on? you guys are very close to introducing this. >> no, i do not think that would be fair. getting distracted a -- getting this drafted and scored is a large undertaking. we are a long ways off. >> [unintelligible] >> and different people might be talking about different things. one track is to get the commission report and a legislative forum so it could be considered. that is one track. there is another track to have a feel safe trigger that would be pulled that would have automatic effects if congress is not putting in place a plan that gets us back on firmer ground.

that is something that can be prepared more quickly. that is not nearly as involved. >> can you explain that a bit more? >> it is not agreed to. >> would that be in tandem [unintelligible] m ideas.shopping ok, i got to go. >> can you talk about the consequences [unintelligible] y >> of the federal government -- the rest of the budget which has been getting in flows from show so security -- from social security, that has stopped.

that is a cash drag on the rest of the budget. i have to go. thank you. >> thank you, sir. >> living standards are going down in america based on the future we have right now. we have created entitlements. we owe to the country to show a different path.

mr. president, our ability to mr. president, our ability to >> mr. present our ability to deliver eight without time limits essential and unique to the united states senate. it is supposed to be that way. it is in our dna. is one of the many traits and template designed distinguished this body from the house of representatives and from every other legislative body in the world. it at his eyes been central to the senate and it should be. but when that arrangement is abused, we have to do something. not merely in the name of efficiency are the sake of political parties fortune in the next election. wen. attacked is when abuses kep

us from doing our work theyp deter us from working togetherfo and they stop us from working for the american people. within these four walls that degrades the relationship that makes the senate round. spe cordis peschel about the senate is that this body operates by consensus. it runs on if fuel made of comedy and trust m. o when abuses happened or when kelly cusack in bad faith and degrades that i fuel and the senate stalls.ere there are nearly as many opinions on what to do about senate as there are senators. senators harkin and udall of new mexico and worked to find solutions. i thank you for their time and efforts anhed energy. senator schumer and alexander. no one is work harder than they have to find a way out of this crisis. and i admire and appreciate their efforts. leader mcconnell and i've

worked alongside all of them anr with each other to find common ground. s in the spirit of compromise, we are trying to restore to the r s senate this is how we have agreed. as to secret holds, first we have to get rid of secret holds. last year a single senator held up for more than 70 -- i'm sorrd held 79 nominations. why? on parochial issue in a state that had nothing to do with what we are trying to do here and approving nominations. the standoff finally ended but only after it became public. what he did was within his right but it wasn't the right thing to do and the rule has to be changed. senators will no longer be able toan hide and the light of day will shine carter on the senate as a body. i thank senators wyden grassley and mccaskill for their leadership on the subject. we have to recognize that public servants are not political pawnt

and appointed by the present president with federal agency is a great honor and in recent years it has become a sentence to purgatory. the senate no longer officially performs her constitutional duty of confirming nominees. that leaves important offices without leaders. these important duties unfulfilled and unfairly leaves in limbo well-qualified nominees. the senate is responsible for confirming about 300, nice to part-time boards and commissions every one of these boards and commissions require the approval of theva senate. because of that, the vetting process for these boards and commissions takes inordinate amount of time. they spend as muchin time as the fbiim and other people to do t background checks on these part-time jobs than they do somebody that is going to become an assistant secretary or ao. judge and it just eats up time that is unnecessary.ary.

there is no reason for senators tom keep them from their posts but that is exactly what happens and it is not always the bulk of the senators. we have to get rid of as many of these nominations as we can and that is what the rules committee leadership has recommended. senator schumer the chairman,, senator alexander the ranking member have come up withs something i think is so veryth important. they are going to help us get rid of about a third of these nominations, not only these part-time boards and commissions but others, and this will be a, the processes will change so we will work to cut by a third the number of executive nominationss that require executive approval. senator schumer and alexander five indicator of thehi leaderss far as what we have done to this point that this legislation will be turned over and they will bee working with senators lieberman and collins who are theurisdi committee of jurisdiction set

the stage develop legislation that will do exactly what i havt outlined.ir third, we can afford to waste time for the sake of wastinge time. and minorities favorite taxce rates have been to force or her threatened to force the clerks a to read amendments.l now, madam president, you will note here i said one of the minority's favorite tactics to threaten to force the clerks to read amendments. i didn't say when the republicans favorite tactics have been to force or threaten to force the clerks to read amendments. we have all threatened to do it and it is wrong and it has got to stop. istop that is what we are going to do here later today. this.this is nothing short of hv showmanship to have these the amendments read and in this day and age, almost always totally 1 unnecessary. in the 18th and 19the, centuries of the united states senate senators officers worked with this w desk. that is all they had. they didn't have offices like wt have.on

their officers were right here on the senate floor so hearing the clerk read the bill was probably more essential and that is an understatement because it was part of the debate.te today that is no longer the case. during the health reform debate toea decembers ago, whilers snow-covered washington and christmas neared, they workedor hard to delay inevitable passaga on a saturday toward the end of the debates minority force the nonpartisan senate clerk to read the entirety of an important amendment to the bill.rt to reading started just before eightor 30:00 a.m. and lasted until just before 4:00 a.m. in the afternoon.e seven hours of time during which nobody listen to the reading of. the bill. everyone had already studieder t and it had been filed a long time before.id after each senator had already decided how he or she would vote any way. we don't have time for these kinds of gratuitous delays so w' the third change we will make in this. if an amendment has already been filed, the senator cannot force

its reading. finally, as to what we call around here inside politics. motions to proceed and fillingth the tree. let me talk a little bit about these two items. i i've often expressed my concerns about the procedural simply to determine whether we can have a second vote to determine whether we can debate a bill. the boat called cloture on the motion toan proceed.ee it is another one of the most common these tactics to frustrate progress and waste time. last congress we had 26 cloture votes on motions to proceed. most all of them were bills that weren't controversial. we had to hold a vote on whether to hold a vote twos debate it will. is called the travel promotion act. after wasting days of precious time, it passed 90-3.he

we had to jump through the same hopes -- oops which passed by 87 votes in before we could vote and letting the fda regulate tobacco which passed with 84 votes and before we could vote on updating our food safety laws for the first time in a century which passed the 75% of the senate. democrats were bothered by how often republicans forced procedural votes on cloture motions to proceed. i know republicans are easily frustrated with me for filling the amendment tree on occasion. and their argument is and i they're right, prevents amendments from being offered. so, this agreement leaderd mcconnell and i have reached is going to clean up a lot of this. just as i will exercise restraint in using my right as majority leader to feel the amendment tree, he and his republican conference will curtail their habit of filibustering the motion to

proceed. both exception rather than the rule and started now they will be.to senator mcconnell and i have prepared a quality reflecting our agreement on these professions and i ask consent oo the injured and the record as if read life.ho >> without objection. >> let me conclude madam president again expressing my appreciation to those parties who have been so heavily involved in this udall, merkley, harkin, and of course my friend from tennessee, lamar alexander, chuck schumer. but especially i want to express my appreciation to the republican leader. and we have set on this floor lots ofat times, most all the american public sees us doing its fighting.ngng we are here arguing on behalf of each senator on our side for a problem we have on our side, but much of the work done in this body is done with senator

mcconnell and i in my office or his office trying to workblem through some of these problems and they take a lot of time and they take their patience and the patience of the entire senate and that is whyat starting here with my remarks this morning, telling everyone i appreciate their understanding that we are trying to work things out. we have been working on this for a long long time. these changes are important and i appreciate my friend a republican leader for his attitude in all this,e recognizing we have to make some progress here. the changes we will agree to today are reducing by one third the number of executive nominations that are subject to senate delays and third in a bir allowing amendments of the publicly available three days and four running feast of filibusters and motions tofi proceed in fifth filling the amendment tree, only whenom necessary. i know someone is to go even further.ot there are just as many arguments for not going so far but remember this.es

making these changes in the name of compromise and disagreement itself was constructed with the same respect for mutualll concession. senator mcconnell and i both believe that reference for this institution must always be more important than our respective political parties and is part of this compromise, we have agreed that i won't force the majority vote to fundamentally change the senate. that is the so-called constitutional option and he won't in the future. fiber forms were very significant. in the minds of many, not far enough and in the minds of some togho far. but that is what the senate is all about. it is about compromise, consensuson building.ove yes we want the senate to move deliberately but we wanted to move.to we have to find a balance that encourages debate but also enables us to legislate. we are governed by a delicate mix ofrn rules andhis

responsibilities in this body. to that mix we need to add respect. the senate should function asnd its founders intended it to function as the country needed to function, not simply as rules will allow it to function.n. thank you madam president. >> madam president? >> the republican leader. >> the quality which the majority leader and i are working on at the i moment will reflect the entirety of our understanding but with regard to comments about howeg we got to this place, let me just say first to my good friend from nevada on severaa,l occasions fh both him and the president of the united states talk about how much was accomplished in the last congress so i am oftenexed perplexed as to which was the case, either an extraordinary amount of legislation was passed and signed or the senate was obstructing. one or the other, they couldn't

both be through and i suspectos that the real view that moste historians will have is that the last congress passed a great deal of very significant legislation. i know we had a referendum on that november 2 and the american people change the equation but without getting back into that or a litany of complaints by the minority, the senate has heard them before, the principle complaint that minorities had over the last two years the number of times the tree is then filled up and we have been unable to offer amendments. we are all aware of our grievances on boths. sides, buts is often the case in the senate, we have worked together through senator alexander and senator schumer to come to an agreemente as to how the senate will goo forward and the procedures that will be employed and we will haveoy votes later, consistent with the precedence of the

senate at the thresholds that are required under senate rulese and then we will move on with the people's people's business. i am optimistic that my good friend to the majority leader andde i can convince our colleagues that we ought to get that to operating the way the senate did as recently as three or four years ago when the bills came up and they were open for r amendment and we voted on amendments and at some point the bill would be completed. i know that we can t do that are quite think it is the right way for the senate to operate and i want to tangle my friend the majority leader for hiski leadership and working throughhu this difficult period of rules consideration and i would say to my colleagues, again, in closing, that the quality which wehi will insert into the recorr will reflect the entirety of our understanding is that how we go forward and we will have the bose later, which will give the senate a chance to go on record about some changes that have

been agreed to and some that are being proposed that are not i ye agreed to. madam president i yield ther: floor.idin >> madam president? >> the senatorfr from new york. >> let me thank our leader harry reid and our minority leader mitch mcconnell for their leadership and guidance.og they are walking out together and that is a good metaphor for what has happened here today.an i want to thank my colleague asked the -- alexander as well who under the two leadersnd authorization we talk in a course in constant touch with them worked out this agreement. so i rise to speak in support or the bipartisan agreement onn senate rules reform. it is an important step forward in changing the way we do business here in thesi senate. last year, the rules committee h held six hearings on the. filibuster.

they talked about the history of the filibuster and what hade happened and how it has gone out of control. both hearings were requested actually by a member of therule rules committee, tom udall, the senator t from new mexico and it is why we embarked on the hearings and i very much appreciate his suggestion that we do that. h at the hearings, democrats brought up that the majority was no longer able to m move forward to consider bills by filibusters on motions to proceed. republicans argued that they were too often blocked from offering amendments by the maj majority filling the tree. both sides have legitimate complaints. what couldn't be disputed that was in many ways the senate was broken. it had become harder and harder for the body to consider debate and decidefo legislation and nominations that it is supposed to take care of. is true what senator mcconnell said that we had a very productive session, but that didn't gain the fact that there were 74 filibusters that many

decided weren't decided and that the senate seemed too many to not be functioning in the way it used to wear debate was stifled by both the majority and the minority. and so when we resolve things. when i first came to the senate, 12 years ago, senior senator pulled mepu aside and said, the role of the majorities to set the agenda. they put bills on the floor in theiorr debate and the role of d minority is to offer amendments to change them.em. we are not doing that much any more. is we offer happens a bill and the minority says we don't want it. now they say we don't want itbea because we refuse to allow unlimited amendments.nts. we think they don't want to because they may want to just come up the senate but whatever the reason both sides have legitimate complaints here, and we are trying to resolve some of

those. so clearly, the time for change has calmed. i believe the reforms were adopting today give us a very good chance to go back to the way of operating where we have real w debate on bills and amendments and votes on bills and amendments. it won't happen overnight. and both sides will still use the procedural tools available to them on the most important issues. but we hope it will work well enough and get us back on trackd leaders reid and mcconnell and the colloquy that they would pua forward that senator alexander and i participated in framing will do two things. in addition to the changes that we will make. one, each will say that we should use the motion tols proceed, to block bills from coming to the floor and frequently and the majority wilf

say we should use filling theha tree to block up evidence thatis might come forward on those bills and obviously we are going to have r to watch how this works over the next several months and obviously there will be times when each side decides they have to use the right the senate gets them to block things, but the presumption will be that in the usual course of business, we will not do that, that they will be the exception, not the rule. the second thing that will be stated by both leaders is whoever's in the majority next congress will not try to change the rules by simple majority. this congress or next.or some on our side were worried that if we didn't try to invoke the constitutional option,he should the other side get the majority? i don't personallyll think we he to worry about that or that will happen anyway, but should that happen, then they might invoke it. w

and do something else so why not do it now?that well, both leaders have agreed that they will not do that and without the leader support it is virtually impossible for it to get done. so that is a significant change that when the colloquy is printed in the record we will see both leaders have agreed to, and i want to tackle them for providing strong leadership and guidance throughout this process i became convinced working with my good friend the senator from tennessee and having conversations plenty with my friend and leader harry reid and a few with senator mcconnell that everybody wanted to come to an agreementn here. everyone wanted to see the fee senate work better and that made me feel pretty good of what we did hear. second, i want to recognize the many senators from my party that works tirelessly to create the momentum for change and at the top of the list of course our tom udall, jeff merkley and -- they worked very hard on these

issues. they too were new in the senate, freshman, one who has much more experience than i do on theha senate, senator harkin worked really hard to see that we change the rules.re and while the changes on everything they would like or i would have liked certainly theif changes we are getting not insignificant at all are becausn tom udall started pushing this idea when he got here to the senate. predecessor clinton anderson had done some of this,j and jeff merkley and tom harkin jointed macaws early on and brought us to -- rot is actually to the point of where the inertia of not doing anything i with no longer govern and we would get together and get something done. there were other senators who played a very important role. senator lautenberg and his proposal.t, michael bennet, mark udall, al franken, all had proposals andyd

all played a very significant role here and can feel very good about the changes we have wrought. and i particularly want to- thanks senator klobuchar for leading the working group ofie senators who spent hours reviewing and refining.gree without all of them i don't think the agreement would have been possible. i make one other point and this is i a disappointment to me andi will just make it myself. what idea championed by the senators that i thought made imm eminent sense as the talking filibuster. didn't change the balance in the senate. it simpleny said that if you art going to filibuster you had to stay on the floor and talk. you couldn't just be there and u object. the american public understands that when a senator wants to filibuster a bill, that senator should be required to stand up and talk on the senate floor. i strongly support the talking filibuster. we sometimes call it the jimmy stewart talking filibuster because everyone knows the movie

and i believe that it would puln back the curtain on the kind of filibusters we have now. we would change the rule of 60, but the filibustering senator and his supporters right now don't even have to show up or talk for a vote. this talking filibuster is one change i hope the senate will adopt in the future because it makes good sense and we should doul it. i don't believe we should eliminate the filibuster altogether, but we need to make it real. be talking filibuster proposals would do that and i hope somedam we will make the talkingster filibuster part of the senate f rules and i will vote for that resolution that will be on theof floor later today. of course it will need two-thirds to pass.. finally i want to thanks senator alexander. he and i've been friends before this but we really work togethes throughout the holidays, vacations, recesses and being here and he was creative. he was flexible as always. he was gdl and as usual he was

smart.d and his concern for thisity institution help bring theh minority in the majority together and i very much appreciate senator alexander's role.part now senator reid outlined the other parts of the bipartisano proposal. which will be done by rule. band of reading of amendments filed or leased 72 hours also done by rule and the third proposal to limit the number of nomination executive nominations. there are so many, about 30% of the total that we propose toe. eliminate he and i and senatorsc lieberman and collins who have the jurisdiction in their committee will introduce a bill and we hope to have it quickly. we have gotten the agreement from the house that they will move the bill and we should eliminate confirmation on sons many of these positions that really don't require or should require confirmation. members of part-time boards and commissions, officials to handle

legislative or public affairs, things like that and i want to s thanks senators lieberman and collins for that.enma finally, let me say in conclusion as chairman of thes c rules committee i believe there is more we can do.s o i want to see her her efforts of reform continue. i would like to continue working on the streamlining of confirmation of nominations, both executive and judicial andr the rules committee will continue to look at that. change doesn't come easy and in conclusion madam president change doesn't come often are easily to theea senate that we e here because many members worked hard on reform and both parties continuing with the tradition of a partisan or the feeling ofhi bipartisanship, that began inh the lame-duck and they think has continued through the state of the union speech is continuing. again today. i hope our efforts will make a difference. iil hope the senate will functin better and i am very hopeful bot that with these changes both formal and informal, they will.

we know there are still sharpur differences within our body on issues and those won't disappear. on certain bills we will, both sides will use every procedural tactic that makes the senate a different body than the house. but hopefully i'm most we won'to in conclusion, while those of us who want reform in the senate didn't get everything we wanted, the senate will be aor significantly better place forg. the changes we are enacting., as a result of this agreement there should be more debate, more pose fewer items locked a single senator or small minority of senators. make no mistake about this agreement is not a panacea but it is a very significant step o the road to making the senatenc action in a better fairway and again i thank all up my colleagues who participated in this. >> madam president?nato >> the senator from tennessee. spin madam president presidentom president-elect to thank the senator from new york and the senator from new mexico and oregon and senator harkin of

iowa for their effort, some over many years, to achieve two goals, to help make the senate a place that is better able to t deal with serious business that comes before us, and second to preserve the senate as a unique forum, unique in the worldody really has a legislative body and its protection off minority rights.p this is an important stepenat forward. reform of the senate, the reform the senate really needs is anot change in behavior, not in its rules. these rules move us in the right direction. the behavior that the senator from new york spoke about and the majority leader and minorith leader spoke about is what in at overlay may most difference?f i have talked with many senators on both sides of the aisle.e we have done a lot of talking both on the floor here and off the floor. about where the senate is today

and a great many of us feel theo senate really is a shadow ofr itself. a shadow of its former self in i terms of its ability to function as a truly deliberative audie. it is hard to see how thefter majority can complain sure legislation after legislation c session where they passed health care legislation and an incher reform legislation and othery legislation that may be been the resulted in a diminishing of their numbers. .. of the aisle -- both sides of the aisle -- we would like to see the senate function in a different way. the majority leader and republican leader have put out in a colloquy what that way is and that will govern what we do, but basically i believe it is this. we want the same thing, a senate where most bills are considered by committee, where most bills come to the floor as a result of

bipartisan cooperation, where most bills are then debated and amended and voted upon. for someone who just tuned in to the united states senate, you'll say well, that's a very simple solution. i thought that's what the senate was supposed to be. it is what the senate is supposed to be, and it wasn't so long ago that it was the standard operating procedure. senator mcconnell said it was senator mcconnell said it was >> senator mcconnell had been here for many years. i mentioned this on the floor in debate in 1997 and 1995 when howard baker of tennessee and record byrd of west virginia were the republican leaders. i worked for an assistant and knew senator byrd. here's what went on then and could go on today.

it gave us a chance to see what they really did to improve them, that hear from voices from all over the country, and then that legislation came to the floor during senator baker's day when he was the majority leader, he would not bring to the floor to support a ten didn't want to waste the senate's time, and he knew that with a 60 vote it brought consensus. people talk about the filibuster, but what we have is a requirement that most important bills get important votes, and if you're sitting with 53 democrats and 47 republicans, you don't have to have an advanced degree in mathematics to figure out that if you don't have some democrats and some republican, you don't get to 60. senator baker was saying back in

the 80s, bring the bill to the floor if it has the republican chairman and the democratic ranking member. then, the calm would go out -- the call would go out for amendment, and sometimes, madam president, there would be 300 amendments. the senator from north carolina or tennessee might off 40 and no one said, wow, stop, you can't do that. bring them on in. sometimes there would be 300 amendments, and then senator baker or senator byrd zed nor unanimous concept to close off amendments. the senators by that time were exhausted by writing amendments that they all agreed to it, and then they started voting. by that time it was a wednesday or thursday and they still had 30 amendments. it's friday and they have five left, maybe you would like to

have one, but if they had one but they wanted to get, they almost always got the amendment, madam president, and that's what the real importance of this agreement is today. the difference of opinion that caused us to degenerate in some cases to a body that didn't function as well as it should has been because on that side of the aisle didn't want to vote. it's like joining the grand olo opri and deciding you don't want to sing. well, we don't want to vote, or well, we don't want to work on friday, and so they go home, and they put pressure on the majority leader to use the procedure called filling the tree, which cuts off votes in the rights to amend. majority leader used that power to cut off all amendments and debate 44 times more than the last six majority leaders

combined. what happens over here? well, then, republican senators say we're not getting amendments, we'll start objecting, and then you have a lot of filibusters. we say you're counting filibusters when you cut off our right to offer amendments. you say, you guys over there keeping us from doing our business, and on both sides, there's some truth to what has been said. i think most senators are happy with this result. i think they will be, i hope that it works, and the idea would be that the leaders will do their best to see that most bills go to committee, come to the floor, and that when they do, if the senator from north carolina has the amendment, but the senator from tennessee would rather not vote on, she offers it anyway if she wants to, or if i had one she doesn't want to vote on, i might offer it anyway

because it's important to the people of my state even though we might be in a political minority at the moment, and i believe that in most cases, most senators in the minority have that opportunity, that that will help us get back to the kind of senate that we want to see. now, i would like to complement senator udall and senator harken. i learned a long time ago in life if you start in one direction, you might not get in the way you want to go, but if you don't start at all, you go nowhere. i think they have a creative time here where the senate is taking some steps today that will help the people of this country know that serious issues, and we've got plenty of them, the debt for example, .42 cents of every dollar is

borrowed. jobs, for example, in my state, there's been 27 months of 9% unemployment. these changes will help us deal better with those issues. i will have more opportunity to talk about those after lunch later this afternoon. i want my friends on the other side to have a chance to make their points before we adjourn or take a recess for an hour, but fundamentally, the steps we're taking make a difference. the one i'm especially glad to see is the effort to make it easier for a president, any president to staff his or her government. one of the problems and senator reed talked about it is we confirm too many people. it's not necessary for us to confirm the pr officer for a minor department. there's no need for that. the secretary needs to go ahead

and be able to appoint that person, and we need to work on more important issues, and secondly, we created a phenomena in that town that i referred to as innocent until nominated. we've created a situation where any citizen who is indicted by the president to serve in his government has to run such a gauntlet it's almost impossible to get to the end the gauntlet without being branded as a criminal. we have a amaze of conflicts and forms in the executive branch, there's press audit and conflicts forms # in the senate, and it not only delays, but traps and tricks people in filling out one form of position here. we all know it needs to be fixed. we tried before, but the majority leaders and minority leader tried to fix it, and they didn't get it done. others tried to fix it, and they

couldn't get it done. two years ago in a bipartisan breakfast that senator lieberman and i hosted, let's get this done. we talked to president obama's administration about this and they said, sure, go ahead. we'd like to see that happen for us or the president after the next term, but we couldn't get it done bus of resistance in the body giving up any sort of power. right now, madam president, there's a unique support for the idea of making it easier for any president to staff his or her government, the majority leader, and the republican leader are solidly behind the effort. senator collins is behind the effort. senator schumer and i are working on a bill to do that, and we hope we can succeed. this opportunity, this window, would not have happened if it wasn't for the work of the senators who have been arguing for reforms. the other steps we're likely to

take is abolishing of the secret hole. i think that's a good idea. i speak from experience. when i was nominated by the first president bush to be education secretary, the senator put a hold on my name, took three months to get it off. we finally found out who it was. i never knew why it was or why he took it off, but i might have known it a little earlier. i think it's a good idea. they put a hold on one of any nominees, but he did it publicly. i put a hold on one of his nominees publicly, but we worked it out. there's nothing with sorting our dislikes, but let's do it publicly. i appreciate the efforts of the senators who have been working more than a decade on that as well as other senators. the stuff that says if a bill has for 72 hours been on the internet and filed that we can't require the clerk to read it all

night long, that's a very common sense proposal. i know it would be greatly appreciated by the employees of the senate who have the job of reading the bill as they had a chance to vote, this would be the bill on which they would like to have a chance to vote yes. these are important steps in the right direction about which we'll have a chance to talk more about today as the debate goes on, but i'd like to end where i began. what we need moe in the senate -- what we need most in the senate is a change in behavior in addition to the change in rules. we need to preserve the senate as a form for minority right. we need to preserve the 60-vote requirement for major votes. that will force consensus. that will cause us to work together. that will build support out of the country as a result of what

we do because they can see both republicans and democrats see, for example, the way we've gone about trying to make social security sol vent is a good way whether than one side or the other jams legislation through. we operate by a simple majority. the house can repeal the health care bill overnight, bring it over to the senate, that side says, let's step and think about it. the house if it's democratic they can repeal the secret ballot elections overnight, and it did with its votes in the last congress, but when it came over here, the republican side said, let's stop and think about it. the american people are better served by having these two different kinds of bodies and the senate and the american people will be better served both by the rules changes that will likely to adopt this afternoon and especially by the agreement by the majority leader and republican leader which i

feel confident has the backing of almost all of us that we would like in the united states senate where most bills are considered by committee, where most bills come to the floor, and where senators most of the time have an opportunity to offer their amendments in debate. to be sure, there will be times when, if it's repeal of the health care, that side does everything they can do exercise their right to stop it, or if it's repeal of the secret ballot union elections, this side will do everything we can to exercise our rights to stop it, but that won't be the ordinary course of events if this works like we hope it does. i hope my friends on the other side feel good about what they have done. they have not achieved everything they sought to achieve, but none of us rarely ever do, particularly in the body offered by a consent of 100. what they have done, i believe

in addition to the rules changes we're likely to adopt, is created a window in which we had a good open discussion about the kind of place we wanted to work, the kinds of senate that we hope would serve the american people the best, and we've come to a consensus about a change in behavior which i believe in the end will be more important than a change in the rules. madam president, i yield the floor. >> madam president? >> the senator from new mexico. >> i have a couple unanimous concept requests from committees and also on a staff member. i ask -- i have five unanimous consent requests for committees to meet during today's session of the senate. they have i provable of the majority and minority leaders, and i ask unanimous consent these requests be agreed to and be printed in the record. >> without objection. >> and i also ask unanimous con acceptability of team woodbury

be granted floor privileges for today's debate. >> without objection. >> before senator alexander leaves, i know we have our conferences, and i guess we're going to go until 1 today, but i'd like to thank him for all of his efforts, and i really look forward to senator alexander being the ranking member, i believe he's going to be the ranking member on the rules committee now that bob bennett has moved on to other things, and he's participated in many of these hearings, and i really look forward to continuing the exchange on rules that we've had. i don't think this is the end of the rules debate which i think is why we have a full time debate on this, and i think the senators listening to us today that you'll talk to on your side i'm sure in about 15 minutes, senator alexander, that they look at our rules and offer

suggestions and we still continue this discussion in the rules committee, and i want to thank all of the leaders that came down here today and talked. senator reid and senator mcconnell they announced an agreement where we're moving forward with reforms. senator schumer has been a real champion on rules reform. i remember going to him and asking for hearings, and he said, well, what kind of hearings are we looking at? what do we want to do? i explained to him, went through we need to talk about the history of the filibuster. the filibuster was not in the original senate. there were rules for 17 years where you had what was called a motion to order the previous question. that is a majority motion to cut off debate, and then later it

was changed, and so i said we got to get the history out there for everybody to see because some of these charges are not very accurate, and he was a champion. he allowed us to do six hearings. we brought in constitutional scholars. both sides participated, and it was very, very productive, so here we are at the beginning of a congress, and we have been pressing with my good colleague and friend from oregon, pressing for rules we form through the constitution, relying on the constitution, and article 1 section 5 of the constitution, it gives up the power and the authority, a majority of us at the beginning of an organizationing session to determine what rules we function under the next two years, and that's the exercise that we have been in, and senator, one of the thing i want to say that i think both of us realize is that we

know that if we hasn't utilized our rights under the constitution, if we hadn't pushed this very hard and said, we are trying to round up 51 senators that will stand up with us and say we want change in this institution, we want to get back to being the greatest deliberative body, we want to consider all the important bills in a timely way, budget bills, appropriations bills, and i think by utilizing our constitutional -- our constitutional option or our rights under the constitution, we have come a long way in a year. we have had many debates in our caucus. we've had many discussions, but the one point i want to make is we're not exactly where i think you and i think we should be at this particular point in time because while these reforms and

let me say that these reforms, i think, are a step forward and in some ways significant, the fact we're getting rid of secret holes if we have that vote today and get 60 votes, that's a good thing. the nominations letting the president get his team in place. that's a good thing. reading of amendments. my cousin mark udall from colorado is involved with that. the motion to proceed, the agreement to proceed and filling the tree, that is a significant step in behavior to say let's change our behavior, and then the fact that we're going to have votes today, later today, on senate resolution 10, on the senator merkley's talk on the filibuster and senator harkin's proposal. these are significant votes to be taking and significant steps forward, but i have to tell you that i -- and that's what i wanted to focus and for you and i to talk about senator

merkley. i strongly disagree with one thing announced here with the idea that the two leaders are taking off the table thus utilizing our constitutional rights. that was what announced, and i think we both heard it the same way. leader mcconnell and leader reid both said they are not going to rely on a majority vote for rules in the future no matter who is in power and what's happening. well, the beauty of the constitution, and i think we all realize this spending some time with it, is that that doesn't -- that's a good agreement for them. it doesn't apply to 98 other senators. senator, each senator under the constitution has his or her right to rely on those constitutional rights, and so i would urge that every time in

the past when we've had a movement for change on rules that it be bipartisan, and that we're seeking 51 senators to join with us because if 51 senators join at the beginning of a congress and say, we want rules reform. we want this place to function better. we want to do the peoples' work better, take up the 400 bills that died, do appropriations bills in a timely way, all of these things are important to a better functioning senate and a better functioning senator is all about the people's work. i thought for the last couple minutes here, i know you want to say initial comments, senator merkley, but we could talking about the idea that we've moved a long way, pushed the constitutional option. i don't think there's any doubt that you and i are giving up on our constitutional rights.

other senators can say what they want to do, but we are going to stand and utilize our rights as we move down the road, and we're hoping that we will be at a place where we have 51 senators, democrats and republicans, that are beginning to continue to look at this and find a better way to make this institution work in terms of modern issues, modern times. i think we're stuck back in another century with these rules, and we really need to bring it up to date, and with that, senator merkley, you and i, i think, are going to engage in a little bit of a colloquy, but i know you had initial comments, and i'm happy to let you jump in at this point. >> mr. president -- madam president? >> the senator from oregon. >> thank you, madam president, and a huge thanks from my colleague from new mexico on his leadership on the constitutional option.

some may ponder how it is that we come to have this constitutional argument at this moment, and as you noted under the constitution, this body is empowered to organize itself, and that is not that those who spoke 100 years ago or 50 years ago get to tell us how to operate, but we today in this chamber have the power of the constitution to organize ourselves. there is little question from constitutional scholars about this understanding of the very plain words written by our forefathers as they designed this institution, and indeed, they were very clear, the authors of the constitution, when supermajority requirements were set, supermajority for overwriting a presidential veto, supermajority for impeachment, supermajority for treaties, but a simple majority to pass bills,

a simple majority to pass amendments, a simple majority to adopt the rules by which we would function, and indeed, that's exactly what the first congress did. they used a simple majority to adopt their rules, and they extended to each other a curtesy to hear each other out, those 26 senators coming from 13 states. they heard each other out to make better discussions. now -- decisions. now, over time, that curtesy has grown to be formally entrenched in senator rule that it shuts down the government and takes a supermajority. to understand such power from one senator to shut down this body requires a supermajority, delay action for a week would be a power rarely used, a power

used in curtesy and respect to the other members, that only be used for the most important issues, the most -- the highest issues of highest concerns for one's particular state or future of this nation, but that social contract is what has disappeared that went hand in hand with the rule with the supermajority. let me put up a simple chart here to show the deterioration of that social contract. here we are with the average number of cloture motions, and the average in 1900 and 1970 was one per year, and in 1970s, 16, and you can see how this grows over time until in the 1990s, we were at 36. in the 2000s, 48, and in the last two years, 68 per year.

this is the change from the curtesy of hearing each other out to using a supermajority as an instrument of legislative destruction to blocking good debate, to block aid the will of the majority, to blockade the will of the senate as a whole. this meant no appropriation bills were adopted last year, that no budget was adopted, that 400 house bills lay collecting dust on the floor rather than being processed and voted on, more than 100 nominations were never acted on and failed in our constitutional duty to advise and concept. it's in recognizing all of that and it's apparent to new members of the body observing this that

something had to be done, and that is why i was so impressed when you stepped forward, senator udall, and said we will use the power of the constitution to help restore the broken senate, and it's been a privilege an honor to team up with you and team up with many of our members in this effort, so we come to this point today where as my colleague mentioned, there's a number of steps forward coming out of this debate, but they are modest steps forward. some of them are ones that have been debated for years. i applaud senator wyden from my state who worked with senator grassley on secret holes, and in 15 years he's argued we shouldn't be able to put o hold

on legislation. for 15 years he's done that since he came into the senate, and he's slothly -- absolutely right, and i think a senate majority will adopt that today. confirmation, they're steps forward. but i'd like you to envision three 60-foot high walls between where you are now and where you need to be to have the senate work as a body that debates legislation an votes on legislation. the first 60-foot wall is cloture on the motion to proceed. the next 60-foot wall is cloture on an amendment. and actually there can be any number of those. and the third 60-foot wall is assathe third 60-foot wall is final passage closing down thea debate forin final passage. agrt and so in this agreement today,e

the leaders that the motiond to proceed will not be w filibustered. that is the first being taken ui down or at least a commitmentxti not to use it except in extraordinary circumstances. that means there is two more pla major walls left in place and i stepped back from that and ask how much will it change for thes senate because if i go back to this chart, we have the first bn wall is one that has only been occasionally used.ainng it's the second and third will cover the main things driving ou the paralysis of the senate. so i hope indeed that when the r majority minority leader talkedn about changing behavior, when my good friend from tennessee, marr alexander, talks about behavior

and who to talk about restoring the social contract, thefilibu d filibuster would rarely be useda because there would be a tremendous step forward so i pro will hold out that promise. onle will onlsy happen when a center n frivolous effort to continue or nomination that's overwhelmingly support it that it would be up to the leadershie to say that's not acceptable wed need to restore the social contract and if the behaviore happens there will be a tremendous step. but meanwhile, i echo my colleague's comments that i u cannot surrender their riseghtsa under the constitution to use ao majority to continue to pursueet rules that will make our brokenk senate work better.s. so i reserve the right as he mao

does. now, there are many who say the senate should be different than the house and the traditionaloue term is and should be a cooling saucer and in part that wast thw related to the debate and the design of the constitution when. our terms were staggered so oneo third elected every two years and so the country may be wayngb over here and the senate maye-te change accordingly but over aver third are up for reelection. there may be one-third and the senate changes less and in a discourtesy hearing each other e out and pondering the argumentit each other are making. but the cooling saucer is very different than the routine usehe of the filibuster to obstruct the ability to act. las jury different than the way it's prev enbeen used a ball last few yeas to prevent us from doing hse

appropriation bills, houseprevet bills, nominations from being e. considered. that has to end. that has to change and so i pledge myself to continuebu working hoping the behavior will change on its own, but workingen with others to say that when it doesn't change we need to change the rule to make this institution fulfill its constitutional responsibility. we are going to be breaking soon and when we come back i hope toe resume aci conversation about se of the specific items we will b. voting on later today. the one i particularly want to talk about is the jimmy stewartt talking filibuster. it's a compromise that takeshe r into account the desire that wee anr each other out, the desires that we be a cooling saucer that accountable to the public not te

havet the silent or the secret filibuster we have now, but toge have the public talking filibuster where we actually debate. so i will say more about that when we come back and i will close, madame president by thinking all of those that have been in the conversation certainly lamar alexander from the republican party and chuck , schumer, both of them on rulesrt to hold hearings to craftders structure for our leadership, our majority leader harry reid, minority leader mitch mcconnellt to had been in thisesulted conversation that has resulted in theha steps forward taken tod and applaud all of the members who have said that as a u.s. senator sworn to uphold theoblio constitution they have anake the obligation to make the senate ae great body something it onceow, was, something is not now, buto something that is in our hands

to make happen again. thank you, madame president.

earlier former president bill clinton urged israel to arrange a peace agreement with the palestinians saying the jewish state will never have a better partner than the current palestinian leadership. in his speech mr. clint also talks about politics in washington and critical of republicans. his remarks came at the world

economic forum in davos switzerland. >> thank you for being able to join us here again in davos. it has become a kind of tradition. you came first in 2009 as president of the united states, and i would say we cannot believe that it's just around ten years ago that you left the office and i would say you have given a new significance to the word retirement if i look at what you have done in between. of course you have created the clinton foundation and the clinton global the initiative which is set up in 2005 and we

are very pleased to share the same objective and to cooperate submission always been what can we do together in order to improve the state of the world. i just would like to mention the four areas you are particularly involved in in the clinton global initiative at this moment because it changes the focus and is in power in the women and girls strengthening market-based solutions and enhancing access to modern technology and harnessing human potential. one area the clinton global the initiative for on has been able to work together is the situation in haiti, and i would

call your attention to a publication, which we just published this week with your help and with your support. it's called private sector development come opportunities for investment, job creation and growth, so we took a very close-knit approach to haiti and we will hear afterwards how you feel about eight. i would like to see three on behalf of both of us to all those members and partners who have been involved in the companies like coca-cola, mckinsey, t. ansi, microsoft, and of course the international organizations such as the world bank, the ifc and the international development bank.

i'm asking you the first question. when you look at haiti where we stand today, are you satisfied with what has been achieved and particularly do you believe what has been achieved sustainable for the future? >> well, first of all, thank you for having me again and for continuing to modify and grow the world economic forum and making all of our facilities more comfortable this year. and thank you for the support you've given to the efforts in haiti. we will begin with haiti. am i satisfied with the progress that has been made?

no. is it sustainable? yes, if we emerge from the current political situation, and let me explain what i mean by that. for in april of last year about three months after the year's quake, after a lot of the emergency work had been done to try to save lives and put people in temporary shelter and maturity of food and water and the basic things taken care of. the government of haiti with its supporters decided that we ought to have a mechanism that would enable the reconstruction to begin to rebuild the economy to deal with the housing and the other challenges on a long-term basis while the government itself felt an agency that could

supervise this for several years. so a very unique mechanism was set up called the interim hagee three construction commission, which is half international donors and participants. the inter-american development bank, the leader who has been just wonderful is here today, that the world bank, the united nations. i would clap for you, too, my friend. the united nations, all the countries that pledged 100 million or more, canada, france, those states, but venezuela is there. cuba has observing status because they've given a lot of things. people who fight with each other in our hemisphere are united in trying to help haiti and in every sector of the societies represented. what we didn't after the tsunami

to help the public donations through and also to get the non-governmental organizations to get their projects approved because this commission basically has a mandate to do the rebuilding in a way consistent with the economic plan and the social development plan adopted by the government of haiti. then we had to step it up. keep in mind 70% of the government work force was killed on earthquake day and we have to create a whole new agencies of it took until about august to really get going. we had a lot of help from the company and others and we were moving now. many countries in the u.n. have given us staff people and people have been willing to go home and work, and since then an enormous amount of work has been done and

i think we've got a better strategy for how to get rid of the rubble we are going to have a housing expo and i think this year you'll see a lot of movement out of those camps in the housing, and so yes it is sustainable. now in the midst of all of this, they're has been an election for a new president and the parliament, and a dispute about the results of the presidential election, which has tried to resolve with the help of other interested parties. if we can have a election which is complete on time for both the new parliament and the new president that is perceived by the government and, i mean by the people of haiti to be an honest transparent process that is in power and to them, and if this can all go forward between now and the time the new government is to start meeting in many, then i think it is sustainable. i have a very, very high regard

for the man who is my co-chair in this commission who was here i think last year as the prime minister of haiti. they have emergency authority to act without legislative approval, and i hope that if we can get an understanding that we can make some changes in law and procedures of the country to make it work more competitive. i think the -- i just left an annual conference in saudi arabia, and i stopped off in both of those countries have done an astonishing job in the last few years of improving their competitiveness by measuring the progress against the world bank's ranking and world economic forum linking of competitive economies. that is what i have urged the haitians to do is to keep pushing themselves of the transparent process and it's one you can keep score on. but yes, i think it is

sustainable. no, i'm not satisfied with a lot of good things have been done even in the aftermath of the cholera epidemic doctors without borders and others have helped us establish clinics set up to deal with cholera but they leave us the skeleton of our national health system, and the private-sector has committed over $100 million in the country where 75% of the 9 million people live on less than $2 a day to the development projects. we just cut the ribbon on the restoration of haiti's's your market and a year urge you to go online, and you can find it on our haiti web site and the cell phone company because it was financed by dennis o'brien, but

the rebuilt in 1891 market fellows really built in turn century style buildings and it stands out with a pressure for a share of the destruction of haiti is one of the most beautiful buildings in the caribbean so we are going to be fine if our supporters will stay with us and we can manage the politics during the rebuilding. >> it was a good demonstration of the public-private partnership. >> in 2015 you have been very much involved, you are involved with your practical work and the conceptual work. my question here would be similar. are you satisfied with the

engagement of business and making the reality. >> the answer to the second question is i am very satisfied that there are more businesses involved in trying to figure of practical affordable and sustainable ways to not only meet but maintain the millennium demint goals than we could have predicted ten years ago that's the good news. i am concerned about something else. i am concerned about both businesses in this difficult environment and government in this difficult environment see the necessary investments in meeting these goals as somehow optional or one of those things that unfortunately needs to be

cut. you and i were talking backstage about whether this will happen or not, and i think it depends upon how central businesses and political leaders throughout the world see the meeting of the millennium of a goal. if you run a corporation and believe in markets and believe that they promote space freedom as well as economic prosperity, you have to be concerned about the continuing inequality in the world not only because it makes you feel that, but because in pos is very severe constraints on future growth. you should be concerned about the pace of climate change because if you look at australia alone it imposes very severe constraints on future growth so what we have to do i think is integrate creating these kinds of measures like the millennium telemental of shared progress

into the basic business plans. these things are no longer what he might call economic a string maladies. the have to be part of the core vision of what it is to run a business in a global society and what it is to run a responsible government. i am very worried, for example, in the united states now and in the aftermath of these congressional elections the majority party in the house, and that the best thing we can do is to pay for it by getting rid of all foreign assistance as if that were not part of not only our moral responsibility that our own economic and social well-being over the next unforeseeable period of time. this is something we need to talk about, and i hope in the form there will be thousands of conversations about this.

devotee it to understand to abandon this as a core set of making the global economy work in the 21st century would be a terrible mistake. >> i would formally in the following way as we did outside integrating external costs into the business model is not just a question of being socially oriented, it is a question long-term of survival. but let me shift to a more political issue. you were so close to reaching an agreement between as israel and

palestine and now we see the events and probably matters will become much more complicated, much more dangerous. would you like to share your ideas with us? >> first i think we don't really know how the tunisian process will play itself out but it is a manifestation of the yearning for change and accountability and shared progress moving throughout the world, particularly throughout the middle east and north africa. but the street demonstrations in cairo i feel differently about what happened in lebanon. so far, i hope i will be proved wrong, but it looks to me like a crash reaction, preemptive

reaction to an international body doing an objective effort to determine who murdered the prime minister hariri, so i feel differently about that. and i just want to make sure the lebanese have some real dominant role in controlling their own destiny over the long run. but i see what happened in tunisia and relatively speaking the smaller protest you see in the streets of cairo as a yearning in the middle east and north africa to be part of a modern world that works. in that sense, to me it is part and parcel of the modernization movement manifest in saudi arabia by building the new communities that first coeducational university which also does amazing surgery's and

research and adopting an economic development mechanism that is half private sector and the women fully represent. the women having the n.y.u. building universities and winning the competition with germany for the international clean energy headquarters on the promise of building in the middle east a city that is completely carbon national in the university and qatar and the whipping they put up on the world cup thing and the air-conditioned stadiums so you can play football when 110-degree temperature. all of this is a part. dubai recently hosted a conference. i flew all the way to do by. 22 countries of north africa about the alarming rise of diabetes, to childhood obesity

and what could be done about because of a project we have in the united states. this is a huge deal of these countries coming together wanting to adopt common policies to restore a longer future to other countries and all of this is really exciting to me. what we have to do is give the tunisian positive way forward and try to get the egyptians a way for word that connects the egypt that i know that the left out and left behind live-in. i recently spoke to the u.s. and egyptian king chamber of commerce and the had more than 1500 people. it was accelerating. but the people you see on the street and television don't feel like they are a part of that. so there will be fits and starts but on balance if i were in israel and i had any influence i

would want to make that deal now because all the countries offer a political and economic and security partnership not just peace or the normalization of relationships with a genuine partnership, and they realize israel will become the first in the world to put 100,000 electric cars on the road, not the u.s. or china, not countries bigger. israel. can you imagine what the synergies of economic and social development that could be if the palestinians were given their state and got the best partner in the west bank they've ever had? so to me all these things going on should make a peace more likely to read they are all kind of arguments against that but just look where we are going to be in five years, ten years, 20 years can anyone imagine the

middle east are in particular the israelis and palestinians will be better off if we do not do this now. it has to be worse, not better the question is when you see on television and the disruptions will animate the party to make a peace agreement but a lot to be done because of the positive future the can build together not just out of fear. >> i would like to ask -- [applause] i see someone sitting also has served. david gergen, how many presidents, five, six? >> since grover cleveland actually. islamic david gergen a thought he was always going to be known

as my republican in the white house but he was so promiscuous it turned out he would work for any president. [laughter] he proved he could outlast us all. >> thank you for coming back to davos. i know i speak for a lot of folks. it's good to see you looking so fit. [applause] to questions, one about leadership. we have many young leaders here in davos coming from business, pacific sector and public sector what advice would you give them, what counsel how they might be effective leaders in the 21st century? first question to be the second question, as you know, the debate has broken out again about whether america is in decline and with public intellectuals like neil ferguson

issuing threats about america's decline. but others like joe nigh who are much more reassuring. and i am curious where you are in the debate and what you think the implications are for american and the world especially in relationship to china. and how does america get back on track in the creation of jobs? if he also has lots i know people would welcome them. thank you. >> to the young leaders i would say the challenges you face depend on where you live and how global your activities are, but if you should -- what ever you do you should focus on the interconnection of your

activities to everything else going on in your country and region in the world and i believe there are two things i would like to see focus on one of which i talked about all the time like a broken record and that is don't just talk about the challenges we face. do something about them. don't just say you wish the people and your government would do this, that or the other thing or you wish the people running the biggest companies in the world would do this, that or the other thing. figured out something you can do to change things in the direction you think they ought to go, because the world is so hungry today for example of things that work. lots of people talk about what doesn't work. it's quite an ka another thing to do something no matter how small it may seem but it changes the lives and the direction you

think. second thing i haven't thought much about but i have been getting a lot of thought to this most of us believe that personal freedom, market economics and political democracy are a pretty good thing but we need a little more sophisticated analysis of how you manifest that. as i always tell people in areas where there is an election for the first time in a long time after bloodshed that a true democracy is more the majority rule was also the minority rights and law. but beyond that, i am struck by how the peculiarities of the political systems continually produce governments that will

not make decisions that all public opinion polls show our support in the country. i just -- i will give you a couple of ideas. if you took a poll in israel and the palestinian territory today, you could get big majorities in both places for a peace agreement that nearly everybody would consider honorable and would be close enough to the one that the king of saudi arabia, king abdullah got the countries in the middle east and then he eventually i'd think the prince is here and can tell me more than 22 other countries to sign off on offering a partnership with israel if they take it. but if you look at how people actually get elected and why and if you look at the political pressures which you see played

out in lebanon, you see that sometimes what may be perfectly honest election is put through a space forum the will not produce a government that reflects the majority rule and that's very frustrating. that brings me to your other question about america. do i think america is in decline? i don't. but it's relative position is changing. you and i used to talk about this when i was in the white house. i used to tell everybody that at the end of the cold war we have a brief moment where america was the world's only military and economic and political superpower. i would remind them china is bigger, in the is bigger than we were, and if europe continues to unite politically and economically they would be bigger than we were and you can

never begrudged someone else the fruits of their labor for the benefit of their imagination. therefore it wouldn't be long before others had aggregate wealth leads as great as we did and then whether our military superpower and its unique depending how they decide to spend their money. and whether our political influence remain unique, dependent on to things, how they decide to exercise their influence and whether we can remain true to our own values that attracted to people throughout the world. so what i think, david, is that relatively speaking the 21st century will belong to a lot of countries but the world would be much better off if america was still a very important positive force and we cannot be an important positive force in politics or security affairs unless we have a strong economy.

i don't like the people that have given up on us because people have been betting against the country more than 200 years and so far everybody has bet against this has lost money because we have a remarkable ability to keep coming back. on the other hand, i don't like what i see has set up as one of the main things that the new republicans are trying to set up in the 2012 election which is they know america is a truly exceptional country and all of these democrats don't. like michele bachman said in her tea party response to president obama, everybody knows we have the greatest health care system in the world. that is factually untrue. that's not true. you can get the best health care in the world if you're bill clinton and david gergen but

that's not the same as having the best system that works for everybody. what i think america needs as much as anything else is to stop conducting its politics in a parallel universe divorced from reality with no facts, and i say that -- [applause] look connie would make every american matter whether you are republican or democrat if we talk about what i thought to be done. i think it is a good thing that a lot of the states with excess pension burdens are going to be forced to reexamine them. i think it is a terrible thing that the state and local governments went around pretending for decades they were running on balanced budgets when they were doing no such thing. i think there's a lot things that conservatives are saying that need to be heard in the budgeting mechanism. on the of our hand, i think the idea of addressing america's's

deficit problems in a period of no growth by saying we are not going to do with the defense budget or medicare or with medicaid we have to pay interest on the debt, therefore we will focus all of our cuts on the 15% of the budget that is our halfway to the future is not. we need to put our country back in the future business. my answer to do about america's future is you go all the way back to the civilization you will see that every successful civilization builds institutions that lifted to greatness and left its talented people up and reward people for their productive efforts. that's what we've got to do in haiti because they don't have those institutions. and if you look at every one of those countries the roman empire you see at some point all those institutions which benefited

people get along in the tooth, they get creaky, the people running them become interested in holding onto their relative powers than advancing the purpose for which the institute was established. they become the people who are the constituents who become more interested in holding on to present benefits and putting a little bit at risk to build a better future for our children and grandchildren. that's where we are now. in the public and private sector that's why there's an opportunity here for genuine bipartisan cooperation in america. we need to modernize america's systems so they fulfill the purpose for which they are established with its government budgeting as a retirement system, the health care system, the education system, the way that we produce and consume energy, the way that we regulate, finance and provide credit investments there's more than enough work to go are

around and real debates to be had about a slightly right of center or left of center job, but i see where we are in 50 years depends on what we do now. so i think the inevitability of those who say we are down and out and the inevitability of those who say we are always going to be on top are both wrong. but i am still with winston churchill was when the british press dated him about not coming into world war ii and he said america always does the right thing after exhausting every other alternative. [laughter] what i believe this we need to be finished with this alternative exhaustion phase and get the show on the road and if we do, don't vote against us, we will come back again. [applause] >> i would like to take this

point a little bit further. you just mentioned the deficiencies in the space election process at this moment it is a society extremely polarized and my question to you and reflects in politics my question to you is what can be done to overcome this? is it something that this more spontaneous nature or something which driven by the system will remain effective? what is your recipe? >> let's just look at the political season. my party was bound to lose quite a number of seats in the congress because we picked on some very marginal seats in 2006

and 2008 because the weakness and the unpopularity of america's military involvement principally an iraq and because the economy was bad. on the other hand, we took what we did because there was a very well organized to your effort to drive every alienated person months by comparing the president and the leaders of congress to the crypto socialists driving the country of the brink. what i mean by parallel universe is one more time the american people rewarded the policy that they say they are against. since 1981 when the government -- when the republican party had the traditional conservatism into demonizing the government as an institution and saying the most important thing you can do is to cut taxes and attack

government, america has been dominated. we had eight years and they had 20, 12 on one side until president obama was elected. during that time the conservatives produced 20 deficits and quadrupled before i took office and doubled it again when i left and i produced four of my budgets for surpluses and i paid down 600 billion. in other words, it's not what it seems. but they had a heck of a campaign. in 1994i lost the congress because it took on all of this and the national rifle association on guns and our party raised a lot of money but we gave it to the individual members of congress because we didn't know you could have a national campaign in the non-presidential year. we've known that since 94. in 98 we've and a national

campaign and we won since 1982 and the six years of the presidency. in 2002 we lost but president bush was at 80% after 9/11 we didn't lose much. in 2010 for the reasons i will never understand the democrats referred to the strategy of 1994, $1.6 billion even 10% to tell the american people what they had done, with the intended to do and what the differences were. so basically we had no national message and they did. it was amplified by rush limbaugh and white socks and amplified by their pay data and i don't blame them a. i am not criticizing the republicans. this is to be us. i am criticizing my party. we had no national message, so our losses were roughly twice as great as they needed to be and it's gotten everybody discouraged thinking of the polarization.

here's the biggest and to happen, they will be skirmishing and the conservatives and the tea party movement will probably try to force the president and democrats to accept the obliteration of the future budget of the federal government and obligations to the world through the aids program and other things we want mode to raise the debt limit. then one side or the other will blink or they both will and then we will get through that and then we will fight some more and then if we are lucky it will be like it was with new gingrich and me and bob dole and start working together and do good things for america. but we are going to have to put up with blood on the floor and a little uncertainty and a little both sides playing chicken for a while. i don't know how which is going to come out but since i believe most of the people genuinely

love their country even the ones that disagree with me i have to believe that in the end will find a way to work together and move the country forward therefore i think the president did the right thing in the state of the union address not to say some of the things i just said to you and instead to be positive and try to keep pushing the ball forward. that's not his job. he did the right thing to read i don't know what is going to come out, but my gut is a lot of these people that got elected they might not have a lot of experience and they might believe a lot of what they said i believe is factually not true but they are smart, they are vigorous and convicted and the are energetic and i know they love their country so they will find a way through this but we've got to stop having these -- i listen to brazillian debates about health care and nobody in the press said what

about the cost of continuing the status quo? 17.2% of the health care and none of our nearest competitors are closer than 10.5. next most expensive is right here in switzerland at 11.5 because your population is over and as you see the reason surgeon distributional challenges to bringing health care for the remote alpine, 10.5, germany, france at ten, the u.k. at 9.5, japan have not and. we are spending $1 trillion a year and nobody even talked about it the last election so what i want to do is be a nag on both sides and get people into the fact based world and going to the challenges. we will be fine if they do. >> we are living in an age of

what say austerity or we have to live in austerity of deleveraging. on the other hand, if everything is included i think the real rate is 16, 17% and if you burn let's say the unemployed people the relatives you come to a figure which is probably close to 40% of people directly or indirectly affected by unemployment so the next election probably very much determined by this issue. what would be your advice to become more protectionist or what would you do to impress this issue of unemployment? >> would make a couple of observations. number one, the tragedy of the

last deflection from my point of view is the democrats and president obama the size of the debt because the stimulus program which was a one-off deal brought because the economy was contracting and there was no private investment. that is the did was was the traditional economic theory. we never had permanent deficits in america before 1981. go back and look. we institutionalize the deficit spending, and it worked about eight years and then it didn't work very well for president bush which is why i won because there's only so long you can just keep borrowing money when the economic circumstances don't work. on the other hand the american people voted against borrowing money when the economic circumstances did warranted it. now that doesn't have to be all bad because on -- on like the

depression when we stopped the stimulus of spending too soon in 1937, we finance our own deficits. my grandfather kept a little money in a coffee tin and when franklin roosevelt would come on the radio he would go by a bomb and try, now we borrow the money from our trading partners and we are aggravating the global imbalances in the capitol when we do that on the other hand look at the dillinger is that your office facing. not part of the bureau's own is in worse shape arguably the and ireland and greece but seems to be coming back quicker because they were not subject to a level of contraction that in the conventional economic times you

wouldn't have so you have to figure out how to get money in. the united states has an interesting dilemma because the american people have voted now and say we want you to cut back now and start showing restraint now. the deficit commission, the bipartisan commission president obama appointed monday issued his report the recommended we not do this until next year when the growth was under way so what is the way out of this? we become more protectionist. in general, no, i was glad to see the president we should adopt the colombian and the panama trade agreements. on the other hand, one of the reasons the germans maintain an unemployment rate two points below the united states even when we had recovered a higher

percentage than germany had, why did they do that? i frankly did it for three or four reasons. one is germany did a better job of penetrating the chinese and other growing markets than we did. number two is the germans partly because of the partnership between the management and labour and partly because of wall have a much better way of dealing with the under employment than we do. in other words before you pay somebody the full unemployment in germany the have a system where you can get money from a trust fund you pay into to keep people employed at your fervor when the activity drops so you don't have to go to the trouble to hire and train again and do all that. the third reason is germany was one of the four countries in the world of the 44 wealthy ones who promised to make specific

targets under the kyoto climate change treaty and the others being sweden and denmark and all four of them before the financial collapse were outperforming the american economy, lower unemployment rates, higher job growth rates, higher business rates, less inequality because the change the way they produced and consumed energy and it turned out to be good economics and so i think that that is an indication that for the rich developed countries if you want doherty economy to grow you don't want to shut it down and become protectionist but you have to have a source of new jobs every five to eight years. the other thing i would say is china joined the world trade organization. we want them to be able to help the poor people in china who are not part of their prosperity yet. india, we don't want to see a major political crisis in india

where the country is the world's biggest middle class and billionaires' and still has 650 million people living on less than $2 a day so we want them to do that. on the other hand, the relative position of the united states and the other countries is different now and we have suffered now and we have 9.5 unemployment and if you count the discouraged workers has said about 16.7% of the working age population, and i do believe that our trade policy has got to reflect that and people can't say welcome you have to be open no matter whether you have any sense of parity in the rules and access to the markets in the currency tell you and what ever, we've got to recover our own economic strength or we won't be able to do any good for anybody else. we won't be able to fund the

global malaria or implement the millennium development goals so if you will see i am being adamantly opposed to some sort of a wholesale protectionism. i don't agree with the immigration of the new majority in congress. i think america and putting the unemployed and underemployed would be more likely to get jobs and raise their income if we pass immigration reform and brought a more skilled immigrant and would generate more economic activity. that's what i believe. [applause] but i do believe that we have no choice now but to try to focus on the american economy. >> we are having a session during this meeting with the prime minister of the scandinavian countries and if you look at our own and competitiveness the most

socially inclusive countries also in terms of gender equality are the most competitive once. >> absolutely. >> this is a lesson in which every country should learn. it is inclusive as we say. >> it goes back to the point that you say that there are no externalities' and economics anymore. the most effective political philosophy when it comes to economics is communitarian as some, not necessarily right or left or the government has to do this, the private sector has to do that, but that we are all in this together and have to create an environment of shared benefits, shared opportunities, shared responsibilities and, in progress. if you have too much in the call the the id is going to limit your growth potential. you are absolutely right. i don't mind us having an argument in america and throughout the world about what the best way to do that is, but

to pretend that the only thing that matters is to keep taxes as low as possible on the private-sector industry will the government and that will give you a good result defies evidence. there's not a single example of the world today of a truly successful economy that does not have number one a vigorous private sector, number two effective government, and number three a strategy to widen the circle of opportunities. there just isn't. you can't find one. so america now has been actually be permitted and i blame us, my party more than the other we had an election conducted on a totally false promise in your right. the interesting thing on this energy the listing all did it differently. germany leapfrogs japan and the united states to become the

number one country in the world with solar power although china is going to pass it. but in germany the sun shines on average as much as it does in london. laughter echoes of the had subsidies and yet deutsche bank, not to greenpeace, deutsche bank says the germans net 300,000 jobs out of the solar process. the swedes adopted a really sensible, unique carbon tax in 1991 under the conservative government. and david, you ought to talk about this on your television. the swedes adopted a carbon tax is it we are going to tax you so you know the real cost of carbon so it won't be in externality anymore and then we are going to give you the money back. 100% of the money. and if you want to spend its just the way you did and maintain the system we had you have the freedom to do it. and they gave the money back and

guess what? people went to spend the money on something else so sweden is the only country to meet its kyoto target virtually 100% through no alternative energy and efficiency than denmark and the u.k. they are slightly different stories but my point is you can argue this right or left, but you can't divide the evidence so i appreciate what you said. we need a conservative and progress of the debate over what kind of humanitarian as we have, how we have shared benefits and shared responsibilities? that is the the date the world needs. >> david, this is a good message to end this session but nevertheless, i have one last question. you have achieved such a lot

during your presidency. you have achieved in a different way a lot over the last ten years. i think a remarkable example of engagement, global engagement, social engagement. what do you want to achieve the next ten years? >> i would like to live. [laughter] i would like to be a grandfather. i have nothing to do with that achievement, but i would like to be. [laughter] and i would like to have a happy life, and she won't be on us she's a grandmother. [laughter] something she wants more than she wanted to be president. [laughter] seriously, i tell you what i would like. i consider every day a gift so i would like to maintain enough mental health and capacity to keep learning about the world as it is and keep trying to change it for the better.

and before i dhaka, whenever that is, i would like to believe that my own country and the world had at least embraced their right paradigm. we are never going to have all the answers and we are always going to fight like crazy over the details. the best is to be thinking that these things in the right way. that's why i love the world economic forum. the primary benefit may be 50 years now of all these davos meetings may have been by then in the millions of conversations that have occurred as people just keep reaching out for each other and reaching out for each other. ..

>> my wife was not surprised to find out i was part meanderthal -- [laughter] but she was stunned to learn that she was. [laughter] now, wait, most important of all, switzerland is now the home of the 6th largest superglider on earth. it was moved from texas to switsland after the 94 budget, but we still have smaller ones in the united states.

the first significant discovery came out of the superconductor last year. it may off a key to how life began after the big bang, and how we can finally do what einstein could be done and have a unified theory that encompasses biology, science, and chemistry. the atoms have to be in equal balance otherwise matter is not coherent and we would fly apart. the superconductor, it turns out that based on the findings confirmed or contra digitted when the swish machine is up and going, turns out they are slightly more positive than negative which would justify the

faith of all the believers of the world, make you more optimistic, and give us an explanation for how we mite of all come to this moment from the premortal time. this is a great and exciting time to be alive. we don't have a level of conscious and understanding embedded enough in these societies to make sintly good -- consistently good decisions. you ask what i want in the next ten years? before i die, i want to believe that's the case so that i can feel that 100 or 1,000 years from now, people on this little planet will make up with the same sense of wander i feel everyday. that's really what i want. >> thank you so much, president clinton. [applause]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] sunday, on c-span's rose to the white house, this past week, the likely 2012 republican presidential candidate spoke in bedford, new hampshire, part of a two day visit.

they will host the state of the nation primary. turn into the road to the white house sunday, at 6:30 and 9:30 p.m. eastern and pacific. >> this year, the federal budget deficits jumps by 40%. we'll hear from cbo director doug elmendorf on c-span2.

>> the u.s. budget deficit will hit a record $1.48 trillion in fiscal year 2011 according to the national congressional budget office. doug elmendorf at the senate budget committee chaired by content conrad of north dakota -- kent conrad of north dakota. >> the meeting will come to order. i want to welcome everybody to the budget committee this morning. i know there's other members who are on their way, but they had other business. as you know, this is a day that committee assignments are determined, and so there are members who will be here who are

involved in that process. today's hearings will focus on cbo's new budget and economic outlook. our witness today is cbo director, doug elmendorf. director elmendorf, welcome back to the committee. i want to take a moment to congratulate you on your reappointment formally made yesterday as cbo director. that is a well-deserved recognition for your extraordinarily professional work. i just want to say the confidence that you enjoy on both sides of the aisle is a testimony to you and to the entire team at cbo. over and over, you have demonstrated your independence. i might add even when i had a proposal that was very important to me, you did not give it very good marks, and i think that dmon straights -- demonstrates clearly your independence. that's healthy. that's what we need to hear.

we need an independent scorekeeper who will give us their best assessment of the affect of the policies enacted by congress. you have demonstrated, i believe, a very high degree of professionalism as has your entire team at the congressional budget office. you've been unbiased in a fair umpire calling it like you see it. your rea.ment by a -- reappointment speaks volumes of the trust and respected that you and your team have earned on both sides of the ail. we look forward to your testimony here today. cbo's report should be a red light flashing to the nation. our fiscal situation is serious and becoming more so. we are at a critical juncture where borrowing .40 cents of

every dollar that we spent. spending, as this chart indicates, is at its highest level as a share of the economy in more than 60 years, and revenue is lowest levels. it's at the lowest level in 60 years, no wonder we're heading towards the largest deficit ever. this is utterly unsustainable, and the sooner we address it, the sooner we come to grips with it, the better. this next chart depicts cbo's new ten year projections with additional policies added in. it shows due to passage of the

tax expansion package and the slow pace of the economic recovery, cbo is expecting to see deficits of more than a trillion dollars a year continuing through at least 2012. it shows deficits will then briefly fall before rising again as the bulk of the baby boom generation begins to retire and health care costs continue to climb. under the same se their owe, gross federal debt is expected to reach growth domestic product this year and continue rising. it is important to remember that many economists regard anything above the 90% threshold as a danger zone, and as disturbing as those near term deficits and debt are, the long term outlook is even more dire. it is the deteriorating long term outlook that is the country's biggest threat to long

term security. the warning signs are clear as they can be. earlier this month to the world's credit agency, s and p warned that rising u.s. debt could lead to america losing its aaa rating. if this happens, it would be a very serious blow and could set up continuing pensions in the global financial markets. in his recent testimony before the senate committee, federal reserve chairman bernanke called for political will to address the long term fiscal imbalances. he staids, and i quote, "nobody doubts the united states has the economic capacity to pay its bills. it's really a question. do we have the political will to do that? demonstration of political will, that's what the markets are watching. is the congress and the public and the administration, are they able to demonstrate that they are serious and that they have

enough willingness to work together to make progress?" at the point where confidence is lost, you can see a quick deterioration in financial conditions. that again all from the chairman of the federal reserve. i hope people are listening. we can't afford to wait until the markets lose confidence in a conduct of our financial affairs. we need to agent, and we need to act this year. that doesn't mean we need to make steep cuts immediately. all of the bipartisan commissions that have come back with recommendations have recommended that we begin modestly because of the continuing economic weakness, but that we put in place a credible plan that convinces markets that we are going to get the result that is required. enacting such a plan now

according to the chairman of the federal reserve and others, would reassure the markets and help boost our near term economy. i believe the deficit and debt reduction plan asemilled by the president -- assembled by the president's fiscal commission provides one way forward. i supported it. there are things in it i don't like, but that's really not the point. the fiscal commission came back with a plan that 11 of the 18 commissioners support it. , five democrats, five republicans, one independent. i can tell you it's not very popular. certainly by the phone calls and letters i've received. we understand that, but it's necessary. it would reduce the debt by some $4 trillion over the next ten years, and it would get us on a path that would take us back from the brink and do so in a

very important way. commission plan was also important because it showed how to reduce the deficit and debt in a balanced way. it included substantial cuts in the discretionary spending. it included entitlement reform. it included tax reform. tax reform that broadened the base and lowered rates to help america be more competitive. if you focus only on nondefense discretionary spending, the cuts have to be so draconian, they are not sustainable. that's my judgment. tax reform that raises revenue also, i believe, must be part of the plan. the result of this balanced approach was to get the deficit and the debt first stabilized and then over time to bring it down quite sharply. to solve the long term challenge, it will require real compromise and a great deal of

political will. we need everyone at the table, and that includes the president of the united states, and we need to have both sides democrat and republicans willing to move off their fixed positions and find commonground. we can't continue to put this off. we need to reach an agreement this year. it is time for the administration and members on both sides in congress to come together to get this done. with that, we'll turn to senator crapo who will do the statement for the republican side. i want to welcome you, senator. he served on the fiscal commission as well. he was one of the 11 that supported its conclusions as did i. thank you, senator for that, and please make whatever statement you choose, and then we will go to the witness and open it for questions. >> thank you very much, mr. chairman. >> if you would with hold --

>> yes. >> i want to welcome -- we haven't formally recognized the new members to the committee. that will happen in a process a little later today, but we now know who new members are going to be, and we want to welcome them here this morning. senator portman, senator tumi, senator johnson, i know later today you will be added to the committee, but we want to include you this morning, and we will extend the curtesy of giving you the chance to ask questions as well. with that, again, thank you, senator capo. >> thank you very much, mr. chairman, and we welcome the new members and look forward to working with them, and as you can see knowing who they are, they bring a high level of new talent to the committee, and we appreciate their willingness to support us. i also wanted to give senator sessions apologies. he had a conflict that was unavoidable. he asked i sit in until he gets

here. he will be the ranking member on our side this year, and we look forward to his solid leadership as well. i agree very strongly with the concerns that you have raised as we move forward to deal with america's fiscal dilemma, and mr. elmendorf, i appreciated working with you in the past and working closely as congress moves forward to develop a proposal that we can -- that is credible and that makes and gets us out of this difficult problem. i just want to hyleg -- highlight a couple points, most of which, senator conrad, you already made. first, the time for delay, the time for gridlock, the time for debate is over. we must take action. one of the strongest messages that the economists and experts who testify to the president's

fiscal commission gave, one the strongest messages they gave was that the single agent of the united states government, congress and the president coming together and developing a credible plan that had a realistic expectation of being followed would be one of the most significant things we could do to stengthen our economy to give confidence to investors and to help rebuild the revenue side of the equation that we are dealing with as we try to build a solution to this problem. we must act, and we must act now. we must demonstrate the political will that will require us to make a lot of tough decisions. the chairman was correct those of us who voted in favor of the plan, i don't think a single one of us liked everything in the plan, but i do believe that every one of us was faced very, very serious criticism because

of the ability to pick apart a proposal to get out of this difficult fiscal situation that we find ourselves in, and the fact that there are going to be plenty who will pick it apart whatever we choose to do, and we must be prepared to move forward aggressively, and i give my commitment, and i know on our side and your side there is the will to engage in this issue, and we've got to move it forward now. i also believe that the president must be heavily engaged in this process. to his credit, he established a fiscal commission to deal with the issue. that fiscal commission has now issued a report. the president has an opportunity to either accept or modify that report or propose some other approach and give us a detailed plan to move forward on it. it won't necessarily be the plan that congress adopts, but the

president needs to engage. we need to engage. we must get past the politics of the past and deal with this issue making the hard decisions that have to be made. as we move forward in that context, i personally very strongly believe that all aspects of the spending and revenue side of the equation must be on the table. they were in the president's fiscal commissions approach. i thought some were too lightly treated and others too heavily treated, but they were all on the table, and as a part of that, i strongly believe that we must have tax reform. one of the, i believe, most beneficial developments of the president's commission's activities was the elevation of the understanding that our tax code today is so complicated, so

unfair, so expensive to comply with, and puts america as a nation in such an anticompetitive position with the rest of the world that we have a tremendous difficulty on the revenue side of the solution achieving a solution. we must eliminate those problems and create a tax code in which americans can thrive in powerful economic activity, and i know dr. elmendorf that your side of that may be more focused on the budget numbers, but ultimately, i believe as a committee that we need, mr. chairman, to guide as we engage and put our approach together, we need to guide this nation in a comprehensive path toward a solution, a credible plan that can be put into place and implemented today. i mean, literally this year we

have to act. the last thing i have to say is this. any plan for us to get out of this difficult fiscal hole in which we have put ourselves as a nation must be a plan that will be implemented over a period of time, a period of years, and that will require that more than just this congress participate in more than just this president participate in implementing this plan. because of that, i believe that process reforms are as critical as the substance reforms dealing with spending and tax policy, and process reforms are going to have to be strong. what i mean by that is we need to not only create the plan we've been talking about and pass the plan and make it law, but also make it law that congress must follow that plan, and that supermajorities of

votes must be achieved in order to change it so that we can send the strong message to our people and to the world that we not only have put a plan on the table, but that we will implement it. there's a lot of tough parts of the task that we have before us, and dr. elmendorf, we're going to be relying on you for the numbers and analysis. we've done that on critical issues before, and i look forward to it on this process, but nothing could be more important. this is the most serious threat to our nation. i include the threat we receive from external sources. in fact, the head of the joint chiefs of staff said the greatest threat to our security is our debt, and i believe that we've got to get it right. we have to get the numbers right, the policy right, and we have to get the process right,

and i hope that we will be able to build a strong bipartisan solution to move forward and achieve that promptly. thank you, mr. chairman. >> thank you so much, mr. senator crapo, and thank you for your strong statement here this morning an thank you for your service on the fiscal commission. thanks, too, to the other members from the senate who supported that effort. senator colburn, senator greg who is now retired, but ranking member of this committee, and senator durbin along with my vote that made 5 of the 6 of the senate support the commission report even though i think all of us believe if we would have done it, we would have done a different job and perhaps a better job, but at the end of the day, we have to get a result. at the end of the day, we have got to find a way to get a result, and i just --

>> can i interject a quick point? >> certainly. >> i think everybody in america knows the commission's report failed to get the necessary 14 votes that would have required a vote in congress on it, but i think it's important to note that it did get more than 60% of the votes that was sufficient enough in the senate to pass. >> 11 of the 18, five democrats, five republicans, one independent supported the recommendations of the report. with that, we will turn to director elmendorf. again, welcome back to the committee, and please proceed with your testimony. >> thank you mr. chairman, senator crapo. i appreciate very much your confidence in me and much more importantly your confidence in the analysis my colleagues and i have been doing and will continue to do for you. among the colleague, i want to recognize bob den sis who is --

dennis who is behind me leading the division and one of the most important people for many years, and he's retiring from cbo at the end of next month. mr. chairman, i also want to -- >> [inaudible] [applause] >> mr. chairman, i want to pass on on behalf of me and my colleagues your plans to retire at the end of the session as we were unhappy for senator gregs plans to retire at the end of the previous congress, but we look forward to working with you for the next two years and working with senator sessions, senator crapo, and others throughout this congress. >> i'm not going to retire. i'm just not going to run again. [laughter] >> i understand.

the united states faces daunting economic and budget challenges. the economy struggled to recover from the recent recession. the pace of growth and output is anemic compared with that of other recoveries, and the unemployment rate has remained quite high. federal deficits and debt surged in the past two years owing to a combination of a severe drop in economic activity, the policy response to the economic problems, and an imbalance in spending and revenues that predates the recession. unfortunately, it is likely that a return to normal economic conditions will take years, and even after the economy has fully recovered, a return to sustainable budget conditions will require significant changes in tax and spending policies. let me discuss the economic outlook first, and then i'll turn to the budget outlook. cbo expects that production and

employment will expand in the coming years, but only at a moderate pace leaving the economy well behind its potential for some time. we project that real gdp increases by 3% this year and again next year reflecting continued strong growth in business investment, improvements in both resident issue investments, net exports, and consumer spending, but we have a long way to go on the employment front. move to the next slide, please. next one after that, please. keep going. sorry. and again. let's focus on this. payroll employment, which declined by 7.3 million during the recent recession, rose by only 70,000 jobs between june 2009 and december 2010. the recovery in employment is slowed not only by the slow

growth in output, but also by structural changes in the labor market such as a mismatch between the requirements of available jobs and skills of job seekers. we estimate the economy will add 2.5 million jobs per year for the next six years similar to the average pace during the late 1990s. even so, we expect the unemployment rate will fall only to 9.2% in the 4th quarter of this year and 8.2 percent in the 4th quarter of 2012. only by 2016 in our forecast does the unemployment rate reach 5.3% close to the natural or sustainable rate. cbo expects inflation will be low in 2011 and 2012 reflecting a large amount of unused resources in the economy, and will average no more than 2% a year between 2013 and 2016.

economic developments and the government's responses to them have, of course, had a big impact on the budget. we estimate that if current laws we rain unchanged, the budget deficit this year will be close to $1.5 trillion or 9.8% of gdp. that would follow deficits of 10% and 8.9% of gdp representing the deficits relative to the size of the economy since 1945. as a result, debts held by the public will jump from 40% of gdp at end of fiscal year of 2008 to 70% at the end of fiscal year 2011. if current laws remain unchanged as we assume for cbo's baseline projections, they drop remarkedly as a share of output. go back, i think, two slides.

the darker line shows the deficit under our baseline projections reflecting current law. deficits average 3.6% of gdp of 2012 through 2021 snching $3 trillion during that decade. as a result, the debt by the public keeps rising reaching 77% of gdp. however, that projection is based on the assumption that tax and spending policies unfold as specified in current law. consequently, it understates the budget deficits that would occur if many policies currently in place were continued rather than allowed to expire as under current law. for example, suppose instead that three major as pelgts of current policy were continued during the coming decade. first, the higher of 2011 exemption amount for minimum tax

is extended and along with the amt tax brackets has inpolice ininflations. second, the recently enacted tax legislation that affected individual taxes were extended rather than expire in january 2013. third, that medicare's payment rate for physician services were held constant rather than dropping sharply as scheduled under current law. all policies have been extended by the congress for one or two years. if they were extended permanently, deficits from 2012 to 2021 average about 6% of gdp rather than 3.6%. deficits over the coming decade total nearly $12 trillion. go to the next slide, please. debt held by the public in 2021 would rise to almost 100% of

gdp, the highest level since 1946. beyond the ten year projection period, further increases in federal debt relative to the nation's output almost certainly lie ahead if current policies remain in place. spending on social security and the government's major mandatory health care programs, medicare, medicaid, the children's health insurance program, and insurance subsidies to be provided through exchanges will increase from roughly 10% of gdp to 16% over the next 25 years. to prevent debt from becoming unsupportable, the congress has to substantially restrain the growth of spending, raise revenues significantly over gdp, or pursue a combination of the approaches. the longer the necessary adjustments are delayed, the greater the negative consequences of the mounting debt. the more uncertain individuals

and businesses will be about the future of government policies and the more drastic the ultimate policy changes will need to be. however, changes of the magnitude to ultimately be required could be disruptive. therefore, congress may wish to implement them gradually to avoid a sudden negative impact on the economy particularly as it recovers from the severe recession, and so as to give families, businesses, and state and local governments time to plan and adjust. allowing for such gradual implementation means remedying the fiscal imbalance takes longer and policy changes need to be enacted soon to limit the further increase in federal debt. thank you very much. >> thank you, director elmendorf. you know, one of the things we say a lot on this committee is the current trajectory projected

project on deficits and debts is unsustainable. you used that language as well. what do you mean by that? >> as the debt rises relative to the size of the economy, so does the burden on the economy, on american citizens of making the payments on that debt, of making the interest payments, and as that burden rises, it becomes more difficult to prevent further increase in debt because the rising interest payments are tending to squeeze out the other forms of government spending or push up tax rev new -- revenue that are difficult in ways for the country to absorb. the rising payments can snowball in a way that makes the debt rise faster and faster and one sees that in the longer term projections in the coming decade where the path of gdp can rise

quite sharply. in order to continue the borrowing implicit in those pictures, the government needs to find investors willing to purchase government securities both to roll over the existing debt as it matures and to acquire the new debt necessary to finance the ongoing budget deficits. at some point, investors are likely to become increasingly nervous about whether the government can, in fact, manage its budget. that's what we and others call the fiscal crisis, and we have seen recently other countries encounter a crisis of that sort in which it becomes impossible for the government to finance its trajectory of debt it has in mind at affordable interest rates. we've been very clear we don't have an analytic capability of

predicting what a tipping point might be and when it might happen, but as the debt rises relative to gdp and as the trajectory continues to be steeply upward, the risk of that sort of crisis increases. >> so part of your analysis and reason for the trajectory of our debt being unsustainable is that puts upward pressure on interest rates in order to satisfy those who loan us money to take on greater risk and that has the effect of slowing the economy, is that part of your analysis? >> yes, that's right. as the government needs to work harder to find buyers for its debt, it has to pay higher interest rates over time, and more importantly from the economic point of view, the government's borrowing is

crowding out the borrowing that private firms or households might do to support investment in plant and commitment or to support -- equipment or to support housing, and it is the crowding out of that private investment that makes future incomes lower than they otherwise might be. >> i think that analysis is very much in line with what every economist told the committee and the chairman of the federal reserve told the committee. let me go further because part of your analysis of the trajectory of future deficits and debt is tied to the question of interest rate levels, and you have a projection of what interest rates are likely to be during the term of this forecast. what would happen if the interest rates were, for example, 1% higher than you project?

i think you did a sensitivity analysis to determine what would happen to our debt if interest rates were just 1% higher than what you project currently? could you tell us what you found? >> yes, mr. chairman, and for others, this is in appendix b of the outlook where we ill lot strait -- illustrate the projections in different pieces of the economic forecast. if interest rates are 1% higher than we project throughout the entire decade for short term and long term rates, we estimate that the budget deficit would be one and a quarter trillion larger in the coming decade in the current projection. >> you add another one and a quarter trillion, trillion, that's with a "t," not billion or million, trillion, if the rate was 1% higher than in your forecast?

>> yes, that's right. >> let me ask you this. as you evaluate where we're headed, the chairman of the federal reserve testified before this committee in recent days and basically his advice to us on deficit and debt reduction was start modestly, but then grow the effort in a very determined way once the economy is on stronger ground. his argument to the committee was that this recovery is still fragile. one in every six americans is either underemployed or unemployed, and so what he was saying to this committee was you ought to begin the process, but begin fiscal discipline in a modest way, but put in place a plan that goes way beyond modest to get the debt first stabilized

and then to bring it down to more manageable levels. is that your advice to this committee as well? or what is your advice? >> as you know, mr. chairman, i won't make policy recommendations to you and your colleagues. i think in judging the speed of policy changing that you are considering, you and your colleagues face a difficult tradeoff. on one hand as i said, the longer that you wait to make the policy changes, the more the debt will mount, the greater the negative con convinces of that -- consequences of that will be including crowding out other investment, in connection increased loss of flexibility, the greater the burden of interest payments and crowding out other spending or pushing up tax receipts to keep the debt from growing yet faster, and the greater the risk of a fiscal crisis.

at the same time, the faster you make changes especially those of the mag any tiew require -- magmagnitude requires to fix this, those changes can be does resistentive to the -- disruptive to the households planning benefits, to the businesses that are planning around certain features of the tax code, to state and local governments who are depending with the federal government to continue the relationship as it has in the past. the faster you move, the harder it is for them to adjust. >> let me ask you this question. i think that analysis you gave is in line with what other economists told this committee of a broad range of philosophical backgrounds because when there's witnesses before the committee, we try to provide a broad range of philosophical input. some are telling us that tax cuts are so beneficial that if

we enact tax cuts, they really won't lead to additional deficits because the cost is justify set by -- offset by the economic growth they encourage. what is your analysis with respect to the effect of tax cuts on the budget? >> so the answer, of course, depends to some extent on the specific tax cuts that one has in mind. as a general matter, reductions in marginal tax rates which affect the incentives based by households and businesses, reductions in those rates can encourage work and saves, thus boost the economy, and through that provide some offset to the direct loss in tax revenue from the reductions in rates. for broad based reductions in taxes, i think the con consensus in the economics profession is

the offset provided by the extra work in saving is significantly smaller than the direct revenue loss, and thus that the net effect on the budget is a reduction in revenues. as i said, one might reach different conclusions for significant changes in rates, but for broad based changes, i think that's the general consensus. >> give us an understanding, and look, i supported extending the tax cuts. i supported extending all of them because i believe the economy was in such weak condition that we needed some certainty and we needed the additional lifts those tax cuts give in the short term. isn't cbo analysis of tax cuts have a deferential effect both short term and long term? >> yes, that's right. again, i don't think that's unique to us either. in the results that we presented to you in testimony at the end

of the september about the effects of different ways of extending the expiring tax provisions that you and your colleagues considered, we looked at the effects of the next few years and the effects of the end of the decade and beyond and future decades. in the short term, we think that reductions in tax receipts that put more money into the hands of taxpayers that they can then spend can stimulate economic activity. the demand for goods and production much employment as a result of that. that is especially true i should emphasize under current economic conditions where there is so much unused labor, so much unused industrial capacity and where the federal reserve pushed the interest rates that it controls most directly down essentially to their lower bound. in the longer term as we showed in the results in september, reductions in tax revenue that are not matched by reductions in

government spending and thus lead to wider budget deficits tend to reduce the level of economic activity and there are different forces working there. the lower tax rates spur work and saving as i said, and we incorporate that in the estimates. at the same time, the larger deficits again on the assumption spending is not cut, the larger investments crowd out larger capital formation. most of the models we use, and we use a variety to show the uncertainties, for most approaches we've taken, the loss of future output in income from the extra deficits outweigh the boost from the lower tax rates. >> isn't it your analysis that the tax cuts we just enacted, in fact, do add to the deficit and the debt? >> yes, that's correct. the legislation as we report in our outlook, that legislation

increased budget deficits this year and next and over the entire decade by around $100 billion i believe. >> all right. let me go to senator crapo, and then we'll go to members for questions in order of arrival. we use the early bird rule here, and we'll follow that as realm i think given the number senators, we better do 7-minute rounds. mr. crapo. >> thank you mr. chairman. i want to follow-up on the last line of questioning. in your analysis, i describe what the chairman and you were talking about as dynamic scoring of tax policy. i don't know if that's the accurate description of it, but do you take into consideration the dynamic impacts of tax policy as you provide us your numbers? in other words, when you do your analysis and come up with the

$800 billion number for deficit impact, are you calculating into that the dynamic impact of tax impacts on our economy and tax revenues #? >> people use this in different ways. i'll tell you what i mean. dynamic scoring i think of as incorporating in a revenue or cost estimate, a full range of microeconomic and macroeconomic responses. the revenue estimates that you get like all the revenue estimates have done for decades in congress and done by the staff, and not by the cb ork, those estimates incorporate a vast array of macroeconomic responses. they don't take account for gdp. we end our colleagues at the end of the joint tax committee and do academic analysis of various sorts in which we do allow the

macroeconomic aggregates to change to the behavioral changes along with microeconomic behavioral effects, and we report to you the dynamic analysis in the testimony i gave in september about the effects of tax policies #, we do this every year with the president's budget. we've done this for the american recovery and reinvestment act. we do this with a variety of circumstances. it is a great deal of work to do only for specific pieces of legislation for which we have weeks or months of lead time in your interest and the tax committee does similar structures of analysis as well. >> okay. let me ask you what kind of revenue growth estimates are you using throughout the decade in your projections? >> so revenue grows slowly for the next -- certainly for this year -- >> 3.8 for this year; right?

>> i believe -- i believe -- >> [inaudible] >> okay, so for this year -- for this year, there's revenue growing by 3.1%. >> 3.1, okay. >> and faster on average for the remainder of the decade, but much of that is from the expiration of a whole set of these tax provisions at the end of this year or end of next year, so over the next few years between now and 2014, tax reniewf rises -- revenue rises 5% of gdp and -- >> do you use projections as to what rate of inflation you expect in the economy? >> so, yes, obviously the nominal growth rates of revenue of spending depend on our projection of inflation. as i mentioned earlier, and we

describe it in the report, we expect inflation to be remain low over the next few years and move up towards the federal reserve's implicit target which according to chairman beer -- bernanke is 2% or lower. it leads to more revenues, more spending, and higher interest payments on the debt, and in appendix c one of the experiments we did is what would happen if inflation was higher, or appendix b, this adds about $100 million to deficits over the next decade. with higher inflation, there's higher interest rates so this already large and growing burden of interest payments would grow even faster. >> are you familiar, i'm shifting gears here, but are you familiar with the studies down

by rhinehart comparing debt and gdp's of different nations? >> yes. >> you're aware then that they use gross debt in their analysis. you've indicated that debt owed to the public which is significantly lower than that is going to be approaching the 90 to 100% mark by the end of the decade. could you comment on giving the context of their analysis and the fact that using literally debt owed to the public as opposed to growth debt, we are rapidly approaching those markers. what do you expect to be the consequences of our failure to change that dynamic, that growth in death? >> u.s. debt, publicly held debt, is already in unfamiliar territory for our country, and over the course of the next

decade if current policies are continued and debt pushed up towards 100% of gdp, that's unfamiliar territory for all developed countries over the past several decades, not completely unknown territory, some countries have gone there. their experiences have usually been poor. the u.s. is different from other countries in a variety of ways that might effect how far we can push up debt before we can incutter kneeing -- encounter negative consequences. people view the u.s. economy as a vibrant one and the system as a reliable one. that gives us a little more room perhaps. on the other hand, we have low private save rates compared with other countries, so our government debt can't be absorbed as much in u.s. savings. it relies # on the savings and investments of others.

that's giving us less room in other countries. >> well, let me interrupt and move to the next question because time is short. i want to follow up on that in a future round. quickly though, there are four major housing and banking activities reflected in the federal budget to various degrees. t.a.r.p. finance programs, the federal government's obligations to fannie and freddie, premiums paid by to banks and deposit insurance policy funds, and the federal reserve's interest income to the treasury earned on open market operations and other portfolio investments. can you explain the budget numbers with each entity reflects? do the numbers reflect cash, credit scoring, or actual cost, and are we treating these different aspects differently in the budget analysis? >> so the answer to the last part of the question is yes, they are treated differently.

the federal budget is primarily a cash flow accounting. money coming in and money going out. about 20 years ago in the federal reform act, there were changing made to try to better reflect the true cost of some of the government's financial activities, the credit programs. in fact, that methodology which we apply to credit programs under law today doesn't reflect the full cost of the government, the full cost the government takes on in credit programs. beyond that, some of the other particular parts of the government's activities that you mentioned have been put in place with different budgetary treatment. the t.a.r.p. was set in place with instructions to us to treat it not exactly under the credit reform basis, but under a credit reform basis with an adjustment for the extra risk the government is taking on, and we

have done that. fannie and freddie were brought into the government through the ownership and control that the government demonstrated. there is nothing in law that specifies how they should be treated in the budget. we are triting them after discussion with a bunch of committees under the same risk adjustment basis that we treat t.a.r.p.. the administration still views them outside the budget when they record the history of transactions. they record cash payments to the entities like they were outside entities. unfortunately, in contrast, our projections which vow them part of the government which we think is appropriate treats them more like -- doesn't record the cash train -- transactions but records what activities they are engaged in. it's a very complicated business and we're in ongoing discussions with the budget committee on both side here and also in the house to try to think through if

there are better ways for us to communicate to you and your colleagues what is really going on. >> can i just intercreed on this point, senator crapo? >> yes. >> because i think it's important for members of the committee to know. cbo when they have a question on how to do these things consults the chairman and ranking member of both the house and senate budget committees. they consulted us on the treatment of fannie or freddie on or off the books. we up cysted -- insisted it be included because we think that is the most accurate reflection of the effect on the federal books, and we were unanimous in that view. senator greg was the ranking here at that time. congressman ryan was ranking in

the house, and the former chairman spratt, the four of us consulted, agreed unanimously -- >> and i agreed with it. >> that it ought to be included. thank you. >> i still believe that's the correct decision and chiropractic bomented to do it -- cbo wanted to do it that way and we thought it was the appropriate way so we're not having things off the books here. >> hopefully omb will follow that lead. >> next is senator cardin. >> thank you, director elmendorf, we appreciate your service and agree with the comments made that we need a credible plan now. the support and enactment of a credible plan would an incredible impact on our economy and all factors need to be par to the solution. the difficulty is