28 years. and in 2009 i.e. skate north korea and entered south korea through china, laos and thailand >> [speaking korean] [speaking korean] >> translator: in february of 1975, for reasons that were unknown to me at that time i was tried with my parents to the prison camp. i was 13 years of the time. during my incarceration at camp number 18i lost my grandmother, mother, brother and my husband. >> [speaking korean]

>> translator: i found out after i was out of that hell on earth can't 18 why i was sent to prison camp, because my father had dissented during the south korean war but by then i had nowhere to go and complain that the situation. i would like to say that the term of north korea is a living hell for human beings, a place where people have committed so-called crimes percent and incarcerated as a group and forced to work emanuel slave labor -- manual slave labor. >> [speaking korean]

>> translator: there are prison camps where people have been found guilty of being against for those resisting the regime are sent intel whereas in places like camp number 18 where i was incarcerated in besides political prisoners, those were guilty of economic crimes are sent along with family members and forced to work in coal mines >> [speaking korean]

[speaking korean] >> translator: in camp number 18 where i was in prison the whole prison camp was encircled by a 13-foot high the electrified fence and trying to ease get through this over 3,000 volts of the electrified fencing was unimaginable. when i first entered the prison camp, we were told to memorize ten rules of the prison camp. i still remember it vividly because i remember it from such an early age one of the rules was that the prisoners were not supposed to know the reason for ending up in the prison camp and those caught violating this rule would be a relentlessly executed by a firing squad. >> [speaking korean]

[speaking korean] >> translator: the young people like me that in the that in the prison camp at a young age, we were given very rudimentary education, basic current language education and then when we turned 16 or 17 with exception everyone was set to decline and this goes without saying for the adults as well. we had to work 16 to 18 hour work days without rest or

holidays and for food in our family of seven was provided only about 10 pounds of corn per month and this was supplemented by anything that we picked up from the ground, tree bark, grass, and that's what we ate, one meal a day, corn and the mixed grass we had to make for ourselves. >> if you could suspend for one brief moment. we are joined by the chairman of the appropriations subcommittee which justice issues and science, but is also the author of the international religious freedom act of 1998, and as we all know, north korea is a tier three countries and so congressman frank wolf can only say a brief minute. >> thank you. i want to thank you and the committee for having this hearing. i met with the witnesses earlier today. it was one of the most significant and moving testimony reports that i have ever heard,

and i think certainly the state department should do everything they can quite frankly to bring about regime change in north korea. when this government falls, as it will fall the same way the east german government fell with regard to the berlin wall, the west will feel so guilty to know that it said nothing other than the hearings that the members here. they said nothing with regard to what takes place. this administration should do everything and lastly and with this. i think the church in the west to all of religious faith in the west should come together and support these people in every way that they can to see about the fact that hundreds of thousands are in these camps. it's totally unacceptable. as anyone within the voice can hear this, can follow this hearing ought to be advocating it.

so i want to again, thank you and the other members and thank the witnesses for coming by my office to and i'm on my way to a 4 o'clock but i was just moved to come by because what i heard was just so powerful. with that, mr. chairman, i yield back to this too terminable, thank you very much. if you could continue. >> [speaking korean] [speaking korean]

i was plagued with ponder by the time i entered the prison camp until the day that i was released, and by one which was to just eat one bowl of white fleiss for one meal and after i became an adult and after lifetimes of working at coal mine walking to and from work i would look for anything to eat and it became a habit to scrape or pluck anything the was green and make soup whether it was from a tree bark or grass. >> [speaking korean] [speaking korean] >> translator: i cannot even

begin to describe how many people suffered and died because of starvation in the prison camp and how many people were killed without reason for not listening to the 40's or not showing enough repentance through a public execution by execution by firing squad through public execution by firing squad their bodies were riddled and i saw countless bodies that ended up like this. the was a time i saw the bodies of people who were killed by firing squad rolled up in straw mats and carried away on carts, and i said to myself even dogs will not die so pitifully. >> [speaking korean]

[speaking korean] >> translator: in this place where human lives were worth less this is where my brother and husband died also. their deaths were classified as due to accidents, but they were intentional deaths carried out in the atmosphere of the prison camps, where nothing was normal. >> [speaking korean] [speaking korean]

>> translator: and as a result of working declines for over 12 years, i contacted black lung and faced death many times, but in place of my mother who passed away before me i vowed to survive and live on and look out after my siblings, my remaining siblings and that devotion is what allowed me to survive that hell. >> [speaking korean] [speaking korean] >> translator: and my siblings are still incarcerated at camp number 18.

my brother and sister. in december of 1974, before our family was sent off to prison camp number 18, my father was pulled away by the state security bureau never to be heard from again. i do not know what happened to him to this day. even at this moment as i speak, there are over 10,000 -- 20,000 people who are in camp 18 without knowing the reason why. people who are dying of abuse and lack of rights at this very moment. >> [speaking korean] [speaking korean]

[speaking korean] [speaking korean] [speaking korean] >> translator: and this is not just happening in camp number

18, but i would like to say that this is the suffering and sadness that 23 million north korean citizens are going through and suffering and experiencing right now. not only that, but besides the human rights violations going on in north korea is now the cruelty end of misery inflicted on the refugee women have the state north korea into china for the terrible situation of human trafficking happening in different places. after nearly is getting def coming out of of korea and into china, and then becoming victims of human and sexual trafficking, i can say with authority that the tragic situation of the north must be told again and again in the international community. i, myself, was sold for different times in four different cities in china and the indescribable suffering that these women go through and china being sold like commodity still keeps me awake at night.

>> [speaking korean] >> translator: please ended the existence of such a society and make it into a place humans can live as people. please, let the people without any rights in north 311 freedom and happiness. please get rid of the political prison camps and please tell those who do not know about freedom of freedom is about. >> [speaking korean] >> translator: i sincerely hope my earnest these will be delivered to the united states congress come to the united states government and the people of america. i also want to thank the

honorable members of this committee to hear today who have made it possible to speak as well as the defense foundation. thank you. >> without a doubt, your message has been heard, and thank you for sharing what can only be described as the enormous suffering that you experienced being sold into sexual slavery, the last of family members, and so there will be positive consequences in your testimony. we will work hard to promote human rights. i can assure you of that. before going to mr. scholte have the combating of his and that 2011, so i will leave briefly but without objection i would like to point out basically -- key will take the committee now.

>> this is a picture of the camp that she was in. we will now hear from our final witness. good afternoon mr. payne. thank you for inviting me to speak about the human rights situation in north korea and about the apparent increase in the amount of the information getting into the country. it is an honor and a privilege to have the opportunity to discuss these issues with you today. mr. payne, i would like to begin by informing you that i will be presenting a brief summary of the views included in my prepared statement. >> thank you. without objection. >> after the emotional comprehensive testimony and after the hard pricking testimony ms. kim hye-sook, there is barely anything i can have on the human-rights situation of north korea. the human-rights situation in

north korea remains abysmal according to experts and testimony by the recent north korean defectors there is no evidence that the human-rights sedition and north korea has improved as the regime proceeds with steps towards leadership succession. on the contrary, it appears the border crackdown aimed at preventing the north koreans from defecting to china has intensified, and the political prisoner camp population has been on the increase. in may of this year, amnesty international released satellite imagery and new testimony shedding light on the horrific conditions of north korea's political prisoner camps. according to the organization, the prisoner population detained at such camps is up to 200,000, and it compares in the latest satellite photographs of satellite imagery from 2001 indicates a considerable increase in the scale of the camps.

moving on to the flow of information and getting into north korea, although officially all personal radios must have a fixed dial and be registered with state security offices, programming by stations including voice of america, radio free asia and broadcasters based in south korea may have a listenership of around 40% in north korea. the number of radio's smuggled from china has been on the increase. the north korean authorities continue to attempt to jam the foreign broadcasting and it's a serious limitation in their efforts as jamming is energy intensive and north korea is experiencing in chemnick energies shortages. in the recent years, we have found out that there has been a significant increase in the amount of information entering north korea. this development is the result of the marketization that has taken place in that country.

such is by no means and intended top-down reform program, but rather the function of state failure. small and informal markets provide ordinary people a coping mechanism that enables them to survive. during the marketization of north korea, supply chains have developed from china to north korea's defense capital city of pyongyang and in pt plater, ct rahman tvd and some drivers have been entering north korea. statistical data, including the the 2010 survey of north korean refugees and travelers by the broadcasting board of governors indicates 27% of respondents have listened to foreign radio. 48% have come in contact with foreign dvds and other material while 27% have watched

foreign tv. information is also being passed from one member to the next along such supply chains. it appears that the korean wheat consisted of south korea soap opera and musical, exceptionally popular asia and beyond has also reached north korea. according to japan's one member of a group of nine north koreans who recently sailed for five days before being picked up off the west coast of japan one a week ago on september 13th this gentleman a squid fishermen said that he was inspired to leave his home by south korean selwa press. in january, 2008, the egyptian companies telecom holding was awarded a license to establish a 3g mobile network in north korea when it launched in december,

2008, the audio link had 5,300 subscribers. in its half year earnings report for january, june, 2011 published on august 10th they stated the number of subscribers in north korea had reached 660,000. separate from the expansion of the network, citizens of north korea have also been using a chinese cellphone smuggled across the border into north korea. we have indication that the intent to launch 3g internet service by the apple ipad in pyongyang this fall by a special card. nevertheless, internet access is likely to continue to be restricted to foreign residents and those close to the regime. there are also those north koreans that possess computers not connected to the web and their estimated to represent

about 3% of the entire population. based on the data collected with interviews in the north korean defectors and proven track record of success in winning the tautological confrontation during the cold war, radio broadcasting will continue to be one of the few media available to grant the people north korea access to information from the outside world. computers not connected to the internet, some drives from the disease from a cd rom's and m p3 players have become increasingly available although access to such devices is still relatively limited. efforts to increase the flow of the information into north korea should take into account the increasing availability of such vehicles. i wish to thank the subcommittee and the staff for the opportunity to testify before you today. and i will now be pleased to try to answer any questions that he might have. thank you very much. >> thank you very much. let me once again thank each of

the witnesses. your testimony is certainly very compelling. we of course have heard and we try to keep up with the situation of north korea, but it certainly brings it home whenever we have a hearing and to hear especially from individuals who have lived through the horror of this regime, and of course we appreciate our experts from the defense foundation and the committee for human rights in north korea. perhaps to either one of you who are working with the organizations that deal with that, mr. scarlatoiu, i have that closely

>> the special envoy for north korean human rights ambassador robert kaine has said that the united states government would engage in and in that dialogue on human rights issues at the six-party talks. the six-party talks are at an impasse and in the absence of the six-party talks, first of all what do each of you feel that the six-party talks have achieved in the past and whether there were any real gains for word first of all and second, if indeed you feel that it is ann password there is really not a real effort on the part of north korea would with the obama administration consider employee

for the human rights dialogue with pyongyang? so whether the talks past and the have been going on a bit through the several administrations come and if their scrapped in absence of that could there be anything else or should we continue, if you would like to comment. >> well, first of all, i think that regarding the six-party talks, this is an effort by the bush administration to rein in the nuclear ambitions, and they made the decision that they would just focus on the nuclear issue and not entered as any of these concerns to kick the human rights concerns down the road. we can tell the history that north koreans are brilliant at manipulating the talks and using

the talks to gain aid and support and make promises they never intend to keep. they did the same thing to bill clinton during the framework and i think before president clinton could be excused from that because he was dealing with a new dictator when he was president, but the bush administration i think should have known better. they should have known the history of how this regime is and what you see during this talk the result has been north korea has developed nuclear weapons, it's a reactive and the weapons and the exact purpose was never realized, but at the same time, millions of north koreans have died, and so i think that talking with says regime is useless. the only use these talks to extract concessions and support and legitimize the regime.

i think instead we need to take a new approach. i think that president obama is in a unique position to do that. i see that we should make human-rights the number one policy of our government. i think that we should reach out to the north korean people and i think president obama should be talking about the fact that i think we should say we want to give north korea as much aid as the need so that people are not starving, but we want to be able to see that it is consumed. i think that we should be talking about the fact that we want to help the people. we want to improve conditions and we would like to see the international red cross people to go to prison camps. number triet denies the have camps refine it, let's let the independent agency like the international red cross go to these camps. and i think that we need to be focusing on the human rights issues and policies that at the same time, do everything we can to support the kind of things

the defectors themselves are doing in the radiobroadcasting because the impact the free north korean radio has that has been on the internet broadcast in 2004 and then went on the shortwave in 2006, the impact that it had was amazing. it set the pace for all the broadcasters because it was the defectors themselves and as you know they were raised to believe that south korea, the united states cost the korean war. they are brainwashed with stuff we would think is completely ridiculous, but they believe that. so when the north koreans themselves are talking in broadcasting these views and opinions and to north korea, the north korean can't can't dismiss them. so it's a tremendous impact and we have to do everything we can to reach out with that message to the north korean people and use the defectors especially.

>> the reason why nothing has been happening on the six-party talks for a while now is that north korea has refused to act as a responsible member of the international community. north korea has continued to proceed with the nuclear developments. north korea engaged in very serious provocations' last year in march it launched a torpedo attack on the south korean that killed the sailors in that attack as it has already been been mentioned as you mentioned on november 23rd, north korea showed of the south korean territory the island and this attack resulted in the military and civilian casualties. we have already heard about assassins sent to kill one of the very active north korean defectors and south korea a few weeks back. the deep concerns about and the alleged assassination plot

targeting the defense minister of south korea cut and before the most high-profile north korean defector castaway last year, late last year, but only a few months before that we've heard about the plot that was stored on him for assassination. that being said, north korea has also continued to press its own people. north korea has continued to refuse to abide by the international obligations they are supposed to abide by given its the party to the international covenant on civil to the kosovo and political life and economic, social and cultural life in the convention against all forms of discrimination against women, the conventional the rights of the child, and as a u.n. member stated it's supposed to be bound by the u.n. declaration of human rights. as to whether the human rights should be on the agenda, it is a

firm belief of the committee for human rights in north korea that human-rights, the improvement of the human rights of korea should be a top of our priorities and personally, as i hope that one day we will see the complete irreversible and very dismantlement of mr. rhea's nuclear program. i also hope that we will see the complete irreversible and verifiable dismantlement of the political prisoner camps as well >> thank you very much. what me ask you, ms. kim hye-sook, there is -- and i know that your experiences in north korea was years ago and you have a very compelling testimony. i'm just curious to know in your days as a young person and as a child, as a teenager growing up,

what type of society, what type of programs does the government impose on children it's supposed to be a time of life when people are happy, they are growing, they are learning. to your best recollection, if you can explain what is life like for a young child and a young teenager and young adult and growing up in north korea? today if you can sort of transpose your experiences.

>> [speaking korean] [speaking korean] [speaking korean] >> translator: in answer to the question the liberation from

japan of 1945 and until the 70's, north korea is actually a little bit better, was better than south korea in terms of the economic situation, and as for myself, when i was young i went to school and i attended at the university of fine arts and i majored in her dance and i learned under the teachings of a very well-known dancer and before i went to the prison camp i could say with assurance i was happy, but my happiness quotient to speak was very high in terms of living in the north korean society. >> thank you -- [speaking korean]

[speaking korean] >> translator: before i was sent to the can buy a life where i had no worries about food or eating. i went to school, i live a normal life but because i was sent to the prison camp at such an early age that's all i can share in terms of my experience in relation to your question. >> thank you. >> another question that i'm just curious about as we know in world war ii there was the question of the brothels that were created in korea, and i wonder whether it was in the north of korea or was that

primarily in korea itself if anyone recalls as you may know we are still working on the a policy of the government of japan. there's been some apologies but this has been an initial five house played to to the to -- plea to the world since that time and i wonder whether it was prevalent throughout korea. >> [speaking korean] >> translator: my answer to you, sir, is before the liberation of 1945, even in the north of the peninsula there

were instances are places where these women were her based in north korea and i believe that even if this issue were to be addressed with the japanese government, we would not be getting a satisfactory answer in regarding your question, sir. >> i will yield to the gentle lady from california. >> thank you very much mr. chair. i would like to follow on a question that mr. payne said about your childhood until you went into the camp, and you said that until the 70's and i realize that is when you went into the camps, but did things drastically change in north korea? and when?

>> [speaking korean] [speaking korean] [speaking korean]

>> to answer the question colin the propaganda was set in place between the liberation, years of liberation and until the korean war those years were known as the best years in terms of the efforts and prosperity of north korea, and after the korean war there were various economic plans instituted to try to help the economy and help people who live better. but in 1987, in the late 80's after the soviet union collapsed and after the help from that part of the region that's what brought on the change in terms of the economics and the

downtrend the conditions for the people in north korea. >> first of all, let me also just thank you sharing your testimony. i think it's very important that people in this country here learn what is going on in north korea because i don't think much is known here about what is happening there. and the pan and the suffering that you described, the life of your -- loss of your family members, not knowing where your children or your husband are, i think it is in a measurable amount of pain, and i appreciate you taking the time and sharing it with us. i think it is especially important because the need for foreign aid and for assistance has said, i don't want to pronounced your name, ms. kim hye-sook, when you talked about the need for there to the foreign assistance and food and

all in times we are talking about cutting back so i think the message is critically important. but you were saying that you thought that we shouldn't have discussions, negotiations with north korea, but at the same time we should do what we can to, you know, deliver food and other things the population would need. by understand the communication part, but how would we get aid to people? >> if you could answer first that would be great ms. soon and ms. sook.

[inaudible conversations] >> [speaking korean] [speaking korean] [speaking korean] >> i would like to say that the world as supporting north korea because they hear stories of people starving and suffering

but as a defector, i believe the regime of north korea should be completely isolated and that's the only way to change the regime and unless number three at optus the market economy and changes drastically with the country is run, no change will come and as a defector, i would like to say that we are helping the regime to continue to be isolated and stop the aid that has been given to the regime. >> i agree except i was just making the point that if we are going -- i agree in a substantial amount of assistance but only if we can stay to the point of consumption because if

we send any amount of assistance to north korea it will be diverted. when you talk to defectors than ever saw food aid and when you talk to defectors that serve another three they will tell you the world food program rolls into town, delivers rice to these families right after they leave the army comes back and takes it back. as was testified years ago about how she had gone to an orphanage and they handed out cookies and the kids just sat there with the cookies waiting for somebody to come back and take it away so of the diversion has been absolute, and because of that i think that is the kind of message the we can send that would be a very powerful message for the positive propaganda, which is that we are very much concerned about the starvation and political prisoner camps and the situation in north korea. we want to help you. we hear about these stories. we want to help you but we want to be sure that we are actually

helping the people and we're only going to give that aid if we know that we can stay there. even from the very beginning with the famine first started, north korea put six stipulations on the food. they actually didn't want -- i never heard of this before, that -- i never heard about this before. in a challenging on this i don't think in any situation where there was a country where there was starvation or the country that was the intended recipient of the demanded that the aid delivers couldn't speak their language. i don't think that's ever happened in any place but north korea because usually to go to a country to deliver aid you are desperate for somebody that speaks the language but that speaks volumes from the very beginning of their intention to divert eight so because of the difficulty of preventing that's why we should only provide aid if we can be there at the point of the consumption. i can tell you all kinds of stories that if we were to go into the orphanages oliver we

have to make sure those babies get that formula because actions against hunter did that and it ended up in pyongyang in the markets and of those babies were given watered-down goat's milk when they showed up late to the current leader to find out the tons of baby formula they delivered, that is just one example, but then in the second point i was making is that we should be looking at creative ways to get information and also through the north koreans that have defected that are sending in remittances to the country for helping to support their families. >> thank you very much. >> i will hold any other questions i have until later time. mr. trash. >> -- mr. chairman. >> thank you in ranking member pain for leading the committee. i had to leave because a bill of

mine on the autism was on the floor and did it pass thankfully. let me ask a question if i could with regards to a few years back in 2002i chaired a hearing on the north korean human rights, one of several and we had a doctor, former medical doctor inside of north korea who actually was given a huge award by the dictatorship for his medical expertise and the fact that he helped cure a lot of people but he also then told the truth about the human rights situation, and he said that they are using food as a weapon, talking about a dictatorship for and against their own people they are treating the genocide, and i think we have to care as an international community we have to intervene. would you say that was in 2002 that the international community i heard in the opening comments that you had criticism that bush

didn't focus on human rights during -- did pass the north korean human rights act and was one of the co-sponsors of that and it's an excellent bill and all of us strongly support it. has that legislation lived up to its promise, or reemphasizing sufficiently in our dialogue or whatever it is of a dialogue with the north koreans? >> guice been very disappointed after all the hard work that we did on the human-rights act. i've been disappointed right from the very start. the bush administration said we welcome these tools or helping on this issue but then they never really used the tools. one thing it did help i know the radiobroadcasting is expanding support which i believe was a result of that legislation and was a huge thing that happened

that some important and also helping the independent broadcasters. the other thing too is the special envoy position. i think it's very significant that president obama has made it very clear the special envoy robert king will be a part of the discussions on north korea. that was in the case during the bush administration. it was cut out so i think that president obama is taking greater advantage of that legislation to try to do more with the north koreans act right by the very nature that he's elevated the ambassador king's position. on the comment you made about north korea using food as a weapon that is absolutely true. it uses food as a weapon against its own people and they have an apartheid side of system in north korea where people are classified based on the regime on the eletes and then you have

what they consider the way during class which is a class that isn't considered to be to the regime and then you've got the hostile class and if you are in that elite you may get white rice but if you are down on that system you may never see any your whole life you may get corn meal so the thing that has happened with the food is because of the breakdown in the public distribution system which is how the regime will reward people for the apartheid system based on loyalty that system is broken down and that is why the markets are so significant that you have over 200 markets and these are just the ones we know by satellite, the ones we know by satellite. so there's probably many more are markets but some people are surviving they are chilling and the the to -- trading and selling and buying them on these markets. >> either or both can just

comment. on the use of torture and the gulags we have had testimony before this committee in the past that christians and people of faith are even more selective out for repression especially in the women who are pregnant or often forcibly aborted in an absolutely crude -- they get beaten and around the abdomen and then miss carey so it is a horrible thing. we even have a testimony for its being put on how the women and soldiers were gulag security guards jumping on the boards on the abdomen of the pregnant women. did you experience torture -- you mentioned how both of you saw the littered bodies everywhere, but people were treated like animals. you said that a society where the whole country is a prison,

society where does that the escape for cost and the prison and those that had the state become lost in the international community to the society where trust the and virginity which is more precious than life is sold teeth cheaper than the cheapest of things of course talking about the human trafficking. if you could speak to the use of torture and these terrible and despicable atrocities being committed by the dictatorship. >> [speaking korean] [speaking korean]

[speaking korean] >> in answer to your question, during the two months of interrogation i was stuck in a room with no calendar, no clocks, a black hole for two months and for somebody to come out of that and not go crazy is america and that's what i experienced and in terms of dealing with my experience there i saw violence. i was injured with my shoulder during work and my fingers were injured during work and in terms of torture that's what i

experienced during my prison experience at the prison camp. >> thank you. >> [speaking korean] [speaking korean] [speaking korean]

[speaking korean] [speaking korean] >> regarding my experience in the qu >> regarding my experience in the question, in some of the drawings i displayed what i went through, but at the prison camp number 18 there was no paved road, and there were many times when the prison guards would force prisoners would stop the prisoners walking back and forth within the camp they would stop these prisoners forced them to open their mouths and these prisoners from the prison guards

would stick to -- spit into the open mouth as prisoners and told them if you swallow it he will not be beaten but if you throw up or resist you will be beaten. she experienced that torture during her 20 years there. and in 2005, in 2005 after she was released from the campus she went into china and during the detention period when she was going through that, she saw an instance where the women who were also tortured were forced to repeat sitting and standing up so that hiding the uterus would fall out and the other contraband the prisoners were trying to find, so that is about the extent of the torture she

witnessed from her time in north korea. >> mr. scarlatoiu, if they are intensifying as they take steps towards leadership succession, could you speak further on that issue and perhaps some of the issues that you have that suggest that? >> mr. chairman, i should tell you that our organize asia and has published one quite well known report on the political prisoner camps in north korea called hidden gulags that happened in 2003 and i am in the process of putting together a second edition. towards that goal we have collected testimony by at least about 60 former inmates of political prisoner camps. the difference between now and then is that we have testimony from some of the guards. we have better satellite imagery. based on such testimony, we seem

to see intensified political repression. we seem to see a crackdown along the border with china, and all indications are that the new nuclear power been created around the service on the gulf kim jong il is not proposed any type of reform. we have all indications in putting violent provocations against south korea while in military provocations discussion of assassins, intensified human rights violations in north korea. we have all the evidence that we are dealing with very hard liners. it's been a glut may ask a question -- i read a book some years back about of the self-reliance, religion and the cult of personality, the deification of kim jong il and

kim il-sung before hand, and it was a very detailed heavily footnoted booklets how they brainwashed the people of north korea, and i'm wondering if all of you might speak to this and especially from the two kims, how did the overcome the brainwashing effort? do people in north korea really regard kim jong il as that? there was a national geographic peace recently and i watched with great interest, i watched it more than once, and a doctor went to north korea to do some surgery on the eye and he was having phenomenal success teaching other doctors and practitioners and north korea to do so, but i was astonished how the people who have been helped, especially at a group meeting,

were looking at a picture of kim jong il and sinking him and getting on their knees and for shipping him and the intensity of it was quite unnerving frankly. ..

[speaking korean] [speaking korean] [speaking korean] [speaking korean] [speaking korean] >> translator: i can answer the question by saying in north to reaffirm basically child birth, from kindergarten on, little children are brainwashed into believing that kid jong il and kim il-sung are capable of words to praise, not enough for us to praise can il-sung and kim jong il that there is no words

to think otherwise in north korea. [speaking korean] [speaking korean] [speaking korean] [speaking korean] [speaking korean] >> translator: and that the people in north korea -- the situation where their minds have been replaced with the brainwashed mind and there is no freedom to travel to a country where you need special color-coded passes to travel to a particular paste into niche

activism site for hansard feet are part of the people so they cannot travel or be free of that society. [speaking korean] [speaking korean] [speaking korean] [speaking korean] [speaking korean] [speaking korean] [speaking korean]

[speaking korean] >> translator: two into your question, from my experience as soon as you are born in north korea, you -- the phrases is thank you, great leader. one might say about that to give you is in thousand nine, there is a woman with a young daughter, a young child who accompanied me and the chinese family that was helping us this starving child food. the first words out of the chance not when she received the food with thank you, cheerleader, kim jong il. this goes to the extent of the brainwashing from the day you're born until. thank you cheerleader, kim jong il. those words are just a brain washing into people's minds.

>> just a few final questions -- did you want to -- >> that's one of the things about this whole idea. there is a woman i met who has been a defect dirt and she taught philosophy come as i casually asked her, who is your favorite philosopher? and she is like i only taught kim il-sung in marxism for the first years of my ear and then for the last, kim jong il. i said when you let to south korea, did you pursue philosophy? she said no, i was afraid the brain was too twisted to understand. the fact that she admitted that proved that it was sent. but her brain had opened up. she was actually studying north korean studies to take your way to help help her country. i wanted to say one of the

programs that treat north korea is trying to do is we are reaching out to christian churches to help us, but they want to do a program explaining the concept of what we think of religious faith of self-sacrifice and helping others versus what they are brainwashed to believe to try to help north koreans open their mind to understanding the concepts of what we value in the western world, which is serving others and helping others is the complete opposite of everything they are taught. they are the servants of the regime and that's one thing important because the defect or sell how to articulate those kinds of things. there is an organization called the coalition for north korea appeared when an solitaire is a coalition north korean women, most of whom were the answer trafficking. when they first came to south korea, the whole concept of human rights was completely alien to them. you believe that the socialist societies try to say women are equal appeared in north korea,

women are treated horribly. so this is something they are doing to restore the assignments and teach them the value they are assuming teams cannot tell you they are as women. >> mr. chairman, i think pirtle and birth are dictators such as the personality depends by far and large i'm denying the knowledge of alternative economic, social and political systems. you have mentioned that christians are subject to harsh punishment. we have also come across those forcibly pictured it from china have come in contact with christian missionaries for south korea's space particularly harsh punishment amounting to public executions. most likely come of the main reason beyond that is that christianity and south korea present alternative systems. one great advantage of eastern europeans have primarily through

public rod casting they are receiving from the outside world was that it was clear to them that the capitalist liberal democracy is a west were clearly the opportunity now to focus on improving the information to persuade not only the overwhelming majority were so oppressed, but also why not the elites of north korea, that there is life after the regime and alternatives are available. >> let me just make a note here to access the administration in hearings and other meetings to put china on human trafficking, not only because of the horrific rise in sex trafficking in republican china, but also because they north korean women thinks she has gotten to relative safety by crossing the

border, she invariably sold into human trafficking a chinese government doesn't let the single singer to mitigate pain and crack down on the traffickers who got the border looking for women pleading for that country. they also represent a signatory to the refugee convention because they send back men and women who are most likely to be incarcerated in the gulags if not executed for leaving without permission. so china bears a huge responsibility for its enabling and complicity in the crimes of pyongyang. let me also ask a final question. how would you rate the international community's response including the u.s., europe and especially the united states. there's a high commission of human rights. there's a whole wrapper char

system, but there's also the human rights council, which was supposed to speak truth to power regardless of the consequences and whole countries to account. now, i frequently, when it was the commission and not the council, which asked the council are commissioned to raise human rights in north korea and frankly there've been revolutions in the past, but it has struck me, flake pro forma resolutions. they have low expectations, no sense of shock or dismay over what kim jong il has been doing and his fellow dictators in pyongyang, but there is a sense that it's an obligatory chastisement and no one expects anything to change because of those low expectations, that country in no way is held to account. so is the international community so incredibly passive

when it comes to what is equivalent to what the did in its gulags to its own people into jewish and other scum which is going on current day in north korea. if you can speak to that and find a way, i was in south korea recently, spoke to a number of lawmakers and others in seoul. i was surprised maybe i'm wrong and my impression, to glean from that experience that many people in south korea don't have the kind of understanding that the two camps here have brought to this committee. and that is what goes on in the gulags and the huge repression that is removed to tune by the dictatorship. the young people kind of trivialize in south korea. is that true? or is that a false impression i picked up on that trip? they know it's there, but it is not as bad and they just don't seem to take it at face value

for the huge atrocity that it is. for any of you who would like to speak to that. >> chairman smith regarding your first question, at the committee for human rights in north korea, we are very familiar with the work and the reporting done by the u.n. special rapporteur's on north korea. both of the current repertory, professor dauber time and the previous from thailand are very dedicated scholars in very good human beings who have worked very hard to put together. >> testified before a committee to pass. >> said they done extraordinary work to shed light on the atrocities and violations happening in north korea. i think that organizations such as ours have a duty to inform the international community to conduct research to publish on

the human rights violations happening in north korea and to engage in robust public information campaigns to inform the public here in the united states and beyond and also to inform north koreans have the right but they have that are being violated with such. >> i was going to say that you mentioned china. and i would say there is a correlation between the ability of the u.n. to do anything in china stating those efforts. what you mentioned about the refugees, does says the most vulnerable of human rights crisis going on today. it can be solved overnight at china simply followed the treaties that is signed. the u.n. has an office in beijing. these refugees have a place to

go. the only refugees they know and the world that makes north korea unique that has a place to go because they are citizens of the south korean constitution and the access we will take some year and people are willing to resettle them. so there is no reason for china to continue this. brutal policy reputation has caused 80% of north korean women to be traffic in this basically modern-day slave markets. i believe you have a hearing tomorrow. one of the pressures on this is the fact that china has a shortage of women because they have been murdering unborn baby girls all these years. they've had this one child policy and that afflicted the shortage of women, so that's why you have north korean women that are vulnerable and been sold. china is the reason we can't get more action at the united nations because they actually block when everyone realized that north korea had caused the death of the south korean

sailors, china was the one that was depressing that action on that. as long as you have tremendous influence in the u.n. but has evolved in perpetrating these kinds are happening in north america come you're not going to get any action by the united nations. i know you wanted to say something, too. [speaking korean] [speaking korean] [speaking korean]

>> translator: i would like to have that north korea, currently the kim jong il regime committed by the regime is the worst in the world in. to totally isolate and the best way to go about prosecuting crimes against humanity to report into the international criminal court. it would do a good job of leading an international movement to make this -- to bring about this work of bringing kim jong il to the criminal court. [speaking korean] [speaking korean]

[speaking korean] >> translator: i want to say as long as kim jong il exists, the people suffering will continue. at that to say once again that our earnest desires of the united states to take a lead in helping the world focus on the important issue of human rights issue and isolating that regime to not provide aid or help that would only go towards keeping the regime alive. [speaking korean] [speaking korean]

[speaking korean] [speaking korean] [speaking korean] [speaking korean] [speaking korean] >> translator: i also would like to point out as i am sitting here before a media and for the congressman here that

regarding food aid, i would like to plant a younger sister and brother who are still in the prison camp certainly all the food aid that has been given is not going to dad has not been sent to them with the people who need it the most common is starving and prison would need the food aid for most, but it is only going to be a leap, to the military and security apparatus and feeding them and empowering them, only giving them more life, more power to continue the abuse that i drew in maturing as you can see on display here. >> also about the attitude inside korea, right? you asked also about the attitude in south korea? >> especially the young people. >> i definitely think they might want to have a comment about it. >> it's almost a sense of disbelief to the crew tee of kim jong il.

this is so important as the media who has downplayed it -- >> that's a huge issue. that's so important because you would think the country that should care the most has been the slowest to respond. the reason for that is during the years of the kim government and the roh government, they actually banned information to be reported about north korea because they have the sunshine policy, basically an engagement policy. and the award-winning documentary, soul train, which is popular today that was produced by americans that the refugee crisis in china. north koreans escaping in the whole situation was banned from being shown in south korea by the government. so there was a suppression of the horrors that were going on. they can tell you stories -- he wanted to speak before the south korean assembly, but wasn't able to do it. and what has happened now -- she

was going to speak before this. they can share that with you, but what happened was what the provocations that it happened against south korea, by north korea, unprovoked attacks at 10 a weekend and i'm very pleased to see a lot of young people trying to this issue. have gone to a conference in 2000 to come an international conference in seoul, which people like this where people will speak in their students protesting against the conference. but that has changed a lot. young people are really getting john to the issue. it's been two very difficult to move the hearts and soul of korean lawmakers. they still have not passed the korean act, which has been done by japan and the united states and that has been the real source of contention. >> it brings to mind after world

war ii, eisenhower said do not burn down the concentration camps because there were some germans who were disbelief that he was real and it seems to me when it's an actual policy of the government to suppress the truth, there is something inherently wrong with that because it creates a distortion, a gross caricature of what pyongyang is actually doing. i hope this hearing and it will be followed by additional hearings will further the information. i was telling -- and conversations, complete information about what i had read and learn from hearings and from and from terrorists who hide in my friends who were south korean, with whom i was meeting was met with disbelief, as if somehow i was exaggerating for engaging in some kind of hyperbole when the truth on the ground, as you have so ably witness to is even worse than what we can imagine in terms of the cruelty and mistreatment.

>> by something else i need to share with you. in october i was at a balloon launch and i was with ken sung min, north korea signed and we were getting ready to do a balloon lunch. there is a former north korean who served in the military and he was so upset because they were south koreans trying to stop the balloon lines and saying they were pro-kim il-sung and almost had tears in his eyes. he said i came from that country. how can they deny the horrible things i've seen? i remember him saying we don't want to get in a confrontation. i said something like i know how you feel. i thought, i don't know how he feels, that he could have gone through these horrible things and then have people be denying it and trying to stop them from doing something to reach out to people suffering.

>> translator: [speaking korean] [speaking korean] [speaking korean] [speaking korean] >> translator: of ms. kim would like to read what she said conscious about the people in south korea, the young people to the politicians not fully knowing or understanding or

appreciation of situation north korea, she wholeheartedly concurs with that statement. because of the strong presence of the last days and the pro-north korean elements in society, mrs. kim believes the peninsula is not ready for unification. south korea is not ready to be unified and she would again like to ask for the united states to take the lead in increasing knowledge and awareness about the situation in north korea and hope that other nations to be able to do this. [speaking korean] [speaking korean] [speaking korean]

>> translator: and there are 23,000 north and korea and also a tf bat north korean set is better all over the world. if there's any sort of encouragement, financial help given to us, we'll stop at nothing and dedicate our very lives to bring about change and the regime in the korea. you can trust me when i say that. >> well, miss dane, i think you think about the left is truly enabling by either suppressing for denying that these atrocities are occurring, that makes you complicit in these crimes against humanity. i would hope that clear thinking people come in newspapers and other media in south korea were just tell the truth about what is going on in north korea because the truth is liberating. i would also add my endorsement to what you said about kim jong

il and others being held to account for genocide at the international criminal court. they have committed barbaric crimes. and while there are some u.n. individuals who have spoken out, there has been no holding to account in any meaningful way. so i asked colin endorsement he said. >> thank you very much. i just had a quick question and might make a quick comment. with the prospect of the anticipation that kim jong il believes would take over a horrible prospect, what do you see the consequences and am like that happening?

[inaudible conversations] [speaking korean] [speaking korean] >> translator: mrs. kim believes that kim jong il will never be the true leader, but if he were to become the next leader, mrs. kim believes that the areas a chance that he might open up and reform the country from her point of view in her opinion. >> thank you very much. i just want to comment and i think that an separated country like we see in korea, the fact that many instances the truths

are cast from the people in the south, the total truth and it's difficult to know whose responsibility, the government, the press, and is it deliberate? one thing that usually happens in divided countries as beside eastern and western europe although you can't compare to eastern europe totally certainly not to north korea, but there is a strong move toward reunification as just a natural nationalistic move to reunite countries that were once united. and so, i could possibly understand why some of these younger people would be striving for unification, trying to of course have a change -- a regime change in the north. so i think it's just kind of

normal nationalism, especially a country that may have felt that it has been, you know, abused or exploited by world wars and things of that nature. the other thing i remember clearly as i travel to eastern europe in the late 60s and i went to poland and germany and russia with eastern europeans and saw especially in poland, photos and news reels of the films taken inside of warsaw, with a warsaw at uprisings. and these were young adults my age at the time who could not believe how brutal their parents were when they were leaving the

not see regime. they were talking in their own language, but i could kind of understand what the internal discussion was going on about in almost disbelief. so i think that as we move forward, we'll have to work with educating people to overcome some of these natural things. i also think that we should try to become even more active in the human rights council. there have been some progress made because of before the u.s. joined the council, when it was the committee before and then the council, issues like what is happening in syria, the brutality of bashir on his people, do some of the other issues would never ever be raised.

and so i think sense because the u.s. has raised the issue scum and they to deal with them and that's why it's important for us to be in the room said that there could be answers when our allies are criticized for resolutions continually come criticizing them. we cannot now say, wait a minute, let me give you the other point of view. i do hope those agencies will also be strengthened as they move and then of course i guess not being part of the bronze statues, and makes us a little less significant in the icc, where we have difficulty pushing for indictments for war criminals who should be indicted and the cases should be raised. finally, i'd like to say that really commending the south korean government, several years ago i visited one of my hospitals they are that the south korean government does,

probably the best hospital in sub-saharan africa just about. and they did it because they were appreciative of the ethiopian soldiers to fight in the korean war. and actually, most stunning is that for those veterans who were still alive who serve, they have been paying pensions to these ethiopian soldiers ever since the end -- i don't know exactly if it started right at the end of the war, but for decades and those that are still alive received a month away regular stipend from the government of korea. so i think if some of the goodwill in southern korea could kind of work its way out to the north, that would be a positive

statement. >> thank you, chair for calling this important meeting. >> just to conclude, i'd like to ask unanimous consent that the testimony of kim sung min, director of free north korea be made part of the record. >> about objections to what are. >> await us to revise the extended remarks and make one comment with a related issue. and i to comment on receipt comports of the part tensioners from south korea to china. as is well known, they are persecuted in china and not forcibly return them to china what they were certainly

face persecution. south korea should find appropriate means within the korean legal system in international conventions on torture and refugees that is ratified 2% these pyongyang practitioners to remain in south korea. i would note on thursday, the subcommittee will hear testimony. it will be the 30th hearing on human rights abuses in china. it is entitled china's one child policy, the government's massive crime against women and unborn babies. i mention this especially in light is essential to you and others. this and ask you between woodchopper policy, the dearth of females in the prc. estimates range from an excess of 100 million missing girls in china so that when north korean women make their way over the border, the traffickers are waiting to sell them into modern-day slavery and sex trafficking and china has not only not lifted a finger to stop it, they have enabled it and it

is attributable in part, maybe large part to the wind policy. we would hear from to the dems have forced abortion who will tell their stories. chai ling, the great tiananmen square activist who found all gros allowed, but, richard littlejohn and valerie johnson will speak about the military implications. i do want to think this very, very affect his group of witnesses for shedding light on the egregious human rights abuses of kim jong il and thank you for bearing witness to the truth. when it's too much what we've done. because her subcommittee, congress, executive branch and the free world. and again, i want to thank all of our witnesses, especially our two women who have made their way to the u.s. has come a long distance, suffered, lost loved ones for speaking truth to a very totalitarian power.

i would like to get the last word if any of our witnesses would like to say anything and conclusion. >> i was just going to announce that we are having, and a on thursday, september 22nd, a protest. we are calling on people wherever you're in the world to go to the chinese embassy admitted to poster rupee chichi in and we have 25 cities in 13 countries participating. >> mr. chairman, i would like to tell you in addition to one report that i've mentioned that we are working on the prisoner camps in north korea, also a report on the circulation of information inside north korea and we will be happy to share reports as soon as they are published for the subcommittee. >> will disseminate widely among the congress. thank you. >> thank you. the hearing is adjourned and thank you very much. [inaudible conversations]

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>> the senate budget committee today considered the president's job creation plan. members heard from alice rivlin, former white house budget or look into that and a stray shin and j.d. foster over to the white house budget office for george w. bush. president obama unveiled his jobs plan to congress earlier this month, which includes payroll and small business tax credits along with infrastructure spending. kent conrad of north checotah chairs this two-hour hearing. >> will come to order. i want to welcome everyone to the senate budget committee today. today we will again focus on the economy and additional steps that can be taken to strength os the recovery and to create jobs. we are fortunate to have threewn distinguished witnesses here today. dr. alice rivlin this will e ount to this committee and hac testified here many times.

she ccoururrently serves as tim. she currently serves as director of the greater washington research and brookings institution as well as cochair of the bipartisan policy centers, debt reduction task force. she was the founding director of the congressional budget office, served as director of the office of management and budget in the lens administration and held the position of vice chair of the federal reserve. she has also served with me last year is a member of the president's fiscal commission. i can attest to the extraordinary contribution she made there. dr. rivlin is truly a giant in the budget world. we are delighted that she could be with us today. dr. harry holzer is professor of public policy at georgetown university. dr. holzer served as the chief economist at the labor department during the clinton administration. delighted that you could be here as well.

and dr. j.d. foster is a senior fellow in the economics of fiscal policy at the heritage foundation. dr. foster serves as assistant director for economic policy at the office of management and budget during the george w. bush administration and i understand he will be here shortly. thank you all and we look forward to your testimony. i would like to just begin by putting things in perspective. and i want to begin with a brief overview of the economic situation as i see it. it is important to remember what has happened to the economy. in january 2009, the economy was losing more than 800,000 private sector jobs a month. private-sector jobs, growth returned in march of 2010 and we have now had 18 consecutive month of growth. however, in august, we gained only 17,000 private sector jobs,

which is clearly not enough. we face a very real threat going back into a recession. that is why i believe we need to take steps to generate near-term economic growth and jobs while we simultaneously address the long-term debt threat. the unemployment rate remains far too high and as of august the unemployment rate was 9.1%. long-term unemployment is up sharply. in august, long-term unemployment, those unemployed for 27 weeks or longer, with 3.9%. that is up dramatically from the .8% average over the period from 1948 to 2007. the median duration of unemployment is also up sharply, climbing to almost 22 weeks in august. we know that some of the drag holding back the recovery is caused by the nature of the recession that preceded it.

economists have found the following recessions that were caused by our company, a severe slew of man -- financial crisis. the recoveries tend to be shallower intake much longer. the two leading economist, the two reinhart's dr. carmen reinhart and dr. vincent reinhart found in their research and i quote, real per capita gdp growth rates are significantly lower during the decade following the severe financial crisis. in a ten-year window following severe financial crises, unemployment rates are significantly higher than in the decade that preceded the crisis. the decade of relative prosperity prior to the fall was importantly fueled by an expansion of credit and rising leverage that spans about 10 years. it is followed by a lengthy period of retrenchment that most often only begins after the crisis and lasts almost as long as the credits surfed.

we also know that federal response to the recession and financial crisis helped to pull the economy back from the franken made the recovery stronger than it would have been without it. one of our witnesses last week, dr. mark zandi come along, long with dr. allen blinder the chairman of the federal reserve, completed a study last year that measure the impact of federal actions to shore up the economy. including both the fed's monetary policy actions in the fiscal actions taken by the congress and the administration. here is a quote from their report. we find that its effects, it being the federal response, on real gdp, jobs and inflation are huge. and probably averted what could have been called the great depression 2.0. when all is said and done the financial and fiscal policies will have cost taxpayers a substantial sum, but not nearly

as much as most of fear do not nearly as much as if policymakers had not acted at all. the comprehensive policy response save the economy from another's depression. as we estimate they were well worth their cost. this chart, the next chart, shows dr. zandi and dr. blinder's testament of the number of shows we would have had without the federal response. it shows we would have stayed million fewer jobs in the second quarter of 2010 if we had not had the federal response. we see a similar picture in the unemployment rate. if we had not had the federal response, the unemployment rate would have been 15% in the second quarter of 2010 and would have continued rising to 16.2% in the fourth quarter of 2010. this again according to sandy and blinder. in addition to helping create jobs it is also worth noting the importance of the 2009 recovery act in strengthening the

nation's social safety net. according to an analysis of census bureau data unemployment benefits kept 3.2 million people out of poverty in 2010. medicaid and chip expansion insured half a million fewer children were uninsured in 2010 than in 2007. snap, formerly known as food stamps, kept 3.9 million people out of poverty in 2010. and the turned on come tax credit capped 5.4 million people out of party in 2010. i hope our witnesses can comment on the importance of these programs and their impact on their recovery. with that we will turn to senator sessions. for his opening remarks and then we will turn to our witnesses for their testimony. >> thank you chairman conrad for holding this hearing. i think it is helpful for us to

meet and continue to discuss these issues, although we are not working on a budget unfortunately. and thank you dr. rivlin for all you have done for your country and for being with us again today and dr. holzer and dr. foster for joining us to share your insights. i know dr. sandy is a good man and he insisted that we have a plan and demanded that we have one. and we got one and it didn't do what he predicted. now he says if it hadn't passed it would have all been a disaster. i am not unaware of the fact that dr. sandy is capable as he is, in january of this year predicted we would have 3.9% economic growth this year. when the first quarter came in at or tenth and the second at one point and now his prediction has dropped to 1.6, a stunning reversal of his predictions. so i guess i would just say mr. chairman that when you are

running up unprecedented debt it is easy to say we borrow and spend and is going to create growth but it didn't create much growth, that's for sure and not as much as dr. zandi and others predicted. there is one thing we can agree on i think and we are suffering from unaccepted leann persistently high unemployment. millions are unable to find jobs and millions are unable to find jobs on a full-time basis and that are now working part-time. our economy has experienced anemic growth this year and unexpectedly high unemployment this year. america's gross debt is rising to dangerous new levels. i do, however, have a confident feeling about our future. i believe that if we meet the challenges of our current crisis, we will struggle but we

will rise from it with a new vibrancy and strength. no workforce on earth is more skilled or more productive or dynamic than the american workforce and no business community is more effective. no nation can compete with the men and women to make up this economy. that is as true today as it ever was and there is some indications that if we do things right, we may take back a reduction of manufacturing that america has lost in past years. america's private sector is just waiting to grow and expand, but unwise government policy continues to stand in the way. unpredictable federal intervention is fostering a busi arthreated and uncertainty .. with constant -- a constant slew of new taxes and regulations and roast debt now 100% of gdp, hangs over the economy like a

dark gray cloud. a prominent study by secretary geithner indicates that are dead and the dead level today already cost us growth and jobs. we need policies that create a better environment for job creation, and ones that don't add to the debt. that means more american energy production, the elimination of harmful and costly regulations, and growth oriented tax reform. all three committee witnesses last week democrat and republican agree with the wisdom of those ideas. since taking office president obama has served their gross federal debt nearly $5 trillion in three years. nondefense discretionary spending spikes 24% during the first two years of his presidency, and his february budget calls for further dramatic increases in spending -- discretionary spending next year, increase,

doubled digit. france as he has requested a increase in educational spending following a 70% increase in total education spending since taking office. the president routinely talks about the roots -- make government investments i.e. spending but if it gets to mention just how much we have already spent. yesterday he made his fourth attempt this year to offer a credible fiscal vision but i was disappointed to see he again failed to present an honest budget plan america deserves and our economy needs. the white house says that the president's plan achieves $3.2 trillion in deficit reduction. the actual deficit reduction is only 1.4 trillion. less than half of what the white house said. note, this is $1.4 trillion in deficit reduction, not spending reduction. even the 1.4 that is achieved,

this has become the pattern. the president understates the depth of our fiscal danger and overstates the impact of his plans. consider the astounding disparity between the levels of taxation claimed versus those actually contained in the proposal. the white house has served $2 in cuts for every 1 dollar in tax hikes. the true figure is nowhere close to that. the president's plan is comprised of tax hikes alone in reality. there is not a single penny of net spending that is cut. yesterday the president said this. quote i'm proposing real serious cuts in spending. when you include the $1 trillion in cuts that i have already signed into law, these would be among the biggest cuts in spending in our history. "matt. in reality and are the president

's planned the net change in spending is an increase. and in fact the president's plan is to keep spending more. part of this as a result of of the presidents need for the stimulus jobs program, but there are three additional accounting tricks the white house used to get these inflated figures. first, or funding. the plan shows $1.1 trillion in savings from putting a cap on the war costs but those costs are going to decrease as the war effort in wines, whether or not there are caps in place. they do not represent actual spending cuts from what we project, or a new policy to achieve future savings. the president proposed cabs simply manipulate a slime concepts that show the savings as a policy choice, which inflate the spending cuts in the president's plan. congress rightly rejected this accounting process as part of

the deficit reduction during our recent debate. the doc fix. the administration lionel so assumes a medic or doc fix which is the payment for our physicians, an increase in spending of $293 billion. over 10 years compared to the current baseline. this gimmick of pounds accounts for the higher spending and big rather than a policy choice that needs to be offset. without this gimmick the president's health care savings of $320 billion becomes a health care savings of only $27 billion. interest savings. the president counts of savings the net interest reduction that results from his proposed tax hikes. becomes that is a spending cut. when you are in a crisis, you must deal honestly with the american people. a president more than anyone should have credibility with the

american people. you must present the facts with a credible solution. americans are good, decent and hard-working people who will accept a difficult course of action on honest terms but the white house is trying to be clever at the expense of being credible. the debt is destroying jobs today and if we are going to restore confidence and growth and credibility, growth credibility as one asset we cannot afford to borrow against. america deserves an honest fact-based approach to our economic challenges, one that controls washington spending and grows the private sector. i hope today's hearing will move us in that direction. thank you mr. chairman for leading us and calling us together with this good panel of witnesses. >> thank you senator sessions. obviously we don't have complete agreement on this panel.

[laughter] you know, we certainly disagree as to how we got here. i don't think the current administration created this problem. they inherited it. they inherited an economy that was on the brink of financial collapse. and that was that we were brought to the brink of collapse by the set of policies that i see being repeated by her friends on the opposite side. it's the same nostrand they offered before that brought us to the brink of financial collapse. don't have regulation that they'd financial institutions. that is what led to the collapse of the financial sector. don't regulate derivatives. we saw what happened. aig, the biggest insurance company in the world, fail. had to be taken over during the bush administration. and the debt skyrocketed as a result of those failed policies.

give tax cuts that disproportionately benefit the wealthy are the answer, we would have had the main economy at the end of the bush administration. instead, we were on the brink of financial collapse. i was in the room. the secretary of the treasury and the bush administration came to tell the leadership of congress, republican and democrat, that if they didn't take over aig the next morning there would be a financial collapse within days. barack obama was not the president. george w. bush was the president. so, the place we do agree it is, we have a death threat that must be confronted. it must be confronted. this is the place we do it. we have got to find a way to come together to both deal with the short-term crisis we

confront in terms of one in every six americans be on them floyd or underemployed, and the harsh reality that we have a debts that is to hide and is growing too fast and must be dealt with. so, that is where we are. >> mr. chairman, there is much truth in what you say. i remember you hammering president bush with the charge week after week on the floor for overspending while in effect, democratic colleagues were simultaneously criticizing a the republicans for not spending enough. but, we did put our country at risk, and decisions were not correct over a period of years including the democratic

blocking of president bush's request to have more regulations of freddie and fannie. had that been done, we may not have had anything like this serious problem we have. so the regulations were proposed by senator shelby, my colleague, pastor of the committee on a partyline vote, but blocked on the floor. but you are correct, we have got to now focus on the future. and i just would say to you, i believe my statement was hard this morning but i believe it was correct, and holding the president accountable for resenting now a fourth planned that does not seriously address our problems. it is essentially a plan to raise taxes on a weak economy and as dr. hassett said previously, in our previous hearing, that it would take -- we may be going a long time with very slow growth and he is

spending now to borrow will come to roost before our economy has come back. that is a dangerous path. thank you for having this hearing and i appreciate your leadership. >> can i take under one minute because the finance committee is going to a markup. i just want to offer one quick thought because i think it can help bring us together. mr. foster is here and he is with a heritage association. mr. foster i'm not sure you are aware that heritage scored our tax reform bill. the legislation i have had with senator gregg and senator coats. here are the numbers. heritage said that bill would create 2.3 million more jobs per year, increased disposable income by $4100 per year for a family of four, raise foreign investment in the united states y. $292 billion a year on average and boost real gdp by an average of $298 billion per

year. let a offer this up because i've listened to this kind of discussion. we have a chance with the bipartisanship here, senator warner in particular and mr. chambliss is done very good work and miss rivlin has done some very good work. i'm trying to go to -- it back mr. chairman but i just wanted to bring that up because i continue to believe we can bring that together particularly around growth oriented policies and my apologies to my colleagues for imposing. >> mr. chairman? senator wyden, truly worked hard on a complex piece of legislation that has the potential for bipartisan support and does have some very fine parts of it. i congratulate you senator wyden for trying to come up with some ideas that can make this country better. >> i thank senator sessions for that observation. i add my voice to that.

this session as senator sessions started with senator gregg who was the ranking republican on this committee. he and senator wyden work together in a very collaborative and intense efforts to look at the tax code, which is a monstrosity by anyone's definition. we appreciate the work. let's go to the witnesses. alice rivlin really needs no introduction before this committee. welcome, please proceed. >> thank you mr. chairman, senator sessions and members of the committee. i'm delighted to be back here and want to reinforce what has been said, that there is a chance for why partisan cooperation now. this is a critical moment for this committee to focus on employment and job creation and for the congress to take action. the future of the united states is a prosperous economy and is a

world power depends on getting people back to work in productive jobs. unless employment accelerates sufficiently to keep up with a natural increase in the labor force and gradually absorbs the unemployed and the hidden labor force of discouraged and part-time workers, we are doomed to stagnation and standard of living. this fate is not necessary. we have jobs that need to be done in both the public and the private sectors and elliott to people who want to do them. it would be unbelievably stupid to allow capacity to sit idle. worker skills to atrophy and workplaces to become museums and out of date technology for lack of imagination and political will. however policies to accelerate job growth and prevents a double-dip recession must be part of the simultaneous strategy to stabilize the projected increases in the national debt and return the

federal budgets to a fiscally responsible path. rather than conflicting these two sets of policies complemented reinforce each other. the faster we get people back to work, the zierdt will be to move toward a sustainable budget. if the recovery stalls and unemployment rises again, prospects for stabilizing the debt will deteriorate rapidly. it will be worse than temporary increase in in the near-term deficits to avoid getting into another downward spiral of falling jobs, sales investment confidence. at the same time the faster we can put a firm plan in place to reduce looming future deficits by reforming entitlements and the tax code to enhance things incentives for growth, the more sustainable the recovery will be. we cannot afford to wait until the economy recovers before acting to reign in future deficits.

these deficits reflect the oncoming tsunami of retirees combined with rising health costs. they can't be blamed on president obama or president bush. the sooner we put fixes in place, either on the spending side or on the tax side, the less disruptive these changes will have to be. if we continue postponing actions to stabilize the debt, we undermine confidence at home and abroad and the ability of our political system to face problems and solve them. a spike in interest rates and even the sovereign debt crisis that could permanently damage the power and prosperity of the united states. no one should underestimate the difficulty of crafting policies that will effectively create jobs and the daunting economic circumstances we face. it will take the best efforts of the public and private sectors working together plus cooperation and compromised across party and ideological

lines, which is hard to achieve in the current polarized political atmosphere. the recession is deeper and more intractable than most economistn the obama administration, including mark zandi and almost all the other economists that i know realize that the time that employment and incomes were plummeting in 2008 and 2009. recessions precipitated by financial crises tend to be deep and long, as scholars like the reinhard's have shown but this one is likely to be especially hard to pull out of quickly. it was precipitated by an uncontrolled and i believe in moral frenzy of overleveraged trading and complex derivatives based on unrealistic expectations of continued value increases in the very assets

that american households depend on most, their homes. after the plunge and those overinflated values, we should not be subprized that complements as low end consumers and businesses that depend on them are deeply frightened of eating overextended. the large stimulus package enacted in 2009 helps the economy -- helped keep the economy from sliding into an even deeper recession. i don't know whether these andy blinder numbers are exactly right but we surely would have had millions more people out of work if we hadn't done something. together with aggressive monetary policy, the stimulus help reverse the downward spiral of falling demand and layoffs. the congressional budget office and many other analysts have rarely shown that the economy performed substantially better than it likely would have in the

absence of fast and aggressive administration and congressional action. the growth, though positive, has been modest and unemployment remains high is evidence of the deep and intractable nature of the recession. not that the stimulus didn't work. the events of the last year have shown that more action is needed. justice the direct impact of the stimulus begin running out additional negative forces hit the economy. the rising energy crisis, the effects of a the japanese nuclear disaster, slowing growth in the rest of the world then worrisome disarray in your. the president is absolutely right i believe to propose a new package of tax cut extensions with incentives to boost employment, help for the long-term unemployed and infrastructure investment. this package was carefully designed to incorporate many policies that appeal to both parties. it included a proposal to

redesign unemployment compensation, to facilitate getting workers into jobs. i believe this congress should take the proposal seriously, but incorporate it into a long-run deficit plan as the president suggests. any action to create jobs right now either through spending or tax increases will increase the deficit and add to the debt. we can afford to do this as the immediate actions are part of the legislative package that stabilizes the debt irish forming and simplifying the personal corporate tax codes, reducing the rate of growth of medicare and medicaid in putting social security on a firm foundation. variations of such a grand bargain were recommended by the simpson-bowles commission and the domenici rivlin task force.

indeed, any serious bipartisan group seeking to stabilize the debt is forced by the arithmetic of the situation to a similar solution. the residents beach yesterday speech yesterday voiced his clear commitment to the double strategy of creating jobs and bringing in future deficits. the new joint select committee, which i think of as conrad gregg come to realize, as the power to go beyond its initial mandate and make the grand bargain a legislative reality. the best thing that could happen to prospects for american growth and jobs both long-run and short run, would be for this committee with a strong the strong support of the current president congressional leadership to go big, to use their extraordinary powers to put into law an immediate jobs creation program incorporated into a grand bargain to stabilize the debt.

mr. chairman, you and your former colleague senator judd gregg and many others worked tirelessly to get the congress and the president to this point. i honestly hope the select committee will prove able to finish the job. thank you. >> thank you dr. rivlin. dr. holton. >> thank you and good morning chairman conrad, senator sessions and senator warner. i would like to make several points this morning about the unemployment rate and also about the u.s. labor market situation in the next several years and i would like to make 5.2 by me. point number one, as we all know the great recession created high unemployment that will persist were several years to come and will have lasting negative impact on millions of workers, even after the economy goes on. as senator conrad pointed out over 40% of the unemployment already have suffered lengthy stalls of unemployment of six months or longer and will make it harder for them to re-enter the job market and find labor,

find jobs when job creation actually picks up. low earnings will scar millions of young workers for years to come even when the labor market recovers. point number two, even before the recession began most american worker workers suffered from a stagnant earnings growth in very high earnings in the quality. during the full economic cycle in 2,002,007, median earnings stagnated or declined for most groups of american workers. many of those hit hardest during the downturn, less educated men, were staring quite badly before the recession began because of declining -- disadvantaged workers who are broadly suffering only from high unemployment but also from low wages and limited labor market activity even when the economy was small. among many other problems the education of skill levels of many of these workers have failed to keep pace with the rising demand for skills and good-paying jobs in our economy. point number three, policy

efforts to improve labor market outcomes for labor workers should focus both on creating jobs and reducing unemployment caused by the recession in in the near-term as well as improving the skills and earnings of american workers over the long-term. to create more jobs and reduce unemployment, i support many provisions in the jobs act including reduced reduce payroll taxes for workers, targeted payroll taxes for employers for expanding payrolls and additional spending on infrastructure, school construction and layoff prevention of state and local government employees. personally i would prefer the tax cuts for employers to be more generous than those proposed by the upon administration but at the same time much more targeted on employers whose payrolls have expanded. this would improve incentive and limit the windfall for employers who don't change the behavior and pocket the tax cuts anyway. at the same time we also need to

take action to improve the education and the work worse preparation of american workers so that they are more able to build good paying jobs and that leads me to my fourth . to improve worker skills we need to develop more effective education and workforce systems. better targeted to its growing and high-paying sectors of the u.s. economy. burning supplements for disadvantaged and dislocated workers who are actually taking low-wage jobs could be expanded while the unemployment insurance system could be more closely tied to skill building efforts. i would like to elaborate on those proposals. the current workforce system funded by the workforce investment act appears to generate employment services and job training quite cost-effectively but it has been starved for funds for many years and should not be further reduced in the context of the budget cutting efforts. we also need to better integrate career services and occupational training in our high schools and in our colleges and to make

institutions more responsive to the demand side of the labor market. for high schools this means generating high-quality career and technical education, not as a substantive for higher education but as another means of preparing students for higher education labor market. career academies have demonstrated the value of such education especially for at-risk young men. turning to american colleges, most never compete any educational -- which i define ethers and occupational certificate. too often they are not in the fields by the labor market.

that is often not the case for them. rigorous evaluation shows that sectoral training in which yoth repared shows how the training is prepared for specific sectors ofific s the ey and employers are actively engagedare actively engaged can provide improvements for the disadvantaged while meeting employer needs for skilled workers. these programs can and should be especially supportive to take the high road and provide good-paying jobs are less educated workers. dislocated workers including the long-term unemployed can also derive substantial benefits from technical training targeted towards growing fields in the economy. now i believe all of this could be supported by a competitive grant program provided to the states that more actively integrate the education and the workforce systems to make all of the more responsive to the labor market and especially the deeds of good paying employees. this program should actively reward states for building on

their effort and leveraging many other sources of funding. any new funding should not become yet another excuse to cut back funding for existing programs. for disadvantaged workers or dislocated workers who don't benefit from training, supplements to their low ratings could be expanded. these would include the earned income tax credit, which right now benefits adults without children too little, who are also wage ensures for the dislocated to have taken lower wage jobs than the one for help before and i believe a variety of the unemployment insurance system might encourage more employers and more training to be provided. finally my last section deals with the budget issue. all of these measures could be undertaken with modest new federal expenditures over time. they are not inconsistent with sensible efforts to limit our budget deficits over the long run. which should primarily focus on raising federal tax revenue

below its historically low level right now and reducing spending on entitlement programs especially for future retirees and that is where where i think the bulk of the long-term savings on the budget chart -- side should be made. thank you nick. i will stop there and look forward to our question and answer session. >> thank you very much. dr. foster. >> chairman conrad ranking member sessions thank you for the opportunities testify. my names jb foster and i'm a senior fellow at the heritage foundation. the views i express or manage it not be construed as representing an official position of the heritage foundation. the rest of the economy today are great and so our focus on jobs and economic growth is critical. two years after the end of the great recession as the economy should be accelerating economic growth and job growth have ground to a hault. mr. chairman as you noted, when a recession is fundamentally involved with financial markets

and they are troubled, they are at the epicenter of the recession you are going to have a very troubled recovery, absolutely correct that you will have recovery. two years on, we should be in recovery. not flat-lining, not heading toward a double dip possibly. while financial markets may explain the early troubles in the recovery i don't believe they provide much of an explanation for today. speculation, richtman patient theorizing and models are now are relevant on this simple point. the data before us agree on the underlying message from the president's recent jobs speech. they'll test to the simple incontrovertible fact that the president stimulus policies have failed utterly and completely. i take no pleasure in pointing out this fact nor an affected we predicted the policy failure two years ago. i would much rather have been wrong and for millions of my fellow citizens be gainfully employed in all the jobs the president promised a gray. to understand what policies might be helpful today and it is

important to assess why the economy is not recovering. the fundamentals of our economy remains sound and natural productive tendencies for american workers. investors an american dr. murderers remain undiminished. there are of course the initial headwinds such as the follow-on effects of japan's devastating earthquake and tsunami. the economy faces and overcome such headwinds even the best of times. headwinds there are to be sure but they are not an explanation of the economies lethargy. the economy suffers from two categories of troubles. the first or structural which to primarily reflects the housing sector till and deep disequilibrium and many urzua country. there is little substantive way the government can do to return the housing markets to normal and heaven knows congress and the president have tried just about everything. that is part of the problem. governments well-intentioned meddling has delayed and distorted the essential requirement for normalization of

the housing markets. on balance these policies have set back the housing recovery by months and perhaps here and there is an important lesson there. the second category of trouble is what might be termed environmental. not the natural impairment that the economic environment. most relevant to our discussion today is alternatively a shortage of confidence or excess of that uncertainty. those who could make the decisions and take the actions that would grow the economy lack the confidence to do so. even today the economy bounce bounds and opportunities for growth. turning potential into reality requires action in action requires confidence. confidence in the future, confidence in the specific effects of government policy and confidence government can properly carry out its basic functions like a green tool budget. america severs a competent shortage and washington is overwhelming the cost. confidence in turn is lacking because of an excess of uncertainty, uncertainty about

the future but also insert me about the effects of government policies, tax, regulatory monetary, trade. insert the actual course in the future is always uncertain. but there is good uncertainty and that uncertainty much as there is good cholesterol and bad cholesterol. good uncertainty for example presents opportunities for-profit. bad uncertainty arises largely when investors amount of printers have real questions about the consequences of government policy. tax policy provides a good example of that uncertainty. the president's repeated insistence on raising taxes on the high income workers and investors slows the economy without the policy even being enacted. it does so by raising the uncertainty about the tax cuts for various actions. does not stop all subsections but it stops some and therein lies the difference between growth and stagnation. the president's insistence is a twofer in terms of bad uncertainty, the specific is that taxpayers don't know what the tax liability will be.

the general is that suggesting raising taxes on anyone in the face of high and rising unemployment suggested gross lack of ms.-- understanding about how it and economy works. that is the source of bad uncertainty that afflicts the entire economy not just those threatened with higher taxes. in this environment congress need not enact bad policy to weaken the economy. threats suffice. the federal government should adopt a simple guiding principle for deciding what to do next. that principle is, do less harm. do less harm. there is very little in terms of concrete actions government can do at this stage that would help and a great deal of the intended help would harm either by raising the deficit to no good effect or by creating more uncertainty in slowing the economy's natural healing process. do less harm means getting spending under control and thereby cutting the budget deficit. americans are worried about spending and the deficit. that worry by itself is debilitating.

do less harm means policymakers should stop threatening higher taxes. we can have debates about who should pay what and how much. in the meantime, this thread is holding us back. do less harm means stop new regulations. the recent pullback of epa's ozone regulation was a good example. even the threat of a regulation creates bad uncertainty for those affected, freezing them in place. again we can work through these regulations when americans are back to work. do less harm means policymakers should stop meddling with economy. there is almost no limit to the harm washington can do to the economy and its efforts to do something for the economy. the patient is in recovery. the difficult recovery to be sure that in recovery, slowed by the incessant products and procedures of washington's policy doctors. the patient doesn't need another procedure. let it heal, do less harm. let me talk briefly about one

philosophy that has been driving a lot of our policy, the model of keynesian demand management. this is a perfect example of a policy that fails do less harm. the philosophy is very simple. the economy is underperforming in demand is too low. the government budget deficit is a component of demand surges reza. it is an equation. huckabee wrong? raise government to deficit spending and a commie should recover. the reason this fails is the economy is a little more complicated than a simple equation. the model it is based on ignore something else in the economy a process called financial intermediation. basic function of financial markets. the problem is that when government runs more deficit spending it has to borrow the money. when it borrows the money that money is not available for private sector you say you have not increased total demand. all you have done is shifted around. now advocates for this policy will say yes but there is so

much saving and people are doing anything with it. corporations are sitting on the money. yes they are but that is not an issue. they don't put it in the mattresses. they have put it available to the financial system which intermediates it to those who needed. it is fiscal -- adding to the headwinds and economy. this is a perfect example of a policy that fails, do less harm. thank you mr. chairman. >> thank you. we are going to go to senator warner for the first round of questioning, because he has got other obligations, as do -- this is a meeting i would say to our witnesses, this is the morning in which other committees in which budget committee members serve have mark-ups, so you are going to be seeing senators, and go to accommodate that. i know senator warner has other obligations as well as does senator sessions. senator warner. >> thank you mr. chairman.

thank you for the courtesy. i would like to thank the panel. a couple of quick questions. while we have a diversity of views on the panel, think in a traditional books we would normally say in periods of recession that the two major tools that a national government has is monetary policy and fiscal stimulus. we can gauge how effective they both been but we basically use both of those bullets, and i am curious, the one thing i haven't heard many of the witnesses quantified, and from across the spectrum is that as someone who liked the chairman and others has been working on and feels very strongly about the deficit reduction and debt reduction, the added cost of the debt of the stagnant economy. have we been able to equate per point of increased unemployment what that translates into in terms of lost tax revenue,

additional mandatory government spending in terms of unemployment insurance and medicaid and other government support programs, so that while some would advocate immediate cuts regardless of effect, we bump up an extra pointer two of unemployment, what direct effect is that have on the current deficit? >> higher unemployment and less growth, clearly cuts into tax revenue, and adds to costs and programs like unemployment compensation. the cbo and others have done that calculation. i don't have the numbers at my fingertips. >> does anybody have that number kind have been off their heads ballpark number? >> i don't have the exact number but i do know that people have looked at the growth of the debt over time. attributed a good part of that

growth not to specific policy choices made since 2008 at in fact to the recession and automatic declines in tax revenues and automatic increases in spending programs. they don't provide any choices that we have made that is added several billion dollars, trillion dollars, i'm sorry to the current level of debt. that is likely to swamp if the economy double-dip stack of swamp any efforts made by the supercommittee to trim the deficit by further reducing tax revenues and raising spending. >> dr. foster. >> yes senator this is one of those rare moments when we are in agreement which is rather pleasant. to read what dr. rivlin said there's there is a chapter in the analytical specter of the bh there is a table. i believe it is chapter 3 and perhaps table 3.11 which goes to a budget sensitivity analysis you can see in their various divergences of economic performance from the president's economic assumptions and the

consequences for revenues and outlays over 10 years. while i don't have the numbers i can tell you at least where you can find them. it would be nice to be able to have this kind of one of our normal talking points, how that adds to the deficit. i guess dr. foster is two things, and i understand your perspective but and you are concerned about kind of the do no harm theory. would that do no harm theory in terms of the revenue side also apply to the immediate government spending side? i mean, would not immediate cuts at this moment in time with the verge of a double-dip in front of us also fall into that category of harming the economy? >> in general i don't believe so senator because i believe that government spending which is being funded by bob harling is

simply moving demand around in our economy. is crowding out in the old expression, certain other spending. now if you quickly switch from formal spending where the economy has predicted capacity built up to deal with that like defense spending, where we have defense contractors who are geared up to produce certain weapon systems so suddenly cut them off. obviously that is going to require -- require changes in cost but otherwise no i don't believe reducing the spending would be harmful. in fact there is so much concern about the deficit and debt that is one of the factors eroding confidence are building up bad uncertainty in the economy and it is what is holding us back. not only would we not suffer a downside to such a policy but there would be an actual game to the economy by reducing the uncertainty. >> but are you saying that transformation in terms of cutting defense spending might be bad but cutting state support

of infrastructure or teachers or others would not be bad or would not have any ill effect? >> the point i'm trying to make as some would have transitory effects that would be harmful and others would not. defense is a simple example because you often have large examples to produce a large aircraft. >> is easy to understand it would be transition cost from cutting babette but there are others as well where you have a profit economy geared for a customer. the federal government cuts out the customer and there's going to be a transition cost but purchase of goods and services are relatively small portion of spending. there's an awful lot of spending that would not the subject to that limitation. >> purchase of goods and services, cutting off direct employment would not a bad? >> that would not have that transitional effect, that is correct. >> one of the of the things i was questioning is i concur with your point that capital sitting on the sidelines does not simply sit in a vault. it is impressive but i would

question in terms of particularly with record low interest rates and a lack of willingness to invest that there are more productive uses of this corporate tech -- capital than investing in t-bills in terms of generating job growth and generating investment, taking greater risk with larger rewards. i am not sure -- . >> there is no doubt there would be more productive very soon i am sure corporate america would love to deploy his best resources more productively. they lack the opportunity to do so in the current economic environment. we have a very uncertain future and sitting on the sidelines. that is not to say you are going to get a better outcome because government puts its hands on and decides to decide suspended itself. >> let me take one last question since the chairman was kind enough to give me the time and i would talk -- love to hear dr. rivlin and dr. hold 'em

comment. i generally agree with your prescriptions but one thing i am talking about is it seems even what the president has proposed there were a few things that are going to get as immediate and short-term and i completely concur with you on the training initiatives and, but i constantly so much of what we try to do appear as well-intentioned the lag time to where it has an effect on immediate job growth or spurs really takes much longer than i would like. and again my tank is to the chairman. >> just a brief comment. i believe what is holding back investment is not crowding out by the federal borrowing, but lack of demand. and possibly some uncertainty, but lack of demand is the basic album.

if you don't think you can sell your product you are not going to make more of it, and the way to increase demand in the short run is to get money into people's pockets that will spend it. that is the argument for extending and increasing the payroll tax cut. it goes to wage earners all over the country. they won't spend all of it because they are trying to repair their balance sheets but they will spend some of that and that is a way to get demand up. >> i think that there were efforts along the line with the american jobs act. we are looking at the rest of this decade but eventually of having very stagnant growth in sufficient demand. i think a lot of this proposal for instance, the payroll tax cut targeted towards employers. again i would targeted much more. i think that could actually raise higher even at this level the demand quickly. not enormously in a

cost-effective way. i think some of the spending proposals like preventing a layoff of state and local employees has been a huge drag on economy and the employment growth numbers and that could occur relatively quickly as well. i think within a reasonable timeframe many of these policies could be effective and also cost effective. i want to take issue with my colleagues analysis. this notion that government spending has a one for one crowding out effect on private spending especially with the recession is not a new idea. has been debated for 70 or 80 years i my profession. i think most economists in this kind of an economy would not subscribe that pointed most economists would not read the evidence as supportive and indeed many conservative economists republican economist like my former teacher martin bell john and economist certainly did not subscribe to that point of view. i think we should put those opinions and perspective is very

much a minority viewpoint within our profession. >> senator whitehouse. >> thank you very much mr. chairman. as some of you who have been here before no, i take a very keen interest in the burden that our health care system plays on our economy. the president's council on economic advisers said he could take $700 billion a year and costs out of the health care system without harming anybody's quality of care. the lewin group which is pretty well-regarded in this area and george bush's treasury secretary, secretary o'neal, who knows a fair amount about this from his work in the pittsburgh regional health initiative and as the ceo of alcoa, they both

have agreed that is actually a trillion dollars a year. .. it would have a very significant lift on american exports, which now carry a huge health care costs their pricing, which our european competitors in some other foreign competitors.i. have been a national health care system and a taxis and that exports dodge because they are not picked up in the vat tax method. and that creates a huge burden wi on an american export productprt compared to competitive productt exported in the same

international market.when whave and so it is frustrating to me when we have a panel of expert s who talk about our economy and nobody talks about health care. and we've had this discussion for what somebody has said is well, that may be true but because of the nature of the reforms that are required to begin to unload those excess costs, the 18% versus 12% of gdp differential that we carry at the load in our health care economy, because the nature of the reform is something that is to use the word of the only matter in washington on a score of zero we are not going to look at that. that was true bull simpson and i believe that was also true of domenici rivlin.

it strikes me that that is a fairly big piece of this equation, and by understand that it doesn't lend itself to the economic analysis as an input because it is a process of innovation and learning in the trial and error and experimentation but clearly there's a huge gain to be made in the difference between where we are as a country where all of our competitors are and there's an agreement on that subject, so i keep sending and a flair whenever we do one of these hearings think for god sake can we please consider health care costs and particularly delivery system reform is the way you deal with health care cost without harming some individual intending on a particular benefit so i would love to hear your reaction to that ms. rivlin or dr. foster. >> thank you. as you know, senator whitehouse, i agree with you that the rising

health care costs are a huge part of the problem i talk about this almost every day. not always in eight minutes, but the -- it's clear that it is the major health care programs driving the deficits and that we compared to our competitors or other advanced countries spend a lot more on health care per patient, per anything. >> those are relatively crummy outcomes. >> that's all right. >> with respect to what to do about it i think the problem is not just that we know what to do but it doesn't score a goal, but lots of things that look promising such as many of the pilot programs and experiments with different payment systems and so forth that are included

in the affordable care act haven't shown clearly that they deliver lower costs and better quality. the way we handle that in the domenici rivlin plan was we did propose a major restructuring of medicare known as premium support which is a defined contribution plan coupled with competition on exchanges among health plans and we think that it's better outcomes in the long run from the competition among the health plans to the score above the and the defined contribution that you can say that unless health care costs

come down welcome in any case, the federal government will be -- contribution will be defined by the congress and once you do that it is perfectly scrabble so it doesn't mean you could never change it. congress can change any time they want to but i do think there's an advantage in getting medicare on to a defined a budget that you vote on and you know what it is. >> we are below two minutes. i apologize to you and dr. foster. >> i will say briefly in terms of how these pack on the labour market of only to the costs, and lemurs' which makes it harder for them to hire more workers but one of the ways to deal with that is to take it out of the workers' paychecks ultimately bear most of the cost and indeed i think as much as -- the previous decade might have been eaten up by the rising health care costs in the u.s. which is one of the major reasons why the high productivity growth didn't show up in the paychecks so

that's why i agree there's an enormous problem affecting these issues my sense and i defer to alice rivlin i say a lot of promising efforts to reduce the health care costs during the the debate on the health care package that politically seems very unpalatable. things like rethinking the very favorable tax treatment at least from the caps on the favorable tax treatment and the benefits and i think we are going to have to return and make harder choices in the future to get those costs under control. >> dr. foster? >> another one of those happy moments in basic agreement. it's no question that the rising health care costs are taking the biggest bite out of the workers' paychecks and the need the cash and that is a fundamental problem. we also have a plan similar to what dr. rivlin described as the premium support model. we think that is ultimately the way to go and it's a very an incremental approach to medicare

reform. it basically says a lot of the things that are currently done in medicare is simply done incompletely and we need to make them a complete model based on the premium support. >> thank you. my time is expired. >> i'm going to take my time now and go to senator begich next. we had a couple of references to the economist mark azande who testified before this committee at the last hearing, and i just want to say first of all its important to know his background and the adviser to the mccain campaign in the last election i think he made clear at the last hearing his forecast was off as were many economists because we've had a series of events which he described in some detail last week which i think

in fairness we ought to remind people loved and the disturbances in the middle east that have a dramatic effect on all but oil prices. oil prices went up and that meant gasoline prices went up and the fuel went up that operate like putting a tax on the american economy and the global economy so that had an effect on slowing things down. second we had a tsunami in the resulting nuclear disaster in japan. that had an effect on the global demand. that had an affect on manufacturing. then we had the european debt crisis. we read about that every day. greece, ireland, spain, portugal, increasingly italy, that has had an impact on

confidence and without confidence as i think all of you have set at various times in your testimony businesses sitting on a trillion dollars in cash are reluctant to invest. the final point i would like to make is what kind of downturn are we having here? in part because i believe it's a balance sheet recession that is because the financial firms had to rebuild their balance sheets. they've had to pull back from extending credit and i hear about this almost every day i'm home from small businesses in terms of securing credit, and that is what the reinhardt's found in their study and i would say to you, dr. foster you say to -- two years is too much for recovery. they were up to 200 years of economic history. 44 countries. what they found is that it takes eight to ten years to recover, not two years, eight to ten

years. we are two years into this. as we are in a very different situation when a garden variety recession, when you have what is in part a balance sheet recession you have weak aggregate demand. we have we can aggregate demand where is it going to come from? of the federal government doesn't put in a store there is no other place big enough to give a lift. that is my own belief. i also believe that whatever is done to give left has got to be in the context of a plan that is credible and serious to get our debt under control because the reinhardt's also found once you get to the gross debt of 90% of gdp your future economic prospects