back to reality. mr atkinson, you believe that unless congress creates a national framework to ensure consistency and fairness in the tax code there is a risk that digital good and services purchased and downloaded in one state will be taxed at higher rates than related physical goods. is that correct? and mr. brubaker, do you agree that that is a legitimate problem? >> i think it is certainly a risk. >> excuse me, mr. brubaker. >> i thought you asked me. >> do you see that as a legitimate issue? >> there is some risk if we

leave it unattended too long, but we need to work for a framework that takes into account the need for definitions and for allowing things to be taxed somewhere. it is possible to construct a framework and it needs to be done in a timely fashion and i think it can be but this framework is not there yet. i do think we need a framework for this. >> you are concerned about definitions in this proposed legislation. what definition do you have? >> there are quite a few. one is a term not used in the bill but it is a foundation for how it works which is you have to have a tangible equivalent before you tax something in the digital world. i have concerns about that because if the term is not in the bill, it forms the basis of

the bill in some respects at the end up in a situation where with all the digital products there are, it is hard to describe an exact tangible equivalent. people will disagree about what is a changeable equivalent and what is not. think of the way music is provided. when is it a tangible equivalent and when is it not? without some work on a precise definition on that we are going to have difficulties. there are quite a few definitions that are not in the bill at all and again, i will supply the committee shortly with a complete list in writing what we think are deficient. >> you are willing to work with folks like mr. atkinson and mr. eads to actually perfect this legislation or can it be

perfected? must we start out again on new legislation? >> it is a tough question to answer in the sense that i am not sure how quickly this particular framework can be brought into line with something that the state can support. i hope it could be. it is important that certain principles have to be followed. fairness and conformity with streamlined sales and tax agreement and neutrality regarding industry and means of delivery. some consideration of revenue impact and on the business side consideration given to the impact on them. that is an important issue in digital goods. takes time to sort through those. i don't want to say it could be done in a couple weeks. it could be done in the course of a reasonable amount of time. >> do you agree it would make

sense to said down and work through some of the problems, some of the bill's opponents might have? wouldn't that be reasonable? >> not a tax administrator. when i hear an issue like the tangible equivalent that seems reasonable to me but i am not a tax administrator. >> i am not either but it seems like a reasonable observation. does it seem that way to you as well? >> it could be. but i also know that -- [talking over each other] >> states impose intervention on taxes and i'm not clear what this is from. >> if there appears to be -- you think there is some reason to go forward with this legislation quickly as opposed to simply having a bipartisan, if you

will, reasonable discourse to perfect it? would that be the best thing to do? >> it would be useful to pass this bill in this congress because these are issues that are going to get worse and as brubaker said, there is some risk if we leave it unattended too long. >> any time someone tells me that you have got to by this time share today or else, you won't be able to buy it tomorrow, the price will go up, it will be gone, you must act quickly, do it now, impulse buying is great, i get the opposite direction. it causes me to just want to hold up and think there is some ulterior purpose for moving

forward. perhaps there is a privileged category in the legislation for certain types of goods and services, some kind of track in their that is going to protect somebody's ability to make an unfair profit off of something. something doesn't smell right when that happens. >> the gentleman's time is expired. that being the last of our questions i would like to thank our witnesses for being here. co-manage -- all members will have five legislative days to submit additional questions. >> excuse me for interrupting respectfully, but i find we have a pattern here with these hearings on legislation here in this committee, particularly. we have just one round of questions, we stick to the five

minute rule, we are not really getting into the guts of the matter is that come before us. i want to make that known for the record. i certainly would not be opposed to a second round or even a third round of questions on this particular issue. ranking member, what his thoughts were as far as another round of discussion about this. this bill is coming up for markup in two weeks or so. i just think we have an hour and 40 minutes and i myself would really like to talk with mr. eads, get his thoughts on that.

>> i have a conflict starting at 5:00 so that would hamper that. mr. cohen? >> at the discretion of the chair i do have a teleconference on peace in the middle east and i am afraid i am not there god knows what will happen. >> i see i am out voted on this. >> i will give you as much time as i can. >> point taken. [talking over each other] >> please note that there are additional questions that need to be asked by members. please have written questions for the witnesses which we will afford ask witnesses to respond as quickly as possible so there answers can be made part of the record. all members will have five legislative days to admit additional questions. i thank the witnesses and this hearing is adjourned.

[inaudible conversations] >> follow c-span's washington journal on twitter and join viewers with advance notice of tomorrow's guests, question of the day and links to video clips of key highlights and tweak your questions to our guests and add your comments to the conversation. don't miss any update from washington turtle. start your twitter account today at twitter.com/c-spanwj. >> remarks from budget director jacob lew. he talked about reducing the federal debt. this is about 50 minutes. >> everybody take their seats. thank you. we are very pleased to have this evening as our special guest jack lew who is director of the

office of management and budget. jack is somebody i have known 35 years because i knew him when he was a relatively young staffer on capitol hill. jack is a native of new york, graduate of harvard college. after graduating he came to work on capitol hill where he worked for tip o'neill and on his staff for eight years, rose to be the head of policy development, policy planning for it to the neil. after eight years with the speaker he came to practice law in washington with feldman and curtis. practiced law for five years and came into the clinton administration where he originally worked in the white house as special assistant to the president, certain areas including drafting legislation for americorps and went to the office of management and budget where he rose from executive

associate director for omb to deputy director to the director of omb and served as director of omb from 1998 to 2001. in that period of time the united states government had the largest budget surplus in history. [applause] during his last year the u.s. government had a budget surplus of $236 billion and we have never be that since and may not. after re-elect the administration and the clinton administration he went to and why you --nyu where he was vice president of operations and later joined citicorp and became c 00 of its internal of investment management at at the beginning of the obama administration came into the administration as deputy

secretary of state for operations and management and then he took the position of being director of omb again. he is the only person who has held that job twice. my first question is the obvious one. if you went from having the highest budget surplus in history and a record that is not likely to be topped any time soon, what made you think it would be a good idea to come back and be head of 0 m b again and preside over some large deficits? >> guest: thanks for having me here tonight, david. i like challenges and this is certainly a challenge. when the president asked me to take a job that i had before, the instinctive answer is why would i want to do it again? when the question -- president make the case that the needy because he met the addition need somebody with experience, it is

hard to say no. >> host: how many times did he ask you? >> guest: that is between me and the president. >> host: what is the difference between being head of the omb before and now? how have the job change other than budget surplus issues? >> guest: leaving after three years of surplus which did not happen by accident, we have a long period when we were focused on deficit reduction and you could eliminate a deficit in terms of that but leaving after three years of surplus, coming back with a deficit larger than any we ever imagined, i testified for the senate budget committee and projected a surplus of $5 trillion over the next ten years. when i came back there was a deficit projection of $10 trillion over the next ten years. it can't get more different than that. a number of things have changed.

apart from the dimensions of the budget problem. part of it is the kind of change being experienced throughout the economy. information flows much more quickly. technology -- there is instantaneous analysis and advance of information which takes a process, always a very stressful and high-stakes process and made it even more so because there's a constant flow of information. >> can you contrast our president clinton dealt with omb with how president obama? did clinton get into the budget issues and does obama get into the budget issues? >> guest: budget appeals are a narrow part of the interaction with the president. i would say in both cases i considered it a mark of some success to keep the number of appeals to a small number.

very few if any. the truth is the shape of the challenge is the same as the challenge the omb director is describing and gets to a question, is very meaningful appeal? >> does anybody go around you? the omb director is terrible and i am in a better position? >> i would say there are occasions when cabinet members want to be heard but i have been privileged to work for two presidents. >> those this year under the budget the president proposed, the projected deficit for f y 12 is what number? >> we projected $1.6 trillion coming in lower than that closer to 1.4. it is a large number. >> though $1.4 trillion deficit.

tax revenues are roughly $2.6 trillion. so we are borrowing about 40% of the budget. >> is a record deficit. it is the reason there is a bipartisan consensus in washington that we need to focus on deficit reduction in a serious way. if you look at the size of the deficit right now it doesn't tell the story of how we got there. we left ten years ago with a huge surplus. there were a series of decisions made and circumstances. decisions were made on policy grants, tax cuts and new benefits like prescription drug benefits that weren't paid for. that essentially eliminated the surpluses. then there were wars there were not paid for and an economic decline that had two impact on the deficit. one is it drove down revenues

because less growth means less income, less taxes. it also required very substantial intervention because with that stimulus we would not be experiencing the recovery we are experiencing. the results when i came back on the scene was a deficit that was bigger than one could ever imagine. >> when you left government before there was a concern in some circles that we would pay off all the government debt and there would be no treasury bill against which corporate debt could be measured. that is not a problem any longer. >> nostalgia to hear that argument reprise. >> the budget problem and debate in washington seems to be we should cut out $4 trillion more or less of spending. your proposal is to cut $12 trillion of spending over 12 years. >> roughly $4 trillion of deficit and $1 trillion of savings. >> if you got everything you want you are still adding

$10 trillion to the deficit over that will year period of time. if we have $14 trillion today of debt and another $10 trillion or so in the next ten years how are we better off? >> when you are talking about numbers that are this large it takes a long time to dig yourself out of the hole. the first challenge is stabilizing the deficit as of percentage of the economy so we get to the point where debt stops growing as a percentage of gdp. our proposal, there is not a practicing parliamentary government here so we know it won't be adopted in any detail we propose. it would bring the deficit down to 2% of gdp which would accomplish the goal by 2015 and lower by the end of the decade. if we look in that range of $4 trillion savings in the next 12 years and really accomplish it we can get the deficit to the

point where we are looking out instead of seeing that that growing ultimately to 100% of gdp, you stabilize and make additional policy decisions to bring it down in the long term. you have to take that first important step. we call it a down payment. that understates what it really is. it is critically important and we need to take that action now. not that we should wait two or three years. >> at the end of the last congress that tax cuts were extended. that added 1 or $2 trillion -- >> $800 billion. >> why would you as omb director support that? why not just eliminate those cuts? >> a very sensitive moment in terms of economic transition. we are no longer in recession but we are in a recovery that is

not something we can take for granted. in december there have been no -- we would have seen on january 1st with a tax increase right at the time when you were seeing job creation and economic growth beginning to settle in, we feared and i think we feared correctly that were that to happen we could have had a double dip. that would be terrible for the economy and fiscal policy because one of the engines we need to get out of this deficit is economic growth. without that you can't cut your way out of the problem. one of the causes was economic decline. the balance in the tax bill in december is one that did a lot to stimulate the economy. there was a payroll tax holiday and extension of refundable tax credits for people sending their kids to college. the earned income tax credit. there is an extension of unemployment insurance. these are things with immediate

stimulative effect. we made no secret of the fact that we did not support the idea of extending tax cuts to the higher brackets. the was a compromise to do it for two years where one side at the end of two years and it should go away and go back to the tax rates which were 1990s and had the longest period of uninterrupted economic growth in history. we think they were highly consistent with stable growth. the other side would like to see them made permanent. we will have a chance to have that debate but last december was not the time to throw the gears into rivers on the economy and that is what we would face if there were not compromised. it was an honorable compromise. >> the president's position was he didn't want any tax increases for people below $250,000 and to protect the middle class but people who make $250,000 or

above are 2% of the populations of the middle classes $100,000 or something like that. if you want to protect the middle class why would you not increase taxes for people above $100,000? 250 is well above the middle class. >> if you look where the middle class lives you get a lot of different explanations. i had people argue it is well above 250. when they argue it is too low, if you look at tax brackets, 250 is the dividing line between the top bracket and the one below. it is not necessary to raise taxes to keep the tax cuts in that top tax bracket. also by putting a plan together, that are accomplishedes $12 trillion of deficit reduction shows you don't need to raise taxes on people below $250,000. we are obviously a long way from a bipartisan agreement on the

future tax policy of the country but we made it clear that shared sacrifice means people lucky enough to be in the top tax bracket have to bear part of the burden. the cuts we're making on the spending side filled disproportionately on people below that. is not a question of who are good people of bad people. the president was quite careful when he made his remarks six weeks ago at george washington university to make it clear this is a question about everything being on the table so we have the choices that can be balanced and people who have been lucky enough to be in that tax bracket don't complain to him that much. >> when people talk about a budget cut do they really mean a cut below what the projection is going to be or a real cut? right now when you talk about budget cuts were you talking about cuts below what the current spending is or below what it would otherwise grow to?

>> you talk about it either way. when you look at the projected deficits, projected deficits are based on projected growth on current level going forward. there is an assumption about inflation on things like social security and medicare. there are assumptions about more people being eligible and any changes you make to that baseline gives you savings for deficit reduction. >> if somebody represents business interests and they come to see you can they come in the lobby? you don't mean lobbyists? how did people influence you? >> i have a schedule from 7:00 in the morning until 10:00 at night. a lot of people see me. i meet with groups more than individuals but i will meet with people who have serious issues

to raise. my frustration is that your time is so filled up with internal meetings and things that take up 80% of the day it feels like you are in a captain and you have to struggle to hear things, people you talked to in those meetings he must be part of. >> the congressional budget office have projections of deficits and inflation rates and economic growth and use have yours. whose are more accurate? >> all projections have risk of error. when i was -- my errors were always underperforming. reality was better than i projected. i haven't had a track record yet. i can't speak after six months. you look at economic projections and they do drive these numbers in a very important way. we are pretty close.

we all gravitate around mainstream centrist blu we all gravitate around mainstream centrist blue-chip kinds of economics. there are factors where there is a principal difference. i will give you an example. our assumption about long-term growth is that this recession, recovery will return us to the same level of potential gdp we had before the recession. that is the experience from every previous recession including every financial who led the recession. the budget office the sims there is a peur anent potential in th economy. that is a legitimate difference. our assumption is the midrange of assumptions. there are within the mainstream as well. we don't know sitting here today who is going to be right. our vn.w is make the right policy the united states has always returned and we don't think there's anything about this recession that should make us that on the opposite. that is a principal difference and are am happy to debate it.

we are a little below in some things. >> what are your predictions what theretnemployment rate woud be in november of next year? >> i donalw remember the year t year unemployment projections. we show a trend dowe th we show growth trending up. >> you think you can get below 8%? >> we would like to get unemployment as low as we can as quickly as we cae th the princue-al thing people are looking to us to worry about, we show the inference. >> a deal was cut from congressional republicans and the clinton administration and budget surplus and what was the key to geand aing that done? you see the elements of a similar deal beat this time?

>> you look at the environment we are and it is less likely than than now. there was a sense of common purpose. a process of building relationshue-s over a period of many months made it possible for us to ehe rlore what was in our common interests but i don't think there was an impending sense of crisis. was a sense it was the right thing to do and a good thing we did. we are a situation where the whole world is watching. will we be able to get our fiscal house in order. there was a lot of understanding we had to worry about the economy through the end of last year. i donalw think the tax bill caused a lot of eyebrows to go ãcut -cin the worcan economic t pommunity. as we are looking at these deficit forecasts there is a

sense we have to take action now. it takes a few years for things topasick in. if we want fiscal consolidation to hit at the point where we should, by 2013 it means waiting until 2015 orfiscl c6. you look at things like standard and poor's examination a few weeks aday this interesting. fundamentally it is an economic factor that the united states has aaa credit. as a political analysis we are afraid no action will be taken now and if there's no action taken now i'd put off until 2015 we are worried we will get beyond the point that action needs to be takee th we. taken now and put off until 2013, we're worried it will get beyond the point when action needs to be taken. i'm not saying that's a reason for us to act today versus six moptds or a year from now. it reflects a real concern that the political environment in washington could stand in the way. one thing that is very promising

in the conversations that are going on now, you know, the vice president is leading -- >> are you involved in those? >> i am involved in those. there's a shared sense of purpose in those conversations. you look at everyone came in with the same definition of the problem. we all said we need to do something $4 trillion roughly. $4 trillion of deficit reduction is something we agree on. we're now engaged in a process where i think there is a lot of trust being built up so that you can discuss serious options withstanding the difficulty of the problems optimistic. >> when do you think a resolution of the biden-led discussions will be madeng public? >> well i think we're now because of all the scheduling complexities going into what is essentially the third week of discussions. i think we have a lot of work ahead of us. i think quite a few weeks of

conversations. >> where do they haveoi those discussions? >> we've been meeting at blair house. tomorrow the meeting will have to be moved because we have a foreign visit tore staying in blair house.us prime minister of israel is staying in blair house. >> okay. so where will you go now? >> we will find other very appropriate accomodations. >> and now you're going to have, even if you get your 4 trillion you're still going to have 20 plus trillion of debt is that right? then you have the fannie mae and freddie mac on top of that, maybe 25 trillion. as a percentage of gdp won't it still be pretty large? >> it is large. but if it stablizes it will,ae i think be possible for usdi to send a very reassuring signal both to markets and to taxpayers that we will be able to work our way out of it. it takes a long time to build down accumulated debt.

a reassurance we will be out of it. it takes a long time to build down accumulated debt. in the 1990s we just worked our way out of the deficits built u up in world war ii. i don't think that we can realistically think that you can take a deficit this large and eliminate it in one negotiation or one cycle. you can arrest it in terms of driving it forward. >> the defense budget is roughly $800 billion a year or something like that? >> if you count the regular defense budget plus the special appropriations for what were called contingency operations. >> so z$800 billion.

do you see a need to reduce that dramatically to get to where you need to go? >> the president proposed we look for savings in every part of the budget. in the security part of the budget he said that we had been successful. secretary gates has been successful over the last two years making roughly $400 billion of saving sin the defense budget. he said we can do that again. we can get another $400 billions of saving sin the security area. it will require a strategic review. to do it again will be difficult just looking for low hanging frutd. we're now, you know, secretary had comments on this last week, launching the streejategic revi. we're looking closely together on it. >> what's the best way to win an argument with you? what argument do you like the best? >> i tend to believe in facts and clear analysis. if you start with facts and clear analysis and less emotion, it tends to work better with me. arguments that begin with, you

know, your staff messed this up aren't the best way to start the conversation. weinberger would show him with pictures of soldiers and show a lot of military soldiers. it got president reagan interested in it. does anybody come in with pictures and illustrations that are really effective? >> nowadays everybody has decks. everything is powerpoint and slides. you can make a clear argument with no pieces of paper. you can make it with a memo or slide slides. >> erg is small when it's yours and large when it's someone else's. >> does he go through appeals in the cabinet room? >> the challenge wen dealing with something as vast as a

federal budge is to find the right level of detail to share with the bt on a regular basis. and you know, having that work for two presidents, every president has their own style. i was privileged to work for two presidents smarter than i am. so it's not hard to get them into a serious discussion. i found if you go department by department on what has changed and what is potentially the dangerion. the danger of trying to take every issue is you don't have enough time, and you don't end

up using the president's time and the things that really are decisions that that he would want to give clear and separate direction. any member of the cabinet could make the issue. >> and do members of congress lobby you as well? and what's the most effective argument they can make? the more on the level arguments are, you know, what the importance of something is, what the facts are, what the case is, there's no reason to be embarrassed, to say that something is important as the economy in your district. you know, if it's rooted in a serious analysis, you know, to say that a project has more

benefits than cost when you look at the analysis, you know, to say that even though to say it tends to be a work. >> do you envision any chance of a debt bill not getting passed? >> no. i think that having now been to to a number of meetings with a number of leaders but there's a shared understanding. it's just unthinkable for us to default on the u.s. -- >> we'll wait to the last possible majority. >> i can't argue that. things rarely happen early in washington.

there's very strong reason to do it sooner rather than later. you know, we saw in the certain days we're potentially heading towards a government shutdown. literally saw the whole world watching to countdown clocks to would the federal government shut down or not. it would be a terrible thing if we end up with that kind of watch for is the united states going to default, you know, is the united states going to, you know, for the first time in its history, you know be bankrupt. >> but did you think there was going to be a government shutdown recently? >> i did not. >> so you told all your employees to come into work and everything? >> you know, i actually tried very carefully to tell my employees the same things that we told every other federal employee. and it anoints them of the people at omb.

it wasn't going to be a shutdown at the very end when there was a chance that wanted to be shut down because the process may get jammed up, we went into a mode of communicating. we tried very hard to keep the issue. >> did you think there was going to be a government shutdown in the clinton administration when it happened? >> well, you know, i think it's a little different. we were on op site sides of this one. there was a decision in that case by one side that it might be a good strategy to shut the government down. and that made it, i think, you know, harder to avoid. i was hopeful to avoid a debt.

it backfired and turned out people weren't so happy when the government shut down and they couldn't get a passport, they couldn't take their family on vacation, they couldn't rely on the fact that basic government services would be provided in an uninterrupted way. so i think we saw again in these last few days leading up to the final, you know, resolution without a shutdown that it made people very anxious for a good reason. we should be able to get our work done. >> what percentage is this? >> so the two major areas are health and social security. health, medicare and medicaid are 20%.

things like agriculture programs, other retirement programs. then you have to go in and change the law in order to have them operate differently. >> what percentage is defense spending? >> 24. >> so 57 and 24, that would be about 81%. >> so discretionary spending, the thing that everyone looks to to solve the problem is 12% of the budget. the other 6% is interest. >> so you have 12% to play with. that's all you can really change. >> and the appropriations process for nonsecurity spending. that's why we always made the case, when you look at a deficit that is large as we're looking at, if you're talking about a

deficit it's $700 billion. there's no way you can solve the deficit. nonsecurity. so we thought it was important to produce spending in the nonsecurity area. we produced $38 billion of reductions. that's also why we say we've gone to the edge. there's not a lot more to cut without going into things that really undermine our future. and it's going to be a question of how you balance the trades. one of the things that everything has to be on the table is if you try to solve the deficit problem with anything off the table, you end up with choices that are frankly the wrong policy outcomes. so if revenue is not hon the table, it pushes you to go deeper into discretionary spending and entitlements. you take entitlements off the

table completely, there's no way to solve the problem on discretionary spending. the only way to solve the problem in the best interest of all the people to bear the problem. >> at the end of those, that period of time, 2016,? >> i don't want to throw a number out there. but i think that if you're looking you could see the deficit in 2016, in the 2.5% or below range, which would be very important. >> what percentage is it now? >> now, no, it's not in the 20s. but it's been hovering. >> i'm sorry. spending is a percentage of gdp.

>> spending is in the 20s. >> okay. all right. and do you think being a business person you were in the business world, has made you a better omb director or a less effective omb director or what would you say? >> i actually think every experience that you have makes you more effective on what you do next. i think that having worked in the private sector, both for a university and in the financial services field, you have a different perspective on what it means to have government policy made and then to try to do your business consistent with those policies. i felt that when i practiced law as well. in the very first. it turned out there was a compromise.

it can't be. i think inform your judgment in many ways. i think having been in government and out of government several times, one of the things that i think for me has been the most important is you kind of refresh your able to look at problems and think about them without thinking that you know the answer already. you know, when i was in this job the last time, i was at omb for six years. it was time for me to leave. i knew that i was probably not able to look at everything fresh. it came back ten years in between. the same issues came up. i know that you felt one way about that ten years ago, but it's different. the economy has changed. is it still the same right

answer? you need to refresh yourself. >> when the president asked you to take this job, he didn't say if you get the deficit to a certain level, i'll make you secretary of state in the second term? nothing like that? you didn't get that promise? >> i neither sought it nor got any commitments on the nufuture >> what would you like your legacy to be when you ultimately leave? would it be to reduce the deficit as a percentage of gdp or what would you like your legacy to be? i was proud to be omb with a surplus. it was the first time there was three years of surplus since andrew jackson was president. it's going to be a long time before somebody says the same thing. i know coming in with the problems we faced today. there's little probability i'll be leaving with a record that is

as objectively strong as the record that i lad the last time. by the same token. if at the end of my tenure, restabilized it. we restored confidence and we're in a path to manage our business in an effective way, that's an enormous accomplishment. i wouldn't say i'm not no st-- lot we can do in the next few years to turn things in the right direction. >> as somebody who has come back to an agency that i have deep feeling for, it's been a tough time. i want to help rebuild the agency as well.

it's not easy. paying attention matters to me. >> how people work at omb? >> about 500. >> how many are political employees? >> the exact number, i don't know. but less than -- >> the people working before are still there? >> about half the staff appeared people i was working with ten years ago. >> all right. we have time for some questions. anybody want to know what the deficit will be? any programs you want to ask if they'll be funded or not? >> mr. lew, a lot has been written about inflation. commodity prices went up.

the had of the federal reserve, ben bernanke is not overly concerned. when you put your economic models together, what were your assumptions on inflation? >> our general view on inflation is not inconsistent with the numbers that the fed looks at. there are real burdens for the american people. oil prices and gasoline prices are a real problem. it has a big impact on consumer confidence and the like. you look across the economy at all the factor unputs and labor and where we stand vis-a-vis other countries, overall inflation does not seem to be something that we need to worry excessively about. we do have to worry about energy prices. that's the reason the president has been so determined to develop new technologies, to

make sure that we can safely, you know, explore u.s. fossil fuel resources and working as hard as we can to make sure that companies that are making substantial profits are doing it the way that's not unfair to consumers. and it's tying back to our tax policy. one thing we would like to do on the tax side is take away the special tax provisions for companies that have benefits from oil and gas, you know, profits. we think it's only fair that we're looking at shared sacrifice. if taxpayers who are burdened by higher gas prices, they're also the ones who are hit when we have to have cuts in domestic spending. it shouldn't be a one-sided calculation. >> other questions?

>> what are the effects of the policy tool? >> i think we learned that it does work to put stimulus into the economy wen you're in need of it, as we were in 2008, we were kind of at the bottom of the recession, when you look at a stimulus package, you have to look not at a kind of random period of time but where are you at this point in time? in 2008 western looking at a situation where projections of the length of the recession were getting longer and longer almost by the day. i was working during the transition period on some of the kind of thinking that went into the stimulus package ultimately. and it was having worked on

several recovery package, i had never seen a situation where every day the sense of how long the recession would be was deepening. now, that changes the tools that you have available to make effective macroeconomic interventions. if you think the recession is going to last a year or 18 months you'll be out of it and worrying about inflation, that would leave you to one set of options. in 2008 we were looking at a period of time when we knew for the next two or three years it would be a good thing if there was an injection of economic activity. and it gave the ability to do things in a shallower recession you may not have done. the combination of immediately putting money into the stays so that they could avoid laying off

teachers and policemen, unemployment and food stamps to get into consumers hands and spend, that's the stuff you knew would have an immediate impact. building roads and rail, it would take longer. because we knew that there was a need for economic stimulus at that period of time, i wasn't in the economic team at the time the decisions were made. it was definitely the right being. you look back and say right now we're seeing solid economic growth. if you were to sub strakt 1% or 2% from that or take our unemployment rate and add 1% or 2% to that, it would feel pretty bad. that where's we would have been without the recovery package. it's prove than it works. it doesn't mean we don't now have to turn the corner and get our hands around our fiscal challenges going forward. but we had to guess in 2008 to 2011. i think the recovery package helped do it in a way that

created millions of jobs and avoided a deeper and long e recession. >> you worked for president clinton and president obama, who was smarter? >> they were both smart. >> you worked for hillary clinton and bill clinton, who was smarter? >> how do you compare? >> you're very diplomatic. all right, jerry. >> after taking a look at your resumé and seeing your accomplishments which david has focused on as well, i was struck by the fact that you were a key player in the social security commission and as i look at the tough decisions that you have to make, it strikes me that's the easiest area to make progress on i would describe it almost as a layup. how would you describe the social security reform proposals that are being talked about as part of a potential package, and

is it one of the things that really, the time is right to move ahead on? >> so i think it's important to separate social security from the broader fiscal policy discussion. it is something i have worked on for 30 years. i believe strongly the the right time to deal with social security is now. the president has said that, and the state of the union said that in the speech a few weeks ago. and we should work on it because we owe it to people who are working now and about to retire. for young people who are looking to retire, many, many decades from now. we owe it to them to have a distant solvent for 75 years. in 1983 we put social security on a firm financial footing. it's one of the things i'm proudest of in my professional career. i think the challenge is you mix

it with deficit reduction and it confuses the issue. there are people who think that social security is the cause of our deficit. it's not the cause of our deficit. social security ran a surplus for decades. 1983 worked. the principle of 1983 was, have enough income come in so that we can build up reserves and when the baby booms retire, draw them down. through the period, we didn't honor that trust. you know, instead of taking the surplus that we built up in the 1990s we spent it, as a country. it's not nar to say social security caused the problem. social security is obviously something we have to deal with. as social security needs to draw on reserves and the reserves aren't there because we spent them, you have to either raise revenues and cut spending or borrow money. it's a fundamental mistake to say social security caused it.

it will complicate and slow the process of dealing with social security if the two issues are emerged. if you separate them and the question is how do you deal with social security, i think it's true that if you took people from opposing views and said you're not constrained by the political arguments that your sides have made, can you identify options where reasonable people could agree? it is much easier than other areas. as a program where you can easily calculate what the income is, what the number of people is, what the outflow is. the problem is, you know, we're not in a place right now where a conversation can be had where everything is on the table. revenues as well as spending have to be on the table to have a serious conversation about social security. in 1983, certainly it was a combination of the twochlt two. so the president, i think, laid out principles that are very clear and speak for themes in terms of thousand to deal with social security.

he very much means it when he says he wants to do it now. i think it's an invitation for everything to be in the discussion and not to start out by saying it's going to have to come from cutting benefits. the question has come up, why not put a plan out? as somebody working for the speaker of the house in 1981 when a plan was put out, i can attest to the fact it doesn't necessarily lead to the results of fast reduction. it didn't lead to a successful 1982 election, h which we were pleased about. the problem was solved through quiet conversations behind the scenes where both parties were able to float ideas without them being politically chargedendoor package in a carefully choreographed moment. i think when we deal with social

security it will require that again. the less proposal, everybody taking hard position, things off the table the more likely we are to solve the problem. >> jack, i think we are out of time. i want to thank you very much for your time. [ applause ] in is a map of the district of columbia from the original district. thank you all very much are. >> the c-span networks we provide coverage of politics, public affairs, nonfiction books and american history. it is all available to you on television, radio online and on social media networking sites and find our content any time through c-span's video library. we take c-span on the road with our digital bus and local content vehicle, bringing our resources to your community. it's washington your way, the c-span networks, now

available in more than 100 million homes. created by cable. provided as a public service. and the u.s. senate is about to gavel in for the day. they will continue work this morning on a bill that would extend certain expiring provisions of patriot act anti-terrorism law. they're expected to recess at about 10:40 so senators can walk to the house chamber for a joint meeting with the address by israeli prime minister benjamin netanyahu. now live coverage of the senate here on c-span2 the presiding officer: the senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. infinite goodness, creator of the sea, earth, sky and air.

enable our lawmakers to serve you in all holiness and to experience your love which passes understanding. let your providential hand be over them and your holy spirit ever be with them, as they submit themselves entirely to your will. lord, direct their thoughts, words, and works to your glory, as you increase their desire to please you. give them grace to forgive their enemies, even as you have forgiven them. and, lord, we ask that you would be with all those affected by

the recent tornadoes and storms. we pray in your merciful name. amen. the presiding officer: join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., may 24, 2011. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorablejeanne shaheen, a senator from the state of new hampshire, to perform the duties of the chair. signed: daniel k. inouye, president pro tempore. mr. reid: phapt?

the presiding officer: -- mr. reid: madam president? the presiding officer: the majority leader. mr. reid: i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: the presiding officer: under the previous order, leadership time is reserved. under the previous order, the senate will resume consideration of the motion to proceed to s. 1038 which the clerk will report. the clerk: motion to proceed to the consideration of s. 1038, a bill to extend expiring provisions of the u.s.a. patriot improvement and reauthorization act of 2005 and the intelligence reform and terrorism prevention act of 2004 until june 1, 2015, and for other purposes.

the presiding officer: the majority leader. mr. reid: following leader remarks the senate will resume consideration to proceed to the patriot extension act. there will be a joint meeting of congress at 11:00 a.m. with israeli prime minister netanyahu. senators should gather in the chamber at 10:30 to proceed to the house, at about 10:40 we'll proceed there as a body. i understand there are three measures at the desk due for second reading. the presiding officer: the clerk will report.

the clerk: s. 1050, a bill to modify the foreign intelligence surveillance act of 1978, and so forth and for other purposes. s.j. res. 13 declaring a state of war exists between the government of libya and the government and the people of the united states and making provision to prosecute the same. s.j. res. 14, declaring that the president exceeded his authority under the war powers resolution as it pertains to the ongoing military engagement in libya. mr. reid: i would object to further proceedings with respect to these three bills. the presiding officer: objection is heard. the bills will be placed on the calendar.

mr. mcconnell: madam president? the presiding officer: the republican leader. mr. mcconnell: later this morning israel prime minister netanyahu will address a joint meeting of congress. his remarks come at a time of great unrest and instability in the middle east, so we're all eager to hear his perspective on how our two countries can work together to further our shared interests. israel is, of course, a great friend and ally to the united states, and the prime minister should be reassured that israel will not be alone during this time of uncertainty. he should return home knowing that at a time when the middle east is awash in instability, his relationship with congress is strong. we always welcome the prime minister to washington, and we're happy to host him again today. now, madam president, on another issue, some time before the end of the week democrats in the senate will have wrapped up

their efforts for the current work period and flown home for the memorial day recess. so it's not too early to ask what they've accomplished over the past several weeks. more specifically, what have they done about a looming fiscal crisis in the six weeks since one of the cochairs of the president's deficit commission called it the most predictable crisis in history. well, the short answer is not much. six weeks after the democrat cochairman of the president's debt commission told us that our nation's deficits and debt are like a cancer that threat tons destroy america from -- threat tons destroy america from within and nearly a year after the chairman of the joint chiefs of staff declared our deficit to be the single biggest threat to our national security, democrats are ready to call it a work appeared. after producing no budget, after offering no plan and with no plan in sight, why? evidently democrats have decided that avoid this go crisis helps

them in the next election. that's why they plan to vote against every budget plan that comes to the floor this week, including the president's. democrats are apparently operating under the assumption that if they're on record opposing everything, it helps them politically. in other words, we might not leave here this week with a solution to our nation's looming debt crisis, but democrats are pretty confident they'll leave with some good material for campaign ads. here's how the senior senator from new york put it yesterday in a moment of candor: to put other budgets out there is not the point, he said. this issue will have staying power and be a defining issue for 2012. they aren't even pretending, not even pretending, to put principle over politics here. according to senator schumer, their focus is on an election that's still almost two years away. my suggestion is the democrats start thinking about putting their names on something other than an attack ad. they could start with a budget.

how about that? a budget. right now america is on pace to spend about $1.6 trillion more than it takes in this year. that's three times the biggest deficit we ever had before president obama took office. the president's plan is to keep deficits like this in place for literally years to come. that's the scenario admiral mullen and erskine bowles are worried about. meanwhile entitlement spending is growing faster than inflation, meaning sooner or later these programs will either consume all the money we have or these programs will be forced to change. members of the president's own cabinet admitted this last week when they signed a report showing that medicare is running out of money and urging prompt reform of the program. so the question isn't whether these programs need reform. the question is how's it going to be done? do we do it now, together?

or do we wait until we're absolutely forced to do it? there's no other choice. congressman ryan has shown a lot of courage by proposing a budget that would tackle a big part of the problem. democrats are showing none by ignoring our problems altogether. this is the contrast americans will see in the senate this week. republicans will vote on several possible approaches to our fiscal crisis this week, including the ryan plan. democrats will vote against every single one of them. we'll also have a vote on the president's budget, which democrats will also oppose. they say they prefer the ideas the president outlined in a speech he gave last month. well, unfortunately we can't vote on a speech, but if that's

what it takes to get democrats engaged in this debate, maybe we should revisit the rules so we can actually vote on a speech. more than two years have passed since democrats have produced a budget of their own. this is a complete and total be a abdication of their responsibilities as a majority party. and there's no excuse for it. every year congress appropriates nearly $100 million to support the offensive management and budget. this money supports a staff of 529 people. o.m.b.'s job is to put together a budget. why exactly haven't they been able to turn the president's speech into a budget we can vote on? they've had nearly six weeks to do it. what's the problem. if democrats can't get 529 people to put some numbers together based on the budget the president outlined in his speech, then they've got

problems over there. either that or democrats are just looking for excuses so they don't have to vote on anything of their own. and they'd rather put together political ads than a solution to the crisis. this is really inexcusable. we have an obligation to the country to come up with a plan. democrats are officially abdicating that responsibility this week. americans are going to remember that. as the crisis approached, democrats did absolutely nothing. madam president, i yield the floor.

the presiding officer: the clerk will call the roll. quorum call:

>>

the presiding officer: the senator from new mexico. mr. bingaman: mr. president, i'd ask that the quorum call be dispensed with. the presiding officer: without

objection. mr. bingaman: mr. president, i have eight unanimous consent requests for committees to meet during today's session of the senate. they have the approval of the majority and the minority leaders, and i'd ask unanimous consent that these requests be agreed to, that these requests be printed in the record. the presiding officer: without objection. mr. bingaman: mr. president, i suggest the absence of a quorum, and i yield the floor. the presiding officer: the clerk will call the roll. quorum call: