security and protecting the homeland. homeland. i am saying this based on experience and reality not out of courtesy. those who protected the country through hard times and those who protected it today are people. our people. the young people confronted dangers, made initiatives and implemented things on the ground. forming popular committees and youth groups making personal mischief which kept the country's name hine reflected its fears in the polls of its views and people. ..

it is deeply rooted values and determination of pete of who aren't adequate intelligence of a civilization of it is he who prevented the confusion between the creed and superpowers on the one hand and the people desired reform and change in the other. those who protected the views from the sacrifice to international powers as you presented all attempts of secretary position screaming at the gates of the homeland and the head of the snake before it could kill it. i say that if i miss you enjoy this great spirit and deep sense of identity, c-reactive sign in case.

[chanting] [chanting] [chanting] >> next on c-span 2. john boehner said tax hikes are at the table agrees with house majority, eric cantor richard in budget talks at the white house because of an impasse on tax increases. antiballistic says democrats want to remove tax breaks for the wealthy. she commented on prison and up on the speech last night on the reduction of u.s. troops in afghanistan. a house budget hearing on the nation's economy, congressional

budget office director, douglas elmendorf testifies in the outlook is daunting. he said the deficit is heading towards the highest level since just after world war ii. then, general david petraeus confirmation hearing to be the new cia director. general petraeus loved this troop surge in iraq says he wants the post. if confirmed, he'll replace leon panetta who was unanimously confirmed as the new defense secretary earlier this week. all of this next on c-span 2. >> at this press briefing, john boehner discuss negotiations over raising the federal debt limit. earlier, house majority leader witcher from toxic vice president by dan over a disagreement on tax. speaker boehner also talked about a resolution funding military operations in libya. [inaudible conversations]

tarmac [inaudible conversations] good morning, everyone. yesterday the house passed a judge go they would eliminate needless surveys and expand energy production to lower energy prices and create jobs in a country. today will be passing another jobs bill. this will streamline and modernize the patent process to help america's innovators. there's been a a focus all year of removing barriers that hold back job growth. our plans to get government out of the way allowed the private sector to do what he does best, invest and create jobs. democrats don't have a plan for jobs. he reckons they can yesterday whether they want for stimulus spending and higher taxes. well, on the same day that the

cbo told her debt crisis daunting democrat leaders came out and asked for more spending. as you recall, we tried this. it is called the stimulus plan and it didn't work. millions of americans are struggling. it's a learning how democrat continue to call for more spending. listen, we've got to start spending money we don't have. since the beginning, majority leader in myself, along with senator mcconnell and senator kyl has been clear. tax rates are at the table. first about raising taxes is going to destroy jobs. as he raised taxes on the people we need to grow our economy and hire new workers, guess what? then i'm going to do if they have to pay higher taxes to the federal government. second, a tax hike cannot passed the u.s. house of representatives.

it is not just a bad idea. it doesn't have the votes and it can't happen. third, the american people don't want us to raise taxes. they know we've got a spending problem. that's why republicans passed the budget pays down debt over time without raising taxes. now, we don't have anymore time to raise. i want to reiterate that we will not agree to the presidents request to increase the debt limit without serious spending cuts and reforms to the ways we spend the american people's money. as i said before, spending cuts must be greater than any increase in the debt limit in these have to be real spending cuts. no targets to push these questions off to the long-term. no more kicking the can down the road. the reason for this is simple. a debt limit that fails this test will hurt the economy, impeach upgrade intensifying the insurgency about imation's

ability to deal with our long-term fiscal problems. this is the moment, folks. it's not about numbers. it's about jobs. it's about the future of their country. we've got a chance to do something big. we have the chance to do it now. for the sake of our economy, sake of the future of our kids and grandkids, this is a chance and opportunity we cannot afford to allow to pass. >> to use the withdraw of mr. cantor tectonicscommand is that they imperil the tax and is that if they know that there is a problem with selling this to your rank-and-file and failing to take this upstairs even if the president and are you to sell this to republicans? >> i have talked to majority leader about these topics for the last several months. and i know the frustration that he feels when democrat members continue to want them for any

tax hikes into this conversation and we've got to raise taxes on the american people. i think mr. cantor has made clear that these conversations could continue if they take the tax hikes out of the conversation. secondly, i would point out what i said several weeks ago. after we were all done in the white house, i said that were going to meet the president to come to an agreement at the end of this month that he needs to engage. if we're going to meet the timeline, the president is going to have to review. >> after having a conversation and we're six weeks out. there's only three weeks in both chambers are here at the same time. >> i would expect to hear from them. >> are you going to call them? >> issue 110 to pull out of these talks? >> i understand his frustration.

i understand why he did what he did, but i think those talks could continue. if they want to take tax hikes at the table. >> can you be more specific? are you talking about tax rates are just cutting subsidies? >> we have talked. we have been opposed to increasing tax rate. >> mr. boehner, if this groups come up with a piece of legislation that without cantor, without somebody in that room, will you allow it to come to the floor as an investment? for democrats to vote for? >> handsome but candy and not. >> would republicans consider to know if for any exchange in expenditures? >> is one of these issues that have been discussed at the biden

talks. something that has merit and i hope they would continue to have conversations. >> mr. presidentis generally supportive of his strategy in general. today's statement last night followed through quite a bit? does that take afghanistan off the table for 2012 do you think or is think or is that still going to be a major issue with the president draws down significant forces? >> success in afghanistan is critically important to safety and security of the american people. the president agreed with general petraeus his strategy 18 months ago to search our troops in order to gain better control to bring better security. there is no question we have had serious success as a result to jen s. strategy. if the president -- and i think the president made this clear last night with enough flexibility in his statement that would allow for him to

continue to listen to commanders on the ground and our diplomats in terms of bringing those troops home. we've gained a lot of success, but i would describe continuous and i don't think anyone wants to jeopardize the gains that we've made in afghanistan. and so, i am cautiously optimistic about where we are going and how repeating there. but, this withdraw shouldn't be done on a political deadline. it should be based on conditions on the ground. yes, sir. [inaudible] >> the president's decisions are more at risk. more time is the same quarries is not necessarily that. what you think about a state only that? also, would you stand on the

libya resolutions that is now the nature news in which of the two are you going to support and bring to the floor of the president? >> well, expect libya resolutions will be on the floor tomorrow. listen, i've dealt with the military commanders. it always like to have more troops always. there is not a commander anywhere who would want more troops. i understand that. as i understand that come in the top brass at the pentagon are comfortable with the president strategy. and i have said since the president took office that if the president listened to his commanders and diplomats in the region, that i would support his plan. and generally supportive of the plan because there is enough flexibility in the withdraw to take into consideration conditions on the ground. and that is critically important

they think for the long-term successors. >> yesterday you said this libya is really a question. i wonder if you could respond to that and tell us whether you think the resolution has any merit. >> well, i believe and i think most of my colleagues believe the president has failed to make his case as to why we have engaged in libya. and as a result, we have not heard the president talk about this for four or five weeks. and therefore, members of the congress and the american people are left in the dark. i think the strategy was flawed from the beginning. as i said, i understand the humanitarian mission, but the idea of the rest of the strategy was to hope that gadhafi would leave begs the question of how long are we going to be there? and i just believe that because of the president's failure to

consult the congress, filter to outline to the american people why were doing this before we engage in that puts us in a position where we have to defend our responsibilities under the constitution. and that's why these resolutions are in fact going to come forward. having said that -- having said that, we are there. the fact is we are there. we are engaged. i believe nato is an important organization and has red hair, i do want to do anything that would undermine nato or send a signal to our allies around the world that we are not going to be engaged. this is primarily a fight between the congress and the president over his unwillingness to the boat with us before making this decision. thank you off. >> this is really a matter --

[inaudible conversations] >> house democratic leaders discussed the item budget talks in afghanistan. we'll hear from minority leader nancy pelosi and the budget committee's lead democrat, kristen holland. this is 25 minutes. [inaudible conversations] [inaudible conversations] >> good afternoon. here we are at our regularly scheduled thursday, a little later in the morning meaning coming together. as you know, i like temple markers. here we have 100 m.d. days into the republican majority and the congress and still not a jobs bill of side. jobs of coors has a responsibility we have two the american people.

it's a trap rarity, which we must address. democrats have put forth in america agenda and leadership with a steny hoyer then that. we have specifically put forth legislation, which we are calling for a discharge position to bring to the fuller to address china's manipulation of current seat, which could be costing us between 1,000,001.5 million jobs in her country. are there other issues that are concerned best to coors is medicare which is repealed and the republican budget. medicare is very important to the republican people while republicans are asking seniors to pay more, they still insist in companies that ship jobs overseas and the wealth he is people in that country. today, we congratulate the president for putting --

releasing a 30 -- 30 billion barrels, which is part of the 60 billion barrels of oil, a concern to america's working families. this has been part of our energy bill that is part of our in america proposal. we are very pleased the president has taken action. other news of the day, mr. van holland and knight and i am very honored to be here with the ranking member of the budget committee and one or two representatives, along with leader jim clyburn with the tax on the budget. but we are just at the white house, meeting this morning with the president to discuss how we can all work together to have a balance bipartisan reduction of the deficit initiative that would do just that. the president has always

determined be a priority for all of us that he no serious production can only take place in a bipartisan and bipartisan way. we left the meeting to find that leader cantor has walked out of meetings. he is locked out of meetings because democrats want to raise taxes. yes, we do want to remove tax subsidies for big oil. we want to remove tax breaks to corporations that send jobs overs these. that list goes on. i don't know if that's a reason to upgrade from the table when were trying to find a balanced approach. i've been encouraged in the past weeks by the report of mr. van holland and mr. cliburn said the talks were proceeding under the leadership of the vice president in the spirit of goodwill in a constructive way and it had a

past that good taste to agreement. but neil torry distinguished representative in talks. the ranking member on the budget committee. >> thank you. then we start a leader pelosi commending the president on his decision to release oil from strategic petroleum reserve in concert, with some of our allies. as you know, as a result of the events in the middle east, there was a supply disruption that had a speculative bubble and there's a lot of speculation going on in the oil market by people making a lot of money, simply by making that clear price of oil will go up, bring down the path, put my money back in people's pockets and help get the economy moving again. i think it was a very good decision and we commend it the president on that decision.

with respect to the budget talks, the vice president and all of us on the democratic side laid out two principles that would govern our participation and talks from the beginning. one is do no harm to the economy. don't do anything that will threaten to throw more people out of work at a very difficult time for working americans around the country. and the second principle was you need to take a balanced approach. every bipartisan group that has looked at the challenge of reducing the deficit has said you have to do this in a balanced approach. so the question is not whether we need to come up with a plan to reduce the deficit in a steady, forget to pull and railway, we also have to do that. the question is, how do you do that? and as i said, the framework that has been put out by

different bipartisan groups, saying that you need to ask different -- ask for shared sacrifice. that was her second principle. i'm disappointed that leader cantor has chosen to lead the talks. they have been proceeding well, although there is no doubt that there are some difficult issues that needed to be decided. it was needed for adult moments. it means it's time for making tough decisions. the reality here that until republican colleagues are more concerned about the need to reduce the deficit, then they are worried about what reverend norquist will say. were going to have a difficult time reducing the deficit. as leader pelosi said, we believe that oil and gas companies that are getting big

taxpayer subsidies should contribute towards the deficit. without their signs in the deficit the other day when they had some of the tax breaks for the purpose of deficit. that's what we've been saying for corporate jets, whether it's tax breaks for corporations that ship jobs overseas instead of shipping projects, judge servers these. those are things we should deal with here and now. there is no justification if you're serious about reducing the deficit. so we'll have to see what the next steps are, but the president is absolutely committed to making sure, number one that the economy is fully charged again in number two, that we tackled this deficit in a meaningful and responsible way. >> thank you very much.

>> dean of the distinction between tax subsidies and tax expenditures? the leader to the distinction between terms of revenue, but republicans say tax increases are at the table. makes me wonder in the music then and, to what extent of other types of tax increases and mentioned, brought up, put on the table by democrats, marginal rates, it all those other things we think of his tax increases, not necessarily subsidies of grover norquist. >> even now i'm not going to get into details of the talks, but let me just say we have proposed a menu of eliminating different kinds of special-interest tax breaks and dealing with tax exemptions for the very wealthy in this country. there have been a number of proposals and ideas come to some

for a republican economist to recommend you can raise revenue without changing the rate by eliminating some of the deductions and tax preferences. there was actually very recently a report by the irs, indicating the number of people with lots of income. i'm talking about individuals and corporations. prefer stories about corporations with lots of income paid to this, but individuals who are high income, using very created sections to pay no income tax. so yes, we at the proposals on the table to say for folks at the very high-end, that we believe there's a responsible way to phase out some of those deductions along the lines recommended, by the way, by that simpson/bowles commission and others. that is a bipartisan approach to dealing with that. >> madam leader and mr. van holland, could you tell us what the president's reaction was

about mr. cantor and center kyl's family walking away from a toxin was there discussion about kicking the can as it were up to the presidential level in him becoming more involved in the talks? >> well, we actually -- i'm not going to go into details of what went on in her discussion with the president, but on this particular fact that we learned of this just as we were leaving the white house. so this did not actually break news within the room when we were there. >> what was discussed at the white house and can you reassess about having these two key players at the table you said it is to be done in a bipartisan fashion. i receive has had very intense discussions with the president. it's a change where we go forward. >> i don't think the principles we play that will change. i am confident the president shares the principles they need to be met as part of any responsible deficit reduction

plan. well, to the best of my knowledge, look, i just learned this the same time you learned it or after you learned that. in fact, we were -- the meeting was breaking up when the vice president got the news and that's when i heard. >> do you think the house gop has a constitutional argument in terms of the kind of withdraw and funding for libya, or do you think they're playing politics? >> i'll think they're playing politics. i think they're expressing what they believe. but if they think it's constitutional or not is a curious question because the speaker himself in the past has said that the war powers act is not constitutional. so you'll have to be the judge of that. but i think their legitimate concerns in both parties in the house of representatives as to the war powers act and the rest.

i myself believe the president has the latitude to do what he's doing that honestly is no boots on the ground. i also always had a consultation strengthens the result is better in that regard whether it triggers the war powers act. a slip of the time said 30,000,030,000,000 barrels from the u.s. euro and 30 million from an international entity, which by the way has 1 billion barrels in reserves. its 30 million barrels in washington millions turning to billions pretty fast, but not in terms of release. [inaudible] >> as far as i'm concerned, she

was still testifying before one of the congressional committees and by the by the time we came here i don't believe that her briefing to place. at least i hope not because i'm hoping to make it, so perhaps we'll have a couple more questions. >> i know you all had talked about setting an internal deadline is about july 2nd at a tentative deals you could then introduce the deal to your members and have time to get comments on. what is today's development due to that plan and do you think you can still come up with something by august 2nd? >> will we simply have to. it's important that they have the confidence in the market we say what is the path that gets us to that place. they shouldn't have to beat these are tied together, but somehow or rather in a fashion

on a lens, the two entities merge and the idea that we would have a deficit reduction package and would be thought of in the same breath as the needs to either one aceves is that a mac, not default on the debt, largely encouraged by president george w. bush. as you what to? >> one thing that would take a fragile economy and for a few would be for the united states to default on its obligations. nobody should be pain a game of political chicken with this issue. we have heard some harebrained schemes that would suggest that we're going to perceive from legislation introduced by the republicans in the house and senate that says don't worry, we will just pay the government of

china. we'll just pay bondholders of u.s. debt. we won't pay our troops and we will pay social security. while that is, first of all, totally misplaced priorities. number two, when united states begins to default on any of its financial obligations to our troops, social security can what every baby, that sends a terrible signal to the credit market, risks higher interest rates, which hurts the economy. so these people are playing with fire and really putting the very fragile economy at greater threat by playing the games that we've been seeing. >> as you have republicans taken a hard line on what they consider tax increases, does that make it easier for democrats at the table to take a hard line when it comes to protect the medicare and medicaid in other entitlement? >> when they say one thing. leader pelosi mentioned this at

the beginning. the house republican budget was a nonstarter. at the same time that protected tax breaks for special interests and by the way, gave the folks millionaires a 30% in the income tax rate that they pay. that is absolutely a nonstarter. what we have said is that the right way to approach the health care issues is to build on the successes on the affordable care in terms of providing greater incentives that reward.yours and hospitals for the value in the quality of care they provide rather than the finder scared, rather than the number of tests. for additional things you can do. we've made it clear when it comes to the prescription drug industry that we can number one, get the medicare program the

same rate with respect to negotiate prices to bring it down for everybody and you can go back to the same payment rates in the system that was in effect prior to 2005, when people who were on medicaid and now medicaid and medicare got a higher rebate, the program got a higher rebate. there were a number of things who made very clear that you can do, but we've also made it clear we're not going to transfer -- we are not going to force seniors into the private insurance market with the cbo, which all of you know is independent entity has said they will face higher costs and get less support from the medicare program, which would in the end give seniors a raw deal and we want to make this final point because it keeps coming up. even though it's been debunked by a lot of these independent fact checkers, the proposal that

they are giving for seniors is not the name is members of congress. they are giving themselves, members of congress, a much better deal than they are now proposing for seniors on medicare. >> can you give me some examples of the kinds of things that democrats take you off are willing to do, but that are really hard for democrats that show a willingness that the republicans interview are showing by walking away from negotiations? >> mr. van holland is in the room, but the fact is we're going to all have to some very difficult decisions because we simply must take down that deficit. we are not willing to pass president bush's debt onto our children and our children's, but we also have to get on a path

where we don't incur, increase the debt as we go forward. the theme that comes out of the meetings and i only get a report that they are very, shall we say discreet about the proceedings in the room is that nothing is agreed to until everything is agreed to. i think that has been a public acknowledgment of a right-click seleucid it is now. and i want to yield to mr. van hollen to see if he wants to reveal any of them. >> will look, the president when he gave his speech at george washington university laid out a framework. it is fair. it calls for significant cut in discretionary spending. i mean, it is a cut, not just in nominal terms, but in real terms than it will impose pain. and then, appropriators have to decide exactly how to allocate

those decisions, and that pain, but it does require that, which is why, you know, he and we and others have made the point, if you're asking for significant changes in that area, why shouldn't we be asking gas companies to get rid of taxpayer subsidies? i mean, it's a very straightforward question and we really haven't gotten a good answer to that. >> general places they were talking about this cat is specific as you can get, examples of where you are willing to make the hard choices? >> all give you an example that's a hard choice for many people and has been a regional issue. i mention it because it been reported publicly, that agriculture subsidies in terms of ratcheting those down would be one example. and there are many other examples, but that's one that would require a change in policy with respect to payments right

now. agricultural interests get paid a certain amount, whether that commodity prices are high like they are now or though doesn't make sense. but that's one example among others. >> but suffice to say that there are significant in the amount of money that it would reduce the deficit and that is very important. and that's all the more reason why you would expect that you know you can't cut yourself -- cut our country out of debt. we have to have cuts. we're going to have two of revenue and we're going to have to have growth in order to bring the money in to help reduce the deficit as well. so what the willingness that has been demonstrated to make serious cash, is hopeful that the republicans will recognize that there has to be some revenue change. i just want to close with this. last night the president made an

announcement about afghanistan. the good news on matters the president is bringing war in afghanistan to an end, similar to the path he took in iraq. many of us would like to see this go faster than the path that was laid out. however, it may. and with the proper progress, whether it's on the civilians that, government side, anticorruption site, it may well be that we can have a quicker draw down and the sooner resolution of the situation in afghanistan as it is in the interest of our national security. and so, the president for his reasons has the timetable he has. i respect that it also accommodates a quicker progress that we ought to work for. i was there in the spring in asking this and period for the

first time i saw the progress in terms of some of these issues, governance, civilian initiatives come anticorruption initiatives, training of both the police and the national security forces in afghanistan. for seven years, we've had no progress. we had no plan. president obama came in, instituted a plan. i think it's going in a positive direction. i hope that the momentum that it now has will bring our troops home sooner. but i commend the president for announcing and reinforcing his previous message that the war in afghanistan will be over in a finite period of time. thank you all very much. [inaudible conversations] [inaudible conversations]

from [inaudible conversations] [inaudible conversations] [inaudible conversations] >> starting next month, we will be able to remove 10,000 of our troops from afghanistan at the end of this year and we will bring home a total of 33,000 troops by next summer.

>> congressional budget office tractor, douglas elmendorf said today that the nation's fiscal

outlook is quote daunting, and quote and lawmakers make significant policy changes. mr. elmendorf presented the results of the cbo's long-term federal budget and debt outlook released on wednesday. this republican paul ryan shares his two-hour hearing. [inaudible conversations] >> welcome onto this very important hearing. the purpose of our hearing today is to discuss what can be done to what he did feel the economic collapse this country. our witness today's doug elmendorf, director of the congressional budget office. want to thank you for her professionalism and hard work and does your associates have cbo and for appearing in our committee again today. history the cbo released its long-term budget outlook. distractors harsh light of the challenges we face in sound similar to many in washington have been ignored for far too long. the federal government will raise across the dangerous

tipping point this year. according to cbo, total u.s. debt will reach 100% of gdp. example of eclipse the size of our entire economy. economists who study suffering that tell us that leading total to rise above 90% of gdp creates a drag on economic growth and intensifies the risk of a delafield economic crisis. the cbo is candid about the increasing likelihood of crisis in the report states quote, such a crisis with them for policymakers is extremely difficult choices and probably have a significant negative impact on the country, unquote. this code demonstrates reveals clear for the understatement. a sudden fiscal crisis would be a complete catastrophe for this country. families and businesses with her the full brunt of the painful consequences. if the nation ultimately experienced a panic run on its debt, policymakers would be forster make immediate and

painful fiscal adjustment like yesterday programs that is still the rates increase. this is the massive tax increases on working families and steep but that cuts our most vulnerable citizens to hurt us. cbo is a nonpartisan agency, so it does not take a position on what would be required to prevent this crisis. but we can draw firm conclusions on the evidence in this report. for one thing, this report makes clear exploding government spending not insufficient revenue is driving us towards this crisis point. if we simply keep revenues that the historic revenue average as a share of gdp, than government spending driven by an aging population and rising health care costs will cause federal debt to grow to a stable levels. again, cbo makes clear programs are driving the debt in driving these programs themselves into bankruptcy. attacking solutions to save these programs, threatens both

the health security and economic security of the american people. if we try to chase ever higher spending with ever higher taxes, the cbo is very clear about the consequences. it estimates the gnp will be 2% lower in 2035 than it would be otherwise. the number represents hundreds of billions in dollars of lost income for american families and businesses on top of much higher taxes they would have to pay. house republicans had have passed a budget, to pass prosperity. perchance to cbo's warnings in the averts the crisis for us. the house budget tackles the explosive growth in spending, save critical programs like medicare and puts our budget on a path to balance without resorting to job tax hikes. meanwhile, the president has not put forward a credible plan, credible budget and its been 785 days. and they said it again. 785 days since the senate passed

any budget at all. we have a leadership deficit in washington and our window for solutions is closing quickly. instead of turning that cbo and others are working to inform us of this danger, let's work together now before it's too late to put america's budget on a sustainable path, grow the economy and the next generation with a better economy than the one we inherited. thank you good but that would like to go to device ranking member, ms. schwartz. >> thank you, mr. chairman. i look forward to this hearing, not because it will be easy or because it's new, but because it's the reality of what our nation is facing and demands our attention. i did want to say that ranking member ben holland is at the white house. he apologizes to dr. elmendorf for not being here. user can of course that the vice president and the white house

and the senate on the republican on the issue of the debt ceiling, which i know we may talk some more about and see if we can't come to some agreement about a balanced approach of spending cut and revenue increases to be able to move forward. we'll see. but i appreciate the opportunity to make a few comments about where we stand at what we hear today about how we move forward. for me to make it and if you know i've been on the budget committee for some time. the federal budget is a statement of as a nation. it's about three things. it's fiscally responsible and reducing debt, meeting obligations to our seniors and making target investments to grow our economy. we need a balanced approach and that spending cuts for every aspect of the budget that ensure economic competitiveness and will increase revenue. we do not need political

rhetoric were strict ideology. everything must be on the table and compromise in finding the common ground is very important. they are committed to deficit reduction. i feel like i should repeat that. democrats are committed to deficit reduction. the cbo's fiscal outlook reinforces the need for action. the question is not if we reduce the deficit because we must. it's how.

the short-term deficit with his works are necessary response to it. as well as revenues in the bush tax cuts to unpaid for spending and medicare. in a long-term deficit is made worse by dramatic changes in demographics in this country in the cbo will point this out. our population is aging. 50 million more americans will be over 65 in the next decade. the ratio of workers to retirees is one to two to one in the next 40 years, meaning fewer wage earners to support and cost of retirees. get its projected by cbo to rise 4% or as much as 187% of gdp by 2035. this is simply unsustainable. a long-term balance deficit reduction is absolutely necessary. the president's fiscal

commission are symbols, alan simpson commission and the bipartisan policy matters, both strongly acknowledge the need to do both cutting spending and raising revenue. the democrats proposed budget for fiscal 2012 tackles the deficit responsibly by both spending cuts and revenue increases. these include reductions from elimination of duplicate of spending, fraud, waste and abuse are streamlining government to make it more efficient and eliminating those that don't work well protect the nose in the nation. it includes the implementation of health care reform to save $1.2 trillion in health costs over 20 years. it increases revenue by ending tax cuts for wealthiest americans saving a hundred billion over the years and ending corporate tax rates that bring in billions more. the democratic should make

smart, strategic investments in education, innovation and come infrastructure and research and development which will strength and economic competitiveness to promote private-sector job growth and expand our economy. this is balanced, fair and responsible approach that it is a clear contrast to the republican badge it. the republican budget takes a sledgehammer to nondefense discretionary spending was careless cuts that don't acknowledge the impact on americans or a recovering economy. the republican budget jeopardized the safety, highway expansion undermines education research and reduces our best hopes for a future prosperity has had income of the republican budget ignores defense spending. it's imperative that we meet our commitment to our troops and military preparedness and security of the nation further growth in dod spending has to be taken into account. if admiral to 20% of her

spending. in the years between fy 08 it will spend more this includes the cold weather cannot be a non-and wars. that's government agencies agencies to become more efficient. a third term republican budget undermines our promise to america's seniors. the republican budget will answer seniors and will not reduce cost by turning medicare into a voucher program. it will simply shift that purgatory seniors. again, i believe we'll talk more about this as we go along. the fact is the republican plan will increase the cost of senior health care and increase will be increase borne by individual seniors, not by all of us. cbo estimates the republican budget will cost a 65 yield an additional $6000 sonata pocket cost and by 2030 will be as high

as 12,000. if republicans continue assault on health reform, the cost burden to seniors will not only increase, but will also reduce coverage and benefits. going back on the promise for me to her seniors and disabled in america is wrong. it's not only morally represent, fiscally irresponsible. finally, fifth, republican colleagues refuse to address the needs to raise revenue, which is essential to balancing our budget. just as we cuts unnecessary federal spending, we must also pay special tax division said a trade deficit. tax expenditures at over $1 trillion to a deficit annually.

yet the republican budget continuesa t millions of dollars in tax rates every year. we should stop this and save taxpayers billions. we cannot afford another 10 years of deficit financed, bush tax cuts and our fiscal outlook to change. revenues must be a part of solution, plain and simple. freelance real quick. indeed sensible, reasonable and strategic solutions to our nation budget challenges. it's clear the house republican budget takes a one-sided approach. we need a balanced approach that needs to meet our commitments as the nation and it's fiscally responsible and will strengthen our economy in the short and long-term. i look forward to our testimony. >> all say we see it a little differently. do not dr. elmendorf, the time

is yours good >> thank you, mr. chairman. to you and all the members, the budget outlook of the united states is daunting during the next decade and over the longer term. as the economy recovers from a severe recession and policies adopted in response to recession phase out come the deficits will decline markedly in the next few years. however, the retirement of the baby boom generation are significant and sustained increase in the share of the population eligible for social security, medicare and medicaid benefits. moreover, per capita spending for health care will probably continue rising faster than spending and other goods and services. in addition, the recession and a company policy of the pen a legacy of greatly increased government debt between the end of fiscal year 2008 in the end of the current fiscal year, debt held by the public will surge from roughly 40% of gdp close to his 40 year average to nearly

70% of gdp. the highest is shortly after world war ii. therefore, we face a budget pressures of an aging population and rising health care costs from a significant beware starting point than just a few years ago. cbo analyzed long-term budget outlook under two scenarios that embody different assumptions about future policies. although there are great uncertainties about future economic conditions, demographic trends and other factors how we think about implications of our analysis would be the same under reasonable alternative assumptions. here are our findings. under one scenario, or extended the same scenario, debt held by the public would increase slowly from its already high level relative to gdp, reaching about 85% to 2035. that scenario adheres closely to current law and can be

summarized in three broad categories. first, spending on the major health care programs as as social security is projected to grow substantially from 10% gdp today to 15% 25 years now. increase the spending will be on the major health care programs. medicare, medicaid and subsidy to provide it for insurance to seniors, which would grow from less than 6% of gdp today to 9% in 2035. spending on social security is also projected to rise, but much less sharply. second to the scenario, given assumptions that underlie our baseline projections, government spending on everything other than interest payments on the debt and the programs they just mentioned include national defense in a way to read the mystic programs. that category of spending would decline to lower share of gdp since before the second world war. third in the scenario, expiration of the tax cuts

enacted since 2001, the grain reaches the alternative minimum tax, tax provisions of last year's health care legislation and the way in which the tax system interacts with economic growth will result in steadily higher revenues. revenues reached between 23% of gdp by 2035, much higher than has been seen in the past. the significant increase in revenues in decreasing the relative amount of spending would offset much, but not all the rise in spending on health care programs and social security. you revenues historically high levels it would continue to rise. however, the budget outlook is much bleaker rendered alternative fiscal mary up in which federal debt would go much more rapidly, 6100% of gdp by 2021 in approaching 190% by 2035. that scenario from which more closely approximates current

policy is incorporate several changes to current law is or where they expected to occur or that would modify some provisions of law that might be difficult to sustain for long. most important are the assumptions on revenues. under this scenario, we've seen attacks cuts enacted since 2001 will be extended, the reach of the alternative minimum tax will be restrained and over the long run, tax will evolve further so revenues remain near historical average of 18% gdp. this scenario also incorporates assumptions about medicare's physician that they remain current levels rather than declining by a third at the end of this year under current law and policies enacted by share for extreme growth by the federal government will not continue after 2021. in addition, the alternative scenario includes the assumption that spending in all other activities will not be quite as low as under the baseline scenario, although we'll still saw close to its lowest level in

the entire postwar period. it is important to note further that these projections do not incorporate the harmful effects of rising debt would have an economic growth in interest rates, incorporating economic feedbacks of the report, debt under this scenario would be well over 200% to gdp in 2035 is such a thing would come to pass. the implications of this analysis are clear. there is a substantial mismatch between what the government would have to spend to maintain existing programs in their current form and the revenues that taxpayers are accustomed to providing good to keep deficits and debts from climate to unsustainable levels how policymakers need to increase revenues for the percentage of gdp. decrease spending from projected bubbles will adapt sun combination of those two approaches. making such changes remain well

below potential levels would probably slow the economic recovery. however, the sooner one team changes pass a spending policies are agreed upon the sooner they are carried out once the economy recovers, the smaller the damage to the economy from growing federal debt. thank you.

yesterday the trustees and the ways and means confirmed in a hearing medicare as we know and use in 2023 so i have three basic questions on this part. if medicare trust funds are empty, and paying for medicare promises requires tens of trillions of dollars to be transferred from general revenue, where will these funds come from, number one, number two, how what medicare be financed in a fiscal crisis and is it plausible medicare could continue to provide current benefits indefinitely as analysis consumes comparing the two? >> on the first question mr. chairman, if the trust fund runs out of money than the only way the benefits will be

continued at the level specified in the current law is if the general revenue were used for that purpose and that can only come from higher taxes or lower spending in other programs. >> or additional borrowing. >> if the government becomes unable to borrow at affordable rates as we have seen from other countries end up in a position, there would probably need to be very stark changes in the whole range of government spending programs and start changes -- >> in the immediate term. >> when the situation arises the government cannot turn to capital markets to obtain the funds it needs and then balance the budget almost literally overnight then the disruption to the federal government policies and the economy and the society could be immense. >> so this is unsustainable. >> the path of the budget the current policy is most

definitely. >> and the medicare baseline itself. >> it funded through the trust fund is on unsustainable path and our own projection it is in 2020 a few years earlier. >> so let's get down to the provider side of this. i've been on the ways and means for a long time and lots of provider issues. historic lee medicare in both parties have been working on this, medicare control cost by paying less than private. it cut by $500 billion not to advance medicare solvency but fund another open-ended entitlement program. on top of that physicians are said to be cut by an additional 29.4% of this january i believe it is 29.4 to read to your -- in the medicare -- to your projections assume providers continue to accept patients with the same rate they do now under

the traditional program because let's remember medicare pays providers eda present what they will receive in the private market. this will fall to about 40%. so, do your projections assume providers continue to accept medicare patients at the same rate now in the traditional program and as your analysis assumed despite the additional provider cuts coming this will have no effect on the quality or access of care? >> we don't model the behavior of physicians. we don't more of the access to carroll quality-of-care. >> it stays as is. >> we noted in the letter analyzing your proposal that's a gap in the tool kit that we are trying to fulfill but under the current circumstances we don't model in the regular baseline projections or analysis of the proposal the affect it might happen under the current law or alternatives. >> your analysis effectively assumes no matter how much the

government pays providers for health care services providers continue to deliver the same quality care and access. that's the gap to talk about one of you accept the premise and position of price control to actually reduce cost strikes me that your analysis does not appear to take into account the choice and competition despite in the economy and even within medicare where applied would put downward pressure on the health inflation. there's a take away here that the only way to get a grip on skyrocketing health care cost is to restrict price control and heavy government rationing. is that what we are to conclude? >> i don't think that's a fair interpretation of the analysis. as you pointed out yourself medicare pays list providers to date and private insurers. so it is i think an open question to how much lower payments can go in medicare relative to private insurers without the access to care or quality-of-care of medicare beneficiaries in an important

way >> but you don't feel like you have the tool kit to model that is that what you're saying? >> we also noted in the letter that we do include the effect of competition in the current private insurance market and assessing the gap today between the costs in medicare and the cost of the similar patient we estimate the downside of medicare, but we do not in the analysis and corporate any effective competition that might arise over time from the additional place pressures that are built into your proposal and from additional flexibility that insurers have relative to the traditional medicare to adjust. >> to be clear on that point medicare part b which is something we looked at -- if you don't mind i would like to have on contact. helpful. medicare part b, it's come and 40% below cost projections. now while those savings can be

attributed to the lower-than-expected in a moment to calculate nearly 85% of the program savings were, quote, direct result of competition and significantly lower plan bids. remember we had an amendment in the ways and means premiums rate that would be about 25% higher than they actually are today. the reforms in the budget are modeled on these kind of reforms so choose from guaranteed medicare coverage option. when analyzing the costs under the house-passed budget, did you take into account choice and competition would have on the health care cost and do you assume people will continue to utilize the same rate they do now meaning what i got out of what you just said is that you're not really greening those lessons from the experience we had from the part d result petraeus too we are not applying any additional effect of

competition on the growth rate over time and analysis of the proposal coming and we don't have, again, the analysis we would need for the quality of valuation on the importance of the factors. interpreting the evidence and interpreting other evidence in the world is complicated at the time of the estimate the we made which was above the ultimate cost prescription drug spending we expect this to slope through of the health care system than we anticipated at the time. part d shared in that slowdown. that is say, again, health care system wide phenomenon. the extent to which the was passed through to medicare part ad is different than it would have been under an alternative structure for part de is a subtle and of the question and if one looks at other examples one tries to compare the public health care programs to systems

where there are competition in the private insurers the comparisons are not straight forward as we shall there are periods of history where the cost and the public programs grow faster than private insurance and periods where there is the opposite can be seen. if one looks the federal employees health benefit program premiums in that program have risen fairly rapidly along with premiums and the rest of the health care system roughly despite the competition. but interpreting this evidence is tricky. we have a public health care program that has evolved over time with a lot of policy changes. it's not a queen from a research and set of policies. we have private health care system that's been affected by developments in the health care system and affected by the tax treatment of employer sponsored health insurance so it isn't a clean run of a purely private system either. we are trying to do this is a long project is to glean the lessons from the different parts

of the historical experience to try to address the policy issue which is the power of the public to find the benefit of chrysostom versus a system where the government makes the fine contribution the competing private insurers to try to give you some more analytics. >> you guys are doing -- at the shop you do such a great work. if we stick with the analytical tools or lack of tools then the only conclusion is price controls and i think economic evidence throughout history shows what happens there. so i think we have got work to do. so really analyze this. any plan, but ours aside for a moment, any plan to address the crisis must address health care programs and help inflation and measuring any of these plants against what is a fiscal fantasy and unsustainable trajectory is

not an accurate measurement of comparison because it's comparing some plan against the future we now know can't continue. and so, i think we just all have to do more work to try to figure out how to really truly address these issues. >> i want to get into the budget only to say we got your analysis of the president's budget i won't go back into that, but the president gave a speech april 13th where he outlined a new budget framework that claims for trillion deficit reduction over 12 years, have you estimated the budget impact of this framework? >> no mr. chairman. we don't estimate speeches. we need more specificity than was provided in the speech through the analysis. >> ms. schwartz?

>> let me take a different approach on medicare. one is we are concerned about the long-term fiscal health of medicare. it's one of the reasons we passed a law last year to use basically every idea that exists for containing costs and ensuring quality and access for seniors. you've looked at some of those and acknowledge they do good to quantify all the cost savings that exist and acknowledge the cost savings and i think both you and the medicare trustees talked about at a minimum it is going to save money over the long run in the affordable care act and it does extend the fiscal health of the trust fund for a number of years, and that is i could do better than that, much of the work that's being done and the payment of a free system reform to reduce the

duplication and waste as well as coordinate care and improve the efficiencies in the health care system. so it's not just about the future service reimbursement. it's changing the way we do this so the debate doesn't become house simply how much do we reimburse doctors particularly relative to the private sector. so yes or no that's true. estimate there were important changes made in the structure of the medicare payment to providers, the whole collections in last year's legislation. some people were frustrated at the hour analysis of got into the gerrans frustration this year's proposal by him we don't have the tools perhaps to capture the full effect of certain changes and we are working in that area as well to build a stronger toolkit to provide you with better information. >> i do appreciate some of the regulations cbo has been able to respond saying this is what we

believe. that it's a ceo can save where there's so many other actions we are taking and the proponents of hospitals that actually has cost savings you've been able to in allies. >> we certainly have estimated some savings for some of the more unusual experiences. we are struggling ourselves with developing tools that could enable us to provide better analysis. islamic i want to make it very clear of course what we did in the for care act was to sit out a path and this is the path. it's not going to happen in ten minutes. it's a path to be on to get better value for our dollars and assured access to the highest quality care for seniors and the idea to focus on the other piece of what we are talking about in medicare in particular republican proposals for the premium support the voucher. it's the same thing. it's a support for cooperative

support for -- >> would you like to yield a minute? i'm happy to go into this if you want to be this and i completely understand how you equate to the federal employees and -- >> there's a difference between supporting vouchers and the cbo very clearly. >> one of the things that seems clear and i want you to clarify this is if we are going to give seniors a certain amount of money for them to be able to go and buy private insurance in the marketplace as the costs rise who pays for the cost, the additional cost? you've been very clear about this but initially over time if you could answer that question. >> the contribution which the government contributions are set as under chairman ryan's proposal then one of your extra

amount private citizens need to pay to obtain the services they would pay themselves. >> have you estimated how much that would be for the average senior? >> the typical 65 year old body new standardized health insurance benefits, and we estimated that in 2020 to for example, under dhaka baseline scenario seniors would pay 27% of the cost of the standardized benefit under the proposal seniors would pay 61% of the cost of that benefit. >> can you give a number with this? >> i don't -- >> about $6,000 is what the average senior 55-year-old to would expect to pay and it could go up as much as 12,000 over time. >> i don't have a dollar figure

and i'm told by my colleagues we don't provide a dollar figure so the percentages to the other estimates of the cost. >> and that's probably where it came from the point i'm making here of course is the republican proposal has been voted on and supported by every republican in the house does shift the burden of additional cost to the individual seniors. >> by our estimate a good deal of burden and also ships risk regarding the ultimate cost. >> right. so the notion seniors would be able to get the same benefit to pending the of an extra 6,000 or 12,000 to pay for them or whatever it might be. all understand they see this as choice we see this as if you can't afford it it's not much as a choice. islamic to buy that package of benefits depends on the resources they have available on the estimates being correct about those costs.

>> i think you made this threat as well if we are all concerned and you have the style of health we come to in the rising growth and cost can be shared by programs and private insurers and how to actually get better value to contain the rising cost. in my district nationally families have seen a 100% increase over the decade its double duty for the health premium between paray and proposal the republican vote on proposals the cost containment built in except for the individual senior not being able to afford to buy the insurance but there isn't anything that's actually moved the system to improve quality and reduce cost over time. is that correct?

the cost containment peace in the private-sector to do it through what people can afford to buy. >> to observations. first, interest and the chairman's proposal, traditional medicare would continue along the lines in the current law and because people move into the new system as they turn 65 under this proposal, a good deal of patience and medicare and even larger share of the spending in medicare remain in the traditional medicare system. islamic 55-year-olds would be different and not traditional medicare anymore after a certain point. >> by 2030 evin, more than half of the medicare beneficiaries are still receiving traditional medicare, 45% are receiving the support so it's a gradual transition and the program as understand the proposal the

programs in place in traditional medicare would maintain. the second of cervezas the proposal rather than deducting specific experiments on the changes as was done in the last legislation would rely on the price pressure affecting the competing private insurers. >> but does that mean then all the cost containment provisions that are built into the law we have now if it should be repealed would then go by the wayside and wouldn't see the cost containment. there's a lot of work in the health care system and i apologize this isn't the expertise as you said you haven't driven down this is a lot of important good work being done across the country that is actually getting better value for the dollar to scale that up to more seniors. >> i don't mean to be little this by using the word experiment. what i'm trying to signal is that the successful experiments getting greater value and there's been a number of them

have tended to be fairly localized and the question of how they can best be extended across the country is something both medicare and private insurers are wrestling with. with medicare and private insurers in different ways of paying providers and so on. i don't mean to be little that but there will be a certain a lot of trial and error for private and public insurance whenever the system is, we need our health care system to become more efficient and i think the crucial policy question is public or private system applies more of the use all kinds of pressure and avoid its more of the detrimental pressure you would judge that. >> my time is up but this is a conversation we have tried to advance we will contain the growth in the that the care because we are serious about that as well that this needs to be done in order to sustain medicare as we hope to but

turning over to private sector is it could contain costs for businesses or for families or seniors for sure that that actually is a model we can't rely on the fact the federal government pays 46% of the cost of health care in this country we could and should be in our view a force for improving quality and insuring access. that's one of the big debates we are having. >> i want to help answer the questions you asked the director to show what is our thinking and why we propose what we proposed because you are right. we've got to do this out. medicare is the biggest driver and the affordable care act does attempt to do that. we disagree with the way it attempts to do that. there's no cost containment there's two ways of doing this. you put the patient in charge or put the bureaucracy in charge?

we think a patient centered system is a better way to go. now, when you put the bureaucracy in charge let's look where we're headed. accountable care organizations. the idea is very good but look what is happening. nobody's going to purchase it in this rule so let's have a system that's decentralized and not a government centralized, not to go with price control because price control might make the numbers add up on paper but it wouldn't deny access to people. and so, what we have found is that we continue to underpay providers where they are telling us providers are going to get about 66 on the dollar for medicare now going down to 33 cents on the dollar. we can't assume they are going to keep taking medicare. so i or we don't think that that is the proper approach. more to the point we don't think an elected unaccountable bureaucrats, technocrats no matter how smart they are can

figure out how to micromanage our economy. we believe that providers competing against each other, insurance company, hospital, physicians competing against each other for our business has uncovered consumers is a better way to go and we have a lot of evidence that shows that to the point his analysis does not include, it does not include the fact we've proposed a risk adjustment subsidy as a person gets sick in medicare we want them to have a high year subsidy. it also does not include the fact that we propose to add an additional $7,800 to begin with which keeps growing every year to low-income seniors to subsidize and cover their out-of-pocket cost. there's only so much money to go around, and our point is we shouldn't subsidize wealthy people was much as a free but deals. and we should subsidize low-income people more than

everybody else. that is the way we think tax payer dollars ought to be deployed and we want the patient to be the nucleus in the health care system and everywhere else instead of some border 15 technocrats' giving a thumbs-up or thumbs down on whether this will work or not or who gets paid what, where and how much really don't think there will work because we have lots of evidence already. with that i yield. estimate your correct saying the numbers i quoted and featured in the report did not include the effect of the additional in the letter. we're part of the cost for a typical 65 year old and include their model. estimate the illustration does not suggest a person will get higher income. >> it's an average so it doesn't take into consideration the fact person who has high your

mortalities, high-risk get a higher subsidy >> to cover the higher cost and get health insurance coverage >> i could take more time on that. you're introductory comment i thought was pretty well set it all and that is the budget outlook is daunting. i agreed to. it's unfortunate we been left in the situation the last years of congress controlled by the oversight that racked up $6 trillion in debt. i want to talk about three things. in 2.1 of the material you handed out today you have some gdp growth charts. can you tell me quickly what the revenue assumption were come excuse become the gdp growth assumptions were in the extended baseline scenario and the alternative fiscal scenario. congressman, we set for the underlying path of the benchmark two years for most budget

projections and economic future and as you see -- >> just give me some numbers quick. >> under the alternative fiscal scenario, gmp would be seven to 18% lower in 2035 the with the under our benchmark that assumes a steady debt to gdp ratio. >> not debt to gdp but would you look at in terms of real gdp growth for long-term? >> the real gdp growth we have had is 2.2% on average per year 2225 and that's lower than our historical long term isn't it? >> it is never particularly because the labour force related to the population aging. >> you talk about the fact that taxes would rise to 23% of gdp under the extended baseline is that correct?

>> what eli models taxpayer behavior in a situation like this? in other words, do you go to maryland and virginia ortiz? >> i live in maryland. >> maryland doubled its tax rates tomorrow would you move? >> my kids finished their sophomore year i would move on peril of my life. >> he would be looking at it right? >> it does incorporate the effect of the changes in marginal tax rates that's an important area we have an hensarling analysis in the past few years as was the difference in debt are included in the gdp. >> that factors into the work gdp growth. so there's an impact on revenue by raising the rates because you put a brake on the economy as you move forward. >> on the extended baseline scenario for the alternative scenario where there is more or less steady and rising debt. >> to the extent that you have

assumed tax revenues as a percentage of gdp are high year than 18.3% long-term average it has a dampening impact on the economic growth. correct? >> the one we emphasizes the marginal tax rate that really matter for economic growth not just the level of revenue but how that money is raised for the modeling captors the effect of the marginal tax rate the disincentive to the workers did. >> right. good. okay, the next question has to do with provider behavior. again, everything that happens in the economy is because an individual or company believes in a certain way based on the conditions thrown by its government or by some of their factory. when you look at provider behavior if we were to cut the pay of everybody in ceo by two-thirds with the impact of your people wanting to receive or move to your position? >> i'm afraid it would come congressman.

>> essentially what the chain saw that was applied to the provider reimbursement under the obamacare to will does impact provider behavior, and you're modeling doesn't assume any change in behavior, right? >> that's right. we don't capture, again, if you were trying to in part, our modeling does not capture any sophisticated way the possible ramifications of that >> looking not theoretically but likely realistic outcome with the reimbursement rates are to providers by two-thirds, we are going to have a lot to the providers less health care. >> that's a possibility but i don't think it's -- i don't think it is a guarantee. a lot of experts on health care system say there's an awful lot of inefficiencies the way things are currently being managed and that by changing the

organization of the health care system a lot of deficiencies can be achieved and providers can continue to cover their lure more efficient levels of cost with lubber payments. estimate you said it wouldn't work of the cbo and would cut your pay by two-thirds. >> the issue was with the possibilities are for improving the efficiency of the system and we set ourselves and our analysis of the legislation last year that how long the cuts could be sustained for was arm surgeon and we provided an alternative scenario in which the cuts are not sustained free long period but i don't think that it's obvious the cuts can happen for some period of time. we don't know how far they can go partly because we don't know what the possibilities really are for improving efficiency in the health care system not just as a theoretical matter but practically speaking what kind efficiencies can be achieved in particular places across the system as a whole. >> couldn't cbo operate with two-thirds of your people? the efficiencies to provide the

same product to do today? >> we could not to read >> i suggest the same is true for the health care system. that is an important part of the economy. i yield back. >> thank you very much. >> i think one word around which this congress is focused so far this year is kutz, the immediate far-reaching cuts. the education committee has met and voted to eliminate dozens of education programs. another republican group has said that pell grants, which allow folks to go to college or just another form of welfare and we cannot sustain the level of financial assistance we have. boats have been taken to eliminate federal support for community policing and firefighters and of course it is seldom a week goes by there isn't a proposal to cut health care. putting aside for a moment before reaching consequences of

denying educational opportunities and health care and adequate law enforcement, i want to direct your attention to the comment of the chair of the federal reserve yesterday dr. bernanke who said in light of the weakness of the recovery it would be best not to have sudden and sharp fiscal consolidation in the near-term. i don't think the sharp immediate cuts in the deficit would create more jobs. do you agree? >> yes i do, and we set the same thing ourselves on a number of occasions. >> i thought that was the case. while we want more agency and to address the long-term costs, if these cuts are dramatic of the not only will deny educational opportunity and health care security, but the cause us to lose more jobs and have less economic growth >> the specifics would depend on the specific policies to read our analysis complies the cuts in spending more in taxes during the next few years would buy

themselves reduce output and employment that would otherwise have been at the same time credible reductions in the future deficits would boost output in the next few years because they would hold on interest rates and probably increase business and household. >> i certainly agree with you on both points on the long term i guess the only problem is the specifics so let me go to one of the specifics, and i want to try to quote but exactly what you said to ms. schwartz on believe plans similar to what chairman rye in advance with medicare will come up with, shift a good deal of burden and risk to seniors. now it's great to talk in theory about putting the patient in charge. we've had the patient in charge with regard to seniors on medicare in the past with prescriptions to pete and i guess we can put the charge again and that may reduce

consumption of health care because there will be some seniors who will say i would rather eat and go see the doctor or by another prescription. i'm going to keep cutting michaels and half. that is the patient nucleus. while you may reduce some consumption that way in medicare, what i hear you saying is that we have an overall problem about rising health care costs that affect a different amount at different times with federal employees plan, medicare, medicaid, the veterans administration and private-sector and that if all we do is shift more of the burden, good deal of the burden and the risk to seniors and we haven't found a way better it is through experiments or something else to address the problem of rising health care cost we may have relieved some of the burden on our debt and our taxpayers but we have not relieve the

burden and we have increased it on some of the most vulnerable people in our society it time that they are trying to achieve a decent level of retirement security. would you agree with that? >> certainly that if the congress chooses to shift the burden to some or all demographic group then that is addressing the government a budget constraint by tightening other people, but i would emphasize almost any way i can think of to address the government budget constraint involves tightening somebody's budget constraint that as i say we are collecting, used to collecting certain amount of revenue relative to gdp which has varied over time but it hasn't shown a trend around the 18% market we have government programs that provide certain benefits to older americans from social security, medicare and medicaid and other tasks in the

government, national defense, homeland security, veterans' care and on and on, that have occupied a certain share of gdp. we cannot have all those things being together in the future. we cannot repeat the past and the federal government because of the aging of the population and rising health care cost. >> certainly we cannot but we can avoid shifting a good deal of the burden and risk to seniors without addressing the broad issue of health care cost. thank you. >> thank you mr. chairman. thank you for joining us today. clich question, how many years have you been director? >> almost two and a half years. >> director, we had discussions today on the house republican plan and by a freshman. how long has it been since you have analyzed the congressional democratic budget?

>> i don't want to sound too technical but we don't analyze budget resolutions. they come from the budget committees. in fact we're trying to the kitchen and ryan proposal we analyze the impact of the proposal and the long term impact of other proposals it has had three we don't do an estimate of the resolution. it's not a law. >> senate democrats' proposal budget committee, when was the last one you analyze that came out of their committee? >> i think, congressman, the last budget resolution voted on by the senate budget committee was in 2009. >> a little over two years. or do they even have one? >> in 2009 because the reconciliation that came out of that budget resolution turned out to be quite important in the final act of the health legislation. selected that passed the senate?

>> i guess i'm not sure, congressmen. >> did they pass the proposal? >> trying to figure that out i heard there has not been for a couple years and it's pretty amazing to me. what i want to talk about the was a question on the economic assumptions. you talk about 26 through 28, the impact of more borrowing, higher tax rates and the impact on economic growth and it's pretty well agreed that increased spending by issuing more debt is going to impact the economy by increasing taxes will do the same though under most economic assumptions it would seem the only reasonable economy to tackle the deficit is reducing spending now has is that correct?

>> there are tradeoffs here. higher marginal tax rate due to reduce economic activity to some extent under the views of most economists. but, certain forms of government spending are important for economic growth and we are using -- reducing those can be damaging. moreover -- >> excuse me, but in your analysis, pages 26 to 28 talk about increasing taxes will hurt economic growth. >> marginal tax rates, yes. >> it's been suggested by the president. additionally by borrowing more debt and has a similar impact on the economy. explain to me that lie reducing spending is not the only alternative to read >> again, congressman, for a dollar reduction in the deficit if one kutz some form of spending that was not in an investment in economic growth, there would be better for the

economy than if one raised about her through increase in marginal tax rates. stomaches medicare spending and economic gross revenue? >> i don't think it's an important driver in the long term. >> what about social security? >> i don't think it's an important drivers -- >> what about the department of defense budget? >> again, there are some pieces of it that have mattered. >> three-fourths of the budget is economic growth as i anderson and? you eliminate two-thirds of it so the remaining third is economic growth? >> there are pieces of federal spending that have been important in economic growth. i don't have an exhaustive list of that and we are not good at modeling those effects. >> but you do make a statement and you identified in the report and are the appreciate you could identify the following program that you believe the right economic growth.

mr. bernanke refuses to identify those and face the possibility that we have a debt crisis and that if we don't face that very soon and quickly and suggest that we can't cut spending that somehow we can borrow and tax and that's going to work out, obviously your report doesn't say that so if you could provide that determination if you would of the type spending you believe cbo believes would help drive economic growth because we are working with that now, and i would appreciate that distinction. >> i would be happy to work with your stuff, congressman. >> thank you. i yield back my time. >> nice to see you again. earlier he mentioned in passing $6 trillion worth of additional debt over the last four years attributed to the congressional

the activity. have you done an analysis of the factors that contribute to that additional $6 trillion in debt? how much would have been attributable to the converse actions and how much the policies already in place? >> we've done an analysis sometimes of the swing in the budget deficit from what cbo is projecting about a decade ago to what has come to pass, and it turns out i think i have the table with me. i often don't remember to bring it but i have it with me. and as you know, congressman, there's been a collection of actions taken over the last decade that significantly worsen the current budget picture. there's also been a collection of default and an economy that were not predicted by cbo that have also led to the worsening of the budget situation. >> would you say a majority of the additional accumulated debt over the last four years was because of congressional like to

the war because of existing policies? bush tax cuts and the war initiated in the earlier years? >> will the to to the baseline projections in january, 2001, just a little over ten years ago, the deterioration in the budget of come in 2008, 2009, ten and 11, they are much more to the legislative changes than the economic and technical surprises. and those legislative changes include both reduction and the tax revenue and increases. >> we will leave it there. there's been a fair amount of conversation already about the impact of increase in marginal tax rates. when you make those statements conclusions they were just economic activities, do you assume an increase in marginal tax rates across the entire population, do you break it down

as to the impact on economic activity of raising the marginal tax rates on people making over $215,000 then people making over million dollars? and is there a difference in the impact economic impact of those increases? >> so, congressman, we do look at the effects on a variety of income categories. i don't know what they are off hand, and we try to apply historical evidence what we think the responsiveness would be. and you can see some of this in all this testimony we did for the budget committee last fall that different ways of the tax provisions, some of those scenarios we study we assume all of the expiring provisions were extended to read that did occur in the end of last year and others we looked at extending only the tax provisions of to a certain point and not above that. i don't have the results of hand. >> is it safe to say the general proposition that if you reduced the marginal tax rates on 35% to

39.6% on people making over a million dollars a year that will not have a huge drag on the economy versus extending the marginal tax rates on the other 99% of the population? >> the question of the total went back and the impact per dollar revenue there are more people on the distribution, much more income earned in the thus changes in the marginal tax rates below that threshold will have a larger aggregate effect on the economy with the per revenue dollar lost, the effects were generally larger at the top of the income distribution because the changes in the marginal tax rates are less revenue is given up in the sense relative to the changing the incentives. so in terms of the distortion of the economy per dollar revenue

lost that is not smaller at the top than it is at the bottom but it depends on the precise nature of the tax policy. >> i look for to discussing it further. one last question to the in the republican budget that was passed by the house, there's an assumption as i recall that unemployment drops to .8% by 2015, and that range stays at a very relative to today's terms and historic terms a very low level. i believe i'm correct on that and if i'm not the chairman was -- >> what kind of assumption do you make in your scenario to what unemployment would be for the next ten years or so? >> because the recovery is slow, we think that it will come down only fully and over the second half of the coming decade be down to about 5.5% of the labor force. >> thank you.

>> that is not an assumption of the budget cbo is the measuring we will use. there's an economic forecast group that did its own separate analysis of the budget. the subsequent week revised that analysis to the deal with that particular statistic and they revise it to think 5% or something like that. next is mr. saltzman. >> thank you mr. chairman and mr. elmendorf for being here. my question is in the report you note the federal government could not issue ever larger amounts of debt relative to the size of the economy indefinitely. do you believe current level of debt is harming the the economy? >> the current level of debt is reducing our output, our incomes relative to what would be the case if we have a lower level of debt leaving aside the effect of the particular recession that

complicate that but for the longer period high levels of debt are more damaging than the lower levels of debt. >> you think the discussion on the tax increases keeps money on the sideline as well without encouraging economic growth? >> i think that on the certainty about the federal policy is diminishing household and business spending and that uncertainty covers a whole set of policies i think it covers tax policies, it covers regulatory policy, health policy. i should say the more important source of the uncertainty is households and businesses, uncertainty about their own income and the demand for the product but we think the government policy is playing some role. >> i agree with you and i feel what families are doing is they are doing what they can control and that is cutting their own spending and budgets controlling their budgets. they can't necessarily control the income revenue because the

job market is tough. they can't take on more debt because it's tough to borrow and it's not necessarily wise to do so. so on here in this committee that we only want to cut spending. i know you've been in this job about two and a half years or so. when is the last time congress talked about cutting spending and actually did cut spending in washington? >> as you know, congressman, the appropriations bill was passed spring reduced spending. i don't keep a list of that to be honest. the covers a variety of proposals that include and but have been enacted into law that include a combination of spending cuts and increases, tax cuts, tax increases. i'm not even sure how i would keep such a tally. >> i don't understand why it is they seem like they should be out of the realm of cutting spending, addressing everything whether it's entitlements, whether it is discretionary come

on discretionary spending, military. i believe everything should be on the table, and from your analysis in the report is that we need to be very cautious in the debt that we hold is damaging or holding back the economy a thing devotee agrees the higher taxes, just the discussion holds money on the sideline. so cutting spending should be a part of the discussion. did you score the affordable health care act? >> yes, we did. >> there was a report about a glitch found on the bill that's going to send 3 million, roughly 3 million middle-income americans and medicaid. can you touch on that? >> i don't know whether it was a glitch in the drafting or the intense but in any case our estimate incorporated of the effect of that provision as a was written. >> what do you think that is going to do to the 3 million middle-income americans trying to find confidence in the

economy and in washington? if we continue this sort of -- i am not blaming you because the intent obviously was there, for some reason was there, and now we are finding out after the fact and what it's going to do to affect at least 3 million americans possibly come so why should say we don't have an estimate of the number of people affected. we took the definition of the income eligibility into account and in our estimate, but we don't have any separate account of how many people were affected by that piece of the definition, and in fact that's not an answer the question because it depends what other things would change to it i don't want to endorse the 3 million. that's not from us. we've had in our estimate. it isn't a surprise to us. >> so, this glitch is not a surprise to see below? >> no, it's not to read i don't know if it is a glitch or in tend but we did that piece of

legislation and use that language in our estimate. >> that's what it seems to be called and there's backtracking by some folks here that this is a glitch and we didn't recognize what happened here, and you know, that's -- i appreciate your answers because you've been balanced in approaching this and because if we don't start talking about cuts come and you know, your report obviously gives not so rosy a picture and we have a lot of work to do to control what we can control and that is cutting spending without doing damage to further damage to the economy, but i believe the tax increases, more borrowing is detrimental to our eligibility. would you agree with that? >> i believe more borrowing is detrimental to our long term outlook and that high your marginal tax rates are also detrimental to the of look and

that is why we try to capture both of those where they are relevant in our economic analysis. >> thank you very much >> thank you for joining us to to the conductor on understand clearly these are days or the expertise is tremendously needed so welcome. if i could just returned briefly to the line of questioning, is it reasonable to assume education spending and economic growth and what about our investment or spending basic infrastructure, the roads, bridges, the connections we need, the infrastructure to move people and goods around the country.

>> we this done and i was of infrastructure investment, and obviously there are some aspects of that investment has been more beneficial to the economy and some that have probably not been beneficial not all. but on balance, sensible investment in public infrastructure, investment to pass some sort of benefit cost test enhance economic growth. stomach asked another way is there is any reason to believe we might see an economic dip if we don't do the investments in education and infrastructure? >> i think the term did and why is a cut in spending more increases in taxing and a short one with as i said before perhaps cause that sort of dip, but usually conversations but education or infrastructure are more of the longer-term and i think reduction in education that occurs in the country, reduction is not infrastructure that we build would be detrimental to the long term economic growth. >> and what about our

unemployment, which i have read has a return in economic activity between $1.60 to $1.70 and every dollar spent in our unemployment insurance? >> so we think that in the short run come in the situation of our economy now, which is a lot of unemployed workers and underutilized factories and equipment, that putting money into the spending stream through benefit payments and reductions in taxes encourages more spending and that leads to more output and unemployment. and in our estimates, the effect of putting money in unemployment insurance is especially powerful because people that receive it tend to spend a large share of it and they are people who have lost their jobs and in many cases they don't have other sources of income. >> it seems as though the economic activity we need to inspire what at least help those

in that unfortunate realm. can we bring up the charts that we have on the long term debt? there we go. this chart is from figure 1i believe, and in this you present, dr. elmendorf, to projections where the debt is headed in the next 35 years. under both scenarios that continues to grow relative to the size of the economy but there's a tremendous difference between the two. where do we in the that the chart and 2035 under each scenario in this chart? >> the extended baseline scenario which largely follows the current law we end up with debt at 84% of gdp. and under the alternative fiscal scenario which more closely corresponds to the current policy settings we end up with debt at 187% of gdp in 2035.

>> thank you. can you briefly summarize the key policy choices that differentiate the two scenarios? >> the biggest differences on the revenue side under the current law because of the expiring tax provisions, the provisions of last year's of legislation, just the natural when collection of the tax code economic growth revenues rise quite a bit relative to gdp. under the alternative fiscal scenario we hold revenue we assume these expiring provisions are instead an extended and keep revenues down closer to their historical average share of gdp. 72035 revenue under the extended baseline scenario or 23% of gdp. and the alternative scenario or about 18.5% of gdp. the differences on the spending side and both of the health programs and then on health on social security part of the budget and the programs for principally assuming under the

alternative scenario some of the cost control features of the last year's legislation don't continue over the entire quarter-century that we are showing here. and on the other mom health care and on social security spending we are assuming still a very substantial decline relative to the historical experience but not quite as sparked an endpoint as under the extended the baseline scenario. >> to summarize, one scenario sticks to the current law and puts the debt of about 80% of gdp in 20 or so years. the other scenario puts it at 180% of gdp by among other things extending tax cuts for the wealthy and refusing to implement the affordable care act. that sounds to me to be an awful lot like the republican agenda this year. my concern is that we are wasting month after month on the pawlenty to policies by the majority and digging us into a deeper hole regardless of how you feel about that strategy going forward, i think we need

to do far better than to create a larger -- >> the gentleman's time is expired. and get back in writing if you would do so. .. larger portions of americans are on food stamps that i've been on

food stamps historically. only involved in a cost-containment because the price of food -- food place cost peanut programs going on? >> not that i'm familiar with. the principal reason why the cost of food stamps or so i because the economy is weak in many people are out of jobs. >> if they are no good cost containment, we hear talk about efficiencies in the marketplace. are there any industry sectors you can point me to where the government has a driver in creating efficiencies for the private sector wasn't succeeding only really got a great initiative program run by the government? >> congressman, a feature and you table 31 underreport corporate excess conscripts in spending for health care and if one looks at the table, one can see it. where in fact federal spending

on health care and medicare and medicaid has increased more slowly than private health care spending. there are other periods where the opposite is true. i said in response to an earlier question that just looking within the health care system, the verdict on whether the private or public sector is better at controlling costs is not self-evident. >> with the gentleman yield on that plane? i'm looking at table 31. for the fourth time periods you have measured from other private health plans have lower conscripts and medicare. there's one of the four appears or medicare is little or and the dirt. although there is lower in cost growth in medicaid. >> so these are -- >> i misreading that chart? >> these are overlapping. i would emphasize. so when the 1985, 2007.

come in the last 23 years -- 22 years, medicare and medicaid spending growth was below spending growth in the private sector. as i emphasized earlier i don't want to pick -- >> in 1990 with 1.6 medicare 1.5%. >> history. over the last 17 years, medicare has been slightly above all other. medicated and below that. so what i'm suggesting instrument conclusions about which is better -- you can't draw those straightforwardly with just a look at historical tabulations and that what makes this analytic challenge we face difficult. >> anatomist trying to draw a conclusion about what is better. i'm trying to draw the conclusion were efficiencies are. would you say we have the government purchasing a must-have for health care in the

country, we could just tell folks are going to pay less. that doesn't create inefficiency. does your modeling suggests efficiencies is why you see these numbers changes or is it just a legislative change it says were not going to pay you for their successes they are not experiencing on the efficiencies i pay a price controls clearly successful if done by the government. >> whether one. pain providers less is a hard thing. there are help analysts who point to experience of european countries that pay providers less for health care than we do and they do that is an appropriate way to proceed. i'm not one to make recommendations as you know. i think efficiency means different things to different people in this context. >> attempt of a certain forms of government spending important to economic growth or did you actually mean certain forms of

government or to certain forms of spending? as you actually point to areas of spending more valuable if done by the federal government didn't send a state or local government or an individual? >> adventures seen in a hard question, congressman. the point i was trying to before it was simply that one shouldn't feel all forms of government spending is a drag because there pieces that have returns, but they are more effectively in different ways, i don't know. some of these things are national standards for consistency across the country. when they think of the interstate highway system. others are more individuals in particular parts of the country could be more effective on that level. today kitimat, mr. chairman. i like to follow up earlier in terms of government efficiency. have you done an analysis of the cost per patient for veterans health versus national averages in the private dirt?

>> we've done analyses of the health care system. that's a good question she raced to the veterans health care system in any point in time provides a high-quality care at no cost. >> at lower cost than the average. >> in which a prescription medicare drug scam over the veterans administration actually negotiates prices, do they provide prices less than what people are paying in the private market? >> they do. >> you're extrapolating individual systems. >> i appreciate that, but i just want to say with all due respect that there are monos the federal government is doing now but are providing higher quality at less cost in terms of food inflation, i would think part of that is we are lavishly subsidizing corn production cheaper unnecessarily with the federal government and

congress, which is linked and not fixed it in fact the chance in this community to vote against that, contributes to food inflation. but i want to go back to something you said that i had a little concerned with. he mentioned in the course of your testimony that having money for food stamps actually tends to get into the economy, has a higher multiplier effect because people take it and spend it very quickly. and then in terms of reaction to my friend where you're saying social security is not an economic driver. we seem to me the money that goes into the hands of our senior citizens is almost analogous to food stamps. the senior citizens in my district are much more likely to spend that medicare dollar -- excuse me, social security dollar and some of the lavish subsidies we have now that we've

try to turn back. i mean, are you really think that does not have substantial economic impact? >> thank you for the chance to clarify this. the discussion we were having over here was about the long-term economic growth path that we show in chapter two of our report. over the longer term, over the medium-term and long-term, what matters most for economic growth is supplied of the factors of production, how many workers are another ways. in the short term, particularly in an economy like ours now come with unemployed resources, the principal determines the rate of economic growth for goods and services and that is why cuts and spending today tend to slow economic. >> super. i appreciate the clarification. i guess i would like to just conclude in one area that you referenced that other countries spend far less than the united

states. actually almost every developed country spends dramatically less than the united states. and if you're old-fashioned come you look at things like life expectancy, child mortality, indicators that the rest of the road used to look at health care quality. it appears that they provide on average better outcomes for far less cause. now -- >> i wanted to ask a question without factual basis. i don't think anybody disputes the numbers we've been provided although some may dispute what they want to say is the best care. i'm just trying to get at this sensitive or something intrinsically about the united states that would prevent us from being able to take to scale reforms within the existing system? i come from a state that is low

cost high quality for medicare. and if everybody packed his status in the they do in my community or in wisconsin, we wouldn't have the crisis were facing. is there something intrinsic about the economic system that would prevent us from being able to nationalize better quality, different part of paddings? >> i think there's a lot of potential in our system to do much better than redoing, congressman. the question at hand than what is the best institutional framework to encourage those sorts of changes. as you point to foreign health care systems come you're certainly correct they spend less money than we spend and have in many cases the better outcome, the thing i wanted to be more careful about and whether the measure of health care quality is more complicated because there's a variety of contributors to health care,

said lifestyle differences. analyses of the treatment for specific conditions in the system or other health care systems is less clear. >> is black. >> thank you, mr. chairman and dr. elmendorf for being here today to give us a perspective the long-term budget outlook. i want to follow up on what congressman altman was talking about and he is going more on how dead is effect in individuals and families. as they could turn the attention a little bit in a different direction on private investment because private investment obviously as we invest in jobs in the tech knowledge is something for that sort, we grow the economy and when the economy grows, there's a need for more

jobs. so first i'd like for you to talk a little bit about the crowding out effect. explain that. and then go to, what level of private investment become problematic? >> the crowding out as you know, congresswoman refers to the phenomenon that there's more government debt being issued in a larger share of the private savings in holding that debt, rather than investments in the cool cat will to make a more productive of retirement. that is one of large cause of rising debt. a cost that economists can best quantify. their other costs that we are not going to quantifying, do we write words about in the report. the more debt you have come and work interest payments the government needs to make an icon for other spending and taxes. the more debt you have come in the less flexibility you have to respond to emerging crises and more debt, the greater risk of a

financial crisis. and so, so for all of these reasons, additional debt is a problem. for much of these effects, there is no particular tipping point. every extra dollar of debt is a little bit worse. everything else equal. the one for which they may be a tipping point in this risk of the fiscal crisis, some particular level of debt, but if we wrote in an issue brief last year, we don't need we can identify a particular level because it's not just the level of debt that matters is the expected trajectory, the confidence of investors in the governing process in the country to make changes in the fiscal policy. if the underlying strength and so on. there's a lot off a lot of facts that matter. we been appropriate unwilling to identify some particular tipping point. even the well-known work, they

don't really find a tipping point so much as they pick countries that debt, but whether there is some threshold i think is not clear. if they contacted you talk to them fay is factors as well. >> just along those lines, i want to note that figure in your report does seem to indicate that government are and will have the negative effect on the economy in the list just a few years and you do have that in your report. so i appreciate that. i think that given the fact that there is no tipping point as you say and there's no time limit where we can say definitely this is going to happen and in what i appreciate so much as we've had previous members who have indicated sort of like a pond that you're skating on, were you skate around the edges that are shallow and the ice is very thick and you feel very safe.

but none of us know when the ice starts to get and come a water starts getting deeper and we just have to let some of the countries that have argued that in the situation where the debt contact us at a point that would be unknown and could in many cases be very quick without us being able to respond. then i assume it's a short period of time i have left you would agree that the sooner we address this dead issue, the more safer going to be in the less likely were going to be to look like this country. >> congresswomen, i certainly think the sooner that policy changes are agreed upon, to see for the country will be in terms of the fiscal picture. the question of how quickly to implement the policy changes you agree upon involve trade-offs that i can't judge for you. the sooner you act in terms of implementing changes, the last debt is accumulated and the more credibility is attached the

future cutbacks that have been discussed. on the other hand, the center government spending and taxes are raised, the less time individuals and businesses, state and local governments have to adjust to the changes and so the harder the transition must be for them. and also, she just implement in the next two years late in economy that authority quite weak. so there is a trade-off in the speed of implementing changes. and semi that reinforces the risk of building up high level so that if one gets into a position where one is confronted with less and less choices and that's part of what she seen a trade-off. >> thank you, mr. chaiman. i yield back my time. >> mr. pascarella. >> thank you, mr. chairman. good morning. in the health care reform, mr. elmendorf, the issue that

keeps on coming up, we pass what i consider to be significant savings, one third of that legislation was devoted to medicare and medicaid. many of those savings were not supported for understandable reasons. that's not the issue here. in a large part -- which is a large part of our deficit, we created innovative payment and delivery models. that was the whole purpose. people say we did not being any changes. democrats, god bless you, who supported the legislation did not ring anything new to the table. they obviously didn't read the bill. but the majority's plan to stop

these models and move everyone into the private bracket, that's a brilliant idea pre-1964. very effective. if we look at the private market in 2010. it's interesting that you outfielder at 29, mr. chairman. 2010 shows a very different situation. in 2010, costs rose by 7.75% cost of health care compared to medicare, cost rate was raised in 3.3% -- rose by 3.3%. that is the standard industries of 2010. that is before three quarters of

the health care bill even even went into effect before this. so the point about what cost more in how it can save money, let's take a look at the facts and will improve the legislation or do away with the legislation may be might be very hurtful to the economy and particularly those who are covered and particularly those losing their jobs. we obviously, mr. elmendorf did not get the forecast radically about the economy in 2008 or 2,642,004 because the 2001 in 2003, when we made those dramatic cut -- tax cut and i'm not singling out any group, but when those cuts were made, what was the forecast of why we were doing this in what the results would be? and then what are the result?

did we have to investment them a good friend miss black talks about? did we have any increase in jobs? no, if you look over the past four decades -- for decades, the only president that has substantial increase in job investment in where the economy stood strong with bill clinton. a 3% increase in business investment under jimmy carter. 3.4% under ronald reagan. under bush one and bush two, president bush, president bush to, we got an increase of about 3.5%, 3.6%. that's a better job than ronald reagan. under bill clinton, 10.2 or send in those eight years with the president of the united states

business investment. so tax cuts are not the panacea that we all are pretending it is, is there, mr. elmendorf? >> well, congressman, there are a variety of influences on the economy. the policies of presidents and congresses are obviously important. i would be close to draw any strong conclusions from that. savages you suggest. >> they're pretty accurate. >> i'm not disputing the numbers. i am just saying to map those directly to the policies while leaving out all the other factors. >> there are other factors aren't there, mr. elmendorf? when the president raised his hand in january 2009, he had no idea, we had no idea of how bad this economy was.

would you agree to that? >> if they do, congressman. >> for the record, mr. chairman. >> thank you mr. pascarella. mr. kerry. >> i thank the chairman. for taking a page out of mr. pascarella's comments i guess is that with the same time forcefulness. it is hard to make these projections that should make overtime. >> certainly is, congressman. so when you made these assumptions -- when you make these projections, what do you do quickly with great to assumptions with regard to the overall capital market structure and investments but have you, how does that play into it? >> the private saving matters. we assume private saving continues over time in a way

that keeps interest rates and that we do others aims for policies. >> you may have heard -- to what they're not, for example, do you take assessment to see what the capital markets are the proverbial trillion dollars, whether that's invested or not come as bad a and look at? >> we're looking more at the 40 year for 30 or 20 or averages when you mature projection. with the updating august we're looking at the current state of the capital market. >> your chairman bernanke say some statement where he said jamie diamond i think said david said looking to and consider -- that he considers that the cost is.frank is on the marketplace and he said no is just too complicated for us to do. you heard that? >> we have also not quantify the effects of that legislation.

>> day is that something be able to do? is that something you should be doing? >> i don't think we have the capacity to do it, congressman. i think it's an interesting question. >> does it necessarily drive part of the cost of stories the economy going? >> i think it's certainly a factor in economic growth. >> said then he sent a press conference last week you said he's seen some sort of saucepot in the economy. he said he doesn't quite understand this sort of clueless, if you will because if you projections going forward, doing all the things from me that we're going to be certain places on gdp growth and unemployment, but were not there. you saw the comment? so could that be part of the problem that if those few inherent feeling to have that bit of information as far as what the cost of regulation and implementation could be

explaining on some of our charts for the albums are? there's enough a lot of themes >> i think it would be a big fat her as one of their two responsibilities of job growth. >> capital markets are important. >> so i came in and you may have paraphrased. he said shortcuts right now in tax increases now would slow economic growth. >> yes, that's right. >> can you quickly decide for me what are sharp cuts in spending? >> i was trying to convey with the word sharpless said the magnitude of the cut or increase relative to the size of the economy. so we have an economy in its weakened state has gdp $15 trillion. policies that move that has to be significant. >> can you define that for me?

>> now, there is no cut off or say. it's a question of degree. our analysis says the cuts in spending -- >> if we cut $100 billion out of the 02 budget, is that a sharp cut? >> that's enough of a cut that would affect her productions over the next two years. yes, congressman. >> 100 billion with? >> yes. >> to what extent? >> it depends on what you change. the analysis we've done other recovery act and alternative policy for increasing output and employment show a range of different effects depending on specifics of the policy, which i think it's not just a matter of dollars, and moderates in the policy. >> or percentages that? 1% of that is $150,000,000,000.2 thirds% of the economy. for some forms of government

policy come effects on the economy can be less or more than not. the downward revision of the forecast that we got coverage yesterday of mr.'s economic growth are less than not. so about two thirds -- .66% cut in spending and your mother would slow down the economy? >> yes. all the models try to capture even the smallest acts. i was trying to convey with the turned sharply that you're concerned about it might be raised if the effects are substantial. >> ms. wasserman schultz. >> thank you, mr. chairman. i want to just follow up on that same line of questioning that mr. kerry had. so if we are assuming that $100 billion cut could cut the growth of the economy demonstrates that would even seems that the small percentage

cut would have a significant impact, that seems backed up, mr. elmendorf committee chairman bernanke he said an article in "politico" today that i don't think a sharp immediate cuts and deficit would create more jobs. it would be best not to a sudden and sharp fiscal consolidation in the near term. so we have more than one of our economic experts pointing to the danger of cutting too much too fast. so generally, are you concerned that the proposed -- what i term a close, but a proposed republican budget cut at the cases proposed them and the amounts in size they have proposed them would negatively impact our ability to recover? >> congressmen, i agree with chairman bernanke statement.

we have not done an economic analysis of the republican budget resolution. as i said earlier and on another occasion, near-term cuts and spending or increases in taxes under the current economic conditions that showed the economy. credible reductions in future deficits for future spending cuts or tax increases would lose confidence, lower interest rates and thus strengthen the economy today. i think the effects of an overall fiscal package on today's economy depends on the balance and timing of the changing policy. >> suet make much sense in terms of making sure the pace ourselves on trying to strike that balance to use a chisel when it comes to cut, to make sure that we have the right combination of investments and cuts so that we don't offend the

applecart? >> from our analysis, there are trade-offs in the speed of the fiscal consolidation term. the faster wonders, the less debt, the better that is in the long run and the more credible future promise kept b.c., which is good for the short run. on the other hand, the faster the policy goes, the less time people, businesses, upper levels of government have to adjust in the bigger the hits on the economy in the short term. so there is a trade-off there that we can do is try to hallucinate the trade-off, but it's up to you and your colleagues how to receive. >> thank you. i want to shift to medicare just the last couple minutes that i have. cbo's analysis of the voucher payments in mr. ryan's plan in 2022 says basically it's equal

to what is 65-year-old would cost than traditional medicare. my question is kind of typing in the first year of the program the voucher doesn't really see the government any money and doubles the out-of-pocket cost for 60 fibril to be covered under the plan? and my understanding that correctly? >> congresswoman, we didn't study the first decade or we don't usually city budget resolution alternately distinguish between federal cost. by our analysis it is more expensive to treat a 65-year-old and treat that person through medicare today for 65-year-old, but the plan also overtime reduces the federal government's payment. so we shall overtime the plan reducing federal payment relative to the medicare system.

but we also show, as you know the beneficiaries of paying more. >> just in my final 30 seconds, your analysis of the one page 13 indicates the reality of the proposal is some people wouldn't actually purchase insurance because of the extra cost is made. so does that mean we could actually see an increase in the rates of elderly who are either uninsured or underinsured and would have to spend a substantial amount of income on health care to make up for the difference in what the coverage used to be? >> congressmen come you might see an increase. we were not able to analyze that anything that's a very important question and one of a number of significant caveats to that analysis. another context we've studied decisions given a set of both the government would put in place. we just have not been able to do that with this proposal. >> bottom line --

>> it raises the risk of older americans over the age of 65 that exists now. >> it's a very different world than the world in the traditional program today. >> thank you, mr. chairman. i yield back. >> last speaker. >> if you could back to my college question on what we lose more people in health care because they wouldn't have the money to buy the difference if our plan actually direct funds more towards lower and middle income as opposed to wealthy millionaires and billionaires, what we in fact improve the circumstance of the insured? >> if we were able to analyze the patient's decision coming absolutely right. the levels of subsidies for different resource is an part of the analysis to be.

>> middle-class americans are good ideas. >> it's not my place to make value judgments. additional subsidies for people would increase participation relative to people. >> i need to come back to this mystical magical $100 million in cuts an impact on the economy, some of the federal government is not actually borrowing that money, what else does the federal government get the money from? >> well, >> from a higher tax how does taking money from one sector of the economy to consumer, giving to another sect of the economy changes dollars in the economy. >> the policy scenario is a cut in spending that match the equal cuts. it's also true that the analysis

from american who is not investing payment and is not getting the contract and that reduction in the government money pushed into the economic system reduces spending of helpful businesses that otherwise get it and the reduction in demand says the economy. >> a message at the money from a consumer might spend it based on their own free choice company abb accrual conflict. >> again, congressman not by reduction probably depends what the cut is, but somebody is not getting a check they would otherwise be getting come either the benefit payment or payment for service provided to the

government. >> that might not also get the tax that otherwise would have. >> well, i think the future taxes are you changed right away, that people pic asian in future taxes would probably be different and that's why emphasize the credible reductions in future deficits through overspending or higher taxes would have confidence building effects. modeling inc. the tax rates >> in your report is a long-term budget -- cbo's production in the most long-term budget understate the severity of the long-term budget because they do not incorporate the federal attack economy, nor do they include the impact of higher tax rates on people's incentives to work and save, which i think is

significant. going onto the next page, you say growing debt would also increase possibility of a sudden fiscal crisis. i wonder if you could talk to me -- is simple to look at what sadness and the crazy things, but what does that any crazies need to? how fast a sudden and how big is the crisis? >> first let me emphasize most of the projections in the report of the economic conditions for comparison across policies. we do in chapter two of an extended analysis on the economy. sudden fiscal crises in other countries have come on and the matter is months or weeks or days they have generally had very destructive effects in the economy to make the decision to put off at a moment when the

economy is already under siege if you will are particularly difficult. and dutcher mantles to economic issues. >> just one final comment and then i'll yield also investors of this confidence in the government's ability and the government would thereby lose its ability. i would dare say based on the conversations i've had with american citizens in my district that many investors and americans have a relative lack of confidence in this government. >> so, that may be to congressmen, but i find books that financial markets, investors putting money on the table are not charging a government tirades. they are actually charging low rate at this point and not things are fine until they aren't anymore.

including our panel of economic advisers meeting, the participants were themselves a little surprised that financial market. and most investors do in fact will be taken on a sustainable path as investors have confidence. >> i hope we weren't that confidence and i'll yield back. >> thank you for indulging us. i know you're hoping to get out of here by noon. it's pretty close to that. hearing is adjourned.

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>> were trying to reach people are interested in how the world works. that's everybody from high school student who's curious about economics to a person who is just tried to make a living and get along and is worried

about what's going on in washington or the country. >> president obama has nominated general david petraeus to be the next head of the central intelligence agency. he's replacing leon panetta who has been confirmed as the next defense secretary. general petraeus clearly commands u.s. forces in afghanistan, but plans to retire from the army as confirmed. the doing of the senate select intelligence committee is two hours 15 minutes.

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[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> hearing will come to order. i've just been told the vice chairman will be five or 10 minute play, but it's going to be a long afternoon and it ain't we should begin.

the committee meets to consider the president's nomination of general david petraeus to be the direct or the cia. general, welcome and congratulations. the way we will proceed on that statement, the vice chair anomic if it meant. you're going to introduce general petraeus and then the general will speak and will do our culinary. the gentleman would like to recognize your wife holly petraeus one edition to be picky behind her success is also serving the nation at a recently becoming the assistant director of the consumer financial bureau where she is in charge of protect them in assisting the servicemembers. we're delighted to have you here this afternoon. this nomination comes in the

midst of a significant change in the national security challenges and posture of the united states. military and intelligence gain in afghanistan and pakistan have for the first time in years shifted the momentum for the taliban to the united states and coalition partners. these gains are still reversible. president obama announcement to withdraw of the surge troops will have an impact on operations after the fighting season and i'm sure members who want to hear your views, general online as well as sunday over a generation. the death of osama bin laden and his cia intelligence operation carried out by the united states special forces marks a strategic shift in our decade-long effort against al qaeda and transnational terrorist group, but the near-term threat from retaliatory strikes has gone up

there is unrest in revolution across the middle east and northern africa, affect key allies and countries that could turn a lake. at home, the nation's economic and financial struggles are requiring a new level of fiscal discipline, which means the major increases of intelligence resource is since 2001 and sei budget has virtually doubled in that time, will likely end in the intelligence community will have to do more with less. in washington, the president's national security team is changing the secretary gates retiring at the end of next week, director panetta moving across to the pentagon and rossiter ryan crocker likely to be concerned for his posting to afghanistan. the cia has been involved in or affected by all of these changes. if confirmed, general petraeus will have the opportunity to

shape the agencies respond to the new realities we now face in our purpose today is to understand how he intends to carry out that charge. general petraeus is a long time can sooner as a top general in afghanistan and iraq has been the combatant commander for a portion of the world were intelligence operations play a key role and he is especially aware of the court nation between military special ops and intelligence covert actions. so he comes to this nomination with 50 familiarity of the intelligence community and that the cia in particular. still, the committee is always mindful that the cia is by far the biggest of the civilian intelligence agencies, while the majority of our intelligence dollars are spent in the department of defense.

the cia is tasked to provide independent, strategic assessments to the president. it is, by design, outside of the military chain of command and supposed to balance the need to provide intelligence to war fighters with the need to operate and make assessments globally. to be sure, cia directors have in the past comes from a military background. i believe there are seven of them. and general petraeus and i have discussed these privately and he has assured me he understand and participate the need for independence. and so we look forward to continuing that conversation today. i've also asked general petraeus to expand his vision of the cia and will do so again today said that the committee has insight into his thinking. members of the committee don't need an interfax into general petraeus come to let me give you a couple of brief highlights.

he is without question one of the finest officers and military minds of his generation. he has presided over the shifting of momentum to our favor in afghanistan and is engineered with other important contributing factors in the area in iraq would defeat often seemed inevitable. he has demonstrated outstanding loyalty and service to this country, agreed to step down from commander of centcom to replace general stanley mcchrystal in afghanistan. at that time, the senators in your records speed with the armed services committee holding a hearing and reporting out the general's nomination on the same day and the senate confirmed within 9190 vo. i notice well and i know senator lieberman will do this in more detail. he's also earned a phd as well as a masters from print and,

which i believe will serve him well. following the abu ghraib scandal and into a debate over detention and interrogation policy, general petraeus wrote an open letter to all soldiers, sailors, airmen, marines and coast guardsmen sharing under his command. here's what he wrote and i quote, her values and the loss and welfare teachers to respect human dignity maintain our integrity and do what is right. adherence to her values distinguishes us from our enemy, end quote. i fully agree it's enormously important to have a director of the cia who is guided by these values and has a sense of right and wrong and what may or may not be possible. the senate confirmed direct are commanded to the secretary of defense by a vote of 100 to zero

in tuesday, even if and when confirmed, general petraeus will not resign his commission income to the cia intelligence able to transition the mission in afghanistan and general alan. so for much of the summer's, the cia will be under the directorship of mike or outcome of the current deputy director in lifelong cia officers. i want to state the cia and the government is very lucky at the helm during this difficult time and i know that he will be a valuable to pd when you take office, general petraeus. i may now turn to the distinguished vice chairman for his opening remarks. >> thank you. they consider your nomination to be the 22nd director of the intelligence agency. am i to appear my wife holly as

well not only supporting you and the military throughout the career, but also where to take military families from predatory lending practices. we appreciate you being here does purchaser nation calls on you for another challenging assignment. it comes at a pivotal moment in history as we face threats from across the globe. as a war fighter come you bring a unique perspective from having seen first-hand the technical value of accurate and timely intelligence. while a key part of cia tactical mission is to support the war fighter come it serves primarily as a civilian strategic collection and analytic agency. whatever terrorism or nuclear capabilities to the future of afghanistan and iraq, policymakers must have unfurnished analytic judgments. your job will be to make sure that the cia delivers these. there's growing demand for intelligence on nationstates,

threats like terrorism, proliferation and cyberattacks and keeping a finger on the world in as many places as possible. while often overlooked and underresourced, this last point proved critical this year as events in the middle east unfolded. while all of these challenges and the ones we don't get into or have your attention, the threat from terrorism will be your main focus is successful strike on bin laden moved the leader, but not the threat for chairs than. a few nap in yemen is the biggest threat of the homeland and energy to make your primary focus for the dismantling of that group before they are able to strike a successfully. we look closely at the intelligence of detainees held at one time and though. the former detainees have joint hq ap and other terrorist groups. you have commented publicly that you believe is appropriate to close wonton memo in a

responsible manner. with the recidivism rate now over 25%, i'd be interested to know whether you think that's still possible and if you think it can be done responsibly. in addition to my concerns about the transfer of dangerous detainees, seems to focus on detention facilities has left a with few realistic options for detaining terrorists outside of afghan is an. you and i in fact have had this conversation about that. as we draw down in afghanistan, we will have nowhere to detain terrorists. and many press stories come you read the u.s. is not trying very hard to capture terrorists. instead, we're killing them. do we know that capturing terrorists is one of the best ways to get action on real-time intelligence to prevent future threats. we clearly need better defined detention and interrogation policies and i'd be interested in your views on this in the

appropriate role for the cia to play in these areas in the future. you will face many other challenges in this assignment and i urge you to speak with director pineda about his experiences, practices and priorities while leaving the cia. he set precedent in an open and co-opt truth matter and i hope you will continue this in much the same way and i know he will. director pineda has also been a fierce advocate for the men and women of the cia. this was evident early on many criticized the decision by the department of justice to reopen the investigation of cia employees involved in the interrogation of detainees. unfortunately, that investigation remains ongoing. i feel very strongly that years of investigating these counterterrorism professionals hurt the mission and that is frankly unfair and unnecessary when the career professionals and department of justice in the previous administration

prosecute no one. i know you understand by your employees on this issue, just as i know you stand by men and women of your charge today. i've had the privilege of enjoying are the epitome of what a leader should be all about as he done a great job of leading men and women in uniform. and that's quite often as are all of us what you think should happen in afghanistan and my first response is never general petraeus says is the direction in which we will go. that is the kind of respect i have for you and i look forward to a continued close relationship with your assume duties at the cia. >> thank you rematch, mr. vice chairman. it is now my privilege to ask the chairman of the homeland -- homeland committee, the

distinguished senator state of connecticut, joe lieberman and were delighted to have you here, mr. chairman. thank you very much. >> thank you very much, chairman feinstein, senator chambliss, members of the committee, colleagues and friends, i am truly honored to have been asked to appear before you this afternoon to introduce president obama's nominee to be the next direct your of the central intelligence agency, general david petraeus. none of chair, as you indicated earlier in a literal sense, and general petraeus needs no introduction. i want to take a few moments to describe what i believe dave petraeus has meant to her country and why i am confident he will be a superb direct and why i am confident he will be a superb direct and why i am confident he will be a superb direct and why i am confident he will be a superb direct petraeus is the most distinguished

general officer at the united states generation of his generation contained a number of very impressive general officers. he is a true american hero who has twice been called upon by our commander-in-chief to assume leadership of a sweltering war effort and twice he not only an effect called, but let our forces out of the shots of defeat onto the path of victory. to my knowledge, no one else in american history shares that record with dave petraeus. at a moment when cynicism too often infuses our national politics and partisanship too often affects national security, general petraeus has won the confidence gratitude and respect of the american people, democrats, republicana