventh on december 1st which is the due date. in between we will have meetings to discuss working group meetings by mandatory discretionary and revenue. i would like to now before the co-chairman poses this meeting have them introduce the members of our staff. >> thank you for the world that you've shown throughout this and the extraordinary amount that you've given in hitting the ground running. i would like to introduce and think a couple people who helped make this possible and who will be working with you over the coming month. first mckay and then the timekeeper. there's no time limit. we have a couple of people who have just joined coming from omb

and has an illustrious career on mandatory spending. she has worked at the gao and cbo as well as the omb and then mark for responsible federal budget is also a mandatory spending expert. and numbers which is and i should say we are fortunate that the members of congress on the commission have some of the most extraordinary talented people in the field and we will be taking phone advantage of that fact going forward. we are determined to build a nonpartisan bipartisan staff has no majority, minority and we look forward to working with you to carry out the ideas and tackle problems we've heard about from the meeting yesterday >> we have a grand total of

three. >> if you did america is bear bones this commission is in their bones. this is about eight. and that is what makes it a conflict we have some hearings around the united states. i tell you we don't have a scratch as the old guy says to do it. >> if you will give us some opportunities that we have to look at so we don't have to physically all go some place we can figure that out. >> you are right it is about education that everywhere you go in the united states you hear the people say something is very wrong here and they know that. >> i don't think i could add to the remarks -- here we go. if it doesn't work i will know that i have given it my best but i have been on commissions that

worked. we did the commission on immigration refugee policy and the only reason that it failed is because the extreme right and extreme left said we have a national id card. but watch out when they are using emotion, fear, guilt and racism on you because that is how you pass or kill anything. the motion, fear, guilt or racism use flash words which like amnesty or taxes or whatever, those are words and i would just say in the study group to people five from each side agree on every word and we wouldn't issue a report until we agree on every word. i was disappointed at the end when i changed a couple of words with sandra day o'connor said to have used the split infinitive. [laughter] i don't even know what the hell

a split infinitive is. [laughter] but the 57 of those suggestions have been accepted to this point out of 79 so they can work with the cynicism of their used to be skepticism and now it is just cynicism and is heavy with the media. we will get out of here. what does it say about entitlements and taxes? so first we go to those and try to laugh them out of their particular complexities. they seem to be twisted. their knickers or twisted as they say in england. [laughter] [inaudible] [inaudible conversations]

[inaudible conversations] >> up next on c-span2 defense secretary robert gates and israel defense minister barack talk to reporters about the least peace and security. after that a senate hearing on expanding small business access to high-speed broadband networks and later a congressional panel

examines defense secretary robert gates met with israeli defense minister edhud barak. this is just over ten minutes. >> both in our bilateral defense relationship and around the

region. i appreciate as always the candor and forthrightness and i look forward to continuing the discussions over the coming months. as president obama has affirmed united states commitment to israel's security is on shippable and a defense relationship is stronger than ever to the mutual benefit of both nations. the united states and our allies share many of the same security challenges from, but in terms of to confronting the threat posed by iran's nuclear weapons program. for years, the united states and israel have worked together to prepare armed forces to meet these and other challenges. a recent major the sample being the juniper exercise held last october. i work together on missile defense technology is on going and the united states will continue to ensure that israel maintains its qualitative military edge. again i thank the minister barak

for being with us today and invite him to make a few remarks before we take a couple of questions >> thank you, secretary gates. i always glad to be here. thank you for the hospitality and the important exchanges we could have. the relationship between israel and the united states is not breakable. being on mutual respect and shared values. this is most prominently in infested by the unmatched support and cooperation in the early minister of defense shared with the united states military department of defense. in my conversation with secretary gates we evaluated the threats and security challenges that the united states and israel face. i should tell you we feel that we are leaving the focal point of the main challenge of the free world facing now violent

extremism accompanied by the technologies and all field states. the way that the individual cannot choose his parents, nations cannot choose their neighbors. we're living in extremely tough neighborhoods but we are there to stay and we will never sway or blink of the allegis, and we are glad to be supported by the american defense establishment, american administration. the keeping and attending for these rall use. these have broad implications little like to the israeli security but the entire regional security and the very

considerable world order. the purpose of my meetings with secretary gates and the administration officials is to provide the response to all of the challenges and threats and therefore stress the strengthening idea right to express my sincere gratitude towards congress and president obama for american support for the state of israel. thank you. >> my question to both of you, secretary gates, do you think that the united states has adequate planning, forethought and strategies in place to deal with the prospect of the nuclear iran and the prime minister are you satisfied with the current approach to that threat or should it move toward more active consideration of a military strategy? >> andres satisfied with the

planning process both within this building and the inter agency. we spend a lot of time on the iran and we will continue to do so. >> i think the effort of the iranians to turn nuclear is a major challenge to not just you but basically to any oral order. if they are about to turn out nuclear it would be the end of any non-proliferation regime that can change the landscape not just of the middle east. so we think that they should be blocked and i think that the time is clearly at this stage time for sanctions and diplomacy with sanctions to be effective

and limited in time, so we will be able to judge whether what kind of results stem from the sanctions. >> are you satisfied with the current united states -- >> i think the united states deals with the world and is the only power that can mobilize so many members of the international community than the u.n. and probably the europeans to establish the most sanctions regime. but of course it is only time will tell what extent there really effective. >> do you want to call on somebody? >> psychiatry gates, if you can

explain why this now with the first time in your term that you are holding such a probability. is it because this administration would like to portray a feeling of the business as usual with the government when the general perception as you well know is that between israel and the united states right now and i would also be happy to get the both of you to understand if this is the perception of the pentagon as general petraeus suggested the united states with the life of american soldiers when israel was not the palestinian [inaudible] >> we noticed your frustration with such meetings the past so we try to correct it. [laughter] >> never too late for a good

idea. >> i think we are working together to face the same challenges and we feel we contributed the americans are clearly sending their youngsters to the toughest corners of the middle east to fight the same feeling state in terrorism and i believe that we are basically doing the right thing. >> let me just address the second point that you made. first of all congenital petraeus did not say that a lack of progress and peace process is costing american lives. and no one in this department in or out of uniform believes that. what we do believe is that heretofore the lack of progress and the peace process has

provided political ammunition to our adversaries in the middle east and in the region and that progress in this arena will enable us not only to perhaps get others to support the peace process but also in our efforts to try to impose sanctions against iran. >> what has syria transferred to hezbollah? [inaudible] >> we feel they keep backing hezbollah in a damaging way that they convey to hezbollah speak

to the delicate balance in lebanon and the balance of disrupting weapons systems including the missiles considered to be a threat to the stability of the region. we do not intend to provoke any kind of a major collision in lebanon or with syria as mentioned. but they are watching closely. the developments seem they do not contribute to the stability in the region. >> i would just say from our vantage point syria and iran are providing hezbollah with rockets and missiles of the ever-increasing capabilities and

we are at a point now where hezbollah has far more rockets and missiles than most government in the world and this is obviously a destabilizing for the whole region so we are watching it very carefully. >> [inaudible] can you comment about [inaudible] shifting may be? >> we are moving toward full democracy and all the neighborhoods we start with freedom of sterling and move toward freedom of all other rights. i don't think that we to do anything in the neighboring

countries. strong and self confident that i believe we are so strong that a and despite of the neighborhood as mentioned for the week there is the second opportunity for those who cannot protect themselves. we are strong enough to be able to afford attempts at negotiating with all of our neighbors and for the winnings against each other i believe we have to focus on the position of strength and confidence to focus on how to change the reality from its very foundations and turn into effective and conclusive sincere negotiations with the palestinians and later on with the rest of our neighbors.

>> thank you. >> thank you. sprick this year's c-span's studentcam the gentry competition asks middle and high school students to create a five to eight minute video dealing with one of the country's greatest strengths or challenge the country is facing. here's this year's grand prize winner. "i've got the power." ♪ i've got the power ♪

>> energy consumption will borrow energy production the next 20 years. the challenge we face is how the projected energy shortfall. >> how would you define the word challenge? >> how what i define the word challenge? it is a cruel or something hard we are trying to overcome. >> challenge is something that's very hard and something that should be achieved with hard work. >> challenges usually an obstacle that is put before a person and usually they have to try to overcome that. >> a member of the united states senate proposed a possible solution to the challenge. >> as one senator offering a blueprint to build 100 nuclear power plants in the next 20 years. >> some individuals questioned the plausibility of the plan. it's been a there's definitely some towards the little bell in the u.s. but 100 is a bit of a

stretch. estimates with a target of 100 new plants of this country the next 20 years and we know we can achieve. >> [inaudible] no one can build and socialize [inaudible] to make any difference [inaudible] roskam if i don't know if that many plants could be built in that time but looking back in the history ran the 1970's and 1980's, the united states was building 35440 nuclear power plants per decade. france did the same thing during the 1970's. so we know we can build 30 or 40 nuclear plants over ten years. >> from our research we identified a significant lack of knowledge in the general public in relation to the nuclear

energy. for example when we asked 100 adults and students how many power plants or operational in the and to become united states the responses were all over the draft. >> a couple hundred. >> i have no idea. >> the individual survey vendors of the concept behind the nuclear fission reaction. the reaction demonstrated by the students from our school, a small boating neutron is absorbed by the nucleus of the uranium, which in turn gives off a tremendous amount of energy moving lighter elements at. these strike other atoms causing a chain reaction as demonstrated by these ping-pong balls. this energy is used to turn water into steam. expenditure by producing electricity. is this challenge with the benefit? >> what do you feel are some of the benefits of nuclear power? >> there are a lge